REG-Unisys Corp: Third quarter financial results
27/10/2020 07:00
Unisys Announces Third-Quarter Results
Achieves Sequential Revenue Growth and Operating Profit Margin Expansion; Free
Cash Flow Positive; Significant Reduction to Required Pension Cash
Contributions and Deficit Pro Forma for Proceeds from Recently-Priced Debt
Offering
BLUE BELL, Pa., Oct. 26, 2020 /PRNewswire/ --
* Revenue growth of 12.9% sequentially to $495.2 million
* Operating profit margin up 750 bps sequentially to 5.6% * Non-GAAP operating
profit((5)) margin up 830 bps sequentially and 50 bps year over year to 8.5%
* Significant reduction in required pension cash contributions and deficit pro
forma for application of proceeds from recently-priced notes offering
* Operating cash flow up $80.5 million sequentially and $48.6 million year
over year to $66.3 million * Free cash flow((10)) positive with free cash flow
growth of $83.9 million sequentially and $48.6 million year over year to $34.3
million
* Repaid $59 million drawn on revolver; cash balance down less than $10
million versus 2Q20 at $774.0 million
* Services Total Contract Value((3)) ("TCV") up 4.3% sequentially
Unisys Corporation
(https://c212.net/c/link/?t=0&l=en&o=2961304-1&h=1532548950&u=http%3A%2F%2Fwww.unisys.com%2F&a=Unisys+Corporation) (NYSE:
UIS) today reported third-quarter 2020 financial results. "Revenue,
profitability, cash flow and Services TCV all improved from the COVID-related
disruptions in the second quarter, with significant sequential revenue growth
and margin expansion in both Services and Technology, and non-GAAP operating
profit margin expansion both sequentially and year over year," said Unisys
Chairman and CEO Peter A. Altabef. "The net proceeds from the notes offering
we recently priced will allow us to significantly reduce our future required
pension cash contributions and pension deficit."
Third-Quarter 2020 Highlights
QoQ Revenue Growth QoQ Profitability
Revenue Services Technology Operating Net EBITDA Diluted EPS
Growth Revenue Revenue Profit Income Margin
Growth Growth Margin Margin
GAAP 12.9% 7.6% 61.7% GAAP 5.6% (2.7%) 6.2% ($0.21)
Constant-Currency (GAAP) 10.0% 4.4% 61.9% QoQ Change 750 bps 1470 bps 1030 bps 82.6%
Non-GAAP 12.8% 7.6% N/M Non-GAAP 8.5% 7.0% 14.9% $0.51
QoQ Change 830 bps 920 bps 350 bps N/M
YoY Revenue Growth YoY Profitability
Revenue Services Technology Operating Net EBITDA Diluted EPS
Growth Revenue Revenue Profit Income Margin
Growth Growth Margin Margin
GAAP (10.3%) (11.0%) (5.6%) GAAP 5.6% (2.7%) 6.2% ($0.21)
Constant-Currency (GAAP) (9.8%) (11.0%) (2.0%) YoY Change (330) bps 260 bps (20) bps 58.0%
Non-GAAP (9.2%) (9.8%) N/M Non-GAAP 8.5% 7.0% 14.9% $0.51
YoY Change 50 bps 410 bps (60) bps 96.2%
Beginning January 1, 2020, the historical results of the company's U.S.
Federal business have been reflected in the company's consolidated financial
statements as discontinued operations. Prior-period amounts have been
reclassified to reflect the company's U.S. Federal business as discontinued
operations. Throughout this release we only refer to the company's continuing
operations.
