QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
( | ||||||||
(Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | ☒ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Page | ||||||||
June 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents (including $ | $ | $ | |||||||||
Short-term investments (including $ | |||||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets (including $ | |||||||||||
Total current assets | |||||||||||
Property and equipment, net (including $ | |||||||||||
Deposits | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Operating right-of-use assets | |||||||||||
Other assets (including $ | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable (including $ | $ | $ | |||||||||
Accrued expenses (including $ | |||||||||||
Related party payable | |||||||||||
Income taxes payable | |||||||||||
Customer deposits (including $ | |||||||||||
Long-term debt, current portion (including $ | |||||||||||
Operating lease liabilities, current portion | |||||||||||
Other payables | |||||||||||
Total current liabilities |
June 30, 2023 | December 31, 2022 | ||||||||||
Deferred tax liability | |||||||||||
Long-term debt, net of current portion and debt discount of $ | |||||||||||
Operating lease liabilities, net of current portion | |||||||||||
Other liabilities (including $ | |||||||||||
Total liabilities | |||||||||||
Commitments and Contingencies (Note 17) | |||||||||||
Karat Packaging Inc. stockholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid in capital | |||||||||||
Treasury stock, $ | ( | ( | |||||||||
Retained earnings | |||||||||||
Total Karat Packaging Inc. stockholders’ equity | |||||||||||
Noncontrolling interest | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Selling expense | |||||||||||||||||||||||
General and administrative expense (including $ | |||||||||||||||||||||||
Impairment expense and loss (gain) on disposal of machinery | ( | ( | |||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Rental income (including $ | |||||||||||||||||||||||
Other income (expense), net | ( | ( | ( | ||||||||||||||||||||
Gain (loss) on foreign currency transactions | ( | ||||||||||||||||||||||
Interest income (including $ | |||||||||||||||||||||||
Interest expense (including $ | ( | ( | ( | ( | |||||||||||||||||||
Total other income (expense), net | ( | ||||||||||||||||||||||
Income before provision for income taxes | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Net income attributable to noncontrolling interest | |||||||||||||||||||||||
Net income attributable to Karat Packaging Inc. | $ | $ | $ | $ | |||||||||||||||||||
Basic and diluted earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares outstanding, basic | |||||||||||||||||||||||
Weighted average common shares outstanding, diluted |
Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders’ Equity Attributable to Karat Packaging Inc. | Noncontrolling Interest | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2022 | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest tax withholding | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest tax withholding | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders’ Equity Attributable to Karat Packaging Inc. | Noncontrolling Interest | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2023 | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | ( | $ | ( | $ | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization (including $ | |||||||||||
Adjustments to allowance for doubtful accounts | ( | ||||||||||
Adjustments to inventory reserve | ( | ||||||||||
Write-off of inventory | |||||||||||
Impairment of deposits | |||||||||||
Loss (gain) on disposal of machinery and equipment | ( | ||||||||||
Change in fair value of interest rate swap (including $ | ( | ||||||||||
Amortization of loan fees (including $ | |||||||||||
Stock-based compensation | |||||||||||
Amortization of operating right-of-use assets | |||||||||||
(Increase) decrease in operating assets | |||||||||||
Accounts receivable (including $ | ( | ( | |||||||||
Inventories | ( | ( | |||||||||
Prepaid expenses and other current assets (including $ | ( | ||||||||||
Other assets (including $ | ( | ( | |||||||||
Increase (decrease) in operating liabilities | |||||||||||
Accounts payable (including $ | |||||||||||
Accrued expenses (including $ | ( | ||||||||||
Related party payable | |||||||||||
Income taxes payable | ( | ||||||||||
Customer deposits (including $ | ( | ||||||||||
Operating lease liability | ( | ( | |||||||||
Other liabilities (including $ | |||||||||||
Other payables | |||||||||||
Net cash provided by (used in) operating activities | $ | $ | ( |
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from investing activities | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Proceeds from disposal of property and equipment | |||||||||||
Payments for costs incurred from sale of machinery and equipment | ( | ||||||||||
Deposits paid for joint venture investment | ( | ( | |||||||||
Deposits refunded from joint venture investment | |||||||||||
Deposit refund from cancelled property and equipment purchase | |||||||||||
Deposits paid for property and equipment | ( | ( | |||||||||
Proceeds from settlement of interest rate swap (including $ | |||||||||||
Purchase of short-term investments (including $ | ( | ||||||||||
Net cash used in investing activities | $ | ( | $ | ( | |||||||
Cash flows from financing activities | |||||||||||
Proceeds from line of credit | |||||||||||
Payments on line of credit | ( | ||||||||||
Proceeds from long-term debt (including $ | |||||||||||
Payments for lender fees | ( | ||||||||||
Payments on long-term debt (including $ | ( | ( | |||||||||
Tax withholding on vesting of restricted stock units | ( | ||||||||||
Proceeds from exercise of common stock options | |||||||||||
Dividends paid to shareholders | ( | ||||||||||
Payments of noncontrolling interest tax withholding (including $ | ( | ||||||||||
Net cash provided by financing activities | $ | $ | |||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents | |||||||||||
Beginning of period | $ | $ | |||||||||
End of period | $ | $ | |||||||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||||||
Transfers from deposit to property and equipment | $ | $ | |||||||||
Non-cash purchases of property and equipment | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for income tax | $ | $ | |||||||||
Cash paid for interest | $ | $ |
Level 1 | Level 2 | Level 3 | |||||||||||||||
(in thousands) | |||||||||||||||||
Cash equivalents | $ | $ | $ | ||||||||||||||
Short-term investments | |||||||||||||||||
Fair value, June 30, 2023 | $ | $ | $ |
Level 1 | Level 2 | Level 3 | |||||||||||||||
(in thousands) | |||||||||||||||||
Cash equivalents | $ | $ | $ | ||||||||||||||
Fair value, December 31, 2022 | $ | $ | $ |
June 30, 2023 | |||||||||||
Carrying Amount | Estimated Fair Value | ||||||||||
(in thousands) | |||||||||||
2026 Term Loan | $ | $ | |||||||||
2027 Term Loan | |||||||||||
$ | $ |
December 31, 2022 | |||||||||||
Carrying Amount | Estimated Fair Value | ||||||||||
(in thousands) | |||||||||||
2026 Term Loan | $ | $ | |||||||||
2027 Term Loan | |||||||||||
$ | $ |
(in thousands) | |||||
Balance at December 31, 2022 | $ | ||||
Goodwill acquired | |||||
Balance at June 30, 2023 | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Raw materials | $ | $ | |||||||||
Semi-finished goods | |||||||||||
Finished goods | |||||||||||
Subtotal | |||||||||||
Less inventory reserve | ( | ( | |||||||||
Total inventories | $ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Machinery and equipment | $ | $ | |||||||||
Leasehold improvements | |||||||||||
Vehicles | |||||||||||
Furniture and fixtures | |||||||||||
Building | |||||||||||
Land | |||||||||||
Computer hardware and software | |||||||||||
Less: accumulated depreciation and amortization | ( | ( | |||||||||
Total property and equipment, net | $ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Accrued miscellaneous expenses | $ | $ | |||||||||
Accrued interest | |||||||||||
Accrued payroll | |||||||||||
Accrued vacation and sick pay | |||||||||||
Accrued shipping expenses | |||||||||||
Accrued professional services fees | |||||||||||
