News Releases
Return to listFederal Signal Corporation Announces Second Quarter Earnings
Company Generates Q2 Profit From Continuing Operations Through Cost Reductions
and Improved Performance from itsFire Rescue Group -- Highlights -- -- Q2 EPS of$0.11 from Continuing Operations -- Overhead Costs Reduced$4 Million versus Q2 2008 -- Q2 Order Backlog =$218 Million --$103 Million of Global Liquidity at end of Q2
OAK BROOK, Ill.,
The Company recorded a net loss including discontinued operations of
Cash flow from continuing operations for the first six months of 2009
totaled
Mr. Osborne continued, "In addition, we are executing our strategy to focus our business portfolio and invest in our core businesses. Just this month, we divested our European sweeper business, a business we struggled to integrate with our domestic sweeper business. The proceeds from this sale will be used to pay down debt and further improve our liquidity position. We are confident our strong brands, global presence and leadership positions in most of our markets have the company well positioned to benefit from an improvement in the global economy."
GROUP RESULTS
Safety and Security Systems
-- Orders declined 27% from 2008 to $72.2 million as a result of the
global economic recession and unfavorable currency effects.
-- Net sales were down 17% to $78.8 million due to low order intake and
unfavorable foreign currency effects of 3%.
-- Operating income was $8.9 million , with an 11.3% operating margin in
the quarter. Operating income declined $2.0 million versus 2008,
driven primarily by lower sales volumes, partially offset by cost
reductions in operating expenses of $3.3 million and in manufacturing
of $1.6 million .
Fire Rescue (Bronto)
-- Q2 orders were down $22.5 million , to $21.2 million . Orders for early
2008 were at record levels across all market segments. Market demand
has been weak in all regions for 2009. An order backlog of $108
million at the end of Q2 continues to provide revenue stability in
2009.
-- Net sales of $41.5 million were flat over the prior year as higher
shipments were offset by an unfavorable currency effect of 12%. The
strong order backlog and the completion in late 2008 of a factory
expansion allowed for higher shipments.
-- Operating income was up 53% to $4.9 million in the quarter. Operating
margin increased from 7.7% in Q2 2008 to 11.8% in Q2 2009 as a result
of higher sales volumes and efficiencies associated with the plant
expansion.
Environmental Solutions
-- Orders declined 37%, to $63.7 million from second quarter 2008 with a
decrease across all product lines.
-- Net sales were down 19% to $83.9 million primarily due to order
weakness.
-- Q2 operating income was $6.2 million . Lower sales volumes translated
into an $8.7 million reduction in operating income. This was
partially offset by favorable purchase prices of $1.3 million , lower
manufacturing and operating expenses of $1.2 million and $1.0 million ,
respectively, and an improved sales mix.
Other
-- Interest expense for Q2 was down $1.2 million in 2009 due to lower
interest rates and lower average borrowings in the quarter.
-- Second quarter corporate expenses totaled $10.7 million , an increase
of $3.2 million from 2008, primarily as a result of $2.1 million in
expenses associated with costs for a proxy contest and an increase of
$1.4 million in incentive compensation costs, caused in part by a
credit of $0.4 million booked in 2008.
-- The Q2 effective tax rate on income from continuing operations was
22.3%, or $1.5 million , compared to 36.3%, or $4.4 million , for the
second quarter of 2008. The lower tax rate through the second quarter
of 2009 reflects better foreign tax effects due to reduced losses in
China and research and development tax credit benefits which did not
exist in 2008.
CONFERENCE CALL
About
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
FEDERAL SIGNAL CORPORATION (NYSE)
Consolidated Financial Data
For the Second Quarter 2009 and 2008 (Unaudited)
(in millions except per share data)
QTR QTR YTD YTD
June 30 June 30 June 30 June 30
2009 2008 2009 2008
—- —- —- —-
Quarter June 30 :
Net Sales $204.2 $239.7 $394.3 $453.9
Cost of sales (149.8) (175.1) (291.1) (332.9)
Operating expenses (45.1) (47.1) (88.4) (92.1)
—-- —-- —-- —--
Operating income 9.3 17.5 14.8 28.9
Interest expense (2.8) (4.0) (6.2) (9.1)
Loss on investment in joint
venture - (0.6) (0.9) (1.2)
Other income (expense) 0.1 (0.8) - (0.7)
— —- — —-
Income before income taxes 6.6 12.1 7.7 17.9
Income tax expense (1.5) (4.4) (1.6) (5.9)
—- —- —- —-
Income from continuing operations 5.1 7.7 6.1 12.0
Loss from discontinued operations
and disposal, net of tax (10.0) (21.1) (10.0) (110.3)
—- —- —- —-
Net loss $(4.9) $(13.4) $(3.9) $(98.3)
===== ====== ===== ======
Gross margin 26.6% 27.0% 26.2% 26.7%
Operating margin 4.6% 7.3% 3.8% 6.4%
Effective tax rate 22.3% 36.3% 21.0% 33.2%
Diluted earnings per share:
Earnings from continuing
