LINCOLN EDUCATIONAL SERVICES CORPLINC
LINCOLN EDUCATIONAL SERVICES CORP Earnings Per Share Disclosure
| 3. |
NET INCOME PER COMMON SHARE
|
Basic and diluted earnings per share (“EPS”) are determined in accordance with ASC Topic 260, “Earnings per Share”, which specifies the computation, presentation and disclosure
requirements for EPS. Basic EPS excludes all dilutive Common Stock equivalents. It is based upon the weighted average number of common shares outstanding during the period. Diluted EPS, as calculated using the treasury stock method, reflects the
potential dilution that would occur if our dilutive outstanding stock options and stock awards were issued.
During the year ended December 31, 2022, the Company presented its basic and diluted
income per common share using the two-class method, which requires all outstanding Series A Preferred Stock (“Series A Preferred Stock”) and unvested shares of Restricted Stock that contain rights to non-forfeitable dividends and therefore
participate in undistributed income with common shareholders to be included in computing income per common share. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of Common Stock
and participating security. The remaining undistributed income is then allocated to Common Stock and participating securities based on their respective rights to receive dividends. Series A Preferred Stock and shares of unvested Restricted
Stock contain non-forfeitable rights to dividends on an if-converted basis and on the same basis as shares of the Company’s Common Stock, respectively, and are considered participating securities. The Series A Preferred Stock and unvested
Restricted Stock are not included in the computation of basic income per common share in periods in which we have a net loss, as the Series A Preferred Stock and unvested Restricted Stock are not contractually obligated to share in our net
losses. However, the cumulative dividends on Series A Preferred Stock for the period decreases the income or increases the net loss allocated to common shareholders unless the dividend is paid in the period. Basic income per common share has
been computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding.
On November 30, 2022, the Company exercised in full its right of mandatory conversion of the Company’s Series A Preferred Stock. In connection with the conversion, each
share of Series A Preferred Stock was cancelled and converted into 423.729 shares of the Company’s Common Stock, no par value per share (the “Common Stock”). No
shares of Series A Preferred Stock remain outstanding and all rights of the holders to receive future dividends have been terminated. As a result of the conversion, the aggregate 12,700 shares of Series A Preferred Stock outstanding were converted into 5,381,356
shares of Common Stock. As of December 31, 2024, the Company still maintains Restricted Stock, but these shares do not participate in the disbursement of dividends.
The following is a reconciliation of the numerator and denominator of the net income per share computations for the years ended December 31, 2024, 2023, and 2022:
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Year Ended December 31,
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||||||||||||
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(in thousands, except share data)
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2024
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2023
|
2022 |
|||||||||
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Numerator:
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||||||||||||
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Net income
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$ | 9,891 |
$
|
25,997
|
$ | 12,634 | ||||||
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Less: preferred stock dividend
|
-
|
-
|
(1,111 | ) | ||||||||
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Less: allocation to preferred stockholders
|
-
|
-
|
(1,753 | ) | ||||||||
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Less: allocation to restricted stockholders
|
-
|
-
|
(559 | ) | ||||||||
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Net income allocated to common stockholders
|
$
|
9,891
|
$
|
25,997
|
$ | 9,211 | ||||||
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Basic net income per share:
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||||||||||||
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Denominator:
|
||||||||||||
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Weighted average common shares outstanding
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30,580,381
|
30,105,194
|
25,879,483 | |||||||||
|
Basic net income per share
|
$
|
0.32
|
$
|
0.86
|
$ | 0.36 | ||||||
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Diluted net income per share:
|
||||||||||||
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Denominator:
|
||||||||||||
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Weighted average number of:
|
||||||||||||
|
Common shares outstanding
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30,890,790
|
30,540,628
|
25,879,483 | |||||||||
|
Dilutive shares outstanding
|
30,890,790
|
30,540,628
|
25,879,483 | |||||||||
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Diluted net income per share
|
$
|
0.32
|
$
|
0.85
|
$ | 0.36 | ||||||
The following table summarizes the potential weighted average shares of Common Stock that were excluded from the determination of our diluted shares outstanding as
they were anti-dilutive:
| Year Ended December 31, |
||||||||||||
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2024
|
2023
|
2022 |
||||||||||
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Unvested restricted stock
|
-
|
-
|
516,233 | |||||||||
|
-
|
-
|
516,233 | ||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 4, 2025 | Showing above |
| 2019 | Mar 6, 2020 | |
| 2017 | Mar 9, 2018 | |
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.