Karat Packaging Inc (KRT) 2024 Q3 法說會逐字稿

Hello and thank you for standing by at this time. I'd like to welcome everyone to the car packaging. Inc third quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Press star one again. Thank you. As a reminder, this call is being recorded. I will now turn the conference over to Roger Pondel. Please go ahead, sir.

您好，感謝您此時的支持。歡迎大家來到汽車包裝。Inc 2024 年第三季財報電話會議。所有線路均已靜音以防止任何背景噪音。演講者發言後，將進行問答環節。如果您想在此期間提問，只需在電話鍵盤上按下星號，然後按數字 1 即可。如果您想撤回您的問題。再按下星號 1。謝謝。提醒一下，本次通話正在錄音。現在我將會議交給羅傑龐德爾。先生，請繼續。

Thank you, operator. Good afternoon, everyone and welcome to Carrot Packaging's 2024 3rd quarter conference call. I'm Roger Pondel with Pondel Wilkinson. Carrot Packaging's Investor relations firm. It will be my pleasure momentarily to introduce the company's Chief Executive Officer, Alan Yu and his Chief Financial Officer Jian. Go before I turn the call over to Alan. I want to remind our listeners that today's call may include forward-looking statements within the meaning of the private securities Litigation Reform Act of 1,995. Such forward-looking statements are subject to numerous conditions. Many of which are beyond the company's control including those set forth in the risk factors section of the company's most recent form 10-K as filed with the securities and exchange commission and copies of which are available on the S ECs website at www.sec.gov.

謝謝您，接線生。大家下午好，歡迎參加 Carrot Packaging 2024 年第三季電話會議。我是 Pondel Wilkinson 的 Roger Pondel。Carrot Packaging 的投資者關係公司。我很高興向大家介紹公司的執行長 Alan Yu 和他的財務長 Jian。在我把電話轉給艾倫之前，你走吧。我想提醒我們的聽眾，今天的電話會議可能包括 1995 年私人證券訴訟改革法案所定義的前瞻性陳述。此類前瞻性陳述受到多種條件的限制。其中許多因素超出了公司的控制範圍，包括公司向美國證券交易委員會提交的最新 10-K 表格中風險因素部分所列的因素，該表格的副本可在美國證券交易委員會網站 www.sec.gov 上查閱。

Along with other company filings made with the SEC from time to time, actual results could differ materially from these forward-looking statements and care Packaging undertakes no obligation to update any forward-looking statements except as required by law.

與本公司不時向美國證券交易委員會提交的其他文件一樣，實際結果可能與這些前瞻性陳述有重大差異，除非法律要求，否則護理包裝不承擔更新任何前瞻性聲明的義務。

Please also note that during today's call, we will be discussing adjusted EBIDA adjusted EBIDA margin and adjusted diluted earnings per share, which are non-GAAP financial measures as defined by SEC regulation. reconciliation of the most directly comparable GAAP measures to the non-GAAP financial measures is included in today's press release which is now posted on the company's website. And with that, it is my pleasure to turn the call over to CEO Alan Yu.

另請注意，在今天的電話會議中，我們將討論調整後的 EBIDA、調整後的 EBIDA 利潤率和調整後的每股攤薄收益，這些都是美國證券交易委員會 (SEC) 法規定義的非 GAAP 財務指標。今天的新聞稿中包含了最直接可比較的 GAAP 指標與非 GAAP 財務指標的對賬，該新聞稿現已發佈在公司網站上。現在，我很高興將電話轉給執行長 Alan Yu。

Thank you, Roger. Good afternoon, everyone. We are encouraged by our third quarter performance with net sales up nearly 7% and volume of approximately 10%. Despite the pricing pressure, we experienced growth in most of our sales channels. Our online business which benefited from the inclusion of $3 million online platform fees in the current quarter achieved a 33% increase over the prior year period.

謝謝你，羅傑。大家下午好。我們第三季的業績令我們感到鼓舞，淨銷售額成長近 7%，銷量成長約 10%。儘管面臨價格壓力，我們的大多數銷售管道仍然實現了成長。我們的線上業務受惠於本季納入的 300 萬美元線上平台費用，較去年同期成長了 33%。

Kris recent expansion into the supermarket chain category is starting to generate positive results.

Kris 最近向連鎖超市領域擴張，並開始取得積極的成果。

After successful product sampling and trial orders, we began shipping customized bakery packaging containers for a major grocery chain customer in late September followed by the initiation of shipments on utensils to another major grocery chain. In mid-October, we are now developing additional product offering and intensifying our sales effort in this sector.

在成功進行產品採樣和試訂單後，我們於 9 月底開始為一家大型連鎖雜貨店客戶運送客製化的烘焙包裝容器，隨後開始向另一家大型連鎖雜貨店運送餐具。十月中旬，我們正在開發更多產品並加強該領域的銷售力度。

Sales of our ecofriendly products increased 9% year over year and now represented 33.4% of total sales in the third quarter.

我們的環保產品的銷售額年增 9%，目前佔第三季總銷售額的 33.4%。

We believe demand for ecofriendly and composable single use disposable product will continue to increase and will contribute positively to the long term. We are focusing on new ecofriendly product development to further enhance our competitive edge. By the end of fourth quarter, we expect to launch a new line RPIET and lead to meet the rising demand that we're seeing in the marketplace.

