Earnings Per Share (Notes)

3 Months Ended

Mar. 31, 2019

14. Earnings Per Share

Net Income (Loss) Attributable to Archrock Common Stockholders Per Common Share

Basic net income (loss) attributable to Archrock common stockholders per common share is computed using the two-class method, which is an earnings allocation formula that determines net income (loss) per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Under the two-class method, basic net income (loss) attributable to Archrock common stockholders per common share is determined by dividing net income (loss) attributable to Archrock common stockholders after deducting amounts allocated to participating securities, by the weighted average number of common shares outstanding for the period. Participating securities include unvested restricted stock and stock settled restricted stock units that have nonforfeitable rights to receive dividends or dividend equivalents, whether paid or unpaid. During periods of net loss, no effect is given to participating securities because they do not have a contractual obligation to participate in our losses.

Diluted net income (loss) attributable to Archrock common stockholders per common share is computed using the weighted average number of shares outstanding adjusted for the incremental common stock equivalents attributed to outstanding options, performance-based restricted stock units and stock to be issued pursuant to our employee stock purchase plan unless their effect would be anti-dilutive.

The following table summarizes net income (loss) attributable to Archrock common stockholders used in the calculation of basic and diluted net income (loss) per common share (in thousands):



	Three Months Ended March 31,
	2019			2018
Net income (loss) from continuing operations attributable to Archrock stockholders	$	19,729		$	(3,816	)
Loss from discontinued operations, net of tax	(273		)	—
Net income (loss) attributable to Archrock stockholders	19,456			(3,816		)
Less: Net income attributable to participating securities	(356		)	(157		)
Net income (loss) attributable to Archrock common stockholders	$	19,100		$	(3,973	)

The following table shows the potential shares of common stock that were included in computing diluted net income (loss) attributable to Archrock common stockholders per common share (in thousands):



	Three Months Ended March 31,
	2019		2018
Weighted average common shares outstanding including participating securities	130,238		71,299
Less: Weighted average participating securities outstanding	(2,029	)	(1,383	)
Weighted average common shares outstanding — used in basic net income (loss) per common share	128,209		69,916
Net dilutive potential common shares issuable:
On exercise of options and vesting of performance-based restricted stock units	40		*
On the settlement of employee stock purchase plan shares	6		*
Weighted average common shares outstanding — used in diluted net income (loss) per common share	128,255		69,916

——————


*	Excluded from diluted net income (loss) per common share as their inclusion would have been anti-dilutive.

The following table shows the potential shares of common stock issuable that were excluded from computing diluted net income (loss) attributable to Archrock common stockholders per common share as their inclusion would have been anti-dilutive (in thousands):



	Three Months Ended March 31,
	2019	2018
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	154	223
On exercise of options and vesting of performance-based restricted stock units	—	78
On the settlement of employee stock purchase plan shares	—	3
Net dilutive potential common shares issuable	154	304