Accrued property tax | |||||||||||
Accrued sale taxes and use taxes | |||||||||||
Total accrued expenses | $ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
The 2026 Term Loan, with an initial balance of $ | $ | $ | |||||||||
The 2027 Term Loan, with an initial balance of $ | $ | $ | |||||||||
Long-term debt | |||||||||||
Less: unamortized loan fees | ( | ( | |||||||||
Less: current portion | ( | ( | |||||||||
Long-term debt, net of current portion | $ | $ |
(in thousands) | |||||
2023 (remainder) | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
$ |
Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contract Life (In Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding at December 31, 2022 | $ | $ | |||||||||||||||||||||
Forfeited | ( | ||||||||||||||||||||||
Outstanding at Outstanding at June 30, 2023 | $ | $ | |||||||||||||||||||||
Expected to vest at June 30, 2023 | $ | $ | |||||||||||||||||||||
Exercisable at June 30, 2023 | $ | $ |
Number of Shares Outstanding | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at December 31, 2022 | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Unvested at June 30, 2023 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||
Net income attributable to Karat Packaging Inc. | $ | $ | $ | $ | |||||||||||||||||||
Weighted average number of common shares in issue | |||||||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||
Net income attributable to Karat Packaging Inc. | $ | $ | $ | $ | |||||||||||||||||||
Weighted average number of common shares in issue | |||||||||||||||||||||||
Dilutive shares | |||||||||||||||||||||||
Stock options and restricted stock units | |||||||||||||||||||||||
Adjusted weighted average number of common shares | |||||||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ |
(in thousands) | ||||||||
Operating lease expense | $ | |||||||
Short-term lease expense | ||||||||
Variable lease expense | ||||||||
Total lease expense | $ |
Weighted average remaining lease term | ||||||||
Weighted average discount rate | % | |||||||
Cash paid for amounts included in measurement of lease obligations | ||||||||
Operating cash flows from operating leases | $ |
(in thousands) | ||||||||
2023 (remainder) | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total future lease payments | ||||||||
Less: imputed interest | ||||||||
Total lease liability balance | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||
Loss on disposal of machinery in scaling back manufacturing | $ | $ | $ | $ | |||||||||||||
Loss (gain) on disposal of fixed assets within normal course of business | ( | ( | |||||||||||||||
Loss on disposal | ( | ( | |||||||||||||||
Impairment of deposits | |||||||||||||||||
Total impairment expense and loss on disposal of machinery | $ | $ | ( | $ | $ | ( |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||
Net sales | $ | 108,740 | $ | 114,881 | $ | 204,541 | $ | 220,294 | ||||||||||||||||||
Cost of goods sold | 66,879 | 80,917 | 124,536 | 152,041 | ||||||||||||||||||||||
Gross profit | 41,861 | 33,964 | 80,005 | 68,253 | ||||||||||||||||||||||
Operating expenses | 28,522 | 26,162 | 53,934 | 50,960 | ||||||||||||||||||||||
Operating income | 13,339 | 7,802 | 26,071 | 17,293 | ||||||||||||||||||||||
Other income (expense) | 661 | 1,144 | (67) | 2,273 | ||||||||||||||||||||||
Provision for income taxes | 3,323 | 1,746 | 6,141 | 4,423 | ||||||||||||||||||||||
Net income | $ | 10,677 | $ | 7,200 | $ | 19,863 | $ | 15,143 |
Three Months Ended June 30, | ||||||||||||||||||||
Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin (Unaudited) | 2023 | 2022 | ||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||
Amount | % of Net Sales | Amount | % of Net Sales | |||||||||||||||||
Net income: | $ | 10,677 | 9.8 | % | $ | 7,200 | 6.3 | % | ||||||||||||
Add (deduct): | ||||||||||||||||||||
Interest income | (519) | (0.5) | (847) | (0.7) | ||||||||||||||||
Interest expense | 573 | 0.5 | 610 | 0.5 | ||||||||||||||||
Provision for income taxes | 3,323 | 3.1 | 1,746 | 1.5 | ||||||||||||||||
Depreciation and amortization | 2,717 | 2.5 | 2,564 | 2.2 | ||||||||||||||||
Stock-based compensation expense | 216 | 0.2 | 565 | 0.5 | ||||||||||||||||
Write-off of inventory (1) | 1,710 | 1.6 | — | — | ||||||||||||||||
Impairment expense and loss on disposal of machinery (1) | 2,445 | 2.2 | — | — | ||||||||||||||||
Adjusted EBITDA | $ | 21,142 | 19.4 | % | $ | 11,838 | 10.3 | % |
Six Months Ended June 30, | ||||||||||||||||||||
Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin (Unaudited) | 2023 | 2022 | ||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||
Amount | % of Net Sales | Amount | % of Net Sales | |||||||||||||||||
Net income: | $ | 19,863 | 9.7 | % | $ | 15,143 | 6.9 | % | ||||||||||||
Add (deduct): | ||||||||||||||||||||
Interest income | (586) | (0.3) | (2,160) | (1.0) | ||||||||||||||||
Interest expense | 980 | 0.5 | 1,083 | 0.5 | ||||||||||||||||
Provision for income taxes | 6,141 | 3.0 | 4,423 | 2.0 | ||||||||||||||||
Depreciation and amortization | 5,350 | 2.7 | 5,148 | 2.4 | ||||||||||||||||
Stock-based compensation expense | 493 | 0.2 | 1,176 | 0.5 | ||||||||||||||||
Write-off of inventory (1) | 1,710 | 0.8 | — | — | ||||||||||||||||
Impairment expense and loss on disposal of machinery (1) | 2,445 | 1.3 | — | — | ||||||||||||||||
Adjusted EBITDA | $ | 36,396 | 17.8 | % | $ | 24,813 | 11.3 | % |
June 30, 2023 | December 31, 2022 | Increase/(Decrease) | |||||||||||||||
(in thousands) | |||||||||||||||||
Current assets | $ | 160,999 | $ | 123,800 | $ | 37,199 | |||||||||||
Current liabilities | 50,722 | 39,253 | 11,469 | ||||||||||||||
Working capital | $ | 110,277 | $ | 84,547 | $ | 25,730 |
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Net cash provided by (used in) operating activities | $ | 31,053 | $ | (7,746) | |||||||
Net cash used in investing activities | (29,317) | (12,351) | |||||||||
Net cash provided by financing activities | 480 | 17,115 | |||||||||
Net change in cash and cash equivalents | $ | 2,216 | $ | (2,982) |
Exhibit No. | Description | |||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | XBRL Instance Document | |||||||
101.SCH* | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | |||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104* | Cover Page Interactive File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
* Filed herewith. ** Furnished herewith. |
DATE: August 9, 2023 | KARAT PACKAGING INC. | |||||||
By: | /s/ Alan Yu | |||||||
Alan Yu | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
By: | /s/ Jian Guo | |||||||
Jian Guo | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer and | ||||||||
Principal Accounting Officer) |
August 9, 2023 | By: | /s/ Alan Yu | |||||||||
Alan Yu Chairman and Chief Executive Officer (Principal Executive Officer) |
August 9, 2023 | By: | /s/ Jian Guo | |||||||||
Jian Guo Chief Financial Officer (Principal Financial and Accounting Officer) |
August 9, 2023 | By: | /s/ Alan Yu | |||||||||
Alan Yu Chairman and Chief Executive Officer (Principal Executive Officer) |
August 9, 2023 | By: | /s/ Jian Guo | |||||||||
Jian Guo Chief Financial Officer (Principal Financial and Accounting Officer) |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
General and administrative expenses | $ 17,192 | $ 16,715 | $ 33,821 | $ 32,172 |
Rental income | 275 | 238 | 522 | 476 |
Interest income | 519 | 847 | 586 | 2,160 |
Interest expense | (573) | (610) | (980) | (1,083) |
VIE, Primary Beneficiary | ||||
General and administrative expenses | 647 | 671 | 1,318 | 1,234 |
Rental income | 239 | 238 | 486 | 476 |
Interest income | 182 | 847 | 198 | 2,187 |
Interest expense | $ (565) | $ (488) | $ (971) | $ (936) |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Parenthetical) |
3 Months Ended |
---|---|
Jun. 30, 2023
$ / shares
| |
Statement of Stockholders' Equity [Abstract] | |
Dividends paid to stockholders (in dollars per share) | $ 0.35 |