Summary of Third-Quarter 2020 Business Results
Company:
Third-quarter revenue was $495.2 million, versus $552.1 million in the
prior-year period, and was up 12.9% sequentially (down 10.3% year over year or
9.8% on a constant-currency((1)) basis). Non-GAAP adjusted revenue((4)) was
$495.1 million, relative to $545.3 million in the prior-year period, and was
up 12.8% sequentially. Sequential comparisons reflect improvement in
COVID-disrupted portions of the business such as Field Services, BPO and
Travel and Transportation. Additionally, the two ClearPath Forward(®)
contracts that were delayed from the second quarter were signed in the third
quarter, though total revenue and Technology revenue would have been up
sequentially even excluding these contracts. Volumes in COVID-disrupted
businesses were still down versus the prior-year period as were volumes in the
company's check-processing JV, as expected, and the ClearPath Forward renewal
schedule was lighter, even including the delayed contracts, also as expected.
These items resulted in the noted year-over-year declines.
Third-quarter total company operating profit was $27.7 million, versus $49.4
million in the prior-year period, and was up $36.2 million sequentially.
Operating profit margin was 5.6%, versus 8.9% in the prior-year period, and
was up 750 bps sequentially. There were $13.8 million of cost-reduction
charges incurred in the third quarter, which impacted the year-over-year
operating profit and operating margin comparisons. Total company non-GAAP
operating profit margin was up 50 basis points year over year to 8.5%, versus
8.0% in the prior-year period, and was up 830 bps sequentially.
Net loss from continuing operations was $13.3 million versus $29.2 million in
the prior-year period and also improved $63.2 million sequentially, from a net
loss of $76.5 million in the second quarter. Diluted loss per share was $0.21,
compared to $0.50 in the prior-year period, and also improved by $1.00
sequentially. Non-GAAP net income((9)) was up 116% year over year to $34.6
million, versus non-GAAP net income of $16.0 million in the prior-year period,
and was up $44.3 million sequentially. Non-GAAP diluted earnings per
share((9)) was up 96.2% year over year to $0.51, versus $0.26 in the
prior-year period, and was up $0.66 sequentially.
Adjusted EBITDA((8)) was $74.0 million, relative to $84.4 million in the
prior-year period, and was up 47.4% sequentially. Net income margin was
(2.7)%, compared to (5.3)% in the prior-year period, and was up 1470 bps
sequentially. Adjusted EBITDA margin was 14.9%, relative to 15.5% in the
prior-year period, and was up 350 bps sequentially.
Operating cash flow was up $48.6 million year over year to $66.3 million,
versus $17.7 million in the prior-year period, and was up $80.5 million
sequentially. Free cash flow was up $48.6 million year over year to $34.3
million, relative to $(14.3) million in the prior-year period, and was up
$83.9 million sequentially. Adjusted free cash flow((11)) was up $38.5 million
year over year to $52.4 million, versus $13.9 million in the prior-year
period, and was up $89.5 million sequentially. At September 30, 2020, the
company had $774.0 million in cash and cash equivalents, relative to
$782.2 million at the end of the second quarter and had fully repaid the $59
million previously outstanding on the company's revolver. Pro forma for the
company's recently priced notes offering (which is expected to close on
October 29, 2020, subject to customary closing conditions), and the
contribution of up to $285 million in 2020 or 2021 from cash on the balance
sheet, substantially all currently-expected required pension contributions
will effectively have been pre-funded. Pro forma for the application of the
notes proceeds, the pension deficit will be reduced by $478 million dollars,
and total contributions to date in 2020 would be over $790 million. Services
TCV was up 4.3% sequentially.
Services:
Services revenue was $426.0 million, relative to $478.8 million in the
prior-year period, and was up 7.6% sequentially (down 11.0% year over year and
11.0% in constant-currency). Services non-GAAP adjusted revenue was $425.9
million, relative to $472.0 million in the prior-year period, and was up 7.6%
sequentially. As noted above, while COVID-disrupted businesses improved
significantly relative to the second quarter, volumes were still down year
over year as were volumes in the company's check-processing JV, as expected,
driving the year-over-year revenue declines. Services gross profit margin was
up 80 bps year over year to 19.0%, versus 18.2% in the prior-year period, and
was up 350 bps sequentially. Non-GAAP adjusted Services gross profit
margin((6)) was up 200 bps year over year to 19.0%, versus 17.0% in the
prior-year period, and was up 350 basis points sequentially. Services
operating profit margin was up 120 basis points year over year to 4.9%, versus
3.7% in the prior-year period, and was up 520 bps sequentially. Non-GAAP
adjusted Services operating profit((7)) margin was up 250 bps year over year
to 4.8%, versus 2.3% in the prior-year period, and was up 520 basis points
sequentially. Services backlog was $3.3 billion, relative to $3.6 billion at
the end of the second quarter.
