Earnings Per Share

12 Months Ended

Dec. 31, 2021

(a)Basic

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


	Year Ended December 31,
	2021		2020
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	20,778	$	17,517
Weighted average shares	18,409		15,177
Basic earnings per share	$	1.13	$	1.15

(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:


	Year Ended December 31,
	2021		2020
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	20,778	$	17,517
Weighted average shares	18,409		15,177
Dilutive shares
Stock options and restricted stock units	157		271
Total dilutive shares	18,566		15,448
Diluted earnings per share	$	1.12	$	1.13

For the year ended December 31, 2021 and 2020 a total of 234,072 and 282,000 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.