Earnings per Share

12 Months Ended

Dec. 25, 2022

7. Earnings per Share

We compute earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. The shares of Series B Preferred Stock, which were repurchased by the Company or converted into shares of common stock during the second quarter of 2021, and time-based restricted stock awards are participating securities because holders of such shares have non-forfeitable dividend rights and participate in undistributed earnings with common stock. Under the two-class method, total dividends provided to the holders of

participating securities and undistributed earnings allocated to participating securities, are subtracted from net income attributable to the Company in determining net income attributable to common shareholders. Additionally, any accretion to the redemption value for the Series B Preferred Stock or cash payments in excess of their respective carrying values upon redemption was treated as a deemed dividend in the two-class earnings per share calculation.

Basic earnings per common share are computed by dividing net income attributable to common shareholders by the weighted-average common shares outstanding. Diluted earnings per common share are computed by dividing the net income attributable to common shareholders by the diluted weighted average common shares outstanding. Diluted weighted average common shares outstanding consist of basic weighted average common shares outstanding plus weighted average awards outstanding under our equity compensation plans, which are dilutive securities.

The calculations of basic earnings per common share and diluted earnings per common share for the years ended December 25, 2022, December 26, 2021 and December 27, 2020 are as follows (in thousands, except per share data):


	2022		2021		2020
Basic earnings per common share
Net income attributable to the Company	$	67,772	$	120,016	$	57,932
Dividends on redemption of Series B Convertible Preferred Stock	—		(109,852)		—
Dividends paid to participating securities	(306)		(6,091)		(14,059)
Net income attributable to participating securities	(104)		—		(2,136)
Net income attributable to common shareholders	$	67,362	$	4,073	$	41,737

Basic weighted average common shares outstanding	35,497		35,007		32,421
Basic earnings per common share	$	1.90	$	0.12	$	1.29

Diluted earnings per common share
Net income attributable to common shareholders	$	67,362	$	4,073	$	41,737

Weighted average common shares outstanding	35,497		35,007		32,421
Dilutive effect of outstanding equity awards (a)	220		330		296
Diluted weighted average common shares outstanding (b)	35,717		35,337		32,717
Diluted earnings per common share	$	1.89	$	0.12	$	1.28

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(a)Shares subject to options to purchase common stock with an exercise price greater than the average market price for the year were not included in the computation of diluted earnings per common share because the effect would have been antidilutive. The weighted average number of shares subject to antidilutive options was 100,000 in 2020 (none in 2022 or 2021).

(b)The Company had 252,500 shares of Series B Preferred Stock outstanding as of December 27, 2020 (none as of December 25, 2022 or December 26, 2021). For the fully diluted calculation, the Series B Preferred Stock dividends were added back to net income attributable to common shareholders. The Company then applied the if-converted method to calculate dilution on the Series B Preferred Stock, which resulted in 5.0 million additional common shares. This calculation was anti-dilutive in 2020 and as such was excluded.

See “Note 20. Equity Compensation” for additional information regarding our equity awards, including restricted stock.