Cubic Corporation Presentation Title placeholder · Goal 2020. 11. 1 . 2019P represents the...
Transcript of Cubic Corporation Presentation Title placeholder · Goal 2020. 11. 1 . 2019P represents the...
Cubic Corporation OverviewJanuary 2019
Safe Harbor & Disclosures22
This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements withinthe meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, objectives,assumptions or future events or our future financial and/or operating performance are not historical and may be forward-looking. Thesestatements are often, but not always, made through the use of words or phrases such as “may,” “will,” “anticipate,” “estimate,” “plan,”“project,” “goal,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “predict,” “potential,” “opportunity” and similar words or phrases or thenegatives of these words or phrases. These statements involve estimates, assumptions and uncertainties, including those discussed in “RiskFactors” in the Company’s annual report on Form 10-K for the year ended September 30, 2018, that could cause actual results to differmaterially from those expressed in these statements.
Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, anyforward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-lookingstatement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipatedevents, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
This presentation also includes non-GAAP financial measures as that term is defined in Regulation G. Non-GAAP financial measuressupplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directlycomparable GAAP financial measures can be found in the Appendix to this presentation. Cubic has not provided a reconciliation of forward-looking financial measures such as Adjusted EBITDA to the most directly comparable financial measures prepared in accordance with GAAPbecause Cubic is unable to quantify certain amounts that would be required to be included in the GAAP measures without unreasonableefforts, and Cubic believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
Global Provider of Market-leading, Innovative Solutions3
Transportation SystemsLeading integrator of payment systems and
intelligent travel solutions
Mission SolutionsBest-in-class provider of
expeditionary C4ISR solutions
Defense TrainingTop provider of
defense training systems
56% of sales 17% of sales 27% of sales
Sales$1.2b
Employees5,600
Backlog90%+ of sales
Prime contractor$4.1b
>3x sales
CustomersBlue chip customers
Note: percentages based on FY2018 sales C4ISR = Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance
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Our Common Mission and TechnologiesCubic is a technology-driven, market-leading global provider of innovative,
mission-critical solutions that reduce congestion and increase operational readiness and effectiveness through increased situational understanding.
Cloud ComputingSecure NetworkCommunications
Algorithms / Simulation
Data Visualization
Cyber Management
Power Management
Instrumentation
Cubic Transportation Systems (CTS)5
~25b transactionsprocessed annually
>130k transit devices installed
across the world
$22b in salescollected annually
We deliver integrated systems for transportation and traffic management, while enabling transportation authorities and agencies to manage demand – all in real-time
Goal 2020 Sales Growth ($m)
Goal 2020 Adj. EBITDA Growth ($m)
Urban Revenue ManagementDynamic solutions to manage complex fare collection and transaction processing
Rail TicketingMobile suite to streamline ticket management process
Surface Transport ManagementSystems to monitor and control urban and intra-urban road networks
NextBusCloud-based solution to provide real-time passenger information systems
TollingIntegrated solution to manage fare collection with back office functions
One Account
Car Share
Train
Bike Share Bus
Tolling
Parking
Retail
70% urban revenue management market share by ridership in North
America, UK and Australia
1Goal 2020 Adj. EBITDA shown as midpoint of expected margin.See “Disclaimer: Forward-looking statements.” Adj. EBITDA is a non-GAAP financial measure. Reconciliations to the most directly comparable GAAP financial measurers can be found in the Appendix
$579 $671 >$800
2017 2018 Goal 2020
$49 $73 ~$1121
2017 2018 Goal 2020
13-15%margin
Cubic Mission Solutions (CMS)6
1Goal 2020 Adj. EBITDA figure shown as midpoint of expected margin; 2 IoT = Internet of Things, C2ISR = Command and Control, Intelligence, Surveillance and ReconnaissanceC4ISR = Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance
Cubic is a highly differentiated niche C4ISR business with a superior growth profile
SATELLITECOMMUNICATIONS
SECURENETWORKING
FULL MOTION VIDEORADIO OVER IP
WIDEBANDDATALINKS
NextMission
Protected Communications
Products / Services
Autonomous Systems
Rugged IoT2 Cognitive C2ISR2
Goal 2020 Sales Growth ($m)
Goal 2020 Adj. EBITDA Growth ($m)
$169 $207
>$250
2017 2018 Goal 2020
$14
$26 ~$381
2017 2018 Goal 2020
14-16%margin
See “Disclaimer: Forward-looking statements.” Adj. EBITDA is a non-GAAP financial measure. Reconciliations to the most directly comparable GAAP financial measurers can be found in the Appendix
Cubic Global Defense (CGD)7
Our solutions deliver critical warfighting skills necessary to achieve mission success in combat under the most unforgiving conditions and against the most determined adversary
GROUND
MARITIME
SPACECYBERSPACE
NATIONALSECURITY
SPECIAL OPERATIONS
AIR
NextTraining
Goal 2020 Sales Growth ($m)
Goal 2020 Adj. EBITDA Growth ($m)
$3521 $325 >$400
2017 2018 Goal 2020
$311$26 ~$402
2017 2018 Goal 2020
8% CAGR 9-11%margin
1 2017 sales and Adj. EBITDA figures exclude $8m REA (request for equitable adjustment) benefit; 2 Goal 2020 Adj. EBITDA figure shown as midpoint of expected margin.
