REG-Unisys Corp: Second quarter financial results
31/07/2019 07:05
Unisys Announces 2Q19 Results; Total Company Revenue Grows At Highest Rate in
Over 20 Years and Company Generates Positive Free Cash Flow; Company Reaffirms
Full-Year Guidance
BLUE BELL, Pa., July 30, 2019 /PRNewswire/ --
* Total revenue grew 12.9% year over year (16.5% on a constant-currency((1))
basis) * Total non-GAAP adjusted revenue((3)) grew 12.0% year over year, the
highest quarterly rate in over 20 years
* U.S. Federal sector revenue grew 33.1% year over year
* Operating profit margin expanded 340 basis points year over year to 11.5% *
Non-GAAP operating profit((4)) margin expanded 370 basis points year over year
to 12.0%
* Operating cash flow of $50.9 million, up $62.6 million year over year * Free
cash flow((11)) of $11.3 million, up $67.9 million year over year
* Diluted EPS increased 6 times year over year to $0.42 * Non-GAAP diluted
EPS((10)) increased 123% year over year to $0.87
* Company reaffirms full-year guidance
Unisys Corporation
(https://c212.net/c/link/?t=0&l=en&o=2538820-1&h=3665827819&u=http%3A%2F%2Fwww.unisys.com%2F&a=Unisys+Corporation) (NYSE:
UIS) today reported second-quarter 2019 financial results and reaffirmed
full-year guidance. "We are pleased to see continued revenue growth coupled
with higher non-GAAP operating profit margin and positive free cash flow this
quarter," said Unisys Chairman and CEO Peter A. Altabef. "We are also
encouraged by the ongoing strength in our U.S. Federal sector, which grew
revenue over 33 percent year over year in the second quarter."
Second-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 12.9% 11.4% 24.4% GAAP 11.5% 3.5% $0.42
Constant-Currency (GAAP) 16.5% 15.0% 27.3% YoY Change 340 bps 290 bps 500%
Non-GAAP 12.0% 10.3% Non-GAAP 12.0% 17.2% $0.87
YoY Change 370 bps 240 bps 123%
U.S. Federal Sector 33.1%
Summary of Second-Quarter 2019 Business Results
Company:
Second-quarter 2019 revenue grew 12.9% year over year to $753.8 million versus
$667.4 million in the prior-year period (16.5% on a constant-currency basis).
Non-GAAP adjusted revenue grew 12.0% to $747.3 million, the highest quarterly
growth rate seen in over 20 years.
Operating profit margin in the second quarter expanded 340 basis points year
over year to 11.5%. Non-GAAP operating profit margin expanded 370 basis points
year over year to 12.0%.
Net income for the second quarter 2019 was $26.2 million, up $22.4 million
versus $3.8 million in the prior-year period. Diluted earnings per share was
up 6 times year over year to $0.42, compared to $0.07 in the prior-year
period. Non-GAAP diluted earnings per share was up 123% year over year to
$0.87 versus $0.39 in the prior-year period.
Adjusted EBITDA((9)) grew 29.8% year over year in the second quarter to $128.5
million, versus $99.0 million in the prior-year period. Net income margin was
up 290 basis points year over year to 3.5%, compared to 0.6% in the prior-year
period. Adjusted EBITDA margin was up 240 basis points year over year to
17.2%, versus 14.8% in the prior-year period.
Operating cash flow in the second quarter was $50.9 million, up $62.6 million
year over year, versus a use of cash of $11.7 million in the prior-year
period. Free cash flow was $11.3 million, up $67.9 million year over year,
compared to a use of cash of $56.6 million in the prior-year period. Adjusted
free cash flow((12)) was $48.3 million, up $52.9 million year over year,
versus a use of cash of $4.6 million in the prior-year period. At June 30,
2019, the company had $507 million in cash and cash equivalents.
Services:
Services revenue grew 11.4% year over year in the second quarter (or 15.0% in
constant-currency) to $653.4 million. Services non-GAAP adjusted revenue grew
10.3% year over year to $646.9 million, marking the highest growth rate since
2003 for this segment. Services gross profit margin was up 130 basis points
year over year to 17.8%, and Services operating profit margin was up 280 basis
points to 6.0%. Non-GAAP adjusted Services gross profit((5)) margin was up 40
basis points year over year to 16.9%, and non-GAAP adjusted Services operating
profit((6)) margin was up 190 basis points year over year to 5.1%, the highest
level since 2014. In the second quarter the noted margins all increased year
over year inclusive of the ongoing impact of transitional business. Services
backlog((2)) was $4.3 billion, down 6.8% year over year largely due to a
lighter renewal schedule in the second quarter of 2019 than in the prior-year
period.
