Q4 2024 Unisys Corp Earnings Call
Good morning, and welcome to the Unisys Corporation fourth quarter and full year 'twenty 'twenty four financial results conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your touch.
The phone keypad.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.
Speaker Change: Now I'd like to turn the conference over to Mikael up the worst ski Vice President of Investor Relations. Please go ahead.
Mikael Updefski: You operator, good morning, everyone. Thank you for joining US yesterday afternoon, Unisys released its fourth quarter and full year financial results.
Speaker Change: I'm joined this morning to discuss those results by Peter <unk>, Our chairman and CEO, David Mccann, our CFO and Mike Thomson, our president and CFO, who will participate in the Q&A session.
Speaker Change: As a reminder, certain statements in today's conference call contain estimates and other forward looking statements within the meaning of the securities laws.
Speaker Change: We caution listeners that the current expectations assumptions and beliefs, forming the basis for forward. Looking statements include many factors that are beyond our ability to control or estimate precisely this could cause results to differ materially from our expectations.
Speaker Change: These items can also be found in the forward looking statements section of today's earnings release furnished on form 8-K and in our most recent forms 10-K and 10-Q as filed with the SEC.
Speaker Change: We do not by including this statement assume any obligation to review or revise any particular forward looking statements referenced herein in light of future events.
Speaker Change: We will also be referring to certain non-GAAP financial measures such as non-GAAP operating profit or adjusted EBITDA that excludes certain items such as post retirement expense cost reduction activities in other expenses. The company believes are not indicative of its ongoing operations as they may be unusual or nonrecurring.
Speaker Change: We believe these measures provide a more complete understanding of our financial performance. However, they are not intended to be a substitute for GAAP.
Speaker Change: The non-GAAP measures have been reconciled to the related GAAP measures and we've provided reconciliations within the presentation. The slides accompanying today's call are available on our investor website with that I'd like to turn the call over to Peter.
Peter: Thank you mackellar good morning, everyone and thank you for joining us to discuss the company's fourth quarter and full year 2024 results.
Our fourth quarter results were solid with 10% sequential revenue growth, both as reported and constant currency and our non-GAAP operating margin was a strong 11, 6%.
Peter: Full year non-GAAP operating profit was $176 million, representing an eight 8% margin up 180 basis points year over year and above the top end of our upwardly revised guidance range.
Peter: We exceeded our initial free cash flow outlook, and then delivering on our goal to improve cash conversion with lower aggregate legal environmental and cost reduction payments.
Peter: Pension free cash flow nearly doubled to $82 million in 2024.
Peter: Our 2025 outlook continues to advance us towards our long term goal of expansion in pre pension free cash flow was approximately 100 million expected in 2025.
Peter: Our outlook reflects continued execution of our ongoing strategy to improve revenue growth and profitability of our ex LMS solutions.
Peter: Hence our high margin <unk> revenue.
Peter: Streamline corporate costs and improve cash conversion.
Peter: With the growth and margin of our new business signings in 2024, and our investments to improve delivery and optimize our workforce. We expect to provide an underpinning for another step up in X L. S profitability in 2025.
Peter: We're also raising our revenue expectations to approximately $390 million in 2025 and $400 million in 2026 at an average expected gross margin of approximately 70%.
Peter: This 395 million average LLS revenue for 25 to 26 has a 25 million dollar annual revenue increase to our previous expectation of $370 million on average for the next two years.
Peter: This is the latest in a string of positive revisions to reflect the success of our clear path forward 2050 strategy and further support the longevity and inherent value of our LMS solutions.
Peter: Our optimism stems from our clients' long term commitment to and expanding use of our platforms, which is also accompanied by a strong flow of demand for support and modernizing and optimizing the surrounding states.
Peter: Looking expired sidings fourth quarter, New business T. C. V was approximately 220 million, our strongest quarter of the year and up 24% compared to the prior year period.
Peter: Year, New business T. C V was approximately $790 million up 29% compared to 2023.
Peter: New logo T C V more than doubled year over year, both in the fourth quarter and on a full year basis. We believe the substantial improvement in new logo conversion marks a positive evolution and our ability to expand our client base.
Peter: This means we will have a higher baseline potential for new scope and expansion in 2025, and we already have follow on opportunities in the pipeline or being qualified with our 2024 new logos.
Peter: Our new business success in 2024 provides underlying confidence and an inflection in X L. N S revenue growth in 2025.
Peter: Is margin accretive societies increase as a proportion of our gws and C&I revenue, we expect a multiyear tailwind to our ex <unk> gross margin.
Peter: Our fourth quarter signings includes several notable examples in dws, we signed a significant field services expansion was one of the largest global Oems related to high end enterprise storage systems in the United States, Canada, and Latin America.
Peter: We expect this engagement will increase the volume of higher value higher margin field services, we provide for this large client.
Peter: Getting cigna profitability and beginning to offset some of the volume declines in lower margin field services, we experienced in 2024.
Peter: In a separate field services, new business win Unisys was chosen by one of the largest global quick service restaurants to provide network deployment and ongoing support for more than 10000 U S restaurant locations and new restaurant openings.
Peter: These sizable wins with global Blue Chip clients are a testament to our leadership and innovation in the digital workplace market.
Peter: And C. A N I, we signed a fourth quarter, new logo contract with a public sector utility expanding our footprint in Latin America Unisys will provide a range of security managed services to our clients each subsidiaries, including extended detection and response and continuous threat exposure management.
Peter: And ECS, we had several fourth quarter wins in specialized services to support modernization and continued use of our LMS platforms and travel and transportation. We want a large managed services contract expansion with a leading international cruise line a client of over 40 years Unisys will refresh.
Peter: [laughter] expand and manage supply its mission critical reservation system infrastructure and takeover administration of databases that they took.
Peter: Aidan reservation excursions promotions, a travel agent interface data.
Peter: We also secured long term L N S renewals during the quarter, including with travel and transportation clients in Spain and Asia Pacific.
Peter: In the public sector Unisys secured a significant illness renewal with a client in Europe, which included infrastructure and application services and law enforcement system that runs on our software in several cases, our ability to provide modernization services from both ECS and C&I was a.
Peter: Iteration for clients, demonstrating our clear path forward 2050 strategy at work.
Peter: So as we have shared with you throughout this past year illustrate the evolution of client perception in our solutions, we see similar trends with independent analysts and advisers that influence client decisions.
Peter: Most recently in the fourth quarter, we improved to a leader position in a major IDC report on worldwide digital workplace services.
