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Segment Information | 6 Months Ended
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Jun. 30, 2024
Segment Reporting [Abstract] |
Segment Information | 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. 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. These products generally do not have communications capability or may be designed for use with non-Itron systems. 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 and designed to meet market requirements; and the implementation and installation of said hardware products. Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated head-end management and 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. The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR); advanced metering infrastructure (AMI) for electricity, water and gas; distributed energy resource management (DERMs); smart grid and distribution automation; smart street lighting; and leak detection and applications for both gas and water systems. Our IIoT platform allows utility and smart city applications to be run and managed on a flexible multi-purpose network. Outcomes – This segment primarily includes our value-added, enhanced software and services, artificial intelligence, and machine learning in which we enable grid edge intelligence and manage, organize, analyze, and interpret raw, anonymized data to improve decision making, maximize operational profitability, enhance resource efficiency, improve grid analytics, and deliver results for consumers, utilities, and smart cities. Outcomes supports high-value use cases, such as data management, grid operations, distributed intelligence, AMI operations, gas distribution and safety, water operations management, revenue assurance, DERMs, energy forecasting, consumer engagement, smart payment, and fleet energy resource management. Utilities leverage these outcomes to unlock the capabilities of their networks and devices, improve the productivity of their workforce, increase the reliability of their operations, manage and optimize the proliferation of distributed energy resources (DERs), address grid complexity, and enhance the customer experience. Revenue from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other third-parties' products on behalf of our end customers. 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 thousands | 2024 |  | 2023 |  | 2024 |  | 2023
Product revenues |  |  |  |  |  |  |
Device Solutions | $ | 117,929 |  |  | $ | 112,509 |  |  | $ | 243,837 |  |  | $ | 229,960 |
Networked Solutions | 387,351 |  |  | 330,668 |  |  | 768,656 |  |  | 612,138 |
Outcomes | 27,627 |  |  | 21,626 |  |  | 48,236 |  |  | 39,029 |
Total Company | $ | 532,907 |  |  | $ | 464,803 |  |  | $ | 1,060,729 |  |  | $ | 881,127 |
Service revenues |  |  |  |  |  |  |
Device Solutions | $ | 621 |  |  | $ | 651 |  |  | $ | 1,465 |  |  | $ | 1,454 |
Networked Solutions | 25,353 |  |  | 30,262 |  |  | 51,564 |  |  | 62,260 |
Outcomes | 50,188 |  |  | 45,354 |  |  | 98,753 |  |  | 90,847 |
Total Company | $ | 76,162 |  |  | $ | 76,267 |  |  | $ | 151,782 |  |  | $ | 154,561 |
Total revenues |  |  |  |  |  |  |
Device Solutions | $ | 118,550 |  |  | $ | 113,160 |  |  | $ | 245,302 |  |  | $ | 231,414 |
Networked Solutions | 412,704 |  |  | 360,930 |  |  | 820,220 |  |  | 674,398 |
Outcomes | 77,815 |  |  | 66,980 |  |  | 146,989 |  |  | 129,876 |
Total Company | $ | 609,069 |  |  | $ | 541,070 |  |  | $ | 1,212,511 |  |  | $ | 1,035,688 |
Gross profit |  |  |  |  |  |  |
Device Solutions | $ | 31,231 |  |  | $ | 24,719 |  |  | $ | 61,295 |  |  | $ | 48,432 |
Networked Solutions | 152,157 |  |  | 121,873 |  |  | 303,182 |  |  | 227,649 |
Outcomes | 27,072 |  |  | 27,355 |  |  | 51,362 |  |  | 54,234 |
Total Company | $ | 210,460 |  |  | $ | 173,947 |  |  | $ | 415,839 |  |  | $ | 330,315 |
Operating income |  |  |  |  |  |  |
Device Solutions | $ | 23,725 |  |  | $ | 14,084 |  |  | $ | 45,428 |  |  | $ | 28,162 |
Networked Solutions | 117,444 |  |  | 88,593 |  |  | 234,122 |  |  | 163,549 |
Outcomes | 10,651 |  |  | 12,676 |  |  | 19,742 |  |  | 25,587 |
Corporate unallocated | (87,173) |  |  | (80,253) |  |  | (171,845) |  |  | (192,591) |
Total Company | 64,647 |  |  | 35,100 |  |  | 127,447 |  |  | 24,707 |
Total other income (expense) | 2,393 |  |  | (802) |  |  | 4,809 |  |  | (2,516) |
Income before income taxes | $ | 67,040 |  |  | $ | 34,298 |  |  | $ | 132,256 |  |  | $ | 22,191 |
For the three and six months ended June 30, 2024 and 2023, no single 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 thousands | 2024 |  | 2023 |  | 2024 |  | 2023
United States and Canada | $ | 498,388 |  |  | $ | 430,617 |  |  | $ | 980,484 |  |  | $ | 803,459 |
Europe, Middle East, and Africa | 86,781 |  |  | 85,676 |  |  | 185,437 |  |  | 184,420 |
Asia Pacific | 23,900 |  |  | 24,777 |  |  | 46,590 |  |  | 47,809 |
Total Company | $ | 609,069 |  |  | $ | 541,070 |  |  | $ | 1,212,511 |  |  | $ | 1,035,688 |
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 thousands | 2024 |  | 2023 |  | 2024 |  | 2023
Device Solutions | $ | 2,832 |  |  | $ | 3,229 |  |  | $ | 5,430 |  |  | $ | 6,491 |
Networked Solutions | 3,997 |  |  | 4,068 |  |  | 8,015 |  |  | 8,199 |
Outcomes | 1,504 |  |  | 1,224 |  |  | 2,960 |  |  | 2,478 |
Corporate unallocated | 5,186 |  |  | 5,384 |  |  | 9,858 |  |  | 11,200 |
Total Company | $ | 13,519 |  |  | $ | 13,905 |  |  | $ | 26,263 |  |  | $ | 28,368 |

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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 -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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