Technology:
Technology revenue grew 24.4% year over year in the second quarter to $100.4
million versus $80.7 million in the prior-year period (up 27.3% in constant
currency). Technology gross profit margin was up 640 basis points year over
year to 73.5% compared to 67.1% in the prior-year period, while Technology
operating profit was up 44.2% year over year, and Technology operating profit
margin was up 870 basis points year over year to 53.8% versus 45.1% in the
prior-year period. There were no non-GAAP adjustments in the Technology
segment in the quarter.
Select Second-Quarter Contract Signings:
In the second quarter, the company entered into several contracts in each of
its sectors including the following:
* U.S. Federal: In the second quarter, Unisys signed a contract to provide
support to a Defense Agency to maintain shared mission-critical IT services
for select Department of Defense agencies and organizations throughout the
government. Under this contract, Unisys will leverage its CloudForte™
solutions to provide a number of enterprise services including operation and
maintenance, enterprise IT modernization, and security.
* Public: In the second quarter, Unisys signed a contract to design, build and
manage new secure cloud infrastructure and an upgraded Wide Area Network for
Australia's Bureau of Meteorology, a new client for Unisys, to support a range
of products and services to better inform decision-making by governments,
emergency services, industry and the community.
* Commercial: In the second quarter, Unisys signed a new scope agreement with
India's flag carrier, Air India, for the Unisys Digistics™ integrated
logistics software suite. Unisys is helping the client create a connected and
automated cargo ecosystem for consistent and accurate data management, to help
improve cash flow for the airline while creating greater transparency around
shipment status for the airline's cargo clients.
* Financial Services: In the second quarter, Unisys signed a renewed and
expanded agreement with a leading Central American financial institution to
modernize infrastructure capabilities using the Unisys ClearPath Forward(®)
platform and development framework in support of their core applications. The
agreement includes on-demand services supporting the bank's core
modernization, designed to give greater flexibility, speed and services to the
bank's customers.
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 and cost-reduction and
other expense. 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 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 expense, cost-reduction and other expense, 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 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 on Earth. 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.: 0730/9693
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 Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Revenue
Services $ 653.4 $ 586.7 $ 1,265.5 $ 1,155.2
Technology 100.4 80.7 184.1 220.6
753.8 667.4 1,449.6 1,375.8
Costs and expenses
Cost of revenue:
Services 534.8 484.2 1,046.7 955.1
Technology 25.1 30.3 59.1 66.6
559.9 514.5 1,105.8 1,021.7
Selling, general and administrative 99.7 92.7 197.7 183.6
Research and development 7.2 6.2 16.2 14.7
666.8 613.4 1,319.7 1,220.0
Operating profit 87.0 54.0 129.9 155.8
Interest expense 16.2 15.7 31.7 32.3
Other income (expense), net (28.9) (18.0) (59.3) (40.6)
Income before income taxes 41.9 20.3 38.9 82.9
Provision for income taxes 12.1 14.3 25.9 35.2
Consolidated net income 29.8 6.0 13.0 47.7
