Net Income Surges at Unisys - Analyst Blog

By
A A A
Share |

Unisys Corporation  ( UIS ) reported revenues of $928 million in the first quarter of 2012, up 2% from a year ago but down 6% sequentially. Foreign currency fluctuations did not have much of an impact on revenue in the quarter.

Services revenues increased 3% year over year due to growth in systems integration revenue. However, revenues from the U.S. federal business continue to decline posting a 20% decline in the quarter. 

Excluding the U.S. Federal business, services revenue grew 7% from the year-ago quarter, driven by continued growth in IT outsourcing and systems integration revenue.

Services orders showed double-digit growth in the quarter, reflecting substantial order gains for outsourcing and infrastructure services. As of March 31, 2012, services backlog was $5.4 billion, down 6% from a year ago and down 1% sequentially.

Technology revenue declined 5% in the quarter driven by lower sales of third-party equipment.

Margins

Gross margin came in at 24.3%, down from 28.4% in the previous quarter, but up from 22.8% in the year-ago quarter. Operating margin came in at 6.9%, down from 12.3% in the previous quarter but up from 4.6% in the year-ago quarter.

Net income came in at $13.4 million or $0.30 per diluted share in the first quarter of 2012 compared to a net loss of $40.8 million or $0.95 per diluted share in the year-ago quarter.

The results include a charge of $7.2 million related to debt reduction and $24.6 million of pension expense. Excluding these expenses, net income came in at $0.97 per diluted share.

Balance Sheet

Unisys generated $33 million of cash from operations in the first quarter of 2012, down from $28 million in the year-ago quarter. Capital expenditures in the first quarter of 2012 declined to $30 million compared with $43 million in the year-ago quarter.

The company ended the quarter with cash and equivalents of $654.7 million, down from $714.9 million at the end of the previous quarter. As part of its debt reduction program, Unisys completed its previously announced redemption of $66 million of outstanding senior notes. Unisys ended the quarter with a long-term debt of $295.5 million, down from $359.7 million at the end of the previous quarter.

Since September 2010, Unisys has reduced its debt nearly 2/3 or more than $540 million. The company is now 87% of the way towards its 2013 debt reduction goal.  These actions, in turn, have reduced the company's annual interest expense by $69 million. 

The macro-economic conditions continue to be challenging. Hence, we continue to have a Zacks #4 Rank on the stock which translates into a short-term rating of Sell. Nevertheless, in the long run, we have a Neutral recommendation on the stock.


 
UNISYS ( UIS ): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: UIS

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

100%

Most Active by Volume

152,099,280
  • $16.13 ▼ 1.59%
76,450,549
  • $59.72 ▲ 1.07%
57,375,391
  • $36.35 ▲ 6.26%
50,140,425
  • $26.93 ▲ 0.60%
49,201,544
  • $3.17 ▲ 2.59%
39,533,031
  • $86.18 ▲ 1.33%
36,760,050
  • $13.42 ▲ 2.84%
33,109,047
  • $26.12 ▲ 1.16%
As of 4/16/2014, 04:05 PM