Cubic Corporation (NYSE: CUB) (“Cubic” or the “Company”) today
announced its financial results for the second fiscal quarter ended
March 31, 2021.
In light of the pending acquisition of Cubic by Veritas Capital
and Evergreen Coast Capital Corporation, the Company will not be
hosting a conference call to discuss its financial results. The
pending acquisition remains subject to the receipt of certain
regulatory approvals and the satisfaction of other closing
conditions. Cubic currently anticipates that the pending
acquisition will be completed during the second calendar quarter of
2021.
Second Quarter Fiscal 2021 Highlights
- Sales of $343.4 million, increased 7% year-over-year
- Net loss from continuing operations attributable to Cubic of
$36.0 million, or $1.14 per share, compared to $39.3 million, or
$1.25 per share, in the second quarter of the fiscal year ended
September 30, 2020 (“fiscal 2020”)
- Adjusted earnings per share (“EPS”) of $0.15, compared to a
loss of $0.12 per share in the second quarter of fiscal 2020
- Adjusted EBITDA of $22.7 million, compared to $4.5 million in
the second quarter of fiscal 2020
“We delivered solid growth in Sales, Adjusted EBITDA and
Adjusted EPS in the second quarter of fiscal 2021,” said Bradley H.
Feldmann, chairman, president and chief executive officer of Cubic.
“We continue to make great progress on our NextCUBIC strategy,
which is driving innovation and sustainable value for our
customers, employees and communities.”
Financial Results Summary
(unaudited)
Three Months Ended
Six Months Ended
March 31,
March 31,
2021
2020
2021
2020
(in millions, except per share
data)
Sales
$
343.4
$
321.5
$
662.2
$
650.3
Operating loss
(25.6
)
(29.9
)
(24.3
)
(36.4
)
Adjusted EBITDA1
22.7
4.5
52.3
15.9
Adjusted net income (loss)1
4.8
(3.9
)
16.5
(7.6
)
Loss from continuing operations
attributable to Cubic before income taxes
$
(32.6
)
$
(58.9
)
$
(42.1
)
$
(72.8
)
Income tax provision (benefit) from
continuing operations attributable to Cubic
3.4
(19.7
)
6.9
(13.5
)
Net loss from continuing operations
attributable to Cubic
$
(36.0
)
$
(39.3
)
$
(49.0
)
$
(59.2
)
Loss per share from continuing operations
attributable to Cubic
$
(1.14
)
$
(1.25
)
$
(1.55
)
$
(1.89
)
Adjusted earnings (loss) per share1
0.15
(0.12
)
0.52
(0.24
)
(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 Second Quarter Fiscal 2021 Results (all
metrics compared to Second Quarter Fiscal 2020 unless otherwise
noted)
Sales increased 7% as reported (4% on a constant currency basis)
to $343.4 million, compared to $321.5 million in the prior year
period, driven by strong growth in Transportation Systems.
Operating loss was $25.6 million, compared to $29.9 million in
the prior year period. Results benefited from an increase in
operating income in Transportation Systems and a decrease in
operating loss in Mission and Performance Solutions. Unallocated
corporate and other costs increased to $36.3 million compared to
$16.8 million in the prior year period driven by costs incurred in
connection with our evaluation of proposals to acquire Cubic and
higher restructuring costs in connection with NextCUBIC
transformation and cost optimization initiatives.
Adjusted EBITDA increased to $22.7 million, compared to $4.5
million in the prior year period. Adjusted EBITDA margin increased
approximately 520 basis points to 6.6%.
Net loss from continuing operations attributable to Cubic was
$36.0 million, or $1.14 per share, compared to $39.3 million, or
$1.25 per share, in the prior year period. Adjusted net income was
$4.8 million, or $0.15 per share, compared to a loss of $3.9
million, or $0.12 per share, in the prior year period.
Net cash used by continuing operations was $36.4 million,
including the impact of consolidating the Company’s Boston variable
interest entity (“VIE”), compared to $26.5 million in the prior
year period. Adjusted Free Cash Flow was negative $33.9 million,
compared to negative $37.0 million in the prior year period.
