Karat Packaging Inc.

Good afternoon, and welcome to Carrot Packaging's 2025 first quarter conference call. All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw a question, please press star, then two. Please also note that this event is being recorded today. I would now like to turn the conference over to Roger Pondell with Pondell Wilkinson. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to Carrot Packaging's 2025 first quarter conference call. I'm Roger Pondell with Pondell Wilkinson. Carrot Packaging's investor relations firm. It'll be my pleasure momentarily to introduce the company's chief executive officer, Alan Yu, and its chief financial officer, Jan Goh. Before I turn the call over to Alan, I want to remind all listeners that today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous conditions and many of which are beyond the company's control, including those set forth in the risk factor section of the company's most recent form, 10-K, as filed with the Securities and Exchange Commission, copies of which are available on the SEC's website at www.sec.gov, along with other company filings made with the SEC from time to time. Actual results could differ materially from those forward-looking statements, and carrot packaging undertakes no obligation to update any forward-looking statements except as required by law. Please also note that during this call, we will be discussing adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and free cash flow, which are non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of the most directly comparable gap measures to the non-gap financial measures is included in today's press release, which is now posted on the company's website. And with that, I will turn the call over to CEO Alan Yu. Alan?

Thank you, Roger. Good afternoon, everyone. We achieve another strong quarterly performance marked by the nearly 11% increase in sales volume of and 8.4% growth in the net sales year over year. Our global strategy sourcing capabilities enabled us to take early action securing inventory from sources outside of China to countries with significantly lower tariffs and more favorable trade conditions. At the end of 2024, our sourcing from China was approximately 20% and it was down to 15% in March of this year we're on track to further reduce imports from China to be under 10% by the end of second quarter. And due to the recent imposed extreme tariffs, we have temporarily suspended imports for most vendors in China starting mid-April. In addition to leveraging our diverse international supplier network, our ability to quickly scale up existing domestic manufacturing operation without significant incremental CapEx is allowing us to respond promptly and effectively to the evolving market dynamic. At the end of the first quarter, we have approximately $80 million in inventory, and we are strategically managing sales to customers ahead of the anticipated supply chain disruption to ensure long-term reliability in meeting customers' needs. We believe Carrot is well-positioned to address ongoing supply chain challenges and navigate an uncertain trade environment. As previously announced, we implemented price increases for certain products on April 1st with higher costs of goods anticipated from more recent global tariff development. We expect to implement additional price increases to most of our products in mid-May. Geographically, our strongest growth for the quarter came from Texas and the Midwest Sales in California, our largest market, also continue to improve, particularly in the retail and distribution and chain sectors. We remain focused on expanding wallet and market share, as well as growing our online businesses, which experienced a nearly 20% sales increase during the first quarter. We continue to strengthen our pipeline and anticipate that several large chain accounts will begin shipping in late June. Our new 187,000 square feet distribution center near our headquarters in Chino, which we expect to be fully operational this month, provides much more needed additional capacity to support anticipated growth, allowing us to add 500 new SKUs of products and additional inventory. The timing also coming at a pivotal moment with regards to the supply chain interruptions and general economic uncertainties. As mentioned on our last call, we continue to focus on lowering operating costs while growing our top line, including enhancing distribution efficiency, lowering third-party domestic shipping costs starting March, and reducing online selling expenses. Carrot has consistently proven to be a reliable supplier to our customers, not only during the height of the COVID-19 period, but also post-pandemic, when there was widespread product shortages. Our ability to maintain steady inventory has reinforced our reputation and resilience. We continue to generate strong operating cash flow as well as liquidity. Our board member remains committed to a balanced capital allocation strategy between shareholder returns and long-term growth investments. I will now turn the call over to Jan Guo, our Chief Financial Officer, to discuss the company financial results in greater detail. Jan?