cubic corporation third quarter fiscal year 2020 results cubic...real estate sale commentary...

August 5, 2020

THIRD QUARTER

FISCAL YEAR 2020 RESULTS

Brad Feldmann

Chairman, President & CEO

Anshooman Aga

EVP & CFO

SAFE HARBOR AND DISCLOSURES

23Q FY2020 Earnings Presentation |

This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the 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 or

operating performance are not historical and may be forward-looking. These statements 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 the negatives of these words or phrases. These statements involve estimates, assumptions and uncertainties, including those discussed in the section

entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 and updated in any subsequent Quarterly Reports on Form 10-

Q and other filings that we make with the Securities and Exchange Commission, 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 statements made by

us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of 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 on which the statement is

made or to reflect the occurrence of unanticipated events, or combination of factors, may cause actual results to differ materially from those contained in any forward-

looking statements.

This presentation also includes financial measures that are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP

financial measures supplement our GAAP disclosures and should be considered in addition to, but not as a substitute for, the applicable GAAP measure. In addition,

other companies may define these non-GAAP measures differently and, as a result, our non-GAAP measures may not be directly comparable to the non-GAAP

measures of other companies. We believe that presenting our results and measures on a non-GAAP basis in conjunction with GAAP measures provides the most

meaningful basis for comparison of our operating results across periods. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP

financial measures can be found in the Appendix to this presentation.

KEY MESSAGES


Committed to diversity, inclusion and ensuring all our team members, customers and partners are treated with respect and dignity

Priorities through COVID-19 and beyond remain caring for our people, customers and communities while focusing on essentials

Continuous strategic execution to build technology-driven and market-leading businesses

Drive profitable growth, improve free cash flow and reduce leverage

01

02

03

04

COMMITTED TO DIVERSITY AND CARING FOR OUR EMPLOYEES AND CUSTOMERS

We Are ALL-IN!


Diversity & Inclusion (D&I),

Social & Racial Justice

Employee

Health & Safety

Business Continuity

& Customers

▪ CEO Action for Diversity & Inclusion (signatory member since 2017)

▪ D&I strategy rolled out 2019, including launch

of Employee Resource Groups (10 ERGs today)

▪ ‘Sharing in the Safe Room’ sessions to discuss

recent events and potential actions to address

inequalities

▪ Launched D&I Toolkit, resources and

mandatory unconscious bias training

▪ Continuing to maximize remote work

▪ Proactively monitoring health and well-being of

employees and communicating frequently

▪ Robust protocols and contract tracing, no

reported cases of employee-to-employee

contraction

▪ Phased ‘return to work’ plan in place, while

most locations remain in ‘site essential’ phase

▪ All manufacturing, customer service centers

and field services have remained operational

▪ No supply chain issues

▪ Conversations with all major transit customer

CEOs to serve their immediate needs and

actionable insights for innovation

Current actions with ongoing discussion:

