Note 12 - Segment Reporting

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

12. SEGMENT REPORTING

The Company has three operating segments, which are also its reportable segments: Infrastructure Solutions; Corrosion Protection; and Energy Services. The Company’s operating segments correspond to its management organizational structure. Each operating segment has leadership that reports to the chief operating decision manager (“CODM”). The operating results and financial information reported by each segment are evaluated separately, regularly reviewed and used by the CODM to evaluate segment performance, allocate resources and determine management incentive compensation.

The following disaggregated financial results have been prepared using a management approach that is consistent with the basis and manner with which management internally disaggregates financial information for the purpose of making internal operating decisions. The Company evaluates performance based on stand-alone operating income (loss), which includes acquisition and divestiture expenses and restructuring charges, if applicable.

Financial information by segment was as follows (in thousands):

	Quarter Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenues:
Infrastructure Solutions	$	152,102		$	156,087		$	419,738		$	443,069
Corrosion Protection		60,986			75,901			182,545			217,996
Energy Services		62,796			76,801			205,993			243,368
Total revenues	$	275,884		$	308,789		$	808,276		$	904,433
Gross profit:
Infrastructure Solutions	$	41,358		$	39,569		$	108,395		$	105,026
Corrosion Protection		13,432			17,232			36,460			46,797
Energy Services		5,470			9,991			18,864			30,701
Total gross profit	$	60,260		$	66,792		$	163,719		$	182,524
Operating income (loss):
Infrastructure Solutions (1)	$	23,497		$	18,376		$	58,056		$	33,211
Corrosion Protection (2)		(1,357	)		2,362			(7,105	)		(3,261	)
Energy Services (3)		(41,701	)		2,257			(45,238	)		7,479
Corporate (4)		(7,679	)		(8,346	)		(22,830	)		(23,095	)
Total operating income (loss)		(27,240	)		14,649			(17,117	)		14,334
Other income (expense):
Interest expense		(4,288	)		(3,446	)		(12,174	)		(10,602	)
Interest income		258			268			701			814
Other (5)		245			(5,236	)		1,634			(6,925	)
Total other expense		(3,785	)		(8,414	)		(9,839	)		(16,713	)
Income (loss) before taxes (benefit)	$	(31,025	)	$	6,235		$	(26,956	)	$	(2,379	)

⁽¹⁾  Operating income in the third quarters of 2020 and 2019 includes reversals of $0.2 million and charges of $1.2 million, respectively, related to restructuring (see Note 4). Additionally, the third quarter of 2019 includes $0.5 million of costs primarily related to the divestiture of certain international operations. Operating income in the first nine months of 2020 and 2019 includes $0.4 million and $4.7 million, respectively, of restructuring charges (see Note 4) and $0.2 million and $1.0 million, respectively, of divestiture costs. Additionally, operating income in the first nine months of 2020 includes $0.7 million of impairment reversals while operating income in the first nine months of 2019 includes $9.0 million of impairment charges to assets held for sale.

⁽²⁾  Operating income (loss) in the third quarters of 2020 and 2019 includes $4.5 million and $0.8 million, respectively, of restructuring charges (see Note 4). Operating loss in the first nine months of 2020 and 2019 includes $7.6 million and $4.3 million, respectively, of restructuring charges (see Note 4). Additionally, operating loss in the first nine months of 2019 includes $2.9 million of impairment charges to assets held for sale.

⁽³⁾ Operating income (loss) in the third quarters of 2020 and 2019 includes $0.9 million and $0.1 million, respectively, of restructuring charges (see Note 4). Additionally, operating loss in the third quarter of 2020 includes goodwill impairment charges of $39.4 million. Operating income (loss) in the first nine months of 2020 and 2019 includes $2.2 million and $0.2 million, respectively, of restructuring charges (see Note 4). Additionally, operating loss in the first nine months of 2020 includes $40.7 million of goodwill impairment charges and $1.0 million of definite-lived intangible asset impairment charges.

⁽⁴⁾  Operating loss in the third quarters of 2020 and 2019 includes $0.5 million and $1.1 million, respectively, of restructuring charges (see Note 4) and $0.7 million and $1.3 million, respectively, of divestiture costs. Operating loss in the first nine months of 2020 and 2019 includes $2.0 million and $2.4 million, respectively, of restructuring charges (see Note 4) and $2.0 million and $1.6 million, respectively, of divestiture costs.

⁽⁵⁾  Other income in the third quarter of 2020 includes gains of $1.5 million related to restructuring (see Note 4) and a $0.6 million loss on the sale of Insituform Australia (see Note 1). Other expense in the third quarter of 2019 includes $5.3 million of restructuring charges (see Note 4). Other income (expense) in the first nine months of 2020 and 2019 includes gains of $1.8 million and charges of $6.5 million, respectively, related to restructuring (see Note 4). Other income in the first nine months of 2020 also includes gains of $0.1 million related to divestitures of Insituform Australia and Insituform Spain (see Note 1).

The following table summarizes revenues and gross profit by geographic region (in thousands):

	Quarter Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues: (1)
United States	$	212,407	$	231,904	$	643,074	$	680,666
Canada		34,325		32,124		81,175		89,584
Europe		9,957		16,347		27,820		49,731
Other foreign		19,195		28,414		56,207		84,452
Total revenues	$	275,884	$	308,789	$	808,276	$	904,433
Gross profit: (1)
United States	$	44,808	$	48,331	$	125,778	$	130,950
Canada		7,003		6,424		15,103		14,906
Europe		3,129		4,309		8,333		11,139
Other foreign		5,320		7,728		14,505		25,529
Total gross profit	$	60,260	$	66,792	$	163,719	$	182,524

⁽¹⁾  Revenues and gross profit are attributed to the country of origin