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Technology-Driven,Market-Leading
Brad FeldmannChairman, President & Chief Executive Officer
Safe Harbor & Disclosures
This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or ourfuture financial and/or operating performance are not historical and may be forward-looking. These statements are often, but not always, made through theuse 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, assumptionsand uncertainties, including those discussed in “Risk Factors” in the Company’s Form 10-K for the year ended September 30, 2018 and Form 10-Q for thequarter ended March 31, 2019, that could cause actual results to differ materially 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 statementsmade by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only asof the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date onwhich the statement is made or to reflect the occurrence of unanticipated events, or combination of factors, may cause actual results to differ materially fromthose 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 measures supplement our GAAPdisclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directly comparable GAAP financial measures canbe found in the Appendix to this presentation. Cubic has not provided a reconciliation of forward-looking financial measures such as Adjusted EBITDA andAdjusted EPS to the most directly comparable financial measures prepared in accordance with GAAP because Cubic is unable to quantify certain amountsthat would be required to be included in the GAAP measures without unreasonable efforts, and Cubic believes such reconciliations would imply a degree ofprecision that would be confusing or misleading to investors.
2
Technology-driven, Market-leading Solutions
1Midpoint of FY2019 sales guidance.2Based on FY2018 sales. C4ISR = Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance
3
Transportation SystemsLeading integrator of payment systems
and intelligent travel solutions
56% of sales2
Mission SolutionsLeading provider of
expeditionary communications solutions
17% of sales2
Defense TrainingLeading provider of
defense training systems
27% of sales2
2019P Sales$1.44b1
Employees6,000 90%+ of sales
Prime contractorCustomersBlue chip customers
Backlog$3.8b
>3x sales2
Strategy Founder-centric conglomerate Technology-driven, market-leading Relying on tradition Refreshed leadership, relying on metrics and performance Few technology breakthroughs every decade Innovation drives the company
Business Model Internally-focused Customer-centric Delivering bespoke systems Product-orientated, information-rich, subscription platforms London driving company profits Good margins and growth across portfolio HR focused on transactions Developing talent
Infrastructure Many silos, poor communication One Cubic Hodgepodge of IT systems Scalable SAP | GEM | Workday | Salesforce
Capital Allocation Opportunistic Disciplined allocation of all discretionary spending Low-cost acquisitions M&A aligned with strategy
4
Our Transformation – Cubic 2.0
FROM TO
5
Cubic is a technology-driven, market-leading global provider of innovative, mission-critical solutions that reduce congestion and increase operational
readiness and effectiveness through superior situational understanding.
Cyber Management
Power Management
Cloud ComputingSecure NetworkCommunications
Algorithms / Simulation Data VisualizationInstrumentation
Our Common Mission and Technologies
Our Strategic Priorities6
7
Goal 2020
1 2019P represents the midpoint of fiscal 2019 guidance.2 FY2017-FY2020 Sales CAGR is calculated on the mid point of Goal 2020 range ($1,575m), which includes $100m of acquisition revenue in fiscal 2020 ($74m in FY19). Organic CAGR based on fiscal 2020 sales of $1,475.3 FY2017-FY2020 Adj. EBITDA CAGR is calculated based on the midpoint of Goal 2020 Adj. EBITDA Margin midpoint of 11.75%. 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, IVSE = Immersive Virtual Shipboard Environment, ISR = Intelligence, Surveillance and Reconnaissance
$1,108$1,203
$1,438
Sales $m
2017 2018
Adj. EBITDA & Margin %
2019P1
$150
Goal 2020
$88$105
$150
7.9%8.7%
10.4%
$1,550 to$1,600
Potential M&ATrafficware + GRIDSMART acquisitions
$1,550 to$2,000
11.0% to
12.5%
Organic Growth Drivers
New York MTA Boston MBTA Brisbane Bay Area
T2C2 FIRSTNET JALN Airborne ISR
SLATE Ground LVC IVSE / Game-
Based Training
