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International Bus Mach Corp reports 40.7% Net Income decline in 2020 and 3.2 pp EBITDA Margin decline from 20.7% to 17.5%

21 Jan 2021 • About International Bus Mach Corp ($IBM) • By InTwits

International Bus Mach Corp reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • International Bus Mach Corp is a company in decline: FY2020 revenue growth was -4.6%, 5 years revenue CAGR was -2.1%
  • International Bus Mach Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.0%. At the same time it's a lot of higher than industry average of 2.1%.
  • CAPEX is quite volatile: £4m in FY2020, £4m in FY2019, £3m in FY2018, £4m in FY2017, £1m in FY2016
  • The company has potentially unprofitable business model: ROIC is 6.7%
  • It operates with high leverage: Net Debt/EBITDA is 4.1x 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


International Bus Mach Corp's Revenue decreased on 4.6%. During the last 5 years Revenue growth topped in FY2018 at 0.57% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.1 pp from 32.3% to 41.4% in FY2020. During the last 5 years EBITDA Margin topped in FY2018 at 20.9% and was declining since that time.

Gross Margin increased slightly on 1.0 pp from 47.3% to 48.3% in FY2020. During the last 5 years Gross Margin bottomed in FY2018 at 46.4% and was growing since that time. SG&A as a % of Revenue increased on 4.6 pp from 26.7% to 31.4% in FY2020. During the last 5 years SG&A as a % of Revenue bottomed in FY2018 at 24.3% and was growing since that time.

Net Income margin decreased on 4.6 pp from 12.2% to 7.6% in FY2020.

Investments (CAPEX, working capital and M&A)


The company's CAPEX/Revenue was 4.1% in FY2020. International Bus Mach Corp's CAPEX/Revenue showed almost no change from FY2017 to FY2020. For the last three years the average CAPEX/Revenue was 3.8%.

Return on investment


The company operates at good ROE (27.0%) while ROIC is low (6.7%). ROIC decreased on 6.3 pp from 13.0% to 6.7% in FY2020. ROE dropped on 23.1 pp from 50.1% to 27.0% in FY2020. ROIC stuck to a declining trend at -3.6 pp per annum in FY2016-FY2020.

Leverage (Debt)


Debt level is 4.1x Net Debt / EBITDA and 5.2x Debt / EBITDA. Net Debt / EBITDA surged on 0.4x from 3.8x to 4.1x in FY2020. Debt decreased on 2.5% while cash jumped on 61.7%. Net Debt/EBITDA grew at 0.7x per annum in FY2016-FY2020.

International Bus Mach Corp has no short term refinancing risk: cash is higher than short term debt (154.7%).

Management team


The company's CEO Arvind Krishna has spent 11 months with the company. The company's CFO James J Kavanaugh "Jim" has spent 3 years with the company.

Financial and operational results


International Bus Mach Corp ($IBM) key annual financial indicators

mln. $201620172018201920202020/2019
P&L
Revenue79,91979,13979,59177,14773,620-4.6%
Gross Profit38,29436,94336,93636,48835,575-2.5%
SG&A21,06919,68019,36620,60423,08212.0%
EBITDA15,85516,21416,67115,95412,855-19.4%
EBIT11,47411,67312,191
Interest expence630615723
Tax4495,6422,619
Net Income11,8725,7538,7289,4315,590-40.7%
Stock Based Compensation544534510
Balance Sheet
Cash7,82611,97211,3798,17213,21261.7%
Inventory1,5531,5831,682
Accounts Payable6,2096,4516,558
Short Term Debt7,5136,98710,20710,1778,540-16.1%
Long Term Debt26,81133,36629,34457,98157,929-0.1%
Cash flow
Capex3,5673,2293,3952,3703,04228.4%
Dividends5,2565,5065,666
Acquisitions5,679496139
Ratios
Revenue growth-2.2%-1.0%0.6%-3.1%-4.6%
EBITDA growth-15.9%2.3%2.8%-4.3%-19.4%

Gross Margin47.9%46.7%46.4%47.3%48.3%1.0%
EBITDA Margin19.8%20.5%20.9%20.7%17.5%-3.2%
EBIT Margin14.4%14.7%15.3%
SG&A, % of revenue26.4%24.9%24.3%26.7%31.4%4.6%
SBC, % of revenue0.7%0.7%0.6%
Net Income Margin14.9%7.3%11.0%12.2%7.6%-4.6%
CAPEX, % of revenue4.5%4.1%4.3%3.1%4.1%1.1%

