REG-Unisys Corp: Final Results <Origin Href="QuoteRef">UIS.N</Origin>
29/01/2016 07:10
Unisys Announces Fourth-Quarter and Full Year 2015 Financial Results
BLUE BELL, Pennsylvania, Jan. 28, 2016 -- Unisys Corporation (NYSE: UIS) today
reported fourth quarter and full year 2015 results.
4Q 2015:
* Revenue of $790 million
* Operating profit margin of 2.0 percent; 12.1 percent(1) before cost
reduction charges and other expense of $53 million and pension expense of
$27 million
* Diluted earnings per share of $0.02
* Non-GAAP diluted earnings per share(2) of $1.58
Full Year 2015:
* Revenue of $3,015 million
* Operating profit margin of (1.8) percent; 5.8 percent before cost reduction
charges and other expense of $123 million and pension expense of $109
million
* Diluted loss per share of ($2.20)
* Non-GAAP diluted earnings per share of $2.26
"Our progress as a provider of higher-value, industry-focused IT solutions
continues," said Unisys President and CEO Peter Altabef. "Our efforts to reduce
costs, sharpen our market focus and enhance our offerings continued to improve
our competitiveness and positioning in the marketplace. In the fourth quarter,
services revenue continued to grow in constant currency, our non-GAAP operating
profitability improved, we made a number of critical leadership additions, and
our Stealth offering continued to gain traction."
Summary of Business Results
* Fourth quarter 2015
+ Company:
o Revenue of $790 million declined 13 percent year-over-year; down 6
percent in constant currency(3) as Services revenue growth in
constant currency was offset by lower Technology revenue.
o Overall operating profit margin of 2.0 percent includes cost
reduction charges and other expense and pension expense. Fourth
quarter 2015 non-GAAP operating profit margin was 12.1 percent, an
increase of 100 basis points from the prior year.
+ Services:
o Service revenue, which represented 82 percent of total revenue,
declined by 6 percent, growing 2 percent in constant currency; the
fourth consecutive quarter of year-over-year growth in constant
currency principally reflected higher Application Services revenue.
o Services operating profit margin was 3.6 percent, an increase of 20
basis points from the prior year, reflecting the benefit of cost
reduction actions taken in 2015.
+ Technology:
o Technology revenue, which represented 18 percent of total revenue,
declined 35 percent, down 30 percent in constant currency,
reflecting reduced ClearPath Forward™ revenue, which can vary
significantly from quarter-to-quarter based on the timing of
license renewals, and lower sales of low-margin third party
equipment.
o Operating profit margin improved to 46.8 percent from 36.1 percent
in the prior year due to a higher proportion of software revenue
and the benefit of operating cost reductions.
* Full Year 2015
+ Company:
o Revenue of $3,015 million declined 10 percent year-over-year; down
2 percent in constant currency, reflecting lower Technology
revenue.
o Overall operating profit margin of (1.8) percent includes cost
reduction charges and other expense and pension expense.
+ Services:
o Services revenue, which represented 86 percent of total revenue,
declined by 6 percent, growing 2 percent in constant currency. The
growth in constant currency principally reflected higher
Application Services revenue.
o Services operating profit margin was 2.3 percent, a decrease of 110
basis points from the prior year, reflecting the impact of
currency, which offset the benefit of cost reduction actions taken
in 2015.
+ Technology:
o Technology revenue, which represented 14 percent of total revenue,
declined 28 percent, down 22 percent in constant currency,
reflecting reduced ClearPath Forward™ revenue and lower sales of
low-margin third party equipment.
o Technology operating profit margin improved to 24.8 percent from
21.9 percent in the prior year due to operating cost reductions.
Cash Flow
* Fourth quarter 2015 free cash flow(4) of $63 million rose 73 percent
year-over-year due principally to lower capital expenditures. Adjusted free
cash flow(5) in fourth quarter 2015 doubled from the prior year to $117
million.
* Full year 2015 free cash flow usage of $213 million, an increase of $121
million from 2014, included $59 million in cost reduction payments and the
impact of $48 million in delayed receivable payments from a large Public
Sector client, which were not received until January 2016. Adjusted free
cash flow usage of $6 million in 2015 declined $98 million from 2014.
* The company ended 2015 with $365 million in cash.
2016 Outlook
* Unisys will discuss the 2016 outlook during the quarterly earnings
conference call.
Conference Call
Unisys will hold a conference call today at 5:30 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 Web site 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.
