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%
01/21/2021 • About International Bus Mach Corp (
$IBM) • By InTwits
International Bus Mach Corp reported FY2020 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: 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 in pair with industry average of 3.5%
- CAPEX is quite volatile: $78m in FY2020, $59m in FY2019, $34m in FY2018, $37m in FY2017, $48m 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 1.8x
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 decreased on 4.6%. During FY2016-FY2020 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 slightly on 0.57 pp from 16.0% to 16.6% in FY2020. During FY2016-FY2020 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 FY2016-FY2020 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)
International Bus Mach Corp's CAPEX/Revenue was 4.1% in FY2020. The company's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years 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 jumped 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 stuck to a growing trend 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%).
Valuation and dividends
The company's trades at EV/EBITDA 12.5x and P/E 19.1x.
Management team
The company's CEO Arvind Krishna has spent 11 months with the company. International Bus Mach Corp'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. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 79,919 | 79,139 | 79,591 | 77,147 | 73,620 | -4.6% |
| Gross Profit | 38,294 | 36,943 | 36,936 | 36,488 | 35,575 | -2.5% |
| SG&A | 21,069 | 19,680 | 19,366 | 20,604 | 23,082 | 12.0% |
| EBITDA | 15,855 | 16,214 | 16,671 | 15,954 | 12,855 | -19.4% |
| EBIT | 11,474 | 11,673 | 12,191 | | | |
| Interest expence | 630 | 615 | 723 | | | |
| Tax | 449 | 5,642 | 2,619 | | | |
| Net Income | 11,872 | 5,753 | 8,728 | 9,431 | 5,590 | -40.7% |
| Stock Based Compensation | 544 | 534 | 510 | | | |
Balance Sheet
|
|---|
| Cash | 7,826 | 11,972 | 11,379 | 8,172 | 13,212 | 61.7% |
| Inventory | 1,553 | 1,583 | 1,682 | | | |
| Accounts Payable | 6,209 | 6,451 | 6,558 | | | |
| Short Term Debt | 7,513 | 6,987 | 10,207 | 10,177 | 8,540 | -16.1% |
| Long Term Debt | 26,811 | 33,366 | 29,344 | 57,981 | 57,929 | -0.1% |
Cash flow
|
|---|
| Capex | 3,567 | 3,229 | 3,395 | 2,370 | 3,042 | 28.4% |
| Dividends | 5,256 | 5,506 | 5,666 | | | |
| Acquisitions | 5,679 | 496 | 139 | | | |
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 Margin | 47.9% | 46.7% | 46.4% | 47.3% | 48.3% | 1.0% |
| EBITDA Margin | 19.8% | 20.5% | 20.9% | 20.7% | 17.5% | -3.2% |
| EBIT Margin | 14.4% | 14.7% | 15.3% | | |
| SG&A, % of revenue | 26.4% | 24.9% | 24.3% | 26.7% | 31.4% | 4.6% |
| SBC, % of revenue | 0.7% | 0.7% | 0.6% | | |
| Net Income Margin | 14.9% | 7.3% | 11.0% | 12.2% | 7.6% | -4.6% |
| CAPEX, % of revenue | 4.5% | 4.1% | 4.3% | 3.1% | 4.1% | 1.1% |
|
|---|
| ROIC | 21.5% | 19.5% | 19.8% | 13.0% | 6.7% | -6.3% |
| ROE | 73.0% | 32.1% | 50.8% | 50.1% | 27.0% | -23.1% |
| Net Debt/EBITDA | 1.7x | 1.8x | 1.7x | 3.8x | 4.1x | 0.4x |
| Interest expence / Average debt | 1.8% | 1.6% | 1.8% | | | |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | | | |
| Employees | 380,300 | 366,600 | 350,600 | | | |
| Revenue/Employee, th. $ | 210 | 216 | 227 | | | |
International Bus Mach Corp ($IBM) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 17,571 | 18,123 | 17,560 | 20,368 | | - | - | - | - |
| EBITDA | 1,977 | 3,549 | 3,951 | 3,379 | | - | - | - | - |
| Net Income | 1,175 | 1,361 | 1,698 | 1,356 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 11,218 | 12,041 | 14,393 | 13,212 | | - | - | - | - |
| Short Term Debt | 12,969 | 10,632 | 11,621 | 8,540 | | - | - | - | - |
| Long Term Debt | 56,484 | 59,133 | 58,764 | 57,929 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 45.1% | 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Unisys Corp ($UIS) | - | -2.8% | 3.0% | 4.4% | -31.3% |
| |
|---|
| Median (1 company) | - | -2.8% | 3.0% | 4.4% | -31.3% |
|---|
| International Bus Mach Corp ($IBM) | - | -1.0% | 0.6% | -3.1% | -4.6% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Unisys Corp ($UIS) | 19.8% | 17.4% | 24.3% | 22.6% | 23.8% |
| |
|---|
| Median (1 company) | 19.8% | 17.4% | 24.3% | 22.6% | 23.8% |
|---|
| International Bus Mach Corp ($IBM) | 47.9% | 46.7% | 46.4% | 47.3% | 48.3% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Unisys Corp ($UIS) | 7.2% | 5.9% | 15.9% | 15.4% | 13.7% |
| |
|---|
| Median (1 company) | 7.2% | 5.9% | 15.9% | 15.4% | 13.7% |
|---|
| International Bus Mach Corp ($IBM) | 19.8% | 20.5% | 20.9% | 20.7% | 17.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Unisys Corp ($UIS) | 3.0% | 4.1% | 3.8% | 2.9% | 2.9% |
| |
|---|
| Median (1 company) | 3.0% | 4.1% | 3.8% | 2.9% | 2.9% |
|---|
| International Bus Mach Corp ($IBM) | 4.5% | 4.1% | 4.3% | 3.1% | 4.1% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Unisys Corp ($UIS) | - | - | - | - | - |
| |
|---|
| Median (1 company) | - | - | - | - | - |
|---|
| International Bus Mach Corp ($IBM) | 21.5% | 19.5% | 19.8% | 13.0% | 6.7% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Unisys Corp ($UIS) | -0.3x | -0.6x | 0.1x | 0.4x | -0.6x |
| |
|---|
| Median (1 company) | -0.3x | -0.6x | 0.1x | 0.4x | -0.6x |
|---|
| International Bus Mach Corp ($IBM) | 1.7x | 1.8x | 1.7x | 3.8x | 4.1x |
