Cubic Corporation Fourth Quarter and Fiscal 2020 Full Year ......investment and delayed U.S. Army...

November 18, 2020

FOURTH QUARTER &

FISCAL 2020 FULL YEAR RESULTS

Brad Feldmann

Chairman, President & CEO

Anshooman Aga

EVP & CFO

Safe Harbor and Disclosures

24Q 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, 2020 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


Strong fourth quarter execution: Record Sales and Adj. EBITDA; strong Adj. Free Cash Flow and reduced leverage

Launched NextCUBIC strategy to accelerate growth and efficiency; unveiled 2025 financial goals

Continued focus on safety, fostering an inclusive “all in" culture and advancing our ESG priorities

01

02

03

Excellent Performance in the Final Quarter of FY20


What We Said – August 5, 2020 What We Achieved – As of September 30, 2020

▪ Strong 4Q20 Adj. EBITDA, driving full year at or slightly above FY19

▪ Positive Adj. Free Cash Flow in 4Q20

▪ Continued focus on leverage reduction

Mission Solutions Segment

▪ Mission Solutions: strong 4Q20 performance, reflecting back-end weighted

shipments (e.g., DTECH and GATR shipments) and PIXIA license renewals

▪ Mission Solutions: expected full year Sales and Adj. EBITDA growth YoY

✓ 4Q20 Adj. EBITDA $104.2M; FY20 $158.3M vs. FY19 $146.6M

✓ Strong 4Q20 Adj. Free Cash Flow of $87.5M; FY20 Adj. FCF of $60.5M

✓ Reduced net leverage ratio to 3.4x

Mission Solutions Segment

✓ Robust growth in Bookings, Sales, Adj. EBITDA and margin YoY;

Adj. EBITDA of $59M (more than double vs. 4Q19)

o FY20 Sales up YoY and FY20 Adj. EBITDA down YoY, reflecting significant

investment and delayed U.S. Army UON GATR orders

UON = Urgent Operational Need. IDIQ = Indefinite Delivery Indefinite Quantity.

Record Financials

4Q20 Sales and Adj. EBITDA

FY20 Adj. EBITDA

Margin Expansion

4Q20 Adj. EBITDA margin +560 bps YoY

FY20 Adj. EBITDA margin +90 bps YoY

Strong Backlog and Execution

Backlog $3.7B (+8% YoY)

Plus ~$1.3B sole-source IDIQs

1.1x Book-to-Bill in all segments (FY20)

‘Big 5’ on track

Strengthened Balance Sheet

4Q20 Adj. FCF $87.5M

FY20 Adj. FCF $60.5M

Reduced net leverage to 3.4x

Urban revenue management

▪ Chicago Ventra 3.0 award

▪ Boston reset agreement

▪ New York (OMNY) and Brisbane installations

remain on track despite COVID-19

▪ Ireland National Transport Authority -

operations win expands Europe footprint

NextCity 2.0 and digital platforms

▪ Acquired Delerrok (fare collection-as-a-service)

▪ Moovit partnership – on track for end of 2020

mobile app launch

▪ Cubic Interactive launched in Miami

▪ Expansion of mobile and virtual cards (DC, LA,

Chicago)

Surface transport management

▪ Integrated Trafficware/GRIDSMART under

CTS Intelligent Transport Systems (ITS)

▪ Won Trafficware/NextBus Traffic Management

deal in Merida, Mexico

$1,108 $1,203

$1,496 $1,476

2017 2018 2019 2020

Sales ($M)

$88$105

$147 $158

7.9%8.7%

9.8%10.7%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2017 2018 2019 2020

Adj. EBITDA1 ($M) & Margin1 (%)

10%

CAGR

(’17-’20)

1 Non-GAAP financial measure. See Appendix for reconciliation.

NGA = National Geospatial-Intelligence Agency. DISA = Defense Information Systems Agency. STE = Synthetic Training Environment. JSILS = Joint Interim

Joint Secure Interoperable LVC Solution. SLATE = Secure LVC Advanced Training Environment. LVC = Live Virtual Constructive.

