Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (May 2014)
22 slides from Federal Signal's investor presentation, May 28, 2014
Slide 1: Disciplined Growth Investor Presentation
Disciplined Growth Investor Presentation May 2014
Slide 2: Forward-looking statements and non-GAAP disclosure
This presentation contains unaudited financial information and forward-looking statements. Statements that are not historical are forward- looking statements and may contain words such as “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “project,” “estimate”, and “objective” or si
Slide 3: Agenda
3 Agenda Management Company overview Investment case Performance trends Growth strategy Segments and products Corporate focus, goals and initiatives Financial results and outlook
Slide 4: Experienced Management Team
Experienced Management Team Dennis Martin, President and Chief Executive Officer President and Chief Executive Officer since October 2010 Previously served as Chairman, President and CEO of General Binding Corporation 35+ years operational and leadership experience, primarily at Illinois Tool
Slide 5: Federal Signal Overview
5 Federal Signal Overview Founded in 1901, joined NYSE in 1969 (“FSS”) Safety, security and environmental products and services that protect people and our planet Environmental Solutions Group (ESG) Safety & Security Systems Group (SSG) Fire Rescue Group (FRG) Restructured for growth and
Slide 6: Investment Case
Leading positions in niche governmental and industrial markets Valuable brands, high quality products, well-established distribution Flexible manufacturing capacity to leverage profits Favorable market dynamics • Improving municipal spend • Growing higher-margin industrial markets • Multiple
Slide 7: Performance Levers and Progress
7 Performance Levers and Progress 2010: Introduced “80/20” education and initiatives 2011-14: Driving continuous improvement in all businesses • Prioritizing customers and suppliers • Tackling proactive pricing improvements • Streamlining product offerings • Streamlining management structure • C
Slide 8: Margin Expansion and Debt Reduction
2.7% 4.8% 6.6% 8.4% 8.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2010 2011 2012 2013 TTM Q1 2014 Op era tin g M arg in To tal FS C C on tin uin g O pe rat ion s Margin Expansion and Debt Reduction 8 Business Segment FY 2011 Operat ng Margin FY 2012 Operating Margin FY 2013 Operating Margin TTM Q1 2014 Operat
Slide 9: Growth Strategy
9 Growth Strategy Geographic Expansion • Jetstream and Industrial Systems in the Asia Pacific and Middle East • Export markets from U.S. • Bronto in North America New Markets for Existing Products • Waterblasting • Hydro-excavation • Security systems New Product Development and Acquisitions • Innova
Slide 10: Growth Markets and Opportunities
10 Growth Markets and Opportunities Developing growth product areas • Vactor (hydro-excavation and sewer cleaning) • Jetstream (waterblasting) • Global Systems (integrated communication safety systems) These predominantly industrial areas aggregate to ≈50% of total revenue* Growth opportunities
Slide 11: Federal Signal Segments
11 Federal Signal Segments Environmental Systems (ESG) Products Geographic Mix Q1 TTM 2014 Revenue Elgin street sweepers Vactor truck-mounted sewer cleaners, hydro-excavators, and industrial vacuum trucks Jetstream waterblasters FS Depot and FS Solutions – parts and service deliveries and re
Slide 12: Environmental Solutions Group
Environmental Solutions Group 12
Slide 13: Safety and Security Group
Safety and Security Group FEDERAL SIGNAL 13
Slide 14: Safety and Security Global Systems
Safety and Security Global Systems SmartMsg Enabled Systems Enterprise Integrated Command Solution Sensors/Detectors Cameras Networked PAGASYS Rack Control Modules/Nodes Control Modules/Nodes Control Modules/Nodes 14
Slide 15: Fire Rescue Group
Fire Rescue Group fs FEDERAL SIGNAL Protecting people and ou planet
Slide 16: Focus and Goals
Focus and Goals 16 Create Disciplined Growth Organic and Acquisitions Diversify Customer Base Leverage Invested Capital Improve Manufacturing Efficiencies and Costs High single-digit % EPS growth Operating margin targets Consolidated ‒ 10% ESG ‒ 11-13% SSG ‒ 14-16% FRG ‒ 10-12% Accelerate industrial
Slide 17: Specific Initiatives
Optimize ERP System Organic and M&A growth in industrial markets Freight cost savings Jetstream expansion Bronto U.S. industrial opportunities Flexible ESG manufacturing Up-fitting police cars New Navigator “Fire” light bar Specific Initiatives 17 Create Disciplined Growth Organic and Acquisitions D
Slide 18: Consolidated Historical Financial Performance
Consolidated Historical Financial Performance 18 ($ in millions) 2011 2012 2013 Q1 2014 Net sales $ 688.7 $ 803.2 $ 851.3 $ 200.2 % Growth 8.8% 16.6% 6.0% Cost of sales 533.3 613.4 646.2 153.4 Gross profit $ 155.4 $ 189.8 $ 205.1 $ 46.8 % Margin 22.6% 23.6% 24.1% 23.4% Operating expenses 122.2 138.3
Slide 19: EPS Trends
0.19 0.35 0.67 0.12 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 YR 2011 YR 2012 YR 2013 YR 2014 $ per share 0.79 or more EPS Trends 19 Adjusted Earnings Per Share * * To facilitate comparisons to 2014, adjusted earnings for 2013 are $0.67 per share, which is computed by excluding special tax i
Slide 20: 2014 Outlook
2014 Outlook 20 EPS target of at least $0.79 Improvement of 18% or more over 2013 normalized EPS Upside based on market conditions Quarterly Dividend Reinstated quarterly dividend in April 2014 (payable 6/3/2014) $0.03 per share Share Repurchase Program Recently announced authorizati
Slide 21: Building Equity in Our Brands
Building Equity in Our Brands 21
Slide 22: Appendix 1: Adjusted Earnings per Share
Appendix 1: Adjusted Earnings per Share * 22 * The adjusted financial measures presented above are unaudited and are not in accordance with U.S. generally accepted accounting principles (“GAAP”). The non-GAAP financial information presented herein should be considered supplemental to, and not a subs