Unisys Announces
3Q19 Results; Revenue Growth and Margin Expansion Continue; Company
Increases Full-Year Non-GAAP Adjusted Revenue Guidance
BLUE BELL, Pa., Oct. 29, 2019 /PRNewswire/ --
- Total revenue grew 10.1% year over year (11.8% on a
constant-currency(1) basis)
- Total non-GAAP adjusted revenue(3) grew 9.6% year
over year, representing the sixth-consecutive quarter of
year-over-year growth
- Operating profit margin expanded 130 basis points year over
year to 9.4%
- Non-GAAP operating profit(4) margin expanded 100
basis points year over year to 8.7%
- EPS was a loss of $0.23 per
share relative to a gain of $0.12 per
share in the prior-year period (current period includes a
$20.2 million or $0.35 per share charge related to the convertible
note transaction)
- Non-GAAP diluted EPS(10) was up 25.6% year over
year to $0.49 per share
- Operating cash flow grew $33.2
million year over year to $17.7
million
- Adjusted free cash flow(12) grew $41.9 million year over year to $35.5 million
- Company increases full-year 2019 non-GAAP adjusted revenue
guidance from 2 to 5%, to 3 to 7% year-over-year growth and
reaffirms full-year guidance for non-GAAP operating profit margin
and adjusted EBITDA margin
Unisys Corporation (NYSE: UIS) today reported third-quarter
2019 financial results, increased full-year non-GAAP adjusted
revenue guidance from 2 to 5% year-over-year growth, to 3 to 7%
year-over-year growth and reaffirmed full-year guidance for
non-GAAP operating profit margin and adjusted EBITDA margin. "We
are pleased to see continued revenue growth and margin expansion
for the company overall this quarter," said Unisys Chairman and CEO
Peter A. Altabef. "Our U.S. Federal
business saw strong revenue growth, and our Enterprise Solutions
business helped drive our profitability expansion year over
year."
Third-Quarter Highlights
|
Revenue Growth |
|
|
|
Profitability |
|
Revenue
Growth |
Services
Revenue
Growth |
Technology
Revenue
Growth |
|
|
|
Operating
Profit
Margin |
|
Net Income
Margin |
|
Adj. EBITDA
Margin |
|
Diluted EPS |
GAAP |
10.1% |
8.0% |
25.2% |
|
GAAP |
9.4% |
|
(1.7%) |
|
|
|
($0.23) |
Constant-Currency (GAAP) |
11.8% |
9.9% |
26.0% |
|
|
YoY Change |
130 |
bps |
(260) |
bps |
|
N/A |
Non-GAAP |
9.6% |
7.4% |
|
|
Non-GAAP |
8.7% |
|
4.3% |
|
14.1% |
|
$0.49 |
|
|
|
|
|
|
YoY Change |
100 |
bps |
80 |
bps |
10 |
bps |
25.6% |
U.S. Federal Sector |
53.6% |
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Third-Quarter 2019 Business
Results
Company:
Third-quarter 2019 revenue grew 10.1% year over year to
$757.6 million versus $688.3 million in the prior-year period (11.8%
growth on a constant-currency basis). Non-GAAP adjusted revenue
grew 9.6% to $750.8 million,
representing the sixth-consecutive quarter of year-over-year
non-GAAP adjusted revenue growth. U.S. Federal sector revenue grew
53.6% year over year, the highest quarterly rate in over 15
years.
Operating profit margin in the third quarter expanded 130 basis
points year over year to 9.4%, versus 8.1% in the prior-year
period. Non-GAAP operating profit margin expanded 100 basis points
year over year to 8.7%.
Net loss for the third quarter 2019 was $13.2 million versus net income of $6.1 million in the prior-year period (current
period includes a $20.2 million
charge related to the convertible note transaction). As a result of
this charge, which had a $0.35 per share impact, the loss per
share was $0.23, compared to earnings
per share of $0.12 in the prior-year
period. Non-GAAP diluted earnings per share was up 25.6% year over
year to $0.49 per share versus
$0.39 per share in the prior-year
period.
Adjusted EBITDA(9) increased 10.5% year over year to
$106.2 million. Net income margin was
(1.7)%, compared to 0.9% in the prior-year period, with the
year-over-year decline due to the charge related to the convertible
note transaction. Adjusted EBITDA margin expanded 10 basis points
year over year to 14.1%, versus 14.0% in the prior-year
period.
Operating cash flow in the third quarter was up $33.2 million year over year to $17.7 million, versus a use of cash of
$15.5 million in the prior-year
period. Free cash flow(11) was up $48.9 million year over year to $(14.3) million, compared to $(63.2) million in the prior-year period.
Adjusted free cash flow was up $41.9
million year over year to $35.5
million, versus a use of cash of $6.4
million in the prior-year period. At September 30, 2019, the company had $425.4 million in cash and cash equivalents.
Services:
Services revenue grew 8.0% year over year in the third
quarter (or 9.9% in constant-currency) to $654.1 million, representing the
sixth-consecutive quarter of year-over-year growth for the segment.
