OAK BROOK, Ill.,
April 26 /PRNewswire-FirstCall/ -- Federal Signal
Corporation reported income from continuing operations of
$6.1 million, or
$.13 per share, for the first quarter of 2007 on revenue of
$292 million. For
the first quarter of 2006, the Company earned
$1.3 million from continuing
operations, or
$.03 per share, on revenue of
$274 million. The year-over-year
improvement in earnings was driven by a 94% increase in operating income.
Robert D. Welding, president and chief executive officer, stated, "Our
first quarter results showed broad strength across the company, both in terms
of new business and operating performance. Internationally, sales were up 34%
and new order bookings grew at nearly the same rate. Operating profits were
higher, with each of our four groups reporting year-over-year margin
improvements. The Safety and Security Systems Group posted its fifth
consecutive quarter of double-digit order growth. We also acquired Codespear
during the quarter to further our transformation into a leading provider of
integrated security and well-being solutions. We are focused on delivering
further gains in 2007 as we execute upon our product leadership, global
expansion and operational improvement strategies."
The Company recorded first quarter net income including discontinued
operations of $30.7 million in 2007 with an after-tax gain of $25 million
associated with the previously announced sale of three industrial cutting tool
businesses, on January 31. In the first quarter of 2006, net income was $0.1
million.
Cash used for continuing operations totaled $8 million for the quarter,
supporting an increase in primary working capital(1) requirements and $6
million in pension fund contributions.
GROUP RESULTS
Safety and Security Systems
-- Orders rose sharply to $98 million, a 24% increase from the prior year
period. Police products showed the greatest strength, although each
of the major product lines in industrial systems and public safety and
transportation systems also reported substantial increases.
-- A 15% increase in revenue to $79 million was driven by strong volume
in police products, both in the US and internationally. Also
contributing to the increase were industrial electrical systems,
mining products, hazardous area lighting, and parking systems.
-- Year-over year, the group's operating income improved to $9.5 million
from $7.4 million. Operating margin increased to 12.0% from 10.9% due
to the absence of $1.0 million in expenses associated with a
management change which were incurred in the first quarter of 2006.
Increased income from the flow-through of higher sales volumes, better
pricing and manufacturing efficiencies was offset by expanded
investment in growth initiatives, including new product development
and global expansion activities.
Fire Rescue
-- Orders of $107 million were 13% above the prior year quarter.
Continuing strong demand for Bronto articulated aerial apparatus in
international markets was the major growth driver. US municipal fire
truck orders declined from the first quarter of 2006 as the business
continued to be adversely impacted by dealer transitions in the
domestic market.
-- Revenue of $70 million was 8% lower than $76 million reported for the
prior year period, mainly as a result of fewer low-margin brush and
wildland trucks shipped during the quarter. These units were
previously manufactured in the Canadian plant which was shut down in
2006.
-- Increased pricing and favorable manufacturing cost variances led to an
improvement in operating margin to (3.2%) from (4.0%). The group
incurred an operating loss of $2.2 million, compared with a loss of
$3.0 million in the first quarter of 2006.
Environmental Solutions
-- Orders of $110 million were modestly lower than $114 million reported
for the same quarter last year. In US municipal markets, orders
declined 3% from the same period last year, attributable to lingering
wintry weather in much of the US and some pull ahead of orders into
December 2006. In US industrial markets, orders increased on solid
demand for industrial vacuum trucks. Non-US orders declined from the
prior year quarter, notably in Canada and the Middle East.
-- Revenue compared to the first quarter of 2006 grew 16% to $114 million
with increased deliveries of sewer cleaners, industrial vacuum trucks,
sweepers and waterblasting equipment.
-- Operating margin increased to 8.9% from 8.0%, benefiting from higher
realized pricing, volume and option content in vehicles shipped during
the quarter.
Tool
-- First quarter revenue was $30 million compared to $32 million in 2006.
Revenues increased in Europe and Asia, however these gains were more
than offset by lower volumes domestically. The US-based die and mold
tooling operations continue to be adversely impacted by weakness in US
automotive and housing markets.
