Cubic Corporation (NYSE: CUB) (“Cubic” or the “Company”) today
announced its financial results for the fourth quarter and fiscal
year ended September 30, 2020.
Fiscal Fourth Quarter 2020 Highlights
- Record sales of $475.4 million, up 1% year-over-year
- Net income from continuing operations attributable to Cubic of
$57.0 million, or $1.82 per share, compared to $41.6 million, or
$1.33 per share, in the fourth quarter of fiscal 2019
- Adjusted earnings per share of $2.82, up 52%
year-over-year
- Record fourth quarter Adjusted EBITDA of $104.2 million, up 36%
year-over-year
- Net cash from operating activities of $95.1 million; Adjusted
Free Cash Flow of $87.5 million
- Combined Cubic’s two defense business segments to drive
customer value, operational effectiveness and cost savings
Full Year Fiscal 2020 Highlights
- Sales of $1.476 billion, down 1% year-over-year
- Net loss from continuing operations attributable to Cubic of
$3.7 million, or $0.12 per share, compared to net income from
continuing operations attributable to Cubic of $51.1 million, or
$1.67 per share, in fiscal 2019; prior year included $32.5 million
gain on sale of fixed assets
- Adjusted earnings per share of $3.32, up 6% year-over-year
- Record full year Adjusted EBITDA of $158.3 million, up 8%
year-over-year; Adjusted EBITDA margin of 10.7% increased 90 basis
points year-over-year
- Net cash used in operating activities of $8.3 million; Adjusted
Free Cash Flow of $60.5 million
- Year-end backlog of $3.7 billion, up 8% year-over-year;
book-to-bill ratio of 1.1 across all segments
- Announced guidance for Cubic’s fiscal year ending September 30,
2021: Sales of $1,550 to $1,600 million; Adjusted EBITDA of $170 to
$190 million; Adjusted EPS of $3.00 to $3.60
“We ended the fiscal year on a strong note, delivering record
fourth quarter Sales and Adjusted EBITDA and strong Adjusted Free
Cash Flow,” said Bradley H. Feldmann, chairman, president and chief
executive officer of Cubic Corporation. “We are grateful to our
customers for their trust and to our employees for their unwavering
commitment to delivering innovative, mission critical solutions,
while safeguarding the well-being of their fellow CUBES. We are
excited about the future as we embark on our recently announced
NextCUBIC strategy, which we expect will drive strong organic sales
growth and increase Adjusted EBITDA margins and return on invested
capital to the mid-teens by fiscal 2025.”
Financial Results Summary
Three Months Ended
Year Ended
September 30,
September 30,
2020
2019
2020
2019
(in millions, except per share
data)
Sales
$
475.4
$
471.2
$
1,476.2
$
1,496.5
Operating income
73.3
58.6
61.6
86.2
Adjusted EBITDA(1)
104.2
76.6
158.3
146.6
Adjusted net income(1)
88.3
58.3
103.8
95.6
Income (loss) from continuing operations
attributable to Cubic before income taxes
$
59.5
$
53.0
$
(10.0
)
$
62.2
Income tax provision (benefit) from
continuing operations attributable to Cubic
2.6
11.3
(6.4
)
11.0
Net income (loss) from continuing
operations attributable to Cubic
$
57.0
$
41.6
$
(3.7
)
$
51.1
Income (loss) per share from continuing
operations attributable to Cubic
$
1.82
$
1.33
$
(0.12
)
$
1.67
Adjusted earnings per share(1)
2.82
1.86
3.32
3.13
_____________________________
(1)
A non-GAAP financial measure. See the
section below titled “Use of Non-GAAP Financial Information” for
additional information regarding non-GAAP financial measures and
reconciliations to the most directly comparable GAAP financial
measures.
Consolidated Fiscal Fourth Quarter 2020 Results (all
metrics compared to Fiscal Fourth Quarter 2019 unless otherwise
noted)
Sales increased 1% as reported and decreased 4% on an organic
basis to $475.4 million, compared to $471.2 million in the prior
year period, reflecting strong growth in Mission Solutions and
impacts related to the ongoing COVID-19 pandemic due to delayed
orders and lower transit ridership.
Operating income was $73.3 million, compared to $58.6 million in
the prior year period, reflecting an increase in operating income
in Mission Solutions and Company-wide cost reduction initiatives.
Operating margin of 15.4% increased 300 basis points.
Adjusted EBITDA increased 36% to $104.2 million, compared to
$76.6 million in the prior year period, driven by Mission
Solutions. Adjusted EBITDA margin of 21.9% increased 560 basis
points.
Net income from continuing operations attributable to Cubic was
$57.0 million, or $1.82 per share, compared to $41.6 million in the
prior year period, or $1.33 per share, primarily reflecting higher
operating income and a lower tax expense, which decreased by $8.8
million. Adjusted net income was $88.3 million, or $2.82 per share,
compared to Adjusted net income of $58.3 million, or $1.86 per
share, in the prior year period, primarily reflecting higher
Adjusted EBITDA and lower tax expense.
Net cash provided by continuing operations increased to $95.1
million, including the impact of consolidating the Boston variable
interest entity (“VIE”), compared to $50.8 million in the prior
year period. Adjusted Free Cash Flow increased to $87.5 million,
compared to $52.1 million in the prior year period.
