Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (March 2021)
30 slides from Federal Signal's investor presentation, March 2021
Slide 1: Disciplined Growth
Disciplined Growth Investor Presentation March 2021
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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”,
Slide 3: Federal Signal at a Glance
Federal Signal at a Glance • Founded in 1901, joined NYSE in 1969 (“FSS”) • Diversified industrial manufacturer of specialized vehicles for maintenance and infrastructure markets such as street sweepers, sewer cleaners, vacuum/hydro-excavators (“safe- digging trucks”), industrial vacuum loaders, wat
Slide 4: An Experienced Leadership Team
An Experienced Leadership Team Jennifer Sherman Mark D. Weber President and Chief Executive Officer Senior Vice President and Chief Operating Officer Appointed January, 2016 Appointed January, 2018 Previously Chief Operating Officer, Chief Administrative Previously served as President and Ch
Slide 5: Why Federal Signal?
Why Federal Signal? Composition of Businesses • Clearly-defined strategy, with two groups – ESG and SSG – each of which have strong growth potential through a combination of organic initiatives and M&A End Market Exposures • Typical annual revenue mix of ~50% publicly-funded / ~50% industrial • Publ
Slide 6: Recent Macro Factors Representing Potential Growth Catalysts
Recent Macro Factors Representing Potential Growth Catalysts • $1.9 trillion of economic stimulus with $350 billion earmarked to go to state, local and territorial governments. Among other things, stimulus package targets the maintenance of essential infrastructure, such as sewer systems and streets
Slide 7: Two Attractive Platforms
Two Attractive Platforms Environmental Solutions Safety and Security Systems Segment $916 M* Group Group (ESG) (SSG) Serves publicly-funded, Serves the needs of industrial, and utility markets for municipalities and industrial Markets surface and sub-surface verticals for audible and cleaning, safe-
Slide 8: Environmental Solutions Group (ESG)
Environmental Solutions Group (ESG) Have established a platform serving maintenance and infrastructure markets to provide customers with a comprehensive suite of products and services Street Sewer Safe Industrial Materials Hauling Road Application sweeping cleaning digging cleaning Marking Brands Pr
Slide 9: Safety and Security Systems Group (SSG)
Safety and Security Systems Group (SSG) Serves the needs of government and industrial verticals for audible and visual safety and security notification devices Public Safety and Security Signaling Systems Lights and siren products for Police, Fire and Audible and visual Warning Systems Application H
Slide 10: Key Strategic Initiatives
Key Strategic Initiatives Specialty Vehicles for Areas of Aftermarket Parts and Audible and Visual Focus Safe Digging Diverse Services Warning Devices End-Markets Supported By Flexible New Product Technology as an Manufacturing & “ETI” Disciplined M&A Development Enabler Culture 10
Slide 11: Strategic Initiative– Safe Digging
Strategic Initiative– Safe Digging Federal Signal is well positioned to establish a leading position in an emerging application for vacuum-excavation technology; increased regulation expected to accelerate growth What is it? Why is it Attractive? Why Federal Signal? • Vacuum excavation or “Safe Digg
Slide 12: Disciplined M&A
Disciplined M&A Target companies that accelerate our current strategic initiatives or provide a platform for growth in adjacent markets or new geographies • Niche market leader (product, geography, end-market) Characteristics • Sustainable competitive advantage Business • Deep domain expertise (tech
Slide 13: Acquisition of OSW Equipment & Repair (completed in February 2021)
Acquisition of OSW Equipment & Repair (completed in February 2021) Highly strategic acquisition which delivers on our objective of geographic expansion of our dump truck body and trailer platform; adds three premier brands that serve attractive markets on the West Coast, in Arizona and in parts of C
Slide 14: Financial Overview
Financial Overview Net Sales Adjusted EBITDA Margin* 2020 Highlights: (Consolidated) • Net sales of $1.13 B • Operating income of $131.4 M • Adjusted EBITDA* of $182.2 M • Adjusted EBITDA margin* of 16.1% up 40 basis points from last year; above high end of target range • GAAP EPS of $1.56 • Adjuste
