Earnings (Loss) per Share

3 Months Ended

Mar. 31, 2022

Earnings (Loss) per Share

Earnings (Loss) per Share

14. Earnings (Loss) per Share

Basic earnings (loss) per share (“EPS” or “LPS”) is calculated by dividing net income or loss attributable to Target Hospitality by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed similarly to basic net income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. During periods when net losses are incurred, potential dilutive securities would be anti-dilutive and are excluded from the calculation of diluted loss per share for that period. Net income was recorded for the three

months ended March 31, 2022 and a net loss was recorded for the three months ended March 31, 2021. The following table presents basic and diluted EPS (LPS) for the periods indicated below ($ in thousands, except per share amounts):

	For the Three Months Ended
	March 31,		March 31,
	2022		2021
Numerator
Net income (loss) attributable to Common Stockholders	$	494	$	(13,138)
Denominator
Weighted average shares outstanding - basic and diluted		96,936,785		96,168,425
Net income (loss) per share - basic and diluted	$	0.01	$	(0.14)

5,015,898 shares of the 8,050,000 shares of common stock held by the Founders, were placed into escrow subject to release pursuant to the terms of the earnout agreement entered into at the closing of the Business Combination by and between Harry E. Sloan, Jeff Sagansky, Eli Baker and the Company (the “Earnout Agreement”). Upon being placed into escrow, the voting and economic rights of the shares were suspended for the period they are in escrow. Given that the Founders are not entitled to vote or participate in the economic rewards available to the other shareholders with respect to these shares, these shares are not included in the EPS calculation for the three months ended March 31, 2021. In accordance with the Earnout Agreement, as of the expiration date of the earnout period (March 15, 2022), the 5,015,898 Founder Shares in escrow had not been released and were cancelled and returned to the Company to be held in treasury. As such, these cancelled shares were reclassed from common stock to common stock in treasury and continued to be excluded from the computation of EPS for the three months ended March 31, 2022.

The Public and Private Warrants representing a total of 16,166,650 shares of the Company’s common stock for the three months ended March 31, 2022 and 2021, respectively, were excluded from the computation of EPS and LPS because they are considered anti-dilutive as the exercise price exceeds the average market price of the common stock during the applicable periods.

As discussed in Note 16, stock-based compensation awards were outstanding for the three months ended March 31, 2022 and 2021, respectively. These stock-based compensation awards were excluded from the computation of EPS because their effect would have been anti-dilutive.

Shares of treasury stock have been excluded from the computation of EPS.