Technology:
Technology revenue was $69.2 million, relative to $73.3 million in the
prior-year period, and was up 61.7% sequentially (down 5.6% year over year or
2.0% in constant currency). While the ClearPath Forward schedule was
expected to be lighter year over year, the two renewals that were delayed from
the second quarter were signed in the third quarter, contributing to the
sequential improvement, though Technology revenue would have been up
sequentially even excluding these two contracts. Technology gross profit
margin was 59.7%, compared to 66.4% in the prior-year period, and was up 1770
bps sequentially. Technology operating profit margin was 33.1%, versus 42.1%
in the prior-year period, and was up 3090 bps sequentially.
Select Third-Quarter Contract Signings:
In the third quarter, the company entered into several noteworthy contracts:
* InteliServe™: Unisys signed a new-logo contract with DJO Global, Inc.,
including to provide the Unisys InteliServe solution to enable omnichannel
service desk support for improved end-user experience and lower service
delivery costs.
* CloudForte(®): The State of North Dakota, a current public sector client,
awarded Unisys a new contract to support Job Service of North Dakota (JSND),
the state's unemployment insurance agency. The contract scope includes
ClearPath Forward for Azure, as well as CloudForte consulting services in the
Azure GovCloud.
* Security Services: A Unisys partner secured several contracts with a U.S.
government organization to provide Unisys Stealth(®) security software and
deployment services to secure workloads for coalition partner information
sharing.
Conference Call
Unisys will hold a conference call tomorrow at 8:00 a.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)) Pipeline – Pipeline represents prospective sale opportunities being
pursued or for which bids have been submitted. There is no assurance that
pipeline will translate into recorded revenue.
((3)) Total Contract Value – TCV is the estimated total contractual revenue
related to contracts signed in the period without regard for cancellation
terms. New business TCV represents TCV attributable to new scope for existing
clients and new logo contracts.
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
extinguishment 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.
((4)) Non-GAAP adjusted revenue – In 2019 and 2020, the company's non-GAAP
results reflect 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.
((5)) Non-GAAP operating profit – The company recorded pretax
post-retirement expense and pretax charges in connection with cost-reduction
activities, debt exchange/extinguishment 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 2019 and 2020,
the company included the non-GAAP adjustments discussed in (4) herein.
((6) ) Non-GAAP adjusted Services gross profit – During 2019 and 2020, the
company included the adjustments discussed in (4) herein.
((7)) Non-GAAP adjusted Services operating profit – During 2019 and 2020,
the company included the adjustments discussed in (4) herein.
((8)) EBITDA & adjusted EBITDA – Earnings before interest, taxes,
depreciation and amortization ("EBITDA") is calculated by starting with net
income (loss) from continuing operations 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/extinguishment, 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 2019 and 2020, the company
included the adjustments discussed in (4) herein.
((9)) Non-GAAP net income and non-GAAP diluted earnings per share – The
company has recorded post-retirement expense and charges in connection with
debt exchange/extinguishment 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 2019 and 2020, the company included the
adjustments discussed in (4) herein.
((10)) 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.
