UIS - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to the Unisys Corporation First Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Courtney Holben, Vice President of Investor Relations. ahead. go Please

Courtney Holben

results. Good and President operator. us. This Courtney CFO. Peter XXXX is today, discuss afternoon Thank results and those Investor afternoon, Mike Relations. Vice by financial quarter first of released our joining joined Thank Holben, this Unisys to Chairman you, Altabef, its everyone. I'm CEO; you Earlier our for Thomson,

to I'd we like cover a details. begin, Before few

the and call Q&A are Unisys the investor via website. First, today's conference being session webcast

and release guide press presentation earnings well the our find can which encourage using our to you we investor that afternoon as to we be on you our the will quarter relating Second, slides as performance to first website, other visit. this information discussion

release financial Third, today's presentation, which is press some measures. include complementary earnings to non-GAAP the

have reconciled and related GAAP measures reconciliations the non-GAAP the been presentation. measures, within to provided we've The

accounting its its generally Company ongoing Company's Although These future make can believes accepted other to liquidity prior exchange, periods compare periods, and or items not anticipated results. to reflect the expense. operations indicative cost are appropriate principles, pension, of its debt results difficult of profitability charges reduction that that consist to competitors' the under and and results

exclude distort Management use of period evaluation supplemental with also prior believes believes impact can or results. enhanced comparativeness enhance with by of of these performance the be consistency that the of order these to future that the ongoing presentation performance. visibility can its each of associated the Company's items trends items and the Management Company's in results financial of

and industry: operating diluted as free EBITDA compare investors cash currency. to EBITDA in adjusted and companies the by results results flow constant Following and to flow, earnings adjusted free enhance analysts as and other measures year-over-year are utilized provided share, cash non-GAAP non-GAAP management, often comparability and profit, per to of well Company's our

included certain result measures and restructuring quarter, report In the revenue Partners from the non-GAAP to as revenue expenses a addition, we this reimbursements as adjusted relating Company's Company's JV of part will related to restructuring of check-processing continuing be program. for

regarding release XX-Q. adjustments, information more these see For our and our Form please earnings

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

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

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

Peter Altabef

families joining safe you, and during all this time. and Thank thank for difficult us healthy friends hope We Courtney, are your that you, today. and you

significantly changed the beginning since world the year. all we As has know, the of

quarter turn So address first we I COVID-XX results. before will to

I of clients our am team has proud of responded each other. current to how situation in and the our support

of our to positioning and innovative solutions associates, Our help most for wellbeing during time, during a strength. the time, this this and the providing service clients emerge to the company COVID-XX challenges and on the period their position critical them priorities safety and through center of best in clients possible from partners, our

connectivity over remote operations already ago, across our all more conferencing securely the work-from-home, and adopted encourage to We we years and short very within quickly IP enabled were working. company. for Voice video of associates Several moved to access. as for remote XX% than our primary period had of technology-enabled a our We time,

or Most associates to provide equipped options management case, the needed In instances this we devices not the limited alternate of the worked workloads. was quickly with our find are laptops. where for of

We allows have avoid to have with security that faced Stealth associated usage many issues companies our also us VPN across the organization, recently. Unisys which deployed

remotely, For those like in the associates performing field who clients team. cannot such services our with work person as essential services

health We are government as doing and ensure including to available everything their safety, utilizing we can providing PPE recommended practices.

volumes. client that call business desks such redeploying underutilized locations accommodate We These procedures. client desk can engineers help as provide support requirements increased from service adjustments, have or service implemented and planning field for experiencing continuity operations shifting certified others are service ISO or our affected to

We management necessary. for a a have number years. of place where essential service also We've crisis had designation received team in

has has operations. COVID-XX team not a subset been clients. this date, of no providing disruptions in of our been to of plan, oversight triggered delivery services While our To material there helpful to management have crisis

third has work-from-home the source much representing a Digital is capabilities been in of of revenue. non-GAAP workplace XXXX Unisys, total services, particularly adjusted approximately news, strength for and a

in workplace fight, active by supporting solutions COVID-XX We drugs. providing medical industries and that are lifesaving and the equipment that digital in clients assist are the help pharmaceutical including healthcare

financial Our logistic able Air their continue be businesses Unisys the needs, operating support operations. to to industry helps ClearPath use system to Forward their system Cargo customers’ banking cloud-based and clients services in the online to support

do our just out but and stands to that clients, have so provide to confidence a supported our has spectrum our been broader way goal get services. a not to ability of through in inspires this, As we in

strength COVID-XX several time, highly particular vectors by geographies is being we industry where this a and especially Unisys consider that across and the are diversified affected vectors at situation. differently

accounting no with base X% revenue. client for more diversified a single than of client have We

government. from state and clients, financial the world. Federal non-GAAP and first sector governments rest U.S. local, of From revenue coming revenue U.S. the U.S. SAIC and the industry with of services, include earned adjusted XX% from for the was commercial other XX% revenue of from quarter, foreign from from perspective, and clients, XX% XX% from came non-GAAP adjusted which XX% and Canada public the In sector license an of revenue