Reportable Segment Results
(unaudited)
Three Months Ended
Six Months Ended
March 31,
March 31,
2021
2020
2021
2020
Sales:
(in millions)
(in millions)
Cubic Transportation Systems
$
217.4
$
197.6
$
414.5
$
386.2
Cubic Mission and Performance
Solutions
126.0
123.9
247.7
264.1
Total sales
$
343.4
$
321.5
$
662.2
$
650.3
Operating income (loss):
Cubic Transportation Systems
$
33.0
$
12.6
$
64.7
$
26.9
Cubic Mission and Performance
Solutions
(22.3
)
(25.7
)
(38.8
)
(34.3
)
Unallocated corporate expenses
(36.3
)
(16.8
)
(50.2
)
(29.0
)
Total operating loss
$
(25.6
)
$
(29.9
)
$
(24.3
)
$
(36.4
)
Adjusted EBITDA:
Cubic Transportation Systems
$
38.4
$
24.2
$
74.2
$
46.4
Cubic Mission and Performance
Solutions
(4.8
)
(8.7
)
(2.1
)
(10.5
)
Unallocated corporate expenses
(10.9
)
(11.0
)
(19.8
)
(20.0
)
Total Adjusted EBITDA1
$
22.7
$
4.5
$
52.3
$
15.9
(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”)
CTS sales increased 10% as reported (6% on a constant currency
basis) to $217.4 million, compared to $197.6 million in the prior
year period, driven by U.S. system development contracts.
CTS Adjusted EBITDA increased 59% to $38.4 million, compared to
$24.2 million in the prior year period. Adjusted EBITDA margin of
17.7% increased 550 basis points, compared to the prior year
period, reflecting strong project execution and the impact of
NextCUBIC cost savings initiatives.
Cubic Mission and Performance Solutions (“CMPS”)
CMPS sales increased 2% as reported (flat on a constant currency
basis) to $126.0 million, compared to $123.9 million in the prior
year period. Sales reflected an increase in sales generated by
C2ISR and expeditionary satellite communications products (GATR),
primarily offset by lower sales from the live, virtual and
constructive (LVC) training business.
CMPS Adjusted EBITDA improved to negative $4.8 million, compared
to negative $8.7 million in the prior year period. Adjusted EBITDA
margin improved to negative 3.8%, compared to negative 7.0% in the
prior year period, reflecting sales mix as well as lower selling,
general and administrative expense as a result of cost savings
initiatives, partially offset by higher research and development
expense.
Backlog
Backlog decreased by $40.6 million from September 30, 2020 to
March 31, 2021. Foreign currency had a favorable impact of $71.8
million during the period.
March 31,
September 30,
2021
2020
(in millions)
Total backlog
Cubic Transportation Systems
$
3,072.1
$
3,139.9
Cubic Mission and Performance
Solutions
554.3
527.1
Total
$
3,626.4
$
3,667.0
Key Orders: Second Quarter Fiscal 2021
CTS
- $23 million to provide road tunnel outstation maintenance for
Transport for London
- $13 million to provide IT network and infrastructure upgrades
for the Port Authority Trans-Hudson (PATH)
- $10 million to provide next-generation readers to Bay Area
Rapid Transit (BART) and Muni Clipper 2.0
CMPS
- $57 million in combined orders to provide expeditionary
satellite communications products for the United States Army
- $32 million Unified Video Dissemination System enterprise
license renewal with government customer
- $26 million first delivery order under Cubic’s sole vendor
Sailor 2025 Ready Relevant Learning indefinite delivery/indefinite
quantity contacts
- Cubic Nuvotronics awarded a contract worth more than $10
million to support Department of Defense “5G to Next G”
program
Balance Sheet
Cubic’s bank net leverage ratio, as defined in the Company’s
credit agreement, was 3.5x at the end of the second quarter of our
fiscal year ended March 31,2021. The credit agreement allows for
net leverage of up to 4.0x.
