EX-99.2 11 d451748dex992.htm EX-99.2

EX-99.2

Federal Signal Q4 2012 Earnings Call

Dennis Martin, President & CEO

Braden Waverley, Interim Chief Financial Officer

Jennifer Sherman, SVP, CAO & General Counsel

March 15, 2013

Exhibit 99.2

2

Q4 Headlines

Results from Continuing Operations during Q4

Revenue = $218MM; +12% vs. Last Year

Operating Income = $13MM; +12% vs. Last Year

Cash Provided by Continuing Operations = $30MM, vs. $1.7MM Last Year

EPS = $0.08 vs. $0.11 Last Year; EPS includes $0.02 higher interest expense, $0.02

higher income tax expense, and $0.01 for restructuring charges vs. Last Year

Second half EPS = $0.19 excluding restructuring and debt settlement charges,

compared to $0.16 for the same period Last Year

Orders = $208MM; -13% vs. Last Year, consistent with guidance and peak order

levels experienced in our ESG business in Q4 2011

Q4 Backlog = $318MM; +$23MM vs. Last Year

2012 Headlines

Continued Progress on Operating Margin Targets

Complemented by Declining Leverage

Business

Segment

FY 2011

Operating

Margin

FY 2012

Operating

Margin

Margin

Targets

ESG

6.8%

9.8%

10% -

12%

Bronto

6.0%

6.6%

10% -

12%

SSG

9.7%

12.0%

14% -

16%

Operating

Margin

excludes

the

impact

of

restructuring

charges

in

both

2011

and

2012

3

11.0

4.8

2.4

0

2

4

6

8

10

12

2010

2011

2012

2.0%

4.8%

6.4%

0%

1%

2%

3%

4%

5%

6%

7%

2010

2011

2012

Debt Refinancing

Completed bank refinancing of our debt on March 13

th

with Wells-Fargo

Bank and GE Capital Corporation leading a bank group of seven

participants

Initial interest rate of LIBOR + 2.75%

Strong market response to our credit across all explored alternatives

Expect annualized interest savings of approximately $10 million compared

to prior arrangements

Increase in liquidity at closing

Incurred debt settlement charges of $8.7 million at closing, approximately

half of which were cash charges

4

Q4 Income Comparison –

Continuing Operations 

Q4

Q4

Growth/

$ Millions

2012

Margin

2011

Margin

Orders

208.0

239.4

(13%)

Sales

217.7

195.0

12%

Gross Profit

49.7

22.8%

45.7

23.4%

Restructuring charges

0.6

-

-

SG&A

36.1

16.5%

34.1

17.5%

Op Income

13.0

6.0%

11.6

5.9%

Interest Expense

5.7

4.5

Debt Settlement Charge

-

-

Other Expense/(Income)

0.4

(0.1)

Pretax Income

6.9

7.2

Tax Expense

2.0

0.7

Income from Cont. Ops

4.9

6.5

EPS, Cont Ops, as reported

$0.08

$0.11

5

2012 Pro Forma EPS

Continuing Operations

Q1

Q2

Q3

Q4

2H

FY

Reported EPS

$0.05

$0.15

$0.07

$0.08

$0.15

$0.35

Debt Settlement Charge

$0.03

-

$0.03

-

$0.03

$0.06

EPS ex Debt Settlement Charge

$0.08

$0.15

$0.10

$0.08

$0.18

$0.41

Restructuring

$0.01

-

-

$0.01

$0.01

$0.02

Pro Forma EPS

$0.09

$0.15

$0.10

$0.09

$0.19

$0.43

6

Q4 Results vs. Last Year

Q4

Q4

2012

Margin

2011

Margin

B/(W)

ESG

Orders

124.0

146.2

(15%)

Sales

106.2

93.2

14%

Op Income

8.2

7.7%

6.7

7.2%

Bronto

Orders

24.2

28.8

(16%)

Sales

44.4

41.4

7%

Op Income

4.5

10.1%

4.9

11.8%

SSG

Orders

59.8

64.4

(7%)

Sales

67.1

60.4

11%

Op Income

9.2

13.7%

5.6

9.3%

Corp. Exp

8.9

5.6

Continuing

Orders

208.0

239.4

(13%)

Ops.