our is than of more geography alone. client and strength diversity The base

perspectives, also value and quickly methodologies especially gender environment. ethnic in critical diversity. which developing to changing a We is situation, best leads approaches, And in and current the different this the solutions RSN to diversity

the resulted the planning Following U.S. investment division, sale increase were continuing us of to we capabilities with our Federal from already allow serve that clients and flexibility to are these our we efforts. and that better our

marketing of capability, these have management including program, several sales modernization platform. and workforce We programs a our ERP underway, and and digital enhanced

out be situation. we well will prepared So the of COVID-XX coming

the closely our and clients impact while to revenue, as rebounds of investments, in support both also Now the withstanding near-term the managing of also these necessary demand mitigating for our now with lower our we ability provide goal are a costs future. maintaining

happens which senior at balance based on real leadership of as reducing the as expenses in reduction actions are term, in some contractors, the workweeks level estate where mind, in costs. of this such of for naturally are normal, furloughs place, expenses also our reductions business, new travel, stay-at-home taking With ongoing redeploying salary and limiting looking and utilizing Longer reducing spend travel orders workforce we temporary necessary. for footprint our the on such as team, we based shifting of such third-party needs the

non-GAAP higher Turning We to had margin our first profit year-over-year. operating activities. quarter and

our capital business, improved We has the U.S. of sale which also improved our and announced and structure flexibility. our Federal closed operating

those more XXXX been at a although, an could than down with financials more a of XXXX indicate of adjusted we expectation year-over-year, non-GAAP have various revenue maybe or XX% Due our to significant of and what the approximately could that looking be scenarios several look like, to that profitability. scenarios full-year situation, it less impact COVID-XX

withdrawing previously Given the XXXX. macroeconomic into this provided our point, guidance for are visibility limited conditions we at

we are to our fundamentals industry-focused and our increasing Nonetheless, include CloudForte, continuing markets. to Stealth, invest our our upside there ClearPath bring value remain business returns to and believe global when These strong Forward, to is in solutions believe clients. We solutions. solutions and InteliServe, stability

leveraged key been and supported pandemic, resonating approach by address industries is to that are solutions by issues have solutions at those which highlighted cloud directly go-to-market cybersecurity. the industry our helping as enablement, being of clients digital transformation, Many workplace such clients. are aimed with Our COVID-XX across

for Managed and are leveraging, consecutive Services North InteliServe reflects advanced learning. machine positioning the We recently this America to go-to-market Gartner We as year. second in process our integrate AI, the analytics, for a and leader making services platform workplace Workplace we investments our named believe its in us for Quadrant automation, are instance, digital efforts. Magic robotic

things As implementation of frozen-food InteliServe. global will an IT implementing of other how example the company modernize signed in support service Unisys Unisys in logo are with desk clients large company's our and quarter, through environment InteliServe, among which new contract the first a a

another solution, increased is gaining As CloudForte traction. key

further which differentiate well-architected quarter, During partner framework Amazon's we believe the designation we first it. will for this offering, achieved

we students quarter, faculty. how in As and deliver clients information our integrate innovative with to expanded contract State and CloudForte, and of first University California are their services administrative the our using to their resources an education example

AOA. We support by institutions. providing solutions CSU announced or for Unisys, become and general features, the availability campuses access Services critical evolving XX educational location, endpoint secure leveraging access face of over such remain solution, Unisys VPNs. Stealth always as organization even regardless threat. to AOA advantages is we Unisys Stealth, and has of on are dynamic Access is especially always and the an to protection a enable relevant across recently of as isolation next-generation all our in at Always-On traditional delivers powered remote AOA

Stealth, is Stealth a the first important real donated February the Providing across networking credentials the medal also and undefeated no instead a In an and at updated the designation money, to to to mentoring handle in XX solution we event women it which and data our protected countries secret but the where also by one NIAP hosted attempted to Capture approves we certification, RSA Flag and top quarter, conference classified information. cybersecurity, reward organization. that Stealth contestants earned capture received world, so remains

major our example other package serve one new and million contract solutions, the commercial assigning $XXX often was for with of logo, a Stealth to contractor We quarter its with which first operations. defense was

of IT not providing the So relationship, we the new transferred services, Stealth. cross-functional including are sale. part contract was this Federal Under U.S. as comprehensive

of previously, proud has are the am our how we to As team facing. I macro I events all responded said

to partners will emerge providing of positioning hold with services clients, and at high-level ourselves keep focus standards the we our to safety on continue strength. ongoing and to We while ourselves health COVID-XX associates, from our our also and of which the our

turn now over on will the quarter our results. I'll color first provide Mike, to more call who

Michael Thomson

and joining us. thank Good for afternoon, you

and Peter’s and healthy, all challenging echo families I this are hope your First, you safe, doing well in that time.

new Our thoughts of this environment. they as everyone challenges face the are daily with

discussion my will refer I GAAP today, and non-GAAP results. to In both

material. in reminder, to a these are reconciliations As available our metrics earnings

operations the in have The company's March reflected on of U.S. discontinued discussed only business we company's beginning U.S. Federal company's as financial business continuing XXXX financial as statements XXXX. we will our the operations. GAAP, reclassified sale have by and consolidated the Throughout all this prior XX, period discussion, accordingly. of U.S. results previously, statements required have As Federal close the refer January X, historic been we been to

million, on a With X.X% respect revenue adjusted X.X% constant to currency first results, or was down quarter non-GAAP year-over-year $XXX.X basis.