Services non-GAAP adjusted revenue grew 7.4% year over year to
$647.3 million. Services gross profit
margin was up 170 basis points year over year to 17.6%, and
Services operating profit margin was up 240 basis points year over
year to 5.5%. Non-GAAP adjusted Services gross profit(5)
margin was up 140 basis points year over year to 16.8%, and
non-GAAP adjusted Services operating profit(6) margin
was up 190 basis points year over year to 4.5%. Services
backlog(2) was $4.2
billion, relative to $4.9
billion in the prior-year period. The growth rate in
the prior-year period represented the highest growth in this metric
since 1999. Inclusive of the unfunded portion of U.S. Federal
Services backlog, Services backlog was up year over year.
Technology:
Technology revenue was up 25.2% year over year to $103.5 million (up 26.0% in constant currency).
During the quarter, there was a large Technology contract in the
U.S. Federal sector that had a significant third-party component,
which impacted margins for the segment. As a result, Technology
gross profit margin was 51.1% compared to 62.4% in the prior-year
period, while Technology operating profit margin was 33.0% versus
39.7% in the prior-year period. There were no non-GAAP adjustments
in the Technology segment in the current or prior-year quarter.
Select Third-Quarter Contract
Signings:
In the third quarter, the company entered into several contracts
in each of its sectors including the following:
- U.S. Federal: In the third quarter, U.S. Defense Information
Systems Agency (DISA), the agency that provides enterprise IT
supporting the full spectrum of military operations, selected
Unisys for the 4th Estate Global Service Center contract to
optimize, modernize and consolidate service desk and field services
for U.S. Department of Defense agencies in the U.S. and overseas.
Under the contract, Unisys will deliver capabilities of its
InteliServe™ platform of service desk managed services. The
contract, worth up to $214 million,
will serve 19 of the Defense Department's "4th Estate"
organizations, a group of agencies and field activities that reside
outside of the military branches and provide support functions
critical to military services.
- Public: The Queensland Department of Transport and Main Roads
(TMR) in Australia has expanded
its contract with Unisys to provide facial image processing
technology and services for the state's smart card driver license.
Unisys will provide TMR's new Facial Signature Image Processing
system based on the Unisys Stealth(identity)™ multi-factor identity
management and authentication solution. Stealth(identity) automates
the process of biometric enrollment – capturing biometric data used
to authenticate identities – and provides configurable application
programming interfaces to integrate biometric authentication across
physical and digital channels, including mobile devices.
- Commercial: Unisys signed a contract in the third quarter to
help MAB Kargo Sdn Bhd (MASkargo), the cargo division of Malaysia
Airlines, expand its range of cargo booking options with a new
online booking service allowing all types of customers to
conveniently access the airline's cargo services, anytime and
anywhere, via the airline's website. Unisys will provide
Digi-Connect systems integration services to link the airline's
website to the core Unisys Digistics™ air cargo digital logistics
management solution. This will enable real-time access to
MASkargo's cargo capacity, rates and tracking via XML/API
connectivity to ensure an omnichannel experience regardless of
which online method is used.
- Financial Services: Bancolombia signed a contract with Unisys,
including using our InteliServe™ offering, to provide a wide range
of secure digital workplace services, help desk and field
services.
Conference Call
Unisys will hold a conference call today at 5:00 p.m. Eastern Time to discuss its results.
The listen-only webcast, as well as the accompanying presentation
materials, can be accessed on the Unisys Investor website at
www.unisys.com/investor. Following the call, an audio replay of the
webcast, and accompanying presentation materials, can be accessed
through the same link.
(1) Constant currency – The company
refers to growth rates in constant currency or on a constant
currency basis so that the business results can be viewed without
the impact of fluctuations in foreign currency exchange rates to
facilitate comparisons of the company's business performance from
one period to another. Constant currency is calculated by
retranslating current and prior period results at a consistent
rate.
(2) Services Backlog – Services Backlog
is the balance of contracted services revenue not yet recognized,
including only the funded portion of services contracts with the
U.S. Federal government.
Non-GAAP and Other Information
Although appropriate under generally accepted accounting
principles ("GAAP"), the company's results reflect revenue and
charges that the company believes are not indicative of its ongoing
operations and that can make its revenue, profitability and
liquidity results difficult to compare to prior periods,
anticipated future periods, or to its competitors' results. These
items consist of certain portions of revenue, post-retirement, debt
exchange and cost-reduction and other expenses. Management believes
each of these items can distort the visibility of trends associated
with the company's ongoing performance. Management also believes
that the evaluation of the company's financial performance can be
enhanced by use of supplemental presentation of its results that
exclude the impact of these items in order to enhance consistency
and comparativeness with prior or future period results. The
following measures are often provided and utilized by the company's
management, analysts, and investors to enhance comparability of
year-over-year results, as well as to compare results to other
companies in our industry.
(3) Non-GAAP adjusted revenue – In 2018
and 2019, the company's non-GAAP results reflect adjustments to
exclude certain revenue. In 2018, this includes revenue from
software license extensions and renewals, which were contracted for
in 2017 and properly recorded as revenue at that time under the
revenue recognition rules then in effect (ASC 605). Upon adoption
of the new revenue recognition rules (ASC 606) on January 1, 2018, and since the company adopted
ASC 606 under the modified retrospective method whereby prior
periods were not restated, the company was required to include
$53 million in the cumulative effect
adjustment to retained earnings on January
1, 2018. ASC 606 requires revenue related to software
license renewals or extensions to be recorded when the new license
term begins, which in the case of the $53
million was January 1, 2018.
