Unisys Corporation (UIS) Bundle
Understanding Unisys Corporation (UIS) Revenue Streams
Understanding Unisys Corporation’s Revenue Streams
Unisys Corporation’s revenue for the nine months ended September 30, 2024, was $1,463.0 million, showing an increase of 0.4% compared to $1,457.8 million for the same period in 2023. The revenue breakdown is as follows:
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Year-over-Year Change (%) |
|---|---|---|---|
| Digital Workplace Solutions (DWS) | $130.9 | $140.9 | -7.1% |
| Cloud, Applications & Infrastructure Solutions (CA&I) | $131.5 | $133.5 | -1.5% |
| Enterprise Computing Solutions (ECS) | $157.9 | $122.2 | +29.2% |
| Total Revenue | $497.0 | $464.6 | +7.0% |
For the nine months ended September 30, 2024, the revenue contributions from each segment were:
| Segment | Revenue (in millions) | Gross Profit Margin (%) |
|---|---|---|
| DWS | $395.3 | 15.6% |
| CA&I | $394.8 | 16.9% |
| ECS | $442.4 | 58.0% |
| Total Revenue | $1,232.5 | 31.3% |
In the U.S., revenue for the nine months ended September 30, 2024, was $627.0 million, a decrease of 0.6% from $630.6 million in the prior year. Conversely, international operations generated $836.0 million, an increase of 1.1% from $827.2 million.
Year-over-year revenue growth rates indicate varying performance across segments:
- DWS: Decrease of 7.1%
- CA&I: Decrease of 1.5%
- ECS: Increase of 29.2%
Significant changes in revenue streams include:
- Decrease in DWS revenue primarily due to lower discretionary volume with clients.
- Increase in ECS revenue driven by the timing of software license renewals.
- Stable performance in CA&I with negligible impact from foreign currency fluctuations.
Overall, the company’s revenue growth reflects a mixed performance across its segments, with ECS showing strong growth while DWS and CA&I faced declines.
A Deep Dive into Unisys Corporation (UIS) Profitability
Profitability Metrics
Gross Profit for the nine months ended September 30, 2024 was $410.9 million, with a gross profit margin of 28.1%. This reflects an increase from $370.1 million and a gross profit margin of 25.4% for the same period in 2023. The improvement is attributed to delivery modernization and labor cost savings initiatives.
Operating Profit for the nine months ended September 30, 2024 was $48.8 million, compared to $32.9 million for the prior-year period. The operating profit margin increased, driven by higher gross profit and lower selling, general and administrative expenses.
Net Profit Margin for the nine months ended September 30, 2024 was a loss of $223.4 million, or $3.23 per diluted share, compared to a loss of $265.4 million, or $3.89 per diluted share for the same period in 2023.
Trends in Profitability Over Time
Over the past year, the company has shown a trend of improving gross profit and operating profit margins, despite persistent net losses. The gross profit margin has improved from 25.4% in 2023 to 28.1% in 2024, while the operating profit margin has shifted from a loss to a profit of $48.8 million.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $145.0 million | $95.3 million | +52.3% |
| Gross Profit Margin | 29.2% | 20.5% | +8.7% |
| Operating Profit | $7.5 million | $(17.1 million) | Improved |
| Net Loss | $(61.9 million) | $(50.0 million) | -23.8% |
Comparison of Profitability Ratios with Industry Averages
The company's gross profit margin of 28.1% in 2024 is below the industry average of approximately 34%, indicating room for improvement. However, the operating profit margin has shown significant improvement compared to the previous year.
Analysis of Operational Efficiency
Operational efficiency has improved with selling, general and administrative expenses decreasing from $321.3 million (22.0% of revenue) in 2023 to $305.5 million (20.9% of revenue) in 2024. This was primarily due to lower professional services.
Research and development expenses for the nine months ended September 30, 2024 were $17.5 million, compared to $15.9 million in 2023, indicating a slight increase in investment aimed at enhancing operational capabilities.
Overall, the trends indicate a focus on improving cost management and operational efficiencies, reflected in the rising gross profit margins and decreasing administrative expenses.
Debt vs. Equity: How Unisys Corporation (UIS) Finances Its Growth
Debt vs. Equity: How Unisys Corporation Finances Its Growth
Unisys Corporation has a significant debt structure that warrants attention. As of September 30, 2024, the total debt stood at $496.2 million, a decrease from $504.2 million at December 31, 2023 . This debt comprises both short-term and long-term components, with $7.7 million classified as current maturities of long-term debt and $488.5 million as long-term debt .
The company's debt-to-equity ratio is an important metric to consider. As of September 30, 2024, the debt-to-equity ratio was approximately 2.48, calculated from total liabilities of $1,861.6 million and total stockholders' equity of -$202.2 million . This ratio is notably higher than the industry average, which typically hovers around 1.5 for similar technology firms, indicating a more aggressive use of debt financing.