Nature of Operations |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Lollicup USA Inc. (“Lollicup”) was incorporated on January 21, 2001 under the laws of the State of California as an S-corporation. Effective January 1, 2018, Lollicup elected to convert from an S-Corporation to a C-Corporation. Karat Packaging Inc. (“Karat Packaging”) was incorporated on September 26, 2018 as a Delaware corporation and became the holding company for Lollicup (collectively, the “Company”) through a share exchange with the shareholders of Lollicup. The Company is a manufacturer and distributor of single-use disposable products used in a variety of restaurant and foodservice settings. The Company supplies a wide range of products such as food containers, tableware, cups, lids, cutlery, and straws. The products are available in plastic, paper, biopolymer-based and other compostable forms. In addition to manufacturing and distribution, the Company offers customized solutions to customers, including new product development, design, printing, and logistics services, and distributes certain specialty food and beverages products, such as boba and coffee drinks. The Company supplies products to national and regional distributors, supermarkets, restaurants, and convenience stores as well as to smaller chains and businesses including boutique coffee houses, bubble tea cafes, pizza parlors and frozen yogurt shops. The Company currently operates manufacturing facilities and distribution and fulfillment centers in Chino, California; Rockwall, Texas and Kapolei, Hawaii. In addition, the Company operates five other distribution centers located in Branchburg, New Jersey; Sumner, Washington; Summerville, South Carolina; Kapolei, Hawaii and City of Industry, California.
|
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as promulgated in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. The financial information as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2023. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022, as included in the Company's Annual Report on Form 10-K filed on March 16, 2023. Principles of Consolidation: The condensed consolidated financial statements include the accounts of Karat Packaging and its wholly-owned and controlled operating subsidiaries, Lollicup, Lollicup Franchising, LLC (“Lollicup Franchising”) and Global Wells, a variable interest entity wherein the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated. Variable Interest Entities: In 2017, Lollicup along with three other unrelated parties formed Global Wells. Lollicup has a 13.5% ownership interest and a 25% voting interest in Global Wells, which is located in Rockwall, Texas. The purpose of this entity is to own, construct, and manage warehouses and manufacturing facilities. Global Wells’ operating agreement may require its members to make additional contributions upon the unanimous decision of the members or when the cash in Global Wells’ bank account falls below $50,000. In the event that a member is unable to make an additional capital contribution, the other members will be required to make contributions to offset the amount that member cannot contribute, up to $25,000. In 2018, Lollicup entered into an operating lease with Global Wells for a facility in Rockwall, Texas. Upon the execution of this lease, it was determined that Lollicup holds current and potential rights that give it the power to direct activities of Global Wells that most significantly impact Global Wells’ economic performance, receive significant benefits, or the obligation to absorb potentially significant losses, resulting in Lollicup having a controlling financial interest in Global Wells. As a result, Lollicup was deemed to be the primary beneficiary of Global Wells and has consolidated Global Wells under the risk and reward model of ASC Topic 810, Consolidations. Assets recognized as a result of consolidating Global Wells do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating Global Wells do not represent additional claims of the Company’s general assets; they represent claims against the specific assets of Global Wells. See Note 9 — Long-Term Debt for a description of the two term loans that Global Wells had with financial institutions as of June 30, 2023. Noncontrolling Interests: The Company consolidates its variable interest entity, Global Wells, in which the Company is the primary beneficiary. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the condensed consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the condensed consolidated statements of income. Tax payments made by the Company on behalf of the noncontrolling interests are deducted from their equity balances, as shown in the condensed consolidated statements of stockholders’ equity. Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ materially from the estimates that were assumed in preparing the condensed consolidated financial statements. Estimates that are significant to the condensed consolidated financial statements include stock-based compensation, allowance for doubtful accounts and reserve for slow-moving and obsolete inventory. Reporting Segments: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and supply of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, foam, post-consumer recycled content and renewable materials. It also consists of the distribution of certain specialty food and beverage products, such as boba and coffee drinks, and certain restaurant and warehouse supplies. The Company’s long-lived assets are all located in the United States, and its revenues are all generated in the United States. Fair Value Measurements: The Company has financial instruments classified within the fair value hierarchy, which consist of the following: •At June 30, 2023, the Company had money market accounts and short-term investments classified as Level 1 within the fair value hierarchy. The short-term investments comprise of certificates of deposits with an original maturity of longer than 90 days and are reported at their carrying value as current assets on the condensed consolidated balance sheet. The carrying value of these short-term investments approximates fair value as they were purchased near or on June 30, 2023. At December 31, 2022, the Company had money market accounts classified as Level 1 within the fair value hierarchy, and reported as current assets on the condensed consolidated balance sheet. The following table summarizes the Company’s fair value measurements by level at June 30, 2023:
The following table summarize the Company’s fair value measurements by level at December 31, 2022:
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, related-party payable, accrued and other liabilities and other payables at June 30, 2023 and December 31, 2022, approximated fair value because of the short maturity of these instruments. The carrying amount of the Company's Line of Credit approximates fair value because the interest rate is variable in nature. The following is a summary of the carrying amount and estimated fair value of the $23,000,000 and $28,700,000 term loans that mature in September 2026 and July 2027, respectively (the "2026 Term Loan" and "2027 Term Loan," respectively):
The fair value of these financial instruments was determined using Level 2 inputs. New and Recently Adopted Accounting Standards: The Company is an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and as such, the Company have elected to take advantage of certain reduced public company reporting requirements. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, as a result, the Company will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for private companies. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which adds to U.S. GAAP an impairment model known as the current expected credit loss ("CECL") model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU is also intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. The FASB subsequently issued ASU 2019-10 (Topic 326), “Financial Instruments-Credit Losses: Effective Dates” which amends the effective date for SEC filers that are eligible to be ‘smaller reporting companies’, non-SEC filers and all other companies, including not-for-profit companies and employee benefit plans. The Company adopted this new standard using the modified retrospective adoption method beginning with its first quarter in 2023. The application of this new standard did not have a material impact on its consolidated financial statements.
