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Unisys' (UIS) CEO Peter Altabef on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 21, 2016 5:30 PM ET

Executives

Niels Christensen - ‎Vice President, Investor Relations

Peter Altabef - President and Chief Executive Officer

Janet Haugen - Senior Vice President and Chief Financial Officer

Analysts

James Friedman - Susquehanna International Group, LLP

Joan Tong - Sidoti & Company, LLC

Ned Davis - William Smith & Co.

Ana Goshko - Bank of America

Operator

Please stand by. Good day and welcome to the Unisys First Quarter 2016 Results Conference Call. At this time, I’d like to turn the call over to Mr. Niels Christensen, Vice President of Investor Relations at Unisys Corporation. Please go ahead, sir.

Niels Christensen

Thank you, operator. Good afternoon, everyone, and thank you for joining us. Earlier today, Unisys released its first quarter 2016 financial results. With us this afternoon to discuss our results are Peter Altabef, our President and CEO; and Janet Haugen, our CFO. We are also joined today by Inder Singh, Chief Marketing and Strategy Officer, who leads our global marketing and communications organization and Investor Relations, joined the company at the end of the first quarter. So we’re very pleased to have him with us.

Before we begin, I’d like to cover a few details. First, today’s conference call and the Q&A session are being webcast via the Unisys Investor website. Second, you can find the earnings press release and the presentation slides that we will be using this afternoon to guide our discussion on our Investor website.

Third, today’s presentation, which is complementary to the earnings press release, includes some non-GAAP financial measures. These have been provided in an effort to give the investors additional information. The non-GAAP measures have been reconciled to the related GAAP measures and we provided reconciliations within the presentation.

From time to time, Unisys may provide specific guidance regarding its expected future financial performance. Such guidance is effective only on the date given, Unisys generally will not update, reaffirm or otherwise comment on any prior guidance except as Unisys deems necessary and then only in a manner that complies with Regulation FD.

And finally, I’d like to remind you that all forward-looking statements made during this conference call are subject to various risks and uncertainties that could cause the actual results to differ materially from our expectations. These factors are discussed more fully in the earnings release and in the company’s SEC filings. Copies of those SEC reports are available from the SEC and from the Unisys Investor website.

And now I’d like to turn the call over to Peter.

Peter Altabef

Thank you, Niels. And thank you all for joining us today to discuss our first quarter financial performance and the progress we are making to improve the company’s profitability and increase our competitiveness and market differentiation.

Our first quarter results demonstrated progress toward our objectives of improved profitability and cash flow. We had a non-GAAP operating profit margin of 2.9%, which was up from negative 0.3% or 320 basis points year over year. Our adjusted cash flow in the quarter was up $100 million year over year.

Our continued progress in improving our cost structure was a key driver behind the improved profitability and cash flow. In the first quarter of 2016, we achieved $25 million in incremental annualized savings, building on the $100 million in net annualized run rate savings we achieved exiting 2015. This was a significant milestone and we remain on target with respect to our cost reduction initiatives.

In the first quarter of 2016, our revenue declined 3% on a constant currency basis, which was consistent with the guidance we provided. Services revenue declined 2%, also consistent with our expectations on the current currency basis. We are very pleased by the strong performance of our U.S. Federal business, which drove its sixth consecutive quarter of year over year services revenue growth. Federal team continues to perform very well and distinguish Unisys in that market.