Unisys Corporation New · NYSE:UIS
Unisys Corporation New — Unisys — FY2004 Earnings Presentation
30 slides from Unisys Corporation New's earnings presentation, Jan 25, 2005
Slide 1: 4Q/Full Year 2004 Financial Release
4Q/Full Year 2004 Financial Release January 25, 2005 Joe McGrath Janet Haugen Jack McHale President & CEO CFO 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 assumptions
Slide 3: Introduction
Introduction Joe McGrath President & CEO
Slide 4: 4Q04 Overview
Chart 1 4Q04 Overview Challenging quarter for Unisys Reported loss of 10 cents for quarter Results impacted by number of factors, including asset impairment charge Expect challenges to continue impacting results in first quarter of 2005 Confident in strategy … taking actions to drive improved perfor
Slide 5: Financial Review
Financial Review Janet Haugen Chief Financial Officer
Slide 6: 4Q04 Significant Items
Chart 2 4Q04 Significant Items $ in Millions As Pension Tax Impairment except EPS Reported Expense Benefit Charge Pre-tax Income $(89.9) $23.1 N/A $125.6 $58.8 (Loss) Net Income $(34.9) $15.7 $(28.8) $87.9 $39.9 (Loss) EPS $(.10) $.05 $(.09) $.26 $.12
Slide 7: Key Factors Behind 4Q04 Shortfall
Chart 3 Key Factors Behind 4Q04 Shortfall About 8 cents of shortfall due to final terms and conditions of a large, multi-element contract • Had expected revenue/profit from hardware and software elements to be recognized in 4Q • Based on final contract terms, we determined to treat as a month-by-mon
Slide 8: 4Q04 Orders
Chart 4 4Q04 Orders Overall orders basically flat vs. year ago Services orders up slightly Technology orders down low double-digits Ended year with $6.78 billion of committed services backlog, plus $2.36 billion of unfunded U.S. government orders
Slide 9: 4Q04 Revenue by Geography
Chart 5 4Q04 Revenue by Geography Revenue: $1,524 Million Americas 4Q04 % Customer Change 7% Revenue vs. 4Q03 Pacific Asia United States $665M -10% 11% United States International $859M -4% Europe/ 44% Africa Total $1,524M -7% 38%
Slide 10: 4Q04 Technology Revenue
Chart 6 4Q04 Technology Revenue Customer Revenue: $270 Million 4Q04 % Customer Change Revenue vs. 4Q03 Specialized Technology Enterprise $233M -13% 14% Servers Specialized $37M -49% Enterprise Technology Servers 86% Overall $270M -21%
Slide 11: 4Q04 Services Revenue
Chart 7 4Q04 Services Revenue Customer Revenue: $1,254 Million 4Q04 % Core Customer Change Maint. Revenue vs. 4Q03 11% Systems SI/Consulting $458M -4% Infrastr. Services Integration/ Outsourcing $452M -1% 16% Consulting 37% Infrastructure $203M -8% Services Outsourcing Core $141M -3% Maintenance 36%
Slide 12: 2004 Revenue by Geography
Chart 8 2004 Revenue by Geography Revenue $5,821 Million 2004 % Americas Customer Change 8% Revenue vs. 2003 Pacific Asia United States $2,636M -4% 12% United States International $3,185M +1% Europe/ 45% Africa 35% Total $5,821M -2%
Slide 13: 2004 Revenue by Segment
Chart 9 2004 Revenue by Segment Revenue $5,821 Million 2004 % Customer Change Revenue vs. 2003 Services Services $4,725M +1% 81% Technology $1,096M -10% Overall $5,821M -2% Technology 19%
Slide 14: 2004 Services Revenue
Chart 10 2004 Services Revenue Revenue $4,725 Million 2004 % Customer Change Core Revenue vs. 2003 Maint. Systems 12% Integration/ $1,652M +4% Systems Consulting Infrastr. Integration Services 35% Outsourcing $1,726M +3% 16% Infrastructure $776M -8% Services Outsourcing Core $571M Flat 37% Maintenan
Slide 15: 2004 Technology Revenue
Chart 11 2004 Technology Revenue Revenue $1,096 Million 2004 % Customer Change Revenue vs. 2003 Specialized Enterprise $870M -6% Technology Servers 21% Specialized $226M -22% Technology Enterprise Servers Overall $1,096M -10% 79%
Slide 16: Operating Margin Trend
Chart 12 Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 12% 12% 10% 10% 8% 9.7% 8% 9.7% 6% 6% 4% 4% 2% 2% 0% 0% 4Q03 4Q04 4Q03 4Q04 -2% -2% -3.6% -4% -5.2% -4% -6% -6% -8% -8% Please refer to reconciliation of GAAP to non-GAAP financial information available on the Unisys Invest
Slide 17: Services Operating Margin Trend