CTS CMS CGD
Margin Improvement DriversSupply Chain
Manufacturing consolidation
Reduction in suppliers Continuous improvement
Segment Examples Discipline during bid
and execution CTS Product model Low cost engineering
SG&A Centralization of
support functions Shared services Benchmarks and
rationalization
2017 2018 2019P1 Goal 2020
Optimizing ERP and Product Lifecycle Management systems and analytics
Driving supply chain and overhead savings
Investing in Innovation Social System with our customers to include:
– Mobile payment and applications– NextBus / Delerrok mid-market solution– GATR and HALO– Next-generation Air Combat Maneuvering
Instrumentation (ACMI)
Sharing technology, talent, processes, ERP, shared services and locations
Living One Cubic8
Winning the Customer - Recent Announcements
Successfully delivered first phase of New York MTA’s new OMNY system
Successful delivery of Mobile for Merchant App for LA Metro
Selected to deliver secure video data link solution for the F-35; follows other recent secure communications contracts for the MH-60 and MQ-25
Awarded Training contracts withIndo-Pacific customers for ACMI, MILES and services ($150m value)
9
OMNY = One Metro New YorkACMI = Air Combat Maneuvering InstrumentationMILES = Multiple Integrated Laser Engagement System
Leader in U.S. urban intelligent intersection management
Has ~35,000 of the ~300,000 signalized U.S. intersections
Aligned with NextCity vision to link mobility payments to predictive, personalized information and regional congestion management
Largest CAV network in ATM (~3,000 connected intersections across 10 U.S. locations and growing)
Applicable to road user charging adjacency
First cross-sale synergy in 2Q (Florida DOT)
10
Intelligent Intersection Acquisitions Optimize Urban Mobility and Reduce Congestion
ATM = Arterial Traffic Management CAV = Connected and Autonomous Vehicle
Enhances Protected Communications business
Addresses high priority, dual-use technology markets (e.g. Space, 5G)
Supply chain benefits significantly de-risk transaction
Accelerates Cubic innovation initiatives
Differentiated, patented PolyStrata® manufacturing process
High-performance Reduced size, weight & power (SWaP) 10x to 100x advantage
Nuvotronics Acquisition Strengthens Cubic’s Protected Communications Offering
11
Summary
Growing technology-driven, market-leading businesses
Strong backlog drives high revenue visibility
Successful phase 1 delivery of NY OMNY system; working with Apple to provide mobile transit payment solutions
Strategy supported by One Cubic initiatives
Remain highly focused on meeting our commitments
12
Contactless usage
Shashi VermaDirector of Strategy and CTOTransport for London
JUNE 2019
Contactless transactions per day on rail
0
400,000
800,000
1,200,000
1,600,000
2,000,000
2,400,000
2,800,000
3,200,000
3,600,000
4,000,000
4,400,000
4,800,000
DailyWeekly averageMaxRecordLinear (Weekly average)
New Contactless devices per day
0
6,000,000
12,000,000
18,000,000
24,000,000
30,000,000
36,000,000
42,000,000
48,000,000
54,000,000
60,000,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
No. of CPCs used for the first timeWeekly averageCumulative No. of CPCs used for the first timeNo. of Active CPCs in the preceding 28 days
Cubic Transportation SystemsMatt ColeSenior Vice President, Cubic CorporationPresident, Cubic Transportation Systems
Initial launch at select subway stations/buses
Start acceptance of contactless open payments & new self-service options
18Monthsfrom NTP
1. Staged Initial Deployment
“Rolling this out in this manner is something that we decided was the right thing to do after conferring with our partners at Cubic. Cubic is the world leader on this type of technology. They have done it in London, Chicago and here in respect to the MetroCard and now with respect to OMNY“
Pat Foye – MTA Chairman
Complete roll out of contactless open payments on Subway/Bus
35months from NTP
2. Complete Contactless Open Payments Roll Out
Introduce contactless MTA Transit card & eTix 2.0
39months from NTP
Roll out new Retail Network
One Metro New York (OMNY) Update17
“I’m really glad we’re going with Cubic. Oyster is a Cubic product and it works really well, I’m really used to it, it’s really quick and in London it becomes second nature. Sydney, where I was working two jobs ago they have now got what’s called the ‘Opal Card’, again it’s based on Cubic technologies”
