35 slides from International Business Machines's earnings presentation, Apr 17, 2012
Slide 1: 1Q 2012 Earnings Presentation
IBM® 1Q 2012 Earnings Presentation April 17, 2012 www.ibm.com/investor
Slide 2: Forward Looking Statements and Non-GAAP Information
Forward Looking Statements and Non-GAAP Information Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and f
Slide 3: 1Q 2012 Highlights
1Q 2012 Highlights Revenue $24.7B Flat, 1% yr/yr @CC Operating Net Income $3.3B +9% yr/yr Operating (Non-GAAP) EPS $2.78 +15% yr/yr Free Cash Flow $1.9B +$1.1B yr/yr 1Q Segment highlights: • Continued momentum in Software: Revenue +7% @CC, Profit +12% • Services Profit +11%; growth markets revenue +
Slide 4: Key Financial Metrics
Key Financial Metrics $ in Billions, except EPS P&L Highlights P&L Ratios B/(W) B/(W) (Operating) 1Q12 Yr/Yr 1Q12 Yr/Yr Revenue $24.7 Flat GP Margin 45.7% 1.2 pts @CC 1% PTI Margin 16.7% 0.5 pts NI – Operating $3.3 9% Tax Rate 20.6% 4.4 pts EPS – Operating $2.78 15% NI Margin 13.2% 1.1 pts Cash High
Slide 5: Revenue by Geography
Revenue by Geography $ in Billions B/(W) Yr/Yr 1Q12 Rptd @CC Americas $10.5 1% 2% Canada/ LA Europe/ME/A 7.6 (2%) 1% EMEA Asia Pacific 6.1 4% 1% U.S. Flat OEM 0.5 (17%) (17%) Japan APac IBM $24.7 Flat 1% - 7% @CC Major Markets (1%) Flat OEM Growth Markets 9% 9% BRIC Countries 10% 11% Performance led
Slide 6: Revenue and Gross Profit Margin by Segment
Revenue and Gross Profit Margin by Segment Operating Revenue Gross Profit Margin $ in Billions B/(W) Yr/Yr B/(W) 1Q12 Rptd @CC 1Q12 Yr/Yr Pts Global Technology Services $10.0 2% 3% 35.3% 1.5 pts Global Business Services 4.6 (2%) (1%) 28.0% 0.7 pts Software 5.6 5% 7% 87.0% (0.1 pts) Systems & Technol
Slide 7: Expense Summary
Expense Summary B/(W) B/(W) Yr/Yr Drivers $ in Billions 1Q12 Yr/Yr Currency Acq.* Base SG&A – Operating $5.8 Flat 1 pts (2 pts) 0 pts RD&E – Operating 1.6 Flat 1 pts (2 pts) 2 pts IP and Development Income (0.3) (3%) Other (Income)/Expense (0.1) (71%) Interest Expense 0.1 (18%) Operating Expense & O
Slide 8: Services Segments
Services Segments Global Technology Services (GTS) Global Business Services (GBS) B/(W) Yr/Yr $ in Billions B/(W) Yr/Yr $ in Billions 1Q12 Rptd @CC 1Q12 Rptd @CC Revenue (External) $10.0 2% 3% Revenue (External) $4.6 (2%) (1%) Gross Margin (External) 35.3% 1.5 pts Gross Margin (External) 28.0% 0.7 p
Slide 9: Software Segment
Software Segment B/(W) Yr/Yr $ in Billions 1Q12 Rptd @CC Revenue (External) $5.6 5% 7% Gross Margin (External) 87.0% (0.1 pts) Pre-Tax Income $1.9 12% PTI Margin 30.2% 1.9 pts 1Q12 Revenue Yr/Yr 1Q12 Revenue Rptd @CC (% of Total Software) WebSphere Family 16% 17% Information Management 5% 6% Tivoli
Slide 10: Systems & Technology Segment
Systems & Technology Segment $ in Billions B/(W) Yr/Yr 1Q12 Rptd @CC Revenue (External) $3.7 (7%) (6%) Gross Margin (External) 34.2% (3.6 pts) Pre-Tax Income ($0.1) nm PTI Margin (2.7%) (5.8 pts) 1Q12 Revenue Yr/Yr 1Q12 Revenue Rptd @CC (% of Total Sys & Tech) System z (25%) (24%) Power Systems Flat
Slide 11: Cash Flow Analysis
Cash Flow Analysis B/(W) $ in Billions 1Q12 Yr/Yr FY11 Net Cash from Operations $4.3 $0.5 $19.8 Less: Global Financing Receivables 1.4 (0.5) (0.8) Net Cash from Operations 2.9 1.0 20.7 (excluding GF Receivables) Net Capital Expenditures (1.0) 0.1 (4.1) Free Cash Flow (excluding GF Receivables) 1.9 1
Slide 12: Balance Sheet Summary
Balance Sheet Summary $ in Billions Mar. 11 Dec. 11 Mar. 12 Cash & Marketable Securities $13.2 $11.9 $12.3 Non-GF Assets* 67.4 69.4 70.3 Global Financing Assets 32.3 35.1 32.7 Total Assets 113.0 116.4 115.3 Other Liabilities 59.9 64.9 62.5 Non-GF Debt* 6.5 8.0 8.5 Global Financing Debt 23.7 23.3 23.
