Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (May 2005)
21 slides from Federal Signal's investor presentation, May 16, 2005
Slide 1: Federal Signal Corporation May 2005
Federal Signal Corporation May 2005
Slide 2: Safe Harbor
This presentation may contain material non-public information about the company. This presentation therefore may not be distributed, reproduced or used without the express written consent of the company. Use or disclosure of material non-public information by the recipient of this presentation or an
Slide 3: Investment Appeals
Investment Appeals Strong market positions: brands and distribution channels Diverse markets: municipal, industrial, international Recovering municipal budgets Restructuring activities nearly completed Q1 2005 represents an important inflection point Accelerating focus on organic growth Disciplined,
Slide 4: Company Overview
Company Overview Key Statistics 6,000 employees; operates manufacturing facilities in 42 plants around the world in 12 countries $1.1B in revenue last year Stock trades on NYSE under ticker symbol FSS Key Competitive Advantages Rich 100+ year history Majority of products hold #1 and #2 positions in
Slide 5: Operating Groups
Operating Groups Fire Rescue Environment Products Safety Products Tool
Slide 6: Diversity of Revenue
Diversity of Revenue Fire Rescue Safety Environmental Tool 2004 0.32 0.22 0.32 0.14 Based on December 31, 2004 year-end figures U.S. Municipal U.S. Commercial / Industrial Non-U.S. 2004 0.38 0.31 0.31
Slide 7: FSS Orders by Market Segment
FSS Orders by Market Segment 50 45 2 40 a & 35 § & 20 f ; i E95 20 16 SfB) S| SIR IS | 2/15] BIg |S fe |S |) S| 4) | 2121S |B] S| S| SSIS | | 2/18 | 2 18/8 28 l2)oz[o2}02 oa o [oz oa foz{oa}oz|oa os [os 0303 [oa] sos [oa fos 3 [o3 03] o4l04fo4]oa oa loa joa|oaloaoa}oaloa oso las —US Commercial/‘Indu
Slide 8: Restructuring Overview
Restructuring Overview Overall goal to enhance FSS' competitive position while creating a foundation to achieve high single-digit revenue growth Phase 1 - "Shrink to Grow" Exit non-strategic businesses through a combination of divestitures, plant consolidations and product rationalizations Improve t
Slide 9: Restructuring Update
Restructuring Update Transactions Status Sale of interest in Plastisol B.V. Holdings Completed Sale of Kelowna production facility in British Columbia Completed Divestiture of the holdings in Safety Storage Completed Sale of taxable leasing assets Completed Cease mfg operations at Dayton France Comp
Slide 10: Gross Margins 2003-2005
30% 25% 20% 15% 10% 5% 0% Gross Margins 2003-2005 ai Q2 Q3 a4 ai Q2 Q3 a4 ai 2003 2004 2005 —Federal Signal - Total —— Environmental Products © —— Fire Rescue (FEDERAL SIGNAL 10
Slide 11: Fire Rescue Group Key Turnaround Factors
Fire Rescue Group Key Turnaround Factors Leadership changes Plant consolidations to reduce fixed costs Smoothing production flow in Ocala to lower costs and inventories Roll-out of commercial configurator to structure orders: 80% of products by 12/31/05 Improve dealer network New product introductio
Slide 12: Fire Rescue Progress Update
Orders remain strong. Revenues have surpassed comparable prior year periods for the past two quarters. Gross margins are increasing. Material cost escalation in 2004 has been addressed through increased prices and reduced dealer discounting Operating margins have been adversely affected by one-time
Slide 13: Environmental Products Group Key Turnaround Factors
Environmental Products Group Key Turnaround Factors Leadership changes Consolidating production sites to reduce overhead and labor rates Factory floor improvements with Medicine Hat consolidation Price increases to recover material costs New product introductions Margins and performance excluding Re
Slide 14: Safety Products Group Update
Safety Products Group Update Positioned well for additional airport business Police lights and sirens - continuing to gain share in new international markets Mining and oil field business is strengthening Sales ($M) Operating Margin (%) Sales vs. Operating Margin 1st Qtr 2002 270 15.3 2003 278 11.4
Slide 15: Tool Group Update
Tool Group Update Approximately 40% sales to automotive industry European markets remain relatively weak Surcharges implemented to offset escalating tool steel costs Shifting manufacturing footprint to reduce fixed costs and remain near manufacturers Closures: Jamestown, NY and Dayton France Expansi
Slide 16: Growth Strategy Overview
Growth Strategy Overview Drive organic growth through new product development Expand international presence Opportunistically engage in bolt- on acquisitions Drive Higher Growth
Slide 17: Financial Performance
Financial Performance In $ millions (except per share data and ratios) 2002 2003 2004 Q1 2004 Q1 2005 Sales 1,002 1,151 1,139 260 280 EPS - cont. ops .95 .73 (.26) .02 .00 EPS - excl. restructuring .95 .76 (.01) .02 .02 Operating Cash Flow 102.1 70.3 52.5 7.4 19.9 Capital Expenditures 18.8 16.8 20.5
Slide 18: Earnings Variance 2003-2004
Earnings Variance 2003-2004 EPS* Earnings 2003 $0.73 Restructuring and Divestitures ($0.24) Loss on RNLAF Project ($0.16) Material Costs Not Recovered from Customers ($0.16) Refuse Volume/Currency ($0.14) Ocala Volume/Mix ($0.14) Corporate Expense Increase ($0.10) Interest Expense Increase ($0.02) O
Slide 19: Primary Working Capital
Primary Working Capital PWC% increase in 2004 largely due to Ocala production problems Q1 2005 improvement due to decreased receivables offset by seasonal increase in inventories PWC (%) PWC ($M)
Slide 20: Outlook (as of 5/16/2005)
Outlook (as of 5/16/2005) 2005 Longer Term Environmental Products Group Revenue Growth 8-10% NA Operating Margin 3-4% 7-8% Fire Rescue Group Revenue Growth Flat NA Operating Margin 3-4% 9-10% Safety Products Group Revenue Growth 9-11% NA Operating Margin 13-15% ~15% Tool Group Revenue Growth 0-3% NA
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