San Diego Business Journal

Cubic Corp. Announces $70M Defense Contract, Reports Earnings

By Brad Graves Thursday, December 5, 2013

San Diego-based Cubic Corp. said that its defense systems subsidiary received a contract worth more than $70 million from an overseas customer. The Kearny Mesa business also reported earnings for the year.

Cubic (NYSE: CUB) said that it will deliver “significant quantities” of combat training center equipment to an unnamed long-term customer in the Asia-Pacific region. The order includes laser-based simulation equipment, vehicle kits and equipment for after-action reviews.

Cubic said it will do engineering and production in Auckland, New Zealand, and San Diego. Work will continue through 2016.

Though a defense contractor, Cubic Corp. also has a business making fare collection equipment for transit services worldwide.

The company reported on Dec. 5 that it had total sales of $1.36 billion in its 2013 fiscal year. The figure was down roughly 1 percent from $1.38 billion in fiscal 2012.

Net income was $19.8 million in fiscal 2013, down sharply from $91.9 million in fiscal 2012.

The company said it recorded a noncash goodwill impairment charge of $50.9 million related to its Mission Support Services business unit.

“The impacts of sequestration and other changes in the business environment caused significant impacts on (Mission Support Services) beginning late in 2013,” Cubic said in a statement. “In light of this, during our strategic and financial planning process late in 2013, we made downward revisions in our estimates of future revenues and margins.” Sequestration is an effort to reduce the federal deficit by making across-the-board cuts to the Pentagon and other federal agency budgets.

In a prepared statement, Cubic CEO William W. Boyle said the company plans to restructure and realign its defense systems business. He forecast fiscal 2014 revenue in the range of $1.42 billion to $1.45 billion.

For the fourth quarter of 2013, Cubic reported a net loss of $38 million on net sales of $343 million. In the year-ago quarter, it reported net income of $21 million on net sales of $360 million.

The company’s backlog on Sept. 30 was roughly $2.7 billion, down from $2.83 billion in fiscal 2012.

The company reported having $204 million in cash and cash equivalents on Sept. 30.