we XX% year-over-year a or and As in the year-over-year Non-GAAP we consensus revenue of ahead basis. revenue mentioned estimates. quarter, X.X% were on the decline currency anticipating down adjusted services constant was a fourth was

for contract. at venture impact in and decreased as largely volume-based an declines demand from services we check-processing our and field related Volume expected joint experienced declined to COVID-XX

as Additionally, the versus foreign us currency currencies worked U.S. weakened dollar. most against

expected. contracts were impact to that in services. several was for for decline of outperformance renewed saw year-over-year in helped COVID-XX The XX.X% expectations technology offset quarter relative revenue the up a Technology than revenue we as earlier the year-over-year

GAAP contract As at our a reminder, the with upfront associated has software revenue part, for of been all signing, requires accounting proprietary the to provided most criteria all be time recognized license met.

These to signed. based up were for a they come according renewal on when schedule contracts originally

these anticipated. sometimes expected later are than sooner However, contracts or

of Given a the renewal on timing revenue have the upfront meaningful impact company revenue the can recognition, period. total for the the

X.X%, than due the higher Non-GAAP anticipated operating margin revenue. was profit largely to the better for technology was expected, basis XX which up quarter than points year-over-year,

be a as they prior the Services in margin bit implemented the decline longer versus non-GAAP in to in initiatives of due the quarter, negative first X.X% and well profit than certain was but we had a We delay taking saving earlier negative services period. anticipated. impact a to cost This a initiatives. businesses intended are year in flow-through as for the volume-based these operating was X.X% field

begun have We plan. expected at savings have executing and our fully underpinned point cost our against this

first of quarter XXXX. $XX As approximately and remaining in we later million business million the U.S. approximately $XX approximately discussed have in these charges anticipate charge million that $XX are costs million $XX post-closing. remove We related in of previously costs targeting to of QX, for Federal a we of allocated to we to took the some the we

We have as to to savings place. of million expect recognized majority already these of approximately XXXX the taken $XX $XX be in million the actions

adjusted estimates Adjusted and the points year-over-year prior XX.X% up was a share cost XXX higher per driven basis versus EBITDA EBITDA was margin up currency loss $X.XX and to to estimates. a $X.XX charges charge. period That year was restructuring reduction by This $X.XX in translation XX.X%. year-over-year the consensus charge $X.XX EPS quarter. due in and not had below in charges These the negative on of being impact of included fully slightly was the charges some currency these underlying translation

$XX.X $XXX.X was and versus of U.S. in a well period. includes million versus $X.XX in ahead $X.XX was estimates. year prior of first was EPS Non-GAAP the This pension of uses used year contributions. prior quarter million the approximately operations period consensus Cash the loss million in $XXX in

flow cash versus CapEx free $XX Federal cash $XX.X balance in the by significantly overall. million year-over-year. a our The for the spend of benefiting $XX.X and business improved million use sale period sheet a our of enhanced and Adjusted position use of quarter from lower U.S. prior was year million

of on senior $XXX.X $XXX additional end cash of the of redemption of was $XXX.X in we an cash company's took on million million that XXXX. the quarter, place the the restricted not that balance notes XX, does had This April sheet. As for secured million earmarked include the

during the XXXX. million We expect voluntary plans U.S. to in to pension $XXX make additional contributions approximately

obligations adjusted including net XX reduced pension of has as Our XX significantly year-end based last months, EBITDA on relative been to to March X.Xx X.Xx leverage XXXX.

April of have senior our been XX, As notes secured fully redeemed.

the our line and of $X.X year-over-year. backlog logo amount million total on X% currency We basis. new of constant signed contracts Service year-end contract $XXX versus was with billion worth and over roughly was in quarter signed in billion, a $X.X year-end XX% value values up up

time. U.S. GAAP pension most valuations performed at As in are market think know, on at of conditions are I year-end and you requires point a based that

have no financial result, on our As or recent have a not market movements direct statements. realized been impact immediate and

the the past what additional with done some color practice I'll on and impact consistent give that end have March. were perspective, However, provide at calculations would of to the been

to to which treasuries. rates Treasuries yields As decreased discount are U.S. value not as a not reminder, are corporate to use on tied as our obligations bonds, tied have much

Further, against muted And hedging in rate we movements is asset strategy few that years of sell-offs the first contributions the on interest impact of the cash returns and equities. lastly, calculation. significant a also have protects

contributions be year. would as As the the or obligations we contributions decreased million a later pension $XXX versus this that next pension there would Post all pension deficit additional million contributions result cast of to our the $XXX made make quarter, year-end. we this, have to the approximately global year by no during voluntary additional of well intend year, this as that

improved contributions sum mechanisms our intend on pension remove based that funding to plan the XXXX. our one up these note ability as or our in made through liabilities pension to well of lump also I'd like innovations. both as status, new We options bulk U.S. pursue freeing to-date, offerings we've

