TIDMIBM
IBM RELEASES THIRD-QUARTER RESULTS
Revenue growth led by Software and Consulting; Strong profit and cash generation
ARMONK, N.Y.,Oct. 25, 2023 -- IBM (NYSE:IBM (http://www.ibm.com/investor)) today
announced third-quarter 2023 earnings results.
"Technology remains a critical source of competitive differentiation and
progress for organizations around the world," said Arvind Krishna, IBM chairman
and chief executive officer. "Clients are increasingly adopting our watsonx AI
and data platform along with our hybrid cloud solutions to unlock productivity
and operational efficiency. This is helping drive solid growth in our software
and consulting businesses. As a result, we remain confident in our revenue and
free cash flow growth expectations for the full year."
Third-Quarter Highlights
· Revenue
-Revenue of $14.8 billion, up 4.6 percent, up 3.5 percent at constant currency
-Software revenue up 8 percent, up 6 percent at constant currency
-Consulting revenue up 6 percent, up 5 percent at constant currency
-Infrastructure revenue down 2 percent, down 3 percent at constant currency
· Profit Margin
-Gross Profit Margin: GAAP: 54.4 percent, up 1.7 points; Operating (Non-GAAP):
55.5 percent, up 1.6 points
-Pre-Tax Income Margin: GAAP: 12.7 percent, up 44.6 points; Operating (Non
-GAAP): 15.6 percent, up 1.7 points
· Cash Flow
-Year to date net cash from operating activities of $9.5 billion, up $3.0
billion; free cash flow of $5.1 billion, up $1.0 billion
THIRD
QUARTER
2023
INCOME
STATEMENT
SUMMARY
Revenue Gross Gross Pre Pre
Net Diluted
Profit -tax -tax
Profit Margin
Income Earnings
Income Income
Per
Margin
Share
GAAP from $ 14.8 B $ 8.0 54.4 % $ 1.9 12.7 %
$ 1.7 $ 1.86
Continuing B B
B
Operations
Year/Year 4.6 %* 8 % 1.7 Pts NM ** 44.6 Pts**
NM ** NM **
Operating $ 8.2 55.5 % $ 2.3 15.6 %
$ 2.0 $ 2.20
B B
B
(Non-GAAP)
Year/Year 8 % 1.6 Pts 17 % 1.7 Pts
23 % 22 %
* 3.5% at
constant
currency
** GAAPYTY
results
include the
impact of a
one-time,
non-cash
pension
settlement
charge
related to
the
transfer of
a portion
of the
company's
U.S.
defined
benefit
pension
obligations
and related
plan assets
to third
-party
insurers in
third
quarter
2022.
"Our continued focus on the fundamentals of our business is driving solid
revenue growth, profit margin expansion, and strong cash generation," said
JamesKavanaugh, IBM senior vice president and chief financial officer. "That
cash generation has enabled us to increase our investment in R&D and
acquisitions, strengthening our future AI and hybrid cloud capabilities, while
supporting continued shareholder returns through our dividend."
Segment Results for Third Quarter
· Software -revenues of $6.3 billion, up 7.8 percent, up 6.3 percent at
constant currency:
-Hybrid Platform & Solutions up 8 percent, up 7 percent at constant currency:
--Red Hat up 9 percent, up 8 percent at constant currency
--Automation up 14 percent, up 13 percent at constant currency
--Data & AI up 6 percent
--Security down 2 percent, down 3 percent at constant currency
-Transaction Processing up 7 percent, up 5 percent at constant currency
· Consulting -revenues of $5.0 billion, up 5.6 percent, up 5.0 percent at
constant currency:
- Business Transformation up 6 percent, up 5 percent at constant currency
-Technology Consulting up 2 percent, up 1 percent at constant currency
-Application Operations up 7 percent
· Infrastructure -revenues of $3.3 billion, down 2.4 percent, down 3.2 percent
at constant currency:
-Hybrid Infrastructure up 1 percent, flat at constant currency
--IBM zSystems up 9 percent
--Distributed Infrastructure down 4 percent, down 6 percent at constant currency
-Infrastructure Support down 6 percent, down 7 percent at constant currency
· Financing -revenues of $0.2 billion, up 6.9 percent, up 5.1 percent at
constant currency
Cash Flow and Balance Sheet
In the third quarter, the company generated net cash from operating activities
of $3.1 billion, up $1.2 billion year to year. Net cash from operating
activities excluding IBM Financing receivables was $2.0 billion. IBM's free cash
flow was $1.7 billion, up $0.9 billion year to year. The company returned $1.5
billion to shareholders in dividends in the third quarter.