5

$1.62$2.19

$3.13$3.32

2017 2018 2019 2020

Adj. EPS1


Mission communications and computing

▪ High Capacity Backbone prototype award;

successful first flight of Halo technology

▪ USMC Troposcatter award

▪ USAF Advanced Battle Management System

award across all categories

Digital intelligence

▪ PIXIA acquisition: NGA award for commercial

software for enterprise data management

▪ GeoSpatial Intelligence Unified Naval

Streaming System (GUNSS) award

▪ DISA contract to continue support for Unified

Video Dissemination System

Multi-domain LVC training

▪ Successful user acceptance eval for live and

virtual solution on U.S. Army STE

▪ Surface Training Immersive Gaming and

Simulations (STIGS) award – sole provider

▪ Secured second order under Navy JSILS

program for SLATE LVC continued

technology maturation and demonstration

22%

CAGR

(’17-’20)

27%

CAGR

(’17-’20)

+280

bps

(’17-’20)

FY20 Achievements – Strong Foundation for Future Execution

Recently Launched NextCUBIC to Drive Growth and Profitability …

Efficiently Building Technology-Driven, Market-Leading Businesses


Winning the Customer Obsession;

Driving Organic Sales Growth

Improving Financial Performance

through Operational Excellence and

Focusing on Free Cash Flow

Creating a More Sustainable Cubic

Underpinned by Living One Cubic

• Execute large backlog in transportation

($3.1B): deliver efficiently, leveraging

reusability and a common core of technology

(productized offering)

• Expand beyond the core into existing key

adjacencies, new geographies

• Grow our defense franchise programs,

supporting national defense strategy

• Expand dual-use technology for

commercial and defense markets

• Drive recurring subscription-based

revenue through digital models

• Executed first steps: combined defense

segments; actions to optimize CTS and Corp.

• Optimize engineering, G&A, external spend

and manufacturing

• Leverage common technologies and

optimize shared support functions

• Execute improvement program with

detailed roadmaps to drive financial

improvement, operational efficiency, scale

and organizational health

• Further drive competitive advantages

through smart investment

• Cultivate a purpose-driven and customer-

obsessed culture

Continued focus on customer

engagement

Leverage our strengths: purpose, team

values, ethics and integrity

Drive Cubic Innovation Social System

(CISS) growth

Develop and train our talent

Measure and reward: align incentives

with performance objectives and metrics

• Effective oversight through refreshed,

purpose-built, diverse and engaged Board

• Continue to advance ESG priorities

…With Clear, Long-term Financial Goals


Financial Goals

By FY2025

FY2020

Actual

FY2025

Goal

Sales $1.48B

Mid to High

Single Digit

Organic CAGR

Subscription-based, as-a-Service Sales $75M ~$200M

Adj. EBITDA Margin 10.7% Mid-teens

ROIC1 9% Mid-teens

1 ROIC = Adjusted EBITA less taxes divided by Average Invested Capital. See appendix for calculation.

Confidence in Ability to Achieve NextCUBIC; Driving Efficiency, Economics, Culture and Value


Focus on Three Critical

Improvement Program Areas...

Organic Growth Initiatives

Across CTS and CMPS

Functional

Transformation

Cultural

Transformation

• Accelerate digital platforms

• CTS: Multi-agency TouchPass with cEMV &

SagePay, enhanced mobile ticketing,

including intl. expansion with multilingual,

multicurrency and GDPR compliance

• CMPS: Build on existing capabilities in data

aggregation, distribution, analytics, data

visualization, human-machine performance

and total learning platform

• CTS: Surface transport management, incl.

geographic expansion and enhanced products

• CTS: Mega-city urban revenue management

(leverage best-in-class position; further improve

efficiency)

• CMPS: Deliver multi-domain live, virtual,

constructive (LVC) training

• CMPS: Capitalize and grow franchise wins –

execute efficiently (STIGS, HCB, ABMS, F-35,

MQ-25, MH-60, Boomslang, Troposcatter)

• Defense business integration

• Geo-shift of CTS engineering

• Optimized corporate functions

• Simplified standard tasks

• Enhanced controls; discipline

around external support

• Centralized with category-

specific management and

best-in-class taxonomy

• Strategic sourcing/negotiations

• Improve from 2nd to 1st quartile

in Organizational Health Index

• Best-in-class engineering and

enhanced quality performance

through optimized structure

• Improved deployment /

utilization of engineers

• Prioritized product roadmaps

• Manufacturing further

centralized – three Centers of

Excellence

1 2 3

Strong Execution Track Record

and Robust Backlog

Backlog

as of 9/30/20

$3.7B

2021-2025

Pipeline

$37.6B

2017-2020

Win Rate ($)

