OAK BROOK, Ill., Feb. 25, 2021 /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, 2020.
Fourth Quarter Highlights
- Q4 net sales of $295 million
- Operating margin of 11.5%, compared to 11.6% last year
- Adjusted EBITDA margin of 15.9%, up from 15.4% last year
- GAAP EPS of $0.42
- Adjusted EPS of $0.44
- Orders of $276 million, up
$10 million, or 4%, compared to the
third quarter of 2020
- Operating cash flow of $57
million, up 27% from last year
- $82 million of cash and
$280 million of credit facility
availability at end of year
- 2021 adjusted EPS* outlook of $1.73 to $1.85
Consolidated net sales for the fourth quarter were $295 million, compared to $314 million in the same quarter a year ago.
Income from continuing operations for the fourth quarter was
$26.0 million, equal to $0.42 per diluted share, compared to $29.7 million, or $0.48 per share, in the prior-year quarter. The
Company also reported adjusted income from continuing operations
for the fourth quarter of $27.2
million, equal to $0.44 per
diluted share, compared to $29.5
million, or $0.48 per share,
in the same quarter a year ago. 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, 2020
were $1.13 billion, compared to
$1.22 billion in the prior year.
Income from continuing operations for the year was $96.1 million, equal to $1.56 per diluted share, compared to $108.4 million, or $1.76 per share, in the prior year. Adjusted
income from continuing operations for the year was $103.0 million, equal to $1.67 per diluted share, compared to $110.1 million, or $1.79 per diluted share, in the prior year.
Impressive Operational Performance Despite Ongoing
Disruptions; Group Margins Exceeds Target Range, and Orders Again
Improve Sequentially
"We had a strong finish to 2020, a year
in which we delivered the second highest adjusted EPS* in our
history. Our teams continue to prioritize the safety of our
employees, while demonstrating excellent operational execution in
challenging circumstances," commented Jennifer L. Sherman, President and Chief
Executive Officer. "Both of our groups delivered margin performance
in excess of their target ranges, contributing to a consolidated
adjusted EBITDA margin of approximately 16%. Demand for our
products and services remained healthy, and we again reported
sequential quarterly order improvement."
In the Environmental Solutions Group, net sales for the fourth
quarter were $238 million, compared
to $252 million in the prior-year
quarter, while in the Safety and Security Systems Group, net sales
of $57 million, compared to
$62 million in the prior-year
quarter.
Consolidated operating income for the fourth quarter was
$33.8 million, compared to
$36.4 million in the prior-year
quarter. Consolidated operating margin was 11.5%, compared to 11.6%
last year.
Consolidated adjusted earnings before interest, tax,
depreciation and amortization ("adjusted EBITDA") for the fourth
quarter was $47.0 million, compared
to $48.5 million in the prior-year
quarter, and consolidated adjusted EBITDA margin improved to 15.9%,
compared to 15.4% last year.
Adjusted EBITDA in the Environmental Solutions Group was
$44.2 million, up from $43.8 million in the prior-year quarter, and its
adjusted EBITDA margin was 18.6%, up from 17.4% last year. Within
the Safety and Security Systems Group, adjusted EBITDA was
$11.2 million, compared to
$12.6 million in the prior-year
quarter, and its adjusted EBITDA margin was 19.6%, compared to
20.3% last year.
Consolidated backlog at December 31, 2020 was $304 million.
Strong Q4 Cash Flow Supports Debt Pay Down, Organic Growth
Investment, M&A and Cash Returns to Shareholders
Net
cash of $57 million was generated
from operations in the fourth quarter, up $12 million, or 27%, compared to $45 million in the prior-year quarter. For the
year ended December 31, 2020, operating cash flow totaled
$136 million, an increase of
$33 million, or 32%, compared to the
prior year.
At December 31, 2020, total debt was $210 million, total cash and cash equivalents
were $82 million and the Company had
$280 million of availability for
borrowings under its current credit facility, which was executed in
July 2019.
"Our cash flow generation this quarter was outstanding, allowing
us to pay down over $30 million of
debt in the quarter, and fund ongoing investments in our facility
expansion projects. Our financial position remains strong,
providing us with significant financial flexibility to invest in
organic growth initiatives, pursue strategic acquisitions, like the
recently announced acquisition of OSW, and fund cash returns to
shareholders," said Sherman.