For the first nine months of the year, the company generated net cash from
operating activities of $9.5 billion, up $3.0 billion year to year. Net cash
from operating activities excluding IBM Financing receivables was $6.3 billion.
IBM's free cash flow was $5.1 billion, up $1.0 billion year to year.
IBM ended the third quarter with $11.0 billion of cash and marketable
securities, up $2.2 billion from year-end 2022. Debt, including IBM Financing
debt of $9.9 billion, totaled $55.2 billion, up $4.3 billion since the end of
2022.
Full-Year 2023 Expectations
· Revenue: The company continues to expect constant currency revenue growth of
three percent to five percent. At current foreign exchange rates, currency is
expected to be about a one-point headwind to revenue growth.
· Free cash flow: The company continues to expect about $10.5 billion in free
cash flow, up more than $1 billion year to year.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein,
statements contained in this release may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on the company's current assumptions
regarding future business and financial performance. These statements involve a
number of risks, uncertainties and other factors that could cause actual results
to differ materially, including, but not limited to, the following: a downturn
in economic environment and client spending budgets; a failure of the company's
innovation initiatives; damage to the company's reputation; risks from investing
in growth opportunities; failure of the company's intellectual property
portfolio to prevent competitive offerings and the failure of the company to
obtain necessary licenses; the company's ability to successfully manage
acquisitions, alliances and dispositions, including integration challenges,
failure to achieve objectives, the assumption of liabilities and higher debt
levels; fluctuations in financial results; impact of local legal, economic,
political, health and other conditions; the company's failure to meet growth and
productivity objectives; ineffective internal controls; the company's use of
accounting estimates; impairment of the company's goodwill or amortizable
intangible assets; the company's ability to attract and retain key employees and
its reliance on critical skills; impacts of relationships with critical
suppliers; product quality issues; impacts of business with government clients;
reliance on third party distribution channels and ecosystems; cybersecurity and
data privacy considerations; adverse effects related to climate change and
environmental matters; tax matters; legal proceedings and investigatory risks;
the company's pension plans; currency fluctuations and customer financing risks;
impact of changes in market liquidity conditions and customer credit risk on
receivables; potential failure of the separation of Kyndryl Holdings, Inc. to
qualify for tax-free treatment; risk factors related to IBM securities; and
other risks, uncertainties and factors discussed in the company's Form 10-Qs,
Form 10-K and in the company's other filings with the U.S. Securities and
Exchange Commission or in materials incorporated therein by reference. Any
forward-looking statement in this release speaks only as of the date on which it
is made. Except as required by law, the company assumes no obligation to update
or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the
company's results as determined by generally accepted accounting principles
(GAAP), the company has also disclosed in this press release the following non
-GAAP information, which management believes provides useful information to
investors:
IBM results -
· adjusting for currency (i.e., at constant currency);
· presenting operating (non-GAAP) earnings per share amounts and related
income statement items;
· free cash flow;
· net cash from operating activities excluding IBM Financing receivables.
The rationale for management's use of these non-GAAP measures is included in
Exhibit 99.2 in the Form 8-K that includes this press release and is being
submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00
p.m. ET, today. The Webcast may be accessed via a link
athttps://www.ibm.com/investor/events/earnings-3q23. Presentation charts will be
available shortly before the Webcast.
Financial Results Below(certain amounts may not add due to use of rounded
numbers; percentages presented are calculated from the underlying whole-dollar
amounts).
