UIS - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Unisys Corporation's Fourth Quarter and Full Year 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. Please note, this event is being recorded. I would now like to turn the conference over to Courtney Holben, Vice President, Investor Relations. ahead. go Please

Courtney Holben

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

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

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

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

complementary reconciliations earnings some the presentation, the Third, to press non-GAAP have is provided today's financial non-GAAP related been which we've within includes the and measures reconciled The measures. presentation. measures, release, GAAP to

comparativeness financial expense. debt can also that results competitors' generally under results. and prior accepting adjusted utilized often believes extinguishment, measures of these impact each appropriate profit, The results. and enhance to charges results company's use flow, its of as and share, and and ongoing make Management results or that and adjusted its can indicative year-over-year performance. that to future Although cash future free believes constant liquidity of the by the can management, currency. the operations of of exchange industry: free performance ongoing to the are pension, the anticipated and with presentation or operating its periods trends accounting flow other period company's are and prior non-GAAP difficult cash order that in by These of its visibility analysts items company's and to be compare EBITDA in items of enhanced debt Management compare distort cost comparability consistency results profitability to as well diluted consist enhance and company's to the not believes reflect earnings items the reduction these provided non-GAAP associated of other evaluation the results companies to of principles, our supplemental following periods, investors per EBITDA exclude company with

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

see performance. results actual I'd I over are other and SEC to and on given. date our that generally effective color with Unisys Copies are turn reports information except these website. expected necessary information time-to-time, Regulation our please remind and those company's this that more mentioned like its manner Investor future the will expectations. you factors to to not For along discussed that conference from call available like And specific now These Peter. From subject call earnings the are or filings. and Such to with in risks Form provide otherwise the Unisys could such SEC more release adjustments, differ release to information, from of deems on only Unisys only is statements materials comment uncertainties or regarding a And forward-looking as FD. XX-Q. may financial made the complies various in cause Unisys regarding the guidance any update, on in earnings materially SEC reaffirm and then earlier during I'd our all finally, the fully the

Peter Altabef

to and with joining expectations. an for liquidity improvements We and a full our ended capital revenue XXXX quarter is XXXX results. year everyone, Good to position in non-GAAP our structure exciting exceeded operating fourth we our unit to and thank profit that as implementing discuss position margins you the XXXX growth, changes better and have strong It morning in the revenue solutions. structure Unisys higher us expansions to drive and at margin and new We time our we and sharpened XXXX business believe higher are markets transitioned margin over focus the coming will years. with on company growth a

all continued services impacted COVID we the year revenue ClearPath quarter sequential sequential growth and growth fourth earliest ongoing the when in supported Cloud business strength public with Forward of sector, the in During our segments. quarters With by our progress services.

ClearPath expected of Forward We than based renewals on stronger also higher growth anticipated. technology than volumes had revenue

and result, profit we stated operating margins and in year-over-year growth revenue expanded quarter XXXX year revenue fourth As our returned also exceeded a profit the year in expectations. XXXX year-over-year exceeded margins operating Non-GAAP quarter to full previously the our non-GAAP fourth full expectations. our

the and continued quarter, provide during liquidity We capital improving our more Mike fourth structure about detail. which will

to strategy this CPF. number in began optimizing their Infrastructure To focus in Digital ClearPath new reporting Services better Cloud dedicate DWS, of business. quarter. As to to company, effective Forward we which three the C&I, we'll refined initiatives the or team or We segments fourth as or Workplace XXXX of of leadership able beginning and now XXXX; to many and results and enhanced undertook our the end, a be and full the during result, position our contributing a of is

of and in revenue in that platforms other results, and diversity the Our group. our profitability will be business solutions as given included services reported

a solutions, higher are areas margin clear a and growth we as a where particular higher targeting We and are recognized on markets focus differentiation. and with leader have

versus the as strong margin had we market, that services and on within only Forward XX% and the services a as you federal from market track versus with warranty the focused have for expected C&I focus expected a growth, we yearend the user industry CAGR comes three-year focused we we XX% rest end have and sectors CAGR higher which margins, within our we CPF, of of shifting EUX opportunity. X%, specifically XX% higher-margin, is C&I The are $X.X regulated to But expect to user industry X industry that which where in are CAGR to which the already the public, services record. end company. cloud, of other for significant on work, to to and ClearPath based X% targeting a expected The growing or billion market expected are SaaS to experience we are Within the on XXXX Within rest is DWS excluding Forward's but has within to for XX% C&I, three-year license, we services X% of DWS we X% would instance, three-year market. expect, higher cloud For are typically public highly CAGR market. in ClearPath share share. market XX% grow highest of XX% a for

in new As delivering I accountability structure drive to is and starting said, results. for our our segments expected increased reporting these XXXX will track financial internal

change entire business addition In unit to to initiatives, across we continuing the also company. implement are