operations $0.11 $0.16 $0.13 $0.25
Loss from discontinued operations
and disposal, net of tax (0.21) (0.44) (0.21) (2.30)
—-- —-- —-- —--
Loss per share $(0.10) $(0.28) $(0.08) $(2.05)
—— —— —— ——
Average common shares outstanding 48.0 47.6 48.4 47.8
QTR QTR YTD YTD
June 30 June 30 June 30 June 30
2009 2008 2009 2008
—- —- —- —-
Group results:
Safety and Security Systems
Group:
Orders $72.2 $98.7 $148.3 $194.6
Net Sales 78.8 94.8 155.0 185.6
Operating Income 8.9 10.9 15.1 19.2
Operating Margin 11.3% 11.5% 9.7% 10.3%
Backlog $46.3 $70.0
Fire Rescue Group :
Orders $21.2 $43.7 $42.0 $101.4
Net Sales 41.5 41.4 74.0 64.4
Operating Income 4.9 3.2 7.3 3.9
Operating Margin 11.8% 7.7% 9.9% 6.1%
Backlog $107.5 $181.7
Environmental Solutions Group :
Orders $63.7 $101.1 $131.1 $186.0
Net Sales 83.9 103.5 165.3 203.9
Operating Income 6.2 10.9 9.2 20.6
Operating Margin 7.4% 10.5% 5.6% 10.1%
Backlog $63.9 $110.7
Corporate operating expenses $(10.7) $(7.5) $(16.8) $(14.8)
—- —- —- —-
Total Operating Income $9.3 $17.5 $14.8 $28.9
==== ===== ===== =====
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30 Dec 31
($ in millions) 2009 2008
—- —-
ASSETS
Current assets
Cash and cash equivalents $12.1 $23.4
Short-term investments - 10.0
Accounts receivable, net of allowances for
doubtful accounts of $1.9 million and $2.0
million, respectively 122.3 138.6
Inventories 127.7 129.4
Other current assets 23.2 21.5
—- —-
Total current assets 285.3 322.9
Properties and equipment, net 66.6 63.5
Other assets
Goodwill, net of accumulated amortization 326.4 328.1
Intangible assets, net 49.4 47.8
Deferred tax assets 26.6 30.3
Deferred charges and other assets 2.0 4.4
— —
Total assets 756.3 797.0
Assets of discontinued operations 34.4 37.0
—- —-
Total assets $790.7 $834.0
===== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $2.2 $12.6
Current portion of long-term borrowings 40.4 25.1
Accounts payable 42.6 48.4
Accrued Liabilities
Compensation and withholding taxes 20.9 23.9
Customer deposits 12.2 17.4
Other 48.3 48.6
—- —-
Total current liabilities 166.6 176.0
Long-term borrowings 213.0 241.2
Long-term pension liabilities 54.3 58.0
Deferred gain 25.2 26.2
Other long-term liabilities 12.0 13.3
—- —-
Total liabilities 471.1 514.7
Liabilities of discontinued operations 27.1 34.8
—- —-
Total liabilities 498.2 549.5
Shareholders' equity
Common stock, $1 par value per share, 90.0 million
shares authorized, 49.6 million and 49.3 million
shares issued, respectively 49.6 49.3
Capital in excess of par value 92.4 106.4
Retained earnings 216.7 226.4
Treasury stock, 0.8 million and 1.9 million shares
at cost, respectively (15.8) (36.1)
Accumulated Other Comprehensive loss
Foreign currency translation, net 7.6 (4.1)
Net derivative loss, cash flow hedges, net (0.9) (0.9)
Unrecognized pension and postretirement losses,
net (57.1) (56.5)
—-- —--
Total (50.4) (61.5)
—-- —--
Total shareholders' equity 292.5 284.5
—-- —--
Total liabilities and shareholders' equity $790.7 $834.0
====== ======
Supplemental data:
Debt $255.6 $278.9
Debt-to-capitalization ratio: 46.6% 49.5%
Net Debt/Cap Ratio 45.4% 46.3%
Net Debt/Cap Ratio = debt-to-capitalization ratio,
net of cash
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Quarter Ended
June 30,
——--
2009 2008
—- —-
($ in millions)
Operating activities
Net loss $(3.9) $(98.3)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Loss on discontinued operations and disposal 10.0 110.3
Loss on investment in joint venture 0.9 1.2
Depreciation and amortization 7.8 8.1
Stock based compensation expense 2.7 1.9
Pension contributions (0.5) (5.8)
Working capital (1) 6.4 (12.3)
Other (4.3) 3.5
—- —
Net cash provided by continuing operating
activities 19.1 8.6
Net cash provided by discontinued operating
activities 1.5 77.3
— —-
Net cash provided by operating activities 20.6 85.9
Investing activities
Purchases of properties and equipment (8.0) (15.5)
Other, net 10.0 (0.1)
—- —-
Net cash provided by (used for) continuing
investing activities 2.0 (15.6)
Net cash provided by discontinued investing
activities 2.8 52.7
— —-
Net cash provided by investing activities 4.8 37.1
Financing activities
Decrease in short-term borrowings, net (10.4) (0.9)
Payments on long-term borrowings, net (14.0) (36.0)
Purchases of treasury stock - (6.0)
Cash dividends paid to shareholders (5.8) (5.8)
Other, net (0.4) -
—- —
Net cash used for continuing financing
activities (30.6) (48.7)
Net cash used for discontinued financing
activities (6.7) (70.8)
—- —--
Net cash used for financing activities (37.3) (119.5)
—-- ——
Effects of foreign exchange rate changes on
cash 0.6 0.6
(Decrease) increase in cash and cash
equivalents (11.3) 4.1
Cash and cash equivalents at beginning of year 23.4 12.5
—- —-
Cash and cash equivalents at end of period $12.1 $16.6
===== ====
(1) Working capital is composed of net accounts receivable, inventories,
accounts payable and customer deposits.
SOURCE
Investors,
+1-630-954-2000,
wbarker@federalsignal.com/