What led Cubic Corporation (NYSE: CUB) stock downfall

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Cubic Corporation (NYSE: CUB) stock lost over 15.6% in the pre market session of November 21st, 2019 (as of  8:22 am GMT-5; Source: Google finance) as the company posted mixed results for the fourth quarter of FY 19. CUB in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.86, missing the analysts’ estimates for the adjusted earnings per share of $1.94.

The company’s adjusted free cash flow, which excludes the impact of the Boston consolidation was $52 million, supported by strong shipments of GATR in the Mission Solutions business and improvement in working capital in the transportation business. The Adjusted net income grew 36% to $58.3 million. CUB’s backlog remains strong at $3.4 billion, which means approximately two years revenue.

The company had reported the adjusted revenue growth of 24 percent to $471.2 million in the fourth quarter of FY 19. The sales growth is driven by strong organic growth from Transportation and Mission Solutions and the impact of the Trafficware and GRIDSMART acquisitions.

Meanwhile, in the third quarter, they bought a 20% stake in Pixia and now the company has announced that Cubic has exercised the option to acquire the remaining 82.5%. This acquisition accelerates NextCity 2.0 by enabling the company with the immediate entry into small and mid-sized cities in North America. By combining Delerrok with Cubic’s NextBus solution, the company can offer an integrated vehicle information, operations and one account payment solution as a subscription-based service at an affordable price point. The company intends to have the double-digit adjusted EBITDA growth over the next few years with superior margins and potential upsides as an enabling technology for the Department of Defense’s Internet of Battlefield Things artificial intelligence strategy.

Further, the company from the last several quarters, has been investing in the ISR as a service capabilities and has recently conducted a successful first flight and endurance testing of Cubic’s unmanned aerial vehicle. The company has also signed a Cooperative Research and Development Agreement with the United States Special Operations Command to mature this capability. In defense training, the company has received key awards of value more than $115 million, at the end of fourth quarter and at the beginning of fiscal 2020. These include key air training programs for Korea, Qutar, Japan and the United States Air Force. These bookings will underpin near-term growth and position for additional opportunities.

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