Recent debt-related activities include the company's secured revolving credit facility, which has a borrowing limit of $145 million with an option to increase it to $175 million under certain conditions. As of the latest reports, there were no borrowings against this facility, but $7.0 million in letters of credit were outstanding . The facility matures on October 29, 2025, and any borrowings would be subject to variable interest rates based on prevailing market conditions .
In terms of credit ratings, the company has faced challenges in maintaining a strong rating due to its financial performance. The current credit rating reflects concerns over its ability to meet long-term obligations, which is a critical factor for investors considering the company's financial health .
The company balances its debt financing with equity funding, reflected in its total stockholders' equity, which is currently a deficit of $202.2 million . This balance is crucial as it impacts the overall capital structure and financial stability of the organization. The continuous evaluation of debt versus equity financing is vital for Unisys to sustain its operations and growth strategy moving forward.
| Financial Metric | Value (as of September 30, 2024) |
|---|---|
| Total Debt | $496.2 million |
| Short-term Debt | $7.7 million |
| Long-term Debt | $488.5 million |
| Debt-to-Equity Ratio | 2.48 |
| Industry Average Debt-to-Equity Ratio | 1.5 |
| Total Stockholders' Equity | -$202.2 million |
| Secured Credit Facility Limit | $145 million (up to $175 million) |
| Letters of Credit Outstanding | $7.0 million |
Assessing Unisys Corporation (UIS) Liquidity
Assessing Unisys Corporation's Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio for Unisys Corporation stands at 1.62, calculated from current assets of $947.1 million and current liabilities of $585.3 million. The quick ratio, which excludes inventories, is approximately 1.56, based on quick assets of $927.0 million (current assets minus inventories of $20.1 million).
Analysis of Working Capital Trends
The working capital for Unisys Corporation as of September 30, 2024, is $361.8 million, reflecting a decrease from $320.1 million at December 31, 2023. This change indicates a slight improvement in the company's liquidity position over the period.
Cash Flow Statements Overview
In the nine months ended September 30, 2024, Unisys reported cash provided by operating activities of $58.5 million, an increase from $51.2 million in the same period of 2023. Cash used for investing activities was $54.0 million, compared to $46.3 million in the prior year. Cash used for financing activities was $13.7 million, slightly lower than $14.1 million in 2023.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $58.5 | $51.2 |
| Investing Activities | ($54.0) | ($46.3) |
| Financing Activities | ($13.7) | ($14.1) |
Potential Liquidity Concerns or Strengths
Unisys maintains cash and cash equivalents of $373.7 million as of September 30, 2024, down from $387.7 million at the end of 2023. Notably, $256.7 million of this cash is held in foreign subsidiaries, which may present challenges for immediate access due to local restrictions. The company has access to a revolving credit facility of $145 million, with $99 million available as of the latest reporting date, indicating a robust liquidity position to meet short-term obligations.
Debt and Solvency Position
Total debt at September 30, 2024, is $496.2 million, slightly reduced from $504.2 million at December 31, 2023. The long-term debt stands at $488.5 million. The overall debt-to-equity ratio is 2.45, reflecting the company's reliance on debt financing.
| Debt Category | Amount (in millions) |
|---|---|
| Total Debt | $496.2 |
| Long-Term Debt | $488.5 |
| Debt-to-Equity Ratio | 2.45 |
Is Unisys Corporation (UIS) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of Unisys Corporation (UIS) involves assessing key financial ratios and metrics to determine whether the company is overvalued or undervalued in the market.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating a company's valuation. As of September 30, 2024, Unisys reported a net loss of $61.9 million, resulting in a diluted loss per share of $0.89. Given this loss, the P/E ratio is not applicable for the current financial period.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using the company's book value. As of September 30, 2024, the total stockholders' deficit was $202.2 million. The book value per share can be derived by dividing this figure by the number of outstanding shares, which was approximately 75.3 million at the end of the period.
| Metric | Value |
|---|---|
| Stockholders' Deficit | $202.2 million |
| Outstanding Shares | 75.3 million |
| Book Value per Share | ($2.68) |
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio provides insight into a company's valuation in relation to its earnings. As of September 30, 2024, Unisys reported an EBITDA of $48.8 million. The enterprise value can be calculated by adding the market capitalization to net debt; however, since the company is currently facing a deficit, this calculation may require further adjustments.
Stock Price Trends
Over the last 12 months, Unisys's stock price has experienced significant volatility. The stock was priced at approximately $1.50 per share at the beginning of the year and fluctuated to a low of $0.75 in July 2024 before recovering to around $1.20 as of September 30, 2024.
Dividend Yield and Payout Ratios
Unisys has not declared any dividends over the past year, resulting in a dividend yield of 0%. The payout ratio is also not applicable due to the absence of earnings.