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 pending acquisition of Cubic by
Veritas Capital and Evergreen Coast Capital Corporation; 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; changes in U.S. and foreign tax laws, exchange rates
or Cubic’s economic assumptions regarding its pension plans; and
whether closing conditions related to the pending acquisition of
Cubic by Veritas Capital and Evergreen Coast Capital Corporation
are satisfied or the timing thereof. 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 (loss), 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. 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, expenses
recognized related to the change in the fair value of contingent
consideration for acquisitions, and costs incurred in connection
with proposals to acquire Cubic.
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 Massachusetts Bay Transportation
Authority 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.
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 (loss) to GAAP net income (loss), 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 March 31,
2021
Six Months Ended March 31,
2021
Cubic
CTS
CMPS
Cubic
CTS
CMPS
Sales growth as reported
6.8
%
10.0
%
1.7
%
1.8
%
7.3
%
(6.2
)%
Contribution from acquisitions
—
—
—
(0.4
)%
(0.1
)%
(0.9
)%
Foreign currency translation
(3.2
)%
(4.2
)%
(1.5
)%
(2.2
)%
(2.9
)%
(1.0
)%
Organic sales growth
3.6
%
5.8
%
0.2
%
(0.7
)%
4.3
%
(8.1
)%
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
Six Months Ended
(in millions, except margin data)
March 31,
March 31,
Cubic Transportation Systems
2021
2020
2021
2020
Sales
$
217.4
$
197.6
$
414.5
$
386.2
Operating income
$
33.0
$
12.6
$
64.7
$
26.9
Depreciation and amortization
7.5
7.4
15.0
14.5
Noncontrolling interest in EBITDA of
VIE
(3.8
)
(1.3
)
(7.2
)
(2.2
)
Acquisition-related expenses (gains),
excluding amortization
0.1
5.4
(0.1
)
6.7
Restructuring costs
1.6
0.1
1.8
0.5
Adjusted EBITDA
$
38.4
$
24.2
$
74.2
$
46.4
Adjusted EBITDA margin
17.7
%
12.2
%
17.9
%
12.0
%
Three Months Ended
Six Months Ended
(in millions, except margin data)
March 31,
March 31,
Cubic Mission and Performance
Solutions
2021
2020
2021
2020
Sales
$
126.0
$
123.9
$
247.7
$
264.1
Operating loss
$
(22.3
)
$
(25.7
)
$
(38.8
)
$
(34.3
)
Depreciation and amortization
15.2
15.1
30.3
24.3
Acquisition-related expenses (gains),
excluding amortization
1.5
1.2
2.5
(1.0
)
(Gain) loss on sale of fixed assets
-
0.1
-
(0.1
)
Restructuring costs
0.8
0.6
3.9
0.6
Adjusted EBITDA
$
(4.8
)
$
(8.7
)
$
(2.1
)
$
(10.5
)
Adjusted EBITDA margin
(3.8
)%
(7.0
)%
(0.8
)%
(4.0
)%
Three Months Ended
Six Months Ended
(in millions, except margin data)
March 31,
March 31,
Cubic Consolidated
2021
2020
2021
2020
Sales
$
343.4
$
321.5
$
662.2
$
650.3
Net income (loss) from continuing
operations attributable to Cubic
$
(36.0
)
$
(39.3
)
$
(49.0
)
$
(59.2
)
Noncontrolling interest in net income
(loss) of VIE
16.8
(13.2
)
22.5
(9.2
)
Income tax provision (benefit)
3.4
(19.7
)
6.9
(13.5
)
Interest expense, net
4.8
6.6
11.2
9.7
Loss on extinguishment of debt
-
16.1
-
16.1
Other non-operating expense (income),
net
(14.5
)
19.6
(15.8
)
19.8
Operating loss
$
(25.6
)
$
(29.9
)
$
(24.3
)
$
(36.4
)
Depreciation and amortization
25.0
23.4
49.7
40.4
Noncontrolling interest in EBITDA of
VIE
(3.8
)
(1.3
)
(7.2
)
(2.2
)
Acquisition-related expenses, excluding
