Funding Delays to Negatively Impact Fourth
Quarter and Full-Year Results
Cubic Corporation (NYSE: CUB) today announced preliminary
financial results for the fourth quarter and fiscal year ended
September 30, 2016. For the year, the Company anticipates that
consolidated sales will be in the range of $1.435 to $1.455 billion
and Adjusted EBITDA(1) will be in the range of $112 to $120
million, both of which are below the range of guidance previously
provided. It is also anticipated that GAAP EPS and EBITDA(1)
results will be below previous guidance. These preliminary
financial results represent the most current information available
to management and are subject to completion of the Company’s
customary year-end closing and review procedures, as well as the
completion of the audit by the Company's independent auditor.
Sales, EBITDA(1), Adjusted EBITDA(1) and GAAP EPS were lower
than expected in the fourth quarter mainly due to funding delays
from the U.S. Department of Defense, specifically for higher margin
orders in the Mission Solutions and Training Systems businesses
within the defense systems segment.
“We are disappointed by the shortfall in the fourth quarter
performance which impacted our FY16 financial results,” said
Bradley H. Feldmann, president and chief executive officer of Cubic
Corporation. “We fully expect that the delayed orders will be
received in fiscal year 2017 and we continue to expect improved
performance in 2017.”
The rest of the Company's operations performed in line with
expectations. The Company completed the next phase of its
Enterprise Resource Planning (ERP) roll out in early October. ERP
implementation costs in fiscal year 2016 were in line with
previously disclosed projections.
The Company anticipates releasing its year-end results in late
November and will provide a detailed update and outlook for fiscal
year 2017 at that time.
(1)
EBITDA and Adjusted EBITDA are Non-GAAP metrics - see
the section titled “Use of Non-GAAP Financial Information” below.
About Cubic Corporation
Cubic Corporation designs, integrates and operates systems,
products and services focused in the transportation, defense
training and secure communications markets. Cubic Transportation
Systems is a leading integrator of payment and information
technology and services to create intelligent travel solutions for
transportation authorities and operators. Cubic Global Defense is a
leading provider of live, virtual, constructive and game-based
training solutions, special operations and intelligence for the
U.S. and allied forces. Cubic Mission Solutions provides networked
Command, Control, Communications, Computers, Intelligence,
Surveillance and Reconnaissance (C4ISR) capabilities for defense,
intelligence, security and commercial missions. For more
information about Cubic, please visit the company's website at
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
that are subject to the safe harbor created by such Act.
Forward-looking statements include, among others, statements about
our expectations regarding our preliminary financial results for
the fourth quarter and fiscal year ended September 30, 2016 and our
expectation that the delayed funding will be received in fiscal
year 2017 and that we will experience improved performance in 2017.
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: actual
results for the fourth quarter and fiscal year ended September 30,
2016 may differ materially from our estimates due to the completion
of our financial closing procedures, final adjustments and audit of
the financial statements, and other developments that may arise
between now and the time the financial results are finalized;
continued funding delays in the U.S. Department of Defense related
orders and 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; 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;
the effect of adverse regulatory changes on our ability to sell
products and services; our ability to identify, attract and retain
qualified employees; unforeseen problems with the implementation
and maintenance of our information systems; 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
We believe that the presentation of earnings before interest,
taxes, depreciation, and amortization (EBITDA) and Adjusted EBITDA
included in this release provides useful information to investors
with which to analyze our operating trends and performance and
ability to service and incur debt. Also, we believe EBITDA
facilitates company-to-company operating performance comparisons by
backing out potential differences caused by variations in capital
structures (affecting net interest expense), taxation, variations
in organic vs. inorganic growth (affecting amortization expense)
and the age and book depreciation of property, plant and equipment
(affecting relative depreciation expense). We believe Adjusted
EBITDA further facilitates company-to-company operating comparisons
by backing out items that we believe are not part of our core
operating performance. Items backed out of Adjusted EBITDA are
comprised of expenses incurred in the development of our ERP system
and the redesign of our supply chain, 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, restructuring costs, and income and
expenses classified as other non-operating income and expenses
which may vary for different companies for reasons unrelated to
operating performance.
In addition, EBITDA and Adjusted EBITDA are key drivers of the
Company’s core operating performance and major factors in
management’s bonus compensation each year. Management has excluded
the effects of these items in these measures to assist investors in
analyzing and assessing our past and future core operating
performance.
In addition, we believe that EBITDA and Adjusted EBITDA are
frequently used by securities analysts, investors and other
interested parties in their evaluation of companies, many of which
present EBITDA, Adjusted EBITDA and/or other adjusted measures when
reporting their results.
EBITDA and Adjusted EBITDA are not measurements of financial
performance under GAAP and should not be considered as alternatives
to net income as a measure of performance. In addition, other
companies may define EBITDA and Adjusted EBITDA differently and, as
a result, our measures of EBITDA and Adjusted EBITDA may not be
directly comparable to EBITDA and Adjusted EBITDA of other
companies. Furthermore, EBITDA and Adjusted EBITDA have limitations
as analytical tools, and you should not consider either of them in
isolation, or as a substitute for analysis of our results as
reported under GAAP.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered as measures 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
EBITDA and Adjusted EBITDA only supplementally. You are cautioned
not to place undue reliance on EBITDA or Adjusted EBITDA.
Due to the ongoing completion of customary year-end closing and
review procedures, we are unable at this time to reconcile
estimated Adjusted EBITDA to net income attributable to Cubic,
which we consider to be the most directly comparable GAAP financial
measure to Adjusted EBITDA, primarily as a result of the yet
undetermined income tax adjustment to our net income. You are
cautioned to read the full year-end earnings results release, when
available, which will include a final reconciliation of Adjusted
EBITDA to net income.
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version on businesswire.com: http://www.businesswire.com/news/home/20161013005446/en/
Cubic CorporationInvestor RelationsDiane Dyer, +1
858-505-2907orMediaJohn D. Thomas, +1 858-505-2989
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