Unisys Zooms Ahead of Estimates
Unisys Corporation (UIS) reported fourth quarter 2012 earnings of $81.8 million or $1.67 per share compared to $94.3 million or $1.94 per share in the year-earlier quarter. Quarterly earnings were well ahead of the Zacks Consensus Estimate of $1.00 but it lagged on a year-over-year basis. Excluding one-time items such as pension expense and debt charges, earnings in the reported quarter were $2.27 per share compared to $2.22 in the year-ago quarter.
For full year 2012, the company reported a net income of $129.4 million or $2.84 per share compared to $120.5 million or $2.71 per share in the previous year. Reported earnings for the year excelled the Zacks Consensus Estimate of $2.20. Excluding one-time items, earnings for full year 2012 were $5.50 per share compared to $5.18 in the year-ago period.
Total revenue for fourth quarter 2012 decreased 1% year over year to $979.3 million. However, on a constant currency basis, revenues were flat year over year. Despite the continued challenging macroeconomic environment, Unisys recorded strong sales of its ClearPath software and servers. Total revenue for the reported quarter surpassed the Zacks Consensus Estimate of $932 million.
For full year 2012, Unisys witnessed a 4% year-over-year decline in total revenue to $3.71 billion. On a constant currency basis, revenues dipped 1% year over year. The decrease in total revenue for the year was primarily attributable to lower revenues from the Services segment.
Segment Results
In the Services segment, revenues plummeted 4% year over year (3% on a constant currency basis) to $805.7 million as order signings decreased significantly. Total services backlog at year-end 2012 was $5.1 billion, representing an 8% dip from the year-ago period.
Technology segment revenues increased 16% year over year to $173.6 million as ClearPath software and servers registered strong sales in the reported quarter.
On a geographic basis, international revenues increased 6% in fourth quarter 2012, which offset a 10% dip in the U.S. revenues. However, on a constant currency basis, international revenues surged 7% driven by a strong performance in Europe and Latin America, which was partially offset by a decline in Asia Pacific.
Balance Sheet/Cash Flow
Cash generated by operating activities totaled $154 million in the fourth quarter of 2012 compared to $159 million in the year-ago quarter. Capital expenditures incurred were $36 million in the reported quarter versus $33 million in the prior-year quarter. This in turn resulted in a free cash flow of $118 million for fourth quarter 2012.
During the quarter, Unisys eliminated all its remaining high-interest debt as part of its debt reduction program by about 75% from Sep 2010 levels. Since 2008, the company has reduced its debt burden by $1 billion, bringing its year-end 2012 tally to $210 million. Cash and cash equivalents at the end of the year were $655.6 million.
Management was encouraged with the margin improvement in the company’s technology business, continuously improving service quality, and the early achievement of its debt reduction goal targeted for 2013.
However, the macroeconomic conditions continue to be challenging for Unisys, which competes with industry bigwigs like Tech Data Corp. (TECD), Amdocs Limited (DOX), and Ebix Inc. (EBIX), each carrying a Zacks Rank #2 (Buy). Unisys presently has a Zacks Rank #3 (Hold).
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