Unisys Announces
3Q18 Results; Revenue Grows for Fourth Consecutive Quarter,
Operating Margin Expands; Company Reaffirms Full-Year Guidance
BLUE BELL, Pa., Nov. 8, 2018 /PRNewswire/ --
3Q 2018:
- Revenue grew 3.3 percent year over year (5.8 percent in
constant-currency(3))
- Backlog(4) was up 33 percent year over year to
$4.9 billion, the highest
year-over-year growth since 4Q1999
- Operating profit margin expanded 850 basis points year over
year to 8.1 percent and non-GAAP operating profit(6)
margin expanded 20 basis points year over year to 7.7
percent
- Net income was $6 million;
Adjusted EBITDA(9) margin expanded to 14.0 percent, up
50 basis points year over year
- Diluted earnings per share was $0.12 versus a diluted loss per share of
$0.81 in the prior-year period;
non-GAAP diluted earnings per share(10) was $0.39 versus $0.31
in the prior-year period
Unisys Corporation (NYSE: UIS) today reported third-quarter 2018
financial results and reaffirmed full-year financial guidance.
Total company revenue grew 3.3 percent (5.8 percent in
constant-currency), and Services revenue grew 5.2 percent year over
year (7.6 percent in constant-currency). This marked the fourth
consecutive quarter of revenue growth for the total company and the
second consecutive quarter of revenue growth in Services. Operating
profit margin expanded 850 basis points year over year to 8.1
percent, and non-GAAP operating profit margin expanded 20 basis
points year over year to 7.7 percent.
The company reported strong contract signings with Total
Contract Value(1) (or "TCV") up 46 percent year over
year for the quarter and 93 percent year to date. New business TCV
was up 133 percent year over year in the quarter and 131 percent
year to date. Backlog was up 33 percent year over year to
$4.9 billion, the highest
year-over-year growth since 4Q1999.
"Our go-to-market momentum continues, with our fourth
consecutive quarter of revenue growth, which was supported by
improvements to profitability year over year," said Unisys
Chairman, President and CEO Peter A.
Altabef. "Additionally, we made further progress with
our focus on digital transformation for state governments, as we
signed a contract with the Virginia Information Technology Agency
following contracts we have signed over the last twelve months with
the states of Hawaii, Georgia and Kansas."
Summary of Third-Quarter 2018 Business
Results
Company:
Revenue grew 3.3 percent year over year to $688.3 million (up 5.8 percent in
constant-currency), reflecting the fourth consecutive quarter of
total company revenue growth. Non-GAAP adjusted
revenue(5) was up 2.8 percent year over year to
$685.2 million.
Operating profit margin expanded 850 basis points year over year
to 8.1 percent. Non-GAAP operating profit margin expanded 20 basis
points year over year to 7.7 percent, helped by a Technology
quarter that was stronger than company expectations.
Net income for the third quarter was $6.1
million, versus a net loss of $41.1
million in the third quarter of 2017. Diluted earnings per
share was $0.12, versus a diluted
loss per share of $0.81 in the third
quarter of 2017. Non-GAAP diluted earnings per share was
$0.39 versus $0.31 in the prior-year period.
Adjusted EBITDA for the third quarter increased to $96.1 million, and Adjusted EBITDA margin
expanded to 14.0 percent, up 50 basis points year over
year.
Third-quarter cash used in operations was $15.5 million versus operating cash flow of
$53.9 million in the third quarter
2017, largely driven by an increase in receivables related to
several Technology contracts signed late in the quarter.
Third-quarter adjusted free cash flow(12) was
$(6.4) million, versus $70.2 million in the third quarter of 2017. At
September 30, 2018, the company had
$516.1 million in cash and cash
equivalents.
The company reaffirms full-year 2018 guidance for non-GAAP
adjusted revenue of $2.7-2.825
billion (GAAP revenue of $2.75-2.875
billion), non-GAAP operating profit margin of 7.75-8.75 percent
(GAAP operating profit margin of 9.5-10.5 percent) and adjusted
EBITDA margin of 13.7-14.9 percent.
TCV grew 46 percent year over year, and new business TCV grew
133 percent. On a cumulative basis year to date, TCV was up 93
percent year over year, with new business TCV up 131 percent year
over year.