The company has excluded revenue and related profit for these
software licenses in its non-GAAP results since it has been
previously reported in 2017. This is a one-time adjustment and it
will not reoccur in future periods. Additionally, the company's
non-GAAP results include adjustments to exclude certain revenue and
related profit relating to reimbursements from the company's
check-processing JV partners for restructuring expenses included as
part of the company's restructuring program.
(4) Non-GAAP operating profit – The
company recorded pretax post-retirement expense and pretax charges
in connection with cost-reduction activities, debt exchange and
other expenses. For the company, non-GAAP operating profit excluded
these items. The company believes that this profitability measure
is more indicative of the company's operating results and aligns
those results to the company's external guidance, which is used by
the company's management to allocate resources and may be used by
analysts and investors to gauge the company's ongoing performance.
During 2018 and 2019, the company included the non-GAAP adjustments
discussed in (3) herein.
(5) Non-GAAP adjusted Services gross
profit – During 2018 and 2019, the company included the
adjustments discussed in (3) herein.
(6) Non-GAAP adjusted Services operating
profit – During 2018 and 2019, the company included the
adjustments discussed in (3) herein.
(7) Non-GAAP adjusted Technology gross
profit – In the first quarter of 2018, the company
included the ASC 606 adjustment discussed in (3) herein.
(8) Non-GAAP adjusted Technology operating
profit – In the first quarter of 2018, the company included the
ASC 606 adjustment discussed in (3) herein.
(9) EBITDA & adjusted EBITDA –
Earnings before interest, taxes, depreciation and amortization
("EBITDA") is calculated by starting with net income (loss)
attributable to Unisys Corporation common shareholders and adding
or subtracting the following items: net income attributable to
noncontrolling interests, interest expense (net of interest
income), provision for income taxes, depreciation and amortization.
Adjusted EBITDA further excludes post-retirement, debt exchange,
and cost-reduction and other expenses, non-cash share-based
expense, and other (income) expense adjustment. In order to provide
investors with additional understanding of the company's operating
results, these charges are excluded from the adjusted EBITDA
calculation. During 2018 and 2019, the company included the
adjustments discussed in (3) herein.
(10) Non-GAAP diluted earnings per
share – The company has recorded post-retirement expense
and charges in connection with debt exchange and cost-reduction
activities and other expenses. Management believes that investors
may have a better understanding of the company's performance and
return to shareholders by excluding these charges from the GAAP
diluted earnings/loss per share calculations. The tax amounts
presented for these items for the calculation of non-GAAP diluted
earnings per share include the current and deferred tax expense and
benefits recognized under GAAP for these amounts. During 2018
and 2019, the company included the adjustments discussed in (3)
herein.
(11) Free cash flow – The company defines
free cash flow as cash flow from operations less capital
expenditures. Management believes this liquidity measure gives
investors an additional perspective on cash flow from on-going
operating activities in excess of amounts used for
reinvestment.
(12) Adjusted free cash flow – Because
inclusion of the company's post-retirement contributions and
cost-reduction charges/reimbursements and other payments in free
cash flow may distort the visibility of the company's ability to
generate cash flow from its operations without the impact of these
non-operational costs, management believes that investors may be
interested in adjusted free cash flow, which provides free cash
flow before these payments. This liquidity measure was provided to
analysts and investors in the form of external guidance and is used
by management to measure operating liquidity.
About Unisys
Unisys is a global information technology company that builds
high-performance, security-centric solutions for the most demanding
businesses and governments. Unisys offerings include security
software and services; digital transformation and workplace
services; industry applications and services; and innovative
software operating environments for high-intensity enterprise
computing. For more information on how Unisys builds better
outcomes securely for its clients across the Government, Financial
Services and Commercial markets, visit www.unisys.com.
Forward-Looking Statements
Any statements contained in this release that are not historical
facts are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, but are not limited to, any projections of
earnings, revenues, annual contract value, total contract value,
new business ACV or TCV, backlog or other financial items; any
statements of the company's plans, strategies or objectives for
future operations; statements regarding future economic conditions
or performance; and any statements of belief or expectation. All
forward-looking statements rely on assumptions and are subject to
various risks and uncertainties that could cause actual results to
differ materially from expectations. In particular, statements
concerning annual and total contract value are based, in part, on
the assumption that all options of the contracts (Federal only)
included in the calculation of such value will be exercised and
that each of those contracts will continue for their full
contracted term. Risks and uncertainties that could affect the
company's future results include, but are not limited to, the
following: our ability to improve revenue and margins in our
services business; our significant pension obligations and required
cash contributions and requirements to make additional significant
cash contributions to our defined benefit pension plans; our
ability to access financing markets; our ability to maintain our
installed base and sell new solutions; the potential adverse
effects of aggressive competition in the information services and
technology marketplace; cybersecurity breaches could result in
significant costs and could harm our business and reputation; the
potential adverse effects of a U.S. Federal government shutdown;
our ability to effectively anticipate and respond to volatility and
rapid technological innovation in our industry; our ability to
retain significant clients; our contracts may not be as profitable
as expected or provide the expected level of revenues; the risks of
doing business internationally when a significant portion of our
revenue is derived from international operations; the business and
financial risk in implementing future acquisitions or dispositions;
the impact of Brexit could adversely affect the company's
operations in the United Kingdom
as well as the funded status of the company's U.K. pension plans;
our ability to attract, motivate and retain experienced and
knowledgeable personnel in key positions; contracts with U.S.