New York to add additional bus validators to

support rear-door fare collection; evaluating with

other agencies

Advancing mobile payment solution and

supporting the reduction of physical touch points

COVID-19 UPDATE

We maximize every person’s

contribution to fuel diverse thought

and celebrate our differences

We empathize with customers,

enable creativity and

drive innovation

We provide a safe environment

for our people to innovate

and explore possibilities

3Q FY20 FINANCIAL SUMMARY

Strong Execution Despite Challenging Economic Environment


Quarterly Financial Highlights

▪ Bookings $452.7M; 3Q and YTD Book-to-Bill 1.3x

▪ Sales of $350.4M decreased 8% YoY due to COVID-19 impacts and timing

of shipments in Mission Solutions

▪ Estimated COVID impacts of up to $41M Sales and $14M Adj. EBITDA

included delayed awards, project pause/slowdowns, lower ridership and

other impacts

▪ Adj. EBITDA of $38.2M increased 25% YoY reflecting strong performance

in CTS (incl. Boston reset) and company-wide cost management

▪ Adj. EPS of $0.74 increased 12% YoY

▪ Strong Adj. FCF $43.8M, including Boston contract reset

What We Said – May 6, 2020 What We Achieved – 3Q FY20

▪ Adj. EBITDA at or better than 3Q19

▪ Complete financial close on the Boston contract reset

▪ Positive Adj. Free Cash Flow in 2H20

▪ Focused on leverage reduction

▪ Cumulative net cost savings of $30-35M in FY20-21

▪ Transit customers facing challenges due to ridership decline; expected

slow transit recovery; road traffic to return faster than transit

✓ Adj. EBITDA $38.2M versus $30.6M in 3Q19, increased 25%

✓ Boston reset completed and cash received in June

✓ 3Q Adj. Free Cash Flow of $43.8M

✓ Net debt decreased by $54M

✓ Cost savings program on track

▪ Ridership improving from pandemic lows, but remains subdued;

uncertainty around timing of recovery; road usage has rebounded

▪ “Big 5” on track (New York, Boston, Brisbane, San Francisco Bay Area, Chicago)

▪ San Francisco Muni Board approved $29.5M contract (expect to book 4Q) for Cubic NextBus to provide real-time bus / train

arrival times; initial term six years with two optional five-year terms (value potential >$80M)

▪ Expansion of mobile and virtual cards: Chicago, LA, WMATA

▪ Procurement delays due to COVID-19, but no major cancellations

▪ Examples of key proposals being progressed (>$1.2B FY21-22): New York Road User Charging, New Zealand, Vancouver,

Dublin, Washington, Account Based for Sydney, Queensland MaaS, Canberra, Atlanta MARTA, Warsaw, Toronto

▪ Won High Capacity Backbone (HCB) for initial $38M to prototype and demonstrate joint networking system – a critical

enabler for US Air Force Joint All-Domain Command & Control (JADC2) capability

▪ Awarded ($950M) IDIQ contract for US Air Force’s Advanced Battle Management System (ABMS)

▪ Received various orders including additional T2C2 ($17M), US Army Command Post/Edge computing ($17M), and Sharklink

(data link for US Navy CVN aircraft carriers; $9M)

▪ Won Surface Training Immersive Gaming and Simulations (STIGS); 4 task orders ready for release ($99M IDIQ)

▪ In last phase of US Army user assessments for Soldier Squad Virtual Trainer (SSVT) and Live Training OTA

▪ USMC Force on Force Next Training OTA phase III demonstration to be completed by end of August

▪ US Navy Sailor 2025, pursuing FY21 Ready Relevant Learning contract

PROGRESS ON OUR STRATEGIC PRIORITIES


WMATA = Washington Metropolitan Area Transit Authority; IDIQ = Indefinite Delivery Indefinite Quantity; OTA = Other Transaction Authority

▪ Single, competitively awarded prime contract

– Provides high-capacity aerial network

– Enables Joint All Domain Command and Control (JADC2)

– Follow-on production effort for distributed ground entry points,

E-11 Battlefield Airborne Communication Node, and KC-135

Tankers

▪ Cubic leveraged technology across CMS portfolio in

an Open Systems strategy

– HALO software defined communication system

– PolyStrataTM RF technology from Nuvotronics

– Standards based, Advanced Tactical Datalink

– Active network defense enabled by TeraLogic’s Atlas Network

Node, a DevSecOps-based solution

▪ Providing integrated HCB air and ground prototype

– Includes resilient networking and active cyber defense

– Implement using commercial and joint OS standards

– Evaluate prototype in operationally relevant environment and

deliver to USAF

CUBIC MISSION SOLUTIONS – HIGH CAPACITY BACKBONE (HCB) CONTRACT AWARD


Estimated Addressable Market Opportunity of $4B+ Over the Next 10 Years

Prototyping and Demonstrating the Entire Air and Ground

System Including Networking and Active Cyber Defense

8

CUBIC & MOOVIT PARTNERSHIP: REVOLUTIONIZING MOBILE ENGAGEMENT BY COMBINING

PAYMENTS AND INFORMATION

>50M passengers use Cubic systems daily | 800M users across all of Moovit’s platforms


INTEGRATING MULTIMODAL JOURNEY PLANNING,

FARE COLLECTION AND REWARDS(coming to the App Store later this year)