The Company funded dividends of $4.9
million during the fourth quarter, bringing the total for
the year to $19.4 million, and as
recently announced, the Board of Directors increased the dividend
that will be payable in the first quarter of 2021 to $0.09 per share dividend, a 13% increase from the
prior dividend.
Outlook
"As we look ahead to 2021, we are encouraged
by conditions in our end markets, the ongoing execution against our
strategic initiatives, and the improvement in order trends that we
have seen during the fourth quarter and so far this year," noted
Sherman. "We are also closely monitoring the potential for economic
stimulus and increased investment in U.S. infrastructure under the
new administration, and have positioned ourselves to be prepared
for further recovery in market conditions. With this momentum, we
are expecting a strong 2021, with top-line growth, double-digit
improvement in pre-tax earnings, and adjusted EPS* of between
$1.73 and $1.85."
CONFERENCE CALL
Federal Signal will host its fourth
quarter earnings conference call on Thursday, February 25,
2021 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 or by dialing phone number
1-877-705-6003 and entering the pin number 13716478. 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: http://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, economic conditions in various regions, product and price
competition, supply chain disruptions, work stoppages, availability
and pricing of raw materials, 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 income from
continuing operations and diluted EPS. In 2020, we made adjustments
to exclude the impact of acquisition and integration-related
expenses, pension-related charges, restructuring activity,
coronavirus-related expenses and purchase accounting effects, where
applicable. We have also previously made adjustments to GAAP income
from continuing operations and diluted EPS for special tax items.
Should any similar items occur in 2021, 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, except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
294.8
|
|
|
$
|
314.4
|
|
|
$
|
1,130.8
|
|
|
$
|
1,221.3
|
|
Cost of
sales
|
218.9
|
|
|
232.9
|
|
|
837.2
|
|
|
898.5
|
|
Gross
profit
|
75.9
|
|
|
81.5
|
|
|
293.6
|
|
|
322.8
|
|
Selling, engineering,
general and administrative expenses
|
40.8
|
|
|
44.5
|
|
|
158.8
|
|
|
173.2
|
|
Acquisition and
integration-related expenses
|
1.3
|
|
|
0.6
|
|
|
2.1
|
|
|
2.5
|
|
Restructuring
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
Operating
income
|
33.8
|
|
|
36.4
|
|
|
131.4
|
|
|
147.1
|
|
Interest
expense
|
1.2
|
|
|
1.8
|
|
|
5.7
|
|
|
7.9
|
|
Other (income)
expense, net
|
(1.0)
|
|
|
0.1
|
|
|
1.1
|
|
|
0.6
|
|
Income before income
taxes
|
33.6
|
|
|
34.5
|
|
|
124.6
|
|
|
138.6
|
|
Income tax
expense
|
7.6
|
|
|
4.8
|
|
|
28.5
|
|
|
30.2
|
|
Income from
continuing operations
|
26.0
|
|
|
29.7
|
|
|
96.1
|
|
|
108.4
|
|
Gain from
discontinued operations and disposal, net of tax
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
Net income
|
$
|
26.1
|
|
|
$
|
29.8
|
|
|
$
|
96.2
|
|
|
$
|
108.5
|
|
Basic earnings per
share:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
0.43
|
|
|
