Unisys Corporation New · NYSE:UIS
Unisys Corporation New — Unisys — Q1 2006 Earnings Presentation
26 slides from Unisys Corporation New's earnings presentation, Apr 18, 2006
Slide 1: 1Q06 Financial Results
1Q06 Financial Results April 18, 2006 Joe McGrath Janet Haugen Jack McHale President & CEO Chief Financial Officer Investor Relations Officer Webcast available on www.unisys.com/investor
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 assumption
Slide 3: 1Q06 Strategic Update
1Q06 Strategic Update Joe McGrath President & CEO
Slide 4: 1Q06 Overview
Slide 1 1Q06 Overview • Made significant progress in executing against repositioning plan • Progress in all key areas: – Divesting of non-core assets – Rightsizing cost structure – Focusing resources on high-growth markets – Realigning sales and services delivery efforts • Continue to look for 2006
Slide 5: Overview – 1Q06 Results
Slide 2 Overview – 1Q06 Results • Changes to business had mixed impact on 1Q results • Continued order strength – Second straight quarter of double-digit order gains – Driven by double-digit growth in services orders • Revenue grew 2% … 5% in constant currency – Driven by 6% growth in services reven
Slide 6: Significant 1Q06 Wins
Slide 3 Significant 1Q06 Wins Client Award Service/Solution U.S. Census Bureau ~$75 million including IT support services (subcontract to Harris Corp) all option years IT infrastructure Unibanco, Brazil 5-year, $47 million services 3-year plus options Data center Cathay Pacific Airways Multi-million
Slide 7: Repositioning – 1Q06 Accomplishments
Slide 4 Repositioning – 1Q06 Accomplishments 9 Restructured iPSL payment processing operation in U.K. 9 Began divestitures of non-core assets/businesses … sold shares in NUL for $378 million 9 Began process of rightsizing cost structure … headcount reductions 9 Adopted changes to U.S. retirement pla
Slide 8: Divesting of Non-Core Assets
Slide 5 Divesting of Non-Core Assets • Made initial divestitures during first quarter • Divested 28% stake in Nihon Unisys Limited of Japan – Sold all 30.5M shares held for cash proceeds of $378M – Business relationship with NUL continues • Also sold part of Unigen semiconductor testing equipment bu
Slide 9: Cost Reduction Program
Slide 6 Cost Reduction Program • In 1Q, began implementing global cost reduction program • Took initial charge of $145.9M for 3,600 headcount reductions • Expect to take second charge for additional reductions, largely in Continental Europe, in 2Q • Expect annualized cost savings of in excess of $25
Slide 10: Restructuring U.S. Retirement Plans
Slide 7 Restructuring U.S. Retirement Plans • Shifting retirement plan focus from defined benefit pension plans to defined contribution plans – Reduce volatility of retirement expenses • As of 12/31/06, will end accrual of future benefits under U.S. defined benefit pension plans – No impact on veste
Slide 11: Finalized Partnering Agreement with NEC
Slide 8 Finalized Partnering Agreement with NEC • Reached final partnering agreement with NEC of Japan – Part of new, more focused global alliances program • Unisys will partner with NEC in range of areas, including: – Server hardware design and development – Middleware – Security solutions – Teleco
Slide 12: Changing the Way We Sell
Slide 9 Changing the Way We Sell • Implemented new account-centric sales model at beginning of January 2006 • First priority: Meet needs of top 500 clients worldwide – Dedicated team to provide full Unisys portfolio – Compensated based on volume of business done, success in selling the full one-Unis