amortization
18.5
6.6
20.8
5.9
Strategic and IT system resource planning
expenses
0.7
1.8
1.3
2.9
(Gain) loss on sale of fixed assets
0.1
0.1
0.1
(0.1
)
Restructuring costs
7.8
3.8
11.9
5.4
Adjusted EBITDA
$
22.7
$
4.5
$
52.3
$
15.9
Adjusted EBITDA margin
6.6
%
1.4
%
7.9
%
2.4
%
Note: Amounts may not sum due to
rounding
GAAP NET INCOME (LOSS) TO ADJUSTED NET
INCOME (LOSS) AND GAAP EPS TO ADJUSTED EPS RECONCILIATION
(UNAUDITED)
Three Months Ended
Six Months Ended
March 31,
March 31,
2021
2020
2021
2020
(in millions, except per share data)
GAAP EPS
$
(1.14
)
$
(1.25
)
$
(1.55
)
$
(1.89
)
GAAP Net loss from continuing
operations attributable to Cubic
$
(36.0
)
$
(39.3
)
$
(49.0
)
$
(59.2
)
Noncontrolling interest in net income
(loss) of VIE
16.8
(13.2
)
22.5
(9.2
)
Amortization of purchased intangibles
15.0
16.5
31.1
26.6
(Gain) loss on sale of fixed assets
0.1
0.1
0.1
(0.1
)
Restructuring costs
7.8
3.8
11.9
5.4
Loss on extinguishment of debt
—
16.1
—
16.1
Acquisition-related expenses, excluding
amortization
18.5
6.6
20.8
5.9
Strategic and IT system resource planning
expenses
0.7
1.8
1.3
2.9
Other non-operating expense (income),
net
(14.5
)
19.6
(15.8
)
19.8
Noncontrolling interest in Adjusted Net
Income of VIE
(3.2
)
(1.3
)
(6.0
)
(2.2
)
Tax impact related to acquisitions1
—
(13.5
)
0.2
(13.5
)
Impact of U.S. Tax Reform
—
0.5
—
0.5
Tax impact related to non-GAAP
adjustments2
(0.4
)
(1.6
)
(0.6
)
(0.6
)
Adjusted Net Income (Loss)
$
4.8
$
(3.9
)
$
16.5
$
(7.6
)
Adjusted EPS
$
0.15
$
(0.12
)
$
0.52
$
(0.24
)
Weighted Average Diluted Shares
Outstanding (in thousands)
31,633
31,296
31,598
31,284
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
Six Months Ended
(in millions)
March 31,
March 31,
Cubic Consolidated
2021
2020
2021
2020
Net cash provided by (used in)
continuing operating activities
$
(36.4
)
$
(26.5
)
$
(58.6
)
$
(74.1
)
Capital expenditures
(13.4
)
(13.5
)
(20.1
)
(25.3
)
Operating cash flow associated with
VIE
15.3
3.0
35.5
23.2
Receipt of withheld proceeds from sale of
trade receivables
0.6
—
2.5
5.5
Adjusted Free Cash Flow
$
(33.9
)
$
(37.0
)
$
(40.7
)
$
(70.7
)
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
(amounts in thousands, except per
share data)
Three Months Ended
Six Months Ended
March 31,
March 31,
2021
2020
2021
2020
Net sales:
Products
$
200,428
$
187,494
$
381,917
$
388,098
Services
142,980
133,988
280,285
262,223
343,408
321,482
662,202
650,321
Costs and expenses:
Products
149,671
153,002
287,690
319,845
Services
98,879
88,420
182,309
171,068
Selling, general and administrative
expenses
83,141
78,294
146,801
144,209
Research and development
14,368
11,360
26,514
19,782
Amortization of purchased intangibles
15,033
16,493
31,140
26,582
(Gain) loss on sale of property, plant and
equipment
125
40
125
(130
)
Restructuring costs
7,746
3,807
11,881
5,382
368,963
351,416
686,460
686,738
Operating loss
(25,555
)
(29,934
)
(24,258
)
(36,417
)
Other income (expenses):
Interest and dividend income
1,946
1,693
3,735
3,911
Interest expense
(6,734
)
(8,219
)
(14,905
)
(13,582
)
Loss on extinguishment of debt
—
(16,090
)
—
(16,090
)
Other income (expense), net
14,543
(19,664
)
15,839
(19,791
)
Loss from continuing operations before
income taxes
(15,800
)
(72,214
)
(19,589
)
(81,969
)
Income tax provision (benefit)
3,440
(19,784
)
6,929
(13,538
)
Loss from continuing operations
(19,240
)
(52,430