governmental agencies may subject us to audits, criminal penalties,
sanctions and other expenses and fines; a significant disruption in
our IT systems could adversely affect our business and reputation;
we may face damage to our reputation or legal liability if our
clients are not satisfied with our services or products; the
performance and capabilities of third parties with whom we have
commercial relationships; an involuntary termination of the
company's U.S. qualified defined benefit pension plans; the
potential for intellectual property infringement claims to be
asserted against us or our clients; the possibility that legal
proceedings could affect our results of operations or cash flow or
may adversely affect our business or reputation; the adverse
effects of global economic conditions, acts of war, terrorism or
natural disasters and the company's consideration of all available
information following the end of the quarter and before the filing
of the Form 10-Q and the possible impact of this subsequent event
information on its financial statements for the reporting period.
Additional discussion of factors that could affect the company's
future results is contained in its periodic filings with the
Securities and Exchange Commission. The company assumes no
obligation to update any forward-looking statements.
RELEASE NO.: 1029/9721
Unisys and other Unisys products and services mentioned herein,
as well as their respective logos, are trademarks or registered
trademarks of Unisys Corporation. Any other brand or product
referenced herein is acknowledged to be a trademark or registered
trademark of its respective holder.
UIS-Q
UNISYS
CORPORATION |
CONSOLIDATED
STATEMENTS OF INCOME |
(Unaudited) |
(Millions, except
per share data) |
|
|
|
|
|
Three Months
Ended
September 30, |
|
Nine Months
Ended
September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue |
|
|
|
|
|
|
|
Services |
$ 654.1 |
|
$ 605.6 |
|
$ 1,919.6 |
|
$ 1,760.8 |
Technology |
103.5 |
|
82.7 |
|
287.6 |
|
303.3 |
|
757.6 |
|
688.3 |
|
2,207.2 |
|
2,064.1 |
Costs and expenses |
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
Services |
536.1 |
|
504.9 |
|
1,582.8 |
|
1,460.0 |
Technology |
49.1 |
|
29.6 |
|
108.2 |
|
96.2 |
|
585.2 |
|
534.5 |
|
1,691.0 |
|
1,556.2 |
Selling, general and administrative |
95.6 |
|
90.9 |
|
293.3 |
|
274.5 |
Research and development |
5.9 |
|
7.1 |
|
22.1 |
|
21.8 |
|
686.7 |
|
632.5 |
|
2,006.4 |
|
1,852.5 |
Operating profit |
70.9 |
|
55.8 |
|
200.8 |
|
211.6 |
Interest expense |
15.2 |
|
15.9 |
|
46.9 |
|
48.2 |
Other income (expense), net |
(49.2) |
|
(17.7) |
|
(108.5) |
|
(58.3) |
Income before income taxes |
6.5 |
|
22.2 |
|
45.4 |
|
105.1 |
Provision for income taxes |
15.9 |
|
15.2 |
|
41.8 |
|
50.4 |
Consolidated net income (loss) |
(9.4) |
|
7.0 |
|
3.6 |
|
54.7 |
Net income attributable to noncontrolling
interests |
3.8 |
|
0.9 |
|
10.0 |
|
4.2 |
Net income (loss) attributable to Unisys
Corporation common shareholders |
$
(13.2) |
|
$
6.1 |
|
(6.4) |
|
$
50.5 |
Earnings (loss) per share attributable to
Unisys Corporation |
|
|
|
|
|
|
|
Basic |
$
(0.23) |
|
$
0.12 |
|
$
(0.12) |
|
$
0.99 |
Diluted |
$
(0.23) |
|
$
0.12 |
|
$
(0.12) |
|
$
0.89 |
Shares used in the per share computations (in
thousands): |
|
|
|
|
|
|
|
Basic |
58,245 |
|
51,021 |
|
53,815 |
|
50,918 |
Diluted |
58,245 |
|
51,718 |
|
53,815 |
|
73,265 |
UNISYS
CORPORATION |
SEGMENT
RESULTS |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
|
|
|
Total |
|
Eliminations |
|
Services |
|
Technology |
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
Customer revenue |
$
757.6 |
|
$
- |
|
$
654.1 |
|
$
103.5 |
Intersegment |
- |
|
(2.3) |
|
- |
|
2.3 |
Total revenue |
$
757.6 |
|
$
(2.3) |
|
$
654.1 |
|
$
105.8 |
Gross profit percent |