我們相信，對環保和可堆肥的一次性產品的需求將持續增加，並將對長期發展產生積極貢獻。我們專注於新型環保產品的開發，以進一步增強我們的競爭優勢。到第四季末，我們預計將推出新的 RPIET 產品線並引領潮流，以滿足市場上日益增長的需求。

This new line of our RPIET product is made with more than 25% recycled pet material.

我們的 RPIET 產品系列新品採用超過 25% 的再生寵物材料製成。

Geographically, we continue to experience strong growth in the Midwest, northwest and east coast compared with last year. Additionally, we see sales stabilizing California, which is our biggest market following a sharp decline in the past few quarters at the gross margin level. We achieved gross margin of 38.6% in the third quarter versus 36.9% in the prior year period. Despite the impact from high ocean freight rate in the first half of the quarter.

從地理位置上看，與去年相比，我們在中西部、西北部和東海岸繼續實現強勁增長。此外，我們看到加州的銷售趨於穩定，加州是我們最大的市場，過去幾季其毛利率急劇下降。我們第三季的毛利率為 38.6%，去年同期的毛利率為 36.9%。儘管本季上半段受到高海運費的影響。

Heading into the fourth quarter, we are encouraged by the positive momentum and our focus on optimizing inventory sourcing and management, controlling expenses and enhancing warehouse capabilities.

進入第四季度，我們對積極的勢頭以及對優化庫存採購和管理、控制費用和增強倉庫能力的關注感到鼓舞。

From an inventory perspective, we implemented procedures to optimize sourcing and inventory management. Even with reduced domestic production and increased sales, we expect to be able to reduce inventory import volume in the fourth quarter of 2024 compared to the prior year. Additionally, with decrease ocean freight rate and reduce vendor pricing in certain categories, we expect fourth quarter margin to remain at a higher level.

從庫存角度來看，我們實施了最佳化採購和庫存管理的程序。即使國內產量減少、銷售量增加，我們預計 2024 年第四季的庫存進口量仍將比去年同期減少。此外，隨著海運費下降和某些類別的供應商定價降低，我們預計第四季度的利潤率將保持在較高水準。

Additionally, we recently implemented measures to further reduce labor and certain other operating costs and we expect such measures to yield benefits in the fourth quarter.

此外，我們最近實施了進一步降低勞動力和某些其他營運成本的措施，我們預計這些措施將在第四季度產生效益。

We are also actively looking for a new distribution center in the southeast region to support anticipated business growth.

我們也正在積極尋找東南地區的新配送中心，以支持預期的業務成長。

We carry strong operating cash flow as well as the company liquidity, solid balance sheet and positive long-term outlook. Our board of director again approved an increase in the quarterly cash dividend payment to 40¢ per share on November 5th from 35¢ per share in the preceding quarter.

我們擁有強勁的營運現金流、公司流動性、穩健的資產負債表和積極的長期前景。我們的董事會於 11 月 5 日再次批准將季度現金股利從上一季的每股 35 美分增加至每股 40 美分。

I will now turn the call over to Jen, go our Chief Financial Officer to discuss company's financial results in greater detail. Jian.

現在我將把電話轉給我們的財務長 Jen，以更詳細地討論公司的財務表現。建。

Thank you, Alan.

謝謝你，艾倫。

Net sales for the 2024 3rd quarter were $112.8 million. Up 6.9% from $105.5 million for the same quarter last year. As Alan mentioned, our sales volume grew nearly 10% compared with the 2023 3rd quarter. Net sales also included a favorable impact from inclusion of $3 million in online platform fees partially offset by a $5.7 million unfavorable year over year pricing comparison by channel compared with a year ago, online sales for the 2024 3rd quarter were up 32.8% benefiting in part from the inclusion of online platform fees. Mentioned earlier, retail and distributor channel sales increased 9.2% and 3.3% respectively from the prior year quarter. As our investments in sales force started to come to fruition sales to national and regional chains were essentially flat cost of goods sold for the 2024. 3rd quarter was $69.3 million compared with $66.6 million in the prior year quarter.

2024 年第三季淨銷售額為 1.128 億美元。較去年同期的 1.055 億美元成長 6.9%。正如艾倫所提到的，與 2023 年第三季相比，我們的銷量成長了近 10%。淨銷售額還包括 300 萬美元線上平台費用的有利影響，但與去年同期相比，按通路劃分的 570 萬美元的同比價格不利影響部分抵消了這一影響，2024 年第三季度的線上銷售額增長了 32.8%，部分受益於線上平台費用的納入。如前所述，零售和分銷商通路銷售額分別較去年同期成長 9.2% 和 3.3%。隨著我們對銷售團隊的投資開始取得成果，2024 年對全國和地區連鎖店的銷售額基本上與銷售成本持平。

The increase was primarily due to higher ocean freight and duty costs driven by elevated ocean freight rates primarily in the first half of the quarter coupled with increased import volume along with the inclusion of production expenses related to machinery repair and me.

