International Bus Mach Corp Net Income surged on 51.7% and Revenue increased slightly on 0.57%
22 Jan 2019 • About International Bus Mach Corp (
$IBM) • By InTwits
International Bus Mach Corp reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- International Bus Mach Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.2%. At the same time it's a lot of higher than industry average of 2.5%.
- CAPEX is quite volatile: 19,836 PKRm in FY2018, 11,353 PKRm in FY2017, 7,389 PKRm in FY2016, 9,857 PKRm in FY2015, 5,603 PKRm in FY2014
- The company has highly profitable business model: ROIC is 19.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.7x while industry average is -1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased slightly on 0.57%. Revenue growth showed slowdown in 18Q4 - it was -3.5% YoY. During the last 5 years Revenue growth bottomed in 2015 at -11.9% and was accelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 19.7% to 12.1% in FY2018. During the last 5 years EBITDA Margin bottomed in 2016 at 19.8% and was growing since that time.
Gross Margin showed almost no change in 2018. Gross Margin followed a declining trend at -1.0 pp per annum in 2014-2018. SG&A as a % of Revenue decreased slightly on 0.54 pp from 24.9% to 24.3% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2016 at 26.4% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. During the last 5 years SBC as a % of Revenue topped in 2016 at 0.68% and was declining since that time.
Net Income margin increased on 3.7 pp from 7.3% to 11.0% in 2018. The efficient tax rate was 23.1% in 2018 while the average for the last five years was 23.1%.
Investments (CAPEX, working capital and M&A)
In 2018 International Bus Mach Corp had CAPEX/Revenue of 4.3%. The company's CAPEX/Revenue showed almost no change from 2015 to 2018. Average CAPEX/Revenue for the last three years was 4.3%.
Inventories as a % of Revenue showed almost no change at 2.1% in 2018. Accounts payable as a % of Revenue showed almost no change in 2018.
International Bus Mach Corp has spent
$139m on M&A in 2018 which accounts for 0.17% of revenue.
Return on investment
The company operates at high and attractive ROE (50.8%) while ROIC is a bit lower (19.8%). ROIC showed almost no change in 2018. ROE surged on 18.7 pp from 32.1% to 50.8% in 2018. ROIC declined at -3.4 pp per annum in 2014-2018.
Leverage (Debt)
Debt level is 1.7x Net Debt / EBITDA and 2.4x Debt / EBITDA. Net Debt / EBITDA decreased on 0.1x from 1.8x to 1.7x in 2018. Debt decreased slightly on 2.0% while cash decreased on 5.0%. Net Debt/EBITDA grew at 0.2x per annum in 2014-2018.
International Bus Mach Corp has good short term financial stability: Interest coverage ratio (ICR) is 16.9x. International Bus Mach Corp has no short term refinancing risk: cash is higher than short term debt (111.5%).
Average interest expence paid by the company was 1.8% in 2018.
The company paid 64.9% of Net Income as dividends in 2018. Dividends grew on average at 5.8% per annum in the last 5 years).
Management team
The company's CEO is Virginia M Rometty "Ginni". Virginia M Rometty "Ginni" has 7 years tenure with the company. CEO total compensation was
$17,552,218 in 2018 which included
$1,600,000 salary. James J Kavanaugh "Jim" is a the company's CFO. James J Kavanaugh "Jim" has spent 2 years at the company.
Insider ownership is 0.086%. Insider ownership didn't change in 2018.
At the end of financial year the company had 350,600 employees. The number of employees decreased on 4.4%. Average revenue per employee in 2018 was
$227,014 and it increased on 5.2%.
