Federal Signal Reports 10% Increase in Net Sales and $0.07 Earnings per Share for Third Quarter

Federal Signal Reports 10% Increase in Net Sales and $0.07 Earnings per Share
                              for Third Quarter

PR Newswire

OAK BROOK, Ill., Nov. 9, 2012

OAK BROOK, Ill., Nov. 9, 2012 /PRNewswire/ --Federal Signal Corporation
(NYSE: FSS), a leader in environmental and safety solutions, today reported
results for the third quarter ended September 30, 2012.

  oQ3 earnings from continuing operations of $0.07 per share versus $0.05
    last year;
  oQ3 2012 results include ($0.03) per share impact of non-cash debt
    settlement charges;
  oYear-to-date earnings per share from continuing operations of $0.28
    compared to $0.11 for the same period in 2011;
  oQ3 operating income from continuing operations increased to $12.4 million,
    a 46% increase over the prior year;
  oQ3 net sales of $185 million, up 10% from the prior year;
  oBacklog increased to $326 million, a 28% increase over the same prior year
    period, and orders declined 4% versus the same prior year period;
  oSale proceeds from the FSTech divestiture used to pay down debt by $75
    million, creating the opportunity to substantially reduce interest expense
    through refinancing in 2013.

Dennis J. Martin, President and Chief Executive Officer, stated, "We are
beginning to reap the rewards of our 80/20 initiatives. Our commitment to
profitable growth is evidenced by our 6.7% operating margin in the quarter, up
from 5.1% during the same prior year period." Mr. Martin continued, "The
third quarter marked both continued improvement in our income statement and
fundamental restructuring of our balance sheet, the combined effect of which
will build our shareholders' value over the long term."

Orders increased $26.3 million or 4% for the nine months ended September 30,
2012 and were $187.7 million and $194.9 million for the three months ended
September 30, 2012 and 2011, respectively. In the three months ended September
30, 2012, U.S. orders increased $3.4 million or 3%, and non-U.S. orders
decreased $10.6 million or 13% compared to the prior-year periods. In the nine
months ended September30, 2012, U.S. orders increased $30.3 million or 9%,
and non-U.S. orders decreased $4.0 million or 2%, compared to the prior-year
periods.

Net sales increased $17.2 million or 10% and $91.8 million or 19% for the
three and nine months ended September 30, 2012, respectively, compared to the
respective prior-year periods, primarily as a result of increased shipments
across most segments, favorable product mix and minor price increases,
partially offset by lower export sales to certain Asian customers and
unfavorable currency impacts.

Operating income increased $3.9 million or 46% and $16.8 million or 77% in the
three and nine months ended September30, 2012, respectively, compared to the
respective prior-year periods. The increase in operating income was primarily
a result of higher sales volume and an overall favorable change in product
mix.

Interest expense increased $0.7 million and $3.8 million for the three and
nine months ended September30, 2012, respectively, compared to the respective
prior year periods, primarily due to an increase in interest rates on the
Company's debt financing agreements entered into in February 2012, partially
offset by interest expense allocated to discontinued operations of $1.7
million and $4.8 million for the three and nine months ended September 30,
2012.

Loss from discontinued operations and disposal, net of tax was $19.1 million
and $0.9 million for the three months ended September30, 2012 and 2011,
respectively, and $49.4 million and $5.6 million for the nine months ended
September 30, 2012 and 2011, respectively.

Mr. Martin concluded, "We are committed to long-term margin expansion and
continued gains in shareholder value in 2013, but we are aware of the impact
global economic challenges can have on demand and are prepared to act as
conditions warrant."