成長的主要原因是本季上半段海運費上漲，導致海運費和關稅成本上升，加之進口量增加，以及機械維修和我公司相關的生產費用增加。

Gross profit for the 2024 3rd quarter increased 11.7% to $43.5 million from $38.9 million. Last year. Gross margin for the 2024 3rd quarter increased $170 billion point to 38.6% which included a net benefit contribution of 110 basis points from adjustments to net sales related to online platform fees and production expenses in cost of goods sold. As discussed earlier, gross margin also benefited from lower vendor pricing and increased imports as a percentage of total products mix partially offset by higher ocean free costs.

2024 年第三季毛利從 3,890 萬美元成長 11.7% 至 4,350 萬美元。去年。2024 年第三季的毛利率增加了 1,700 億美元，達到 38.6%，其中包括與線上平台費用和銷售成本中的生產費用相關的淨銷售額調整產生的 110 個基點的淨利潤貢獻。如前所述，毛利率也受惠於較低的供應商定價和進口量佔總產品組合比例的增加，但被更高的免運費成本部分抵銷。

Operating expenses in the 2024 3rd quarter was $32.2 million compared with $27.6 million in the prior year quarter.

2024 年第三季的營運費用為 3,220 萬美元，而去年同期為 2,760 萬美元。

Operating expenses in the current quarter included online sales platform fees, higher rent and warehouse expense, increased shipping and transportation costs and higher online marketing expense.

本季的營運費用包括線上銷售平台費用、更高的租金和倉庫費用、增加的運輸和運輸成本以及更高的線上行銷費用。

Such increases were partially offset by the inclusion of production expense in cost of goods sold as discussed earlier and a decrease in professional expenses due to transaction costs in connection with the secondary offering during the 2023 3rd quarter.

如前所述，此類增幅被銷售成本中納入生產費用以及 2023 年第三季與二次發行相關的交易成本導致的專業費用減少部分抵銷。

Net income for the 2024 3rd quarter increased 1.3% to $9.3 million from $9.1 million for the prior year quarter. Net income margin was 8.2% in the 2024 3rd quarter compared with 8.7% a year ago.

2024 年第三季淨收入從去年同期的 910 萬美元成長 1.3% 至 930 萬美元。2024 年第三季的淨收入率為 8.2%，而去年同期為 8.7%。

Net income attributable to Paris for both the 2024 and 2023 3rd quarter with $9.1 million or 45¢ per diluted. Share adjusted EBIDA was $14.7 million for the 2024 3rd quarter. Compared with $15.2 million for the prior year quarter.

2024 年及 2023 年第三季歸屬於巴黎的淨收入均為 910 萬美元，即每股攤薄收益 45 美分。2024 年第三季的股票調整後 EBIDA 為 1,470 萬美元。相比之下，去年同期為 1,520 萬美元。

Adjusted dividend margin was 13.0% for the 2024 3rd quarter versus 14.4% in the prior year quarter. Adjusted diluted earnings per common share was 47¢ for both the 2024 and 2023. 3rd quarter.

2024 年第三季的調整後股利率為 13.0%，而去年同期為 14.4%。2024 年及 2023 年第三季的調整後每股普通股攤薄收益均為 47¢。

We generated operating cash flows of $19.5 million in the third quarter and ended the quarter with $115.6 million in working capital compared with $110.5 million at the end of 2023.

我們在第三季產生了 1,950 萬美元的營運現金流，本季末的營運資本為 1.156 億美元，而 2023 年底的營運資本為 1.105 億美元。

As of September 30th 2024 we had financial liquidity of $75.1 million with another $21.5 million in short term investments.

截至 2024 年 9 月 30 日，我們的流動資金為 7,510 萬美元，另有 2,150 萬美元的短期投資。

As Alan mentioned earlier, our board of directors just approved another increase of our quarterly dividend to 40¢ per share. This is on top of the $23 million. We returned to shareholders in the current year in regular and special dividends. We remain committed to a balanced capital allocation strategy between shareholder return and Longterm growth investments.

正如艾倫之前提到的，我們的董事會剛剛批准將季度股息再次增加至每股 40 美分。這還不包括 2,300 萬美元。我們今年以定期股息和特別股息的形式回報股東。我們始終致力於在股東回報和長期成長投資之間平衡的資本配置策略。

We expect net sales for the 2024 4th quarter to increase by net to high single digit over the prior year quarter. Our gross margin goal for the 2024 4th quarter is approximately 39 to 40%. We are also reaffirming our four-year 2024 guidance today, Alan and I will now be happy to answer your questions, and I'll turn the call back to the operator.

我們預計 2024 年第四季的淨銷售額將比去年同期淨增至高個位數。我們 2024 年第四季的毛利率目標約為 39% 至 40%。今天我們也重申了我們的四年期 2024 年指導方針，艾倫和我現在很樂意回答您的問題，然後我會將電話轉回給接線員。

Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to take your question, simply press star one again.

謝謝。我們現在開始問答環節。如果您想提問，請按下電話鍵盤上的星號 1 來舉手並加入排隊。如果您想回答問題，只需再次按星號鍵即可。

And your first question comes from the line of Ryan Meyers with Lake Street Capital Markets, LLC. Your line is open.

您的第一個問題來自 Lake Street Capital Markets, LLC 的 Ryan Meyers。您的線路已開通。

Hey guys, thanks for taking my questions. Jan just wanted to follow up and get a good understanding of what you said in regard to the guidance. So, thinking about, you know, the Q4 guide, you guys called out an increase in sales of mid to high single digit percent, but I believe back to last quarter, sort of the implied Q4 number with the full year guidance, I think was looking for a double-digit growth rate. Just want to make sure I understand that correctly. If there's anything that I miss in, it'd be kind of helpful to walk through that.

