Federal Signal Corporation · NYSE:FSS
Federal Signal — Q4 2023 Earnings Presentation
19 slides from Federal Signal's earnings presentation, Feb 27, 2024
Slide 1: Federal Signal Q4 2023 Earnings Call
Federal Signal Q4 2023 Earnings Call February 27, 2024 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer Felix Boeschen, VP, Corporate Strategy & Investor Relations
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: Full-Year Financial Highlights
Full‐Year Financial Highlights * • Record net sales of $1.72 B, up $288 M, or 20% • Organic growth of $220 M, or 15% • Operating income of $224.5 M, up $63.7 M, or 40% • Adjusted EBITDA of $286.0 M, up $71.0 M, or 33% • Adjusted EBITDA margin of 16.6%, vs. 15.0% • GAAP EPS of $2.56, up $0.59, or 30%
Slide 4: Q4 Highlights
Q4 Highlights * • Record net sales of $448 M, up $57 M, or 15% • Organic growth of $42 M, or 11% • Operating income of $63.1 M, up $16.5 M, or 35% • Adjusted EBITDA of $77.5 M, up $16.4 M, or 27% • Adjusted EBITDA margin of 17.3%, vs. 15.6% • GAAP EPS of $0.75, up $0.18, or 32% • Record adjusted EPS
Slide 5: Group and Corporate Results
Group and Corporate Results $ millions, except % Q4 2023 Q4 2022 % Change Enivronmental Solutions Orders $ 398.8 $ 383.5 4% Group Sales 373.1 325.3 15% Operating income 58.2 44.7 30% Operating margin 15.6% 13.7% Adjusted EBITDA 73.3 57.6 27% Adjusted EBITDA margin 19.6% 17.7% Safety and Security Ord
Slide 6: Statement of Operations
Statement of Operations $ millions, except % and per share Q4 2023 Q4 2022 $ Change % Change Net sales $ 448.4 $ 391.5 $ 56.9 15% Gross profit 119.4 96.6 22.8 24% SEG&A expenses 54.1 46.2 7.9 17% Amortization expense 3.8 3.3 0.5 15% Acquisition and integration-related (benefits) expenses (1.6) 0.5 (
Slide 7: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Net income $ 46.4 $ 34.6 $ 157.4 $ 120.4 Add (less): Income tax expense 12.1 7.4 45.6 30.5 Income before income taxes 58.5 42.0 203.0 150.9 Add (les
Slide 8: Financial Strength and Flexibility
Financial Strength and Flexibility * • Cash and cash equivalents of $61.0 M • Net debt of ~$238 M ** • In October 2022, executed a five-year, $800 M revolving credit facility, with Strong capital opportunity to increase further by the greater of (i) $400 M or (ii) 100% of TTM structure consolidated
Slide 9: CEO Remarks – Q4 Performance
CEO Remarks – Q4 Performance • Outstanding execution by both groups contributed to a record- setting quarter across sales, adjusted EPS and backlog • Q4 adjusted EBITDA margin slightly above midpoint of recently raised margin target range • Environmental Solutions Group highlights: YoY net sales g
Slide 10: CEO Remarks – Market Conditions
CEO Remarks – Market Conditions • Demand for our products and aftermarket offerings remains strong, as evidenced by Q4 orders of $465 M, up 5% YoY • Q4 backlog at ~$1.03 B (up 17% YoY), up slightly vs. Q3; provides excellent visibility into 2024 • End-market diversification efforts yielding order st
Slide 11: CEO Remarks – Executing on Strategic Framework in 2024
CEO Remarks – Executing on Strategic Framework in 2024 Recently Raised EBITDA Margin Targets: Operational Organic Value‐ Excellence Growth Added M&A • Consolidated: 14‐20% • Environmental Solutions Group: 17-22% • Safety and Security Systems Group: 17-21% Net Sales CAGR (’16A – ’23A) Total: ~14% Org
Slide 12: 2024 Financial Outlook
2024 Financial Outlook Issuing 2024 Guidance • Full‐Year Adjusted EPS1 Outlook of $2.85 to $3.05 • Would represent YoY growth of 10% - 18%, and the highest EPS level in our history • Does not include discrete tax benefit of ~$14 M, anticipated in Q1 2024 • Full‐year net sales of $1.85 B to $1.90 B •
Slide 13: Federal Signal Q4 2023 Earnings Call Q&A
Federal Signal Q4 2023 Earnings Call Q&A February 27, 2024 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer Felix Boeschen, VP, Corporate Strategy & Investor Relations 13
Slide 14: 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 CONTACTS 630-954-2000 Felix Boeschen VP, Corporate Strategy and Investor Relations fboeschen@federalsignal.com 14
Slide 15: Appendix
Federal Signal Q4 2023 Earnings Call Appendix 15
Slide 16: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA Consolidated Three Months Ended December 31, Twelve Months Ended December 31, $ millions, except % 2023 2022 2023 2022 Net income $ 46.4 $ 34.6 $ 157.4 $ 120.4 Add (less): Interest expense 4.3 4.4 19.7 10.3 Acquisition and integration-related (benefits) expenses (1.6) 0.
Slide 17: Segment Adjusted EBITDA
Segment Adjusted EBITDA $ millions, except % Q4 2023 Q4 2022 Operating Income $ 58.2 $ 44.7 Add: Acquisition and integration-related expenses 0.2 0.1 Purchase accounting effects 0.7 - Depreciation and amortization 14.2 12.8 Adjusted EBITDA $ 73.3 $ 57.6 Net Sales $ 373.1 $ 325.3 Adjusted EBITDA marg
Slide 18: Non-GAAP Measures
Non‐GAAP Measures • Adjusted net income and earnings per share (“EPS”) - The Company believes that modifying its 2023 and 2022 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 19: Federal Signal Moves. Cleans. Protects.
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