|
Goodwill |
6 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Goodwill | Goodwill The following table summarizes the activity in the Company's goodwill from December 31, 2022 to June 30, 2023:
|
Joint Venture |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Joint Venture | Joint Venture On April 6, 2022, the Company entered into a joint venture agreement (the "JV Agreement") to establish a new corporation, Bio Earth, to build a bagasse factory in Taiwan. The JV Agreement stipulated an investment by the Company of approximately $6,500,000 for a 49% interest in Bio Earth. Through December 31, 2023, the Company made net payments totaling $4,000,000 under the JV Agreement. During the three months ended March 31, 2023, the Company made additional payments of $2,900,000 and received a refund of $900,000 under the JV Agreement. On May 8 2023, the Company entered into a Share Transfer Agreement (the "Share Transfer Agreement"), with approval of the Board of Directors, to sell all of its equity interest in Bio Earth to Keary Global for a total consideration of approximately $6,100,000 (the "Share Transfer"), representing the total net deposits made by the Company of $6,000,000 under the JV Agreement as discussed above and interest accruing at 5% per annum. Keary Global and its affiliate, Keary International are both owned or controlled by Jeff Yu, brother of our Chief Executive Officer, Alan Yu. Concurrent with the Share Transfer Agreement, the Company also entered into an agreement with Keary Global, Bio Earth and Happiness Moon Co., Ltd. (“Happiness Moon”) pursuant to which (i) Lollicup agreed to transfer all Bio Earth shares, as well as its rights and obligations under the JV Agreement to Keary Global, (ii) Happiness Moon and Bio Earth agree to foregoing and (iii) Bio Earth shall manage the regulatory and registration requirements related to the Share Transfer. As of June 30, 2023, the Company has completed the Share Transfer to Keary Global and received the total consideration of $6,100,000 in full. See Note 15 — Related Party Transactions for further discussion on our business activities with Keary Global.
|
Inventories |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following:
The Company incurred inventory adjustments and write-off of $2,729,000 and $2,944,000 for the three and six months ended June 30, 2023, respectively. Included within the amount for both the three and six months ended June 30, 2023, was a $1,700,000 write-off of raw materials, as the Company disposed of certain machinery and equipment in executing the strategy to scale back production in certain locations. Inventory adjustments and write-offs are included in cost of goods sold on the accompanying condensed consolidated statements of income. See Note 14 — Impairment Expense and Loss on Disposal of Machinery for further discussion about the disposal of machinery.
|
Property and Equipment |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment
Depreciation and amortization expense on property and equipment was $2,711,000 and $2,558,000 for the three months ended June 30, 2023 and 2022, respectively. Depreciation and amortization expense on property and equipment was $5,337,000 and $5,135,000 for the six months ended June 30, 2023 and 2022, respectively. Depreciation and amortization expense is reported within general and administrative expense except for depreciation and amortization expense related to manufacturing facilities and equipment, which is included in cost of goods sold on the accompanying condensed consolidated statements of income.
|
Line of Credit |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit | Line of Credit Pursuant to the terms of the Business Loan Agreement, dated February 23, 2018, between Lollicup, as borrower, and Hanmi Bank, as lender (as amended, the “Loan Agreement”), the Company has a line of credit with a maximum borrowing capacity of $40,000,000 (the “Line of Credit”) secured by the Company’s assets. The Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. The Company is required to comply with certain financial covenants, including a minimum current ratio, minimum debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio and a minimum fixed charge coverage ratio. On March 14, 2023, the Company amended the Line of Credit. Prior to March 14, 2023, interest accrued at the annual rate of prime less 0.25% with a minimum floor of 3.25%. The amendment on March 14, 2023, among other things, (1) extended the maturity date to March 14, 2025, and (2) revised the interest on any Line of Credit borrowings to an annual rate of one month term Secured Overnight Financing Rate ("SOFR") plus 2.50%, with a SOFR floor of 1.0%. The Line of Credit also includes a standby letter of credit sublimit, which was amended and increased to $5,000,000 from $2,000,000 on June 20, 2023. As of June 30, 2023, the maximum remaining amount that could be borrowed under the Line of Credit was $37,764,000. The Company had $0 of borrowings outstanding under the Line of Credit as of both June 30, 2023 and December 31, 2022. The amount issued under the standby letter of credit was $2,236,000 and $1,070,000 as of June 30, 2023 and December 31, 2022, respectively. As of both June 30, 2023 and December 31, 2022, the Company was in compliance with the financial covenants under the Line of Credit. Long-Term Debt Long-term debt consists of the following:
At June 30, 2023, future maturities are:
The 2027 Loan was a refinance in June 2022 from a previous $21,580,000 term loan, and was accounted for as a debt modification. The Company was in compliance with all of its financial covenants as of both June 30, 2023 and December 31, 2022.
|
Accrued Expenses |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses The following table summarizes information related to accrued expense liabilities:
|
Long-Term Debt |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Line of Credit Pursuant to the terms of the Business Loan Agreement, dated February 23, 2018, between Lollicup, as borrower, and Hanmi Bank, as lender (as amended, the “Loan Agreement”), the Company has a line of credit with a maximum borrowing capacity of $40,000,000 (the “Line of Credit”) secured by the Company’s assets. The Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. The Company is required to comply with certain financial covenants, including a minimum current ratio, minimum debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio and a minimum fixed charge coverage ratio. On March 14, 2023, the Company amended the Line of Credit. Prior to March 14, 2023, interest accrued at the annual rate of prime less 0.25% with a minimum floor of 3.25%. The amendment on March 14, 2023, among other things, (1) extended the maturity date to March 14, 2025, and (2) revised the interest on any Line of Credit borrowings to an annual rate of one month term Secured Overnight Financing Rate ("SOFR") plus 2.50%, with a SOFR floor of 1.0%. The Line of Credit also includes a standby letter of credit sublimit, which was amended and increased to $5,000,000 from $2,000,000 on June 20, 2023. As of June 30, 2023, the maximum remaining amount that could be borrowed under the Line of Credit was $37,764,000. The Company had $0 of borrowings outstanding under the Line of Credit as of both June 30, 2023 and December 31, 2022. The amount issued under the standby letter of credit was $2,236,000 and $1,070,000 as of June 30, 2023 and December 31, 2022, respectively. As of both June 30, 2023 and December 31, 2022, the Company was in compliance with the financial covenants under the Line of Credit. Long-Term Debt Long-term debt consists of the following:
At June 30, 2023, future maturities are:
The 2027 Loan was a refinance in June 2022 from a previous $21,580,000 term loan, and was accounted for as a debt modification. The Company was in compliance with all of its financial covenants as of both June 30, 2023 and December 31, 2022.
|
Interest Rate Swaps |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Swaps | Interest Rate Swap In June 2022, Global Wells terminated its ten-year floating-to-fixed interest rate swap, and recognized cash proceeds of $825,000 as gain on the settlement, which was included in interest income in the accompanying condensed consolidated statements of income. This interest rate swap had a notional value of $21,580,000 as of the effective date of June 13, 2019 based on the prime rate versus a 5.0% fixed rate. For the three and six months ended June 30, 2022, Global Wells recognized $847,000 and $2,159,000 (including the gain on settlement) as interest income related to the interest rate swap, respectively.