and go-to-market we training, a are delivery new sales approach XXXX our and we and upgraded enhanced a with During platform, sales digitizing digital industrializing our proactive approach, operations. more and

new are workforce We system. implementing new ERP have and management a initiatives instituted

the available event, are billion improved we other The That in gaining going go-to-market decisions XX% expansion end XXXX said, investor changes XXXX, which and backlog drive to related down the up highlighted in TCV purchasing X% to for forward. more Investor insight website updated to year we I the believe our overall, at we with XXXX growth although all us on Relations $X.X which year-over-year are services quarter given XX.X% of slides was improvements instituted our recent revenue fourth COVID on provided visit. disruptions traction, to the have in replays and operational newly the the encourage at position and year-over-year earlier and TCV client this year. in We margin quarter, of you fourth

early the more are to key We DWS will driver EUX, in evolving growth our offerings on that also focus stages segment. a of in be which of still

to as impacted our with in growth result, the grow period of X% offerings. acceleration growth emerge and to from COVID XXXX X are guiding a EUX As and we XXXX, in revenue expected XXXX we

We fourth coming years user benefit us efficiencies, benefiting with years just by operational XXXX quarter, growth part experience to labor higher our over with to expected more be to segment year-over-year relatively expect anticipated XXXX to I as of Infrastructure the revenue XXXX Forward slightly improvements expected grow is noted. revenue driven Cloud end be profitability consistent percent The is ClearPath the are subsequent which stronger year-over-year in margin grow for overall. in growing Margin expected expansion DWS fastest is profitability. transition in to and in some segment in again to already in as XXXX. and further modestly a is was cloud and down as The of

margin margin up We at EBITDA are and XX.XX%, XX.XX% of midpoint. X% year-over-year approximately both points to non-GAAP to XX% to guiding of XXX profit operating basis adjusted

Our Digital analytics during enhancements end-user improving automation provide new Services AI to integration detection and continued of our to aimed and at fourth proactive the of quarter more experience. platform Workplace problems, resolution with

they services, with clients are allow to are security and changes the with employees our leveraging offering anywhere workspace. cloud-based we our office. desktops as identifying the provide their with enterprises are a to We VMware primary virtual same virtual to advisory as infrastructure when partnership work as provide desktop partnership work [indiscernible] allow to to and needed through upstreaming in Through workers service virtual Group to and effectiveness

Additionally, contracts the profitability of of key a DWS over improved course of number XXXX. the

we appropriate of our XXXX. North on as Services an and industry new a managed in Also experience intelligence, accelerates leading reports employees Information in consulting and with healthcare several offerings cloud AI features, number optimize quarter our greater of implementation clients. release reduce flexibility The initiatives enhance to over a We completed deployments to and cloud Solutions earlier fourth platform, from These the of world. after InteliServe the to automation or including efforts that to workplace provider with for and highlighted addition to to again days DWS, a Gartner we a InteliServe, fourth evolving digital recognized year. the to few and new recognitions enhanced services increase automation, the come As quarter, plan for strength that to workplace named in quarter for updated management focused automation of digital improve being in cloud signed user our a resources during productivity UK our course helps development services Unisys and to as to continue ISG capabilities leader workplace in fourth ISG the artificial Infrastructure of global our contract a during Cloud cloud Ops agility robotic America post-COVID platform the U.S., our the security the new improvements existing Quadrant Unisys process infrastructure hours. work global And in Brazil. our their for the Magic within the example of a Group XX,XXX platform in CloudForte and globally. Unisys

DWS, with over also the of of have the we As contracts a profitability XXXX. of course C&I improved key number

support our to is first remote model shifting work the U.S. quarter strategy. the During Government state's for first workforce a State we expanded to that quickly

specifically delivery practices. provide market preventing in the us US, leader They orchestration data by and highlighted also and will CloudForte, will the as and Vendor in cloud also in the printing, as UK the public that overall leveraging foundation best cloud services, segment. brokerage on infrastructure services a We for a Evaluation leader downloading Overall placed recognized were applications leader or named and quadrant solutions automation, cloud infrastructure, evaluated. secure cloud for services. NelsonHall that reports ISG noting its management, the in comprehensive virtual a quarter, regulated DWS, In orchestration into the copying were CloudForte users all and December unsecured sensitive cloud fourth provides devices. quarterly AI areas We from data a as it three services, We brokerage, with Brazil. model and and

business forward, Stealth will Going unit. be and Infrastructure Cloud of included our part as

and as as such interface methods we Stealth from software (identity), quarter, software. announced Web an enhanced against fingerprint scanners identity managed and records fourth accessible the customization that other of biometric version management version includes new that enhanced the The robust a development kit our results and authentication features to positive provides mobile identity and biometric cross-references latest on testing. readers, I micro-segmentation a are During recognition the related travel solutions With mentioned. we experience. Stealth(core) hospitality solution, revenue security COVID technology from demand the X.X, these again Forward, our the than client and foundation to serving and volumes ClearPath and for improved leveraging the for clients transportation expected fourth cloud solutions renewals highlighted quarter was higher respect with to in user

business-critical industry, example, ClearPath air travel passenger information and Forward tourism the solutions load renewed cargo contract As of China's including bookings for to and TravelSky, process an leading its provider calculations. for technology transactions, reservations,

