Earnings Per Share

9 Months Ended

Sep. 30, 2023

Basic and diluted earnings per share are based on the weighted average number of shares of common stock and potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted earnings per share, includes the effects of dilutive RSUs, stock options, and equity units. The effect of such potential common stock is computed using the treasury stock method for RSUs and stock options, and is computed using the if-converted method for equity units.

The following table is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for income from continuing operations for the three and nine months ended September 30, 2023 and 2022, where income represents the numerator and weighted average shares represent the denominator.


Three Months Ended September 30,	2023					2022
(in millions, except per share data)	Income		Shares	$ per Share		Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders	$	231	670	$	0.34	$	421	668	$	0.63
EFFECT OF DILUTIVE SECURITIES

Stock options	—		—	—		—		1	—
Restricted stock units	—		2	—		—		2	—
Equity units	—		40	(0.02)		—		40	(0.04)
DILUTED EARNINGS PER SHARE	$	231	712	$	0.32	$	421	711	$	0.59


Nine Months Ended September 30,	2023					2022
(in millions, except per share data)	Income		Shares	$ per Share		Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders	$	343	669	$	0.51	$	357	668	$	0.53
EFFECT OF DILUTIVE SECURITIES

Stock options	—		1	—		—		1	—
Restricted stock units	—		2	—		—		2	—
Equity units	1		40	(0.03)		1		40	(0.03)
DILUTED EARNINGS PER SHARE	$	344	712	$	0.48	$	358	711	$	0.50

The calculation of diluted earnings per share excluded 2 million outstanding stock awards for the three and nine months ended September 30, 2023 and September 30, 2022, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future.

As described in Note 11—Equity, the Company issued 10,430,500 Equity Units in March 2021 with a total notional value of $1,043 million. Each Equity Unit has a stated amount of $100 and was initially issued as a Corporate Unit, consisting of a 2024 Purchase Contract and a 10% undivided beneficial ownership interest in one share of Series A Preferred Stock. Prior to February 15, 2024, the Series A Preferred Stock may be converted at the option of the holder only in connection with a fundamental change. On and after February 15, 2024, the Series A Preferred Stock may be converted freely at the option of the holder. Upon conversion, the Company will deliver to the holder with respect to each share of Series A Preferred Stock being converted (i) a share of our Series B Preferred Stock, or, solely with respect to conversions in connection with a redemption, cash and (ii) shares of our common stock, if any, in respect of any conversion value in excess of the liquidation preference of the preferred stock being converted. The conversion rate was initially 31.5428 shares of common stock per one share of Series A Preferred Stock, which was equivalent to an initial conversion price of approximately $31.70 per share of common stock. As of September 30, 2023, due to customary anti-dilution provisions, the conversion rate was 31.6465, equivalent to a conversion price of approximately $31.60 per share of common stock. The Series A Preferred Stock and the 2024 Purchase Contracts are being accounted for as one unit of account. In calculating diluted EPS, the Company has applied the if-converted method to determine the impact of the forward purchase feature and considered if there are incremental shares that should be included related to the Series A Preferred conversion value.