Try our mobile app

IBM RELEASES FOURTH-QUARTER RESULTS

Published: 2023-01-25 21:08:00 ET
<<<  go to IBM company page

Revenue Growth in All Key Segments; Expanded Margins; Solid Cash Generation

ARMONK, N.Y., Jan. 25, 2023 /PRNewswire/ -- IBM (NYSE: IBM) today announced fourth-quarter 2022 earnings results.

IBM Corporation logo. (PRNewsfoto/IBM)

"Our solid fourth-quarter performance capped a year in which we grew revenue above our mid-single digit model. Clients in all geographies increasingly embraced our hybrid cloud and AI solutions as technology remains a differentiating force in today's business environment," said Arvind Krishna, IBM chairman and chief executive officer. "Looking ahead to 2023, we expect full-year revenue growth consistent with our mid-single digit model."

Fourth-Quarter Highlights

  • Revenue of $16.7 billion, flat, up 6 percent at constant currency - Software revenue up 3 percent, up 8 percent at constant currency- Consulting revenue up 0.5 percent, up 9 percent at constant currency- Infrastructure revenue up 2 percent, up 7 percent at constant currency

Full-Year Highlights

  • Revenue of $60.5 billion, up 6 percent, up 12 percent at constant currency (about 4 points from sales to Kyndryl)- Hybrid cloud revenue of $22.4 billion, up 11 percent, up 17 percent at constant currency
  • On a consolidated basis, net cash from operating activities of $10.4 billion; free cash flow of $9.3 billion

Full-Year 2023 Expectations

  • The company expects constant currency revenue growth consistent with its mid-single digit model and about $10.5 billion in consolidated free cash flow, up more than $1 billion year to year

FOURTH QUARTER 2022 INCOME STATEMENT SUMMARY

Pre-tax

Diluted

Gross

Pre-tax

  Income

Net

Earnings

Revenue

Profit

Income

Margin

Income

Per Share

GAAP from Continuing Operations

$

16.7B

$

9.6B

$

3.3B

19.8

%

$

2.9B

$

3.13

    Year/Year

0

%*

1

%

15

%

2.7

Pts

17

%

15

%

Operating (Non-GAAP)

$

9.8B

$

3.8B

22.9

%

$

3.3B

$

3.60

    Year/Year

1

%

8

%

1.7

Pts

9

%

7

%

* 6% at constant currency

"IBM's revenue growth and operating profit in 2022 demonstrate the strength and multiplier effect of our platform-centric approach to hybrid cloud and AI," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our client-focused portfolio and strong recurring revenue stream position IBM well for continued growth, solid cash generation and returning value to shareholders through dividends."

Segment Results for Fourth Quarter

  • Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $7.3 billion, up 2.8 percent, up 8.0 percent at constant currency:- Hybrid Platform & Solutions up 5 percent, up 10 percent at constant currency:      -- Red Hat up 10 percent, up 15 percent at constant currency      -- Automation up 4 percent, up 9 percent at constant currency      -- Data & AI up 4 percent, up 8 percent at constant currency      -- Security up 4 percent, up 10 percent at constant currency- Transaction Processing down 3 percent, up 3 percent at constant currency
  • Consulting (includes Business Transformation, Technology Consulting and Application Operations)— revenues of $4.8 billion, up 0.5 percent, up 9.3 percent at constant currency:- Business Transformation down 1 percent, up 7 percent at constant currency- Technology Consulting up 1 percent, up 10 percent at constant currency- Application Operations up 2 percent, up 12 percent at constant currency
  • Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)— revenues of $4.5 billion, up 1.6 percent, up 7.4 percent at constant currency:- Hybrid Infrastructure up 6 percent, up 11 percent at constant currency:      -- IBM z Systems up 16 percent, up 21 percent at constant currency      -- Distributed Infrastructure flat, up 5 percent at constant currency- Infrastructure Support down 8 percent, flat at constant currency
  • Financing (includes client and commercial financing)— revenues of $0.2 billion, down 0.4 percent, up 3.9 percent at constant currency

Cash Flow and Balance SheetOn a consolidated basis, in the fourth quarter, the company generated net cash from operating activities of $4.0 billion, up $1.4 billion. Net cash from operating activities excluding IBM Financing receivables was $5.8 billion, up $1.9 billion. IBM's free cash flow was $5.2 billion, up $1.9 billion. The company returned $1.5 billion to shareholders in dividends in the fourth quarter.