Consolidated Fiscal Year 2020 Results (all metrics
compared to Fiscal Year 2019 unless otherwise noted)
Sales decreased 1% as reported and 3% on an organic basis to
$1.476 billion, compared to $1.496 billion in fiscal 2019. The
Company estimates that the COVID-19 pandemic negatively impacted
Sales by up to $73 million during fiscal 2020 as a result of
delayed orders and lower transit ridership.
Operating income was $61.6 million, compared to $86.2 million in
fiscal 2019. Excluding the impact of a $32.5 million gain on sale
of real estate in 2019, the change in operating income primarily
reflects growth in Transportation Systems and Company-wide cost
reduction initiatives, offset by an operating loss in Mission
Solutions. Cubic’s consolidated VIE recognized higher operating
income due to the Massachusetts Bay Transit Authority (“MBTA”)
contract amendment. Operating margin of 4.2% decreased 160 basis
points.
Adjusted EBITDA increased 8% to $158.3 million, compared to
$146.6 million in fiscal 2019, driven by growth in Transportation
Systems. The Company estimates that the COVID-19 pandemic
negatively impacted Adjusted EBITDA by up to $28 million during
fiscal 2020, which was partially offset by Company-wide cost
reduction initiatives. Adjusted EBITDA margin of 10.7% increased 90
basis points.
Net loss from continuing operations attributable to Cubic was
$3.7 million, or $0.12 per share, compared to net income from
continuing operations attributable to Cubic of $51.1 million in
fiscal 2019, or $1.67 per share, primarily reflecting lower
operating income, a $16.1 million loss on extinguishment of debt
and higher interest expense, which was partially offset by an
income tax benefit of $6.4 million, compared to an income tax
expense of $11.0 million in fiscal 2019.
Adjusted net income was $103.8 million, or $3.32 per share,
compared to Adjusted net income of $95.6 million in fiscal 2019, or
$3.13 per share, reflecting higher Adjusted EBITDA and lower taxes,
partially offset by higher depreciation and interest expense.
Net cash used in continuing operations was $8.3 million,
including the impact of consolidating the VIE, compared to $31.9
million in fiscal 2019. Adjusted Free Cash Flow increased to $60.5
million, compared to $14.1 million in fiscal 2019.
Reportable Segment
Results
Three Months Ended
Year Ended
September 30,
September 30,
2020
2019
2020
2019
Sales:
(in millions)
(in millions)
Cubic Transportation Systems
$
239.1
$
254.6
$
840.9
$
849.8
Cubic Mission Solutions
169.9
125.5
337.1
328.8
Cubic Global Defense Systems
66.4
91.1
298.2
317.9
Total sales
$
475.4
$
471.2
$
1,476.2
$
1,496.5
Operating income (loss):
Cubic Transportation Systems
$
43.2
$
40.2
$
121.0
$
77.2
Cubic Mission Solutions
40.9
19.9
(26.7
)
7.8
Cubic Global Defense Systems
4.8
13.0
22.9
23.0
Unallocated corporate expenses
(15.6
)
(14.5
)
(55.6
)
(21.8
)
Total operating income
$
73.3
$
58.6
$
61.6
$
86.2
Adjusted EBITDA:
Cubic Transportation Systems
$
45.7
$
46.2
$
134.0
$
110.5
Cubic Mission Solutions
59.0
24.5
28.2
34.4
Cubic Global Defense Systems
9.0
13.2
32.9
32.8
Unallocated corporate expenses
(9.5
)
(7.3
)
(36.8
)
(31.1
)
Total Adjusted EBITDA(1)
$
104.2
$
76.6
$
158.3
$
146.6
_____________________________ (1)
A non-GAAP financial measure. See the
section below titled “Use of Non-GAAP Financial Information” for
additional information regarding non-GAAP financial measures and
reconciliations to the most directly comparable GAAP financial
measures.
Cubic Transportation Systems (“CTS”)
Fourth quarter CTS sales decreased 6% as reported and 8% on an
organic basis to $239.1 million, compared to $254.6 million in the
prior year period. Full year sales decreased 1% both as reported
and on an organic basis to $840.9 million compared to $849.8
million in fiscal 2019. Both fourth quarter and full year sales
during fiscal 2020 were negatively impacted by COVID-19 due to
delays of new awards and lower transit ridership.
Fourth quarter CTS Adjusted EBITDA decreased 1% to $45.7
million, compared to $46.2 million in the prior year period as the
impact of lower sales was mostly offset by cost savings. Full year
Adjusted EBITDA increased 21% to $134.0 million compared to $110.5
million in fiscal 2019. The increase in full year Adjusted EBITDA
reflects the MBTA contract amendment, as well as strong execution
on Services and cost savings, which offset certain unfavorable
impacts related to COVID-19.
Cubic Mission Solutions (“CMS”)
Fourth quarter CMS sales increased 35% as reported and 21% on an
organic basis to $169.9 million, compared to $125.5 million in the
prior year period. Full year sales increased 3% as reported and
decreased 6% on an organic basis to $337.1 million compared to
$328.8 million in fiscal 2019. Both fourth quarter and full year
sales reflect the acquisition of PIXIA Corp. (“PIXIA”) and growth
from secure networks products, partially offset by lower deliveries
of expeditionary satellite communications products, including
delays related to COVID-19.