((11)) Adjusted free cash flow – Because inclusion of the company's
post-retirement contributions, discontinued operations 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 IT services company that delivers successful outcomes for
the most demanding businesses and governments. Unisys offerings include
digital workplace services, cloud and infrastructure services and software
operating environments for high-intensity enterprise computing. Unisys
integrates security into all of its solutions. For more information on how
Unisys delivers 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 or expectations 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 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: uncertainty of the magnitude, duration and
spread of the novel coronavirus ("COVID-19") pandemic and the impact of
COVID-19 and governments' responses to it on the global economy and our
business, growth, reputation, projections, prospects, financial condition,
operations, cash flows and liquidity, our ability to continue revenue growth
and margin expansion in our Services business; 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;
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 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; our ability to access financing markets;
the adverse effects of a reduction in our credit rating; cybersecurity
breaches could result in significant costs and could harm our business and
reputation; we may not achieve the operational and financial results that we
anticipate from the sale of our U.S. Federal business; the adverse effects of
global economic conditions, acts of war, terrorism, natural disasters or the
widespread outbreak of infectious diseases; 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;
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; our
ability to use our net operating loss carryforwards and certain other tax
attributes may be limited; 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; 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.: 1026/9795
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 (LOSS)
(Unaudited)
(Millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenue
Services $ 426.0 $ 478.8 $ 1,247.9 $ 1,433.8
Technology 69.2 73.3 201.5 242.2
495.2 552.1 1,449.4 1,676.0
Costs and expenses
Cost of revenue:
Services 345.9 389.3 1,061.6 1,185.2
Technology 29.4 22.8 79.9 73.1
375.3 412.1 1,141.5 1,258.3
Selling, general and administrative 85.5 84.7 252.5 268.0
Research and development 6.7 5.9 16.1 22.1
467.5 502.7 1,410.1 1,548.4
Operating income 27.7 49.4 39.3 127.6
Interest expense 2.4 15.2 20.9 46.9
Other expense, net (32.5) (49.2) (134.3) (108.5)
Loss from continuing operations before income taxes (7.2) (15.0) (115.9) (27.8)
Provision for income taxes 6.1 10.4 26.6 23.4
Consolidated net loss from continuing operations (13.3) (25.4) (142.5) (51.2)
Net income attributable to noncontrolling interests - 3.8 0.5 10.0
Net loss from continuing operations attributable to Unisys Corporation (13.3) (29.2) (143.0) (61.2)
Income loss from discontinued operations, net of tax 0.4 16.0 1,066.8 54.8
Net income (loss) attributable to Unisys Corporation $ (12.9) $ (13.2) $ 923.8 $ (6.4)
Earnings (loss) per share attributable to Unisys Corporation
Basic
Continuing Operations $ (0.21) $ (0.50) $ (2.27) $ (1.14)
Disontinued Operations 0.01 0.27 16.96 1.02
Total $ (0.20) $ (0.23) $ 14.69 $ (0.12)
Diluted
Continuing Operations $ (0.21) $ (0.50) $ (2.27) $ (1.14)
Disontinued Operations 0.01 0.27 16.96 1.02
