OAK
BROOK, Ill., Feb. 27,
2024 /PRNewswire/ -- Federal Signal Corporation
(NYSE:FSS), a leader in environmental and safety solutions, today
reported results for the fourth quarter and year ended
December 31, 2023.
Fourth Quarter Highlights
- Net sales of $448 million, up
$57 million, or 15%, from last year;
organic growth of $42 million, or
11%
- Operating income of $63.1
million, up $16.5 million, or
35%, from last year
- Operating cash flow of $103
million, up $64 million, or
162%, from last year
- GAAP EPS of $0.75, up
$0.18, or 32%, from last year
- Adjusted EPS of $0.74, up
$0.17, or 30%, from last year
- Orders of $465 million, up
$21 million, or 5%, from last
year
- Backlog of $1.03 billion, up
$146 million, or 17%, from last
year
Full-Year Highlights
- Net sales of $1.72 billion, up
$288 million, or 20%, from last year;
organic growth of $220 million, or
15%
- Operating income of $224.5
million, up $63.7 million, or
40%, from last year
- Operating cash flow of $194
million, up $123 million, or
171%, from last year
- GAAP EPS of $2.56, up
$0.59, or 30%, from last year
- Adjusted EPS of $2.58, up
$0.62, or 32%, from last year
- Orders of $1.87 billion, up
$178 million, or 11%, from last
year
2024 Outlook
- Adjusted EPS* of $2.85 to
$3.05
- Net sales of $1.85 billion to
$1.90 billion
- Capital expenditures of $35
million to $40 million
Consolidated net sales for the fourth quarter were $448 million, an increase of $57 million, or 15%, compared to the same quarter
a year ago. Net income for the fourth quarter was $46.4 million, or $0.75 per diluted share, compared to $34.6 million, or $0.57 per diluted share, in the prior-year
quarter. The Company also reported adjusted net income for the
fourth quarter of $45.7 million, or
$0.74 per diluted share, compared to
$35.0 million, or $0.57 per diluted share, in the same quarter a
year ago. Both net sales and adjusted EPS for the fourth quarter
were new Company records. The Company is reporting adjusted results
to facilitate comparisons of underlying performance on a
year-over-year basis. A reconciliation of these and other non-GAAP
measures is provided at the conclusion of this news release.
Consolidated net sales for the year ended December 31, 2023 were $1.72 billion, an increase of $288 million, or 20%, compared to the prior year.
Net income for the year was $157.4
million, or $2.56 per diluted
share, compared to $120.4 million, or
$1.97 per diluted share, in the prior
year. Adjusted net income for the year was $158.8 million, or $2.58 per diluted share, compared to $120.1 million, or $1.96 per diluted share, in the prior year.
Strong Fourth Quarter Performance Wraps up Record Year;
Customer Demand at Unprecedented Levels
"Our record-setting fourth quarter performance represented a
strong finish to a year in which we delivered the highest net sales
and adjusted EPS in our history," commented Jennifer L. Sherman, President and Chief
Executive Officer. "Within our Environmental Solutions Group,
increased sales volumes, contributions from recent acquisitions,
and strong price realization contributed to a 15% year-over-year
net sales increase and a 190 basis point improvement in EBITDA
margin. Our Safety and Security Systems Group also delivered
impressive results, with double-digit top line growth and an EBITDA
margin in excess of 21%. Demand for our products remains high, with
our strong order intake this quarter contributing to a record
backlog of $1.03 billion at the end
of 2023."
In the Environmental Solutions Group, net sales for the fourth
quarter were $373 million, up
$48 million, or 15%, compared to the
prior-year quarter, while in the Safety and Security Systems Group,
net sales for the fourth quarter were $75
million, up $9 million, or
14%, compared to the prior-year quarter.
Consolidated operating income for the fourth quarter was
$63.1 million, up $16.5 million, or 35%, compared to the prior-year
quarter. Consolidated operating margin for the fourth quarter was
14.1%, up from 11.9% last year.