Services:
Services revenue grew 5.2 percent year over year (or 7.6 percent
in constant-currency) to $605.6
million, marking the second consecutive quarter of revenue
growth for the segment. Services non-GAAP adjusted revenue grew 4.7
percent year over year to $602.5
million. Backlog grew 33 percent year over year to end the
third quarter at $4.9 billion, the
highest year-over-year growth since 4Q1999. Services gross profit
margin was 15.9 percent, down 60 basis points year over year, and
Services operating profit margin was 3.1 percent, down 10 basis
points year over year. Non-GAAP adjusted Services gross profit
margin(7) was 15.4 percent, down 110 basis points year
over year, and non-GAAP adjusted Services operating profit
margin(8) was 2.6 percent, down 60 basis points year
over year. Year-over-year declines in Services margins were driven
by new Services contracts in ramp-up stage.
Technology:
Technology revenue in the third quarter was $82.7 million, ahead of company expectations and
up sequentially, although down 8.9 percent year over year (or 5.3
percent in constant currency). Technology gross profit margin for
the third quarter expanded 910 basis points year over year to 62.4
percent. Technology operating profit margin was up 860 basis points
year over year to 39.7 percent. The improvements to Technology
margins were driven in part by a higher mix of software revenue in
the quarter.
Key Third-Quarter Contract
Signings:
In the third quarter, the company entered into several key
contracts in each of its sectors including the following:
- U.S. Federal: Unisys signed a contract with the U.S. Army for
the first phase of Next Generation Biometric Collection Capability.
Unisys will leverage its Stealth(identity)™ Software solution and
deep domain expertise in biometrics system integration for the U.S.
Federal Government to provide end-to-end data flow required to
support multiple U.S. Army operational missions, and to be capable
of achieving efficient, near real-time, identity matches to the
soldier in the field.
- Public: The Virginia Information Technologies Agency (VITA) has
awarded a six-year, $242.4 million
contract to Unisys for server, storage and data center services,
representing a significant step in VITA's strategy to modernize the
state's IT infrastructure.
- Commercial: Unisys announced it has entered into an agreement
with Bangalore International
Airport Limited (BIAL) to develop an Analytics Center of
Excellence. The Analytics Center of Excellence will support a
business intelligence and advanced data analytics platform for BIAL
to consolidate and rationalize the Airport's strategic, tactical
and operational reporting – enabling Airport staff to make faster
and better-informed business decisions, process air travelers more
quickly and enhance the airport experience for the customer.
- Financial Services: Unisys' banking platform, Elevate™, was
selected by Monmouthshire Building Society (MBS) to provide new
current account services to its customers – which many building
societies in the UK do not offer. The new services include digital
wallet capabilities which provide MBS customers more flexibility in
managing their money.
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) Total Contract Value – TCV is the
estimated total contractual revenue related to contracts signed in
the period including option years (Federal contracts only) and
without regard for cancellation terms. New business TCV represents
TCV attributable to new scope for existing clients and new logo
contracts.
(2) Annual Contract Value – ACV represents the
revenue expected to be recognized during the first twelve months
following the signing of a contract in the period.
(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) Backlog – 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.
(5) Non-GAAP adjusted revenue – In 2018,
the company's non-GAAP results reflect adjustments to exclude
certain revenue. 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 is 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. However, in its 2018 quarterly
disclosures, the company is required to report what its financial
statements would have been if it had not adopted ASC 606. The
$53 million is included in those
adjustments. There are additional adjustments being made, but they
do not represent previously recorded revenue. Those adjustments
represent other differences between ASC 605 and ASC 606,
principally extended payment term software licenses and short-term
software licenses both of which are recorded at the inception of
the license term under ASC 606 but were required to be recognized
ratably over the software license term under ASC 605. 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 recent restructuring
program.
(6) 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,
the company included the non-GAAP adjustments discussed in (5)
herein.
(7) Non-GAAP adjusted Services gross profit
margin – During 2018, the company included the adjustments
discussed in (5) herein.
