Federal Signal Corporation Announces Fourth Quarter Earnings
23 Februar 2010 - 2:00PM
PR Newswire (US)
Company Generates $0.18 in Q4 From Continuing Operations vs. $0.06
in Q4 2008 -Highlights- - Q4 Orders up 13% sequentially over Q3
2009 - Overhead Costs Reduced $11 Million versus Q4 2008 -
Double-Digit Q4 Operating Margins for Safety & Security and
Fire Rescue Groups - Net Debt Reduced $37 Million in the Quarter -
$160 Million of Global Liquidity Available at year-end OAK BROOK,
Ill., Feb. 23 /PRNewswire-FirstCall/ -- Federal Signal Corporation
(NYSE:FSS) reported income from continuing operations of $9.0
million, or $0.18 per share, for the fourth quarter of 2009 on
revenue of $206 million. For the same period of 2008, the Company
earned $3.0 million from continuing operations, or $0.06 per share,
on revenue of $232 million. The year-over-year fourth quarter
income improvement was due to a record profit quarter for the Fire
Rescue Group, significantly lower overhead costs and 2008 Q4 EPS
being impacted by $0.08 from a charge related to a China joint
venture. For the full year, the Company reported earnings per share
from continuing operations of $0.36 on net sales of $753 million
after restating prior quarters for the discontinuation of the
Pauluhn business divested in the fourth quarter. In 2008, earnings
per share from continuing operations totaled $0.57 per share on net
sales of $879 million. The year-over-year reduction in income from
continuing operations was due to lower sales volumes offset in part
by lower overhead costs, lower interest expense and higher profits
in the Fire Rescue Group (Bronto). The Company recorded net income
including discontinued operations of $22.7 million in the fourth
quarter of 2009, compared to net loss of $(11.2) million in the
prior year period with the difference coming primarily from a gain
on the sale of the Pauluhn business. For the full year, net income
including discontinued operations was $23.1 million compared to a
net loss of $(95.0) in 2008 due to the divestitures of the E-ONE
and remaining Tool group businesses in that year. Operating cash
flow from continuing operations for the full year of 2009 totaled
$60.1 million, a $67.5 million improvement versus the prior year,
primarily due to improved working capital management and lower
pension contributions. The Company had $160 million of global
liquidity at the end of the quarter. William H. Osborne, president
and chief executive officer, stated, "The Company delivered strong
results in the quarter, as our operations delivered a 14% increase
in operating income. We continued to reduce our overhead costs and
generate strong cash flow, as we have all year. Our Safety and
Security Group and Bronto, our Fire Rescue business, both generated
strong double-digit operating margins, with Bronto achieving a
record profit quarter." Mr. Osborne continued, "As we began 2009,
it was clear that cost reduction and cash flow had to be top
priorities. Our management team delivered a $30 million reduction
in overhead cost for the year and a huge improvement in operating
cash flow, both of which reflect the team's dedication to
delivering results in any economic environment. Our goal is to
translate these efficiencies into even higher margins as our
revenue trend recovers. We saw continued improvement in our
sequential order pattern with Q4 orders rising 13% above those
generated in Q3. The cost actions we enacted during the year,
combined with our market leading positions have the company well
positioned to profit in 2010 and beyond." GROUP RESULTS Safety and
Security Systems Fourth Quarter: -- Orders were up 8% versus Q3,
but down 10%, or $7.6 million, from 2008 to $72.3 million. --
Strong order growth (40%+) versus 2008 for PIPS Automated License
Plate Recognition (ALPR) cameras and a double-digit increase in
orders for the parking business were more than offset by lower
orders vs. 2008 in municipal markets in the U.S. and Europe. -- Net
sales declined 12%, or $10.2 million, vs. 2008 to $78.6 million in
the fourth quarter. Revenue growth for PIPS and favorable currency
effects of $1.4 million partially offset lower sales volumes in the
other SSG businesses. -- Q4 operating margin was 11.2% versus 13.1%
in Q4 2008. Operating income declined to $8.8 million from $11.6
million due to lower sales volumes in the quarter, which were
partially offset by lower SG&A costs. Q4 2009 operating income
included $1.1 million of restructuring costs. Full Year: -- Orders
declined 19% to $277.7 million from softness in most markets as a
result of the global economic recession. However, orders in the
domestic ALPR market increased for the year. Industrial markets
were affected by a weak oil and gas market and municipal spending
was slow due to lower tax receipts. International orders declined
23% primarily in the vehicular lighting and siren markets. -- Net
sales decreased 15% to $292.7 million in 2009 with decreases across
all businesses except domestic ALPR cameras and warning systems. --
Operating income for 2009 declined 22% to $27.5 million primarily
due to lower sales volumes. Partially offsetting the lower revenue,
operating expenses fell $15.3 million below the prior year driven
by cost management initiatives implemented in 2009 and the absence
of a $5.3 million charge in 2008 to settle a dispute and write off
assets associated with a parking system contract. Fire Rescue
Fourth Quarter: -- Orders were up 6% to $28.4 million over the
prior year primarily as a result of favorable currency. -- Net
sales increased 11% to $58.6 million resulting in a record quarter.
