Unisys(UIS)2025-02-19 19:02Financial Data and Key Metrics Changes - The fourth quarter revenue was $545 million, down 2.2% year-over-year as reported and 1.5% in constant currency [36] - Full year revenue was $2 billion, down 0.3% on both a reported and constant currency basis [37] - Non-GAAP operating profit for the full year was $176 million, representing an 8.8% margin, up 180 basis points year-over-year [9] - Free pension free cash flow nearly doubled to $82 million in 2024, with full year free cash flow reaching $55 million compared to negative $5 million last year [56][57] Business Line Data and Key Metrics Changes - Digital Workplace Solutions (DWS) revenue declined 8.2% year-over-year to $128 million in Q4, with full year revenue down 4.2% to $524 million [38] - Cloud Applications and Infrastructure (CA&I) revenue declined 5.2% year-over-year to $132 million in Q4, with full year revenue down 0.8% to $527 million [41] - Enterprise Computing Solutions (ECS) revenue increased 6.2% year-over-year to $209 million in Q4, with full year revenue up 1.3% to $651 million [43] Market Data and Key Metrics Changes - New Business Total Contract Value (TCV) was approximately $220 million in Q4, up 24% compared to the prior year period, with full year new business TCV at approximately $790 million, up 29% compared to 2023 [11] - The company exited the year with a backlog of $2.8 billion compared to $3 billion a year ago [46] Company Strategy and Development Direction - The company is raising its L&S revenue expectations to approximately $390 million in 2025 and $400 million in 2026, reflecting a $25 million annual revenue increase from previous expectations [10] - The focus for 2025 includes investments in AI-enabled solutions, application services, and the ClearPath Forward 2050 strategy [22][30] - The company aims to streamline operations and enhance cross-selling opportunities through a centralized application factory [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory in 2025, driven by strong new business signings and expected recovery in client volumes [80][82] - The company anticipates a positive inflection in Ex-L&S revenue growth in 2025, supported by backlog conversion and an expected uptick in the PC refresh cycle [81][84] - Management highlighted the importance of maintaining a strong cash balance while improving free cash flow and reducing legal and environmental payments [65][66] Other Important Information - The company received multiple leader designations from reputable firms in various service areas, validating its investments in innovation and market positioning [20][21] - The company is focusing on workforce optimization initiatives to enhance productivity and minimize external hiring [32] Q&A Session Summary Question: Insights on Ex-L&S business growth trajectory - Management indicated confidence in growth due to strong new business signings and backlog conversion, with expectations for a recovery in client volumes [80][84] Question: Free pension free cash flow improvement and margin levers - Management confirmed expectations for gross margin improvement driven by higher-margin solutions and operational efficiencies, alongside SG&A reductions [88][97] Question: Details on L&S revenue uptick - Management noted that the uptick is broad-based, driven by increased client consumption and longer contract durations, particularly in the context of AI and modernization efforts [108][110] Question: Timing of application services restructuring - Management clarified that the restructuring was planned as part of a broader strategy to leverage existing capabilities and enhance industry focus [115]