Peter: And received new leader acknowledged woods from episodic for generative AI services and from Everest for both mid market digital workplace services and analytics and AI services.
We were also recognized as a leader in eight areas of multi cloud services, but I S. G.
Peter: And reports published during 2024, we have received 16 liter designations six of which are new from highly reputable firms, including Amazon.
Peter: C ISG Everest and Nelson Hall.
Peter: And Dws, we received numerous leader with designations for our global digital workplace offerings as well as recognition in the future of work end user computing and this service now ecosystem.
Peter: In C&I, we were awarded leader rankings and cloud services as well as designation for our solutions in areas such as security data Center services, Microsoft services, cognitive and self fueling infrastructure and artificial intelligence. These.
Peter: These recognitions are important validation of our investments in innovation sales and marketing and help us get invited to more opportunities.
Peter: I will now discuss four E 2025 priorities that will position us to capitalize on market demand artificial.
Peter: Intelligence application services clear path for 2015 and go to market.
Peter: We expect artificial intelligence to accelerate in 2025.
Peter: And we are continuing to invest in our AI enabled solutions and the services to build a strong foundation to support adoption. This foundation requires orchestrated operations across multi cloud environments data and application layers and devices that deliver intelligent and user experience.
Peter: Excess knowledge.
Peter: In C&I, we our infusion AI into cloud services and development to increase automation and delivery speed and efficiency.
Peter: We're also developing specialized AI agents, where clients are trained on client specific data to automate specialized tasks.
Peter: Dws, we're investing in our generative AI enabled technology framework called sort of experience accelerator, which is the foundation of our next generation of service desk. We believe this accelerator has the potential to disrupt the digital workplace market by addressing client data secure.
Peter: Alrighty and cost considerations the platform significantly reduces client costs and deploys in the client's environment to provide client control over the use and security of their data.
Peter: We're also expanding our liquid cooling expertise within field services to support power intensive AI workloads of the future.
Peter: These AI related investments compound on the strong foundation laid in 2024 to support our growth plans.
Peter: Over the past year, we streamlined and modernized our field service dispatch and ticketing systems and bolstered our sales force and service now relationships, which allow us to onboard clients and scale delivery at a faster pace.
Peter: We have also secured several framework agreements that are not reflected in our reported T C V or backlog.
Peter: A second priority in 2000 and twenty-five as application services.
Peter: Where we are centralizing our capabilities and sharpening industry focus.
Peter: January one 2025, we executed a realignment to fast track to those efforts by consolidating most of our operations that are currently reported in all other intra E C S and C. A N I segments.
These solutions are largely concentrated in Europe, and Asia Pacific and broadly consistent application services for public sector clients, which will move into C&I and business process services in the financial and public sectors, which will move into E. C. S.
Peter: Our I P. S. L check processing joint venture will continue to be reported within all other.
Peter: We have also moved ECS client application services into C&I. This centralizes, our application development capabilities into one application factory.
Peter: A deeper industry focus and connection to all of our clients, including the E. C S client base.
Peter: This will enhance cross selling standardized development and foster innovation within a central pool of application talent, which we can leverage to more effectively deliver faster and better solutions for our clients.
A scaled application factory also elevate our position within the fast growing application arena and will allow us to pursue larger engagements.
Peter: A third priority is focused on supporting our clear path forward 2050 strategy in the fourth quarter. We went live with a major new clear path forward release that delivers performance scalability and security enhancements.
Peter: The release also includes new capabilities to prepare clients for post quantum cryptography geologist.
Peter: <unk> PQ see compliance encryption for surfing data.
Peter: We're continuing to elevate our presence at air cargo so our industry solution portfolio in the fourth quarter. We went live with an enhanced version of Unisys logistics optimization for cargo capacity planning and rolled out initial multi modal routing capabilities.
Peter: We also enhanced our cargo core offerings with functionality for compliance with new customs regulations and fully on boarded one of the largest global air cargo carriers into our cargo portal.
Peter: A fourth priority for 2025 is advancing our go to market by investing in innovation thought leadership industry expertise and our alliance partners.
Peter: We're expanding both our team of client technology officers with key clients and our industry vertical teams, where we see the largest opportunities for growth.
Peter: Finally, we are intensifying our efforts to strengthen and expand our partner ecosystem, including relationships with key existing hyperscale or OEM and enterprise software partnerships as well as with new partners that ensure we can deliver and incorporate a diverse set of emerging technology into our clients environment.
Peter: Yes.
Deb: Before turning the call over to Deb I want to briefly touch on our workforce initiatives in 2024, we focused on career growth and cost effective talent management by evolving career pathing and early career development programs and launching a new talent mobility platform.
Deb: We also continue to promote a positive workplace, resulting in finishing the year with low trailing 12 month voluntary attrition of 11, 8% compared to 12, 4% a year ago.
Deb: In 2025, we will increase our focus on talent transformation initiatives based around a three key objectives.
Deb: Our first objective is optimization of our internal labor.
Deb: This includes initiative, increasing campus hiring talent rotation and Upskilling and redeploy associates. Our second objective is increasing utilization to enhance productivity and minimized external hiring.
Deb: And our third objective is cost reduction, which includes initiatives related to contract or use and scaling capacity at key delivery centers in lower cost domestic and international labor markets.
Deb: With that I'll turn the call over to Deb to discuss our financials in more detail.
Deb: Thank you Peter and good morning, everyone.
Deb: During my discussion today will reference the supplemental slides posted on our website analytics that total revenue growth, but as reported and in constant currency and segment growth in constant currency.
Deb: It will also provide information excluding license and support revenue or Exxon are you, allowing doctors to this asset.
Deb: We are making outside Washington, D C, where revenue and profit recognition tied to license renewal timing, which can be uneven between quarters and years as Peter mentioned, we are pleased with the improvement.
non-GAAP operating margin and the strong year over year free cash flow growth, we were able to achieve the operational improvements we've made in our favor.
Deb: Leading to sustained gross margin expansion, which is being enhanced by stronger performance as clients continue to commit to an increased usage of our operating system.
Deb: The resolution of several legal matters in 2024 eliminate the teacher headwind to cash from legal costs related to these matters. We also continue to expect higher conversion in 2025, and 2026 is environmental and cost reduction payments decline.
Deb: Looking at our involved in more detail you can see on slide four fourth quarter revenue was $545 million down 2.2% year over year as reported and one 5% in constant currency during the quarter revenue came in stronger than our already increased expectation well Exxon that's right.
