Unisys CEO: Our Federal Business Focus, Particularly Around Border Security, Aligns Well With The Trump Administration

Unisys President and CEO Peter Altabef said his company's federal practice and the new administration of President Donald Trump share the same priorities, particularly as they relate to securing the border.

"In general, we feel bullish that our focus is increasingly the focus of the new administration," Altabef said during Thursday's earnings call. "The areas of our focus are where you're less likely to see cuts, and more likely to see actual focus, attention, and perhaps growth."

Border security is already the largest of Unisys's 30 U.S. government business units, and Altabef said Unisys is increasingly bullish about this practice under Trump. Conversely, Altabef said reports indicating that the Trump administration will temporarily freeze contract activity for the U.S. Environmental Protection Agency won't affect Unisys since the company doesn't do any business with the EPA.

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"Obviously, there is some uncertainty about what will happen in certain federal agencies around their pipeline in terms of new contracts," Altabef said. "It's less of a strategy hat and more of a crystal ball."

Unisys is responsible for managing the IT infrastructure for the organization that manages European border management, migration and asylum, according to Inder Singh, Unisys's chief financial officer. Singh said these prior engagements in other parts of the world give Unisys a strong position going forward for its U.S. federal business.

"Our relationship with the U.S. border security efforts positions us in the right way," Singh said. "As a global phenomenon around border security, we do believe we're well positioned."

The Blue Bell, Penn.-based company, No. 19 on the CRN Solution Provider 500, saw revenue in the quarter ended Dec. 31 drop to $721.7 million, down 9 percent from $789.9 million the year prior. That fell short of Seeking Alpha's estimate of $725.6 million.

Unisys recorded a net loss of $1.2 million, or 2 cents a share, down from net income of $1.1 million last year. On a non-GAAP basis, earnings fell to $38.5 million, or 60 cents a share, down 51.5 percent from $79.3 million, or $1.58 a share, the year prior. That missed Seeking Alpha non-GAAP earnings estimate of 70 cents per share.

Shares of Unisys fell 0.4 percent in after-hours trading Thursday to $13.70 per share. Earnings were released after the market closed.

For all of 2016, Unisys reported sales of $2.82 billion, down 9 percent from $3.02 billion last year. The company lost $47.7 million, or 95 cents a share, a 56.6 percent improvement over its net loss of $109.9 million, or $2.20 a share, last year.

Services revenue fell by 8 percent to $597 million in the fourth quarter as the company undertakes cost-cutting efforts to improve efficiency and hires additional domain experts for focus industries.

Similarly, Unisys' technology revenue declined to $125 million, down 11 percent from $141 million the year prior. The decline stemmed in part from stronger-than-expected technology sales in the first nine months of 2016, Unisys said.

For all of 2016, revenue from Unisys' commercial and U.S. federal sectors declined by 1 percent as gains in technology sales were more than offset by modest declines in services sales. Unisys' federal backlog is up on a year-over-year basis from the end of 2015.

The financial services sector, meanwhile, experienced a 15 percent revenue sales due to both services weakness and tough year-over-year comparisons in its technology business. And the company's public sector business witnessed a 9 percent drop in sales as a strong year in technology was more than offset by a services decline.

From a geographic standpoint, Unisys' U.S. and Canadian sales fell by 9 percent for all of 2016 due to declines in both its services and technology business. The company's Latin American sales dropped by 6 percent in 2016 as a strong technology year was more than offset by a drop in services sales.

Sales in Europe, the Middle East and Asia (EMEA) fell by 11 percent due to weakness in the United Kingdom's check processing business and lower services revenue generally. The company's Asia-Pacific revenue climbed by 14 percent thanks to key new client wins in its public sector business and general increases in the company's services business.

Unisys expects revenue for all of 2017 to come in between $2.65 billion and $2.75 billion, representing a sales decline of between 1 percent and 5 percent after factoring out changes in foreign currency exchange rates.