Welcome to Cubic Corporation’s Fourth Quarter and Fiscal Year 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. If anyone has any objections, you may disconnect at this time. Now, I would like to turn the conference over to Diane Dyer, Director of Investor Relations. Please go ahead.

Thank you. Good morning, everyone and thank you for joining Cubic’s webcast. Yesterday, after the market closed, we reported our fourth quarter and fiscal year 2015 results. We encourage you to refer to the company’s press release, the most recent reports filed with the SEC as well as today’s presentation slides. You can access these documents on the Investor Relations tab of Cubic’s website at www.cubic.com or on the SEC’s website. On today’s call, Brad Feldmann, Cubic’s President and CEO and Jay Thomas, Executive Vice President and Chief Financial Officer will comment on Cubic’s fiscal year 2015 results and the company’s 2016 plans and outlook. Mark Harrison, Cubic’s Senior Vice President and Corporate Controller will join us for the Q&A session. Now, I would like to turn the call over to Jim Edwards, Cubic’s Senior Vice President and General Counsel for the Safe Harbor disclosure.

Thank you, Diane. Please note that certain information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that during the call, Cubic management will be making forward-looking statements about future events or Cubic’s future financial and operating performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business. These forward-looking statements should be considered in conjunction with and are qualified by the cautionary statements contained in Cubic’s earnings press release and SEC filings, including its Annual Report on Form 10-K and quarterly reports on Form 10-Q. This conference call contains time-sensitive information that is accurate only as of the date of this broadcast, November 24, 2015. Cubic undertakes no obligation to revise or update any of the forward-looking statements to reflect events or circumstances after the date of this conference call. This conference call will also include a discussion of non-GAAP financial measures as that term is defined in Regulation G. Cubic believes this information is useful to investors, because it provides a basis for measuring the company’s available capital resources, the actual and forecasted operating performance of the company’s business and the company’s cash flows. A reconciliation between the GAAP financial measures that correspond to these non-GAAP financial measures is contained in our earnings press release and in today’s presentation. Any discussion of non-GAAP measures is not intended to detract from the importance of comparable GAAP measures. With that said, let me turn the call over to Brad Feldmann, our President and Chief Executive Officer.

Thank you, Jim. Good morning, everyone. Thank you for joining us on the call today. Yesterday, we reported our financial results for the fourth quarter and year ended September 30, 2015. On the call today, I will be referencing the presentation that we have posted on our website, which you can also access on the conference call link. I will be discussing some key items related to our strategic plan and businesses and then Jay will cover our non-GAAP reconciliation and segment level financial results in more detail following my comments. Turning to Slide 3, we show our consolidated operating highlights. Year end backlog remains strong at $2.976 billion, which is two times our annual revenue, but was down compared to last year, primarily due to unfavorable foreign exchange comparisons. Sales for FY ‘15 totaled $1.431 billion were at an all-time record high, up 2.3% over last year. Adverse currency headwinds impacted FY ‘15 sales by $52.1 million, or 3.6%. We have included non-GAAP comparisons for adjusted EBITDA, adjusted operating profits and adjusted diluted earnings per share. The presentation of this non-GAAP information is in management’s opinion useful for investors and analysts to better understand the underlying sustainable operating results of the company. Jay will discuss these reconciliations in a few moments. Consolidated adjusted EBITDA was $140.4 million this year compared to $129.6 million last year driven by improved performance in our transportation and defense systems segments. The 50 basis point improvement in adjusted EBITDA margins year-on-year reflected improved margins in our transportation segment. As part of our ongoing efforts to rebuild and modernize the infrastructure of the company, operating profits were impacted by upgrading our ERP system and a reorganization to reduce overhead costs. Operating profits compared to last year were also affected by the strength of the U.S.…

