Federal Signal Corporation · NYSE:FSS
Federal Signal — Proxy Contest (April 2009)
42 slides from Federal Signal's proxy contest presentation, Apr 8, 2009
Slide 1: Federal Signal Corporation Investor Presentation April 2009
Federal Signal Corporation Investor Presentation April 2009
Slide 2: Forward-Looking Language / Important Proxy Information
Forward-Looking Language / Important Proxy Information FORWARD-LOOKING LANGUAGE This presentation contains various forward-looking statements as of the date hereof and the Company undertakes no obligation to update these statements regardless of new developments or otherwise. Statements in this pres
Slide 3: Overview, Actions Taken, Strategic Plan, Governance
Federal Signal Investor Presentation Overview Actions Taken Strategic Plan Governance
Slide 4: Board and Management Team Have the Experience and Strategic Plan to Enhance Value
Federal Signal's Board and Management Team Have the Experience and Strategic Plan to Enhance Value for All Stockholders Federal Signal is the leader in providing total solutions for the safety, security and well-being of communities and workplaces around the world Over the last year, Federal Signal'
Slide 5: About Federal Signal
About Federal Signal Founded in 1901, Federal Signal enhances the safety, security and well-being of communities and workplaces around the world Leading global designer and manufacturer of products and total solutions that serve municipal, governmental, industrial and institutional customers Operate
Slide 6: Financial Overview
Financial Overview FY 2008 summary: Net sales: $959 million EBITDA: $74 million Income from continuing operations: $31 million, or $0.66 per share Strong order backlog of $301 million at year-end Solid balance sheet Cash flow from operations for 2008: $124 million $33 million of cash and short-term
Slide 7: 2008 Segment Revenues & Orders
2008 Segment Revenues & Orders ESG Bronto SSG 4th Qtr East 441.5 145.5 371.8 20.4 West North Segment Revenues Diverse, Balanced Business Mix and End-Markets Environmental Solutions 46% Safety & Security Systems 39% Customer Orders Fire Rescue Group 15% Non-US I&C Muni 4th Qtr East 433.6 233 273.8 20
Slide 8: Environmental Solutions Group (ESG)
8 Street Sweepers Sewer Cleaners Combination Cleaners Catch Basin Cleaners Jetting Units Hydroexcavators Industrial Vacuum Loaders Waterblasters #2 WW & #1 NA -Street Sweepers #2 Europe; #1 Benelux - Compact Sweepers #1 WW & #1 NA - Truck Mounted Sewer Cleaners #2 NA - Truck Mounted Hydroexcavators
Slide 9: Safety & Security Systems Group (SSG)
9 Offer Systems to the Growing Public Safety and Intelligent Transportation Markets Business Units & Solutions Safety & Security Systems Group (SSG) U.S. Non-U.S. 3rd Qtr 4th Qtr Orders 202.5 164.6 Total: $367 million U.S. 55% Non-U.S. 45% Public Safety Systems Industrial Safety & Security Industria
Slide 10: Fire Rescue Operations (Bronto)
10 Leadership in Truck Mounted Aerial Applications: Aerial platforms that may include ladders, rescue cages, and water or foam extinguishing capabilities Source: Management estimates and 2008 10K Fire Rescue Operations Global Leader In Truck Mounted Hydraulic Platforms U.S. Non-U.S. 3rd Qtr 4th Qtr
Slide 11: Federal Signal Overview, Actions Taken, Strategic Plan, Governance
Federal Signal Investor Presentation Overview Actions Taken Strategic Plan Governance
Slide 12: Federal Signal is Positioned for Growth
Federal Signal is Positioned for Growth Appointed new executive management team following a robust search process Bill Osborne, president and chief executive officer Bill Barker, senior vice president and chief financial officer Divested underperforming assets Enhanced liquidity through various mone
Slide 13: Robust CEO Search Process
Robust CEO Search Process Rigorous nine-month search process undertaken by Search Committee of Federal Signal's Board of Directors in 2008, assisted by nationally recognized executive search firm Search Committee members: Jim Janning (Chairman), Joe Wright, Chuck Campbell, John McCartney and Jim Goo
Slide 14: New Leadership Team
New Leadership Team Bill Osborne, appointed president and CEO in September 2008 31 years of experience in building and leading complex global organizations Strategic insight, operational and financial discipline, and strong customer focus in industrial and municipal markets From 2005 to 2008, served
Slide 15: Divested Underperforming Assets
