Unisys Corporation New · NYSE:UIS
Unisys Corporation New — Unisys — Q1 2020 Earnings Presentation
26 slides from Unisys Corporation New's earnings presentation, May 5, 2020
Slide 1: Company Presentation
Company Presentation May 5, 2020 Mike Thomson, Chief Financial Officer Courtney Holben, VP, Investor Relations 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: Unisys Approach At-A-Glance
Unisys Approach At-A-Glance Delivering on our vision and mission Unisys Vision: Enhancing people’s lives through secure, reliable, advanced technology. Unisys Approach Unisys Mission Loyal Engaged Transformative Clients Associates Solutions To build high- • Live client centricity – our • Encourage c
Slide 4: First Quarter 2020 Unisys Revenue Profile
First Quarter 2020 Unisys Revenue Profile Percent of First Quarter Non-GAAP Adjusted Revenue © 2020 Unisys Corporation. All rights reserved. | 4
Slide 5: 1Q20 Highlights
1Q20 Highlights • Closed sale of U.S. Federal business March 13, 20201; $1.2 billion of proceeds • Net Leverage reduced from 4.3x as of December 31, 2019 to 2.7x as of March 31, 20202 • Technology revenue growth of 11.2% YoY, ahead of internal expectations • Non-GAAP operating profit growth of 7.1%
Slide 6: Financial Trends
Financial Trends Non-GAAP Revenue Growth Non-GAAP Operating Profit Margin Average of 4.0 pts of non-GAAP 12% 280 basis points of non-GAAP operating profit revenue growth improvement per year margin expansion over the last 4 years over last 4 years 8% 6% 10% +0.2 pts +0.1 pts +0.8 pts 8.9% 9.0% 3% 8.
Slide 7: Pension Deficit Perspectives
Pension Deficit Perspectives Perspective 1: Adjusting for cash contributions to U.S. plan following Sale of U.S. Federal ($ in M) Pension Deficit as of 12/31/19 $1,750 Contributions to U.S. plans in Q1(1) (315) 12/31/19 balance pro forma for U.S. plan contributions through 3/31/20 $1,435 Remaining a
Slide 8: U.S Federal Sale Overview and Balance Sheet Impact
U.S Federal Sale Overview and Balance Sheet Impact Key Balance Sheet Metrics • Key Transaction Terms Net Leverage1 Net Debt ⁃ Sale price: $1.2 billion • Represents 13x Adj. EBITDA for the twelve-month period 4.3x $1.8B ending 9/30/2019, a significant premium to Unisys’ trading multiple 2.7x ⁃ Sale c
Slide 9: Estimated Future Pension Cash Contributions Through 2028
Estimated Future Pension Cash Contributions Through 2028 $M $279 $267 U.S. Qualified Defined Benefit Plans $254 $40 $240 $34 All Other Plans $210 $31 Estimated Cash $40 Contributions as of $40 12/31/19 $104 $239 $233 $223 $200 $37 $170 $67 $31 $31 $31 $31 2019 A 2020 2021 2022 2023 2024 2025 2026 20
Slide 10: Illustrative Considerations for Mitigating Pension Risk
Illustrative Considerations for Mitigating Pension Risk Within Outside Plan Plan • Regulatory Relief • Plan Split • Legislative Relief • Managing Premiums • Accessing Capital Markets • Asset Management to Enhance Liquidity • Pension Buy-outs • In-kind Contributions • Pension Risk Transfers • Asset S
Slide 11: UNISYS
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Slide 12: Appendix
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Slide 13: 1Q20 Financial Results
1Q20 Financial Results Adjusted Revenue Operating Profit Adjusted EBITDA ($M) Diluted Earnings ($M) Margin (%) and Margin (%) per Share Non-GAAP Non-GAAP Non-GAAP Non-GAAP 13.9% $553 $71 5.5% 11.7% $0.01 $515 14.2% $665 GAAP Non- $65 GAAP 4.8% 3.3% ($0.11) GAAP $(33) 1Q19 1Q20 1Q19 1Q20 GAAP 1Q19 1Q
Slide 14: 1Q20 Segment Results
1Q20 Segment Results YoY declines largely due to flow-through of Services Adjusted Services Gross COVID-related Services Operating Revenue ($M) Profit (%) Profit (%) Non-GAAP decline in Non-GAAP Non-GAAP demand for field -10.0% YoY decline due -200 bps services and to declines at declines in check-
Slide 15: 1Q20 EBITDA and Cash Flow Results
