Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (March 2016)
34 slides from Federal Signal's investor presentation, Mar 7, 2016
Slide 1: Disciplined Growth Investor Presentation March 2016
Disciplined Growth Investor Presentation March 2016
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: Our Mission, Values and Numbers
3 Our Mission Providing products and services to protect people and our planet Our Values We operate with the highest principles and deliver results through - Customer focus - Innovation - Continuous improvement - Teamwork and investing in our people Our Numbers $768 M revenue, $103 M operating in
Slide 4: Experienced Management Team
4 Experienced Management Team Dennis Martin Executive Chairman President and Chief Executive Officer October 2010 – December 2015 Previously served as Chairman, President and CEO of General Binding Corporation 35+ years operational and leadership experience, primarily at Illinois Tool Works an
Slide 5: Federal Signal Businesses
Federal Signal Businesses Environmental Solutions (ESG) Vactor vacuum trucks, sewer cleaners, and hydro-excavators Elgin street sweepers Jetstream waterblasters FS Solutions rental centers, parts and service Safety and Security Systems (SSG) Vehicle lights and sirens (U.S. PSS and Vama)
Slide 6: Environmental Solutions and Safety and Security Systems markets and customers
6 Environmental Solutions (ESG) Market Share: ≈30-50% U.S. Customers Served • Municipal and other government customers, via #1 dealer network • Primary end users are contractors and rental companies serving industrial cleaning, construction, oil and gas, utility and other industries 59% 41% Sales by
Slide 7: Positioning for Profitable Growth
Positioning for Profitable Growth Dennis Martin named Executive Chairman; Jennifer Sherman Appointed President and CEO Completion of acquisition of Westech Vac Systems Ltd. Entered into definitive agreement to acquire substantially all of the assets and operations of Joe Johnson Equipment Execution
Slide 8: Strengthened Growth Platform
Strengthened Growth Platform Federal Signal is well positioned to weather business cycles and grow long term Succession planning and talent development Flexible manufacturing model New product development Portfolio realignment, Bronto divestiture Reinstated dividend Disciplined M&A process Strong Ba
Slide 9: 2015 Results
2015 Results * • Market saturation due to quick, dramatic slowdown of oil & gas • Reduction and change in mix of backlog • Ongoing uncertainty in industrial markets • Higher projected hearing loss expense in 2H • Jetstream distribution changes and increased expense due to EPA engine compliance 2015
Slide 10: Balance Sheet and Cash Flow
• Strong cash flow 2015 cash flow from operations of $91 M, up from $81 M in 2014 • Robust financial position Cash balance at 12/31/15 of $76 M, up from $24 M last year Total debt at 12/31/15 was $44 M, compared to $50 M last year Cash on hand exceeded total debt by $32M at 12/31/15 • Health
Slide 11: 2016 Priorities
• Ongoing Initiatives to Grow Shareholder Value: Create disciplined growth Leverage invested capital Diversify customer base Improve manufacturing efficiencies and costs • Long-Range Goals: Grow revenue faster than GDP, increasing industrial share Strong Return on Invested Capital perfor
Slide 12: Innovating for Growth
12 Innovating for Growth ParaDIGm (ESG) G-Series (SSG) Targeted global expansion in higher- margin industrial markets Developed the Global Signaling (“G-Series”) line of internationally certified (ATEX or IECEx) products for rugged, hazardous industrial applications Product design and developm
Slide 13: New Product Development
13 New Product Development Water Recycler (ESG) Introduced in February 2016 Saves water, re-using sewer water instead of clean water Increases productivity up to 100% – uninterrupted cleaning of more lines in less time Appears superior to existing competitive products Trailer-Mounted Jetter (ESG
Slide 14: Joe Johnson Equipment Acquisition
14 Joe Johnson Equipment Acquisition * Estimate based on unaudited financial statements prepared in accordance with Canadian Accounting Standards for Private Enterprises (ASPE). ** Includes estimated impact of resulting intercompany eliminations, including Federal Signal’s sales to JJE, which approx
Slide 15: JJE Full Product and Service Offering
Rental of Equipment Sewer & Street Maintenance Hydro Excavation, DOT & Industrial Vacuum Snow & Ice Control Refuse & Recycling Indoor Recreational Ice Products Industrial Service Sale of New Equipment Sale of Used Equipment Parts Full Maintenance Lease Programs Premier Infrastructure Maintenance Equ