A large order backlog and recent plant expansion enabled strong
shipments during the fourth quarter. -- Operating income was up 66%
to $9.6 million in the fourth quarter as a result of the higher
sales volumes and efficiencies and process improvements from the
plant expansion. Operating margin of 16.4% was up 5.5 ppts over the
prior year. Full Year: -- Orders were down 40% or $65.7 million
from the prior year as a result of the global recession with
weakness in all products and all regions. -- Net sales increased
10% to $160.0 million. A high backlog at the end of 2008 and a
recent plant expansion enabled strong shipment levels over the
year. -- Operating income of $19.2 million, nearly double the
operating income of $10.4 million in 2008, was the result of strong
sales volumes throughout the year and efficiencies and process
improvements from the plant expansion. Operating margin of 12.0%
was up 4.9 ppts over the prior year. Environmental Solutions Fourth
Quarter: -- Orders increased 21% versus Q3, but declined 16% from
the fourth quarter of 2008 largely as a result of weak municipal
and industrial demand for sewer cleaners and industrial vacuum
trucks, partially offset by an increase in demand for municipal
sweepers and international orders. -- Net sales of $69.1 million
were down 23% from the prior year primarily as a result of lower
sales for sewer cleaners and vacuum trucks. -- Operating income of
$3.0 million was down $2.2 million from 2008 primarily due to lower
shipments which were partially offset by an 18% reduction in
SG&A costs. Full Year: -- Orders declined 26% to $265.4 million
in 2009 as a result of the global recession and reduced municipal
and industrial spending. U.S. orders declined 30% driven primarily
by reductions in sewer cleaning and industrial vacuum trucks and to
a lesser extent water blasters and sweepers. -- Net sales decreased
23% from 2008 mainly on lower volumes in sewer cleaning and
industrial vacuum trucks of $61.3 million and to a smaller extent
street sweepers and waterblasters. -- SG&A costs were reduced
$10.5 million versus 2008. -- Operating income was $14.9 million
for 2009, a reduction of $20.0 million as a result of lower sales
volumes. OTHER Fourth Quarter: -- Fourth quarter corporate expenses
totaled $7.6 million, a reduction of $2.9 million from 2008
primarily from lower overall legal costs related to the hearing
loss litigation. -- Interest expense was essentially flat from
2008. -- The effective tax rate on income from continuing
operations was 26.3%. Full Year: -- Full year corporate expenses
totaled $28.6 million, compared to $30.7 million in 2008. The $2.1
million reduction is primarily due to lower legal costs from the
hearing loss litigation and the absence of 2008 restructuring costs
partially offset by 2009 proxy costs. -- Interest expense was down
$3.9 million in 2009 largely due to lower average borrowings from a
reduction in net debt of $65.0 million from strong working capital
management and proceeds from the sale of discontinued businesses,
including the sale of Ravo and Pauluhn. -- The effective tax rate
on income from continuing operations was 20.6%. CONFERENCE CALL
Federal Signal will host its fourth quarter conference call on
Tuesday, February 23, 2010 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, Ill., with manufacturing facilities
worldwide, the Company operates three groups: Safety and Security
Systems, Environmental Solutions and Fire Rescue. 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.