(8) Non-GAAP adjusted Services operating
profit margin – During 2018, the company included the
adjustments discussed in (5) 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, the
company included the adjustments discussed in (5) 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, the company included the
adjustments discussed in (5) 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 ability to maintain our installed base and
sell new solutions in our technology business; our ability to
effectively anticipate and respond to volatility and rapid
technological innovation in our industry; our ability to retain
significant clients; 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; 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 attract, motivate and retain
experienced and knowledgeable personnel in key positions; the risks
of doing business internationally when a significant portion of our
revenue is derived from international operations; our contracts may
not be as profitable as expected or provide the expected level of
revenues; our ability to access financing markets; 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 plan; the
potential for intellectual property infringement claims to be
asserted against us or our clients; the business and financial risk
in implementing future acquisitions or dispositions; the adverse
effects of global economic conditions, acts of war, terrorism or
natural disasters; the possibility that pending litigation could
affect our results of operations or cash flow; 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.: 1108/9625
Unisys and other Unisys products and services mentioned herein,
as well as their respective logos, are trademarks or registered
trademarks of Unisys Corporation. Any other brand or product
referenced herein is acknowledged to be a trademark or registered
trademark of its respective holder.
UIS – Q
UNISYS
CORPORATION |
|
CONSOLIDATED
STATEMENTS OF INCOME |
|
(Unaudited) |
|
(Millions, except
per share data) |
|
|
|
|
Three Months
Ended
September 30, |
|
Nine Months
Ended
September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Revenue |
|
|
|
|
|
|
|
|
Services |
$ 605.6 |
|
$ 575.5 |
|
$ 1,760.8 |
|
$ 1,735.6 |
|
Technology |
82.7 |
|
90.8 |
|
303.3 |
|
261.4 |
|
|
688.3 |
|
666.3 |
|
2,064.1 |
|
1,997.0 |
|
Costs and expenses |
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Services |
504.9 |
|
522.5 |
* |
1,460.0 |
|
1,519.7 |
* |
Technology |
29.6 |
|
40.2 |
* |
96.2 |
|
116.4 |
* |
|
534.5 |
|
562.7 |
* |
1,556.2 |
|
1,636.1 |
* |
Selling, general and administrative |
90.9 |
|
97.8 |
* |
274.5 |
|
314.2 |
* |
Research and development |
7.1 |
|
8.7 |
* |
21.8 |
|
31.3 |
* |
|
632.5 |
|
669.2 |
* |
1,852.5 |
|
1,981.6 |
* |
Operating profit (loss) |
55.8 |
|
(2.9) |
* |
211.6 |
|
15.4 |
* |
Interest expense |
15.9 |
|
16.4 |
|
48.2 |
|
36.4 |
|
Other income (expense), net |
(17.7) |
|
(21.1) |
* |
(58.3) |
|
(78.5) |
* |
Income (loss) before income taxes |
22.2 |
|
(40.4) |
|
105.1 |
|
(99.5) |
|
Provision for income taxes |
15.2 |
|
12.5 |
|
50.4 |
|
21.6 |
|
Consolidated net income (loss) |
7.0 |
|
(52.9) |
|
54.7 |
|
(121.1) |
|
Net income (loss) attributable to noncontrolling
interests |
0.9 |
|
(11.8) |
|
4.2 |
|
(5.3) |