)
(26,518
)
(68,431
)
Net income (loss) from discontinued
operations
—
129
—
(455
)
Net loss
(19,240
)
(52,301
)
(26,518
)
(68,886
)
Less noncontrolling interest in net income
(loss) of VIE
16,777
(13,178
)
22,494
(9,188
)
Net loss attributable to Cubic
$
(36,017
)
$
(39,123
)
$
(49,012
)
$
(59,698
)
Amounts attributable to Cubic:
Net loss from continuing operations
$
(36,017
)
$
(39,252
)
$
(49,012
)
$
(59,243
)
Net loss from discontinued operations
—
129
—
(455
)
Net loss attributable to Cubic
$
(36,017
)
$
(39,123
)
$
(49,012
)
$
(59,698
)
Net loss per share:
Basic
Continuing operations attributable to
Cubic
$
(1.14
)
$
(1.25
)
$
(1.55
)
$
(1.89
)
Discontinued operations
$
—
$
—
$
—
$
(0.01
)
Basic earnings per share attributable to
Cubic
$
(1.14
)
$
(1.25
)
$
(1.55
)
$
(1.91
)
Diluted
Continuing operations attributable to
Cubic
$
(1.14
)
$
(1.25
)
$
(1.55
)
$
(1.89
)
Discontinued operations
$
—
$
—
$
—
$
(0.01
)
Diluted earnings per share attributable to
Cubic
$
(1.14
)
$
(1.25
)
$
(1.55
)
$
(1.91
)
Weighted average shares used in per share
calculations:
Basic
31,633
31,296
31,598
31,284
Diluted
31,633
31,296
31,598
31,284
CUBIC CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(amounts in thousands)
March 31,
September 30,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
133,817
$
128,619
Cash of consolidated VIE
1,546
1,065
Restricted cash
28,580
25,478
Restricted cash of consolidated VIE
7,322
1,822
Accounts receivable:
Billed
109,604
161,473
Allowance for doubtful accounts
(1,450
)
(1,498
)
108,154
159,975
Contract assets
321,545
268,773
Recoverable income taxes
20,502
17,434
Inventories
132,803
127,251
Other current assets
41,926
32,626
Other current assets of consolidated
VIE
—
31
Total current assets
796,195
763,074
Long-term contracts financing
receivables
72,605
64,642
Long-term contracts financing receivables
of consolidated VIE
257,185
221,245
Property, plant and equipment, net
168,783
166,301
Operating lease right-of-use asset
83,076
87,167
Financing lease right-of-use asset,
net
12,766
—
Deferred income taxes
5,483
4,790
Goodwill
788,027
784,882
Purchased intangibles, net
179,460
210,361
Other assets
25,424
21,759
Other assets of consolidated VIE
12,454
—
Total assets
$
2,401,458
$
2,324,221
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings
$
279,000
$
215,716
Trade accounts payable
147,223
156,953
Trade accounts payable of consolidated
VIE
35
49
Contract liabilities
74,779
75,546
Accrued compensation and current
liabilities
131,465
126,388
Other current liabilities of consolidated
VIE
108
85
Income taxes payable
719
799
Current portion of long-term debt
11,250
11,250
Total current liabilities
644,579
586,786
Long-term debt
425,498
430,115
Long-term debt of consolidated VIE
208,594
163,348
Operating lease liability
76,971
80,568
Financing lease liability
10,002
395
Other noncurrent liabilities
58,163
68,939
Other noncurrent liabilities of
consolidated VIE
—
5,890
Shareholders’ equity:
Common stock
304,293
295,986
Retained earnings
797,190
850,472
Accumulated other comprehensive loss
(132,408
)
(149,603
)
Treasury stock at cost - 9,031 shares at
March 31, 2021 and 8,945 at September 30, 2020
(41,321
)
(36,078
)
Shareholders’ equity related to Cubic
927,754
960,777
Noncontrolling interest in VIE
49,897
27,403
Total shareholders’ equity
977,651
988,180
Total liabilities and shareholders’
