Unisys Continues Strong Momentum in New Business(6) Signings and Reiterates Full-Year Guidance Revenue growth of 0.3% year over year (YoY), a 0.5% increase in constant currency(1); Excluding License and Support (Ex-L&S)(15) revenue was flat YoY, a 0.1% increase in constant currency Gross profit margin of 27.2%, an improvement of 290 bps YoY; Ex-L&S gross profit margin of 18.7%, an increase of 270 bps YoY Operating profit margin of 4.9 %; non-GAAP operating profit(8) margin of 6.1 % New Business Total Contract Value (TCV)(4) increased 64% YoY and 17% quarter-over-quarter (QoQ) driven by more than doubling of new logo signings in both YoY and QoQ BLUE BELL, Pa., Aug. 5, 2024 /PRNewswire/ -- Unisys Corporation (NYSE: UIS) reported financial results for the second quarter of 2024. "Unisys had another strong quarter of new logo signings, which more than doubled sequentially for the third consecutive quarter," said Unisys Chair and CEO Peter A. Altabef. "Overall New Business TCV grew double-digit year-over-year, which we believe signals strong marketplace momentum for our solution portfolio and recognition of the innovation we are bringing to our clients. We are also continuing to advance industry solutions that bring together data, engineering and industry expertise to drive tangible business value." Unisys Chief Financial Officer Deb McCann said, "Unisys reported another solid quarter, with slightly stronger than expected Ex-L&S revenue growth. Our second quarter Ex-L&S gross profit margin improvement of 270 bps compared to prior year extends a track record of execution against our plan to improve profitability. Looking ahead for the second half of the year, we anticipate sequential revenue growth and operating profit and cash flow improvement as New Business signings begin to generate revenue and we further benefit from our operating efficiency initiatives." Financial Highlights Please refer to the accompanying financial tables for a reconciliation of the GAAP to non-GAAP measures presented except for financial guidance since such a reconciliation is not practicable without unreasonable effort. (In millions, except numbers presented as percentages) 2Q24 2Q23 YTD24 YTD23 Revenue $478.2 $476.8 $966.0 $993.2 YoY revenue growth 0.3 % (2.7) % YoY revenue growth in constant currency 0.5 % (3.5) % Ex-L&S revenue $396.1 $396.0 $790.7 $775.5 YoY revenue growth — % 2.0 % YoY revenue growth in constant currency 0.1 % 1.5 % License and Support(14) revenue $82.1 $80.8 $175.3 $217.7 YoY revenue growth 1.6 % (19.5) % YoY revenue growth in constant currency 2.1 % (21.1) % Gross profit $129.9 $115.8 $265.9 $274.8 Gross profit percent 27.2 % 24.3 % 27.5 % 27.7 % Ex-L&S gross profit $74.2 $63.4 $145.4 $115.9 Ex-L&S gross profit percent 18.7 % 16.0 % 18.4 % 14.9 % Operating profit $23.6 $0.1 $41.3 $50.0 Operating profit percent 4.9 % — % 4.3 % 5.0 % Non-GAAP operating profit $29.3 $16.3 $63.7 $76.4 Non-GAAP operating profit percent 6.1 % 3.4 % 6.6 % 7.7 % Net loss attributable to Unisys Corporation ($12.0) ($40.0) ($161.5) ($215.4) Non-GAAP net income (loss) attributable to Unisys Corporation(10) $11.0 ($6.1) $13.7 $28.6 EBITDA $35.6 $9.2 ($68.6) ($108.6) Adjusted EBITDA(9) $58.4 $50.3 $123.7 $148.5 Adjusted EBITDA as a percentage of revenue 12.2 % 10.5 % 12.8 % 15.0 % Second Quarter 2024 Results Revenue growth of 0.3% YoY, a 0.5% increase in constant currency. Ex-L&S revenue was flat YoY, a 0.1% increase in constant currency. Gross profit margin improved 290 bps YoY and Ex-L&S gross profit margin improved 270 bps YoY primarily driven by delivery improvements and an increase in higher-margin solutions in our New Business signings. Financial Highlights by Segment (In millions, except numbers presented as percentages) 2Q24 2Q23 YTD24 YTD23 Digital Workplace Solutions (DWS): Revenue $132.1 $135.0 $264.4 $266.0 YoY revenue growth (2.1) % (0.6) % YoY revenue growth in constant currency (2.2) % (1.1) % Gross profit $21.4 $18.4 $40.4 $34.0 Gross profit percent 16.2 % 13.6 % 15.3 % 12.8 % Cloud, Applications & Infrastructure Solutions (CA&I): Revenue $134.3 $132.6 $263.3 $258.6 YoY revenue growth 1.3 % 1.8 % YoY revenue growth in constant currency 1.3 % 1.8 % Gross profit $23.9 $22.4 $45.3 $38.8 Gross profit percent 17.8 % 16.9 % 17.2 % 15.0 % Enterprise Computing Solutions (ECS): Revenue $137.5 $134.6 $284.5 $322.8 YoY revenue growth 2.2 % (11.9) % YoY revenue growth in constant currency 2.5 % (13.3) % Gross profit $76.9 $72.8 $161.9 $198.3 Gross profit percent 55.9 % 54.1 % 56.9 % 61.4 % Second Quarter 2024 Segment Results DWS revenue declined 2.1% YoY, a decline of 