OAK BROOK, Ill., July 30 /PRNewswire-FirstCall/ -- Federal Signal Corporation , a leader in environmental, safety and transportation solutions, announced today second quarter reported earnings per share from continued operations was $0.02 on income of $1.4 million and net sales of $198.7 million. Excluding restructuring charges, adjusted earnings per share from continuing operations would be $0.06 for the second quarter. Adjusted earnings per share from continuing operations excludes $3.7 million of pre-tax restructuring related charges. For the same period of 2009, the Company reported earnings per share from continuing operations of $0.09 on income of $4.4 million and net sales of $198.5 million. The year over year second quarter income decline was primarily due to the restructuring charges as well as $1.1 million in acquisition and integration costs related to the Sirit and VESystems acquisitions. The Company's earnings per share calculation was also impacted by an increased number of outstanding shares related to the equity offering completed in May 2010.
Year to date, the Company reported a loss per share of $(0.03) from continuing operations on net sales of $365.2 million as compared to earnings per share from continuing operations in 2009 of $0.10. The year over year reduction is primarily related to lower first quarter net sales, restructuring charges of $4.0 million, and $3.7 million in acquisition and integration costs. Excluding restructuring charges, adjusted earnings per share from continuing operations would be $0.02.
William H. Osborne, president and chief executive officer, stated, "We continued to see positive signs across many of our businesses in the quarter, but our near-term expectations have been tempered by economic conditions in Europe. We saw a 23% increase in total company orders versus last year, including a 16% increase in orders for our existing businesses. We achieved order growth rates in excess of 15% in many of our key businesses: PIPS Automated License Plate Recognition (ALPR) cameras, parking, industrial safety and security, Vactor sewer cleaners and Jetstream waterblasters. However, as the European debt crisis unfolded, we saw a significant drop in the order rate for some of our European-based businesses. As an example, Q2 orders for our Bronto Skylift business were 37% below Q1 orders."
Mr. Osborne continued, "As we have previously discussed, this quarter we established a new operating group -- Federal Signal Technologies, or 'FSTech', which consists of our PIPS ALPR business, our parking business and our three recent acquisitions: Sirit, VESystems and Diamond Consulting Services. Due to the change in our business group structure, as well as some other changes across the company, we recognized a $3.7 million restructuring charge in the quarter. The expected annualized savings from the restructuring actions are well in excess of the second quarter charge, and will position the company for improved profitability as we move forward."
The Company recorded a net loss of $(0.4) million in the second quarter of 2010 compared to a net loss of $(4.9) million in the prior year period. Year to date, the net loss was $(4.0) million and $(3.9) million for 2010 and 2009, respectively. The losses in both 2009 and 2010 are primarily related to the discontinuation of Ravo which was sold in 2009, and also the 2010 second quarter discontinuation of Riverchase, a business in the Safety and Security Systems group.
GROUP RESULTS (excluding restructuring related charges)
Safety and Security Systems
The following table summarizes the Safety and Security Systems Group's operating results for the three and six month periods ended June 30, 2010 and 2009, respectively:
Three months ended June Six months ended June
30, 30,
------------------------ ----------------------
($ in millions) 2010 2009 Change 2010 2009 Change
---- ---- ------ ---- ---- ------
Orders $54.6 $54.6 $- $115.1 $109.9 $5.2
Net sales 57.2 57.7 (0.5) 109.6 114.0 (4.4)
Operating income,
adjusted (*) 7.6 6.8 0.8 12.5 11.4 1.1
Operating margin 13.3% 11.8% 1.5% 11.4% 10.0% 1.4%
Depreciation and
amortization $0.9 $0.9 $- $1.9 $1.9 $-
(*) Excludes restructuring related charges
-- Orders of $54.6 million for the second quarter were flat year over
year. U.S. orders were down slightly with lower municipal spending,
offset partially by strong industrial demand. Non-U.S. orders were
slightly favorable driven by strong demand for industrial products,
partially offset by weaker demand for fire and police products and an
unfavorable currency impact. Year to date orders were up $5.2 million
driven by strong demand in non-U.S. orders for industrial products as
well as a large European police order partially offset by lower U.S.
municipal spending.
-- Net sales of $57.2 million for the quarter were down slightly from the
prior year quarter as a result of soft municipal demand for fire and
police products, the absence of a large order placed in 2009 and
unfavorable currency impacts of $1.0 million. Partially offsetting
this decline was strong industrial demand. Similarly, year to date net
sales were down $4.4 million as a result of weak municipal demand and
the absence of a large 2009 order which decline was offset partially
by strong industrial demand.