As Peter COVID-XX steps numerous taken business. impact minimize highlighted, our we've to of the on

disruption We client's to and for temporary engine is during time maintain an short-term prepared unprecedented a rapidly increased a strength. support position delivery end. this impacts when to to of mitigating from period and negative goal financial needs Our in comes to emerging between strike this demand strong balance be our a evolving

credit discretionary given manage expectation also the some of naturally million new and by to and we for scope delays down up We reducing contracts. CapEx and costs cash operating possible. logo new reduced will are our where $XX increased CapEx things be potential Growth we're the Peter noted doing drawing reserve facility. from

our of enhanced development marketing Initiatives and that or management ERP digital the continuing and All such various a creation our internal are said, capabilities in clients. platform will sales serve planning, workforce are as to to of in program, stages that implementation. system, us all our we better new our allow modernization being investment increase

Our expectations lower for anticipated. XXXX originally than are

As we COVID-XX on it XX% XXXX run revenue approximately of than these at could previously scenarios full-year scenarios of impact results. non-GAAP ultimately be maybe looked adjusted down year-over-year potential Several number that a noted, financial indicate that of our down so more less or a that.

of from bulk technology service as The contracts XXXX in reduction our December revenue XX, maybe though renewals, rates already the revenue. XX% and contracted a see XXXX technology and of may our some especially XX%. anticipated to revenue of come approximately seen delays within adjusted is renewal and above There revenue in we've historically volume-based renewals non-GAAP our

work to New situation client more logo, the due uncertainty XXXX also continues is given evolve and financials. guidance. around be project the in the new from to decisions Profitability on to see impact is conditions, are our impacted scope resulting macroeconomic we how inherent pressures delays potential expansion likely embedded annual purchasing and withdrawing to expected significantly quickly

current our and Despite the to more market with once we uncertainty global period, associated fundamentally see stabilize, expect demand robust. begin is to the strong we business become

In which to clients the our will our to solutions. currently speed challenges their are bodes decision well we fact, digital, transform for facing believe

of TCB logo, for demand targeting solutions. strong full-year We new our QX, indicating our approximately achieved XX%

we XXXX. Assuming expect that again that contained COVID-XX growth situation is see we revenue XXXX, to will in

with believe the still we line range the term industry. X% medium in X% that, should revenue to growth be Beyond in

to I'll back turn that, over With Peter. call the

Peter Altabef

postponed conditions. we on we to visibility much. better announced I today. macro And to thank we session, begin our until economic Investor like highlight we on before that very us call everyone the I have the would Q&A like Mike as previously, again Day Thanks joining for

to company provide created time years. interim, to at number many of designed we Unisys, or the which of first we first have time investors as overview looking company the an introduction the and analysts in a is the for an So in the

were introduction that company, together By the to time us. even for would those the we it, finished in an anyone be helpful we as putting familiar our Unisys, it realized And we thing happened. interesting with interested already

of So actually website. is the I posted posted investor would last it which on to We encourage you week. access presentation, our all

open questions. we'll that, up With Operator? to

Operator

Thank you.

now question-and-answer will Instructions] Jon from session. CJS. ahead. We first [Operator begin come question go will And Tanwanteng with the Please our

Jonathan Tanwanteng

questions and for Good my afternoon, guys. quarter. Thank you a nice taking

Peter Altabef

Thanks, Jon.

Jonathan Tanwanteng

mentioned you this is, one And this first what margin a about revenue than My range being talk declines incremental, of year, decremental there? the given Can be? revenue you impacted year. profits profitability more would scenario the XX%

Peter Altabef

Yes, Jon.

So I'll to that getting although question. let we're feedback. back me your start some Jon, go

would for So surprised obviously, when again, number of really the put are, we take. different will out year which I companies our that we running be there, and how or higher now if best the are long others exactly is the be exactly a it than that And view our lower best that. will judgment have modeling, COVID-XX certainly of out or we fill don't many – The and how good scenarios guess. again are right on XX% could based rest

affected affected reason give with I look directionally modeling, that not not company the we're we that When The will our again, as kind company dramatically others. the on side, be is by but was revenue a profit a we you also share as affected, affected as of but to some expect out you believe to not that we we some XX% it side. put be COVID-XX, others but by that only as the of on

I tends unknowns the way of are a looking said, revenue quarter, in the get are the Those the think have the a higher the at on That of cash and are did the us. to for we usage. things at I in rest flow especially be We we could delayed this. think looked quarter. exceeded for of we of are approaching margin list which We we contracts higher and what we ameliorate technology instance, in extensive to ahead there's very to where do as clients well our expected those The just quarter. bunch issues, profit done curve

exactly profitability. So we effect don't on just the clearly simply know

Some people require of work-from-home. operating effective of getting to know some the one more with effectively. our everyone things efficient sites, that And client so and it's things model done on and especially more that at being over are now, to do XX% are on involves as thing we customer we But there put our activities. have

as we of or if could going well all not that actually be right at now done onsite. So to is it not to able be were as least be

that right very end think have revenue kind with out does. fixed costs revenue, especially So the somewhat profit that other be that to is than that, to immediately away now, good at think lower we go the as this cash we Mike. will put we defer of pretty I With the think disproportionately position. We we equal, But strong of company a when day, show. things And plan. have being I'll strong a very liquidity it don't

