Cubic FY 2017 Guidance Falls Below Street Outlook, Contractor Expects Defense Order Delay Resolutions

CubicLogoGovCon Index-listed Cubic Corp. (NYSE: CUB) issued earnings and revenue guidance below Wall Street’s consensus outlook for the company’s 2017 fiscal year started Oct. 1 with expectations of delayed orders from the Defense Department to be received over the next 12 months.

San Diego-based Cubic said in October the DoD funding delays would impact product orders in its defense segments and cause fourth quarter and FY 2016 financial results to come in below the contractor’s guidance for both periods.

Cubic also expects to wrap up its ongoing enterprise resource planning system implementation in FY 2017 as part of continued internal investments at the defense and transportation contractor after the 2014-2015 series of technology acquisitions.

The company expects FY 2017 earnings of $0.40-$0.80 per share versus the analyst forecast of $1.88 at revenue of $1.50 billion-$1.55 billion compared to Wall Street’s midpoint forecast of $1.54 billion.

Cubic reported a fourth quarter loss of $0.29 per share, or $7.5 million, versus Wall Street’s forecast of a $0.17 EPS gain.

Sales for the July-September period declined 4.53 percent from the prior year period to $406.6 million on the defense order delays but exceeded analysts’ outlooks of $390.3 million.

Full-year earnings for 2016 totaled $0.06 per share, or $1.7 million compared to the $0.85 EPS and $22.9 million figures reported in fiscal year 2015 on costs related to the One Cubic ERP program and higher interest expenses.

Revenue for the 12-month period climbed 2.16 percent to $1.46 billion on higher volume in its defense product and transportation segments.

As of Friday’s close, shares in Cubic have added 3.28 percent since the start of the year and are up 10.87 percent over 12 months.

By comparison, the GovCon Index has climbed 15.76 percent on a year-to-date basis and 10.82 percent for 52 weeks.

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