2.2% in constant currency, but was better than expected at the beginning of the second quarter, as the decline in discretionary volume was more modest than anticipated. DWS gross profit margin was 16.2%, an increase of 260 bps YoY, reflecting results from delivery modernization and efficiency initiatives as well as higher-margin solutions in our New Business signings. CA&I revenue increased 1.3% in both YoY and constant currency. CA&I gross profit margin was 17.8%, an increase of 90 bps YoY, primarily driven by labor cost savings initiatives. ECS revenue increased 2.2% YoY, an increase of 2.5% in constant currency. ECS gross profit margin was 55.9%, an increase of 180 bps YoY. The increase in revenue and gross profit margin was primarily driven by the timing of software license renewals and managed services growth. Balance Sheet and Cash Flows (In millions) June 30, 2024 December 31,2023 Cash and cash equivalents $               344.9 $               387.7 (In millions) 2Q24 2Q23 YTD24 YTD23 Cash provided by operations $2.7 $42.5 $26.5 $55.3 Free cash flow(11) ($18.5) $24.7 ($14.6) $17.2 Pre-pension and postretirement free cash flow(12) ($13.8) $39.4 ($2.2) $48.3 Adjusted free cash flow(13) ($8.0) $68.1 $9.3 $88.2 Free cash flow declined by ($43.2) million YoY in the second quarter of 2024 and by ($31.8) million in the six months ended June 30, 2024, primarily due to the timing of collections and other fluctuations in working capital. Other Key Performance Metrics YoY Change QoQ Change* TCV Total company 19 % 25 % Ex-L&S TCV 10 % 35 % Pipeline(3) Total company (25) % (7) % Ex-L&S pipeline (25) % (8) % * QoQ - quarter over quarter TCV improvements reported above were primarily impacted by increased New Business TCV of 64% YoY and 17% QoQ, primarily driven by new logo signings more than doubling YoY and QoQ. Total company and Ex-L&S pipeline declines YoY resulted from strong New Business conversion and timing of the renewal schedule. Backlog(2) was $2.79 billion for the second quarter of 2024 compared to $2.69 billion for the second quarter of 2023. 2024 Financial Guidance The company reiterates full-year 2024 revenue growth and profitability guidance:  Guidance Revenue growth in constant currency (1.5)% to 1.5% Non-GAAP operating profit margin 5.5% to 7.5% Constant currency revenue guidance implies (1.7)% to 1.3% revenue growth as reported, based on recent exchange rates, and assumes Ex-L&S full-year revenue growth of 1.5% to 5.0% and L&S revenue of approximately $375 million. Conference Call Unisys will hold a conference call with the financial community on Tuesday, August 6 at 8 a.m. Eastern Time to discuss the results of the second quarter of 2024. The live, listen-only webcast, as well as the accompanying presentation materials, can be accessed on the Unisys Investor Website at www.unisys.com/investor. In addition, domestic callers can dial 1-844-695-5518 and international callers can dial 1-412-902-6749 and provide the following conference passcode: Unisys Corporation Call. A webcast replay will be available on the Unisys Investor Website shortly following the conference call. A replay will also be available by dialing 1-877-344-7529 for domestic callers or 1-412-317-0088 for international callers and entering access code 6869066 from two hours after the end of the call until August 20, 2024. (1) Constant currency – A significant amount of the company's revenue is derived from international operations. As a result, the company's revenue has been and will continue to be affected by changes in the U.S. dollar against major international currencies. The company refers to revenue growth rates in constant currency or on a constant currency basis so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates to facilitate comparisons of the company's business performance from one period to another. Constant currency is calculated by retranslating current and prior-period revenue at a consistent exchange rate rather than the actual exchange rates in effect during the respective periods. (2) Backlog – Represents future revenue associated with contracted work, which has not yet been delivered or performed. Although the company believes this revenue will be recognized, it may, for commercial reasons, allow the orders to be canceled, with or without penalty. (3) Pipeline – Represents qualified prospective sale opportunities for which bids have been submitted or vetted prospective sales opportunities which are being actively pursued. There is no assurance that pipeline will translate into recorded revenue. (4) Total Contract Value (TCV) – Represents the