Michael Thomson

Yes. Jon, two maybe to add or I'll just point a that.

other thing covered was maintaining Peter it well, doing right. but the think that staff, our were very focused on we I

indicated because remarks way it's our your So goal not than went is revenue, into great out in had right. we that stronger to a prepared to COVID of decline of do COVID, removing we And temporary the staff a certainly here our in come that.

out position better this sure we've prepared So serve crisis. folks we got retraining, of actually to lined doing that a little are as we're where we've retooling, we so making a come clients that up taken even our

trying mentioned hold for what this And see to opportunity. can, we mention even masses, alluded Or as to variable, you not associate and to, in though other cost things the we've tweaked so model an some of Peter that but we're cases, reason, furloughs that some that as fixed we really the where base. it's

space a many got go. lot of our are You've letting that in other people folks

of that we're get there skillset, there the those are resources are on well, resources if out in board. some right to looking at Well, opportunity an

into will it. were going again, be post crisis the that stronger than we that So

be why think a topline. impacted reasons that will than those profitability the I a greater are in So of manner couple

Jonathan Tanwanteng

to What business that is actually And they say now you. then of have revenue to, their could be clients that a of they your Okay, times And contracts, renegotiated things you Thank if is couple to just great. XX% businesses? run to you your of to percentage would tied had cut, what XX% recurring. tied helped maybe a What situation? that in percentage or those? were of is volume-based I you if then I'm think wondering solvency mentioned essential revenue

Michael Thomson

pick Sure. Jon. on up Well, recurring the theme, I'll

So would work. of right. talk we revenue as our about project-based that's it's recurring workspace most that's our not many type et times, our recurring. really, XX% part, are it's cetera, over discretionary the not Whether for I say things, solutions, global

they're really renegotiated. positions be So in not to

had really payments not negotiation we've in a clients contract throughout select but renegotiation come and things like not or situation. clients talked frankly, certainly in to that, perhaps crisis even around to this of We've renegotiation crisis. a of us deferral And any in

revenue remarks, his we make have any in greater than of base. of that clients our up mentioned some don't X% Peter As

far client that diversity as diversity well. respect us in our is So as as concerned, helps

to far As those the smaller the our you tied overall pie. relatively see BPO a can largely piece which volume-based is, is as of business, are contracts,

we serve, remarks workloads, general, made that think our of gotten interruption. diversity base again, serve, to in and we've their clients diversity with made I sectors support the in in that fact historically, the we been think, we've the earlier our I ability able to cetera. we've in businesses. base shift that that client in the general, our geographies We've high And our diversity in that without our really perform got that marks business et So service from we client we've in,

Jonathan Tanwanteng

that pension. was the the just was finally, And great. improving. to actually Okay, hear That deficit on great

could being benefit If about get you what could that if you does – talk was currently in and something Washington, And passed? you how [indiscernible] discussed? might

Michael Thomson

Sure.

on touch I'll two maybe So points.

being withdrew essentially process about we waiver the suspect We've prepaid we've that that talked XXXX as already would on we've past. made. contributions that voluntary in just XXXX. waiver first The that We the you based and would the

legislation currently waiver of the what one being is as required not any referring of stimulus you’re was longer. So is packages. some the part for XXXX to discussed Two, that

rate that two they're and is over the cash interest amortizing payments for also things a The period. the program XX-year over is Essentially, of corridor current talking deferring a contributions expansion or period. about seven-year

what So cash put into more opposed and today put are some stimulus to some ultimately and the their place it's they've companies packages. do other that as ability a to those with would the give permanent essentially in businesses to infuse the temporary that fix place of both of already in solutions

So take think I years, under and something for year away $XX six the pension in the given probably duration. contributions next would have essentially, million Jon, that, like, it our certainly don't throughout post year we a that exceeds any

when those spread is obligations due. those out So come streamlines and it longer really a over contributions much indicative to period, frankly, which a actual more lot

would us cash over be a allow and would to stretch viewed it period of longer time. our much So our really contributions perspective, positively from

Jonathan Tanwanteng

Great. Thanks for…

Peter Altabef

Thanks very much.

