Segment Report

The Company operates and evaluates its business as a single reportable segment. This segment encompasses the manufacturing and distribution of a diverse range of single-use food and beverage service products made from materials such as plastic, paper, biopolymer-based, and other compostable forms. It also includes the distribution of specialty food and beverage items, like syrups, boba, and coffee drinks, as well as restaurant and warehouse supplies. This single segment is identified because it engages in business activities in which it generates revenue and expenses, its performance is reviewed by the Company’s chief executive officer who is the chief operating decision maker (“CODM”), and it has distinct financial information available. The CODM assesses performance of the reportable segment and decides how to allocate resources based on consolidated net income, which is also reported on the consolidated statements of income. The CODM uses this information to compare actual results against budgeted expectations in assessing the performance of the segment.

The following is the summary of the financial information for the Company’s reportable segment:


	Year Ended December 31,
	2024		2023
	(in thousands)
Net sales	$	422,633	$	405,651
Less:
Cost of goods sold	258,304		252,608
Shipping and transportation	34,119		32,001
Salaries and benefits	36,311		35,831
Professional services	5,024		4,337
Depreciation and amortization	4,290		4,008
Rent expense	9,364		6,096
Marketing expense	6,762		4,865
Online platform fees	11,043		6,440
Warehouse expense	3,862		2,426
Stock-based compensation	2,065		770
Secondary offering costs	—		453
Impairment expense and loss, net, on disposal of machinery	2,752		2,525
Interest expense	2,123		2,043
Provision for income taxes	9,871		9,804
Other segment expenses*	10,976		11,215
Add:
Interest income	2,299		1,803
Other income, net	2,758		1,148
Segment net income	30,824		33,180
Reconciliation of segment net income to consolidated net income
Adjustments and reconciling items	—		—
Consolidated net income	30,824		33,180

* Other segment expenses includes property taxes, insurance expenses, office expenses, and utilities.

The Company’s long-lived assets are all located in the United States, and its revenues are almost entirely generated in the United States. The accounting policies of the reportable segment are the same as those described in Note 2 — Summary of Significant Accounting Policies. Additionally, the total segment assets are the same as the consolidated total assets reported on the consolidated balance sheets.

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

Karat Packaging Inc. Segments Disclosure

About Segments Disclosures

Other Available Disclosures