Earnings Per Share and Weighted-Average Shares Outstanding

9 Months Ended

Sep. 30, 2020

Earnings Per Share and Weighted-Average Shares Outstanding

Earnings Per Share and Weighted-Average Shares OutstandingU.S. GAAP guidance — Earnings (Loss) Per Share provides guidance on the computation and presentation of earnings (loss) per share (“EPS”). Basic EPS excludes dilution and is computed by dividing Net income available to common stockholders by the weighted-average number of shares of common stock outstanding and contingent shares for which all necessary conditions have been satisfied except for the passage of time. Net income (loss) is allocated to Newmark’s outstanding common stock, FPUs, limited partnership units and Cantor units (see Note 2 — “Limited Partnership Interests in Newmark Holdings and BGC Holdings”). In addition, in relation to the Newmark OpCo Preferred Investment, the EPUs issued in June 2018 and September 2018 are entitled to a preferred payable-in-kind dividend which is recorded as accretion to the carrying amount of the EPUs and is a reduction to net income available to common stockholders for the calculation of Newmark’s basic earnings per share and fully diluted earnings per share.

The following is the calculation of Newmark’s basic EPS (in thousands, except per share data):


	Three months ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Basic earnings per share:
Net income available to common stockholders (1)	$	72,101	$	85,475	$	75,703	$	118,599
Basic weighted-average shares of common stock outstanding	179,501		177,020		178,527		178,122
Basic earnings per share	$	0.40	$	0.48	$	0.42	$	0.67

(1)Includes a reduction for dividends on preferred stock or exchangeable preferred partnership units in the amount of $3.2 million and $8.1 million for the three and nine months ended September 30, 2020, respectively, and $3.2 million and $9.7 million for the three and nine months ended September 30, 2019, respectively. (see Note 1 — “Organization and Basis of Presentation”).

Fully diluted EPS is calculated utilizing net income available to common stockholders plus net income allocations to the limited partnership interests in Newmark Holdings as the numerator. The denominator comprises Newmark’s weighted-average number of outstanding shares of Newmark common stock to the extent the related units are dilutive and, if dilutive, the weighted-average number of limited partnership interests and other contracts to issue shares of common stock, stock options and RSUs. The limited partnership interests generally are potentially exchangeable into shares of Newmark Class A common stock and are entitled to remaining earnings after the deduction for the Preferred Distribution; as a result, they are included in the fully diluted EPS computation to the extent that the effect would be dilutive.

The following is the calculation of Newmark’s fully diluted EPS (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Fully diluted earnings per share:
Net income available to common stockholders	$	72,101	$	85,475	$	75,703	$	118,599
Allocations of net income to limited partnership interests in Newmark Holdings, net of tax	31,522		14,025		34,719		3,780
Net income for fully diluted shares	$	103,623	$	99,500	$	110,422	$	122,379
Weighted-average shares:
Common stock outstanding	179,501		177,020		178,527		178,122
Partnership units (1)	86,912		28,466		86,093		5,661
RSUs (Treasury stock method)	155		786		254		1,231
Newmark exchange shares	225		344		230		399
Fully diluted weighted-average shares of common stock outstanding	266,793		206,616		265,104		185,413
Fully diluted earnings per share	$	0.39	$	0.48	$	0.42	$	0.66

(1)Partnership units collectively include founding/working partner units, limited partnership units, and Cantor and BGC units (see Note 2 — “Limited Partnership Interests in Newmark Holdings and BGC Holdings” for more information).

For the three and nine months ended September 30, 2020, 9.2 million and 6.0 million potentially dilutive securities, respectively, were excluded from the computation of fully diluted EPS because their effect would have been anti-dilutive. Anti-dilutive securities for the three and nine months ended September 30, 2020 included only RSUs. For the three and nine months ended September 30, 2019, 61.8 million and 85.4 million potentially dilutive securities, respectively, were excluded from the computation of fully diluted EPS because their effect would have been anti-dilutive. Anti-dilutive securities for the three months ended September 30, 2019 included 61.7 million limited partnership interests and 0.1 million RSUs. Anti-dilutive securities for the nine months ended September 30, 2019 included 84.9 million limited partnership units and 0.5 million RSUs.