Non-GAAP Information
Unisys reports its results in accordance with Generally Accepted Accounting
Principles (GAAP) in the United States. However, in an effort to provide
investors with additional perspective regarding the company's results as
determined by GAAP, the company also discusses, in its earnings press release
and/or earnings presentation materials, non-GAAP information which management
believes provides useful information to investors. Management uses supplemental
non-GAAP financial measures internally to understand, manage and evaluate the
business and assess operational alternatives.
Non-GAAP measures are not intended to be considered in isolation or as
substitutes for results determined in accordance with GAAP and should be read
only in conjunction with our consolidated financial statements prepared in
accordance with GAAP. (See GAAP to non-GAAP reconciliations attached.)
(1) Non-GAAP operating profit - During the fourth quarter and full year 2015,
Unisys recorded pretax pension expense and a pretax charge in connection with
cost reduction actions and other expense. In order to provide investors with
additional understanding of the company's operating results, these changes are
excluded from the operating profit.
(2) Non-GAAP diluted earnings per share - During the fourth quarter and full
year 2015, Unisys recorded pension expense, net of tax, and a charge, net of
tax, in connection with cost reduction actions and other expense. In an effort
to provide investors with a perspective on the company's earnings without these
charges, they are excluded from the non-GAAP diluted earnings/loss per share
calculations.
(3) 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.
(4) Free cash flow - The company defines free cash flow as cash flow from
operations less capital expenditures. Management believes this measure gives
investors an additional perspective on cash flow from operating activities in
excess of amounts required for reinvestment.
(5) Adjusted free cash flow - Adjusted free cash flow provides free cash flow
before the company's pension contributions or cost reduction payments in an
effort to provide investors with a perspective on the company's free cash flow
generation before these items.
About Unisys
Unisys is a global information technology company that works with many of the
world's largest companies and government organizations to solve their most
pressing IT and business challenges. Unisys specializes in providing
integrated, leading-edge solutions to clients in the government, financial
services and commercial markets. With more than 20,000 employees serving
clients around the world, Unisys offerings include cloud and infrastructure
services, application services, security solutions, and high-end server
technology. For more information, visit http://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, 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. Risks and uncertainties
that could affect the company's future results include the company's ability to
effectively anticipate and respond to volatility and rapid technological
innovation in its industry; the company's ability to maintain and grow its
technology business; the company's ability to improve margins in its services
business; the company's ability to drive efficiencies across all of its
operations; the company's significant pension obligations and requirements to
make significant cash contributions to its defined benefit plans; financial
market conditions that may inhibit the company's ability to access capital and
credit markets to address its liquidity needs; the company's ability to
attract, motivate and retain experienced and knowledgeable personnel in key
positions; the potential adverse effects of aggressive competition in the
information services and technology marketplace; the company's ability to
retain significant clients; the company's contracts may not be as profitable as
expected or provide the expected level of revenues; cybersecurity breaches
could result in significant costs and could harm the company's business and
reputation; a significant disruption in the company's IT systems could
adversely affect the company's business and reputation; the company may face
damage to its reputation or legal liability if its clients are not satisfied
with its services or products; the performance and capabilities of third
parties with whom the company has commercial relationships; the adverse effects
of global economic conditions, acts of war, terrorism or natural disasters;
contracts with U.S. governmental agencies may subject the company to audits,
criminal penalties, sanctions and other expenses and fines; the risks of doing
business internationally when a significant portion of the company's revenue is
derived from international operations; the potential for intellectual property
infringement claims to be asserted against the company or its clients; the
possibility that pending litigation could affect the company's results of
operations or cash flow; the business and financial risk in implementing future
dispositions or acquisitions; and the company's consideration of all available
information following the end of the year and before the filing of the Form
10-K 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.: 0128/9388
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.
