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Segments Segments (Policies) | 3 Months Ended
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Mar. 31, 2023
Segment Reporting [Abstract] |
Segment Reporting | SEGMENTS The segment reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses internally. In our 2022 Form 10-K, the management reporting structure and the Company’s reportable segments were mainly organized by geographic regions. In March 2023, we announced internal management changes as a part of our ongoing strategy to align our business to meet our customers’ needs and deliver on our major strategic objectives. The management reporting structure is now composed of four SBUs, mainly organized by technology, led by our President and Chief Executive Officer. Using the accounting guidance on segment reporting, the Company determined that its four operating segments are aligned with its four reportable segments corresponding to its SBUs. All prior period results have been retrospectively revised to reflect the new segment reporting structure. •Renewables — Solar, wind, energy storage, hydro, biomass, and landfill gas generation facilities; •Utilities — AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities; •Energy Infrastructure — Natural gas, LNG, coal, pet-coke, diesel and oil generation facilities, and our businesses in Chile, which have a mix of generation sources, including renewables, that are pooled to service our existing PPAs; and •New Energy Technologies — Green hydrogen initiatives and investments in Fluence, Uplight, 5B, and other new and innovative energy technology businesses. Our Renewables, Utilities and Energy Infrastructure SBUs participate in our generation business line, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. Our Utilities SBU participates in our utilities business line, in which we own and/or operate utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors within a defined service area. In certain circumstances, our utilities also generate and sell electricity on the wholesale market. Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions. Included in “Corporate and Other” are the results of the AES self-insurance company, corporate overhead costs which are not directly associated with the operations of our four reportable segments, and certain intercompany charges such as self-insurance premiums which are fully eliminated in consolidation. During the first quarter of 2023, management began assessing operational performance and making resource allocation decisions using Adjusted EBITDA. Therefore, the Company uses Adjusted EBITDA as its primary segment performance measure. Adjusted EBITDA, a non-GAAP measure, is defined by the Company as earnings before interest income and expense, taxes, depreciation and amortization, adjusted for the impact of NCI and interest, taxes, depreciation and amortization of our equity affiliates, and adding back interest income recognized under service concession arrangements; excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure SBU, associated with the early contract terminations with Minera Escondida and Minera Spence. The Company has concluded Adjusted EBITDA better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company's internal evaluation of the financial performance of its segments. Additionally, given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure that better assists investors in determining which businesses have the greatest impact on the Company's results. Revenue and Adjusted EBITDA are presented before inter-segment eliminations, which includes the effect of intercompany transactions with other segments except for charges for certain management fees and the write-off of intercompany balances, as applicable. All intra-segment activity has been eliminated within the segment. Inter-segment activity has been eliminated within the total consolidated results. The following tables present financial information by segment for the periods indicated (in millions):
|  |  | Three Months Ended March 31,
Total Revenue |  |  |  |  | 2023 |  | 2022
Renewables SBU |  |  |  |  | $ | 495 |  |  | $ | 420 |
Utilities SBU |  |  |  |  | 971 |  |  | 859 |
Energy Infrastructure SBU |  |  |  |  | 1,724 |  |  | 1,607 |
New Energy Technologies SBU |  |  |  |  | 74 |  |  | — |
Corporate and Other |  |  |  |  | 27 |  |  | 23 |
Eliminations |  |  |  |  | (52) |  |  | (57) |
Total Revenue |  |  |  |  | $ | 3,239 |  |  | $ | 2,852 |
|  |  | Three Months Ended March 31,
Reconciliation of Adjusted EBITDA (in millions) |  |  |  |  | 2023 |  | 2022
Net income |  |  |  |  | $ | 189 |  |  | $ | 171 |
Income tax expense |  |  |  |  | 72 |  |  | 60 |
Interest expense |  |  |  |  | 330 |  |  | 258 |
Interest income |  |  |  |  | (123) |  |  | (75) |
Depreciation and amortization |  |  |  |  | 273 |  |  | 270 |
EBITDA |  |  |  |  | $ | 741 |  |  | $ | 684 |
Less: Adjustment for noncontrolling interests and redeemable stock of subsidiaries (1) |  |  |  |  | (170) |  |  | (156) |
Less: Income taxes expense (benefit), interest expense (income) and depreciation and amortization from equity affiliates |  |  |  |  | 39 |  |  | 34 |
Interest income recognized under service concession arrangements |  |  |  |  | 18 |  |  | 19 |
Unrealized derivative and equity securities losses (gains) |  |  |  |  | (39) |  |  | 42 |
Unrealized foreign currency losses (gains) |  |  |  |  | 32 |  |  | (18) |
Disposition/acquisition losses (gains) |  |  |  |  | (3) |  |  | 9 |
Impairment losses |  |  |  |  | 9 |  |  | 1 |
Loss on extinguishment of debt |  |  |  |  | 1 |  |  | 6 |
Adjusted EBITDA |  |  |  |  | $ | 628 |  |  | $ | 621 |
_____________________________ (1)The allocation of earnings to tax equity investors from both consolidated entities and equity affiliates is removed from Adjusted EBITDA.
|  |  | Three Months Ended March 31,
Adjusted EBITDA |  |  |  |  | 2023 |  | 2022
Renewables SBU |  |  |  |  | $ | 124 |  |  | $ | 119 |
Utilities SBU |  |  |  |  | 162 |  |  | 184 |
Energy Infrastructure SBU |  |  |  |  | 363 |  |  | 354 |
New Energy Technologies SBU |  |  |  |  | (26) |  |  | (35) |
Corporate and Other |  |  |  |  | (1) |  |  | 4 |
Eliminations |  |  |  |  | 6 |  |  | (5) |
Adjusted EBITDA |  |  |  |  | $ | 628 |  |  | $ | 621 |
The Company uses long-lived assets as its measure of segment assets. Long-lived assets includes amounts recorded in Property, plant and equipment, net and right-of-use assets for operating leases recorded in Other noncurrent assets on the Condensed Consolidated Balance Sheets.
Long-Lived Assets | March 31, 2023 |  | December 31, 2022
Renewables SBU | $ | 10,611 |  |  | $ | 9,533 |
Utilities SBU | 6,452 |  |  | 6,311 |
Energy Infrastructure SBU | 7,561 |  |  | 7,532 |
New Energy Technologies SBU | 1 |  |  | 2 |
Corporate and Other | 15 |  |  | 17 |
Long-Lived Assets | 24,640 |  |  | 23,395 |
Current assets | 7,643 |  |  | 7,643 |
Investments in and advances to affiliates | 768 |  |  | 952 |
Debt service reserves and other deposits | 180 |  |  | 177 |
Goodwill | 362 |  |  | 362 |
Other intangible assets | 1,862 |  |  | 1,841 |
Deferred income taxes | 324 |  |  | 319 |
Loan receivable | 1,044 |  |  | 1,051 |
Other noncurrent assets, excluding right-of-use assets for operating leases | 2,534 |  |  | 2,623 |
Total Assets | $ | 39,357 |  |  | $ | 38,363 |

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