Consolidated adjusted earnings before interest, tax,
depreciation and amortization ("adjusted EBITDA") for the fourth
quarter was $77.5 million, up
$16.4 million, or 27%, compared to
the prior-year quarter, and consolidated adjusted EBITDA margin for
the fourth quarter was 17.3%, up from 15.6% last year.
Adjusted EBITDA in the Environmental Solutions Group for the
fourth quarter was $73.3 million, up
$15.7 million, or 27%, compared to
the prior-year quarter, and its adjusted EBITDA margin for the
fourth quarter was 19.6%, up from 17.7% last year. Within the
Safety and Security Systems Group, adjusted EBITDA for the fourth
quarter was $16.0 million, up
$2.8 million, or 21%, compared to the
prior-year quarter, and its adjusted EBITDA margin for the fourth
quarter was 21.2%, up from 19.9% last year.
Orders for the fourth quarter were $465
million, up $21 million, or
5%, compared to the prior-year quarter. With the strong momentum in
customer demand, consolidated backlog at December 31, 2023 was $1.03 billion, an improvement of $146 million, or 17%, from last year.
Increased Operating Cash Flow Further Strengthens Financial
Position, Providing Flexibility to Fund Growth Opportunities and
Cash Returns to Stockholders
Operating cash flow during the fourth quarter was $103 million, an increase of $64 million, or 162%, from the prior-year
quarter. Full-year cash generated from operations totaled
$194 million, an increase of
$123 million, or 171%, compared to
the prior-year period.
At December 31, 2023, total debt was $299 million, total cash and cash equivalents
were $61 million and the Company had
$493 million of availability for
borrowings under its credit facility.
"Our operating cash flow generation this quarter was
outstanding, enabling us to pay down approximately $70 million of debt during the quarter," said
Sherman. "Our full-year operating cash flow increased by 171%
compared to last year, further strengthening our financial
position, and providing significant flexibility to invest in
organic growth initiatives and pursue additional strategic
acquisitions. As demonstrated with the recent increase in our
dividend and our share repurchases during the quarter, we also
remain committed to returning cash to stockholders."
The Company funded dividends of $6.1
million during the fourth quarter, reflecting a dividend of
$0.10 per share, and as recently
announced, the Board of Directors increased the dividend that will
be payable in the first quarter of 2024 to $0.12 per share, a 20% increase from the prior
dividend.
The Company also funded stock repurchases of $1.2 million during the fourth quarter.
Outlook
"Conditions in our end markets remain strong, and with the
ongoing execution against our strategic initiatives and
opportunities to drive improved efficiencies, we are confident that
we will have another record year in 2024," noted Sherman. "Although
seasonal effects typically result in our first quarter earnings
being lower than subsequent quarters, we are anticipating full-year
net sales of between $1.85 billion
and $1.90 billion, double-digit
improvement in pre-tax earnings and EBITDA margin performance in
the upper half of our recently-increased target range. For the
full-year, we currently expect to report adjusted EPS* of between
$2.85 and $3.05 per share, which would represent a
year-over-year increase of between 10% and 18%, and the highest EPS
level in the Company's history. Our outlook does not include an
anticipated tax benefit of approximately $14
million that we expect to realize in the first quarter, and
assumes continued improvement in production output and robust
aftermarket activity. With an active M&A pipeline, ongoing
investment in new product development, available capacity, good
access to skilled labor, and anticipated multi-year tailwinds from
infrastructure legislation, our businesses are well positioned for
long-term, sustainable growth."
CONFERENCE CALL
Federal Signal will host its fourth quarter earnings conference
call on Tuesday, February 27, 2024 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
https://www.federalsignal.com or by dialing phone number
1-877-704-4453 and entering the pin number 13743554. An archived
replay will be available on Federal Signal's website shortly after
the call.