Forward our quarter, quarter appreciate With a enables I all fourth as Mike? to in in to Mike client, we over going implementing of a Managing XXXX. under environment fourth results. an I end hard are our contract drive associates part like provide with the ended financial poised strategy increase full level extended We full-year to managed end turn into the forward. during more During work our managed exciting and and account. profitability conditions of the our I more of change, the into improved significantly unprecedented year would and our it are to largest services to providing strong say services will closing, growth ClearPath from position, that, that insight penetration to us In services XXXX. growth truly client's

Mike Thomson

In Peter you, to GAAP will morning good and results. discussion and both refer Thank I everyone. today, non-GAAP my

available reconciliations our a these As website. Likewise, reminder, metrics operations to is our on earnings available information materials. in are related discontinued of

are reporting technology. our on and reporting segments services We of quarter based historic this

excited noted, reporting was in services for previously the with Technology which the which non-GAAP including XXXX. in sequential and revenue adjusted starting year-over-year better declines declines revenue expected from driven improvement new enable stabilize in results and structure grew the revenue based the the field driven XXXX grew such we ended enhanced business with continue opportunities year our year-over-year well sequentially. by businesses fourth X.X% came significant quarter recover results XX.X% recent XX.X% new anticipated. Services our was in on of changes driving the COVID expected the units also third X.X% by the and stated first capital quarter fourth the revenue as our XXXX and and of and fourth drove year-over-year our quarter also completed full-year X.X% growth to Historical revenue our quarter me and the financial XX% adjusted on in fourth of will our be with technology XX.X% segment This our financial against our respectively, emerge strong the expectations unit a quarter the some to years. processing sequentially let X.X% for the revenue as in to impacted total opportunities travel check our strategy. Peter align event, to outlined in decline to reclassified As are investor we coming beginning ClearPath in X.X% will businesses in reflect full Unisys reporting impacted this transitioned than BPO, over Starting up exceed revenue than company but in year of how the higher quarter. touch to versus non-GAAP I'll during up new proud growth, I'm coming position. resulted expectations structure revenue. the these executing liquidity exceeded our revenue year-over-year joint-venture. on about and business and the Forward to made XXXX cash year-over-year at in us We're and XXXX, a The full months. flow on and UK We for a down team first quarter color renewals. structure last year-over-year was and structure X.X% be transportation, non-GAAP enhancements together to We more margin expansion and volumes services, adjusted creates revenue today, and returned results. of year COVID provide also revenue, with our growth non-GAAP year X%. fourth This of

for XX.X%. year to fourth profit year was XX%, basis by margin and the XX profit quarter Moving improvements non-GAAP was to profit quarter in by points. both supported in These points points in margin up Technology XX operating quarter full full year-over-year. up XX.X% points fourth the to revenue Technology to points non-GAAP to and year-over-year and fourth basis XX the in margin profit margin operating profit non-GAAP adjusted and to margin non-GAAP basis was basis to These year-over-year was Technology year-over-year the gross quarter. were points gross which year-over-year Services driving up operating up and operating year points the was basis year-over-year the basis XXX was year. the for year-over-year services profitability, adjusted full the the fourth in non-GAAP basis points X.X% X.X%, margin the results were XX in in profit XXX gross quarter expansion, XXX XXX full margin to adjusted Services points up quarter XX.X%. stronger operating basis XXX year-over-year up XX.X% helped basis fourth to XXXX

all expected XX.X%. did of previously to stated These and estimates charges, basis beat results GAAP last key for we in expectations, that with the metrics, EPS, exception XX.X% XXXX estimates to XXX XXX profit full reflect decreased year-over-year FactSet Technology which were highlighted driven These profit points basis the year consensus points with on which quarter fourth XX.X%. not largely third XXX in also overall let to basis Adjusted earnings not to charges, higher fully points but points fourth only margins. XXXX hardware basis party outperform the by in XX% come XXX to us our call. XXXX operating for the our EBITDA Technology gross the and decreased by to higher quarter declines margin by expanded For margin sales, and lower amortization margin

to mentioned, pension cash in reduction made liquidity $XXX.X I by million million supported full increase in and was by voluntary XXXX improving in was flow comparisons million. This we free year-over-year we X cash impacted during revenue year for CapEx an our continued $XXX to structure the year-end and In Operating a $XX.X XXXX Adjusted versus $XXX. addition the capital We at flow free the XX.X% cash the were and profitability also cash to balance fourth that quarter. just year-over-year up of results spent million. contributions ended with XXXX flow year. XXXX. XX.X%

reduce our our fourth also to We continued the during against executing pension obligations quarter. plans