嘿夥計們，謝謝你們回答我的問題。Jan 只是想跟進並更好地理解您關於該指導的說法。因此，想想第四季度的指引，你們宣布銷售額將成長中高個位數百分比，但我相信回到上個季度，全年指引中隱含的第四季數字，我認為是在尋找兩位數的成長率。只是想確保我理解正確。如果我遺漏了什麼，那麼指導這一點可能會很有幫助。

Yes. So Ryan, thank you for the question. Yes, that's correct. So, at this point, we do expect the fourth quarter sales growth to be mid to high single digit. We're also reaffirming our four-year guidance as we mentioned in the, in the prepared remarks. I do also want to call out if you recall right last Q4 2023 last year, our Q4 net sales amount actually included an accounting re misclassification adjustment of a four-year amount of a little over $6 million. So that was a benefit to Q4 2023. So that's going to cause a little bit of an apple to orange comparison in this year. But with that impact, we, we are still expecting to see mid to high, single digit year over year growth in Q4.

是的。所以 Ryan，謝謝你的提問。是的，正確。因此，目前我們確實預期第四季的銷售額成長率將達到中高個位數。我們也重申了我們在準備好的演講中提到的四年指導方針。我還想指出，如果您還記得去年 2023 年第四季度，我們的第四季度淨銷售額實際上包括了四年期會計重新錯誤分類調整，金額略高於 600 萬美元。因此這對 2023 年第四季有利。因此，這將導致今年蘋果和橘子之間的比較有點像。但考慮到這種影響，我們仍然預計第四季的年成長將達到中高個位數。

Okay. Got it. That that, that makes sense. And then just thinking about, you know, the national and regional change segment looks like revenue was flat for the year over year. You know, is most of that pricing or is there anything else kind of to call out there? It looks like, you know, volume across the business is pretty strong, but just to get an understanding of kind of that segment itself would be helpful.

好的。知道了。那那那，那很有道理。然後想想，你知道，國家和地區變化部分的收入看起來與去年同期持平。您知道，這是大部分的定價嗎，還是有其他需要注意的嗎？看起來，你知道，整個業務的量相當強勁，但僅僅了解該部分本身就會有所幫助。

You're talking about the chain segment.

您談論的是鏈條部分。

Yeah. Correct. Because I know, you know, over the past handful of quarters, you guys have obviously made some, you know, emphasis of, of rolling out into, you know, new regional change, whether it's with salespeople or, or additional products, but just kind of get a good feel for that, that line item.

是的。正確的。因為我知道，在過去幾個季度裡，你們顯然已經強調了推出新的區域變革，無論是銷售人員還是附加產品，但只是對該專案有了很好的感覺。

Yeah, sure. I can start and I'm sure Alan can add additional detail there. So, for some of the chain accounts, I mean, that, that is right, what you said, right, as far as the pricing adjustments, we wanted to make sure that we remain competitive, and pro in, in our value propositions with our, with our customers. So, we do, we do have, we do have some, some price adjustment in the past quarter. I also wanted to point out as, as we mentioned in our prepared remarks, we started shipping in some of the for, for, for a major supermarket chain customer. We started shipping to this particular customer in the very last week of September, which was a little later than what we previously anticipated. However, we are at a full annualized volume with this particular customer now and we do expect to get a benefit in the fourth quarter in the chain segment. Alan anything else you want to add.

是的，當然。我可以開始，我相信艾倫可以在那裡添加更多細節。所以，對於一些連鎖帳戶，我的意思是，那是正確的，正如你所說的，就價格調整而言，我們希望確保我們保持競爭力，並在對客戶的價值主張方面保持專業。所以，我們在過去的一個季度確實進行了一些價格調整。我還想指出，正如我們在準備好的演講中提到的那樣，我們已開始為一家大型連鎖超市客戶運送部分貨物。我們從九月的最後一周開始向這位特定客戶發貨，這比我們之前預期的要晚一點。然而，我們與這位特定客戶的年交易量現在已經達到了滿額，我們預計第四季度連鎖店業務將獲利。艾倫，您還有什麼要補充的嗎？

Sure. First of all, Brian, to your first question earlier question about the double-digit growth that we expected it. If you look at the, as Jen mentioned that if you were to take out the $6 million from last year, fourth quarter, our revenue would have been $89 million total, but we had a $6 million$95 million dollars. Now, if we were to take out the $96 million with $89 million compared to what we're guiding right now. It's a little bit over 14% which is double digit growth year over year. And that's what Jen said. It's, we were to compare Apple to Apple are a real, real growth will be double digit in 14%. Now, in terms of what Jen just mentioned to you in terms of additional national chain account. Yes, we just started the supermarket chain accounts, which is very repute. It's a very nice reputable company in Texas as well as another national supermarket chain that we're focusing, and we started shipping. Of course, there are other national chain that we're working on that. We are hopeful that we'll start shipping in the fourth quarter, maybe later of the fourth quarter of this year or earlier, first quarters. And that is our goal and in terms of additional growth that we're seeing is online sales. We, we're seeing strong online sales as you, as I mentioned earlier in our conference call, we're already seeing a 33% growth year over year, which in the fourth quarter, which we will, we will rely heavily on, on online sales because we're going to be promoting more marketing towards that. And the third quarter, we actually invested a lot more in terms of online marketing advertisement, which will come to fruition in the fourth quarter.

