Unisys Corporation New · NYSE:UIS
Unisys Corporation New — Unisys — Q3 2005 Earnings Presentation
27 slides from Unisys Corporation New's earnings presentation, Oct 18, 2005
Slide 1: 3Q05 Financial Release
3Q05 Financial Release October 18, 2005 Joe McGrath Janet Haugen Jack McHale President & Chief Financial Officer Investor Relations Officer Chief Executive Officer
Slide 2: Disclaimer
Disclaimer Statements made by Unisys during today’s presentation that are not historical facts, including those regarding future performance, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and assumptions
Slide 3: Third-Quarter 2005 Strategic Update
Third-Quarter 2005 Strategic Update Joe McGrath President & CEO
Slide 4: 3Q05 Overview
Slide 1 3Q05 Overview Preliminary results came in below expectations for quarter Net loss per share of 5 cents, excluding 9 cents of pension expense & 2 cents charge for debt tender offer Revenue of $1.39B – down 4% from 3Q04 Results unacceptable … taking actions to drive improved results and enhanc
Slide 5: Today's Agenda
Slide 2 Today’s Agenda Discussion of business reasons behind 3Q05 shortfall Update on the two challenging outsourcing operations Discussion of action plan to improve results and address business challenges
Slide 6: 3Q05 Shortfall Against Guidance
Slide 3 3Q05 Shortfall Against Guidance Weaker-than-expected revenue in technology business • Deferral of a few large ClearPath transactions Costs associated with outsourcing contract renegotiation Lower-than-expected revenue and margin in project- based services Need to reduce overcapacity, better
Slide 7: Update on Outsourcing Operations
Slide 4 Update on Outsourcing Operations iPSL check-processing joint venture in UK • Signed memorandum of understanding … expect to finalize in 4Q • Will improve economics in 2006 and beyond Second challenging BPO operation • Working aggressively to address issues • Expect to see improvement by earl
Slide 8: Evaluation Criteria for Strategic Decisions
Slide 5 Evaluation Criteria for Strategic Decisions Criteria for investment in growth businesses: • Double-digit compound annual growth rate • Business of $500M or larger by 2008 Overall company financial objectives: • Revenue growth at or above industry average • 8-10% operating profit margin, excl
Slide 9: High-Growth Market Focus Areas
Slide 6 High-Growth Market Focus Areas Market ’05-’08 Services Focus Size CAGR Outsourcing – BPO, ITO, infrastructure $300B 8-10% Enterprise security $15B ~20% Open source/Linux services $15B ~20% Microsoft services and solutions $20B ~10% Driven with vertical industry consulting expertise Sources:
Slide 10: Technology Focus
Slide 7 Technology Focus ClearPath and ES7000 • Continuous improvement in features and functions – modernization, J2EE, Windows, Linux • Focus on operating systems and software as differentiator/intellectual property • Leverage industry partners for platform manufacturing/design Volume driver – focu
Slide 11: Cost Reduction Actions
Slide 8 Cost Reduction Actions Annual Area Action Cost Savings • Reduce overcapacity in delivery Services $125M resources • Rightsize cost structure, rationalize Technology $50M R&D/manufacturing spending • Drive down SG&A expenses, Other $75M continue Six Sigma Total $250M Expect restructuring char
Slide 12: Divest Non-Core Assets
Slide 9 Divest Non-Core Assets Divest businesses/assets that currently generate $500M of annual revenue Dedicated full-time senior executive to drive divestiture program working with outside financial advisor Proceeds to fund primarily cost-reduction actions and acquisitions in high-growth areas Pro
Slide 13: Actions to Focus Resources
Slide 10 Actions to Focus Resources Area Actions • Concentrate on 10 countries … ~85% of revenue Geographic • Restructure 30 smaller countries into simplified, client-based model Clients • Focus on top 500 accounts … ~85% of revenue • Pool systems integration consulting delivery resources, build cri