-- For the quarter and year to date, operating income and margins were up
compared to the prior year periods with operating expense improvements
more than offsetting net sales declines and unfavorable currency
impacts.
Fire Rescue
The following table summarizes the Fire Rescue Group's operating results for the three and six month periods ended June 30, 2010 and 2009, respectively:
Three months ended June Six months ended June
30, 30,
------------------------ ----------------------
($ in millions) 2010 2009 Change 2010 2009 Change
---- ---- ------ ---- ---- ------
Orders $19.9 $21.2 $(1.3) $51.6 $42.0 $9.6
Net sales 29.6 41.5 (11.9) 54.4 74.0 (19.6)
Operating
income,
adjusted (*) 3.4 4.9 (1.5) 4.2 7.3 (3.1)
Operating margin 11.5% 11.8% (0.3%) 7.7% 9.9% (2.2%)
Depreciation and
amortization $0.5 $0.4 $0.1 $1.1 $0.8 $0.3
(*) Excludes restructuring related charges
-- Orders for the second quarter decreased 6.1% from the second quarter
of 2009 with weakness in the European fire-lift market and an
unfavorable currency impact of $1.6 million. Year to date orders were
up 22.8% to $51.6 million primarily as result of strong demand for the
fire-lift product in Asia. Demand for the industrial market continues
to lag as a result of the global economic recession.
-- Net sales declined 28.7% in the second quarter primarily as a result
of lower volumes with the weaker industrial and rental markets and
unfavorable currency impacts of $2.0 million. Year to date net sales
declined 26.5% as a result of a weak backlog and unfavorable currency
impacts of $1.3 million.
-- Operating income for the second quarter compared to the prior year
declined primarily as a result of the lower volumes. Unit margins
improved as a result of operational and manufacturing improvements,
but were more than offset by increased expenses and unfavorable
currency impacts. Year to date operating income was down due to lower
net sales levels and an unfavorable currency impact.
Environmental Solutions
The following table summarizes the Environmental Solutions Group's operating results for the three and six month periods ended June 30, 2010 and 2009, respectively:
Three months ended June Six months ended June
30, 30,
------------------------ ----------------------
($ in millions) 2010 2009 Change 2010 2009 Change
---- ---- ------ ---- ---- ------
Orders $77.1 $63.7 $13.4 $164.8 $131.1 $33.7
Net sales 84.7 83.9 0.8 154.8 165.3 (10.5)
Operating
income,
adjusted (*) 7.4 6.1 1.3 11.1 9.2 1.9
Operating margin 8.7% 7.3% 1.4% 7.2% 5.6% 1.6%
Depreciation and
amortization $1.2 $1.1 $0.1 $2.3 $2.2 $0.1
(*) Excludes restructuring related charges
-- Orders of $77.1 million in the second quarter of 2010 were up 21.0%
from the prior year period. U.S. orders increased 18.3%, or $9.1
million, from the prior year period with municipal sewer cleaners up
$5.3 million and industrial vacuum trucks up $5.9 million, offset by
weaker demand in the municipal sweepers of $2.8 million. Non-U.S.
orders were up $4.3 from the prior year period. Year to date orders
of $164.8 million were up 25.7%, or $33.7 million from the prior year
period. U.S. orders were up 26.3% or $27.3 million from the prior year
period primarily as a result of increases in industrial vacuum trucks
of $11.5 million, municipal sewer cleaners of $10.2 million and
waterblasters of $2.8 million. Non-U.S. orders were up 23.4% or $6.4
million from the prior year period.
-- Net sales for the second quarter were slightly higher than the prior
year period. Increases in sweepers and waterblaster shipments were
offset by lower shipments of sewer cleaners and vacuum trucks as a
result of a draw down on backlog in December 2009. Year to date net
sales were down $10.5 million from the prior year period primarily as
a result of lower backlog levels as compared to early 2009. Increased
shipments of waterblasters and sweepers were more than offset by
reductions in sewer cleaners and vacuum trucks.
-- Operating income and margins for the second quarter and year to date
were up from the prior year period due to higher gross margins
resulting from cost reduction activities and 2009 restructuring
benefits.