Divested Underperforming Assets Tool business Strategic rationale: non-strategic, cyclical, and low margin business E-ONE business Strategic rationale: unprofitable ($25mm loss in 2007), diverted management attention with chronic operational problems 2 Divestitures focused management attention on co
Slide 16: Enhanced Liquidity
Enhanced Liquidity Enhanced liquidity through various initiatives including: Liquidation of $94mm of municipal leasing portfolio Completed sale leaseback for two manufacturing facilities, capturing large after-tax gain, benefiting from capital loss carry forwards, and generating cash proceeds of $35
Slide 17: Expanded Plants to Enhance Profitability
Expanded Plants to Enhance Profitability Completed expansion of Bronto production facility Increased capacity to in source components and reduce cost Gross margins projected to expand by 500bps Reduced lead times and improved production flow Improved efficiency and quality Bronto's orders more than
Slide 18: Quick and Immediate Action - First Days
Quick and Immediate Action - First 60 Days New management team enacted more than $20 million of cost reductions versus 2008 Eliminated over 200 head count positions Reduced use of contractors and consultants Terminated contracts with vendors Reduced 2009 compensation of Board and CEO Combining relat
Slide 19: Federal Signal Overview, Actions Taken, Strategic Plan, Governance
Federal Signal Investor Presentation Overview Actions Taken Strategic Plan Governance
Slide 20: Strategy to Achieve Consistent, Profitable Growth
Strategy to Achieve Consistent, Profitable Growth Recently launched a two-pronged strategy to deliver consistent, profitable growth and to drive stockholder value: I. Drive growth through the Company's Public Safety Systems platform II. Increase margins and extract efficiencies from the Company's le
Slide 21: I. Drive Growth Through Public Safety Systems Platform
21 I. Drive Growth Through Public Safety Systems Platform Why Public Safety Systems? Global Growth - rising customer acceptance and government funding FSS Market Leadership / brand strength Attractive growth profile Introduce new products and services to more receptive, better funded global customer
Slide 22: Federal Signal's Public Safety Network
22 A network of devices providing monitoring services across the entire geography of a jurisdiction Alerting and notification capability Data storage and management Data mining and reporting Networked into existing infrastructure Federal Signal's "Public Safety Network" Law Enforcement & Transportat
Slide 23: PIPS: Platform for The Public Safety Network
23 PIPS: Platform for The Public Safety Network PIPS is the leading ALPR technology "ALPR" = Automated license plate recognition Will deploy into existing infrastructure - provide 24-hour monitoring Maintaining valuable database of information - used to manage traffic, enforce laws, identify threats
Slide 24: Market Opportunity: Significant Global Funding
24 Market Opportunity: Significant Global Funding Case Study: State and Local Grant Programs In the U.S., for instance, Federal Signal's Public Safety product suite is eligible for significant funding at the State & Local Level (excluding Federal Level expenditures and impact of the 2009 US stimulus
Slide 25: PIPS Case Studies: Unmatched Technology & Credibility
25 PIPS Case Studies: Unmatched Technology & Credibility Increasing Customer Acceptance City of Cincinnati Full network to be deployed in 2009 DHS approved multi-year contract: -- Template for services contract in future -- Funding process-expertise will allow PSS to help customers more readily obta
Slide 26: Public Safety Systems Services Model
26 Public Safety Systems Services Model Customer Benefits Intend to introduce a services model offering a full suite of product capabilities in exchange for recurring payments over the service period Legacy sales model has been discrete sales of hardware products Customers will leverage 100% of the
Slide 27: II. Improve Margins and Extract Efficiencies
27 II. Improve Margins and Extract Efficiencies Environmental Solutions Group (ESG): Streamline product offering Reduce product design costs Leverage cost efficiencies of single IT system implementation Safety and Security Systems Group (SSG): Outsource non-core manufacturing to reduce footprint Con
Slide 28: ESG Initiatives to Accelerate Growth & Increase Margins
28 ESG Initiatives to Accelerate Growth & Increase Margins Jetstream is well positioned in growing markets Building international distributor channel to increase share of global water blaster market Strategy to maintain core machining operations in the U.S. and ship pump kits globally - enabling low
