Federal Signal Corporation · NYSE:FSS
Federal Signal — Q2 2023 Earnings Presentation
18 slides from Federal Signal's earnings presentation, Jul 27, 2023
Slide 1: Federal Signal Q2 2023 Earnings Call
Federal Signal Q2 2023 Earnings Call July 27, 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: Q2 Highlights
Q2 Highlights * • Record net sales of $442 M, up $76 M, or 21% • Organic growth of $54 M, or 15% • Operating income of $59.4 M, up $13.2 M, or 29% • Adjusted EBITDA of $75.5 M, up $17.3 M, or 30% • Adjusted EBITDA margin of 17.1%, compared to 15.9% • GAAP EPS of $0.66, up $0.11, or 20% • Record adju
Slide 4: Group and Corporate Results
Group and Corporate Results $ millions, except % Q2 2023 Q2 2022 % Change ESG Orders 408.6 351.7 16% Sales 373.0 306.3 22% Operating income 56.2 39.1 44% Operating margin 15.1% 12.8% Adjusted EBITDA 70.7 51.6 37% Adjusted EBITDA margin 19.0% 16.8% SSG Orders 71.6 61.6 16% Sales 69.4 60.4 15% Operati
Slide 5: Consolidated Statement of Operations
Consolidated Statement of Operations $ millions, except % and per share Q2 2023 Q2 2022 $ Change % Change Net sales $ 442.4 $ 366.7 $ 75.7 21% Gross profit 117.3 89.8 27.5 31% SEG&A expenses 53.4 42.1 11.3 27% Amortization expense 3.9 3.2 0.7 22% Acquisition and integration related expenses (benefit
Slide 6: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income, as reported $ 40.3 $ 33.5 $ 67.7 $ 54.0 Add: Income tax expense 12.4 11.1 19.7 18.2 Income before income taxes 52.7 44.6 87.4 72.2 Add: Acquisition and integration-relate
Slide 7: Financial Strength and Flexibility
Financial Strength and Flexibility * • Cash and cash equivalents of $49 M • Net debt of ~$360 M ** • In October 2022, executed a five‐year, $800 M revolving credit facility, with Strong capital opportunity to increase further by the greater of (i) $400 M or (ii) 100% of TTM structure consolidated EB
Slide 8: CEO Remarks – Q2 Performance
CEO Remarks – Q2 Performance • Impressive execution by both groups contributed to a record‐setting quarter • Environmental Solutions Group highlights: YoY net sales growth of 22% and a 220‐basis point improvement in adjusted EBITDA margin Third consecutive quarter of production improvement at ou
Slide 9: CEO Remarks – Market Conditions
CEO Remarks – Market Conditions • Demand for our products and aftermarket offerings remains at unprecedented levels with Q2 orders and backlog again setting new company records • Public funding for infrastructure investments continues to fuel demand • American Rescue Plan Act $350 B for maintenanc
Slide 10: CEO Remarks – Growth Initiatives
CEO Remarks – Growth Initiatives • Eighty‐twenty improvement initiatives Elgin street sweeper lean initiatives aimed at increasing throughput Travis trailer product line simplification • Aftermarket expansion Aftermarket revenues represented ~28% of ESG’s total revenues in Q2 1H 2023 rental
Slide 11: Raising 2023 Outlook
Raising 2023 Outlook Raising Full-Year Adjusted EPS* Outlook to a new range of $2.30 to $2.46, from the previous range of $2.21 to $2.43 Would represent highest EPS in Company’s history and YoY growth of 17%-26%, despite aggregate headwind of ~$0.22 from higher interest expense and increase in effec
Slide 12: Federal Signal Q2 2023 Earnings Call Q&A
Federal Signal Q2 2023 Earnings Call Q&A July 27, 2023 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 630‐954‐2000 Ian Hudson SVP, Chief Financial Officer IHudson@federalsignal.com 13
Slide 14: Appendix
Federal Signal Q2 2023 Earnings Call Appendix 14
Slide 15: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA $ millions, except % Q2 2023 Q2 2022 Net income $ 40.3 $ 33.5 Add: Interest expense 5.6 1.9 Acquisition and integration-related expenses (benefits) 0.6 (1.7) Other income, net 1.1 (0.3) Income tax expense 12.4 11.1 Depreciation and amortization 15.5 13.7 Consolidated adj
Slide 16: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q2 2023 Q2 2022 Operating Income $ 56.2 $ 39.1 Add: Acquisition and integration-related expenses (benefits) 0.2 (0.1) Depreciation and amortization 14.3 12.6 Adjusted EBITDA $ 70.7 $ 51.6 Net Sales $ 373.0 $ 306.3 Adjusted EBITDA margin 19.0% 16.8% SS
Slide 17: Non-GAAP Measures
Non‐GAAP Measures • Adjusted net income and earnings per share (“EPS”) ‐ The Company believes that modifying its 2023 and 2022 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 18: Federal Signal: Moves. Cleans. Protects.
FEDERAL SIGNAL is a Moves. Cleans. Protects. 4 : oF o> ae ES = a @