22.8 % |
|
|
|
17.6 % |
|
51.1 % |
Operating profit percent |
9.4 % |
|
|
|
5.5 % |
|
33.0 % |
Three Months Ended September 30, 2018 |
|
|
|
|
|
|
|
Customer revenue |
$
688.3 |
|
$
- |
|
$
605.6 |
|
$
82.7 |
Intersegment |
- |
|
(4.3) |
|
- |
|
4.3 |
Total revenue |
$
688.3 |
|
$
(4.3) |
|
$
605.6 |
|
$
87.0 |
Gross profit percent |
22.3 % |
|
|
|
15.9 % |
|
62.4 % |
Operating profit percent |
8.1 % |
|
|
|
3.1 % |
|
39.7 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Eliminations |
|
Services |
|
Technology |
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
Customer revenue |
$ 2,207.2 |
|
$
- |
|
$ 1,919.6 |
|
$
287.6 |
Intersegment |
- |
|
(6.8) |
|
- |
|
6.8 |
Total revenue |
$ 2,207.2 |
|
$
(6.8) |
|
$ 1,919.6 |
|
$
294.4 |
Gross profit percent |
23.4 % |
|
|
|
17.0 % |
|
60.9 % |
Operating profit percent |
9.1 % |
|
|
|
4.7 % |
|
40.6 % |
Nine Months Ended September 30, 2018 |
|
|
|
|
|
|
|
Customer revenue |
$ 2,064.1 |
|
$
- |
|
$ 1,760.8 |
|
$
303.3 |
Intersegment |
- |
|
(18.3) |
|
- |
|
18.3 |
Total revenue |
$ 2,064.1 |
|
$
(18.3) |
|
$ 1,760.8 |
|
$
321.6 |
Gross profit percent |
24.6 % |
|
|
|
16.3 % |
|
66.7 % |
Operating profit percent |
10.3 % |
|
|
|
3.1 % |
|
48.1 % |
UNISYS
CORPORATION |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
September 30,
2019 |
|
December 31,
2018 |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$
425.4 |
|
$
605.0 |
|
Accounts receivable, net |
504.4 |
|
509.2 |
|
Contract assets |
38.3 |
|
29.7 |
|
Inventories: |
|
|
|
|
Parts and finished equipment |
15.0 |
|
14.0 |
|
Work in process and materials |
13.2 |
|
13.3 |
|
Prepaid expenses and other current assets |
122.7 |
|
130.2 |
|
Total current assets |
1,119.0 |
|
1,301.4 |
|
Properties |
799.0 |
|
800.2 |
|
Less-Accumulated depreciation and
amortization |
676.6 |
|
678.9 |
|
Properties, net |
122.4 |
|
121.3 |
|
Outsourcing assets, net |
208.3 |
|
216.4 |
|
Marketable software, net |
183.3 |
|
162.1 |
|
Operating lease right-of-use assets |
126.8 |
|
- |
|
Prepaid postretirement assets |
150.4 |
|
147.6 |
|
Deferred income taxes |
102.0 |
|
109.3 |
|
Goodwill |
176.2 |
|
177.8 |
|
Restricted cash |
7.9 |
|
19.1 |
|
Other long-term assets |
209.5 |
|
202.6 |
|
Total assets |
$
2,405.8 |
|
$
2,457.6 |
|
Liabilities and deficit |
|
|
|
|
Current liabilities: |
|
|
|
|
Current maturities of long-term-debt |
$
13.4 |
|
$
10.0 |
|
Accounts payable |
240.6 |
|
268.9 |
|
Deferred revenue |
236.0 |
|
294.4 |
|
Other accrued liabilities |
362.9 |
|
350.0 |
|
Total current liabilities |
852.9 |
|
923.3 |
|
Long-term debt |
563.6 |
|
642.8 |
|
Long-term postretirement liabilities |
1,830.5 |
|
1,956.5 |
|
Long-term deferred revenue |
142.4 |
|
157.2 |
|
Long-term operating lease liabilities |
83.8 |
|
- |
|
Other long-term liabilities |
50.0 |
|
77.4 |
|
Commitments and contingencies |
|
|
|
|
Total deficit |
(1,117.4) |
|
(1,299.6) |
|
Total liabilities and deficit |
$
2,405.8 |
|
$
2,457.6 |
|
UNISYS
CORPORATION |
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(Unaudited) |
(Millions) |
|
|
|
|
|
Nine Months
Ended
September 30, |
|
2019 |
|
2018 |
Cash flows from operating activities |
|
|
|
Consolidated net income |
$
3.6 |
|
$ 54.7 |
Adjustments to reconcile consolidated net income
to net cash used for operating activities: |
|
|
|
Foreign currency transaction losses |
7.2 |
|
1.1 |
Non-cash interest expense |
7.5 |
|
7.8 |
Loss on debt exchange |
20.2 |
|
- |
Employee stock compensation |
10.1 |
|
10.0 |
Depreciation and amortization of properties |
26.7 |
|
31.2 |
Depreciation and amortization of outsourcing
assets |
47.3 |
|
48.7 |
Amortization of marketable software |
35.0 |
|
42.8 |
Other non-cash operating activities |
(0.8) |
|
(2.6) |
Loss on disposal of capital assets |
1.3 |
|
0.6 |
Gain on sale of properties |
