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, 2023

The following table presents a reconciliation of the earnings (loss) and shares used in calculating basic and diluted earnings (loss) per share for the three and six months ended June 30, 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				Six Months Ended
	June 30,				June 30,
(in thousands, except share data)	2023		2022		2023		2022
Basic Earnings (Loss) Per Share:


Net income (loss)	$	197,445	$	(72,420)	$	20,637	$	212,850


Dividends on preferred stock	(12,115)		(13,748)		(24,480)		(27,495)
Gain on repurchase and retirement of preferred stock	2,454		—		2,454		—
Dividends and undistributed earnings allocated to participating restricted stock units	(1,233)		(290)		(668)		(910)
Net income (loss) attributable to common stockholders, basic	$	186,551	$	(86,458)	$	(2,057)	$	184,445
Basic weighted average common shares	96,387,877		86,069,431		94,492,389		86,034,722
Basic earnings (loss) per weighted average common share	$	1.94	$	(1.00)	$	(0.02)	$	2.14
Diluted Earnings (Loss) Per Share:
Net income (loss) attributable to common stockholders, basic	$	186,551	$	(86,458)	$	(2,057)	$	184,445
Reallocation impact of undistributed earnings to participating restricted stock units	120		—		—		(8)

Interest expense attributable to convertible notes	4,692		—		—		9,843
Net income (loss) attributable to common stockholders, diluted	$	191,363	$	(86,458)	$	(2,057)	$	194,280
Basic weighted average common shares	96,387,877		86,069,431		94,492,389		86,034,722
Effect of dilutive shares issued in an assumed vesting of performance share units	199,753		—		—		135,870
Effect of dilutive shares issued in an assumed conversion	9,474,748		—		—		9,914,881
Diluted weighted average common shares	106,062,378		86,069,431		94,492,389		96,085,473
Diluted earnings (loss) per weighted average common share	$	1.80	$	(1.00)	$	(0.02)	$	2.02

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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, 2023 and the six months ended June 30, 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 six months ended June 30, 2023 and the three months ended June 30, 2022, excluded from the calculation of diluted loss per share was the effect of adding undistributed earnings reallocated to 650,604 and 443,996 weighted average participating RSUs, respectively, as their inclusion would have been antidilutive.

For the three months ended June 30, 2023 and 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 since it was more dilutive than the alternative treasury stock method. For the six months ended June 30, 2023 and the three months ended June 30, 2022, PSUs were excluded from the calculation of diluted loss per share, as their inclusion would have been antidilutive.

For the three months ended June 30, 2023 and 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 six months ended June 30, 2023 and the three months ended June 30, 2022 excluded from the calculation of diluted loss per share was the effect of adding back $9.5 million and $4.8 million of interest expense and 9,606,204 and 9,739,163 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.