On a consolidated basis, for the full year, the company generated net cash from operating activities of $10.4 billion, down $2.4 billion. Net cash from operating activities excluding IBM Financing receivables was $11.2 billion, up $2.3 billion. IBM's free cash flow was $9.3 billion, up $2.8 billion. IBM returned $5.9 billion to shareholders in dividends.

IBM ended the fourth quarter with $8.8 billion of cash on hand (which includes marketable securities), up $1.3 billion from year-end 2021. Debt, including IBM Financing debt of $12.9 billion, totaled $50.9 billion, down $0.8 billion since the end of 2021.

Full-Year 2022 Results

FULL-YEAR 2022 INCOME STATEMENT

GAAP results include impact of one-time, non-cash pension settlement charge*

Pre-tax 

Gross

Pre-tax 

Income 

Net 

Diluted 

Revenue

Profit

Income

Margin

Income

EPS

GAAP from Continuing Operations

$

60.5B

$

32.7B

$

1.2B

*

1.9

%* 

$

1.8B

*

$

1.95

*

    Year/Year

6

%**

4

%

(76)

%* 

(6.5)

Pts*

(62)

%*

(63)

%*

Operating (Non-GAAP)

$

33.4B

$

9.8B

16.2

%

$

8.3B

$

9.13

    Year/Year

4

%

25

%

2.5

Pts

16

%

15

%

* GAAP results include the impact of a one-time, non-cash pension settlement charge in the third quarter of $5.9 billion ($4.4 billion net of tax) 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.

** 12% at constant currency

Full-Year 2023 Expectations

  • Revenue Growth: The company expects constant currency revenue growth consistent with its mid-single digit model. At current foreign exchange rates, currency is expected to be neutral to a one-point tailwind to revenue growth.
  • Free Cash Flow: The company expects about $10.5 billion in consolidated free cash flow, up more than $1 billion year to year.

Forward-Looking and Cautionary StatementsExcept 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 ReleaseOn November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise specified, results are presented on a continuing operations basis. The reference in Full-Year Highlights to the revenue impacts from sales to Kyndryl are incremental sales post-separation, year to date through October.

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;
  • consolidated free cash flow;
  • consolidated 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 WebcastIBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EST, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-4q22. 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 Months Ended

Year Ended

December 31, 

December 31, 

2022

2021*

2022** 

2021*

REVENUE BY SEGMENT

Software

$

7,288

$

7,087

$

25,037

$

23,426

Consulting

4,770

4,746

19,107

17,844

Infrastructure

4,483

4,414

15,288

14,188

Financing

172

172

645

774

Other

(22)

275

453

1,119

TOTAL REVENUE

16,690

16,695

60,530

57,350

GROSS PROFIT

9,632

9,500

32,687

31,486

GROSS PROFIT MARGIN

Software

81.2

%

81.6

%

79.6

%

79.6

%

Consulting

27.4

%

27.0

%

25.5

%

28.0

%

Infrastructure

54.9

%

54.8

%

52.8

%

55.3

%

Financing

47.1

%

32.5

%

38.3

%

31.7

%

TOTAL GROSS PROFIT MARGIN

57.7

%

56.9

%

54.0

%

54.9

%

EXPENSE AND OTHER INCOME

S,G&A

4,765

4,903

18,609

18,745

R,D&E

1,604

1,625

6,567

6,488

Intellectual property and custom development income

(245)

(181)

(663)

(612)

Other (income) and expense

(118)

(18)

