Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (March 2017)
32 slides from Federal Signal's investor presentation, Mar 6, 2017
Slide 1: Disciplined Growth Investor Presentation March 2017
Disciplined Growth Investor Presentation March 2017
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 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: About Federal Signal
About Federal Signal • Founded in 1901, joined NYSE in 1969 (“FSS”) • Diversified industrial manufacturer of specialized environmental cleaning vehicles such as street sweepers, sewer cleaners and hydroexcavators; as well as safety and security products including audible and visual warning devices •
Slide 4: An Experienced Leadership Team
An Experienced Leadership Team 4 Brian Cooper Chief Financial Officer Appointed May, 2013 Previously served as Chief Financial Officer of Westell Technologies, Inc. from 2009-2013 Previously with Fellowes, Inc. (CFO), United Stationers, Borg-Warner Security and Amoco Jennifer Sherman President
Slide 5: Positioned for Long-Term Growth
Positioned for Long-Term Growth Two platforms poised for profitable growth Attractive mix of municipal and industrial end markets Revitalized new product development initiative Active M&A pipeline Strong balance sheet and cash flow Ongoing focus on continuous improvement utilizing “80/20”
Slide 6: Two Attractive Platforms
Serves the needs of municipalities and industrial verticals for audible and visual safety and security notification devices and systems Two Attractive Platforms 6 Environmental Solutions Group (ESG) Safety and Security Systems Group (SSG) $491 M $217 M Serves municipal, industrial, and utility marke
Slide 7: Environmental Solutions Group (ESG)
Environmental Solutions Group (ESG) 7 During 2016 we expanded our product portfolio to offer customers a comprehensive solution of new and used equipment, parts & service and rental offerings Markets Served Rental/Aftermarket Distribution Brands End Markets and Channels Aggregate addressable market
Slide 8: ESG: Market Influencers and Where We Play
ESG: Market Influencers and Where We Play 8 Municipal/Government Industrial Cleaning Construction & Industrial Utility Oil and Gas Other (Rental) 2016 End Markets by Users1 75% 25% 2016 Sales by Geography U.S. Non-U.S. Economic recovery supports state and local funding for sweepers and sewer clean
Slide 9: Safety and Security Systems Group (SSG)
Safety and Security Systems Group (SSG) 9 Serves the needs of government and industrial verticals for audible and visual safety and security notification devices Public Safety and Security Signaling Systems Brands Lights and siren products for Police, Fire and Heavy Duty (HD) end-markets Audible and
Slide 10: SSG: Market Influencers and Where We Play
SSG: Market Influencers and Where We Play 10 65% 35% 2016 Sales by Geography U.S. Non-U.S. Municipal/Government Industrial Cleaning Construction & Industrial Utility Oil and Gas Other 2016 End Markets by Users Increased national focus on issues of public safety and law enforcement, and rising publ
Slide 11: Federal Signal Strategic Focus
Federal Signal Strategic Focus 11 Optimize Existing End-Markets Invest to grow revenue faster than GDP Continue to improve manufacturing efficiencies and costs Leverage our existing plants and invested capital Grow in New End-Markets Innovate to develop new product applications for adjacent
Slide 12: ESG Strategic Initiatives
ESG Strategic Initiatives 12 Maintain or achieve leading market position in all product categories for North American governmental market Refocus on dealer development Renewed focus on product development Increase equipment sales in North American non-governmental markets Utility market in
Slide 13: SSG Strategic Initiatives
SSG Strategic Initiatives 13 Defend and expand leading market share positions in police, signaling and outdoor warning markets New products and portfolio optimization Grow into heavy duty and fire adjacencies “Go to Market” initiatives Capture higher share of municipal spending by police d
Slide 14: Our 2020 Revenue Goal
2016-2020 CAGR ≥ 9% Our 2020 Revenue Goal 14 $1.0 B+ $708 M Key Drivers • Full-year impact of 2016 completed acquisitions • Modest recovery in our end markets • GDP growth • Strategic initiatives that drive growth above GDP growth rates • Additional acquisitions, including completion of our existing
Slide 15: Priority Driven Capital Allocation
Priority Driven Capital Allocation 15 Organic projects leverage existing assets, generally require limited cash investment Innovation R&D efforts target new and updated products Generally, already funded within operating results, cash flow and normal capital expenditures Reinvest in the Busine
Slide 16: Renewed Focus on Product Development