Slide 13: Operating EPS Bridge – 1Q11 to 1Q12
Operating EPS Bridge – 1Q11 to 1Q12 $0.15 $2.78 $0.21 $2.41 $0.01 1Q11 Revenue Growth Margin Share 1Q12 Operating EPS @ Actual Expansion Repurchases Operating EPS www.ibm.com/investor 13
Slide 14: 1Q 2012 Summary
2015e At least $20 1Q 2012 Summary Continued strength in growth initiatives • Growth markets +9% yr/yr 2012e $15.00+ • Business analytics +14% yr/yr 2011 $13.44 • Cloud doubled yr/yr • Smarter Planet >25% yr/yr 2010 $11.67 • High value content contributes to margin expansion Expanded margins • Opera
Slide 15: www.ibm.com/investor
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Slide 16: Supplemental Materials
Supplemental Materials Supplemental Materials Some columns and rows in these materials, including the supplemental exhibits, may not add due to rounding Currency – Year/Year Comparison Supplemental Segment Information – Global Services Supplemental Segment Information – Systems & Technology, Softwar
Slide 17: Currency – Year/Year Comparison
Supplemental Materials Currency – Year/Year Comparison Quarterly Averages per US $ 4/16 Yr/Yr @ 4/16 Spot 1Q12 Yr/Yr Spot 2Q12 3Q12 4Q12 Euro 0.76 (4%) 0.76 (10%) (8%) (3%) Pound 0.64 (2%) 0.63 (3%) (1%) 1% Yen 79 4% 80 1% (4%) (4%) IBM Revenue Impact (1 pts) ~(3pts) ~(3 pts) ~(0-1 pts) (US$B) Yr/Yr
Slide 18: Supplemental Segment Information – 1Q 2012
Supplemental Materials Supplemental Segment Information – 1Q 2012 Supplemental Revenue Information Supplemental Backlog / Signings Information Revenue Growth $ in Billions Backlog Global Services Yr/Yr @CC Global Services 1Q12 Yr/Yr @CC GTS Outsourcing 2% 3% Total Backlog $139 ($3) $1 Integrated Tec
Slide 19: Supplemental Segment Information – 1Q 2012
Supplemental Materials Supplemental Segment Information – 1Q 2012 Revenue Growth Revenue Growth Systems & Technology Yr/Yr @CC GP% Share Software Yr/Yr @CC System z (25%) (24%) WebSphere Family 16% 17% = Information Management 5% 6% Power Systems Flat 1% Tivoli 5% 6% System x Flat Flat = Lotus Flat
Slide 20: Global Financing Portfolio
Supplemental Materials Global Financing Portfolio 1Q12 – $25.1B Net External Receivables Invest ment Grade N o n- Invest ment Grad e 62% 38% 40% 30% 20% 38% 24% 22% 10% 5% 10% 1% 0% A aa-A3 B aa1-B aa3 B a1-Ba2 Ba3-B 1 B 2-B3 Caa-D 1Q12 4Q11 1Q11 Identified Loss Rate 0.8% 0.8% 1.2% Anticipated Loss
Slide 21: Revenue by Key Industry Sales Unit
Supplemental Materials Revenue by Key Industry Sales Unit $ in Billions B/(W) Yr/Yr 1Q12 Rptd @CC Public Financial Services $7.1 (2%) (2%) Industrial Public 3.8 3% 3% Financial Distribution Industrial 2.5 2% 3% Services Comms Distribution 2.3 Flat Flat General Communications 2.3 Flat 1% Business Gen
Slide 22: Cash Flow (FAS 95)
Supplemental Materials Cash Flow (FAS 95) $ in Billions 1Q12 1Q11 Net Income from Operations $3.1 $2.9 Depreciation / Amortization of Intangibles 1.2 1.2 Stock-based Compensation 0.2 0.2 Working Capital / Other (1.5) (2.4) Global Financing A/R 1.4 1.9 Net Cash provided by Operating Activities 4.3 3.