GROUP RESULTS

Safety and Security Systems

The following table summarizes the Safety and Security Systems Group's
operating results as of and for the three and nine-month periods ended
September 30, 2012 and 2011, respectively:

                 ThreemonthsendedSeptember30, NinemonthsendedSeptember30,
($ in millions)  2012       2011       Change     2012       2011       Change
Orders          $ 57.1     $ 57.4     $ (0.3 )   $ 182.1    $ 170.9    $ 11.2
Backlog          38.7       27.8       10.9       38.7       27.8       10.9
Net              57.8       52.0       5.8        173.2      161.0      12.2
sales
Operating income 7.8        4.4        3.4        18.7       15.9       2.8
Operating        13.5%      8.5 %      5.0%       10.8%      9.9 %      0.9%
margin
Depreciation and $  1.0    $  1.1    $ (0.1)    $  3.2   $  3.3   $ (0.1)
amortization

Orders of $57.1 million in the third quarter decreased $0.3 million compared
to the same quarter in 2011. U.S. orders increased $2.8 million due to
improved municipal spending in the police, fire and outdoor warning markets
and improvement in the industrial market. Non-U.S. orders declined $3.1
million primarily due to a $2.1 million order cancellation and weak demand in
the European and export markets. Orders increased $11.2 million or 7% for the
nine months ended September30, 2012 compared to the respective prior-year
period. U.S. orders increased $16.7 million, primarily as a result of
increased municipal and governmental spending and strong industrial demand.
Non-U.S. orders decreased $5.5 million, driven primarily by weak demand in
European and Asian markets.

Net sales increased $5.8 million for the three months ended September 30, 2012
compared to the respective prior-year period. Higher industrial sales of $4.0
million, improved domestic municipal shipments of $2.3 million, market share
gains in the police market of $1.9 million and higher mining product sales of
$1.1 million were partially offset by lower exports of $2.0 million and
exchange rate impacts of 2.5% of sales. Net sales increased $12.2 million or
8% for the nine months ended September 30, 2012 compared to the respective
prior-year period. U.S. sales grew by $4.0 million due to market share gains
in police and fire markets, $2.6 million due to increased warning system
shipments, $1.4 million due to strong industrial sales, and minor price
increases. International sales were lower by $4.2 million due to lower export
sales to certain Asian customers and unfavorable currency impacts of
approximately 2.0% of sales.

Operating income increased $3.4 million for the three months ended September
30, 2012 compared to the respective prior-year period, primarily due to higher
sales volumes as well as higher gross profit, which more than offset higher
operating expenses to support the higher sales levels. Operating income
increased $2.8 million for the nine months ended September30, 2012 compared
to the respective prior-year period due to higher sales of $12.2 million,
slight price increases in several divisions, and lower warranty expense of
$0.4 million and the other reductions in cost of sales noted above, which were
partially offset by higher charges for inventory reserves of $2.0 million.
Improvements in gross margin were partially offset by higher operating
expenses to support higher sales levels. In addition, the Safety and Security
Systems Group recorded $0.9 million of restructuring charges in the nine
months ended September 30 2012, while no restructuring charges were recorded
during the respective prior year period.

Fire Rescue

The following table summarizes the Fire Rescue Group's operating results as of
and for the three and nine-month periods ended September30, 2012 and 2011,
respectively:

                 ThreemonthsendedSeptember30, NinemonthsendedSeptember30,
($ in millions)  2012       2011       Change     2012       2011       Change
Orders          $34.7      $ 42.0     $ (7.3)    $ 112.3    $ 108.8    $ 3.5
Backlog          101.3      95.7       5.6        101.3      95.7       5.6
Net              25.6       22.2       3.4        90.7       68.1       22.6
sales
Operating        1.9        0.2        1.7        4.4        1.7        2.7
income
Operating        7.4 %      0.9 %      6.5%       4.9%       2.5 %      2.4%
margin
Depreciation and $ 0.6     $ 0.7     $ (0.1)    $  1.9    $ 1.9     $ —
amortization

Orders of $34.7 million in the third quarter decreased $7.3 million compared
to the same quarter in 2011. The decrease is due to a decline in the average
order size for fire-lift products from customers in Asia compared to the prior
year, when chassis orders were steadily on the rise. Orders increased $3.5
million for the nine months ended September30, 2012 compared to the
respective prior-year period, primarily as result of strong demand for
fire-lift products in Asia and strong demand for industrial and rental
products in Australia.