Fourth quarter CMS Adjusted EBITDA increased 141% to $59.0
million, compared to $24.5 million in the prior year period,
primarily reflecting higher sales of secure network products and
the impact of the acquisition of PIXIA. Full year Adjusted EBITDA
decreased 18% to $28.2 million compared to $34.4 million in fiscal
2019, primarily driven by investments in franchise programs and
higher research and development expense. The impacts were partially
offset by the contribution of PIXIA.
Cubic Global Defense Systems (“CGD”)
Fourth quarter CGD sales decreased 27% as reported and 28% on an
organic basis to $66.4 million, compared to $91.1 million in the
prior year period. Full year sales decreased 6% both as reported
and on an organic basis to $298.2 million compared to $317.9
million in fiscal 2019. Both the fourth quarter and full year
reflect lower sales in ground training due to delays in new awards
and exercise delays, primarily due to COVID-19.
Fourth quarter CGD Adjusted EBITDA decreased 32% to $9.0
million, compared to $13.2 million in the prior year period,
reflecting lower sales. Full year Adjusted EBITDA was essentially
flat at $32.9 million compared to $32.8 million in fiscal 2019 with
strong cost management offsetting lower sales.
Backlog
Backlog of $3.667 billion increased $266.0 million
year-over-year. Foreign currency had a favorable impact of $62.2
million during the period.
September 30,
2020
2019
(in millions)
Total backlog
Cubic Transportation Systems
$
3,139.9
$
2,953.3
Cubic Mission Solutions
153.4
103.7
Cubic Global Defense Systems
373.7
344.0
Total
$
3,667.0
$
3,401.0
Fiscal Fourth Quarter 2020 Key Orders (awards for
unfunded indefinite delivery, indefinite quantity contracts are not
recognized in backlog until the customer places a firm order;
amounts shown for the bookings below do not include the value of
unexercised options)
CTS
- $27 million to provide maintenance services to Metropolitan
Atlanta Rapid Transit Authority
- $30 million for Cubic NextBus to provide real-time bus and
train arrival times
- $25 million to provide intelligent traffic management systems
for multiple customers
CMS
- $38 million to deliver High Capacity Backbone prototype for the
U.S. Air Force
- $36 million across multiple customer orders for DTECH and other
secure networking products
- PIXIA award to continue providing commercial software for data
management and dissemination to the National
Geospatial-Intelligence Agency
- Advanced Battle Management System multiple award, indefinite
delivery indefinite quantity (“IDIQ”) with a ceiling of $950
million for the U.S. Air Force
- Follow-on, single-award, IDIQ with a ceiling of $172 million to
deliver GATR inflatable SATCOM terminals and baseband
communications equipment in support of U.S. special operations
forces communications requirements
CGD
- $19 million to provide Urban Operations Training Solution and
support for customer in Oceania
- $8.5 million second order in support of the Interim Joint
Secure Interoperable Live-Virtual-Constructive and Secure Live
Virtual Constructive Advanced Training Environment – Advanced
Technology Demonstration for continued technology maturation and
demonstration
- First two task orders received in support of U.S. Navy Surface
Training Immersive Gaming and Simulations (single award, $99
million IDIQ)
Business Realignment
As previously announced in August 2020, the Company combined its
CMS and CGD business segments to form Cubic Mission and Performance
Solutions (“CMPS”) to advance its strategic priorities and enhance
operational effectiveness. Commencing in the first quarter of
fiscal 2021, Cubic will report its results under two business
segments: CTS and CMPS. Pro forma financials for CMPS are included
in the Company’s fourth quarter earnings presentation located in
the Investor Relations section of the Company’s website:
https://www.cubic.com/investor-relations.
Balance Sheet and Liquidity
Cubic’s bank net leverage ratio, as defined in the Company’s
credit agreement, was 3.4x at quarter end. The credit agreement
allows for net leverage of up to 4.75x through December 2020 and
4.0x beginning in the second quarter of fiscal 2021. Cubic remains
focused on lowering net leverage to its target of below 3.0x in
future periods. Cubic believes it currently has ample liquidity to
navigate the evolving economic conditions surrounding COVID-19.
Fiscal 2021 Outlook(1)
Fiscal 2021 Full Year
Guidance
Sales (in millions)
$1,550 to $1,600
Adjusted EBITDA (in millions)
$170 to $190
Adjusted EPS
$3.00 to $3.60
(1) Constant foreign currency.
Conference Call and Webcast Information
Date:
November 18, 2020
Time:
5:00 p.m. ET
Hosts:
Bradley H. Feldmann, Chairman, President
and Chief Executive Officer
Anshooman Aga, Executive Vice President
and Chief Financial Officer
Dial in:
833-968-2299
778-560-2777 (international)
Conference ID 4459744
Webcast:
https://event.on24.com/wcc/r/2633778/28CFCBC10748C62E42F1CA5841A1FF2A
An archive of the webcast will be made available on the Investor
Relations section of the Company’s website:
https://www.cubic.com/investor-relations/earnings.
About Cubic Corporation
Cubic is a technology-driven,
market-leading provider of integrated solutions that increase
situational understanding for transportation, defense C4ISR and
training customers worldwide to decrease urban congestion and
improve the militaries’ effectiveness and operational readiness.
Our teams innovate to make a positive difference in people’s lives.
