International Bus Mach Corp Debt jumped on 72.3% while Revenue decreased on 3.1%
21 Jan 2020 • About International Bus Mach Corp (
$IBM) • By InTwits
International Bus Mach Corp reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- International Bus Mach Corp is a company in decline: FY2019 revenue growth was -3.1%, 5 years revenue CAGR was -3.6%
- International Bus Mach Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.1%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: £39m in FY2019, £28m in FY2018, £22m in FY2017, £28m in FY2016, £8m in FY2015
- The company has highly profitable business model: ROIC is 13.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.8x while industry average is -1.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
International Bus Mach Corp's Revenue decreased on 3.1%. During the last 5 years Revenue growth topped in FY2018 at 0.57%. EBITDA Margin showed almost no change in FY2019.
Gross Margin increased slightly on 0.89 pp from 46.4% to 47.3% in FY2019. During the last 5 years Gross Margin bottomed in FY2018 at 46.4%. SG&A as a % of Revenue increased on 2.4 pp from 24.3% to 26.7% in FY2019.
Net Income margin increased slightly on 1.3 pp from 11.0% to 12.2% in FY2019. During the last 5 years Net Income margin bottomed in FY2017 at 7.3% and was growing since that time.
Investments (CAPEX, working capital and M&A)
International Bus Mach Corp's CAPEX/Revenue was 3.1% in FY2019. International Bus Mach Corp showed small CAPEX/Revenue decline of 1.4 pp from 4.5% in FY2016 to 3.1% in FY2019. It's average CAPEX/Revenue for the last three years was 3.8%.
Return on investment
The company operates at high and attractive ROE (50.1%) while ROIC is a bit lower (13.0%). ROIC decreased on 6.8 pp from 19.8% to 13.0% in FY2019. ROE decreased slightly on 0.64 pp from 50.8% to 50.1% in FY2019. ROIC stuck to a declining trend at -3.5 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 3.8x Net Debt / EBITDA and 4.3x Debt / EBITDA. Net Debt / EBITDA surged on 2.1x from 1.7x to 3.8x in FY2019. Debt surged on 72.3% while cash dropped on 28.2%.
International Bus Mach Corp has short term refinancing risk: cash is only 80.3% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 3.8x and P/E 0.1x.
Management team
The company's CEO Virginia M Rometty "Ginni" is a founder and has spent 7 years with the company. International Bus Mach Corp's CFO is James J Kavanaugh "Jim". James J Kavanaugh "Jim" has 2 years tenure at the company.
Financial and operational results
FY ended 30 Nov -0001
International Bus Mach Corp ($IBM) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 81,741 | 79,919 | 79,139 | 79,591 | 77,147 | -3.1% |
| Gross Profit | 40,684 | 38,294 | 36,943 | 36,936 | 36,488 | -1.2% |
| SG&A | 20,430 | 21,069 | 19,680 | 19,366 | 20,604 | 6.4% |
| EBITDA | 18,862 | 15,855 | 16,214 | 16,671 | 15,954 | -4.3% |
| EBIT | 15,007 | 11,474 | 11,673 | 12,191 | | |
| Interest expence | 468 | 630 | 615 | 723 | | |
| Tax | 2,581 | 449 | 5,642 | 2,619 | | |
| Net Income | 13,190 | 11,872 | 5,753 | 8,728 | 9,431 | 8.1% |
| Stock Based Compensation | 468 | 544 | 534 | 510 | | |
Balance Sheet
|
|---|
| Cash | 7,686 | 7,826 | 11,972 | 11,379 | 8,172 | -28.2% |
| Inventory | 1,551 | 1,553 | 1,583 | 1,682 | | |
| Accounts Payable | 6,028 | 6,209 | 6,451 | 6,558 | | |
| Short Term Debt | 6,461 | 7,513 | 6,987 | 10,207 | 10,177 | -0.3% |
| Long Term Debt | 25,483 | 26,811 | 33,366 | 29,344 | 57,981 | 97.6% |
Cash flow
|
|---|
| Capex | 3,579 | 3,567 | 3,229 | 3,395 | 2,370 | -30.2% |
| Dividends | 4,897 | 5,256 | 5,506 | 5,666 | | |
| Acquisitions | 3,349 | 5,679 | 496 | 139 | | |
Ratios
|
|---|
| Revenue growth | -11.9% | -2.2% | -1.0% | 0.6% | -3.1% | |
| EBITDA growth | -15.3% | -15.9% | 2.3% | 2.8% | -4.3% | |
|
|---|
| Gross Margin | 49.8% | 47.9% | 46.7% | 46.4% | 47.3% | 0.9% |
