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Unisys CEO Altabef: COVID-19 Impact Is Making The Company Stronger

Unisys, like most companies, couldn't escape the impact from the COVID-19 pandemic, but the changes it implemented both before and while the pandemic hit will help make it a stronger company going forward.

Global solution provider Unisys is seeing an impact from the COVID-19 coronavirus pandemic and has withdrawn its financial performance guidance for the rest of 2020. But the impact is less than what the company’s peers are facing, Chairman and CEO Peter Altabef told financial analysts Tuesday.

Even more important, Altabef told investors during the company's fiscal 2020 first quarter financial results call, the very services and technologies Unisys takes to its clients is helping the company prepare for improved operations after the pandemic.

"As we have supported our clients, our goal is not just to get through this, but to stand out for our services," he said during his prepared remarks.

[Related: Unisys Outlook: Sale Of Fed Business To SAIC Will, Coronavirus Might, Impact 2020]

The $1.2-billion sale of Unisys' federal government business to SAIC (Science Applications International Corp.), a Reston, Va.-based global solution provider, earlier this year before the pandemic also gave Unisys the ability to invest in its enterprise resource planning (ERP) modernization, enhanced workforce management system, and digital sales platform, Altabef said.

"So we will be well-prepared as we come out of the COVID crisis," he said.

As the COVID-19 coronavirus pandemic unfolded, Unisys was able to move 95 percent of its employees to work from home with the use of videoconferencing and VoIP technologies and Unisys' Stealth security architecture across the organization, Altabef said.

The company also implemented ISO-certified business continuity procedures and redeployed under-utilized field engineers to help support customers in new ways, he said.

"To date, there have been no national disruptions to delivering services to our clients," he said.

Altabef, when asked about the business impact from COVID-19, said Unisys' revenue and profit were less impacted than those of many of its competitors, as the company has done what it can to ameliorate the difficulties, and knows it can do more.

For instance, he said, Unisys would have liked to have had its own ERP project done by now, and so it is important to do it while business slows down because of the pandemic. "This is a company that has always had potential, but sometimes we didn't get out of our way," he said.

However, Unisys' ability to provide clients with remote services and add its Stealth security technology to the mix is something others cannot do.

Many of the constraints put in place by the COVID-19 pandemic will result in a permanent shift in how companies do business, Altabef said.

"Not everyone will be going back to the office, or will go back to the office for three days a week," he said. "So our ability to help clients with remote solutions is important."

Mike Thomson, senior vice president and chief financial officer of Unisys, said over 80 percent of the company's revenue is recurring revenue, and is not project-based, and so for the most part is not expected to be impacted by renegotiation.

For the first quarter of fiscal 2020, Unisys reported revenue of $515.4 million, down 7 percent from the $554.5 million the company reported for its first fiscal quarter in 2019. That includes services revenue of $425.9 million, down from last year's $474.0 million, and technology revenue of $89.5 million, up from last year's $80.5 million.

Revenue for the quarter beat analyst expectations by $7.3 million, according to Seeking Alpha.

Unisys also reported a GAAP net loss of $52.2 million, or 85 cents per share based on continuing operations, which was higher than the loss of $32.7 million, or 64 cents per share, the company reported for the same period last year. On a non-GAAP basis, Unisys reported income of $700,000, or 1 cent per share, better than last year's loss of $5.5 million, or 11 cents per share.

Analysts had been expecting GAAP earnings of 96 cents per share, and a non-GAAP loss of 31 cents per share, according to Seeking Alpha.

Altabef said that Unisys' business strength came from a diversified client base, with no single client accounting for over 5 percent of revenue.

About 44 percent of Unisys' revenue in the quarter came from the U.S. and Canada, with about 56 percent coming from the rest of the world. About 37 percent of total revenue came from commercial clients, 30 percent from financial services, and 33 percent from government, including non-U.S. government sales and sales of Unisys technologies like Stealth via SAIC, he said.

Looking ahead, Altabef said it is hard to determine how business for the rest of the year might be impacted by the COVID-19 pandemic and the resulting economic slowdown. The company might see non-GAAP revenue fall by 10 percent year over year, or it could be more or less, he said.

"Given the decreased visibility into the macroeconomic environment, we are withdrawing our guidance for the year," he said.

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