Federal Signal Corporation · NYSE:FSS
Federal Signal — Q4 2022 Earnings Presentation
22 slides from Federal Signal's earnings presentation, Mar 1, 2023
Slide 1: Federal Signal Q4 2022 Earnings Call
Federal Signal Q4 2022 Earnings Call March 1, 2023 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: Delivering on our Strategy
Delivering on our Strategy Strategic acquisitions, primarily focused on developing a Specialty Vehicle platform, and organic growth have contributed meaningfully to Federal Signal’s growth since 2016 (US$ in millions) Net Sales CAGR (2016‐22) Total: ~13% $1,435 Organic: ~6% $1,221 $1,213 $1,131 $1,0
Slide 4: Financial Framework Driving Long-Term Value Creation
Financial Framework Driving Long‐Term Value Creation With continued focus on organic growth and M&A, and with margin performance above that of many of our peers, our financial framework aims to create long-term stockholder value Long‐Term Organic Value‐Added Revenue Growth Acquisitions (Couple of %
Slide 5: 2022 in Review
2022 in Review • Delivered highest net sales, adjusted EPS and orders in our history • Improved EBITDA margin performance towards the high end of current target range • Executed against several long‐term strategic objectives in 2022: Continued expansion of our aftermarkets business, with revenues
Slide 6: Full-Year Financial Highlights
Full‐Year Financial Highlights * • Record net sales of $1.43 B, up $222 M, or 18% • Organic growth of $130 M, or 11% • Operating income of $160.8 M, up $30.1 M, or 23% • Adjusted EBITDA of $215.0 M, up $34.5 M, or 19% • Adjusted EBITDA margin of 15.0%, vs. 14.9% • GAAP EPS of $1.97, up $0.34, or 21%
Slide 7: Q4 Highlights
Q4 Highlights * • Record net sales of $392 M, up $90 M, or 30% • Organic growth of $71 M, or 24% • Operating income of $46.6 M, up $16.5 M, or 55% • Adjusted EBITDA of $61.1 M, up $21.1 M, or 53% • Adjusted EBITDA margin of 15.6%, vs. 13.3% • GAAP EPS of $0.57, up $0.25, or 78% • Record adjusted EPS
Slide 8: Group and Corporate Results
Group and Corporate Results $ millions, except % Q4 2022 Q4 2021 % Change ESG Orders $ 383.5 $ 381.3 1% Sales 325.3 245.5 33% Operating income 44.7 24.1 85% Operating margin 13.7% 9.8% Adjusted EBITDA 57.6 36.2 59% Adjusted EBITDA margin 17.7% 14.7% SSG Orders 60.7 62.5 -3% Sales 66.2 55.9 18% Opera
Slide 9: Statement of Operations
Statement of Operations $ millions, except % and per share Q4 2022 Q4 2021 $ Change % Change Net sales $ 391.5 $ 301.4 $ 90.1 30% Gross profit 96.6 67.4 29.2 43% SEG&A expenses 46.2 37.6 8.6 23% Amortization expense 3.3 2.7 0.6 22% Acquisition and integration-related expenses (benefits) 0.5 (3.0) 3.
Slide 10: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, 2022 2021 2022 2021 Net income $ 34.6 $ 19.5 $ 120.4 $ 100.6 Add (less): Income tax expense (benefit) 7.4 (0.3) 30.5 17.0 Income before income taxes 42.0 19.2 150.9 117
Slide 11: Financial Strength and Flexibility
Financial Strength and Flexibility * • Cash and cash equivalents of $48 M • Net debt of ~$316 M ** • In October 2022, executed a five‐year, $800 M revolving credit facility, with opportunity Strong capital to increase further by the greater of (i) $400 M or (ii) 100% of TTM consolidated EBITDA, stru
Slide 12: CEO Remarks – Q4 Performance
CEO Remarks – Q4 Performance • Outstanding execution by both groups contributed to strong Q4 results, which included record quarterly net sales and adjusted EPS, and an adjusted EBITDA margin towards the high end of target range • Environmental Solutions Group highlights: Sales growth of 33% Adj
Slide 13: CEO Remarks – Looking Ahead
CEO Remarks – Looking Ahead • Order strength and record backlog provide good visibility into 2023 • Economic stimulus and infrastructure legislation expected to be catalysts for multi‐year growth • Continued investment in new product development, with momentum on electrification initiatives Fully‐
Slide 14: Continued M&A Execution
Continued M&A Execution • Fills critical product gap in road • Manufacturer of multi‐purpose, off‐road marking/line‐removal business and municipal tractors and a variety of attachments establishes Florida location for other • Attractive aftermarket business with aftermarket opportunities opportuniti
Slide 15: 2023 Outlook
2023 Outlook Adjusted EPS* ranging from $2.15 to $2.40 Would represent highest EPS in Company’s history and YoY growth of 10%-22%, despite aggregate headwind of ~$0.23 from higher interest expense and normalization of tax rate Key Assumptions Revenue of $1.58 B to $1.72 B; represents YoY YoY ear
Slide 16: Federal Signal Q4 2022 Earnings Call Q&A
Federal Signal Q4 2022 Earnings Call Q&A March 1, 2023 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer 16
Slide 17: 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 SVP, Chief Financial Officer IHudson@federalsignal.com 17
Slide 18: Appendix
Federal Signal Q4 2022 Earnings Call Appendix 18
Slide 19: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA Consolidated Three Months Ended December 31, Twelve Months Ended December 31, $ millions, except % 2022 2021 2022 2021 Net income $ 34.6 $ 19.5 $ 120.4 $ 100.6 Add (less): Interest expense 4.4 1.2 10.3 4.5 Pension settlement charges - 10.3 - 10.3 Acquisition and integrat
Slide 20: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q4 2022 Q4 2021 Operating Income $ 44.7 $ 24.1 Add: Acquisition and integration-related expenses 0.1 0.1 Purchase accounting effects * - - Depreciation and amortization 12.8 12.0 Adjusted EBITDA $ 57.6 $ 36.2 Net Sales $ 325.3 $ 245.5 Adjusted EBITDA
Slide 21: Non-GAAP Measures
Non‐GAAP Measures • Adjusted net income and earnings per share (“EPS”) ‐ The Company believes that modifying its 2022 and 2021 net income and diluted EPS provides additional measures which are representative of the Company’s underlying performance and improves the comparability of results between re
Slide 22: FEDERAL SIGNAL is a
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