68.7%

2017-2020

Book-to-Bill

1.25x

…Expected to Generate $50M - $75M

in Incremental Adj. EBITDA by 2023

+$1.3B of sole-source IDIQs

Meaningful Opportunity Across G&A,

External Spend, Manufacturing and Engineering

GDPR = General Data Protection Regulation. STIGS = Surface Training Immersive Gaming and Simulations. HCB = High Capacity Backbone. ABMS = Advanced Battle Management System.

Fostering an Inclusive, "ALL IN" Culture


As Always, Our #1 Priority is to Care for our People

▪ Adhering to strict safety protocols to ensure employee health and

safety during the COVID-19 pandemic

▪ Driving our Diversity & Inclusion strategy to further enable an

engaged, accepting and innovative culture

– CHRO Grace Lee named among the 2020 Top 50 Chief

Diversity Officers by the National Diversity Council

▪ Achieved highest Employee Engagement score since survey

inception in 2016 (as of 3Q FY20); improved to 82%

▪ Recognized as San Diego Union-Tribune’s Top Workplaces 2020

ESG Progress: Key Q4 Updates

▪ Launched ESG website to provide periodic updates,

enhancements and disclosures

▪ Published Cubic’s Worldwide Human Rights Policy

▪ Published Cubic’s global Living Wage Statement

▪ Completed North America Health, Safety & Environmental

(HSE) assessment initiative to align with other regions

around a common set of HSE elements

https://www.cubic.com/about/environmental-social-governance

https://www.cubic.com/sites/default/files/Cubic%20Ethics%2C%20Human%20Rights%20Sep%2020%2C%20.pdf

https://www.cubic.com/sites/default/files/Living%20Wage%20Statement%20Oct%202020%20-%20Final.pdf

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

4Q FY20 Consolidated Financial Highlights


$250.5

$367.9

4Q19 4Q20

$3.4 $3.7

9/30/2019 9/30/2020

$471.2 $475.4

4Q19 4Q20

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

$76.6

$104.2

4Q19 4Q20

$1.86

$2.82

4Q19 4Q20

$52.1

$87.5

4Q19 4Q20

Commentary

Bookings: Growth driven by Mission Solutions and

Transportation; Book-to-Bill 0.8x reflecting timing of orders

(full year >1x)

Sales: Reflects strong growth in Mission Solutions and

inorganic PIXIA impact, primarily offset by Transportation

and Defense Training, incl. ongoing COVID-19 impacts

Adj. EBITDA: Robust growth in CMS (incl. the impact of

PIXIA) and company-wide cost management

Strong sales of high-margin CMS products

Transportation segment flat; Training down

Adj. EPS: Growth primarily reflects higher Adj. EBITDA and

lower tax expense

Adj. FCF: Strong working capital management and cash

conversion

+1% (-4% Organic1)

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

+36%

+47%

+52%

+8%

+68%

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

Full Year Fiscal 2020 Consolidated Financial Highlights


$1,002

$1,683

FY19 FY20

$3.4 $3.7

9/30/2019 9/30/2020

$1,496 $1,476

FY19 FY20

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

$146.6 $158.3

FY19 FY20

$3.13 $3.32

FY19 FY20

$14.1

$60.5

FY19 FY20

Commentary

Bookings: Growth primarily driven by the Boston contract

reset, Chicago Ventra 3.0 and Air Training; Book-to-Bill

>1.1x (in all segments)

Sales: Reflects impact of acquisitions, offset by COVID-19

impacts, including delayed awards, slowdowns, lower

transit ridership and GATR Europe UON delay

Adj. EBITDA: Company-wide cost management and strong

performance in Transportation more than offset Mission

Solutions and COVID-19 impacts

Investments in CMS franchise programs $18.8M

Transportation segment up >20%; Training flat

COVID-19 impact: Estimated impact up to ~$73M Sales

and $28M Adj. EBITDA (gross impact, before cost savings)

