CUB
#I will let <UNK> address that.
Yes.
So I mean, you could really ---+ it's two things.
One is we have lower revenues in London because we no longer get a usage bonus.
That was probably $10 million to $15 million per year.
And then the other change, of course, is ---+ what I talked about in the call, is the lower exchange rate.
So, we've kind of given kind of the headwinds from the lower pound rate, but effectively, the pound is down, say, 10% year-over-year ---+ 10% to 12%.
So I don't see any operating changes as far as the subway goes or anything like that because of Brexit.
This is <UNK>.
I'll address where the solicitation stands, and <UNK> can talk about the economics.
So we've turned in our proposal.
We did a great job on our proposal.
And as you might have noted, we teamed up exclusively with our customer transport for London.
They had provided some EMV open payment technology that we believed the New York customer really liked.
So, we feel very fortunate with the teaming agreement that we have in place.
As you know, we've been there for a long time and have done a great job there.
Orals are coming up towards the latter end of this month, and both Cubic and Transport for London will be at the table with our customer in New York.
We expect that will be down select to a few, post the orals, and then we expect ---+ the customer has told us to expect an award before the end of the new year.
Some of our team is a little skeptical that that may slide a little bit.
I would guess that it will be somewhere in the first quarter of next calendar year.
Yes, I'll just add, <UNK>, that the contract to do the system would be done over, say, two to three years.
From what we can determine right now, it's going to be percentage completion accounting, so our revenue would start to show up once we kind of cost on cost.
So it will have some positive incremental revenue impact in 2017.
And then we would see full-year benefits in 2018, 2019, and 2020, and then they are also going to procure services as well.
So this will have a really long-term tail.
Yes, this is <UNK>.
We've tended to see change orders over time.
We have a number of change orders that we are working on, so I would expect modest growth in London in the near-term.
<UNK> may have more to add.
Yes, I think we are seeing some expansion on the road work that we've been doing with our ITMS business.
The fare collection business, we are ---+ we've rolled out the open payment, so I think there will be further add-ons there.
And then another important part of what we are doing in the UK is, I think we've got about an 80% market share with all the train operating companies where we have put gated systems.
And so, there's kind of a movement to put some oyster applications into the train operating companies' systems.
Well, it's a quick short, you get an order and you ship it pretty quickly.
So volume does matter.
Fortunately, these products are in very, very high demand, and we are providing very innovative solutions to SOCOM and the like, and they are deploying them pretty quickly.
So we expect nothing but demand to grow.
That program of record we won with the United States Army, we are in the LRIP phase, low rate initial production phase, where they bought a few terminals.
And that will expand from hundreds to, you know, maybe 1,000.
Our team continually is working on new innovations.
A lot of products in that business are commercially priced, so they have less margin pressure.
So we would expect very good margins in that business.
And I would just add, like when you are in LRIP, obviously you start to get a lot better efficiencies with your suppliers once you kind of go into steady-state.
I don't see ---+ actually I see our margin profile probably getting better as the programs mature.
Yes, let me address that.
So most of that, <UNK>, would've been compensation-related purchase accounting.
So when we bought the companies, because they had options for the employees ---+ and <UNK> Harrison, you can jump in, but I believe that was about $25 million of the $30 million.
So I think on an ongoing basis, just the kind of purchase accounting stuff is probably about $5 million to $6 million per year on a go-forward basis on the recent acquisitions.
It's related to earnouts, primarily.
So, this is <UNK>.
So, in Sydney, we are in the process of rolling out a pilot to bring open payments there.
We think that that pilot will turn into a job across the enterprise there that will be worth north of $100 million to us.
We are seeing a bunch of procurements potentially coming out in Boston and then the like of ---+ of course, there's New York City.
The system in Washington, as you know, a competitor received the pilot, and fortunately or unfortunately, depending upon who you are, it didn't work out so well.
So they were canceled.
We are starting to see some demand there.
I would expect us to get upgrades in Washington, DC.
As you know, there is a competitor who did the system in Philadelphia.
You know I've heard mixed things so we'll see how that plays out.
In Melbourne, as you know, we were not the incumbent.
There was another outfit that was the incumbent.
And they had a cost advantage on us being the incumbent of running their system.
And it ---+ the customer didn't want to pay a premium to select us.
So the incumbent won.
In terms of the overall pipeline of opportunities going forward, <UNK>, there is plenty to bid on to grow this Company.
Our team is ---+ you know, when we get New York and Sydney, I think there will be 8 instead of a 6 in front of hundreds of millions, and there's a lot more opportunities to bid on.
The CTS team is working to get to $1 billion in the midterm.
So we see plenty of growth there.
I might just add, <UNK> ---+ I saw on the wire today we announced an upgrade for Miami to basically take them from stored value to open payments, and also to put some of their system into what we call the cloud.
I think that's going to be indicative of what we are going to see kind of across our installed base, is that we are going to see a lot of upgrades.
So, this is <UNK>.
How are you.
You know, I'd say a couple things.
The first is that we have greatly improved our estimating system in the Company, and we are really looking at the underlying metrics that drive nonrecurring engineering, and really honing that, and getting multiple estimates, and making sure, and doing risk-adjusted cost estimates when we think about how to price these opportunities.
And so ---+ and we are working very hard and have been working at improving basic program management blocking and tackling execution.
More fundamentally, we are changing the business in the sense that we're going to have reusability of code from one system to another.
Matt has hired a Product Vice President that, if you will, is creating Legos for the various pieces of functionality, and we're going to have high reusability of the software going forward.
And that will reduce the risk inherently going forward.
So, we absolutely have been learning and intend not to have nonrecurring whoopses going forward.
Thank you for joining us on the call today.
We are excited about Cubic's future.
Thank you very much for your continued interest and support in our great Company.
