Federal Signal Corp (FSS) Q3 2024 Earnings Call Highlights: Strong Sales Growth and Raised EPS ...

In This Article:

  • Consolidated Net Sales: $474 million, an increase of $28 million or 6% year-over-year.

  • Operating Income: $75.9 million, up $13.4 million or 21% year-over-year.

  • Adjusted EBITDA: $93 million, up $14.5 million or 18% year-over-year; margin of 19.6%, up 200 basis points.

  • GAAP Diluted EPS: 87 per share, up 16 or 23% year-over-year.

  • Adjusted EPS: 88 per share, up 17 or 24% year-over-year.

  • Order Intake: $426 million, contributing to a backlog of $1.03 billion, up $27 million or 3% year-over-year.

  • ESG Net Sales: $398 million, up $25 million or 7% year-over-year.

  • ESG Adjusted EBITDA: $87.2 million, up $15.2 million or 21% year-over-year; margin of 21.9%, up 260 basis points.

  • SSG Net Sales: $76 million, up $3 million or 4% year-over-year.

  • SSG Adjusted EBITDA: $17.8 million, up $3.2 million or 22% year-over-year; margin of 23.4%, up 350 basis points.

  • Cash from Operations: $69 million, up $21 million year-over-year.

  • Net Debt: $158 million, with $557 million availability under credit facility.

  • Dividends Paid: $7.3 million, reflecting a dividend of 12 per share.

  • Share Repurchases: $4.4 million during the quarter.

  • Full Year Adjusted EPS Outlook: Raised to $3.30 to $3.40 from $3.20 to $3.35.

  • Full Year Net Sales Outlook: Narrowed to $1.86 billion to $1.88 billion from $1.85 billion to $1.9 billion.

  • CapEx Outlook: Maintained at $35 million to $40 million for the year.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Federal Signal Corp (NYSE:FSS) reported a 6% year-over-year organic net sales growth, with consolidated net sales reaching $474 million.

  • The company achieved a 21% increase in consolidated operating income, amounting to $75.9 million.

  • Adjusted EBITDA for the quarter rose by 18% to $93 million, translating to a margin of 19.6%, a 200 basis point improvement from the previous year.

  • Order intake remained strong, with third-quarter orders totaling $426 million, contributing to a backlog of $1.03 billion, up 3% compared to the previous year.

  • The Environmental Solutions Group (ESG) reported a 7% increase in net sales and a 21% rise in adjusted EBITDA, with margins expanding by 260 basis points to 21.9%.

Negative Points

  • Corporate operating expenses increased to $12.4 million from $8.4 million last year, partly due to unfavorable changes in post-retirement reserves.

  • Domestic industrial orders declined by 8% year-over-year, primarily due to a $19 million reduction in orders for safe digging products.

  • The Safety and Security Systems Group (SSG) experienced a 3% decline in orders compared to the previous year.

  • The effective tax rate increased to 25.8% from 24.2% last year, impacting net income.

  • The company faces challenges in reducing lead times for certain product lines, despite increased production efforts.