Unisys Announces Third Quarter 2014 Financial Results 

Unisys Corporation today reported third-quarter 2014 net income of $47.8 million, or 95 cents per diluted share, which included $17.9 million of pension expense. In the third quarter of 2013, the company reported a net loss of $11.6 million, or a loss of 26 cents per diluted share, which included $22.6 million of pension expense. Excluding pension expense in both periods, non-GAAP diluted earnings per share in the third quarter of 2014 was $1.30 compared with 25 centsin the third quarter of 2013.

Third-quarter 2014 revenue grew 11 percent to $883 million from $792 million in the year-ago quarter.  Foreign currency translations had a 1 percentage-point positive impact on revenue comparisons in the quarter.

"This was a strong quarter for Unisys," said Unisys Chairman and CEO Ed Coleman.  "We grew our revenue double digits, with growth in both our services and technology businesses, and more than tripled pretax profit.  In our services business, we grew both our systems integration and IT outsourcing revenue.  Our technology results benefited from significantly higher sales of our flagship ClearPath enterprise servers.  Year to date through the first nine months of 2014, our technology revenue is up 2 percent year over year."

Third-Quarter Company and Business Segment Highlights

U.S. revenue grew 12 percent in the quarter while international revenue grew 11 percent as all regions contributed to growth.  On a constant currency basis, international revenue grew 8 percent.

Reflecting the higher technology revenue, the company reported an overall third-quarter 2014 gross profit margin of 26.6 percent, up from 21.7 percent a year ago. Operating expenses (SG&A and R&D expenses) increased 7 percent from the year-ago period, reflecting increased investments in the company's growth initiatives.  The company reported a third-quarter 2014 operating profit of $76.6 million, or 8.7 percent of revenue, compared with an operating profit of $24.0 million, or 3.0 percent of revenue, in the third quarter of 2013.

Third-quarter 2014 services revenue grew 6 percent from the prior-year quarter as growth in systems integration and IT outsourcing more than offset declines in infrastructure services.  Third-quarter 2014 services gross profit margin was 19.5 percent compared with 21.1 percent in the year-ago quarter.  Third quarter 2014 services operating profit margin was 6.9 percent compared with 7.7 percent a year ago.

Third-quarter 2014 services orders declined as order gains for systems integration and IT outsourcing were more than offset by declines in infrastructure services.  Services backlog at September 30, 2014 was $4.4 billion, down 7 percent from June 30, 2014 levels and down 9 percent from December 31, 2013.

Third-quarter 2014 technology revenue grew 66 percent from the prior-year quarter driven by significantly higher sales of ClearPath enterprise software and servers.  Reflecting the higher ClearPath sales, third-quarter 2014 technology gross profit margin increased to 61.5 percent compared with 35.3 percent in the year-ago quarter and technology operating profit (loss) margin improved to 25.5 percent compared with (11.0) percent in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

Unisys used $8 million of cash from operations in the third quarter of 2014, including $58 million of pension contributions. In the third quarter of 2013, the company generated $16 million of cash from operations, which included $40 million of pension contributions. Reflecting increased investments in the company's IT outsourcing business, capital expenditures in the third quarter of 2014 increased to $54 million compared with $39 million in the year-ago quarter. After capital expenditures, the company used $62 million of free cash(3) in the third quarter of 2014 compared with free cash usage of $23 million in the third quarter of 2013. Free cash usage before pension contributions was $4 million in the third quarter of 2014 compared with free cash flow before pension contributions of $17 million in the third quarter of 2013.

At September 30, 2014, the company reported a cash balance of $477 million and total debt of $215 million.