Earnings call transcript Q3 2022

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Operator

Good day and welcome to the Karat Packaging Inc.

Third Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. Instructions]. [Operator event this being is note, recorded. Please

now Roger Pondel, would ahead. like Packaging. to to over call the Investor go turn Please I Relations Karat for

Roger Pondel

afternoon, to Packaging's and Officer, Investor XXXX firm. It Alan Karat I'm Good Yu my its Pondel company's Relations welcome Jian pleasure Chief be earnings Officer, momentarily Roger Karat Financial quarter the Guo. call. Packaging's PondelWilkinson, with will and everyone introduce Chief third to Executive

remind Private to listeners over within XXXX. to Reform Alan, call Before include that Act I turn may want today's the call the I meaning Securities of our forward-looking statements of the Litigation

Such with forward-looking the most recently including which control, those the along of statements at set website Form forth which XX-K the SEC Karat to Exchange many the Packaging's Commission, from Risk filings with and are www.sec.gov, of to conditions, on available Securities made copies in time are beyond section company's numerous as of are the SEC's with the subject Factors company other filed time.

differ to materially obligation and Packaging statements, Karat from as forward-looking by these no could statements, law. any undertakes required forward-looking update results except Actual

also we discussing EBITDA, diluted Regulation GAAP in to G. will included today's EBITDA the directly posted today's during of adjusted most financial adjusted note on the which comparable is company's is now earnings measures website. margin defined be and are press the share, by measures SEC that adjusted per non-GAAP non-GAAP Please as call, release, measures which A financial reconciliation

Yu. it CEO, turn Alan? with the is that, call Alan to pleasure to And my over

Alan Yu

everyone. Thank you, Good afternoon, Roger.

net particularly quarter year XXXX from sales post X% increased Our prior was reopenings. from strong period, COVID which third the quarter

see recent grew by prior to friendly long year of which quarter environmentally products period. solid most inventories. to term XX% nonetheless, recovery customers the comparable over Due destocking we particularly demand, our impacted continue for for Result supply chain certain were the

customers to both and our gain existing customers. new wallet we recently shares and are numerous existing deals with with closed distributors new also continuing We and chain

offering as to disposable the committed styrofoam States and fully regulations product and eco-friendly plastic. an states growing foodservice enacting use are single are cities ban We to world our and in the around United more

increasing, while as our continue in remain new to Customer we innovative optimistic increase about demand. leadership is And we are and composable products. position invest

well. joint Our progressing a building in is venture factory Taiwan of bagasse

It composable food that expected service in manufacturing is We new early begin the fill are entries orders already begin XXX% first with capacities. December in products and receiving to shipment year. could

is of expand by capacity in to target to And investment to project approximately our with XXX double the of line containers production produce million in $X.X on this mid we partner approximately Our Taiwan annually. initial are discussion manufacturing XXXX. products

and the with freight Gross margin some significantly despite duty quarter third first for the inventory quarter. selling second cause higher absorbed and from through expanded

customers. to We currency the pass to normalized quarters allow from reduction already ocean savings continue us freight which foreign gross and gains, our price shift solid to see on continue margin fourth products margin higher implement proactively improvement to to rates, some into

$XX.X We operating quarterly liquidity achieved financial with and quarter flow of million. record cash the ended

We our common are special a share per on regionally stock. that pleased dividend of cash the to board of announce director $X.XX declare company's

shareholders. strong and XXXX, a return to growth company, have Karat's quarter capital fourth online fiscal into sales. flexibility financial position excess consistent of solid initiatives number has to giving Proceeding the significantly the implemented built we a our us liquidity for grow the new and to

product in eco-friendly line, our from growth improvement reason operating fulfillment efficiencies. with continue to rate, our expansion and expecting a warehouse are We better

$XX in for million range $XX.X million, the fourth XXXX quarters of fourth targeting the be are million quarter. net XXXX up currently the We $XX sales to for to from

XX%. average year confident XX% to are achieve our full We to margin gross of goal

the over Jian? Guo, discuss turn our Chief our greater in now call detail. Officer will Financial financial to Jian results to I

Jian Guo

of Alan. you, $XXX.X million X% quarter, the last for in from We the up sales $XXX year. million achieved net Thank same period

