Federal Signal Corporation · NYSE:FSS
Federal Signal — Investor Presentation (August 2008)
33 slides from Federal Signal's investor presentation, Aug 28, 2008
Slide 1: Federal Signal Corporation, August 2008
August, 2008 Federal Signal Corporation
Slide 2: Safe Harbor
This presentation contains various forward-looking statements as of the date hereof and the company undertakes no obligation to update these statements regardless of new developments or otherwise. Statements in this presentation that are not historical are forward- looking statements and may be impa
Slide 3: Agenda
Agenda Overview Recent Accomplishments Strategic Focus Financial Review Business Segments Management and Corporate Governance Conclusion
Slide 4: Federal Signal Overview
Founded in 1901, Federal Signal is a leader in advancing security and well-being for communities and workplaces around the world We design and manufacture a suite of products and integrated solutions in three business segments Safety and Security Systems Group (SSG) Environmental Solutions Group (ES
Slide 5: Federal Signal Overview - Financial data
Financial data Market capitalization: ~$740 million 1H 2008 revenues: $482 million Net manufacturing debt to capitalization: 41% as of June 30, 2008 Quarterly dividend: $0.06/share; 242 consecutive quarterly dividends Federal Signal Overview
Slide 6: Federal Signal Overview - Diverse Markets
Federal Signal Overview - Diverse Markets YTD 2008 Orders ($514 Million) Non-U.S. Bronto demand remaining strong; weaker Europe offset by strong ROW. Exports remain solid, benefiting from weak USD U.S. Muni/Government Police products and sweeper markets weakened in late 2007/early 2008 Public safety
Slide 7: Federal Signal Overview - Investment Highlights
Robust 100+ years history of product leadership Leading brands: Federal Signal, Elgin, Vactor, Bronto, Jetstream, Guzzler, PIPS, Codespear Strategic shift to higher-growth, higher-return products Sale of E-ONE and other portfolio changes strengthen corporate profitability and balance sheet Serve str
Slide 8: Recent Accomplishments
Recent Accomplishments Completed divestitures of Tool and E-ONE businesses, applying proceeds to reduce debt Initiated cost reduction program to reduced budgeted spend by $20 million Launched Public Safety Systems division to build-out opportunities associated with 2007 acquisitions Began liquidatio
Slide 9: Recent History
Recent History Initiated "Shrink to Grow" strategy 2004 2005 2006 2007 February Divested Cutting Tools Acquired Security-Focused Technology Companies Significant New Products Launched New Growth Strategy Launched Closed 6 plants Sold/Divested 7 Business Units Formalized New Product Development Proce
Slide 10: Tightened Strategic Focus
Tightened Strategic Focus Leasing portfolio Plastisol Preble Justrite TTI Victor product lines Refuse FAPD do Brasil Superior Tool Group E-ONE Codespear $17M Riverchase $7M PIPS $126M "Shrink to Grow" 2007 Acquisitions >$300 million $150 million
Slide 11: 2007 Acquisitions
2007 Acquisitio Purchase Strategic Target Price Rationale PIPS $126M Leading provider of automated license plate recognition systems High-growth market addressing security Video analytic software Codespear $17M Personal alerting complements mass-warning ° ° Best interoperable communications product
Slide 12: Sale of E-One
Sale of E-One Sale Process: Sold to American Industrial Partners ("AIP"), a leading middle market private equity firm, for a stated purchase price of $20 million, subject to working capital and other adjustments AIP chosen at conclusion of 8-month sale process involving 6 initial bidders. Financial
Slide 13: Strategic Focus: Long Term Value Growth
Strategic Focus: Long Term Value Growth Safety & Security Focus resources on public safety markets Integrate products into solutions Launch new products in China Environmental Solutions Expand globally in Asia Increase US capacity Bronto Increase capacity Shorten backlog Accelerate North American gr
Slide 14: Segment Overview
Segment Overview (Sinmitionsy Operating Assets Revenue LT Organic Margin % 12/31/07 2007 Growth 2007 LT Target Safety & Security $419 $367 10% -15% 13.5% 14% - 16% Environmental 213 451 6-8 89 9-10 Fire Rescue (Bronto only) 121 118 6-8 67 9-10 (EE ete
Slide 15: Long-Term Consolidated Financial Targets
Long-Term Consolidated Financial Targets Revenue Growth 6-8% p.a. International Sales > 50% EBIT Margins 10% Working Capital 15% sales Debt/Capitalization 30-40%
Slide 16: Financial Performance
Financial Performance ($ millions, except share data) 2006 2007 1H 2008 Operating Data Net Sales 800.9 941.7 482.4 Operating Income 66.6 82.1 31.4 Operating Cash Flow 29.7 65.4 85.9 Diluted Earnings Per Share (from Continuing Ops) 0.61 0.85 0.26 Operating Margin 8.3% 8.7% 6.5% Effective Tax Rate 25.
