Unisys Corporation New · NYSE:UIS
Unisys Corporation New — Unisys — Q2 2003 Earnings Presentation
29 slides from Unisys Corporation New's earnings presentation, Jul 17, 2003
Slide 1: 2Q 2003 Financial Results Conference Call & Webcast
2Q 2003 Financial Results Conference Call & Webcast Larry Weinbach Janet Haugen Jack McHale Chairman & CEO CFO VP, Investor Relations
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: Disclaimer
Disclaimer This presentation is complementary to the company’s earnings press release. Today’s call, as well as the accompanying presentation materials, can be accessed through a link on the Unisys Investor Web site at www.unisys.com/investor. In this presentation, we will be presenting certain non-
Slide 4: Larry Weinbach, Chairman & CEO
Larry Weinbach Chairman & CEO
Slide 5: 2Q 2003 Highlights
Chart 1 2Q 2003 Highlights Solid, consistent performance Met financial targets for quarter Grew EPS 23% despite lower pension income Grew services revenue 12% Double-digit growth in services orders Strong cash flow ... generated free cash flow
Slide 6: 2Q 2003 Demand Trends
Chart 2 2Q 2003 Demand Trends Business environment remains mixed • U.S. market stable • International markets weak – Europe, Latin America Areas of strength: • U.S. Federal government business • Business process outsourcing, enterprise security • Intel-based ES7000 servers Clients demanding clear RO
Slide 7: 2Q 2003 Financial Highlights
Chart 3 2Q 2003 Financial Highlights 2Q02 2Q03 Change Revenue $1,360M $1,425M 5% Services $1,039M $1,163M 12% Technology $321M $262M -18% Gross Profit % 29.7% 27.5% -2.2 pts Services 21.9% 20.0% -1.9 pts Technology 46.8% 46.6% -0.2 pts Operating Profit % 7.1% 6.0% -1.1 pts Services 5.8% 5.5% -0.3 pt
Slide 8: Operating Margin Trend
Chart 4 Operating Margin Trend Pension Income Impact Reported (GAAP) Excluding Pension Income 12% 12% 10% 10% 8% 8% 7.1% 6% 6% 6.0% 5.5% 4% 4% 4.7% 2% 2% 0% 0% 2Q02 2Q03 2Q02 2Q03 Please refer to reconciliation of GAAP to non-GAAP financial information beginning on Chart 21.
Slide 9: Services Operating Margin Trend
Chart 5 Services Operating Margin Trend Pension Income Impact Reported (GAAP) Excluding Pension Income 12% 12% 10% 10% 8% 8% 6% 6% 5.8% 5.5% 4% 5.2% 4% 3.7% 2% 2% 0% 0% 2Q02 2Q03 2Q02 2Q03 Please refer to reconciliation of GAAP to non-GAAP financial information beginning on Chart 21.
Slide 10: Technology Operating Margin Trend
Chart 6 Technology Operating Margin Trend Pension Income Impact Reported (GAAP) Excluding Pension Income 14% 14% 12% 12% 12.2% 10% 10% 8% 8% 9.2% 7.8% 6% 6% 6.4% 4% 4% 2% 2% 0% 0% 2Q02 2Q03 2Q02 2Q03 Please refer to reconciliation of GAAP to non-GAAP financial information beginning on Chart 21.
Slide 11: Net Income Comparison
Chart 7 Net Income Comparison Pension Income Impact 2Q02 2Q03 GAAP Net Income $42.2M $52.5M Pension Income After-Tax Benefit $22.4M $5.3M Net Income Excl. Pension Income $19.8M $47.2M Please refer to reconciliation of GAAP to non-GAAP financial information beginning on Chart 21.