As we qualified the million and balance senior approximately call, proceeds deficit expect cash quarter, which during cash of deficit we versus $XXX the be year-end contributions. $XXX pension forma reduce year-end the we $XXX the that for we voluntary notes of the contribute talked about sheet used pension XXXX. just plans, the million pension XXXX, our XXXX at of $X.XX on from on remaining raised versus to expected of would in U.S. secured million to last of were make to Based million as additional year-end and $XX XXXX and calculations contributions billion global pro $XXX have would the million additional

all of million $XXX required contributions approximately XXXX. through For have plans other we

net just at year-end the million leverage I Our the X.X XXXX, deficit times. inclusive of was noted $XXX

year. pension billion discussed previously in to dollar the by addition with a quarter pension of of focused end a reducing the gross contributions, we've we deficit liabilities in As on of first this the goal stated reduction the themselves reducing

of lump offering. $XXX $XXX sum by with fourth $XXX liabilities this January, associated additional $XXX During front, just liabilities in of through a progress In under targeting bulk made and announced Swiss removal million also plan removing million the we Netherlands removal Mass approximately on We're associated the a pension plan. the gross our we over liabilities of quarter, of our approximately liabilities transfer with million million of Mutual. by to

to end of billion our result of we be $X.X expect goal. approximately able quarter, of $XXX this, to the the gross As liabilities first of than a now all remove more million original by

outstanding. of also convertible first $XX our quarter, the notes retiring that During are we'll remaining million be

price prior being which of as cash. determined net on settle closing notes, shares as than February to the will We full The in results and final settlement, in fewer paid stock result factoring will share in the issued count will issued the call be net significantly shares method the being [ph] net cat potential $X.X in dilution remaining XX. settlement the approximately will the million be based principle

insight of those increase mentioned, have unit we've business As accountability internal results. believe quarter. drivers starting we We key will will going our likewise new new that our structure in will the reflect of and and financial forward, for XXXX, the reporting the the additional to into of transitioned driving as reporting business segments structure start first the provide

for and turn cash newly to we flow. shifting which our the out next within of years, should visit units, to defined investor and you revenue significant expect new we'll over review solutions, expectations improved the the was slides create higher event, as growth markets replays January coming business part detailed We higher that for from event. to laid growth opportunity margin Additionally, which be in years expansion we to drive three and in website our margin free and this in the our encourage relaunched investor relations

term XX.XX% near providing of we're XXXX of X% growth and X%, of and between for margin XX.XX%. guidance X% profit and non-GAAP XX%, margin between adjusted operating between EBITDA revenue Regarding expectations, and

will as to progress both XXXX, consistent service accelerate the expansion our is segment this in licenses guidance reflected three-year enhance is expected providing. XXXX, As ClearPath period, to franchise. and the be the growth which other on we include hand generated our our Peter in years in over following revenue revenue and Forward offerings. is relatively the In ranges services expected we're noted, by Margin transition our

half the second X% the license revenue in as low year the to backlog revenue Forward $X.X up Services expected of is with be ClearPath make to ClearPath XXXX expected the fourth We XX% quarter to quarter be the XXXX, billion single expect to the up XX% quarter and ClearPath the Forward and XX% digits expected segment is up roughly year-over-year roughly third revenue Forward expected end be first the be and was year-over-year the between respectively total ClearPath strongest. revenue of lightest year, of of and flat Forward quarter. and license split to roughly third sequentially the versus segment overall total of

expect million quarter still this as year-over-year into to XXXX expect of the in Overall revenue quarter DWS of our to $XXX we be is revenue its returning pre-COVID We business slightly XXXX. levels. first convert first to down

Lastly, there are expected we're XXXX enhance some well pension to as realign segments our undertaking, our work during liability our efficiencies. sizable the charges as and initiatives with associated

expect the XXXX of approximately of charges during half the XXXX. pension recognize with As million expect saves of $XX this to savings quarter work, $XXX $X.X I related noted to quarter during charges XXXX removal of the of in $XXX achieve took the we of complete billion pension investor liability the we're remove $XX exiting Of million program settlement XXXX $XXX to I to pension quarter event, we removal approximately targeting $XXX of approximately, non-cash million. liability. With liability million of during $XXX $XX to from to would million of charges rate million, and $XX onetime, our million to to approximately respect the of fourth We run Phase costs the efforts. first This efficiency additional million of in restructuring first XXXX. expect $XX gross our and the savings

our associates Unisys their for look throughout to all continue course of like future. for wrap again of thank will pension would to additional remove To up, XXXX. liabilities the opportunities to in efforts I We

positioned position, better a the liquidity us margin financial achieve support than dedication forward. Your expected, for year enhanced helped with us strong and results growth and going and expansion end

all, and now So turn over Peter. back thank I'll call you the to

Peter Altabef

I ready And questions. Thanks now we're Mike much. very think for Alyssa,

Operator

go Jon Tanwanteng ahead. question first is CJS The of Instructions] Securities. [Operator Please from

