Earnings Per Share

12 Months Ended

Dec. 31, 2022

(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,
	2022		2021
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	23,648	$	20,778
Weighted average shares	19,825		18,409
Basic earnings per share	$	1.19	$	1.13

(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,
	2022		2021
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	23,648	$	20,778
Weighted average shares	19,825		18,409
Dilutive shares
Stock options and restricted stock units	101		157
Total dilutive shares	19,926		18,566
Diluted earnings per share	$	1.19	$	1.12

For the years ended December 31, 2022 and 2021 a total of 449,223 and 234,072 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.