- |
|
(7.3) |
Postretirement contributions |
(82.3) |
|
(124.5) |
Postretirement expense |
71.5 |
|
58.2 |
Decrease in deferred income taxes, net |
1.0 |
|
9.3 |
Changes in operating assets and liabilities: |
|
|
|
Receivables, net |
(17.4) |
|
(69.3) |
Inventories |
(1.7) |
|
(1.3) |
Accounts payable and other accrued
liabilities |
(173.4) |
|
(144.1) |
Other liabilities |
33.1 |
|
(1.5) |
Other assets |
9.3 |
|
8.8 |
Net cash used for operating activities |
(1.8) |
|
(77.4) |
Cash flows from investing activities |
|
|
|
Proceeds from investments |
2,824.9 |
|
2,889.3 |
Purchases of investments |
(2,835.8) |
|
(2,892.4) |
Investment in marketable software |
(56.2) |
|
(61.7) |
Capital additions of properties |
(29.1) |
|
(25.0) |
Capital additions of outsourcing assets |
(44.4) |
|
(54.4) |
Net proceeds from sale of properties |
(0.2) |
|
19.2 |
Other |
(0.9) |
|
(0.9) |
Net cash used for investing activities |
(141.7) |
|
(125.9) |
Cash flows from financing activities |
|
|
|
Cash paid in connection with debt exchange |
(56.3) |
|
- |
Proceeds from capped call transactions |
7.2 |
|
- |
Proceeds from issuance of long-term debt |
28.6 |
|
- |
Payments of long-term debt |
(12.2) |
|
(2.0) |
Financing fees |
- |
|
(0.2) |
Other |
(4.6) |
|
(2.2) |
Net cash used for financing activities |
(37.3) |
|
(4.4) |
Effect of exchange rate changes on cash, cash
equivalents and restricted cash |
(10.0) |
|
(22.5) |
Decrease in cash, cash equivalents and
restricted cash |
(190.8) |
|
(230.2) |
Cash, cash equivalents and restricted cash,
beginning of period |
624.1 |
|
764.1 |
Cash, cash equivalents and restricted cash, end
of period |
$ 433.3 |
|
$ 533.9 |
UNISYS
CORPORATION |
RECONCILIATIONS OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES |
(Unaudited) |
(Millions, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September
30, |
|
September
30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GAAP net income (loss) attributable
to Unisys Corporation common shareholders |
|
$
(13.2) |
|
$
6.1 |
|
$
(6.4) |
|
$
50.5 |
|
|
|
|
|
|
|
|
|
|
Topic 606 adjustment: |
pretax |
|
- |
|
- |
|
- |
|
(53.0) |
|
tax |
|
- |
|
- |
|
- |
|
5.3 |
|
net of tax |
|
- |
|
- |
|
- |
|
(47.7) |
|
|
|
|
|
|
|
|
|
|
Postretirement expense: |
pretax |
|
24.4 |
|
19.7 |
|
71.5 |
|
58.2 |
|
tax |
|
0.1 |
|
0.3 |
|
0.2 |
|
0.8 |
|
net of tax |
|
24.5 |
|
20.0 |
|
71.7 |
|
59.0 |
|
|
|
|
|
|
|
|
|
|
Debt exchange, cost reduction and other
expenses: |
pretax |
|
18.4 |
|
(4.0) |
|
29.0 |
|
(6.2) |
|
tax |
|
(0.8) |
|
0.1 |
|
(1.8) |
|
0.2 |
|
net of tax |
|
17.6 |
|
(3.9) |
|
27.2 |
|
(6.0) |
|
minority interest |
|
3.4 |
|
1.5 |
|
6.6 |
|
1.5 |
|
net of minority interest |
|
21.0 |
|
(2.4) |
|
33.8 |
|
(4.5) |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to
Unisys Corporation common shareholders |
|
32.3 |
|
23.7 |
|
99.1 |
|
57.3 |
|
|
|
|
|
|
|
|
|
|
Add interest expense on convertible
notes |
|
3.2 |
|
4.9 |
|
13.2 |
|
14.6 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to
Unisys Corporation for diluted earnings per share |
|
$
35.5 |
|
$
28.6 |
|
$
112.3 |
|
$
71.9 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
(thousands) |
|
58,245 |
|
51,021 |
|
53,815 |
|
50,918 |
|
|
|
|
|
|
|
|
|
|
Plus incremental shares from assumed
conversion: |
|
|
|
|
|
|
|
|
Employee stock plans |
|
341 |
|
697 |
|
395 |
|
479 |
|
Convertible notes |
|
13,951 |
|
21,868 |
|
19,229 |
|
21,868 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted weighted average
shares |
|
72,537 |
|
73,586 |
|
73,439 |
|
73,265 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP basis |
|
|
|
|
|
|
|
|
GAAP net income (loss) attributable to
Unisys Corporation for diluted earnings per share |
|
$ (13.2) |
|
$
6.1 |
|
$
(6.4) |
|
$
65.1 |
|
|
|
|
|