5,803

873

Interest expense

313

303

1,216

1,155

TOTAL EXPENSE AND OTHER INCOME

6,320

6,632

31,531

26,649

INCOME FROM CONTINUING OPERATIONS

BEFORE INCOME TAXES

3,312

2,869

1,156

4,837

Pre-tax margin

19.8

%

17.2

%

1.9

%

8.4

%

Provision for/(Benefit from) income taxes

443

407

(626)

124

Effective tax rate

13.4

%

14.2

%

(54.2)

%

2.6

%

INCOME FROM CONTINUING OPERATIONS

$

2,869

$

2,462

$

1,783

$

4,712

DISCONTINUED OPERATIONS

Income/(loss) from discontinued operations, net of taxes

(159)

(129)

(143)

1,030

NET INCOME

$

2,711

$

2,332

$

1,639

$

5,743

EARNINGS PER SHARE OF COMMON STOCK

Assuming Dilution

Continuing Operations

$

3.13

$

2.72

$

1.95

$

5.21

Discontinued Operations

$

(0.17)

$

(0.14)

$

(0.16)

$

1.14

TOTAL

$

2.96

$

2.57

$

1.80

$

6.35

Basic

Continuing Operations

$

3.17

$

2.74

$

1.97

$

5.26

Discontinued Operations

$

(0.18)

$

(0.14)

$

(0.16)

$

1.15

TOTAL

$

2.99

$

2.60

$

1.82

$

6.41

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's)

Assuming Dilution

915.9

906.6

912.3

904.6

Basic

905.8

898.2

902.7

896.0

____________________

*   Recast to conform with 2022 presentation.

** Includes a one-time, non-cash pension settlement charge of $5.9 billion ($4.4 billion net of tax). 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

At

At

December 31, 

December 31, 

(Dollars in Millions)

2022

2021

ASSETS:

Current Assets:

Cash and cash equivalents

$

7,886

$

6,650

Restricted cash

103

307

Marketable securities

852

600

Notes and accounts receivable - trade, net

6,541

6,754

Short-term financing receivables, net

7,790

8,014

Other accounts receivable, net

817

1,002

Inventories

1,552

1,649

Deferred costs

967

1,097

Prepaid expenses and other current assets

2,611

3,466

Total Current Assets

29,118

29,539

Property, plant and equipment, net

5,334

5,694

Operating right-of-use assets, net

2,878

3,222

Long-term financing receivables, net

5,806

5,425

Prepaid pension assets

8,236

9,850

Deferred costs

866

924

Deferred taxes

6,256

7,370

Goodwill

55,949

55,643

Intangibles, net

11,184

12,511

Investments and sundry assets

1,617

1,823

Total Assets

$

127,243

$

132,001

LIABILITIES:

Current Liabilities:

Taxes

$

2,196

$

2,289

Short-term debt

4,760

6,787

Accounts payable

4,051

3,955

Deferred income

12,032

12,518

Operating lease liabilities

874

974

Other liabilities

7,592

7,097

Total Current Liabilities

31,505

33,619

Long-term debt

46,189

44,917

Retirement related obligations

9,596

14,435

Deferred income

3,499

3,577

Operating lease liabilities

2,190

2,462

Other liabilities

12,243

13,996

Total Liabilities

105,222

113,005

EQUITY:

IBM Stockholders' Equity:

Common stock

58,343

57,319

Retained earnings

149,825

154,209

Treasury stock — at cost

(169,484)

(169,392)

Accumulated other comprehensive income/(loss)

(16,740)

(23,234)

Total IBM Stockholders' Equity

21,944

18,901

Noncontrolling interests

77

95

Total Equity

22,021

18,996

Total Liabilities and Equity

$

127,243

$

132,001

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW ANALYSIS

(Unaudited)

Three Months Ended

Year Ended

December 31, 

December 31, 

(Dollars in Millions)

2022

2021

2022

2021

Consolidated Net Cash from Operations per GAAP

$

3,965

$

2,543

$

10,435

$

12,796

Less: change in IBM Financing receivables

(1,788)

