Earnings (Loss) per Share

6 Months Ended

Jun. 30, 2023

Earnings (Loss) per Share

Earnings (Loss) per Share

13. Earnings (Loss) per Share

Basic earnings (loss) per share (“EPS” or “LPS”) is calculated by dividing net income or loss attributable to Target Hospitality by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS is computed similarly to basic net income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. We apply the treasury stock method in the calculation of diluted earnings per share. During periods when net losses are incurred, potential dilutive securities would be anti-dilutive and are excluded from the calculation of diluted loss per share for that period. Net income was recorded for the three and six months ended June 30, 2023 and 2022. The following table reconciles net income attributable to common stockholders and the weighted average shares outstanding for the basic calculation to the net income attributable to common stockholders and the

weighted average shares outstanding for the diluted calculation for the periods indicated below ($ in thousands, except per share amounts):  

	For the Three Months Ended				For the Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2023		2022		2023		2022
Numerator
Net income attributable to Common Stockholders - basic	$	46,453	$	22,851	$	90,278	$	23,345
Change in fair value of warrant liabilities		(675)		(853)		(4,385)		374
Net income attributable to Common Stockholders - diluted	$	45,778	$	21,998	$	85,893	$	23,719
Denominator
Weighted average shares outstanding - basic		101,465,088		97,076,935		101,056,450		97,007,247
Dilutive effect of outstanding securities:
Warrants		1,357,752		—		1,844,596		—
PSUs		473,115		—		480,882		—
SARs		191,496		—		233,334		—
Stock Options		418,934		—		606,983		—
RSUs		1,139,223		—		1,477,439		—
Weighted average shares outstanding - diluted		105,045,608		97,076,935		105,699,684		97,007,247
Net income per share - basic	$	0.46	$	0.24	$	0.89	$	0.24
Net income per share - diluted	$	0.44	$	0.24	$	0.81	$	0.24

When liability-classified warrants are in the money and the impact of their inclusion on diluted EPS is dilutive, diluted EPS also assumes share settlement of such instruments through an adjustment to net income available to common stockholders for the fair value (gain) loss on common stock warrant liabilities and inclusion of the number of dilutive shares in the denominator. The Public and Private Warrants representing a total of 16,166,650 shares of the Company’s Common Stock for the three and six months ended June 30, 2022 were excluded from the computation of diluted EPS because they are considered anti-dilutive. Public and Private Warrants representing a total 8,044,287 shares of the Company’s Common Stock for the three and six months ended June 30, 2023 were included in the computation of diluted EPS because their effect is dilutive as noted in the above table.

As discussed in Note 15, stock-based compensation awards were outstanding for the three and six months ended June 30, 2023 and 2022. These stock-based compensation awards were excluded from the computation of diluted EPS for the three and six months ended June 30, 2022 because their effect would have been anti-dilutive. For the three and six months ended June 30, 2023, stock-based compensation awards were included in the computation of diluted EPS because their effect is dilutive as noted in the above table. However, approximately 1,005,769 of contingently issuable PSUs were excluded from the computation of diluted EPS for the three and six months ended June 30, 2023 as not all necessary conditions for issuance of these PSUs were satisfied, which includes 68,269 of PSUs that did not meet all of the Company’s Total Shareholder Return performance and Diversification EBITDA criteria (see Note 15) and 937,500 of PSUs issued in 2022 that did not meet all of the specified share price thresholds as discussed in the Company’s 2022 Form 10K.    

Shares of treasury stock have been excluded from the computation of EPS.