Contact: IBM
Sarah Meron, 347-891-1770
sarah.meron@ibm.com
Tim Davidson, 914-844-7847
tfdavids@us.ibm.com
INTERNATIONAL BUSINESS
MACHINES CORPORATION
COMPARATIVE FINANCIAL
RESULTS
(Unaudited; Dollars in
millions except per share
amounts)
Three Nine
Months Months
Ended Ended
September September
30, 30,
2023 2022* 2023 2022*
REVENUE BY SEGMENT
Software $ 6,265 $ 5,811 $ 18,794 $ 17,749
Consulting 4,963 4,700 14,938 14,337
Infrastructure 3,272 3,352 9,988 10,805
Financing 186 174 566 474
Other 67 70 192 475
TOTAL REVENUE 14,752 14,107 44,479 43,840
GROSS PROFIT 8,023 7,430 24,033 23,055
GROSS PROFIT MARGIN
Software 79.5 % 79.0 % 79.4 % 79.0
%
Consulting 27.4 % 26.0 % 26.2 % 24.8
%
Infrastructure 53.5 % 50.8 % 53.8 % 51.9
%
Financing 49.7 % 32.8 % 47.5 % 35.1
%
TOTAL GROSS PROFIT MARGIN 54.4 % 52.7 % 54.0 % 52.6
%
EXPENSE AND OTHER INCOME
S,G&A 4,458 4,391 14,212 13,843
R,D&E 1,685 1,611 5,027 4,963
Intellectual property and (190) (121) (618) (418)
custom development income
Other (income) and (215) 5,755 (721) 5,921
expense
Interest expense 412 295 1,202 903
TOTAL EXPENSE AND OTHER 6,150 11,931 19,102 25,212
INCOME
INCOME/(LOSS) FROM 1,873 (4,501) 4,931 (2,156)
CONTINUING OPERATIONS
BEFORE INCOME TAXES
Pre-tax margin 12.7 % (31.9) % 11.1 % (4.9)
%
Provision for/(Benefit 159 (1,287) 702 (1,070)
from)
income taxes
Effective tax rate 8.5 % 28.6 % 14.2 % 49.6
%
INCOME/(LOSS) FROM $ 1,714 $ (3,214 $ 4,229 $ (1,087
CONTINUING OPERATIONS
) )
DISCONTINUED OPERATIONS
Income/(loss) from (10) 18 (15) 16
discontinued operations,
net
of taxes
NET INCOME/(LOSS) $ 1,704 $ (3,196 $ 4,214 $ (1,071
) )
EARNINGS/(LOSS) PER SHARE
OF
COMMON STOCK
Assuming Dilution
Continuing Operations $ 1.86 $ (3.55) $ 4.59 $ (1.21)
Discontinued Operations $ (0.01) $ 0.02 $ (0.02) $ 0.02
TOTAL $ 1.84 $ (3.54) $ 4.58 $ (1.19)
Basic
Continuing Operations $ 1.88 $ (3.55) $ 4.65 $ (1.21)
Discontinued Operations $ (0.01) $ 0.02 $ (0.02) $ 0.02
TOTAL $ 1.87 $ (3.54) $ 4.63 $ (1.19)
WEIGHTED-AVERAGE NUMBER
OF
COMMON
SHARES OUTSTANDING (M's)
Assuming Dilution 923.7 904.1 920.3 901.6
Basic 912.8 904.1 910.1 901.6
_________________________
* Includes a one-time,
non
-cash, pre-tax pension
settlement charge of $5.9
billion ($4.4 billion net
of
tax).