About Federal Signal
Federal Signal Corporation (NYSE: FSS) builds and delivers
equipment of unmatched quality that moves material, cleans
infrastructure, and protects the communities where we work and
live. Founded in 1901, Federal Signal is a leading global designer,
manufacturer and supplier of products and total solutions that
serve municipal, governmental, industrial and commercial customers.
Headquartered in Oak Brook, Ill.,
with manufacturing facilities worldwide, the Company operates two
groups: Environmental Solutions and Safety and Security Systems.
For more information on Federal Signal, visit:
https://www.federalsignal.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
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: direct
and indirect impacts of the coronavirus pandemic and the associated
government response, risks and adverse economic effects associated
with emerging geopolitical conflicts, product and price
competition, supply chain disruptions, work stoppages, availability
and pricing of raw materials, cybersecurity risks, risks associated
with acquisitions such as integration of operations and achieving
anticipated revenue and cost benefits, 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.
* Adjusted earnings per share ("EPS") is a non-GAAP measure,
which includes certain adjustments to reported GAAP net income and
diluted EPS. In 2023, we made adjustments to exclude the impact of
acquisition and integration-related expenses (benefits),
environmental remediation costs of a discontinued operation and
purchase accounting effects. In prior years, we have also made
adjustments to exclude the impact of debt settlement charges and
certain other unusual or non-recurring items. Should any similar
items occur in 2024, we would expect to exclude them from the
determination of adjusted EPS. However, because of the underlying
uncertainty in quantifying amounts which may not yet be known, a
reconciliation of our Adjusted EPS outlook to the most applicable
GAAP measure is excluded based on the unreasonable efforts
exception in Item 10(e)(1)(i)(B).
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in millions of
dollars, except per share data and percentages)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$
448.4
|
|
$
391.5
|
|
$
1,722.7
|
|
$
1,434.8
|
Cost of
sales
|
329.0
|
|
294.9
|
|
1,272.5
|
|
1,089.9
|
Gross profit
|
119.4
|
|
96.6
|
|
450.2
|
|
344.9
|
Selling, engineering,
general and administrative expenses
|
54.1
|
|
46.2
|
|
210.1
|
|
171.7
|
Amortization
expense
|
3.8
|
|
3.3
|
|
15.2
|
|
12.9
|
Acquisition and
integration related (benefits) expenses
|
(1.6)
|
|
0.5
|
|
0.4
|
|
(0.5)
|
Operating
income
|
63.1
|
|
46.6
|
|
224.5
|
|
160.8
|
Interest expense,
net
|
4.3
|
|
4.4
|
|
19.7
|
|
10.3
|
Other expense (income),
net
|
0.3
|
|
0.2
|
|
1.8
|
|
(0.4)
|
Income before income
taxes
|
58.5
|
|
42.0
|
|
203.0
|
|
150.9
|
Income tax
expense
|
12.1
|
|
7.4
|
|
45.6
|
|
30.5
|
Net income
|
$ 46.4
|
|
$ 34.6
|
|
$
157.4
|
|
$
120.4
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$ 0.76
|
|
$ 0.57
|
|
$ 2.59
|
|
$ 1.99
|
Diluted
|
$ 0.75
|
|
$ 0.57
|
|
$ 2.56
|
|
$ 1.97
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
60.8
|
|
60.5
|
|
60.7
|
|
60.5
|
Diluted
|
61.6
|
|
61.2
|
|
61.5
|
|
61.2
|
Cash dividends declared
per common share
|
$ 0.10
|
|
$ 0.09
|
|
$ 0.39
|
|
$ 0.36
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Operating