|
Net income (loss) attributable to Unisys
Corporation
common shareholders |
$
6.1 |
|
$ (41.1) |
|
50.5 |
|
$ (115.8) |
|
Earnings (loss) per share attributable to
Unisys
Corporation |
|
|
|
|
|
|
|
|
Basic |
$
0.12 |
|
$ (0.81) |
|
$
0.99 |
|
$ (2.30) |
|
Diluted |
$
0.12 |
|
$ (0.81) |
|
$
0.89 |
|
$ (2.30) |
|
Shares used in the per share computations (in
thousands): |
|
|
|
|
|
|
|
|
Basic |
51,021 |
|
50,471 |
|
50,918 |
|
50,388 |
|
Diluted |
51,718 |
|
50,471 |
|
73,265 |
|
50,388 |
|
|
|
*Certain amounts have been
reclassified to conform to the current-year presentation. |
|
UNISYS
CORPORATION |
SEGMENT
RESULTS |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
|
|
|
Total |
|
Eliminations |
|
Services |
|
Technology |
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% |
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
Customer revenue |
$ 666.3 |
|
$
- |
|
$ 575.5 |
|
$
90.8 |
Intersegment |
- |
|
(4.4) |
|
- |
|
4.4 |
Total revenue |
$ 666.3 |
|
$
(4.4) |
|
$ 575.5 |
|
$
95.2 |
Gross profit percent |
15.5% |
* |
|
|
16.5% |
|
53.3% |
Operating profit (loss) percent |
(0.4)% |
* |
|
|
3.2% |
|
31.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Eliminations |
|
Services |
|
Technology |
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% |
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
Customer revenue |
$ 1,997.0 |
|
$
- |
|
$ 1,735.6 |
|
$ 261.4 |
Intersegment |
- |
|
(15.1) |
|
- |
|
15.1 |
Total revenue |
$ 1,997.0 |
|
$
(15.1) |
|
$ 1,735.6 |
|
$ 276.5 |
Gross profit percent |
18.1% |
* |
|
|
16.3% |
|
53.2% |
Operating profit percent |
0.8% |
* |
|
|
2.1% |
|
27.8% |
|
|
|
|
|
|
|
|
*Certain amounts have been
reclassified to conform to the current-year presentation. |
UNISYS
CORPORATION |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
(Millions) |
|
|
|
|
|
|
September 30,
2018 |
|
December 31,
2017 |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$
516.1 |
|
$
733.9 |
|
Accounts receivable, net |
492.2 |
|
503.3 |
|
Contract assets |
73.3 |
|
- |
|
Inventories: |
|
|
|
|
Parts and finished equipment |
12.3 |
|
13.6 |
|
Work in process and materials |
10.7 |
|
12.5 |
|
Prepaid expenses and other current assets |
102.6 |
|
126.2 |
|
Total current assets |
1,207.2 |
|
1,389.5 |
|
Properties |
857.2 |
|
898.8 |
|
Less-Accumulated depreciation and
amortization |
737.4 |
|
756.3 |
|
Properties, net |
119.8 |
|
142.5 |
|
Outsourcing assets, net |
202.0 |
|
202.3 |
|
Marketable software, net |
157.2 |
|
138.3 |
|
Prepaid postretirement assets |
155.0 |
|
148.3 |
|
Deferred income taxes |
97.3 |
|
119.9 |
|
Goodwill |
178.1 |
|
180.8 |
|
Restricted cash |
17.8 |
|
30.2 |
|
Other long-term assets |
193.6 |
|
190.6 |
|
Total assets |
$
2,328.0 |
|
$
2,542.4 |
|
Liabilities and deficit |
|
|
|
|
Current liabilities: |
|
|
|
|
Current maturities of long-term-debt |
$
9.9 |
|
$
10.8 |
|
Accounts payable |
225.7 |
|
241.8 |
|
Deferred revenue |
254.7 |
|
327.5 |
|
Other accrued liabilities |
351.9 |
|
391.5 |
|
Total current liabilities |
842.2 |
|
971.6 |
|
Long-term debt |
640.1 |
|
633.9 |
|
Long-term postretirement liabilities |
1,814.0 |
|
2,004.4 |
|
Long-term deferred revenue |
167.4 |
|
159.0 |
|
Other long-term liabilities |
68.1 |
|
100.0 |
|
Commitments and contingencies |