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in Millions) At At
September 30, December 31,
2023 2022
ASSETS:
Current Assets:
Cash and cash equivalents $ 7,257 $ 7,886
Restricted cash 19 103
Marketable securities 3,721 852
Notes and accounts receivable - trade, net 5,330 6,541
Short-term financing receivables, net 5,625 7,790
Other accounts receivable, net 842 817
Inventories 1,399 1,552
Deferred costs 931 967
Prepaid expenses and other current assets 2,582 2,611
Total Current Assets 27,705 29,118
Property, plant and equipment, net 5,369 5,334
Operating right-of-use assets, net 3,112 2,878
Long-term financing receivables, net 4,789 5,806
Prepaid pension assets 8,901 8,236
Deferred costs 822 866
Deferred taxes 6,168 6,256
Goodwill 59,596 55,949
Intangibles, net 11,278 11,184
Investments and sundry assets 1,582 1,617
Total Assets $ 129,321 $ 127,243
LIABILITIES:
Current Liabilities:
Taxes $ 1,559 $ 2,196
Short-term debt 6,414 4,760
Accounts payable 3,342 4,051
Deferred income 11,917 12,032
Operating lease liabilities 807 874
Other liabilities 6,566 7,592
Total Current Liabilities 30,606 31,505
Long-term debt 48,828 46,189
Retirement related obligations 9,090 9,596
Deferred income 3,085 3,499
Operating lease liabilities 2,476 2,190
Other liabilities 12,081 12,243
Total Liabilities 106,165 105,222
EQUITY:
IBM Stockholders' Equity:
Common stock 59,313 58,343
Retained earnings 149,506 149,825
Treasury stock - at cost (169,640) (169,484)
Accumulated other comprehensive income/(loss) (16,098) (16,740)
Total IBM Stockholders' Equity 23,081 21,944
Noncontrolling interests 75 77
Total Equity 23,156 22,021
Total Liabilities and Equity $ 129,321 $ 127,243
INTERNATIONAL BUSINESS
MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited)
Three Nine
Trailing
Months Months
Twelve
Ended Ended
Months
September September Ended
30, 30,
September
30,
(Dollars in Millions) 2023 2022 2023 2022* 2023
Net Cash from Operations $ 3,055 $ 1,901 $ 9,468 $ 6,470 $
13,432
per GAAP
Less: change in IBM 1,092 704 3,119 1,071 1,331
Financing receivables
Capital Expenditures, net (282) (445) (1,226) (1,317)
(1,769)
Free Cash Flow 1,682 752 5,123 4,082
10,332
Acquisitions (4,589) (62) (4,945) (1,020)
(6,274)
Divestitures (10) 3 (4) 1,271 (3)
Dividends (1,515) (1,491) (4,522) (4,454)
(6,016)
Non-Financing Debt (942) 2,946 7,572 4,686 4,795
Other (includes IBM 41 (198) (1,068) (2,395)
(1,566)
Financing net receivables
and
debt)
Change in Cash, Cash $ (5,333) $ 1,950 $ 2,156 $ 2,171 $
1,268
Equivalents, Restricted
Cash
and Short-term Marketable
Securities
_________________________
* Includes immaterial
cash flows from
discontinued operations.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
CASH FLOW
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in Millions) 2023 2022 2023 2022*
Net Income/(Loss) from $ 1,704 $ (3,196) $ 4,214 $ (1,071)
Operations
Pension Settlement Charge - 5,894 - 5,894
Depreciation/Amortization 1,093 1,163 3,243 3,665
of Intangibles
Stock-based Compensation 286 251 843 739
