OAK
BROOK, Ill., Nov. 2, 2023
/PRNewswire/ -- Federal Signal Corporation (NYSE:FSS) (the
"Company"), a leader in environmental and safety solutions, today
reported results for the third quarter ended September 30,
2023.
Third Quarter Highlights
- Record net sales of $446 million,
up $100 million, or 29%, from last
year; organic growth of $80 million,
or 23%
- Operating income of $62.5
million, up $23.0 million, or
58%, from last year
- GAAP EPS of $0.71, up
$0.19, or 37%, from last year
- Record adjusted EPS of $0.71, up
$0.18, or 34%, from last year
- Orders of $450 million, up
$68 million, or 18%, from last
year
- Backlog of $1.01 billion, up
$182 million, or 22%, from last
year
- Operating cash flow of $48
million, up $38 million, or
380%, from last year
- Raises 2023 adjusted EPS* outlook to a new range of
$2.44 to $2.52, from the prior range of $2.30 to $2.46
- Increases low end of 2023 net sales outlook range by
$30 million; new range of
$1.68 billion to $1.72 billion
- Raises Consolidated EBITDA margin target to a new range of 14%
to 20%, from the previous range of 12% to 16%
- Raises EBITDA margin target for the Environmental Solutions
Group to a new range of 17% to 22%, from the previous range of 15%
to 18%
Consolidated net sales for the third quarter were $446 million, the highest quarterly net sales in
the Company's history, and an increase of $100 million, or 29%, compared to the prior-year
quarter. Net income for the third quarter was $43.3 million, or $0.71 per diluted share, compared to $31.8 million, or $0.52 per diluted share, in the prior-year
quarter.
The Company also reported adjusted net income for the third
quarter of $43.8 million, or
$0.71 per diluted share, compared to
$32.2 million, or $0.53 per diluted share, in the prior-year
quarter. 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.
Double-Digit Improvement in Net Sales and Earnings in
Record-Setting Quarter; Increasing EBITDA Margin Targets for the
Environmental Solutions Group and the Company
"In another quarter of outstanding performance by our
businesses, we reported new Company records for quarterly net sales
and adjusted EPS, a 220-basis point year-over-year increase in
adjusted EBITDA margin, an 18% increase in orders, and significant
improvement in cash generation," commented Jennifer L. Sherman, President and Chief
Executive Officer. "Within our Environmental Solutions Group, an
improving supply chain supported higher production levels, and with
increased sales volumes, contributions from recent acquisitions,
robust aftermarket demand, and strong price realization, we were
able to deliver a 31% year-over-year net sales increase and a
300-basis point improvement in adjusted EBITDA margin. Our Safety
and Security Systems Group also delivered another impressive
quarter, with double-digit top line growth and an adjusted EBITDA
margin of approximately 20%. With its consistently strong
performance over the last several quarters, we are increasing the
EBITDA margin target for our Environmental Solutions Group to a new
range of 17% to 22%, from the previous range of 15% to 18%. At the
same time, we are increasing our consolidated EBITDA margin target
to a new range of 14% to 20%, from the previous range of 12% to
16%."
In the Environmental Solutions Group, net sales for the third
quarter were $373 million, up
$88 million, or 31%, compared to the
prior-year quarter. In the Safety and Security Systems Group, net
sales were $73 million, up
$12 million, or 19%, compared to the
prior-year quarter.
Consolidated operating income for the third quarter was
$62.5 million, up $23.0 million, or 58%, compared to the prior-year
quarter. Consolidated operating margin for the third quarter was
14.0%, up from 11.4% in the prior-year quarter.
Consolidated adjusted earnings before interest, tax,
depreciation and amortization ("adjusted EBITDA") for the third
quarter was $78.5 million, up
$25.0 million, or 47%, compared to
the prior-year quarter, and consolidated adjusted EBITDA margin was
17.6%, up from 15.4% in the prior-year quarter.
