Earnings Per Share

6 Months Ended

Jun. 30, 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 June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net income (loss) from continuing operations attributable to Archrock stockholders	$	11,423		$	1,937		$	31,152		$	(1,879	)
Loss from discontinued operations, net of tax	—			—			(273		)	—
Net income (loss) attributable to Archrock stockholders	11,423			1,937			30,879			(1,879		)
Less: Net income attributable to participating securities	(261		)	(157		)	(574		)	(313		)
Net income (loss) attributable to Archrock common stockholders	$	11,162		$	1,780		$	30,305		$	(2,192	)

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 June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Weighted average common shares outstanding including participating securities	130,330		112,995		130,276		92,130
Less: Weighted average participating securities outstanding	(2,002	)	(1,699	)	(2,015	)	(1,541	)
Weighted average common shares outstanding used in basic net income (loss) per common share	128,328		111,296		128,261		90,589
Net dilutive potential common shares issuable:
On exercise of options and vesting of performance-based restricted stock units	25		99		33		*
On settlement of employee stock purchase plan shares	1		7		3		*
Weighted average common shares outstanding used in diluted net income (loss) per common share	128,354		111,402		128,297		90,589

——————


*	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 June 30,		Six Months Ended June 30,
	2019	2018	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	187	154	205
On exercise of options and vesting of performance-based restricted stock units	—	—	—	89
On settlement of employee stock purchase plan shares	—	—	—	5
Net dilutive potential common shares issuable	154	187	154	299