Cubic Corp. FY16 Profit Down

(RTTNews) - Cubic Corp. (CUB) reported that its net income attributable to Cubic for fiscal year 2016 decreased to $1.7 million or $0.06 per share from $22.9 million or $0.85 per share in 2015. The change was primarily due to the decrease in operating income and an increase in interest expense related to increased outstanding debt, partially offset by a reduction in income tax expense.

Cubic's income tax benefit totaled $9.2 million for fiscal 2016, compared to an income tax provision of $49.0 million in fiscal 2015. The benefit for income taxes in fiscal 2016 primarily results from the benefit derived from the release of a portion of the existing valuation allowance against U.S. deferred tax assets due to acquired deferred tax liabilities, partially offset by nondeductible acquisition related compensation expenses.

Operating income was $7.2 million in 2016 compared to $75.4 million in 2015, a decrease of 90 percent. CGD Systems had an operating loss of $17.1 million in 2016 compared to operating income of $18.4 million in 2015 primarily due to the impact of purchase accounting on businesses acquired in this segment during fiscal 2016,. CTS operating income decreased by 24 percent primarily related to lower profits on the transition to the follow-on fare collection contract in London as well as the impact of changes in foreign exchange rates, partially offset by improved profitability on contracts in Chicago, Sydney and Vancouver.

Sales in 2016 were $1.462 billion compared to $1.431 billion in 2015, an increase of 2 percent. Increases in sales for CTS and CGD Systems of 3 percent and 5 percent, respectively, were partially offset by a 3 percent decrease in CGD Services sales. Revenues from businesses acquired in 2016 and 2015, all within the CGD Systems operating segment, were $79.6 million in 2016 compared to $45.8 million in 2015. The impact of changes in foreign currency exchange rates, particularly the strengthening of the U.S. dollar against the British pound, adversely affected sales. The average exchange rates between the prevailing currencies in foreign operations and the U.S. dollar had a negative impact on sales of 2 percent, or $32.3 million in 2016 compared to 2015.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.51 per share and revenues of $1.45 billion for fiscal year 2016. Analysts' estimates typically exclude special items.

Looking ahead for 2017, the company expects net income to be in the range of $10 million - $20 or $0.40 - $0.80 per share, and sales of $1.505 billion - $1.555 billion. Wall Street currently is looking for fiscal year 2017 earnings of $1.88 per share on annual revenues of $1.54 billion.