International Business Machines Corporation · NYSE:IBM
International Business Machines — Q1 2009 Earnings Presentation
28 slides from International Business Machines's earnings presentation, Apr 20, 2009
Slide 1: 1Q 2009 Earnings Presentation
® 1Q 2009 Earnings Presentation April 20, 2009 www.ibm.com/investor
Slide 2: Forward Looking Statements
Forward Looking Statements Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerni
Slide 3: 1Q 2009 Highlights
1Q 2009 Highlights EPS $1.70 +4% yr/yr Free Cash Flow* $1B +$450M yr/yr ¾ Delivering value to clients through adaptable offerings • Signings +10% yr/yr @CC, longer-term categories +27% @CC ¾ Driving favorable mix • Services, software and financing deliver 99% of segment pre-tax profit ¾ Investing to
Slide 4: Financial Summary
Financial Summary B/(W) $ in Billions, except EPS 1Q09 Yr/Yr Revenue $21.7 (11%) @CC (4%) GP % 43.4% 1.9 pts Expense $6.3 9% Pre-Tax Income $3.1 (2%) PTI Margin 14.4% 1.3 pts Tax Rate 26.5% 1.0 pts Net Income $2.3 (1%) Net Income Margin 10.6% 1.1 pts Shares (Diluted) (M) 1,349.5 4% EPS $1.70 4% Stro
Slide 5: Revenue by Segment
Revenue by Segment $ in Billions B/(W) Yr/Yr 1Q09 Rptd @CC Global Global Technology Services $8.8 (10%) (1%) Business Systems Services & Global Business Services 4.4 (10%) (4%) Technology Global Systems & Technology 3.2 (23%) (18%) Technology Software 4.5 (6%) 2% Services Software Global Financing 0
Slide 6: Revenue by Geography
Revenue by Geography $ in Billions B/(W) Yr/Yr 1Q09 Rptd @CC Canada/ Americas $9.3 (7%) (3%) LA Europe/ME/A 7.2 (18%) (3%) U.S. EMEA Asia Pacific 4.8 (6%) (3%) -5% Total Geographies $21.2 (11%) (3%) APac Japan +3% -10% @CC IBM $21.7 (11%) (4%) @CC OEM Major Markets (10%) (4%) -34% Growth Markets (12
Slide 7: Revenue by Key Industry Sales Unit
Revenue by Key Industry Sales Unit $ in Billions B/(W) Yr/Yr 1Q09 Rptd @CC Financial Services $6.1 (10%) (3%) Public Public 3.6 (3%) 6% Fin’l - Industrial U.S. Industrial 2.4 (20%) (15%) Financial - Distribution Distribution 2.1 (14%) (7%) Rest of Communications 2.2 (10%) Flat World Comms General Bu
Slide 8: Expense Summary
Expense Summary B/(W) Yr/Yr Drivers B/(W) $ in Billions 1Q09 Yr/Yr Currency Acq.* Ops SG&A $5.3 6% 8 pts (2 pts) Flat RD&E 1.5 6% 5 pts (3 pts) 4 pts IP and Development Income (0.3) (2%) Other (Income)/Expense (0.3) 143% Interest Expense 0.1 23% Total Expense & Other $6.3 9% 9 pts (3 pts) 4 pts Inco
Slide 9: Margins by Segment
Margins by Segment External Total Gross Profit Margins Pre-Tax Margins B/(W) B/(W) 1Q09 Yr/Yr Pts 1Q09 Yr/Yr Pts Global Technology Services 33.9% 2.6 pts 12.1% 2.3 pts Global Business Services 26.5% 1.5 pts 11.3% 0.1 pts Systems & Technology 34.0% (3.0 pts) 0.8% (2.5 pts) Software 84.2% 0.3 pts 25.9
Slide 10: Services Segments
Services Segments Global Technology Services (GTS) Global Business Services (GBS) $ in Billions B/(W) Yr/Yr $ in Billions B/(W) Yr/Yr 1Q09 Rptd @CC 1Q09 Rptd @CC Revenue (External) $8.8 (10%) (1%) Revenue (External) $4.4 (10%) (4%) Gross Margin (External) 33.9% 2.6 pts Gross Margin (External) 26.5%
Slide 11: Software Segment
Software Segment B/(W) Yr/Yr $ in Billions 1Q09 Rptd @CC Revenue (External) $4.5 (6%) 2% Gross Margin (External) 84.2% 0.3 pts PTI Margin 25.9% 2.9 pts 1Q09 Revenue Yr/Yr 1Q09 Revenue Rptd @CC (% of Total Software) WebSphere Family 5% 14% Information Management (8%) 1% Other Tivoli (1%) 8% Key Middl
Slide 12: Systems & Technology Segment
Systems & Technology Segment $ in Billions B/(W) Yr/Yr 1Q09 Rptd @CC Revenue (External) $3.2 (23%) (18%) Gross Margin (External) 34.0% (3.0 pts) PTI Margin 0.8% (2.5 pts) 1Q09 Revenue Yr/Yr 1Q09 Revenue Rptd @CC (% of Total S&TG) System z (19%) (12%) Converged System p (2%) 5% System x Servers (27%)
Slide 13: Cash Flow Analysis
Cash Flow Analysis B/(W) $ in Billions 1Q09 Yr/Yr FY08 Net Cash from Operations $4.4 $0.2 $18.8 Less: Global Financing Receivables 2.6 0.2 0.0 Net Cash from Operations 1.8 0.0 18.8 (excluding GF Receivables) Net Capital Expenditures (0.8) 0.5 (4.5) Free Cash Flow (excluding GF Receivables) 1.0 0.4 1
Slide 14: Balance Sheet Summary
Balance Sheet Summary $ in Billions Mar. 08 Dec. 08 Mar. 09 Cash & Marketable Securities $12.0 $12.9 $12.3 Non-GF Assets* 74.6 61.8 59.1 Global Financing Assets* 35.2 34.9 30.5 Total Assets 121.8 109.5 101.9 Other Liabilities 57.8 62.0 57.3 Non-GF Debt 8.9 9.6 7.6 Global Financing Debt 26.2 24.4 23.
