Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (November 2024)
31 slides from Federal Signal's investor presentation, November 2024
Slide 1: Investor Presentation: November 2024
Moves. Cleans. Protects. Investor Presentation: November 2024
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: Leading Safety Equipment & Specialty Vehicle OEM
Federal Signal at a Glance: Leading Safety Equipment & Specialty Vehicle OEM Environmental Solutions Group (“ESG”) 1901 Founded Downers Grove, IL 83% of Headquarters FY23 Net Sales2 ~4,500 Global Employees 23 Manufacturing Locations 12 Acquisitions from 2016 – 2024 104% 5-Year Cash Conversion1 Avg.
Slide 4: Net Sales by Distribution Channel & End Market Exposure
Net Sales by Distribution Channel & End Market Exposure Net Sales by Category (FY 2023)1 Net Sales by End Market (FY 2023)1 Industrial Warning Systems 2% Other Signaling Aftermarket Oil & Gas 4% 1% 23% 3% Publicly Funded Utility Public Safety 3% 51% 10% Other Specialty Equipment(2) 22% Vacuum Trucks
Slide 5: Federal Signal Product & Service Offerings
Federal Signal Product & Service Offerings ESG (83% of 2023 Net Sales) SSG (17% of 2023 Net Sales) Dump Multi- Truck Purpose Metal Public Vacuum Street Industrial Bodies & Maint. Road Extraction Safety Warning Trucks Sweepers Cleaning Trailers Vehicles Marking Support Aftermarket Equipment Signaling
Slide 6: Delivering on our Growth Strategy
Delivering on our Growth Strategy Key Financial Targets ➢ Low double digit annual net sales growth Net Sales CAGR (’16A – ’23A) (raised in Q2’24) Total: ~14% $1,838 Organic: ~7% $1,723 ➢ Adjusted EBITDA margins: 14-20%1 ➢ ROIC > Cost of Capital $1,435 $1,213 $1,221 $1,090 $1,131 (US$ in millions) $8
Slide 7: ESG: Growing A Best-In-Class Specialty Vehicle Platform
ESG1: Growing A Best-In-Class Specialty Vehicle Platform Vehicle Product Market Share Rank2 Vacuum Trucks #1 Street Sweepers #1-2 Industrial Cleaning (Waterblasting Equipment) #2 Headquarters Dump Truck Bodies & Trailers #1 Manufacturing Facility (20) Aftermarket Site (36) Multi-Purpose Maintenance
Slide 8: ESG: Resilient End-Market Characteristics
ESG: Resilient End-Market Characteristics Water Taxes1 Funding – United States CAGR (’10A – ’23A): ~4.0% Water taxes are a significant COVID: funding mechanism for +3.7%YoY sewer cleaners Industrial Recession: +1.7%YoY 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 LTM Source:
Slide 9: SSG: Industry Leader in Audible & Visual Safety Equipment
SSG1: Industry Leader in Audible & Visual Safety Equipment Market Share Product Rank2 Key Multi-Year Trends: ➢ Strategically positioned in end-markets with high barriers to entry given stringent regulatory requirements for safety Public Safety equipment Equipment #2 ➢ The increase in natural and man
Slide 10: Strategic Pillars: Aftermarket Ecosystem Optimization
Strategic Pillars: Aftermarket Ecosystem Optimization Aftermarket Snapshot Parts & Services ➢ Size: ~27% of ESG Net Sales (FY 2023) ➢ Sale of parts/services/refurbishment ➢ 2015-2023 Net Sales CAGR: ~16% New Vehicle / ➢ 30+ locations across US + Canada Equipment Sales ➢ Targeting all FSS customers r
Slide 11: Strategic Pillars: "Safe Digging" Market Acceleration
Strategic Pillars: “Safe Digging” Market Acceleration Map of State Adoptions1 OSHA’s National Emphasis Program on Trenching and Excavation Commentary ➢ Vacuum excavation or “Safe Digging” involves the use of pressurized air or water (“hydro- excavation”) to dig (coupled with a vacuum system) as an a
Slide 12: Strategic Pillars: "Safe Digging" Use Cases
Strategic Pillars: “Safe Digging” Use Cases Use Cases Select Examples & Benefits Airports ➢ Less disruptive/damage to worksite Environmental (truck can be parked far away vs. driving an excavator over worksite) Construction ➢ Safely identify/locate existing utilities prior to using large excavators
Slide 13: Strategic Pillars: Innovation & Product Development
Strategic Pillars: Innovation & Product Development New Product Examples Select Product Development Highlights: ➢ ~20% of R&D budget is spent on electrification projects ➢ Launched a sweeper without a CDL requirement to operate ➢ Seeing increased orders for fully electric/hybrid sweepers Fully-elect
Slide 14: Strategic Pillars: Executing on our M&A Pipeline
Strategic Pillars: Executing on our M&A Pipeline Specialty Vehicle Market – North America M&A Target Criteria Includes All Systems Built on Class 3-8 Commercial Chassis (~395K Units) Surgically evaluating ➢ Return on capital greater than cost of capital, risk adjusted opportunities that meet ➢ Niche
Slide 15: M&A Case Study: Trackless Vehicles
M&A Case Study: Trackless Vehicles M&A Checklist Trackless Growth by Geography In Year 1 of Ownership Niche-market leader in specialty vehicles Ability to leverage the existing ESG distribution channel for geographic expansion Versatile products offer year-round value across maintenance and infrastr
Slide 16: Update on Current Environment
