Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (March 2014)
23 slides from Federal Signal's investor presentation, Mar 25, 2014
Slide 1: Disciplined Growth Investor Presentation
Disciplined Growth Investor Presentation March 25, 2014
Slide 2: Forward-looking statements
This presentation contains forward looking statements made by management and may contain words such as “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “project,” “estimate”, and “objective” or similar terminology, or the negative thereof, concerning the Company’s future financial
Slide 3: Agenda
3 Agenda Management Company overview Investment case Recent progress and accomplishments Growth strategy Segments and products Corporate initiatives and goals 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) Recently restructured for g
Slide 6: Investment Case
Well-defined market position in critical infrastructure markets Unparalleled brand equity and distribution franchise in core markets Strengthened balance sheet, profitability and free cash flow – Can fund organic and inorganic growth, and opportunities to drive shareholder value Flexible man
Slide 7: Recent Progress and Accomplishments
7 Recent Progress and Accomplishments Major repositioning with 2012 sale of FSTech Debt refinancing to improve balance sheet and interest costs 80/20 focus and continuous improvement • Lean manufacturing efficiencies • Customer prioritization and pricing • Working capital efficiency targets
Slide 8: Margin Expansion and Debt Reduction
Margin Expansion and Debt Reduction 8 Continued Progress on Operating Margin Targets * Business Segment FY 2011 Operating Margin FY 2012 Operating Margin FY 2013 Operating Margin Margin Targets ESG 6.8% 9.8% 12.3% 11% - 13% SSG 9.7% 12.0% 11.3% 14% - 16% FRG 6.0% 6.6% 6.5% 10% - 12% *Operating margi
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) • Industrial Systems (integrated communication safety systems) These areas aggregate to ≈50% of total revenue * Other markets • Industrial uses for high-
Slide 11: Industrial Business Growth Areas
Business Unit Industrial Order Mix* Success Factors in Increasing Industrial Mix U.S. Industrial Systems 60% • Extending leadership in public warning systems in commercial markets • Building global distribution capabilities Global Jetstream 100% • Global channel development • New product and applica
Slide 12: Federal Signal Segments
12 Federal Signal Segments Environmental Systems (ESG) Products Geographic Mix 2013 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 rental ce
Slide 13: Diversified Product Mix
Diversified Product Mix fof FEDERAL SIGNAL 13 Protecting people and our planet
Slide 14: Hydro-Excavation
Hydro-Excavation Hydro-excavating through ice with hot water 14
Slide 15: Waterblasting
Waterblasting Hydro-demolition, hydro-cleaning and high pressure cleaning 15
Slide 16: Industrial Systems
Industrial Systems Integrated Communications 16 SmartMsg Enabled Systems ICS Integrated Command Solutions Indoor Warning Systems Public Address/General Alarm Public Safety Software Systems Outdoor Warning Systems Interoperable Communications Citizen Alerting Systems
Slide 17: Consolidated Historical Financial Performance
Consolidated Historical Financial Performance 17 ($ in millions) 2010 2011 2012 2013 Net Sales $ 633.1 $ 688.7 $ 803.2 $ 851.3 % Growth — 8.8% 16.6% 6.0% Cost of Sales 482.2 533.3 613.4 646.2 Gross Profit $ 150.9 $ 155.4 $ 189.8 $ 205.1 % Margin 23.8% 22.6% 23.6% 24.1% Operating Expenses 138.5 122.2
Slide 18: Corporate Initiatives and Goals
Corporate Initiatives and Goals 18 Initiative Goal 1 Disciplined Growth: - Organic Initiatives - Targeted Acquisitions • • Consistent high single digit operating income and EPS growth Sequential improvement in the share of revenue from new markets and products 2 Leverage our Invested Capital • Seque
Slide 19: EPS Trends and Key Areas of Focus
EPS Trends 19 Key Areas of Focus Progress toward margin targets at Bronto and SSG Capacity expansion and growth at ESG (Vactor, Jetstream) Accelerate growth in industrial markets Deliver increased value to shareholders Adjusted Earnings Per Share * * Adjusted EPS excludes the effects of rest
Slide 20: Normalized Earnings per Share
Normalized Earnings per Share 20 To facilitate comparisons to 2014, normalized earnings for 2013 are $0.67 per share, which is computed by excluding special tax items, the impacts of restructuring and debt settlement charges and applying a 32% income tax rate. Our effective book tax rate is expected
Slide 21: Building Equity in Our Brands
Building Equity in Our Brands 21
Slide 22: Appendix 1: Adjusted Earnings per Share
Appendix 1: Adjusted Earnings per Share * 22 * The financial measures presented above are unaudited and are not in accordance with U.S. generally accepted accounting principles (“GAAP”). The non- GAAP financial information presented herein should be considered supplemental to, and not a substitute f
Slide 23: Appendix 2: Normalized Earnings per Share
Appendix 2: Normalized Earnings per Share * 23 in Millions Diluted EPS Income from continuing operations 160.2$ 2.53$ Less: Income tax benefit 107.2 1.70$ Income before income taxes 53.0 0.84$ Add: Restructuring charges 0.7 0.01$ Debt settlement charges 8.7 0.14$ Adjusted income before income taxes