|
|
|
|
Total deficit |
(1,203.8) |
|
(1,326.5) |
|
Total liabilities and deficit |
$
2,328.0 |
|
$
2,542.4 |
|
UNISYS
CORPORATION |
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
|
(Unaudited) |
|
(Millions) |
|
|
|
|
|
|
|
Nine Months
Ended
September 30, |
|
|
2018 |
|
2017 |
|
Cash flows from operating activities |
|
|
|
|
Consolidated net income (loss) |
$ 54.7 |
|
$ (121.1) |
|
Adjustments to reconcile consolidated net income
(loss) to net cash used for operating
activities: |
|
|
|
|
Foreign currency transaction losses (gains) |
1.1 |
|
(0.5) |
|
Non-cash interest expense |
7.8 |
|
6.9 |
|
Loss on debt extinguishment |
- |
|
1.5 |
|
Employee stock compensation |
10.0 |
|
8.6 |
|
Depreciation and amortization of properties |
31.2 |
|
29.6 |
|
Depreciation and amortization of outsourcing
assets |
48.7 |
|
39.3 |
|
Amortization of marketable software |
42.8 |
|
47.1 |
|
Other non-cash operating activities |
(2.6) |
|
3.3 |
|
Loss on disposal of capital assets |
0.6 |
|
4.5 |
|
Gain on the sale of properties |
(7.3) |
|
- |
|
Postretirement contributions |
(124.5) |
|
(119.2) |
* |
Postretirement expense |
58.2 |
|
74.5 |
* |
Decrease in deferred income taxes, net |
9.3 |
|
2.3 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
(69.3) |
|
3.1 |
|
Inventories |
(1.3) |
|
(2.6) |
|
Accounts payable and other accrued
liabilities |
(144.1) |
|
(15.3) |
|
Other liabilities |
(1.5) |
|
(18.5) |
* |
Other assets |
8.8 |
|
20.2 |
|
Net cash used for operating activities |
(77.4) |
|
(36.3) |
|
Cash flows from investing activities |
|
|
|
|
Proceeds from investments |
2,889.3 |
|
3,663.5 |
|
Purchases of investments |
(2,892.4) |
|
(3,632.8) |
|
Investment in marketable software |
(61.7) |
|
(46.6) |
|
Capital additions of properties |
(25.0) |
|
(21.8) |
|
Capital additions of outsourcing assets |
(54.4) |
|
(60.1) |
|
Net proceeds from sale of properties |
19.2 |
|
- |
|
Other |
(0.9) |
|
(0.8) |
|
Net cash used for investing activities |
(125.9) |
|
(98.6) |
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issuance of long-term debt |
- |
|
445.0 |
|
Issuance costs relating to long-term debt |
- |
|
(12.1) |
|
Payments of long-term debt |
(2.0) |
|
(98.4) |
|
Financing fees |
(0.2) |
|
- |
|
Other |
(2.2) |
|
0.2 |
|
Net cash (used for) provided by financing
activities |
(4.4) |
|
334.7 |
|
Effect of exchange rate changes on cash, cash
equivalents and restricted cash |
(22.5) |
|
19.1 |
|
(Decrease) increase in cash, cash equivalents
and restricted cash |
(230.2) |
|
218.9 |
|
Cash, cash equivalents and restricted cash,
beginning of period |
764.1 |
|
401.1 |
|
Cash, cash equivalents and restricted cash, end
of period |
$ 533.9 |
|
$ 620.0 |
|
|
|
|
|
|
* Certain amounts have been
reclassified to conform to the current-year presentation. |
|
UNISYS
CORPORATION |
|
RECONCILIATIONS OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES |
|
(Unaudited) |
|
(Millions, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months |
|
|
Nine Months |
|
|
|
|
Ended September
30, |
|
|
Ended September
30, |
|
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
GAAP net income (loss) attributable
to Unisys
Corporation common shareholders |
|
$
6.1 |
|
$
(41.1) |
|
|
$
50.5 |
|
