Sotherly Hotels Inc. Earnings Per Share Disclosure
13. Earnings (Loss) per Share and per Unit
Earnings (Loss) Per Share. The limited partners’ outstanding limited partnership units in the Operating Partnership (which may be redeemed for common stock upon notice from the limited partner and following our election to redeem the units for stock rather than cash) have been excluded from the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners’ share of income would also be added back to net loss. The shares of the Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock are not convertible into or exchangeable for any other property or securities of the Company, except upon the occurrence of a change of control and have been excluded from the diluted earnings per share calculation as there would be no impact on the current controlling stockholders. The 120,701, 247,043 and 364,177 non-committed, unearned ESOP shares are treated as reducing the number of issued and outstanding common shares and similarly reducing the weighted average number of common shares outstanding, for the years ended December 31, 2024, 2023, and 2022, respectively. The effect of allocated and committed to be released shares during the years ended December 31, 2024, 2023, and 2022, have not been included in the weighted average diluted earnings per share calculation, since there would be an anti-dilutive effect from the dilution by these shares, although the amount of compensation for allocated shares is reflected in net loss available to common stockholders for basic computation.
The computation of the Company’s basic net earnings (loss) per share is presented below:
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Twelve Months Ended |
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Twelve Months Ended |
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Twelve Months Ended |
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December 31, 2024 |
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December 31, 2023 |
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December 31, 2022 |
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Numerator |
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Net income |
$ |
1,179,854 |
|
|
$ |
3,809,711 |
|
|
$ |
33,959,848 |
|
Less: Net income allocated to participating share awards |
|
(13,194 |
) |
|
|
(49,118 |
) |
|
|
(113,405 |
) |
Net income attributable to non-controlling interest |
|
122,515 |
|
|
|
131,710 |
|
|
|
(1,423,327 |
) |
Undeclared distributions to preferred stockholders |
|
(7,977,250 |
) |
|
|
(7,977,250 |
) |
|
|
(7,634,219 |
) |
Gain on extinguishment of preferred stock |
|
— |
|
|
|
— |
|
|
|
64,518 |
|
Net (loss) income attributable to common stockholders for EPS computation |
$ |
(6,688,075 |
) |
|
$ |
(4,084,947 |
) |
|
$ |
24,853,415 |
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Denominator |
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Weighted average number common shares outstanding for basic EPS computation |
|
19,417,448 |
|
|
|
18,843,032 |
|
|
|
17,802,772 |
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Basic and diluted net (loss) income per common share: |
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Undistributed (loss) income |
$ |
(0.34 |
) |
|
$ |
(0.22 |
) |
|
$ |
1.40 |
|
Total basic and diluted |
$ |
(0.34 |
) |
|
$ |
(0.22 |
) |
|
$ |
1.40 |
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The accounting for unvested share-based payment awards (share-based awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid), are participating securities and included in the computation of basic earnings per share. Our grants of restricted stock awards to our employees and directors are considered participating securities, and we have prepared our earnings per share calculations to include outstanding unvested restricted stock awards in the numerator for basic weighted average shares outstanding calculation. However, since the participating outstanding unvested restricted stock awards of 26,940 and 25,936 as of December 31, 2024 and 2023, respectively, in the denominator are anti-dilutive, due to net losses, they are not included in a dilutive calculation.
Earnings (Loss) Per Unit. The Series B Preferred Units, Series C Preferred Units, and Series D Preferred Units are not convertible into or exchangeable for any other property or securities of the Operating Partnership, except upon the occurrence of a change of control and have been excluded from the diluted earnings per unit calculation as there would be no impact on the current unitholders. The number of non-committed, unearned shares in the Company’s ESOP have no impact on the calculation of the loss per unit in the Operating Partnership.
The computation of basic earnings (loss) per general and limited partnership unit in the Operating Partnership is presented below:
|
Twelve Months Ended |
|
|
Twelve Months Ended |
|
|
Twelve Months Ended |
|
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|
December 31, 2024 |
|
|
December 31, 2023 |
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|
December 31, 2022 |
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Numerator |
|
|
|
|
|
|
|
|
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Net income |
$ |
1,179,854 |
|
|
$ |
3,809,711 |
|
|
$ |
33,959,848 |
|
Less: Net income allocated to participating unit awards |
|
(13,194 |
) |
|
|
(49,118 |
) |
|
|
(113,405 |
) |
Undeclared distributions to preferred unitholders |
|
(7,977,250 |
) |
|
|
(7,977,250 |
) |
|
|
(7,634,219 |
) |
Gain on extinguishment of preferred stock |
|
— |
|
|
|
— |
|
|
|
64,518 |
|
Net (loss) income attributable to unitholders for EPU computation |
$ |
(6,810,590 |
) |
|
$ |
(4,216,657 |
) |
|
$ |
26,276,742 |
|
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Denominator |
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Weighted average number of units outstanding for basic EPU computation |
|
19,997,274 |
|
|
|
19,808,602 |
|
|
|
19,266,320 |
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Basic and diluted net (loss) income per unit: |
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Undistributed (loss) income |
$ |
(0.34 |
) |
|
$ |
(0.21 |
) |
|
$ |
1.36 |
|
Total basic and diluted |
$ |
(0.34 |
) |
|
$ |
(0.21 |
) |
|
$ |
1.36 |
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The accounting for unvested unit-based payment awards (unit-based awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid), are participating securities and included in the computation of basic earnings per unit. Our grants of restricted unit awards to our employees and directors are considered participating securities, and we have prepared our earnings per unit calculations to include outstanding unvested restricted unit awards in the numerator for basic weighted average shares outstanding calculation. However, since the participating outstanding unvested restricted unit awards 26,940 and 25,936 as of December 31, 2024 and 2023, respectively, in the denominator are anti-dilutive, due to net losses, they are not included in a dilutive calculation.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 31, 2025 | Showing above |
| 2020 | Mar 24, 2021 | |
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.