Ecovyst Inc.ECVT
Ecovyst Inc. Earnings Per Share Disclosure
21. Earnings per Share:
Basic earnings per share is calculated as income available to common stockholders, divided by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding during the period for the computation of basic earnings per share excludes RSAs that have legally been issued but are nonvested during the period, as the sale of these shares is prohibited pending satisfaction of certain vesting conditions by the award recipients in order to earn the rights to the shares (see Note 20 to these consolidated financial statements for further information regarding outstanding nonvested restricted stock awards).
Diluted earnings per share is calculated as income available to common stockholders, divided by the weighted average number of common and potential common shares outstanding during the period, if dilutive. Potential common shares reflect (1) unvested RSAs and RSUs with service vesting conditions, (2) PSUs with vesting conditions considered probable of achievement and (3) options to purchase common stock, all of which have been included in the diluted earnings per share calculation using the treasury stock method.
The reconciliation from basic to diluted weighted average shares outstanding is as follows:
| Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted average shares outstanding – Basic | 115,291,879 | 116,719,437 | 118,367,214 | ||||||||||||||
| Dilutive effect of unvested common shares and RSUs with service conditions, PSUs considered probable of vesting and assumed stock option exercises and conversions | 665,683 | 728,001 | 1,120,495 | ||||||||||||||
| Weighted average shares outstanding – Diluted | 115,957,562 | 117,447,438 | 119,487,709 | ||||||||||||||
The Company utilizes the control number concept in the computation of diluted earnings per share to determine whether potential common stock equivalents are dilutive. The control number used is income from continuing operations. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.
Basic and diluted income per share are calculated as follows:
| Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Numerator: | |||||||||||||||||
| Net income from continuing operations | $ | 6,288 | $ | 45,504 | $ | 48,223 | |||||||||||
| Net (loss) income from discontinued operations, net of tax | (77,414) | (52,156) | 22,931 | ||||||||||||||
| Net (loss) income | $ | (71,126) | $ | (6,652) | $ | 71,154 | |||||||||||
| Denominator: | |||||||||||||||||
| Weighted average shares outstanding – Basic | 115,291,879 | 116,719,437 | 118,367,214 | ||||||||||||||
| Weighted average shares outstanding – Diluted | 115,957,562 | 117,447,438 | 119,487,709 | ||||||||||||||
| Net (loss) income per share: | |||||||||||||||||
| Basic income per share—continuing operations | $ | 0.05 | $ | 0.39 | $ | 0.41 | |||||||||||
| Diluted income per share—continuing operations | $ | 0.05 | $ | 0.39 | $ | 0.40 | |||||||||||
| Basic (loss) income per share—discontinued operations | $ | (0.67) | $ | (0.45) | $ | 0.19 | |||||||||||
| Diluted (loss) income per share—discontinued operations | $ | (0.67) | $ | (0.44) | $ | 0.19 | |||||||||||
| Basic (loss) income per share | $ | (0.62) | $ | (0.06) | $ | 0.60 | |||||||||||
| Diluted (loss) income per share | $ | (0.61) | $ | (0.06) | $ | 0.60 | |||||||||||
The table below presents additional details of the Company’s weighted average equity-based awards outstanding during each respective year that were excluded from the calculation of diluted earnings per share:
| Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Stock options with performance only targets not yet achieved | — | — | 51,526 | ||||||||||||||
| Anti-dilutive RSUs and PSUs | 282,675 | 387,078 | 286,729 | ||||||||||||||
| Anti-dilutive stock options | 367,100 | 367,100 | 508,623 | ||||||||||||||
RSAs and stock options with performance only vesting conditions were not included in the dilution calculation, as the performance targets have not been achieved nor were probable of achievement as of the end of the respective periods. These awards and stock options were canceled on March 7, 2023 (see Note 20 to these consolidated financial statements for additional information). Certain stock options to purchase shares of common stock were excluded from the computation of diluted earnings per share for the respective periods because the options’ exercise price was greater than the average market price of the common shares. These stock options and anti-dilutive awards are not included in the dilution calculation, as their inclusion would have the effect of increasing diluted income per share or reducing diluted loss per share.
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.