(1,328)

(717)

3,907

Capital Expenditures, net

(544)

(526)

(1,860)

(2,381)

Consolidated Free Cash Flow

5,209

3,345

9,291

6,508

Acquisitions

(1,329)

(275)

(2,348)

(3,293)

Divestitures

1

88

1,272

114

Dividends

(1,494)

(1,474)

(5,948)

(5,869)

Non-Financing Debt

(2,777)

(20)

1,909

(1,191)

Other (includes IBM Financing net receivables and debt)

(498)

(2,514)

(2,893)

(2,987)

Change in Cash, Cash Equivalents, Restricted Cash and Short-term Marketable Securities*

$

(888)

$

(850)

$

1,283

$

(6,718)

____________________

* Cash flows are presented on a consolidated basis. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW

(Unaudited)

Three Months Ended

Year Ended

December 31, 

December 31, 

(Dollars in Millions)

2022

2021

2022

2021

Net Income from Operations

$

2,711

$

2,332

$

1,639

$

5,743

Pension Settlement Charge

-

-

5,894

-

Depreciation/Amortization of Intangibles

1,137

1,380

4,802

6,416

Stock-based Compensation

248

264

987

982

Working Capital / Other

1,657

(105)

(2,170)

(4,253)

IBM Financing A/R

(1,788)

(1,328)

(717)

3,907

Net Cash Provided by Operating Activities

$

3,965

$

2,543

$

10,435

$

12,796

Capital Expenditures, net of payments & proceeds

(544)

(526)

(1,860)

(2,381)

Divestitures, net of cash transferred

1

88

1,272

114

Acquisitions, net of cash acquired

(1,329)

(275)

(2,348)

(3,293)

Marketable Securities / Other Investments, net

553

38

(1,265)

(414)

Net Cash Provided by/(Used in) Investing Activities

$

(1,318)

$

(675)

$

(4,202)

$

(5,975)

Debt, net of payments & proceeds

(1,350)

(2,030)

1,221

(8,116)

Dividends

(1,494)

(1,474)

(5,948)

(5,869)

Financing - Other

(8)

811

(231)

630

Net Cash Provided by/(Used in) Financing Activities

$

(2,852)

$

(2,692)

$

(4,958)

$

(13,354)

Effect of Exchange Rate changes on Cash

219

(26)

(244)

(185)

Net Change in Cash, Cash Equivalents and Restricted Cash*

$

13

$

(850)

$

1,032

$

(6,718)

____________________

* Cash flows are presented on a consolidated basis. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)

Three Months Ended December 31, 2022

(Dollars in Millions)

Software

Consulting

Infrastructure

Financing

Revenue

$

7,288

$

4,770

$

4,483

$

172

Pre-tax Income from Continuing Operations

$

2,347

$

523

$

1,026

$

75

Pre-tax Margin

32.2

%

11.0

%

22.9

%

43.6

%

Change YTY Revenue

2.8

%

0.5

%

1.6

%

(0.4)

%

Change YTY Revenue - constant currency

8.0

%

9.3

%

7.4

%

3.9

%

Three Months Ended December 31, 2021

(Dollars in Millions)

  Software *

Consulting

Infrastructure

Financing

Revenue

$

7,087

$

4,746

$

4,414

$

172

Pre-tax Income from Continuing Operations

$

2,142

$

436

$

1,036

$

79

Pre-tax Margin

30.2

%

9.2

%

23.5

%

46.0

%

____________________

* Recast to conform with 2022 presentation. 

