Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (December 2021)
33 slides from Federal Signal's investor presentation, December 2021
Slide 1: Disciplined Growth
Disciplined Growth Investor Presentation December 2021
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 vehicles for maintenance and infrastructure markets such as street sweepers, sewer cleaners, vacuum/hydro-excavators (“safe- digging trucks”), industrial vacuum loaders, wat
Slide 4: Two Attractive Platforms
Two Attractive Platforms Environmental Solutions Safety and Security Systems Segment $996 M* Group Group (ESG) (SSG) Serves publicly-funded, Serves the needs of industrial, and utility markets for municipalities and industrial Markets surface and sub-surface verticals for audible and cleaning, safe-
Slide 5: Environmental Solutions Group (ESG)
Environmental Solutions Group (ESG) Have 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 Road Application sweeping cleaning digging cleaning Marking Brands Pr
Slide 6: 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 7: Why Federal Signal?
Why Federal Signal? Composition of Businesses • Clearly-defined strategy, with two groups – ESG and SSG – each of which have strong growth potential through a combination of organic initiatives and M&A End Market Exposures • Typical annual revenue mix of ~50% publicly-funded / ~50% industrial • Publ
Slide 8: Macro Factors Driving Demand
Macro Factors Driving Demand Federal Signal’s diverse portfolio of specialty vehicles is well-positioned to Proposed Infrastructure Spending Allocation Plan . capitalize on favorable macro trends across its core end markets. Infrastructure Bill • $550 billion of government spending over five years t
Slide 9: Macro Factors Driving Demand
Macro Factors Driving Demand Additional macro trends driving opportunity for Federal Signal’s U.S. Housing Starts diverse portfolio of products and equipment U.S. Housing - A Mountain To Climb • Construction of new housing in the past 20 years fell 5.5 million units short of long-term historical lev
Slide 10: 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 10
Slide 11: 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 Digg
Slide 12: 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 13: Acquisition of OSW Equipment & Repair (completed in February 2021)
Acquisition of OSW Equipment & Repair (completed in February 2021) Highly strategic acquisition which delivers on our objective of geographic expansion of our dump truck body and trailer platform; adds three premier brands that serve attractive markets on the West Coast, in Arizona and in parts of C
Slide 14: Acquisition of Ground Force Worldwide (completed in October 2021)
Acquisition of Ground Force Worldwide (completed in October 2021) Acquisition augments Federal Signal’s materials hauling portfolio by adding a range of specialty vehicles that supports the extraction of metals Fuel & Lube Truck Water Truck Rock Spreader Truck Cable Reel Truck Dump Body Parts 14
Slide 15: Agreement to Acquire Deist Industries (announced in November 2021)
Agreement to Acquire Deist Industries (announced in November 2021) Attractive product line extension that expands our presence in landscaping and waste hauling markets Interchangeable Mini Roll-Off Cable Hoist Systems Truck Bodies Containers (Drop Boxes) Front/Rear Roll-Off Containers Parts Loading
Slide 16: Financial Overview
Financial Overview Net Sales Adjusted EBITDA Margin* Q3 2021 Highlights2: (Consolidated) • Net sales of $298M, up $19M, or 7% 1,221 1,207 1,131 899 1,090 228 215 211 • Operating income of $34.3M, up 226 $ in millions 206 14.6% 15.7% 16.1% 15.5% $0.3M, or 1% Adjusted EBITDA 12.4% • Adjusted EBITDA* o
Slide 17: Strong Financial Position Supports Priority-Driven Long-Term Capital Allocation
Strong Financial Position Supports Priority-Driven Long-Term Capital Allocation In July 2019, executed five-year, $500 M revolving credit facility, with flexibility to increase by additional $250 M for acquisitions; No debt maturities until July 2024; At end of Q3 2021, net debt leverage remained lo
