Unisys Corporation New · NYSE:UIS
Unisys Corporation New — Unisys — Q2 2006 Earnings Presentation
27 slides from Unisys Corporation New's earnings presentation, Jul 19, 2006
Slide 1: 2Q06 Financial Results
2Q06 Financial Results July 19, 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: 2Q06 Strategic Update
2Q06 Strategic Update Joe McGrath President & CEO
Slide 4: 2Q06 Overview
Slide 1 2Q06 Overview • Continued to make progress in implementing repositioning program • Primary focus in 2Q was implementing cost-reduction program – Moved aggressively to implement headcount reductions and identify opportunities for further reductions • Overall, implementing 5,500 headcount redu
Slide 5: Overview – 2Q06 Results
Slide 2 Overview – 2Q06 Results • Changes in business impacted results in the quarter • Orders down double-digits • Revenue declined 2% • Lower than expected sales volume impacted margins, especially in technology business • Reported bottom-line net loss of $194.6 million including $141.2 million pr
Slide 6: Update on Repositioning Program
Slide 3 Update on Repositioning Program • Financial goals of repositioning … by 2008: – Revenue growth of mid to high single digits – Operating profit margin, excluding retirement-related expense, of 8-10% • Areas of focus in repositioning: – Drive top-line growth through greater focus in market – I
Slide 7: Key Drivers to 2008 Operating Margin Target
Slide 4 Key Drivers to 2008 Operating Margin Target 8-10% Offsetting Factors: • Investment in growth initiatives • Investment in global sourcing centers/people • Employee development Global Sourcing • Declines in ClearPath, core maintenance Attrition Management Revenue Growth Fix Problem Contracts +
Slide 8: Timetable for Reductions, Cost Savings
Slide 5 Timetable for Reductions, Cost Savings Headcount Reductions Net Annualized Cost Savings 2Q06 ~2,200 End of 2006 2H 2007 3Q06 ~1,300 4Q06 ~1,500 ~$280M $325M+ FY06 ~5,000 1H07 ~500
Slide 9: Investing in Global Sourcing
Slide 6 Investing in Global Sourcing • Accelerating use of global sourcing • Have set aggressive, mandatory targets for all businesses in making use of offshore resources • Managing attrition – back filling appropriate positions via offshore centers • Expect to grow # of offshore resources to ~6,000
Slide 10: Initiatives in Technology Business
Slide 7 Initiatives in Technology Business • Announced major initiatives to drive demand in enterprise servers, address revenue decline in ClearPath • Continue to shift technology focus/resources to value-added software, while leveraging advances in industry-standard hardware • Announced next-genera
Slide 11: Unisys Technology Roadmap
Slide 8 Unisys Technology Roadmap Customer Choices Virtualization ClearPath on Intel ClearPath Today Windows ClearPath Linux Windows ClearPath Optional Virtualization Linux Open Virtualization Intel Intel Intel Mainframe Attributes CMOS Intel Mainframe Attributes
Slide 12: Summary
Slide 9 Summary • In 2Q, we continued to implement repositioning program • Moved aggressively to implement cost-reduction plan – Will continue to be a primary focus in 3Q • Expect to substantially reduce cost base by second half of 2007 • Also made important announcements in technology business
Slide 13: 2Q06 Financial Review
2Q06 Financial Review Janet Haugen Chief Financial Officer
Slide 14: 2Q06 Financial Results
