Federal Signal Corporation · NYSE:FSS
Federal Signal — Q1 2019 Earnings Presentation
18 slides from Federal Signal's earnings presentation, May 2, 2019
Slide 1: Federal Signal Q1 2019 Earnings Call
Federal Signal Q1 2019 Earnings Call May 2, 2019 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer
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: Q1 Highlights
Q1 Highlights * • Net sales of $274 M, up $24 M, or 10% • Operating income of $25.8 M, up $6.2 M, or 32% • Adjusted EBITDA of $35.9 M, up $6.9 M, or 24% • ESG up $6.0 M, or 21% • SSG up $2.8 M, or 41% • Adjusted EBITDA margin of 13.1%, compared to 11.6% • GAAP EPS of $0.29, up $0.08, or 38% • Adjust
Slide 4: Group and Corporate Results
Group and Corporate Results $ millions, except % Q1 2019 Q1 2018 % Change ESG Orders 243.7 274.4 -11% Sales 219.5 196.6 12% Operating income 25.7 20.6 25% Operating margin 11.7% 10.5% Adjusted EBITDA 34.7 28.7 21% Adjusted EBITDA margin 15.8% 14.6% SSG Orders 55.3 55.3 0% Sales 54.3 53.1 2% Operatin
Slide 5: Consolidated Statement of Operations
Consolidated Statement of Operations $ millions, except % and per share Q1 2019 Q1 2018 $ Change % Change Net sales $ 273.8 $ 249.7 $ 24.1 10% Gross profit 70.3 61.9 8.4 14% SEG&A expenses 43.9 41.8 2.1 5% Acquisition and integration related expenses 0.6 0.5 0.1 20% Operating income 25.8 19.6 6.2 32
Slide 6: Adjusted Earnings per Share
Adjusted Earnings per Share ($ in millions) Three Months Ended March 31, 2019 2018 Net income $ 17.5 $ 12.9 Add: Income tax expense 5.9 4.1 Income before income taxes 23.4 17.0 Add: Acquisition and integration-related expenses 0.6 0.5 Purchase accounting effects (1) 0.1 0.6 Hearing loss settlement c
Slide 7: Financial Strength and Flexibility
Financial Strength and Flexibility * • Used ~$9 M of cash for operations in Q1 • $217 M of debt outstanding; $23 M of cash Net debt of $194 M ** • ~$173 M of availability under credit facility • Paid $4.8 M for dividends; recently declared $0.08 per share dividend for Q2 2019 • $1.0 M of share rep
Slide 8: CEO Remarks
CEO Remarks • Outstanding Q1 results exceed expectations Each of our groups reporting top line growth and margin improvement • Q1 orders were 3rd highest on record Surpassed only by order intake in Q1 2018 and Q4 2017, which collectively included an estimated $40 M - $45 M of accelerated orders
Slide 9: TRUVAC Launch
TRUVAC Launch During Q1, we launched TRUVACTM, a dedicated line of vacuum excavation trucks designed specifically to satisfy the safe-digging requirements of organizations that locate and verify underground utility lines and pipes HXX Prodigy Paradigm 9
Slide 10: Disciplined M&A
Disciplined M&A Target companies that accelerate our current strategic initiatives or provide a platform for growth in adjacent markets or new geographies • Niche market leader (product, geography, end-market) • Sustainable competitive advantage Characteristics Business • Deep domain expertise (tech
Slide 11: 2019 Outlook
2019 Outlook Raising low end of adjusted EPS* outlook range by $0.02, establishing a new range of $1.50 to $1.60 Key Assumptions Adjustments to include acquisition- Interest expense of ~4% related items Increase in pension expense (non- Depreciation and amortization expense operating) of $0.
Slide 12: Federal Signal Q1 2019 Earnings Call Q&A
Federal Signal Q1 2019 Earnings Call Q&A May 2, 2019 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer 12
Slide 13: 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 Ian Hudson Svetlana Vinokur SVP, Chief Financial Officer VP, Treasurer and Corporate Development IHuds
Slide 14: Appendix
Federal Signal Q1 2019 Earnings Call Appendix 14
Slide 15: Consolidated Adjusted EBITDA
Consolidated Adjusted EBITDA $ millions, except % Q1 2019 Q1 2018 Net income $ 17.5 $ 12.9 Add: Interest expense 2.0 2.5 Hearing loss settlement charges - 0.4 Acquisition and integration-related expenses 0.6 0.5 Purchase accounting effects * - 0.4 Other expense, net 0.4 0.1 Income tax expense 5.9 4.
Slide 16: Segment Adjusted EBITDA
Segment Adjusted EBITDA ESG $ millions, except % Q1 2019 Q1 2018 Operating Income $ 25.7 $ 20.6 Add: Acquisition and integration-related expenses 0.4 0.3 Purchase accounting effects * - 0.4 Depreciation and amortization 8.6 7.7 Adjusted EBITDA $ 34.7 $ 29.0 Less: Deferred gain recognition - (0.3) Ad
Slide 17: Non-GAAP Measures
Non-GAAP Measures • Impact of New Lease Accounting Standard on Non-GAAP measures - Effective January 1, 2019, the Company adopted the new lease accounting standard, which resulted in a change to the Company’s recognition of the deferred gain associated with historical sale lease-back transactions. P
Slide 18: Federal Signal
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