Stockholders’ Equity

3 Months Ended

Mar. 31, 2024

Stockholders' Equity Note [Abstract]

Stockholders’ Equity

Stockholders’ Equity

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period, adjusted for the potential dilutive effect of our outstanding stock options, outstanding RSUs, and shares issuable under the ESPP, as if the RSUs were vested, the stock options were exercised, and the shares expected to be issued under the ESPP at the end of the current offering period were issued.

The components of basic and diluted earnings per common share comprised the following (in millions, except per share amounts):

	Three Months Ended March 31,
	2024		2023
Numerator:
Net income	$	306.6	$	240.9
Denominator:
Weighted average outstanding shares — basic	47.0		46.3
Effect of dilutive securities(1):
Stock options, RSUs, and ESPP(2)	2.7		3.3
Weighted average shares — diluted(2)	49.7		49.6
Net income per common share:
Basic	$	6.52	$	5.20
Diluted	$	6.17	$	4.86
Stock options and RSUs excluded from calculation(2)	0.7		0.1

(1)Calculated using the treasury stock method.

(2)The common shares underlying certain stock options and RSUs have been excluded from the computation of diluted earnings per share because their impact would be anti-dilutive.

Share Repurchase

In March 2024, our Board of Directors approved a share repurchase program authorizing up to $1.0 billion in aggregate repurchases of our common stock. Pursuant to this authorization, we entered into an accelerated share repurchase agreement (the ASR agreement) with Citibank, N.A. (Citi) on March 25, 2024, to repurchase approximately $1.0 billion of our common stock. Under the ASR agreement, we made an aggregate upfront payment of $1.0 billion to Citi and received an aggregate initial delivery of 3,275,199 shares of our common stock on March 27, 2024, representing approximately 80 percent of the total shares that would be repurchased under the ASR agreement measured based on the closing price of our common stock on March 25, 2024. The final number of shares that we will ultimately repurchase pursuant to the ASR agreement will be based on the average of the daily volume-weighted average price per share of our common stock during the repurchase period, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreement. At the final settlement of the ASR agreement, we may be entitled to receive additional shares of common stock, or, under certain limited circumstances, be required to make a cash payment to Citi or, if we so elect, deliver shares of common stock to Citi. The final settlement of the transactions under the ASR agreement is expected to occur in the second quarter of 2024 with respect to $300 million of the transactions and in the third quarter of 2024 with respect to $700 million of the transactions.

The ASR agreement will be accounted for in two separate transactions. The initial repurchase of our common stock was accounted for as a reduction to stockholders’ equity in the consolidated balance sheets and treated as a reduction of the outstanding shares used to calculate the weighted average common stock outstanding for basic and diluted earnings per common share. The final settlement of the transactions under the ASR agreement will be accounted for as an unsettled forward contract indexed to our common stock and we expect to conclude that equity classification, in accordance with ASC 815, Derivatives and Hedging, will be appropriate. During the first quarter of 2024, we recorded $6.9 million for an excise tax imposed under the Inflation Reduction Act as a result of our repurchase of shares under the ASR agreement.