CONSOLIDATED STATEMENTS OF OPERATIONS QTR QTR YTD YTD December
December December December 31 31 31 31 2009 2008 2009 2008 ----
---- ---- ---- Quarter Dec 31: ($in millions, except per share
data) Net Sales $206.3 $231.9 $752.5 $879.0 Cost of sales (151.9)
(167.3) (558.9) (643.6) Operating expenses (39.5) (49.8) (159.1)
(182.9) Restructuring charges (1.1) (2.7) (1.5) (2.7) ------ ------
------ ------ Operating income 13.8 12.1 33.0 49.8 Interest expense
(2.7) (2.6) (11.4) (15.3) Gain (Loss) on investment in joint
venture 1.2 (13.0) Other (expense) income 1.0 (11.9) (0.5) (0.8)
------ ------ ------ ------ (Loss) income before income taxes 12.1
(2.4) 22.3 20.7 Income tax benefit (expense) (3.1) 5.4 (4.6) 6.5
------ ------ ------ ------ Income from continuing operations 9.0
3.0 17.7 27.2 (Loss) gain from discontinued operations and
disposal, net of tax 13.7 (14.2) 5.4 (122.2) ------ ------ ------
------ Net (loss) income $22.7 $(11.2) $23.1 $(95.0) ====== ======
====== ====== Gross margin 26.4% 27.9% 25.7% 26.8% Operating margin
6.7% 5.2% 4.4% 5.7% Effective tax rate 26.3% (225.0%) 20.6% (31.4%)
Diluted earnings per share: Earnings from continuing operations
$0.18 $0.06 $0.36 $0.57 Earnings (loss) from discontinued
operations and disposal, net of taxes 0.28 (0.29) 0.11 (2.56)
------ ------ ------ ------ (Loss) earnings per share $0.46 $(0.23)
$0.47 $(1.99) ------ ------ ------ ------ Average common shares
outstanding 48.9 47.6 48.6 47.7 QTR QTR YTD YTD December December
December December 31 31 31 31 2009 2008 2009 2008 ---- ---- ----
---- Group results: ($in millions) Safety and Security Systems
Group: Orders $72.3 $79.9 $277.7 $341.3 Net Sales 78.6 88.8 292.7
345.9 Operating Income 8.8 11.6 27.5 35.2 Operating Margin 11.2%
13.1% 9.4% 10.2% Backlog $33.2 $48.2 Fire Rescue Group: Orders
$28.4 $26.7 $96.6 $162.3 Net Sales 58.6 53.0 160.0 145.5 Operating
Income 9.6 5.8 19.2 10.4 Operating Margin 16.4% 10.9% 12.0% 7.1%
Backlog $73.8 $143.8 Environmental Solutions Group: Orders $73.5
$87.0 $265.4 $357.3 Net Sales 69.1 90.1 299.8 387.6 Operating
Income 3.0 5.2 14.9 34.9 Operating Margin 4.3% 5.8% 5.0% 9.0%
Backlog $67.8 $98.2 Corporate operating expenses $(7.6) $(10.5)
$(28.6) $(30.7) ------ ------ ------ ------ Total Operating Income
$13.8 $12.1 $33.0 $49.8 ====== ====== ====== ====== FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December
31 December 31 2009 2008 ($in millions) ---- ---- ASSETS Current
assets Cash and cash equivalents $21.1 $23.4 Short term investments
10.0 Accounts receivable, net of allowances for doubtful accounts
of $2.5 million and $2.0 million, respectively 120.2 136.1
Inventories 112.1 131.6 Other current assets 26.0 21.0 ------
------ Total current assets 279.4 322.1 Properties and equipment,
net 65.5 62.5 Other assets Goodwill 319.6 303.6 Intangible assets,
net of accumulated amortization 52.7 47.8 Deferred tax asset 17.5
31.2 Deferred charges and other assets 1.7 4.5 ------ ------ Total
assets of continuing operations 736.4 771.7 Assets of discontinued
operations, net 8.5 67.3 ------ ------ Total assets $744.9 $839.0
====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities Short-term borrowings $- $12.6 Current portion of
long-term borrowings 41.9 25.1 Accounts payable 45.2 47.5 Accrued
Liabilities Compensation and withholding taxes 20.8 23.3 Customer
deposits 10.4 17.4 Other 48.1 48.2 ------ ------ Total current
liabilities 166.4 174.1 Long-term borrowings 159.7 241.2 Long-term
pension and other postretirement benefit liabilities 39.6 58.0
Deferred gain 24.2 26.2 Other long-term liabilities 12.2 13.3
------ ------ Total liabilities of continuing operations 402.1
512.8 Liabilities of discontinued operations 14.1 39.1 ------
------ Total liabilities 416.2 551.9 Shareholders' equity Common