margin
|
14.1 %
|
|
11.9 %
|
|
13.0 %
|
|
11.2 %
|
Adjusted
EBITDA
|
$ 77.5
|
|
$ 61.1
|
|
$
286.0
|
|
$
215.0
|
Adjusted EBITDA
margin
|
17.3 %
|
|
15.6 %
|
|
16.6 %
|
|
15.0 %
|
Total
orders
|
$
465.0
|
|
$
444.2
|
|
$
1,870.1
|
|
$
1,692.2
|
Backlog
|
1,025.1
|
|
879.2
|
|
1,025.1
|
|
879.2
|
Depreciation and
amortization
|
15.3
|
|
14.0
|
|
60.4
|
|
54.7
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
|
|
|
As of December
31,
|
(in millions of
dollars, except per share data)
|
2023
|
|
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
61.0
|
|
$
47.5
|
Accounts receivable,
net of allowances for doubtful accounts of $2.5 and $2.5,
respectively
|
186.2
|
|
173.8
|
Inventories
|
303.4
|
|
292.7
|
Prepaid expenses and
other current assets
|
19.6
|
|
17.4
|
Total current
assets
|
570.2
|
|
531.4
|
Properties and
equipment, net of accumulated depreciation of $173.3 and $156.4,
respectively
|
190.8
|
|
179.3
|
Rental equipment, net
of accumulated depreciation of $47.5 and $45.4,
respectively
|
134.8
|
|
109.1
|
Operating lease
right-of-use assets
|
21.0
|
|
24.7
|
Goodwill
|
472.7
|
|
453.4
|
Intangible assets, net
of accumulated amortization of $70.7 and $55.4,
respectively
|
207.5
|
|
208.2
|
Deferred tax
assets
|
12.0
|
|
8.8
|
Deferred charges and
other long-term assets
|
11.5
|
|
9.4
|
Total assets
|
$
1,620.5
|
|
$
1,524.3
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term borrowings and finance lease obligations
|
$
4.7
|
|
$
1.5
|
Accounts
payable
|
66.7
|
|
72.4
|
Customer
deposits
|
27.1
|
|
25.4
|
Accrued
liabilities:
|
|
|
|
Compensation and
withholding taxes
|
42.3
|
|
31.1
|
Current operating
lease liabilities
|
6.8
|
|
6.9
|
Other current
liabilities
|
48.2
|
|
43.2
|
Total current
liabilities
|
195.8
|
|
180.5
|
Long-term borrowings
and finance lease obligations
|
294.3
|
|
361.5
|
Long-term operating
lease liabilities
|
14.9
|
|
18.5
|
Long-term pension and
other post-retirement benefit liabilities
|
44.2
|
|
38.9
|
Deferred tax
liabilities
|
53.2
|
|
51.0
|
Other long-term
liabilities
|
16.2
|
|
13.0
|
Total
liabilities
|
618.6
|
|
663.4
|
Stockholders'
equity:
|
|
|
|
Common stock,
$1 par value per share, 90.0 shares authorized,
70.0 and 69.5 shares issued, respectively
|
70.0
|
|
69.5
|
Capital in excess of
par value
|
291.1
|
|
271.8
|
Retained
earnings
|
915.8
|
|
782.2
|
Treasury stock, at
cost, 9.0 and 8.8 shares, respectively
|
(193.7)
|
|
(178.6)
|
Accumulated other
comprehensive loss
|
(81.3)
|
|
(84.0)
|
Total stockholders'
equity
|
1,001.9
|
|
860.9
|
Total liabilities and
stockholders' equity
|
$
1,620.5
|
|
$
1,524.3
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
For the Years
Ended
December 31,
|
(in millions of
dollars)
|
2023
|
|
2022
|
Operating
activities:
|
|
|
|
Net income
|
$
157.4
|
|
$
120.4
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
60.4
|
|
54.7
|
Deferred financing
costs
|
0.5
|
|
0.4
|
Stock-based
compensation expense
|
13.1
|
|
10.2
|
Pension-related
expense, net of funding
|
(1.8)
|
|
(1.4)
|
Changes in fair value
of contingent consideration
|
(2.1)
|
|
—
|
Amortization of
interest rate swap settlement gain
|
(2.4)
|
|
—
|
Deferred income taxes,
including change in valuation allowance
|
(0.3)
|
|
(4.2)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(6.1)
|
|
(38.0)
|
Inventories
|
9.8
|
|
(61.0)
|
Prepaid expenses and
other current assets
|
(1.7)
|
|
(0.5)
|
Rental
equipment
|
(44.8)
|
|
(26.0)
|
