Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (March 2023)
31 slides from Federal Signal's investor presentation, March 2023
Slide 1: Disciplined Growth
Disciplined Growth Investor Presentation March 2023
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
Federal Signal at a Glance • Founded in 1901, joined NYSE in 1969 (“FSS”) • Diversified industrial manufacturer of specialized vehicles for maintenance and infrastructure markets such as street sweepers, sewer cleaners, vacuum/hydro-excavators (“safe- digging trucks”), industrial vacuum loaders, wat
Slide 4: Why Federal Signal?
Why Federal Signal? Composition of Businesses • Clearly-defined strategy, with two groups – ESG and SSG – each of which have strong growth potential through a combination of organic initiatives and M&A End Market Exposures • Typical annual revenue mix of ~50% publicly-funded / ~50% industrial • Publ
Slide 5: Delivering on our Strategy
Delivering on our Strategy Strategic acquisitions, primarily focused on developing a Specialty Vehicle platform, and organic growth have contributed meaningfully to Federal Signal’s growth since 2016 (US$ in millions) Net Sales CAGR (2016-22) Total: ~13% $1,435 Organic: ~6% $1,221 $1,213 $1,131 $1,0
Slide 6: Two Attractive Platforms
Segment Two Attractive Platforms Environmental Solutions $1.19 B* Safety and Security Systems Group (ESG) Group (SSG) Serves publicly-funded, Serves the needs of industrial, and utility markets for Markets municipalities and industrial surface and sub-surface cleaning, verticals for audible and visu
Slide 7: Environmental Solutions Group (ESG)
Environmental Solutions Group (ESG) Have established a platform serving maintenance and infrastructure markets to provide customers with a comprehensive suite of products and services Street Sewer Safe Industrial Road Materials Hauling Metal Extraction Application sweeping cleaning digging cleaning
Slide 8: Safety and Security Systems Group (SSG)
Safety and Security Systems Group (SSG) Serves the needs of government and industrial verticals for audible and visual safety and security notification devices Public Safety and Security Signaling Systems Lights and siren products for Police, Fire and Audible and visual Warning Systems Application H
Slide 9: Macro Factors Driving Demand
Macro Factors Driving Demand Federal Signal’s diverse portfolio of specialty vehicles is well-positioned to Proposed Infrastructure Spending Allocation Plan . capitalize on favorable macro trends across its core end markets Infrastructure Bill • $550 billion of government spending over five years to
Slide 10: Macro Factors Driving Demand
Macro Factors Driving Demand Additional macro trends driving opportunity for Federal Signal’s U.S. Housing Starts diverse portfolio of products and equipment U.S. Housing – Builder Confidence Rebounding • As of February 2023, National Association of Homebuilders (NAHB)/Wells Fargo Market Index indic
Slide 11: Key Strategic Initiatives
Key Strategic Initiatives Specialty Vehicles for Areas of Aftermarket Parts and Audible and Visual Focus Safe Digging Diverse Services Warning Devices End-Markets Supported By Flexible New Product Technology as an Manufacturing & “ETI” Disciplined M&A Development Enabler Culture 11
Slide 12: Strategic Initiative– Safe Digging
Strategic Initiative– Safe Digging Federal Signal is well positioned to establish a leading position in an emerging application for vacuum-excavation technology; increased regulation expected to accelerate growth What is it? Why is it Attractive? Why Federal Signal? • Vacuum excavation or “Safe Digg
Slide 13: Continued M&A Execution
Continued M&A Execution • Product line addition to Ground Force • Fills critical product gap in road • Manufacturer of multi-purpose, off-road (acquired in 2021) marking/line-removal business and municipal tractors and a variety of attachments • Establishes platform serving a global establishes Flor
Slide 14: Financial Overview
Financial Overview Net Sales Adjusted EBITDA Margin* Full Year 2022 Highlights3: (Consolidated) • Record net sales of $1.43B, up 1,221 1,213 1,435 $222M, or 18%, with organic 1,090 1,131 growth of $130M, or 11% $ in millions 899 244 226 228 215 209 14.6% 15.7% 16.1% 15.0% • Operating income of $160.