Adj. EPS: Reflects higher Adj. EBITDA and lower taxes,

partially offset by higher depreciation and interest expense

Adj. FCF: Reflects receipt of milestone payments on CTS

contracts and working capital management

-1% (-3% Organic1)

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

+8%

+68%

+6%

+8%

PY includes $44.9M RE sale proceeds

+328%

Bookings ($M) Sales ($M)

Adj. EBITDA ($M) Adj. EBITDA Margin

Cubic Transportation Systems


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

1.1x Book-to-Bill

$88.3

$142.4

4Q19 4Q20

$397.3

$966.9

FY19 FY20

$254.6 $239.1

4Q19 4Q20

$849.8 $840.9

FY19 FY20

$46.2 $45.7

4Q19 4Q20

$110.5

$134.0

FY19 FY20

18.1%19.1%

4Q19 4Q20

13.0%

15.9%

FY19 FY20

+143%

+61%

(6%)(8%) Organic

(1%)(1%) Organic

(1%)

+21%+290 bps

+100 bps

Q4 Commentary

▪ Bookings growth reflect NextBus SF Muni, Atlanta

maintenance booking and Trafficware/GRIDSMART

▪ Sales down and Adj. EBITDA flat YoY impacted by

COVID-19 and lower New York D&B, partially offset

by Ventra 3.0 growth and cost savings

FY20 Commentary

▪ Strong bookings primarily reflect the Boston contract

reset and Ventra 3.0

▪ Sales reflect growth from Boston, SF Bay Area,

Chicago and Brisbane, offset by COVID-19 and

lower Sales from New York D&B

▪ Estimated COVID-19 impacts on Sales up to ~$46M

Delay in short-cycle, Intelligent Transport

Systems business (Trafficware/GRIDSMART)

Other business opportunity delays

Transit ridership decline

▪ Adj. EBITDA increased 21% driven by Boston MBTA

contract reset, strong execution on Service projects

and cost savings

$24.5

$59.0

4Q19 4Q20



Cubic Mission Solutions


Note: See Appendix of this presentation for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures. IRAD = Internal Research & Development.

1.1x Book-to-Bill

$72.9

$143.4

4Q19 4Q20

$353.3 $376.3

FY19 FY20

$125.5

$169.9

4Q19 4Q20

$328.8 $337.1

FY19 FY20

$34.4

$28.2

FY19 FY20

19.5%

34.7%

4Q19 4Q20

10.5%8.4%

FY19 FY20

+7%

+97%+35%

+21% Organic

+3%(6%) Organic

+141%

(18%) (210) bps

+1,520 bps

Q4 Commentary

▪ Strong bookings across the CMS portfolio + PIXIA

▪ Sales growth reflects Rugged IoT shipments and

the inorganic impact of PIXIA

▪ Adj. EBITDA more than doubled YoY on higher

sales of Rugged IoT products and PIXIA

FY20 Commentary

▪ Bookings growth reflects PIXIA acquisition

▪ Sales primarily reflect organic growth from Rugged

IoT and the inorganic impact of PIXIA, offset by

lower Sales for GATR including COVID-19 and

other delays (Europe UON)

▪ Adj. EBITDA reflects strong contribution of PIXIA

($16.6M), offset by lower sales of GATR (high-

margin), continued investment in franchise

programs ($18.8M) and higher IRAD expense

(+$3M YoY)



Cubic Global Defense


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

1.1x Book-to-Bill

$89.3 $82.1

4Q19 4Q20

$251.8

$340.3

FY19 FY20

$91.1

$66.4

4Q19 4Q20

$317.9 $298.2

FY19 FY20

$13.2

$9.0

4Q19 4Q20

$32.8 $32.9

FY19 FY20

14.5%13.6%

4Q19 4Q20

10.3% 11.0%

FY19 FY20

+35%

(8%)

(27%)(28%) Organic

(6%)(6%) Organic

(32%)