$
|
0.49
|
|
|
$
|
1.59
|
|
|
$
|
1.80
|
|
Earnings from
discontinued operations and disposal, net of tax
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
Net earnings per
share
|
$
|
0.43
|
|
|
$
|
0.49
|
|
|
$
|
1.59
|
|
|
$
|
1.80
|
|
Diluted earnings per
share:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
1.56
|
|
|
$
|
1.76
|
|
Earnings from
discontinued operations and disposal, net of tax
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
Net earnings per
share
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
1.56
|
|
|
$
|
1.76
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
60.3
|
|
|
60.3
|
|
|
60.3
|
|
|
60.2
|
|
Diluted
|
61.6
|
|
|
61.8
|
|
|
61.7
|
|
|
61.6
|
|
Cash dividends
declared per common share
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Operating
margin
|
11.5
|
%
|
|
11.6
|
%
|
|
11.6
|
%
|
|
12.0
|
%
|
Adjusted
EBITDA
|
$
|
47.0
|
|
|
$
|
48.5
|
|
|
$
|
182.2
|
|
|
$
|
191.3
|
|
Adjusted EBITDA
margin
|
15.9
|
%
|
|
15.4
|
%
|
|
16.1
|
%
|
|
15.7
|
%
|
Total
orders
|
$
|
276.1
|
|
|
$
|
333.2
|
|
|
$
|
1,047.1
|
|
|
$
|
1,269.0
|
|
Backlog
|
303.9
|
|
|
386.9
|
|
|
303.9
|
|
|
386.9
|
|
Depreciation and
amortization
|
11.7
|
|
|
11.4
|
|
|
44.8
|
|
|
41.5
|
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
As of December
31,
|
(in millions, except per share data)
|
2020
|
|
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
81.7
|
|
|
$
|
31.6
|
|
Accounts receivable,
net of allowances for doubtful accounts of $2.9 and $2.4,
respectively
|
127.0
|
|
|
134.2
|
|
Inventories
|
185.0
|
|
|
182.9
|
|
Prepaid expenses and
other current assets
|
11.8
|
|
|
12.0
|
|
Total current
assets
|
405.5
|
|
|
360.7
|
|
Properties and
equipment, net of accumulated depreciation of $136.2 and $125.5,
respectively
|
106.9
|
|
|
91.9
|
|
Rental equipment, net
of accumulated depreciation of $43.5 and $33.6,
respectively
|
113.3
|
|
|
115.4
|
|
Operating lease
right-of-use assets
|
21.9
|
|
|
27.6
|
|
Goodwill
|
394.2
|
|
|
388.8
|
|
Intangible assets,
net of accumulated amortization of $31.9 and $22.1,
respectively
|
153.5
|
|
|
162.9
|
|
Deferred tax
assets
|
9.5
|
|
|
10.0
|
|
Deferred charges and
other long-term assets
|
3.8
|
|
|
7.9
|
|
Long-term assets of
discontinued operations
|
0.2
|
|
|
0.3
|
|
Total
assets
|
$
|
1,208.8
|
|
|
$
|
1,165.5
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term borrowings and finance lease obligations
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Accounts
payable
|
51.6
|
|
|
65.0
|
|
Customer
deposits
|
13.3
|
|
|
11.5
|
|
Accrued
liabilities:
|
|
|
|
Compensation and
withholding taxes
|
30.3
|
|
|
31.1
|
|
Current operating
lease liabilities
|
8.2
|
|
|
8.2
|
|
Other current
liabilities
|
44.7
|
|
|
44.0
|
|
Current liabilities of
discontinued operations
|
0.1
|
|
|
0.2
|
|
Total current
liabilities
|
148.4
|
|
|
160.2
|
|
Long-term borrowings
and finance lease obligations
|
209.8
|
|
|
220.3
|
|
Long-term operating
lease liabilities
|
15.5
|
|
|
21.6
|
|
Long-term pension and
other post-retirement benefit liabilities
|
54.0
|
|
|
50.9
|
|
Deferred tax
liabilities
|
53.7
|
|
|
52.7
|
|
Other long-term
liabilities
|
24.5
|
|
|
17.3
|
|
Long-term liabilities
of discontinued operations