We simplify their daily journeys. We promote mission success and
safety for those who serve their nation. For more information about
Cubic, please visit www.cubic.com or on Twitter @CubicCorp.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(the “Act”) that are subject to the safe harbor created by the Act.
Forward-looking statements include, among others, statements about
Cubic’s expectations regarding future events or its future
financial and operating performance and delivering on its strategic
growth plan. These statements are often, but not always, made
through the use of words or phrases such as “may,” “will,”
“anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “predict,” “potential,”
“opportunity” and similar words or phrases or the negatives of
these words or phrases. These statements involve risks, estimates,
assumptions and uncertainties that could cause actual results to
differ materially from those expressed in these statements,
including, among others: the impact of the COVID-19 outbreak or
future epidemics or pandemics on Cubic’s business, financial
condition and operating results; Cubic’s dependence on U.S. and
foreign government contracts; delays in approving U.S. and foreign
government budgets and cuts in U.S. and foreign government defense
expenditures; the ability of certain government agencies to
unilaterally terminate or modify Cubic’s contracts with them;
Cubic’s assumptions covering behavior by public transit
authorities; Cubic’s ability to successfully integrate recently
acquired companies, including Trafficware, GRIDSMART, Nuvotronics,
Delerrok and PIXIA, into its business and to properly assess the
effects of such integration on its financial condition and
operating results; the U.S. government’s increased emphasis on
awarding contracts to small businesses, and Cubic’s ability to
retain existing contracts or win new contracts under competitive
bidding processes; negative audits by the U.S. government; the
effects of politics and economic conditions on negotiations and
business dealings in the various countries in which Cubic does
business or intends to do business; competition and technology
changes in the defense and transportation industries; the change in
the way transit agencies pay for transit systems; Cubic’s ability
to accurately estimate the time and resources necessary to satisfy
obligations under its contracts; the effect of adverse regulatory
changes on Cubic’s ability to sell products and services; Cubic’s
ability to identify, attract and retain qualified employees;
unforeseen problems with the implementation and maintenance of
Cubic’s information systems, including Cubic’s enterprise resource
planning (“ERP”) system; business disruptions due to cyber security
threats, physical threats, terrorist acts, acts of nature and
public health crises (including COVID-19); Cubic’s involvement in
litigation, including litigation related to patents, proprietary
rights and employee misconduct; Cubic’s reliance on subcontractors
and on a limited number of third parties to manufacture and supply
its products; Cubic’s ability to comply with its development
contracts and to successfully develop, introduce and sell new
products, systems and services in current and future markets;
defects in, or a lack of adequate coverage by insurance or
indemnity for, Cubic’s products and systems; and changes in U.S.
and foreign tax laws, exchange rates or Cubic’s economic
assumptions regarding its pension plans. In addition, please refer
to the risk factors contained in Cubic’s filings with the
Securities and Exchange Commission (the “SEC”) available at
www.sec.gov, including Cubic’s most recent Annual Report on Form
10-K for its fiscal year ended September 30, 2020 and subsequent
Quarterly Reports on Form 10-Q. Because the risks, estimates,
assumptions and uncertainties referred to above could cause actual
results or outcomes to differ materially from those expressed in
any forward-looking statements, you should not place undue reliance
on any forward-looking statements. Any forward-looking statement
speaks only as of the date of this press release, and, except as
required by law, Cubic undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this press release.
Use of Non-GAAP Financial
Information
In addition to results reported under U.S. generally accepted
accounting principles (“GAAP”), Cubic provides certain financial
measures that are not prepared in accordance with GAAP. These
non-GAAP measures consist of organic sales growth, Adjusted net
income, Adjusted earnings per share (“Adjusted EPS”), Adjusted
EBITDA and Adjusted Free Cash Flow. Cubic believes that these
non-GAAP measures provide additional insight into its ongoing
operations and underlying business trends, facilitate a comparison
of its results between current and prior periods, and facilitate
the comparison of its operating results with the results of other
public companies that provide non-GAAP measures. Cubic uses
Adjusted EBITDA internally to evaluate the operating performance of
its business, for strategic planning purposes, and as a factor in
determining incentive compensation for certain employees. These
non-GAAP measures facilitate company-to-company operating
comparisons by excluding items that Cubic believes are not part of
its core operating performance. Organic sales growth is defined as
the year-over-year percentage change in reported sales relative to
the prior comparable period, excluding the impact of acquisitions
and divestitures over the prior 12 months and the impact of foreign
currency translation. Adjusted EBITDA is defined as GAAP net income
from continuing operations attributable to Cubic before interest
expense, loss on extinguishment of debt, income taxes, depreciation
and amortization, other non-operating expense, acquisition-related
expenses, strategic and information technology (“IT”) system
resource planning expenses, restructuring costs, and gains or
losses on the disposal of fixed assets. Adjusted net income is
defined as GAAP net income from continuing operations attributable
to Cubic excluding amortization of purchased intangibles,
restructuring costs, loss on extinguishment of debt, acquisition
related expenses, strategic and IT system resource planning
expenses, gains or losses on the disposal of fixed assets, other
non-operating expense (income), tax impacts related to
acquisitions, and the impact of the Tax Cuts and Jobs Act (“U.S.