Slide 15: Strong Financial Position Supports Priority-Driven Long-Term Capital Allocation
Strong Financial Position Supports Priority-Driven Long-Term Capital Allocation In July 2019, executed five-year, $500 M revolving credit facility, with flexibility to increase by additional $250 M for acquisitions; No debt maturities until July 2024; At end of 2020, net debt leverage remained low,
Slide 16: 2021 Outlook
2021 Outlook Adjusted EPS* ranging from $1.73 to $1.85 Represents increase of 4% to 11% over 2020* Key Assumptions Revenue growth Interest rate of 2-3% Double-digit improvement in pre-tax earnings Effective income tax rate of ~24%, including estimated Depreciation and amortization expense
Slide 17: Positioned for Long-Term Growth
Positioned for Long-Term Growth With continued focus on organic growth and M&A, and margin performance above that of many of our peers, our financial framework aims to create long-term shareholder value Long-Term Organic Value-Added Revenue Growth Acquisitions (Couple of % points > GDP) High Single
Slide 18: Appendix
Appendix I. Segments Overview II. Eighty-Twenty Improvement Culture III. New Product Development IV. Non-GAAP Measures V. Executive Compensation VI. Investor Information 18
Slide 19: Appendix I: ESG Products
Appendix I: ESG Products VACTOR OW TRUVAC Jetstream, a OS WESTECH a. M¢Solutions {Depot
Slide 20: Appendix I: ESG Products (continued)
Appendix I: ESG Products (continued) 20
Slide 21: Appendix I: ESG - Market Influencers & Where We Play
Appendix I: ESG - Market Influencers & Where We Play Market Dynamics Many ESG products support essential services that are 2020 Sales by Geography focused on cleaning Aging infrastructure, pipeline expansion and increasing 19% urbanization support long-term demand for safe digging products, dump
Slide 22: Appendix I: SSG Products
Appendix I: SSG Products FEDERAL SIGNAL Safety and Security Systems Public Safety Systems FEDERAL SIGNAL Safety and Security Systems Heavy Duty FEDERAL SIGNAL Safety and Security Systems Signaling FEDERAL SIGNAL Safety and Security Systems Systems FEDERAL SIGNAL VAMA Safety and Security Systems
Slide 23: Appendix I: SSG - Market Influencers & Where We Play
Appendix I: SSG - Market Influencers & Where We Play Market Dynamics 2020 Sales by Geography Increased national focus on issues of public safety and law enforcement, and rising public expectations for transparency and accountability driving demand for 40% safety and security products 60% Rising
Slide 24: Appendix II: Eighty–Twenty Improvement ("ETI") Culture
Appendix II: Eighty–Twenty Improvement (“ETI”) Culture Manufacturing Efficiency Material Cost Reduction • Lean manufacturing focus • Waste reduction • Throughput flexibility • SKU rationalization • Labor pool management • Savings through volume aggregation • Flexible manufacturing model • Sourcing o
Slide 25: Appendix III: New Product Development
Appendix III: New Product Development Customer-Focused Process • Complete change in approach to innovation, starting in 2013; with the revamped innovation structure, completed several successful new product launches, including the award-winning launch of the ParaDIGm vacuum excavator in 2016 • In 20
Slide 26: Appendix IV: Non-GAAP Measures (Adjusted EPS)
Appendix IV: Non-GAAP Measures (Adjusted EPS) ($ in millions) Year Ended December 31, Adjusted income from continuing operations and 2020 2019 earnings per share (“EPS”) Income from continuing operations $ 96.1 $ 108.4 Add: The Company believes that modifying its 2020 and Income tax expense 28.5 30.
Slide 27: Appendix IV: Non-GAAP Measures (Adjusted EBITDA)
Appendix IV: Non-GAAP Measures (Adjusted EBITDA) Adjusted EBITDA and adjusted EBITDA margin ($ in millions) 2016 2017 2018 2019 2020 Net Sales $ 707.9 $ 898.5 $1,089.5 $ 1,221.3 $ 1,130.8 The Company uses adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) and t
Slide 28: Appendix V: Executive Compensation Aligned with Long-term Objectives
Appendix V: Executive Compensation Aligned with Long-term Objectives • The Company continues to focus on executing against a number of key long-term objectives, which include the following: Creating disciplined growth Improving manufacturing efficiencies and costs Leveraging invested capital
Slide 29: Appendix VI: Investor Information
Appendix VI: 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 Deve
Slide 30: Federal Signal - Moves. Cleans. Protects.
[z FEDERAL SIGNAL Moves. Cleans. Protects.