XML 33 R22.htm IDEA: XBRL DOCUMENT v3.22.2
Segment Information
 6 Months Ended
Jun. 30, 2022
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. Goodwill impairment charges are recognized in Corporate unallocated. Refer to Note 5: Goodwill for discussion of goodwill impairment recognized during the second quarter of 2022. 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.

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 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 Energy Management suite of products 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 June 30,Six Months Ended June 30,
In thousands2022202120222021
Product revenues
Device Solutions$103,433 $160,647 $241,319 $330,978 
Networked Solutions241,592 235,167 490,860 493,870 
Outcomes14,873 15,905 27,529 29,675 
Total Company$359,898 $411,719 $759,708 $854,523 
Service revenues
Device Solutions$1,377 $2,320 $3,056 $4,770 
Networked Solutions27,870 29,891 57,422 59,502 
Outcomes42,737 45,482 87,027 90,191 
Total Company$71,984 $77,693 $147,505 $154,463 
Total revenues
Device Solutions$104,810 $162,967 $244,375 $335,748 
Networked Solutions269,462 265,058 548,282 553,372 
Outcomes57,610 61,387 114,556 119,866 
Total Company$431,882 $489,412 $907,213 $1,008,986 
Gross profit
Device Solutions$13,878 $30,452 $35,684 $62,748 
Networked Solutions89,909 95,953 181,260 208,712 
Outcomes22,318 23,470 44,385 45,459 
Total Company$126,105 $149,875 $261,329 $316,919 
Operating income (loss)
Device Solutions$5,459 $19,988 $17,037 $41,689 
Networked Solutions62,282 64,630 123,289 143,921 
Outcomes9,109 12,537 17,450 22,873 
Corporate unallocated(110,377)(104,087)(184,484)(184,475)
Total Company(33,527)(6,932)(26,708)24,008 
Total other income (expense)(2,697)(25,729)(4,761)(38,428)
Loss before income taxes$(36,224)$(32,661)$(31,469)$(14,420)

For the three and six months ended June 30, 2022 and 2021, no customer represented more than 10% of total company revenue.
Revenues by region were as follows:
Three Months Ended June 30,Six Months Ended June 30,
In thousands2022202120222021
United States and Canada$311,831 $308,673 $629,724 $634,209 
Europe, Middle East, and Africa96,921 150,851 226,227 311,220 
Asia Pacific23,130 29,888 51,262 63,557 
Total Company$431,882 $489,412 $907,213 $1,008,986 

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 June 30,Six Months Ended June 30,
In thousands2022202120222021
Device Solutions$3,549 $5,609 $7,483 $11,797 
Networked Solutions4,285 4,252 8,725 8,527 
Outcomes1,218 1,129 2,127 2,363 
Corporate unallocated7,362 10,119 14,916 20,232 
Total Company$16,414 $21,109 $33,251 $42,919