Earnings Per Share

9 Months Ended

Sep. 30, 2024

(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.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	9,094	$	9,065	$	24,360	$	28,572
Weighted average number of common shares in issue	20,018		19,891		19,994		19,888
Basic earnings per share	$	0.45	$	0.46	$	1.22	$	1.44

(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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands, except per share data)
Net income attributable to Karat Packaging Inc.	$	9,094	$	9,065	$	24,360	$	28,572
Weighted average number of common shares in issue	20,018		19,891		19,994		19,888
Dilutive shares
Stock options and restricted stock units	116		104		114		75
Adjusted weighted average number of common shares	20,134		19,995		20,108		19,963
Diluted earnings per share	$	0.45	$	0.45	$	1.21	$	1.43

For both the three months ended September 30, 2024 and 2023, no shares of potentially dilutive shares, have been excluded in the diluted earnings per share calculation due to their anti-dilutive impact on earnings per share. For the nine months ended September 30, 2024 and 2023, a total of 6,403 and 285,000 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.