Deb: <unk> declined four 7% as reported unfortunately, 8% in constant currency.
Deb: Full year revenue was $2 billion down 3% on both a reported and constant currency basis and within our guidance range.
Deb: Excluding license and support full year revenue was $1.58 billion down 6% year over year, both as reported and in constant currency.
Deb: Despite certain headwinds we view as temporary.
Deb: We remain optimistic about the strong levels of new business to be assigned and the growth prospects for both Gws N C. A N I G 25.
Deb: I will now discuss our segment revenue, which you can find on slide six in constant currency terms.
Deb: Digital workplace solutions revenue declined eight 2% year over year to $128 million in the fourth quarter and for the full year Gws revenue was down four 2% to $524 million.
Deb: The fourth quarter and full year declines were driven by lower hardware and isolated lower margin field services volumes.
Deb: We expect that during the year gws positively inflect as recent new business signings ramp.
Deb: <unk> increased higher and field services volumes.
Deb: And expect growth in technology and services revenue related to a stronger PC refresh cycle in 2025, including advisory device subscription services and modern management.
Deb: The segment's new business signings were up more than 40% in 2024 with favorable margins and strong contribution from heat load that we expect <unk> to contribute to segment growth in 2025.
Deb: Cloud applications and infrastructure solutions revenue declined five 2% year over year to $132 million in the fourth quarter for the full year revenue was down 8% to $527 million. The decline in the fourth quarter was driven by lower third party technology breadth and.
Deb: Volume of certain clients related to the timing of project uptake, which can be uneven.
Anticipating improving project volumes in 2025.
Deb: Clients continue to adopt and optimized hybrid multi cloud strategy and modernize their data and application layers to support AI our.
Deb: Our combination of physical infrastructure cloud and application expertise.
Deb: That is for growth in the high value project work.
Deb: <unk> services to secure and intelligently manage hybrid ICSC and are becoming increasingly complex.
Deb: And we found AWS or see a new business.
Deb: Also increased more than 40% in 2024 and week.
Deb: That's our central application factory to expand our opportunity in high growth areas of the market.
Deb: Enterprise computing solutions revenue was up six 2% year over year to $209 million in the fourth quarter for the full year U S revenue was up one 3% to $651 million.
Deb: During the quarter Ellen Escalations revenue grew eight 4% to $152 million and $432 million for the full year.
Deb: Our expectation at $415 million, which we had increased from $375 million in the third quarter.
Deb: The $17 million of fourth quarter upside.
Deb: Driven by increased client consumption on our platform as we continue to see expanding usage at many of our larger clients.
Deb: Specialized services next generation compute solutions within ECS grew one 3% in the fourth quarter and two 3% for the year led by growth within financial services client.
Deb: This quarter, we are beginning to provide T. C D disclosures in absolute dollar term, which we believe frame our disclosure more in line with the broader service peers.
Deb: Fourth quarter total contract value was $752 million, including $218 million from new business and $534 million from regular.
Speaker Change: Hello, Your T C D $1 9 billion.
Deb: With new business T C D $791 million.
Deb: Trailing 12 month book to Bill with one time for the total company and <unk> nine times for XL and escalation.
Deb: Ended the year with backlog of $2 8 million compared to $3 billion a year ago.
Deb: Modest declines in backlog and book to Bill were the result of renewal timing with lower aggregate T. C. D up for renewal in 2024 with additional impact from movements in FX.
Deb: 2025 is expected to be a higher renewal T. C. D are benefiting backlog and book to bill throughout the year. This also provides a good opportunity to procure expansion and new scope that clients may seek to integrate renewing existing contracts.
Deb: Moving to slide seven fourth quarter gross profit was $175 million or 32, 1% margin compared to 32, 5% in the prior year period.
Deb: Fourth quarter, Excell and ask or margin was 15, 7% down from 16, 5% in the prior year.
Deb: Traction in both the total company and selling our gross margin during the fourth quarter were primarily driven by incremental cost reduction charges during the quarter.
Deb: For the full year gross profit increased more than $30 million to $586 million a gross margin of 29, 2%, which included delivering improvement in our axon installations.
Deb: Full year of selling into gross profit was $278 million, a 17 point gross margin compared to 15, 1% last year, an increase of 250 basis points, which includes a one time benefit from a previously equity contract.
Deb: I'll now touch briefly on segment gross profit, but you will find on slide eight.
Deb: WNS segment gross margin was 15, 9% in the fourth quarter up 60 basis points year over year full year Gws current margin expanded 170 basis points to 15, 7%.
Deb: These gains as a consequence that technology investments, we are making to modernize our delivery capability and boost employee productivity.
Deb: We're also benefiting from a strengthened leadership position in the market relative to our peer and an increased focus on value based pricing.
Deb: C&I segment gross margin was 15, 4% in the fourth quarter down 90 basis points year over year for.
Deb: For the full year gross margin was 16, 5% up 110 basis points year over year, our workforce optimization efforts, such as increased automation and expanded campus hiring continuing to drive positive outcomes.
Deb: Looking ahead, we anticipate greater benefits from automation AI and labor efficiency as we scale key delivery centers. We also expect our new central application factory.
Industry salaries and increased ECS cross selling to accelerate the mix shifts to higher margin solutions and C&I.
Deb: You see US segment gross margin was 64, 7% in the fourth quarter down 270 basis points year over year full year E. C. S. Gross margin was 62% down 100 basis points year over year, the fourth quarter and full year margin decline was primarily driven by a slightly higher mix of hardware and our Elena.
Deb: Within the period.
Deb: Moving to slide nine fourth quarter non-GAAP operating profit margin was 11, 6%.
Deb: Third to 11, 5% in the prior period fourth quarter, adjusted EBITDA was $91 million a margin of 16, 8%.
Deb: For the full year non-GAAP operating profit was eight 8% compared to 7% in 2023 exceeding the top end of our guidance range at six and a half to eight 5%, which was raised during the third quarter earnings call.
Deb: The year over year improvement in guidance beat was driven by a combination of an enhanced margin profile and are excelling installation upside in our Allen Escalations and SG&A efficiencies.
Deb: Adjusted EBITDA was $292 million, representing an adjusted EBITDA margin of 14, 5% compared to 14, 2% in 2023, we remain focused on streamlining corporate function rationalizing real estate and centralizing I T. While also investing in go to market.
