Federal Signal Corporation · NYSE:FSS
Federal Signal — Q3 2021 Earnings Presentation
20 slides from Federal Signal's earnings presentation, Nov 9, 2021
Slide 1: Federal Signal Q3 2021 Earnings Call
Federal Signal Q3 2021 Earnings Call November 9, 2021 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: Q3 Highlights
Q3 Highlights * • Net sales of $298 M, up $19 M, or 7% • Operating income of $34.3 M, up $0.3 M, or 1% • Adjusted EBITDA of $47.4 M, up $1.5 M, or 3% • Adjusted EBITDA margin of 15.9%, compared to 16.4% • GAAP EPS of $0.47, up $0.06, or 15% • Adjusted EPS of $0.48, up $0.06, or 14% • $0.05 of the ye
Slide 4: Group and Corporate Results
Group and Corporate Results $ millions, except % Q3 2021 Q3 2020 % Change ESG Orders 292.1 220.0 33% Sales 249.1 231.0 8% Operating income 30.8 33.0 -7% Operating margin 12.4% 14.3% Adjusted EBITDA 42.7 43.9 -3% Adjusted EBITDA margin 17.1% 19.0% SSG Orders 58.3 45.8 27% Sales 49.2 48.8 1% Operating
Slide 5: Consolidated Statement of Operations
Consolidated Statement of Operations $ millions, except % and per share Q3 2021 Q3 2020 $ Change % Change Net sales $ 298.3 $ 279.8 $ 18.5 7% Gross profit 70.9 72.6 (1.7) -2% SEG&A expenses 36.2 38.4 (2.2) -6% Acquisition and integration related expenses 0.4 0.2 0.2 100% Operating income 34.3 34.0 0
Slide 6: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income, as reported $ 29.2 $ 25.3 $ 81.1 $ 70.1 Add: Income tax expense 4.3 7.6 17.3 20.9 Income before income taxes 33.5 32.9 98.4 91.0 Add: Acquisition and integrati
Slide 7: Financial Strength and Flexibility
Financial Strength and Flexibility * • Cash and cash equivalents of ~$88 M • Net debt of ~$164 M ** • In July 2019, we executed a five-year, $500 M revolving credit facility, Strong capital with flexibility to increase by additional $250 M for acquisitions structure • No debt maturities until July 2
Slide 8: CEO Remarks – Q3 Performance
CEO Remarks – Q3 Performance • Meaningful improvement in net sales and earnings during Q3 • However, delays in chassis deliveries and other parts shortages estimated to have adversely impacted Q3 sales by ~$30 M • Despite this impact, Q3 adjusted EBITDA margin towards high end of target range • Cont
Slide 9: CEO Remarks – Market Conditions
CEO Remarks – Market Conditions • Outstanding Q3 orders of $350 M, up $85 M, or 32% vs. last year; contributing to another record backlog • Seeing signs that first tranche of stimulus money is flowing to municipal customers • U.S. municipal orders up 50% in both Q3 and YTD 2021 YTD street sweeper
Slide 10: Acquisition of Ground Force Worldwide
Acquisition of Ground Force Worldwide 10
Slide 11: Agreement to Acquire Deist Industries, Inc.
Agreement to Acquire Deist Industries, Inc. Interchangeable Mini Roll-Off Cable Hoist Systems Truck Bodies Containers (Drop Boxes) Front/Rear Roll-Off Containers Parts Loading Containers 11
Slide 12: 2021 Outlook
2021 Outlook Adjusted EPS* outlook range of $1.68 to $1.78 Key Full-Year Assumptions Revenue growth Effective income tax rate of ~18%, Depreciation and amortization expense of including estimated discrete tax ~$50 M benefits Capital expenditures of $20 M to $25 M ~62 M weighted average sha
Slide 13: Looking Ahead
Looking Ahead • Economic stimulus and infrastructure legislation expected to be catalysts for growth, benefiting most of our product offerings • Recent capacity expansions position us well to respond once supply chains improve • Diversification of revenue streams and end markets over last several ye
Slide 14: Q&A
Federal Signal Q3 2021 Earnings Call Q&A November 9, 2021 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 630-954-2000 Ian Hudson SVP, Chief Financial Officer IHudson@federalsignal.com 15
Slide 16: Appendix
Federal Signal Q3 2021 Earnings Call Appendix 16
Slide 17: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA $ millions, except % Q3 2021 Q3 2020 Net income $ 29.2 $ 25.3 Add: Interest expense 1.1 1.2 Acquisition and integration-related expenses 0.4 0.2 Coronavirus-related expenses - 0.4 Purchase accounting effects * - 0.1 Other income, net (0.3) (0.1) Income tax expense 4.3 7.
Slide 18: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q3 2021 Q3 2020 Operating Income $ 30.8 $ 33.0 Add: Acquisition and integration-related expenses 0.1 0.1 Coronavirus-related expenses - 0.3 Purchase accounting effects * - 0.1 Depreciation and amortization 11.8 10.4 Adjusted EBITDA $ 42.7 $ 43.9 Net S
Slide 19: Non-GAAP Measures
Non-GAAP Measures • Adjusted net income and earnings per share (“EPS”) - The Company believes that modifying its 2021 and 2020 net income and diluted EPS provides additional measures which are representative of the Company’s underlying performance and improves the comparability of results between re
Slide 20: Federal Signal
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