Cubic Cuts FY 2016 Earnings Outlook, Holds Revenue Guidance as 3Q Results Below Street Consensus

Cubic Corp. (NYSE: CUB) cut its full-year earnings outlook in fiscal third quarter financial results released Wednesday as the defense and transportation contractor expects increases to interest and financing costs on a new credit facility, tax expenses and a partial pension settlement plan in the fourth quarter.

San Diego-based Cubic expects adjusted earnings of $0.85-$1.05 per share for the company’s 2016 fiscal year ending September 30 compared to prior guidance of $1.20-$1.40 EPS issued in May, while revenue guidance remains at $1.51 billion-$1.56 billion on projected product shipments in the fourth quarter.

The consensus Wall Street analyst forecast for Cubic’s FY 2016 has $1.28 earnings per share and $1.52 billion in revenue.

Second quarter earnings came in at 17 cents per share versus the consensus analyst expectation of 29 cents and net income fell 48.75 percent year-over-year to $4.5 million on higher interest expenses and increases in both average outstanding debt and tax expenses.

Revenue increased 7.89 percent from the same April-June period in 2015 to $375.24 million on higher ground combat training system and simulator sales within the defense systems segment and increased activity in North America for the transportation business.

Analysts expected Cubic to report $387.45 million in second quarter revenue.

The company also reiterated its full-year guidance of earnings before interest, tax, debt and amortization at $70 million-$85 million and reported $200.69 million in long-term debt as of June 30.

Third quarter EBITDA climbed 33.45 percent year-over-year to $24.93 million.

Shares in Cubic were up 1.68 percent of 1:00 p.m. Eastern in a reversal from a nearly 2.18-percent decline at 12:30 p.m.

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