ROIC21.5%19.5%19.8%13.0%6.7%-6.3%
ROE73.0%32.1%50.8%50.1%27.0%-23.1%
Net Debt/EBITDA1.7x1.8x1.7x3.8x4.1x0.4x
Interest expence / Average debt1.8%1.6%1.8%
People
Insider ownership0.1%0.1%0.1%
Employees380,300366,600350,600
Revenue/Employee, th. $210216227

International Bus Mach Corp ($IBM) key quoterly financial indicators

mln. $FY20Q1FY20Q2FY20Q3FY20Q4 YoY change
P&L
Revenue17,57118,12317,56020,368 ----
EBITDA1,9773,5493,9513,379 ----
Net Income1,1751,3611,6981,356 ----
Balance Sheet
Cash11,21812,04114,39313,212 ----
Short Term Debt12,96910,63211,6218,540 ----
Long Term Debt56,48459,13358,76457,929 ----
Ratios
Gross Margin45.1%48.0%48.0%51.7% ----
EBITDA Margin 11.3% 19.6% 22.5% 16.6% ----
Net Income Margin 6.7% 7.5% 9.7% 6.7% ----

Peers in Software & Computer Services


Below you can find International Bus Mach Corp benchmarking vs. other companies in Software & Computer Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Actual Experience ($ACT)2.3%-49.1%195.1%79.7%-
Ideagen ($IDEA)-23.6%33.2%29.2%21.2%
Eagle Eye Solutions Ltd ($EYE)-71.2%24.6%22.8%20.6%
Arcontech Group ($ARC)-7.8%9.2%12.8%4.0%
Oxford Metrics ($OMG)--1.1%8.6%11.7%-14.3%
 
Median (15 companies)11.7%15.9%21.8%6.5%4.0%
International Bus Mach Corp ($IBM)--1.0%0.6%-3.1%-4.6%


Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Craneware ($CRW)94.0%93.8%94.9%93.8%93.7%
Eagle Eye Solutions Ltd ($EYE)78.8%88.3%89.3%93.1%93.5%
Ideagen ($IDEA)88.0%89.5%91.2%91.6%-
Netcall ($NET)91.2%91.7%90.2%89.8%88.3%
Dotdigital Group ($DOTD)87.4%86.1%78.9%89.7%86.6%
 
Median (14 companies)61.5%59.8%56.0%78.0%86.6%
International Bus Mach Corp ($IBM)47.9%46.7%46.4%47.3%48.3%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Dotdigital Group ($DOTD)30.4%31.7%26.9%34.9%37.6%
Arcontech Group ($ARC)14.5%16.7%23.0%32.4%40.4%
Micro Focus International ($MCRO)40.9%38.9%27.5%30.3%-
Craneware ($CRW)32.3%30.4%31.1%30.3%33.4%
Ideagen ($IDEA)23.9%21.8%23.8%23.5%-
 
Median (15 companies)10.5%10.9%12.2%15.4%15.8%
International Bus Mach Corp ($IBM)19.8%20.5%20.9%20.7%17.5%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Netcall ($NET)2.7%0.7%0.8%4.7%0.6%
Unisys Corp ($USY)3.0%4.1%3.8%2.9%2.9%
Micro Focus International ($MCRO)0.8%0.9%0.8%1.7%-
Ideagen ($IDEA)1.6%1.1%1.4%1.5%-
Oxford Metrics ($OMG)1.8%5.8%3.9%1.3%1.0%
 
Median (15 companies)1.1%1.1%0.8%1.1%0.6%
International Bus Mach Corp ($IBM)4.5%4.1%4.3%3.1%4.1%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Craneware ($CRW)27.9%30.0%34.9%33.4%29.8%
Rm ($RM.)254.7%73.8%39.0%31.6%-
Dotdigital Group ($DOTD)28.9%29.3%26.6%25.9%22.8%
Arcontech Group ($ARC)14.5%14.5%17.8%22.9%20.4%
Oxford Metrics ($OMG)16.3%12.7%16.4%14.7%5.0%
 
Median (16 companies)7.0%4.7%5.0%2.0%5.0%
International Bus Mach Corp ($IBM)21.5%19.5%19.8%13.0%6.7%


Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Ncc Group ($NCC)0.5x-0.8x0.5x1.0x
Eagle Eye Solutions Ltd ($EYE)-----0.5x
Unisys Corp ($USY)-0.3x-0.6x0.1x0.4x-0.6x
Dotdigital Group ($DOTD)-2.1x-2.0x-1.3x-1.3x-1.2x
Netcall ($NET)-4.3x-4.3x0.3x-0.3x-1.3x
 
Median (8 companies)-1.0x-0.6x-0.4x-0.1x-1.2x
International Bus Mach Corp ($IBM)1.7x1.8x1.7x3.8x4.1x