$ (115.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Topic 606 adjustment: |
pretax |
|
- |
|
- |
|
|
(53.0) |
|
- |
|
|
tax |
|
- |
|
- |
|
|
(5.3) |
|
- |
|
|
net of tax |
|
- |
|
- |
|
|
(47.7) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement expense: |
pretax |
|
19.7 |
|
25.3 |
* |
|
58.2 |
|
74.5 |
* |
|
tax |
|
(0.3) |
|
0.1 |
|
|
(0.8) |
|
(1.7) |
|
|
net of tax |
|
20.0 |
|
25.2 |
* |
|
59.0 |
|
76.2 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
Cost reduction and other expense: |
pretax |
|
(4.0) |
|
46.1 |
|
|
(6.2) |
|
100.5 |
|
|
tax |
|
(0.1) |
|
1.2 |
|
|
(0.2) |
|
10.2 |
|
|
net of tax |
|
(3.9) |
|
44.9 |
|
|
(6.0) |
|
90.3 |
|
|
minority interest |
|
(1.5) |
|
11.1 |
|
|
(1.5) |
|
11.1 |
|
|
net of minority interest |
|
(2.4) |
|
33.8 |
|
|
(4.5) |
|
79.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to
Unisys
Corporation common shareholders |
|
23.7 |
|
17.9 |
* |
|
57.3 |
|
39.6 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
Add interest expense on convertible
notes |
|
4.9 |
|
4.8 |
|
|
14.6 |
|
14.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to
Unisys
Corporation for diluted earnings per share |
|
$
28.6 |
|
$
22.7 |
* |
|
$
71.9 |
|
$
53.8 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
(thousands) |
|
51,021 |
|
50,471 |
|
|
50,918 |
|
50,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus incremental shares from assumed
conversion: |
|
|
|
|
|
|
|
|
|
|
Employee stock plans |
|
697 |
|
241 |
|
|
479 |
|
308 |
|
|
Convertible notes |
|
21,868 |
|
21,868 |
|
|
21,868 |
|
21,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted weighted average
shares |
|
73,586 |
|
72,580 |
|
|
73,265 |
|
72,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP basis |
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) attributable to
Unisys
Corporation for diluted earnings per share |
|
$
6.1 |
|
$ (41.1) |
|
|
$
65.1 |
|
$ (115.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Divided by adjusted weighted average
shares |
|
51,718 |
|
50,471 |
|
|
73,265 |
|
50,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings (loss) per
share |
|
$
0.12 |
|
$
(0.81) |
|
|
$
0.89 |
|
$
(2.30) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basis |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to
Unisys Corporation
for diluted earnings per share |
|
$
28.6 |
|
$
22.7 |
* |
|
$
71.9 |
|
$
53.8 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
Divided by Non-GAAP adjusted weighted
average shares |
|
73,586 |
|
72,580 |
|
|
73,265 |
|
72,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted earnings per
share |
|
$
0.39 |
|
$
0.31 |
* |
|
$
0.98 |
|
$
0.74 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
* Certain amounts have been
reclassified to conform to the current-year presentation. |
|
|
|
|
|
|
UNISYS
CORPORATION |
|
RECONCILIATIONS OF
GAAP TO NON-GAAP |
|
(Unaudited) |
|
(Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
FREE CASH
FLOW |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months |
|
|
Nine Months |
|
|
|
|
Ended September
30, |
|
|
Ended September
30, |
|
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
Cash (used for) provided by
operations |
|
$ (15.5) |
|
$
53.9 |
|
|
$ (77.4) |
|
$ (36.3) |
|
Additions to marketable software |