In the Environmental Solutions Group, adjusted EBITDA for the
third quarter was $72.0 million, up
$25.5 million, or 55%, compared to
the prior-year quarter, and its adjusted EBITDA margin was 19.3%,
up from 16.3% last year. In the Safety and Security Systems Group,
adjusted EBITDA for the third quarter was $14.6 million, up $3.1
million, or 27%, compared to the prior-year quarter, and its
adjusted EBITDA margin was 19.9%, up from 18.7% last year.
Consolidated orders for the third quarter were $450 million, up $68
million, or 18%, compared to the prior-year quarter. With
the strong momentum in customer demand, consolidated backlog at
September 30, 2023 was $1.01 billion, an increase of $182 million, or 22%, 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 third quarter was $48 million, an increase of $38 million, or 380%, from the prior-year
quarter. Cash generated from operations in the first nine months of
this year totaled $91 million, an
increase of $59 million, or 181%,
compared to the prior-year period.
At September 30, 2023,
consolidated debt was $366 million,
total cash and cash equivalents were $41
million and the Company had $425
million of availability for borrowings under its credit
facility.
"Our operating cash flow generation this quarter was
outstanding, enabling us to pay down approximately $40 million of debt during the quarter," said
Sherman. "So far this year, our operating cash flow has increased
by 181% compared to last year, further strengthening our financial
position, and providing significant flexibility to invest in
organic growth initiatives, pursue additional strategic
acquisitions, and fund cash returns to stockholders through
dividends and opportunistic share repurchases."
The Company funded dividends of $6.1
million during the third quarter, reflecting a dividend of
$0.10 per share, and recently
announced a similar dividend that will be payable in the fourth
quarter of 2023. The Company also funded stock repurchases of
$4.3 million during the third
quarter.
Outlook
"Demand for our products and our aftermarket offerings remains
exceptionally high," noted Sherman. "We continue to successfully
execute against our strategic initiatives, and with our third
quarter performance, our current backlog and improving supply chain
conditions, we are raising our full-year adjusted EPS* outlook to a
new range of $2.44 to $2.52, from the prior range of $2.30 to $2.46. We
are also increasing the low end of our full-year net sales outlook
range by $30 million, establishing a
new range of $1.68 billion to
$1.72 billion."
CONFERENCE CALL
Federal Signal will host its third quarter conference call on
Thursday, November 2, 2023 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 www.federalsignal.com or by dialing phone
number 1-833-816-1432 and entering the pin number 10183590. A
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:
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.
Contact: Ian Hudson, Chief
Financial Officer, +1-630-954-2000, ihudson@federalsignal.com
* Adjusted earnings per share ("EPS") is a non-GAAP
measure, which includes certain adjustments to reported GAAP net
income and diluted EPS. In the nine months ended September 30,
2023, we made adjustments to exclude the impact of acquisition and
integration-related expenses (benefits) and environmental