Operator

will next with Rod from come Our DeepDive. Bourgeois ahead. Please question go

Rod Bourgeois

of the a in a your of a that take road market crisis. position to I you kind of bigger trends whether the Hey, to see kind guys. crisis I'd get want you crisis during put happening the coronavirus after looking ask Hey other down to question, side love the on have subsides. the better would share picture on

client that you key So gain base or trends that investments clients? there to your of your share at developments or would wallet are some allow in you're happening essentially making

Peter Altabef

question. thanks Rod, the for So

time we're spending I think lot one question, great it is on. of a a and it's

they we whole One, are much think the fall right doing the now, what company optimize how having When situation, and to current to two looking and ahead very like stronger are get when not things a forward I shoemaker we is trying of are that but there. lot would shoes. we So for we looks looking categories. we new the say about normal into a

putting ERP Federal So of program, subsequent have a manage program, the new that all we are in putting new workforce would sales – to management new our team. done a in changing things sale marketing the platform and

it's as we come time is but out really even really have sometimes potential, of we ready that in we we can get out that we do do to time, now a important that And right with sure own our way. make of by that of but it a because not own always in over. more company more Now it anyone and this processes This that terms our kind phase lot of be getting period of we we that our we financial compete to it, the of under nail way. is had COVID-XX has are flexibility will in

With respect solutions to clients. for our

have focus, a solutions little generation now focusing years now next we and been across bit key of for areas developing our that. have We several on

talk provide site, So of but for about when these it's InteliServe, we folks ability to do we and been something global inherent but client when to that remotely course, adding it's us, which services Stealth our talk always only mix, on the into add a that in application, workforce about other this isn't have. don't not an

attention now into CEO C-level, not would workforce, just C-level sweet spot. but right – workforce So which level is attention our from getting, the I the global say, fits

solutions So global we for feel very good workforce. about our

a days, going back do go shift. of back offices. permanent a going instead days Those one that to two Not days three will a to everyone day, week five is this be And is week.

for is to a artificial our the add have to adding it, been work so the to and do to AI we deal. ability So big this kind automation of of remotely, much add clients our

because COVID-XX I pretty less are the we of it's now, majority clients interesting. already think Clients cloud done have an and are issues that having to in CloudForte, of and effectively experiencing up when what centers experiencing with those clouds IT have the they're own a who worry having are level are They their work with think from your data running their of standpoint dealing own about of I than without redundancy those people and outsourced. what have onsite. still

right what appropriate now solutions, operation exactly hard the and for administration called to cloud now a So encourage it's right and called our which to the work both time CloudForte afterwards. of that is and and [Indiscernible] will going movement that's the to time the not more is imagine particularly platform the for the forward. be

Our up XX% Stealth pipeline is year-on-year.

we to spot opportunities us. tremendous think very, in bright of very that and a that's number have front a of We be going us, for

that hate really are do core a bad whole use to experience, of whose in we solutions So that's fortunate say a been series to have solutions because we have go-to-market time appropriate. word is our but I this very

Rod Bourgeois

of We an see trend. enterprises extension enable So greater a the that much see work-from-home so I modify we needing infrastructure to the all their scale. to question, at think

history that opportunity huge you the a business, have natural so solutions it's have You in an there. workplace

they further client, the to workplace arena? in thing to a let's most position, work-from-home. the say, you So cross-sell the in the into to be ready add what's thing that workplace natural beyond bring that you scope most for natural upgrade, What's that add you're relationship now to

Peter Altabef

as third – about today already about of I digital we're so Well, a that said is around workspace our revenue model.

CloudForte revenue call solutioning, would revenue at have If that, a subject of of right. of our to outside I you the is also what kind look we about third

to whether cloud, whether is about going that programs that optimizing is So cloud that for on-premise is infrastructure, infrastructure the cloud. a applications work whether the

another revenue into of third solutions. our it’s another our fits suit of ours, is strong that which CloudForte So

cloud the them of between doing. need environments And okay, of we you are for operations it managing what to with on competitive, I as remotely. the environments able would answer to environment next because global already onto to these security all need pricing so more your is give client a that's is working say, becomes workspace that going to if which it door those right to move We a we in and well, question more specifically, Rod, optimize cloud to we're cloud be you say, it

our offering, to actually it's Stealth then offering them. from and burst of both CloudForte our short I say, would InteliServe So underlies a

Rod Bourgeois

of Understood. And the in loss of the your then to what one clearly the that Can happened kind COVID. in final of services question, was demand margin volumes in some QX, evaporation margin demand you due impacted by first particular the was on in some hit the from the side? quarter quantify in operating

Michael Thomson

specific Mike. there. Rod, that we've look, got Hey a don't data it's Yes, I know point

or can the are in decline it's much not you to or not the how another in thing the is you location to very location. difficult imagine, or one know being specific As specific to of volume

our to at more I a our that So like to clients were be disruptions in support had everything we go systems as think and COVID concerned don't guess from able were in around be time. that this our to doing down. they no lot it ready for we're that as client base we perspective, get have themselves would it'd to not crucial precise point ensuring I But

industries, right, different pharma, government. sector, know, As we transportation, name support healthcare, it, you public you many

delivery point in this a to So focused versus work more else. lot something were then percentage COVID the we of pinpoint to that related trying ensuring

Rod Bourgeois

Got it.

just also your clients. that margin though, had clarify costs just flow you. So from care than that It COVID some to was of to to take to sort was operating more of through you some adjust hit incur the revenue on so hurt of margin the

model. some needed it So lumpy to in be to your costs ways incurred some that was were operating there convert

Michael Thomson

would look at Sure. it Look, I I think threefold.