0%

+70 bps

(90) bps

Q4 Commentary

▪ Performance reflects lower YoY sales due to delays

in Ground Training program awards and exercise

delays primarily driven by COVID-19

FY20 Commentary

▪ Bookings reflect international awards in Air Training

and Services; and awards in Digital

▪ Strong book-to-bill 1.1x

▪ Sales negatively impacted by lower YoY sales in

Ground Training, program awards and exercise

delays from COVID-19, partially offset by strong

growth in Air Training and Services

▪ Adj. EBITDA flat YoY, supported by continued

emphasis on strong cost management

As a Reminder, Combined Defense Segments into CMPS – First Key NextCUBIC Action


GRAPHICS GRAPHICS GRAPHICS GRAPHICS

Streamlined organizational structure is designed to:

▪ Leverage our world-class talent and common technologies

and enhance collaboration and customer intimacy

Capitalize on key franchise wins in C4ISR market

Accelerate our digital transformation

Advance multi-domain LVC solutions

▪ Increase organizational and operational effectiveness;

reduce complexity and cost

Achievements:

✓ Combined sub business units (reduced from 9 to 5

units) for focused and efficient operation

✓ Created cost savings and operational synergies

leveraging common support functions across business

✓ Leveraged existing international market channels

across full business product lines

✓ Integrated common product approach across

computing and communications products

✓ Created digital group to leverage agile software and

commercial business models

✓ Aligned training focus on multi-domain operations

using LVC as integration element

Note: On August 28, 2020 Cubic announced the combination of Cubic Mission Solutions (CMS) and Cubic Global Defense (CGD) to form a new Cubic Mission and Performance Solutions (CMPS) segment.

Maintaining a Healthy Balance Sheet

Focused on Financial Flexibility, Reducing Leverage and Driving FCF Improvement


($M) 9/30/20

Cash and Cash Equivalents $ 129

Total Current Assets 763

Total Assets 2,324

Total Current Liabilities 587

Total Debt without VIE 657

Total Liabilities and Equity $ 2,324

BALANCE SHEET SUMMARY

9/30/20

Cash and Cash Equivalents $ 129

Available Line of Credit 548

1. LTM = Last Twelve Months. Leverage ratio as of September 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.

2. Non-GAAP financial measure. See appendix for reconciliation.

LIQUIDITY SUMMARY($M)

VIE Debt is non-

recourse to Cubic

and excluded by

banks for leverage

definition

Maintain Strong Financial Flexibility

• Debt restructuring (2Q20) provided additional capacity,

more favorable terms and less restrictive covenants

• Covenant: 4.75x net leverage ratio through 1Q21 and 4.0x

thereafter

• Term loan and revolver maturity date: March 2025;

FY21 payment ~$11M

Continue to Reduce Leverage

• 3.38x Net Debt-to-LTM EBITDA1 at 9/30/20

• Focused on target of <3.0x

Drive FCF Improvement

• Strong Adj. FCF2 of $60.5M in FY20

• Reaffirming 3-year (FY20-22) Adj. FCF conversion target of

100%+ of Net Income


Sales Adj. EBITDA Adj. EPS

$1,550M – $1,600M$1,575M Midpoint

$170M – $190M$180M Midpoint

$3.00 – $3.60$3.30 Midpoint

Note: constant foreign currency

Commentary

▪ Strong progress in line with NextCUBIC goals

Expected Sales growth of 6.7% YoY at

mid-point

Adj. EBITDA margin expansion

Adj. EPS reflects higher taxes

▪ Good visibility: ~80% of Sales plan in backlog or

high-probability win / follow-on

▪ Seasonality expected to remain back-end loaded

(majority weighted to 4Q)

▪ Expect 1Q21 Adj. EBITDA to be approximately flat

to slightly higher than prior year (1Q20 = $11.4M)

▪ Estimated FY21 Depreciation $37M;

Amortization $61M

Expected Key Growth Drivers

▪ CTS

~75% of full year plan in backlog

• Chicago (Ventra 3.0) growth

• New York OMNY O&M growth

Growth from Trafficware/GRIDSMART

Fare collection sole source upgrades

▪ CMPS

Legacy CMS supported by programs of record and franchise programs;

DTECH funding supported by ongoing technology refresh / replacement

cycles for edge networking and computing

Growth from recent acquisitions

International training (e.g., recent Oceana win; upcoming opportunities

in Southeast Asia, EMEA)

U.S. training (e.g., STIGS, FoF funding support in Defense Budget)

FY21 Outlook: Reinstating Guidance After Strong Finish to FY20 and Initial NextCUBIC Actions