remediation costs of a discontinued operation. 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 the remainder of 2023, 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
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in millions, except
per share data)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$ 446.4
|
|
$ 346.4
|
|
$
1,274.3
|
|
$
1,043.3
|
Cost of
sales
|
328.7
|
|
263.6
|
|
943.5
|
|
795.0
|
Gross profit
|
117.7
|
|
82.8
|
|
330.8
|
|
248.3
|
Selling, engineering,
general and administrative expenses
|
50.6
|
|
39.8
|
|
156.0
|
|
125.5
|
Amortization
expense
|
3.9
|
|
3.1
|
|
11.4
|
|
9.6
|
Acquisition and
integration-related expenses (benefits)
|
0.7
|
|
0.4
|
|
2.0
|
|
(1.0)
|
Operating
income
|
62.5
|
|
39.5
|
|
161.4
|
|
114.2
|
Interest expense,
net
|
5.1
|
|
2.7
|
|
15.4
|
|
5.9
|
Other expense (income),
net
|
0.3
|
|
0.1
|
|
1.5
|
|
(0.6)
|
Income before income
taxes
|
57.1
|
|
36.7
|
|
144.5
|
|
108.9
|
Income tax
expense
|
13.8
|
|
4.9
|
|
33.5
|
|
23.1
|
Net income
|
$
43.3
|
|
$
31.8
|
|
$ 111.0
|
|
$
85.8
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.71
|
|
$
0.53
|
|
$
1.83
|
|
$
1.42
|
Diluted
|
$
0.71
|
|
$
0.52
|
|
$
1.81
|
|
$
1.40
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
60.8
|
|
60.4
|
|
60.7
|
|
60.5
|
Diluted
|
61.4
|
|
61.0
|
|
61.4
|
|
61.1
|
Cash dividends declared
per common share
|
$
0.10
|
|
$
0.09
|
|
$
0.29
|
|
$
0.27
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Operating
margin
|
14.0 %
|
|
11.4 %
|
|
12.7 %
|
|
10.9 %
|
Adjusted
EBITDA
|
$
78.5
|
|
$
53.5
|
|
$ 208.5
|
|
$ 153.9
|
Adjusted EBITDA
margin
|
17.6 %
|
|
15.4 %
|
|
16.4 %
|
|
14.8 %
|
Total
orders
|
$ 450.2
|
|
$ 382.1
|
|
$
1,405.1
|
|
$
1,248.0
|
Backlog
|
1,005.8
|
|
824.1
|
|
1,005.8
|
|
824.1
|
Depreciation and
amortization
|
15.3
|
|
13.6
|
|
45.1
|
|
40.7
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
September
30,
2023
|
|
December 31,
2022
|
(in millions, except
per share data)
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
41.0
|
|
$
47.5
|
Accounts receivable,
net of allowances for doubtful accounts of $2.4 and $2.5,
respectively
|
213.3
|
|
173.8
|
Inventories
|
330.1
|
|
292.7
|
Prepaid expenses and
other current assets
|
19.3
|
|
17.4
|
Total current
assets
|
603.7
|
|
531.4
|
Properties and
equipment, net of accumulated depreciation of $169.9 and $156.4,
respectively
|
188.3
|
|
179.3
|
Rental equipment, net
of accumulated depreciation of $51.1 and $45.4,
respectively
|
130.3
|
|
109.1
|
Operating lease
right-of-use assets
|
23.7
|
|
24.7
|
Goodwill
|
473.6
|
|
453.4
|
Intangible assets, net
of accumulated amortization of $66.8 and $55.4,
respectively
|
212.2
|
|
208.2
|
Deferred tax
assets
|
12.1
|
|
8.8
|
Other long-term
assets
|
10.7
|
|
9.4
|
Total assets
|
$ 1,654.6
|
|
$ 1,524.3
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term borrowings and finance lease obligations
|
$
3.9
|
|
$
1.5
|
Accounts
payable
|
82.4
|
|
72.4
|
Customer
deposits
|
27.6
|
|
25.4
|
Accrued
liabilities:
|
|
|
|
Compensation and
withholding taxes
|
34.5
|
|
31.1
|
Current operating
lease liabilities
|
7.4
|
|
6.9
|
Other current
liabilities
|
46.8
|
|
43.2
|
Total current
liabilities
|
202.6
|
|
180.5
|
Long-term borrowings
and finance lease obligations
|
362.0
|
|
361.5
|
Long-term operating
lease liabilities
|
17.0
|
|
18.5
|
Long-term pension and