stock, $1 par value per share, 90.0 million shares authorized, 49.6
million and 49.3 million shares issued, respectively 49.6 49.3
Capital in excess of par value 93.8 106.4 Retained earnings 240.4
229.0 Treasury stock, 0.8 and 1.9 million shares, respectively, at
cost (15.8) (36.1) Accumulated other comprehensive (loss) income:
Foreign currency translation, net 8.5 (4.1) Net derivative loss,
cash flow hedges, net (0.7) (0.9) Unrecognized pension and
postretirement losses, net (47.1) (56.5) ------ ------ Total
accumulated other comprehensive (loss) (39.3) (61.5) ------ ------
Total shareholders' equity 328.7 287.1 ------ ------ Total
liabilities and shareholders' equity $744.9 $839.0 ====== ======
Supplemental data: Debt $201.6 $278.9 Debt-to-capitalization ratio:
0.38 0.49 Net Debt/Cap Ratio 0.35 0.46 Net Debt/Cap Ratio =
debt-to-capitalization ratio, net of cash FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, ----------------------------- 2009
2008 2007 ------ ------ ------ ($in millions) Operating activities
Net income (loss) $23.1 $(95.0) $54.7 Adjustments to reconcile net
(loss) income to net cash provided by operating activities (Gain)
loss on discontinued operations and disposal (5.4) 122.2 (19.6)
(Gain) loss on joint venture (1.2) 13.0 3.3 Depreciation and
amortization 15.3 14.9 13.3 Stock option and award compensation
expense 3.1 2.9 3.5 Provision for doubtful accounts 0.9 7.1 0.6
Deferred income taxes 3.6 (14.4) 6.2 Changes in operating assets
and liabilities, net of effects from acquisitions and dispositions
of companies Accounts receivable 17.4 (14.2) (0.9) Inventories 20.9
(18.6) (19.6) Other current assets (0.7) 1.9 (1.3) Accounts payable
(3.1) (10.4) 1.6 Customer deposits (7.4) - 3.6 Accrued liabilities
(4.1) (1.9) 0.3 Income taxes 2.0 (7.9) (3.5) Pension contributions
(1.0) (11.5) (6.7) Other (3.3) 4.5 (1.0) ------ ------ ------ Net
cash (used for) provided by continuing operating activities 60.1
(7.4) 34.5 Net cash provided by discontinued operating activities
4.1 131.1 30.9 ------ ------ ------ Net cash provided by operating
activities 64.2 123.7 65.4 Investing activities Purchases of
properties and equipment (14.6) (28.0) (19.5) Proceeds from sale of
properties and equipment 2.2 38.0 0.6 Payments for acquisitions,
net of cash acquired (13.5) - (147.5) Other, net 10.0 (10.1) (1.7)
------ ------ ------ Net cash used for continuing investing
activities (15.9) (0.1) (168.1) Net cash provided by (used for)
discontinued investing activities 45.1 54.7 61.5 ------ ------
------ Net cash provided by (used for) investing activities 29.2
54.6 (106.6) Financing activities (Reduction) increase in
short-term borrowings, net (12.6) 0.6 (28.3) Proceeds from issuance
of long-term borrowings 12.5 148.8 230.1 Repayment of long-term
borrowings (77.6) (169.5) (142.2) Purchases of treasury stock -
(6.0) - Cash dividends paid to shareholders (11.7) (11.5) (11.5)
Other, net 0.2 0.2 0.4 ------ ------ ------ Net cash (used for)
provided by continuing financing activities (89.2) (37.4) 48.5 Net
cash used for discontinued financing activities (7.3) (129.3)
(11.7) ------ ------ ------ Net cash (used for) provided by
financing activities (96.5) (166.7) 36.8 ------ ------ ------
Effects of foreign exchange rate changes on cash 0.8 (0.7) 1.1
(Decrease) increase in cash and cash equivalents (2.3) 10.9 (3.3)
Cash and cash equivalents at beginning of year 23.4 12.5 15.8
------ ------ ------ Cash and cash equivalents at end of year $21.1
$23.4 $12.5 ====== ====== ====== DATASOURCE: Federal Signal
Corporation CONTACT: William Barker of Federal Signal Corporation,
+1-630-954-2000, Web Site: http://www.federalsignal.com/
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