Strong FY20 Performance, Now Driving a Step Change in Value Creation with NextCUBIC


01Proactively monitoring the evolving situation and taking necessary

actions to mitigate COVID-19 impact

02Strong Q4 and FY20 performance and execution despite a

challenging economic environment

03NextCUBIC growth and efficiency initiatives to accelerate

operational performance

04Technology-driven, market-leading positions, large backlog and

franchise wins build a strong foundation for transformational

growth and profitability

05Committed to a diverse and inclusive culture, which drives

innovation and collaboration across the organization

NextCUBIC

Strategy to

Drive Growth,

Profitability and

Returns with

Clear Priorities

and Long-term

Financial Goals

Appendix

Use of Non-GAAP Financial Measures

20

ORGANIC SALES GROWTH, ADJUSTED EBITDA, ADJUSTED NET INCOME, ADJUSTED EPS AND RETURN ON INVESTED CAPITAL

▪ 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. Return on Invested Capital (ROIC) is defined as non-GAAP net operating profit

after tax (NOPAT) divided by average invested capital. NOPAT is defined as Adjusted EBITDA (described above) excluding depreciation and incomes taxes, less tax impact related to acquisitions, the impact of

US Tax Reform, and the tax impact related to the non-GAAP adjustments. Average invested capital is defined as shareholders’ equity related to Cubic plus net debt using a two-point average of the beginning

and ending amounts.

▪ 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. With respect to our fiscal year 2021 Adjusted EBITDA and Adjusted

EPS guidance, certain items that affect GAAP net income cannot be reasonably predicted as we are unable to quantify certain amounts that would be required to be included in the comparable forecasted GAAP

measures without unreasonable effort. As such, we are unable to provide a reasonable estimate of GAAP net income or GAAP EPS, or a corresponding reconciliation of Adjusted EBITDA and Adjusted EPS

guidance to GAAP net income or GAAP EPS for the full year. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.

▪ 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 VIE 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 VIE 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 VIE. Additional information regarding the VIE can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 as filed with the SEC.

▪ 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.


Cubic Mission and Performance Solutions Pro Forma ResultsContinuing Operations – Full Year Fiscal 2017 through Fiscal 2020 and Fiscal 2020 by Quarter


(in mill ions, except margin data)

Full Year FY2017 to FY2020 FY2017 FY2018 FY2019 FY2020

Sales 529.1$ 532.2$ 646.7$ 635.3$

Operating income (loss) 18.8$ 16.5$ 30.8$ (3.8)$

Depreciation and amortization 34.2 30.9 30.1 55.0

Acquisition-related expenses (gains), excluding amortization (0.1) 3.6 5.0 4.8

Gain on sale of fixed assets — — (2.0) (0.2)

Restructuring costs 0.9 1.5 3.3 5.3

Adjusted EBITDA 53.8$ 52.5$ 67.2$ 61.1$

Adjusted EBITDA margin 10.2% 9.9% 10.4% 9.6%

FY2020 by Quarter Q1FY20 Q2FY20 Q3FY20 Q4FY20

Sales 140.2$ 123.9$ 134.9$ 236.3$

Operating income (loss) (8.6)$ (25.7)$ (15.2)$ 45.7$


Acquisition-related expenses (gains), excluding amortization (2.2) 1.2 2.6 3.2

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

Restructuring costs — 0.6 1.1 3.6

Adjusted EBITDA (1.8)$ (8.7)$ 3.6$ 68.0$

Adjusted EBITDA margin -1.3% -7.0% 2.7% 28.8%


Summary of Reportable Segment ResultsThree Months and Year Ended September 30, 2020 and September 30, 2019

Sales:

Cubic Transportation Systems $ 239.1 $ 254.6 $ 840.9 $ 849.8

Cubic Mission Solutions 169.9 125.5 337.1 328.8

Cubic Global Defense Systems 66.4 91.1 298.2 317.9

Total sales $ 475.4 $ 471.2 $ 1,476.2 $ 1,496.5

Operating income (loss):


Cubic Mission Solutions 40.9 19.9 (26.7) 7.8


Unallocated corporate expenses (15.6) (14.5) (55.6) (21.8)

Total operating income $ 73.3 $ 58.6 $ 61.6 $ 86.2

Adjusted EBITDA:


Cubic Mission Solutions 59.0 24.5 28.2 34.4


Unallocated corporate expenses (9.5) (7.3) (36.8) (31.1)

Total Adjusted EBITDA $ 104.2 $ 76.6 $ 158.3 $ 146.6

(in mi l l ions) (in mi l l ions)

Three Months Ended Year Ended

September 30, September 30,

2020 2019 2020 2019

Organic Sales Growth Rate ReconciliationThree Months and Year Ended September 30, 2020


Note: percentages may not sum due to rounding.

