May 02, 2018 • 04:45 pm ET



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Greetings and welcome to Cubic Corporation's Second Quarter Fiscal Year 2018 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Kirsten Nielsen, Vice President of Investor Relations. Thank you. Please begin.

Kirsten Nielsen

Hello, everyone, and thank you for joining us today. Today, after the market closed, we reported our second quarter fiscal 2018 results. I'm joined by Brad Feldmann, Chairman, President and Chief Executive Officer; and Anshooman Aga, Executive Vice President and Chief Financial Officer.

I'll remind everyone that statements made on today's call that are not historical facts are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of Federal Securities Law. You can find factors that could cause the company's actual results to differ materially from our expectations listed in today's presentation, press release and our most recent SEC filings.

In addition, we have included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release and in the appendix of today's presentation.

With that, I'd like to turn the call over to Brad.

Brad Feldmann

Thank you, Kirsten. Thank you, everyone, for joining us today. On today's call, I will start by discussing our second quarter and first half results for fiscal year 2018. Then, I'll hand the call over to our CFO, Anshooman Aga, who will cover the financial results in more detail.

Starting with Slide 3, you'll find an overview of our financial results from continuing operations as we recently announced the sale of our non-original Manufacturer Training Services business.

Sales for the second quarter were $278.6 million, a 12% increase compared to the second quarter last year. Sales for the first half were $527 million, a 7% increase compared to last year. Adjusted EBITDA for Q2 was $15.8 million, a 35% increase compared to the second quarter of last year, with $27.3 million from the first half, a decline of 7% compared to last year due to $4.3 million increased R&D investments in Mission Solutions and innovative training technologies. With the financial close of the Boston contract in March, our backlog is over $3.4 billion, the highest in Cubic's history.

In the second quarter, we also received a limited notice to proceed from the Washington Metropolitan Area Transit Authority in D.C. to launch a Near Field Communications mobile solution for their riders. With this win, the Top 5 US transit agencies have now selected Cubic for their mobile solution.

During Q3, we will be releasing the first iteration of the new Cubic mobile platform, Cubic Traveler Application when the Chicago Transit Authority upgrades its Ventra mobile app. The Cubic Traveler application will build upon the success of the current Ventra app that has logged more than 2 million downloads since launch.

On April 19, we announced an agreement to sell our Defense Services business to Valiant Integrated Services. This transaction marks a significant milestone for Cubic as we continue to