|
Stock-Based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation In January 2019, the Company’s Board of Directors adopted the 2019 Stock Incentive Plan (the “Plan”). A total of 2,000,000 shares of common stock were authorized and reserved for issuance under the Plan in the form of incentive or nonqualified stock options and stock awards. A compensation committee appointed by the Board of Directors of the Company determines the terms and conditions of each grant under the Plan. Employees, directors, and consultants are eligible to receive stock options and stock awards under the Plan. The aggregate number of shares available under the Plan and the number of shares subject to outstanding options may be increased or decreased by the Plan administrator to reflect any changes in the outstanding common stock by reason of any recapitalization, reorganization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock or similar transaction. The exercise price of incentive stock options may not be less than the fair market value of the common stock at the date of grant. The exercise price of incentive stock options granted to individuals that own greater than 10% of the voting stock may not be less than 110% of the fair market value of the common stock at the date of grant. The term of each incentive and nonqualified option is based upon conditions as determined by the option agreement; however, the term can be no more than ten years from the date of the grant. In the case of an incentive stock option granted to an optionee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary, the term of the option will be a shorter term as provided in the option agreement, but not more than five years from the date of the grant. As of June 30, 2023, a total of 1,330,683 shares of common stock were available for further award grants under the Plan. For the three months ended June 30, 2023 and 2022, the Company recognized a total of $216,000 and $565,000 in stock-based compensation expense, respectively. For the six months ended June 30, 2023 and 2022, the Company recognized a total of $493,000 and $1,176,000 in stock-based compensation expense, respectively. The Company recognizes stock-based compensation over the vesting period, which is generally three (3) years for both the restricted stock units and stock options. Stock Options A summary of the Company’s stock option activity under the Plan for the period ended June 30, 2023 is as follows:
There were no stock options granted during the six months ended June 30, 2023. At June 30, 2023, total remaining stock-based compensation cost for unvested stock options under the Plan was approximately $444,000. The cost is expected to be recognized over a weighted-average period of 1.1 years. The aggregate intrinsic value is calculated by subtracting the exercise price of the option from the closing price of the Company’s common stock on June 30, 2023, multiplied by the number of shares per each option. Restricted Stock Units The Company issued restricted stock units to its employees. The following table summarizes the unvested restricted stock units for the six months ended June 30, 2023:
At June 30, 2023, total remaining stock-based compensation cost for unvested restricted stock units was approximately $128,000. The cost is expected to be recognized over a weighted-average period of 0.5 years.
|
Earnings Per Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share (a)Basic Basic earnings per share is calculated by dividing the net income attributable to equity holders of the Company for the period by the weighted average number of common shares outstanding during the period.
(b)Diluted Diluted earnings per share is calculated based upon the weighted average number of common shares and common equivalent shares outstanding during the period, calculated using the treasury stock method. Under the treasury stock method, exercise proceeds include the amount the employee must pay for exercising stock options and the amount of compensation cost related to stock awards for future services that the Company has not yet recognized. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. The following table summarizes the calculation of diluted earnings per share:
For the three months ended June 30, 2023 and 2022, a total of 420,000 and 447,000 shares of potentially dilutive shares, respectively, have been excluded in the diluted earnings per share calculation due to its anti-dilutive impact on earnings per share. For the six months ended June 30, 2023 and 2022, a total of 427,000 and 460,000 shares of potentially dilutive shares, respectively, have been excluded in the diluted earnings per share calculation due to its anti-dilutive impact on earnings per share.
|
Leases |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company primarily leases manufacturing facilities, distribution centers and office spaces with lease terms expiring through 2031. For the six months ended June 30, 2023, the Company recognized the following lease costs in the accompanying condensed consolidated statement of income:
For the three months ended June 30, 2023 and 2022, rent expense included in operating expenses was $1,524,000 and $1,070,000, respectively, and rent expense included in cost of goods sold was $258,000 and $245,000, respectively. For the six months ended June 30, 2023 and 2022, rent expense included in operating expenses was $2,889,000 and $1,714,000, respectively, and rent expense included in cost of goods sold was $486,000 and $505,000, respectively. The following table presents supplemental information related to operating leases for the six months ended June 30, 2023:
As of June 30, 2023, future lease payments under operating leases were as follows:
In September 2020, Global Wells entered into an operating lease with an unrelated party as the landlord. The lease generates monthly rental payments from $58,000 to $61,000 over the lease term of 38 months beginning September 9, 2020. The expected rental income is $229,000 for the remainder of the year ended December 31, 2023.
|
Impairment Expense and Loss on Disposal of Machinery and Equipment |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment Expense and Loss on Disposal of Machinery and Equipment | Impairment Expense and Loss on Disposal of Machinery and Equipment In February 2023, the Company started to execute a strategy to increase imports and scale back manufacturing in certain locations. The Company has since reached an agreement with two unrelated third-party vendors in Taiwan to sell them certain of its manufacturing machinery and equipment. The Company also cancelled certain equipment purchase commitments that it had previously paid deposits towards, and disposed of certain machinery and equipment through abandonment. The Company recognized the following amounts related to impairment expense and loss on disposal of machinery:
|
Related Party Transactions |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Keary Global Ltd. ("Keary Global") owns 250,004 shares of the Company's common stock as of June 30, 2023, which Keary Global acquired upon exercise of two convertible notes during the third quarter of 2018. Keary Global and its affiliate, Keary International, are owned by one of the Company’s stockholders’ family member. In addition to being a stockholder, Keary Global and Keary International are inventory suppliers and purchasing agents for the Company overseas. The Company has entered into ongoing purchase and supply agreements with Keary Global. At June 30, 2023 and December 31, 2022, the Company has accounts payable due to Keary Global and Keary International of $7,127,000 and $4,940,000, respectively. Purchases for the three months ended June 30, 2023 and 2022 from this related party were $13,606,000 and $13,789,000, respectively. Purchases for the six months ended June 30, 2023 and 2022 from this related party were $25,013,000 and $25,715,000, respectively. See Note 4 — Joint Venture for discussion on our share transfer agreement with Keary Global.
|
Income Taxes |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three months ended June 30, 2023 and 2022, the Company's income tax expense was $3,323,000 and $1,746,000, with effective tax rate of 23.7% and 19.5%, respectively. For the six months ended June 30, 2023 and 2022, the Company's income tax expense was $6,141,000 and $4,423,000, with effective tax rate of 23.6% and 22.6%, respectively. For both the three and six months ended June 30, 2023 and 2022, the Company's effective tax rate differed from the United States federal statutory rate of 21% primarily due to state taxes. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. Based upon the level of historical taxable income, at this time, the Company determined that sufficient positive evidence existed to conclude that it is more likely than not there will be full utilization of the deferred tax assets in each jurisdiction. As such, as of June 30, 2023, based on the available evidence, the Company did not record any valuation allowance. The Company remains subject to IRS examination for the 2017 through 2022 tax years, and has received notice in February 2019 that it is under examination for years 2016 and 2017. Additionally, the Company files multiple state and local income tax returns and remains subject to examination in various of these jurisdictions for the 2018 through 2021 tax years. As of June 30, 2023, and December 31, 2022, the Company did not have any unrecognized tax benefit. In August 2022, the Inflation Reduction Act of 2022 (the "Act") was signed into law. The Act, among other things, imposes a nondeductible 1% excise tax on the fair market value of certain stock that is "repurchased" during the taxable year by publicly traded U.S. corporations or acquired by certain of its subsidiaries. The taxable amount is reduced by the fair market value of certain issuances of stock throughout the year. The Act also imposes a 15% corporate minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after December 31, 2022. We do not expect these tax law changes to have a material impact on our condensed consolidated financial statements; however, we will continue to evaluate their impact. In March 2023, the Internal Revenue Service ("IRS") announced that taxpayers in California affected by severe winter storms, flooding, landslides, and mudslides have until October 16, 2023, to file various individual and business tax returns and make tax payments. The Company has taken advantage of this tax relief in the current year.