Slide 13: Changing the Way We Deliver Services
Slide 10 Changing the Way We Deliver Services • Rolled out new “3D-VE High Performance Center” in 1Q – Integrated teams of service delivery resources – Organized according to focused areas of growth • Key to improving utilization, especially in SI/consulting – Better able to leverage resources to me
Slide 14: Summary
Slide 11 Summary • Made significant progress in 1Q in executing repositioning plan • Will continue focus on execution in 2Q, rest of year – #1 priority in 2Q is on implementing cost-reduction actions • Continue to drive toward long-term (2008) financial goals: – Revenue growth of mid to high single
Slide 15: 1Q06 Financial Review
1Q06 Financial Review Janet Haugen Chief Financial Officer
Slide 16: 1Q06 Financial Results
Slide 12 1Q06 Financial Results 1Q05 1Q06 Revenue $1,367M $1,388M Pre-Tax Loss ($78.3M) ($35.2M) Benefit for Taxes $32.8M $7.3M Loss Per Share ($.13) ($.08)
Slide 17: 1Q06 Loss and Significant Items
Slide 13 1Q06 Loss and Significant Items $ Millions except EPS Gain –NUL Cost As Share Reduction Pension 1Q06 Reported Sale Charge Expense Pre-Tax ($35.2) ($149.9) $145.9 $7.9* ($31.3) Tax (Expense) Benefit 7.3 -- (19.8) (5.8) (18.3) Net Income (Loss) (27.9) (149.9) 126.1 2.1 (49.6) EPS (.08) (.44)
Slide 18: 1Q06 Revenue by Geography
Slide 14 1Q06 Revenue by Geography Customer Revenue: $1,388 Million Americas 1Q06 % 8% Customer Change Pacific Revenue vs. 1Q05 Asia 15% United States $620M Flat United States 45% International $768M +3% Europe/ Africa Overall $1,388M +2% 32%
Slide 19: 1Q06 Revenue by Segment
Slide 15 1Q06 Revenue by Segment Customer Revenue: $1,388 Million 1Q06 % Customer Change Services Revenue vs. 1Q05 85% Services $1,177M +6% Technology $211M -18% Overall $1,388M +2% Technology 15%
Slide 20: 1Q06 Services Revenue
Slide 16 1Q06 Services Revenue Customer Revenue: $1,177 Million 1Q06 % Customer Change Core Revenue vs. 1Q05 Maint. 10% Consulting/SI $382M +3% Consulting/ Infrastructure Systems Int. Outsourcing $455M +14% Services 19% 32% Infrastructure $225M +11% Services Outsourcing Core 39% $115M -15% Maintenan
Slide 21: 1Q06 Technology Revenue
Slide 17 1Q06 Technology Revenue Customer Revenue: $211 Million 1Q06 % Customer Change Revenue vs. 1Q05 Enterprise $168M -15% Servers Specialized Enterprise Technology Servers Specialized 80% $43M -29% 20% Technology Overall $211M -18%
Slide 22: Services Operating Margin Trend
Slide 18 Services Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 4% 4% 2% 2% 0% 0% 1Q05 1Q06 1Q05 1Q06 -2% -2% -0.9% -0.1% -4% -4% -3.2% -6% -6% -6.8% -8% -8% Please refer to reconciliation of GAAP to non-GAAP financial information available on the Unisys Investor Web at www.uni
Slide 23: Technology Operating Margin Trend
Slide 19 Technology Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 10% 10% 8.5% 8% 8% 6.1% 6% 6% 4% 4% 2% 2% 0% 0% -2% 1Q05 1Q06 -2% 1Q05 1Q06 -4% -4% -6% -5.4% -6% -8% -8% -6.1% -10% -10% Please refer to reconciliation of GAAP to non-GAAP financial information available on the
Slide 24: 1Q06 Cash Flow, Balance Sheet
Slide 20 1Q06 Cash Flow, Balance Sheet 1Q05 1Q06 Cash Flow From Operations $27M $27M Capital Expenditures $97M $73M Free Cash (Usage) ($70M) ($46M) Depreciation & Amortization $93M $98M
Slide 25: Questions & Answers
Questions & Answers Joe McGrath Janet Haugen President & CEO Chief Financial Officer
Slide 26: 1Q06 Financial Results
1Q06 Financial Results April 18, 2006