- Revenue grows 6 percent to $1.02 billion; up slightly in constant currency
- Excluding the U.S. Federal business, revenue grows 14 percent
- Services revenue excluding the U.S. Federal business grows 12 percent, led by growth in systems integration and IT outsourcing
- Technology revenue grows 36 percent, driven by higher ClearPath sales
- Operating profit rises 48 percent to $113 million, or 11.1 percent of revenue
- Services operating profit margin of 8.7 percent, up from 8.0 percent in 3Q 2010
- Net income from continuing operations of $79 million, up significantly
- Diluted EPS from continuing operations of $1.63 vs. 50 cents in 3Q 2010
- Free cash flow of $65 million
- Company announces call of the remaining $66 million of 2012 senior notes
BLUE BELL, Pa., October 24, 2011 – Unisys Corporation (NYSE: UIS) today reported third-quarter 2011 net income from continuing operations of $78.6 million, or $1.63 per diluted share, compared with third-quarter 2010 net income from continuing operations of $21.8 million, or 50 cents per diluted share. Revenue in the third quarter of 2011 grew 6 percent to $1.02 billion compared with $961 million in the year-ago quarter. Foreign currency fluctuations had a positive impact on revenue in the quarter of almost 6 percentage points.
“This was a strong quarter for Unisys,” said Unisys Chairman and CEO Ed Coleman. “Building on our foundational work to strengthen our competitive and financial position, we grew both total revenue and services revenue and tripled our earnings per share from continuing operations. Strong ClearPath sales, continued growth in our non-U.S. Federal IT outsourcing business, and higher sales of industry solutions within our system integration business more than offset a decline in our U.S. Federal business where market conditions remain challenging.
“We remain focused on achieving our strategic financial goals, delivering innovative products and solutions, and providing consistently high levels of service quality to our customers,” Coleman said.
Overall Company and Business Segment Highlights
Third-quarter 2011 revenue grew 6 percent year-over-year despite a decline in the company’s U.S. Federal business. Excluding the U.S. Federal business, overall revenue grew 14 percent when compared to the prior-year period. The company saw revenue growth in all regions except for Latin America outside of Brazil. On a constant currency basis, overall third-quarter 2011 revenue was up slightly over the year-ago period.
Unisys reported a third-quarter 2011 gross profit margin of 27.9 percent, up from 24.7 percent in the year-ago quarter, primarily reflecting higher sales of ClearPath software and servers and a more profitable mix of services revenue. Operating expenses (selling, general and administrative expenses plus research and development) increased 7 percent, largely attributable to currency fluctuations. Unisys reported third-quarter 2011 operating income of $113.0 million, or 11.1 percent of revenue, up from operating income of $76.1 million, or 7.9 percent of revenue, in the third quarter of 2010.
Third-quarter 2011 services revenue increased 2 percent year-over-year despite lower revenue in the company’s U.S. Federal business. Excluding the U.S. Federal business, services revenue grew 12 percent from the year-ago quarter, driven by the seventh consecutive quarter of growth in IT outsourcing revenue and by growth in systems integration revenue in the quarter. Services gross profit margin improved to 21.6 percent compared with 20.6 percent a year ago while services operating profit margin improved to 8.7 percent compared with 8.0 percent a year ago.
Services backlog at September 30, 2011 was $5.3 billion, a decrease of 8 percent from September 30, 2010. Third-quarter services orders showed a low double-digit year-over-year decline in the quarter, reflecting lower outsourcing and U.S. Federal orders. Services orders increased mid-single digits sequentially from the second quarter of 2011.
Third-quarter 2011 technology revenue grew 36 percent year-over-year, driven by significantly higher sales of ClearPath software and servers. Reflecting the higher ClearPath sales, technology gross profit margins improved to 57.4 percent compared with 47.5 percent in the year-ago quarter, while technology operating profit margin increased to 25.8 percent compared with 7.4 percent a year ago.
Cash Flow and Balance Sheet Highlights
Unisys generated $94 million of cash from operations in the third quarter of 2011 compared with $127 million in the year-ago quarter. Capital expenditures in the third quarter of 2011 were $29 million compared with $46 million in the year-ago quarter. The company generated $65 million of free cash flow (cash provided by operations less capital expenditures) compared with free cash flow of $81 million in the year-ago quarter.
At September 30, 2011, Unisys reported $667 million of cash on hand and $445 million of total debt. As part of its debt reduction program, Unisys is calling for redemption its 8% senior notes due October 2012. The $65.9 million of notes will be redeemed in accordance with the provisions of the notes.
Conference Call
Unisys will hold a conference call today at 5:30 p.m. Eastern Time to discuss its results. The listen-only Webcast, as well as the accompanying presentation materials, can be accessed via a link on the Unisys Investor Web site at www.unisys.com/investor. Following the call, an audio replay of the Webcast, and accompanying presentation materials, can be accessed through the same link.
