Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (May 2024)
30 slides from Federal Signal's investor presentation, May 2024
Slide 1: Investor Presentation: May 2024
Moves. Cleans. Protects. Investor Presentation: May 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
Federal Signal at a Glance Revenue by Category (2023) Industrial Warning ➢ Leading safety equipment & specialty vehicle OEM Signaling Systems 4% 2% ➢ Healthy product portfolio mix Public Safety 10% ➢ Resilient end market exposure Aftermarket 23% ➢ Disciplined M&A strategy Street Sweepers, ➢ Targetin
Slide 4: Federal Signal Product & Service Offerings
Federal Signal Product & Service Offerings ESG (83% of 2023 Revenue) SSG (17% of 2023 Revenue) 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 Sys
Slide 5: Delivering on our Growth Strategy
Delivering on our Growth Strategy Key Financial Targets ➢ High single digit annual revenue growth Net Sales CAGR (’16A – ’23A) Total: ~14% ➢ EBITDA margins: 14-20% (raised in Q4’23 Organic: ~7% $1,762 from 12-16%) $1,723 ➢ ROIC > Cost of Capital $1,435 $1,213 $1,221 $1,090 $1,131 (US$ in millions) $
Slide 6: 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 (19) Aftermarket Site (29) Multi-Purpose Maintenance
Slide 7: ESG: Resilient End-Market Characteristics
ESG: Resilient End-Market Characteristics Water Taxes Funding – United States $20,000 CAGR (’10A – ’23A): ~4.0% $19,543 $19,000 Water taxes are a significant funding mechanism for sewer cleaners COVID: $18,000 +3.7%YoY $17,000 (US$ in millions) Industrial $16,000 Recession: +1.7%YoY $15,000 $14,000
Slide 8: 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 9: Strategic Pillars: Aftermarket Ecosystem Optimization
Strategic Pillars: Aftermarket Ecosystem Optimization Aftermarket Snapshot Parts & Services ➢ Size: ~27% of ESG Sales (FY 2023) ➢ Sale of parts/services/refurbishment ➢ 2015-2023 Sales CAGR: ~16% New Vehicle / ➢ 29 locations across US + Canada Equipment Sales ➢ Targeting all FSS customers regardless
Slide 10: 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 11: 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 12: 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 13: 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 14: M&A Case Study: Ground Force & TowHaul
M&A Case Study: Ground Force & TowHaul M&A Checklist Average Mineral Inputs1 (kg / vehicle) Niche-market leader in specialty vehicles Graphite Growth platform for M&A and organic growth in 207 kg Copper metal extraction & support equipment space Long-term growth potential given significant Nickel ex
Slide 15: Update on Current Environment
Update on Current Environment Demand Exceptionally Strong American Rescue Plan Act ➢ $350bn of government spending designated for cities, states, tribal governments and U.S. territories o First $175bn distributed in 2021; second $175bn in 2022. Funds to be obligated by end of 2024 and expended by en
Slide 16: 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 17: Targeting Best in Class Growth & Continued Margin Expansion
Targeting Best in Class Growth & Continued Margin Expansion Peer 8 Specialty Vehicle Peers Industrial Consolidator Peers Peer 6 2023 Adj. EBITDA Margin (%) 20%+ Peer 7 Peer 9 17.0% FSS Peer 5 Peer 1 13.0% Peer 4 Peer 2 Peer 3 9.0% 5.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 201
Slide 18: Industry-Leading Margin Performance Through the Business Cycle
Industry-Leading Margin Performance Through the Business Cycle ADJ. EBITDA1 ADJ. EBITDA Margin1 $286 $302 Margin Targets: ➢ New Consolidated EBITDA Margin Target: 14 – 20% (from: 12-16%) ➢ New ESG EBITDA Margin Target: 17 – 22% (from: 15-18%) ➢ SSG EBITDA Margin Target: 17 – 21% $215 $191 $182 $181
Slide 19: Financial Performance
Financial Performance $186 Net Sales & Orders Free Cash Flow Generation1 $1,870 $1,898 $164 Net Sales Orders $160 $1,762 $1,692 $1,723 Facility $140 investments & $1,539 supply chain related working $1,435 capital $120 headwinds $1,269 $107 $1,213 $1,173 $1,131 $1,221 $100 (US$ in millions) (US$ in
Slide 20: Raising 2024 Outlook
Raising 2024 Outlook ➢ Raising Full-Year Adjusted EPS1 Outlook to a new range of $2.95 to $3.15 ➢ Increased from the prior range of $2.85 to $3.05 ➢ New range would represent YoY growth of 14% - 22%, and the highest EPS level in our history ➢ Does not include discrete tax benefit of ~$13mm, recogniz
Slide 21: 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 21
Slide 22: Appendix I: Our Portfolio of Brands & Products
Appendix I: Our Portfolio of Brands & Products ESG SSG Source: Management 22
Slide 23: 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 23
Slide 24: 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 25: 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 26: 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 27: Appendix V: Non-GAAP Measures (Net Debt Leverage and Free Cash Flow)
Appendix V: Non-GAAP Measures (Net Debt Leverage and Free Cash Flow) Net Debt Leverage Net debt leverage is a non-GAAP measure that is computed as total borrowings and finance lease obligations less cash and cash equivalents, divided by Adjusted EBITDA (as separately defined within). The Company bel
Slide 28: 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 29: Appendix VI: Investor Information
Appendix VI: Investor Information Stock Ticker: NYSE:FSS Company website: federalsignal.com/investors HEADQUARTERS 1415 West 22nd Street, Suite 1100 Oak Brook, IL 60523 Felix Boeschen VP Corporate Strategy & Investor Relations fboeschen@federalsignal.com 29
Slide 30: Federal Signal
[e FEDERAL SIGNAL Moves. Cleans. Protects.