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions, except per share data)
Three Months Year
Ended December Ended December 31
31
2015 2014 2015 2014
Revenue
Services $649.1 $688.7 * $2,605.6 $2,785.7 *
Technology 140.8 217.1 * 409.5 570.7 *
789.9 905.8 3,015.1 3,356.4
Costs and expenses
Cost of revenue:
Services 592.0 573.9 * 2,306.7 2,337.8 *
Technology 38.9 87.2 * 167.5 240.8 *
630.9 661.1 2,474.2 2,578.6
Selling, general and administrative 130.0 144.0 519.6 554.1
Research and development 13.2 18.3 76.4 68.8
774.1 823.4 3,070.2 3,201.5
Operating profit (loss) 15.8 82.4 (55.1) 154.9
Interest expense 3.6 2.6 11.9 9.2
Other income (expense), net 0.2 8.8 8.2 (0.2)
Income (loss) before income taxes 12.4 88.6 (58.8) 145.5
Provision for income taxes 11.1 23.9 44.4 86.2
Consolidated net income (loss) 1.3 64.7 (103.2) 59.3
Net income attributable to
noncontrolling interests 0.2 2.9 6.7 12.6
Net income (loss) attributable to
Unisys
Corporation 1.1 61.8 (109.9) 46.7
Preferred stock dividend - - - 2.7
Net income (loss) attributable to
Unisys
Corporation common shareholders $1.1 $61.8 ($109.9) $44.0
Earnings (loss) per common share
attributable to Unisys Corporation
Basic $ .02 $ 1.24 ($ $ .89
2.20)
Diluted $ .02 $ 1.24 ($ $ .89
2.20)
Shares used in the per share computations
(thousands):
Basic 49,937 49,689 49,905 49,280
Diluted 50,049 49,948 49,905 49,584
* Changed to conform with the 2015
presentation.
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Total Eliminations Services Technology
Three Months Ended
December 31, 2015
Customer revenue $789.9 $649.1 $140.8
Intersegment ($8.4) - 8.4
Total revenue $789.9 ($8.4) $649.1 $149.2
Gross profit percent 20.1% 16.2% 68.4%
Operating profit percent 2.0% 3.6% 46.8%
Three Months Ended
December 31, 2014 *
Customer revenue $905.8 $688.7 $217.1
Intersegment ($35.5) - 35.5
Total revenue $905.8 ($35.5) $688.7 $252.6
Gross profit percent 27.0% 17.9% 58.2%
Operating profit percent 9.1% 3.4% 36.1%
Year Ended
December 31, 2015
Customer revenue $3,015.1 $2,605.6 $409.5
Intersegment ($49.0) 0.1 48.9
Total revenue $3,015.1 ($49.0) $2,605.7 $458.4
Gross profit percent 17.9% 15.8% 55.3%
Operating profit (loss) percent (1.8%) 2.3% 24.8%
Year Ended
December 31, 2014 *
Customer revenue $3,356.4 $2,785.7 $570.7
Intersegment ($58.4) 0.3 58.1
Total revenue $3,356.4 ($58.4) $2,786.0 $628.8
Gross profit percent 23.2% 17.4% 55.3%
Operating profit percent 4.6% 3.4% 21.9%
* Changed to conform with the 2015
presentation.
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
December 31, December 31,
2015 2014
Assets
Current assets
Cash and cash equivalents $365.2 $494.3
Accounts and notes receivable, net 581.6 619.3
Inventories
Parts and finished equipment 20.9 22.2
Work in process and materials 22.9 24.5
Deferred income taxes 24.1 16.4
Prepaid expense and other current assets 121.0 140.6
Total 1,135.7 1,317.3
Properties 876.6 1,059.4
Less accumulated depreciation and amortization 722.8 890.7
Properties, net 153.8 168.7
Outsourcing assets, net 182.0 150.9
Marketable software, net 138.5 144.1
Prepaid postretirement assets 45.1 19.9
Deferred income taxes 114.5 154.6
Goodwill 177.4 183.9
Other long-term assets 196.2 209.3
Total $2,143.2 $2,348.7
Liabilities and deficit
Current liabilities
Notes payable $65.8 $0.0
Current maturities of long-term debt 11.0 1.8
Accounts payable 219.3 262.5
Deferred revenue 335.1 348.3
Other accrued liabilities 339.3 385.1
Total 970.5 997.7
Long-term debt 235.5 222.2
Long-term postretirement liabilities 2,111.3 2,369.9
Long-term deferred revenue 123.3 119.5
Other long-term liabilities 81.2 91.8
Commitments and contingencies
Total deficit (1,378.6) (1,452.4)
Total $2,143.2 $2,348.7
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions)
Year Ended
December 31
2015 2014
Cash flows from operating activities
Consolidated net (loss) income ($103.2) $59.3
Add (deduct) items to reconcile consolidated net (loss)
income to net cash provided by operating activities:
Foreign currency transaction loss 8.4 7.4
Employee stock compensation 9.4 10.4
Depreciation and amortization of properties 57.5 52.0
Depreciation and amortization of outsourcing assets 55.7 58.1