About Unisys
Unisys is a worldwide information technology company. We provide a portfolio of IT services, software, and technology that solves critical problems for clients. We specialize in helping clients secure their operations, increase the efficiency and utilization of their data centers, enhance support to their end users and constituents, and modernize their enterprise applications. To provide these services and solutions, we bring together offerings and capabilities in outsourcing services, systems integration and consulting services, infrastructure services, maintenance services, and high-end server technology. With approximately 23,000 employees, Unisys serves commercial organizations and government agencies throughout the world. For more information, 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, or other financial items; any statements of the company’s plans, strategies or objectives for future operations; statements regarding future economic conditions or performance; and any statements of belief or expectation. All forward-looking statements rely on assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Risks and uncertainties that could affect the company’s future results include the company’s ability to drive profitable growth in consulting and systems integration; the company’s ability to take on, successfully implement and grow outsourcing operations; market demand for the company’s high-end enterprise servers and maintenance on those servers; the potential adverse effects of aggressive competition in the information services and technology marketplace; the company’s ability to retain significant clients; the company’s ability to effectively anticipate and respond to volatility and rapid technological change in its industry; the adverse effects of global economic conditions; the company’s significant pension obligations and potential requirements to make significant cash contributions to its defined benefit pension plans; the success of the company’s program to reduce costs, focus its global resources and simplify its business structure; the risks that the company’s contracts may not be as profitable as expected or provide the expected level of revenues and that contracts with U.S. governmental agencies may subject it to audits, criminal penalties, sanctions and other expenses and fines; the risk that the company may face damage to its reputation or legal liability if its clients are not satisfied with its services or products; the performance and capabilities of third parties with whom the company has commercial relationships; the risks of doing business internationally when more than half of the company’s revenue is derived from international operations; the company’s ability to access capital and credit markets to address its liquidity needs; the potential for intellectual property infringement claims to be asserted against the company or its clients; the possibility that pending litigation could affect the company’s results of operations or cash flow; the business and financial risk in implementing future dispositions or acquisitions; the company’s ability to use its U.S. Federal net operating loss carryforwards and other tax attributes; 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.
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RELEASE NO.: 1024/9070
Unisys is a registered trademark of Unisys Corporation. Any other brands and products referenced herein are acknowledged to be trademarks or registered trademarks of their respective holders
Investor Contact:
Niels Christensen, 215-986-6651
Niels.Christensen@unisys.com
Media Contact:
Jim Kerr, 215-986-5795
Jim.Kerr@unisys.com
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions, except per share data)
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Revenue
Services $876.3 $855.2 $2,519.3 $2,597.7
Technology 143.8 105.4 349.2 377.3
-------- -------- -------- --------
1,020.1 960.6 2,868.5 2,975.0
Costs and expenses
Cost of revenue:
Services 680.0 675.9 2,010.6 2,070.5
Technology 55.3 47.3 151.2 143.9
-------- -------- -------- --------
735.3 723.2 2,161.8 2,214.4
Selling, general and
administrative 153.3 142.4 446.5 458.7
Research and development 18.5 18.9 57.2 60.8
-------- -------- -------- --------
907.1 884.5 2,665.5 2,733.9
-------- -------- -------- --------
Operating profit 113.0 76.1 203.0 241.1
Interest expense 12.5 25.0 51.7 76.8
Other income (expense), net 16.6 (0.2) (56.6) (44.6)
-------- -------- -------- --------
Income from continuing
operations before
income taxes 117.1 50.9 94.7 119.7
Provision for income taxes 33.4 28.2 52.4 52.7
-------- -------- -------- --------
Consolidated income before
discontinued operations 83.7 22.7 42.3 67.0
Income from discontinued
operations, net of taxes - 6.5 - 73.2
-------- -------- -------- --------
Net income 83.7 29.2 42.3 140.2
Less: Net income attributable to
noncontrolling interests 1.0 0.9 6.6 3.3
Less: Preferred stock
dividends 4.1 - 9.5 -
-------- -------- -------- --------
Net income attributable to
Unisys Corporation
common shareholders $78.6 $28.3 $26.2 $136.9
======== ======== ======== ========
Amounts attributable to Unisys
Corporation common shareholders
Income from continuing
operations, net of tax $78.6 $21.8 $26.2 $63.7
Income from discontinued
operations, net of tax - 6.5 - 73.2
-------- -------- -------- --------
Net income attributable to
Unisys Corporation
common shareholders $78.6 $28.3 $26.2 $136.9
======== ======== ======== ========
Earnings per common share attributable
to Unisys Corporation
Basic
Continuing operations $ 1.82 $ .51 $ .61 $ 1.50
Discontinued operations .00 .15 .00 1.72
-------- -------- -------- --------
Total $ 1.82 $ .66 $ .61 $ 3.22
======== ======== ======== ========
Diluted
Continuing operations $ 1.63 $ .50 $ .60 $ 1.47
Discontinued operations .00 .15 .00 1.69
-------- -------- -------- --------
Total $ 1.63 $ .65 $ .60 $ 3.16
======== ======== ======== ========
Shares used in the per share
computations (thousands):
Basic 43,246 42,620 43,063 42,536
Diluted 50,623 43,292 43,635 43,335