Year Ended December 31, 2022

(Dollars in Millions)

Software

Consulting

Infrastructure

Financing

Revenue

$

25,037

$

19,107

$

15,288

$

645

Pre-tax Income from Continuing Operations

$

6,162

$

1,677

$

2,262

$

340

Pre-tax Margin

24.6

%

8.8

%

14.8

%

52.6

%

Change YTY Revenue

6.9

%

7.1

%

7.8

%

(16.6)

%

Change YTY Revenue - constant currency

11.9

%

14.9

%

13.5

%

(13.0)

%

Year Ended December 31, 2021

(Dollars in Millions)

  Software *

Consulting

Infrastructure

Financing

Revenue

$

23,426

$

17,844

$

14,188

$

774

Pre-tax Income from Continuing Operations

$

4,849

$

1,449

$

2,025

$

441

Pre-tax Margin

20.7

%

8.1

%

14.3

%

57.0

%

____________________

* Recast to conform with 2022 presentation. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)

Three Months Ended December 31, 2022

Continuing Operations

Acquisition-

Retirement-

Tax

Kyndryl-

Related

Related

Reform

Related

Operating

GAAP

Adjustments (1)

Adjustments (2)

Impacts

Impacts (3)

(Non-GAAP)

Gross Profit

$

9,632

$

156

$

—

$

—

$

—

$

9,788

Gross Profit Margin

57.7

%

0.9

pts. 

—

pts. 

—

pts. 

—

pts.

58.6

%

S,G&A

$

4,765

$

(262)

$

—

$

—

$

(0)

$

4,503

Other (Income) & Expense

(118)

(1)

(93)

—

2

(210)

Total Expense & Other (Income)

6,320

(263)

(93)

—

2

5,965

Pre-tax Income from Continuing Operations

3,312

419

93

—

(2)

3,823

Pre-tax Income Margin from Continuing Operations

19.8

%

2.5

pts. 

0.6

pts. 

—

pts. 

(0.0)

pts.

22.9

%

Provision for/(Benefit from) Income Taxes (4)

$

443

$

109

$

16

$

(42)

$

—

$

526

Effective Tax Rate

13.4

%

1.4

pts. 

0.1

pts. 

(1.1)

pts. 

0.0

pts.

13.8

%

Income from Continuing Operations

$

2,869

$

310

$

77

$

42

$

(2)

$

3,296

Income Margin from Continuing Operations

17.2

%

1.9

pts. 

0.5

pts. 

0.3

pts. 

(0.0)

pts.

19.8

%

Diluted Earnings Per Share:Continuing Operations

$

3.13

$

0.34

$

0.08

$

0.05

$

(0.00)

$

3.60

Three Months Ended December 31, 2021

Continuing Operations

Acquisition-

Retirement-

Tax

Kyndryl-

Related

Related

Reform

Related

Operating

GAAP

Adjustments (1)

Adjustments (2)

Impacts

Impacts (3)

(Non-GAAP)

Gross Profit

$

9,500

$

182

$

—

$

—

$

—

$

9,682

Gross Profit Margin

56.9

%

1.1

pts. 

—

pts. 

—

pts. 

—

pts.

58.0

%

S,G&A

$

4,903

$

(290)

$

—

$

—

$

(8)

$

4,605

Other (Income) & Expense

(18)

(1)

(315)

—

126

(208)

Total Expense & Other (Income)

6,632

(290)

(315)

—

118

6,145

Pre-tax Income from Continuing Operations

2,869

472

315

—

(118)

3,537

Pre-tax Income Margin from Continuing Operations

17.2

%

2.8

pts. 

1.9

pts. 

—

pts. 

(0.7)

pts.

21.2

%

Provision for/(Benefit from) Income Taxes (4)

$

407

$

117

$

109

$

(94)

$

(37)

$

502

Effective Tax Rate

14.2

%

1.4

pts. 

1.8

pts. 

(2.7)

pts. 

(0.6)

pts.

14.2

%

Income from Continuing Operations

$

2,462

$

355

$

206

$

94

$

(81)

$

3,035

Income Margin from Continuing Operations

14.7

%

2.1

pts. 

1.2

pts. 

0.6

pts. 

(0.5)

pts.

18.2

%

Diluted Earnings Per Share: Continuing Operations

$

2.72

$

0.39

$

0.23

$

0.10

$

(0.09)

$

3.35

____________________

(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.