Cubic CTS CMS CGD

Sales growth as reported 0.9% (6.0%) 35.4% (27.2%)

Contribution from acquisitions (4.0%) (0.2%) (14.5%) —

Foreign currency translation (1.2%) (2.0%) — (0.7%)

Organic sales growth (4.3%) (8.3%) 21.0% (27.8%)

Cubic CTS CMS CGD

Sales growth as reported (1.4%) (1.0%) 2.5% (6.2%)

Contribution from acquisitions (2.3%) (0.7%) (8.7%) —

Foreign currency translation 0.3% 0.4% — 0.4%

Organic sales growth (3.4%) (1.3%) (6.2%) (5.8%)

Three Months Ended September 30, 2020

Year Ended September 30, 2020

Adjusted EBITDA Reconciliation by SegmentThree Months and Year Ended September 30, 2020 and September 30, 2019


(in millions, except margin data)

Cubic Transportation Systems

Sales $ 239.1 $ 254.6 $ 840.9 $ 849.8

Operating income $ 43.2 $ 40.2 $ 121.0 $ 77.2

Depreciation and amortization 7.9 6.6 29.5 30.7 Noncontrolling interest in EBITDA of VIE (7.3) (3.1) (25.1) (8.9)

Acquisition-related expenses, excluding amortization 0.6 1.5 6.6 8.3


Adjusted EBITDA $ 45.7 $ 46.2 $ 134.0 $ 110.5


Cubic Mission Solutions

Sales $ 169.9 $ 125.5 $ 337.1 $ 328.8

Operating income (loss) $ 40.9 $ 19.9 $ (26.7) $ 7.8


Acquisition-related expenses, excluding amortization 2.7 (1.5) 4.8 3.3 Restructuring costs 1.9 - 2.3 -

Adjusted EBITDA $ 59.0 $ 24.5 $ 28.2 $ 34.4


Cubic Global Defense Systems

Sales $ 66.4 $ 91.1 $ 298.2 $ 317.9

Operating income $ 4.8 $ 13.0 $ 22.9 $ 23.0


Acquisition-related expenses, excluding amortization 0.5 0.5 - 1.7

Gain on sale of fixed assets - (2.3) (0.2) (2.0)


Adjusted EBITDA $ 9.0 $ 13.2 $ 32.9 $ 32.8


2020 2019 2020 2019

Three Months Ended Year Ended September 30, September 30,

Three Months Ended Year Ended

2020 2019 2020 2019

2020 2019 2020 2019

September 30, September 30,


Consolidated Adjusted EBITDA ReconciliationThree Months and Year Ended September 30, 2020 and September 30, 2019


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

(in millions, except margin data)

Cubic Consolidated

Sales $ 475.4 $ 471.2 $ 1,476.2 $ 1,496.5

Net income (loss) from continuing operations attributable to Cubic $ 57.0 $ 41.6 $ (3.7) $ 51.1

Noncontrolling interest in net income (loss) of VIE 6.4 (0.8) 6.6 (9.8)

Income tax provision (benefit) 2.6 11.3 (6.4) 11.0

Interest expense, net 5.1 3.5 20.2 13.9

Loss on extinguishment of debt - - 16.1 -

Other non-operating expense (income), net 2.2 3.0 28.8 20.0

Operating income (loss) $ 73.3 $ 58.6 $ 61.6 $ 86.2


Noncontrolling interest in EBITDA of VIE (7.3) (3.1) (25.1) (8.9)


Strategic and IT system resource planning expenses 0.6 2.0 3.9 8.3

(Gain) loss on sale of fixed assets - 0.1 (0.2) (32.5)


