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Earnings (Loss) per Share

3 Months Ended

Mar. 31, 2024

Earnings (Loss) per Share

Earnings (Loss) per Share

13. Earnings (Loss) per Share

Basic earnings (loss) per share (“EPS” or “LPS”) is calculated by dividing net income or loss attributable to Target Hospitality by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS is computed similarly to basic net income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. We apply the treasury stock method in the calculation of diluted earnings per share. During periods when net losses are incurred, potential dilutive securities would be anti-dilutive and are excluded from the calculation of diluted loss per share for that period. Net income was recorded for the three months ended March 31, 2024 and 2023. The following table reconciles net income attributable to common stockholders and the weighted average shares

outstanding for the basic calculation to the net income attributable to common stockholders and the weighted average shares outstanding for the diluted calculation for the periods indicated below ($ in thousands, except per share amounts):


	For the Three Months Ended
	March 31,			March 31,
	2024			2023
Numerator
Net income attributable to Common Stockholders - basic	$	20,383		$	43,825
Change in fair value of warrant liabilities		—			(3,711)
Net income attributable to Common Stockholders - diluted	$	20,383		$	40,114

Denominator
Weighted average shares outstanding - basic		100,657,706			100,643,271
Dilutive effect of outstanding securities:
Warrants		—			2,264,522
PSUs		435,040			489,063
SARs		292,842			224,796
Stock Options		245,130			797,457
RSUs		731,824			1,838,339
Weighted average shares outstanding - diluted		102,362,542			106,257,448

Net income per share - basic	$	0.20		$	0.44
Net income per share - diluted	$	0.20		$	0.38

When liability-classified warrants are in the money and the impact of their inclusion on diluted EPS is dilutive, diluted EPS also assumes share settlement of such instruments through an adjustment to net income available to common stockholders for the fair value (gain) loss on common stock warrant liabilities and inclusion of the number of dilutive shares in the denominator. The Public and Private Warrants representing a total of 8,058,787 shares of the Company’s Common Stock for the three months ended March 31, 2023 were included in the computation of diluted EPS because their effect is dilutive as noted in the above table. No Public or Private Warrants were outstanding as of March 31, 2024 given they expired on March 15, 2024; therefore, the Public and Private Warrants had no impact on the computation of diluted EPS for the three months ended March 31, 2024.

As discussed in Note 15, stock-based compensation awards were outstanding for the three months ended March 31, 2024 and 2023. These stock-based compensation awards were included in the computation of diluted EPS for the three months ended March 31, 2023 because their effect is dilutive as noted in the above table. For the three months ended March 31, 2024, stock-based compensation awards were included in the computation of diluted EPS because their effect is dilutive as noted in the above table. However, approximately 919,082 of contingently issuable PSUs were excluded from the computation of diluted EPS for the three months ended March 31, 2024 as not all necessary conditions for issuance of these PSUs were satisfied, which includes 294,082 of PSUs that did not meet all of the Company’s Diversification EBITDA and TSR criteria (see Note 15) and 625,000 of PSUs issued in 2022 that did not meet all of the specified share price thresholds as discussed in the Company’s 2023 Form 10-K.

Shares of treasury stock have been excluded from the computation of EPS.