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Unisys Corporation has posted a net income (including pension expenses) of $46.6 million or 99 cents per diluted share in the second quarter of 2012 compared to a net loss (including debt reduction charge, post-tax charge and pension charge) of $11.6 million or 27 cents per diluted share in the year-ago quarter, and a net income (including a charge related to debt reduction and pension expense) of $13.4 million or 30 cents per diluted share in the first quarter of 2012.
Excluding these charges and expenses, net income for the quarter came in at $1.41 per diluted share versus $1.07 per diluted share in the year-earlier quarter and 97 cents per diluted share in the previous quarter.
The rise in the company’s earnings for the quarter was primarily driven by increased sales in the Technology segment, as well as in its Information technology outsourcing division. The company’s earnings easily surpassed the Zacks Consensus Estimate of 48 cents per share for the quarter.
Net revenues came to $921 million in the second quarter of 2012, down 2% from the year-ago quarter and 0.8% sequentially. Foreign currency fluctuations negatively affected the revenue by 5% in the quarter. However, on a constant currency basis, revenue improved 3% annually.
Services revenues plummeted 3% year over year, due to a 20% fall in revenue from the U.S. Federal business and adverse impact from foreign currency fluctuations.
Excluding the U.S. Federal business, services revenue remained flat year over year, but it improved by 5% on a constant currency basis, driven by the augmented sales in Information Technology and Business Process Outsourcing divisions.
In the reported quarter, services orders dropped by double-digit, due to a fall in the amount of orders in outsourcing and infrastructure services. As of June 30, 2012, services backlog was $5.1 billion versus $5.7 billion in the year-ago quarter.
Technology revenue in the quarter surged 12% from the prior-year quarter, primarily led by high ClearPath sales.
Gross margin came in at 26.4%, up from 24.3% in the previous quarter and 22.8% in the year-ago quarter. Operating margin came in at 8.6%, increasing from 6.9% in the previous quarter and up from 5.1% in the year-ago quarter.
Selling and administrative expenses amounted to $142 million compared with $147.2 million in the previous-year quarter. Research and development expenses were $22.2 million versus $18.4 million in previous year quarter.
Balance Sheet/Cash Flow
The company ended the quarter with cash and cash equivalents of $659.7 million, up from $654.7 million at the end of the previous quarter. Long-term debt was $291.8 million, down from $295.5 million at the end of the previous quarter.
Cash provided by operating activities amounted to $57.1 million in the second quarter of 2012 compared with $35.5 million in the year-ago quarter. Capital expenditures incurred were $35 million in the second quarter of 2012 versus $29 million in the previous year quarter.
The macro-economic conditions continue to be challenging for Unisys. Hence, we continue to have a Zacks #3 Rank on the stock which translates into a short-term rating of Hold. Nevertheless, in the long run, we have a Neutral recommendation on the stock.