Federal Signal Q4 2012 Earnings Conference Call Transcript - Thomson StreetEvents

Federal Signal Q4 2012 Earnings Conference Call Transcript

19 pages (10037 words) — Published Mar 15, 2013
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Abstract:

Edited Transcript of FSS earnings conference call or presentation 15-Mar-13 2:00pm GMT

  
Brief Excerpt:

...Operator Good day and welcome to the Federal Signal Corporation fourth quarter conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Braden Waverley, Interim Chief Financial Officer. You may begin. Braden Waverley ...

  
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Matt McConnell - Citi - Analyst : Good morning, thanks for taking my question.


Question: Matt McConnell - Citi - Analyst : Can we start off just with an update on the path to the longer-term margin goals? And maybe Dennis, since you're over in Europe we could start with Bronto, where there might be the most room for improvement on an annual basis. But in the quarter you're right up there at the long-term target. So what have been the productivity improvements there, in the Finland facility? And kind of what's the path to that goal in each of the segments maybe?


Question: Matt McConnell - Citi - Analyst : Okay, great, so in 2013 you think kind of (multiple speakers)


Question: Matt McConnell - Citi - Analyst : Okay great, that's helpful. And then I guess one of the advantages of reporting at this time in the quarter is that you have probably decent visibility into how first quarter has started. So you had orders down year-over-year in each of the segments in 4Q. But is there any kind of end market update on how the first quarter has progressed? companies.


Question: Matt McConnell - Citi - Analyst : Great. And then finally, on the debt to EBITDA, the covenant in the new agreements, do you have -- where do you stand versus the 2.4 where you finished this quarter? And then kind of related to that, is debt reduction still kind of the number one and maybe only priority for capital allocation for this year?


Question: Matt McConnell - Citi - Analyst : Or, yeah, where is the covenant mapped out versus the 2.4 where you finished 2012. What is your threshold?


Question: Matt McConnell - Citi - Analyst : Yes, that's helpful on the downside as well, but would the rate go up if the debt to EBITDA also went up?


Question: Matt McConnell - Citi - Analyst : Okay great, that's very helpful. Thank you very much.


Question: Steve Barger - KeyBanc Capital Markets - Analyst : Good morning. My first question, just on the first half guidance, over the past few years there is typically a pretty big step up from 1Q to 2Q in terms of EPS. Do you expect that is going to be the pattern in the first half of 2013? Or is the $0.20 to $0.25 more level loaded?


Question: Steve Barger - KeyBanc Capital Markets - Analyst : Got you. And free cash flow from continuing operations looks like it was around $36 million in 2012. You indicated -- or can you tell us where CapEx is going to fall in 2013? And do you expect that operating cash flow will increase enough to have free cash flow even or better than what you put up in 2012? companies.


Question: Steve Barger - KeyBanc Capital Markets - Analyst : Got you. So, just broadly speaking, continued margin improvement, some reduction in inventory; so maybe a positive from a working cap standpoint, and then 2013 to 2015 CapEx? Did I get that right?


Question: Steve Barger - KeyBanc Capital Markets - Analyst : I understand.


Question: Steve Barger - KeyBanc Capital Markets - Analyst : Well, it's a good question -- a good point on the backlog. It's very healthy, especially in ESG. Can you talk about backlog mix for the Company and I guess for ESG specifically? Is it better than the mix you just shipped in the quarter in terms of machines or -- and pricing?


Question: Steve Barger - KeyBanc Capital Markets - Analyst : Got you, okay. And you talked about, in some of the corporate goals, accelerating new customer acquisition in global markets. Do you have to hire a lot of people or build out a lot of infrastructure to do that? Or do you feel like you have that model in place and it's really just getting better leverage out of the existing assets you have?


Question: Steve Barger - KeyBanc Capital Markets - Analyst : Okay. And then last question and I'll jump back in line, as you look at the segment growth rates and the margin expansion potential, you know, what do you think is a reasonable way for us to think about the normalized revenue growth rate over the next few years? And what level of EBITDA margin do you think the business can generate over time?


Question: Steve Barger - KeyBanc Capital Markets - Analyst : Right. All right. Very good, I will get back in line. Thanks.


Question: Brad Evans - Heartland - Analyst : Good morning, thanks for taking the questions.


Question: Brad Evans - Heartland - Analyst : Doing well, thanks. Thanks for asking, Dennis. Let me see; you gave us your thoughts for margins at Bronto for the year for fire rescue. Can you just -- where do you think EPG and SSG shake out for the full year from a contribution margin perspective?