|
0.8
|
|
|
0.9
|
|
Total
liabilities
|
506.7
|
|
|
523.9
|
|
Stockholders'
equity:
|
|
|
|
Common stock,
$1 par value per share, 90.0 shares authorized,
67.8 and 66.9 shares issued,
respectively
|
67.8
|
|
|
66.9
|
|
Capital in excess of
par value
|
240.8
|
|
|
228.6
|
|
Retained
earnings
|
605.0
|
|
|
528.2
|
|
Treasury stock, at
cost, 7.3 and 6.4 shares, respectively
|
(119.8)
|
|
|
(93.0)
|
|
Accumulated other
comprehensive loss
|
(91.7)
|
|
|
(89.1)
|
|
Total stockholders'
equity
|
702.1
|
|
|
641.6
|
|
Total liabilities and
stockholders' equity
|
$
|
1,208.8
|
|
|
$
|
1,165.5
|
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
For the Years
Ended December 31,
|
(in
millions)
|
2020
|
|
2019
|
Operating
activities:
|
|
|
|
Net income
|
$
|
96.2
|
|
|
$
|
108.5
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Net gain on
discontinued operations and disposal
|
(0.1)
|
|
|
(0.1)
|
|
Depreciation and
amortization
|
44.8
|
|
|
41.5
|
|
Deferred financing
costs
|
0.3
|
|
|
0.3
|
|
Stock-based
compensation expense
|
8.4
|
|
|
8.8
|
|
Pension-related
expense, net of funding
|
(6.6)
|
|
|
(0.1)
|
|
Changes in fair value
of contingent consideration and deferred payment
|
(0.1)
|
|
|
1.0
|
|
Payments for
acquisition-related activity
|
—
|
|
|
(3.1)
|
|
Deferred income taxes,
including change in valuation allowance
|
5.8
|
|
|
3.3
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
8.6
|
|
|
(4.7)
|
|
Inventories
|
2.5
|
|
|
(10.4)
|
|
Prepaid expenses and
other current assets
|
(0.6)
|
|
|
(2.2)
|
|
Rental
equipment
|
(16.9)
|
|
|
(35.5)
|
|
Accounts
payable
|
(13.9)
|
|
|
(6.6)
|
|
Customer
deposits
|
1.7
|
|
|
(5.1)
|
|
Accrued
liabilities
|
(1.2)
|
|
|
2.8
|
|
Income
taxes
|
1.3
|
|
|
1.3
|
|
Other
|
6.1
|
|
|
3.7
|
|
Net cash provided by
continuing operating activities
|
136.3
|
|
|
103.4
|
|
Net cash used for
discontinued operating activities
|
(0.1)
|
|
|
(0.3)
|
|
Net cash provided by
operating activities
|
136.2
|
|
|
103.1
|
|
Investing
activities:
|
|
|
|
Purchases of
properties and equipment
|
(29.7)
|
|
|
(35.4)
|
|
(Payments for)
proceeds from acquisition-related activity
|
(5.4)
|
|
|
(49.6)
|
|
Other, net
|
0.7
|
|
|
0.6
|
|
Net cash used for
investing activities
|
(34.4)
|
|
|
(84.4)
|
|
Financing
activities:
|
|
|
|
(Decrease) increase in
revolving lines of credit, net
|
(11.8)
|
|
|
7.4
|
|
Payments of debt
financing fees
|
—
|
|
|
(1.0)
|
|
Purchases of treasury
stock
|
(13.7)
|
|
|
(1.0)
|
|
Redemptions of common
stock to satisfy withholding taxes related to stock-based
compensation
|
(9.1)
|
|
|
(2.1)
|
|
Payments for
acquisition-related activity
|
—
|
|
|
(10.3)
|
|
Cash dividends paid to
stockholders
|
(19.4)
|
|
|
(19.3)
|
|
Proceeds from stock
compensation activity
|
0.6
|
|
|
1.7
|
|
Net cash used for
financing activities
|
(53.4)
|
|
|
(24.6)
|
|
Effects of foreign
exchange rate changes on cash and cash equivalents
|
1.7
|
|
|
0.1
|
|
Increase (decrease)
in cash and cash equivalents
|
50.1
|
|
|
(5.8)
|
|
Cash and cash
equivalents at beginning of year
|
31.6
|
|
|
37.4
|
|
Cash and cash
equivalents at end of year
|
$
|
81.7
|
|
|
$
|
31.6
|
|
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, 2020 and 2019:
|
|
Environmental