Thanks Brad. Turning to Slide 8, we have provided a reconciliation of EBITDA to adjusted EBITDA from net income. Adjusted EBITDA was $140.4 million after adjusting for $27.4 million in charges in FY ‘15. We consider our adjusted EBITDA to be more reflective of the true core earnings power of our business. We also show our FY ‘14 adjusted EBITDA on a comparable basis, which aggregates $129.6 million. As Brad mentioned, there was a 50 basis point improvement year-over-year in our EBITDA margin. This improvement relates primarily to higher margins from our transportation services contracts in North America. The $27.4 million of adjustments in FY ‘15 to our EBITDA consist of costs related to our One Cubic initiatives including a $6.3 million charge last year related to a restructuring and $13.2 million of expenses associated primarily with a new ERP system. In addition, we incurred acquisition related expenses totaling $7.9 million, which includes transaction costs, retention bonuses and earn-out cost. FY ‘15 operating profits were also impacted by unfavorable currency comparisons totaling $7.8 million. Slide 9 shows a reconciliation of GAAP operating income to adjusted operating income using a similar comparison of the same expenses. On Slide 10, we have provided a bridge from our reported GAAP diluted EPS for FY ‘15 and FY ‘14 to an adjusted diluted EPS. The adjusted diluted EPS includes the cost items previously discussed, net of tax, plus the impact of a non-cash U.S. deferred tax valuation allowance we took this fiscal year aggregating to $1.33 per share. Adjusted diluted EPS in FY ‘15 was $2.79 per share, up 1.8% over the comparable FY ‘14 adjusted EPS. Now, turning to our operating segments, Cubic Transportation Systems, or CTS, which is on Slide 11, CTS sales were down 5.5% in FY ‘15 compared to FY…

Thank you, Jay. To achieve Goal 2020, we will seek significant opportunities to build our market leading businesses by pursuing NextCity, C4ISR and next training opportunities, capitalizing on adjacent markets, expanding our international businesses, underwriting innovative investments, and closing strategic acquisitions. We believe our strategy is sound and that a laser focus on winning the customer inspired by innovation will enable us to deliver superior value for our customers and shareholders. The next few years are pivotal for us as we rebuild our infrastructure and increase our productivity and efficiency. We are very excited for the future and much appreciate your partnership in the company. Now, let’s proceed to the Q&A session.

Thank you. [Operator Instructions] Our first question comes from Julian Mitchell with Credit Suisse. Please state your question.

Hi, this is Brian Gibbons in for Julian today. Could you touch on how the discussion with Vancouver is going and how you might expect that to affect profitability next year?

This is Brad. We are doing a great job of delivering the system and are in negotiation discussions with them. We expect a favorable outcome for us next year.

Great. Thanks. And then maybe if you could give some color on pipeline for overseas acquisitions, if you are looking more towards the NextCity or what you are seeing there in terms of outlook.

We continue to – our acquisition pipeline continues to be robust. We continue to see many opportunities, both onshore and offshore and we are keen to invest that capital.

Okay. Thank you very much.

Thank you. Our next question comes from Jim Ricchiuti from Needham & Company. Please state your question.

Thank you. I appreciate the color on the profitability of how you see transportation systems and the defense systems business. I may have missed it, how are you viewing the services portion of the business from the standpoint of operating profitability in fiscal ‘16?

Jim, this is Jay Thomas. We will see a little bit of an uptick relative to this year, primarily because the amortization expense is going to reduce and that’s kind of spelled out in the 10-K. Margin wise, I don’t think we are going to see more than a 25 basis points or 30 basis point improvement, so the pricing is still pretty difficult.

Got it. Okay. And Jay is there any way you can perhaps give us a way to think about the growth rates for the businesses transportation, defense systems services, just given the overall range of revenues that you are forecasting for this year?

So I would say on transportation, I think this year and this is assuming no FX headwinds, probably in the 1% to 2% range. Same I would hold for the defense services business. And then we will probably see more positive growth, maybe in the 2% to 4% range on the defense systems business. And again, we are not assuming any FX headwinds in our guidance.

Got it. Just in terms of the New York opportunity, do you have a sense as to when we might see that proposal?

We believe – this is Brad.

Hi Brad.

We believe we will see – how are you?

Good.

We believe we will see the RFP during this fiscal year. I think we are close for it being released and we are very savvy that we will continue that work. As you know, that system is somewhat behind compared to other systems in the world. And we are very excited to apply our knowhow from other major cities around the world to help folks in New York City.

Got it. And one final question, if I may Brad, if we think about the inorganic opportunities that you see in the businesses, do you see more in the transportation business or some more opportunities in defense?

I think we see them in both. We see good acquisition candidates, as I said both in transportation with our vision of NextCity, we are focused on expanding in tolling, parking, data analytics and so forth. We are thrilled by the acquisition we did with DTECH and C4ISR and we look forward to expanding that. Both of those markets, as you know are higher margin, higher growth and we are very much focused on those market segments.

And Jim, I will just add a comment that typically because the defense market is bigger, we just see more – there tends to be a larger pipeline of opportunities than in the transit marketplace. But as we are sort of going into some adjacent markets beyond just pure fare collection, we have sort of widened our scope.

