Earnings (Loss) per Share

9 Months Ended

Sep. 30, 2023

Basic earnings (loss) per share is calculated using the weighted average number of common shares outstanding. Diluted earnings (loss) per share is calculated using the weighted average number of common shares outstanding, including the dilutive effect of the Company’s stock option grants, SARs, RSUs, employee stock purchase plan (ESPP) awards as determined per the treasury method, and the 2023 Notes, as determined per the if-converted method.

Effect of Convertible Notes and Related Convertible Note Hedges and Warrants

In connection with the issuance of the 2023 Notes, the Company entered into Convertible Note Hedge and Warrant Transactions as described further in Note 8, Debt. The expected collective impact of the Convertible Note Hedge and Warrant Transactions is to reduce the potential dilution that would occur if the price of the Company's common stock was between the conversion price of $59.33 per share and the strike price of the warrants of $80.91 per share.

Diluted earnings (loss) per share related to the 2023 Notes is calculated using the if-converted method. The number of dilutive shares is based on the initial conversion rate associated with the 2023 Notes. The Convertible Note Hedge and Warrant Transactions are excluded in the calculation of diluted earnings (loss) per share because inclusion would be anti-dilutive. Specifically, the denominator of the diluted earnings (loss) per share calculation excludes the additional shares related to the warrants because the average price of the Company's common stock was less than the strike price of the warrants of $80.91 per share. The Convertible Note Hedge Transactions are not considered in calculating diluted earnings (loss) per share as their impact would be anti-dilutive.

In addition to the above described effect of the 2023 Notes and the related Convertible Note Hedge and Warrant Transactions, the Company also excluded the common stock equivalents of the following outstanding stock-based awards and shares associated with the conversion of the 2023 Notes in the calculation of diluted earnings (loss) per share, because their inclusion would be anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
	(unaudited)		(unaudited)

2023 Notes	—	6,783,936	2,261,312	—

Stock options, RSUs, PSUs	411,506	792,904	486,080	470,822

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2023 and 2022 under the if-converted method (dollars in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)				(unaudited)
Numerator:
Net earnings (loss)	$	(15,976)	$	1,749	$	141	$	35,230
After-tax interest expense for 2023 Notes	—		—		—		2,664
Numerator for dilutive earnings (loss) per share	$	(15,976)	$	1,749	$	141	$	37,894
Denominator:
Weighted average shares outstanding, basic	54,608,963		53,789,674		54,498,687		53,517,838
Effect of dilutive securities:
Stock options, RSUs and SARs	—		1,245,164		1,076,235		1,241,347
Convertible notes	—		—		—		6,783,936
Weighted average shares outstanding, diluted	54,608,963		55,034,838		55,574,922		61,543,121

Earnings (loss) per share, basic	$	(0.29)	$	0.03	$	0.00	$	0.66
Earnings (loss) per share, diluted	$	(0.29)	$	0.03	$	0.00	$	0.62