Solutions Group
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
($ in
millions)
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
Net sales
|
$
|
237.6
|
|
|
$
|
252.2
|
|
|
$
|
(14.6)
|
|
|
$
|
915.8
|
|
|
$
|
992.9
|
|
|
$
|
(77.1)
|
|
Operating
income
|
33.3
|
|
|
33.0
|
|
|
0.3
|
|
|
124.3
|
|
|
139.4
|
|
|
(15.1)
|
|
Adjusted
EBITDA
|
44.2
|
|
|
43.8
|
|
|
0.4
|
|
|
169.0
|
|
|
178.9
|
|
|
(9.9)
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
14.0
|
%
|
|
13.1
|
%
|
|
0.9
|
%
|
|
13.6
|
%
|
|
14.0
|
%
|
|
(0.4)
|
%
|
Adjusted EBITDA
margin
|
18.6
|
%
|
|
17.4
|
%
|
|
1.2
|
%
|
|
18.5
|
%
|
|
18.0
|
%
|
|
0.5
|
%
|
Total
orders
|
$
|
224.8
|
|
|
$
|
270.9
|
|
|
$
|
(46.1)
|
|
|
$
|
840.0
|
|
|
$
|
1,038.0
|
|
|
$
|
(198.0)
|
|
Backlog
|
282.5
|
|
|
357.6
|
|
|
(75.1)
|
|
|
282.5
|
|
|
357.6
|
|
|
(75.1)
|
|
Depreciation and
amortization
|
10.7
|
|
|
10.6
|
|
|
0.1
|
|
|
41.3
|
|
|
38.1
|
|
|
3.2
|
|
Safety and
Security Systems Group
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
($ in
millions)
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
Net sales
|
$
|
57.2
|
|
|
$
|
62.2
|
|
|
$
|
(5.0)
|
|
|
$
|
215.0
|
|
|
$
|
228.4
|
|
|
$
|
(13.4)
|
|
Operating
income
|
10.3
|
|
|
11.8
|
|
|
(1.5)
|
|
|
35.5
|
|
|
38.6
|
|
|
(3.1)
|
|
Adjusted
EBITDA
|
11.2
|
|
|
12.6
|
|
|
(1.4)
|
|
|
39.3
|
|
|
41.9
|
|
|
(2.6)
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
18.0
|
%
|
|
19.0
|
%
|
|
(1.0)
|
%
|
|
16.5
|
%
|
|
16.9
|
%
|
|
(0.4)
|
%
|
Adjusted EBITDA
margin
|
19.6
|
%
|
|
20.3
|
%
|
|
(0.7)
|
%
|
|
18.3
|
%
|
|
18.3
|
%
|
|
—
|
%
|
Total
orders
|
$
|
51.3
|
|
|
$
|
62.3
|
|
|
$
|
(11.0)
|
|
|
$
|
207.1
|
|
|
$
|
231.0
|
|
|
$
|
(23.9)
|
|
Backlog
|
21.4
|
|
|
29.3
|
|
|
(7.9)
|
|
|
21.4
|
|
|
29.3
|
|
|
(7.9)
|
|
Depreciation and
amortization
|
0.9
|
|
|
0.8
|
|
|
0.1
|
|
|
3.4
|
|
|
3.3
|
|
|
0.1
|
|
Corporate Expenses
Corporate operating expenses were $9.8
million and $8.4 million for
the three months ended December 31, 2020 and 2019,
respectively.
Corporate operating expenses were $28.4
million and $30.9 million for
the years ended December 31, 2020 and 2019, 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 income from continuing operations and adjusted earnings
per share from continuing operations ("Adjusted EPS"):
The Company believes that modifying its 2020 and 2019 income from
continuing operations and diluted earnings per share from
continuing operations ("EPS") provides additional measures which
are representative of the Company's underlying performance and
improve the comparability of results between reporting periods.
Adjusted income from continuing operations and adjusted EPS are
both non-GAAP measures. During the three and twelve months ended
December 31, 2020 and 2019, adjustments were made to reported
GAAP income from continuing operations and diluted EPS to exclude
the impact of acquisition and integration-related expenses,
pension-related charges, restructuring activity,
coronavirus-related expenses, and purchase accounting effects,
where applicable. In addition, during the three and twelve months
ended December 31, 2019, adjustments were made to reported
GAAP income tax expense to exclude certain special tax items.
