Federal Signal Corporation · NYSE:FSS
Federal Signal — Q3 2019 Earnings Presentation
18 slides from Federal Signal's earnings presentation, Oct 31, 2019
Slide 1: Federal Signal Q3 2019 Earnings Call
Federal Signal Q3 2019 Earnings Call October 31, 2019 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer
Slide 2: Safe Harbor
Safe Harbor This presentation contains unaudited financial information and various forward-looking statements as of the date hereof and we undertake no obligation to update these forward- looking statements regardless of new developments or otherwise. Statements in this presentation that are not his
Slide 3: Q3 Highlights
Q3 Highlights * • Net sales of $309 M, up $39 M, or 15% • Operating income of $38.6 M, up $8.2 M, or 27% • Adjusted EBITDA of $49.8 M, up $10.1 M, or 25% • ESG up $9.3 M, or 25% • SSG up $0.7 M, or 8% • Adjusted EBITDA margin of 16.1%, compared to 14.7% • GAAP EPS of $0.46, up $0.10, or 28% • Adjust
Slide 4: Group and Corporate Results
Group and Corporate Results $ millions, except % Q3 2019 Q3 2018 % Change ESG Orders 270.2 214.5 26% Sales 254.0 216.3 17% Operating income 35.9 28.3 27% Operating margin 14.1% 13.1% Adjusted EBITDA 46.0 36.7 25% Adjusted EBITDA margin 18.1% 17.0% SSG Orders 58.6 53.6 9% Sales 54.8 53.1 3% Operating
Slide 5: Consolidated Statement of Operations
Consolidated Statement of Operations $ millions, except % and per share Q3 2019 Q3 2018 $ Change % Change Net sales $ 308.8 $ 269.4 $ 39.4 15% Gross profit 82.0 69.0 13.0 19% SEG&A expenses 43.0 38.2 4.8 13% Acquisition and integration related expenses 0.4 0.4 - NM Operating income 38.6 30.4 8.2 27%
Slide 6: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net income $ 28.4 $ 21.7 $ 78.7 $ 61.5 Add: Income tax expense 7.9 6.5 25.4 18.9 Income before income taxes 36.3 28.2 104.1 80.4 Add: Acquisition and integration-related expense
Slide 7: Financial Strength and Flexibility
(1) Financial Strength and Flexibility • Generated $32.8 M of cash from operations in Q3, increasing year-to- date operating cash generation to ~$60 M • YTD capital expenditures of $21.2 M, up from $10.1 M Expect full-year cap ex of up to $35 M • Significant Q3 cash outflows included initial cash
Slide 8: CEO Remarks
CEO Remarks • Q3 operating results benefited from seasonally-strong performance at many of our businesses Double-digit increase in sales and orders; operating income up 27% Consolidated EBITDA margin above target range, at 16.1% • Q3 earnings include effects of a low tax rate, which added $0.02
Slide 9: Mark Rite Lines ("MRL") Acquisition Update
Mark Rite Lines (“MRL”) Acquisition Update • Completed acquisition of MRL, including its wholly-owned subsidiary (HighMark), on July 1, 2019 • MRL is a leading U.S. manufacturer of truck-mounted and ride-on road-marking equipment, whereas HighMark provides road- marking application and line removal
Slide 10: Raising 2019 Outlook
Raising 2019 Outlook Raising adjusted EPS* outlook range to a new range of $1.70 to $1.76, from a range of $1.64 to $1.72 Represents increase of 21% - 25% over record 2018 FY19 Guidance $1.48 $1.60 - Feb 2019 FY19 Guidance $1.50 $1.60 - May 2019 FY19 Guidance $1.64 $1.72 - July 2019 FY19 Guidance $1
Slide 11: Heading into 2020
Heading into 2020 ▲ Strong backlog, particularly for sewer cleaners and safe-digging trucks, providing good visibility into first half of 2020 ▲ Continued momentum with expansion of safe-digging technology into new end-markets ▲ Benefits from capacity expansion expected to start in Q2 2020 ▲ Municip
Slide 12: Federal Signal Q3 2019 Earnings Call Q&A
Federal Signal Q3 2019 Earnings Call Q&A October 31, 2019 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer 12
Slide 13: Investor Information
Investor Information Stock Ticker - NYSE:FSS Company website: federalsignal.com/investors HEADQUARTERS 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523 INVESTOR RELATIONS CONTACTS 630-954-2000 Ian Hudson Svetlana Vinokur SVP, Chief Financial Officer VP, Treasurer and Corporate Development IHuds
Slide 14: Appendix
Federal Signal Q3 2019 Earnings Call Appendix 14
Slide 15: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA $ millions, except % Q3 2019 Q3 2018 Net income $ 28.4 $ 21.7 Add: Interest expense 2.1 2.2 Acquisition and integration-related expenses 0.4 0.4 Purchase accounting effects * - - Other expense, net 0.2 - Income tax expense 7.9 6.5 Depreciation and amortization 10.8 9.4 C
Slide 16: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q3 2019 Q3 2018 Operating Income $ 35.9 $ 28.3 Add: Acquisition and integration-related expenses 0.1 0.3 Purchase accounting effects * - - Depreciation and amortization 10.0 8.4 Adjusted EBITDA $ 46.0 $ 37.0 Less: Deferred gain recognition - (0.3) Adj
Slide 17: Non-GAAP Measures
Non-GAAP Measures • Impact of New Lease Accounting Standard on Non-GAAP measures - Effective January 1, 2019, the Company adopted the new lease accounting standard, which resulted in a change to the Company’s recognition of the deferred gain associated with historical sale lease-back transactions. P
Slide 18: Federal Signal: Moves. Cleans. Protects.
ff: FEDERAL SIGNAL Moves. Cleans. Protects.