|
(20.6) |
|
(17.8) |
|
|
(61.7) |
|
(46.6) |
|
Additions to properties |
|
(15.1) |
|
(5.9) |
|
|
(25.0) |
|
(21.8) |
|
Additions to outsourcing assets |
|
(12.0) |
|
(23.2) |
|
|
(54.4) |
|
(60.1) |
|
Free cash flow |
|
(63.2) |
|
7.0 |
|
|
(218.5) |
|
(164.8) |
|
Postretirement funding |
|
51.6 |
|
43.0 |
* |
|
124.5 |
|
119.2 |
* |
Cost reduction and other payments, net
of reimbursements |
|
5.2 |
|
20.2 |
|
|
32.2 |
|
49.0 |
|
Adjusted free cash flow |
|
$
(6.4) |
|
$
70.2 |
* |
|
$ (61.8) |
|
$
3.4 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
* Certain amounts have been
reclassified to conform to the current-year presentation. |
|
UNISYS
CORPORATION |
|
RECONCILIATIONS OF
GAAP TO NON-GAAP |
|
(Unaudited) |
|
(Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months |
|
|
Nine Months |
|
|
|
|
Ended September
30, |
|
|
Ended September
30, |
|
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
Net income (loss) attributable to
Unisys Corporation
common shareholders |
|
$
6.1 |
|
$ (41.1) |
|
|
$
50.5 |
|
$ (115.8) |
|
Net income (loss) attributable to
noncontrolling interests |
|
0.9 |
|
(11.8) |
|
|
4.2 |
|
(5.3) |
|
Interest expense, net of interest
income of $2.7, $2.5,
$9.0, $7.2 respectively** |
|
13.2 |
|
13.9 |
|
|
39.2 |
|
29.2 |
|
Provision for income taxes |
|
15.2 |
|
12.5 |
|
|
50.4 |
|
21.6 |
|
Depreciation |
|
26.4 |
|
22.8 |
|
|
79.9 |
|
68.9 |
|
Amortization |
|
14.2 |
|
15.3 |
|
|
42.8 |
|
47.1 |
|
EBITDA |
|
$
76.0 |
|
$
11.6 |
|
|
$ 267.0 |
|
$
45.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Topic 606 adjustment |
|
$ - |
|
$ - |
|
|
$ (53.0) |
|
$ - |
|
Postretirement expense |
|
19.7 |
|
25.3 |
* |
|
58.2 |
|
74.5 |
* |
Cost reduction and other
expense*** |
|
(4.0) |
|
45.8 |
|
|
(6.2) |
|
100.2 |
|
Non-cash share based expense |
|
2.7 |
|
2.4 |
|
|
10.0 |
|
8.6 |
|
Other (income) expense
adjustment**** |
|
1.7 |
|
5.1 |
|
|
12.0 |
|
14.9 |
|
Adjusted EBITDA |
|
$
96.1 |
|
$
90.2 |
* |
|
$ 288.0 |
|
$ 243.9 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
*Certain amounts have been
reclassified to conform to the current-year
presentation. |
|
|
**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 |
|
UNISYS
CORPORATION |
|
RECONCILIATIONS OF
SEGMENT REPORTING TO NON-GAAP SEGMENT REPORTING |
|
(Unaudited) |
|
(Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months |
|
Nine Months |
|
Services Segment |
|
Ended September
30, |
|
Ended September
30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
GAAP total revenue |
|
$ 605.6 |
|
$ 575.5 |
|
$ 1,760.8 |
|
$ 1,735.6 |
|
Restructuring reimbursement |
|
(3.1) |
|
- |
|
(3.1) |
|
- |
|
Non-GAAP revenue |
|
$ 602.5 |
|
$ 575.5 |
|
$ 1,757.7 |
|
$ 1,735.6 |
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin |
|
$
96.1 |
|
$
95.0 |
* |
$ 286.9 |
|
$ 282.8 |
* |
Restructuring reimbursement |
|
(3.1) |
|
- |
|
(3.1) |
|
- |
|
Non-GAAP gross margin |
|
$
93.0 |
|
$
95.0 |
* |
$ 283.8 |
|
$ 282.8 |
* |
|
|
|
|
|
|
|
|
|
|
GAAP operating profit |
|
$
18.6 |
|
$
18.7 |
* |
$
54.3 |
|
$
36.6 |
* |
Restructuring reimbursement |
|
(3.1) |
|
- |
|
(3.1) |
|
- |
|
Non-GAAP operating profit |
|
$
15.5 |
|
$
18.7 |
* |
$
51.2 |
|
$
36.6 |
* |
|
|
|
|
|
|
|
|
|
|
GAAP gross margin % |
|
15.9% |
|
16.5% |