|
|
|
|
|
Divided by adjusted weighted average
shares |
|
58,245 |
|
51,718 |
|
53,815 |
|
73,265 |
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings (loss) per
share |
|
$
(0.23) |
|
$
0.12 |
|
$
(0.12) |
|
$
0.89 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP basis |
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to
Unisys Corporation for diluted earnings per share |
|
$
35.5 |
|
$
28.6 |
|
$ 112.3 |
|
$
71.9 |
|
|
|
|
|
|
|
|
|
|
Divided by Non-GAAP adjusted weighted
average shares |
|
72,537 |
|
73,586 |
|
73,439 |
|
73,265 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted earnings per
share |
|
$
0.49 |
|
$
0.39 |
|
$
1.53 |
|
$
0.98 |
UNISYS
CORPORATION |
RECONCILIATIONS OF
GAAP TO NON-GAAP |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
|
|
|
|
FREE CASH
FLOW |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September
30, |
|
September
30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Cash provided by (used for)
operations |
|
$
17.7 |
|
$
(15.5) |
|
$
(1.8) |
|
$
(77.4) |
Additions to marketable software |
|
(19.0) |
|
(20.6) |
|
(56.2) |
|
(61.7) |
Additions to properties |
|
(8.3) |
|
(15.1) |
|
(29.1) |
|
(25.0) |
Additions to outsourcing assets |
|
(4.7) |
|
(12.0) |
|
(44.4) |
|
(54.4) |
Free cash flow |
|
(14.3) |
|
(63.2) |
|
(131.5) |
|
(218.5) |
Postretirement funding |
|
34.6 |
|
51.6 |
|
82.3 |
|
124.5 |
Cost reduction and other payments, net
of reimbursements |
|
15.2 |
|
5.2 |
|
37.1 |
|
32.2 |
Adjusted free cash flow |
|
$
35.5 |
|
$
(6.4) |
|
$
(12.1) |
|
$
(61.8) |
UNISYS
CORPORATION |
RECONCILIATIONS OF
GAAP TO NON-GAAP |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September
30, |
|
September
30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income (loss) attributable to
Unisys Corporation common shareholders |
|
$
(13.2) |
|
$
6.1 |
|
$
(6.4) |
|
$
50.5 |
Net income attributable to
noncontrolling interests |
|
3.8 |
|
0.9 |
|
10.0 |
|
4.2 |
Interest expense, net of interest
income of $2.8, $2.7, $8.6, $9.0 respectively* |
|
12.4 |
|
13.2 |
|
38.3 |
|
39.2 |
Provision for income taxes |
|
15.9 |
|
15.2 |
|
41.8 |
|
50.4 |
Depreciation |
|
24.5 |
|
26.4 |
|
74.0 |
|
79.9 |
Amortization |
|
13.4 |
|
14.2 |
|
35.0 |
|
42.8 |
EBITDA |
|
$
56.8 |
|
$
76.0 |
|
$ 192.7 |
|
$ 267.0 |
|
|
|
|
|
|
|
|
|
Topic 606 adjustment |
|
$
- |
|
$
- |
|
$
- |
|
$ (53.0) |
Postretirement expense |
|
24.4 |
|
19.7 |
|
71.5 |
|
58.2 |
Debt exchange, cost reduction and
other expenses** |
|
18.4 |
|
(4.0) |
|
27.9 |
|
(6.2) |
Non-cash share based expense |
|
2.8 |
|
2.7 |
|
10.1 |
|
10.0 |
Other (income) expense
adjustment*** |
|
3.8 |
|
1.7 |
|
14.9 |
|
12.0 |
Adjusted EBITDA |
|
$ 106.2 |
|
$
96.1 |
|
$ 317.1 |
|
$ 288.0 |
|
|
|
|
|
|
|
|
|
|
*Included in other (income) expense,
net on the consolidated statements of income |
**Reduced for depreciation and
amortization included above |
***Other (income) expense, net as
reported on the consolidated statements of income less
postretirement expense, interest income and items included in debt
exchange, cost reduction and other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September
30, |
|
September
30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue |
|
|
$ 757.6 |
|
$ 688.3 |
|
$ 2,207.2 |
|
$ 2,064.1 |
Non-GAAP revenue |
|
|
$ 750.8 |
|
$ 685.2 |
|
$ 2,191.9 |
|
$ 2,008.0 |
Net income as a percentage of
revenue |
|
(1.7)% |
|
0.9 % |
|
(0.3)% |
|
2.4 % |
Non-GAAP net income as a percentage of
Non-GAAP revenue |
|
4.3 % |
|
3.5 % |
|
4.5 % |
|
2.9 % |
Adjusted EBITDA as a percentage of
Non-GAAP revenue |
|
14.1 % |
|
14.0 % |
|
14.5 % |
|
14.3 % |
UNISYS
CORPORATION |
RECONCILIATIONS OF
GAAP SEGMENT REPORTING TO NON-GAAP SEGMENT REPORTING |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
Services Segment |