Net income attributable to noncontrolling interests 3.6 2.2 6.2 3.3
Net income (loss) attributable to Unisys Corporation common shareholders $ 26.2 $ 3.8 6.8 $ 44.4
Earnings per share attributable to Unisys Corporation
Basic $ 0.51 $ 0.07 $ 0.13 $ 0.87
Diluted $ 0.42 $ 0.07 $ 0.13 $ 0.74
Shares used in the per share computations (in thousands):
Basic 51,782 50,986 51,600 50,867
Diluted 73,978 51,398 52,022 73,105
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Total Eliminations Services Technology
Three Months Ended June 30, 2019
Customer revenue $ 753.8 $ - $ 653.4 $ 100.4
Intersegment - (2.1) - 2.1
Total revenue $ 753.8 $ (2.1) $ 653.4 $ 102.5
Gross profit percent 25.7 % 17.8 % 73.5 %
Operating profit percent 11.5 % 6.0 % 53.8 %
Three Months Ended June 30, 2018
Customer revenue $ 667.4 $ - $ 586.7 $ 80.7
Intersegment - (4.0) - 4.0
Total revenue $ 667.4 $ (4.0) $ 586.7 $ 84.7
Gross profit percent 22.9 % 16.5 % 67.1 %
Operating profit percent 8.1 % 3.2 % 45.1 %
Total Eliminations Services Technology
Six Months Ended June 30, 2019
Customer revenue $ 1,449.6 $ - $ 1,265.5 $ 184.1
Intersegment - (4.5) - 4.5
Total revenue $ 1,449.6 $ (4.5) $ 1,265.5 $ 188.6
Gross profit percent 23.7 % 16.6 % 66.4 %
Operating profit percent 9.0 % 4.3 % 44.8 %
Six Months Ended June 30, 2018
Customer revenue $ 1,375.8 $ - $ 1,155.2 $ 220.6
Intersegment - (14.0) - 14.0
Total revenue $ 1,375.8 $ (14.0) $ 1,155.2 $ 234.6
Gross profit percent 25.7 % 16.5 % 68.2 %
Operating profit percent 11.3 % 3.1 % 51.2 %
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
June 30, December 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents $ 507.2 $ 605.0
Accounts receivable, net 496.4 509.2
Contract assets 32.7 29.7
Inventories:
Parts and finished equipment 13.5 14.0
Work in process and materials 14.4 13.3
Prepaid expenses and other current assets 141.6 130.2
Total current assets 1,205.8 1,301.4
Properties 814.2 800.2
Less-Accumulated depreciation and amortization 690.4 678.9
Properties, net 123.8 121.3
Outsourcing assets, net 210.1 216.4
Marketable software, net 177.8 162.1
Operating lease right-of-use assets 134.5 -
Prepaid postretirement assets 152.9 147.6
Deferred income taxes 104.0 109.3
Goodwill 177.8 177.8
Restricted cash 10.3 19.1
Other long-term assets 210.8 202.6
Total assets $ 2,507.8 $ 2,457.6
Liabilities and deficit
Current liabilities:
Current maturities of long-term-debt $ 7.5 $ 10.0
Accounts payable 233.5 268.9
Deferred revenue 288.3 294.4
Other accrued liabilities 342.4 350.0
Total current liabilities 871.7 923.3
Long-term debt 668.6 642.8
Long-term postretirement liabilities 1,888.0 1,956.5
Long-term deferred revenue 147.0 157.2
Long-term operating lease liabilities 96.1 -
Other long-term liabilities 50.1 77.4
Commitments and contingencies
Total deficit (1,213.7) (1,299.6)
Total liabilities and deficit $ 2,507.8 $ 2,457.6
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions)
Six Months Ended
June 30,
2019 2018
Cash flows from operating activities
Consolidated net income $ 13.0 $ 47.7
Adjustments to reconcile consolidated net income to net cash used for operating activities:
Foreign currency transaction losses 5.3 1.5
Non-cash interest expense 5.4 5.2
Employee stock compensation 7.3 7.3
Depreciation and amortization of properties 17.8 21.6
Depreciation and amortization of outsourcing assets 31.7 31.9
Amortization of marketable software 21.6 28.6
Other non-cash operating activities (0.2) (1.6)
Loss on disposal of capital assets 1.3 0.3
Gain on sale of properties - (7.1)
Postretirement contributions (47.7) (72.9)
Postretirement expense 47.1 38.5