BUILDING ON AREAS OF STRENGTH AND GROWING

IN NEW REGIONS TOGETHER

Journey

Planning

MaaS

Marketplace

Mobility

Intelligence Loyalty &

Rewards

Micro-

mobility

Payments

Regional Strength

Cubic

Moovit

New market

opportunities

MaaS = Mobility as a Service


Why

WINNING

THE

CUSTOMER

MARKET NEEDSCUBIC’s INNOVATIVE

SOLUTIONS

REMOVING

PHYSICAL

TOUCHPOINTS

• Health and safety for all

• Contactless and open payments

• Leveraging mobile technology

• Touchless customer service

• TouchPass: Urban Mobility Back Office

• Gateless Gateline: Virtual Station Control

• Virtual Ticket Agent (multichannel)

• NextApp

• Hands Free Mobile Ticketing

MODIFYING

BEHAVIOR

• Communicating to travelers

• Journey planning

• Incentivizing behavior

• NextBus

• NextApp

• Interactive

REDUCING

CONGESTION

• Situational awareness

• Safer roads

• Automated pedestrian crossings

• Road user charging

• Congestion management

• Transportation Management Platform

• Trafficware / GRIDSMART

• Road User Charging

• Urban Mobility Backoffice

ENHANCING

MOBILITY

• Mobility as a Service (MaaS)

• Public and Private Operators working

together

• Predictable multimodal journeys

• Cubic MaaS Marketplace

Demand and Yield Management

for managing capacity and

informing passengers

Sensing technology using AI based cameras for face

mask detection and thermal sensors for body temperature

LEVERAGING TECHNOLOGY TO HELP OUR CUSTOMERS REBOUND, ADAPT AND

THRIVE POST-PANDEMIC

ACCELERATING OUR ESG JOURNEY

Corporate Responsibility has Always Been a Part of Cubic’s Culture; Taking Steps to Make ESG a Strategic Priority


ERG = Employee Resource Group. FWA = Flexible Work Arrangement. HSE = Heath, Safety and Environment. NEO = Named Executive Officer

CTS: Our intelligent travel solutions enhance

mobility and safety and help cities reduce the

environmental and economic costs of

traffic congestion

CGD: Our live, virtual and constructive training

solutions improve proficiency and readiness,

enabling a safer world

CMS: Our networked C4ISR solutions improve

mission effectiveness by delivering superior

performance while reducing physical footprint

All Segments Support Our ESG Journey

✓ Hired Sr. Director of Responsible Business

& Sustainability

✓ Began foundational ESG work

✓ D&I strategy rolled out; 10 ERGs globally

✓ Manufacturing / procurement – low or zero

emission designated sites

✓ Implemented majority voting for directors

✓ Signatory to UN Global Compact

✓ Conducted materiality assessment

✓ Developed sustainability strategy

✓ Gathering legacy data; determined KPIs

✓ Launched D&I toolkit, resources and training

✓ Increased Board / NEO stock ownership

requirements; improvements to exec. comp.

program alignment with shareholders

▪ Finalize ESG objectives and policies

▪ Initial website enhancements/updates

▪ COVID-19 response – global engagement

▪ Release of inaugural Annual Corporate

ESG Report

▪ Solar and EV project at Corporate Office

▪ General waste and water baseline

assessments

▪ Implementing HSE management system

▪ Supply chain sustainability and

rationalization

▪ Identify and action Sustainable Development

Goals (UN SDGs)

▪ Achieve best-in-class ESG status2017 signatoryHow

LIVING

ONE

CUBIC

2019 2020 2021+

Bookings ($M) Backlog ($B) Sales ($M)

3Q FY20 CONSOLIDATED FINANCIAL HIGHLIGHTS


$323.3

$452.7

3Q19 3Q20

$3.4 $3.7

9/30/2019 6/30/2020

$382.7 $350.4

3Q19 3Q20

Adj. EBITDA1 ($M) Adj. EPS1 Adj. FCF1 ($M)

$30.6

$38.2

3Q19 3Q20

$0.66

$0.74

3Q19 3Q20

$7.6

$43.8

$52.5

3Q19 3Q20

real estate sale

Commentary

Bookings: Growth driven by the Boston contract

reset ($228M); 3Q and YTD Book-to-Bill 1.3x

Sales: Reflects timing of shipments in Mission

Solutions and COVID-19 impacts / award delays

Timing of CMS DTECH and GATR Sales

(expect strong 4Q)

Estimated COVID-19 impact up to ~$41M

Adj. EBITDA: Growth in Transportation and Defense

Training, offset by Mission Solutions

Lower sales of high-margin CMS products YoY

CMS franchise program investments

Estimated COVID-19 impact up to ~$14M

(gross impact, before cost savings)

Adj. EPS: Growth reflects higher Adj. EBITDA, offset

by higher taxes and depreciation expense

Adj. FCF: Strong Adj. FCF driven by Boston contract

financial close and New York milestone payment

-8% (-9% Organic1)

1 See Appendix of this presentation for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures.

+25%

+40%

+12%

+10%

11.5%

19.4%

3Q19 3Q20

$212.7 $215.5

3Q19 3Q20

Bookings ($M) Sales ($M)

+112% +1%

+2% Organic

Adj. EBITDA ($M) Adj. EBITDA Margin

+71% +790 bps

$151.6

$321.0

3Q19 3Q20

CUBIC TRANSPORTATION SYSTEMS


Commentary

▪ Higher bookings reflect the Boston contract reset

▪ Sales reflect growth from Boston and San

Francisco Bay Area (Clipper 2.0), primarily offset by

COVID-19

▪ Adj. EBITDA increased 71% driven by Boston

MBTA contract reset, cost savings and strong

performance

▪ Estimated COVID-19 impacts up to ~$28M:

Delay in short-cycle, Intelligent Transport

Systems business (Trafficware/

GRIDSMART); however, bookings up 8%

Project slowdowns

Transit ridership decline

Note: See Appendix of this presentation for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures.

1.5x Book-to-Bill

$24.5

$41.9

3Q19 3Q20

$95.0

$69.0

3Q19 3Q20

$76.6 $79.1

3Q19 3Q20

CUBIC MISSION SOLUTIONS



+3% (27%)

(32%) Organic


Commentary

▪ 3Q bookings comparable to prior year

▪ Adj. EBITDA reflects lower sales of GATR (high-

margin) and continued investment in franchise

programs ($6M)

▪ Continue to expect traditional backend-driven year

(4Q) due to regular timing of orders

▪ Q4 key profit drivers:

GATR (T2C2) ~$73M in backlog to ship Q4

DTECH (edge networking and computing) –

programs funded, orders on track

PIXIA - renewal of largest enterprise license

agreement (awarded in July)


$9.3

$(5.0)

3Q19 3Q20

9.8%

(7.2%)

3Q19 3Q20

$75.0 $65.9

3Q19 3Q20

9.9%

13.1%

3Q19 3Q20

CUBIC GLOBAL DEFENSE



(45%) (12%)

(11%) Organic


+16% +320 bps

Commentary

▪ Bookings reflect program award delays, including

expected international opportunities / COVID-19

process disruptions

▪ Sales were impacted by program award delays and

reflect lower YoY sales in Ground Training, partially

offset by growth in Air Training

▪ Adj. EBITDA growth driven by strong operational

and cost management$7.4

$8.6

3Q19 3Q20

$95.1

$52.6

3Q19 3Q20


4Q FY20 ADJUSTED EBITDA DRIVERS


Key Drivers and Assumptions

▪ Expect strong 4Q YoY Adj. EBITDA, leading to anticipated FY20 performance at or slightly above FY19 Adj. EBITDA ($146.6M)

▪ Reminder: typical CMS seasonality reflects 4Q weighted performance

In FY18 >95% of CMS segment Adj. EBITDA generated in 4Q; in FY19 >70%

PIXIA acquisition drives heavier 4Q weighting

>80% of expected 4Q CMS sales already in backlog as of 7/31

• GATR shipments / customer acceptance • $73M GATR bookings in backlog, expected to ship 4Q

• PIXIA renewal of largest enterprise license • Booked in July, $14M sales, high-margin