32%54%
14%
Air Training Ground TrainingVirtual Training
Key Customers
US Other2%
International51%
USAF21%
US Army16%
USN / USMC10%
Segments(excluding REA)
(excluding REA)
See “Disclaimer: Forward-looking statements.” Adj. EBITDA is a non-GAAP financial measure. Reconciliations to the most directly comparable GAAP financial measurers can be found in the Appendix
Goal 2020 Growth Catalysts Achieved
BAFO 8/18Award FY19
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Investments paying off with all six catalysts achieved in Fiscal 2018
$1.8B new business won (with ~$2B potential follow-on) while building growth platform
Transformative Innovations to Advance Strategic Priorities9
TransportationTransportation SystemsOneAccount• Account based ticketing• Advanced mobile• Cloud based solutions
C4ISR
Cognitive C2/ISR
ProtectedCommunications
Defense Training
Performance-based training solutions Live, Virtual, Constructive and Gaming (LVC-G) training
Living One CubicScalable SAP platform (all data in one place)
Ideation and collaboration platform
IRAD focused on winning technologies
Culture of innovation and collaboration
Advanced Customer Experience• Intelligent gateline• Assisted service kiosk
Operations & Analytics• NextBus 2.0• Next-Gen intelligent
congestion management
Joint Aerial Networking
ISR as a Service
Acquisition Strategy10
1 Minority investments 2 ISR = Intelligence, Surveillance and Reconnaissance
TransportationGRIDSMART - Intersection video detection to optimize the flow of vehicle and pedestrian trafficTrafficware - Integrated suite of intelligent intersection technology to optimize the flow of vehicle and pedestrian trafficDelerrok1 - Ticketing solutions for small- to mid-sized transit operators
Mission SolutionsShield - Autonomous aircraft systems for ISR2 servicesBeatty1 - Secure, cloud operating systems technologyMotionDSP - Real-time video enhancement / analytics Vocality - Optimizes communication pathsGATR - Inflatable, ultra-portable satellite communications antennaTeraLogics - Full motion video platformDTECH - Ruggedized modular cloud-computing
Defense TrainingDeltenna - Wireless tactical comms. infrastructure
Aligned with strategy12 Potential market-leading position
3 Technology-driven
4 Returns > risk adj. WACC
5 Cash EPS accretive year 2
M&A Evaluation Criteria
Goal 202011
1 2019P represents the midpoint of fiscal 2019 guidance plus the expected contribution of Gridsmart (acquired 1/2/2019). Our fiscal 2019 guidance announced on November 15, 2018 is: Sales of $1,370m to $1,450m and Adj. EBITDA of $135 to $155m. Gridsmart is expected to contribute additional sales of $24m and Adj. EBITDA of $5m in fiscal year 2019 (9 month impact).2 MTA = Metropolitan Transportation Authority, MBTA = Massachusetts Bay Transportation Authority, T2C2 = Transportable Tactical Command Communications, JALN = Joint Aerial Layer Network, SLATE = Secure Live, Virtual, Constructive Advanced Training Environment, LTE = Long-term evolution, ISR = Intelligence, Surveillance and Reconnaissance3 Adj. EBITDA is a non-GAAP financial measure. Reconciliations to the most directly comparable GAAP financial measurers can be found in the Appendix to this presentation
7.9%8.7%
~10.4%
$1,108 $1,203
~$1,550 to$2,000
$1,450to
$1,500organic
Sales $mPotential M&A
11-12.5%
2017 2018 Goal 2020
Adj. EBITDA3 Margin
Organic Growth Drivers
New York MTA2
Boston MBTA2
Brisbane Bay Area Mobile and
adjacencies
T2C22
FIRSTNET JALN2
Airborne ISR2
SLATE2
LTE2 on the move Virtual training
CTS CMS CGD
Margin Improvement DriversSupply Chain
Consolidation of manufacturing
Reduction in # of suppliers
Continuous improvement
Segment Examples
Discipline during bid and execution
Product model in CTS Low cost engineering
centers
SG&A
Centralization of support functions
Shared Services implementation
Benchmarks and rationalization
2019P1 2017 2018 Goal 20202019P1
$1,434
$150$1,360organic
Implied margin at midpoint
Trafficware + GRIDSMART acquisition impact 11% CAGR
organic+19%+13% organic
$87.5m$104.6m
~$150m
Next Wave of Value Creation12
Enable US Army Network Transformation
