Earnings per Share

12 Months Ended

Dec. 31, 2019

21. Earnings per Share

Basic net income (loss) attributable to Archrock common stockholders per common share is computed using the two-class method, which is an earnings allocation formula that determines net income (loss) per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Under the two-class method, basic net income (loss) attributable to Archrock common stockholders per common share is determined by dividing net income (loss) attributable to Archrock common stockholders after deducting amounts allocated to participating securities, by the weighted average number of common shares outstanding for the period. Participating securities include unvested restricted stock and stock-settled restricted stock units that have nonforfeitable rights to receive dividends or dividend equivalents, whether paid or unpaid. During periods of net loss, no effect is given to participating securities because they do not have a contractual obligation to participate in our losses.

Diluted net income (loss) attributable to Archrock common stockholders per common share is computed using the weighted average number of shares outstanding adjusted for the incremental common stock equivalents attributed to outstanding options, performance-based restricted stock units and stock to be issued pursuant to our employee stock purchase plan unless their effect would be anti-dilutive.

The following table summarizes net income attributable to Archrock common stockholders used in the calculation of basic and diluted net income per common share (in thousands):



	Year Ended December 31,
	2019			2018			2017
Net income from continuing operations attributable to Archrock stockholders	$	97,603		$	21,063		$	19,007
Loss from discontinued operations, net of tax	(273		)	—			(54		)
Net income attributable to Archrock stockholders	97,330			21,063			18,953
Less: Net income attributable to participating securities	(1,348		)	(815		)	(681		)
Net income attributable to Archrock common stockholders	$	95,982		$	20,248		$	18,272

The following table shows the potential shares of common stock that were included in computing diluted net income attributable to Archrock common stockholders per common share (in thousands):



	Year Ended December 31,
	2019		2018		2017
Weighted average common shares outstanding including participating securities	139,317		110,843		70,860
Less: Weighted average participating securities outstanding	(1,825	)	(1,538	)	(1,308	)
Weighted average common shares outstanding used in basic net income per common share	137,492		109,305		69,552
Net dilutive potential common shares issuable:
On exercise of options and vesting of performance-based restricted stock units	34		111		112
On settlement of employee stock purchase plan shares	2		5		—
Weighted average common shares outstanding used in diluted net income per common share	137,528		109,421		69,664

The following table shows the potential shares of common stock issuable that were excluded from computing diluted net income attributable to Archrock common stockholders per common share as their inclusion would have been anti-dilutive (in thousands):



	Year Ended December 31,
	2019	2018	2017
On exercise of options where exercise price is greater than average market value for the period	154	195	268