Deb: Fourth quarter net income of $30 million and $24 million on an adjusted basis translating to diluted earnings of 41.
Deb: Our 33 on an adjusted basis.
Deb: The fourth quarter included a $40 million benefit related to a favorable settlement of a lawsuit we get brought to protect our intellectual property and confidential information.
Deb: Full year, GAAP net losses of $193 million or diluted loss per share of $2 79.
Deb: And includes a negative $130 million settlement charge related to our first quarter pension annuity purchase.
Deb: On an adjusted basis net income for the full year was $32 million or diluted earnings per share of 45 cents.
Deb: Turning to slide 11 capital expenditures totaled approximately $21 million in the fourth quarter and $80 million for the full year relatively flat on a year over year basis. As a reminder, a significant portion of capital expenditure relates to research and development for our Elena platform.
Deb: And we are maintaining a capital light strategy in our axon escalations.
Deb: Okay pension free cash flow, which is free cash flow prior to pension and postretirement contributions with $82 million in 2024 up from $44 million in 2023.
Deb: We generated $56 million of free cash flow in the fourth quarter, bringing our full year free cash flow at $55 million.
Deb: <unk> to negative $5 million last year. This was driven by lower international pension contribution and net legal payments as well as Arizona profit improvement.
Deb: That's ahead of the upwardly revised expectations of $30 million for the full year, primarily due to high fourth quarter, Elena's revenue and $15 million of the previously mentioned $40 million legal settlement received in the fourth quarter, the remaining $25 million due to a mid 2025 and it's assumed in our 2002.
Deb: 25 outlook.
Deb: Moving to slide 12 cash balances were $377 million at year end compared to 388 million at the end of 2020, right. Our net leverage ratio, including all defined benefit pension plans with 3.0 times at year end relatively flat on a year over year basis.
Deb: As a reminder, we strengthened our liquidity position by obtaining a two year extension on our ABL facility, which has a capacity of $125 million with an accordion feature up to $155 million and matures at the end of October 2027.
Deb: Our ABL remains undrawn and its maturity is aligned with our $485 million senior secured notes that come due in November 2027.
Deb: I will now provide an update on our global pension plans beginning with slide 13.
Deb: Each year, we provide more detailed estimated projections for expected global cash pension contributions and got deficit relative to our quarterly update.
Deb: These projections change based on factors, such as financial market conditions funding regulation and actuarial assumptions.
Deb: Our global GAAP pension deficit, which can be seen on slide 13, with approximately $750 million at year end 24, compared to approximately $700 million at the end of 2023.
On Slide 14, you can see a detailed projection of our expected cash contributions volatility contributions is lower in the first five years of the projection and informed our near term liquidity needs for.
Deb: For the five year period, beginning in 2025 through 2029 contributions are expected to total $585 million $10 million higher than our projections at the beginning of 2024.
Deb: Turning to slide 15, I'll now discuss our financial guidance for the full year. We expect total company revenue growth of positive 5% to positive two 5% in constant currency, which faced on January 31, 2025, foreign exchange rate equates to reported revenue growth of.
Deb: One 9% to positive <unk>, 1%.
Deb: Our growth range. It seems that fell on a constant currency revenue growth of approximately 1% to 5% and license and support revenue of approximately $390 million.
Deb: As a reminder, the tiny an exact amount of elements revenue can be difficult to forecast with precision given it is dependent on renewal timing insight, which can change based on clients' budgeting visions consumption levels and duration preferences among other factors.
Deb: We expect non-GAAP operating profit margin to be between six 5% and eight 5% for the full year. Our profit guidance reflects the decline in Illinois profit contribution due to renewal timing and coming off a strong 2024, we expect this to be partially offset by approximately 150 basis.
Deb: Point of improvement in aggregate tw at gain on gross margin and a reduction in SG&A.
Deb: For the full year, we expect to generate approximately $100 million of pre pension free cash flow and slightly positive free cash flow after funding our pension contributions, allowing us to preserve our strong cash balance.
Deb: Our pre pension free cash flow outlook reflects significant improvement in cash conversion of environmental legal structuring and other payments are expected to be a net positive $10 million, which includes a onetime collection of the remaining $25 million owed to us as part of the favorable legal settlement negotiated in the fourth quarter.
Deb: Sure.
Deb: We have settled several matters contributing to our elevated levels of legal payments in prior quarters.
Also expect lower cost reduction and other payments this year.
Deb: Our cash outlook assumes capital expenditures of approximately $95 million cash taxes of approximately $60 million and net interest payments of about $15 million cash interest does not include any assumption of refinancing.
Deb: However, we are monitoring credit market conditions, along with our banking partners to be prepared to Opportunistically take advantage of any favorable opening to refinance in 2025.
Deb: Looking specifically at the first quarter Exxon as revenue is expected to be approximately $370 million, which includes more than $10 million of expected FX impact relative to the prior year and equating to a low single digit decline year over year in constant currency.
Deb: The majority of the constant currency Exxon. This decline is due to a benefit in the prior year related to the favorable settlement of a previously exited contracts.
Deb: We also expect a slight decline in Arizona as revenue from our I T. S. L joint venture, which has zero margin and is reported within all other.
Deb: Based on our renewal timing first quarter Elena <unk> revenue is expected to be approximately $70 million compared to $93 million in the prior year.
Deb: First quarter is expected to be our lowest Elena quarter of the year full year. Alan S. Revenue is expected to be back half weighted with a split of approximately 40% in the first half and approximately 60% in the back half.
Deb: Given the cadence of Allen S renewal timing and the impact of FX. This translates to a total company reported revenue decline of approximately 10% or 7% in constant currency.
Deb: Low single digit non-GAAP operating margin.
Deb: Well, we do not provide financial guidance, our cash flow color beyond the current year I wanted to touch on the potential path that we see for achieving improved pre pension free cash flow in light of the expected increase in pension obligations next year, we expect much of the incremental cash flow to come from increasing gross profit in our ex element solutions.
Deb: Well, we are targeting approximately 150 basis points of annual growth margin expansion, resulting from delivery optimization and accretive new business momentum, we have demonstrated our ability to deliver gross profit improvement. These past few years.
Deb: We will continue to do so we also anticipate some incremental <unk> gross profit in 2020 based on our expectation of $400 million in Helena revenue. In addition, we expect further improvements in SG&A. As a reminder, we also expect an approximate $30 million reimbursement of environmental costs.
Deb: 1026 and.
