Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (November 2016)
33 slides from Federal Signal's investor presentation, Nov 7, 2016
Slide 1: Disciplined Growth Investor Presentation November 2016
Disciplined Growth Investor Presentation November 2016
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: Our Mission, Values and Numbers
Our Mission Providing products and services to protect people and our planet Our Values We operate with the highest principles and deliver results through - Customer focus - Innovation - Continuous improvement - Teamwork and investing in our people Our Numbers $718 M revenue, $68 M operating incom
Slide 4: Experienced Management Team
Experienced Management Team Dennis Martin Executive Chairman President and Chief Executive Officer October 2010 – December 2015 Previously served as Chairman, President and CEO of General Binding Corporation 35+ years operational and leadership experience, primarily at Illinois Tool Works and
Slide 5: Federal Signal Businesses
Federal Signal Businesses Environmental Solutions (ESG) Vactor sewer cleaners and hydro-excavators, and Guzzler vacuum trucks Elgin street sweepers Jetstream waterblasters Safety and Security Systems (SSG) Vehicle lights and sirens (U.S. PSS and Vama) Indoor and outdoor mass warning and no
Slide 6: Federal Signal Business Groups
Environmental Solutions (ESG) Market Share: ≈30-50% U.S. 78% 22% Sales by Geography U.S. Non-U.S. Federal Signal Business Groups Note: Sales-by-Geography data represents Q3 2016 TTM End Markets by Users* 63% 37% Sales by Geography U.S. Non-U.S. Safety and Security Systems (SSG) Market Share: ≈30% U.
Slide 7: Positioning for Profitable Growth
Positioning for Profitable Growth Dennis Martin named Executive Chairman; Jennifer Sherman Appointed President and CEO Completion of acquisition of Westech Vac Systems Ltd. Close of transaction to acquire substantially all of the assets and operations of Joe Johnson Equipment Execution of new $325 m
Slide 8: Strengthened Growth Platform
Strengthened Growth Platform Federal Signal is well positioned to take advantage of business cycles and grow long term Succession planning and talent development Flexible manufacturing model New product development Portfolio realignment, Bronto divestiture Reinstated dividend Disciplined M&A process
Slide 9: Strong Financial Performance
Strong Financial Performance 9 Targeting 12% Company Operating Margin Cash Returns to Shareholders Revenue Headwinds and JJE Acquisition in 2016 Strong Balance Sheet Net Sales Total Orders Operating margin excludes the impacts of restructuring charges, purchase accounting charges and acquisition-rel
Slide 10: Federal Signal Strategic Focus
• Add $250 M in revenues through strategic acquisitions • Successfully integrate acquired businesses • Deliver on strategic value of JJE and Westech • Innovate to develop new product applications for adjacent end-markets • Build new sources of profitability, including service, recurring and after-ma
Slide 11: 2016 Priorities
• Continue our focus on refreshing products and developing new product opportunities • Continue investing in sales resources to capture new market opportunities and offset soft markets • Closely monitor our costs and performance metrics against our targets • Smoothly integrate the Joe Johnson Equipm
Slide 12: Innovating for Growth – New Product Development
Innovating for Growth – New Product Development ParaDIGm (ESG) G-Series (SSG) Targeted global expansion in higher- margin industrial markets Developed the Global Signaling (“G-Series”) line of internationally certified (ATEX or IECEx) products for rugged, hazardous industrial applications Prod
Slide 13: Innovating for Growth – New Product Development
Innovating for Growth – New Product Development Water Recycler (ESG) Introduced in February 2016 Saves water, re-using sewer water instead of clean water Increases productivity up to 100% – uninterrupted cleaning of more lines in less time Appears superior to existing competitive products Tr
Slide 14: Acquisition Strategy – Stay Close To The Core
Acquisition Strategy – Stay Close To The Core Geographies Products Desire to add $250 M of revenue from acquisitions within three years • Channel access for FSC products to new or extended markets • Complementary offerings for new or underserved geographies Geographies Products Channels and end mark
Slide 15: JJE Acquisition
JJE Acquisition Significantly expands our industrial footprint from 13 to 25 service centers throughout Canada and US Expands our share of after-market activity Allows capture of additional customer base Attractive margin profile Product offering to capture more market and respond to compe
Slide 16: JJE Update
