Unisys Reiterates Full-Year Guidance and Builds Momentum in New Logo Signings Revenue declined 5.5% year over year (YoY), 7.1% decline in constant currency(1); Excluding License and Support (Ex-L&S)(15) revenue grew 4.0% YoY, 3.0% growth in constant currency Gross profit margin of 27.9%, down 290 bps; Ex-L&S gross profit margin of 18.0%, up 420 bps Operating profit margin of 3.6 %; non-GAAP operating profit(8) margin of 7.1 % Operating cash flow of $23.8 million, compared to $12.8 million for 1Q23, and free cash flow(11) of $3.9 million compared to $(7.5) million for 1Q23 New Logo Total Contract Value (TCV)(4) more than doubled YoY BLUE BELL, Pa., May 7, 2024 /PRNewswire/ -- Unisys Corporation (NYSE:UIS) reported financial results for the first quarter of 2024. "Unisys' first quarter results signal a growing market recognition of the transformation we have achieved within our portfolio of solutions and services, which can be seen in the momentum of our New Logo signings that more than doubled year over year," said Unisys Chair and CEO Peter A. Altabef. "Our focus on business outcomes is resonating with clients, and we believe they are turning to Unisys as a trusted partner." "Unisys reported a solid first quarter, with revenue and profit slightly ahead of our expectations," said Unisys Chief Financial Officer Deb McCann. "As expected, total company revenue and profit margin declined year over year due to the timing of License and Support (L&S)(14) renewals. However, we are continuing to improve Ex-L&S performance, streamline corporate costs, minimize volatility of our pension contributions and improve conversion of adjusted EBITDA to free cash flow. We are pleased to reiterate our full-year guidance and anticipate strong second-half performance, given our momentum with New Logos and the mix of the current pipeline." 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) 1Q24 1Q23 Revenue $487.8 $516.4 YoY revenue growth (5.5) % YoY revenue growth in constant currency (7.1) % Ex-L&S revenue $394.6 $379.5 YoY revenue growth 4.0 % YoY revenue growth in constant currency 3.0 % L&S revenue $93.2 $136.9 YoY revenue growth (31.9) % YoY revenue growth in constant currency (34.4) % Gross profit $136.0 $159.0 Gross profit percent 27.9 % 30.8 % Ex-L&S gross profit $71.2 $52.5 Ex-L&S gross profit percent 18.0 % 13.8 % Operating profit $17.7 $49.9 Operating profit percent 3.6 % 9.7 % Non-GAAP operating profit $34.4 $60.1 Non-GAAP operating profit percent 7.1 % 11.6 % Net loss attributable to Unisys Corporation ($149.5) ($175.4) Non-GAAP net income attributable to Unisys Corporation (10) $2.7 $34.7 EBITDA ($104.2) ($117.8) Adjusted EBITDA(9) $65.3 $98.2 Adjusted EBITDA as a percentage of revenue 13.4 % 19.0 % First Quarter 2024 Results Revenue was down 5.5% YoY, 7.1% decline in constant currency, and gross profit margin was down 290 bps YoY. The decline in revenue and gross profit margin was primarily driven by the timing of software license renewals. Ex-L&S revenue was up 4.0% YoY, 3% increase in constant currency, primarily driven by New Business(6) with existing clients. Ex-L&S gross profit margin was up 420 bps YoY primarily driven by delivery efficiencies achieved through the company's cost reduction initiatives. Ex-L&S revenue and gross profit included a one-time benefit of 180 bps and 140 bps, respectively, due to the resolution of a contractual dispute with a former client. Financial Highlights by Segment (In millions, except numbers presented as percentages) 1Q24 1Q23 Digital Workplace Solutions (DWS): Revenue $132.3 $131.0 YoY revenue growth 1.0 % YoY revenue growth in constant currency 0.0 % Gross profit $19.0 $15.6 Gross profit percent 14.4 % 11.9 % Cloud, Applications & Infrastructure Solutions (CA&I): Revenue $129.0 $126.0 YoY revenue growth 2.4 % YoY revenue growth in constant currency 2.3 % Gross profit $21.4 $16.4 Gross profit percent 16.6 % 13.0 % Enterprise Computing Solutions (ECS): Revenue $147.0 $188.2 YoY revenue growth (21.9) % YoY revenue growth in constant currency (24.4) % Gross profit $85.0 $125.5 Gross profit percent 57.8 % 66.7 % First Quarter 2024 Segment Results DWS revenue increased 1.0% YoY, foreign currency fluctuations had a negligible impact. DWS gross profit margin was 14.4%, an increase of 250 bps YoY, reflecting results from delivery modernization and efficiency initiatives. CA&I revenue increased 2.4% YoY, 2.3% increase in constant currency. CA&I gross profit margin was 16.6%, an increase of 360 bps YoY, primarily driven by labor cost savings initiatives. ECS revenue declined 21.9% YoY, 24.4% decline in constant currency. ECS gross profit margin was 57.8%, a decrease of 890 bps YoY. The decrease in revenue and gross profit margin was primarily driven by the timing of software license renewals. Balance Sheet and Cash Flows (In millions) March 31,2024 December 31, 2023 Cash and cash equivalents $               382.8 $               387.7 (In millions) 1Q24 1Q23 Cash provided by operations $23.8 $12.8 Free cash flow $3.9 ($7.5) Pre-pension and postretirement free cash flow $11.6 $8.9 Adjusted free cash flow(13) $17.4 $20.1   Free cash flow improved by $11.4 million YoY primarily due to working capital timing and lower pension and postretirement contributions. In March 2024, the company purchased a group annuity contract, with plan assets, for approximately $195 million to transfer projected benefit obligations related to one of its U.S. defined benefit pension plans. This action resulted in a non-cash pension settlement loss of $132.3 million for the first quarter of 2024. Other Key Performance Metrics YoY Change QoQ Change* Pipeline(3) Total company (9) % 6 % Ex-L&S pipeline (6) % 8 % TCV Total company (1) % (68) % Ex-L&S TCV (20) % (73) % *    QoQ - quarter over quarter Total company and Ex-L&S pipeline declines YoY resulted from lower renewal pipeline due to the timing of the renewal schedule. New Business pipeline increased 4% YoY. TCV declines reported above were primarily impacted by renewal timing, which included more renewal TCV timed in 2023, with particularly strong TCV signings in the fourth quarter of 2023. New Business TCV, which excludes renewals, declined 2% YoY and increased 4% sequentially. Backlog(2) was $2.78 billion for the first quarter 2024 compared to $2.79 billion for the first 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 (1.6)% to 1.4% 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 Wednesday, May 8 at 8 a.m. Eastern Time to discuss the results of the first 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 1436383 from two hours after the end of the call until May 22, 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 cancelled, 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)