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

3 Months Ended

Mar. 31, 2023

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 months ended March 31, 2023 and 2022. All per share amounts, common shares outstanding and common equity-based awards for all periods presented have been adjusted on a retroactive basis to reflect the reverse stock split.


	Three Months Ended
	March 31,
(in thousands, except share data)	2023		2022
Basic (Loss) Earnings Per Share:


Net (loss) income	$	(176,808)	$	285,270


Dividends on preferred stock	(12,365)		(13,747)

Dividends and undistributed earnings allocated to participating restricted stock units	(382)		(1,293)
Net (loss) income attributable to common stockholders, basic	$	(189,555)	$	270,230
Basic weighted average common shares	92,575,840		85,999,628
Basic (loss) earnings per weighted average common share	$	(2.05)	$	3.14
Diluted (Loss) Earnings Per Share:
Net (loss) income attributable to common stockholders, basic	$	(189,555)	$	270,230
Reallocation impact of undistributed earnings to participating restricted stock units	—		83

Interest expense attributable to convertible notes	—		5,042
Net (loss) income attributable to common stockholders, diluted	$	(189,555)	$	275,355
Basic weighted average common shares	92,575,840		85,999,628
Effect of dilutive shares issued in an assumed vesting of performance share units	—		113,373
Effect of dilutive shares issued in an assumed conversion	—		10,092,550
Diluted weighted average common shares	92,575,840		96,205,551
Diluted (loss) earnings per weighted average common share	$	(2.05)	$	2.86

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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 March 31, 2023, excluded from the calculation of diluted loss per share was the effect of adding undistributed earnings reallocated to 655,137 weighted average participating RSUs, as their inclusion would have been antidilutive. For the three months ended March 31, 2022, participating RSUs were included in the calculation of diluted earnings per share under the two-class method since it was more dilutive than the alternative treasury stock method.

For the three months ended March 31, 2023, PSUs were excluded from the calculation of diluted loss per share, as their inclusion would have been antidilutive. For the three months ended March 31, 2022, the assumed vesting of outstanding PSUs was included in the calculation of diluted earnings per share under the two-class method since it was more dilutive than the alternative treasury stock method.

For the three months ended March 31, 2023, excluded from the calculation of diluted loss per share was the effect of adding back $4.8 million of interest expense and 9,739,120 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 March 31, 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.