1Q20 EBITDA and Cash Flow Results $M 1Q19 1Q20 YoY Change EBITDA $26 $7 (72.0%) Adjusted EBITDA $65 $71 10.4% Adjusted EBITDA Margin 11.7% 13.9% 220 bps Operating Cash Flow ($70) ($378) ($308) Capital Expenditures ($58) ($28) $30 Free Cash Flow ($129) ($406) ($277) Adjusted Free Cash Flow ($96) ($68
Slide 16: Defined Benefit Pension Plans Funded Status
Defined Benefit Pension Plans Funded Status December 31, 2018 December 31, 2019 December 31, 2019 Pro Forma for Sale of U.S. Federal1 $B $7.89 $7.89 $7.39 $6.74 $6.14 $5.65 ($1.15) ($1.74) ($1.75) Assets PBO Deficit In accordance with U.S. GAAP, discount rates are set annually at December 31. 1As of
Slide 17: Potential Economic Benefit of Tax Assets
Potential Economic Benefit of Tax Assets $M Future Available Net Deferred Tax Description Reductions in Assets1 Taxable Income U.S. Net Operating Loss – Federal & State $596 $1,657 NOLs and Tax Credits Tax Credits 241 1,148 Pension 376 1,506 Pension and Other Other Deferred Tax Assets 60 240 Total a
Slide 18: 1Q20 Non-GAAP Adj. Revenue Growth by Region and Sector
1Q20 Non-GAAP Adj. Revenue Growth by Region and Sector By Region1 Total Company U.S. & Canada EMEA Asia Pacific Latin America 20% 12% 12% 10% (7%) (5%) 1Q20 YoY (22%) (23%) (25%) (23%) Constant Currency By Sector1 Total Company Commercial Financial Public 9% 6% (5%) (7%) (9%) 1Q20 YoY (11%) (13%) (1
Slide 19: Revenue and Operating Profit
Schedule A: GAAP to Non-GAAP Reconciliation Revenue and Operating Profit $M 1Q19 1Q20 Reported revenue $554.5 $515.4 Restructuring reimbursement (2.0) (0.9) Non-GAAP adjusted revenue $552.5 $514.5 Operating profit (loss) $25.2 $20.1 Restructuring reimbursement (2.0) (0.9) Postretirement expense 0.8
Slide 20: EBITDA and Adjusted EBITDA
Schedule B: GAAP to Non-GAAP Reconciliation EBITDA and Adjusted EBITDA $M 1Q19 1Q20 Net income (loss) from continuing operations attributable to Unisys ($32.7) ($53.2) Net income (loss) attributable to noncontrolling interests 2.6 0.5 Interest expense, net of interest income of $2.9, $2.4 respective
Slide 21: Net Income and EBITDA as a percentage of revenue
Schedule C: GAAP to Non-GAAP Reconciliation Net Income and EBITDA as a percentage of revenue $M 1Q19 1Q20 Revenue $554.5 $515.4 Non-GAAP adjusted revenue $552.5 $514.5 Net income (loss) from continuing operations as percentage of (5.9%) (10.3%) revenue Non-GAAP net income (loss) from continuing oper
Slide 22: Earnings per Diluted Share
Schedule D: GAAP to Non-GAAP Reconciliation Earnings per Diluted Share $M except share and per share data 1Q19 1Q20 Net income (loss) from continuing operations attributable to Unisys Corporation common shareholders ($32.7) ($53.2) Post-retirement expense: pretax 23.5 23.5 tax (0.1) 0.3 net of tax 2
Slide 23: Free Cash Flow
Schedule E: GAAP to Non-GAAP Reconciliation Free Cash Flow $M 1Q19 1Q20 Cash provided by (used for) operations ($70.4) ($377.9) Capital expenditures (58.1) (27.7) Free cash flow ($128.5) ($405.6) Postretirement funding 23.1 327.7 Cost reduction funding 9.5 9.8 Adjusted free cash flow ($95.9) ($68.1)
Slide 24: Reconciliation of Segment Reporting
Schedule F: GAAP to Non-GAAP Reconciliation Reconciliation of Segment Reporting $M 1Q19 1Q20 Total Services Revenue $474.0 $425.9 Restructuring reimbursement (2.0) (0.9) Total Services non-GAAP adjusted Revenue $472.0 $425.0 Services gross profit $71.5 $54.8 Restructuring reimbursement (2.0) (0.9) N
Slide 25: Non-GAAP and Other Information
Non-GAAP and Other Information Although appropriate under generally accepted accounting principles (“GAAP”), the company’s results reflect charges that the company believes are not indicative of its ongoing operations and that can make its profitability and liquidity results difficult to compare to
Slide 26: Non-GAAP and Other Information
Non-GAAP and Other Information Although appropriate under generally accepted accounting principles (“GAAP”), the company’s results reflect charges that the company believes are not indicative of its ongoing operations and that can make its profitability and liquidity results difficult to compare to