Total $ (0.20) $ (0.23) $ 14.69 $ (0.12)
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Total Eliminations Services Technology
Three Months Ended September 30, 2020
Customer revenue $ 495.2 $ - $ 426.0 $ 69.2
Intersegment - (6.0) - 6.0
Total revenue $ 495.2 $ (6.0) $ 426.0 $ 75.2
Gross profit percent 24.2 % 19.0 % 59.7 %
Operating profit percent 5.6 % 4.9 % 33.1 %
Three Months Ended September 30, 2019
Customer revenue $ 552.1 $ - $ 478.8 $ 73.3
Intersegment - (2.3) - 2.3
Total revenue $ 552.1 $ (2.3) $ 478.8 $ 75.6
Gross profit percent 25.4 % 18.1 % 66.4 %
Operating profit percent 8.9 % 3.7 % 42.1 %
Total Eliminations Services Technology
Nine Months Ended September 30, 2020
Customer revenue $ 1,449.4 $ - $ 1,247.9 $ 201.5
Intersegment - (10.9) - 10.9
Total revenue $ 1,449.4 $ (10.9) $ 1,247.9 $ 212.4
Gross profit percent 21.2 % 15.8 % 59.7 %
Operating profit percent 2.7 % 0.4 % 32.1 %
Nine Months Ended September 30, 2019
Customer revenue $ 1,676.0 $ - $ 1,433.8 $ 242.2
Intersegment - (6.8) - 6.8
Total revenue $ 1,676.0 $ (6.8) $ 1,433.8 $ 249.0
Gross profit percent 24.9 % 16.6 % 67.9 %
Operating profit percent 7.6 % 1.8 % 44.7 %
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
September 30, December 31,
2020 2019
Assets
Current assets:
Cash and cash equivalents $ 774.0 $ 538.8
Accounts receivable, net 364.1 417.7
Contract assets 47.0 38.4
Inventories 14.5 16.4
Prepaid expenses and other current assets 103.0 100.7
Current assets of discontinued operations - 109.3
Total current assets 1,302.6 1,221.3
Properties 755.6 784.0
Less-accumulated depreciation and amortization 648.7 668.0
Properties, net 106.9 116.0
Outsourcing assets, net 177.3 202.1
Marketable software, net 191.5 186.8
Operating lease right-of-use assets 67.8 71.4
Prepaid postretirement assets 144.2 136.2
Deferred income taxes 121.6 114.0
Goodwill 108.6 110.4
Restricted cash 10.1 13.0
Other long-term assets 176.8 198.9
Long-term assets of discontinued operations - 133.9
Total assets $ 2,407.4 $ 2,504.0
Liabilities and deficit
Current liabilities:
Current maturities of long-term-debt $ 100.0 $ 13.5
Accounts payable 183.4 204.3
Deferred revenue 197.4 246.4
Other accrued liabilities 272.4 316.7
Current liabilities of discontinued operations - 146.4
Total current liabilities 753.2 927.3
Long-term debt 48.4 565.9
Long-term postretirement liabilities 1,563.6 1,960.2
Long-term deferred revenue 122.5 147.0
Long-term operating lease liabilities 49.3 56.0
Other long-term liabilities 70.7 47.6
Long-term liabilities of discontinued operations - 28.3
Commitments and contingencies
Total Unisys Corporation stockholders' deficit (237.9) (1,265.4)
Noncontrolling interests 37.6 37.1
Total deficit (200.3) (1,228.3)
Total liabilities and deficit $ 2,407.4 $ 2,504.0
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions)
Nine Months Ended
September 30,
2020 2019
Cash flows from operating activities
Consolidated net loss from continuing operations $ (142.5) $ (51.2)
Income from discontinued operations, net of tax 1,066.8 54.8
Adjustments to reconcile consolidated net loss to net cash used for operating activities:
Gain on sale of U.S. Federal business (1,057.7) -
Loss on debt extinguishment 28.5 20.2
Foreign currency translation losses 14.3 7.2
Non-cash interest expense 3.5 7.5
Employee stock compensation 11.1 10.1
Depreciation and amortization of properties 22.0 26.7
Depreciation and amortization of outsourcing assets 48.9 47.3
Amortization of marketable software 50.2 35.0