other postretirement benefit liabilities
|
38.8
|
|
38.9
|
Deferred tax
liabilities
|
56.7
|
|
51.0
|
Other long-term
liabilities
|
21.6
|
|
13.0
|
Total
liabilities
|
698.7
|
|
663.4
|
Stockholders'
equity:
|
|
|
|
Common stock, $1 par
value per share, 90.0 shares authorized, 69.9 and 69.5 shares
issued,
respectively
|
69.9
|
|
69.5
|
Capital in excess of
par value
|
284.7
|
|
271.8
|
Retained
earnings
|
875.5
|
|
782.2
|
Treasury stock, at
cost, 9.0 and 8.8 shares, respectively
|
(190.4)
|
|
(178.6)
|
Accumulated other
comprehensive loss
|
(83.8)
|
|
(84.0)
|
Total stockholders'
equity
|
955.9
|
|
860.9
|
Total liabilities and
stockholders' equity
|
$ 1,654.6
|
|
$ 1,524.3
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
Nine Months
Ended
September
30,
|
(in
millions)
|
2023
|
|
2022
|
Operating
activities:
|
|
|
|
Net income
|
$
111.0
|
|
$
85.8
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
45.1
|
|
40.7
|
Stock-based
compensation expense
|
8.9
|
|
7.5
|
Changes in fair value
of contingent consideration
|
(0.2)
|
|
—
|
Amortization of
interest rate swap settlement gain
|
(1.8)
|
|
—
|
Deferred income
taxes
|
2.0
|
|
0.3
|
Changes in operating
assets and liabilities
|
(74.0)
|
|
(101.9)
|
Net cash provided by
operating activities
|
91.0
|
|
32.4
|
Investing
activities:
|
|
|
|
Purchases of
properties and equipment
|
(21.4)
|
|
(45.6)
|
Payments for
acquisition-related activity, net of cash acquired
|
(55.1)
|
|
(6.6)
|
Other, net
|
0.8
|
|
2.1
|
Net cash used for
investing activities
|
(75.7)
|
|
(50.1)
|
Financing
activities:
|
|
|
|
Increase in revolving
lines of credit, net
|
4.6
|
|
49.9
|
Purchases of treasury
stock
|
(4.3)
|
|
(16.1)
|
Redemptions of common
stock to satisfy withholding taxes related to stock-based
compensation
|
(5.6)
|
|
(3.0)
|
Payments for
acquisition-related activity
|
(0.5)
|
|
—
|
Cash dividends paid to
stockholders
|
(17.7)
|
|
(16.4)
|
Proceeds from
stock-based compensation activity
|
2.3
|
|
0.1
|
Other, net
|
—
|
|
(0.1)
|
Net cash (used for)
provided by financing activities
|
(21.2)
|
|
14.4
|
Effects of foreign
exchange rate changes on cash and cash equivalents
|
(0.6)
|
|
(1.7)
|
Decrease in cash and
cash equivalents
|
(6.5)
|
|
(5.0)
|
Cash and cash
equivalents at beginning of year
|
47.5
|
|
40.5
|
Cash and cash
equivalents at end of period
|
$
41.0
|
|
$
35.5
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES GROUP RESULTS
(Unaudited)
|
|
The following tables
summarize group operating results as of and for the three and nine
months ended September 30, 2023 and 2022:
|
|
Environmental
Solutions Group
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
($ in
millions)
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
Net sales
|
$
373.0
|
|
$
284.8
|
|
$ 88.2
|
|
$
1,064.8
|
|
$
865.3
|
|
$
199.5
|
Operating
income
|
57.2
|
|
33.9
|
|
23.3
|
|
151.0
|
|
99.8
|
|
51.2
|
Adjusted
EBITDA
|
72.0
|
|
46.5
|
|
25.5
|
|
193.9
|
|
137.4
|
|
56.5
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
15.3 %
|
|
11.9 %
|
|
3.4 %
|
|
14.2 %
|
|
11.5 %
|
|
2.7 %
|
Adjusted EBITDA
margin
|
19.3 %
|
|
16.3 %
|
|
3.0 %
|
|
18.2 %
|
|
15.9 %
|
|
2.3 %
|
Total
orders
|
$
374.8
|
|
$
321.4
|
|
$ 53.4
|
|
$
1,179.2
|
|
$
1,060.7
|
|
$
118.5
|
Backlog
|
938.6
|
|
764.6
|
|
174.0
|
|
938.6
|
|
764.6
|
|
174.0
|
Depreciation and
amortization
|
14.3
|
|
