Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (March 2019)
31 slides from Federal Signal's investor presentation, March 2019
Slide 1: Disciplined Growth
Disciplined Growth Investor Presentation March 2019
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 environmental cleaning vehicles such as street sweepers, sewer cleaners, vacuum trucks, dump bodies and trailers; as well as safety and security products including audible a
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: Two Attractive Platforms
Segment Two Attractive Platforms Environmental Solutions Safety and Security Systems Group $864 M* Group (ESG) (SSG) Serves municipal, industrial, Serves the needs of and utility markets for $226 M* municipalities and industrial Markets surface and sub-surface verticals for audible and cleaning, saf
Slide 6: Environmental Solutions Group (ESG)
Environmental Solutions Group (ESG) Have successfully 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 Application sweeping cleaning digging cleaning Brands Pr
Slide 7: 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 8: 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 8
Slide 9: 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 Dig
Slide 10: Strategic Initiative – Aftermarket Parts & Services
Strategic Initiative – Aftermarket Parts & Services Optimizing platform to transform Federal Signal’s aftermarket business into an industry leader of parts and services to the infrastructure maintenance and material hauling markets • Unified platform to serve municipal and industrial Rentals custome
Slide 11: Strategic Initiative – Audible & Visual Warning Devices
Strategic Initiative – Audible & Visual Warning Devices SSG businesses focused on optimizing their existing channels and expanding product offerings Optimize Channel Product Portfolio Expansion Smart Products • Pricing / Promotion Strategy • “Allegiant” – low cost lightbar to • CommanderOne – moneti
Slide 12: Eighty–Twenty Improvement (“ETI”) Culture
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 optimization •
Slide 13: New Product Development (“NPD”)
New Product Development (“NPD”) Customer Focused Process • Complete change in approach to innovation, starting in 2013 • Current innovation organization has had a number of successes, including the record- breaking launch of the ParaDIGm vacuum excavator • Most successful new product launch in over
Slide 14: Profitable Growth Execution and Strong Financial Position
Profitable Growth Execution and Strong Financial Position Net Sales Adjusted EBITDA Margin** 2018 Highlights: (Consolidated) • Record year in revenues and earnings • Net sales of $1.1B, up $191M, or 21%, from 2017 • Adjusted EBITDA* of $160.5M, up 41%, from $113.5M in 2017 • Improved Adjusted EBITDA
Slide 15: 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 16: Priority Driven Long-Term Capital Allocation
Priority Driven Long-Term Capital Allocation • Organic projects leverage existing assets, generally require limited cash investment • Innovation R&D efforts target new and updated products Cash Deployment Reinvest in the • Generally, funded within operating results, cash flow and normal cap ex (2016
Slide 17: Headwinds and Tailwinds in 2019
Headwinds and Tailwinds in 2019 ▲ Strong backlog, particularly for sewer cleaners and vacuum trucks, providing good visibility into first half of 2019 ▲ Amount of used equipment in end markets continues to be at “normal” levels ▲ Industrial demand remains healthy, particularly from rental customers
Slide 18: 2019 Outlook
2019 Outlook Adjusted EPS* ranging from $1.48 to $1.60 At the midpoint, represents increase of ~9% over record 2018* Key Assumptions ▪ Adjustments to include acquisition-related items ▪ Interest expense of ~4% ▪ Depreciation and amortization expense to increase ▪ Increase in pension expense (non-ope
Slide 19: Positioned for Long-Term Growth
Positioned for Long-Term Growth With continued focus on organic growth and M&A, and margin performance above that of many of our peers, our financial framework aims to create long-term shareholder value Adjusted Earnings per Share* Long-Term Organic Value-Added (US$/share) Revenue Growth Acquisition
Slide 20: Appendix
Appendix I. Segments Overview II. Non-GAAP Reconciliations III. Executive Compensation IV. Investor Information 20
Slide 21: Appendix I: ESG Products
Appendix I: ESG Products . a ccc, = Ss eee (or allFi VACTOR sd ~~ -@ amr) i QTRUVAC Jetstream», WESTECH Aa. EsSolutions
Slide 22: Appendix I: ESG Products (continued)
Appendix I: ESG Products (continued) 22
Slide 23: Appendix I: ESG - Market Influencers & Where We Play
Appendix I: ESG - Market Influencers & Where We Play Market Dynamics ▪ Economic recovery supports state and local funding for 2018 Sales by Geography sweepers and sewer cleaners ▪ Funding for sewer cleaners through water tax 18% revenues adds further stability 82% ▪ Continued recovery in oil & gas m
Slide 24: Appendix I: SSG Products
‘a@ FEDERAL SIGNAL Safety and Security Systems Public Safety Systems f FEDERAL SIGNAL Safety and Security Systems Integrated Systems fi FEDERAL SIGNAL VAMA Safety and Security Systems
Slide 25: Appendix I: SSG - Market Influencers & Where We Play
Appendix I: SSG - Market Influencers & Where We Play Market Dynamics 2018 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 safety and security products 37% 63% ▪ Recover
Slide 26: Appendix II: Impact of Lease Accounting Change on Non-GAAP Measures
Appendix II: Impact of Lease Accounting Change on Non-GAAP Measures ▪ Effective January 1, 2019, the Company will adopt the new lease accounting standard, which will result in the recognition of right-of-use assets and lease liabilities on the Company’s Consolidated Balance Sheet and will result in
Slide 27: Appendix II: Impact of Lease Accounting Change on 2018 Adjusted EPS
Appendix II: Impact of Lease Accounting Change on 2018 Adjusted EPS 27
Slide 28: Appendix II: Impact of Lease Accounting Change on 2018 Adjusted EBITDA/Margin
Appendix II: Impact of Lease Accounting Change on 2018 Adjusted EBITDA/Margin The Company uses adjusted EBITDA and the ratio of adjusted EBITDA to net sales (“adjusted EBITDA margin”) as additional measures which are representative of its underlying performance and to improve the comparability of re
Slide 29: Appendix III: Executive Compensation Aligned with Long-term Objectives
Appendix III: 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 30: Appendix IV: Investor Information
Appendix IV: 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 31: Federal Signal – Moves. Cleans. Protects.
ff FEDERAL SIGNAL Moves. Cleans. Protects.