(3)

Primarily relates to the realized gain/(loss) and unrealized fair value changes in Kyndryl common stock and the related 2022 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.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)

Year Ended December 31, 2022

Continuing Operations

Acquisition-

Retirement-

Tax

Kyndryl-

Related

Related

Reform

Related

Operating

GAAP

Adjustments (1)

Adjustments* (2)

Impacts

Impacts (3)

(Non-GAAP)

Gross Profit

$

32,687

$

682

$

—

$

—

$

—

$

33,370

Gross Profit Margin

54.0

%

1.1

pts. 

—

pts. 

—

pts. 

—

pts. 

55.1

%

S,G&A

$

18,609

$

(1,080)

$

—

$

—

$

(0)

$

17,529

Other (Income) & Expense

5,803

(3)

(6,548)

—

(351)

(1,099)

Total Expense & Other (Income)

31,531

(1,083)

(6,548)

—

(351)

23,549

Pre-tax Income from Continuing Operations

1,156

1,765

6,548

—

351

9,821

Pre-tax Income Margin from Continuing Operations

1.9

%

2.9

pts. 

10.8

pts. 

—

pts. 

0.6

pts. 

16.2

%

Provision for/(Benefit from) Income Taxes (4)

$

(626)

$

436

$

1,615

$

70

$

—

$

1,495

Effective Tax Rate

(54.2)

%

14.2

pts. 

52.6

pts. 

0.7

pts. 

1.9

pts. 

15.2

%

Income from Continuing Operations

$

1,783

$

1,329

$

4,933

$

(70)

$

351

$

8,326

Income Margin from Continuing Operations

2.9

%

2.2

pts. 

8.1

pts. 

(0.1)

pts. 

0.6

pts. 

13.8

%

Diluted Earnings Per Share: Continuing Operations

$

1.95

$

1.46

$

5.41

$

(0.08)

$

0.38

$

9.13

____________________

* Includes a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4 billion net of tax).

Year Ended December 31, 2021

Continuing Operations

Acquisition-

Retirement-

Tax

Kyndryl-

Related

Related

Reform

Related

Operating

GAAP

Adjustments (1)

Adjustments (2)

Impacts

Impacts (3)

(Non-GAAP)

Gross Profit

$

31,486

$

719

$

—

$

—

$

—

$

32,205

Gross Profit Margin

54.9

%

1.3

pts. 

—

pts. 

—

pts. 

—

pts. 

56.2

%

S,G&A

$

18,745

$

(1,160)

$

—

$

—

$

(8)

$

17,577

Other (Income) & Expense

873

(2)

(1,282)

—

126

(285)

Total Expense & Other (Income)

26,649

(1,162)

(1,282)

—

118

24,324

Pre-tax Income from Continuing Operations

4,837

1,881

1,282

—

(118)

7,881

Pre-tax Income Margin from Continuing Operations

8.4

%

3.3

pts. 

2.2

pts. 

—

pts. 

(0.2)

pts. 

13.7

%

Provision for/(Benefit from) Income Taxes (4)

$

124

$

457

$

251

$

(89)

$

(37)

$

706

Effective Tax Rate

2.6

%

5.2

pts. 

2.8

pts. 

(1.1)

pts. 

(0.4)

pts. 

9.0

%

Income from Continuing Operations

$

4,712

$

1,424

$

1,031

$

89

$

(81)

$

7,174

Income Margin from Continuing Operations

8.2

%

2.5

pts. 

1.8

pts. 

0.2

pts. 

(0.1)

pts. 

12.5

%

Diluted Earnings Per Share: Continuing Operations

$

5.21

$

1.57

$

1.14

$

0.10

$

(0.09)

$

7.93

____________________

(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.

(3)

Primarily relates to the realized gain/(loss) and unrealized fair value changes in Kyndryl common stock and the related 2022 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.

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/ibm-releases-fourth-quarter-results-301730936.html

SOURCE IBM