Slide 23: Non-GAAP Supplemental Materials
Supplemental Materials Non-GAAP Supplemental Materials In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company also discusses, in its earnings press release and earnings presentation m
Slide 24: Non-GAAP Supplemental Materials: Cash Flow
Supplemental Materials Non-GAAP Supplemental Materials Cash Flow Management uses a free cash flow measure to evaluate the company’s operating results, plan share repurchase levels, evaluate strategic investments and assess the company’s ability and need to incur and service debt. The entire free cas
Slide 25: Reconciliation of Operating Earnings Per Share
Supplemental Materials Non-GAAP Supplemental Materials Non-GAAP Reconciliation of Operating Earnings Per Share 2012 Expectations IBM GAAP EPS $14.27+ IBM Operating EPS (Non-GAAP) $15.00+ Adjustments Acquisition-Related Charges * $0.47 Amortization of Purchased Intangibles $0.43 Other Acquisition-Rel
Slide 26: GAAP to Operating (Non-GAAP) Bridge – 1Q 2012
Supplemental Materials Non-GAAP Supplemental Materials GAAP to Operating (Non-GAAP) Bridge – 1Q 2012 $ in Millions, except EPS Acquisition-related Retirement-related Operating GAAP Adjustments* Adjustments** (Non-GAAP) Gross Profit $11,118 $89 $71 $11,278 SG&A 5,886 (84) (36) 5,766 RD&E 1,601 0 4 1,
Slide 27: GAAP to Operating (Non-GAAP) Bridge – 1Q 2011
Supplemental Materials Non-GAAP Supplemental Materials GAAP to Operating (Non-GAAP) Bridge – 1Q 2011 $ in Millions, except EPS Acquisition-related Retirement-related Operating GAAP Adjustments* Adjustments** (Non-GAAP) Gross Profit $10,858 $85 $14 $10,957 SG&A 5,826 (76) (10) 5,740 RD&E 1,587 0 19 1
Slide 28: GAAP to Operating (Non-GAAP) Bridge – 1Q 2012
Supplemental Materials Non-GAAP Supplemental Materials GAAP to Operating (Non-GAAP) Bridge – 1Q 2012 Acquisition- Retirement- related related Operating GAAP Adjustments* Adjustments ** (Non-GAAP) Gross Profit Margin 45.1% 0.4 pts 0.3 pts 45.7% PTI Margin 15.5% 0.7 pts 0.4 pts 16.7% Tax Rate *** 20.1
Slide 29: GAAP to Operating (Non-GAAP) Bridge – 1Q 2011
Supplemental Materials Non-GAAP Supplemental Materials GAAP to Operating (Non-GAAP) Bridge – 1Q 2011 Acquisition- Retirement- related related Operating GAAP Adjustments* Adjustments ** (Non-GAAP) Gross Profit Margin 44.1% 0.3 pts 0.1 pts 44.5% PTI Margin 15.5% 0.7 pts 0.0 pts 16.2% Tax Rate *** 25.0
Slide 30: Reconciliation of Free Cash Flow (excluding GF Receivables)
Supplemental Materials Non-GAAP Supplemental Materials Reconciliation of Free Cash Flow (excluding GF Receivables) $ in Billions 12 months ended 3/31/12 Net Cash from Operations $20.3 Less: Global Financing Receivables (1.3) Net Cash from Operations (excluding GF Receivables) 21.7 Net Capital Expend
Slide 31: Reconciliation of Revenue Growth
Supplemental Materials Non-GAAP Supplemental Materials Reconciliation of Revenue Growth 1Q12 Yr/Yr As Rptd @CC Growth Markets – Services 9% 10% Growth Markets – ITS 13% 14% Growth Markets – System x 19% 17% Canada 8% 9% UK 8% 10% Japan (4%) (7%) The above serves to reconcile the Non-GAAP financial i
Slide 32: Reconciliation of B/(W) Yr/Yr Expense Drivers – 1Q12
Supplemental Materials Non-GAAP Supplemental Materials Reconciliation of B/(W) Yr/Yr Expense Drivers – 1Q12 Non-GAAP Operating GAAP Adjustments (Non-GAAP) SG&A Currency 1 pts 0 pts 1 pts Acquisitions (2 pts) 0 pts (2 pts) Base 0 pts 0 pts 0 pts RD&E Currency 1 pts 0 pts 1 pts Acquisitions (2 pts) 0
Slide 33: Reconciliation of Debt-to-Capital Ratio
Supplemental Materials Non-GAAP Supplemental Materials Reconciliation of Debt-to-Capital Ratio 1Q11 FY11 1Q12 Non-Global Financing Debt / Capital 25% 32% 33% IBM Consolidated Debt / Capital 57% 61% 61% The above serves to reconcile the Non-GAAP financial information contained in the “Balance Sheet S
Slide 34: Reconciliation of Operating EPS Bridge 1Q11 to 1Q12
Supplemental Materials Non-GAAP Supplemental Materials Reconciliation of Operating EPS Bridge 1Q11 to 1Q12 Acquisition- related Retirement-related Operating GAAP Adjustments* Adjustments** (Non-GAAP) 1Q11 EPS $2.31 $0.09 $0.01 $2.41 Revenue growth @ actual 0.01 0.00 0.00 0.01 Margin expansion 0.15 0
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