EARNINGS PER SHARE

3 Months Ended

Oct. 31, 2023

As discussed in Note 2 - "Basis of Presentation", the Reverse/Forward Stock Split was effective on June 21, 2023. The Company’s shares of outstanding common stock and earnings per share amounts have been retroactively restated for all periods presented for the Reverse/Forward Stock Split. The following table reconciles net earnings per share for the three months ended October 31, 2023 and 2022:


	Successor		Predecessor
	Three Months Ended October 31,		Three Months Ended October 31,
	2023		2022
	(In thousands, except per share data)
Reconciliation of net income to net income attributable to common stockholders after assumed conversions:
Net income	$	4,436	$	4,957
Less: Preferred dividends on Series C redeemable preferred stock	(536)		(537)
Net income available to common stockholders	3,900		4,420
Less: Undistributed earnings allocated to participating securities	(2,970)		—
Net income attributable to common stockholders	$	930	$	4,420

Effect of dilutive securities:

Dividends on Series C preferred stock	—		537
Undistributed earnings allocated to Series E preferred stock	2,970		—
Net income attributable to common stockholders - assuming dilution	$	3,900	$	4,957

Net income per common share - basic	$	0.15	$	0.69

Net income per common share - diluted	$	0.15	$	0.59

Weighted average common shares outstanding - basic	6,199		6,434
Effect of dilutive securities:
Common stock equivalents - Restricted stock and restricted stock shares	57		56

Common stock equivalents - Series C Preferred stock	—		1,913
Common stock equivalents - Series E Preferred stock	19,810		—
Weighted average common shares outstanding - diluted	26,066		8,403

For the three months ended October 31, 2023, the Company calculated basic and diluted net income per common share using the two-class method, as the Series E Convertible Preferred Stock meets the definition of a participating security. The two-class method is an allocation formula that determines net income per common share for each share of common stock and Series E Convertible Preferred Stock, a participating security, according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and Series E Convertible Preferred Stock based on their respective rights to receive dividends. The holders of Series E Convertible Preferred Stock are entitled to participate equally and ratably with the holders of shares of Common Stock in all dividends or other distributions on the shares of Common Stock as if, immediately prior to each record date for payment of dividends or other distributions on the Common Stock, shares of Series E Preferred Stock then outstanding were converted into shares of Common Stock. Basic net income per common share is computed by dividing net income allocated to common stockholders for the period by the weighted average number of common shares outstanding for the period. Net income available to common stockholders for the period includes dividends paid to common stockholders during the period plus a proportionate share of undistributed net income allocable to common stockholders for the period; the proportionate share of undistributed net income allocable to common stockholders for the period is based on the proportionate share of total weighted-average common shares and participating securities outstanding during the period. Diluted net income per common share is computed based on the weighted average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not antidilutive. Potential common shares consist of restricted common stock

(calculated based on the treasury stock method) and shares issuable upon debt or preferred stock conversion (calculated using an as-if converted method), using the more dilutive of either the two-class method or as-converted stock method.

The Company was not required to apply the two-class method during the Predecessor Period as there were no participating securities, and as such, there were no changes to the Predecessor Period other than the retrospective restatement for the Reverse/Forward Stock Split discussed previously.

For the three months ended October 31, 2023, $0.2 million of interest expense, net of tax related to the SPHG Note, and $0.5 million of Series C preferred dividends were excluded from the numerator in the calculation of diluted net income per share as their inclusion would have been antidilutive. For the three months ended October 31, 2022, $0.8 million of interest expense, net of tax impact related to the SPHG Note was excluded from the numerator in the calculation of diluted net income per share as their inclusion would have been antidilutive.

For the three months ended October 31, 2023, 2.5 million common stock equivalent shares (including those related to the SPHG Note and the Series C Preferred stock) were excluded from the denominator in the calculation of diluted net income per share as their inclusion would have been antidilutive. For the three months ended October 31, 2022, 0.7 million common stock equivalent shares (including those related to the SPHG Note) were excluded from the denominator in the calculation of diluted net income per share as their inclusion would have been antidilutive.