• Rugged IoT / DTECH • ~$40M (backlog through July + high probability bookings), expected

to ship 4Q

• Trafficware / GRIDSMART • ~50% of expected 4Q sales booked (through July)

• Design-build on CTS fare collection projects • In backlog, projects on track with no supply chain issues

FOCUSED ON LIQUIDITY & CASH PRESERVATION


($M) 6/30/20

Cash and Cash Equivalents $ 109

Total Current Assets 736

Total Assets 2,262

Total Current Liabilities 599

Total Debt without VIE 722

Total Liabilities and Equity $ 2,262

BALANCE SHEET SUMMARY

Cash and Cash Equivalents $ 109

Available Line of Credit 479

1. LTM = Last Twelve Months. Leverage ratio as of June 30, 2020 is calculated according to the EBITDA and net debt definitions in our credit agreement. The leverage ratio, net debt and EBITDA calculations under the credit agreement are non-GAAP financial measures. Our credit agreement EBITDA

represents Adj. EBITDA plus stock-based compensation expense, TTM EBITDA of related acquisitions, less strategic and IT system resource planning expenses, and restructuring costs in excess of $10M, as well as certain other adjustments as defined in our credit agreement. Net debt is calculated

as total debt less cash and cash equivalents as defined in our credit agreement.

LIQUIDITY SUMMARY($M)

VIE Debt is non-

recourse to Cubic

and excluded by

banks for leverage

definition

FOCUSED ON ESSENTIALS:

LIQUIDITY AND CASH PRESERVATION

✓ Reduced discretionary expenses

✓ Indirect/overhead positions hiring freeze

✓ Compensation modifications

✓ Reduction/delay in R&D and capex

✓ Vendor and customer payment terms

✓ Stimulus benefits

✓ Debt restructuring enhances financial flexibility

3.70x Net Debt-to-LTM EBITDA1 at 6/30

Covenant: 4.75x net leverage ratio (through 1Q21)

Cost Savings Program: Expected Cumulative Net Savings

$30M-$35M FY20-21


01Committed to a diverse and inclusive culture, which ensures

care and collaboration across the organization

02Progress made on strategic execution and key wins to drive

shareholder value

03Well positioned with large backlog and driving innovation to

provide world class customer experience

TAKING ACTIONS TO MANAGE THROUGH CURRENT ENVIRONMENT

AND SUPPORT OUR CUSTOMERS IN THE POST-PANDEMIC REBOUND

APPENDIX

USE OF NON-GAAP FINANCIAL MEASURES

19

ORGANIC SALES GROWTH, ADJUSTED EBITDA, ADJUSTED NET INCOME AND ADJUSTED EPS

▪ We believe that these non-GAAP measures provide additional insight into our ongoing operations and underlying business trends, facilitate a comparison of our results between current and prior periods,

and facilitate the comparison of our operating results with the results of other public companies that provide non-GAAP measures. We use Adjusted EBITDA internally to evaluate the operating

performance of our business, for strategic planning purposes, and as a factor in determining incentive compensation for certain employees. These non-GAAP measures facilitate company-to-company

operating comparisons by excluding items that we believe are not part of our core operating performance.

▪ Organic sales growth is defined as the year-over-year percentage change in reported sales relative to the prior comparable period, excluding the impact of acquisitions and divestitures over the prior 12

months and the impact of foreign currency translation. Adjusted EBITDA is defined as GAAP net income from continuing operations attributable to Cubic before interest expense (income), loss on

extinguishment of debt, income taxes, depreciation and amortization, other non-operating expense (income), acquisition-related expenses, strategic and IT system resource planning expenses,

restructuring costs, and gains or losses on the disposal of fixed assets. Adjusted net income is defined as GAAP net income from continuing operations attributable to Cubic excluding amortization of

purchased intangibles, restructuring costs, loss on extinguishment of debt, acquisition-related expenses, strategic and IT system resource planning expenses, gains or losses on the disposal of fixed

assets, other non-operating expense (income), tax impacts related to acquisitions, and the impact of US Tax Reform. Adjusted EPS is defined as adjusted net income on a per share basis using the

weighted average diluted shares outstanding. Strategic and IT system resource planning expenses consists of expenses incurred in the development of our ERP system and the redesign of our supply

chain which include internal labor costs and external costs of materials and services that do not qualify for capitalization. Acquisition-related expenses include business acquisition expenses including

retention bonus expenses, due diligence and consulting costs incurred in connection with the acquisitions, and expenses recognized related to the change in the fair value of contingent consideration for

acquisitions.