Increase role in Airborne ISR
Cross domain and multi-modal training offering
Training as a Service
AI powered Adaptive Training Systems
Capitalize on AFC competitive position, expand in mid-market
Leverage mobile app launches to further monetize NextCity
Capture adjacencies of congestion management and charging
Establish key position in Joint Aerial Layer Network Architecture
Extend into new and attractive markets leveraging our core capabilities
Leverage new digitally enabled business models to drive top quartile returns
Expand leadership in core positions with a pivot to digital business models
Transform our business• From programs to digital platforms• From data collection to data-driven decisions• From one-time delivery to recurring revenue
Leverage One Cubic platforms
Going Forward
Building technology-driven, market-leading platforms
CTS
CMS
CGD
Mid-term
Key Investment Highlights13
Robust Growth Profile Supported by Significant Backlog and Recent Wins
Proven Management Team With Deep Industry and Operational Experience
Technology-driven, Market-leading Global Provider of Innovative, Mission-critical Solutions
Enhanced Portfolio and Disciplined Capital Allocation Position Cubic for Growth and Shareholder Value Creation
Enriching Products with Information & Analytics to Provide Keener Insights to Customers
Transformative Innovations and Acquisitions to Advance Strategic Priorities
Appendix
GAAP to Non-GAAP Adjusted EBITDA Reconciliation by SegmentContinuing Operations – Twelve Months and Three Months Ended September 30, 2018 and September 30, 2017
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($ In Millions)Cubic Transportation Systems 2018 2017 2018 2017Sales 670.7$ 578.6$ 192.6$ 170.7$ Operating income 60.4$ 39.8$ 17.7$ 23.3$ Depreciation and amortization 12.0 8.8 2.9 2.0 Acquisition related expenses, excluding amortization 0.5 (0.2) 0.5 - Restructuring costs 0.4 0.4 (0.2) - Adjusted EBITDA 73.3$ 48.8$ 20.9$ 25.3$ Adjusted EBITDA margin 10.9% 8.4% 10.9% 14.8%
Cubic Mission Solutions 2018 2017 2018 2017Sales 207.0$ 168.9$ 95.1$ 65.6$ Operating income (loss) (0.1)$ (9.3)$ 17.1$ 5.2$ Depreciation and amortization 22.4 23.8 6.6 5.7 Acquisition related expenses, excluding amortization 3.7 (0.1) 1.1 0.5 Restructuring costs 0.2 - 0.2 - Adjusted EBITDA 26.2$ 14.4$ 25.0$ 11.4$ Adjusted EBITDA margin 12.7% 8.5% 26.3% 17.4%
Cubic Global Defense 2018 2017 2018 2017Sales 325.2$ 360.2$ 92.0$ 112.8$ Operating income 16.6$ 28.1$ 3.0$ 9.7$ Depreciation and amortization 8.5 10.4 2.4 3.1 Acquisition related expenses, excluding amortization (0.1) - - - Restructuring costs 1.3 0.9 0.3 (0.3) Adjusted EBITDA 26.3$ 39.4$ 5.7$ 12.5$ Adjusted EBITDA margin 8.1% 10.9% 6.2% 11.1%
Twelve Months Ended September 30, Three Months Ended September 30,
Twelve Months Ended September 30, Three Months Ended September 30,
Twelve Months Ended September 30, Three Months Ended September 30,
GAAP to Non-GAAP EBITDA & Adjusted EBITDA ReconciliationContinuing Operations – Twelve Months and Three Months Ended September 30, 2018 and September 30, 2017
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($ In Millions)Cubic Consolidated 2018 2017 2018 2017Sales 1,202.9$ 1,107.7$ 379.7$ 349.1$ Net income (loss) from continuing operations attributable to Cubic 8.1$ (25.7)$ 22.0$ 9.6$ Noncontrolling interest in loss of VIE (0.3) - 1.6 - Provision for income taxes 7.1 14.6 2.8 8.7 Interest expense, net 8.8 14.1 2.5 2.6 Other non-operating expense (income), net 0.7 (0.4) (1.2) 0.3
Operating income 24.4 2.6 27.7 21.2 Depreciation and amortization 46.6 48.0 12.5 12.2 Other non-operating (expense) income, net (0.7) 0.4 1.2 (0.3) EBITDA 70.3 51.0 41.4 33.1 Acquisition related expenses, excluding amortization 4.5 (0.2) 2.0 0.6 ERP/Supply chain initiatives 24.1 34.4 5.3 10.8 Restructuring costs 5.0 2.3 1.6 0.7 Loss on sale of fixed assets - 0.4 - - Other non-operating expense (income), net 0.7 (0.4) (1.2) 0.3
Adjusted EBITDA 104.6$ 87.5$ 49.1$ 45.5$ Adjusted EBITDA margin 8.7% 7.9% 12.9% 13.0%
Twelve Months Ended September 30, Three Months Ended September 30,