Federal Signal Corporation · NYSE:FSS
Federal Signal — Q1 2018 Earnings Presentation
18 slides from Federal Signal's earnings presentation, May 8, 2018
Slide 1: Federal Signal Q1 2018 Earnings Call
Federal Signal Q1 2018 Earnings Call May 8, 2018 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: Q1 Highlights
Q1 Highlights * • Net sales of $249.7 M, up $72 M, or 40% • Organic sales growth of $20.6 M, or 12% • Operating income of $19.6 M, up $8.2 M, or 72% • Adjusted EBITDA of $29.5 M, up $10.5 M, or 55% • Adjusted EBITDA margin of 11.8%, compared to 10.7% • GAAP EPS of $0.21, up $0.09, or 75% • Adjusted
Slide 4: Income from Continuing Operations
Income from Continuing Operations $ millions, except % and per share Q1 2018 Q1 2017 $ Change % Change Net sales 249.7 177.8 71.9 40% Gross profit 61.9 43.6 18.3 42% SEG&A expenses 41.8 31.4 10.4 33% Acquisition and integration related expenses 0.5 0.5 - 0% Restructuring - 0.3 (0.3) -100% Operating
Slide 5: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months Ended March 31, 2018 2017 Income from continuing operations $ 12.9 $ 7.2 Add: Income tax expense 4.1 3.8 Income before income taxes 17.0 11.0 Add: Restructuring - 0.3 Executive severance costs - 0.7 Acquisition and integration-related expenses
Slide 6: Group and Corporate Results
Group and Corporate Results $ millions, except % Q1 2018 Q1 2017 % Change ESG Orders 274.4 166.6 65% Sales 196.6 127.8 54% Operating income 20.6 10.3 100% Operating margin 10.5% 8.1% Adjusted EBITDA 29.0 15.5 87% Adjusted EBITDA margin 14.8% 12.1% SSG Orders 55.3 48.0 15% Sales 53.1 50.0 6% Operatin
Slide 7: Financial Strength and Flexibility
Financial Strength and Flexibility * • Generated $10.3 M of cash from operations in Q1, compared to $13.7 M in prior year • Paid down ~$9 M of debt in Q1 • $267 M of debt outstanding; $35 M of cash Net debt of $232 M ** • ~$121 M of availability under credit facility • Paid $4.2 M for dividends; r
Slide 8: CEO Remarks
CEO Remarks • Strong market conditions and traction on strategic initiatives contribute to record Q1 orders, surpassing previous high set last quarter • As in Q4 last year, customers placed “advanced” orders in Q1 Estimate that an incremental $25 M of orders were accelerated into Q1 from later in
Slide 9: Targeted Savings from Eighty–Twenty Improvement ("ETI")
Targeted Savings from Eighty–Twenty Improvement (“ETI”) Each of our businesses are targeting savings from our ETI program in 2018, which are intended to reduce impact of material/wage inflation Material Cost Reduction Manufacturing Efficiency • Waste reduction • Lean manufacturing focus Material Cos
Slide 10: New Product Development
New Product Development ESG – Vactor Sewer Cleaner Rapid SSG – Allegiant Police Light Bar Deployment Boom (Patent Pending) • Improves operator safety with • Feature-rich, dual-color light bar less lifting and fewer tube with a “value line” price point clamps • Utilizes patented LED optics • Dramatic
Slide 11: Raising 2018 Outlook
Raising 2018 Outlook Raising adjusted EPS* outlook range to a new range of $1.15 to $1.22, from a range of $1.10 to $1.20 Represents increase of 35% - 44% over 2017 Key Assumptions Adjustments to include items related to Interest expense of ~4% acquisitions Additional operating expenses to D
Slide 12: Federal Signal Q1 2018 Earnings Call Q&A
Federal Signal Q1 2018 Earnings Call Q&A May 8, 2018 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer 12
Slide 13: 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 Svetlana Vinokur SVP, Chief Financial Officer VP, Treasurer and Corporate Development IHuds
Slide 14: Appendix
Federal Signal Q1 2018 Earnings Call Appendix 14
Slide 15: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA $ millions, except % Q1 2018 Q1 2017 Income from continuing operations $ 12.9 $ 7.2 Add: Interest expense 2.5 0.6 Hearing loss settlement charges 0.4 - Acquisition and integration-related expenses 0.5 0.5 Restructuring - 0.3 Executive severance costs - 0.7 Purchase accou
Slide 16: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q1 2018 Q1 2017 Operating Income $ 20.6 $ 10.3 Add: Acquisition and integration-related expenses 0.3 0.2 Purchase accounting effects * 0.4 0.4 Depreciation and amortization 7.7 4.6 Adjusted EBITDA $ 29.0 $ 15.5 Net sales $ 196.6 $ 127.8 Adjusted EBITD
Slide 17: Non-GAAP Measures
Non-GAAP Measures • Adjusted net income and earnings per share (“EPS”) - The Company believes that modifying its 2018 and 2017 net income and diluted EPS provides additional measures which are representative of the Company’s underlying performance and improves the comparability of results across rep
Slide 18: Protecting people and our planet
Protecting people and our planet (‘2 FEDERAL SIGNAL “<= a