Deb: An increase in interest payments, assuming a refinancing in 2026, it largely be offset by a further reduction in our baseline environmental and restructuring and other payments. This pathway should lead us to the pre pension free cash flow needed to fund our future pension contributions and organic investments for profitable growth with.
Deb: That I will turn the call back to Peter.
Deb: Before we open the call to our Q&A session I want to thank you for all of your attention to our company.
Speaker Change: For several years I have been joined by both Deb and Mike Thomson, Our President and Chief operating officer, and the Q&A session of our earnings calls we announced in December 2024 that effective April one 2025, Mike will become our CEO and I will continue.
Deb: Share of the Unisys Board of directors. Thank you also for your support of Mike.
Deb: Given that change I'm asking Mike to take the lead on this Q&A session and working with them on the earnings calls going forward. Operator, Please open the call to comments and questions.
Deb: Okay.
Deb: We will now begin the question and answer session.
Deb: Ask a question you May press Star then one on your telephone keypad, if you're using a speaker phone. Please pick up your handset before pressing the keys.
Deb: Any time your question has been addressed and you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Rod Bourgeois: The first question comes from Rod bourgeois with deep dive equity research. Please go ahead.
Speaker Change: Great Great and thanks.
Speaker Change: So when I just give my kudos to Peter and then Mike for this transition you guys are both Class Act then I wish you guys wish you guys. The best just to just to jump into the first question here.
Speaker Change: Given the low growth exit rate and the X L. A N S business as you exit 2024, you've got a pretty significant growth rebound expected during 2025.
Speaker Change: And I know some of that is coming from the strong new T. C V bookings that you've had but can you give it some more visibility into how.
Speaker Change: How youre looking at that growth trajectory in X L. N at I mean, how much of your confidence in that growth inflection point is coming out of work that's already booked in the backlog, where you have visibility into the ramp up.
Speaker Change: I'm also wondering if you had any assumption that these weak client volumes are going to come back or is all of the assumption based on what you're seeing in the backlog. Thank you.
Rod Bourgeois: Hey, Rod Thanks for the question and in your opening comment there much appreciate it and.
Speaker Change: Obviously.
Speaker Change: Thanks for following the company et cetera.
Speaker Change: Your viewpoints here are always insightful and we appreciate the time following you.
Speaker Change: Your question is has a couple of parts to it so I'll try to break it down.
Speaker Change: Into those.
Speaker Change: I think in general as you know.
Speaker Change: No from an industry perspective, we did we did fairly well in relation to the peers in 2024, but clearly we were behind in our expectations in X L. S revenue growth <unk>.
Speaker Change: You're exactly right that we're you know we're looking at that inflection in 'twenty five.
Speaker Change: We're calling for as Deb alluded to 1% to 5% growth in that selling.
Speaker Change: On constant currency basis, and I think that comes from really probably free component pieces and I'll break those down to give you a little bit more color.
Speaker Change: The first as you've alluded to at the end of your question was in relation to the backlog conversion.
Speaker Change: Clearly, we had a very strong new business signings in both.
Speaker Change: C. A N I M dws from a new business PCB perspective bulk of which were you know roughly 40% increases.
Speaker Change: I think we called a 29% year over year in new business signings. So we've got this I'll say lapping component of new business that we've signed in the back half of 'twenty four that we're going to see the benefit of in 'twenty five and a reminder, that those new business signings are also.
Speaker Change: Kind of our our new solution components, which are higher margin.
Speaker Change: Elements to that so that's number one.
Speaker Change: Number two when you look at you know what happened in 'twenty, four specifically with kind of the low volume components of our field services work, specifically PC oriented you're seeing from an industry perspective, where we're all expecting an.
Speaker Change: Uptick in that PC refresh cycle. So I think that was volumes will.
Speaker Change: Start to come back and Moreover, we and as we announced earlier and then some of Peter's early commentary.
Speaker Change: We've accelerated.
Speaker Change: With one of our large OEM global partners, our field services component on our higher margin storage work. So not only are we lapping year over year.
Speaker Change: P C volume decline, but we're also picking up additional field services work at a higher margin profile as well. So I think I think what we saw at the end of 'twenty four was kind of a little bit of.
Speaker Change: Our renewal.
Speaker Change: And the work effort from volume based projects.
Speaker Change: Starting to come back so we'll see that pick up we see the margin inflection on the PC refresh and and our DSS offerings that we think are going to be pretty strong in 'twenty five.
Speaker Change: The pick up in the type of work that we're doing much of that is in backlog already and if it's not in backlog. If we look at just in general our pipeline and visibility to deals we expect to close in 2025 those deals are in a much more of a.
Steve: Sure Steve.
Steve: We're a little over 20% more into our later stage.
Steve: Process when you talk about closing out our go to market contracts. So a lot of it is visibility of backlog a lot of it is later stage work and a lot of it is lapping.
Steve: What I would say our.
Steve: Quarterly or <unk>.
Speaker Change: Back half of the year lower volumes that we expect to recover in 'twenty five so hopefully Rob that gives you the type of color that youre looking for and kind of where that inflection confidence is coming from.
Rob: Yeah Super helpful commentary, there and so that my my my follow up is really about your ability to continue to drive the improvement in pre pension free cash flow.
Rob: The reversal in the environmental legal and restructuring bucket, which which had been very large in 2023. The reversal. There is super encouraging and I. Appreciate the color that you guys had provided on that already.
Rob: So now I want to focus on the margin levers that you have and what I'm hearing is you have gross margin levers.
Rob: And you're also continuing to do work on the SG&A front, although there are some investments in SG&A as well so.
Rob: Just to clarify you clearly are citing gross margin improvement from here are you also expecting.
Rob: SG&A benefit to your overall operating margin and then just just a specific thing within gross margin can you give us a sense for how much of the gross margin improvement confidence is coming from cost takeout and productivity versus pricing and mix shift because it does.
Rob: Sounds like you're you're you're you have opportunities on the productivity side, but also on the mix shift and add on the pricing side and can you, let us give us the incentive the balance of those two buckets in your gross margin trajectory. Thank you.
Yeah, sure and again, thanks, Rob for the question and the clarity here, so you're you're really right on all accounts here right. So if we just talk about the gross margin I'll stay on the operation side for a minute and then I'll flip over to U S. D N a and maybe ask Dan to comment on the.
Rob: S T a component as well, but if you think about the gross margin improvement in the business.
Rob: Youre seeing what were calling in in 'twenty five has two components. It has the L. N S.