Slide 10 2Q06 Financial Results 2Q06 2Q05 Revenue $1,407M $1,436M Pre-tax Cost Reduction Charge $141.2M -- Pre-Tax Loss ($203.5M) ($39.8M) Benefit for Taxes $8.9M $12.7M Net Loss ($194.6M) ($27.1M) Loss Per Share (.57) (.08)
Slide 15: 2Q06 Charge and Pension Expense Detail
Slide 11 2Q06 Charge and Pension Expense Detail Included in Results $ Millions Cost Reduction Pension Charge Expense Cost of Revenue $101.4 $29.2 SG&A $28.3 $8.5 R&D $11.8 $2.8 Other Income ($.3) Total $141.2 $40.5
Slide 16: Pension Expense
Slide 12 Pension Expense $M 2Q06 2Q05 2006E 2005 Services $35.5 $38.5 $121.0 $151.6 Technology $5.0 $7.3 $14.0 $29.5 Total $40.5 $45.8 $135.0* $181.1 *Net of $45M curtailment gain in 1Q06
Slide 17: 2Q06 Revenue by Geography
Slide 13 2Q06 Revenue by Geography Customer Revenue: $1,407 Million Americas 2Q06 % 9% Customer Change Pacific Revenue vs. 2Q05 Asia 11% United United States $628M -6% States 45% International $779M +2% Europe/ Africa 35% Overall $1,407M -2%
Slide 18: 2Q06 Revenue by Segment
Slide 14 2Q06 Revenue by Segment Customer Revenue: $1,407 Million 2Q06 % Customer Change Services Revenue vs. 2Q05 87% Services $1,224M -1% Technology $183M -8% Technology Overall $1,407M -2% 13%
Slide 19: 2Q06 Services Revenue
Slide 15 2Q06 Services Revenue Customer Revenue: $1,224 Million 2Q06 % Core Customer Change Maint. Revenue vs. 2Q05 9% Consulting/ Consulting/SI $404M -9% Infrastructure Systems Int. 33% Outsourcing $471M +4% Services 19% Infrastructure $229M +10% Services Outsourcing 39% Core $120M -9% Maintenance
Slide 20: 2Q06 Technology Revenue
Slide 16 2Q06 Technology Revenue Customer Revenue: $183 Million 2Q06 % Customer Change Revenue vs. 2Q05 Enterprise $146M -12% Specialized Enterprise Servers Technology Servers 80% Specialized 20% $37M +10% Technology Overall $183M -8%
Slide 21: Segment Operating Margin Trend
Slide 17 Segment Operating Margin Trend Services Technology 4% 16% 2% 12% 8% 0% 4% -2% -0.9% 0% -4% -4% -3.7% -4.8% -8% -6% -12% -12.2% -8% -16% 2Q05 2Q06 2Q05 2Q06 Segment margins exclude impact of 2Q06 restructuring charge
Slide 22: 2Q06 Cash Flow, Balance Sheet
Slide 18 2Q06 Cash Flow, Balance Sheet 2Q06 2Q05 Cash Flow From Operations ($193M) $64M Capital Expenditures $65M $112M Free Cash (Usage) ($258M) ($48M) Depreciation & Amortization $93M $93M
Slide 23: Retirement-Related Expense
Slide 19 Retirement-Related Expense ($ million) 2003 2004 2005 2006E 2007E 2008E Defined Benefit Pension Expense (Income) United States (69) 38 104 92 (18) (50) -- Curtailment Gain (45) Non-U.S. 46 56 77 88 80 75 Total defined benefit pension plans (23) 94 181 135 62 25 Total U.S.401(k) Match Expens
Slide 24: Defined Benefit Pension Expense (Income) Expectations
Slide 20 Defined Benefit Pension Expense (Income) Expectations $Millions $200 $181 $150 135* $100 $94 $62 $50 $25 $0 ($23) ($50) 2003 2004 2005 2006E 2007E 2008E * Includes $45M curtailment gain. See disclaimer note on Slide 19
Slide 25: Retirement Expense (Income) Expectations
Slide 21 Retirement Expense (Income) Expectations $Millions U.S. 401k Plan Worldwide Defined Benefit Pension Plans $250 $200 $200 $154* $150 $121 $114 $181 $85 $100 $135* $62 $94 $25 $50 $59 $60 $19 $20 $19 $19 $0 -$23 ($4) -$50 2003 2004 2005 2006E 2007E 2008E * Includes $45M curtailment gain. See
Slide 26: Questions & Answers
Questions & Answers Joe McGrath Janet Haugen President & CEO Chief Financial Officer
Slide 27: 2Q06 Financial Results
2Q06 Financial Results July 19, 2006 Webcast available on www.unisys.com/investor