Amortization of marketable software 66.9 58.5
Other non-cash operating activities 4.6 7.8
Disposals of capital assets 9.7 1.8
Gain on sale of business - (0.7)
Pension contributions (148.3) (183.4)
Pension expense 108.7 73.8
Decrease in deferred income taxes, net 1.2 24.8
Increase in receivables, net (11.5) (14.3)
(Increase) decrease in inventories (3.7) 6.3
(Decrease) increase in accounts payable and other (61.1) 14.4
accrued liabilities
Decrease in other liabilities (7.5) (31.1)
Decrease (increase) in other assets 14.4 (23.7)
Net cash provided by operating activities 1.2 121.4
Cash flows from investing activities
Proceeds from investments 3,831.6 5,654.0
Purchases of investments (3,806.2) (5,640.3)
Investment in marketable software (62.1) (73.6)
Capital additions of properties (49.6) (53.3)
Capital additions of outsourcing assets (102.0) (85.9)
Other 10.4 3.8
Net cash used for investing activities (177.9) (195.3)
Cash flows from financing activities
Purchases of common stock - (35.7)
Payments of long-term debt (10.4) -
Dividends paid on preferred shares - (4.0)
Proceeds from exercise of stock options 3.7 3.4
Proceeds from issuance of long-term debt 31.8 -
Net proceeds from short-term borrowings 65.8 -
Financing fees (0.3) (0.6)
Net cash provided by (used for) financing activities 90.6 (36.9)
Effect of exchange rate changes on cash and cash (43.0) (34.7)
equivalents
Decrease in cash and cash equivalents (129.1) (145.5)
Cash and cash equivalents, beginning of period 494.3 639.8
Cash and cash equivalents, end of period $365.2 $494.3
( 1 )
UNISYS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months Ended Year Ended
December 31, 2015 December 31, 2015
GAAP net income (loss)
attributable to Unisys Corporation
common shareholders $1.1 ($109.9)
Cost reduction and other expense, net of 51.5 116.5
tax
Pension expense, net of tax 26.7 106.6
Non-GAAP net income
attributable to Unisys Corporation
common shareholders 79.3 113.2
Add preferred stock dividend 0.0 0.0
Non-GAAP net income
attributable to Unisys Corporation
for diluted earnings per share $79.3 $113.2
Weighted average shares (thousands) 49,937 49,905
Plus incremental shares from assumed
conversion:
Employee stock plans 112 150
Preferred stock 0 0
GAAP adjusted weighted average shares 50,049 50,055
Diluted earnings per share
GAAP basis
GAAP net income (loss)
attributable to Unisys Corporation
for diluted earnings per share $1.1 ($109.9)
Divided by adjusted weighted average 50,049 49,905
shares
GAAP earnings (loss) per diluted share $ .02 ($ 2.20)
Non-GAAP basis
Non-GAAP net income
attributable to Unisys Corporation
for diluted earnings per share $79.3 $113.2
Divided by Non-GAAP adjusted weighted 50,049 50,055
average shares
Non-GAAP earnings per diluted share $ 1.58 $ 2.26
(2)
UNISYS CORPORATION
RECONCILIATION OF GAAP OPERATING PROFIT TO NON-GAAP OPERATING PROFIT
(Unaudited)
(Millions)
Three Months Year
Ended December 31 Ended December 31
2015 2014 2015 2014
GAAP operating profit $15.8 $82.4 ($55.1) $154.9
(loss)
Cost reduction and other 52.5 0.0 122.5 0.0
expense
FAS87 pension expense 27.2 18.3 108.7 73.8
Non-GAAP operating profit $95.5 $100.7 $176.1 $228.7
Customer Revenue $789.9 $905.8 $3,015.1 $3,356.4
GAAP operating profit 2.0% 9.1% (1.8%) 4.6%
(loss) %
Non-GAAP operating profit 12.1% 11.1% 5.8% 6.8%
%
(3)
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
FREE CASH FLOW
Three Months Year
Ended December 31 Ended December 31
2015 2014 2015 2014
Cash provided by operations $109.7 $105.5 $1.2 $121.4
Additions to marketable software (15.3) (17.5) (62.1) (73.6)
Additions to properties (9.4) (11.4) (49.6) (53.3)
Additions to outsourcing assets (21.6) (40.0) (102.0) (85.9)
Free cash flow 63.4 36.6 (212.5) (91.4)
Pension funding 32.7 22.1 148.3 183.4
Cost reduction funding 20.9 - 58.5 -
Free cash flow before pension & $117.0 $58.7 ($5.7) $92.0
cost reduction funding
SOURCE: Unisys Corporation
CONTACT: Investor Contact: Niels Christensen, 215-986-6651,
Niels.Christensen@unisys.com; or Media Contact: Bruce Hight, 512-944-2032,
bruce.hight@hkstrategies.com
END
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