-- Operating income increased to $2.1 million from $1.6 million and
operating margin increased to 6.9% from 5.0%. The prior year results
include $.9 million in costs related to a voluntary workforce
reduction at the Dayton, Ohio plant.
OTHER
Corporate expenses declined $1.6 million from the same quarter last year.
The reduction primarily reflects lower net legal expenses associated with the
Company's ongoing hearing loss litigation.
On January 17, 2007, the Company invested $17 million to purchase the
assets of Codespear, LLC, a developer of specialized software used in
emergency management situations. On January 31, 2007, the Company completed
the sale of three industrial cutting tool businesses for $67 million.
Proceeds from the sale were partly used to pay down debt. At the end of the
first quarter, manufacturing debt net of cash as a percent of
capitalization(2) totaled 30%, down from 35% at the end of the fourth quarter
of 2006.
(1) defined as accounts receivable plus inventory less accounts payable
and customer deposits
(2) manufacturing operations only, net of cash
Federal Signal will host its fourth quarter conference call on Thursday,
April 26, 2007 at 11:00 a.m. Eastern Time to highlight results of the quarter.
The call will last approximately one hour. You may listen to the conference
call over the Internet through Federal Signal's website at
http://www.federalsignal.com. If you are unable to listen to the live
broadcast, a replay accessible from the company website will be available
shortly after the call.
Federal Signal Corporation (NYSE: FSS) is a leader in advancing security
and well-being for communities and workplaces around the world. The company
designs and manufactures a suite of products and integrated solutions for
municipal, governmental, industrial and airport customers. Federal Signal's
portfolio of trusted, high-priority products include Bronto aerial devices,
Elgin and Ravo street sweepers, E-ONE fire apparatus, Federal Signal safety
and security systems, Guzzler industrial vacuums, Jetstream waterblasters and
Vactor sewer cleaners. In addition, the company operates consumable industrial
tooling businesses. Federal Signal was founded in 1901 and is based in Oak
Brook, Illinois. 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 such as the FIRE Act grant program and other risks and
uncertainties described in filings with the Securities and Exchange
Commission.
FEDERAL SIGNAL CORPORATION (NYSE)
Consolidated Financial Data
For the First Quarter 2007 and 2006 (Unaudited)
(in millions except per share data)
QTR QTR
March 31 March 31
2007 2006
Quarter March 31:
Revenues $292.1 $273.6
Cost of sales (224.2) (212.2)
Operating expenses (52.9) (53.7)
Operating income 15.0 7.7
Interest expense (6.0) (5.9)
Other expense (0.2) -
Income before income taxes 8.8 1.8
Income tax expense (2.7) (0.5)
Income from continuing operations 6.1 1.3
Income (loss) from discontinued
operations and disposal, net of tax 24.6 (1.2)
Net income $30.7 $0.1
Gross margin on revenues 23.2% 22.5%
Operating margin on revenues 5.1% 2.8%
Effective Tax Rate 30.7% 29.5%
Diluted earnings per share:
Income from continuing operations $.13 $.03
Income (loss) from discontinued
operations and disposal, net of
tax .51 (.03)
Diluted earnings per share $0.64 $ -
Average common shares outstanding 47.8 48.3
QTR QTR
March 31 March 31
2007 2006
Group results:
Safety and Security Systems Group:
Orders $97.9 $79.0
Net Revenue 78.7 68.2
Operating Income 9.5 7.4
Operating Margin 12.0% 10.9%
Backlog $78.0 68.3
Fire Rescue Group:
Orders $106.9 $94.2
Net Revenue 69.5 75.7
Operating Loss (2.2) (3.0)
Operating Margin (3.2%) (4.0)%
Backlog $246.0 $251.8
Environmental Solutions Group:
Orders $110.5 $113.5
Net Revenue 113.7 97.7
Operating Income 10.1 7.8
Operating Margin 8.9% 8.0%
Backlog $125.5 $105.3
Tool Group:
Orders $30.5 $32.5