JJE Update • Acquisition closed on June 3, 2016 • Initial integration efforts largely complete • Post-acquisition results (standalone basis, through end of Q3) Net sales of ~$50 M Adjusted operating income of ~$4 M • Excludes purchase accounting effects of $3 M • Excludes acquisition costs of $0
Slide 17: Priority Driven Capital Allocation
Priority Driven Capital Allocation Organic projects leverage existing assets, generally require limited cash investment Innovation R&D efforts target new and updated products Generally, already funded within operating results, cash flow and normal capital expenditures Desire to add $250 M fr
Slide 18: 2016 Outlook
2016 Outlook Adjusted EPS ranging from $0.65 to $0.70 18 Narrowed from previous outlook range of $0.65 to $0.75 Range reflects: Solid performance in municipal-based businesses (> 60% of company revenues) Negative volume/operating leverage in manufacturing activities versus prior year Backlog
Slide 19: Protecting People And Our Planet
Protecting People And Our Planet 19
Slide 20: Appendix
Appendix • Company Products (Pictured) • Group and Corporate Results • Consolidated Historical Financial Performance • Adjusted EPS • Total Debt to Adjusted EBITDA • Operating Margins • Estimated Global Sales • Joe Johnson Equipment (JJE) Background • Investor Information 20
Slide 21: Environmental Solutions Group Products
Environmental Solutions Group Products 21
Slide 22: Safety and Security Systems Group Products
Safety and Security Systems Group Products 22
Slide 23: Safety and Security Integrated Systems Products
Safety and Security Integrated Systems Products SmartMsg Enabled Systems Enterprise Integrated Command Solution Sensors/Detectors Cameras Networked PAGASYS Rack Control Modules/Nodes Control Modules/Nodes Control Modules/Nodes 23
Slide 24: Appendix 2: Group and Corporate Results
Appendix 2: Group and Corporate Results $ millions, except % Q3 2016 Q3 2015 % Chg ESG Orders 136.0 108.5 25% Sales 134.3 123.0 9% Operating income 12.5 21.5 -42% Operating margin 9.3% 17.5% SSG Orders 50.1 59.7 -16% Sales 52.4 56.7 -8% Operating income 6.5 9.3 -30% Operating margin 12.4% 16.4% Corp
Slide 25: Appendix 3: Consolidated Historical Financial Performance
Appendix 3: Consolidated Historical Financial Performance* ($ in millions) 2011 2012 2013 2014 2015 Q3 2016 YTD Net sales $ 579.2 $ 668.1 $ 712.9 $ 779.1 $ 768.0 $ 531.8 % Growth, Year over Year 10.5% 15.3% 6.7% 9.3% -1.4% -8.6% Cost of sales 447.2 506.7 536.9 570.4 542.4 394.1 Gross profit $ 132.0
Slide 26: Appendix 4: Adjusted Earnings per Share
Appendix 4: Adjusted Earnings per Share (“EPS”)* * The adjusted financial measures presented above are unaudited and are not in accordance with U.S. generally accepted accounting principles (“GAAP”). The non-GAAP financial information presented herein should be considered supplemental to, and not a
Slide 27: Appendix 5: Total Debt to Adjusted EBITDA
Appendix 5: Total Debt to Adjusted EBITDA The Company uses the ratio of total debt to adjusted EBITDA as one measure of its long-term financial stability. The ratio of debt to adjusted EBITDA is a non-GAAP measure that represents total debt divided by the trailing 12-month total of income from conti
Slide 28: Appendix 6: Operating Margins
Appendix 6: Operating Margins Operating margin excludes the impact of purchase accounting, acquisition- related expenses and restructuring charges in all periods Busi e s Segment FY 2011 Operating Margin FY 2012 Operating Margin FY 2013 Operating Margin FY 2014 Operating Margin FY 2015 Operating Mar
Slide 29: Appendix 7: Estimated Global Sales
74% 9% 17% Sales by domestic subsidiaries within U.S. Sales by domestic subsidiaries outside of U.S. * Sales by non-U.S. subsidiaries outside of U.S. ** Estimated trailing 12 month sales allocations as of September 30, 2016 * Sales from the U.S. are predominantly denominated in U.S. dollars. ** Sale
Slide 30: JJE Full Product and Service Offering
Rental of Equipment Sewer & Street Maintenance Hydro Excavation, DOT & Industrial Vacuum Snow & Ice Control Refuse & Recycling Indoor Recreational Ice Products Industrial Service Sale of New Equipment Sale of Used Equipment Parts Full Maintenance Lease Programs Premier Infrastructure Maintenance Equ
Slide 31: JJE – Expanding ESG Industrial Reach
JJE – Expanding ESG Industrial Reach North American Industrial Market Coverage 31 Expands our after- market reach Increases service center locations from 13 to 25 Serves majority of our end-customer concentrations
Slide 32: Investor Information
Investor Information Stock Ticker NYSE: FSS Website www.federalsignal.com/investors Headquarters 1415 W. 22nd Street, Suite 1100 Oak Brook, IL 60523 Investor Relations Contacts: Telephone: 630-954-2000 Brian Cooper BCooper@federalsignal.com SVP, Chief Financial Officer Svetlana Vinokur SVinokur@fede
Slide 33: Federal Signal
FEDERAL SIGNAL Protecti:
Federal Signal — Investor Presentation (November 2016) on 6ix