12.5
|
|
1.8
|
|
41.8
|
|
37.5
|
|
4.3
|
|
Safety and Security
Systems Group
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
($ in
millions)
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
Net sales
|
$ 73.4
|
|
$ 61.6
|
|
$ 11.8
|
|
$
209.5
|
|
$
178.0
|
|
$
31.5
|
Operating
income
|
13.7
|
|
10.5
|
|
3.2
|
|
39.9
|
|
28.7
|
|
11.2
|
Adjusted
EBITDA
|
14.6
|
|
11.5
|
|
3.1
|
|
43.0
|
|
31.8
|
|
11.2
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
18.7 %
|
|
17.0 %
|
|
1.7 %
|
|
19.0 %
|
|
16.1 %
|
|
2.9 %
|
Adjusted EBITDA
margin
|
19.9 %
|
|
18.7 %
|
|
1.2 %
|
|
20.5 %
|
|
17.9 %
|
|
2.6 %
|
Total
orders
|
$ 75.4
|
|
$ 60.7
|
|
$ 14.7
|
|
$
225.9
|
|
$
187.3
|
|
$
38.6
|
Backlog
|
67.2
|
|
59.5
|
|
7.7
|
|
67.2
|
|
59.5
|
|
7.7
|
Depreciation and
amortization
|
0.9
|
|
1.0
|
|
(0.1)
|
|
3.1
|
|
3.1
|
|
—
|
|
Corporate Expenses
Corporate operating expenses were $8.4
million and $4.9 million for
the three months ended September 30,
2023 and 2022, respectively. For the nine months ended
September 30, 2023 and 2022,
corporate operating expenses were $29.5
million and $14.3 million,
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 Earnings Per Share ("EPS"):
The Company believes that modifying its 2023 and 2022 net income
and diluted EPS provides additional measures which are
representative of the Company's underlying performance and improves
the comparability of results across reporting periods. During the
three and nine months ended September 30, 2023 and 2022
adjustments were made to reported GAAP net income and diluted EPS
to exclude the impact of acquisition and integration-related
expenses (benefits) and environmental remediation costs of a
discontinued operation, where applicable.
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income, as
reported
|
$
43.3
|
|
$
31.8
|
|
$
111.0
|
|
$
85.8
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
13.8
|
|
4.9
|
|
33.5
|
|
23.1
|
Income before income
taxes
|
57.1
|
|
36.7
|
|
144.5
|
|
108.9
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses (benefits)
|
0.7
|
|
0.4
|
|
2.0
|
|
(1.0)
|
Environmental
remediation costs of a discontinued operation
(a)
|
—
|
|
—
|
|
0.8
|
|
—
|
Adjusted income before
income taxes
|
57.8
|
|
37.1
|
|
147.3
|
|
107.9
|
Adjusted income tax
expense (b)
|
(14.0)
|
|
(4.9)
|
|
(34.2)
|
|
(22.8)
|
Adjusted net
income
|
$
43.8
|
|
$
32.2
|
|
$
113.1
|
|
$
85.1
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(dollars per diluted
share)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
EPS, as
reported
|
$
0.71
|
|
$
0.52
|
|
$
1.81
|
|
$
1.40
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
0.22
|
|
0.08
|
|
0.55
|
|
0.38
|
Income before income
taxes
|
0.93
|
|
0.60
|
|
2.36
|
|
1.78
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses (benefits)
|
0.01
|
|
0.01
|
|
0.03
|
|
(0.02)
|
Environmental
remediation costs of a discontinued operation
(a)
|
—
|
|
—
|
|
0.01
|
|
—
|
Adjusted income before
income taxes
|
0.94
|
|
0.61
|
|
2.40
|
|
1.76
|
Adjusted income tax
expense (b)
|
(0.23)
|
|
(0.08)
|
|
(0.56)
|
|
(0.37)
|
Adjusted EPS
|
$
0.71
|
|
$
0.53
|
|
$
1.84
|
|
$
1.39
|
(a)
|
Environmental
remediation costs of a discontinued operation in the nine months
ended September 30, 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 Condensed Consolidated
Statements of Operations.