With net for destocking quarter by third downturn of XXXX recovery, supply certain inventory. sales anticipated with were impacted the chain the the economic widely customers along

strong The continued principally increase in year quarter from with due reopenings share wallet the prior eco-friendly our COVID products, by to customers. driven including was gains our

for sales online to channel quarter. sales our decreased channel quarter. largest national X% channel X%. increased Sales for channel and distributors, Sales and to third By regional to increased from XX% grew the the retail the chains the XXXX X%

expanded from last XX% increased year. million basis profit in million quarter XX.X% Gross points same $XX.X margin XXX to to last the the year. XX.X% for from $XX.X Gross XXXX third period

margin from rates exchange offset previously eco-friendly and efficiencies currency inflation, favorable margin price higher products and foreign to implemented Gross benefited operating leverage. improved increases

in Although ocean quarter, dropped quarter. sales of of year at during end rates significantly the remained freight the duty freight third the towards the of and third prior sales XX.X% total elevated net of compared XX.X% XXXX with net costs quarter

and duty absorbed million we freight cost of first third with freight The quarter. the as and through from capitalization higher second included quarter from inventory duty some freight duty costs and impact XXXX $X.X an sold and

duty expect as continue XXXX to decrease We and the in costs a quarter, potentially fourth net sales and to into freight percentage total of XXXX.

improving eco-friendly offset and products. our optimizing to reductions on focus to certain efficiencies online price and products operating continue of We sell

gross margin mentioned, we year. our on the goal deliver full for Alan confident As are to

about increase and XXXX sales, The increase workforce quarter in distribution expense year. net the from expanded higher warehouse same sales net were the last with was rental also network. in million, in expenses compared expenses $XX.X cost million to our primarily or an net in and period Operating XX% expansion of $XX.X of due third labor XX%

year a totaled expense third transactions of other Other totaled third with in quarter. $XXX,XXX foreign prior in currency $XXX,XXX compared quarter loss XXXX XXXX the quarter. third $XX,XXX with $XX,XXX for of XXXX the gain Other currency the foreign income quarter, income on a in compared included

the compared million with income for from same XXXX last the Net income million year Net year. ago. $X.X for quarter quarter for a was increased the $X.X XX% third X.X% X.X% XXXX third quarter to margin

per with Net the income ago. or the from third $XX.X Packaging $X.X million EBITDA was million to XX% attributable ago. $X.X compared quarter quarter diluted year or Karat XXXX $X.XX to diluted a year Adjusted million $X.XX million share for third $X.X a share, for rose per

XX.X% third margin from year EBITDA share common X.X% earnings quarter $X.XX the prior was adjusted per adjusted in for XX% the versus last the to Consolidated quarter. quarter same diluted year, $X.XX in increased

execute of quarter, XXXX credit. line of $XX.X We strategies. record the its growth future cash outstanding of third the and borrowings $XX During to quarterly Karat is $XX.X million million million we entire operating believe off paid on our flow generated balance on well-positioned

quarter compared million XXXX million $XX.X the capital, $XX working the of with and at liquidity in finished million. We financial $XX.X with of end

liquidity of in long business to explore growth, term further value. enhance continue to to other and We expand shareholder support options

and the Alan turn call will And I now to I'll happy the operator. be answer your back to questions.

Operator

you. Thank

the question answer We Instructions] Our begin Truist first Jake now Please from will go and [Operator ahead. question comes with session. Securities. Bartlett

Jake Bartlett

taking My just see that what's Alan is for what sales. -- is the is question. Thanks what one. to if first driving lower Great. the competence that your destocking

has the to But those slower change impactful being online. something your distributor also destocking than everything the think channels grew than like distributors I more channel. or

is as level what's that So is slower confidence something what's first destocking is question your temporary really the sales driving just growth?