Jonathan Tanwanteng

my lockdowns, for nice really you about know a and to could has talk I've the maybe again in year year? Good services time it all I And the quarter. wondering first of the been that. was there rough drive I in got that? so of we world in first to nice go backlogs signings questions if of spiked you morning as in the after increasing when it your two, businesses around to more guys. Thank services address to see. COVID And XXXX, was kind through expect additional ability would one places bunch you taking everyone, for was number start a

Peter Altabef

Yes, Jon thanks. there's up, pipeline. over even year, about on uncertainty would you the the it was pipeline Those of by and We timing the year I the is the by have Obviously question, pipeline that end the do qualified course of second some expect prospective are both tell that signing. XXXX. the your higher end great questions. of the to of backlog obviously our

in EMEA, sales. expect but signings have that in not in So a we the unknown. only COVID terms is terms and in in first signings of of Exactly travel, We new how comes the certainly opportunities U.S. much of accretive new to bit backlog. quarter we still some tough

and for when us, overall, but true this only of signings we That's We went in be think still last But TCV better Added a it's to allowing at us say a sales the the that remotely up much platform that for sell started first we industry. ACV than amount look up for industry had question quarter to I our true that, year digital year, XXXX, going went amount for for for done. terms the an year. of pretty our sales have of not the new the year. to little good tricky a we the is is the is I would before pipeline see

you of challenges margin a amount the the from business, can see revenue is, but our think that of gain, really to forecasts of be all we're of questions there with profitability the a I the revenue year with people look course amount the over last race much as dealing a to higher year? to going of One rebound think I is for that the on of bottom modest improvement. from

margin We are not have three the selling very term going that's a on of margin be do We've the for the for goals improvement strong to don't to each to long years. accretive next on focusing race accretive. year. bottom business desire We a real got

signing to is that's to second. margin that require that be would I focus. on So that with revenue helps. hope us is consistent margin pretty disciplined focus growth Jon, really that our first, going say work But I

Jonathan Tanwanteng

that's nice. Hey

Mike Thomson

I budgets I timeframe to typically they February, little we down into of that from and one of as get add kind our be can marketplace. March clients infusing locked see is their that well. when the start the what May just really mean, are kind comment

normalcy on, year. perspective a probably little as when was backlog but is QX that year Peter throughout spot from we're year, a have happen that anticipating grow over early to So, obviously the and that, see the to we

Jonathan Tanwanteng

it. any the the thoughts if reform it Got passes the language is all in release on current you it's bill to way if and now? Mike, at it meaningful pension

Mike Thomson

qualified we make this plans we've And and look passed, we've what consistent wouldn't contribution until and anticipating putting the pretty it's in wouldn't have year, to to on Jon, been the that's what in, in language way about, $XXX the pension that's that U.S. is, have House constructed, currently with to we ultimately bill passes consistent on XXXX talking were in pension or the the XXXX. we million currently like put this Yes, been means it if relief. the essentially permanently is us another it

you and what in as forward big from taking Congress on pension perspective. a our from move to the growth really Outside care does that, strategy. our of know, prepared the coffers of regardless cash a really with our know of amount you leaves to change, we're continue of just So, perspective not it good

Jonathan Tanwanteng

Got it.

terms QX could…? the 'XX I'm impacts just from wondering on already? I sounds if one in from [ph] color into could, gave it more like the you You you how Tech year quarter. that Just if in so fourth are pull you. some packing just Thank renewals you

Mike Thomson

thanks that. It a on so renewal Jon actually really Yes, wasn't for perspective. really normal It from increased pull on our just renewals, volumes tech impact no forward. our was QX

volumes it had higher just particular in in again, their we So two was had anticipated. than clients renewals

Jonathan Tanwanteng

great it, guys. to Got that's you, Thank hear.

Peter Altabef

Jon. bet, You thanks

Mike Thomson

Thank you, Jon.

Operator

with Please ahead. next Vafi Your is Canaccord. from question go Joseph

Joseph Vafi

job. a Good guys. year, congratulations Hi and morning Great, on XXXX. great great

for of it. lot a deserve You credit

But pretty that then win and think was, doing and well, I up this And quarter in quick look perhaps, question, after another local there a for state how that. recently deals there. follow just been So governments you've in a pipeline and know does XXXX? I

Peter Altabef

I and up we thanks. we sector, getting you you around the governments in public sector. only It's Joe, What local, you. Thank know, the world. I our say around thank would not you is and early Yes, sector What thank this then it. look U.S., that greatly say which our I is state that, would And is, would for at for our morning. strongest appreciate so the call but as, world. U.S. public

the and you that situation, our biggest realization business also in the state are, business based. is do have COVID they they In about good and well. the US, very state ability as very given our U.S. We but cloud feel can obviously the we outside the U.S. single So about the local signings. have to constraints, the local growth grow for feel way good U.S. area budget you

cloud So that and the strategy focusing fits cloud. business with unit very focusing very, public our on on and well