|
(b)
|
Adjusted income tax
expense for the three and nine months ended September 30, 2023 and
2022 was recomputed after excluding the impact of acquisition and
integration-related expenses (benefits) and environmental
remediation costs of a discontinued operation, where
applicable.
|
|
|
Adjusted EBITDA and Adjusted EBITDA Margin:
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 expenses (benefits), other income/expense,
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 expenses (benefits), other
income/expense, 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 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 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 nine
months ended September 30, 2023 and 2022:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
($ in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
|
$ 43.3
|
|
$ 31.8
|
|
$ 111.0
|
|
$ 85.8
|
Add:
|
|
|
|
|
|
|
|
Interest expense,
net
|
5.1
|
|
2.7
|
|
15.4
|
|
5.9
|
Acquisition and
integration-related expenses (benefits)
|
0.7
|
|
0.4
|
|
2.0
|
|
(1.0)
|
Other expense
(income), net
|
0.3
|
|
0.1
|
|
1.5
|
|
(0.6)
|
Income tax
expense
|
13.8
|
|
4.9
|
|
33.5
|
|
23.1
|
Depreciation and
amortization
|
15.3
|
|
13.6
|
|
45.1
|
|
40.7
|
Consolidated adjusted
EBITDA
|
$ 78.5
|
|
$ 53.5
|
|
$ 208.5
|
|
$ 153.9
|
|
|
|
|
|
|
|
|
Net sales
|
$ 446.4
|
|
$ 346.4
|
|
$ 1,274.3
|
|
$ 1,043.3
|
|
|
|
|
|
|
|
|
Consolidated adjusted
EBITDA margin
|
17.6 %
|
|
15.4 %
|
|
16.4 %
|
|
14.8 %
|
|
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 nine months
ended September 30, 2023 and 2022:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
($ in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
income
|
$ 57.2
|
|
$ 33.9
|
|
$ 151.0
|
|
$ 99.8
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
0.5
|
|
0.1
|
|
1.1
|
|
0.1
|
Depreciation and
amortization
|
14.3
|
|
12.5
|
|
41.8
|
|
37.5
|
Adjusted
EBITDA
|
$ 72.0
|
|
$ 46.5
|
|
$ 193.9
|
|
$ 137.4
|
|
|
|
|
|
|
|
|
Net sales
|
$ 373.0
|
|
$ 284.8
|
|
$ 1,064.8
|
|
$ 865.3
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
19.3 %
|
|
16.3 %
|
|
18.2 %
|
|
15.9 %
|
|
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 nine months
ended September 30, 2023 and 2022:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
($ in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
income
|
$ 13.7
|
|
$ 10.5
|
|
$ 39.9
|
|
$ 28.7
|
Add:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
0.9
|
|
1.0
|
|
3.1
|
|
3.1
|
Adjusted
EBITDA
|
$ 14.6
|
|
$ 11.5
|
|
$ 43.0
|
|
$ 31.8
|
|
|
|
|
|
|
|
|
Net sales
|
$ 73.4
|
|
$ 61.6
|
|
$ 209.5
|
|
$ 178.0
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
19.9 %
|
|
18.7 %
|
|
20.5 %
|
|
17.9 %
|
|
View original
content:https://www.prnewswire.com/news-releases/federal-signal-reports-third-quarter-results-with-29-net-sales-growth-and-58-increase-in-operating-income-raises-full-year-outlook-and-ebitda-margin-targets-301975093.html
SOURCE Federal Signal Corporation