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Cubic Reports Financial Results for the Quarter Ended December 31, 2012

Cubic Reports Financial Results for the Quarter Ended December 31, 2012 
SAN DIEGO, CA -- (Marketwire) -- 02/11/13 --  Cubic Corporation
(NYSE: CUB) today reported its financial results for the quarter
ended December 31, 2012. Net income attributable to Cubic
shareholders for the first quarter of fiscal 2013 was $12.4 million,
or 47 cents per share this year compared to $20.7 million, or 77
cents per share last year. Sales for the quarter decreased from
$316.8 million to $313.4 million, a decrease of 1 percent. Operating
income was $18.2 million in this year's first quarter compared to
$27.8 million last year, a decrease of 34 percent. Adjusted Earnings
Before Interest, Taxes, Depreciation and Amortization (Adjusted
EBITDA), a non-GAAP measure (as described below), for the first
quarter this year was $23.0 million, compared to $33.6 million last
year. 
"While our first quarter reflected some unusual cost items and lower
profitability, we continue to make progress on major long-term
transit projects and have completed two acquisitions that will
provide growth opportunities in our defense and transportation
segments in key strategic focus areas," said William W. Boyle, Chief
Executive Officer of Cubic Corporation.  "I believe our
diversification and strategic focus will differentiate Cubic over the
long term." 
Transportation Systems 
Cubic Transportation Systems (CTS) develops and delivers innovative
fare collection systems and services for public transit authorities
worldwide. In the first quarter of this year, CTS sales decreased 6
percent to $118.6 million compared to $125.8 million in the same
period last year, primarily due to reduced work on a contract to
design and build a system in Vancouver. Last year's first quarter
revenues were higher on the project as we were producing a
significant amount of the hardware for the system, while this year we
are in the latter stages of system delivery. This decrease was
partially offset by higher sales from a contract to design and build
a system in Sydney, Australia. CTS is currently in the design and
build phase for three major projects to design, build and operate
transit fare systems in Sydney, Vancouver and Chicago. 
Operating income from CTS decreased 26 percent in the first quarter
this year to $13.
2 million, compared to $17.9 million in the first
quarter of last year. In addition to the impact on operating income
caused by the decrease in sales, we are currently incurring costs in
excess of revenues on our contract in Sydney, Australia due to the
transition of portions of the system into full operations. We
anticipate improved profitability on the Sydney contract as the
systems complete the transition phase and move into full operations. 
Mission Support Services 
Mission Support Services (MSS) is a leading provider of highly
specialized support services to the U.S. government and allied
nations. Sales from MSS increased 5 percent to $113.4 million in the
first quarter this year, from $107.5 million in the first quarter of
last year. Sales growth was driven by an increase in activity during
the first quarter at the Joint Readiness Training Center (JRTC) in
Fort Polk, Louisiana and by higher sales from Abraxas, a company
Cubic acquired in fiscal year 2011.  
MSS operating income decreased 7 percent to $4.2 million in the first
quarter this year from $4.5 million in the first quarter of last
year. NEK, a Special Operations Forces Training company we acquired
in December 2012, had an operating loss of $0.5 million in the first
quarter of fiscal 2013 primarily due to the incurrence of $0.4
million of acquisition-related costs.  
Defense Systems 
Cubic Defense Systems (CDS) is focused on two primary lines of
business: training systems and secure communications. Training
systems sales increased 1 percent in the first quarter this year to
$65.6 million while operating income decreased 48 percent for the
quarter from $4.8 million last year to $2.5 million this year.
Although total training systems sales increased, the sales of higher
margin small arms training systems and air combat training systems to
a customer in the Far East decreased, which decreased operating
income.  
Secure communications sales decreased 23 percent in the first quarter
this year to $11.6 million compared to $15.0 million in the first
quarter of last year. Secure communications operating income
decreased to $0.3 million in the first quarter this year from $3.2
million in the first quarter of last year. Decreased profitability on
lower data link sales, including the impact of a $1.2 million cost
increase on a U.S. government contract, contributed to the decrease
in operating income. 
Segment Results 
The following table presents sales, operating profits, and
depreciation and amortization for each of the three business
segments, in millions.  


