Federal Signal Corporation · NYSE:FSS
Federal Signal — Q4 2019 Earnings Presentation
20 slides from Federal Signal's earnings presentation, Feb 27, 2020
Slide 1: Federal Signal Q4 2019 Earnings Call
Federal Signal Q4 2019 Earnings Call February 27, 2020 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: A History of Outstanding Performance
A History of Outstanding Performance Over the last several years, Federal Signal has successfully navigated a series of macro-economic challenges and delivered outstanding financial performance Net Sales Adjusted Earnings per Share* (US$ millions) (US$ / share) 2016-2019 CAGR: 20% 2016-2019 CAGR: 39
Slide 4: 2019 in Review
2019 in Review • Outstanding year in which our businesses reported record annual revenues and earnings Net sales up 12% Adjusted EBITDA up 21%, with EBITDA margin of 15.7% • Margin up 110 bps from 2018; towards high end of target range 27% improvement in Adjusted EPS vs. prior record, set last
Slide 5: CEO Remarks
CEO Remarks • Q4 orders and backlog at record levels; strategic initiatives gaining traction • ESG’s aftermarket revenues grew 13% year-over-year; platform provides growth opportunity for acquisitions • Ongoing momentum on “safe-digging“ initiative driving increased demand • Streator expansion will
Slide 6: Full-Year Financial Highlights
Full-Year Financial Highlights * • Net sales of $1.22 B, up $132 M, or 12% • Operating income of $147.1 M, up $25.6 M, or 21% • Adjusted EBITDA of $191.3 M, up $32.7 M, or 21% • ESG up $32.7 M, or 22% • SSG up $4.9 M, or 13% • Adjusted EBITDA margin of 15.7%, compared to 14.6% • GAAP EPS of $1.76, u
Slide 7: Q4 Highlights
Q4 Highlights * • Net sales of $314 M, up $35 M, or 13% • Operating income of $36.4 M, up $3.0 M, or 9% • Adjusted EBITDA of $48.5 M, up $5.9 M, or 14% • Adjusted EBITDA margin of 15.4%, compared to 15.2% • GAAP EPS of $0.48, compared to $0.53 • Prior year included $8.6 M benefit associated with tax
Slide 8: Group and Corporate Results
Group and Corporate Results $ millions, except % Q4 2019 Q4 2018 % Change ESG Orders $ 270.9 $ 239.6 13% Sales 252.2 217.3 16% Operating income 33.0 26.9 23% Operating margin 13.1% 12.4% Adjusted EBITDA 43.8 35.3 24% Adjusted EBITDA margin 17.4% 16.2% SSG Orders 62.3 58.2 7% Sales 62.2 62.1 0% Opera
Slide 9: Income from Continuing Operations
Income from Continuing Operations $ millions, except % and per share Q4 2019 Q4 2018 $ Change % Change Net sales $ 314.4 $ 279.4 $ 35.0 13% Gross profit 81.5 72.0 9.5 13% SEG&A expenses 44.5 38.4 6.1 16% Acquisition and integration related expenses 0.6 0.2 0.4 NM Operating income 36.4 33.4 3.0 9% In
Slide 10: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months December 31, Twelve Months Ended December 31, 2019 2018 2019 2018 Income from continuing operations $ 29.7 $ 32.2 $ 108.4 $ 93.7 Add: Income tax expense (benefit) 4.8 (1.0) 30.2 17.9 Income before income taxes 34.5 31.2 138.6 111.6 Add: Acquis
Slide 11: Financial Strength and Flexibility
Financial Strength and Flexibility * • ~$45 M of operating cash flow, more than double ~$21 M last year Full-year cash from operations of ~$103 M, up 11%, from prior year • Paid down ~$30 M of debt and continued to fund ongoing facility expansion projects in Q4 • $221 M of debt outstanding; $32 M
Slide 12: 2020 Outlook Inputs
2020 Outlook Inputs ▲ Strong backlog, particularly for sewer cleaners and “safe-digging” trucks, providing good visibility into first half of 2020 ▲ Continued momentum with expansion of “safe-digging” technology into new end-markets ▲ Expect to start seeing benefits from Vactor capacity expansion in
Slide 13: 2020 Outlook
2020 Outlook Adjusted EPS* ranging from $1.84 to $1.94 Represents increase of 3% to 8% over record 2019*, despite EPS headwind of up to $0.09 from normalization of tax rate in 2020 Key Assumptions Revenue growth and double-digit Effective income tax rate of ~25%-26%, up improvement in pre-tax ea
Slide 14: Federal Signal Q4 2019 Earnings Call Q&A
Federal Signal Q4 2019 Earnings Call Q&A February 27, 2020 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer 14
Slide 15: 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 16: Appendix
Federal Signal Q4 2019 Earnings Call Appendix 16
Slide 17: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA $ millions, except % Q4 2019 Q4 2018 Income from continuing operations $ 29.7 $ 32.2 Add: Interest expense 1.8 2.1 Acquisition and integration-related expenses 0.6 0.2 Purchase accounting effects * 0.1 - Other expense, net 0.1 0.1 Income tax expense (benefit) 4.8 (1.0) D
Slide 18: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q4 2019 Q4 2018 Operating Income $ 33.0 $ 26.9 Add: Acquisition and integration-related expenses 0.1 0.1 Purchase accounting effects * 0.1 - Depreciation and amortization 10.6 8.5 Adjusted EBITDA $ 43.8 $ 35.5 Less: Deferred gain recognition - (0.2) A
Slide 19: 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 20: Federal Signal: Moves. Cleans. Protects.
ff: FEDERAL SIGNAL Moves. Cleans. Protects.