Rob: Up in AR in top line that is also an increase in gross margin.
Rob: As that top line pull through and you'll note that.
Deb Thomson: When we when we Deb gave the commentary around the.
Deb Thomson: <unk> gross margin for 2024 was a higher mix of hardware components in that and in general was sitting at probably the.
Deb Thomson: Low to mid 60% gross margin rates here, we've got a step up in both top line primarily based on consumption.
Deb Thomson: And so this 2050 L program has been helpful. In driving additional gross margin dollars were also talked about that being in the approximately 70% range. So there is a pick up to your point on the topline from an LLS.
Deb Thomson: If I shift to X L and as we've got really two things at play.
Deb Thomson: One as you just alluded to there is a there is a topline benefit to gross margin because we're selling our solutions at a higher margin.
Deb Thomson: From the start and there are more valued solutions right. So it's not.
Deb Thomson: The whole point of our strategy was to kind of move up that stack and we're seeing some of the benefit of that coming through and we see this continued workforce.
Deb Thomson: Innovation, so Peter alluded to that in his opening remarks and gave three elements of that.
Deb Thomson: As it pertains to the shifting of the workforce, the upskilling and Reskilling the workforce as well as the Ah.
Deb Thomson: Efficiency and utilization play so I would think from an operational perspective, we're calling for about a point and a half on the aggregate and excelling as margin improvement and I would say you know if I look at that proportionally.
Speaker Change: It's probably about a half a point or so pull through offline in a point from a efficiency in the workforce right and it's also just the efficiency and how we're delivering our solutions Rod when you talk about the.
Rod Bourgeois: You know of AI, and AI ops, and orchestration et cetera, right that just being able to deliver that in a more efficient way.
Rod Bourgeois: It is where a good chunk of that comes from you right and that we're also expecting continue.
Deb Thomson: <unk> seen in SG&A as well Deb mentioned, a couple of components of that and Deb I'll ask that if.
Deb Thomson: If you want to weigh in here on the SG&A components for 2020.
Deb Thomson: Great. Thank you.
Speaker Change: And thanks, Rob for your question.
Speaker Change: The yeah, we definitely are making progress executing what we had laid out at Investor day, and 23, our SG&A initiatives, we're streamlining corporate functions rationalizing real estate and centralizing technology.
Speaker Change: Where we've made a lot of progress with that to your point you had made me are also reinvesting some back into our go to market in our portfolio, but we still will see.
Speaker Change: Portion of our operating profit improvement in 25 will be from that continued SG&A reduction and progress we're making.
Speaker Change: And I would say rod just to close that out I mean, obviously, our focus is on pre pension cash flow and kind of a continual step up in that you've seen that number almost double in 'twenty for Deb talked about that being in the $100 million ish range in 'twenty, five and the path to the 150 million ish.
Speaker Change: Range in 'twenty, six which gets the comfort level that the contributions that need to be made in those out years are covered and we're not tapping into our cash balances to do that so I think that's kind of the name of the game here.
Speaker Change: Great. Thank you guys and thank you to Peter you will you will be minutes talk to you guys later.
Speaker Change: Thanks, Rob.
Speaker Change: Thanks for that drug.
Speaker Change: The next question comes from Joseph <unk>.
Speaker Change: Buffy excuse me with Canaccord. Please go ahead.
Speaker Change: Hey, everyone. Good morning, nice to see progress in the business and yes. They can.
Speaker Change: Congratulations Peter and the team for everything they've accomplished over the last few years and with Mike.
Speaker Change: I'm looking forward to more progress in the business moving forward. So maybe just drill down on L enough a little bit more it's obviously, a big lever moving forward.
Speaker Change: We did see a step up in the guide.
Speaker Change: After two through you exceeded that and then we have another step up here, we drill down a little bit on where.
Speaker Change: Where those where that uptick is coming from the broad based as a function of the new releases software AI.
Speaker Change: Verticals.
Color there would be appreciated and I have a quick follow up.
Joe: Sure and thanks for the question, Joe and I agree with you and Rob Peter will certainly be missed.
Joe: And looking forward to continuing the great legacy he has he left US here. So I appreciate the opening comments there look I think you you know Joe this pretty well this business has continued to outperform.
Joe: We continue to see clients over the broad base.
Joe: <unk> signed contracts for longer durations, continuing to invest in the I T has stayed around the <unk> platform in general.
Joe: I think you know.
Joe: Interestingly enough when you think about what's going on obviously in the world today, and you think about the AI component of that.
Joe: And you look at this business I don't think it's really any different right.
Joe: The value in the AI is really about the large language models and the data and when you think about R. R. L N S operating system.
Joe: Got tremendous amounts of data that is secure and usable from from that perspective. So when you. When you look at the work that we're doing in the planning process around clear path forward 2050, it's really about the ecosystem around the LNR platform and.
Joe: I think what we've seen over the course of the last couple of years and we expect to see.
Joe: Prospectively, which is why we raised our our color guidance there up in both 'twenty five and in 'twenty six or an average of.
Joe: Roughly 25 million per annum of an increase in those years on a topline basis, it's because we're getting that.
Joe: <unk> from our clients in their increased consumption and their willingness to sign longer term deals right there, they're coming to us wanting to extend the.
Joe: The life of the deal and also giving US work in the application space that sit on top of that platform to help modernize that infrastructure. So.
Joe: This is not been new right I think we've seen this this trend of over performance from this business.
Joe: Probably over the course of the last two years.
Joe: And then as you know we have a pretty deep line of sight into the clients that utilize this.
Joe: This platform and work with them you know fairly exclusively and how we can continue to modernize and we're seeing that take up rate. So we're pretty excited about the longevity of this business. We think it fits in really nicely to what you would consider a modernization story and as you.
Speaker Change: No. It's it's the most secure.
Speaker Change: Operating system on the planet when you when you talk about according to news and the value that that brings so you've got this tremendous dataset.
Speaker Change: That can be utilized in a modernized way. So you know we're seeing a really I'll say strong client.
Speaker Change: Support of that and that's giving us confidence to increase our color there.
Speaker Change: That's great. Thanks, Mike and then.
Speaker Change: Maybe on the operation side, a bit I know Peter discussed this.
Speaker Change:
Speaker Change: Yeah, I guess, the repositioning and restructuring and.
Speaker Change: Application services and the software factory do anything special to note there on timing that's occurring now I know you've done a lot of repositioning internally over the last few years was this something new pop up on the roadmap or with just kind of planned.