 
                                                                            
                                                        Three Months Ended  
                                                           December 31,     
                                                          2012       2011   
                                                       ---------  --------- 
Sales:                                                                      
  Transportation Systems                               $   118.6  $   125.8 
  Mission Support Services                                 113.4      107.5 
  Defense Systems                                           81.2       83.3 
  Other                                                      0.2        0.2 
                                                       ---------  --------- 
Total sales                                            $   313.4  $   316.8 
                                                       =========  ========= 
                                                                            
Operating income (loss):                                                    
  Transportation Systems                               $    13.2  $    17.9 
  Mission Support Services                                   4.2        4.5 
  Defense Systems                                            1.2        6.0 
  Unallocated corporate expenses and other                  (0.4)      (0.6)
                                                       ---------  --------- 
Total operating income                                 $    18.2  $    27.8 
                                                       =========  ========= 
                                                                            
Depreciation and amortization:                                              
  Transportation Systems                               $     0.5  $     0.9 
  Mission Support Services                                   3.1        3.5 
  Defense Systems                                            0.8        1.2 
  Other                                                      0.3        0.2 
                                                       ---------  --------- 
Total depreciation and amortization                    $     4.7  $     5.8 
                                                       =========  ========= 

 
Total backlog  
Total backlog decreased $15.2 million from $2,831.6 million at
September 30, 2012 to $2,816.4 million at December 31, 2012. Backlog
in our defense businesses has been impacted in part due to the
budgetary uncertainties experie
nced by our U.S. governmental agency
customers and shorter-term contract awards.  
Conference Call 
Cubic's management will hold its first-ever earnings conference call
on Monday, February 11, 2013 at 4:30 p.m. Eastern Time (1:30 p.m.
Pacific Time) to review the company's financial results for the first
quarter ended December 31, 2012 and provide a company update. The
company's prepared remarks will be followed by a question and answer
period. Please refer to the company's press release for more details. 
About Cubic  
Cubic Corporation is the parent company of three business segments:
Transportation Systems, Mission Support Services, and Defense
Systems. Transportation Systems is a leading provider of automated
fare collection systems and services for public transit authorities
worldwide. Mission Support Services is a leading provider of
training, operations, maintenance, technical and other support
services to the U.S. and allied nations. Defense Systems is a leading
provider of realistic combat training systems and secure
communications, including data links, cyber technologies, asset
tracking solutions, and defense electronics. For more information
about Cubic, see the company's Web site at www.cubic.com.  
Forward-Looking Statements 
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that
are subject to the safe harbor created by such Act. Forward-looking
statements include, among others, statements about our expectations
regarding future events or our future financial and/or operating
performance. 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:
our 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 our contracts
with them; our ability to successfully integrate new companies into
our business and to properly assess the effects of such integration
on our financial condition; the U.S. government's increased emphasis
on awarding contracts to small businesses, and our ability to retain
existing contracts or win new contracts under competitive bidding
processes; the effects of politics and economic conditions on
negotiations and business dealings in the various countries in which
we do business or intend to do business; competition and technology
changes in the defense and transportation industries; our ability to
accurately estimate the time and resources necessary to satisfy
obligations under our contracts; the effect of adverse regulatory
changes on our ability to sell products and services; our ability to
identify, attract and retain qualified employees; business
disruptions due to cyber security threats, physical threats,
terrorist acts, acts of nature and public health crises; our
involvement in litigation, including litigation related to patents,
proprietary rights and employee misconduct; our reliance on
subcontractors and on a limited number of third parties to
manufacture and supply our products; our ability to comply with our
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, our products and systems; and changes in U.S. and foreign tax
laws, exchange rates or our economic assumptions regarding our
pension plans. In addition, please refer to the risk factors
contained in our SEC filings available at www.sec.gov, including our
most recent Annual Report on Form 10-K and 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
hereof, and, except as required by law, we undertake no obligation to
update any forward-looking statement to reflect events or
circumstances after the date hereof.  
Use of Non-GAAP Financial Information 
To supplement our consolidated financial statements presented in
accordance with U.S. generally accepted accounting principles (GAAP),
we use Adjusted EBITDA which represents net income attributable to
Cubic before interest, taxes, non-operating income, depreciation and
amortization. We believe that the presentation of Adjusted EBITDA
provides useful information to investors with which to analyze our
operating trends and performance and ability to service and incur
debt. Also, Adjusted EBITDA is a factor we use in measuring our
performance and compensating certain of our executives. Further, we
believe Adjusted EBITDA facilitates company-to-company operating
performance comparisons by backing out potential differences caused
by variations in capital structures (affecting net interest expense),
taxation and the age and book depreciation of property, plant and
equipment (affecting relative depreciation expense), and
non-operating expenses which may vary for different companies for
reasons unrelated to operating performance. In addition, we believe
that Adjusted EBITDA is frequently used by securities analysts,
investors and other interested parties in their evaluation of
companies, many of which present an Adjusted EBITDA measure when
reporting their results. Adjusted EBITDA is not a measurement of
financial performance under GAAP and should not be considered as an
alternative to net income as a measure of performance. In addition,
other companies may define Adjusted EBITDA differently and, as a
result, our measure of Adjusted EBITDA may not be directly comparable
to Adjusted EBITDA of other companies. Furthermore, Adjusted EBITDA
has limitations as an analytical tool, and you should not consider it
in isolation, or as a substitute for analysis of our results as
reported under GAAP. 
Because of these limitations, Adjusted EBITDA should not be
considered as a measure of discretionary cash available to us to
invest in the growth of our business. We compensate for these
limitations by relying primarily on our GAAP results and using
Adjusted EBITDA only supplementally. You are cautioned not to place
undue reliance on Adjusted EBITDA.   
The following table reconciles Adjusted EBITDA to net income
attributable to Cubic, which we consider to be the most directly
comparable GAAP financial measure to Adjusted EBITDA. 


