Torchmark Corp reports 51.8% Net Income decline in 2018
05 Feb 2019 • About Torchmark Corp (
$TMK) • By InTwits
Torchmark Corp reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Torchmark Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- In the last 5 years the company invested considerably less than D&A: $147m vs. $517m. In 2018 this situation was still the same: CAPEX was 45 while D&A was 517
- The company has potentially unprofitable business model: ROIC is 4.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Torchmark Corp's Revenue increased on 3.6%. During 2014-2018 Revenue growth topped in 2017 at 5.6%.
Net Income margin dropped on 18.7 pp from 35.0% to 16.3% in 2018. The efficient tax rate was 18.8% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.0% in 2018. The company's CAPEX/Revenue showed almost no change from 2015 to 2018. For the last three years the average CAPEX/Revenue was 0.73%.
Return on investment
The company operates at good ROE (12.0%) while ROIC is low (4.2%). ROIC showed almost no change in 2018. ROE dropped on 14.9 pp from 26.9% to 12.0% in 2018. During the last 5 years ROIC bottomed in 2017 at 4.2%.
Leverage (Debt)
Debt jumped on 14.0% while cash increased on 2.1%.
Torchmark Corp has short term refinancing risk: cash is only 39.3% of short term debt.
Average interest expence paid by the company was 5.4% in 2018.
The company paid 10.1% of Net Income as dividends in 2018.
Management team
The company's CEO Gary L Coleman has spent 7 years with the company. CEO total compensation was
$15,629,024 in 2018 which included
$1,840,772 salary. The company's CFO Frank M Svoboda has spent 7 years with the company.
At the end of financial year the company had 3,102 employees. Average revenue per employee in 2018 was
$1,387,412.
Financial and operational results
FY ended 31 Dec 2018
Torchmark Corp ($TMK) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 3,620 | 3,766 | 3,935 | 4,156 | 4,304 | 3.6% |
| Interest expence | | | | | 90 | |
| Tax | | | | | 162 | |
| Net Income | 543 | 527 | 550 | 1,454 | 701 | -51.8% |
Balance Sheet
|
|---|
| Cash | 66 | 61 | 76 | 119 | 121 | 2.1% |
| Short Term Debt | 238 | 490 | 264 | 328 | 308 | -6.2% |
| Long Term Debt | 992 | 744 | 1,133 | 1,132 | 1,357 | 19.9% |
Cash flow
|
|---|
| Capex | 19 | 37 | 25 | 20 | 45 | 122.3% |
| Dividends | | | | | 71 | |
Ratios
|
|---|
| Revenue growth | -4.0% | 4.0% | 4.5% | 5.6% | 3.6% | |
|
|---|
| Net Income Margin | 15.0% | 14.0% | 14.0% | 35.0% | 16.3% | -18.7% |
| CAPEX, % of revenue | 0.5% | 1.0% | 0.6% | 0.5% | 1.0% | 0.6% |
|
|---|
| ROIC | 4.6% | 4.3% | 4.2% | 4.2% | 4.2% | 0.0% |
| ROE | 12.8% | 12.0% | 12.8% | 26.9% | 12.0% | -14.9% |
| Interest expence / Average debt | | | | | 5.4% | |
People
|
|---|
| Employees | | | | | 3,102 | |
| Revenue/Employee, th. $ | | | | | 1,387 | |
Peers in Life Insurance
Below we provide Torchmark Corp benchmarking against other companies in Life Insurance 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 |
|---|
| Shin Kong Financial Hldg Co ($SKFS) | | 2.9% | 14.0% | 31.3% | |
| Cathay Financial Hldg Co ($CFHS) | 14.8% | 9.3% | -27.6% | 20.4% | |
| Sagicor Financial Corp ($SFI) | -2.8% | 7.5% | 2.6% | 8.0% | |
| Standard Life ($SL.) | | -46.4% | 110.6% | -9.3% | |
| Aviva ($AV.A) | 25.6% | -45.7% | 133.9% | -9.9% | |
| |
|---|
| Median (5 companies) | 14.8% | -31.3% | 44.0% | 8.0% | |
|---|
| Torchmark Corp ($TMK) | | 4.0% | 4.5% | 5.6% | 3.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sagicor Financial Corp ($SFI) | 2.1% | 1.6% | 1.6% | 1.1% | |
| Cathay Financial Hldg Co ($CFHS) | 0.2% | 0.2% | 0.7% | 0.6% | |
| Shin Kong Financial Hldg Co ($SKFS) | 0.4% | 0.8% | 0.4% | 0.3% | |
| Standard Life ($SL.) | 0.1% | 0.1% | 0.1% | 0.2% | |
| Aviva ($AV.A) | 0.3% | 0.2% | 0.1% | 0.1% | |
| |
|---|
| Median (5 companies) | 0.3% | 0.2% | 0.4% | 0.3% | |
|---|
| Torchmark Corp ($TMK) | 0.5% | 1.0% | 0.6% | 0.5% | 1.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sagicor Financial Corp ($SFI) | | | 4.7% | 3.8% | |
| Cathay Financial Hldg Co ($CFHS) | 1.3% | 1.3% | 0.8% | 0.9% | |
| Aviva ($AV.A) | 1.0% | 0.6% | 0.4% | 0.7% | |
| Shin Kong Financial Hldg Co ($SKFS) | 0.7% | 0.5% | 0.4% | 0.6% | |
| Standard Life ($SL.) | 0.5% | 0.4% | 0.5% | 0.6% | |
| |
|---|
| Median (5 companies) | 0.7% | 0.6% | 0.6% | 0.7% | |
|---|
| Torchmark Corp ($TMK) | 4.6% | 4.3% | 4.2% | 4.2% | 4.2% |