Chart 13 Services Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 12% 12% 8% 8% 7.2% 7.5% 4% 4% 0% 0% 4Q03 4Q04 4Q03 4Q04 -4% -4% -7.8% -8% -9.4% -8% -12% -12% Please refer to reconciliation of GAAP to non-GAAP financial information available on the Unisys Investor Web at www.uni
Slide 18: Technology Operating Margin Trend
Chart 14 Technology Operating Margin Trend Reported (GAAP) Excluding Pension Accounting 20% 20% 16% 16% 14.6% 12% 12% 13.6% 12.8% 12.0% 8% 8% 4% 4% 0% 0% 4Q03 4Q04 4Q03 4Q04 Please refer to reconciliation of GAAP to non-GAAP financial information available on the Unisys Investor Web at www.unisys.co
Slide 19: 4Q04 Cash Flow, Balance Sheet
Chart 15 4Q04 Cash Flow, Balance Sheet 4Q03 4Q04 FY03 FY04 Cash Flow From Operations $378M $227M $571M $470M Capital Expenditures $119M $123M $437M $434M % Revenue-Generating Cap Ex 76% 68% 75% 69% Free Cash Flow $259M $104M $134M $36M Depreciation & Amortization $97M $109M $350M $394M
Slide 20: 2005 Pension Accounting Assumptions
Chart 16 2005 Pension Accounting Assumptions Expect about $186M pension expense in 2005 Cash contributions to worldwide plans of about $70M No cash payment required for U.S. qualified defined benefit plan U.S. Pension Plan Assumptions 2004 2005 Exp. Long-Term Rate of Return 8.75% 8.75% Discount Rate
Slide 21: 2005 Financial Outlook
Chart 17 2005 Financial Outlook Expect continued challenges in 1Q05 • Impact of challenging transformational outsourcing engagements • Weak ClearPath demand • Doubling-up of costs for cost reduction programs First-quarter 2005 outlook: • Approximately breakeven to a slight loss in earnings per share
Slide 22: 2005 Business Initiatives
2005 Business Initiatives Joe McGrath President & CEO
Slide 23: Initiatives to Drive Improved Results
Chart 18 Initiatives to Drive Improved Results Fix challenging contracts in outsourcing business … drive improved execution and delivery Drive programs to grow the top line … particularly in outsourcing and enterprise servers Execute cost reduction program
Slide 24: Initiative #1: Fix Outsourcing Issues
Chart 19 Initiative #1: Fix Outsourcing Issues Facing continued challenges in several transformational BPO contracts Taking actions to improve execution: • Changed management in operations … upgraded skills • Put top performers in place to manage operations • Strengthened proposal bid/review practic
Slide 25: Initiative #2: Grow Orders, Revenue
Chart 20 Initiative #2: Grow Orders, Revenue Reengineering sales process • Dedicated teams to serve top 50 accounts • Created “One Unisys” sales compensation program Improving delivery excellence • Building common set of delivery processes across organization • Allows use of best people/talent in en
Slide 26: Areas of Marketing Focus in 2005
Chart 21 Areas of Marketing Focus in 2005 3D Visible Enterprise • Unique offering in marketplace • Strong interest from clients … 60+ engagements … 40+ workshops, another 80+ in development • 200+ potential opportunities Security • Federal government: DHS and TSA • Commercial: Shippers, pharmaceutic
Slide 27: 2005 Focus: Expand Server Sales
Chart 22 2005 Focus: Expand Server Sales Focused on driving greater sales volume through focused, targeted marketing ClearPath: • Rolled out new products in 2004 with metering, other leading-edge functionality • In 2005, focused on marketing new products/functionality to broad client base ES7000: •
Slide 28: Initiative #3: Reduce Costs
Chart 23 Initiative #3: Reduce Costs Continue taking steps to reduce costs … 3Q04 initiative to save $70M of annualized costs Also initiating “Six Sigma Lean” program Multi-year program to create data-driven, performance-based culture at Unisys Ensure all activities are focused on delivering value f
Slide 29: Summary
Chart 24 Summary Taking specific, concrete actions to drive profitable growth over short and long term Early part of 2005 will have challenges … But confident about prospects to returning to earnings growth, particularly in 2H05 Committed to fixing challenging contracts … growing services business …
Slide 30: Questions & Answers
ion Answer Consulting. Systems Integration Outsourcing. infrastructure. Vviviviv UNISYS infrastructure. Imagine ite Done