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CUB Cubic

Filed: 5 May 21, 4:06pm

Exhibit 99.1

Cubic Reports Second Quarter Fiscal Year 2021 Results

SAN DIEGO – May 5, 2021 – 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.

Investor Contact

Kirsten Nielsen

Investor Relations

Cubic Corporation

Kirsten.Nielsen@cubic.com

Media Contact

Christina Itzkowitz

Corporate Communications

Cubic Corporation

Christina.Itzkowitz@cubic.com


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