Unisys Corporation New · NYSE:UIS
Unisys Corporation New — Unisys — Q4 2005 Earnings Presentation
31 slides from Unisys Corporation New's earnings presentation, Jan 26, 2006
Slide 1: 4Q/Full Year 2005 Financial Release
4Q/Full Year 2005 Financial Release January 26, 2006 Joe McGrath Janet Haugen Jack McHale President & CEO Chief Financial Officer Investor Relations 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 assumption
Slide 3: Fourth-Quarter 2005 Strategic Update
Fourth-Quarter 2005 Strategic Update Joe McGrath President & CEO
Slide 4: 4Q05 Overview
Slide 1 4Q05 Overview • Solid performance by Unisys employees – Achieved high end of pre-tax income target … strong free cash flow • Improved sales traction • Strong growth in orders, driven by outsourcing • Strong results in technology business • Made good progress against repositioning plan
Slide 5: Highlights – 4Q05 Results
Slide 2 Highlights – 4Q05 Results • Revenue grew 3% … 5% in constant currency – Driven by 11% growth in technology revenue – Solid growth in outsourcing and infrastructure services • Reported pre-tax income of $72M, excluding pension – At high end of targeted range given in November – Compared to pr
Slide 6: Significant 4Q05 Wins
Slide 3 Significant 4Q05 Wins Client Award Service/Solution U.S. Transportation 1-year base = $308M Managed services Security 3-year ceiling with outsourcing Administration options = $750M 7-year, ~350M pound Applications, Metropolitan Police contract to Capgemini; desktop Service, U.K. Unisys a maj
Slide 7: Update on Repositioning Plan
Slide 4 Update on Repositioning Plan • Designed to improve profitability, address performance issues, enhance success in market • Key elements of plan: – Focus investment/resources on high-growth markets … pool delivery resources around growth areas – Divest non-core assets – Reduce cost structure …
Slide 8: Progress – Business Refocusing
Slide 5 Progress – Business Refocusing • Focusing resources on large growth markets – Outsourcing, security, open source solutions, Microsoft solutions – Also focused on real-time infrastructure with ClearPath, ES7000 • Reorganizing services delivery force – Creating “pools” of highly skilled people
Slide 9: Progress – Cost Reduction Actions
Slide 6 Progress – Cost Reduction Actions • Reengineering business to drive operational efficiency – Will enable us to reduce headcount by ~3,600 positions • In 4Q, worked to reengineer processes to prepare for headcount reductions – Pooling of services delivery personnel – Reengineering hardware de
Slide 10: Progress – Divestiture Program
Slide 7 Progress – Divestiture Program • Assigned dedicated divestiture leader, team • Identified potential non-core assets • In discussions with potential interested parties for some of these assets • Targeting to announce agreements on certain transactions in 1H06
Slide 11: Progress – Sales/Marketing
Slide 8 Progress – Sales/Marketing • Continue to rebuild sales/marketing team, programs • Major progress: – Three new global industry sales leaders – Dedicated teams for top 500 accounts – Concentrating sales efforts on top 10 countries globally – New sales compensation programs effective January 1
Slide 12: Progress – BPO Contracts
Slide 9 Progress – BPO Contracts • Reached agreement for restructuring iPSL operation – New agreement effective January 1 – Unisys will continue processing checks for partner banks, but at higher tariffs – Expect to result in additional ~$150M of revenue from 2006-2010 – Expect to operate iPSL near
Slide 13: Long-Term Financial Goals (2008)
Slide 10 Long-Term Financial Goals (2008) • Revenue growth in targeted areas at or above industry average • Build each of targeted businesses to at least $500M in revenue by 2008 • Overall company financial goals – 2008 – Revenue growth in mid to high single-digits – OPM% between 8-10%, excluding pe
Slide 14: Expectations for 2006
Slide 11 Expectations for 2006 • Looking for transitional year – Due to repositioning efforts, will not be giving quarterly/annual earnings guidance • Expect revenue growth in low to mid single-digits before divestitures – Including divestitures, revenue could be flat to down slightly • Expect outso
Slide 15: Summary
Slide 12 Summary • Good progress in 4Q in repositioning Unisys for growth • Achieved financial target … improved margins … strong free cash flow … strong order growth • Implemented elements of repositioning plan • Encouraged by improvements in business