Tax Reform”). Adjusted EPS is defined as Adjusted net income on a
per share basis using the weighted average diluted shares
outstanding. Strategic and IT system resource planning expenses
consists of expenses incurred in the development of Cubic’s ERP
system and the redesign of its supply chain which include internal
labor costs and external costs of materials and services that do
not qualify for capitalization. Acquisition-related expenses
include business acquisition expenses including retention bonus
expenses, due diligence and consulting costs incurred in connection
with the acquisitions, and expenses recognized related to the
change in the fair value of contingent consideration for
acquisitions.
Adjusted Free Cash Flow is defined as Net cash provided by
continuing operations, excluding operating cash flow associated
with the VIE in which Cubic has a 10% equity stake, less capital
expenditures plus proceeds from the sale of fixed assets and the
receipt of withheld proceeds from the sale of trade receivables.
The VIE has contracted with Cubic for the design-build and
operations and maintenance phases of the next-generation fare
collection system for the MBTA and pays Cubic progress payments
during the design-build phase of the project. These payments are
primarily funded by non-recourse debt issued by the VIE. Additional
information regarding the VIE can be found in Cubic’s Annual Report
on Form 10-K for the fiscal year ended September 30, 2020 and its
subsequent Quarterly Reports on Form 10-Q. Management believes that
Adjusted Free Cash Flow is meaningful to investors because
management reviews cash flows generated from operations after
taking into consideration capital expenditures, which are necessary
to maintain and expand Cubic’s business, in addition to the other
adjustments noted above. Adjusted Free Cash Flow does not represent
the residual cash flow available for discretionary expenditures
since other non-discretionary expenditures are not deducted from
the measure.
These non-GAAP measures are not measurements of financial
performance under GAAP and should not be considered as measures of
discretionary cash available to the Company or as alternatives to
net income as a measure of performance. In addition, other
companies may define these non-GAAP measures differently and, as a
result, Cubic’s non-GAAP measures may not be directly comparable to
the non-GAAP measures of other companies. Furthermore, non-GAAP
financial measures have limitations as an analytical tool and you
should not consider these measures in isolation, or as a substitute
for analysis of Cubic’s results as reported under GAAP. Investors
are advised to carefully review Cubic’s GAAP financial results that
are disclosed in its filings with the SEC, including its Annual
Report on Form 10-K for the fiscal year ended September 30, 2020
and its subsequent Quarterly Reports on Form 10-Q. With respect to
the Company’s fiscal year 2021 Adjusted EBITDA and Adjusted EPS
guidance, certain items that affect GAAP net income cannot be
reasonably predicted as we are unable to quantify certain amounts
that would be required to be included in the comparable forecasted
GAAP measures without unreasonable effort. As such, we are unable
to provide a reasonable estimate of GAAP net income or GAAP EPS, or
a corresponding reconciliation of Adjusted EBITDA and Adjusted EPS
guidance to GAAP net income or GAAP EPS for the full year. In
addition, we believe such reconciliations would imply a degree of
precision that would be confusing or misleading to investors.
Cubic reconciles organic sales growth to sales growth as
reported, which it considers to be the most directly comparable
GAAP financial measure. Cubic reconciles Adjusted EBITDA and
Adjusted net income to GAAP net income, which it considers to be
the most directly comparable GAAP financial measure. Cubic
reconciles Adjusted EPS to GAAP EPS, which it considers to be the
most directly comparable GAAP financial measure. Cubic reconciles
Adjusted Free Cash Flow to Net cash provided by continuing
operations, which it considers to be the most directly comparable
GAAP financial measure. The following tables reconcile these
non-GAAP measures to their most directly comparable GAAP financial
measure:
ORGANIC SALES GROWTH RATE RECONCILIATION (UNAUDITED)
Three Months Ended September
30, 2020
Year Ended September 30,
2020
Cubic
CTS
CMS
CGD
Cubic
CTS
CMS
CGD
Sales growth as reported
0.9
%
(6.0
%)
35.4
%
(27.2
%)
(1.4
%)
(1.0
%)
2.5
%
(6.2
%)
Contribution from acquisitions
(4.0
%)
(0.2
%)
(14.5
%)
—
(2.3
%)
(0.7
%)
(8.7
%)
—
Foreign currency translation
(1.2
%)
(2.0
%)
—
(0.7
%)
0.3
%
0.4
%
—
0.4
%
Organic sales growth
(4.3
%)
(8.3
%)
21.0
%
(27.8
%)
(3.4
%)
(1.3
%)
(6.2
%)
(5.8
%)
Note: Percentages may not sum due to
rounding.
