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Segment Information | 9 Months Ended
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Sep. 30, 2021
Segment Reporting [Abstract] |
Segment Information | We operate under the Itron brand worldwide and manage and report under three operating segments: Device Solutions, Networked Solutions, and Outcomes. We have three GAAP measures of segment performance: revenues, gross profit (gross margin), and operating income (operating margin). Intersegment revenues are minimal. Certain operating expenses are allocated to the operating segments based upon internally established allocation methodologies. Corporate operating expenses, interest income, interest expense, other income (expense), and the income tax provision (benefit) are neither allocated to the segments, nor are they included in the measure of segment performance. In addition, we allocate only certain production assets and intangible assets to our operating segments. We do not manage the performance of the segments on a balance sheet basis. Segment Products Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing that do not have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products not part of a complete end-to-end solution. Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas, electricity, and water meters for a variety of global markets and adhering to regulations and standards within those markets, as well as our heat and allocation products; communicating meters that are not a part of an Itron end-to-end solution such as Smart Spec meters and the implementation and installation of non-communicating devices, such as gas regulators. Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions includes products and software for the implementation, installation, and management of communicating devices and data networks. Examples from the Networked Solutions portfolio include: communicating measurement, control, or sensing endpoints such as our Itron® OpenWay® Centron and Riva meters, Itron traditional ERT® technology, Intelis smart gas meters, 500G gas communication modules, 500W water communication modules; GenX networking infrastructure products and network interface cards (NICs); Smart City control and management software; Distribution Automation bridge devices, and specific network control and management software applications. The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR), advanced metering infrastructure (AMI), smart grid and distribution automation, smart street lighting and an ever-growing set of smart city applications such as traffic management, smart parking, air quality monitoring, electric vehicle charging, customer engagement, digital signage, acoustic (e.g., gunshot) detection, and leak detection and mitigation for both gas and water systems. Our IIoT platform allows all of these industry and smart city applications to be run and managed on a single, multi-purpose network. Outcomes – This segment primarily includes our value-added, enhanced software and services in which we manage, organize, analyze, and interpret data to improve decision making, maximize operational profitability, drive resource efficiency, and deliver results for consumers, utilities, and smart cities. Outcomes places an emphasis on delivering to Itron customers high-value, turn-key, digital experiences by leveraging the footprint of our Device Solutions and Networked Solutions segments. The revenues from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other products on behalf of our end customers. Examples from the Outcomes portfolio include: our meter data management and analytics offerings; our managed service solutions including Network-as-a-Service (NaaS) and Platform-as-a-Service (PaaS), forecasting software and services; our Distributed Intelligence suite of applications and services; and any consulting-based engagement. Within the Outcomes segment, we also identify new business models, including performance-based contracting, to drive broader portfolio offerings across utilities and cities. Revenues, gross profit, and operating income associated with our operating segments were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2021 |  | 2020 |  | 2021 |  | 2020
