EARNINGS PER SHARE AND STOCKHOLDERS EQUITY

9 Months Ended

Sep. 30, 2024

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

NOTE 10—EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY

Earnings per share (“EPS”) is calculated under the two-class method. The two-class method allocates all earnings (distributed and undistributed) to each class of common stock and participating securities based on their respective rights to receive dividends. The Company grants share-based awards to various employees and nonemployee directors under the Company’s 2024 Equity Incentive Plan, which was approved by stockholders on May 2, 2024 and constitutes an amendment and restatement of the Company’s 2020 Equity Incentive Plan, that entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities.

The following table presents the calculation of basic and diluted EPS for the three and nine months ended September 30, 2024 and 2023 under the two-class method. Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the treasury-stock method.

	For the three months ended September 30,				For the nine months ended September 30,
EPS Calculations (in thousands, except per share amounts)	2024		2023		2024		2023
Calculation of basic EPS
Walker & Dunlop net income	$	28,802	$	21,458	$	63,331	$	75,758
Less: dividends and undistributed earnings allocated to participating securities		626		534		1,449		1,942
Net income applicable to common stockholders	$	28,176	$	20,924	$	61,882	$	73,816
Weighted-average basic shares outstanding		33,169		32,737		33,090		32,654
Basic EPS	$	0.85	$	0.64	$	1.87	$	2.26
Calculation of diluted EPS
Net income applicable to common stockholders	$	28,176	$	20,924	$	61,882	$	73,816
Add: reallocation of dividends and undistributed earnings based on assumed conversion		—		—		—		2
Net income allocated to common stockholders	$	28,176	$	20,924	$	61,882	$	73,818
Weighted-average basic shares outstanding		33,169		32,737		33,090		32,654
Add: weighted-average diluted non-participating securities		34		158		45		199
Weighted-average diluted shares outstanding		33,203		32,895		33,135		32,853
Diluted EPS	$	0.85	$	0.64	$	1.87	$	2.25

The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury-stock method includes the unrecognized compensation costs associated with the awards. For the three and nine months ended September 30, 2024, 78 thousand average restricted shares and 81 thousand average restricted shares, respectively, were excluded from the computation of diluted EPS under the treasury-stock method. For the three and nine months ended September 30, 2023, 169 thousand average restricted shares and 343 thousand average restricted shares, respectively, were excluded from the computation. These average restricted shares were excluded from the computation of diluted EPS under the treasury method because the effect would have been anti-dilutive (the exercise price of the options, or the grant date market price of the restricted shares was greater than the average market price of the Company’s shares of common stock during the periods presented).

In February 2024, the Company’s Board of Directors approved a stock repurchase program that permits the repurchase of up to $75.0 million of the Company’s common stock over a 12-month period beginning on February 23, 2024. During the first nine months of 2024, the Company did not repurchase any shares of its common stock under the share repurchase program. As of September 30, 2024, the Company had $75.0 million of authorized share repurchase capacity remaining under the 2024 share repurchase program.

During each of the first three quarters of 2024, the Company paid a dividend of $0.65 per share. On November 6, 2024, the Company’s Board of Directors declared a dividend of $0.65 per share for the fourth quarter of 2024. The dividend will be paid on December 6, 2024 to all holders of record of the Company’s restricted and unrestricted common stock as of November 22, 2024.

The Company awarded $4.4 million and $3.0 million of stock to settle compensation liabilities, a non-cash transaction, for the nine months ended September 30, 2024 and 2023, respectively.

The Company’s note payable contains direct restrictions on the amount of dividends the Company may pay, and the warehouse debt facilities and agreements with the Agencies contain minimum equity, liquidity, and other capital requirements that indirectly restrict the amount of dividends the Company may pay. The Company does not believe that these restrictions currently limit the amount of dividends the Company can pay for the foreseeable future.

During the second quarter of 2024, the Company purchased a noncontrolling interest for cash consideration of $7.0 million, of which $4.0 million was paid at the time of closing, with an additional $1.0 million to be paid in each of the next three quarters. The purchase of the noncontrolling interest resulted in a reduction to APIC of $25.7 million (a non-cash transaction) for the excess of the purchase price over the noncontrolling interest balance.

During the fourth quarter of 2024, the Company purchased the remaining noncontrolling interest of Zelman Holdings, LLC for cash consideration of $11.9 million, all of which was paid at the time of closing. The purchase of the noncontrolling interest is expected to result in an increase to APIC of $9.8 million (a non-cash transaction) for the excess of the noncontrolling interest balance over the purchase price.