4Q 2014 vs. 4Q 2013:
- Revenue declines 9% (6% on a constant currency basis(1))
- U.S. and Canada revenue grew 6%
- Net income of $61.8 million vs. $117.4 million in 4Q 2013
- Diluted EPS of $1.24 vs. $2.37 in 4Q 2013
- Non-GAAP diluted EPS(2) of $1.60 vs. $2.82 in 4Q 2013
Full-year 2014 vs. full-year 2013:
Revenue declines 3% (2% in constant currency)
- U.S. and Canada revenue grew 1%
- Net income of $44.0 million vs. $92.3 million for FY 2013
- Diluted EPS of $0.89 vs. $2.08 for FY 2013
- Non-GAAP diluted EPS of $2.36 vs. $3.87 for FY 2013
Unisys Corporation (NYSE: UIS) today reported fourth-quarter 2014 net income of $61.8 million or $1.24 per diluted share, including $18.1 million of pension expense. Excluding pension expense, non-GAAP diluted earnings per share was $1.60. In the comparable period in 2013, the company reported diluted earnings per share of $2.37, and non-GAAP diluted earnings per share of $2.82. Fourth-quarter 2014 revenue declined 9% to $906 million from $996 million in the fourth quarter of 2013. On a constant currency basis, fourth-quarter 2014 revenue declined 6%.
For the full year of 2014, Unisys reported net income of $44.0 million, or $0.89 per diluted share, which included $73.2 million of pension expense. Excluding pension expense, non-GAAP diluted earnings per share was $2.36. In the comparable period in 2013, the company reported earnings of $2.08 per diluted share, and non-GAAP diluted earnings per share of $3.87. Full-year 2014 revenue declined 3% to $3.36 billion from $3.46 billion in 2013. On a constant currency basis, full-year 2014 revenue declined 2%.
"Our U.S. & Canada team, particularly our US Federal group, posted strong growth in the quarter, balancing weakness in some global markets," said Peter Altabef who joined the company as President and CEO on January 1, 2015.
Fourth-Quarter Company and Business Segment Highlights
Services revenue represented 80% of the company's fourth-quarter 2014 total and declined 11%, reflecting declines in outsourcing, systems integration, and infrastructure services. On a constant currency basis, fourth quarter 2014 services revenue declined 8%. As a result of the lower revenue, fourth-quarter services gross profit margin declined to 17.5% from 21.9% a year ago. Services operating profit margin declined to 3.9% from 9.8%. Services backlog at December 31, 2014 was $4.8 billion, unchanged from the prior year.
Technology revenue grew 1% from the prior-year fourth quarter or 3% on a constant currency basis. Fourth-quarter 2014 technology gross profit margin was 60.4% versus 61.4% a year ago. Technology operating profit margin was 36.3% compared to 40.6%. This reflected the impact of higher investments in growth programs.
The company reported an overall fourth-quarter 2014 gross profit margin of 27.0% versus 31.7% in the year-ago quarter. Operating expenses (SG&A and R&D expenses) increased 2% from the year-ago period, reflecting increased investments in growth programs. The company reported a fourth-quarter 2014 operating profit of $82.4 million, or 9.1% of revenue, compared to fourth-quarter 2013 operating profit of $155.9 million, or 15.7% of revenue.
From a geographic perspective, U.S and Canada revenue grew 6% in the fourth quarter driven by growth in the company's U.S. Federal business. International revenue declined 18% in the fourth quarter (14% on a constant currency basis) as growth in Latin America was offset by revenue declines in EMEA and Asia-Pacific.
Cash Flow and Balance Sheet Highlights
In the fourth quarter of 2014, Unisys generated $106 million of cash from operations, including $22 million of pension contributions. In the fourth quarter of 2013, the company generated $141 million of cash from operations, including $45 million of pension contributions. Capital expenditures in the fourth quarter of 2014 were $69 million compared with $48 million in the year-ago quarter. The company generated $37 million of free cash flow(3) in the fourth quarter of 2014 compared with free cash flow of $93 million in the fourth quarter of 2013. Free cash flow before pension contributions was $59 million in the fourth quarter of 2014 and $138 million in the year-ago quarter.
Unisys made a total of $183 million in pension contributions in 2014 compared to $147 million of pension contributions in 2013. For the full year of 2014, the company generated free cash flow before pension contributions of $92 million compared to $183 million in 2013.
At December 31, 2014, the company reported a cash balance of $494 million and total debt of $224 million.