Accounts
payable
|
(8.5)
|
|
8.3
|
Customer
deposits
|
1.1
|
|
1.3
|
Accrued
liabilities
|
15.8
|
|
1.1
|
Income
taxes
|
(0.5)
|
|
8.0
|
Other
|
4.5
|
|
(1.5)
|
Net cash provided by
operating activities
|
194.4
|
|
71.8
|
Investing
activities:
|
|
|
|
Purchases of
properties and equipment
|
(30.3)
|
|
(53.0)
|
Payments for
acquisition-related activity, net of cash acquired
|
(55.0)
|
|
(49.8)
|
Other, net
|
1.6
|
|
3.1
|
Net cash used for
investing activities
|
(83.7)
|
|
(99.7)
|
Financing
activities:
|
|
|
|
(Decrease) increase in
revolving lines of credit, net
|
(64.1)
|
|
81.2
|
Payments on long-term
borrowings
|
(0.8)
|
|
—
|
Payments of debt
financing fees
|
—
|
|
(1.9)
|
Purchases of treasury
stock
|
(5.5)
|
|
(16.1)
|
Redemptions of common
stock to satisfy withholding taxes related to stock-based
compensation
|
(7.0)
|
|
(6.2)
|
Payments for
acquisition-related activity
|
(0.5)
|
|
—
|
Cash dividends paid to
stockholders
|
(23.8)
|
|
(21.8)
|
Proceeds from stock
compensation activity
|
3.9
|
|
0.2
|
Other, net
|
(0.1)
|
|
0.1
|
Net cash (used for)
provided by financing activities
|
(97.9)
|
|
35.5
|
Effects of foreign
exchange rate changes on cash and cash equivalents
|
0.7
|
|
(0.6)
|
Increase in cash and
cash equivalents
|
13.5
|
|
7.0
|
Cash and cash
equivalents at beginning of year
|
47.5
|
|
40.5
|
Cash and cash
equivalents at end of year
|
$
61.0
|
|
$
47.5
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
GROUP
RESULTS
|
|
The following tables
summarize group operating results as of and for the three and
twelve months ended December 31, 2023 and 2022:
|
|
Environmental
Solutions Group
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(in millions of
dollars, except percentages)
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
Net sales
|
$
373.1
|
|
$
325.3
|
|
$ 47.8
|
|
$
1,437.9
|
|
$
1,190.6
|
|
$
247.3
|
Operating
income
|
58.2
|
|
44.7
|
|
13.5
|
|
209.2
|
|
144.5
|
|
64.7
|
Adjusted
EBITDA
|
73.3
|
|
57.6
|
|
15.7
|
|
267.2
|
|
194.9
|
|
72.3
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
15.6 %
|
|
13.7 %
|
|
1.9 %
|
|
14.5 %
|
|
12.1 %
|
|
2.4 %
|
Adjusted EBITDA
margin
|
19.6 %
|
|
17.7 %
|
|
1.9 %
|
|
18.6 %
|
|
16.4 %
|
|
2.2 %
|
Total
orders
|
$
398.8
|
|
$
383.5
|
|
$ 15.3
|
|
$
1,578.0
|
|
$
1,444.2
|
|
$
133.8
|
Backlog
|
966.5
|
|
824.4
|
|
142.1
|
|
966.5
|
|
824.4
|
|
142.1
|
Depreciation and
amortization
|
14.2
|
|
12.8
|
|
1.4
|
|
56.0
|
|
50.3
|
|
5.7
|
|
Safety and Security
Systems Group
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(in millions of
dollars, except percentages)
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
Net sales
|
$ 75.3
|
|
$ 66.2
|
|
$
9.1
|
|
$
284.8
|
|
$
244.2
|
|
$ 40.6
|
Operating
income
|
14.9
|
|
12.1
|
|
2.8
|
|
54.8
|
|
40.8
|
|
14.0
|
Adjusted
EBITDA
|
16.0
|
|
13.2
|
|
2.8
|
|
59.0
|
|
45.0
|
|
14.0
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
19.8 %
|
|
18.3 %
|
|
1.5 %
|
|
19.2 %
|
|
16.7 %
|
|
2.5 %
|
Adjusted EBITDA
margin
|
21.2 %
|
|
19.9 %
|
|
1.3 %
|
|
20.7 %
|
|
18.4 %
|
|
2.3 %
|
Total
orders
|
$ 66.2
|
|
$ 60.7
|
|
$
5.5
|
|
$
292.1
|
|
$
248.0
|
|
$ 44.1
|
Backlog
|
58.6
|
|
54.8
|
|
3.8
|
|
58.6
|
|
54.8
|
|
3.8
|
Depreciation and
amortization
|
1.1
|
|
1.1
|
|
—
|
|
4.2
|
|
4.2
|
|
—
|
Corporate Expenses
Corporate operating expenses were $10.0
million and $10.2 million for
the three months ended December 31, 2023 and 2022,
respectively.