estimated revenue related to contracts signed in the period without regard for cancellation terms. New Business TCV represents TCV attributable to expansion and new scope for existing clients and new logo contracts. (5) Book-to-bill – Represents total contract value booked divided by revenue in a given period. (6) New Business – Represents expansion and new scope for existing clients and new logo contracts. (7) Next-Gen Solutions – Includes our Modern Workplace solutions within DWS, Digital Platforms and Applications (DP&A) solutions within CA&I, Specialized Services and Next-Gen Compute (SS&C) solutions within ECS, as well as Micro-Market solutions. The company uses estimated Next-Gen Solutions metrics to provide insight into the company's progress in shifting the revenue mix towards solutions that are generally higher-growth and higher-margin. (8) Non-GAAP operating profit – This measure excludes pretax pension and postretirement expense and pretax charges in connection with certain legal matters related to professional services and legal fees, including legal defense costs, associated with certain legal proceedings, and cost-reduction activities and other expenses. (9) EBITDA & adjusted EBITDA – Earnings before interest, taxes, depreciation and amortization (EBITDA) is calculated by starting with net income (loss) attributable to Unisys Corporation common shareholders and adding or subtracting the following items: net income (loss) attributable to noncontrolling interests, interest expense (net of interest income), provision for (benefit from) income taxes, depreciation and amortization. Adjusted EBITDA further excludes pension and postretirement expense; certain legal matters related to settlements, professional services and legal fees, including legal defense costs, associated with certain legal proceedings; environmental matters related to previously disposed businesses; cost-reduction activities and other expenses, non-cash share-based expense, and other (income) expense adjustments. (10) Non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share – These measures excluded pension and postretirement expense and charges or (credits) in connection with certain legal matters related to settlements, professional services and legal fees, including legal defense costs, associated with certain legal proceedings; environmental matters related to previously disposed businesses; cost-reduction activities and other expenses. The tax amounts related to these items for the calculation of non-GAAP diluted earnings (loss) per share include the current and deferred tax expense and benefits recognized under GAAP for these items. (11) Free cash flow – Represents cash flow from operations less capital expenditures. (12) Pre-pension and postretirement free cash flow – Represents free cash flow before pension and postretirement contributions. (13) Adjusted free cash flow – Represents free cash flow less cash used for pension and postretirement funding; certain legal matters related to professional services and legal fees, including legal defense costs, associated with certain legal proceedings; environmental matters related to previously disposed businesses; and cost-reduction activities and other payments. (14) License and Support (L&S) – Represents software license and related support revenue within the company's ECS segment. (15) Excluding License and Support (Ex-L&S) – These measures exclude revenue, gross profit and gross profit margin in connection with software license and support revenue within the company's ECS segment. The company provides these measures to allow investors to isolate the impact of software license renewals, which tend to be significant and impactful based on timing, and related support services in order to evaluate the company's business outside of these areas. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Unisys cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond Unisys' ability to control or estimate precisely, such as estimates of future market conditions, the behavior of other market participants and that TCV is based, in part, on the assumption that each of those contracts will continue for their full contracted term. Words such as "anticipates," "estimates," "expects," "projects," "may," "will," "intends," "plans," "believes," "should" and similar expressions may identify forward-looking statements and such forward-looking statements are made based upon management's current expectations, assumptions and beliefs as of this date concerning future developments and their potential effect upon Unisys. There ...