Other non-cash operating activities 0.6 (0.8)
Loss on disposal of capital assets 3.3 1.3
Postretirement contributions (344.5) (82.3)
Postretirement expense 72.8 71.5
Deferred income taxes, net (16.9) 1.0
Changes in operating assets and liabilities:
Receivables, net 12.4 (17.4)
Inventories 1.5 (1.7)
Accounts payable and current liabilities (127.7) (173.4)
Other liabilities 27.2 33.1
Other assets 0.4 9.3
Net cash used for operating activities (325.8) (1.8)
Cash flows from investing activities
Net proceeds from sale of U.S. Federal business 1,162.9 -
Proceeds from investments 2,550.2 2,824.9
Purchases of investments (2,561.7) (2,835.8)
Investment in marketable software (54.8) (56.2)
Capital additions of properties (16.7) (29.1)
Capital additions of outsourcing assets (23.6) (44.4)
Net proceeds from sale of properties - (0.2)
Other (0.5) (0.9)
Net cash provided by (used for) investing activities 1,055.8 (141.7)
Cash flows from financing activities
Cash paid in connection with debt extinguishment (23.7) (56.3)
Proceeds from capped call transactions - 7.2
Proceeds from issuance of long-term debt 7.1 28.6
Payments of long-term debt (451.0) (12.2)
Other (4.8) (4.6)
Net cash used for financing activities (472.4) (37.3)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (25.3) (10.0)
Increase (decrease) in cash, cash equivalents and restricted cash 232.3 (190.8)
Cash, cash equivalents and restricted cash, beginning of period 551.8 624.1
Cash, cash equivalents and restricted cash, end of period $ 784.1 $ 433.3
UNISYS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
GAAP net loss from continuing operations attributable to Unisys Corporation $ (13.3) $ (29.2) $ (143.0) $ (61.2)
Postretirement expense: pretax 24.4 24.4 72.8 71.5
tax 0.4 (0.1) 1.1 (0.2)
net of tax 24.0 24.5 71.7 71.7
Debt extinguishment, cost reduction and other expenses: pretax 23.7 18.1 97.4 28.7
tax (0.2) 0.8 0.9 1.8
net of tax 23.9 17.3 96.5 26.9
minority interest - 3.4 0.4 6.6
net of minority interest 23.9 20.7 96.9 33.5
Non-GAAP net income from continuing operations attributable to Unisys Corporation 34.6 16.0 25.6 44.0
Add interest expense on convertible notes 2.1 3.2 6.2 13.3
Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $ 36.7 $ 19.2 $ 31.8 $ 57.3
Weighted average shares (thousands) 63,032 58,245 62,897 53,815
Plus incremental shares from assumed conversion:
Employee stock plans 613 341 504 395
Convertible notes 8,625 13,951 8,625 19,229
Non-GAAP adjusted weighted average shares 72,270 72,537 72,026 73,439
Diluted earnings (loss) per share from continuing operations
GAAP basis
GAAP net loss from continuing operations attributable to Unisys Corporation for diluted earnings per share $ (13.3) $ (29.2) $ (143.0) $ (61.2)
Divided by weighted average shares 63,032 58,245 62,897 53,815
GAAP diluted loss per share $ (0.21) $ (0.50) $ (2.27) $ (1.14)
Non-GAAP basis
Non-GAAP net income from continuing operations attributable to Unisys Corporation for diluted earnings per share $ 36.7 $ 19.2 $ 31.8 $ 57.3
Divided by Non-GAAP adjusted weighted average shares 72,270 72,537 72,026 73,439
Non-GAAP diluted loss per share $ 0.51 $ 0.26 $ 0.44 $ 0.78
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
FREE CASH FLOW
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Cash provided by (used for) operations $ 66.3 $ 17.7 $ (325.8) $ (1.8)
Additions to marketable software (18.1) (19.0) (54.8) (56.2)
Additions to properties (6.1) (8.3) (16.7) (29.1)
Additions to outsourcing assets (7.8) (4.7) (23.6) (44.4)
Free cash flow 34.3 (14.3) (420.9) (131.5)