Corporate operating expenses were $39.5
million and $24.5 million for
the years ended December 31, 2023 and
2022, respectively.
SEC REGULATION G NON-GAAP RECONCILIATION
The financial measures presented below are unaudited and are not
in accordance with U.S. generally accepted accounting principles
("GAAP"). The non-GAAP financial information presented herein
should be considered supplemental to, and not a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
The Company has provided this supplemental information to
investors, analysts, and other interested parties to enable them to
perform additional analyses of operating results, to illustrate the
results of operations giving effect to the non-GAAP adjustments
shown in the reconciliations below, and to provide an additional
measure of performance which management considers in operating the
business.
Adjusted net income and adjusted earnings per share ("Adjusted
EPS"):
The Company believes that modifying its 2023 and 2022 net income
and diluted earnings per share ("EPS") provides additional measures
which are representative of the Company's underlying performance
and improve the comparability of results between reporting periods.
Adjusted net income and Adjusted EPS are both non-GAAP measures.
During the three and twelve months ended December 31, 2023 and
2022, adjustments were made to reported GAAP net income and diluted
EPS to exclude the impact of acquisition and integration-related
(benefits) expenses, environmental remediation costs of a
discontinued operation, debt settlement charges, and purchase
accounting effects, where applicable.
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in millions of
dollars)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
|
$
46.4
|
|
$
34.6
|
|
$
157.4
|
|
$
120.4
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
12.1
|
|
7.4
|
|
45.6
|
|
30.5
|
Income before income
taxes
|
58.5
|
|
42.0
|
|
203.0
|
|
150.9
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related (benefits) expenses
|
(1.6)
|
|
0.5
|
|
0.4
|
|
(0.5)
|
Environmental
remediation costs of a discontinued operation
(a)
|
—
|
|
—
|
|
0.8
|
|
—
|
Debt settlement
charges (b)
|
—
|
|
0.1
|
|
—
|
|
0.1
|
Purchase accounting
effects (c)
|
0.7
|
|
—
|
|
0.7
|
|
—
|
Adjusted income before
income taxes
|
$
57.6
|
|
$
42.6
|
|
$
204.9
|
|
$
150.5
|
Adjusted income tax
expense (d)
|
(11.9)
|
|
(7.6)
|
|
(46.1)
|
|
(30.4)
|
Adjusted net
income
|
$
45.7
|
|
$
35.0
|
|
$
158.8
|
|
$
120.1
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in dollars per
diluted share)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
EPS, as
reported
|
$
0.75
|
|
$
0.57
|
|
$
2.56
|
|
$
1.97
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
0.20
|
|
0.12
|
|
0.74
|
|
0.50
|
Income before income
taxes
|
0.95
|
|
0.69
|
|
3.30
|
|
2.47
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related (benefits) expenses
|
(0.03)
|
|
0.01
|
|
0.01
|
|
(0.01)
|
Environmental
remediation costs of a discontinued operation
(a)
|
—
|
|
—
|
|
0.01
|
|
—
|
Debt settlement
charges (b)
|
—
|
|
0.00
|
|
—
|
|
0.00
|
Purchase accounting
effects (c)
|
0.01
|
|
—
|
|
0.01
|
|
—
|
Adjusted income before
income taxes
|
$
0.93
|
|
$
0.70
|
|
$
3.33
|
|
$
2.46
|
Adjusted income tax
expense (d)
|
(0.19)
|
|
(0.13)
|
|
(0.75)
|
|
(0.50)
|
Adjusted EPS
|
$
0.74
|
|
$
0.57
|
|
$
2.58
|
|
$
1.96
|
|
|
(a)
|
Environmental
remediation costs of a discontinued operation in the twelve months