Net sales increased $3.4 million and $22.6 million for the three and nine
months ended September30, 2012 compared to the respective prior-year periods.
For the three months ended September 30, 2012, net sales increased $4.8
million as a result of increased Asian and Australian business together with
some increased shipments to European markets, and $1.6 million of higher
pricing attributable to sales commissions, partially offset by unfavorable
currency impacts of $3.2 million. The strong backlog and improvements in
manufacturing processes also contributed to the growth in sales. Year-to-date,
net sales increased $22.6 million, primarily due to sales volumes of $24.5
million, higher pricing attributable to sales commissions of $3.3 million, and
a favorable product mix of $4.3 million, partially offset by unfavorable
currency impacts of $9.4 million.

Operating income increased $1.7 million and $2.7 million for the three and
nine months ended September30, 2012, compared to the respective prior-year
periods. For the three months ended September30, 2012, operating income
increased due to higher sales volumes of $1.0 million, and improved product
mix into higher margin products of $1.4 million, partially offset by higher
Selling, General, and Administrative ("SG&A") expenses of $0.5 million and
unfavorable currency impacts of $0.2 million. For the nine months ended
September 30, 2012, compared to the respective prior-year period, operating
income increased primarily due to higher sales volumes of $5.3 million,
partially offset by higher SG&A expenses of $1.5 million, unfavorable product
mix of $0.7 million, and unfavorable currency impacts of $0.5 million.

Environmental Solutions

The following table summarizes the Environmental Solutions Group's operating
results as of and for the three and nine-month periods ended September30,
2012 and 2011, respectively:

                 ThreemonthsendedSeptember30, NinemonthsendedSeptember30,
($ in millions)  2012      2011         Change     2012       2011        Change
Orders          $95.9     $ 95.5      $  0.4   $ 323.9    $ 312.3     $ 11.6
Backlog          185.9     130.3        55.6       185.9      130.3       55.6
Net              101.6     93.6         8.0        321.6      264.6       57.0
sales
Operating        9.3       7.7          1.6        33.8       17.8        16.0
income
Operating        9.2 %     8.2 %        1.0%       10.5 %     6.7 %       3.8%
margin
Depreciation and $ 1.3    $   1.3    $ —        $  3.9    $  3.8    $  0.1
amortization

Orders increased $0.4 million for the three months ended September 30, 2012
compared to the respective prior-year period. U.S. orders increased $0.1
million from the prior-year period primarily due to increases in sewer
cleaners of $6.1 million, sweepers of $6.0 million, and waterblasters of $0.8
million, partially offset by declines in vacuum trucks of $12.5 million.
Non-U.S. orders increased $0.3 million from the prior-year period due to
market increases in Canada and Asia, partially offset by declines in Mexico
and Europe. Year-to-date orders of $323.9 million were up from the previous
year by $11.6 million, or 4%. U.S. orders were up 4%, or $11.6 million,
primarily as a result of increases in orders for municipal sewer cleaners of
$13.8 million, waterblasters of $5.8 million, and sweepers of $2.0 million,
partially offset by declines in industrial orders of $11.2 million. Non-U.S.
orders remained flat at $63.9 million compared to the prior year.

Net sales increased $8.0 million and $57.0 million for the three and nine
months ended September 30, 2012 compared to the respective prior-year periods.
U.S. sales increased $3.0 million for the three months primarily resulting
from municipal sewer cleaner shipments, which is consistent with the increased
order volume. Non-U.S. sales for the three months were up $5.0 million due to
strength in Canada, partially offset by declines in Europe and Mexico. U.S.
sales for the nine months were up $44.7 million due to increases across all
product lines. Non-U.S. sales for the nine months were up $12.3 million
resulting from large backlogs, despite flat non-U.S. orders.

Operating income increased $1.6 million and $16.0 million for the three and
nine months ended September 30, 2012, compared to the respective prior-year
periods. Operating income increases are a result of higher gross margins of
$2.0 million and $17.5 million, respectively, partially offset by increased
SG&A expenses of $0.4 million and $1.5 million, respectively. The increase in
SG&A expenses relates to additional commission expenses associated with
increased orders.

Corporate Expenses

Corporate expenses were $6.6 million and $3.8 million for the three months
ended September30, 2012 and 2011, respectively. The increase primarily was
due to higher incentive compensation expense of $1.1 million in 2012 and a
$1.3 million reduction in an insurance reserve associated with carrier paid
claims in 2011.

