REDWOOD TRUST INCRWT

REDWOOD TRUST INC Earnings Per Share Disclosure

10-KFiled Feb 27, 20263 min read
Earnings per Common Share
The following table provides the basic and diluted earnings per common share computations for the years ended December 31, 2025, 2024, and 2023.
Table 21.1 – Basic and Diluted Earnings per Common Share
Years Ended December 31,
(In Thousands, except Share Data)202520242023
Basic (Loss) Earnings per Common Share:
Net (loss) income (related) available to common stockholders$(77,041)$46,989 $(8,958)
Less: Dividends and undistributed earnings allocated to participating securities(5,642)(4,391)(3,999)
Net (loss) income (related) available to common stockholders$(82,683)$42,598 $(12,957)
Basic weighted average common shares outstanding130,250,167 132,050,825 116,283,328 
Basic (Loss) Earnings per Common Share$(0.63)$0.32 $(0.11)
Diluted (Loss) Earnings per Common Share:
Net (loss) income (related) available to common stockholders$(77,041)$46,989 $(8,958)
Less: Dividends and undistributed earnings allocated to participating securities(5,642)(4,391)(3,999)
Net (loss) income (related) available to common stockholders$(82,683)$42,598 $(12,957)
Weighted average common shares outstanding130,250,167 132,050,825 116,283,328 
Net effect of dilutive equity awards— 88,609 — 
Net effect of assumed convertible notes conversion to common shares— — — 
Diluted weighted average common shares outstanding130,250,167 132,139,434 116,283,328 
Diluted (Loss) Earnings per Common Share$(0.63)$0.32 $(0.11)
We included participating securities, which are certain equity awards that have non-forfeitable dividend participation rights, in the calculations of basic and diluted earnings per common share as we determined that the two-class method was more dilutive than the alternative treasury stock method for these shares. Dividends and undistributed earnings allocated to participating securities under the basic and diluted earnings per share calculations require specific shares to be included that may differ in certain circumstances.
During the years ended December 31, 2025, 2024 and 2023, none of our convertible or exchangeable senior notes were determined to be dilutive and were not included in the calculation of diluted EPS under the "if-converted" method. Under this method, for the exchangeable senior notes due in 2025, and previously for the repaid convertible senior notes due in 2024 and 2023, the periodic interest expense (net of applicable taxes) for dilutive notes is added back to the numerator and the weighted average number of shares that the notes are entitled to (if converted, regardless of whether they are in or out of the money) are included in the denominator. For convertible notes due in 2027, if the potential conversion of the debt is dilutive, then the number of shares needed to settle the conversion premium are added to the shares outstanding used to calculate dilutive EPS.
During the year ended December 31, 2025, none of our Warrants were determined to be dilutive to our calculation of dilutive earnings per common share. The Warrants would have a dilutive effect on earnings per common share to the extent that the Warrants are vested and exercisable, and the average market value per share of our common stock exceeds the strike price of the Warrants.
For the years ended December 31, 2025, 2024 and 2023, 30,448,518, 32,422,712, and 42,229,598 of common shares, respectively, related to the assumed conversion of our convertible and exchangeable senior notes, were antidilutive and were excluded in the calculation of diluted earnings per share. For the years ended December 31, 2025, 2024 and 2023, the number of outstanding equity awards that were antidilutive totaled 89,565, 81,779 and 105,592, respectively.

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.

Other Available Disclosures

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