ended December 31, 2023 relate to estimated environmental clean up
costs at a facility associated with a business that was
discontinued in 2009. Such charges are included as a component of
Other expense (income), net on the Consolidated Statements of
Operations.
|
(b)
|
Debt settlement charges
in the three and twelve months ended December 31, 2022 relate to
the write off of deferred financing fees incurred in connection
with the execution of the Company's 2022 Credit Agreement. Such
costs are included as a component of Other expense (income), net on
the Consolidated Statements of Operations.
|
(c)
|
Purchase accounting
effects in the three and twelve months ended December 31, 2023
relate to adjustments to exclude the step-up in the valuation of
equipment acquired in connection with acquisitions that was sold
subsequent to the acquisition date. Such costs are included as a
component of Cost of sales on the Consolidated Statements of
Operations.
|
(d)
|
Adjusted income tax
expense for the three and twelve months ended December 31, 2023 and
2022 was recomputed after excluding the impact of acquisition and
integration-related (benefits) expenses, environmental remediation
costs of a discontinued operation, debt settlement charges, and
purchase accounting effects, where applicable.
|
Adjusted EBITDA:
The Company uses adjusted EBITDA and the ratio of adjusted
EBITDA to net sales ("adjusted EBITDA margin"), at both the
consolidated and segment level, as additional measures which are
representative of its underlying performance and to improve the
comparability of results across reporting periods. We believe that
investors use versions of these metrics in a similar manner. For
these reasons, the Company believes that adjusted EBITDA and
adjusted EBITDA margin, at both the consolidated and segment level,
are meaningful metrics to investors in evaluating the Company's
underlying financial performance.
Consolidated adjusted EBITDA is a non-GAAP measure that
represents the total of net income, interest expense, acquisition
and integration-related (benefits) expenses, purchase accounting
effects, other expense/income, income tax expense, and depreciation
and amortization expense, as applicable. Consolidated adjusted
EBITDA margin is a non-GAAP measure that represents the total of
net income, interest expense, acquisition and integration-related
(benefits) expenses, purchase accounting effects, other
expense/income, income tax expense, and depreciation and
amortization expense, as applicable, divided by net sales for the
applicable period(s).
Segment adjusted EBITDA is a non-GAAP measure that represents
the total of segment operating income, acquisition and
integration-related expenses, purchase accounting effects, and
depreciation and amortization expense, as applicable. Segment
adjusted EBITDA margin is a non-GAAP measure that represents the
total of segment operating income, acquisition and
integration-related expenses, purchase accounting effects, and
depreciation and amortization expense, as applicable, divided by
net sales for the applicable period(s). Segment operating income
includes all revenues, costs and expenses directly related to the
segment involved. In determining segment income, neither corporate
nor interest expenses are included. Segment depreciation and
amortization expense relates to those assets, both tangible and
intangible, that are utilized by the respective segment.
