Information technology service provider Unisys Corporation (UIS) reported third quarter 2013 net loss of $11.6 million or 26 cents per share compared with a net loss of $12.4 million or 28 cents per share in the year-earlier quarter. The lackluster performance was primarily attributable to a year-over-year decline in revenues in both of its operating segments.
Excluding one-time items such as pension expense and debt charges, non-GAAP earnings in the reported quarter were 25 cents per share compared with 85 cents in the year-ago quarter. In addition to the drastic year-over-year fall in adjusted earnings, it also fell way short of the Zacks Consensus Estimate of $1.25.
Total revenue for third quarter 2013 decreased 9.7% year over year to $792.1 million and missed the Zacks Consensus Estimate of $881 million. While revenues from the U.S. dipped about 2%, international revenues declined 13% year over year.
In the Services segment, revenues dropped 3.7% year over year to $720.0 million owing to lower outsourcing revenues. Order signings increased marginally as growth in systems integration orders and IT outsourcing more than offset order declines in other services areas. Total services backlog at quarter-end was $4.8 billion. Gross profit margin for the reported quarter improved to 21.1% from 19.9% in the prior-year period. Operating profit margin was up to 7.7% from 6.0% in the year-ago quarter.
Technology segment revenues declined 44.3% year over year to $72.1 million due to lower ClearPath software and servers sales in the reported quarter. Gross profit margin fell to 35.3% from 59.9% in the year-ago quarter. Operating loss margin was 11.0% compared to operating profit margin of 29.1% in third quarter 2012.
Balance Sheet/Cash Flow
Cash generated by operating activities totaled $16.0 million in the third quarter of 2013 compared with $16.9 million in the prior-year quarter. The company incurred capital expenditure of $39 million in the reported quarter versus $32 million in the year-earlier quarter. Free cash flow before pension contributions aggregated $17.4 million in the reported quarter compared with $41.7 million in the year-ago quarter.
At quarter-end, Unisys had a long-term debt burden of $210 million, with cash and cash equivalents of $555.9 million.
Management expects to face continuing challenges in the coming quarters as it grapples with the softness in the Technology segment and adjusts its cost structure in line with its depleting revenues. At the same time, Unisys remains bullish for strong long-term growth from its Technology segment with new product offerings.
Other companies in the industry that are worth mentioning include Cognizant Technology Solutions Corporation (CTSH), MSCI Inc. (MSCI) and Tech Data Corp. (TECD), each carrying a Zacks Rank #2 (Buy).
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