Postretirement funding 11.5 34.6 344.5 82.3
Discontinued operations 0.2 (21.6) (8.9) (73.3)
Debt extinguishment, cost reduction and other payments, net of reimbursements 6.4 15.2 23.5 37.1
Adjusted free cash flow $ 52.4 $ 13.9 $ (61.8) $ (85.4)
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
EBITDA
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Net loss from continuing operations attributable to Unisys Corporation $ (13.3) $ (29.2) $ (143.0) $ (61.2)
Net income attributable to noncontrolling interests - 3.8 0.5 10.0
Interest expense, net of interest income of $1.3, $2.8, $6.0, $8.6 respectively* 1.1 12.4 14.9 38.3
Provision for income taxes 6.1 10.4 26.6 23.4
Depreciation 22.6 24.5 70.9 74.0
Amortization 14.2 13.4 50.2 35.0
EBITDA $ 30.7 $ 35.3 $ 20.1 $ 119.5
Postretirement expense $ 24.4 $ 24.4 $ 72.8 $ 71.5
Debt extinguishment, cost reduction and other expenses** 15.5 18.1 89.2 27.6
Non-cash share based expense 3.1 2.8 11.1 10.1
Other expense, net adjustment*** 0.3 3.8 2.4 14.9
Adjusted EBITDA $ 74.0 $ 84.4 $ 195.6 $ 243.6
*Included in other 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 extinguishment, cost reduction and other expenses
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenue $ 495.2 $ 552.1 $ 1,449.4 $ 1,676.0
Non-GAAP revenue 495.1 545.3 1,448.4 1,660.7
Net loss from continuing operations attributable to Unisys Corporation as a percentage of revenue (2.7)% (5.3)% (9.9)% (3.7)%
Non-GAAP net income from continuing operations attributable to Unisys Corporation as a percentage of Non-GAAP revenue 7.0 % 2.9 % 1.8 % 2.6 %
Adjusted EBITDA as a percentage of Non-GAAP revenue 14.9 % 15.5 % 13.5 % 14.7 %
UNISYS CORPORATION
RECONCILIATION OF GAAP SEGMENT REPORTING TO NON-GAAP SEGMENT REPORTING
(Unaudited)
(Millions)
Three Months Ended Nine Months Ended
Services Segment September 30, September 30,
2020 2019 2020 2019
GAAP total revenue $426.0 $478.8 $1,247.9 $1,433.8
Restructuring reimbursement (0.1) (6.8) (1.0) (15.3)
Non-GAAP revenue $425.9 $472.0 $1,246.9 $1,418.5
GAAP gross margin $ 81.0 $ 87.0 $ 197.4 $ 237.7
Restructuring reimbursement (0.1) (6.8) (1.0) (15.3)
Non-GAAP gross margin $ 80.9 $ 80.2 $ 196.4 $ 222.4
GAAP operating profit $ 20.7 $ 17.7 $ 5.1 $ 25.3
Restructuring reimbursement (0.1) (6.8) (1.0) (15.3)
Non-GAAP operating profit $ 20.6 $ 10.9 $ 4.1 $ 10.0
GAAP gross margin % 19.0% 18.2% 15.8% 16.6%
Non-GAAP gross margin % 19.0% 17.0% 15.8% 15.7%
GAAP operating profit % 4.9% 3.7% 0.4% 1.8%
Non-GAAP operating profit % 4.8% 2.3% 0.3% 0.7%
Three Months Ended Nine Months Ended
Total Unisys September 30, September 30,
2020 2019 2020 2019
GAAP total revenue $495.2 $552.1 $1,449.4 $1,676.0
Restructuring reimbursement (0.1) (6.8) (1.0) (15.3)
Non-GAAP revenue $495.1 $545.3 $1,448.4 $1,660.7
GAAP gross margin $ 119.9 $ 140.0 $ 307.9 $ 417.7
Restructuring reimbursement (0.1) (6.8) (1.0) (15.3)
Cost reduction expense 2.9 (1.9) 15.7 (6.6)
Non-GAAP gross margin $122.7 $131.3 $ 322.6 $ 395.8
GAAP operating profit $ 27.7 $ 49.4 $ 39.3 $ 127.6
Restructuring reimbursement (0.1) (6.8) (1.0) (15.3)
Postretirement expense 0.9 0.9 2.5 2.5
Cost reduction and other expense 13.8 0.2 30.8 10.8
Non-GAAP operating profit $ 42.3 $ 43.7 $ 71.6 $ 125.6
GAAP gross margin % 24.2% 25.4% 21.2% 24.9%
Non-GAAP gross margin % 24.8% 24.1% 22.3% 23.8%
GAAP operating profit % 5.6% 8.9% 2.7% 7.6%
Non-GAAP operating profit % 8.5% 8.0% 4.9% 7.6%
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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