Slide 29: Bronto Initiatives to Accelerate Growth & Increase Margins
29 Bronto Initiatives to Accelerate Growth & Increase Margins Capacity expansion leading to improved margins Continue focus on recent efforts that have resulted in margin improvements Able to in-source more production Reduce cost and improve operational efficiency Increase sourcing in low cost count
Slide 30: Federal Signal Overview, Actions Taken, Strategic Plan, Governance
Federal Signal Investor Presentation Overview Actions Taken Strategic Plan Governance
Slide 31: Demonstrated Commitment to Strong Corporate Governance
Demonstrated Commitment to Strong Corporate Governance Independent Board and Committees All current directors and each of the Board's nominees, other than Mr. Osborne, are independent under NYSE rules New directors In 2008, added two new independent stockholder-proposed directors (Dennis Martin, Joe
Slide 32: Process for Nominating Directors
Process for Nominating Directors As part of its regular governance process for the 2009 Annual Meeting, the Board evaluated a number of highly qualified candidates in order to determine a slate of nominees that would best serve the interests of all Federal Signal stockholders Board's Nominating and
Slide 33: Federal Signal's Board Nominees: Experienced and Qualified
Federal Signal's Board Nominees: Experienced and Qualified James E. Goodwin Independent director of Federal Signal (since 2005) Former interim president and CEO of Federal Signal - oversaw substantial progress in Company's transformation from December 2007 - September 2008 Former chairman and CEO of
Slide 34: Continuing Directors: Experienced, Independent and Qualified
Federal Signal's Continuing Directors: Experienced, Independent and Qualified Charles R. Campbell Director Director since 1998 Former Partner, Everest Group Robert M. Gerrity Director Director since 2003 Principal, Gerrity Partners Chairman, Industrial Products Group of Glencoe Capital Other Boards:
Slide 35: Compensation Program Provides Appropriate Incentives for Superior Performance
Compensation Program Provides Appropriate Incentives for Superior Performance Beginning in 2009, replaced Economic Value program with new Short Term Incentive Bonus Plan for management: Bonuses based on achieving financial measures, primarily, and individual objectives Includes clawback feature Shif
Slide 36: Kanders' Agenda is Not in the Interests of All Stockholders
Kanders' Agenda is Not in the Interests of All Federal Signal Stockholders We believe Kanders wants Board seats at Federal Signal to impose his self- serving agenda In 2008, Federal Signal's Board considered and rejected Kanders as CEO candidate Shortly thereafter, Kanders accumulated stake and emba
Slide 37: Kanders' Record of Shareholder Value Creation Is Inconsistent
Kanders' Record of Shareholder Value Creation Is Inconsistent Aside from one transaction, Kanders has presided over decreasing stockholder value at most companies with which he is or has been involved Stamford Industrial Group (formerly Net Perceptions) (Kanders served as executive chairman from Apr
Slide 38: Kanders: Paying Himself is Priority #1
Kanders: Paying Himself is Priority #1 Kanders has extracted approximately $6.5 million from his affiliated companies Date Payor "Service" Provided Recipient Benefit Awarded 1999 Armor Holdings Role in a stock offering Kanders & Co. $300,000 2001 Armor Holdings Role in an acquisition Expense reimbur
Slide 39: Kanders' Nominees: Sokolow and Gerbsman
Partner, Lebow & Sokolow LLP Principal, Gerbsman Partners, Crisis & Private Investment Consulting Firm NO operational experience in the market in which FSS operates, with the exception of Armor NO public company experience, other than with Kanders' companies Relationship with Kanders: Has served on
Slide 40: Federal Signal is the Leader in Total Solutions for Safety and Security
Federal Signal is the leader in providing total solutions for the safety, security and well-being of communities and workplaces around the world Over the last year, Federal Signal's Board of Directors and management team has undertaken a series of actions to position the Company for sustainable and
Slide 41: Conclusion: Vote the WHITE Proxy Card
Conclusion We believe the choice is clear. Vote the WHITE Proxy Card to Elect Federal Signal's Board Nominees.
Slide 42: Vision
Vision Federal Signal ... the leader in advancing security and well-being for communities and workplaces around the world.