Working Capital / Other (1,119) (2,914) (1,952) (3,827)
IBM Financing A/R 1,092 704 3,119 1,071
Net Cash Provided by $ 3,055 $ 1,901 $ 9,468 $ 6,470
Operating Activities
Capital Expenditures, net (282) (445) (1,226) (1,317)
of payments & proceeds
Divestitures, net of cash (10) 3 (4) 1,271
transferred
Acquisitions, net of cash (4,589) (62) (4,945) (1,020)
acquired
Marketable Securities / 2,927 (1,193) (3,732) (1,818)
Other Investments, net
Net Cash Provided $ (1,953) $ (1,697) $ (9,906) $ (2,883)
by/(Used in) Investing
Activities
Debt, net of payments & (1,550) 2,138 4,619 2,572
proceeds
Dividends (1,515) (1,491) (4,522) (4,454)
Financing - Other (67) 67 (252) (223)
Net Cash Provided $ (3,132) $ 714 $ (154) $ (2,106)
by/(Used in) Financing
Activities
Effect of Exchange Rate (119) (197) (120) (463)
changes on Cash
Net Change in Cash, Cash $ (2,149) $ 721 $ (713) $ 1,018
Equivalents and
Restricted
Cash
_________________________
* Includes immaterial
cash flows from
discontinued operations.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
Three
Months
Ended
September
30, 2023
(Dollars in Millions) Software Consulting Infrastructure
Financing
Revenue $ 6,265 $ 4,963 $ 3,272 $
186
Pre-tax Income from $ 1,486 $ 509 $ 387 $
91
Continuing Operations*
Pre-tax Margin* 23.7 % 10.2 % 11.8 %
49.2 %
Change YTY Revenue 7.8 % 5.6 % (2.4) %
6.9 %
Change YTY Revenue - 6.3 % 5.0 % (3.2) %
5.1 %
Constant Currency
Three
Months
Ended
September
30, 2022
(Dollars in Millions) Software Consulting Infrastructure
Financing
Revenue $ 5,811 $ 4,700 $ 3,352 $
174
Pre-tax Income from $ 1,306 $ 462 $ 280 $
79
Continuing Operations
Pre-tax Margin 22.5 % 9.8 % 8.3 %
45.4 %
_________________________
* The third quarter 2023
pre-tax charge of
approximately $0.03
billion for workforce
rebalancing is not
included in the measure
of
segment pre-tax income,
consistent with the
company's management
system.
Nine
Months
Ended
September
30, 2023
(Dollars in Millions) Software Consulting Infrastructure
Financing
Revenue $ 18,794 $ 14,938 $ 9,988 $
566
Pre-tax Income from $ 4,154 $ 1,336 $ 1,236 $
256
Continuing Operations*
Pre-tax Margin* 22.1 % 8.9 % 12.4 %
45.3 %
Change YTY Revenue 5.9 % 4.2 % (7.6) %
19.5 %
Change YTY Revenue - 6.5 % 6.4 % (6.4) %
20.3 %
Constant Currency
Nine
Months
Ended
September
30, 2022
(Dollars in Millions) Software Consulting Infrastructure
Financing
Revenue $ 17,749 $ 14,337 $ 10,805 $
474
Pre-tax Income from $ 3,816 $ 1,154 $ 1,236 $
265
Continuing Operations
Pre-tax Margin 21.5 % 8.0 % 11.4 %
55.9 %
_________________________
* The year-to-date 2023
pre-tax charge of
approximately $0.41
billion for workforce
rebalancing is not
included in the measure
of
segment pre-tax income,
consistent with the
company's management
system.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
U.S. GAAP TO OPERATING
(Non-GAAP) RESULTS
RECONCILIATION
(Unaudited; Dollars in
millions except per share
amounts)
Three Months
Ended
September 30,
2023
Continuing
Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1)
Adjustments(2) Impacts Impacts(3)
