Earnings per Share

6 Months Ended

Jun. 30, 2023

The Company calculates its basic and diluted earnings (loss) per share using the two-class method for all periods presented, which defines unvested stock-based compensation awards that contain nonforfeitable rights to dividends as participating securities. The two-class method is an allocation formula that determines earnings per share for each share of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. The unvested restricted shares of its common stock granted to certain current and former employees and affiliates of the Manager qualify as participating securities. These restricted shares have the same rights as the Company’s other shares of common stock, including participating in any dividends, and therefore are included in the Company’s basic and diluted earnings per share calculation. For the three months ended June 30, 2023 and 2022, $0.4 million and $0.2 million, respectively, of common stock dividends declared and undistributed net income attributable to common stockholders were allocated to unvested shares of our common stock pursuant to stock grants made under the Company’s Incentive Plan. For the six months ended June 30, 2023 and 2022, $0.8 million and $0.4 million, respectively, of common stock dividends declared and undistributed net income attributable to common stockholders were allocated to unvested shares of our common stock pursuant to stock grants made under the Company’s Incentive Plan. See Note 12 for details.

The computation of diluted earnings per common share is based on the weighted average number of participating securities outstanding plus the incremental shares that would be outstanding assuming exercise of the Warrants. The number of incremental common shares is calculated utilizing the treasury stock method. For the three months ended June 30, 2023 and June 30, 2022, the Warrants are excluded from the calculation of diluted earnings per common share since their effect would be anti-dilutive. For the six months ended June 30, 2023, the Warrants are excluded from the calculation of diluted earnings per common since their effect would be anti-dilutive. For the six months ended June 30, 2022, the Warrants are included in the calculation of diluted earnings per common share because the Company generated earnings on a per common share basis, and the average market price of the Company’s common stock was $11.32, which exceeds the applicable strike price of $7.50, per common share for Warrants currently outstanding.

The following table sets forth the calculation of basic and diluted earnings per common share based on the weighted-average number of shares of common stock outstanding (dollars in thousands, except share and per share data):



	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	(69,173)	$	(5,434)	$	(61,798)	$	18,347
Preferred stock dividends(1)	(3,148)		(3,148)		(6,296)		(6,296)
Participating securities' share in (loss) earnings	(403)		(226)		(807)		(423)


Net income attributable to common stockholders	$	(72,724)	$	(8,808)	$	(68,901)	$	11,628
Weighted average common shares outstanding, basic	77,417,566		77,188,291		77,414,006		77,186,136
Incremental shares of common stock issued from the assumed exercise of the Warrants	—		—		—		4,049,470
Weighted average common shares outstanding, diluted	77,417,566		77,188,291		77,414,006		81,235,606
Earnings per common share, basic(2)	$	(0.94)	$	(0.11)	$	(0.89)	$	0.15
Earnings per common share, diluted(2)	$	(0.94)	$	(0.11)	$	(0.89)	$	0.14

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(1)Includes preferred stock dividends declared and paid for Series A preferred stock and Series C Preferred Stock shares outstanding for the three and six months ended June 30, 2023 and 2022.

(2)Basic and diluted earnings per common share are computed independently based on the weighted-average shares of common stock outstanding. Diluted earnings per common share also includes the impact of participating securities outstanding plus any incremental shares that would be outstanding assuming the exercise of the Warrants. The sum of the quarterly (loss) earnings per common share amounts may not agree to the total for the six months ended June 30, 2023 and 2022.