 
                                                                            
                                                        Three Months Ended  
                                                           December 31,     
                                                          2012       2011   
                             
                          ---------  --------- 
                                                          (in thousands)    
Reconciliation:                                                             
Net income attributable to Cubic                       $  12,446  $  20,694 
Add:                                                                        
  Provision for income taxes                               5,400      8,353 
  Interest expense (income), net                             425       (415)
  Other income, net                                         (102)      (923)
  Noncontrolling interest in income of VIE                    73         45 
  Depreciation and amortization                            4,718      5,832 
                                                       ---------  --------- 
    ADJUSTED EBITDA                                    $  22,960  $  33,586 
                                                       =========  ========= 
                                                                            
                                                                            
                             CUBIC CORPORATION                              
          CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)           
               (amounts in thousands, except per share data)                
                                                                            
                                                        Three Months Ended  
                                                           December 31,     
                                                          2012       2011   
                                                       ---------  --------- 
                                                                            
Net sales:                                                                  
  Products                                             $ 135,701  $ 153,310 
  Services                                               177,670    163,456 
                                                       ---------  --------- 
                                                         313,371    316,766 
                                                                            
Costs and expenses:                                                         
  Products                                               100,895    113,449 
  Services                                               143,851    131,408 
  Selling, general and administrative                     40,997     35,220 
  Research and development                                 5,822      4,896 
  Amortization of purchased intangibles                    3,564      4,039 
                                                       ---------  --------- 
                                                         295,129    289,012 
                                                       ---------  --------- 
                                                                            
Operating income                                          18,242     27,754 
                                                                            
Other income (expense):                                                     
  Interest and dividend income                               437        762 
  Interest expense                                          (862)      (347)
  Other income (expense) - net                               102        923 
                                                       ---------  --------- 
                                                                            
Income before income taxes                                17,919     29,092 
                                                                            
Income taxes                                               5,400      8,353 
                                                       ---------  --------- 
                                                                            
Net income                                                12,519     20,739 
                                                                            
Less noncontrolling interest in income of VIE                 73         45 
                                                       ---------  --------- 
                                                                            
Net income attributable to Cubic                       $  12,446  $  20,694 
                                                       =========  ========= 
                                                                            
Basic and diluted net income per common share          $    0.47  $    0.77 
                                                       =========  ========= 
                                                                            
Average number of common shares outstanding               26,736     26,736 
                                                       =========  ========= 
                                                                            
                                                                            
                             CUBIC CORPORATION                              
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                               (in thousands)                               
                                                                            