Gross Profit $ 8,023 $ 162 $ -
$ - $ - $ 8,185
Gross Profit Margin 54.4 % 1.1 pts. -
pts. - pts. - pts. 55.5 %
S,G&A $ 4,458 $ (277) $ -
$ - $ - $ 4,181
Other (Income) & Expense (215) - 12
- - (203)
Total Expense & Other 6,150 (277) 12
- - 5,885
(Income)
Pre-tax Income from 1,873 438 (12)
- - 2,299
Continuing Operations
Pre-tax Income Margin 12.7 % 3.0 pts. (0.1)
pts. - pts. - pts. 15.6 %
from
Continuing Operations
Provision for/(Benefit $ 159 $ 99 $ (14)
$ 24 $ - $ 268
from)
Income Taxes(4)
Effective Tax Rate 8.5 % 2.7 pts. (0.5)
pts. 1.0 pts. - pts. 11.7 %
Income from Continuing $ 1,714 $ 340 $ 1
$ (24) $ - $ 2,031
Operations
Income Margin from 11.6 % 2.3 pts. 0.0
pts. (0.2) pts. - pts. 13.8 %
Continuing Operations
Diluted Earnings $ 1.86 $ 0.37 $ 0.00
$ (0.03) $ - $ 2.20
PerShare:
Continuing Operations
Three Months
Ended
September 30,
2022
Continuing
Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1)
Adjustments(2) Impacts Impacts(3)
Gross Profit $ 7,430 $ 165 $ -
$ - $ - $ 7,595
Gross Profit Margin 52.7 % 1.2 pts. -
pts. - pts. - pts. 53.8 %
S,G&A $ 4,391 $ (253) $ -
$ - $ 0 $ 4,138
Other (Income) & Expense 5,755 (1) (6,062)
- 14 (293)
Total Expense & Other 11,931 (253) (6,062)
- 14 5,630
(Income)
Pre-tax Income/(Loss) (4,501) 418 6,062
- (14) 1,965
from
Continuing Operations
Pre-tax Income/(Loss) (31.9) % 3.0 pts. 43.0
pts. - pts. (0.1) pts. 13.9 %
Margin
from Continuing
Operations
Provision for/(Benefit $ (1,287) $ 103 $ 1,495
$ - $ - $ 312
from)
Income Taxes(4)
Effective Tax Rate 28.6 % (0.8) pts. (12.1)
pts. - pts. 0.2 pts. 15.9 %
Income/(Loss) from $ (3,214) $ 315 $ 4,566
$ - $ (14) $ 1,653
Continuing
Operations
Income/(Loss) Margin from (22.8) % 2.2 pts. 32.4
pts. - pts. (0.1) pts. 11.7 %
Continuing Operations
Diluted Earnings/(Loss) $ (3.55) $ 0.35 $ 5.05
$ - $ (0.02) $ 1.81
Per
Share: Continuing
Operations(5)
_________________________
(1) Includes
amortization
of purchased
intangible
assets, in
process R&D,
transaction
costs,
applicable
restructuring
and related
expenses, tax
charges
related
to acquisition
integration
and pre
-closing
charges, such
as financing
costs.
(2) Includes
amortization
of prior
service costs,
interest cost,
expected
return on plan
assets,
amortized
actuarial
gains/losses,
the impacts of
any plan
curtailments/se
ttlements and
pension
insolvency
costs and
other costs.
2022 also
includes a one
-time, non
-cash, pre-tax
pension
settlement
charge of $5.9
billion ($4.4
billion net of
tax).
(3) Primarily
relates to
fair value
changes in
shares of
Kyndryl common
stock that
were retained
by IBM and the
related cash
-settled swap.
(4) Tax impact on
operating (non
-GAAP) pre-tax
income from
continuing
operations is
calculated
under the same
accounting
principles
applied to the
As Reported
pre-tax income
under ASC 740,
which employs
an annual
effective tax
rate method to
the results.
(5) Due to the
GAAP net loss
for the three
months ended
September 30,
2022, dilutive
potential
shares were
excluded from
the GAAP loss
per share as
the effect
would have
been
antidilutive.