▪ These non-GAAP measures are not measurements of financial performance under GAAP and should not be considered as measures of discretionary cash available to the company or as alternatives to

net income as a measure of performance. In addition, other companies may define these non-GAAP measures differently and, as a result, our non-GAAP measures may not be directly comparable to the

non-GAAP measures of other companies. Furthermore, non-GAAP financial measures have limitations as an analytical tool and you should not consider these measures in isolation, or as a substitute for

analysis of our results as reported under GAAP. Investors are advised to carefully review our GAAP financial results that are disclosed in our SEC filings.

▪ We reconcile organic sales growth to sales growth as reported, which we consider to be the most directly comparable GAAP financial measure. We reconcile Adjusted EBITDA and Adjusted Net Income

to Net Income, which we consider to be the most directly comparable GAAP financial measure. We reconcile Adjusted EPS to GAAP EPS, which we consider to be the most directly comparable GAAP

financial measure.

ADJUSTED FREE CASH FLOW

▪ Adjusted Free Cash Flow is defined as Net cash provided by continuing operations, excluding operating cash flow associated with the Boston Special Purpose Vehicle (SPV) in which Cubic has a 10%

equity stake, less capital expenditures plus proceeds from the sale of fixed assets and the receipt of withheld proceeds from the sale of trade receivables. The Boston SPV has contracted with Cubic for

the design-build and operations and maintenance phases of the next-generation fare collection system for the Massachusetts Bay Transit Authority and pays Cubic progress payments during the design-

build phase of the project. These payments are primarily funded by non-recourse debt issued by the SPV. Additional information regarding the company’s Boston SPV can be found in our Annual Report

on Form 10-K for the year ended September 30, 2019.

▪ Management believes that Adjusted Free Cash Flow is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures,

which are necessary to maintain and expand Cubic’s business, in addition to the other adjustments noted above. It is important to note that Adjusted Free Cash Flow does not represent the residual cash

flow available for discretionary expenditures since other non-discretionary expenditures are not deducted from the measure.

▪ We reconcile Adjusted Free Cash Flow to Net cash provided by continuing operations, which we consider to be the most directly comparable GAAP financial measure.



SUMMARY OF REPORTABLE SEGMENT RESULTSTHREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2020 AND JUNE 30, 2019

Sales:

Cubic Transportation Systems $ 215.5 $ 212.7 $ 601.8 $ 595.2

Cubic Mission Solutions 69.0 95.0 167.2 203.3

Cubic Global Defense Systems 65.9 75.0 231.8 226.8 Total sales $ 350.4 $ 382.7 $ 1,000.8 $ 1,025.3

Operating income (loss):


Cubic Mission Solutions (21.3) 1.3 (67.6) (12.1)

Cubic Global Defense Systems 6.1 1.9 18.1 10.0

Unallocated corporate expenses (11.0) 14.3 (40.0) (7.3) Total operating income (loss) $ 24.7 $ 34.7 $ (11.7) $ 27.6

Adjusted EBITDA:


Cubic Mission Solutions (5.0) 9.3 (30.8) 9.9

Cubic Global Defense Systems 8.6 7.4 23.9 19.6

Unallocated corporate expenses (7.3) (10.6) (27.3) (23.8) Total Adjusted EBITDA $ 38.2 $ 30.6 $ 54.1 $ 70.0

(in mi l l ions)

June 30, June 30,

Three Months Ended Nine Months Ended

2020 2019 2020 2019

(in mi l l ions)

ORGANIC SALES GROWTH RATE RECONCILIATIONTHREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2020


Note: percentages may not sum due to rounding.