                                                              September 30, 
                                                December 31,       2012     
                                                    2012        (See note   
                                                (Unaudited)       below)    
                                               -------------  ------------- 
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                    $     174,116  $     212,267 
  Restricted cash                                     68,829         68,749 
  Accounts receivable - net                          359,301        350,697 
  Recoverable income taxes                             4,817          7,083 
  Inventories - net                                   53,095         52,366 
  Deferred income taxes and other current                                   
   assets                                             24,243         21,564 
                                               -------------  ------------- 
Total current assets                                 684,401        712,726 
                                               -------------  ------------- 
                                                                            
Long-term contract receivables                        21,460         22,070 
Long-term capitalized contract costs                  40,146         26,875 
Property, plant and equipment - net                   55,434         55,327 
Goodwill                                             173,734        146,933 
Purchased intangibles - net                           54,188         39,374 
Other assets                                          21,390         23,012 
                                               -------------  ------------- 
                                               $   1,050,753  $   1,026,317 
                                               =============  ============= 
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities:                                                        
  Short-term borrowings                        $      25,000  $           - 
  Trade accounts payable                              29,001         47,917 
  Customer advances                                  107,913        100,764 
  Accrued compensation and othe
r current                                    
   liabilities                                       122,316        108,668 
  Income taxes payable                                 8,715         20,733 
  Current portion of long-term debt                    4,563          4,561 
                                               -------------  ------------- 
Total current liabilities                            297,508        282,643 
                                               -------------  ------------- 
                                                                            
Long-term debt                                         2,814          6,942 
Other long-term liabilities                           65,533         66,390 
                                                                            
Shareholders' equity:                                                       
  Common stock                                        12,574         12,574 
  Retained earnings                                  727,489        715,043 
  Accumulated other comprehensive loss               (19,111)       (21,148)
  Treasury stock at cost                             (36,078)       (36,078)
                                               -------------  ------------- 
Shareholders' equity related to Cubic                684,874        670,391 
  Noncontrolling interest in variable interest                              
   entity                                                 24            (49)
                                               -------------  ------------- 
Total shareholders' equity                           684,898        670,342 
                                               -------------  ------------- 
                                               $   1,050,753  $   1,026,317 
                                               =============  ============= 
                                                                            
                                                                            
Note: The Balance Sheet at September 30, 2012 has been derived from the     
 audited financial statements at that date.                                 
                                                                            
                                                                            
                             CUBIC CORPORATION                              
         CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)         
                               (in thousands)                               
                                                        Three Months Ended  
                                                           December 31,     
                                                          2012       2011   
                                                       ---------  --------- 
Operating Activities:                                                       
  Net income                                           $  12,519  $  20,739 
  Adjustments to reconcile net income to net cash used                      
   in operating activities:                                                 
    Depreciation and amortization                          4,718      5,832 
    Changes in operating assets and liabilities          (43,353)   (64,948)
                                                       ---------  --------- 
NET CASH USED IN OPERATING ACTIVITIES                    (26,116)   (38,377)
                                                       ---------  --------- 
                                                                            
Investing Activities:                                                       
  Acquisition of businesses, net of cash acquired        (33,095)         - 
  Purchases of property, plant and equipment              (1,423)    (5,249)
  Proceeds from sales or maturities of short-term                           
   investments                                                 -      6,957 
                                                       ---------  --------- 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES      (34,518)     1,708 
                                                       ---------  --------- 
                                                                            
Financing Activities:                                                       
  Proceeds from short-term borrowings                     25,000          - 
  Principal payments on long-term debt                    (4,140)    (4,136)
  Net change in restricted cash                              229          - 
                                                       ---------  --------- 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES       21,089     (4,136)
                                                       ---------  --------- 
                                                                            
Effect of exchange rates on cash                           1,394        798 
                                                       ---------  --------- 
                                                                            
NET DECREASE IN CASH AND CASH EQUIVALENTS                (38,151)   (40,007)
                                                                            
Cash and cash equivalents at the beginning of the                           
 period                                                  212,267    329,148 
                                                       ---------  --------- 
                                                                            
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD     $ 174,116  $ 289,141 
                                                       =========  ========= 
                                                                            
                                                                            
Supplemental disclosure of non-cash operating and investing activities:     
                                                                            
  Liability incurred to acquire NEK                    $  20,130  $       - 

  
Contact:
Diane Dyer
Investor Relations
Cubic Corporation
(858) 505-2907  
 
 
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