Slide 15: Strong Financial Position Supports Priority-Driven Long-Term Capital Allocation
Strong Financial Position Supports Priority-Driven Long-Term Capital Allocation In October 2022, executed 5-year, $800 M revolving credit facility, with flexibility to increase further for acquisitions; At end of 2022, net debt leverage remained low, with ~$428 M of availability under credit facilit
Slide 16: 2023 Outlook
2023 Outlook Adjusted EPS* ranging from $2.15 to $2.40 Would represent highest EPS in Company’s history and YoY growth of 10%-22%, despite aggregate headwind of ~$0.23 from higher interest expense and normalization of tax rate Key Assumptions Revenue of $1.58 B to $1.72 B; represents YoY growth of
Slide 17: Positioned for Long-Term Growth
Positioned for Long-Term Growth With continued focus on organic growth and M&A, and margin performance above that of many of our peers, our financial framework aims to create long-term shareholder value Long-Term Organic Value-Added Revenue Growth Acquisitions (Couple of % points > GDP) High Single
Slide 18: Appendix
Appendix I. Segments Overview II. Environmental, Social and Governance Initiatives III. Eighty-Twenty Improvement Culture IV. New Product Development V. Non-GAAP Measures VI. Executive Compensation VII. Investor Information 18
Slide 19: Appendix I: ESG Products
Appendix I: ESG Products ey ELGini VACTOR OTRUVAC =
Slide 20: Appendix I: ESG Products (continued)
Appendix I: ESG Products (continued) 20
Slide 21: ESG - Market Influencers & Where We Play
Appendix I: ESG - Market Influencers & Where We Play Market Dynamics Many ESG products support essential services that are 2022 Sales by Geography focused on cleaning COVID relief stimulus includes $350 B for state, local and territorial governments; package targets maintenance of 16% essential
Slide 22: Appendix I: SSG Products
Appendix I: SSG Products FEDERAL SIGNAL Safety and Security Systems Public Safety Systems FEDERAL SIGNAL Safety and Security Systems Heavy Duty FEDERAL SIGNAL Safety and Security Systems Signaling FEDERAL SIGNAL Safety and Security Systems Systems FEDERAL SIGNAL VAMA Safety and Security Systems
Slide 23: SSG - Market Influencers & Where We Play
Appendix I: SSG - Market Influencers & Where We Play Market Dynamics 2022 Sales by Geography Increased national focus on issues of public safety and law enforcement, and rising public expectations for transparency and accountability driving demand for 37% safety and security products 63% Rising
Slide 24: Environmental, Social and Governance Initiatives
Appendix II: Environmental, Social and Governance Initiatives We know that as a global manufacturer of critical infrastructure products, we have the responsibility to do the right thing-operate sustainably Environmental Social Corporate Governance • Products • Diversity, Equity, & Inclusion (DEI) •
Slide 25: Eighty–Twenty Improvement (ETI) Culture
Appendix III: Eighty–Twenty Improvement (“ETI”) Culture Manufacturing Efficiency Material Cost Reduction • Lean manufacturing focus • Waste reduction • Throughput flexibility • SKU rationalization • Labor pool management • Savings through volume aggregation • Flexible manufacturing model • Sourcing
Slide 26: New Product Development
Appendix IV: New Product Development • Several successful new product launches resulting from our customer-focused approach to innovation, including the award-winning launch of the ParaDIGm® vacuum excavator in 2016 • Targeting long-term organic revenue growth of a couple percentage points above GDP
Slide 27: Non-GAAP Measures (Adjusted EPS)
Appendix V: Non-GAAP Measures (Adjusted EPS) ($ in millions, except per share data) Year Ended December 31, 2022 2021 Adjusted net income and earnings per share (“EPS”) Net income $ 120.4 $ 100.6 The Company believes that modifying its 2022 and 2021 Add (less): net income and diluted EPS provides ad
Slide 28: Non-GAAP Measures (Adjusted EBITDA)
Appendix V: Non-GAAP Measures (Adjusted EBITDA) Adjusted EBITDA and adjusted EBITDA margin ($ in millions) 2017 2018 2019 2020 2021 2022 Net income (from continuing operations) $ 60.5 $ 93.7 $ 108.4 $ 96.1 $ 100.6 $ 120.4 The Company uses adjusted EBITDA and adjusted EBITDA margin as Add (less): add
Slide 29: 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: Investor Information
Appendix VII: 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 SVP & Chief Financial Officer IHudson@federalsignal.com 30
Slide 31: Federal Signal: Moves. Cleans. Protects.
[z FEDERAL SIGNAL Moves. Cleans. Protects.