Cubic CTS CMS CGD

Sales growth as reported (8.4%) 1.3% (27.3%) (12.2%)

Contribution from acquisitions (1.2%) (0.2%) (4.4%) —

Foreign currency translation 0.9% 1.2% — 1.0%

Organic sales growth (8.8%) 2.4% (31.7%) (11.1%)

Cubic CTS CMS CGD

Sales growth as reported (2.4%) 1.1% (17.7%) 2.2%

Contribution from acquisitions (1.5%) (0.9%) (5.2%) —

Foreign currency translation 1.0% 1.4% — 0.8%

Organic sales growth (2.9%) 1.6% (22.9%) 3.0%

Nine Months Ended June 30, 2020

Three Months Ended June 30, 2020

ADJUSTED EBITDA RECONCILIATION BY SEGMENTTHREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2020 AND JUNE 30, 2019


(in millions)

Cubic Transportation Systems

Sales $ 215.5 $ 212.7 $ 601.8 $ 595.2

Operating income $ 50.9 $ 17.2 $ 77.8 $ 37.0

Depreciation and amortization 7.1 6.9 21.6 24.1

Noncontrolling interest in income of VIE (15.6) (2.5) (17.8) (5.8)

Acquisition-related expenses (gains), excluding amortization (0.7) 1.4 6.0 6.8

Restructuring costs 0.2 1.5 0.7 2.2

Adjusted EBITDA $ 41.9 $ 24.5 $ 88.3 $ 64.3

Adjusted EBITDA margin 19.4% 11.5% 14.7% 10.8%

(in millions)

Cubic Mission Solutions

Sales $ 69.0 $ 95.0 $ 167.2 $ 203.3

Operating income (loss) $ (21.3) $ 1.3 $ (67.6) $ (12.1)


Acquisition-related expenses, excluding amortization 2.6 2.0 2.1 4.8

Restructuring costs 0.4 - 0.4 -

Adjusted EBITDA $ (5.0) $ 9.3 $ (30.8) $ 9.9

Adjusted EBITDA margin (7.2%) 9.8% (18.4%) 4.9%

(in millions)

Cubic Global Defense Systems

Sales $ 65.9 $ 75.0 $ 231.8 $ 226.8

Operating income $ 6.1 $ 1.9 $ 18.1 $ 10.0


Acquisition-related expenses (gains), excluding amortization - 0.9 (0.5) 1.2

(Gain) loss on sale of fixed assets (0.1) 0.3 (0.2) 0.3


Adjusted EBITDA $ 8.6 $ 7.4 $ 23.9 $ 19.6


2020 2019

Three Months Ended

June 30,

2020 2019

Three Months Ended

June 30,

2020 2019

Nine Months Ended

June 30,

2020 2019

Nine Months Ended

June 30,

2020 2019

Nine Months Ended

June 30,

2020 2019

Three Months Ended

June 30,

CONSOLIDATED ADJUSTED EBITDA RECONCILIATIONTHREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2020 AND JUNE 30, 2019


Note: The difference between consolidated amounts and segments represents Corporate. Amounts may not sum due to rounding.

(in millions)

Cubic Consolidated

Sales $ 350.4 $ 382.7 $ 1,000.8 $ 1,025.3

Net income (loss) from continuing operations attributable to Cubic $ (1.4) $ 24.1 $ (60.7) $ 9.5

Noncontrolling interest in net income (loss) of VIE 9.4 (3.6) 0.2 (9.0)

Income tax provision (benefit) 4.6 1.0 (8.9) (0.3)

Interest expense, net 5.4 4.5 15.0 10.4

Loss on extinguishment of debt - - 16.1 -

Other non-operating expense (income), net 6.8 8.8 26.6 17.1

Operating income (loss) $ 24.7 $ 34.7 $ (11.7) $ 27.6


Gain/Loss of sale of fixed assets - - - -

Noncontrolling interest in EBITDA of VIE (15.6) (2.5) (17.8) (5.8)


Strategic and IT system resource planning expenses 0.4 2.4 3.3 6.3

Gain on sale of fixed assets (0.1) (32.6) (0.2) (32.6)


Adjusted EBITDA $ 38.2 $ 30.6 $ 54.1 $ 70.0


2020 20192020 2019

Nine Months Ended

June 30,

Three Months Ended

June 30,

ADJUSTED NET INCOME AND ADJUSTED EPS RECONCILIATIONTHREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2020 AND JUNE 30, 2019


Note: Amounts may not sum due to rounding. 1 Represents the tax accounting impact of significant discrete items recorded at the time of acquisition.2 The tax effect of the non-GAAP adjustments is generally based on the statutory tax rate of the jurisdiction of the event.

