Federal Signal Corporation · NYSE:FSS
Federal Signal — Q3 2023 Earnings Presentation
20 slides from Federal Signal's earnings presentation, Nov 2, 2023
Slide 1: Federal Signal Q3 2023 Earnings Call
Federal Signal Q3 2023 Earnings Call November 2, 2023 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer Felix Boeschen, VP, Corporate Strategy & Investor Relations
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: Q3 Highlights
Q3 Highlights * • Record net sales of $446 M, up $100 M, or 29% • Organic growth of $80 M, or 23% • Operating income of $62.5 M, up $23.0 M, or 58% • Adjusted EBITDA of $78.5 M, up $25.0 M, or 47% • Adjusted EBITDA margin of 17.6%, compared to 15.4% • GAAP EPS of $0.71, up $0.19, or 37% • Record adj
Slide 4: Group and Corporate Results
Group and Corporate Results $ millions, except % Q3 2023 Q3 2022 % Change ESG Orders 374.8 321.4 17% Sales 373.0 284.8 31% Operating income 57.2 33.9 69% Operating margin 15.3% 11.9% Adjusted EBITDA 72.0 46.5 55% Adjusted EBITDA margin 19.3% 16.3% SSG Orders 75.4 60.7 24% Sales 73.4 61.6 19% Operati
Slide 5: Consolidated Statement of Operations
Consolidated Statement of Operations $ millions, except % and per share Q3 2023 Q3 2022 $ Change % Change Net sales $ 446.4 $ 346.4 $ 100.0 29% Gross profit 117.7 82.8 34.9 42% SEG&A expenses 50.6 39.8 10.8 27% Amortization expense 3.9 3.1 0.8 26% Acquisition and integration related expenses 0.7 0.4
Slide 6: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income, as reported $ 43.3 $ 31.8 $ 111.0 $ 85.8 Add: Income tax expense 13.8 4.9 33.5 23.1 Income before income taxes 57.1 36.7 144.5 108.9 Add: Acquisition and integ
Slide 7: Financial Strength and Flexibility
Financial Strength and Flexibility * • Cash and cash equivalents of $41 M • Net debt of ~$325 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 – Q3 Performance
CEO Remarks – Q3 Performance • Impressive execution by both groups contributed to another record-setting quarter • Environmental Solutions Group highlights: YoY net sales growth of 31% 300-basis point improvement in adjusted EBITDA margin Production output continues to improve with combined Q3
Slide 9: CEO Remarks – Market Conditions
CEO Remarks – Market Conditions • Demand for our products and aftermarket offerings remains exceptionally high, as evidenced by Q3 orders of $450 M, up 18% YoY • Backlog remains unchanged from Q2 2023 at ~$1.01 B (up 22% YoY) • Order strength broad based across public funded & industrial end-markets
Slide 10: CEO Remarks – Historical Margin Performance
CEO Remarks – Historical Margin Performance • Initially launched EBITDA margin targets for groups and Company overall in 2017 consistent with multi-year growth strategy • Margin targets intended to be annual, through-the-cycle targets • Since 2017, we have consistently operated within, or above, 12-
Slide 11: CEO Remarks – Increasing Margin Targets
CEO Remarks – Increasing Margin Targets • As we look ahead and consistent with the execution of our key strategic objectives of (i) operational excellence, (ii) organic growth initiatives, and (iii) value-added M&A, we are today raising our EBITDA margin targets for ESG and the Company overall • Int
Slide 12: Raising 2023 Outlook
Raising 2023 Outlook Raising Full-Year Adjusted EPS* Outlook to a new range of $2.44 to $2.52, from the previous range of $2.30 to $2.46 Would represent highest EPS in Company’s history and YoY growth of 24%-29%, despite aggregate headwind of ~$0.20 from higher interest expense and increase in effec
Slide 13: Federal Signal Q3 2023 Earnings Call Q&A
Federal Signal Q3 2023 Earnings Call Q&A November 2, 2023 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer Felix Boeschen, VP, Corporate Strategy & Investor Relations 13
Slide 14: 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 Felix Boeschen VP, Corporate Strategy and Investor Relations fboeschen@federalsignal.com 14
Slide 15: Appendix
Federal Signal Q3 2023 Earnings Call Appendix 15
Slide 16: Consolidated Adjusted EBITDA (Q3 2023 vs. Q3 2022)
Consolidated Adjusted EBITDA (Q3 2023 vs. Q3 2022) $ millions, except % Q3 2023 Q3 2022 Net income $ 43.3 $ 31.8 Add: Interest expense 5.1 2.7 Acquisition and integration-related expenses 0.7 0.4 Other expense, net 0.3 0.1 Income tax expense 13.8 4.9 Depreciation and amortization 15.3 13.6 Consolida
Slide 17: Segment Adjusted EBITDA (Q3 2023 vs. Q3 2022)
Segment Adjusted EBITDA (Q3 2023 vs. Q3 2022) ESG $ millions, except % Q3 2023 Q3 2022 Operating Income $ 57.2 $ 33.9 Add: Acquisition and integration-related expenses 0.5 0.1 Depreciation and amortization 14.3 12.5 Adjusted EBITDA $ 72.0 $ 46.5 Net Sales $ 373.0 $ 284.8 Adjusted EBITDA margin 19.3%
Slide 18: Consolidated Adjusted EBITDA (2016-2023 LTM)
Consolidated Adjusted EBITDA (2016‐2023 LTM) LTM ($ in millions) 2016 2017 2018 2019 2020 2021 2022 Q3 2023 Net income 39.4 $ 60.5 $ 93.7 $ 108.4 $ 96.1 $ 100.6 $ 120.4 $ 145.6 Add (less): Interest expense 1.9 7.3 9.3 7.9 5.7 4.5 10.3 19.8 Pension settlement charges - 6.1 - - - 10.3 - - Hearing loss
Slide 19: 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 20: Federal Signal Moves. Cleans. Protects.
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