GAAP NET INCOME TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION (EBITDA) RECONCILIATION
(UNAUDITED)
Three Months Ended
Year Ended
(in millions, except margin data)
September 30,
September 30,
Cubic Transportation Systems
2020
2019
2020
2019
Sales
$
239.1
$
254.6
$
840.9
$
849.8
Operating income
$
43.2
$
40.2
$
121.0
$
77.2
Depreciation and amortization
7.9
6.6
29.5
30.7
Noncontrolling interest in EBITDA of
VIE
(7.3
)
(3.1
)
(25.1
)
(8.9
)
Acquisition-related expenses, excluding
amortization
0.6
1.5
6.6
8.3
Restructuring costs
1.3
1.0
2.0
3.2
Adjusted EBITDA
$
45.7
$
46.2
$
134.0
$
110.5
Adjusted EBITDA margin
19.1
%
18.1
%
15.9
%
13.0
%
Three Months Ended
Year Ended
September 30,
September 30,
Cubic Mission Solutions
2020
2019
2020
2019
Sales
$
169.9
$
125.5
$
337.1
$
328.8
Operating income (loss)
$
40.9
$
19.9
$
(26.7
)
$
7.8
Depreciation and amortization
13.5
6.1
47.8
23.3
Acquisition-related expenses, excluding
amortization
2.7
(1.5
)
4.8
3.3
Restructuring costs
1.9
-
2.3
-
Adjusted EBITDA
$
59.0
$
24.5
$
28.2
$
34.4
Adjusted EBITDA margin
34.7
%
19.5
%
8.4
%
10.5
%
Three Months Ended
Year Ended
September 30,
September 30,
Cubic Global Defense Systems
2020
2019
2020
2019
Sales
$
66.4
$
91.1
$
298.2
$
317.9
Operating income
$
4.8
$
13.0
$
22.9
$
23.0
Depreciation and amortization
2.0
1.4
7.2
6.8
Acquisition-related expenses, excluding
amortization
0.5
0.5
-
1.7
(Gain) loss on sale of fixed assets
-
(2.3
)
(0.2
)
(2.0
)
Restructuring costs
1.7
0.6
3.0
3.3
Adjusted EBITDA
$
9.0
$
13.2
$
32.9
$
32.8
Adjusted EBITDA margin
13.6
%
14.5
%
11.0
%
10.3
%
Three Months Ended
Year Ended
September 30,
September 30,
Cubic Consolidated
2020
2019
2020
2019
Sales
$
475.4
$
471.2
$
1,476.2
$
1,496.5
Net income (loss) from continuing
operations attributable to Cubic
$
57.0
$
41.6
$
(3.7
)
$
51.1
Noncontrolling interest in net income
(loss) of VIE
6.4
(0.8
)
6.6
(9.8
)
Income tax provision (benefit)
2.6
11.3
(6.4
)
11.0
Interest expense, net
5.1
3.5
20.2
13.9
Loss on extinguishment of debt
-
-
16.1
-
Other non-operating expense (income),
net
2.2
3.0
28.8
20.0
Operating income (loss)
$
73.3
$
58.6
$
61.6
$
86.2
Depreciation and amortization
24.7
15.8
88.5
64.7
Noncontrolling interest in EBITDA of
VIE
(7.3
)
(3.1
)
(25.1
)
(8.9
)
Acquisition-related expenses, excluding
amortization
5.1
0.1
13.0
13.4
Strategic and IT system resource planning
expenses
0.6
2.0
3.9
8.3
(Gain) loss on sale of fixed assets
-
0.1
(0.2
)
(32.5
)
Restructuring costs
7.8
3.1
16.6
15.4
Adjusted EBITDA
$
104.2
$
76.6
$
158.3
$
146.6
Adjusted EBITDA margin
21.9
%
16.3
%
10.7
%
9.8
%
Note: Amounts may not sum due to
rounding
GAAP NET INCOME TO ADJUSTED NET INCOME AND GAAP EPS TO
ADJUSTED EPS RECONCILIATION (UNAUDITED)
Three Months Ended
Year Ended
September 30,
September 30,
2020
2019
2020
2019
(in millions, except per share data)
GAAP EPS
$
1.82
$
1.33
$
(0.12
)
$
1.67
GAAP Net income (loss) from continuing
operations attributable to Cubic
$
57.0
$
41.6
$
(3.7
)
$
51.1
Noncontrolling interest in net income
(loss) of VIE
6.4
(0.8
)
6.6
(9.8
)
Amortization of purchased intangibles
16.4
9.4
59.3
42.1
(Gain) loss on sale of fixed assets
—
0.1
(0.2
)
(32.5
)
Restructuring costs
7.8
3.1
16.6
15.4
Loss on extinguishment of debt
—
—
16.1
—
Acquisition-related expenses, excluding
amortization
5.1
0.1
13.0
13.4
Strategic and IT system resource planning
expenses
0.6
2.0
3.9
8.3
Other non-operating expense (income),
net
2.2
3.0
28.8
20.0
Noncontrolling interest in Adjusted Net
Income of VIE
(6.7
)
(3.5
)
(24.6
)
(9.7
)
Tax impact related to acquisitions1
0.4
0.9
(12.4
)
(6.6
)
Impact of U.S. Tax Reform
—
—
0.7
—
Tax impact related to non-GAAP
adjustments2
(0.9
)
2.5
(0.3
)
3.9
Adjusted Net Income
$
88.3
$
58.3
$
103.8
$
95.6
Adjusted EPS
$
2.82
$
1.86
$
3.32
$
3.13
Weighted Average Diluted Shares
Outstanding (in thousands)
31,299
31,427
31,299
30,606
Note: Amounts may not sum due to rounding
1
Represents the tax accounting impact of
significant discrete items recorded at the time of acquisition.
2
The tax effect of the non-GAAP adjustments
is generally based on the statutory tax rate of the jurisdiction of
the event.
OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW RECONCILIATION
(UNAUDITED)
Three Months Ended
Year Ended
(in millions)
September 30,
September 30,
Cubic Consolidated
2020
2019
2020
2019
Net cash provided by (used in)
continuing operating activities
$
95.1
$
50.8
$
(8.3
)
$
(31.9
)
Capital expenditures
(13.4
)
(13.8
)
(49.2
)
(49.1
)
Proceeds from sale of property, plant and
equipment
—
—
—
44.9
Operating cash flow associated with
VIE
5.8
15.1
112.5
50.2
Receipt of withheld proceeds from sale of
trade receivables
—
—
5.5
—
Adjusted Free Cash Flow
$
87.5
$
52.1
$
60.5
$
14.1
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(amounts in thousands, except per
share data)
Years Ended September
30,
2020
2019
2018
Net sales:
Products
$
947,765
$
1,011,069
$
704,941
Services
528,470
485,406
497,957
1,476,235
1,496,475
1,202,898
Costs and expenses:
Products
678,840
732,137
472,698
Services
340,807
332,923
362,694
Selling, general and administrative
expenses
274,701
270,064
258,644
Research and development
44,574
50,132
52,398
Amortization of purchased intangibles
59,309
42,106
27,064
Gain on sale of property, plant and
equipment
(170
)
(32,510
)
—
Restructuring costs
16,599
15,386
5,018
1,414,660
1,410,238
1,178,516
Operating income
61,575
86,237
24,382
Other income (expenses):
Interest and dividend income
7,522
6,519
1,615
Interest expense
(27,685
)
(20,453
)
(10,424
)
Loss on extinguishment of debt
(16,090
)
—
—
Other income (expense), net
(28,767
)
(19,957
)
(687
)
Income (loss) from continuing operations
before income taxes
(3,445
)
52,346
14,886
Income tax provision (benefit)
(6,380
)
11,040
7,093
Income from continuing operations
2,935
41,306
7,793
Net income (loss) from discontinued
operations
436
(1,423
)
4,243
Net income
3,371
39,883
12,036
Less noncontrolling interest in net income
(loss) of VIE
6,592
(9,811
)
(274
)
Net income (loss) attributable to
Cubic
$
(3,221
)
$
49,694
$
12,310
Amounts attributable to Cubic:
Net income (loss) from continuing
operations
(3,657
)
51,117
8,067
Net income (loss) from discontinued
operations
436
(1,423
)
4,243
Net income (loss) attributable to
Cubic
$
(3,221
)
$
49,694
$
12,310
Net income (loss) per share:
Basic
Continuing operations attributable to
Cubic
$
(0.12
)
$
1.68
$
0.30
Discontinued operations
$
0.01
$
(0.05
)
$
0.16
Basic earnings per share attributable to
Cubic
$
(0.10
)
$
1.63
$
0.45
Diluted
Continuing operations attributable to
Cubic
$
(0.12
)
$
1.67
$
0.29
Discontinued operations
$
0.01
$
(0.05
)
$
0.16
Diluted earnings per share attributable to
Cubic
$
(0.10
)
$
1.62
$
0.45
Weighted average shares used in per share
calculations:
Basic
31,299
30,495
27,229
Diluted
31,299
30,606
27,351
CUBIC CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
September 30,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
128,619
$
65,800
Cash of consolidated VIE
1,065
347
Restricted cash
25,478
19,507
Restricted cash of consolidated VIE
1,822
9,967
Accounts receivable:
Billed
161,473
127,406
Allowance for doubtful accounts
(1,498
)
(1,392
)
159,975
126,014
Contract assets
268,773
349,559
Recoverable income taxes
17,434
7,754
Inventories
127,251
106,794
Other current assets
32,626
38,534
Other current assets of consolidated
VIE
31
33
Total current assets
763,074
724,309
Long-term contracts financing
receivables
64,642
36,285
Long-term contracts financing receivables
of consolidated VIE
221,245
115,508
Property, plant and equipment, net
166,301
144,969
Operating lease right-of-use asset
87,167
—
Deferred income taxes
4,790
4,098
Goodwill
784,882
578,097
Purchased intangibles, net
210,361
165,613
Other assets
21,759
76,872
Other assets of consolidated VIE
—
1,419
Total assets
$
2,324,221
$
1,847,170
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings
$
215,716
$
195,500
Trade accounts payable
156,953
180,773
Trade accounts payable of consolidated
VIE
49
25
Contract liabilities
75,546
46,170
Accrued compensation
75,924
58,343
Other current liabilities
50,464
36,670
Other current liabilities of consolidated
VIE
85
191
Income taxes payable
799
773
Current portion of long-term debt
11,250
10,714
Total current liabilities
586,786
529,159
Long-term debt
430,115
189,110
Long-term debt of consolidated VIE
163,348
61,994
Operating lease liability
80,568
—
Financing lease liability
395
—
Accrued pension liability
19,760
25,386
Deferred compensation
9,570
11,040
Income taxes payable
539
937
Deferred income taxes
6,187
4,554
Other noncurrent liabilities
32,883
22,817
Other noncurrent liabilities of
consolidated VIE
5,890
21,605
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par value; authorized
5,000 shares, none issued
—
—
Common stock, no par value; authorized
50,000 shares
40,274 issued and 31,329 outstanding at
September 30, 2020
40,124 issued and 31,178 outstanding at
September 30, 2019
295,986
274,472
Retained earnings
850,472
862,948
Accumulated other comprehensive loss
