Two Harbors Investment Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Share

Earnings Per Share

6 Months Ended

Jun. 30, 2022

The following table presents a reconciliation of the (loss) earnings and shares used in calculating basic and diluted (loss) earnings per share for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except share data)	2022		2021		2022		2021
Basic (Loss) Earnings Per Share:


Net (loss) income	$	(72,420)	$	(117,960)	$	212,850	$	122,197


Dividends on preferred stock	13,748		13,747		27,495		30,963
Dividends and undistributed earnings allocated to participating restricted stock units	290		227		910		331
Net (loss) income attributable to common stockholders, basic	$	(86,458)	$	(131,934)	$	184,445	$	90,903
Basic weighted average common shares	344,277,723		273,718,561		344,138,889		273,714,684
Basic (loss) earnings per weighted average common share	$	(0.25)	$	(0.48)	$	0.54	$	0.33
Diluted (Loss) Earnings Per Share:
Net (loss) income attributable to common stockholders, basic	$	(86,458)	$	(131,934)	$	184,445	$	90,903
Reallocation impact of undistributed earnings to participating restricted stock units	—		—		(8)		(11)

Interest expense attributable to convertible notes (1)	—		—		9,843		7,908
Net (loss) income attributable to common stockholders, diluted	$	(86,458)	$	(131,934)	$	194,280	$	98,800
Basic weighted average common shares	344,277,723		273,718,561		344,138,889		273,714,684
Effect of dilutive shares issued in an assumed vesting of performance share units	—		—		543,480		—
Effect of dilutive shares issued in an assumed conversion	—		—		39,659,522		32,284,519
Diluted weighted average common shares	344,277,723		273,718,561		384,341,891		305,999,203
Diluted (loss) earnings per weighted average common share	$	(0.25)	$	(0.48)	$	0.51	$	0.32

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(1)If applicable, includes a nondiscretionary adjustment for the assumed change in the management fee calculation.

For the three months ended June 30, 2022 and 2021, excluded from the calculation of diluted earnings per share was the effect of adding undistributed earnings reallocated to 1,775,985 and 954,763 weighted average participating RSUs, respectively, as their inclusion would have been antidilutive. For the six months ended June 30, 2022 and 2021, participating RSUs were included in the calculations of basic and diluted earnings per share under the two-class method, as it was more dilutive than the alternative treasury stock method.

For the three months ended June 30, 2022 and the three and six months ended June 30, 2021, PSUs were excluded from the calculation of diluted earnings per share, as their inclusion would have been antidilutive. For the six months ended June 30, 2022, the assumed vesting of outstanding PSUs was included in the calculation of diluted earnings per share under the two-class method, as it was more dilutive than the alternative treasury stock method.

For the three months ended June 30, 2022, excluded from the calculation of diluted earnings per share was the effect of adding back $4.8 million of interest expense and 38,956,653 weighted average common share equivalents related to the assumed conversion of the Company’s convertible senior notes, as their inclusion would have been antidilutive. For the six months ended June 30, 2022, the assumed conversion of the Company’s convertible senior notes was included in the calculation of diluted earnings per share under the if-converted method.

For the three and six months ended June 30, 2021, excluded from the calculation of diluted earnings per share was the effect of adding back $7.1 million and $5.6 million of interest expense and 48,043,744 and 13,789,691 weighted average common share equivalents, respectively, related to the assumed conversion of the Company’s convertible senior notes, as their inclusion would have been antidilutive. For the three months ended June 30, 2021, both the 2022 notes and the 2026 notes were excluded from the calculation of diluted earnings per share. For the six months ended June 30, 2021, only the 2022 notes were excluded from the calculation of diluted earnings per share, and the assumed conversion of the Company’s 2026 notes was included in the calculation of diluted earnings per share under the if-converted method.