But there were other things to do first just some more color there would be appreciated. Thanks, a lot yeah.
Speaker Change: Yeah, Great question and Thanks, Joe again for your continued following the story here and being spot on with these.
Speaker Change: The applications factoring as we're calling it is nothing new.
Speaker Change: Youre right when when we did our first premise of what the future strategy of the company would look like this was under consideration that right, but we had so much to do in order to.
Speaker Change: Kind of get the new strategy in place, we had a lot of change going on and it just wasn't the time from an adoption perspective. So you know, we we kind of lap these areas sitting there.
Speaker Change: I'll say legacy business ownership some of it was in ECS. Some of it was in bps, which is in our was in our other segment.
Speaker Change: We kind of let it mature a little bit there.
Speaker Change: But was always intentional to bring this together to get the leverage that that we wanted out of this business, where we're just at a point where were mature enough I think in both our leadership.
Speaker Change: Our structure, our solution development and wanting to get deeper into the industry verticals, where it made sense to do it now so there's really no magic bullet as to why.
Speaker Change: You know other than it's the majority.
Speaker Change: Of our solutions in all of our management team and of our strategy that allowed us to do it effective January now, we we will be putting out and.
Speaker Change: An 8-K shortly.
Speaker Change: That relates to the kind of restatement of those segment data. So that everyone has the ability to model will put two years out by quarter.
Speaker Change: It'll be probably filed after we file the K, which we expect to be a little later this week.
Speaker Change: And that'll give the kind of movements out of ECS into C. A N a.
Speaker Change: And out of all other into C&I and give a good viewpoint, but look we know that apps.
Speaker Change: Modern is are you seeing in general is a fast moving element of the industry and in the segment and we wanted to take advantage of that so we're putting some I'll say more wood behind the bat, we're bringing these teams together is giving us a good geography base.
Speaker Change: Especially in EMEA to grow from which we've seen some good growth over the course of the last year.
Speaker Change: So we think it's the right time to do it but there is no like triggering event. If you will it's kind of always been in the Hopper and this is just the time, we thought was the most advantage to us to pull it together and take advantage of the growth that we're seeing in new business.
Speaker Change: Yeah.
Speaker Change: That's great. Thanks for that color, Mike and congrats between best of luck to everybody.
Joe: Great. Thank you Joe.
Joe: The next question comes from my Rune Chowdhry with BNP Paribas.
Speaker Change: Please go ahead.
Joe: Yes, hi, thanks.
Speaker Change: Taking me in here, Congrats again to Peter and Mike and the recent announcements and appreciate the continuity by our leadership of the board.
Joe: Peter.
Speaker Change: Just very quickly for me just a couple of things first I think.
You've kind of talked about a higher renewal PCB year in 2025.
Speaker Change: Versus 'twenty 'twenty four is there any way you can quantify I guess, you know how much higher or a T. C V renewal you're 25, it is relative to 'twenty four.
Speaker Change: Yeah, I don't know that I have the percentage that I that I can give you a room, but there is really two reasons for that one is just the timing of the renewal cycle right and that does ebb and flow a little bit. The other was there there were a couple of deals that we expected to renew at the tail.
Speaker Change: End of 'twenty for that got pushed into 'twenty. Five so you know when I look at it from that perspective, I would say.
Speaker Change: 25 is probably a little bit more of a normalized renewal cycle. If there is such a thing.
Speaker Change: So not really a percentage that I would give you I guess.
Speaker Change: I can tell you is if I look at.
Speaker Change: Backlog conversion.
Speaker Change: The expectation is the backlog conversion of revenue and 25 is going to be fairly consistent to what it was in 'twenty four and we're expecting that that renewal cycle to be stronger in 'twenty five both for.
Speaker Change: Just the due dates on when they come up to bid and I guess secondarily. The rollover of a couple of things that we expect it to have happened in 24 that that got pushed into 'twenty five.
Speaker Change: Got it thank you for that and I assume that's also the push from 24 to 25 for some of those renewals is basically what impacted the.
Speaker Change: The the book to Bill is is there some kind of connection there as well.
Speaker Change: Yeah, you're exactly right Arun and thanks for calling that out I should've done it as well.
Speaker Change: Yeah, we were certainly expecting a higher book to bill in 'twenty and in 'twenty four and it wasn't in relation to these these expected closings, but as you know tail end of the year, you've got these closings they push out a week or two and they change fiscal year. So I think you'll see you know.
Speaker Change: Higher number than normal in 'twenty five based on that right from a book to Bill perspective.
Speaker Change: And the increase in backlog and T C D, but if youre looking at the two years combined.
Speaker Change: Its normalized and aligned to what was in our strategy from from inception.
Speaker Change: I appreciate it and one more from me and that is in terms of the you know it was really great to see the <unk>.
Speaker Change: <unk> revenue.
Speaker Change: The transition here.
Speaker Change: And do you continue.
Speaker Change: Prior guidance versus prior guidance, but can you talk about sort of just to get a sense for how broad that is across your across your <unk> base is there any way you could sort of talk about how many customers I guess accounted for this pretty significant improvement from the beginning of the year to the end of the year in terms of your expectations for the overall and in its evolution.
Joe: Yeah look I I would say in general and maybe tying this back into to Joe's question.
Speaker Change: The favorable.
Speaker Change: I'll say market conditions that we're seeing is across the whole base right. It's not like it's.
Speaker Change: Specific client now as you know these LMS renewals come up you know these are.
Speaker Change: Five or seven year deals right. So when they come up for renewal is more a timing on the renewal schedule, which is why we break it out and its lumpy, but I would say in general you know we've.
Speaker Change: <unk> seen increased consumption and we've seen increased desire to extend contracts right in and that's across the base not.
Speaker Change: Not a one off or or one project oriented thing.
Speaker Change: And it's been pretty consistent over the last couple of years in that manner. So.
Speaker Change: So it so it's not some anomaly in our opinion.
Speaker Change: Of a one off thing and there's a reason why we have clear path 2050, as our mantra here right.
Speaker Change: We have seen and continue to see.
Speaker Change: The increase in consumption and the <unk>.
Speaker Change: Insight from our clients that there's there's a long tail here and they liked this this platform it works well for them in the business and they've seen our ability to modernize around it so.
It's really been pretty pretty favorable experience from our perspective.
Deb Thomson: Thank you, Mike and then one last thing maybe for Deb.
Speaker Change: <unk>.