|
September
30, |
|
September
30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GAAP total revenue |
|
$
654.1 |
|
$
605.6 |
|
$ 1,919.6 |
|
$ 1,760.8 |
Restructuring reimbursement |
|
(6.8) |
|
(3.1) |
|
(15.3) |
|
(3.1) |
Non-GAAP revenue |
|
$
647.3 |
|
$
602.5 |
|
$ 1,904.3 |
|
$ 1,757.7 |
|
|
|
|
|
|
|
|
|
GAAP gross margin |
|
$
115.4 |
|
$
96.1 |
|
$
325.9 |
|
$
286.9 |
Restructuring reimbursement |
|
(6.8) |
|
(3.1) |
|
(15.3) |
|
(3.1) |
Non-GAAP gross margin |
|
$
108.6 |
|
$
93.0 |
|
$
310.6 |
|
$
283.8 |
|
|
|
|
|
|
|
|
|
GAAP operating profit |
|
$
36.1 |
|
$
18.6 |
|
$
90.5 |
|
$
54.3 |
Restructuring reimbursement |
|
(6.8) |
|
(3.1) |
|
(15.3) |
|
(3.1) |
Non-GAAP operating profit |
|
$
29.3 |
|
$
15.5 |
|
$
75.2 |
|
$
51.2 |
|
|
|
|
|
|
|
|
|
GAAP gross margin % |
|
17.6% |
|
15.9% |
|
17.0% |
|
16.3% |
Non-GAAP gross margin % |
|
16.8% |
|
15.4% |
|
16.3% |
|
16.1% |
GAAP operating profit % |
|
5.5% |
|
3.1% |
|
4.7% |
|
3.1% |
Non-GAAP operating profit % |
|
4.5% |
|
2.6% |
|
3.9% |
|
2.9% |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
Technology Segment |
|
September
30, |
|
September
30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GAAP total revenue |
|
$
105.8 |
|
$
87.0 |
|
$
294.4 |
|
$
321.6 |
Topic 606 adjustment |
|
- |
|
- |
|
- |
|
(53.0) |
Non-GAAP revenue |
|
$
105.8 |
|
$
87.0 |
|
$
294.4 |
|
$
268.6 |
|
|
|
|
|
|
|
|
|
GAAP gross margin |
|
$
54.1 |
|
$
54.3 |
|
$
179.4 |
|
$
214.4 |
Topic 606 adjustment |
|
- |
|
- |
|
- |
|
(53.0) |
Non-GAAP gross margin |
|
$
54.1 |
|
$
54.3 |
|
$
179.4 |
|
$
161.4 |
|
|
|
|
|
|
|
|
|
GAAP operating profit |
|
$
34.9 |
|
$
34.5 |
|
$
119.4 |
|
$
154.7 |
Topic 606 adjustment |
|
- |
|
- |
|
- |
|
(53.0) |
Non-GAAP operating profit |
|
$
34.9 |
|
$
34.5 |
|
$
119.4 |
|
$
101.7 |
|
|
|
|
|
|
|
|
|
GAAP gross margin % |
|
51.1% |
|
62.4% |
|
60.9% |
|
66.7% |
Non-GAAP gross margin % |
|
51.1% |
|
62.4% |
|
60.9% |
|
60.1% |
GAAP operating profit % |
|
33.0% |
|
39.7% |
|
40.6% |
|
48.1% |
Non-GAAP operating profit % |
|
33.0% |
|
39.7% |
|
40.6% |
|
37.9% |
|
|
UNISYS
CORPORATION |
RECONCILIATIONS OF
GAAP SEGMENT REPORTING TO NON-GAAP SEGMENT REPORTING |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
Total Unisys |
|
September
30, |
|
September
30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GAAP total revenue |
|
$
757.6 |
|
$
688.3 |
|
$ 2,207.2 |
|
$ 2,064.1 |
Topic 606 adjustment |
|
- |
|
- |
|
- |
|
(53.0) |
Restructuring reimbursement |
|
(6.8) |
|
(3.1) |
|
(15.3) |
|
(3.1) |
Non-GAAP revenue |
|
$
750.8 |
|
$
685.2 |
|
$ 2,191.9 |
|
$ 2,008.0 |
|
|
|
|
|
|
|
|
|
GAAP gross margin |
|
$
172.4 |
|
$
153.8 |
|
$
516.2 |
|
$
507.9 |
Topic 606 adjustment |
|
- |
|
- |
|
- |
|
(53.0) |
Restructuring reimbursement |
|
(6.8) |
|
(3.1) |
|
(15.3) |
|
(3.1) |
Cost reduction expense |
|
(1.9) |
|
(0.7) |
|
(6.7) |
|
(4.2) |
Non-GAAP gross margin |
|
$
163.7 |
|
$
150.0 |
|
$
494.2 |
|
$
447.6 |
|
|
|
|
|
|
|
|
|
GAAP operating profit |
|
$
70.9 |
|
$
55.8 |
|
$
200.8 |
|
$
211.6 |
Topic 606 adjustment |
|
- |
|
- |
|
- |
|
(53.0) |
Restructuring reimbursement |
|
(6.8) |
|
(3.1) |
|
(15.3) |
|
(3.1) |
Postretirement expense |
|
0.9 |
|
1.0 |
|
2.5 |
|
2.9 |
Cost reduction and other expense |
|
0.5 |
|
(0.9) |
|
11.1 |
|
(3.1) |
Non-GAAP operating profit |
|
$
65.5 |
|
$
52.8 |
|
$
199.1 |
|
$
155.3 |
|
|
|
|
|
|
|
|
|
GAAP gross margin % |
|
22.8% |
|
22.3% |
|
23.4% |
|
24.6% |
Non-GAAP gross margin % |
|
21.8% |
|
21.9% |
|
22.5% |
|
22.3% |
GAAP operating profit % |
|
9.4% |
|
8.1% |
|
9.1% |
|
10.3% |
Non-GAAP operating profit % |
|
8.7% |
|
7.7% |
|
9.1% |
|
7.7% |
CONTACT: Investors: Courtney
Holben, Unisys, 215-986-3379, courtney.holben@unisys.com;
Media: John Clendening, Unisys,
214-403-1981, john.clendening@unisys.com