Financial and operational results
FY ended 31 Dec 2018
International Bus Mach Corp ($IBM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 92,793 | 81,741 | 79,919 | 79,139 | 79,591 | 0.6% |
| Gross Profit | 46,407 | 40,684 | 38,294 | 36,943 | 36,936 | -0.0% |
| SG&A | 23,180 | 20,430 | 21,069 | 19,680 | 19,366 | -1.6% |
| EBITDA | 22,282 | 18,862 | 15,855 | 16,214 | 16,671 | 2.8% |
| EBIT | 17,790 | 15,007 | 11,474 | 11,673 | 12,191 | 4.4% |
| Interest expence | 484 | 468 | 630 | 615 | 723 | 17.6% |
| Tax | 4,234 | 2,581 | 449 | 5,642 | 2,619 | -53.6% |
| Net Income | 12,022 | 13,190 | 11,872 | 5,753 | 8,728 | 51.7% |
| Stock Based Compensation | 512 | 468 | 544 | 534 | 510 | -4.5% |
Balance Sheet
|
|---|
| Cash | 8,476 | 7,686 | 7,826 | 11,972 | 11,379 | -5.0% |
| Inventory | 2,103 | 1,551 | 1,553 | 1,583 | 1,682 | 6.3% |
| Accounts Payable | 6,864 | 6,028 | 6,209 | 6,451 | 6,558 | 1.7% |
| Short Term Debt | 5,731 | 6,461 | 7,513 | 6,987 | 10,207 | 46.1% |
| Long Term Debt | 27,244 | 25,483 | 26,811 | 33,366 | 29,344 | -12.1% |
Cash flow
|
|---|
| Capex | 3,740 | 3,579 | 3,567 | 3,229 | 3,395 | 5.1% |
| Dividends | 4,265 | 4,897 | 5,256 | 5,506 | 5,666 | 2.9% |
| Acquisitions | 656 | 3,349 | 5,679 | 496 | 139 | -72.0% |
Ratios
|
|---|
| Revenue growth | -5.7% | -11.9% | -2.2% | -1.0% | 0.6% | |
| EBITDA growth | -7.8% | -15.3% | -15.9% | 2.3% | 2.8% | |
|
|---|
| Gross Margin | 50.0% | 49.8% | 47.9% | 46.7% | 46.4% | -0.3% |
| EBITDA Margin | 24.0% | 23.1% | 19.8% | 20.5% | 20.9% | 0.5% |
| EBIT Margin | 19.2% | 18.4% | 14.4% | 14.7% | 15.3% | 0.6% |
| SG&A, % of revenue | 25.0% | 25.0% | 26.4% | 24.9% | 24.3% | -0.5% |
| SBC, % of revenue | 0.6% | 0.6% | 0.7% | 0.7% | 0.6% | -0.0% |
| Net Income Margin | 13.0% | 16.1% | 14.9% | 7.3% | 11.0% | 3.7% |
| CAPEX, % of revenue | 4.0% | 4.4% | 4.5% | 4.1% | 4.3% | 0.2% |
|
|---|
| ROIC | 31.6% | 29.7% | 21.5% | 19.5% | 19.8% | 0.3% |
| ROE | 69.4% | 101.0% | 73.0% | 32.1% | 50.8% | 18.7% |
| Net Debt/EBITDA | 1.1x | 1.3x | 1.7x | 1.8x | 1.7x | -0.1x |
| Interest expence / Average debt | 1.5% | 1.4% | 1.9% | 1.6% | 1.8% | 0.2% |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.0% |
| Employees | 379,592 | 377,757 | 380,300 | 366,600 | 350,600 | -4.4% |
| Revenue/Employee, th. $ | 244 | 216 | 210 | 216 | 227 | 5.2% |
International Bus Mach Corp ($IBM) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 19,072 | 20,003 | 18,755 | 21,760 | | 5.1% | 3.7% | -2.1% | -3.5% |
| EBITDA | 2,511 | 4,094 | 4,326 | 5,740 | | -0.8% | 13.2% | 8.5% | -1.2% |
| Net Income | 1,679 | 2,404 | 2,694 | 1,951 | | -4.1% | 3.1% | -1.2% | |
Balance Sheet
|
|---|
| Cash | 11,949 | 10,741 | 11,563 | 11,379 | | 18.4% | -8.2% | 5.9% | -5.0% |
| Short Term Debt | 5,977 | 7,646 | 10,932 | 10,207 | | -28.3% | -5.1% | 154.3% | 46.1% |
| Long Term Debt | 33,718 | 31,498 | 29,695 | 29,344 | | 27.4% | 17.0% | -0.5% | -12.1% |
Ratios
|
|---|
| Gross Margin | 43.2% | 46.0% | 46.9% | 49.1% | | -0.5% | -0.5% | 1.0% | 0.1% |
| EBITDA Margin | 13.2% | 20.5% | 23.1% | 26.4% | | -0.8% | 1.7% | 2.3% | 0.6% |
| Net Income Margin | 8.8% | 12.0% | 14.4% | 9.0% | | -0.8% | -0.1% | 0.1% | 13.6% |