Slide 14: Actions - Sales & Marketing
Slide 11 Actions - Sales & Marketing Significant upgrade in leadership • New VP of Sales for North America • New VP of Sales for Continental Europe • New VP of Sales for Worldwide Technology • New VP of Global Alliances Major relaunch of the Unisys brand in 4Q05
Slide 15: Summary: Focus and Grow
Slide 12 Summary: Focus and Grow Positioning Unisys in large, mainstream, fast-growing markets Rightsizing company cost structure to new, more focused model Focus on significantly improving utilization and services margins Pooling delivery resources to complement targeted market areas Divest non-cor
Slide 16: Financial Review
Financial Review Janet Haugen Chief Financial Officer
Slide 17: 3Q05 Forecast & Actual
Slide 13 3Q05 Forecast & Actual 3Q04 3Q05 Guidance 3Q05 Actual Actual Revenue $1.45B $1.50 - $1.53B $1.39B EPS $.12 $.04 - $.06 ($.07) Excluding Pension EPS $.07 ($.03 - $.05) ($.16) Including Pension Please refer to reconciliation of GAAP to non-GAAP financial information available on the Unisys In
Slide 18: 3Q05 Financial Results
Slide 14 3Q05 Financial Results 3Q04 3Q05 Revenue $1,446M $1,387M Operating Margin – As Reported (2.6%) (5.5%) Net Income (Loss) – As Reported $25M ($54M) Earnings (Loss) Per Share – As Reported 7 cents (16 cents) Operating Margin – Excluding Pension Expense (1.0%) (2.3%) Net Income (Loss) – Excludi
Slide 19: 3Q05 Order Performance
Slide 15 3Q05 Order Performance Overall double-digit order decline Services orders down double-digits, driven by outsourcing Double-digit growth in systems integration/consulting
Slide 20: Significant 3Q05 Awards
Slide 16 Significant 3Q05 Awards Client Contract Service/Solution U.S. Federal 3-year base + three Systems & services Bureau of Prisons 1-year options = $96M U.S. Department 3-year base, ~$65M of Health & Human Managed services outsourcing 2-year option, ~$35M Services Lufthansa Unisys Airline Core
Slide 21: 3Q05 Revenue by Geography
Slide 17 3Q05 Revenue by Geography Revenue: $1,387 Million Americas 3Q05 % Change Customer 8% vs. 3Q04 Revenue Pacific Asia 13% United United States $672M +3% States 48% Europe/ International $715M -10% Africa 31% Total $1,387M -4%
Slide 22: 3Q05 Revenue by Business Segment
Slide 18 3Q05 Revenue by Business Segment Revenue: $1,387 Million 3Q05 % Change Customer vs. Revenue 3Q04 Services 85% Services $1,174M +2% Technology $213M -29% Technology Overall $1,387M -4% 15%
Slide 23: 3Q05 Services Revenue Breakdown
Slide 19 3Q05 Services Revenue Breakdown Customer Revenue: $1,174 Million 3Q05 Core % Change Customer vs. 3Q04 Maint. Revenue 10% Infrastr. Consulting/SI $392M -3% Consulting/ Services Systems Int. Outsourcing $456M +11% 18% 33% Infrastructure $204M +6% Services Outsourcing Core $122M -12% 39% Maint
Slide 24: 3Q05 Technology Revenue Breakdown
Slide 20 3Q05 Technology Revenue Breakdown Customer Revenue: $213 Million 3Q05 % Change Customer vs. Revenue 3Q04 Specialized Technology Enterprise $171M -32% 20% Servers Enterprise Servers Specialized $42M -14% 80% Technology Overall $213M -29%
Slide 25: 3Q05 Cash Flow
Slide 21 3Q05 Cash Flow 3Q04 3Q05 Cash Flow (Usage) From Operations $6M ($68M) Capital Expenditures $84M $85M % Revenue-Generating Cap Ex 77% 70% Free Cash Flow (Usage) ($78M) ($154M) Depreciation & Amortization $94M $91M
Slide 26: Financial Outlook
Slide 22 Financial Outlook Look to close out 2005 with profitable 4Q • Driven by stronger sales of ClearPath systems Fourth-quarter 2005 guidance • Excluding pension expense and impact of planned actions, look for EPS in 10-15 cents range • Low single-digit revenue growth from prior-year levels 4Q g
Slide 27: Questions & Answers
Consulting. Systems Integration Outsourcing. infrastructure. Vviviviv UNISYS infrastructure. Imagine ite Done