Slide 18: 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 Long-Term Organic Value-Added Revenue Growth Acquisitions (Couple of % points > GDP) High Single
Slide 19: 2021 Outlook
2021 Outlook Adjusted EPS* outlook range of $1.68 to $1.78 Key Full-Year Assumptions Revenue growth Effective income tax rate of ~18%, including Depreciation and amortization expense of ~$50 M estimated discrete tax benefits Capital expenditures of $20 M to $25 M, including ~62 M weighted
Slide 20: Appendix
Appendix I. Segments Overview II. Eighty-Twenty Improvement Culture III. New Product Development IV. Non-GAAP Measures V. Executive Compensation VI. Investor Information 20
Slide 21: Appendix I: ESG Products
Appendix I: ESG Products VACTOR OW TRUVAC Jetstream, a OS WESTECH a. M¢Solutions {Depot
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 Many ESG products support essential services that are focused 2020 Sales by Geography on cleaning Recent $1.9 T of economic stimulus earmarks $350 B for state, local and territorial governments; package targets maintenance 19%
Slide 24: Appendix I: SSG Products
Appendix I: SSG Products FEDERAL SIGNAL Safety and Security Systems Public Safety Systems FEDERAL SIGNAL Safety and Security Systems Heavy Duty FEDERAL SIGNAL Safety and Security Systems Signaling FEDERAL SIGNAL Safety and Security Systems Systems FEDERAL SIGNAL VAMA Safety and Security Systems
Slide 25: Appendix I: SSG - Market Influencers & Where We Play
Appendix I: SSG - Market Influencers & Where We Play Market Dynamics 2020 Sales by Geography Increased national focus on issues of public safety and law enforcement, and rising public expectations for transparency and accountability driving demand for 40% safety and security products 60% Rising
Slide 26: Appendix II: Eighty–Twenty Improvement ("ETI") Culture
Appendix II: Eighty–Twenty Improvement (“ETI”) Culture Manufacturing Efficiency Material Cost Reduction • Lean manufacturing focus • Waste reduction • Throughput flexibility • SKU rationalization • Labor pool management • Savings through volume aggregation • Flexible manufacturing model • Sourcing o
Slide 27: Appendix III: New Product Development
Appendix III: New Product Development Customer-Focused Process • Complete change in approach to innovation, starting in 2013; with the revamped innovation structure, completed several successful new product launches, including the award-winning launch of the ParaDIGm® vacuum excavator in 2016 • In 2
Slide 28: Appendix IV: Non-GAAP Measures (Adjusted EPS)
Appendix IV: Non-GAAP Measures (Adjusted EPS) Adjusted net income and earnings per share (“EPS”) ($ in millions) Three Months Ended September 30, The Company believes that modifying its Q3 2021 2021 2020 and Q3 2020 net income and diluted EPS provides Net income, as reported $ 29.2 $ 25.3 additional
Slide 29: Appendix IV: Non-GAAP Measures (Adjusted EBITDA)
Appendix IV: Non-GAAP Measures (Adjusted EBITDA) Adjusted EBITDA and adjusted EBITDA margin Three Months Ended September 30 ($ in millions) 2021 2020 The Company uses adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) and the ratio of Net income $ 29.2 $ 25.3 a
Slide 30: Appendix IV: Non-GAAP Measures (Adjusted EBITDA cont.)
Appendix IV: Non-GAAP Measures (Adjusted EBITDA cont.) TTM Adjusted EBITDA and adjusted EBITDA margin ($ in millions) 2017 2018 2019 2020 9/30/2021 Net income $ 60.5 $ 93.7 $ 108.4 $ 96.1 $ 107.1 The Company uses adjusted EBITDA and adjusted EBITDA margin as Add (less): - additional measures which a
Slide 31: Appendix V: Executive Compensation Aligned with Long-term Objectives
Appendix V: 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 32: Appendix VI: Investor Information
Appendix VI: 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 SVP & Chief Financial Officer IHudson@federalsignal.com 32
Slide 33: Federal Signal Moves. Cleans. Protects.
[z FEDERAL SIGNAL Moves. Cleans. Protects.
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