Peers in Software & Computer Services
Below we provide International Bus Mach Corp benchmarking against other companies in Software & Computer Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Pinnacle Technology Group ($PINN) | -17.1% | | | 108.6% | |
| Wandisco ($WAND) | 40.0% | -2.0% | 3.5% | 72.6% | |
| Microgen ($MCGN) | -0.0% | 7.2% | 34.5% | 45.7% | |
| Lombard Risk Management ($LRM) | 21.6% | 5.4% | 10.3% | 44.8% | |
| Zoo Digital Group ($ZOO) | | 19.9% | 1.5% | 41.7% | 73.2% |
| |
|---|
| Median (39 companies) | 0.6% | 6.3% | 11.7% | 12.4% | 34.8% |
|---|
| International Bus Mach Corp ($IBM) | | -11.9% | -2.2% | -1.0% | 0.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lombard Risk Management ($LRM) | 99.2% | 98.6% | 99.3% | 99.6% | |
| Netcall ($NET) | 91.0% | 90.9% | 91.2% | 91.7% | 90.2% |
| Wandisco ($WAND) | 80.7% | 93.2% | 88.1% | 90.0% | |
| Eleco ($ELCO) | 87.8% | 88.9% | 86.7% | 87.9% | |
| Dotdigital Group ($DOTD) | 90.5% | 89.3% | 87.4% | 86.1% | 78.9% |
| |
|---|
| Median (33 companies) | 57.6% | 58.8% | 60.0% | 57.0% | 40.4% |
|---|
| International Bus Mach Corp ($IBM) | 50.0% | 49.8% | 47.9% | 46.7% | 46.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rightster Group ($RSTR) | -146.3% | -64.1% | -19.9% | 114.2% | |
| Dotdigital Group ($DOTD) | 29.2% | 32.0% | 30.4% | 31.7% | 26.9% |
| Sopheon ($SPE) | 6.8% | 19.8% | 22.6% | 27.9% | |
| Mail.Ru Group Ltd ($61HE) | 50.5% | 34.6% | 35.2% | 25.1% | |
| Gresham Computing ($GHT) | 8.8% | 18.1% | 20.6% | 22.6% | |
| |
|---|
| Median (39 companies) | 10.3% | 12.3% | 10.2% | 10.7% | 7.4% |
|---|
| International Bus Mach Corp ($IBM) | 24.0% | 23.1% | 19.8% | 20.5% | 20.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Actual Experience ($ACT) | 2.6% | 6.0% | 39.9% | 48.7% | 3.6% |
| Csf Group ($CSFG) | 2.4% | 7.1% | 4.9% | 8.5% | 16.5% |
| Pennant International Group ($PEN) | 1.4% | 0.2% | 6.3% | 7.1% | |
| Nasstar ($NASA) | 2.1% | 5.2% | 8.9% | 6.5% | |
| Oxford Metrics ($OMG) | 2.8% | 2.4% | 1.8% | 5.8% | 3.9% |
| |
|---|
| Median (39 companies) | 1.7% | 1.1% | 1.2% | 1.3% | 1.0% |
|---|
| International Bus Mach Corp ($IBM) | 4.0% | 4.4% | 4.5% | 4.1% | 4.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rm ($RM.) | 130.8% | 289.2% | 254.7% | 73.8% | |
| Triad Group ($TRD) | 24.5% | 61.5% | 74.4% | 61.1% | 41.0% |
| Sopheon ($SPE) | -10.5% | 14.7% | 22.7% | 32.3% | |
| Dotdigital Group ($DOTD) | 28.5% | 31.4% | 28.9% | 29.3% | 26.6% |
| Microgen ($MCGN) | 9.0% | 12.1% | 15.4% | 18.4% | |
| |
|---|
| Median (41 companies) | 9.0% | 4.0% | 7.1% | 6.3% | 6.0% |
|---|
| International Bus Mach Corp ($IBM) | 31.6% | 29.7% | 21.5% | 19.5% | 19.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Datatec ($DTC) | 0.3x | 0.4x | 1.1x | 10.2x | |
| Progility ($PGY) | 1.8x | 12.8x | 6.8x | 3.9x | |
| Zoo Digital Group ($ZOO) | | | 38.3x | 3.2x | 0.9x |
| Statpro Group ($SOG) | -0.3x | -0.2x | | 3.0x | |
| Idox ($IDOX) | 1.0x | 1.3x | 1.2x | 2.2x | |
| |
|---|
| Median (31 companies) | -0.3x | -0.6x | -0.9x | -0.5x | -0.5x |
|---|
| International Bus Mach Corp ($IBM) | 1.1x | 1.3x | 1.7x | 1.8x | 1.7x |
