Earnings Per Share

3 Months Ended

Mar. 31, 2024

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 months ended March 31, 2024 and 2023, where income represents the numerator and weighted average shares represent the denominator.


Three Months Ended March 31,	2024					2023
(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	$	432	690	$	0.63	$	151	669	$	0.22
Less: Increase in redemption value of redeemable stock of subsidiaries	(6)			(0.01)		$	—		—
Income available to The AES Corporation common stockholders	$	426	690	$	0.62	$	151	669	$	0.22

EFFECT OF DILUTIVE SECURITIES

Stock options	—		—	—		—		1	—
Restricted stock units	—		2	—		—		2	—
Equity units	—		20	(0.02)		—		40	(0.01)
DILUTED EARNINGS PER SHARE	$	426	712	$	0.60	$	151	712	$	0.21

For the three months ended March 31, 2024, income from continuing operations available to AES common stockholders included a $6 million adjustment related to the increase of the carrying value of redeemable stock of subsidiaries at AES Clean Energy Development, as a result of a non-fair value redemption feature. The Company has elected to administer the entire non-fair value redemption adjustment consistent with the treatment of dividends in the earnings per share calculation. While the adjustment reduced net income available to AES common stockholders and earnings per share, it did not impact Net income in the Condensed Consolidated Statement of Operations.

The calculation of diluted earnings per share excluded 2 million and 1 million outstanding stock awards for the three months ended March 31, 2024 and March 31, 2023, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future.

As described in Note 12—Equity, the Company issued 10,430,500 Equity Units in March 2021 with a total notional value of $1,043 million. Each Equity Unit had 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. 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. The Series A Preferred Stock and the 2024 Purchase Contracts were 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.