The difference
in share count
resulted in an
additional
($0.02)
reconciling
item.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
U.S. GAAP TO OPERATING
(Non-GAAP) RESULTS
RECONCILIATION
(Unaudited; Dollars in
millions except per share
amounts)
Nine Months Ended
September 30, 2023
Continuing Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1)
Adjustments(2) Impacts Impacts(3)
Gross Profit $ 24,033 $ 460 $ -
$ - $ - $ 24,492
Gross Profit Margin 54.0 % 1.0 pts. -
pts. - pts. - pts. 55.1 %
S,G&A $ 14,212 $ (768) $ -
$ - $ - $ 13,444
Other (Income) & Expense (721) (2) 16
- - (707)
Total Expense & Other 19,102 (770) 16
- - 18,348
(Income)
Pre-tax Income from 4,931 1,229 (16)
- - 6,144
Continuing Operations
Pre-tax Income Margin 11.1 % 2.8 pts. 0.0
pts. - pts. - pts. 13.8 %
from
Continuing Operations
Provision for/(Benefit $ 702 $ 277 $ (27)
$ (91) $ - $ 861
from)
Income Taxes(4)
Effective Tax Rate 14.2 % 1.7 pts. (0.4)
pts. (1.5) pts. - pts. 14.0 %
Income from Continuing $ 4,229 $ 953 $ 11
$ 91 $ - $ 5,283
Operations
Income Margin from 9.5 % 2.1 pts. 0.0
pts. 0.2 pts. - pts. 11.9 %
Continuing Operations
Diluted Earnings Per $ 4.59 $ 1.04 $ 0.01
$ 0.10 $ - $ 5.74
Share:
Continuing Operations
Nine Months Ended
September 30, 2022
Continuing Operations
GAAP Acquisition- Retirement-
Tax Kyndryl- Operating
Related Related
Reform Related (Non
-GAAP)
Adjustments(1)
Adjustments(2) Impacts Impacts(3)
Gross Profit $ 23,055 $ 526 $ -
$ - $ - $ 23,582
Gross Profit Margin 52.6 % 1.2 pts. -
pts. - pts. - pts. 53.8 %
S,G&A $ 13,843 $ (818) $ -
$ - $ 0 $ 13,025
Other (Income) & Expense 5,921 (2) (6,455)
- (353) (889)
Total Expense & Other 25,212 (820) (6,455)
- (353) 17,584
(Income)
Pre-tax Income/(Loss) (2,156) 1,346 6,455
- 353 5,998
from
Continuing Operations
Pre-tax Income/(Loss) (4.9) % 3.1 pts. 14.7
pts. - pts. 0.8 pts. 13.7 %
Margin
from Continuing
Operations
Provision for/(Benefit $ (1,070) $ 327 $ 1,599
$ 112 $ - $ 969
from)
Income Taxes(4)
Effective Tax Rate 49.6 % (5.7) pts. (26.7)
pts. 1.9 pts. (2.9) pts. 16.1 %
Income/(Loss) from $ (1,087) $ 1,019 $ 4,856
$ (112) $ 353 $ 5,029
Continuing
Operations
Income/(Loss) Margin from (2.5) % 2.3 pts. 11.1
pts. (0.3) pts. 0.8 pts. 11.5 %
Continuing Operations
Diluted Earnings/(Loss) $ (1.21) $ 1.13 $ 5.39
$ (0.12) $ 0.39 $ 5.52
Per
Share: Continuing
Operations(5)
_________________________
(1) Includes amortization
of purchased intangible
assets, in process R&D,
transaction costs,
applicable
restructuring and
related expenses, tax
charges related to
acquisition integration
and pre-closing
charges, such as
financing costs.
(2) Includes amortization
of prior service costs,
interest cost, expected
return on plan assets,
amortized actuarial
gains/losses, the
impacts of any plan
curtailments/settlements
and pension insolvency
costs and other costs.
2022 also includes a
one-time, non-cash, pre
-tax pension settlement
charge of $5.9 billion
($4.4 billion net of
tax).
(3) Primarily relates to
fair value changes in
shares of Kyndryl
common stock that were
retained by IBM and the
related cash-settled
swap.
(4) Tax impact on operating
(non-GAAP) pre-tax
income from continuing
operations is
calculated under the
same accounting
principles applied to
the As Reported pre
-tax income under ASC
740, which employs an
annual effective tax
rate method to the
results.
(5) Due to GAAP net loss
for the nine months
ended September 30,
2022, dilutive
potential shares were
excluded from the GAAP
loss per share
calculation as the
effect would have been
antidilutive. The
difference in share
count resulted in an
additional ($0.06)
reconciling item.
This information was brought to you by Cision http://news.cision.com
(END) Dow Jones Newswires
October 26, 2023 02:00 ET (06:00 GMT)
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