Earnings (Loss) per Common Share

9 Months Ended

Sep. 30, 2021

Earnings (Loss) per Common Share

Earnings (Loss) per Common Share

14. Earnings (Loss) per Common Share

The Company computes basic net income (loss) per share using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of common shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities may consist of warrants, restricted stock units or other contingently issuable shares. The dilutive effect of outstanding warrants, restricted stock units, convertible debt, and other contingently issuable shares is reflected in diluted earnings per share by application of the treasury stock method. The weighted average share impact of warrants and restricted stock units that were excluded from the calculation of diluted shares due to the Company incurring a net loss for the three and nine months ending September 30, 2020 were 178,333 and 169,555 shares, respectively.

The following table provides the basic and diluted earnings per share by reconciling the denominators of the computations:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
(In Thousands)
Weighted average shares outstanding:
Basic weighted average shares outstanding	15,302	15,147	15,293	15,144
Effect of dilutive securities	2,803	—	1,808	—
Diluted weighted average shares outstanding	18,105	15,147	17,101	15,144

The Company expects to settle the principal amount of Convertible Notes in cash, but settle the conversion premium in shares. As a result, only the amount by which the conversion value exceeds the aggregate principal amount of the Convertible Debt (the “conversion premium”) is considered in the diluted earnings per share calculation. The conversion premium has a potentially dilutive effect on diluted net income per share when the average market price of the

Company’s common stock for a given period exceeds the initial conversion price of $37.325 per share for the Convertible Notes. The Company calculates the number of shares needed to satisfy the conversion premium by using an average monthly stock price for each month; and the resulting dilutive impact for the three months ended is 1,915,000 shares and 1,338,444 shares nine months ended September 30, 2021.

The Capped Call Transaction is anti-dilutive and is excluded from the calculation of diluted earnings per share.