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Unisys Corporation Reasserts Strong 2024 Prospects Despite Economic Turbulence

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Michael Chen

May 7, 2024 - 20:55 pm

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Unisys Corporation Maintains Positive Full-Year Guidance Amid Growth in New Client Engagements

Steady Course Through Economic Headwinds

BLUE BELL, Pa., May 7, 2024 /PRNewswire/ -- In a recent financial release, Unisys Corporation (NYSE: UIS), a global technology outfit, disclosed its financial analysis for the initial quarter of 2024. Despite the turbulent economic conditions impacting global companies, Unisys remains on a stable financial trajectory, reaffirming its commitment to full-year guidance.

Peter A. Altabef, Unisys Chair and CEO, remarked, "The preliminary quarter figures mirror the mounting market acknowledgment of the transformation we've instituted within our solution and service offerings. This paradigm shift is evidently impacting our New Logo signings, which have impressively more than doubled compared to last year. Our sharp focus on forging robust business outcomes is garnering positive client response, cementing Unisys as a reliable partner in their organizational growth."

Echoing this sentiment, Deb McCann, Unisys Chief Financial Officer, stated, "Unisys has had a robust first quarter, slightly surpassing our expectations in both revenue and profits. Although year-over-year revenues and margins experienced a downturn, predominately influenced by software license renewal cycles, these were anticipated. Striving to refine our performance excluding these licenses and support services, minimize corporate costs, and ensure steady pension contributions, we anticipate a vigorous second-half performance leveraged by New Logo momentum and our burgeoning pipeline."

Financial Highlights

The company reported a revenue contraction of 5.5% year over year, with a sharper 7.1% decline when considering constant currency factors. Nevertheless, when sidelining license and support revenue sources, Unisys enjoyed a revenue augmentation of 4.0% year over year, or a 3.0% increase in constant currency.

Gross profit margin stood at 27.9%, a fall of 290 basis points, while the gross profit margin for revenues outside of licenses and support showcased a significant rise of 420 basis points, reaching 18.0%.

The operating profit margin was documented at 3.6%, with a non-GAAP operating profit margin striking an encouraging 7.1%.

Operating cash flow demonstrated a salient increase, presenting $23.8 million compared to the $12.8 million of 1Q23. Free cash flow witnessed a substantial improvement, boasting $3.9 million vis-à-vis the negative free cash flow of $7.5 million during the same period last year.

New Logo signings, pivotal to Unisys's strategic growth, saw a staggering ascension of more than double year over year.

"The first quarter of 2024 has strengthened our resolve in our innovative strides," remarked CEO Altabef. "Our ascendancy in new client contracts represents a trust in our evolution, reflecting a robust acknowledgment of our refined solution portfolio."

Segment Performance Insights

Notably, Unisys's Digital Workplace Solutions (DWS) segment saw a year over year revenue increase of 1.0%, where currency fluctuations played a minimal role. This segment's gross profit margin, capturing the beneficial outcomes of delivery modernization and efficiency initiatives, jumped 250 basis points year over year to reach 14.4%.

Their Cloud, Applications & Infrastructure Solutions (CA&I) also reported an upward trend with a revenue uptick of 2.4% year over year. CA&I gross profit margins climbed to 16.6%, a 360 basis point year over year increase, largely due to labor cost savings initiatives.

Enterprise Computing Solutions (ECS) faced a contrasting fate. The revenue diminished by 21.9% year over year, and when adjusted for constant currency, the drop was an even more pronounced 24.4%. Consequently, the ECS gross profit margin shrank by 890 basis points year over year.

Navigating Economic Challenges and Looking Ahead

Unisys's balance sheet and cash flow statements reflect a company insightfully navigating through fiscal challenges. As of March 2024, the company fortified its pension strategies through a group annuity contract. This pension settlement transaction, although non-cash, led to a $132.3 million loss for the first quarter.

On a more encouraging note, free cash flow saw a YoY increase of $11.4 million, primarily owing to strategic working capital timing and lower contributions to pension and postretirement plans.

Looking at key performance metrics, both the total company and the Ex-L&S pipeline experienced declines, which were attributed to the lower renewal pipeline due to renewal scheduling. However, the New Business pipeline swelled by an impressive 4% YoY.

Total Contract Value (TCV) showed declines largely impacted by renewal timing, which saw particularly strong TCV signings in the fourth quarter of 2023. Nevertheless, New Business TCV, excluding renewals, reported a slight 2% YoY decline but marked an appreciable sequential growth of 4%.

Backlog figures stood at $2.78 billion for the first quarter of 2024, comparable to the $2.79 billion of the same period in 2023.

Unwavering in 2024 Prospects and Projections

Looking forward, Unisys upholds its revenue growth and profitability guidance for the entirety of 2024. This includes a revenue growth expectation between (1.5)% to 1.5% in constant currency, inferring a (1.6)% to 1.4% revenue growth as reported based on current exchange rates. The guidance also forecasts Ex-L&S revenue growth of 1.5% to 5.0% for the full year, alongside L&S revenue approximating $375 million.

Concluding Remarks and Next Steps

In anticipation of its next earnings conference call, Unisys will be connecting with the financial community on Wednesday, May 8, at 8 a.m. Eastern Time. The discussion is poised to delve deeper into the first-quarter results and the company's dynamic response to the evolving market landscape.

Those interested can access the live webcast and the accompanying presentation materials on the Unisys Investor Website at www.unisys.com/investor. A webcast replay will be available subsequently for those unable to participate live.

In summary, Unisys Corporation's first-quarter showing of 2024 indicates a solid continuity in financial discipline and strategic foresight. With a steadfast view towards long-term goals and market dynamics, Unisys emerges as a vigilant navigator, steadily charting a course towards sustainable growth amid a fluctuating economic climate.


Forward-Looking and Cautionary Statements

This news release comprises forward-looking statements that consider important factors such as market conditions, Unisys' expectations regarding its revenue growth, profitability, pension strategy, and other financial metrics. For further information regarding potential risks and uncertainties that could affect the company’s business and financial results, please refer to Unisys' filings with the U.S. Securities and Exchange Commission, which can be accessed at http://www.sec.gov.

About Unisys Corporation

Unisys is a powerhouse of technological solutions, catalyzing breakthroughs for leading global organizations. With an illustrious history of 150 years, Unisys continues to craft a future where businesses flourish amid digital reinvention. For more insights into Unisys' ethos and innovations, visit unisys.com and follow the company on LinkedIn.

(UIs-Q)

Additional Information

For complete tables and detailed financial information, visit the original source of this press release. Further inquiries and investor relations can be directed to Unisys Corporation's official channels.

Unisys and other trademarks mentioned are the property of their respective holders.

Disclosure of reconciliations of GAAP to Non-GAAP measures and the detailed financial data can be found within Unisys' official earnings release documentation.

Unisys’ unwavering commitment to guiding its clients through the intricacies of the digital realm solidifies its standing as a thought leader and trusted partner in the technology space.

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