Got it. Thanks very much.

Thank you. Our next question comes from Brian Ruttenbur with BB&T Capital Markets. Please state your question.

Yes, thank you very much. A couple of questions, first of all, in terms of one-time expenses for this next fiscal year, you state $4 million to $6 million of acquisition related, is that divestiture related expenses?

No Brian, that will be – that’s actually more retention and earn-out cost is what we are projecting in those numbers.

Okay. So in there, is there – do you have any projected costs for any divestitures, it sounds like you may be doing some divestitures and do those typically cost a significant amount of money or is it relatively small?

There is nothing projected in the numbers for divestitures.

Okay. Thank you. And then post the Paris situation, have you seen any pickup on either your services side or your systems side. And then I was actually thinking maybe even the transportation side, maybe widening of scope or opportunities to widen into additional security within transportation?

We certainly are seeing an uptick of enthusiasm for systems related to counterterrorism. We have an ability to build shoot houses for security and police forces as well as we have some special operation forces services. And we are seeing an uptick there around the world. And we have been working on transportation security for some point. We are not quite yet seeing an uptick of demand signal there.

And Brian we a number of years ago, we have developed a capability to do explosive detection. And we really never found a home for that marketplace. So I think it’s something – we will just have to see how this environment shifts, but we had the ability to do trace particle detection. So it’s something that we are looking into again.

Okay. And then last question, back on the New York City opportunity, you mentioned RFP likely out in fiscal ’16, what would be the timeline of award, is it going to be 1 year or 2 years, I don’t know how long the award cycle is on the transportation side, especially if something this bureaucratic in New York City?

It’s always hard to guess timing, but I think FY ‘17 for award.

Okay. And do you have estimated size of that opportunity?

We don’t tend to get that information out, but it’s big.

Yes. It will be a large bid for us.

Okay. Thank you very much.

Our next question comes from Josephine Millward with The Benchmark Company. Please state your question.

Good afternoon.

Hi, Josephine. How are you?

Hi, Josephine.

I am doing well. Hi, Jay. Hi Brad. Question for you guys, your guidance implies more than 100 basis point decrease in your overall margin. So other than the ERP investments, is most of it coming from the London contract, should we see an improvement in margin for defense systems?

So yes, the contraction is really related into transportation in London and as we kind of said in the call and we will see an overall improvement in the defense systems business.

And Josephine as you know, we have been working hard to create a C4ISR business and we are doing that. And those – that business tends to have higher margins.

So what kind of a negative impact are we going to see from London, because it’s implying a fairly large decrease from London in terms of profitability?

Yes. We haven’t provided specific guidance on the segments. But you can go through – and I think we will be in sort of a normalized range, which I think the normalized range is sort of now 11% to 13%. So it’s going to be in the lower quadrant at an operating profit level.

Okay, that’s helpful. And for transportation in the past, you had talked about the possibility of Washington DC and Philly potentially coming up for rebid, can you give us an update on that?

In Washington, I think there is a chance that pieces of that will come out for rebid and as well as the leadership in WMATA has recently changed. So we will see what the leadership decides. I think that’s all the information I have on that.

Great. What about cost recovery on Vancouver, do you think we will have news on that soon and would it happen sometime this year in the coming quarters?

We believe we will have positive news this fiscal year.

Thank you.

[Operator Instructions] Our next question comes from Paul Coster with JPMorgan. Please state your question.

Yes. Hi, this is Mark Strouse on for Paul. Thanks for taking our questions. So I just wanted to go back to something from the prepared remarks kind of a follow-on to Josephine’s questions, but when you are talking about operating margins expanding by 200 basis points to 250 basis points by 2018, is that just what you are expecting from the One Cubic initiative or is that more of a target for the overall company?

That’s just One Cubic. As you know, we are rebuilding our infrastructure in the company. We are putting SAP and then Workday as well as many other improvement initiatives, so we are investing. And we strongly believe that we will create savings both in SG&A spend as well as rationalizing supply chain.

Got it. Okay. And then that based off of the expansion, is that based off the 2016 guidance or the 2015 actuals?

That’s really kind of coming off of the 2015 numbers.

Got it, okay. Thank you very much guys.

Thank you. There are no further questions at this time. I will now turn the conference back to Bradley Feldmann for closing remarks. Thank you.

Thank you all for joining us this afternoon. As always, we appreciate your continued support and interest in our great company. We are available if you have any further questions. Thank you very much.