Federal Signal Technologies
The following table summarizes the Federal Signal Technology Group's operating results for the three and six month periods ended June 30, 2010 and 2009, respectively:
Three months ended June Six months ended June
30, 30,
------------------------ ----------------------
($ in millions) 2010 2009 Change 2010 2009 Change
---- ---- ------ ---- ---- ------
Orders $35.7 $12.8 $22.9 $54.5 $28.3 $26.2
Net sales 27.2 15.4 11.8 46.4 29.6 16.8
Operating (loss)
income, adjusted
(*) (0.7) 1.2 (1.9) (2.1) 1.8 (3.9)
Operating margin (2.6%) 7.8% (10.4%) (4.5%) 6.1% (10.6%)
Depreciation and
amortization $2.2 $1.0 $1.2 $3.5 $2.0 $1.5
(*) Excludes restructuring related charges
-- Orders were up $22.9 million to $35.7 million in the three months
ended June 30, 2010 compared to the prior year. U.S. orders were up
$19.6 million primarily as a result of increases in parking systems of
$10.0 million related to a contract renewal, orders attributed to the
newly acquired businesses, Sirit and VESystems and $2.1 million of
ALPR cameras. Non-U.S. orders were up $3.3 million. Orders were up
$26.2 million in the six months ended June 30, 2010 compared to prior
year. U.S. orders were up $22.6 million from the 2009 period
primarily as a result of increases in parking systems of $10.1
million, orders from the newly acquired businesses of Sirit and
VESystems and $2.9 million of ALPR cameras. Non-U.S. orders were up
$3.6 million from the 2009 period.
-- Net sales increased $11.8 million in the three months ended June 30,
2010 compared to prior year due to net sales from the newly acquired
businesses of Sirit, VESystems and Diamond and an increase in ALPR
camera net sales. Net sales increased $16.8 million in the six months
ended June 30, 2010 primarily due to the newly acquired businesses.
-- Operating income and margins were down for the second quarter and year
to date compared to prior year as a result of deferred retention
payments from the acquisition of Diamond and an increase in
amortization expense as a result of the newly acquired businesses.
CORPORATE EXPENSES, Adjusted (excluding restructuring related charges)
-- Corporate expenses (excluding restructuring related charges) for the
second quarter decreased to $9.6 million compared to $10.7 million in
2009. The decrease was due largely to the $2.1 million in expenses
associated with costs for a proxy contest initiated by an activist
shareholder in 2009, a $1.2 million decrease from medical expenses and
$0.5 million decrease associated with headcount reductions. The
offset was from a $2.2 million increase in expenses associated with
legal and trial costs associated with the Company's ongoing
firefighter hearing loss litigation and $1.1 million in expenses
associated with the acquisitions of Sirit and VESystems and the
integration of FSTech in 2010.
-- Year to date corporate expenses (excluding restructuring related
charges) were $17.7 million and $16.8 million for the comparable
period in 2009. The increase was due largely to the $1.5 million
associated with legal and trial costs from the Company's ongoing
firefighter hearing loss litigation and $3.7 million in expenses
associated with the acquisitions of Sirit and VESystems and
integration of FSTech in 2010. The offset in 2010 was from a $0.3
million decrease associated with hearing loss insurance
reimbursements, a $0.9 million decrease from medical expenses and $2.7
million associated with the costs for a proxy contest initiated by an
activist shareholder charged in 2009.
CONFERENCE CALL
Federal Signal will host its second quarter conference call on Friday, July 30th, 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 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 four groups: Safety and Security Systems, Environmental Solutions, Federal Signal Technologies, 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.