Net Revenue 30.2 32.0
Operating Income 2.1 1.6
Operating Margin 6.9% 5.0%
Backlog $5.1 $5.7
Corporate operating expenses $(4.5) $(6.1)
Total Operating Income $15.0 $7.7
March 31, December 31,
($ in millions) 2007 2006
ASSETS
Manufacturing activities:
Current assets
Cash and cash equivalents $29.5 $19.3
Accounts receivable, net of
allowances for doubtful accounts of
$3.7 million and $3.0 million,
respectively 174.9 192.1
Inventories 201.5 174.2
Other current assets 26.4 33.2
Total current assets 432.3 418.8
Properties and equipment, net 87.4 85.7
Other assets
Goodwill, net of accumulated
amortization 322.7 310.6
Other deferred charges and assets 25.2 17.6
Total manufacturing assets 867.6 832.7
Assets of discontinued operations 7.3 57.8
Financial services activities - Lease
financing and other receivables, net
of allowances for doubtful accounts of
$4.0 million 159.2 158.9
Total assets $1,034.1 $1,049.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Manufacturing activities:
Current liabilities
Short-term borrowings $4.9 $30.3
Current portion of long-term
borrowings 37.4 34.4
Accounts payable 94.9 90.0
Customer deposits 23.7 23.0
Accrued liabilities and income taxes 77.1 96.2
Total current liabilities 238.0 273.9
Long-term borrowings 161.6 160.3
Long-term pension and other
liabilities 28.7 27.9
Deferred income taxes 24.7 20.7
Total manufacturing liabilities 453.0 482.8
Liabilities of discontinued
operations 17.1 31.2
Financial services activities -
Borrowings 149.3 149.0
Total liabilities 619.4 663.0
Shareholders' equity
Common stock, $1 par value per share,
90.0 million shares authorized,
49.4 million and 49.1 million
shares issued, respectively 49.4 49.1
Capital in excess of par value 100.4 99.8
Retained earnings 317.9 290.7
Treasury stock, 1.5 million shares,
at cost (30.1) (30.1)
Accumulated other comprehensive loss (22.9) (23.1)
Total shareholders' equity 414.7 386.4
Total liabilities and shareholders'
equity $1,034.1 $1,049.4
Supplemental data:
Manufacturing debt $203.9 $225.0
Debt-to-capitalization ratio:
Manufacturing 33% 37%
Financial services 94% 94%
Net Debt/Cap Ratio 30% 35%
Net Debt/Cap Ratio - manufacturing debt-to-capitalization ratio, net of
cash
March 31 March 31
($ in millions) 2007 2006
Operating activities:
Net income $30.7 $0.1
Adjustments to reconcile net
income to net cash provided
by operating activities:
(Gain)loss on discontinued
operations and disposal, net (24.6) 1.2
Depreciation and amortization 4.8 4.4
Stock-based compensation
expense 1.0 1.3
Lease financing and other
receivables (0.4) 10.2
Pension contributions (6.2) (10.4)
Working capital (1) (4.2) (4.1)
Other (12.2) (2.9)
Net cash used for continuing
operating activities (11.1) (0.2)
Net cash provided by (used
for) discontinued operating
activities 2.7 (3.9)
Net cash used for operating
activities (8.4) (4.1)
Investing activities:
Purchases of properties and
equipment (4.8) (4.6)
Payment for acquisition, net
of cash acquired (16.6) -
Other, net (2.1) (1.0)
Net cash used for continuing
investing activities (23.5) (5.6)
Net cash provided by (used
for) discontinued
investing activities 67.0 (0.8)
Net cash provided by (used
for) investing activities 43.5 (6.4)
Financing activities:
Decrease in short-term
borrowings, net (26.1) (1.0)
Proceeds from long-term
borrowings 10.5 -
Payments on long-term
borrowings (6.4) (46.2)
Repurchase of common stock - (3.0)
Cash dividends paid to
shareholders (2.9) (2.9)
Other, net - (1.2)
Net cash used for continuing
financing activities (24.9) (54.3)
Increase (decrease) in cash
and cash equivalents 10.2 (64.8)
Cash and cash equivalents at
beginning of period 19.3 91.9
Cash and cash equivalents at
end of period $29.5 $27.1
(1) Working capital is composed of net accounts receivable, inventories,
accounts payable and customer deposits.
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