Earnings per Share

9 Months Ended

Sep. 30, 2023

Earnings per Share For the three and nine months ended September 30, 2023, we recorded a net loss attributable to PENN. As such, because the dilution from potential common shares was anti-dilutive, we used basic weighted-average common shares outstanding, rather than diluted weighted-average common shares outstanding when calculating diluted loss per share for the three and nine months ended September 30, 2023. Stock options, restricted stock, convertible preferred shares and convertible debt that could potentially dilute basic EPS in the future that were not included in the computation of diluted loss per share were as follows:


	For the three months ended September 30,	For the nine months ended September 30,
(in millions)	2023
Assumed conversion of dilutive stock options	0.5	0.7
Assumed conversion of dilutive restricted stock	0.4	0.4
Assumed conversion of convertible preferred shares	0.2	0.3
Assumed conversion of convertible debt	14.1	14.1

For the three and nine months ended September 30, 2022, we recorded net income attributable to PENN. As such, we used diluted weighted-average common shares outstanding when calculating diluted income per share for the three and nine months ended September 30, 2022. 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 (loss) for the three and nine months ended September 30, 2023 and 2022 under the two-class method.


	For the three months ended September 30,				For the nine months ended September 30,
(in millions)	2023		2022		2023		2022
Net income (loss) attributable to PENN Entertainment	$	(724.8)	$	123.5	$	(131.9)	$	201.3
Net income applicable to preferred stock	—		0.5		—		0.8
Net income (loss) applicable to common stock	$	(724.8)	$	123.0	$	(131.9)	$	200.5

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 and nine months ended September 30, 2023 and 2022:


	For the three months ended September 30,		For the nine months ended September 30,
(in millions)	2023	2022	2023	2022
Weighted-average common shares outstanding — basic	150.9	157.6	152.3	163.5
Assumed conversion of:
Dilutive stock options	—	1.0	—	1.2
Dilutive restricted stock	—	0.3	—	0.2
Convertible debt	—	14.1	—	14.1
Weighted-average common shares outstanding — diluted	150.9	173.0	152.3	179.0

Restricted stock with performance and market based vesting conditions that have not been met as of September 30, 2023 were excluded from the computation of diluted EPS.

In addition to the 0.5 million and 0.7 million options included in the table above for the three and nine months ended September 30, 2023, respectively, options to purchase 2.0 million and 0.9 million shares were outstanding during the three months ended September 30, 2023 and 2022, respectively, and 1.7 million and 0.8 million during the nine months ended September 30, 2023 and 2022, respectively, but were not included in the computation of diluted EPS because they were anti-dilutive.

The assumed conversion of 0.2 million and 0.6 million preferred shares were excluded from the computation of diluted EPS for the three months ended September 30, 2023 and 2022, respectively, and 0.3 million and 0.6 million preferred shares for the nine months ended September 30, 2023 and 2022, respectively, because including them would have been anti-dilutive.

The Company’s calculation of weighted-average common shares outstanding includes the Exchangeable Shares as discussed in 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 and nine months ended September 30, 2023 and 2022:


	For the three months ended September 30,				For the nine months ended September 30,
(in millions, except per share data)	2023		2022		2023		2022
Calculation of basic earnings (loss) per share:
Net income (loss) applicable to common stock	$	(724.8)	$	123.0	$	(131.9)	$	200.5
Weighted-average shares outstanding — PENN Entertainment	150.3		157.0		151.7		162.9
Weighted-average shares outstanding — Exchangeable Shares	0.6		0.6		0.6		0.6
Weighted-average common shares outstanding — basic	150.9		157.6		152.3		163.5
Basic earnings (loss) per share	$	(4.80)	$	0.78	$	(0.87)	$	1.23

Calculation of diluted earnings (loss) per share:
Net income (loss) applicable to common stock	$	(724.8)	$	123.0	$	(131.9)	$	200.5
Interest expense, net of tax (1):
Convertible Notes	—		1.8		—		5.4
Diluted income (loss) applicable to common stock	$	(724.8)	$	124.8	$	(131.9)	$	205.9
Weighted-average common shares outstanding — diluted	150.9		173.0		152.3		179.0
Diluted earnings (loss) per share	$	(4.80)	$	0.72	$	(0.87)	$	1.15

(1)The three and nine months ended September 30, 2022 were tax-affected at a rate of 21%.