Alan Yu

distributors talking tell change supply A past so lot outages a The all, destocking Well, distributors, the these actually first they the of in were lot by is that are distributors. of afraid month. disruption mainly and of I of right. overstock. can of to chain the you're

well those in they them as in as bought of and from buying truckloads themselves All us. were

warehouse just to sudden, product. a to destock was actually Some from are day all store one to warehouse, packed were emergency lease of able people the our operations XX And luckily, also We inventories. had some the that we were buying And inventory. of including back a XX our products was every normal. coming And that's of with to California days warehouse secondary our why in overseas.

extra month terms in it find Or people and in actually warehouse the product. we put move extra were had the to spend spaces spaces, operation. to money August in July the product scrambling of just hampering and We was of to to

packed warehouse. Our the efficiency every was lanes blocking efficiency down, with warehouse product down, operational because was the in every a was that was

I think well. as our situation same customers with that's the

Jake Bartlett

what you the RSS Alan, much. you're biggest below on your in the driving? is mess guidance, mean, think by that What So, wasn't do versus distributors

-- has you so would I premise have coming Or slower it do that's the restaurant online, why I it such fairly through? robust. off think issue at in demand than just much that then at from coverage and look So the Is pricing chains been remained has growth you think our expecting.

the business? destocking onlines slower is what than expected growth, you chains think So if the that the started and do it's not driving

Alan Yu

Yes.

have started we price reduction. We

last increases costs. two seven year, in freight due the to know As this we had you that increase and increases year, ocean mainly

ocean to lower take has for starting wanted actually the the to dropped, actually price freight our As we customers. to allow initiative

So lower we can year, this containers. from of ocean also end was costs to during they offset at $XX,XXX benefit that some and incur earlier and inflationary last costing a of when the year the the freight

So our the it's revenue. but lower I say it's total of that a in overall will is -- also another issues not sales, slower

Jake Bartlett

the onto Okay. And pricing. just

couple as Is of situation down move obviously that years of as You've [Indiscernible] decrease? average the of it you've the actually year-over-year price lot price years. XXXX pricing, taken you in Do forward? last couple be Thank last prices a over taken a to expect your will where you you. that

Alan Yu

to The certain are lower, increased I other also strong banning But only looking for has size. paper banning are California, dropping. not hold of on demand increase with Styrofoam, states in will paper -- do lot the be in some pass price the has especially plastics in paper very banning actually see places it significantly, categories overall. plastic, it side,

-- still on And supplies. shortage So demand also the on paper of cost is which rise. the paper the

The see do growth its coming plastic But And eco-friendly the a line. I where down. versus is, bag paper the the up. that's plastic prices we going sides, paper So shopping bag. product the see side,

container. traditional versus soda even food costing compostable cup. Paper higher compostable plastic and the cup paper will food paper container The styrofoam cup actually soda paper versus

cost I go of paper see which the difference up, offset in where other. each come prices. and Plastic that's kind will down the So will separation of

Jake Bartlett

be average, there's think to decrease. going on So a don't you

flat in -- Is in maybe versus flat I'm hold versus expect portfolio pricing that prices you XXXX your products XXXX. whole of should the to just XXXX think XXXX. across will You message? really

Alan Yu

do the plastic to it's on go But up. selling No. price see and side, it might side, paper going slowly. plastic the down cost of price, the Actually, come I

So that's where I see the offsetting.

So eating out. average the

Jake Bartlett

average will be The flat.

Okay. you much. very Thank

Alan Yu

problem. a Not

Operator

comes from with Stifel. Hoffman ahead. Michael Our Please next question go

Michael Hoffman

Alan. Hi, good afternoon,

units physical sort the and how next XQ year SKUs of If year. price? bit going of of could this year-over-year that was carried much little into in that and then in what's about The talk or happened, you on the remainder growth versus a

Alan Yu

I would that think that year-over-year Jian of in number. question the terms answer growth Jian? will

Jian Guo

Michael. Hi question. Yes. the Thank you for

Michael Hoffman

Hi, Jian.

Jian Guo

Yes.

are was of in bit of revenue majority vast the in the growth volume. of quarterly pricing. a by So terms of driven We what year-over-year actually seeing little terms decline actually, we saw a the is actually growth,

this over with if year, in remarks, for So third year-over-year little prepared growth about -- year's strong recall our over really quarter really I was you strong challenging about last post overall, year-over-year will our quarter was is COVID is point QX probably a as XX%. that as from overall recall, X%. the reopening. volume very year a we us Last you talked with growth in comp actually out over because year-over-year

feel Alan as continued revenue pointed term still with in our really demand do we growth. term out, long long confident we do momentum, So the

Michael Hoffman

do And product your you across current you think customer are Are model. aggravate destocking works the in through you lines [Indiscernible] where is about getting side sort your destocking the in of marketplace? in that in those changing where demand growth -- at the as base just the confident

