54.3 F
San Diego
Tuesday, Mar 19, 2024
-Advertisement-

On Track For Change

While the memory of its founder endures, Cubic Corp. now sits squarely in the post-Walter J. Zable era.

Zable ran the company for 61 years, holding the CEO’s job until his death in 2012 at age 97. Today his son, Walter C. Zable, serves as executive chairman while Bradley H. Feldmann calls the shots as CEO.

Feldmann, 54, marked his first anniversary as chief executive in July, though he’s no newcomer either. He first arrived 26 years ago.

Kearny Mesa-based Cubic (NYSE: CUB) has a unique business model. It trains the U.S. military and foreign forces, offering high-tech products and services … but it’s not a pure-play defense contractor. Cubic is also a leading supplier of mass-transit fare collection equipment, and it’s starting a business to analyze transportation data as part of a wider push called NextCity.

Founded in 1951, Cubic was once even more diversified: it was parent company to U.S. Elevator, and held a subsidiary that made cardboard boxes and freeway call boxes.

Things are different than they were under the elder Zable.

Previously, the $1.4 billion corporation was a holding company. Each business segment ran separately with its own profit and loss, and its own chain of command, said Josephine Millward of Benchmark Securities.

The operating units “did not really communicate or collaborate with each other,” said Millward, who has reported on Cubic for 10 years. “The new leadership has restructured the company to operate as one corporate unit in order to drive more synergies and efficiencies.”

OneCubic

Management has a name for that push: OneCubic.

Part of that push is a plan to spend $55 million to $60 million on an enterprise resource management computer system to better coordinate operations. The company is making that large investment in a system running software from Germany-based SAP. During a recent interview at his office, Feldmann said that the business had underinvested in information technology.

To spearhead the move, Feldmann hired Jan L. Marshall in September to be Cubic’s new chief information officer. Marshall served as CIO of Southwest Airlines Co. (NYSE: LUV) between 2006 and 2012 before going into consulting.

SAP will give Cubic a single customer database and a single vendor list, Marshall said. With the system, the corporation will be able to achieve savings with coordinated manufacturing, finance, human resources and, most importantly, procurement. For example, Cubic will be able to see and bundle all of its Microsoft (Nasdaq: MSFT) software contracts together.

Once the system is up and running, the company should save $30 million a year, Marshall said.

Millward, the analyst, said she likes the changes she sees.

“Cubic is more open and transparent with investors and started hosting [a] quarterly earnings call,” she said by email. “Brad is available to speak and meet with investors, whereas Mr. Zable was not.”

Feldmann, who has been with the company off and on since 1989, recalled Walter J. Zable as an All-American football player who relished competition, prized innovation and focused on meeting customer needs.

Feldmann does not seem to have the same zeal for one-upmanship — at least he doesn’t show it. He does show a similar passion for innovation, speaking of 48-hour weekend “hackathons” where Cubic engineers get together and solve problems. He also noted it’s important to be empathetic toward the client and to see the customer’s pain points.

The Painful Part

In his first year, Feldmann has had to carry out some difficult tasks, such as restructuring the company.

Cubic announced in February that it would fold its two defense units together. “It was very obvious to combine those two companies,” Feldmann said.

Cubic laid off about 100 members of its global work force, a spokeswoman said. Layoffs were completed by spring. Cubic took a $6 million charge to cover severance packages.

Feldmann’s more recent challenges include a weak third quarter.

Analyst Brian Gesuale at Raymond James & Associates said several factors — particularly foreign exchange rates, defense contracting delays and problems with a transit project in Vancouver, Canada — stunted results from the quarter, which ended June 30. Gesuale said in a recent research note that that the current quarter ought to be a strong one, and that Cubic’s $3 billion backlog is a sign the company can achieve revenue estimates.

Gesuale said he looked forward to results from a strategic review that Cubic executives are conducting. One thing the corporation is evaluating is the defense services business, which is under pressure from continuing Pentagon budget cuts.

Feldmann, the CEO, said he sees opportunities ahead, including high growth and high margins in C4ISR defense electronics. (The abbreviation stands for command, control, communications, computers, information, surveillance and reconnaissance.)

From Air Force to Frequent Flyer

This is actually Feldmann’s second go-around at Cubic.

The executive has an MBA from San Diego State University, studied business at Stanford University and holds an electrical engineering degree from the U.S. Air Force Academy. He was a program manager in the Air Force. Feldmann started with Cubic Defense Systems in 1989, when he followed a colleague over from Remec (a business now known as Cobham). Feldmann recalled that his original job at Cubic Defense Systems was to see whether he could make programs run more closely to schedule and budget, and more efficiently.

He stayed at Cubic Defense until 1999. In 2008, Cubic hired Feldmann away from Omniplex World Services Corp., a security company based in suburban Washington, D.C.; Cubic needed a president for its Defense Systems unit. At the time, Feldmann said, his wife was enthusiastic about the chance to return to California, and that sealed the deal.

He led the defense unit until early 2013, when he was named president and COO of Cubic. He got a seat on the Cubic board in May 2014, and the CEO’s chair in July of that year.

Today, Feldmann occupies a corner office at Balboa and Ruffin. His office wall includes a reproduction of the Rosetta Stone — an archeological find that let modern scholars break the code of ancient Egyptian hieroglyphics. There is also a plaque with nine chip-embedded “Oyster” cards from London’s mass transit agency. And there is a series of deceptively simple drawings by Pablo Picasso.

As CEO, Feldmann estimates he is on the road half the time. “I travel too much,” he said. But it goes back to the value of listening to the client. Client visits are a duty, Feldmann said, and clients are spread all over the planet. It’s also important to spend time with staff, he said.

Outside of work, Feldmann said he spends his time with family — he has six children — and he is involved in church activities. He will celebrate his 30th wedding anniversary in October.

Hitting a golf ball around can help clear his mind, he said.

Feldmann lives in Carlsbad, and on those days when he is home, he travels Interstate 5.

Time on I-5 can actually be a productive half-hour with phone calls to Asia or Europe, the CEO said. Besides, he relishes his time on a congested highway in Southern California. By leaving early, he can do Carlsbad to Kearny Mesa in about 30 minutes. It beats a 30-minute commute in Northern Virginia, Feldmann said, any day.

CUBIC CORP.

CEO: Bradley H. Feldmann

Revenue: $1.4 billion in 2014; $1.36 billion in 2013

Net income: $69.4 million in 2014; $25.1 million in 2013

No. of local employees: 1,043 total, with 901 full-time

Headquarters: Kearny Mesa

Year founded: 1951

Stock symbol and exchange: CUB on the New York Stock Exchange

Company description: Defense contractor that also provides products and services to public transit agencies

-Advertisement-

Featured Articles

Oberon Eyes Europe for Renewable DME

Leaders of Influence in Law 2024

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-