| EBITDA Margin | 23.1% | 19.8% | 20.5% | 20.9% | 20.7% | -0.3% |
| EBIT Margin | 18.4% | 14.4% | 14.7% | 15.3% | |
| SG&A, % of revenue | 25.0% | 26.4% | 24.9% | 24.3% | 26.7% | 2.4% |
| SBC, % of revenue | 0.6% | 0.7% | 0.7% | 0.6% | |
| Net Income Margin | 16.1% | 14.9% | 7.3% | 11.0% | 12.2% | 1.3% |
| CAPEX, % of revenue | 4.4% | 4.5% | 4.1% | 4.3% | 3.1% | -1.2% |
|
|---|
| ROIC | 29.7% | 21.5% | 19.5% | 19.8% | 13.0% | -6.8% |
| ROE | 101.0% | 73.0% | 32.1% | 50.8% | 50.1% | -0.6% |
| Net Debt/EBITDA | 1.3x | 1.7x | 1.8x | 1.7x | 3.8x | 2.1x |
| Interest expence / Average debt | 1.5% | 1.9% | 1.6% | 1.8% | | |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | 0.1% | | |
| Employees | 377,757 | 380,300 | 366,600 | 350,600 | | |
| Revenue/Employee, th. $ | 216 | 210 | 216 | 227 | | |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Actual Experience ($ACT) | 23.4% | 2.3% | -49.1% | 195.1% | |
| Micro Focus International ($MCRO) | 92.7% | 49.2% | 29.3% | 128.8% | |
| Proactis Holdings ($PHD) | 69.6% | 12.5% | 31.1% | 105.6% | |
| Zoo Digital Group ($ZOO) | 19.9% | 1.5% | 41.7% | 73.2% | |
| Sanderson Group ($SND) | 16.9% | 11.1% | 1.1% | 48.7% | |
| |
|---|
| Median (16 companies) | 7.2% | 12.2% | 14.1% | 26.9% | 11.7% |
|---|
| International Bus Mach Corp ($IBM) | | -2.2% | -1.0% | 0.6% | -3.1% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Netcall ($NET) | 90.9% | 91.2% | 91.7% | 90.2% | |
| Proactis Holdings ($PHD) | 80.4% | 82.4% | 86.0% | 88.6% | |
| Sanderson Group ($SND) | 84.5% | 84.1% | 82.2% | 79.6% | |
| Dotdigital Group ($DOTD) | 89.3% | 87.4% | 86.1% | 78.9% | |
| Micro Focus International ($MCRO) | 89.0% | 89.1% | 77.2% | 73.0% | |
| |
|---|
| Median (16 companies) | 60.2% | 60.8% | 57.6% | 43.4% | 71.2% |
|---|
| International Bus Mach Corp ($IBM) | 49.8% | 47.9% | 46.7% | 46.4% | 47.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Micro Focus International ($MCRO) | 31.6% | 40.9% | 38.9% | 27.5% | |
| Dotdigital Group ($DOTD) | 32.0% | 30.4% | 31.7% | 26.9% | |
| Proactis Holdings ($PHD) | 26.4% | 23.7% | 3.7% | 25.4% | |
| Oxford Metrics ($OMG) | 28.4% | 23.1% | 19.9% | 23.5% | 21.3% |
| Sanderson Group ($SND) | 20.2% | 19.9% | 19.3% | 17.4% | |
| |
|---|
| Median (16 companies) | 12.3% | 10.3% | 10.9% | 9.7% | 21.3% |
|---|
| International Bus Mach Corp ($IBM) | 23.1% | 19.8% | 20.5% | 20.9% | 20.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Csf Group ($CSFG) | 7.1% | 4.9% | 8.5% | 16.5% | |
| Oxford Metrics ($OMG) | 2.4% | 1.8% | 5.8% | 3.9% | 1.3% |
| Unisys Corp ($USY) | 5.0% | 3.0% | 4.1% | 3.8% | |
| Actual Experience ($ACT) | 6.0% | 39.9% | 48.7% | 3.6% | |
| Proactis Holdings ($PHD) | 1.3% | 0.9% | 0.3% | 2.1% | |
| |
|---|
| Median (16 companies) | 1.0% | 1.1% | 1.2% | 0.9% | 1.3% |
|---|
| International Bus Mach Corp ($IBM) | 4.4% | 4.5% | 4.1% | 4.3% | 3.1% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Triad Group ($TRD) | 61.5% | 74.4% | 61.1% | 41.0% | |
| Rm ($RM.) | 289.2% | 254.7% | 73.8% | 39.0% | |
| Dotdigital Group ($DOTD) | 31.4% | 28.9% | 29.3% | 26.6% | |
| Oxford Metrics ($OMG) | 14.6% | 16.3% | 12.7% | 16.4% | 14.7% |
| Sanderson Group ($SND) | 10.6% | 12.0% | 11.2% | 10.7% | |
| |
|---|
| Median (18 companies) | 4.3% | 7.1% | 5.6% | 5.6% | 7.2% |
|---|
| International Bus Mach Corp ($IBM) | 29.7% | 21.5% | 19.5% | 19.8% | 13.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Micro Focus International ($MCRO) | 5.3x | 2.1x | 6.6x | 4.2x | |
| Proactis Holdings ($PHD) | -0.3x | 0.1x | 1.0x | 2.5x | |
| Zoo Digital Group ($ZOO) | | 38.3x | 3.2x | 0.9x | |
| Netcall ($NET) | -3.4x | -4.3x | -4.3x | 0.3x | |
| Rm ($RM.) | -2.2x | -2.2x | 0.7x | 0.2x | |
| |
|---|
| Median (13 companies) | -0.5x | -0.9x | -0.5x | -0.4x | -1.8x |
|---|
| International Bus Mach Corp ($IBM) | 1.3x | 1.7x | 1.8x | 1.7x | 3.8x |