Update on Current Environment Demand Remains Healthy Tight Commercial Driver’s License Labor Pool ➢ The qualified CDL driver market for many specialty vehicle applications remains tight, exacerbated by the legalization of marijuana across North America. This is leading to rising customer needs for e
Slide 17: Infrastructure Bill Impacts in Early Innings of Multiyear Opportunities
Infrastructure Bill Impacts in Early Innings of Multiyear Opportunities Select IIJA1 Awards FY 2022 Potential Market Opportunities: WA-1 Segment: Ogden Junction Rockport Bridge Rehabilitation Freight Rail Project Description: Constructs a new toll road and Port of Entry facility at Otay Mesa Otay Me
Slide 18: Targeting Best in Class Growth & Continued Margin Expansion
Targeting Best in Class Growth & Continued Margin Expansion Source: Company Filings Specialty Vehicle & Industrial Consolidator Peers Included (Listed in alphabetical order): ALG, AME, DOV, GGG, IEX, IR, ITW, OSK, PLOW, SPXC, TEX, TTC and WAB, with information presented herein calculated using publi
Slide 19: Industry-Leading Margin Performance Through the Business Cycle
Industry-Leading Margin Performance Through the Business Cycle Adjusted EBITDA1 Adjusted EBITDA Margin1 $339 Margin Targets: ➢ Consolidated EBITDA Margin Target: 14 – 20% ➢ ESG EBITDA Margin Target: 17 – 22% ➢ SSG EBITDA Margin Target: 18 – 24% (increased from 17 – 21%) $286 $215 18.4% (US$ in milli
Slide 20: Financial Performance
Financial Performance Net Sales & Orders Free Cash Flow Generation1 $1,870 $1,868 Net Sales Orders $1,692 $1,838 $1,723 $203 $1,539 Facility investments & $1,435 supply chain related working $1,269 capital $164 $1,213 headwinds $1,173 $1,131 $1,221 (US$ in millions) (US$ in millions) $1,090 $1,018 $
Slide 21: Raised 2024 Outlook
Raised 2024 Outlook ➢ Raised Full-Year Adjusted EPS1 Outlook to a new range of $3.30 to $3.40 ➢ Increased from the prior range of $3.20 to $3.35 ➢ New range would represent YoY growth of 28% - 32%, and the highest EPS level in our history ➢ Narrowed full-year net sales outlook to a new range of $1.8
Slide 22: Appendix
Appendix I. Our Portfolio of Brands & Products II. Extensive Geographic Footprint Across North America III. Federal Signal Operating System IV. Sustainability Initiatives V. Non-GAAP Measures VI. Executive Compensation VII. Investor Information 22
Slide 23: Appendix I: Our Portfolio of Brands & Products
Appendix I: Our Portfolio of Brands & Products ESG SSG Source: Management 23
Slide 24: Appendix II: Extensive Geographic Footprint Across North America
Appendix II: Extensive Geographic Footprint Across North America Manufacturing Facility Aftermarket Site Dealers1 1) Defined as dealer-managed locations from dealers that sell Elgin, Truvac, and Vactor products 24
Slide 25: Appendix III: Federal Signal Operating System
Appendix III: Federal Signal Operating System Material Cost Reduction Manufacturing Efficiency ➢ Waste reduction ➢ Lean manufacturing focus ➢ SKU rationalization ➢ Throughput flexibility ➢ Savings through volume aggregation ➢ Labor pool management ➢ Sourcing optimization ➢ Flexible manufacturing mod
Slide 26: Appendix IV: Environmental, Social and Governance Initiatives
Appendix IV: Environmental, Social and Governance Initiatives ➢ Products ➢ Diversity, Equity, & Inclusion ➢ Board Composition o Continue to search for ways to (DEI) o 38% of directors are gender diverse integrate electrification into our suite o Ongoing DEI training at executive o 50% of directors a
Slide 27: Appendix V: Non-GAAP Measures (Adjusted EBITDA)
Appendix V: Non-GAAP Measures (Adjusted EBITDA) Adjusted EBITDA and Adjusted EBITDA Margin The Company uses adjusted EBITDA and the ratio of adjusted EBITDA to net sales (“adjusted EBITDA margin”), as additional measures which are representative of its underlying performance and to improve the compa
Slide 28: Appendix V: Non-GAAP Measures (Cash Conversion, Net Debt Leverage and Free Cash Flow)
Appendix V: Non-GAAP Measures (Cash Conversion, Net Debt Leverage and Free Cash Flow) Cash Conversion Cash conversion is a non-GAAP measure that is computed by dividing net cash provided by operating activities by net income (represented as a percentage). The Company believes that cash conversion pr
Slide 29: Appendix VI: Executive Compensation Aligned with Long-term Objectives
Appendix VI: Executive Compensation Aligned with Long-term Objectives ➢ The Company continues to focus on executing against a number of key long-term objectives, which include (i) creating disciplined growth; (ii) improving manufacturing efficiencies and costs; (iii) leveraging invested capital; and
Slide 30: Appendix VI: Investor Information
Appendix VI: Investor Information Stock Ticker: NYSE:FSS Company website: federalsignal.com/investors HEADQUARTERS 1333 Butterfield Road, Suite 500 Downers Grove, IL 60515 Felix Boeschen VP Corporate Strategy & Investor Relations fboeschen@federalsignal.com 30
Slide 31: Federal Signal: Moves. Cleans. Protects.
[e FEDERAL SIGNAL Moves. Cleans. Protects.
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