Karat Packaging Inc.

Good afternoon everyone and welcome to the Carat Packaging Inc. Second Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then 1 on your touchtone telephones. To withdraw your questions, you may press star and 2. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Roger Pondell. Sir, please go ahead.

Good afternoon everyone and welcome to Carat Packaging's 2025 Second Quarter Conference Call. I'm Roger Pondell with Pondell Wilkinson, Carat Packaging's Investor Relations Firm. It will be my pleasure momentarily to introduce the company's Chief Executive Officer, Alan Yu, and its Chief Financial Officer, Jan Gow. Before I turn the call over to Alan, I want to remind our 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, many of which are on the company's control, including those set forth in the risk factor section of Carat'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 .sec.gov, along with other company filings made with the SEC from time to time. Actual results could differ materially from these forward-looking statements. In-carat packaging undertakes no obligation to update any forward-looking statements except as required by law. Please also note that during today's 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 recently comparable GAAP measures to the non-GAAP 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 New. Alan?

Thank you, Roger. Good afternoon, everyone. We achieved a record second quarter performance marked by a 13% increase in sales volume, 10% growth in net sales, and 20% growth in net income year over year. Despite a significant foreign currency hit win due to sudden substantial weakening in the US dollar against new Taiwan dollar. Heading into the third quarter, we continue to diversify our global sourcing and expanding to new countries and geographies, and we see the currency pressure starting to ease. A record quarter performance is a testimony to CARES' nimble business model and resilient global supply chain, which allows us to early success in navigating the supply chain disruption and trade uncertainties. We are swiftly diversifying our sourcing footprint, reducing reliance on China to just 10% in the second quarter, while implementing plans to further expand our sourcing across other Asian countries and Latin America to enhance supply chain resilience and flexibilities. In addition to the sourcing diversification, CARES' ability to quickly ramp up existing domestic manufacturing operations enable us to respond rapidly to customers' needs. Together, these actions have further enhanced our agilities and competitiveness, and are helping us to secure new business and position the company well for sustained growth in a challenging external environment. Business trend remains strong. As we proceed into the third quarters and the remainder of 2025 and continue double-digit sales growth across our major markets, including California, further, reason new business wins from a number of large national chains are scheduled to begin shipping in the third and fourth quarters. Our new distribution center near our Chino headquarters is now fully operational, significantly strengthening our logistic capabilities and enabling even faster delivery time. This facility also supported inventory buildup during the second quarter, positioning us well to accommodate our anticipated growth in the second half of the year. As previously announced, we implemented price increases for select products on April 1, followed by broader price adjustment across most of our product lines in late May. We continue to assess the impact of these changes, along with potential effects from the new tariffs effected in August. CARES remains focused on accelerating top-line growth and profitability through product innovation, strategic expansion, and a track record of being a dependable supplier to our customers. At the same time, we continue to drive operational efficiency through disciplined cost management. In the second quarter, we improved our operating cost leverage, saving $1 million in online shipping and marketing, by switching providers even as shipping volume increased. We also shifted our online sales focus from third-party platform fulfillment to our own e-commerce storefront, lowering online selling costs and more effectively utilizing online marketing dollars. These efforts reflect our ongoing focus on balancing growth with profitability and building long-term operational resilience. We believe CARES is well positioned for continued profitable growth, and I will now turn the call over to Jan Glow, our Chief Financial Officer, to discuss the company's financial results in greater detail. Jan?