Corporate expenses were $18.4 million and $13.8 million for the nine months
ended September30, 2012 and 2011, respectively. The increase primarily was
due to higher incentive compensation expense of $2.8 million and a $1.3
million reduction in an insurance reserve associated with carrier-paid claims
in 2011.

Corporate expenses included depreciation and amortization expense of $0.1
million and $0.6 million for the three and nine months ended September 30,
2012, respectively, and $0.0 million and $0.6 million for the comparable
periods in 2011, respectively.

CONFERENCE CALL

Federal Signal will host its third quarter conference call on Friday, November
9, 2012 at 10:00 a.m. Eastern Time. The call will last approximately one hour.
The call may be accessed over the internet through Federal Signal's website at
http://www.federalsignal.com. A replay will be available on Federal Signal's
website shortly after the call.

About Federal Signal

Federal Signal Corporation (NYSE: FSS) enhances the safety, security and
well-being of communities and workplaces around the world. Founded in 1901,
Federal Signal is a leading global designer and manufacturer of products and
total solutions that serve municipal, governmental, industrial and
institutional customers. Headquartered in Oak Brook, IL, with manufacturing
facilities worldwide, the Company operates three groups: Safety and Security
Systems, Fire Rescue, and Environmental Solutions. For more information on
Federal Signal, visit: http://www.federalsignal.com.

This release 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 release that are not historical
are forward-looking statements. Such statements are subject to various risks
and uncertainties that could cause actual results to vary materially from
those stated. Such risks and uncertainties include but are not limited to:
economic conditions in various regions, product and price competition,
supplier and raw material prices, foreign currency exchange rate changes,
interest rate changes, increased legal expenses and litigation results, legal
and regulatory developments and other risks and uncertainties described in
filings with the Securities and Exchange Commission.



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
                                       Threemonthsended   Ninemonthsended

                                       September30,        September30,
(in millions, except per share data)   2012      2011       2012     2011
Net sales               $ 185.0  $ 167.8   $ 585.5  $ 493.7
Cost of sales                  139.4     131.3      445.4    384.0
Gross profit                           45.6      36.5       140.1    109.7
Selling, engineering, general and      33.2      28.0       100.8    88.0
administrative
Restructuring charge         —         —          0.8      —
Operating income                       12.4      8.5        38.5     21.7
Interest expense                     5.2       4.5        15.7     11.9
Debt settlement charges                1.9       —          3.5      —
Other (income) expense,                (0.1)     0.5        0.2      0.4
net
Income before income                   5.4       3.5        19.1     9.4
taxes
Income tax expense        (1.0)     (0.2)      (1.9)    (2.8)
Income from continuing operations     4.4       3.3        17.2     6.6
Loss from discontinued operations and
disposal, net of income tax benefit of (19.1)    (0.9)      (49.4)   (5.6)
$2.9, $0.3, $3.5 and $0.3,
respectively
Net (loss) income                      $ (14.7)  $   2.4 $ (32.2) $   1.0
Basic and diluted earnings (loss) per
share:
Income from continuing operations  $  0.07 $  0.05  $  0.28 $  0.11
Loss from discontinued operations and
disposal,                              (0.31)    (0.01)     (0.79)   (0.09)

net of tax
(Loss) earnings per share         $ (0.24)  $  0.04  $ (0.51) $  0.02
Weighted average common shares
outstanding:
Basic                         62.4      62.2       62.3     62.2
Diluted                           63.0      62.2       62.6     62.2
Cash dividends declared per share of   $   —   $   —    $  —   $  —
common stock