equity
$
2,401,458
$
2,324,221
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(amounts in thousands)
Three Months Ended
Six Months Ended
March 31,
March 31,
2021
2020
2021
2020
Operating Activities:
Net loss
$
(19,240
)
$
(52,301
)
$
(26,518
)
$
(68,886
)
Net income (loss) from discontinued
operations
—
(129
)
—
455
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
25,055
23,414
49,716
40,364
Share-based compensation expense
6,472
5,382
11,151
9,859
Change in fair value of contingent
consideration
1,260
(1,473
)
684
(4,478
)
Change in fair value of interest rate swap
of consolidated VIE
(15,091
)
15,819
(18,343
)
11,482
Deferred income taxes
161
2,909
(977
)
2,909
Loss on extinguishment of debt
—
16,090
—
16,090
Other items
2,094
13
5,705
4,308
Changes in operating assets and
liabilities, net of effects from acquisitions
(37,150
)
(36,281
)
(80,027
)
(86,222
)
NET CASH USED IN OPERATING ACTIVITIES FROM
CONTINUING OPERATIONS
(36,439
)
(26,557
)
(58,609
)
(74,119
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
FROM DISCONTINUED OPERATIONS
—
129
—
85
NET CASH USED IN OPERATING ACTIVITIES
(36,439
)
(26,428
)
(58,609
)
(74,034
)
Investing Activities:
Acquisition of businesses, net of cash
acquired
—
(234,538
)
—
(234,538
)
Purchases of property, plant and
equipment
(13,389
)
(13,478
)
(20,053
)
(25,311
)
Purchase of non-marketable debt and equity
securities
(1,446
)
—
(1,446
)
—
Receipt of withheld proceeds from sale of
trade receivables
641
—
2,483
5,521
NET CASH USED IN INVESTING ACTIVITIES
(14,194
)
(248,016
)
(19,016
)
(254,328
)
Financing Activities:
Proceeds from short-term borrowings
104,786
727,000
186,644
884,500
Principal payments on short-term
borrowings
(32,956
)
(616,500
)
(123,646
)
(743,000
)
Proceeds from long-term borrowings
1,008
450,000
1,008
450,000
Principal payments on long-term
borrowings
(3,653
)
(199,833
)
(5,625
)
(199,833
)
Proceeds from long-term borrowings of
consolidated VIE
18,967
3,036
41,501
23,222
Debt extinguishment make-whole payment
—
(15,856
)
—
(15,856
)
Deferred financing fees
—
(2,517
)
—
(2,517
)
Principal payments on finance lease
liability
(673
)
—
(691
)
—
Proceeds from stock issued under employee
stock purchase plan
1,170
—
1,170
1,169
Purchase of common stock
(1,004
)
(39
)
(4,014
)
(3,660
)
Shares repurchased for tax
withholdings
(5,243
)
—
(5,243
)
—
Dividends paid
(4,270
)
(4,225
)
(4,270
)
(4,225
)
Contingent consideration payments related
to acquisitions of businesses
(1,006
)
—
(1,006
)
—
NET CASH PROVIDED BY FINANCING
ACTIVITIES
77,126
341,066
85,828
389,800
Effect of exchange rates on cash
(2,448
)
(11,224
)
6,078
(7,203
)
NET INCREASE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
24,045
55,398
14,281
54,235
Cash, cash equivalents and restricted cash
at the beginning of the period
147,220
94,458
156,984
95,621
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
AT THE END OF THE PERIOD
$
171,265
$
149,856
$
171,265
$
149,856
Supplemental disclosure of non-cash
investing and financing activities:
Receivable recognized in connection with
the acquisition of PIXIA, net
—
1,214
—
1,214
Contingent consideration liability
incurred with the acquisition of Delerrok
—
1,600
—
1,600
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210505006053/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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