Sales

217.7

195.0

12%

Op Income

13.0

6.0%

11.6

5.9%

7

Free Cash Flow –

Continuing Operations 

8

Q4

FY

Q4

FY

Operating Cash Flow:

Income from Continuing Ops

4.9

22.0

6.5

13.1

Depreciation & Amortization

3.6

13.2

3.4

13.0

Debt Settlement Charges

(1.0)

2.5

-

-

Stock-based Comp. Expense

0.5

2.6

0.2

1.8

Pension Expense, Net of Funding

0.5

(5.7)

-

1.5

Restructuring Charge

0.1

0.9

-

-

Deferred Income Taxes

(7.4)

(4.8)

(0.3)

1.8

Changes in Other Operating Assets & Liabilities

29.3

18.5

(8.1)

(17.1)

Operating Cash Flow

30.5

49.2

1.7

14.1

Capital Expenditures, net

(3.3)

(11.2)

(2.2)

(11.6)

Free cash flow, continuing operations

27.2

38.0

(0.5)

2.5

2012

2011

Balance Sheet

9

December

December

$ Millions

2012

2011

Cash

30.7

9.5

Other Current Assets

235.7

229.5

PP&E, Net

59.3

60.0

Goodwill & Other

285.5

274.4

Mfg Assets Subtotal

611.2

573.4

Net Assets of Disc Ops

2.0

133.3

Total Assets

613.2

706.7

Current Liabilities

138.2

118.8

Total Debt

157.8

222.2

Deferred Taxes & Other

155.3

151.0

Mfg Liabilities Subtotal

451.3

492.0

Net Liabilities of Disc Ops

15.0

40.0

Equity

146.9

174.7

Liabilities & Equity

613.2

706.7

Net Debt

127.1

212.7

Total Debt / TTM EBITDA

2.4

4.8

Total Debt/Capital

52%

56%

Net Debt/Capital

46%

55%

Refinancing Terms and Conditions

$225 Million Total “Pro-Rata”

Credit Facility

$75 Million Term Loan A with $150 million cash flow revolver

Fixed LIBOR component of term loan at closing

Five Year Term

Quarterly required amortization on the Term Loan

No prepayment penalties at any time

Interest Rate

Pricing based on leverage ratio

Opening at LIBOR + 2.75%

Customary Financial Covenants

Fixed Charge Coverage Ratio

Total Debt-to-EBITDA Ratio

Negotiated

EBITDA

“add-back”

provisions

Dividends and Other Restricted Payments Permitted

Based on leverage

Debt Settlement Charges of $8.7 Million

$4.6 million non-cash write-off of deferred financing costs ($0.07 per share impact)

$4.1 million cash prepayment premium ($0.07 per share impact)

10

2013 Corporate Goals

Initiatives & Success Factors

1.

Refinance balance sheet

a)

Redirects high interest costs into debt reduction and growth

b)

Increases total liquidity

2. Diversify customer base

a)

Develop customer mix in industrial and commercial markets

b)

Continue profitably building presence in global markets

3. Stabilize and improve profitability in our municipal based businesses

a)

Elgin

b)

US Public Safety

c)

Vama (Europe)

4.

Profitably grow the business organically

a)

Develop new applications and vertical markets for proven FSC products

b)

Develop and implement innovation program

5.

Improve manufacturing efficiencies

a)

Continued focus on 80/20 processes

b)

Further reductions in unit production break-even levels

c)

Continued reductions in production lead-times and associated increases in throughput

d)

Generate improved working capital efficiency

11

12

First Half 2013 Guidance

First Half Guidance Range

EPS = $0.20 to $0.25

EPS performance estimates exclude debt settlement charges incurred as part of the

refinancing completed in the first quarter

Factors Impacting Guidance Range

Interest savings

Timing and financial impact of defense costs associated with hearing loss cases

Large order shipments at Bronto and ESG

Product mix

Uncertainty of economic conditions in key markets

Federal Signal Q4 2012 Earnings Call

Dennis Martin, President & CEO

Braden Waverley, Interim Chief Financial Officer

Jennifer Sherman, SVP, CAO & General Counsel

March 15, 2013