REG-Unisys Corp: 3rd Quarter Results
30/10/2019 07:05
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
(https://c212.net/c/link/?t=0&l=en&o=2625567-1&h=2421704232&u=http%3A%2F%2Fwww.unisys.com%2F&a=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 Services Technology Operating Net Income Adj. EBITDA Diluted EPS
Growth Revenue Revenue Profit Margin Margin
Growth Growth Margin
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 Nine Months Ended
September 30, 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, December 31,
2019 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
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