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
                                            September30,     December31,
(in millions, except per share data)
                                            2012              2011
                                            (unaudited)
ASSETS
Current assets
Cash and cash equivalents         $       9.1 $      9.5
Restricted cash                             1.5               —
Accounts receivable, net of allowances for
doubtful
                                            99.4              105.0
accounts of $2.4 and $2.4,
respectively
Inventories                            129.5             104.3
Other current assets                  20.7              18.7
Current assets of discontinued              1.3               131.9
operations 
Total current assets                       261.5             369.4
Properties and equipment,                   58.8              60.0
net
Other assets
Goodwill                          271.0             270.6
Intangible assets, net                  1.0               1.8
Deferred charges and other                  13.3              2.0
assets
Long-term assets of discontinued            1.6               2.9
operations
Total assets                       $     607.2   $    706.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings                     $       2.0 $      9.0
Current portion of long-term borrowings and 6.1               0.1
capital lease obligations
Accounts payable                   50.9              49.5
Customer deposits                   15.6              14.4
Deferred revenue                 3.0               2.9
Accrued liabilities
Compensation and withholding                21.1              18.7
taxes
Other                                  36.6              34.0
Current liabilities of discontinued         15.8              35.7
operations
Total current liabilities      151.1             164.3
Long-term borrowings and capital lease      151.8             213.1
obligations, less current portion
Long-term pension and other postretirement  63.3              74.1
liabilities
Deferred gain                   19.9              21.4
Deferred tax liabilities      42.0              36.0
Other long-term liabilities         13.9              14.5
Long-term liabilities of discontinued       6.7               8.6
operations
Total liabilities                      448.7             532.0
Shareholders' equity
Common stock, $1 par value per share,
90.0million shares authorized,
                                            63.4              63.1
63.4million and 63.1million shares
issued, respectively
Capital in excess of par value             170.0             167.7
Retained earnings                       4.2               36.4
Treasury stock, 0.9million and 0.9million
shares, respectively,                       (16.4)            (16.1)

at cost
Accumulated other comprehensive             (62.7)            (76.4 )
loss
Total shareholders' equity                  158.5             174.7
Total liabilities and shareholders'         $     607.2   $    706.7
equity



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
                                                           Nine months ended

                                                           September30,
($ in millions)                                            2012      2011
Operating activities
Net (loss) income                                          $ (32.2)  $   1.0
Adjustments to reconcile net loss to net cash (used for)
provided by operating activities
Loss on discontinued operations and disposal             49.4      5.6
Depreciation and amortization               9.6       9.6
Debt settlement charges                                    3.5       —
Stock-based compensation expense                      2.1       1.6
Pension expense, net of funding                            (6.2)     1.5
Restructuring charge                                       0.8       —
Deferred income taxes                                      2.6       2.1
Changes in other operating assets and liabilities          (10.8)    (9.0)
Net cash provided by continuing operating activities      18.8      12.4
Net cash used for discontinued operating activities    (21.1)    (11.6)
Net cash (used for) provided by operating activities    (2.3)     0.8
Investing activities
Purchases of properties and equipment       (9.2)     (10.6)
Proceeds from sales of properties, plant and equipment  1.3       1.2
Proceeds from sale of FSTech Group                         82.1      —
Increase in restricted cash                          (1.5)     —
Net cash provided by (used for) continuing investing       72.7      (9.4)
activities
Net cash provided by discontinued investing                —         —
activities
Net cash provided by (used for) investing activities   72.7      (9.4)
Financing activities
Reduction in debt outstanding under revolving credit       (173.1)   (28.6)
facilities
Proceeds on short-term borrowings                    50.9      48.5
Payments on short-term borrowings                     (58.5)    (42.4 )
Proceeds from issuance of long-term                        215.0     —
borrowings
Payments on long-term borrowings                     (99.4)    (12.3)
Payments of debt financing fees                 (6.9)     (2.3)
Cash dividends paid to shareholders                     —         (3.7)
Other, net                                              2.3       0.7
Net cash used for continuing financing activities (69.7)    (40.1)
Net cash used for discontinued financing activities   (0.9)     (0.3)
Net cash used for financing activities        (70.6)    (40.4)
Effects of foreign exchange rate changes on cash and cash  (0.2)     0.1
equivalents
Decrease in cash and cash equivalents            (0.4)     (48.9)
Cash and cash equivalents at beginning of period    9.5       62.1
Cash and cash equivalents at end of period               $   9.1 $  13.2



SOURCE Federal Signal Corporation

Website: http://www.federalsignal.com
Contact: Braden Waverley +1-630-954-2000, bwaverley@federalsignal.com
 
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