Slide 16: JJE Acquisition: Staying Close to the Core
JJE Acquisition: Staying Close to the Core Significantly expands our industrial footprint from 13 to 25 service centers throughout Canada and US Expands our share of after-market activity Allows capture of additional customer base Attractive margin profile Product offering to capture more
Slide 17: Acquisition Strategy – Stay Close To The Core
17 Acquisition Strategy – Stay Close To The Core • Complementary product/services offerings that better meet customer requirements • Channel access for FSC products to new or extended markets • Complementary offerings for new or underserved geographies Geographies Products Channels and Markets • Cus
Slide 18: JJE – Expanding ESG Industrial Reach
JJE – Expanding ESG Industrial Reach North American Industrial Market Coverage 18 Expands our after- market reach Increases service center locations from 13 to 25 Serves majority of our end-customer concentrations
Slide 19: Shareholder Value Creation
19 Shareholder Value Creation Create Disciplined Growth Organic & Acquisitions Diversify Customer Base Leverage Invested Capital Improve Manufacturing Efficiencies and Costs Long-term operating margin targets Grow revenue faster than GDP Grow EPS at an average % rate in low to mid teens Increase ind
Slide 20: Priority Driven Capital Allocation
20 Priority Driven Capital Allocation Internal Growth Initiatives Dividend Policy Share Repurchase Acquisitions
Slide 21: 2016 Outlook
+ Municipal markets healthy (~60% of revenue) + New product introductions: ParaDIGm, Water Recycler, G-Series, trailer-mounted jetter + Modest contribution from JJE acquisition + Strong balance sheet Adjustments to include items related to acquisitions $10-15 M in capital expenditures 2016 Outlo
Slide 22: Protecting People And Our Planet
22 Protecting People And Our Planet
Slide 23: Appendix
Appendix • Group and Corporate Results • Consolidated Historical Financial Performance • Adjusted EPS • Total Debt to Adjusted EBITDA • Operating Margins • Estimated Global Sales • Company Products (Pictured) • Investor Information 23
Slide 24: Appendix 1: Group and Corporate Results
24 $ millions, except % FY 2014 FY 2015 % Chg ESG Orders 555.6 449.2 -19% Sales 536.6 534.1 0% Operating income 81.9 96.9 18% Operating margin 15.3% 18.1% SSG Orders 251.8 236.9 -6% Sales 242.5 233.9 -4% Operating income 32.1 32.3 1% Operating margin 13.2% 13.8% Corporate expenses 25.3 26.0 3% Conso
Slide 25: Appendix 2: Consolidated Historical Financial Performance
Appendix 2: Consolidated Historical Financial Performance* 25 ($ in millions) 2012 2013 2014 2015 Net sales $ 668.1 $ 712.9 $ 779.1 $ 768.0 % Growth, Year over Year 15.3% 6.7% 9.3% -1.4% Cost of sales 506.7 536.9 570.4 542.4 Gross profit $ 161.4 $ 176.0 $ 208.7 $ 225.6 % Margin 24.2% 24.7% 26.8% 29.
Slide 26: Appendix 3: Adjusted Earnings per Share
Appendix 3: Adjusted Earnings per Share* * The adjusted financial measures presented above are unaudited and are not in accordance with U.S. generally accepted accounting principles (“GAAP”). The non-GAAP financial information presented herein should be considered supplemental to, and not a substitu
Slide 27: Appendix 4: Total Debt to Adjusted EBITDA
Appendix 4: 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 conti
Slide 28: Appendix 5: Operating Margins
Appendix 5: Operating Margins 28 Operating margin excludes the impact of restructuring charges in all periods Business Segment FY 2012 Operating Margin FY 2013 Operating Margin FY 2014 Operating Margin FY 2015 Operating Margin Long-term Margin Targets ESG 9.8% 12.3% 15.3% 18.1% 14% - 16% SSG 12.0% 1
Slide 29: Appendix 6: Estimated Global Sales
Appendix 6: Estimated Global Sales 29 75% 19% 6% Sales by domestic subsidiaries within U.S (2015, in US $) Sales by domestic subsidiaries outside of U.S (2015, in US $)* Sales by non-U.S. subsidiaries outside of U.S (2015, in local currency) ** * Sales from the U.S. are predominantly denominated in
Slide 30: Environmental Solutions Group Products
Environmental Solutions Group Products 30
Slide 31: Safety and Security Systems Group Products
Safety and Security Systems Group Products 31
Slide 32: Safety and Security Integrated Systems Products
Safety and Security Integrated Systems Products SmartMsg Enabled Systems Enterprise Integrated Command Solution Sensors/Detectors Cameras Networked PAGASYS Rack Control Modules/Nodes Control Modules/Nodes Control Modules/Nodes 32
Slide 33: Investor Information
Investor Information 33 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@f
Slide 34: Federal Signal
FEDERAL SIGNAL Protecti: