John D. Thomas, the EVP and CFO of Cubic Corporation (CUB), Interviews with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - May 27, 2014 - The Wall Street Transcript has just published its Industrial Equipment, Aerospace and Defense Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Capital Equipment Technology Investing - Growth Opportunities in Data Security - Professional Security Equipment - Emerging Markets Penetration - Heightened M&A Activity - Future Growth and Market Share Gains - Increased Commercial Aircraft Production Rate - Aircraft Manufacturing Supply Chain

Companies include: Cubic Corp. (CUB) and many more.

In the following excerpt from the Industrial Equipment, Aerospace and Defense Report, the EVP and CFO of Cubic Corporation (CUB) discusses company strategy and the outlook for this vital industry:

TWST: In the U.S., how is the defense-related portion of your business doing these days?

Mr. Thomas: It's holding its own. Most defense companies are shrinking, and we've seen a falloff in what we call professional services. But on the other side, we've seen an increase in demand for some of our training systems. So while it's down, it's not down as much as some of the other companies that were totally dependent on one or two things.

TWST: I believe the company had sought to restructure or realign its defense-systems business. What specifically are you doing in that regard, and what progress has been made?

Mr. Thomas: At the end of last year, in order to get more competitive, we took costs out of the business. In our defense-systems business, we did some consolidation in our manufacturing, and we also realigned some of our engineering around what we had in backlog. In our professional-services business, we cut back overhead and realigned the business for an increasingly competitive environment.

TWST: Are there any examples of important new contracts you would like to tell us about?

Mr. Thomas: We've won a number of contracts internationally this year - that's always a good sign - and these are in new countries for us, such as Turkey. We've also seen continued follow-on work internationally, both in Europe and the Middle East. The U.S. markets have been relatively slow. On the transportation side, we had follow-on work with a lot of our new clients. We've also won some awards for some of our projects. I'd say it's been kind of a steady year.

Backlog in our defense business is actually at an all-time high, but that's been pushed up by international awards. Our defense-services business backlog is down, and that's been reflective of sequestration and the shutdown in government and the government cutback. Sometime later this year we anticipate that the Department of Defense will start deploying money because they've gotten behind on some of their training needs.

TWST: Cubic has made several acquisitions in the past year or so. Would you tell us about those, why they were good fits for the company, and how the integration has gone?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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