Jian Guo

if I sure I'm you heard got right. question clearly I I your question, repeating a quite a sorry. noise. Michael? mind Would your of am bit not

Michael Hoffman

Yes.

in Sorry, I'm an airport.

happened When in destocking. there's before that Would Or to still to SKUs done? that destocking. analyze happen the focus are the alluded more it third you you say quarter? that we're of you So all types of

Alan Yu

destockings customers answer customers me inventory month have up, do this quarter. quarter market. on the But the familiar ago. reordering, that full. of believe to last sector, I the floor right of overstock. holiday I -- most month, starting that the fourth retail versus We're of starting warehouse question, They're their Let especially season. to particularly seeing stores. couple beginning happened of still also this But I'm end still with knowledge see that getting maybe and is sides. of now, Their holiday are their prepared to retail in that third basically their are it's customer season They are the reducing November the in on people the my for -- and months since coming the is from more some

Michael Hoffman

us what of fourth price year-over-year you an tag price destocking, increases you're quarter well be as When factored give done as of revenue in would the we've for incremental year? all projecting through the the on the whatever course level

Alan Yu

Correct.

Michael Hoffman

product the real and SKUs pattern greater destocking categories just specific that overall activity? there seeing pressure or there a another on are that And are is in are

Alan Yu

I do on have that the the been down. coming on on Yes. inventory the plastic side, price the are because is side, see inventory they sides, that particularly destocking customer plastic see

has value. higher to So cost, higher nobody wants hold inventory the to on that

really items. plastic that last year, though not So But the they too up. of that Because no unlike size, outages stocking on think one people afraid would paper last the on since they year. customer shouldn't know stocking are even -- that's I be much

with higher I demand paper. in think even the

inventory I about like correct. side. the just It paper hasn't think the been last on where the a of is scarcity inventory there's year

Michael Hoffman

so this pressure of we as your of model, just like? sense If what a think to get we feels about a were of kind plastics percentage

Alan Yu

our the entire it's always I of think plastic XX% about model.

Michael Hoffman

And do the correction of the end quarter? clear this plastic you you inventory fourth think by

Alan Yu

our I of do out costs believe inventory fourth that we the quarter. by the the yes. brought in will Yes, cleared be that higher end

Michael Hoffman

Okay.

a of do lower freight down teasing you? the I costs inventory cost piece. quarter or sort out of into known tail carry impacts, freight in it close have the impact going And I'm There's is and dramatically. the by this sequential to starts given for this the favorable quarter? of Freight third in fourth to through? XXXX Sorry. happened about think current piece how How sort costs

Alan Yu

mainly I seen duty quarter. or third costs in call, most, we've we mentioned the the in say conference would were Jian of earlier have XX% XX% actually, absorbed and freight higher the

quarter, majority we were third absorbing absorbed out million of million of X some, of Second $X.X but like point the the $X.X quarters.

comfortable do capital what freight So the of effecting a fourth quarter will be on our in the gross seeing margin and terms margin that significantly second to be and think entire that quarters, the duty annual gross costs we will we're much higher quarter. our of of That's third our quarters, goal there's actually than the in fourth costing we're by more margin fourth not that XX% XX% so gross confident size. achieved

Michael Hoffman

into And correspondingly, first lever the get first to XXXX, anniversaring gross of margin the incremental that of would be it half in that would XXXX. the carry so of half

Alan Yu

Yes. correct. That's

Michael Hoffman

you Okay. And expansion to new a alluded wallet. business then of

of and get you destocking, think level would are you in the to the when expect then some of about positive pressure, which clearing So, we having unit growth unit normal be XXXX? pricing through

Alan Yu

Yes.

bagasse into, that them year-over-year know, to get to is on customers now compostable always And and what normal. They're We're comp, we also available. is kind think something now that will letting know them on everyone the a We York that law everyone we a January front vendors quarters, free in of us sit are New are rushing PFAS, January item. I product, -- X. fourth be quarters chemical PFAS first visit going to start of that into that have Xst, hands banding the like products customers. is expect both the as allowing do bagasse growth starting the that California explain Especially, we able their because the in and to the and positive to the, in unit also back

composable years. a increase on have products. abundant our high be that's will expecting been And the receiving that are -- we for focus new something XXXX we these So,

Michael Hoffman

Thanks for my very taking question. much

Operator

from ahead. Our next question William go comes Ryan with Merkel Please Blair.