Decrease in deferred income taxes, net 2.7 8.3
Changes in operating assets and liabilities:
Receivables, net 10.1 (21.2)
Inventories (0.3) (0.8)
Accounts payable and other accrued liabilities (140.3) (152.8)
Other liabilities 16.9 10.8
Other assets (11.2) (7.2)
Net cash used for operating activities (19.5) (61.9)
Cash flows from investing activities
Proceeds from investments 1,704.1 2,028.8
Purchases of investments (1,706.9) (2,034.6)
Investment in marketable software (37.2) (41.1)
Capital additions of properties (20.8) (9.9)
Capital additions of outsourcing assets (39.7) (42.4)
Net proceeds from sale of properties (0.2) 19.7
Other (0.4) (0.9)
Net cash used for investing activities (101.1) (80.4)
Cash flows from financing activities
Proceeds from issuance of long-term debt 28.1 -
Payments of long-term debt (10.5) (1.3)
Other (4.5) (2.1)
Net cash provided by (used for) financing activities 13.1 (3.4)
Effect of exchange rate changes on cash, cash equivalents and restricted cash 0.9 (17.3)
Decrease in cash, cash equivalents and restricted cash (106.6) (163.0)
Cash, cash equivalents and restricted cash, beginning of period 624.1 764.1
Cash, cash equivalents and restricted cash, end of period $ 517.5 $ 601.1
UNISYS CORPORATION
RECONCILIATIONS OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
GAAP net income attributable to Unisys Corporation common shareholders $ 26.2 $ 3.8 $ 6.8 $ 44.4
Topic 606 adjustment: pretax - - - (53.0)
tax - - - 5.3
net of tax - - - (47.7)
Postretirement expense: pretax 23.6 19.2 47.1 38.5
tax - 0.2 0.1 0.5
net of tax 23.6 19.4 47.2 39.0
Cost reduction and other expense: pretax 7.0 0.7 10.6 (2.2)
tax (0.3) - (1.0) 0.1
net of tax 6.7 0.7 9.6 (2.1)
minority interest 2.5 - 3.2 -
net of minority interest 9.2 0.7 12.8 (2.1)
Non-GAAP net income attributable to Unisys Corporation common shareholders 59.0 23.9 66.8 33.6
Add interest expense on convertible notes 5.0 4.9 10.0 9.7
Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $ 64.0 $ 28.8 $ 76.8 $ 43.3
Weighted average shares (thousands) 51,782 50,986 51,600 50,867
Plus incremental shares from assumed conversion:
Employee stock plans 328 412 422 370
Convertible notes 21,868 21,868 21,868 21,868
Non-GAAP adjusted weighted average shares 73,978 73,266 73,890 73,105
Diluted earnings per share
GAAP basis
GAAP net income attributable to Unisys Corporation for diluted earnings per share $ 31.2 $ 3.8 $ 6.8 $ 54.1
Divided by adjusted weighted average shares 73,978 51,398 52,022 73,105
GAAP diluted earnings per share $ 0.42 $ 0.07 $ 0.13 $ 0.74
Non-GAAP basis
Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $ 64.0 $ 28.8 $ 76.8 $ 43.3
Divided by Non-GAAP adjusted weighted average shares 73,978 73,266 73,890 73,105
Non-GAAP diluted earnings per share $ 0.87 $ 0.39 $ 1.04 $ 0.59
UNISYS CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
FREE CASH FLOW
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Cash provided by (used for) operations $ 50.9 $ (11.7) $ (19.5) $ (61.9)
Additions to marketable software (19.2) (22.1) (37.2) (41.1)
Additions to properties (10.1) (4.8) (20.8) (9.9)
Additions to outsourcing assets (10.3) (18.0) (39.7) (42.4)
Free cash flow 11.3 (56.6) (117.2) (155.3)
Postretirement funding 24.6 42.0 47.7 72.9
Cost reduction and other payments, net of reimbursements 12.4 10.0 21.9 27.0
Adjusted free cash flow $ 48.3 $ (4.6) $ (47.6) $ (55.4)
UNISYS CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
EBITDA
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Net income attributable to Unisys Corporation common shareholders $ 26.2 $ 3.8 $ 6.8 $ 44.4