Andy Byford – NYCT President
New Fare Payment System TimelinePhased Approach
Customers begin usingContactless openPayment media
Contactless open payment available on all busses and subways
Upon completion, retire MetroCard & current LIRR/MNR systems
5.Project
Complete
Removal of legacy sale equipment
69months from NTP
Jul 2023Mar 2022
Deploy new machines across NYCT, MNR and LIRR
52Monthsfrom NTP
4. In-System Sales
3. Expanded Payment Options Available
Feb 2021Oct 2020
May 2019
Market Dynamics18
Sustainability Rising customer expectations Space constraints Funding constraints Petrol/gas tax pressures Capitaless business models
Human connectivity Fuel efficient cars Processing power Big data + analytics Internet of things Cloud
Urbanization Population growth Aging population Millennials Congestion at peak
19CTS Business Overview
Sub-Businesses
Strategic Priorities20
Master Customer Engagement Leverage
OneAccount
Lead Mobile Payments and
Customer Experience
Expand Into Transportation Operations and
Analytics
Transform the Business and
Execute
Realize NextCity
Strategic Priorities
OMNY Launch LA Merchant Launch LACMTA Maintenance Clipper 2.0 in Bay Area Trafficware Acquisition Gridsmart Acquisition Miami Easy Pay – Open
Payments – Coming Soon Singapore Thomson Line Sydney contactless
expansion Chicago/New York Apple
Partnership ScotRail Account-Based
Pilot Dublin Mobile Ticketing
$579
2017 2018 2020P
21
Goal 2020: CTS Summary
Goal 2020 on Track
>$900
Revenue $m
8.4%margin
Adj. EBITDA Margin % New York Boston Brisbane Bay Area Mobile Customer upgrades ICMP Penetrate Congestion Management Trafficware and Gridsmart execution
RevenueCore Business Growth, Upsell to Cities, NextCity
MarginTransformation and Execution Product orientation Engineering Test Services
Avoid project execution issues
Digital Transformation
13-15%margin
10.9%margin
$671$800
Organic
~$100Acquisitions
FY19 Highlights
Backlog, Pipeline and Key Opportunities22
1. Ventra 3.02. Toronto AFC3. New York Road User Charging4. Vancouver Contract Extension & Upgrade5. BC Transit AFC6. SFMTA RTPI7. MTR Hong Kong AFC8. Singapore LTA AFC Operations9. Dublin NTA AFC Operations10. UK Transport for the North
Key Pipeline Opportunities
Backlog US$m
0 50 100 2,850
Urban Revenue Management
Surface Transport Management
Road User Charging
Pipeline US$m
0 1,000 2,000 3,000 4,000 5,000 6,000
Urban Revenue Management
Surface Transport Management
Road User Charging
NextCity®23
Eliminate uncertainty Reduce service costs New revenue opportunities
Integrated policy Reduced operations costs Enhanced customer experience
Identify unknown relationships Model + measure impact of
decisions + policy changes Benchmark + performance
measurements
How Trafficware and Gridsmart fit into NextCity24
25
Mobile Leadership
Agency Ridership (000)
% of Market
Scope of Solution
New York MTA New York City Transit (MTA) 3,440 36% UMB
Traveler App
Boston Massachusetts Bay Transit Authority (MBTA) 383 4%
UMBTraveler AppInspection AppMerchant App
Chicago Chicago Transit Authority (CTA) 479 5% Traveler App
DCWashington Metropolitan Area Transit Authority (WMATA)
353 4% Traveler App
LALos Angeles County Metropolitan Transportation Authority (LACMTA) and regional partners
823 5% Traveler AppMerchant App
Bay Area Metropolitan Transportation Commission (MTC) 780 5%
UMBTraveler AppInspection AppMerchant App
Miami Miami-Dade Transit 163 2% Merchant App
6,421 61%London Transport for London (TfL) TfL App
Brisbane TransLink
UMBTraveler AppInspection AppMerchant App
MobileWallet
TravelerApp
InspectionApp
MerchantApp
26
NextCity 2.0
Before NextCity NextCity 1.0 NextCity 2.0
Agency 1
Agency 2
Agency 1
Agency 2
All agencieson one instance
Connected with other city infrastructure
Economies of scale
Payment Transaction Fees
Payment
Firm Fixed Price
Scope OneAccount, Cloud On Premise & Limited Connectivity
Delivery API & Cloud SolutionsProprietary Solutions
Partnerships & CollaborationCOTS & Limited VendorsPlatform
28
GAAP to Non-GAAP EBITDA & Adjusted EBITDA ReconciliationContinuing Operations – Twelve Months and Three Months Ended September 30, 2018 and September 30, 2017
($ 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,
29
GAAP to Non-GAAP Adj. EBITDA Reconciliation by SegmentContinuing Operations – Twelve Months and Three Months Ended September 30, 2018 and September 30, 2017
($ 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,