Earnings per Share

3 Months Ended

Mar. 31, 2023

Earnings per Share For the three months ended March 31, 2023 and 2022 we recorded net income attributable to PENN. As such, we used diluted weighted-average common shares outstanding when calculating diluted income per share. Stock options, restricted stock, convertible preferred shares and convertible debt that could potentially dilute basic EPS in the future are included in the computation of diluted income per share.

The following table sets forth the allocation of net income for the three months ended March 31, 2023 and 2022 under the two-class method.


	For the three months ended March 31,
(in millions)		2023		2022
Net income attributable to PENN Entertainment		$	514.5	$	51.7
Net income applicable to preferred stock		1.7		0.2
Net income applicable to common stock		$	512.8	$	51.5

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the three months ended March 31, 2023 and 2022:


	For the three months ended March 31,
(in millions)		2023	2022
Weighted-average common shares outstanding		153.3	168.2
Assumed conversion of:
Dilutive stock options		0.9	1.5
Dilutive restricted stock		0.3	0.4
Convertible debt		14.1	14.1
Weighted-average common shares outstanding - Diluted		168.6	184.2

Restricted stock with performance and market based vesting conditions that have not been met as of March 31, 2023 were excluded from the computation of diluted EPS.

Options to purchase 1.5 million shares were outstanding during the three months ended March 31, 2023, compared to 0.8 million during the three months ended March 31, 2022, but were not included in the computation of diluted EPS because they were anti-dilutive.

The assumed conversion of 0.5 million preferred shares were excluded from the computation of diluted EPS for the three months ended March 31, 2023, as compared to 0.7 million preferred shares for the three months ended March 31, 2022, because including them would have been anti-dilutive.

The Company’s calculation of weighted-average common shares outstanding includes the Exchangeable Shares as discussed Note 13, “Stockholders’ Equity and Stock-Based Compensation.” The following table presents the calculation of basic and diluted EPS for the Company’s common stock for the three months ended March 31, 2023 and 2022:


	For the three months ended March 31,
(in millions, except per share data)		2023		2022
Calculation of basic earnings per share:
Net income applicable to common stock		$	512.8	$	51.5
Weighted-average shares outstanding - PENN Entertainment		152.7		167.5
Weighted-average shares outstanding - Exchangeable Shares		0.6		0.7
Weighted-average common shares outstanding - basic		153.3		168.2
Basic earnings per share		$	3.35	$	0.31

Calculation of diluted earnings per share:
Net income applicable to common stock		$	512.8	$	51.5
Interest expense, net of tax (1):
Convertible Notes		1.8		1.8
Diluted income applicable to common stock		$	514.6	$	53.3
Weighted-average common shares outstanding - diluted		168.6		184.2
Diluted earnings per share		$	3.05	$	0.29

(1)The three months ended March 31, 2023 were tax-affected at a rate of 21%. The three months ended March 31, 2022, were tax-affected at a rate of 20%.