Net Income Per Share

3 Months Ended

Mar. 31, 2021

(2) Net Income Per Share

Basic and diluted earnings or loss per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The Company’s Restricted Stock Awards (“RSA”) are considered participating securities because they are legally issued at the date of grant and holders are entitled to receive non-forfeitable dividends during the vesting term.

The computation of diluted EPS includes additional common shares, such as unvested Restricted Stock Units (“RSU”) and stock options with exercise prices less than the average market price of the Company’s common stock during the period (“in-the-money options”), which would be considered outstanding. This assumes that additional shares would have to be issued in cases where the exercise price of stock options is less than the value of the common stock being acquired because the cash proceeds received from the stock option holder would not be sufficient to acquire that same number of shares. The Company does not compute diluted EPS in cases where the inclusion of such additional shares would be anti-dilutive in effect.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2021 and 2020 (in thousands, except for earnings per share):

	Three Months Ended
	March 31,
	2021		2020
Weighted-average shares:
Common shares outstanding		35,753		36,024
RSAs		116		95
Total weighted-average shares		35,869		36,119
Earnings per common share—Basic
Net income	$	43,306	$	28,954
Less: Undistributed earnings allocated to RSAs		140		76
Net income available to common shareholders—Basic	$	43,166	$	28,878

Net income per common share—Basic	$	1.21	$	0.80

Basic weighted-average common shares outstanding		35,753		36,024
Effect of diluted shares		1,996		2,006
Diluted weighted-average shares outstanding		37,749		38,030

Net income per common share—Diluted	$	1.14	$	0.76

During the three months ended March 31, 2021 and 2020, the Company had 0 and 439,405 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.