Slide 16: Financial Review
Financial Review Janet Haugen Chief Financial Officer
Slide 17: 4Q05 Financial Results
Slide 13 4Q05 Financial Results 4Q04 4Q05 Revenue $1,524M $1,570M Operating Margin – As Reported (5.2%) 2.3% Pre-Tax Income (Loss) – As Reported ($90M) $27M Provision (Benefit) for Taxes ($55M) $58M Earnings (Loss) Per Share – As Reported ($.10) ($.09) Operating Margin – Excluding Pension Expense (3
Slide 18: 4Q05 Orders
Slide 14 4Q05 Orders • Overall orders showed double-digit growth vs. year ago • Services orders up double digits • Technology orders up single digits • Ended year with $6.37 billion of firm services backlog – Additional $2.30 billion of unfunded U.S. government orders
Slide 19: 4Q05 Revenue by Geography
Slide 15 4Q05 Revenue by Geography Customer Revenue: $1,570 Million Americas 8% 4Q05 % Pacific Asia Customer Change Revenue vs. 4Q04 11% United United States $689M +4% States 44% Europe/ International $881M +3% Africa 37% Overall $1,570M +3%
Slide 20: 4Q05 Revenue by Segment
Slide 16 4Q05 Revenue by Segment Customer Revenue: $1,570 Million 4Q05 % Change Customer Services Revenue vs 4Q04 81% Services $1,271M +1% Technology $299M +11% Overall $1,570M +3% Technology 19%
Slide 21: 4Q05 Services Revenue
Slide 17 4Q05 Services Revenue Customer Revenue: $1,271 Million 4Q05 % Core Customer Change Maint. Revenue vs 4Q04 10% Infrastr. Consulting/ Consulting/SI $449M -2% Services Systems Int. 17% 35% Outsourcing $480M +6% Infrastructure $219M +8% Services Outsourcing Core 38% $123M -13% Maintenance Overa
Slide 22: 4Q05 Technology Revenue
Slide 18 4Q05 Technology Revenue Customer Revenue: $299 Million 4Q05 % Customer Change Revenue vs 4Q04 Enterprise Enterprise Specialized $251M +8% Servers Technology Servers 16% 84% Specialized $48M +29% Technology Overall $299M +11%
Slide 23: 2005 Revenue by Geography
Slide 19 2005 Revenue by Geography Customer Revenue: $5,759 Million Americas 8% 2005 % Pacific Customer Change Asia Revenue vs. 2004 13% United United States $2,652M +1% States 46% International $3,107M -2% Europe/ Africa 33% Overall $5,759M -1%
Slide 24: 2005 Revenue by Segment
Slide 20 2005 Revenue by Segment Customer Revenue: $5,759 Million 2005 % Change Customer Services Revenue vs 2004 83% Services $4,789M +1% Technology $970M -11% Overall $5,759M -1% Technology 17%
Slide 25: 2005 Services Revenue
Slide 21 2005 Services Revenue Customer Revenue: $4,789 Million 2005 % Core Customer Change Maint. Revenue vs 2004 10% Infrastr. Consulting/SI $1,655M Flat Consulting/ Services Systems Int. 17% 35% Outsourcing $1,830M +6% Infrastructure $801M +3% Services Outsourcing Core 38% $503M -12% Maintenance
Slide 26: 2005 Technology Revenue
Slide 22 2005 Technology Revenue Customer Revenue: $970 Million 2005 % Change Customer vs 2004 Revenue Specialized Enterprise Enterprise Servers $786M -10% Technology Servers 19% 81% Specialized $184M -18% Technology Overall $970M -11%
Slide 27: Operating Margin Trend
Slide 23 Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 12% 12% 10% 10% 8% 8% 6% 6% 5.2% 4% 4% 2.3% 2% 2% 0% 0% 4Q04 4Q05 4Q04 4Q05 -2% -2% -4% -4% -3.6% -6% -5.2% -6% 4Q04 Includes Outsourcing Asset Impairment Please refer to reconciliation of GAAP to non-GAAP financial informa
Slide 28: Services Operating Margin Trend
Slide 24 Services Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 12% 12% 8% 8% 4% 4% 0.9% 0% 0% 4Q04 4Q05 4Q04 4Q05 -4% -4% -2.0% -8% -8% -7.8% -9.4% -12% -12% 4Q04 Includes Outsourcing Asset Impairment Please refer to reconciliation of GAAP to non-GAAP financial information ava
Slide 29: Technology Operating Margin Trend
Slide 25 Technology Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 20% 20% 18.7% 16.7% 15% 15% 12.8% 12.0% 10% 10% 5% 5% 0% 0% 4Q04 4Q05 4Q04 4Q05 Please refer to reconciliation of GAAP to non-GAAP financial information available on the Unisys Investor Web at www.unisys.com/inve
Slide 30: 4Q04 Cash Flow, Balance Sheet
Slide 26 4Q04 Cash Flow, Balance Sheet 4Q04 4Q05 FY04 FY05 Cash Flow From Operations $227M $260M $470M $282M Capital Expenditures $123M $87M $434M $382M % Revenue-Generating Cap Ex 68% 69% 69% 71% Free Cash Flow (Usage) $104M $172M $36M ($100M) Depreciation & Amortization $109M $97M $394M $374M
Slide 31: Questions & Answers
Questions & Answers Joe McGrath Janet Haugen President & CEO Chief Financial Officer