|
Commitments and Contingencies |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesThe Company is a party to, and certain of its property is the subject of, various pending claims and legal proceedings that routinely arise in the ordinary course of its business. Management believes that the outcome of such litigation and claims, should they arise in the future, is not likely to have a material effect on the Company’s financial position or results of income. |
Subsequent Events |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as promulgated in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. The financial information as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2023. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022, as included in the Company's Annual Report on Form 10-K filed on March 16, 2023.
|
Principles of Consolidation | Principles of Consolidation: The condensed consolidated financial statements include the accounts of Karat Packaging and its wholly-owned and controlled operating subsidiaries, Lollicup, Lollicup Franchising, LLC (“Lollicup Franchising”) and Global Wells, a variable interest entity wherein the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated. |
Variable Interest Entities | Variable Interest Entities: In 2017, Lollicup along with three other unrelated parties formed Global Wells. Lollicup has a 13.5% ownership interest and a 25% voting interest in Global Wells, which is located in Rockwall, Texas. The purpose of this entity is to own, construct, and manage warehouses and manufacturing facilities. Global Wells’ operating agreement may require its members to make additional contributions upon the unanimous decision of the members or when the cash in Global Wells’ bank account falls below $50,000. In the event that a member is unable to make an additional capital contribution, the other members will be required to make contributions to offset the amount that member cannot contribute, up to $25,000. In 2018, Lollicup entered into an operating lease with Global Wells for a facility in Rockwall, Texas. Upon the execution of this lease, it was determined that Lollicup holds current and potential rights that give it the power to direct activities of Global Wells that most significantly impact Global Wells’ economic performance, receive significant benefits, or the obligation to absorb potentially significant losses, resulting in Lollicup having a controlling financial interest in Global Wells. As a result, Lollicup was deemed to be the primary beneficiary of Global Wells and has consolidated Global Wells under the risk and reward model of ASC Topic 810, Consolidations.Assets recognized as a result of consolidating Global Wells do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating Global Wells do not represent additional claims of the Company’s general assets; they represent claims against the specific assets of Global Wells. See Note 9 — Long-Term Debt for a description of the two term loans that Global Wells had with financial institutions as of June 30, 2023.
|
Noncontrolling Interests | Noncontrolling Interests: The Company consolidates its variable interest entity, Global Wells, in which the Company is the primary beneficiary. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the condensed consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the condensed consolidated statements of income. Tax payments made by the Company on behalf of the noncontrolling interests are deducted from their equity balances, as shown in the condensed consolidated statements of stockholders’ equity. |
Estimates and Assumptions | Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ materially from the estimates that were assumed in preparing the condensed consolidated financial statements. Estimates that are significant to the condensed consolidated financial statements include stock-based compensation, allowance for doubtful accounts and reserve for slow-moving and obsolete inventory. |
Reporting Segments | Reporting Segments: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and supply of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, foam, post-consumer recycled content and renewable materials. It also consists of the distribution of certain specialty food and beverage products, such as boba and coffee drinks, and certain restaurant and warehouse supplies. The Company’s long-lived assets are all located in the United States, and its revenues are all generated in the United States. |
Fair Value Measurements | Fair Value Measurements: The Company has financial instruments classified within the fair value hierarchy, which consist of the following: •At June 30, 2023, the Company had money market accounts and short-term investments classified as Level 1 within the fair value hierarchy. The short-term investments comprise of certificates of deposits with an original maturity of longer than 90 days and are reported at their carrying value as current assets on the condensed consolidated balance sheet. The carrying value of these short-term investments approximates fair value as they were purchased near or on June 30, 2023. At December 31, 2022, the Company had money market accounts classified as Level 1 within the fair value hierarchy, and reported as current assets on the condensed consolidated balance sheet. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, related-party payable, accrued and other liabilities and other payables at June 30, 2023 and December 31, 2022, approximated fair value because of the short maturity of these instruments. The carrying amount of the Company's Line of Credit approximates fair value because the interest rate is variable in nature.
|
New and Recently Adopted Accounting Standards | New and Recently Adopted Accounting Standards: The Company is an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and as such, the Company have elected to take advantage of certain reduced public company reporting requirements. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, as a result, the Company will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for private companies. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which adds to U.S. GAAP an impairment model known as the current expected credit loss ("CECL") model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU is also intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. The FASB subsequently issued ASU 2019-10 (Topic 326), “Financial Instruments-Credit Losses: Effective Dates” which amends the effective date for SEC filers that are eligible to be ‘smaller reporting companies’, non-SEC filers and all other companies, including not-for-profit companies and employee benefit plans. The Company adopted this new standard using the modified retrospective adoption method beginning with its first quarter in 2023. The application of this new standard did not have a material impact on its consolidated financial statements.
|
Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value measurements by level for the assets and liabilities measured at fair value on a recurring basis | The following table summarizes the Company’s fair value measurements by level at June 30, 2023:
The following table summarize the Company’s fair value measurements by level at December 31, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of carrying values and estimated fair values of debt | The following is a summary of the carrying amount and estimated fair value of the $23,000,000 and $28,700,000 term loans that mature in September 2026 and July 2027, respectively (the "2026 Term Loan" and "2027 Term Loan," respectively):
|
Goodwill (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Schedule of goodwill | The following table summarizes the activity in the Company's goodwill from December 31, 2022 to June 30, 2023:
|
Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consist of the following:
|
Property and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment, net |
|
Accrued Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expense liabilities | The following table summarizes information related to accrued expense liabilities:
|
Long-Term Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future maturities | At June 30, 2023, future maturities are:
|
Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | A summary of the Company’s stock option activity under the Plan for the period ended June 30, 2023 is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of unvested restricted stock unit activity | The Company issued restricted stock units to its employees. The following table summarizes the unvested restricted stock units for the six months ended June 30, 2023:
|
Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | Basic earnings per share is calculated by dividing the net income attributable to equity holders of the Company for the period by the weighted average number of common shares outstanding during the period.