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Income from
continuing operations
|
$
|
26.0
|
|
|
$
|
29.7
|
|
|
$
|
96.1
|
|
|
$
|
108.4
|
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
7.6
|
|
|
4.8
|
|
|
28.5
|
|
|
30.2
|
|
Income before income
taxes
|
33.6
|
|
|
34.5
|
|
|
124.6
|
|
|
138.6
|
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
1.3
|
|
|
0.6
|
|
|
2.1
|
|
|
2.5
|
|
Pension-related
charges (a)
|
(0.2)
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
Restructuring
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
Coronavirus-related
expenses (b)
|
0.1
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
Purchase accounting
effects (c)
|
0.2
|
|
|
0.3
|
|
|
0.7
|
|
|
0.8
|
|
Adjusted income
before income taxes
|
$
|
35.0
|
|
|
$
|
35.4
|
|
|
$
|
133.3
|
|
|
$
|
141.9
|
|
Adjusted income tax
expense (d)
|
(7.8)
|
|
|
(5.9)
|
|
|
(30.3)
|
|
|
(31.8)
|
|
Adjusted income from
continuing operations
|
$
|
27.2
|
|
|
$
|
29.5
|
|
|
$
|
103.0
|
|
|
$
|
110.1
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31,
|
|
Twelve Months
Ended
December 31,
|
(dollars per
diluted share)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
EPS, as
reported
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
1.56
|
|
|
$
|
1.76
|
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
0.12
|
|
|
0.08
|
|
|
0.46
|
|
|
0.49
|
|
Income before income
taxes
|
0.54
|
|
|
0.56
|
|
|
2.02
|
|
|
2.25
|
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
0.03
|
|
|
0.01
|
|
|
0.03
|
|
|
0.04
|
|
Pension-related
charges (a)
|
0.00
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Restructuring
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Coronavirus-related
expenses (b)
|
0.00
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Purchase accounting
effects (c)
|
0.00
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
Adjusted income
before income taxes
|
$
|
0.57
|
|
|
$
|
0.58
|
|
|
$
|
2.16
|
|
|
$
|
2.30
|
|
Adjusted income tax
expense (d)
|
(0.13)
|
|
|
(0.10)
|
|
|
(0.49)
|
|
|
(0.51)
|
|
Adjusted
EPS
|
$
|
0.44
|
|
|
$
|
0.48
|
|
|
$
|
1.67
|
|
|
$
|
1.79
|
|
|
|
(a)
|
Pension-related
charges in the twelve months ended December 31, 2020 relate to
charges incurred in connection with the withdrawal from a
multi-employer pension plan. During the three months ended
December 31, 2020, an adjustment was recorded to reduce the
estimate of the charge, initially recorded in the second quarter of
2020. Such charges are included as a component of Other (income)
expense, net on the Consolidated Statement of
Operations.
|
(b)
|
Coronavirus-related
expenses in the three and twelve months ended December 31,
2020 include direct expenses incurred as a result of the
coronavirus pandemic, that are incremental to, and separable from,
normal operations. Such expenses primarily relate to incremental
paid time off provided to employees and costs incurred to implement
enhanced workplace safety protocols.
|
(c)
|
Purchase accounting
effects 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 dates in the three and
twelve months ended December 31, 2020 and 2019, as well as to
exclude the depreciation of the step-up in the valuation of the
rental fleet acquired in the JJE transaction.
|
(d)
|
Adjusted income tax
expense for the three and twelve months ended December 31,
2020 and 2019 was recomputed after excluding the impact of
acquisition and integration-related expenses, pension-related
charges, restructuring activity, coronavirus-related expenses, and
purchase accounting effects, where applicable. Adjusted income tax
expense for the three and twelve months ended December 31,
2019 also excludes an $0.8 million benefit from changes in state
deferred tax valuation allowances.