Slide 15: EPS Bridge – 1Q08 to 1Q09
EPS Bridge – 1Q08 to 1Q09 $0.22 ($0.07) $0.08 $1.70 $1.64 ($0.19) $0.02 1Q08 EPS Revenue Gross Expense Tax Share 1Q09 EPS Growth Margin Productivity Rate Repurchases @ Actual www.ibm.com/investor 15
Slide 16: 1Q 2009 Summary
1Q 2009 Summary ¾ IBM’s transformation positions the company for the current environment • Shifting to higher value • Globalizing operations • Delivering value to clients with adaptable offerings • Investing to capture opportunity in growth markets ¾ Cost and expense initiatives improve our balance
Slide 17: www.ibm.com/investor
www.ibm.com/investor 17
Slide 18: Supplemental Materials
Supplemental Materials Some columns and rows in these materials, including the supplemental exhibits, may not add due to rounding ¾ Currency – Year/Year Comparison ¾ Supplemental Segment Information – Global Services ¾ Supplemental Segment Information – Systems & Technology, Software ¾ Global Financ
Slide 19: Currency – Year/Year Comparison
Currency – Year/Year Comparison Quarterly Averages per US $ 4/17 Yr/Yr @ 4/17 Spot 1Q09 Yr/Yr Spot 2Q09 3Q09 4Q09 Euro 0.77 (15%) 0.77 (20%) (15%) (1%) Pound 0.70 (38%) 0.67 (33%) (27%) (5%) Yen 93 11% 99 5% 8% (3%) IBM Revenue Impact (8 pts) ~(8-9 pts) ~(6-7 pts) (1 pts) (US$B) Yr/Yr Negative Yr/Yr
Slide 20: Supplemental Segment Information – 1Q 2009
Supplemental Segment Information – 1Q 2009 Revenue Growth Signings ($B) Global Services Yr/Yr @CC Global Services 1Q09 Yr/Yr @CC Strategic Outsourcing (9%) (1%) Global Services Shorter-Term $5.5 (14%) (5%) Business Transformation (20%) (9%) GBS (C&SI) 3.6 (13%) (4%) Outsourcing GTS (ITS) 1.9 (16%) (
Slide 21: Supplemental Segment Information – 1Q 2009
Supplemental Segment Information – 1Q 2009 Revenue Revenue Growth Systems & Technology Group Yr/Yr @CC GP% Share Software Yr/Yr @CC System z (19%) (12%) WebSphere Family 5% 14% Converged System p (2%) 5% Information Management (8%) 1% System x Servers (27%) (22%) Tivoli (1%) 8% System Storage (20%)
Slide 22: Global Financing Portfolio
Global Financing Portfolio 1Q09 - $22.4B External Receivables Investment Grade Non-Investment Grade 60% 40% 35% 30% 25% 20% 15% 31% 29% 10% 20% 5% 11% 3% 6% 0% Aaa-A3 Baa1-Baa3 Ba1-Ba2 Ba3-B1 B2-B3 Caa-D 1Q09 1Q08 Identified L os s R ate 1.7% 0.9% Anticipated L os s R ate 0.6% 0.5% R es erve C overa
Slide 23: Cash Flow (FAS 95)
Cash Flow (FAS 95) $ in Billions 1Q09 1Q08 Net Income from Operations $2.3 $2.3 Depreciation / Amortization of Intangibles 1.2 1.3 Stock-based Compensation 0.1 0.2 Working Capital / Other (1.9) (2.0) Global Financing A/R 2.6 2.4 Net Cash provided by Operating Activities 4.4 4.2 Capital Expenditures,
Slide 24: Non-GAAP Supplementary Materials
Non-GAAP Supplementary 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/or earnings presentation materials, the follo
Slide 25: Non-GAAP Supplementary Materials
Non-GAAP Supplementary Materials Reconciliation of Revenue Growth 1Q09 Yr/Yr As Rptd @CC Asia Pacific Revenue, other than Japan (12%) 3% Japan Revenue 1% (10%) India (10%) 12% China 14% 11% Distribution Sector – Growth Markets 2% 22% The above serves to reconcile the Non-GAAP financial information c
Slide 26: Non-GAAP Supplementary Materials
Non-GAAP Supplementary Materials Reconciliation of Debt-to-Capital Ratio 1Q08 FY08 1Q09 Non-GF Debt / Capital 26% 49% 42% IBM Consolidated Debt / Capital 55% 71% 69% The above serves to reconcile the Non-GAAP financial information contained in the “Balance Sheet Summary” discussion regarding the non
Slide 27: Computation of Global Financing Return on Equity
Computation of Global Financing Return on Equity The following are details on the computation of IBM’s Global Financing Return on Equity. The Global Financing segment is in the business of providing financing to IBM’s clients and its business partners, and is measured as if it were a standalone enti
Slide 28: www.ibm.com/investor
Jh>- 28 www.ibm.con7 investor
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