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
-----------------------------------------------------------
Three months ended June Six months ended June
30, 30,
------------------------ ----------------------
2010 2009 2010 2009
---- ---- ---- ----
( in millions,
except per share
data)
Net sales $198.7 $198.5 $365.2 $382.9
Costs and
expenses
Cost of sales (145.3) (146.6) (270.1) (284.6)
Selling, general
and
administrative (44.2) (43.6) (83.4) (85.4)
Acquisition and
integration
related costs (1.1) - (3.7) -
Restructuring
charges (3.7) - (4.0) -
---- --- ---- ---
Operating income 4.4 8.3 4.0 12.9
Interest expense (3.2) (2.8) (6.1) (6.2)
Other (expense)
income, net (0.5) 0.1 (1.3) (0.8)
---- --- ---- ----
Income (loss)
before income
taxes 0.7 5.6 (3.4) 5.9
Income tax
benefit
(expense) 0.7 (1.2) 2.0 (1.0)
--- ---- --- ----
Income (loss)
from continuing
operations 1.4 4.4 (1.4) 4.9
Loss from
discontinued
operations and
disposal, net of
income tax
benefit
(expense) of
$1.0, ($0.3),
$1.2, and
($0.6),
respectively (1.8) (9.3) (2.6) (8.8)
---- ---- ---- ----
Net loss $(0.4) $(4.9) $(4.0) $(3.9)
===== ===== ===== =====
COMMON STOCK
DATA:
Basic and diluted
earnings (loss)
per share:
Earnings (loss)
from continuing
operations $0.02 $0.09 $(0.03) $0.10
Loss from
discontinued
operations and
disposal (0.03) (0.19) (0.05) (0.18)
----- ----- ----- -----
Loss per share $(0.01) $(0.10) $(0.08) $(0.08)
====== ====== ====== ======
Weighted average
common shares
outstanding:
Basic 57.1 48.0 53.0 48.4
Diluted 57.2 48.0 53.1 48.4
Cash dividends
per share of
common stock $0.06 $0.06 $0.06 $0.06
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
-------------------------------------------------
December
June 30, 31,
($ in millions, except per share data) 2010 2009
---- ----
ASSETS
Current assets
Cash and cash equivalents $13.2 $21.1
Accounts receivable, net of allowances for
doubtful accounts of $2.3 million and $2.5
million, respectively 123.9 119.8
Inventories, net 113.8 111.5
Other current assets 24.3 26.0
---- ----
Total current assets 275.2 278.4
Properties and equipment, net 64.6 65.5
Other assets
Goodwill 374.5 319.6
Intangible assets, net of accumulated
amortization 97.6 50.5
Deferred tax assets 17.6 17.5
Deferred charges and other assets 4.0 1.7
--- ---
Total assets of continuing operations 833.5 733.2
Assets of discontinued operations 9.7 12.2
--- ----
Total assets $843.2 $745.4
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $8.0 $-
Current portion of long-term borrowings and
capital lease obligations 13.2 41.9
Accounts payable 52.2 45.2
Customer deposits 10.2 10.4
Accrued liabilities
Compensation and withholding taxes 20.5 20.8
Other 48.7 48.4
---- ----
Total current liabilities 152.8 166.7
Long-term borrowings and capital lease
obligations, less current portion 213.4 159.7
Long-term pension liabilities 38.4 39.6
Deferred gain 23.3 24.2
Other long-term liabilities 12.0 12.2
---- ----
Total liabilities of continuing operations 439.9 402.4
Liabilities of discontinued operations 12.5 14.3
---- ----
Total liabilities 452.4 416.7
Shareholders' equity
Common stock, $1 par value per share, 90.0
million shares authorized, 63.1 million and
49.6 million shares issued, respectively 63.1 49.6
Capital in excess of par value 164.1 93.8
Retained earnings 229.7 240.4
Treasury stock, 0.9 million and 0.8 million
shares at cost, respectively (15.8) (15.8)
Accumulated other comprehensive loss (50.3) (39.3)
----- -----
Total shareholders' equity 390.8 328.7
----- -----
Total liabilities and shareholders' equity $843.2 $745.4
====== ======
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
-----------------------------------------------------------
Six months ended June
30,
----------------------
($ in millions) 2010 2009
---- ----
Operating activities:
Net loss $(4.0) $(3.9)
Adjustments to reconcile net loss to net cash
(used for) provided by operating activities:
Loss on discontinued operations and disposal 2.6 8.8
Loss on joint venture - 0.9
Depreciation and amortization 9.2 7.4
Stock-based compensation expense 2.2 2.7
Pension contributions - (0.5)
Changes in other assets and liabilities,
exclusive of the effects of businesses
acquired and disposed: (17.1) 1.0
----- ---
Net cash (used for) provided by continuing
operating activities (7.1) 16.4
Net cash (used for) provided by discontinued