The following table summarizes the calculation of diluted earnings per share:
|
Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of lease cost and supplemental cash flow information | For the six months ended June 30, 2023, the Company recognized the following lease costs in the accompanying condensed consolidated statement of income:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental information related to operating leases | The following table presents supplemental information related to operating leases for the six months ended June 30, 2023:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future lease payments under operating leases | As of June 30, 2023, future lease payments under operating leases were as follows:
|
Impairment Expense and Loss on Disposal of Machinery and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment Expense and Loss on Disposal of Machinery | The Company recognized the following amounts related to impairment expense and loss on disposal of machinery:
|
Nature of Operations (Details) |
6 Months Ended |
---|---|
Jun. 30, 2023
distribution_center
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Distribution centers operated by entity | 5 |
Summary of Significant Accounting Policies - Narrative (Details) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2023
USD ($)
segment
|
Dec. 31, 2017
USD ($)
|
|
Debt Instrument [Line Items] | ||
Reportable segment | segment | 1 | |
2026 Term Loan | ||
Debt Instrument [Line Items] | ||
Face amount of loan | $ 23,000,000 | |
2027 Term Loan | ||
Debt Instrument [Line Items] | ||
Face amount of loan | $ 28,700,000 | |
Global Wells | ||
Debt Instrument [Line Items] | ||
Ownership interest (as a percent) | 13.50% | |
Voting interest (as a percent) | 25.00% | |
Minimum bank account to make additional contributions from members | $ 50,000 | |
Contributions to offset the amount that member cannot contribute (up to) | $ 25,000 |
Summary of Significant Accounting Policies - Summary of Carrying Values and Estimated Fair Values of Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Carrying Amount | $ 50,255 | $ 42,731 |
Carrying Amount | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 50,065 | 42,515 |
Estimated Fair Value | ||
Debt Instrument [Line Items] | ||
Estimated Fair Value | 47,213 | 39,033 |
2026 Term Loan | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 21,863 | 22,168 |
2026 Term Loan | Carrying Amount | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 21,786 | 22,079 |
2026 Term Loan | Estimated Fair Value | ||
Debt Instrument [Line Items] | ||
Estimated Fair Value | 19,693 | 20,115 |
2027 Term Loan | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 28,392 | 20,563 |
2027 Term Loan | Carrying Amount | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 28,279 | 20,436 |
2027 Term Loan | Estimated Fair Value | ||
Debt Instrument [Line Items] | ||
Estimated Fair Value | $ 27,520 | $ 18,918 |
Goodwill - Schedule of Goodwill (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 3,510 |
Goodwill acquired | 0 |
Goodwill, ending balance | $ 3,510 |
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 12,973 | $ 18,061 |
Semi-finished goods | 1,528 | 1,850 |
Finished goods | 62,135 | 52,044 |
Subtotal | 76,636 | 71,955 |
Less inventory reserve | (341) | (749) |
Total inventories | $ 76,295 | $ 71,206 |
Inventories - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Inventory [Line Items] | |||
Write-off of inventory | $ 2,729 | $ 2,944 | $ 0 |
Cost of Sales | |||
Inventory [Line Items] | |||
Raw materials | $ 1,700 | $ 1,700 |
Line of Credit (Details) - USD ($) |
Mar. 14, 2023 |
Jun. 30, 2023 |
Jun. 20, 2023 |
Jun. 19, 2023 |
Dec. 31, 2022 |
Feb. 23, 2018 |
---|---|---|---|---|---|---|
SOFR | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate | 2.50% | |||||
Floor interest rate | 1.00% | |||||
Line of credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 37,764,000 | $ 40,000,000 | ||||
Floor rate (as a percent) | 3.25% | |||||
Long-term line of credit, noncurrent | 0 | |||||
Line of credit | Prime Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Basis spread on variable rate | 0.25% | |||||
Standby letter of credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 2,000,000 | $ 5,000,000 | ||||
Long-term line of credit, noncurrent | $ 2,236,000 | $ 1,070,000 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued miscellaneous expenses | $ 1,816 | $ 2,094 |
Accrued interest | 30 | 108 |
Accrued payroll | 1,905 | 1,586 |
Accrued vacation and sick pay | 789 | 543 |
Accrued shipping expenses | 1,323 | 1,918 |
Accrued professional services fees | 478 | 600 |
Accrued property tax | 588 | 1,164 |
Accrued sale taxes and use taxes | 1,017 | 992 |
Total accrued expenses | $ 7,946 | $ 9,005 |
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Aug. 01, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
|
Debt Instrument [Line Items] | |||
Carrying Amount | $ 50,255 | $ 42,731 | |
Less: unamortized loan fees | (190) | (216) | |
Less: current portion | (971) | (957) | |
Long-term debt, net of current portion | 49,094 | 41,558 | |
2026 Term Loan | |||
Debt Instrument [Line Items] | |||
Carrying Amount | 21,863 | 22,168 | |
Amount converted to term loan | 16,115 | ||
Term loan, accordion feature | $ 6,885 | ||
Fixed interest rate (as a percent) | 3.50% | ||
Monthly principal and interest payments | $ 116 | ||
2027 Term Loan | |||
Debt Instrument [Line Items] | |||
Carrying Amount | 28,392 | $ 20,563 | |
Amount converted to term loan | 20,700 | ||
Term loan, accordion feature | $ 8,000 | ||
Fixed interest rate (as a percent) | 4.375% | ||
Monthly principal and interest payments | $ 104 | ||
2027 Term Loan | Subsequent Event | |||
Debt Instrument [Line Items] | |||
Monthly principal and interest payments | $ 144 |
Long-Term Debt - Schedule of Future Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Future maturities: | ||
2023 (remainder) | $ 534 | |
2024 | 1,122 | |
2025 | 1,179 | |
2026 | 20,798 | |
2027 | 26,622 | |
Long-term debt | $ 50,255 | $ 42,731 |
Long-Term Debt - Narrative (Details) |
Jun. 30, 2023
USD ($)
|
---|---|
Term Loan, Maturing May 2029 | |
Debt Instrument [Line Items] | |
Face amount of loan | $ 21,580,000 |
Interest Rate Swaps (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 13, 2019 |
|
Derivative [Line Items] | ||||||
Proceeds from settlement of interest rate swap (including $0 and $825 associated with variable interest entity for the six months ended June 30, 2023 and 2022, respectively) | $ 0 | $ 825 | ||||
Global Wells | Interest Rate Swap | ||||||
Derivative [Line Items] | ||||||
Term of contract (in years) | 10 years | |||||