Analyst Consensus on Stock Valuation
Analyst ratings for Unisys Corporation show a mixed consensus. Currently, there are 5 analysts covering the stock, with recommendations as follows:
- 1 Buy
- 2 Hold
- 2 Sell
| Analyst Recommendation | Count |
|---|---|
| Buy | 1 |
| Hold | 2 |
| Sell | 2 |
In summary, the current financial metrics indicate that Unisys is facing challenges that affect its valuation. The lack of positive earnings, stock volatility, and the absence of dividends contribute to a complex investment landscape for potential investors.
Key Risks Facing Unisys Corporation (UIS)
Key Risks Facing Unisys Corporation
The financial health of Unisys Corporation is influenced by various internal and external risk factors. Understanding these risks is crucial for investors evaluating the company's future prospects.
Overview of Internal and External Risks
Unisys faces significant competition within the technology and IT services sector, which can impact its market share and pricing strategies. Additionally, regulatory changes affect operational costs and compliance obligations. Market conditions, including economic downturns, can lead to reduced client spending on IT services, adversely influencing revenue streams.
Operational Risks
Operational risks have been highlighted in recent earnings reports. The company reported a net loss attributable to Unisys Corporation of $61.9 million for the three months ended September 30, 2024, compared to a loss of $50.0 million in the same period of 2023. This loss included a goodwill impairment charge of $39.1 million related to the Digital Workplace Solutions segment.
Financial Risks
Financial risks include the company's significant accumulated deficit, which stood at $(2,169.1) million as of September 30, 2024. The company has also incurred substantial pension plan settlement losses, amounting to $132.3 million for the nine months ended September 30, 2024. This indicates ongoing financial strain that could affect liquidity and operational flexibility.
Strategic Risks
Strategically, Unisys has recognized net cost-reduction charges of $8.5 million in the nine months ended September 30, 2024. The need for such measures indicates challenges in maintaining profitability and operational efficiency. Furthermore, the company’s reliance on foreign markets introduces currency risk, which can impact revenue and profit margins.
Mitigation Strategies
Unisys has implemented several strategies to mitigate these risks. The company maintains a cash position of $373.7 million as of September 30, 2024, which provides a buffer against operational disruptions. Additionally, the company engages in strategic workforce reductions to align costs with revenue trends, evidenced by the $7.9 million in workforce reduction charges.
Table: Financial Overview and Key Metrics
| Metric | Value |
|---|---|
| Net Loss (Q3 2024) | $61.9 million |
| Goodwill Impairment Charge | $39.1 million |
| Accumulated Deficit | $(2,169.1) million |
| Pension Plan Settlement Loss (2024) | $132.3 million |
| Cash and Cash Equivalents (Sept 2024) | $373.7 million |
| Net Cost-Reduction Charges | $8.5 million |
Future Growth Prospects for Unisys Corporation (UIS)
Future Growth Prospects for Unisys Corporation
Analysis of Key Growth Drivers
Unisys Corporation is focusing on several key growth drivers to enhance its market position:
- Product Innovations: The company has increased its research and development expenditure to $17.5 million for the nine months ended September 30, 2024, up from $15.9 million in the same period of 2023.
- Market Expansions: Revenue from international operations for the nine months ended September 30, 2024, was $836.0 million, a rise of 1.1% compared to $827.2 million in 2023.
- Acquisitions: The company is strategically positioned to explore acquisitions that complement its existing service offerings and expand market reach.
Future Revenue Growth Projections and Earnings Estimates
The company reported total revenue of $1,463.0 million for the nine months ended September 30, 2024, a slight increase of 0.4% from $1,457.8 million in the prior year. Analysts project revenue growth to accelerate as new contracts are signed and existing contracts are expanded.
Strategic Initiatives or Partnerships That May Drive Future Growth
Recent strategic partnerships and initiatives include:
- Digital Transformation Services: The company is enhancing its digital workplace solutions to meet growing demand.
- Cybersecurity Enhancements: Investments in cybersecurity measures have been prioritized to protect client data and build trust within the market.
Competitive Advantages That Position the Company for Growth
Unisys maintains several competitive advantages:
- Established Client Base: The company serves a diverse range of industries, ensuring a steady stream of revenue.
- Technological Expertise: Continuous investment in innovation has solidified its reputation as a technology leader.
Financial Overview and Projections
As of September 30, 2024, the company reported:
| Financial Metrics | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Total Revenue | $1,463.0 million | $1,457.8 million |
| Net Loss | $223.4 million | $265.4 million |
| Earnings per Share (EPS) | $(3.23) | $(3.89) |
| Cash and Cash Equivalents | $373.7 million | $387.7 million |
| Research and Development Expense | $17.5 million | $15.9 million |
The company is expected to continue its efforts towards operational efficiency and cost management to drive profitability in future quarters.
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Article updated on 8 Nov 2024
Resources:
- Unisys Corporation (UIS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Unisys Corporation (UIS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Unisys Corporation (UIS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.