Unisys Corporation reported third quarter 2015 results.
- Revenue of $739 million
- Operating profit margin of 1.2 percent; 7.2 percent before restructuring charges of $17 million and pension expense of $27 million
- Diluted loss per share of $0.19
- Non-GAAP diluted earnings per share of $0.67
"Our transformative cost actions are strengthening the company's underlying operating profitability," said Unisys President and CEO Peter Altabef. "These actions, combined with improved offerings and go-to-market capabilities, are enhancing our competitiveness in the market."
Summary of Business Results
- Third quarter 2015 revenue of $739 million declined 16 percent year-over-year. Foreign currency fluctuations caused approximately half of this decline. In constant currency(2), Services revenue grew for the third consecutive quarter. Lower Technology revenue, which can vary significantly from quarter-to-quarter based on the timing of license renewals, caused the overall revenue decline in constant currency.
- The third quarter 2015 operating profit margin of 1.2 percent declined year-over-year due principally to lower operating profit in the Technology segment where profitability is highly sensitive to revenue volume, as well as cost reduction charges and higher pension expense. The operating profit margin of 7.2 percent before restructuring charges and pension expense almost doubled sequentially reflecting benefits of the cost saving actions taken by the company.
- The Services segment showed progress in the quarter towards its goals with an increase in order bookings and improvement in profitability. Services bookings were $778 million on strong services contract renewals. This is an increase of 34 percent in bookings as compared to second quarter 2015 and an increase of 42 percent as compared to the third quarter of 2014.
- Services revenue of $656 million declined by 8 percent but increased by 1 percent year-over-year in constant currency and was flat sequentially.
- Services gross profit margin was 17.3 percent, an increase of 1.6 percentage points as compared to the second quarter 2015. This sequential improvement reflects the benefit of our cost reduction actions to increase profitability.
The Technology segment showed increased sequential profitability despite sequentially lower revenue.
- Third-quarter 2015 Technology revenue of $83 million was down sequentially and year over year reflecting lower ClearPath Forward™ revenue.
- Technology gross profit margin increased to 55.0 percent from 43.9 percent in the second quarter 2015. Technology operating profit margin increased to 20.7 percent from 15.6 percent in the second quarter of 2015.
- Technology gross profit margin decreased year over year on lower revenue. Currency fluctuations negatively affected Technology gross profit margin by approximately 450 basis points and operating profit margin by 700 basis points.
Unisys will hold a conference call today at 5:30 p.m. Eastern Time to discuss its results. The listen-only Webcast, as well as the accompanying presentation materials, can be accessed on the Unisys Investor Web site at www.unisys.com/investor. Following the call, an audio replay of the Webcast, and accompanying presentation materials, can be accessed through the same link.
Unisys reports its results in accordance with Generally Accepted Accounting Principles (GAAP) in the United States. However, in an effort to provide investors with additional perspective regarding the company's results as determined by GAAP, the company also discusses, in its earnings press release and/or earnings presentation materials, non-GAAP information which management believes provides useful information to investors. Our management uses supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and assess operational alternatives. These non-GAAP measures may include constant currency and non-GAAP diluted earnings per share.
Our non-GAAP measures are not intended to be considered in isolation or as substitutes for results determined in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. (See GAAP to non-GAAP reconciliations attached.)
Non-GAAP diluted earnings per share. Unisys recorded pension expense, net of tax, of $26.6 million and $17.9 million during the third quarters of 2015 and 2014, respectively. Unisys recorded a charge, net of tax, of $16.4 million in connection with cost reduction actions during the third quarter of 2015. In an effort to provide investors with a perspective on the company's earnings without these charges, they are excluded from the non-GAAP diluted earnings/loss per share calculations.
Constant currency. The company refers to growth rates in constant currency or on a constant currency basis so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates to facilitate comparisons of the company's business performance from one period to another. Constant currency is calculated by retranslating current and prior period results at a consistent rate.