operating activities (0.8) 4.2
---- ---
Net cash (used for) provided by operating
activities (7.9) 20.6
Investing activities:
Purchases of properties and equipment (6.5) (8.1)
Proceeds from sales of properties, plant and
equipment 1.2 -
Payments for acquisitions, net of cash
acquired (97.3) -
Other, net - 10.0
--- ----
Net cash (used for) provided by continuing
investing activities (102.6) 1.9
Net cash provided by discontinued investing
activities - 2.9
--- ---
Net cash (used for) provided by investing
activities (102.6) 4.8
Financing activities:
Increase in debt outstanding under revolving
credit facilities 61.1 51.3
Proceeds on short-term borrowings 7.6 1.4
Payments on short-term borrowings - (11.8)
Proceeds on long-term borrowings - 4.8
Payments on long-term borrowings (35.0) (70.1)
Cash dividends paid to shareholders (6.7) (5.8)
Proceeds from equity offering, net of fees 71.0 -
Other, net 0.3 (0.4)
--- ----
Net cash provided by (used for) continuing
financing activities 98.3 (30.6)
Net cash used for discontinued financing
activities (0.4) (6.7)
---- ----
Net cash provided by (used for) financing
activities 97.9 (37.3)
Effects of foreign exchange rate changes on
cash and cash equivalents 4.7 0.6
--- ---
Decrease in cash and cash equivalents (7.9) (11.3)
Cash and cash equivalents at beginning of
period 21.1 23.4
---- ----
Cash and cash equivalents at end of period $13.2 $12.1
===== =====
SUPPLEMENTAL DATA
In this news release, Federal Signal uses non-GAAP financial measures. For purposes of SEC Regulation G, a "non-GAAP financial measure" is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Operating and statistical measures and certain ratios and other statistical measures are not non-GAAP financial measures. GAAP refers to generally accepted accounting principles in the United States.
Federal Signal has used the financial measures that are included in its internal evaluation and management of its businesses. Federal Signal's management believes that these measures (including those that are "non-GAAP financial measures") and the information they provide are useful to investors because they permit investors to view Federal Signal's performance using the same tools that Federal Signal uses and to better evaluate Federal Signal's ongoing business performance. The Company's management believes that the non-GAAP financial measures "Adjusted EPS" and "Operating income (loss), adjusted" are more meaningful to investors because they provides investors with an understanding of the profitability of our segments excluding certain charges and is more meaningful than in the past because of the magnitude of the charges in 2010.
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2010 (1) 2009 2010 (1) 2009
------- ---- ------- ----
Diluted net
earnings
from
continuing
operations $0.02 $0.09 $(0.03) $0.10
Restructuring
charges $0.04 $- $0.05 $-
Diluted net
earnings
from
continuing
operations,
adjusted $0.06 $0.09 $0.02 $0.10
===== ===== ===== =====
Diluted net
loss $(0.01) $(0.10) $(0.08) $(0.08)
Restructuring
charges $0.04 $- $0.05 $-
Diluted net
earnings
(loss),
adjusted $0.03 $(0.10) $(0.03) $(0.08)
===== ====== ====== ======
(1) Includes a tax rate of 34.0%.
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2010 2009 2010 2009
---- ---- ---- ----
(in
millions)
Safety and
Security
Systems
Group:
Operating
income $5.7 $6.8 $10.3 $11.4
Restructuring
charge 1.9 2.2
--- ---
Operating
income,
adjusted 7.6 6.8 12.5 11.4
Fire Rescue
Group:
Operating
income 2.8 4.9 3.6 7.3
Restructuring
charge 0.6 0.6
--- ---
Operating
income,
adjusted 3.4 4.9 4.2 7.3
Environmental
Solutions
Group:
Operating
income 7.2 6.1 10.9 9.2
Restructuring
charge 0.2 0.2
--- ---
Operating
income,
adjusted 7.4 6.1 11.1 9.2
Federal
Signal
Technologies
Group:
Operating
(loss)
income (1.1) 1.2 (2.5) 1.8
Restructuring
charge 0.4 0.4
--- ---
Operating
(loss)
income,
adjusted (0.7) 1.2 (2.1) 1.8
Corporate
expenses (10.2) (10.7) (18.3) (16.8)
Restructuring
charge 0.6 0.6
--- ---
Corporate
expenses,
adjusted (9.6) (10.7) (17.7) (16.8)
Total
Operating
income 4.4 8.3 4.0 12.9
Restructuring
charge 3.7 4.0
--- ---
Total
Operating
income,
adjusted $8.1 $8.3 $8.0 $12.9
==== ==== ==== =====
Federal Signal Corporation
CONTACT: William Barker of Federal Signal Corporation, +1-630-954-2000,wbarker@federalsignal.com
Web Site: http://www.federalsignal.com/