Earnings Per Share

6 Months Ended

Jun. 30, 2022

(a)Basic

Basic earnings per share is calculated by dividing the net income attributable to the Company for the period by the weighted average number of common shares outstanding during the related period.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	6,344	$	9,583	$	13,011	$	11,363
Weighted average number of common shares in issue	19,809		18,909		19,809		17,048
Basic earnings per share	$	0.32	$	0.51	$	0.66	$	0.67

(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:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	6,344	$	9,583	$	13,011	$	11,363
Weighted average number of common shares in issue	19,809		18,909		19,809		17,048
Dilutive shares
Stock options and restricted stock units	118		117		105		117
Adjusted weighted average number of common shares	19,927		19,026		19,914		17,165
Diluted earnings per share	$	0.32	$	0.50	$	0.65	$	0.66

For the three months ended June 30, 2022 and 2021, a total of 447,000 and 144,000 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, 2022 and 2021, a total of 460,000 and 190,000 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.