Adjusted EBITDA $ 104.2 $ 76.6 $ 158.3 $ 146.6


2020 2019 2020 2019


Adjusted Net Income and Adjusted EPS ReconciliationThree Months and Year Ended September 30, 2020 and September 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 $ 1.82 $ 1.33 $ (0.12) $ 1.67

GAAP Net income (loss) from continuing operations attributable to Cubic $ 57.0 $ 41.6 $ (3.7) $ 51.1

Noncontrolling interest in net income (loss) of VIE 6.4 (0.8) 6.6 (9.8)

Amortization of purchased intangibles 16.4 9.4 59.3 42.1

(Gain) loss on sale of fixed assets — 0.1 (0.2) (32.5)


Loss on extinguishment of debt — — 16.1 —


Strategic and IT system resource planning expenses 0.6 2.0 3.9 8.3

Other non-operating expense (income), net 2.2 3.0 28.8 20.0

Noncontrolling interest in Adjusted Net Income of VIE (6.7) (3.5) (24.6) (9.7)

Tax impact related to acquisitions1 0.4 0.9 (12.4) (6.6)

Impact of U.S. Tax Reform — — 0.7 —

Tax impact related to non-GAAP adjustments2 (0.9) 2.5 (0.3) 3.9

Adjusted Net Income $ 88.3 $ 58.3 $ 103.8 $ 95.6

Adjusted EPS $ 2.82 $ 1.86 $ 3.32 $ 3.13

Weighted Average Diluted Shares Outstanding (in thousands) 31,299 31,427 31,299 30,606

2020 2019 2020 2019


Adjusted EBITDA to Adjusted Net Income ReconciliationThree Months and Year Ended September 30, 2020 and September 30, 2019



(in millions) 2020 2019 2020 2019

Adjusted EBITDA 104.2$ 76.6$ 158.3$ 146.6$

Depreciation Expense (8.3) (6.4) (29.2) (22.6)

Interest Expense (5.1) (3.5) (20.2) (13.9)

Income tax benefit (expense) (2.6) (11.3) 6.4 (11.0)

Tax impact related to acquisitions1 0.4 0.9 (12.4) (6.6)

Impact of U.S. Tax Reform — — 0.7 —

Tax impact related to non-GAAP adjustments2 (0.9) 2.5 (0.3) 3.9

Noncontrolling interest in EBITDA of VIE 7.3 3.1 25.1 8.9

Noncontrolling interest in Adjusted Net Income of VIE (6.7) (3.5) (24.6) (9.7)

Adjusted Net Income 88.3$ 58.3$ 103.8$ 95.6$

Three Months Ended September 30, Year Ended September 30,

Adjusted Free Cash Flow ReconciliationThree Months and Year Ended September 30, 2020 and September 30, 2019


Note: Amounts may not sum due to rounding.

(in millions)Cubic Consolidated

Net cash provided by (used in) continuing operating activities $ 95.1 $ 50.8 $ (8.3) $ (31.9)

Capital expenditures (13.4) (13.8) (49.2) (49.1)

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

Operating cash flow associated with VIE 5.8 15.1 112.5 50.2

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

Adjusted Free Cash Flow $ 87.5 $ 52.1 $ 60.5 $ 14.1

2020 2019 2020 2019


Return on Invested Capital (ROIC) ReconciliationYear Ended September 30, 2020 and September 30, 2019


(in millions) 2020 2019

Adjusted EBITDA 158.3$ 146.6$

Depreciation (29.2) (22.6)

Adjusted EBITA 129.1$ 124.0$

Income tax benefit (expense) 6.4 (11.0)

Tax impact related to acquisitions1 (12.4) (6.6)

Impact of U.S. Tax Reform 0.7 —

Tax impact related to non-GAAP adjustments2 (0.3) 3.9

non-GAAP NOPAT 123.5$ 110.3$

Shareholders' equity related to Cubic 960.8$ 961.6$

Short-term borrowings 215.7 195.5

Current portion of long-term debt 11.3 10.7

Long-term debt 430.1 189.1

Cash and cash equivalents (128.6) (65.8)

Invested Capital 1,489.2$ 1,291.2$

Average Invested Capital 1,390.2$ 1,039.6$

Return on Invested Capital (ROIC) 8.9% 10.6%

Year Ended September 30,


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