(149,603
)
(139,693
)
Treasury stock at cost - 8,945 shares
(36,078
)
(36,078
)
Shareholders’ equity related to Cubic
960,777
961,649
Noncontrolling interest in VIE
27,403
18,919
Total shareholders’ equity
988,180
980,568
Total liabilities and shareholders’
equity
$
2,324,221
$
1,847,170
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(amounts in thousands)
Years Ended September
30,
2020
2019
2018
Operating Activities:
Net income
$
3,371
$
39,883
$
12,036
Net (income) loss from discontinued
operations
(436
)
1,423
(4,243
)
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
88,482
64,742
46,600
Share-based compensation expense
22,728
15,488
7,515
Change in fair value of contingent
consideration
(1,856
)
(1,005
)
1,029
Change in fair value of interest rate swap
of consolidated VIE
18,687
—
—
Gain on sale of property, plant and
equipment
(170
)
(32,510
)
—
Gain on sale of investment in real
estate
—
—
(1,474
)
Deferred income taxes
(15,160
)
(3,363
)
(6,860
)
Deferred compensation
(1,470
)
(436
)
41
Net pension benefit
(833
)
(1,337
)
(2,770
)
Loss on extinguishment of debt
16,090
—
—
Other items
2,202
—
—
Changes in operating assets and
liabilities, net of effects from acquisitions
Accounts receivable
(35,177
)
44,473
(34,762
)
Contract assets
84,899
(83,697
)
—
Inventories
(19,720
)
(31,544
)
3,023
Prepaid expenses and other current
assets
6,443
5,317
(15,455
)
Long-term financing receivables
(133,894
)
(56,575
)
—
Long-term capitalized contract costs
—
—
(29,552
)
Operating lease right of use asset
(9,715
)
—
—
Accounts payable and other current
liabilities
(3,031
)
27,792
30,423
Contract liabilities
27,531
(15,359
)
21,566
Income taxes
(8,610
)
(17,268
)
(361
)
Operating lease liability
6,894
—
—
Other items, net
(55,546
)
12,125
(18,167
)
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES FROM CONTINUING OPERATIONS
(8,291
)
(31,851
)
8,589
NET CASH PROVIDED BY OPERATING ACTIVITIES
FROM DISCONTINUED OPERATIONS
3,417
—
10,376
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
(4,874
)
(31,851
)
18,965
Investing Activities:
Acquisition of businesses, net of cash
acquired
(234,788
)
(393,908
)
(16,322
)
Proceeds from sale of property, plant and
equipment
—
44,891
—
Purchases of property, plant and
equipment
(49,247
)
(49,084
)
(31,696
)
Proceeds from sale of investment in real
estate
—
—
2,400
Purchase of non-marketable debt and equity
securities
(1,173
)
(60,694
)
(1,500
)
Receipt of withheld proceeds from sale of
trade receivables
5,521
—
—
NET CASH USED IN INVESTING ACTIVITIES FROM
CONTINUING OPERATIONS
(279,687
)
(458,795
)
(47,118
)
NET CASH PROVIDED BY INVESTING ACTIVITIES
FROM DISCONTINUED OPERATIONS
—
—
133,795
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES
(279,687
)
(458,795
)
86,677
Financing Activities:
Proceeds from short-term borrowings
1,100,163
898,000
269,770
Principal payments on short-term
borrowings
(1,080,000
)
(702,500
)
(324,770
)
Proceeds from long-term borrowings
450,000
—
—
Principal payments on long-term
borrowings
(205,622
)
—
—
Proceeds from long-term borrowings of
consolidated VIE
204,905
50,162
13,196
Principal payments on long-term borrowings
of consolidated VIE
(92,575
)
—
—
Debt extinguishment make-whole payment
(15,856
)
—
—
Deferred financing fees
(3,354
)
(1,907
)
—
Deferred financing fees of consolidated
VIE
(9,153
)
—
(4,778
)
Proceeds from stock issued under employee
stock purchase plan
2,493
1,832
1,517
Purchase of common stock
(3,707
)
(3,688
)
(2,449
)
Dividends paid
(8,431
)
(8,414
)
(7,355
)
Contingent consideration payments related
to acquisitions of businesses
—
(820
)
(1,156
)
Equity contribution from Boston VIE
partner
1,892
—
24,349
Proceeds from equity offering, net
—
215,832
—
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES
340,755
448,497
(31,676
)
Effect of exchange rates on cash
5,169
(1,838
)
(2,935
)
NET INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
61,363
(43,987
)
71,031
Cash, cash equivalents and restricted cash
at the beginning of the period
95,621
139,608
68,577
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
AT THE END OF THE PERIOD
$
156,984
$
95,621
$
139,608
Supplemental disclosure of non-cash
investing and financing activities:
Contingent consideration liability
incurred with the acquisition of Delerrok
$
1,600
$
—
$
—
Withheld proceeds from the sale of trade
receivables to be received in fiscal 2021
$
1,842
$
—
$
—
Liability recognized in connection with
the acquisition of Nuvotronics, net
$
—
$
4,900
$
—
Liability recognized in connection with
the acquisition of Shield Aviation, net
$
—
$
—
$
6,248
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201118006043/en/
Investor Contact Kirsten Nielsen Investor Relations Cubic
Corporation Kirsten.Nielsen@cubic.com
Media Contact Christina Itzkowitz Corporate
Communications Cubic Corporation Christina.Itzkowitz@cubic.com
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