Earnings per Share

12 Months Ended

Sep. 30, 2022

We calculate basic earnings per common share (“EPS”) pursuant to the two-class method as a result of the issuance of the Series A Preferred Stock on June 24, 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series A Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines EPS for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. The Series A Preferred Stock is not included in the computation of basic EPS in periods in which we have a net loss, as the Series A Preferred Stock is not contractually obligated to share in our net losses.

Diluted earnings per common share is calculated using the more dilutive of the two-class method or as-converted method. The two-class method uses net income available to common shareholders and assumes conversion of all potential shares other than the participating securities. The as-converted method uses net income and assumes conversion of all potential shares including the participating securities. Dilutive potential common shares include outstanding stock options, unvested restricted stock units, unvested performance units and convertible preferred stock.

The following table summarizes the computation of basic and diluted earnings per common share under the two-class or as-converted method, as well as the anti-dilutive shares excluded:


	Year Ended September 30,
	2022		2021		2020
Basic earnings per common share:
Net income	$	25,848	$	14,581	$	8,008
Less: Preferred stock dividend declared	(5,159)		(5,250)		(5,264)
Income available for distribution	20,689		9,331		2,744
Income allocated to participating securities	(7,847)		(3,647)		(1,135)
Net income available to common shareholders	$	12,842	$	5,684	$	1,609

Weighted average basic shares outstanding	33,218		32,766		29,812

Basic income per common share	$	0.39	$	0.17	$	0.05

Diluted earnings per common share:
Method used:	Two-class		Two-class		Two-class
Net income available to common shareholders	$	12,842	$	5,684	$	1,609

Weighted average basic shares outstanding	33,218		32,766		29,812
Dilutive effect related to employee stock plans	525		357		301
Weighted average diluted shares outstanding	33,743		33,123		30,113

Diluted income per common share	$	0.38	$	0.17	$	0.05


	Year Ended September 30,
	2022	2021	2020
Anti-dilutive shares excluded:
Outstanding stock-based grants	9	186	14
Convertible preferred stock	20,297	21,021	21,021
Total anti-dilutive shares excluded	20,306	21,207	21,035

Dilutive shares under the as-converted method(1)	54,040	54,144	51,134

(1) The dilutive shares under the as-converted method assume conversion of the Series A Preferred Stock and are presented here merely for reference. In a net income position, diluted earnings per share is determined by the more dilutive of the two-class method or the as-converted method.