Question: Brad Evans - Heartland - Analyst : Okay, thanks for that. What do you think the corporate expense shakes out for the full year within a range?


Question: Brad Evans - Heartland - Analyst : I'm sorry; so that's about $25 million or $26 million?


Question: Brad Evans - Heartland - Analyst : Okay, that's great. And Dennis, it sounds like -- appreciate your caution. It does sound like there is a prospect of things improving with industrial production growing here in the US, and as you mentioned, in muni markets. I guess international markets might be a wildcard with some of the turbulence overseas, but hopefully directionally better. So it sounds like you think, across the three business segments, that you have a fighting chance to grow each of the segments modestly. And if things turn a little more quickly we could be surprised. Is that a good way to characterize it?


Question: Brad Evans - Heartland - Analyst : Okay. And you should be deferring the vast majority of your current tax bill. Is that correct, going forward?


Question: Brad Evans - Heartland - Analyst : So a rough number, say -- you'll defer, say, 75% of the book tax level?


Question: Brad Evans - Heartland - Analyst : So you should be deferring about 75% of the book tax -- the book tax expense?


Question: Brad Evans - Heartland - Analyst : So can I ask you what's the level of debt to EBITDA that you need to get below where you have more flexibility to entertain share repurchases or restoring the dividend?


Question: Brad Evans - Heartland - Analyst : Yes.


Question: Brad Evans - Heartland - Analyst : Okay, well, I guess I'm just looking at -- on a forward basis, you're -- at least on a net debt to EBITDA basis it's not hard to see if, at the end -- as you get into the second half of this year, where you'll be -- again, net debt to EBITDA, you will be substantially -- right around 1.5 turns or maybe even a little better than that. companies.


Question: Brad Evans - Heartland - Analyst : Great, because it looks like -- well, I guess the surprise could be if the business grows a little faster, then perhaps working capital would be a use of cash versus perhaps a neutral, or maybe a small source. So the bottom line is the free cash flow dynamics are vastly improving here.


Question: Brad Evans - Heartland - Analyst : Okay, thank you.


Question: Nelson Obus - Winfield Capital - Analyst : Yes, hi. Just in terms of corporate, I'm just curious about your accounting philosophy in terms of pushing down as much as possible the corporate expense into the segments. Is that something you look at periodically? Or is that kind of a set process that you've governed by -- over a period? Where does that stand? Obviously because the more you can push down, the clearer we get a view of the divisions.


Question: Nelson Obus - Winfield Capital - Analyst : All right, thanks.

Table Of Contents

Federal Signal Q1 2014 Earnings Conference Call Transcript – 2014-05-01 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 1-May-14 2:00pm GMT

Federal Signal Q4 2013 Earnings Conference Call Transcript – 2014-03-05 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 5-Mar-14 3:00pm GMT

Federal Signal Q3 2013 Earnings Conference Call Transcript – 2013-11-06 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 6-Nov-13 3:00pm GMT

Federal Signal Q2 2013 Earnings Conference Call Transcript – 2013-08-09 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 9-Aug-13 2:00pm GMT

Federal Signal Q1 2013 Earnings Conference Call Transcript – 2013-05-06 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 6-May-13 2:00pm GMT

Federal Signal Q3 2012 Earnings Conference Call Transcript – 2012-11-09 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 9-Nov-12 3:00pm GMT

Federal Signal Q2 2012 Earnings Conference Call Transcript – 2012-08-03 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 3-Aug-12 2:00pm GMT

Federal Signal Conference Call to Discuss Its Definitive Agreement to Sell the Business of Federal Signal Technologies, LLC to 3M Summary – 2012-06-25 – $54.00 – Edited Brief of FSS M&A conference call or presentation 25-Jun-12 3:00pm GMT

Federal Signal Conference Call to Discuss Its Definitive Agreement to Sell the Business of Federal Signal Technologies, LLC to 3M Transcript – 2012-06-25 – $54.00 – Edited Transcript of FSS M&A conference call or presentation 25-Jun-12 3:00pm GMT

Federal Signal Q1 2012 Earnings Conference Call Transcript – 2012-05-04 – $54.00 – Edited Transcript of FSS earnings conference call or presentation 4-May-12 2:00pm GMT

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Thomson StreetEvents. "Federal Signal Q4 2012 Earnings Conference Call Transcript" Mar 15, 2013. Alacra Store. Jul 23, 2014. <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2012-Federal-Signal-Earnings-Conference-Call-T5030509>
  
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