Other companies may use different methods to calculate adjusted
EBITDA and adjusted EBITDA margin.
Consolidated
The following table summarizes the Company's consolidated
adjusted EBITDA and adjusted EBITDA margin and reconciles net
income to consolidated adjusted EBITDA for the three and twelve
months ended December 31, 2023 and 2022:
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in millions of
dollars, except percentages)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
|
$
46.4
|
|
$
34.6
|
|
$ 157.4
|
|
$ 120.4
|
Add (less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
4.3
|
|
4.4
|
|
19.7
|
|
10.3
|
Acquisition and
integration-related (benefits) expenses
|
(1.6)
|
|
0.5
|
|
0.4
|
|
(0.5)
|
Purchase accounting
effects
|
0.7
|
|
—
|
|
0.7
|
|
—
|
Other expense
(income), net
|
0.3
|
|
0.2
|
|
1.8
|
|
(0.4)
|
Income tax
expense
|
12.1
|
|
7.4
|
|
45.6
|
|
30.5
|
Depreciation and
amortization
|
15.3
|
|
14.0
|
|
60.4
|
|
54.7
|
Consolidated adjusted
EBITDA
|
$
77.5
|
|
$
61.1
|
|
$ 286.0
|
|
$ 215.0
|
|
|
|
|
|
|
|
|
Net sales
|
$ 448.4
|
|
$ 391.5
|
|
$
1,722.7
|
|
$
1,434.8
|
|
|
|
|
|
|
|
|
Consolidated adjusted
EBITDA margin
|
17.3 %
|
|
15.6 %
|
|
16.6 %
|
|
15.0 %
|
Environmental Solutions Group
The following table summarizes the Environmental Solutions
Group's adjusted EBITDA and adjusted EBITDA margin and reconciles
operating income to adjusted EBITDA for the three and twelve months
ended December 31, 2023 and 2022:
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in millions of
dollars, except percentages)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
income
|
$
58.2
|
|
$
44.7
|
|
$ 209.2
|
|
$ 144.5
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
0.2
|
|
0.1
|
|
1.3
|
|
0.1
|
Purchase accounting
effects
|
0.7
|
|
—
|
|
0.7
|
|
—
|
Depreciation and
amortization
|
14.2
|
|
12.8
|
|
56.0
|
|
50.3
|
Adjusted
EBITDA
|
$
73.3
|
|
$
57.6
|
|
$ 267.2
|
|
$ 194.9
|
|
|
|
|
|
|
|
|
Net sales
|
$ 373.1
|
|
$ 325.3
|
|
$
1,437.9
|
|
$
1,190.6
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
19.6 %
|
|
17.7 %
|
|
18.6 %
|
|
16.4 %
|
Safety and Security Systems Group
The following table summarizes the Safety and Security Systems
Group's adjusted EBITDA and adjusted EBITDA margin and reconciles
operating income to adjusted EBITDA for the three and twelve months
ended December 31, 2023 and 2022:
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in millions of
dollars, except percentages)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
income
|
$
14.9
|
|
$
12.1
|
|
$
54.8
|
|
$
40.8
|
Add:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
1.1
|
|
1.1
|
|
4.2
|
|
4.2
|
Adjusted
EBITDA
|
$
16.0
|
|
$
13.2
|
|
$
59.0
|
|
$
45.0
|
|
|
|
|
|
|
|
|
Net sales
|
$
75.3
|
|
$
66.2
|
|
$ 284.8
|
|
$ 244.2
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
21.2 %
|
|
19.9 %
|
|
20.7 %
|
|
18.4 %
|
View original
content:https://www.prnewswire.com/news-releases/federal-signal-completes-record-year-with-impressive-fourth-quarter-results-including-15-net-sales-growth-35-operating-income-increase-and-strong-cash-generation-issues-2024-outlook-302071890.html
SOURCE Federal Signal Corporation