Renewed Focus on Product Development 16 1 Kicked off innovation refocus in late 2013 Re-allocated engineering resources toward innovation Implemented innovation development processes and project management – several projects underway that have originated from customer & market-based needs asse
Slide 17: Sample of New Product Development Initiatives
Sample of New Product Development Initiatives Environmental Solutions Group (ESG) Safety and Security Systems Group (SSG)New Markets Optimize Existing Markets • ParaDIGm • Water recycler • Vehicle-based monitoring and reporting solutions • Trailer-mounted jetter • Improved air sweeper offerings • Gl
Slide 18: M&A Target Evaluation
• Niche market leader (product, geography, end-market) • Sustainable competitive advantage • Deep domain expertise (technology, application, manufacturing) • Strong management team • Leverages FSC’s distribution and manufacturing capabilities • Solid growth potential • Through-the-cycle margins comp
Slide 19: Joe Johnson Equipment (JJE) – Platform for Industrial and Geographic Growth
* Estimated % of JJE 2015 revenues based on unaudited financial statements prepared in accordance with ASPE. Completed Acquisition Acquired valuable expertise in rentals, used equipment, parts and service Platform for industrial sales into Canada Significantly expands our footprint from 13 to
Slide 20: Returning Value to Shareholders
Returning Value to Shareholders 20 Cash Returns to Stockholders Declining Debt and Leverage …while maintaining a strong Balance Sheet 43 5.9x 2.9x 1.3x 0.5x 0.4x 0.8x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 2011 2012 2013 2014 2015 2016 To ta l D eb t / A dj us te d EB IT D A 0.0 10.3 10.6 37.8 5.6
Slide 21: 2016: In Review
2016: In Review Steady progress over last 5 years via: 80/20 implementation Pricing improvements Efficiencies from leveraging volume 2016 Business Highlights Public Safety Systems continued to profitably gain market share Elgin sweeper business posted second highest year ever, in terms
Slide 22: 2017 Outlook
2017 Outlook 22 + Stable municipal demand + Improving recent order patterns and sales funnels, with benefits beginning in Q2 + Full year of Paradigm sales into utility and construction end-markets + Full year impact from 2016 acquisitions Adjustments to include items related to acquisitions Depr
Slide 23: Positioned for Long-Term Growth: 2017 and Beyond
Positioned for Long-Term Growth Two platforms poised for profitable growth Attractive mix of municipal and industrial end markets Revitalized new product development initiative Active M&A pipeline Strong balance sheet and cash flow • Achieve at least $1.0 B of revenue by 2020 • Deliver on
Slide 24: Appendix
Appendix 24 I. Company Products (Pictured) II. Total Debt to Adjusted EBITDA III. Adjusted Operating Margin IV. Estimated Global Sales V. Investor Information
Slide 25: Appendix I: Environmental Solutions Group
Appendix I: Environmental Solutions Group 25
Slide 26: Appendix I: Safety and Security Systems Group
Appendix I: Safety and Security Systems Group 26
Slide 27: Appendix I: Integrated Systems Division
Appendix I: Integrated Systems Division 27 Enterprise Integrated Command Solution Sensors/Detectors Control Modules/Nodes Public Address Cameras Intercoms Visual Signals Telephony Audible Devices Outdoor Warning Sensors/Detectors SmartMsg Enabled Systems Control Modules/Nodes Control Modules/Nodes N
Slide 28: Total Debt to Adjusted EBITDA
The Company uses the ratio of total debt to adjusted EBITDA as one measure of its long-term financial stability. The ratio of debt to adjusted EBITDA is a non-GAAP measure that represents total debt divided by the trailing 12-month total of income from continuing operations before interest expense,
Slide 29: Adjusted Operating Margin
The Company references adjusted operating margin in these materials. Adjusted operating margin is a non-GAAP measure that represents total consolidated operating income (as reported) plus acquisition and integration related expenses, restructuring charges and purchase accounting effects and divides
Slide 30: Appendix IV: Estimated Global Sales
72% 12% 16% Sales by domestic subsidiaries within U.S. Sales by domestic subsidiaries outside of U.S. * Sales by non-U.S. subsidiaries outside of U.S. ** Sales allocations for period ending December 31, 2016 * Sales from the U.S. are predominantly denominated in U.S. dollars. ** Sales from and withi
Slide 31: Appendix V: Investor Information
31 Stock Ticker NYSE: FSS Website www.federalsignal.com/investors Headquarters 1415 W. 22nd Street, Suite 1100 Oak Brook, IL 60523 Investor Relations Contacts: Telephone: 630-954-2000 Brian Cooper BCooper@federalsignal.com SVP, Chief Financial Officer Svetlana Vinokur SVinokur@federalsignal.com VP,
Slide 32: Federal Signal: Protecting people and our planet
4a = rss ee P FEDERAL SIGNAL Protecting people and our planet