Oak Brook, Illinois, May 2, 2022 — Federal Signal Corporation (NYSE:FSS) (the “Company”), a leader in environmental and safety solutions, today reported results for the first quarter ended March 31, 2022.
First Quarter Highlights
- Net sales of $330 million, up $51 million, or 18%, from last year
- GAAP EPS of $0.33
- Adjusted EPS of $0.34
- Record quarterly orders of $453 million, up $69 million, or 18%, from last year
- Record backlog of $751 million, up $342 million, or 83%, from last year
- Raises low end of 2022 adjusted EPS* outlook range by $0.04, establishing a new range of $1.80 to $2.00
- Increases low end of 2022 net sales outlook range by $30 million; new range of $1.38 billion to $1.45 billion
Consolidated net sales for the first quarter were $330 million, up $51 million, or 18%, compared to the prior-year quarter. Net income for the first quarter was $20.5 million, or $0.33 per diluted share, compared to $22.2 million, or $0.36 per diluted share, in the prior-year quarter.
The Company also reported adjusted net income for the first quarter of $20.7 million, or $0.34 per diluted share, compared to $23.2 million, or $0.38 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.
Despite Ongoing Disruptions, Operational Performance Improved as the Quarter Progressed
“Our businesses worked diligently to mitigate the impact of ongoing supply chain volatility and increased coronavirus-related disruption that we experienced at many of our facilities in the early part of the year,” commented Jennifer L. Sherman, President and Chief Executive Officer. “As the quarter progressed, production levels and customer deliveries meaningfully improved, and with benefits from pricing actions and contributions from recent acquisitions, our teams were successful in delivering year-over-year top line growth of 18% during the quarter, at an EBITDA margin within our target range.”
In the Environmental Solutions Group, net sales for the first quarter were $274 million, up $46 million, or 20%, compared to the prior-year quarter. In the Safety and Security Systems Group, net sales were $56 million, up $5 million, or 10%, compared to the prior-year quarter.
Consolidated operating income for the first quarter was $28.5 million, up $0.7 million, or 3%, compared to the prior-year quarter. Consolidated operating margin for the first quarter was 8.6%, compared to 10.0% in the prior-year quarter.
Consolidated adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) for the first quarter was $42.2 million, up $1.0 million, or 2%, compared to the prior-year quarter, and consolidated adjusted EBITDA margin was 12.8%, compared to 14.8% in the prior-year quarter.
In the Environmental Solutions Group, adjusted EBITDA for the first quarter was $39.3 million, in line with the prior-year quarter, and its adjusted EBITDA margin was 14.3%, compared to 17.2% last year. In the Safety and Security Systems Group, adjusted EBITDA for the first quarter was $8.9 million, up $0.7 million, or 9%, compared to the prior-year quarter, and its adjusted EBITDA margin was 15.9%, compared to 16.2% last year.
Consolidated orders for the first quarter were $453 million, a new record for the Company, and an improvement of $69 million, or 18%, compared to the prior-year quarter. Consolidated backlog at March 31, 2022 was $751 million, another Company record, and an increase of $342 million, or 83%, from last year.
Financial Position Remains Strong, Providing Flexibility to Invest in Organic Growth, Fund M&A and Return Cash to Stockholders
Operating cash flow during the first quarter was $7 million. At March 31, 2022, consolidated debt was $330 million, total cash and cash equivalents were $39 million and the Company had $162 million of availability for borrowings under its revolving credit facility. During the first quarter, the Company completed the purchase of its manufacturing facility in University Park, Illinois.
“Our current financial position provides us significant flexibility to pursue strategic acquisitions and invest in organic growth initiatives, like the purchase of our University Park facility,” said Sherman. “We also remain committed to returning cash to stockholders through dividends and opportunistic share repurchases.”
The Company funded dividends of $5.5 million during the first quarter, reflecting a dividend of $0.09 per share, and the Board of Directors recently declared a similar dividend that will be payable in the second quarter.
The Company also funded share repurchases of $13.6 million during the first quarter.
“Demand for our products and our aftermarket offerings remains at unprecedented levels, with both our orders and backlog this quarter again setting new Company records,” noted Sherman. “Although we expect the volatile supply chain environment to continue, we are encouraged with how our teams have navigated through these challenges so far this year. With our first quarter performance, our record backlog and current expectations of component availability, we are raising the low end of our full-year adjusted EPS* outlook range by $0.04, establishing a new range of $1.80 to $2.00. We are also increasing the low end of our full-year net sales outlook range by $30 million, establishing a new range of $1.38 billion to $1.45 billion.”
Federal Signal will host its first quarter conference call on Monday, May 2, 2022 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 1-855-327-6837 and entering the pin number 10018930. 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, email@example.com
* 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 2021, we made adjustments to exclude the impact of acquisition and integration-related (benefits) expenses, pension-related charges, coronavirus-related expenses and purchase accounting effects, where applicable. Should any similar items occur in 2022, 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).
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