當然。首先，布萊恩，回答你之前提出的第一個問題是關於我們預期的兩位數成長。如果你看一下，正如 Jen 所提到的，如果你從去年第四季拿出 600 萬美元，我們的收入總額將是 8,900 萬美元，但我們有 600 萬美元到 9,500 萬美元。現在，如果我們將 9,600 萬美元與現在指導的金額進行比較，得出的結果是 8,900 萬美元。這一數字略高於 14%，年增了兩位數。這就是 Jen 所說的。我們將蘋果與蘋果進行比較，實際成長率將達到兩位數，即 14%。現在，就 Jen 剛才向您提到的額外的全國連鎖帳戶而言。是的，我們剛開始做超市連鎖帳戶，這個很有信譽。這是德州一家聲譽非常好的公司，也是我們關注的另一家全國性連鎖超市，我們已開始為其提供出貨服務。當然，我們正在與其他全國連鎖店合作。我們希望能在第四季開始出貨，也許是今年第四季晚些時候或更早，第一季。這就是我們的目標，就我們看到的額外成長而言，就是線上銷售。正如我之前在電話會議中提到的那樣，我們看到了強勁的在線銷售，我們已經看到了同比增長 33％，在第四季度，我們將嚴重依賴在線銷售，因為我們將針對此開展更多的營銷。而在第三季度，我們實際上在線上行銷廣告方面投入了更多，這將在第四季度取得成果。

Okay. Got it. That makes sense. Yeah, that the commentary on the, the guidance and that $6 million impact from last year is helpful and kind of gets us in a good spot. So awesome. Thanks for taking my questions.

好的。知道了。這很有道理。是的，關於該指導的評論以及去年 600 萬美元的影響很有幫助，並且讓我們處於有利地位。太棒了。感謝您回答我的問題。

Make you right. Right.

讓你正確。正確的。

That's fine.

沒關係。

Next question comes from the line of Jake Bartlett with Truist Securities. Your line is open.

下一個問題來自 Truist Securities 的 Jake Bartlett。您的線路已開通。

Great. Thanks for taking the questions. You know, my first one is just on the supermarket opportunity. Allen, you, you, you mentioned, you know, this, this new account that you've or two new accounts you you've brought on. My, my question is how big an opportunity this is, you, you, you know, obviously focusing on it on the press release and the call today. But how, how much of an opportunity really is it for Carrot? And maybe in the near and also the long term. And then also what makes, you know, carrot well suited for this business? You know, it, it seems to be a business you hadn't pursued in the past or, or maybe you hadn't just had success with it. But what, what makes this a good business for, for Carrot to be getting into at this point?

偉大的。感謝您回答這些問題。你知道，我的第一個機會就在超市。艾倫，你，你提到過，你知道，這個，你新開設的一個或兩個新帳戶。我的問題是，這是一個多大的機會，您，您知道，顯然您在今天的新聞稿和電話會議上重點關注了這一點。但對 Carrot 來說，這究竟是一個多大的機會呢？或許在近期如此，也可能在長期如此。那麼，胡蘿蔔為什麼適合做這項生意呢？你知道，這似乎是一項你過去沒有從事過的事業，或者也許你還沒有獲得成功。但是對 Carrot 來說，什麼使得這成為一門好生意？

Well, with the initial number and forecast projected by the customers, our initial annual annualized revenue will be five around $5 million or more or a little over $5 million to $6 million. And we are currently working on additional project with the same accounts that should bring us to analyze revenue of $15 million for this, this one account. And also, for another supermarket chain, it's about around a half a million to a million dollars to start with and it can grow even larger. What special, what, what is special about the going after the supermarket chain is that we realize supermarkets have they, they have less, and they use higher volume, and this is more catering to the bakery product section. I mean, in the past, our focus would have would have been in the cup business in the restaurant business in the drinking business. But now our, our focus is going to the bakery business. So, it's from the supermarket. We're also wanting to get into the deli business. There's a lot of paper opportunities in the delis and supermarket and bakeries like the paper containers, the paper bags. So, these are the things that we really want to move shift into the business that we haven't been focused on the past in the past is always the hot cup, the Coke cup, the paper Coke cup, the P/E T cup, the portion cup. Now as we shift into this business, we see that the opportunities are, are, are much greater and the potential, it's a lot higher than what we have been doing it. They're selling in the past with the cup business.