Speaker Change: Just in terms of the free cash flow guidance I want to make sure that the 2025 guidance includes the remainder of the I guess, the 25 million remaining of the legal legal settlement that was announced in Q4, and then on a on a sort of a longer timeframe.
Speaker Change: I think we saw in 2025, there was a small reduction in pension funding requirements relative to your expectations going into the year any other possibilities like this in 2025 that could impact 2026 and beyond in terms of reducing the front end of the of the pension cash obligations. Thank you.
Speaker Change: Right. So just to clarify in the or $100 million of prevention of free cash flow color that we gave that does include the 25 million are expected from that settlement. So that's your first question and second I think from a pension perspective I'm not sure you know we did have a slight uptick in.
Speaker Change: In the.
Speaker Change: <unk> for the next five years, which is what we typically focus on since that's the.
Speaker Change: Less volatile and more of the volatility is out in the later in the later years and also you know that's what we really focus on to look at our liquidity needs that are near term that that five years out.
Speaker Change: The uptick there, but we feel like we're still on a path to be able to fund those with our pre pension pre cash flow.
Speaker Change: Just remember.
Speaker Change: When we do that pension analysis annually right into full analysis is done the actuarial viewpoint. There is typically very little movement in the first 18 months on the contribution side.
Speaker Change: When you see a movement in that it typically comes in later in those contribution schedule as they pertain to actuarial assumptions so.
Speaker Change: I expect that the next several years of those contributions are pretty much locked and loaded and if we do see.
Speaker Change: Any movement up or down it would be probably two years and beyond when we look at that so that's.
Speaker Change: Point on the short term liquidity component of it.
Speaker Change: Thank you Bob.
Speaker Change: Welcome again.
Speaker Change: Again, if you have a question. Please press Star then one the next question comes from Anja Soderstrom with Sidoti. Please go ahead.
Anja Söderström: And thank you for taking my question. So I also want to thank Peter for his time and look forward to come from working with Mike.
Anja Söderström: Most of my questions have been addressed already but I'm, just curious with a much stronger LMS in expected in 2026, how is that going to impact your cash.
Cash my expectations.
Anja Söderström: Hi.
Speaker Change: Good to hear from you. Thank you for the question Dan.
Anja Söderström: Why don't you why don't you field that one.
Speaker Change: Okay great.
Speaker Change: And it will help so as far as that you know.
Speaker Change: Kind of expected you know potential branch to 'twenty six.
Speaker Change: That is an element of it so that S. Alan asked him you know going from what we're expecting to be $390 million and 25 going to $400 million and 26.
Speaker Change: And it is at that higher margin.
Speaker Change: <unk>, 70% that we laid out and so given that it does.
Speaker Change: Contribute a decent amount to getting to that bridge in addition to.
Speaker Change: A bigger component is the XL on a gross margin improvement, which we kind of proven that we've been able to continue to increase that.
Speaker Change: Approximately 150 basis points, particularly if you're looking particularly theory and I need to go in the U S. Thanks for calling for again in 2025, and then also you can expect that continue in 2000, and so that's a bigger piece of it that gross profit from Arizona, but that Ellen S. Bump of that 10 million more of <unk>.
Speaker Change: Revenue will also be a contributor to it along with SG&A improvements as I mentioned and then you know continued.
Speaker Change: The improvement in cash conversion.
Speaker Change: Okay. Thank you and then in terms of.
Speaker Change: Demand in the commercial vertical we stay in a industry that's worth calling out.
Speaker Change: And then decide on a positive side.
Speaker Change: Yeah, I wouldn't I wouldn't say that there's any industry I would call out certainly on the negative side, though we don't really have anything to call out there.
Speaker Change: We have as you know.
Speaker Change: Focused in public sector.
Speaker Change: Diving, a little deeper into higher Ed we have a pretty strong presence in travel and transportation and obviously in financial services. So we're pretty as you.
Speaker Change: No on your pretty.
Speaker Change: Evenly distributed amongst those various industries as far as our businesses is concerned and where were fairly evenly distributed from a.
Speaker Change: Geography perspective, as well so I think we have a really nice mix of diversity, both in geography and segment that that kind of insulate one another from any specific anomalies.
And again, we've got a clearly a focus area in and public sector and as a reminder from from that perspective, and you are talking to state and local business domestically and internationally clearly foreign countries et cetera that make up our public sector. So.
Speaker Change: So nothing I would call out in particular other than to say that they have all been at least where we're playing all been performing pretty well as of late.
Speaker Change: Okay. Thank you that was all for me.
Speaker Change: Great. Thanks Tanya.
Speaker Change: This concludes our question and answer session.
Peter: I'd like to turn the conference back over to Peter <unk>.
Excuse me alphabet.
Speaker Change: Any closing remarks.
Speaker Change: I'll do a quick closing remarks, but then I'll, let Mike actually do the final closing remarks, I really want to appreciate and thank each of you.
Speaker Change: Joe a rune and Andres. Thank you for your remarks following rods.
Speaker Change: Thanks for your support and it's encouraging and totally expected.
Speaker Change: That you are supportive of mic in the new role he will be terrific in this role and I can tell you. He has the support of both our board of directors and our entire leadership team with that over to you Mike.
Speaker Change: Great. Thank you and I would like to acknowledge Peter here as well.
Speaker Change: Thank you Peter so much for your leadership in the company.
Speaker Change: And as a reminder to the folks on the following year Peter is staying on as chair of the board. So we're lucky to keep him with us for in.
Speaker Change: And extended period here on the board side of the equation. So thanks, Peter for your guidance.
Speaker Change: Look I'll, just wrap by saying number one thanks for taking the additional time I know we went over but it's always good to get the questions and get the color out you know, we continually try to give more and more transparency in our remarks and in our content and.
Speaker Change: And by that I would also remind you all to visit Unisys Dot Com Investor Relations website. There is a ton of information that we've talked about here and additional information.
Speaker Change: Then from a quarterly perspective, and an annual perspective exceed.
Speaker Change: We exceeded our upward guidance as far as profitability is concerned met our revenue guidance improved our operating and free cash flow and hopefully gave you. Some good color into what we're expecting in 'twenty five which is.
Speaker Change: The continual improvement of the margin component of this business as well as seeing growth in that X L. S business as well driving additional profitability and cash flows right and that's what we're focused on.
Speaker Change: No that youll see the continuity in the strategy and the team and looking forward to our next call. So thanks, a lot for your time and attention and looking forward to Q1. Thanks.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].