Slide 1: Federal Signal Q2 2019 Earnings Call
Federal Signal Q2 2019 Earnings Call July 31, 2019 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 * • Net sales of $324 M, up $33 M, or 11% • Operating income of $46.3 M, up $8.2 M, or 22% • Adjusted EBITDA of $57.1 M, up $9.8 M, or 21% • ESG up $8.9 M, or 20% • SSG up $1.3 M, or 14% • Adjusted EBITDA margin of 17.6%, compared to 16.3% • GAAP EPS of $0.54, up $0.10, or 23% • Adjust
Slide 4: Group and Corporate Results
Group and Corporate Results $ millions, except % Q2 2019 Q2 2018 % Change ESG Orders 253.2 217.3 17% Sales 267.2 233.3 15% Operating income 44.8 37.2 20% Operating margin 16.8% 15.9% Adjusted EBITDA 54.4 45.5 20% Adjusted EBITDA margin 20.4% 19.5% SSG Orders 54.8 60.3 -9% Sales 57.1 57.7 -1% Operati
Slide 5: Consolidated Statement of Operations
Consolidated Statement of Operations $ millions, except % and per share Q2 2019 Q2 2018 $ Change % Change Net sales $ 324.3 $ 291.0 $ 33.3 11% Gross profit 89.0 79.2 9.8 12% SEG&A expenses 41.8 40.7 1.1 3% Acquisition and integration related expenses 0.9 0.4 0.5 NM Operating income 46.3 38.1 8.2 22%
Slide 6: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net income $ 32.8 $ 26.9 $ 50.3 $ 39.8 Add: Income tax expense 11.6 8.3 17.5 12.4 Income before income taxes 44.4 35.2 67.8 52.2 Add: Acquisition and integration-related expenses 0.9
Slide 7: Financial Strength and Flexibility
(1) Financial Strength and Flexibility • Generated $34.6 M of cash from operations in Q2, up $7.1 M, or 26%, vs. prior year • YTD capital expenditures of $9.4 M, up from $7.0 M ▪ Expect cap ex to increase in 2H 2019 with Vactor expansion • In addition, expect Q3 cash outflows to include initial cash
Slide 8: CEO Remarks
CEO Remarks • Outstanding Q2 results exceed expectations ▪ Double-digit organic growth in orders and net sales • Q2 orders were the 2nd highest on record ▪ Each of our groups reported significant margin expansion ▪ Q2 Sales and Adjusted EPS are a record for the Company • ESG benefited from increased
Slide 9: Mark Rite Lines ("MRL") Acquisition Update
Mark Rite Lines (“MRL”) Acquisition Update • Completed acquisition of MRL, including its wholly-owned subsidiary (HighMark), on July 1, 2019 • MRL is a leading U.S. manufacturer of truck-mounted and ride-on road-marking equipment, whereas HighMark provides road- marking application and line removal
Slide 10: 2019 Outlook
2019 Outlook Raising adjusted EPS* outlook range to a new range of $1.64 to $1.72, from a range of $1.50 to $1.60 Key Assumptions ▪ Adjustments to include acquisition-related ▪ Interest expense of ~4% items ▪ Increase in pension expense (non- ▪ Depreciation and amortization expense to operating) of
Slide 11: Federal Signal Q2 2019 Earnings Call Q&A
Federal Signal Q2 2019 Earnings Call Q&A July 31, 2019 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer 11
Slide 12: 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 13: Appendix
Federal Signal Q2 2019 Earnings Call Appendix 13
Slide 14: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA $ millions, except % Q2 2019 Q2 2018 Net income $ 32.8 $ 26.9 Add: Interest expense 2.0 2.5 Acquisition and integration-related expenses 0.9 0.4 Purchase accounting effects * 0.1 0.3 Other (income) expense, net (0.1) 0.4 Income tax expense 11.6 8.3 Depreciation and amort
Slide 15: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q2 2019 Q2 2018 Operating Income $ 44.8 $ 37.2 Add: Acquisition and integration-related expenses 0.6 0.3 Purchase accounting effects * 0.1 0.3 Depreciation and amortization 8.9 8.0 Adjusted EBITDA $ 54.4 $ 45.8 Less: Deferred gain recognition - (0.3)
Slide 16: Non-GAAP Measures
Non-GAAP Measures • Impact of New Lease Accounting Standard on Non-GAAP measures - Effective January 1, 2019, the Company adopted the new lease accounting standard, which resulted in a change to the Company’s recognition of the deferred gain associated with historical sale lease-back transactions. P
Slide 17: Federal Signal
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