嗯，根據初始數字和客戶預測的結果，我們初始年度化收入將達到 500 萬美元左右或更多，或略高於 500 萬美元到 600 萬美元。我們目前正在利用相同的帳戶開展額外的項目，這將為我們帶來 1500 萬美元的收入。此外，對於另一家連鎖超市來說，起步資金大約需要 50 萬到 100 萬美元，而且資金規模還可以進一步擴大。追逐超市連鎖店的特殊之處在於，我們意識到超市擁有的庫存較少，但使用量較大，這更適合烘焙產品部分。我的意思是，過去我們的重點是餐飲業、杯子業和飲料業。但現在我們的重點是烘焙業務。它是從超市來的。我們還想進入熟食店產業。熟食店、超市和麵包店中有很多紙張用途，例如紙容器、紙袋。所以，這些都是我們真正想要轉移到我們過去沒有關注的業務中的東西，過去一直關注的是熱杯，可樂杯，紙質可樂杯，P/E T杯，分量杯。現在，隨著我們轉向這個行業，我們看到機會更大，潛力也比我們一直以來所做的要高得多。他們過去一直從事杯子銷售業務。

Okay, great. And, you know, on the ecofriendly side, nice to see that the, the continued growth there. I'm trying to understand, you know, what, what the implications are for, for the new, you know, product or products that you're going to be launching in the fourth quarter. I mean, how, how big a deal is that? How, how much could that, you know, could that be adding to the ecofriendly product growth in 25 and beyond?

好的，太好了。您知道，在生態友好方面，我很高興看到它持續成長。我想了解的是，這對您將在第四季度推出的新產品有何影響。我的意思是，那到底有多大關係呢？您知道，這能在多大程度上促進 25 年及以後的環保產品成長？

Well, we're, we're actually starting to add the corrugated box takeout container business. If you were to go out into bakery stores and some of these chains, they're trying to switch away from the plastic takeout container into the corrugated board box and as well as the bakeries, they have, you can see all these little corrugated boxes, bakery container, paper containers with the plastic openings before it was all plastic or Styrofoam, paperback SOSB. Those are the things that we want to get into and there's different sizes. SOSB. It's not just the shopping bag. What we're, we're looking to the RP/E T business is that we've been asked by a lot of our, some of our chains that they want us to reduce the use of version material. How can we utilize the use of the recycled material so that it, it's a, we use less plastic as well as more recycled material. In the in Europe, basically, they ban all plastic, especially if you were to mix with 25% or more of the recycled content material. So, this is more of the future. Just how we started the pl A cut business back in 2007. If we have to, if the company still have to use plastic, which is more functionable. They want us to at least they want the company to start using less version material and more recycled content material. That's part of that as far as the Coreg the box business. It's not just for the packaging, it's now for the food container take out as well.

嗯，我們實際上開始增加瓦楞紙箱外帶容器業務。如果你走進麵包店和一些連鎖店，你會發現他們正試圖將外賣容器從塑料容器換成瓦楞紙板盒，在麵包店裡，你可以看到所有這些小瓦楞紙盒、麵包容器、帶有塑料開口的紙質容器，以前都是塑料或泡沫塑料，還有平裝的 SOSB。這些都是我們想要涉足的領域，而且規模大小不一。SOSB。這不僅僅是購物袋。我們對 RP/E T 業務的期望是，許多連鎖店要求我們減少版本材料的使用。我們如何利用再生材料，以便使用更少的塑膠以及更多的再生材料。在歐洲，他們基本上禁止所有塑料，特別是如果混合了 25％ 或更多的再生材料。所以，這更多的是未來。正如我們在 2007 年啟動 pl A cut 業務的方式一樣。如果必須的話，如果公司仍然必須使用更強大的塑膠。他們希望我們至少希望公司開始使用更少的版本材料和更多的再生內容材料。就 Coreg 盒子業務而言，這就是其中的一部分。它不僅適用於包裝，現在也適用於食品容器的取出。

Okay. And then, and then my last question, maybe I'll jump back in with another later. But you know, is the gross margins, obviously, the gross margins have been much stronger than, than initially expected, maybe a couple of years ago. But my question is, and then also continue to remain very strong obviously with, with the guidance in the fourth quarter. My question is how sustainable that is. What, what portion of this margin expansion, you know, versus to the 31% you were running two years ago, you know, now you're looking on, on, on, on pace for 39% in 2024. So, you know, of the gains, you know, what should we think about as a long term, you know, gain what's sustainable for this business, long term for from a gross margin perspective.

好的。然後，然後是我的最後一個問題，也許我稍後會回答另一個問題。但您知道，毛利率顯然比最初預期的要高得多，也許比幾年前要高得多。但我的問題是，在第四季的指引下，公司顯然仍將繼續保持強勁勢頭。我的問題是，這種做法有多可持續。您知道，與兩年前的 31% 相比，利潤率成長的比例是多少？所以，你知道，對於收益，我們應該考慮什麼作為長期收益，從毛利率的角度來看，這項業務的長期可持續性收益是什麼。

Oh, as.

哦，就像。

As Jen just mentioned earlier in ours.

正如 Jen 剛才提到的。

Call, we're seeing our I I'm not sure if we mentioned that our gross margin guidance for the fourth quarter. We're looking at 39 to 40% versus our last quarter, 38.5%. So, we're still seeing this margin in the high 30s in the low 40s. Is it sustainable? Well, we believe it is because we're, as, as we mentioned earlier, we're, we're focusing more on online sales, online revenue. Online revenue generally has to carry a larger higher amount of, of, of the margin, basically profit margin. And we, we're already at 33% of growth, which is about 17 to 18% of our overall revenue. We do, I do expect that to continue to grow into the 20s or the low 20s overall revenue on the online sales possibly 25% or more for the online sales compared to our overall revenues. That's going to help us to boost our overall margin as well as ocean freight. We do continue to see that ocean freight is not going to spike up. We're seeing that it's stabilizing, it's dropping for the for the remaining of the year and possibly very likely the first quarter. So these will also help in terms of reducing our cost and increase our growth margin. So we're, we're doing everything we can in terms of selling online, which online would generate more higher margin for us. That is going to offset us in terms of growing our volume in the distribution side of the business. There is pricing pressure on the distribution side of the business, but that is helping us with the sales volume. We're looking at volume potentially up to a year over year 20% growth in volume wise overall volume wise in the fourth quarter.