Ryan Merkel

customers, comment Good seeing slower for about Alan, on not yet? or for your for My first just restaurants? outlook question, thinking consumer demand everyone. You are Thanks. think about you're spending afternoon, could on the XXXX, budgeting you that you

Alan Yu

they're demand of But chains, some I'm the restaurants retail Mom are growing and shifting and a a that the chains, Mom the chains versus the I'm restaurant restaurant to higher people to see the money fast slower national and seeing the and this Pop more more volume, Pop restaurants, more, that's demand their from stores. where part. talking Actually, in spending food as we these seeing

Ryan Merkel

trying try year? next And customers come think them in of Just consumer a prior to price slower downturns, products? costs? your economy what Do see typically to Do concessions? some you lower save they the of do? they looking price through back, to Do find implications

Alan Yu

side. concern perspective the work packaging. This to expense And the packaging Right labor is customer is staff actually main now, people, in in on restaurant restaurant, biggest main It's the from I the labor, the key. costs, concerns the talking from getting that the the not the on to all side. the not growth getting see is coming in the is on

food as level, costs Even basically. have

to the to So basically in dropping them it's is especially costs months, nothing in that's what three comparable labor been or X%, two XX%, past has California. increase the the if packaging,

Ryan Merkel

sense. Makes Yes.

Okay. for Earth me. from Can venture Last Green you expect how Technology the revenue comment one on you joint XXXX? much

Alan Yu

terms past were in of we around we're we containers capacity, believe looking a I $XX at XXX think mentioned million. it's expecting quarter, maximum around we to That of in -- ship about the overall XXXX. that I But revenue, in year

and banning million was Styrofoam. XXXX. to more and discussion Because mid New York at the in $XX capacity revenue cities in other increase that states time, overall them by I are million And California we bagasse in actually and approximately and are demand that. think are Styrofoam about product same to with $XX more we seeing banning from as the the increase

sharply. limited, But product demand manufacturers the is is So for rise making there aren't these because supply in the the actually the bagasse product actually that bagasse world. on

Ryan Merkel

color. Right. it's Thanks hear. for Well, great to the

Alan Yu

Thank you.

Operator

Please Bartlett Our is a from with Securities. Jake ahead. next question Truist go follow up

Jake Bartlett

the the for just Alan, goodness of the pricing. And prices want you up. for think typically offering your I along to is lower you too. your because taking Thank follow don't lower on is heart, prices you Great. my question because competition pass

you're And that is kind you've business supplying of accounts, might seeing the win who the they in made getting competition incumbent can to other supply maybe Are trying happening compete of price? they to be win supply as trying -- used the had some or what's whether are customers can that suppliers prior? seeing aggressive of now to you back. be the eases so here Is the the into wondering I'm chain to more their part simply like more back more business what that on gains just

Alan Yu

see I our competitors after really, think I going price going that, right now. don't the are

-- prices And the account. to and think things. service to But the I that on one starting their the the really as they import all are issue chain of overcome domestic do and both account our to But know market bigger anymore. we the those the of from from actually start distribution back basically, disruption lowering and ones going the the us, supply national issues. side, not Most lowering our much that's more ones, the come to customer much chain price want they're and about issue. supply it's a manufacturer where the they is back of in There maintain that. distributor They not to market. are for buy didn't distribution the they're share tend competitors, overseas, really really

be. sharp Mexico, move a in selling into That's sure start looking seeing we course, what basically, really see what Amazon and I business terms supplies the of Amazon in into service implementations, And there's don't year, our going online the we our sorts to the it's lowering where rather of disruption. that But online, different a forward our with we're also, Hawaii. we're growth growth lot making channels, Amazon of price of of price, including no Canada, than getting for think But back. offering next competitors domestic terms -- how

now part key want a think They I that's stability. want. people right

Jake Bartlett

Got it.

think don't disruptions. you're some you that So losing during you're not -- chain of gained the share supply the you

last You going think those that gained each the couple you're the to that years? you hold on to over of business

