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Cubic Corporation (CUB)
Q1 2018 Earnings Conference Call
February 06, 2018, 04:30 PM ET
Kirsten Nielsen - Director of IR
Brad Feldmann - President & CEO
Anshooman Aga - EVP & CFO
Ken Herbert - Canaccord Genuity
Jim Ricchiuti - Needham & Company
Mark Strouse - JPMorgan
Brian Ruttenbur - Drexel Hamilton
Ladies and gentlemen, welcome to Cubic Corporation's First Quarter Fiscal Year 2018 Earnings Conference Call.
Previous Statements by CUB
» Cubic Corporation's (CUB) CEO Brad Feldmann on Q4 2017 Results - Earnings Call Transcript
» Cubic Corporation's (CUB) CEO Brad Feldmann on Q3 2017 Results - Earnings Call Transcript
» Cubic Corporation's (CUB) CEO Brad Feldmann on Q2 2017 Results - Earnings Call Transcript
» Cubic Corporation's (CUB) CEO Brad Feldmann on Q1 2017 Results - Earnings Call Transcript
Now, I'd like to turn the call over to Kirsten Nielsen, Vice President of Investor Relations. Thank you. Please begin.
Hello, everyone, and thank you for joining Cubic’s webcast. Today, after the market closed, we reported our first quarter fiscal year 2018 results. I am joined by Brad Feldmann, Chief Executive Officer and Anshooman Aga, Executive Vice President and Chief Financial Officer.
I would like to reminder everyone that statements made on today's call that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. You can find factors that could cause the company's actual results to differ material from our expectations listed in today's presentation, press release and most recent SEC filings.
In addition, we've included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release and in the appendix of today's presentation.
With that, I'd like to turn the call over to Brad.
Thank you, everyone for joining us today. Thank you, Kirsten. I want to start by welcoming Kirsten, our new Vice President of Investor Relations. Kirsten is an experienced financial executive who joined our team from Arconic, formerly Alcoa, where she was Director of Investor Relations. Kirsten has already made significant contributions and enhanced our dialogue with our shareholder base. We're excited to have her on Board.
On today's call, I will start by discussing our first quarter results for fiscal year 2018 and the highlights of the quarter. Then I'll hand the call over to our CFO, Anshooman Aga, who will cover our financial results in more detail.
Starting with Slide 3, you will find an overview of our first quarter results. As you can see, strong execution on our Winning the Customer initiative has led to the highest backlog in the company's history totaling $3.64 billion. We won all of the major opportunities we're pursuing including our major transportation wins in New York and Boston.
An Air Force Datalink Enterprise ID/IQ Award and an important defense training wins for continued support of the Joint Readiness Training Center in Fort Polk Louisiana and at OASIS-EUCOM for training support, as well as a training support services enterprise mission support services ID/IQ.
This accelerated award momentum generated a book-to-bill ratio of 2.44 for the quarter, providing us substantial organic growth in the future. Sales for the quarter were $340.7 million, a 2% increase compared to last year. Adjusted EBITDA was $17 million in line with our expectations and slightly lower than last year's $20.1 million.
R&D increased roughly $3 million due to our investment in CMS Technologies and our acceleration of development of innovative training technologies. We remain hopeful that the president and congressional leadership will reach a new 2018-2019 bipartisan budget agreement with DOD funding tax increased.
President Trump is now expected to ask for an all-in military budget request of $716 billion for fiscal 2019, which would be roughly 7% over his 2018 request and 13% over 2017. We think this level of defense spending and potential topline growth in the out years will allow for steady organic growth in the future.
Turning to Slide 4, with our many key recent wins and the T2C2 full rate production decision, we are in a strong path to goal 2020.
On Slide 5, you will see that our investments are paying off. Along with our transportation award in New York, in November Cubic was selected by the Massachusetts Bay Transportation Authority to design, build, operate and maintain a next-generation fare payment system.
With the Boston win, we're now providing fare payment systems for the top five metro agencies in the United States. In January, our Cubic Mission Solutions GATR team received a full material release and a full rate production decision from our United States Army Customers Milestone Decision Authority PEO C3T for the Transportable Tactical Command Communications Program.
The T2C2 full rate production decision authorizes our customers to procure and field over 800 satellite communications terminals to US Army units worldwide. The growing success of our efforts on U.S. programs of record like T2C2 could lead to fleetwide adoption by the Army and other services, while positioning us for large international opportunities.
Additionally, because of our strong customer relationship with the United States Army, we continue to support exercises at the Joint Readiness Training Center. This follows our recent Combat Training Center Award in Asia-Pacific and numerous task orders for our superior gaming training solution to support the Littoral Combat Ship program.
Moving to Slide 6, we continue to make investments in technology. We are investing in MotionDSP, a Silicon Valley-based artificial intelligence software company specializing in real-time video enhancement and computer vision analytics. We will now be able to detect and track entities in near real time augmenting our existing full motion video dissemination capability.