(in millions, except per share data)

GAAP EPS $ (0.04) $ 0.77 $ (1.94) $ 0.31

GAAP Net income (loss) from continuing operations attributable to Cubic $ (1.4) $ 24.1 $ (60.7) $ 9.5

Noncontrolling interest in net income (loss) of VIE 9.4 (3.6) 0.2 (9.0)

Amortization of purchased intangibles 16.4 9.7 42.9 32.7

Gain on sale of fixed assets (0.1) (32.6) (0.2) (32.6)


Loss on extinguishment of debt — — 16.1 —


Strategic and IT system resource planning expenses 0.4 2.4 3.3 6.3

Other non-operating expense (income), net 6.8 8.8 26.6 17.1

Noncontrolling interest in Adjusted Net Income of VIE (15.6) (2.7) (17.8) (6.2)

Tax impact related to acquisitions1 0.6 0.1 (12.9) (7.4)

Impact of U.S. Tax Reform 0.1 — 0.7 —

Tax impact related to non-GAAP adjustments2 1.1 1.3 0.5 1.4

Adjusted Net Income $ 23.0 $ 20.7 $ 15.4 $ 37.4

Adjusted EPS $ 0.74 $ 0.66 $ 0.49 $ 1.23

Weighted Average Diluted Shares Outstanding (in thousands) 31,299 31,249 31,289 30,332


June 30, June 30,

2020 2019 2020 2019

ADJUSTED EBITDA TO ADJUSTED NET INCOME RECONCILIATIONTHREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2020 AND JUNE 30, 2019


Note: Amounts may not sum due to rounding. 1 Represents the tax accounting impact of significant discrete items recorded at the time of acquisition.2 The tax effect of the non-GAAP adjustments is generally based on the statutory tax rate of the jurisdiction of the event.

($ In Millions) 2020 2019 2020 2019

Adjusted EBITDA 38.2$ 30.6$ 54.1$ 70.0$

Depreciation Expense (7.0) (5.6) (20.9) (16.2)

Interest Expense (5.4) (4.5) (15.0) (10.4)

Income tax benefit (expense) (4.6) (1.0) 8.9 0.3

Tax impact related to acquisitions1 0.6 0.1 (12.9) (7.4)

Impact of U.S. Tax Reform 0.1 — 0.7 —

Tax impact related to non-GAAP adjustments2 1.1 1.3 0.5 1.4

Noncontrolling interest in EBITDA of VIE 15.6 2.5 17.8 5.8

Noncontrolling interest in Adjusted Net Income of VIE (15.6) (2.7) (17.8) (6.2)

Adjusted Net Income 23.0$ 20.7$ 15.4$ 37.4$

Three Months Ended June 30, Nine Months Ended June 30,

ADJUSTED FREE CASH FLOW RECONCILIATIONTHREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2020 AND JUNE 30, 2019


Note: Amounts may not sum due to rounding.

($ In Millions)

Cubic Consolidated

Net cash provided by (used in) continuing operating activities $ (29.2) $ 1.1 $ (103.3) $ (82.7)

Capital expenditures (10.5) (13.1) (35.8) (35.3)

Proceeds from sale of property, plant and equipment — 44.9 — 44.9

Operating cash flow associated with SPV 83.5 19.6 106.7 35.1

Receipt of withheld proceeds from sale of trade receivables — — 5.5 —

Adjusted Free Cash Flow $ 43.8 $ 52.5 $ (26.9) $ (37.9)

2020 2019 2020 2019


June 30, June 30,

cubic corporation third quarter fiscal year 2020 results cubic...real estate sale commentary...

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