打電話，我們看到了我們的我不確定我們是否提到了第四季度的毛利率指引。我們預計這一比例將達到 39% 至 40%，而上一季這一比例為 38.5%。因此，我們仍然看到這個利潤率在 30 多到 40 多之間。它可持續嗎？嗯，我們相信這是因為正如我們之前提到的，我們更加關注線上銷售和線上收入。在線收入通常必須具有更高的利潤率。我們的成長率已經達到 33%，約占我們總收入的 17% 至 18%。我們確實，我確實預計在線銷售的總收入將繼續增長到 20% 或 20% 出頭，在線銷售額占我們總收入的比重可能達到 25% 或更多。這將有助於我們提高整體利潤以及海運費用。我們確實繼續看到海運價格不會大幅上漲。我們看到它正在穩定下來，在今年剩餘時間內它將下降，而且很有可能在第一季下降。因此，這些也有助於降低我們的成本並提高我們的成長利潤。因此，我們正在盡一切努力進行線上銷售，這將為我們帶來更高的利潤。這將抵消我們業務分銷方面的成長。業務分銷方面存在定價壓力，但這有助於我們提高銷售量。我們預計第四季的銷量可能比去年同期成長 20%。

Sorry, the.

抱歉，這個。

Volume, just that last comment, the volume from the distributors in the fourth quarter or, or overall, you expect the mix to be very high for volume in terms of what's driving sales.

銷量，只是最後一條評論，第四季度來自分銷商的銷量，或者總體而言，就推動銷售的因素而言，您預計銷量組合會非常高。

Overall model to 20% higher in the.

整體模型要高出20%。

Fourth.

第四。

Quarter.

四分之一.

Got it. Thanks a lot. Appreciate it.

知道了。多謝。非常感謝。

Oh last, last comment, Jake, while I have you on the phone, we have not seen a double-digit growth for the past 18 months. And basically, we're, we're seeing that as a very hopeful sign that our goal is we, we do want to continue this to be the double-digit growth in the future, going for the future.

哦，最後的評論，傑克，當我和你通電話時，我們在過去的 18 個月裡沒有看到兩位數的增長。基本上，我們認為這是一個非常有希望的跡象，我們的目標是，我們確實希望在未來繼續保持兩位數的成長，繼續前進。

Next question comes from the line of Brian Butler with Stifel Financial Corp. Your line is open.

下一個問題來自 Stifel Financial Corp 的 Brian Butler。

Good afternoon. Thank you for taking the question, I guess Allen just to kind of kind of follow up on that, you know, double digit growth kind of in the future. You know, you have, it looks like very good momentum, and it seems like the market's improved with California kind of flattening, at least not being down more. And then you move into supermarkets as well as new products. How do we think about, you know, fourth quarter being high, you know, our mid-single digit revenue growth when you look at 25 what's the early, you know, thoughts on where that can be? Could that be double digits again or is it really more of a mid-single digit until you know, maybe some of the macro kind of gets more of a tail in?

午安.感謝您回答這個問題，我想艾倫只是想跟進一下未來兩位數的增長。你知道，現在看起來勢頭非常好，而且看起來市場有所改善，加州的市場趨於平穩，至少沒有進一步下跌。然後你就會進入超市並推出新產品。您知道，我們如何看待第四季度的高收入成長，您知道，當您看 25 時，我們的收入將達到中等個位數成長，您早期對這一成長能達到什麼水平的想法是什麼？這可能再次是兩位數嗎，或者它實際上更像是一個中等個位數，直到你知道，也許一些宏觀因素會得到更多的尾部影響？

Well, Brian, as I mentioned earlier and to answer this question, we fourth quarter, if we're comparing Apple to Apple, it's already double-digit growth in revenue wise. If we take out the $6 million that we, that, that was a, we added the $6 million from our online platform fee from the, you know, January to December. So, we're, that's why, that's why we're expecting to see. Hopefully, we're expecting to see actually, we are expecting to see a double-digit growth in the first quarter of 2025 based on the trajectory right now and our goal is historically, are in the past year prior to the COVID. We have been growing double digit year over year and this is basically where it seems like we're on the right track back to our trajectory double digit growth organically.

布萊恩，正如我之前提到的，為了回答這個問題，如果我們將第四季的蘋果與蘋果進行比較，那麼它的收入已經實現了兩位數的成長。如果我們拿出 600 萬美元，那就是，我們從 1 月到 12 月的線上平台費用中加上了 600 萬美元。所以，這就是我們期待看到的原因。希望的是，根據目前的軌跡，我們預計 2025 年第一季將實現兩位數的成長，而從歷史上看，我們的目標是在 COVID 爆發之前的一年。我們的年復一年都保持著兩位數的成長，現在看起來我們基本上已經回到了正確的軌道上，實現了兩位數的有機成長。

Okay, great. And then on the cost side operating costs again, you had, you know, the operating costs included the platform fees. When do we anniversary that? And when you think about 2025 you know how, how much, how fast should that grow? If you're growing top line kind of double digits.

