Unisys (UIS) Q4 2023 earnings summary

Executive summary

• FY23 revenue was $2,015.4M, up 1.8% reported and 1.6% in constant currency; Ex-L&S revenue was $1,586.3M, up 4.9% on both bases.

• Ex-L&S gross margin expanded 390 bps to 15.1%; non-GAAP operating profit was $141M, a 7.0% margin.

• FY23 GAAP net loss was $430.7M, including a $348.2M non-cash pension settlement loss; non-GAAP net income was $41.7M.

• Ex-L&S TCV rose 27% for FY23 and 137% in Q4; New Business TCV increased 18% for FY23 and 84% in Q4.

Financial highlights

• Q4 revenue was $557.6M, up 0.1% reported and down 2.1% in constant currency; Ex-L&S revenue rose 6.8% to $413.3M, or 4.3% in constant currency.

• FY23 GAAP operating profit was $77M (3.8% margin); non-GAAP operating profit was $141M (7.0% margin), versus $159M (8.0%) in FY22.

• FY23 adjusted EBITDA was $285.9M, or 14.2% of revenue, versus $325.8M and 16.5% in FY22; Q4 adjusted EBITDA was $100.4M, or 18.0%.

• FY23 operating cash flow was $74.2M and free cash flow was -$4.5M, improving $68.7M YoY; adjusted free cash flow was $121M.

• FY23 non-GAAP net income was $41.7M versus $74.8M in FY22; Q4 non-GAAP net income was $35.4M versus $82.8M in Q4 2022.

Outlook and guidance

• FY24 guidance: constant-currency revenue growth of -1.5% to 1.5% and non-GAAP operating profit margin of 5.5% to 7.5%.

• Guidance implies reported revenue growth of -1.0% to 2.0%, Ex-L&S revenue growth of 1.5% to 5.0%, and L&S revenue of ~$375M.

• FY24 expectations include free cash flow of ~$10M, capital expenditures of $90M-$100M, cash taxes of ~$50M and pension contributions of ~$21M.

• Environmental, legal, restructuring and other payments are expected at $75M-$80M; net interest payments are expected at ~$20M, in line with FY23.