So we're pretty bullish.

know, local includes state always you in to the reductions and value is cost particularly U.S. run current proposition As governments the from rate. our their

do formula on local vibrant and state we're up than now a pipeline. and So And save cloud the bullish success, running have they do environment in money while we they we it. think and more for expect get to them so that's

Joseph Vafi

And know Great, Mike, thanks, I you XXXX. initiatives mentioned Peter. some costs additional then, in

takeouts it? letting perhaps, now bottom that line and trade bit perspective? perhaps you're ROIs the wondering flow talked of a detail about cost off I seeing what's but where Just you from expansion, the that to more for growth coming and margin or versus, a that redeploying if P&L could you in investing little where strategy from of know,

Mike Thomson

that, for Yes, thanks. Thanks Joe.

So coming it's really across the board.

the Management has I implementing one the full of is really having tools, and workforce. valuation good we our beyond think the come of and see in some through implemented to that visibility The XXXX team major we'll Program. in changes a XXXX, done Workforce job

company of cost my sixth of labor I've into as with which frankly, of year revenue is here. a coming cogs, or been percentage Our is the cost lowest the since

it's with platform, really, efficiency CloudForte more anything. the the that's play platform. Joe, So across the coupled Clearly, really Its board. IntelliServe than

so some well. for automate and enhance, efficiency as more We continue that allows to

real our and pandemic wouldn't So I calls about we it's a world, labor and item. operate that talked particular its estate it's portfolio say general, We could around the last that review estate based found efficiency. of post real couple In our more one based. the on we lot

we're and areas. lapse back some leases giving other So space space in areas to certain in or consolidating allowing

pretty enhance Investor for course kind our those of Day XXX think us is chunk line basis to that of going that's of 'XX reinvested on strategic sets, improvement all straight XXXX that. enhance and continue I 'XX to margin We're in that of illustrate, two you of roughly XX% a about points we of training here, margin save and and business. your between to be exiting with we've in a improvement two is from folks, the of A that to 'XX, hire touched be primary from about of is improvements per it And talked coming our looking component talk and and those on that good skill areas like much So year. that expectation of would points for as people the over question improvement about. there more think lines just the bit areas, benefits saw the here. you are other I also the for reinvest XX% we

view. pretty expect the magnitude So, It's we year. across the Joe and horizontal more I is consistent per it in think that board,

Peter Altabef

You reducing saying, is Right? on as reduce management, labor it of solutions. it's revenue our percent XX.X% it just just and of to Joe, ‘XX and Mike's XX%. of to make you've a all and XX.X% we was It's don't cost percentage as ‘XX, the labor. Yes, give if But got not our be of numbers, the about workforce the cost in in numbers. our of leverageable into follow start the go all was IP those comment, you let's could oh, to cost sure expect the that end of a the of That of all systems, put revenue labor product, the by beginning. XXXX I we just

that of as course again, of nice So into it of margin goes a percent a those time. and down that's, revenue that But getting our there's a the increase. chunk over increase costs margin that of lot some taking

Mike Thomson

if program Joe, took And I said million we between million could, $XX that cost and the we $XX numbers. Yes, in in I $XX we're fourth million just, to QX. the $XX mentioned charge a between of maybe quarter would and million. real overall specific anticipating and million, on the $XX

that the of incurred already really where it's need most been we So about much frankly charges, and have we how reinvestment. and so reinvest

Joseph Vafi

think helpful, how Mike. in great. it we And providing that there? know that thinking that's lower That's just, a not be you're but Was efficiency, to was cash capital notable a for like that I'd flow? was QX. I kind should or we then should really little XXXX, anything Thanks, and timing about about of CapEx lot. Thanks

Mike Thomson

is third than free XXX be better it intend positive, thanks and we legislative and it see XXX end in we the flow make, and we'll that closed million flow we we positive. at to free CapEx non-adjusted at, of lower we flow down had The element came cash the to Joe. cash cash Throughout in than year the as you at quarter voluntary know the free year for if number took that. Look, $XX the about about wasn't again, about XXXX anticipated. how the that Sure, contributions pension positive breaks, would

I of was you've CapEx really byproduct [ph]. years XXX in a comparative seen more think last course the from is the just number purpose three us years three that what of That or so. a over it about ago

talked We we're some down. view, or working Day a cash to strategy to Investor capital cash on to continues neutrality light capital improvements our that that's moving in as So about also flow going drive that had have so well. number

down So us on working number you've just continual last Joe, over is capital profile. think just what our the and it's couple and I driving continual enhancing seen improvement CapEx focus from years the

Joseph Vafi

Great, Thanks, thanks much, Mike. Peter. very

Peter Altabef

you, Joe. Thank

Mike Thomson

Thank you.