pass-through You to. you alluded have just the straight revenue as

can't of what You are because to And into you highly complex you kind our you remediate be remote. get set up right, to that own one-time on have infrastructure for to also have have situations working things, inability to your the have site. costs the for people then lumpiness

to delay as some were there's first again, some clients foremost, costs operational. and and seamless there duplicative our was So in well. sure making regards around But goodwill building and it delivery, that

Rod Bourgeois

Thank guys. you, it. Got

Peter Altabef

Peter. is this Rod, And

be would say going which of be result? how to be going so probably industry industry is going expect set putting what field evolving at as that. some a is COVID-XX your looking part we that, may forward. you as first somewhat services circle look that aside, to we include are to part our to piece. as is is to actually going full deemphasized won't slightly of be we a trends we If we get services about the the field more say, although that up There to piece coming at Just and the But company emphasized what services deemphasized IoT, out. I make question are much of look and would pressure okay, up and field under more

replaces you're service desk. or remote more security doing that as more work service remotely, things is What more

you the And standpoint. of going and field services a shift we margins, from would margins work-from-home margins security from significantly good support things look work All margin you're service to low at that and remote higher work. are when between margin say desk the at margin I margins and

think endure our over I So time. to that will benefit do

Rod Bourgeois

the the moving growth digital of a the the in market. because sky’s of side workplace a is Definitely bit to buzzing

Thank color. interesting. guys. you, Helpful So

Peter Altabef

Thanks Rod.

Operator

Vafi Our next question Joseph will come Please go Loop from Capital. with ahead.

Joseph Vafi

Hey Canaccord. over guys. at It's Vafi Joe

or Stealth-driven business maybe couple Always-On how this Just and for both your what I up positive time with number a one, – I and we'd stacks start mean the analyst, maybe mean, thanks could sounds negative a on minutes it candid here against here VPN. moving on this on the thought tough business in it time. on intriguing just remarks pretty AOA more business but I'm equipment not it it a forward. positive

Peter Altabef

Yes.

is and a powered Access Always-On Stealth, it that the a is variation is environment. – Stealth targeted by Stealth of Stealth our specifically So work-from-home at

about VPN, up client’s were seeing initially it initially up, was remotely. not that somewhere a the levels for VPNs road have up to to that typical set laptop VPNs pipe it's set is and help the access volume It of base you to home you XX% of Usually network. a they if set was and on a maturity, carry were So but – now. allows that think Joe different of a they're

XX%. about talking we're Now

the And not that to pipe, modern could is which that is up when everything network consoles, is opening else be a stuff. equipment laptop. neighbor a it network old all problem on VPN up as is it It sorts the of be the it gaming could at open what house in you're up somebody's is as you network, opening on also

which our that So extend of the equipment, and also is of network piece software-as-a-service identify specific that the uses into the of system, piece system coking doesn't that generation enables so environment. specific technology next is user rest and home has. it It Stealth the identity the to of the of system Stealth equipment

or laptop a there inside is it which bad is And address there is server if the isolation, somebody means an doing IP finally, outside matter for network, is firewall. a if it somebody that somebody home infiltrating this or if it doesn't the from allows doing you're or whether it's or dynamic a hacker, from from there whether

it can seconds. we we XX as within that close close to soon As down is detected, down it and XX

when shutdown events hackers two the not at you And cybersecurity bad last so the have that to that of allows some the years. isolate the on which is rest gone network, critical look really the and us of in

that. excited interest is very you Always-On will about tell of we're I extraordinary. the So it I'll level And we just have Access. leave at

Joseph Vafi

pretty That's exciting Peter.

that closed, you contractor logo remind licensed potentially now this a I did deal over. into SAIC is that defense could deal if Stealth transfer assume us this with working? know point they the that Just as resell mentioned not new SAIC have you on at you deal commercial the I with How that is government.

Peter Altabef

do. We

points. separate two So

business. not out public of So the we're

revenue governance. business The a XX% Federal. is and U.S. of state So with Joe, public of of earlier, overseas business foreign that and is you sale local talk majority as vast post it our me the heard is

government. the of our to for one of continues become we a addition, as In supplier to things SAIC it use the that software in

ClearPath clients Some software of is license clients. and to exactly is We U.S. SAIC their they it government that a through Forward, ClearPath for available same. use use the Forward. arrangement that make Stealth

Stealth uses So clients. SAIC we provide for to Stealth and it its

ClearPath clients. is newer a which the Stealth with far Now, as offering offering still concerned. as Federal pretty Forward, mature government is is that unlike was a expanding

technology the U.S. business. sale of the a sales Stealth sale revenue a fact And our generated government post in for to Federal first that of one U.S. the quarter in was us so client of

SAIC behind that. that getting $X is billion SAIC was us Stealth then a that So providing organization. contract and

service to Federal revenues team all license increasing. million. get that although We margin expect higher U.S. will and that, some but license we'll get Our of be get that. was actually of pipeline to all revenue the we the revenues, We about won't be the increasing $XXX

Joseph Vafi

always it's focused technology of renew too. been I keep your to segment, feel look if on and It clients the that it? you being business you encouraging. impediment I'd I an And like doesn't Great. got a a on at historically opinion that’s kind business that. on strategic this guess, here renewal then, wouldn't anything lights and the people that's you was to – get thought Do see that where those as I with really me, just That's