Alan Yu

we're we top to that actually, market been in on suppliers. new that now some tapping And car, can out and didn't we're we an coming the sales more and on that realize, start of new and seeing opportunity product region that or we're gaining Yes. Midwest into, didn't needed basically, really have go fly accounts, and also actually, earlier, customers people able new that, to we're start really to actually our region, product, our and mentioned way presenting haven't to going the southeast in out customer as that look market for vendors more

that doing something right that's think now. I we're

Ryan Merkel

and We've Great. they're tracking costs down year-over-year Coast, And Asia China, about then from last the been July. to East down question. West and have currently been early freight XX% since

want I that know a I So, flows just understand there's through? delay. to how

visibility -- savings inventory help that's customers along how your that impact margins. shipped freight. It passing first lower that just a to But understand have sounds price for this partly you're year. from the maybe like on giving prices of higher the the gross the margins gross half going into that on lowering You now have us lower has been in at margins, and looks

prime should gross So about even margins in we strokes, think should we broad for XXXX? what what

Alan Yu

because I has product certifications, in margin? more it And at city. higher, margin. higher are bring I the that say products, approved one the XX% -- looking believe gross or There it's one will a carry producing it in the the that a gross that by that ESG carry limited is the still items. would higher a looking products, XXXX actually be capacity ESG that we're right Why we're even we're margin margin to now, XX% eco-friendly to

sure as free the that are are straws, lack actually, a it product also with items higher to course, up. that compostable not of product make with it. through chemicals, food orders price containers, soaking grease, these absorb supplies, the of goes carries that bagasse free chemicals. such And PFAS PFAS bagasse bamboo premium products making the These With as cost can a or increase basically waters To in absorb cost. such

I think that cups, is as such be will the these there kind of price offset that cups, terms in plastic part would on other portion that in some essence. like plastic So of elevation to items going products

So, I because a think looking were the see do eco-friendly that they terms ordering product distribution gross potentials that that area. the cannot on do more these local sales, with margin sales that online growing. especially seeing part, of looking online in is We're we online great good in customers are find the actually for

Jake Bartlett

Okay. And then just lastly on that.

as just more rates one also understand you We're contract. get But here them. spot So we on. paying we sometimes as looking at are them

might at being XX% -- they at prices like the so, for think that be -- gross on look there been current market, year-over-year you're But that If we of you've your instance, costs. change It you were as I time. seems being in sales. just the And major not of were quarter at mean, paying paying as a about that you spot down prices weren't freight XX% when again, impact from a think costs paying remind been margins. us, the second contracts time. I in I maybe the contract have paying year, XXXX when could freight

might market so can just and So us were switch -- try we gross when just of margins, how what costs freight you the flow understand to into when paying gauge how were remind you to gross margins? you contract, kind

Alan Yu

most a of availabilities containers, the But Sure. our importers a give didn't any of rate. Well $X,XXX use the approximately freight contract rate $X,XXX though ocean containers contract product contract rate they for last [Indiscernible] to us have shippers, even container. problem that per we year, is, had of

out out have containers. $XX,XXX $XX,XXX, needed. may we go give get that spot to to of $XX,XXX So in us we market per the what XX% They rate

to perhaps $X,XXX. XX% of were So add contract to we need able get we that we container, have, with

for our paying per get have side most X,XXX been of in We containers to go X,XXX, importer of and $X,XXX for $XX,XXX X,XXX, of different now out using rate of And a containers. the on we container, because But spot dropping rest containers. to like went most the the started companies the up down out contract market year got and This price contract. $XX,XXX is signed of May. is we spot the rate stop has the X,XXX, that us, little like over in

came okay, freight back we're ocean April to of lower at says, is. change one whatever our spot rate to your signed you and $XX,XXX. every to these So the We'll importer going market that in contract it

that's this the between year. year and last So difference

Jake Bartlett

it. I a appreciate lot. Thanks Okay.

Alan Yu

Thank you.

Operator

with comes from go Instructions] [Operator Our next question [Indiscernible] UBS. Please ahead.