好的，太好了。然後在成本方面，再次是營運成本，您知道，營運成本包括平台費用。我們什麼時候慶祝這個紀念日？當你想到2025年時，你知道這個數字該如何成長、成長多少、成長速度有多快嗎？如果您的營收成長達到兩位數。

We are going to in that I would call that this is more of an investment in terms of advertisement for future additional sales online. If, if for online business in order to continue growth, we're, we're basically acquiring pa paying spending advertisement to acquire a new business for that. So that so they can continue and buy our product on a on a recurring basis. So, if basically our goal is to grow our business, increase by 50% from currently this year of 70 to $75 million to $125 million next year, we are going to see more expenses spend on the advertisement for the online expense. But at the same time, it's definitely going to help us increase our revenue faster than it was in the past 12 months.

我們這樣做是為了將來在網路上增加銷售，這更多的是一種廣告投資。如果為了線上業務的持續成長，我們基本上會透過收購 pa 來支付廣告費用以獲得新的業務。這樣他們就可以繼續定期購買我們的產品。因此，如果我們的目標是發展業務，從今年的 7,000 萬美元增加 50% 至 7,500 萬美元，再到明年的 1.25 億美元，那麼我們將看到線上廣告費用的增加。但同時，它肯定會幫助我們比過去 12 個月更快增加收入。

Okay. And then on kind of generating that growth, what type of capital expectations do you have for from a spending perspective on what has to be you know, outlay to support kind of that double digit growth. Can you give some color there.

好的。然後，在實現這種成長方面，從支出角度來看，您對需要多少資本支出才能支持這種兩位數的成長，您對此有何預期？你能給出一些顏色嗎？

In terms of capital expenditure? We won't be spending that as much. Basically. We do set a budget in terms of how much online growth and how much we spend on the online advertisement. We, we have, we'll be pushing a little bit higher, but we're not going to go crazy on that. And so that's why I, I don't see a big capital expansion on that part except for the exception that we are looking to expand additional warehouse space. That is where we're going to see the capital expenditure on additional warehouse based in the southeast region where we definitely want to build a mega center for the but to support our growth, it could be in the millions on that part, but definitely, well, we have the cash flow on hand to support that already.

在資本支出方面？我們不會花那麼多錢。基本上。我們確實根據線上增長量以及線上廣告支出設定了預算。我們，我們已經，將會再進一步努力，但我們不會為此而瘋狂。所以這就是為什麼我不認為這方面會有大的資本擴張，除了我們正在尋求擴大額外的倉庫空間。我們將在東南地區增加倉庫的資本支出，我們肯定想在那裡建立一個大型中心，但是為了支持我們的成長，這部分支出可能高達數百萬，但可以肯定的是，我們手頭有足夠的現金流來支持這一點。

Okay. And then my last one just you had reported a data breach in the third quarter. Do you have an update on, on where that, that kind of stands and, and what that impact might have been or might be in the future here?

好的。然後我的最後一個問題是，您報告了第三季的資料外洩事件。您能否更新一下這種情況的現狀以及可能已經產生或將來會產生什麼影響？

We actually based on our initial investigation, there were no material data breach. We were a little bit more cautious in terms of some, some it was more of an employee or a couple of employees. They click on the attachment which were the hacker were able to hack into our email system. And at the same time, we, we hired a third-party investigator to investigate. Initial investigation came out that there were no material data breach. We're continue following through and see if there's any issue of that part. In terms of monetary damages. There were no monetary damages and among spend is very nominal, very no material.

事實上，根據我們的初步調查，並沒有發生重大資料外洩。我們對某些方面更加謹慎，有些方面更多的是一個員工或幾個員工。他們點擊了附件，駭客就能夠侵入我們的電子郵件系統。同時，我們也聘請了第三方調查員進行調查。初步調查顯示，並無重大資料外洩事件。我們將繼續跟進，看看該部分是否存在任何問題。就金錢賠償而言。沒有任何金錢損失，而且損失非常小，物質損失極少。

Great. Thanks for taking the questions.

偉大的。感謝您回答這些問題。

Thank you. Thank you.

謝謝。謝謝。

Again. If you would like to ask a question, press star one on your telephone keypad, there are no questions at this time. I will turn the call back over to Alan you for closing remarks.

再次。如果您想提問，請按電話鍵盤上的星號 1，目前沒有問題。我將把電話轉回給艾倫，請他作最後發言。

Thank you, operator. And thanks to all of you for joining us today. We appreciate your continued support. We remain confident about Kiri's future, and we look forward to keeping you appraised of our Congress. Our progress, have a great evening and a wonderful Thanksgiving holiday season. Thank you all, Bye bye.

謝謝您，接線生。感謝大家今天的參與。感謝您一直以來的支持。我們對 Kiri 的未來依然充滿信心，並期待向您通報我們國會的情況。我們的進步，祝您有個愉快的夜晚和一個美好的感恩節假期。謝謝大家，再見。

And this concludes the meeting. We thank you all for your participation. You may now disconnect.

會議到此結束。我們感謝大家的參與。您現在可以斷開連線。