Peter Altabef

and low so that at are secure an technology doesn't the fact fortunate number and addition secure to feel either. to to quickly high that that us that using it its are cost. one, organizations way extremely It's relatively volume is ability It real so a that environment. extremely – Yes. The process is in

has – given up against that financial so would gone ever. post cyber platform more having institutions, secure that attacks the is I of healthcare especially level important And COVID-XX, government institutions, institutions, than

anything don't it we're that is And interest. investing in affect ongoing get point. indications obviously, We your would the that that to

have operating now Forward cloud. ClearPath we the So in

cloud. public the have We operating an in

to where revenue interest consider revenue industry include license platform. license products to and more platform is ClearPath than place revenue making we Stealth no be areas also of that anybody in course, technology us has So an to in for and bringing all really those advances application has we're in of that a that growth. And who leaving Forward interest

Michael Thomson

applications in there and so And who Vishal our we that, could, Peter I some code the couple to support Joe, that for real perspective, computing. Gupta, slides different just a there. the there Actually gives the if one leads in thing I'd have insight we a cloud from to to on add Unisys, of as have introduction about open well practice technology now writing services alluded top

at hardware is software agnostic basically deployed. application and completely that stage So this

play all embedded solutions real to these Rod's nicely think all kind and perspective. back together, security question, even very from And of advantages. and we of there's some tying obviously together, play So a

Joseph Vafi

you that think, say to there the on don't right that is is there that perhaps roadmap about have but that you that's perhaps said fortunate, favors Sure. all know an guys think I you done and that there luck mind. saying you're you and you’re want I mean I encouraging Peter, mark, old prepared – earlier, proverb – I you the the

set So to to good luck. for be prepared yourself it's up

Peter Altabef

Well, thank Joe. you,

that axiom. take for are an and We I'll works us. prepared It as so

Operator

come will Company. from ahead. question with & Faruk next Please Sidoti Our go Ishfaque

Ishfaque Faruk

guys. afternoon, guys. Hi Good

Mike, couple Most some questions On that have there's some of revenue mentioned there. you addressed deal, the revenues of actually. a from TSAs tech side, your out of my been your still questions. Just already, SAIC

what This if percentage Forward? me was sense quarter it that was for ClearPath pretty high, give SAIC deal a from was you can or any it

Michael Thomson

Yes. Hi Ishfaque.

around say from anticipated, So increases. we were ClearPath earlier volume the than contracts couple They is but they a had would the the and to really you renewal were SAIC little opening were venture I what remarks we a we schedule renew also had Forward based. had some and

client legacy The of a went was very very been relations with has the good it concept So smooth. that with SAIC, good. working in over And sale. transition the obviously a

already volume going. our we a the both we as consummated happy how parties that, flow through quarter, associated of clients with get revenues for getting that part base. business. And And from the that extremely is sold deal only that not ultimately did revenue were that of ended additional think are legacy up I a one with with in we've

far, space. were to earlier, that bigger start so we off a roughly than Peter Xx space. or are they so as XXx in good good, to in So, that really And alluded

continue that and revenue ClearPath technology and our So we will increase Forward relationship sit to that that were that Stealth ClearPath hopefully base. and see really in to looking top of on forward between services the

Operator

question Edward will Mally come go ahead. next Capital. Please with The from Imperial

Edward Mally

Yes. you. Hi. Thank

of just the on heard during I made comments your to had presented correctly. some you remarks, prepared deficit back the pension had sure figures make to go the that want you some to Just of

first reduction end that the versus a talked been $XXX have quarter You you forma about year-end pro basis, reported number XXXX? a million the that at on would the to relative is of or

Michael Thomson

we quarter. of not in would ending forma the reduction only that as included that remainder making make of million pro of been and but quarter, contributions and during the $XXX in anticipating the through forma that position, was all contributions the would we're impact the that have the the also XXXX, so well activities did as that XXXX have against deficits pro Yes,

in So movements on in et interest has equities, what rates cetera. and gone

really pro trying a forma of like. to just sense would give So you it have looked what

Now end the only year. all do – actuarial don't It's the at I'll with done you year. that the of couple of during valuation an

I So would to ending done things some the it just those additional caution from to be perspective at only position. give But it what look would XX/XX as color you like. a to directional are

Operator

like session to for it you. This I and will remarks. over question-and-answer management Thank conclude closing hand any would today's to

Peter Altabef

everyone is and glitch. call. This the Peter few know again. very a technical really started for I later, do minutes I Thanks much. I joining we appreciate apologize that

We as for much and open as Company an are team. a Relations business very Investor

your at So Melissa, myself Courtney, Mike, really service. all are

you, an put continue the welcome our Relations introduction information Investor introduction. And ongoing website, an We Unisys, to questions such to than you which more is basis. more to comments again, and on much it I we as recommend and from on

So thank in the for we call look the next participating very you much one. and to forward

Operator

conference The you. now has Thank concluded.

disconnect. may now You

Unisys (UIS) 29 Apr 202020 Q1 Earnings call transcript