Unisys Announces Second Quarter 2014 Financial Results
Unisys Corporation today reported a second-quarter 2014 net loss of $12.1 million, or a loss of 24 cents per diluted share, which included $17.9 million of pension expense. In the second quarter of 2013, the company reported net income of $20.4 million, or 46 cents per diluted share, which included $21.9 million of pension expense. Excluding pension expense in both periods, non-GAAP earnings per diluted share in the second quarter of 2014 was 11 cents compared with 91 cents in the second quarter of 2013.
Second-quarter 2014 revenue declined 6 percent to $806 million from $859 million in the year-ago quarter. Foreign currency translations had a one percentage-point positive impact on year-over-year revenue comparisons in the quarter. On a sequential basis, second-quarter 2014 revenue was up 6 percent from $762 million in the first quarter of 2014.
“Our second-quarter 2014 results were impacted by lower sales of our flagship ClearPath family of enterprise software and servers, which can vary significantly from quarter to quarter based on the timing of client transactions,” said Unisys Chairman and CEO Ed Coleman. “However, we were pleased to see sequential improvement in results over the first quarter of 2014 and we look for a strong second half of 2014 in our technology business driven by sales of ClearPath as well as increased traction in our Stealth cybersecurity and Forward! server products.
“In our services business, we saw strong order growth in the quarter and were pleased by recent wins such as a significant contract with the Commonwealth of Pennsylvania to deliver one of the largest secure, cloud-based, on-demand IT computing implementations by a U.S. state government,” Coleman said. “This contract is one more example of Unisys providing innovative, modern mission-critical solutions in the marketplace.”
Second-Quarter Company and Business Segment Highlights
Second-quarter 2014 North America revenue declined 10 percent while international revenue declined 3 percent from the second quarter of 2013. On a constant currency basis, international revenue declined 4 percent compared with the second quarter of 2013 as declines in Asia-Pacific offset growth in Europe and Latin America.
On lower revenue, second-quarter 2014 gross profit margin declined to 20.5 percent from 23.4 percent in the second quarter of 2013. Operating expenses (SG&A and R&D expenses) decreased 8 percent from the year-ago period. The company reported a second-quarter 2014 operating profit of $15.8 million, or 2.0 percent of revenue, compared with an operating profit of $38.0 million, or 4.4 percent of revenue, in the second quarter of 2013.
Second-quarter 2014 services revenue declined 4 percent from the second quarter of 2013 as growth in outsourcing and core maintenance was more than offset by declines in systems integration and infrastructure services. Reflecting the lower services revenue, second-quarter 2014 services gross profit margin declined to 16.8 percent from 18.2 percent a year ago. On reduced operating expenses, services operating profit margin was consistent year-over-year at 4.0 percent.
Second-quarter 2014 services orders showed substantial gains both sequentially and from year-ago levels driven by growth in outsourcing orders. Services backlog at June 30, 2014 was $4.7 billion, down 2 percent from December 31, 2013 levels.
Second-quarter 2014 technology revenue declined 21 percent from the second quarter of 2013 driven primarily by lower sales of ClearPath enterprise servers and software. Reflecting the lower ClearPath sales, second-quarter 2014 technology gross profit margin declined to 50.2 percent compared with 59.4 percent in the year-ago quarter and technology operating profit margin declined to 1.9 percent compared with 23.9 percent in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
Unisys generated $3 million of cash from operations in the second quarter of 2014, including $48 million of pension contributions. In the second quarter of 2013, the company generated $16 million of cash from operations, which included $35 million of pension contributions. Capital expenditures in the second quarter of 2014 were $45 million compared with $38 million in the year-ago quarter. After capital expenditures, the company used $42 million of free cash compared with $22 million of free cash usage in the second quarter of 2013. Free cash flow before pension contributions was $6 million in the second quarter of 2014 compared with $13 million in the year-ago quarter.
During the second quarter of 2014 the company returned $13.1 million to shareholders through the repurchase of common shares. Overall, through June 30, 2014 the company has repurchased a total of $25.7 million of common shares under a $50 million share repurchase authorization that expires on December 31, 2014.
At June 30, 2014, the company reported a cash balance of $574 million and total debt of $210 million.