Slide 12: Strategic Objectives for 2003
Chart 8 Strategic Objectives for 2003 Outsourcing: Continue double-digit growth Infrastructure: Drive growth in IT infrastructure security SI/Consulting: Continue margin improvement Server Technology: Expand market for ES7000 Branding: Build market awareness of Unisys Ongoing: Maintain tight cost co
Slide 13: Progress Report – Outsourcing
Chart 9 Progress Report – Outsourcing Revenue up 22% in 2Q03 • Driven by BPO, infrastructure managed services $1.1B of long-term services contracts in 1H03 Major 2Q03 contract wins: • Eli Lilly & Company – expansion of services work • FDIC – new Unisys client • Third major client for insurance proce
Slide 14: Progress Report – Enterprise Security
Chart 10 Progress Report – Enterprise Security Expanded base of security clients • Starwood Hotels, U.S. Dept. of Defense, Australian Board of Airlines, ING (Taiwan), Chiao Tung Bank (Taiwan), French Ministry of Education/Cegetel Selected for pilot on Operation Safe Commerce Significant growth in de
Slide 15: Progress Report – SI/Consulting
Chart 11 Progress Report – SI/Consulting Revenue up 13% in 2Q03 Margins holding, excluding pension income Continue to move up client value chain with new services, solutions Launch of Business Blueprinting strategy in 2Q • Market feedback positive
Slide 16: Progress Report – ES7000 Servers
Chart 12 Progress Report – ES7000 Servers Building market traction Sales up 50%+ in 2Q03 ... best quarter since program began 4 consecutive quarters of YOY double-digit growth ~40% of sales to new clients Growing number of multi-unit orders Continue to enhance ES7000 product family
Slide 17: Progress Report – Brand Awareness
Chart 13 Progress Report – Brand Awareness Major area of focus in 2003 Key vehicles: Advertising, thought leadership, Wall Street coverage, media relations Focused on building Unisys awareness in targeted growth markets Forming new security advisory board • Outside experts ... key advisory role for
Slide 18: Financial Outlook
Chart 14 Financial Outlook On track to achieve 2003 financial goals, despite challenging environment Maintaining outlook for full-year 2003 • Revenue: Mid single-digit revenue growth • EPS: 77 – 82 cents Expect seasonal softness in 3Q Third-quarter 2003 outlook: • Revenue: Modest growth • EPS: 15 –
Slide 19: Janet Haugen, Chief Financial Officer
Janet Haugen Chief Financial Officer
Slide 20: 2Q03 Revenue by Geography
Chart 15 2Q03 Revenue by Geography Revenue $1,425 Million Americas 9% 2Q03 Pacific % of Customer Asia Revenue Revenue 13% United States United States $668M 47% Europe/ 47% Africa International $757M 53% 31%
Slide 21: 2Q03 Revenue by Business Segment
Chart 16 2Q03 Revenue by Business Segment Revenue $1,425 Million 2Q03 % Change Customer Services Revenue vs. 2Q02 82% Services $1,163M +12% Technology $262M -18% Technology Overall $1,425M +5% 18%
Slide 22: 2Q03 Services Revenue
Chart 17 2Q03 Services Revenue Revenue $1,163 Million 2Q03 % Change Core Customer vs. 2Q02 Maint. Revenue 13% Systems Outsourcing $422M +22% Infrastr. Integration Systems Services 33% Integration $386M +13% 18% Infrastructure $212M -1% Services Core Outsourcing Maintenance $143M +5% 36% Overall $1,1
Slide 23: 2Q03 Technology Revenue
Chart 18 2Q03 Technology Revenue Revenue $262 Million 2Q03 % Change Customer vs. 2Q02 Specialized Revenue Technology Enterprise $194M -19% Servers 26% Enterprise Specialized $68M -15% Technology Servers 74% Overall $262M -18%
Slide 24: 2Q03 Expense Trends
Chart 19 2Q03 Expense Trends 2Q02 2Q03 % Change SG&A Expense $246M $242M -1% SG&A as % Revenue 18.1% 17.0% -1.1 pts R&D $62M $64M +3% Operating Profit % 7.1% 6.0% -1.1 pts Other Income (Expense) ($16M) $11M NM% Pre-Tax Pension Income $34M $8M -76%
Slide 25: Cash Flow, Balance Sheet
Chart 20 Cash Flow, Balance Sheet 2Q02 2Q03 Cash Flow From Operations $3M $113M Payments for Restructuring Actions $28M $14M Capital Expenditures $102M $100M % Revenue-Generating Cap Ex 78% 77% Depreciation & Amortization $75M $86M Cash $201M $382M Total Debt $865M $1,067M
Slide 26: Reconciliation of GAAP to Non-GAAP Financial Information
Chart 21 Reconciliation of GAAP to Non-GAAP Financial Information
Slide 27: Reconciliation of GAAP to Non-GAAP Financial Information
Chart 22 Reconciliation of GAAP to Non-GAAP Financial Information
Slide 28: Non-GAAP Information
Chart 23 Non-GAAP Information The preceding financial data includes financial measures that are considered non-GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows where amounts are either excluded or included not in accor
Slide 29: www.unisys.com/investor
Visit Our Web Site: www.unisys.com/investor