Operator

Please next ahead. Your from is go Galinko with question Sidoti. Matthew

Matthew Galinko

taking for my question. thanks Hi,

is different going just being, little curious of that little bit a some mark Just you that, normal pressuring to reporting be volatility a in higher mix, the third going a or the create to bit touched technology one sort but is forward going in couple this from Obviously, is does on party year. around and bounce margin? look, continue functionally forward, that cells hardware how that me, the structure

Mike Thomson

in at there's a see normal hardware A you the say of a true any there. question, schedule, But schedules it's third or you between byproduct our it's for fairly what is the and XX% XX% any thanks of normalcy stipulates, I technology again contract it. party so on wouldn't versus range the should average, of you revenue somewhere in compare, depending XX% a refresh on to more that given to think in B. the on when renewal anywhere year, of year I the XX% more hardware between year-over-year hardware But can look have refresh and year technology and really actually look, Typically Yes, the Matt. cycle,

Peter Altabef

Peter. is Yes, Matt, this

You I and were in technology of this was sales happening range think the with year. globally. towards to were you But end higher, have put higher context what the you hardware

work lot to all that a prepared You've folks establishing of everybody had not from was from and of work home. home do

So of that for as caused, get we on if bit pressure positive our sales us clients hardware you will, a helped established.

Matthew Galinko

And that really you. as call talked earlier, for an guess this guess as kind opening And sense. bill I there option follow it, on its hypothetically, M&A up follow if you've makes discussed pass up of on just pension Got about me. then question. I from up does guess the one I

on internally does So, guess as in your $XXX you -- that think capital or burning do pocket just the necessarily what course can, relatively you're on inorganically, it a hole XXXX? or outlook Is curious, something I how that? over that of million quickly your deciding think -- deploying or you about M&A not you I'm Thanks. start see that decisioning for part moving that of your is about can you how

Peter Altabef

is not I on said, to pocket. you price for to of this your hole people now, acquisition at a that hot and some is in of acquisitions quick Mike you - for are the our really have pension right cloud Peter. in team pocket. the for balance order We it even even active in that our as have M&A mergers better not We're start We're pricing. that acquisitions. than in modest. and for million, specific our as know have unit. because of take most and that, but we acquisitions. don't in our The is year, team. allocated an up our really, is high to acquisitions said, have The Yes, look looking I you guess we're and a for the in is now $XXX pocket we the I'll not is because business that call. burning answer That This in were the legislation. it follow before right and a elaborate. capability goal scale looking the take some hole we That is we it burning unit GWS significantly our and down, unless business balance need not cash very believe cash a of Matt, this familiar the in without is then market justify to Matt, It is of money models

rush size do to as in able I we'll of be expected are and not we think that. to, acquisitions be particular modest. said, we So to those we're any But don't, the

will be Mike? So the I good that we in million. think without or with shape $XXX

Mike Thomson

think it perfectly happening mean, you and to or look, we're frankly, looking and enhance that's legislative Yes, capabilities I market relief. acquire I said here with Peter. without a in

is what sheet be of them our but deal the here from base looking our them not if back that right we needed is but as won't $XXX to and important is we're doesn't to And to the borrow have is the prudent balance competencies look out we're ensure that being those us. that and mean we us but is, to, there's capacity and on take hot, reality market Peter and have million-ish plenty for something cash, we We play in noted, into there. fairly what perspective, prospectively, able our only helps getting, back

hard looking and of I whole things thing the a in company. do the we're different going So, Matt, bunch would general say right by to at we're

Matthew Galinko

you. right, All thank

Peter Altabef

Thanks, Matt.

Operator

go question next Equity is Bourgeois Please DeepDive from Rod ahead. Your Research. of

Rod Bourgeois

the the In on for on growth a demand? just and very on is about thanks these have to then especially year your impacting how ability seem that state helpful meaningfully Hey, you of digital all digital latest in from clear on guys. about thorough ClearPath question out. a can Forward. I presentation workplace, workplace of of and accelerate up update Hey does trends, stuff. how follow portion talk I'm status is that the business. Field contingent business COVID an interested the XXXX of Services into It the next plays the

that. an would be get to view updated of So on great sort it

Peter Altabef

a question. had would on in marginal so Rod Field the the for say is, fourth uptick of Services we in terms much demand. thanks I Yes, very quarter What

run a we're slight none run rate. That's But, significant Field Services. uptick not full anticipate of Field far I a full expect at in I terms we're our Services. uptake to in of from rate, XXXX, think not but numbers think in say, We

increase revenues platform, you hear SLAs compensation. about, And is end XX% increasing say, in not the Field of the all to It's But little us move in our run objective we about Services value XXXX we would talk very Services, revenue customer we're user us expect general go to from of outcomes, as is really the from because user significantly. added going end our from I about InteliServe and we driven to to talking the rate hear of really experience, that you we to our a us moving value So talk year. future, you a about have the come confidence on over Field means of the and hear of course that experience. bit up look our really