Slide 17: Liquidity Update
Liquidity Update-($ in millions) June 30, 2008 Net Debt 305 Actual/Expected Reductions Thru 12/31/08: Sale/Leaseback Transaction (37) Second Tranche of Leases Sold (18) Proceeds from AIP (E-ONE Sale) (5-9) Further Financial Services Asset Sales (30-35) Operating and other Cash Flow (15-20) Projected
Slide 18: Net Debt Trend Chart
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E Net Debt 310.6 397.5 449.2 458.6 488.2 454 398.1 343.3 354.7 410.1 200 Net Debt Trend Chart ($ in millions)
Slide 19: Other Financing/Capital
Other Financing/Capital Strong credit position Year 2 of 5-yr $250 million revolving credit facility Staggered private placement maturities to 2013 Current borrowing cost 5.35% 2009 interest expense forecast $2-3mm/qtr Quarterly dividend 242 consecutive quarterly dividends $.06/share Debbie: insert
Slide 20: Segment Revenues and Customer Orders
Segment Revenues $942 million Customer Orders $1006 million 2007 Revenues by Segment* Environmental Solutions Group (ESG) 48% Fire Rescue (Bronto) 13% Safety & Security Systems (SSG) 39% U.S. Municipal 31% U.S. Industrial/ Commercial 25% Non-U.S. 44% End markets increasingly well diversified Target
Slide 21: Safety and Security Systems Group Highlights
Safety and Security Systems Group Highlights Dave McConnaughey, President Recent Highlights: PSS gaining traction through new sales force, new alliances with 3M, AT&T and others U.S. police orders weaker due to municipal budgets, but gaining share Launched two product groups from China plant 1H 2008
Slide 22: Safety and Security Systems Group Organic Growth
Safety and Security Systems Group Organic Growth ($ in millions) +18% +17% CAGR = 2%
Slide 23: Safety and Security Systems Group Products, Customers, Channels
Safety and Security Systems Group Mobile Vehicular Systems Industrial Communications, Safety and Security Public Safety Systems Products Lightbars, beacons, sirens, mobile data systems, speakers and license plate recognition systems Beacons, horns, interoperable communications systems, mining and ma
Slide 24: Environmental Solutions Group Highlights
Environmental Solutions Group Highlights Mark Weber, President Recent Highlights: China-based Joint Venture growing, added sweeper product line Water blaster rental activity growing - 3 centers now open JD Edwards implementation progressing $9 Million Vactor plant expansion underway 1H 2008 Orders -
Slide 25: Environmental Solutions Group Organic Growth
Environmental Solutions Group Organic Growth ($ in millions) +21% +5% CAGR = 5%
Slide 26: Environmental Solutions Group Products, Customers, Competitors
Environmental Solutions Group Sweepers Vacuum Trucks - Municipal Vacuum Trucks - Industrial Water Blasters Products Street, parking lot and industrial sweepers Sewer and catch basin cleaners, glycol recovery vehicles, hydro excavating vehicles Vacuum loaders that clean up industrial waste or recover
Slide 27: Bronto Highlights
Bronto Highlights Esa Peltola, President Recent Highlights: Orders continue strong: Book-to-bill >150% in first half Plant expansion completed in Q3 (+ 40% capacity) Next generation products being rolled out on schedule 1H 2008 Orders - $102 mm Skylifts 22% Service 4% Firelifts 74%
Slide 28: Bronto Organic Growth
Bronto Organic Growth ($ in millions) +53% +51% CAGR = 13%
Slide 29: Bronto Products, Customers, Competitors
Bronto Rescue and Fire General Purpose Electric Utility Products Telescopic and articulated aerial devices for rescue and fire Telescopic and articulated aerial devices for general purposes Insulated telescopic and articulated aerial devices for transmission line work Customers Municipal, voluntary
Slide 30: Experienced Management Team
Experienced Management Team
Slide 31: Commitment to Strong Corporate Governance
Commitment to Strong Corporate Governance All directors independent under NYSE rules Two new independent directors appointed to Board in 2008: Dennis J. Martin, retired chairman, CEO of General Binding Corp. Joseph R. Wright, vice chairman and director of Scientific Games Corp. Chairman and CEO role
Slide 32: Federal Signal Overview - Investment Highlights
Robust 100+ years history of product leadership Leading brands: Federal Signal, Elgin, Vactor, Bronto, Jetstream, Guzzler, PIPS, Codespear Strategic shift to higher-growth, higher-return products Sale of E-ONE and other portfolio changes strengthen corporate profitability and balance sheet Serve str
Slide 33: Federal Signal: Advancing security and well-being
|e FEDERAL SIGNAL Advancing security and well-being. (PEE eaten re