Unidentified Analyst

paying Hello. Thank my maybe can, regarding special that you capital discuss have? dividend first other rationale, you of buying a all, options bit company wondering, your if for taking maybe allocation question. was little versus I a you about back stock or

Alan Yu

market back stock shares of flow in flow very the have versus marketplace. is Well, that you. We to much buying is our don't limited. rationale Got that behind the

our enough is is because actually discounted, stock price why flow want do we our and market. goal in the have So, that's don't we

we're Okay. do it? mentioned sitting we when expenditure. of will that capital on What reducing Well, in last do excess be had capital And our We cash. have overall we're went the and with our can of we first X% year, it, public, revenue. we expected we beginning expenditure

cash next our actually, our we're increased. it's freight than has And we're we're our daily year ocean has looking And generating operation, profit, approximately year, And looking capital expenditure, we're X%. dropped, this at X%. less at

our seeing, actually value. on be out to -- sitting of will cash dollars we want of not over go millions there, money on sitting what buy hand we're be will company So do we're waste and has we

found partner Taiwan, we that money, actually of that just did they the actually in company the we world availability the the U.S. actually is, market that not have with we what composable with So in in needs, new company very little oversea can what invest this can is what technology products.

lot And to still investing of cash. doubling on investment next money Even on we with that into a year, investment and our that going be that's it. why are down we're sitting

We it to have repurchase been asking good shares. is advisors,

telling us, not already repurchase to in is advisors idea flow the Our our out because a small good are there shares, it's market.

actually have to we shareholders. market rationale. goal in flow Our can that is more we so attract to the more need is That our

Unidentified Analyst

Great, It's thank you. really helpful. very appreciate. I

detail, more I little your a You coming on you a maybe if give and expand wondering the and but little bit growth for beyond? your expectations XXXX online was strategy of in could

Alan Yu

selling looking Amazon, we're our walmart.com, Currently, just on to And recently Lollicupstore.com. Sure. we're channels. product added We own other ebay.com our

the that X, all selling January we're been compostable we've straw food plastic. be for container, side, there's products on the major the not on only Amazon.com, going XXXX, the product, And On Canada seeing to starting the in need on a only. is U.S. eco-friendly we we container And space. And a banning Mexico, we'll the where more cup on be to With in Hawaii. Coast We need pushing products side, add through with also thing warehouse see Amazon warehouse. our Amazon Canada. East need said Same that have that's more Amazon sides. to

seven California whereas majority In of the product we've the want struggling East most product Connecticut, of product, in shipping York, East are to days. customers are Coast, in Coast, Boston's, into the product. to seven wait our who to to days they get five about Customer has into California the to past, and the from been five takes that get in don't only New BXB that

South as So Carolina, double we that New South we as in why a southeast South is serve distribution this we strategy of the be much or actually stock facility up with County inspection, month in by end lose which that's can our that the our Carolina, inspection our have increased the facility region. business. we will York, fire restock could And

we so brought customer Do they an suppliers. driving getting ship. the DCs multiple of their hour find can product? is up hours. wait focus how you a last can faster half that order ship like don't to within or How to can quickly They XX the week. Well, you by you And a ship have going an mile, the can get half ordering have sales fast minutes local out mile XX The to online hour, online.

going we be, to that's product year. And our we're eco-friendly people for So more online is ESG see seeing next products eco-friendly sourcing growth online. where

Unidentified Analyst

question, Thank time. you. your And my I appreciate last

quarters because revenue you clear about and you today small that forward it's several of your well over next relatively and of today? guess You've being, it's, Can the percentage products. beyond year, the I growth next look the talk been years, you about eco-friendly see what years several last very as

Alan Yu

eco-friendly now overall XX% believe of Right our I product is approximately revenue.

with Our in ESG additional new we revenue expansion only other our not it's goal the In joint to will in adding terms XXX% do of product see our proposal business, ESG the core venture, XXX% at eco-friendly XXXX XX% be bagasse XXXX. U.S. ESG product. should selling XX% product. And product. I in be That actually of

it As we free the paper on on chemical PFAS revenue. sales growth top bag, move on has for shopping the that mainly our year. in in I will XXXX the with see be do the our bagasse would drivers

Unidentified Analyst

Great. Thank Have color. it. day. Really you very much appreciate wonderful a for the

Alan Yu

you. Thank

Operator

for closing any This question-and-answer would our remarks. concludes to the Alan back conference session. I turn to like

Alan Yu

progress very all with appreciate thank ahead. your And our you and in today. and speaking a And We support you to of company. Have you of our you keeping operator. and forward I Thank look the holiday for Bye-bye. joining interest future season much. again. to in Thank appraised Thanksgiving you, great us

Operator

conference concluded. today's Thank for presentation. you attending now The has

now may You disconnect.

Karat Packaging (KRT) 10 Nov 222022 Q3 Earnings call transcript