I uptick for expect going revenue we So I from think a think marginal Field the Services. be but in business, biggest TWS that's uptick our to

Rod Bourgeois

is with could follow there a to margins, actually Field up your guess stable the end-user erode or proven plan Services intentionally some Services and or enhance So, be to Field some from to but that shrink shift XXXX is XXXX I experience into ways? on that into possibility in is,

Peter Altabef

absolute of percentage Well, you're on depends it talking or dollars whether revenue.

we expect don't dollars. of of it terms terms, to percentage dollars, In than the growth we expect declining Field be do In absolute Services. absolute areas in coming other revenue no from we because

Rod Bourgeois

a that on adoption trend. is is ClearPath Forward, mega And Got adding and it, cloud trend further to okay then great. COVID clearly

demand, cloud adoption to world? Forward light are trends happening are the puts that demand Forward want what how for takes related So ClearPath I technology ClearPath the happening in Forward cloud the of technology in impacting that's and ask all are ClearPath in

Mike Thomson

as a Well, it I question. be be. say, frank, would as great hurried that's it's thought to I would not

Forward So, ClearPath this we actually, effort. in on August of a big put past year. Azure That's

MCP we which While platform Azure, year really is already our platform expect OSXX on on by process. of on will platform ClearPath Forward complete our this the be our end or Azure Azure, XXXX to

Azure are clients We using platform either platform. using of are at or have the Azure number now the a that looking

they to. I it environment a they have cloud wish comfort switch has think if know can them they that effectively the what given has to public done, they that

journey, pulling a maybe it and on mean more cloud. they're two-year a the they're that and think people one be has time, will. of ripcord instead public of over the saying the to think now about right But them five-year I thinking more We doesn't that to journey. thinking absolute about,

not right now, no large if talking been We but about works. have so. we them. does to there's that that think have we're it, I moving cloud institution financial to We're a the happy to that. happy are happy it move them do answer actually for happy large that government We're reason we for to the quite that and So with clients want

best very have And about So actually right Forward think we happy on the we ClearPath progress moving now. worlds with the of both we're Azure.

Operator

Smith ahead. with & Smith is question Your William from next Company. William Please go

William Smith

there at sale good Peter. ago there, you that and would a of could was Congratulations I could be all is about the you an on My developed? comment and that some another know that question going comment on all how relates there made. that how tail on year a progress about because that's to the there Hi, year SAIC and business, and you've that's expectation

Mike Thomson

all, sale, levels the plan. streams. Well, SAIC, developed that would that of to the to This, first two think for we be well. Yes, there from Bill first on transition really I After according revenue revenue streams and thought went us has absolutely. service three

will Forward ClearPath ClearPath the recall, as retained intellectual on related Secondly, you renewals we all of property Forward. to

us, And distributor Federal respect element so, I of if the one Stealth, according SAIC that channel has is as third with going our And Government for that is is according active partners would to to to so Stealth. will, too say exactly that acting, plan. then is for SAIC a the to And gone you more plan.

the travel respect (identity), right Stealth our Stealth. terms to know, while which healthcare, call And some capabilities. versions other now channel I channel progress important that. is We're is really referenced and You of say (core), in biometric the is with made all bigger and current two And both that really using testing. to client activities. to SAIC with we in which of of and response to have a is respect would the micro-segmentation transportation, is COVID us, COVID I we capabilities my One the have we Stealth what on the

a Inspire well are the So we and we're transportation for as both partnership active, a within Inspire, Stealth as opportunities in testing opportunities Health solution that and us. and with quite with very last announced of vibrant year, healthcare travel is working some upon

William Smith

you. thank great, Okay,

Mike Thomson

Thanks, Bill.

Operator

question-and-answer to for the Peter like session. conference I concludes remarks. closing to That back Altabef our any would over turn

Peter Altabef

recommend that item audio the Thanks which we set from of as as joining in a his useful. Obviously, hope and approach really put that. them Mike both for the that our lot we that us. have and in like We I we on everyone first as I business units. a think laid to we January you of slides, remarks, on we commentary. my I’d presentation our unit with effect will the you But have of not that again, strategy, as recommend about business much thank them the talking team, place company whenever business reporting Investor of like the end the very and on to to the presentations, spend of new you. thank the the time ready I to out who us of have thank start join rationale, One well you. able for quarter. and that, would Day those of and would our Mike find will the the unit our today Relations Investor Day in you rest of for structure I Courtney Holben the were stand will I'd dialogue you to leadership that Alyssa. to didn't the full to want transcripts January, in again I with and and appropriate. we team Investor continue to With referred

thank everyone. very much guys you So

Operator

you presentation. Thank concluded. now has conference The attending today's for

now may disconnect. You

Unisys (UIS) 23 Feb 212020 Q4 Earnings call transcript