Net income attributable to noncontrolling interests 3.6 2.2 6.2 3.3
Interest expense, net of interest income of $2.9, $3.1, $5.8, $6.3 respectively* 13.3 12.6 25.9 26.0
Provision for income taxes 12.1 14.3 25.9 35.2
Depreciation 24.5 26.2 49.5 53.5
Amortization 12.1 13.9 21.6 28.6
EBITDA $ 91.8 $ 73.0 $ 135.9 $ 191.0
Topic 606 adjustment $ - $ - $ - $ (53.0)
Postretirement expense 23.6 19.2 47.1 38.5
Cost reduction and other expense** 7.0 0.7 9.5 (2.2)
Non-cash share based expense 2.6 3.3 7.3 7.3
Other (income) expense adjustment*** 3.5 2.8 11.1 10.3
Adjusted EBITDA $ 128.5 $ 99.0 $ 210.9 $ 191.9
*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 cost reduction and other expense
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Revenue $ 753.8 $ 667.4 $ 1,449.6 $ 1,375.8
Non-GAAP revenue $ 747.3 $ 667.4 $ 1,441.1 $ 1,322.8
Net income as a percentage of revenue 3.5 % 0.6 % 0.5 % 3.2 %
Adjusted EBITDA as a percentage of Non-GAAP revenue 17.2 % 14.8 % 14.6 % 14.5 %
UNISYS CORPORATION
RECONCILIATIONS OF SEGMENT REPORTING TO NON-GAAP SEGMENT REPORTING
(Unaudited)
(Millions)
Three Months Ended Six Months Ended
Services Segment June 30, June 30,
2019 2018 2019 2018
GAAP total revenue $ 653.4 $ 586.7 $ 1,265.5 $ 1,155.2
Restructuring reimbursement (6.5) - (8.5) -
Non-GAAP revenue $ 646.9 $ 586.7 $ 1,257.0 $ 1,155.2
GAAP gross margin $ 116.0 $ 96.7 $ 210.5 $ 190.8
Restructuring reimbursement (6.5) - (8.5) -
Non-GAAP gross margin $ 109.5 $ 96.7 $ 202.0 $ 190.8
GAAP operating profit $ 39.2 $ 18.6 $ 54.4 $ 35.7
Restructuring reimbursement (6.5) - (8.5) -
Non-GAAP operating profit $ 32.7 $ 18.6 $ 45.9 $ 35.7
GAAP gross margin % 17.8% 16.5% 16.6% 16.5%
Non-GAAP gross margin % 16.9% 16.5% 16.1% 16.5%
GAAP operating profit % 6.0% 3.2% 4.3% 3.1%
Non-GAAP operating profit % 5.1% 3.2% 3.7% 3.1%
Three Months Ended Six Months Ended
Technology Segment June 30, June 30,
2019 2018 2019 2018
GAAP total revenue $ 102.5 $ 84.7 $ 188.6 $ 234.6
Topic 606 adjustment - - - (53.0)
Non-GAAP revenue $ 102.5 $ 84.7 $ 188.6 $ 181.6
GAAP gross margin $ 75.3 $ 56.8 $ 125.3 $ 160.1
Topic 606 adjustment - - - (53.0)
Non-GAAP gross margin $ 75.3 $ 56.8 $ 125.3 $ 107.1
GAAP operating profit $ 55.1 $ 38.2 $ 84.5 $ 120.2
Topic 606 adjustment - - - (53.0)
Non-GAAP operating profit $ 55.1 $ 38.2 $ 84.5 $ 67.2
GAAP gross margin % 73.5% 67.1% 66.4% 68.2%
Non-GAAP gross margin % 73.5% 67.1% 66.4% 59.0%
GAAP operating profit % 53.8% 45.1% 44.8% 51.2%
Non-GAAP operating profit % 53.8% 45.1% 44.8% 37.0%
Three Months Ended Six Months Ended
Total Unisys June 30, June 30,
2019 2018 2019 2018
GAAP total revenue $ 753.8 $ 667.4 $ 1,449.6 $ 1,375.8
Topic 606 adjustment - - - (53.0)
Restructuring reimbursement (6.5) - (8.5) -
Non-GAAP revenue $ 747.3 $ 667.4 $ 1,441.1 $ 1,322.8
GAAP gross margin $ 193.9 $ 152.9 $ 343.8 $ 354.1
Topic 606 adjustment - - - (53.0)
Restructuring reimbursement (6.5) - (8.5) -
Cost reduction expense (1.0) (0.5) (4.7) (3.5)
Non-GAAP gross margin $ 186.4 $ 152.4 $ 330.6 $ 297.6
GAAP operating profit $ 87.0 $ 54.0 $ 129.9 $ 155.8
Topic 606 adjustment - - - (53.0)
Restructuring reimbursement (6.5) - (8.5) -
Postretirement expense 0.8 0.9 1.6 1.9
Cost reduction and other expense 8.0 0.7 10.6 (2.2)
Non-GAAP operating profit $ 89.3 $ 55.6 $ 133.6 $ 102.5
GAAP gross margin % 25.7% 22.9% 23.7% 25.7%
Non-GAAP gross margin % 24.9% 22.8% 22.9% 22.5%
GAAP operating profit % 11.5% 8.1% 9.0% 11.3%
Non-GAAP operating profit % 12.0% 8.3% 9.3% 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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