* |
16.3% |
|
16.3% |
* |
Non-GAAP gross margin % |
|
15.4% |
|
16.5% |
* |
16.1% |
|
16.3% |
* |
GAAP operating profit % |
|
3.1% |
|
3.2% |
* |
3.1% |
|
2.1% |
* |
Non-GAAP operating profit % |
|
2.6% |
|
3.2% |
* |
2.9% |
|
2.1% |
* |
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months |
|
Nine Months |
|
Technology Segment |
|
Ended September
30, |
|
Ended September
30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
GAAP total revenue |
|
$
87.0 |
|
$
95.2 |
|
$ 321.6 |
|
$ 276.5 |
|
Topic 606 impact |
|
- |
|
- |
|
(53.0) |
|
- |
|
Non-GAAP revenue |
|
$
87.0 |
|
$
95.2 |
|
$ 268.6 |
|
$ 276.5 |
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin |
|
$
54.3 |
|
$
50.7 |
* |
$ 214.4 |
|
$ 147.0 |
* |
Topic 606 impact |
|
- |
|
- |
|
(53.0) |
|
- |
|
Non-GAAP gross margin |
|
$
54.3 |
|
$
50.7 |
* |
$ 161.4 |
|
$ 147.0 |
* |
|
|
|
|
|
|
|
|
|
|
GAAP operating profit |
|
$
34.5 |
|
$
29.6 |
* |
$ 154.7 |
|
$
77.0 |
* |
Topic 606 impact |
|
- |
|
- |
|
(53.0) |
|
- |
|
Non-GAAP operating profit |
|
$
34.5 |
|
$
29.6 |
* |
$ 101.7 |
|
$
77.0 |
* |
|
|
|
|
|
|
|
|
|
|
GAAP gross margin % |
|
62.4% |
|
53.3% |
* |
66.7% |
|
53.2% |
* |
Non-GAAP gross margin % |
|
62.4% |
|
53.3% |
* |
60.1% |
|
53.2% |
* |
GAAP operating profit % |
|
39.7% |
|
31.1% |
* |
48.1% |
|
27.8% |
* |
Non-GAAP operating profit % |
|
39.7% |
|
31.1% |
* |
37.9% |
|
27.8% |
* |
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months |
|
Nine Months |
|
Total Unisys |
|
Ended September
30, |
|
Ended September
30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
GAAP total revenue |
|
$ 688.3 |
|
$ 666.3 |
|
$ 2,064.1 |
|
$ 1,997.0 |
|
Topic 606 impact |
|
- |
|
- |
|
(53.0) |
|
- |
|
Restructuring reimbursement |
|
(3.1) |
|
- |
|
(3.1) |
|
- |
|
Non-GAAP revenue |
|
$ 685.2 |
|
$ 666.3 |
|
$ 2,008.0 |
|
$ 1,997.0 |
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin |
|
$ 153.8 |
|
$ 103.6 |
* |
$ 507.9 |
|
$ 360.9 |
* |
Topic 606 impact |
|
- |
|
- |
|
(53.0) |
|
- |
|
Restructuring reimbursement |
|
(3.1) |
|
- |
|
(3.1) |
|
- |
|
Postretirement expense |
|
- |
|
0.8 |
* |
- |
|
3.1 |
* |
Cost reduction expense |
|
(0.7) |
|
42.7 |
|
(4.2) |
|
70.8 |
|
Non-GAAP gross margin |
|
$ 150.0 |
|
$ 147.1 |
* |
$ 447.6 |
|
$ 434.8 |
* |
|
|
|
|
|
|
|
|
|
|
GAAP operating profit (loss) |
|
$
55.8 |
|
$
(2.9) |
* |
$ 211.6 |
|
$
15.4 |
* |
Topic 606 impact |
|
- |
|
- |
|
(53.0) |
|
- |
|
Restructuring reimbursement |
|
(3.1) |
|
- |
|
(3.1) |
|
- |
|
Postretirement expense |
|
1.0 |
|
1.2 |
* |
2.9 |
|
4.6 |
* |
Cost reduction expense |
|
(0.9) |
|
51.7 |
|
(3.1) |
|
99.6 |
|
Non-GAAP operating profit |
|
$
52.8 |
|
$
50.0 |
* |
$ 155.3 |
|
$ 119.6 |
* |
|
|
|
|
|
|
|
|
|
|
GAAP gross margin % |
|
22.3% |
|
15.5% |
* |
24.6% |
|
18.1% |
* |
Non-GAAP gross margin % |
|
21.9% |
|
22.1% |
* |
22.3% |
|
21.8% |
* |
GAAP operating profit (loss) % |
|
8.1% |
|
(0.4)% |
* |
10.3% |
|
0.8% |
* |
Non-GAAP operating profit % |
|
7.7% |
|
7.5% |
* |
7.7% |
|
6.0% |
* |
|
|
|
|
|
|
|
|
|
|
*Certain amounts have been
reclassified to conform to the current-year presentation. |
|
CONTACT: Investors: Courtney
Holben, Unisys, 215-986-3379, courtney.holben@unisys.com;
Media: John Clendening, Unisys,
214-403-1981, john.clendening@unisys.com