Product revenues |  |  |  |  |  |  |
Device Solutions | $ | 149,830 |  |  | $ | 174,039 |  |  | $ | 480,808 |  |  | $ | 501,157 |
Networked Solutions | 242,527 |  |  | 282,677 |  |  | 736,397 |  |  | 898,465 |
Outcomes | 18,590 |  |  | 13,942 |  |  | 48,265 |  |  | 38,158 |
Total Company | $ | 410,947 |  |  | $ | 470,658 |  |  | $ | 1,265,470 |  |  | $ | 1,437,780 |
Service revenues |  |  |  |  |  |  |
Device Solutions | $ | 2,404 |  |  | $ | 2,089 |  |  | $ | 7,174 |  |  | $ | 6,415 |
Networked Solutions | 31,971 |  |  | 23,982 |  |  | 91,473 |  |  | 73,519 |
Outcomes | 41,627 |  |  | 43,455 |  |  | 131,818 |  |  | 130,479 |
Total Company | $ | 76,002 |  |  | $ | 69,526 |  |  | $ | 230,465 |  |  | $ | 210,413 |
Total revenues |  |  |  |  |  |  |
Device Solutions | $ | 152,234 |  |  | $ | 176,128 |  |  | $ | 487,982 |  |  | $ | 507,572 |
Networked Solutions | 274,498 |  |  | 306,659 |  |  | 827,870 |  |  | 971,984 |
Outcomes | 60,217 |  |  | 57,397 |  |  | 180,083 |  |  | 168,637 |
Total Company | $ | 486,949 |  |  | $ | 540,184 |  |  | $ | 1,495,935 |  |  | $ | 1,648,193 |
Gross profit |  |  |  |  |  |  |
Device Solutions | $ | 22,480 |  |  | $ | 20,528 |  |  | $ | 85,228 |  |  | $ | 64,843 |
Networked Solutions | 89,915 |  |  | 102,295 |  |  | 298,627 |  |  | 332,368 |
Outcomes | 22,568 |  |  | 20,428 |  |  | 68,027 |  |  | 56,123 |
Total Company | $ | 134,963 |  |  | $ | 143,251 |  |  | $ | 451,882 |  |  | $ | 453,334 |
Operating income (loss) |  |  |  |  |  |  |
Device Solutions | $ | 12,095 |  |  | $ | 11,017 |  |  | $ | 53,784 |  |  | $ | 28,095 |
Networked Solutions | 61,150 |  |  | 71,404 |  |  | 205,071 |  |  | 237,466 |
Outcomes | 11,774 |  |  | 12,044 |  |  | 34,647 |  |  | 29,468 |
Corporate unallocated | (80,856) |  |  | (118,445) |  |  | (265,331) |  |  | (338,026) |
Total Company | 4,163 |  |  | (23,980) |  |  | 28,171 |  |  | (42,997) |
Total other income (expense) | (4,037) |  |  | (13,063) |  |  | (42,465) |  |  | (35,020) |
Income (loss) before income taxes | $ | 126 |  |  | $ | (37,043) |  |  | $ | (14,294) |  |  | $ | (78,017) |
For the three and nine months ended September 30, 2021 and the three months ended September 30, 2020, no customer represented more than 10% of total company revenue. During the nine months ended September 30, 2020, one customer represented 11% of total company revenues. Revenues by region were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2021 |  | 2020 |  | 2021 |  | 2020
United States and Canada | $ | 323,784 |  |  | $ | 354,841 |  |  | $ | 957,993 |  |  | $ | 1,110,028 |
Europe, Middle East, and Africa | 126,548 |  |  | 156,810 |  |  | 437,768 |  |  | 431,593 |
Asia Pacific and Latin America(1) | 36,617 |  |  | 28,533 |  |  | 100,174 |  |  | 106,572 |
Total Company | $ | 486,949 |  |  | $ | 540,184 |  |  | $ | 1,495,935 |  |  | $ | 1,648,193 |
(1) On June 25, 2020, we sold our Latin American operations. We continue to sell into the region through an exclusive distributor. Depreciation expense is allocated to the operating segments based upon each segment's use of the assets. All amortization expense is recognized within Corporate unallocated. Depreciation and amortization of intangible assets expense associated with our operating segments was as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2021 |  | 2020 |  | 2021 |  | 2020
Device Solutions | $ | 5,911 |  |  | $ | 5,926 |  |  | $ | 17,708 |  |  | $ | 18,423 |
Networked Solutions | 4,274 |  |  | 4,377 |  |  | 12,801 |  |  | 12,447 |
Outcomes | 1,068 |  |  | 1,327 |  |  | 3,431 |  |  | 4,132 |
Corporate unallocated | 10,080 |  |  | 12,446 |  |  | 30,312 |  |  | 37,304 |
Total Company | $ | 21,333 |  |  | $ | 24,076 |  |  | $ | 64,252 |  |  | $ | 72,306 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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