Proceeds from settlement of interest rate swap (including $0 and $825 associated with variable interest entity for the six months ended June 30, 2023 and 2022, respectively) | $ 825 | |||||
Notional value | $ 21,580 | |||||
Fixed interest rate (as a percent) | 5.00% | |||||
Derivative interest income (expense) | $ 847 | $ 2,159 |
Stock-Based Compensation - Schedule of Unvested Restricted Stock Units (Details) - Restricted Stock Units (RSUs) |
6 Months Ended |
---|---|
Jun. 30, 2023
$ / shares
shares
| |
Number of Shares Outstanding | |
Outstanding at beginning of period (in shares) | shares | 82,146 |
Vested (in shares) | shares | (4,550) |
Forfeited (in shares) | shares | 1,667 |
Outstanding at end of period (in shares) | shares | 75,929 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 11.47 |
Vested (in dollars per share) | $ / shares | 16.64 |
Forfeited (in dollars per share) | $ / shares | 10.00 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 11.19 |
Leases - Schedule of Lease Cost (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
| |
Leases [Abstract] | |
Operating lease expense | $ 2,848 |
Short-term lease expense | 37 |
Variable lease expense | 490 |
Total lease expense | $ 3,375 |
Leases - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 09, 2020 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Lessee, Lease, Description [Line Items] | |||||
Payments receivable in 2023 | $ 229 | $ 229 | |||
Global Wells | |||||
Lessee, Lease, Description [Line Items] | |||||
Term of contract | 38 months | ||||
Global Wells | Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Monthly lease payment | $ 58 | ||||
Global Wells | Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Monthly lease payment | $ 61 | ||||
Operating Expense | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease expense | 1,524 | $ 1,070 | 2,889 | $ 1,714 | |
Cost of Sales | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease expense | $ 258 | $ 245 | $ 486 | $ 505 |
Leases - Schedule of Supplemental Information Related to Operating Leases (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
| |
Leases [Abstract] | |
Weighted average remaining lease term (in years) | 4 years 6 months 18 days |
Weighted average discount rate | 5.70% |
Cash paid for amounts included in measurement of lease obligations | |
Operating cash flows from operating leases | $ 2,740 |
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands |
Jun. 30, 2023
USD ($)
|
---|---|
Leases [Abstract] | |
2023 (remainder) | $ 2,933 |
2024 | 5,254 |
2025 | 3,928 |
2026 | 4,044 |
2027 | 2,711 |
Thereafter | 2,885 |
Total future lease payments | 21,755 |
Less: imputed interest | 2,854 |
Operating lease liability | $ 18,901 |
Impairment Expense and Loss on Disposal of Machinery and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||||
Loss on disposal of machinery in scaling back manufacturing | $ 1,922 | $ 0 | $ 1,922 | $ 0 |
Loss (gain) on disposal of fixed assets within normal course of business | 14 | (21) | 96 | (17) |
Loss on disposal | 1,936 | (21) | 2,018 | (17) |
Impairment of deposits | 523 | 0 | 523 | 0 |
Total impairment expense and loss on disposal of machinery | $ 2,459 | $ (21) | $ 2,541 | $ (17) |
Related Party Transactions (Details) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2023
USD ($)
shares
|
Jun. 30, 2022
USD ($)
|
Sep. 30, 2018
convertible_note
|
Jun. 30, 2023
USD ($)
shares
|
Jun. 30, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
shares
|
|
Related Party Transaction [Line Items] | ||||||
Common Stock, Shares, Outstanding | shares | 19,888,039 | 19,888,039 | 19,885,005 | |||
Number of exercised convertible notes | convertible_note | 2 | |||||
Keary Global | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Common Stock, Shares, Outstanding | shares | 250,004 | 250,004 | ||||
Keary Global and Keary International | ||||||
Related Party Transaction [Line Items] | ||||||
Purchases from related party | $ | $ 13,606,000 | $ 13,789,000 | $ 25,013,000 | $ 25,715,000 | ||
Keary Global and Keary International | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Accounts payable | $ | $ 7,127,000 | $ 7,127,000 | $ 4,940,000 |
Income Taxes - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 3,323,000 | $ 1,746,000 | $ 6,141,000 | $ 4,423,000 | |
Effective tax rate | 23.70% | 19.50% | 23.60% | 22.60% | |
Deferred tax assets, valuation allowance | $ 0 | $ 0 | |||
Uncertain tax positions | $ 0 | $ 0 | $ 0 |
Subsequent Events (Details) - $ / shares |
Aug. 31, 2023 |
Aug. 07, 2023 |
---|---|---|
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Ordinary share per dividend (in dollars per share) | $ 0.10 | $ 0.40 |
KU#!LZ/"EXU=WEI^Z^;?46W]:#OW
MG;R=='DKL6P=\XYJZ\>L2,-[X06FGZ?+Z[P28#)<80U67N2-L+&GH,:S0\V?
M%^<.NA*IO-N+/O* <2%F(5DVYPNS-7+9(^,WD"=PK215!C[+'//7^-!6,902
M;TI9QGL)O[7R&)+H".(H3O;P)4-KB>=+_M,:,)G#E20F2[X2" MCD Q<<),)
M95J-\'NQ,J3M'^3/KF?HLXQW9W&BF9J&93@/K"H,ZD<,TL.#T4ETMJ>'\=##
M>!_[WO'L1>ZN:WB2[Q5"H825)) R,-LDH;RWBF2P=AM)T.,G\#Q*4P*?*-/>1 $Y"8 L$2<<&EYDJ$9BUFL]KR^8"P2K +S6W&RB4R%$;
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MH$1*(97%)\JW/B[@THLZXX;0M F*=&^L"SX.02[A"(F:2"D&5+3?2(2'UN;;R68)XFZ#G
M\H1RAC(!?4J!>PO86E-5VZP(^W4FE"['",-
M)0IJO%D*F[M.I,]CY< J5N2%P0"'4=C49"88=_H_XJVG)F%EO_$9#'-C<+=
M$$(6I:F#OC:5)I1QVU&\TU%JTU'Y3D>U>L[!A@(]&S.$(<%Q2-S+U0MO0KN%
MGW3GZ0"!^@+Y :L[_''YY349H>JA\T)D>WKO+?4[9V!X2^_>G*;]]/V>G8A_
ML$"V#W^DF Y4[
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M.*XI;[M>NT"0K%*H
MA^^BCJ%LZAC*IHZA@I;7 JQIT5EWB_Y+^0T)=:45:B^N4U)T/J&---)KNU"!6$&N1/&>"I2C5
M9XA>-E2_P>_!4FEIVN[/>S=1L7??9[>C>*,*DF#?,;.F4&[1"4Y/VI?>[1'M
MW49[]QA[$-(M39&G"@I"4] "U$$!<$8YI((Q8NP"975G[_[.*LUUF<:._S;P
M6IV+GKL]%.<>=&>.ZU267MRDJ:E*K\N%^&QRG6KE7A][G$>[CM-(^S;0
MGNRA?28^F=(OG7A79BKK[S\&GPVSDYK9V\F+!'^LRJ&8CA(Q&4VF+]";-L)/
MF=YT#[T=4HK_OIDY;^$L_[-+X$#O9#<]"J KMY*I>C- A#AE']7@[9__-#X;
M7;_ [4G#[
ZQ*92\'
MA7/U^7ALLT)4W(YT+12>K+6IN,.MV8QM;03/O5!5CM,XGH\K+M7@ZL*OW9NK
M"]VX4BIQ;YAMJHJ;IQM1ZNWE(!ET"Q_EIG"T,+ZZJ/E&?!+NG_6]P=VXUY++
M2B@KM6)&K"\'U\GYS93V^PW_DF)K=ZX9>;+2^@O=O,LO!S$!$J7('&G@^/<@
M;D59DB+ ^+W5.>A-DN#N=:?]K?<=OJRX%;>Z_$WFKK@<+ >NWM(G:ZLN_4541#WM3;^+*E":%Y-)CZKJ)9^;!LR>%-85\N H2LG
MOG$D\VA4ZTDZG1Y-:JE,R*)>ELL"P./KZ+T]GL\G%QQOQ
M[>7E._XVO3@6"&38Z[&H[+"MJQ#@.%!4>6"-Z.L*$&@X@CCAC:!0(*:3T3]X
MV:7U.BN4>#J:G-+A[]6R*0*5F]$_Q^Q&-H<@Q69(Y)SZ+ WF1E3&@X>L:'+8
MI"@B3WUF%\9XK(/\5OW6:%+T?".BX"PPV;)07NT\9LP&WZ,+UBF<3;7.%H^T
MS(I?6:7XB=/WH@P^KLC'=VS"AYD X%HX78B56:L[98?)G*;6%9V+0TM9(2T0
MAT.67.:_(AP&Q1R1[K1CB&!I1?P6D#YKK*5G0)!M9.&.6
600>- TX'JM#;;73@1)&BO&RLC%RV+610+7>+'W8D0.JM1P6/^U*8L&%(
MUVEN/QG##]N9RS9DQ&VAF-NW\1#TIY/MC=;D('!?TUSW9P!2B1_0W"#B[?6
M+Z/4]P.:''0+?NK80_1 :>H