|
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 income from continuing operations, interest
expense, acquisition and integration-related expenses,
restructuring activity, coronavirus-related 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 income from continuing operations, interest expense,
acquisition and integration-related expenses, restructuring
activity, coronavirus-related 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, restructuring activity,
coronavirus-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, restructuring activity,
coronavirus-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 income from continuing operations to consolidated
adjusted EBITDA for the three and twelve months ended
December 31, 2020 and 2019:
|
Three Months Ended
December
31,
|
|
Twelve Months
Ended December
31,
|
($ in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Income from
continuing operations
|
26.0
|
|
|
29.7
|
|
|
96.1
|
|
|
108.4
|
|
Add:
|
|
|
|
|
|
|
|
Interest
expense
|
1.2
|
|
|
1.8
|
|
|
5.7
|
|
|
7.9
|
|
Acquisition and
integration-related expenses
|
1.3
|
|
|
0.6
|
|
|
2.1
|
|
|
2.5
|
|
Restructuring
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
Coronavirus-related
expenses
|
0.1
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
Purchase accounting
effects *
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
Other (income)
expense, net
|
(1.0)
|
|
|
0.1
|
|
|
1.1
|
|
|
0.6
|
|
Income tax
expense
|
7.6
|
|
|
4.8
|
|
|
28.5
|
|
|
30.2
|
|
Depreciation and
amortization
|
11.7
|
|
|
11.4
|
|
|
44.8
|
|
|
41.5
|
|
Consolidated adjusted
EBITDA
|
$
|
47.0
|
|
|
$
|
48.5
|
|
|
$
|
182.2
|
|
|
$
|
191.3
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
294.8
|
|
|
$
|
314.4
|
|
|
$
|
1,130.8
|
|
|
$
|
1,221.3
|
|
|
|
|
|
|
|
|
|
Consolidated adjusted
EBITDA margin
|
15.9
|
%
|
|
15.4
|
%
|
|
16.1
|
%
|
|
15.7
|
%
|
|
|
*
|
Excludes purchase
accounting expense effects included within depreciation and
amortization of $0.1 million and $0.2 million for the three months
ended December 31, 2020 and 2019, respectively, and $0.4 million
and $0.6 million for the twelve months ended December 31, 2020 and
2019, respectively
|
Environmental Solutions Group
The following table
summarizes the Environmental Solutions Group's adjusted EBITDA and
adjusted EBITDA margin and reconciles operating income to adjusted
EBITDA for the three and twelve months ended December 31, 2020
and 2019:
|
Three Months Ended
December
31,
|
|
Twelve Months
Ended December
31,
|
($ in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating
income
|
$
|
33.3
|
|
|
$
|
33.0
|
|
|
$
|
124.3
|
|
|
$
|
139.4
|
|
Add:
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
0.1
|
|
|
0.1
|
|
|
0.4
|
|
|
1.2
|
|
Restructuring
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
Coronavirus-related
expenses
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
Purchase accounting
effects *
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
Depreciation and
amortization
|
10.7
|
|
|
10.6
|
|
|
41.3
|
|
|
38.1
|
|
Adjusted
EBITDA
|
$
|
44.2
|
|
|
$
|
43.8
|
|
|
$
|
169.0
|
|
|
$
|
178.9
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
237.6
|
|
|
$
|
252.2
|
|
|
$
|
915.8
|
|
|
$
|
992.9
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
18.6
|
%
|
|
17.4
|
%
|
|
18.5
|
%
|
|
18.0
|
%
|
|
|
*
|
Excludes purchase
accounting expense effects included within depreciation and
amortization of $0.1 million and $0.2 million for the three months
ended December 31, 2020 and 2019, respectively, and $0.4 million
and $0.6 million for the twelve months ended December 31, 2020 and
2019, respectively
|
Safety and Security Systems Group
The following table
summarizes the Safety and Security Systems Group's adjusted EBITDA
and adjusted EBITDA margin and reconciles operating income to
adjusted EBITDA for the three and twelve months ended
December 31, 2020 and 2019:
|
Three Months Ended
December
31,
|
|
Twelve Months
Ended December
31,
|
($ in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating
income
|
$
|
10.3
|
|
|
$
|
11.8
|
|
|
$
|
35.5
|
|
|
$
|
38.6
|
|
Add:
|
|
|
|
|
|
|
|
Restructuring
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
Coronavirus-related
expenses
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
Depreciation and
amortization
|
0.9
|
|
|
0.8
|
|
|
3.4
|
|
|
3.3
|
|
Adjusted
EBITDA
|
$
|
11.2
|
|
|
$
|
12.6
|
|
|
$
|
39.3
|
|
|
$
|
41.9
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
57.2
|
|
|
$
|
62.2
|
|
|
$
|
215.0
|
|
|
$
|
228.4
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
19.6
|
%
|
|
20.3
|
%
|
|
18.3
|
%
|
|
18.3
|
%
|
View original
content:http://www.prnewswire.com/news-releases/federal-signal-reports-strong-fourth-quarter-results-and-positive-outlook-for-2021-301235199.html
SOURCE Federal Signal Corporation