Federal Signal (US:FSS)2023-02-28 16:00Financial Performance - Total orders for the year reached a record level of $1.7 billion, an increase of $153 million, or 10%, from the previous year[118]. - Net sales for the year ended December 31, 2022 were $1.4 billion, an increase of $222 million, or 18%, from the previous year[118]. - Operating income for the year was $160.8 million, an increase of $30.1 million, or 23%, from the previous year, with a consolidated operating margin of 11.2%[118]. - Income from continuing operations was $120.4 million, an increase of $19.8 million, or 20%, from the previous year[120]. - Adjusted EBITDA for the year was $215.0 million, an increase of $34.5 million, or 19%, with an adjusted EBITDA margin of 15.0%[120]. - The Environmental Solutions Group reported a net sales increase of $186.6 million, or 19%, driven by various product sales improvements[124]. - Gross profit for the year ended December 31, 2022, increased by $56.2 million, or 19%, with a gross profit margin of 24.0% compared to 23.8% in the prior year[126]. - Operating income increased by $30.1 million, or 23%, with a consolidated operating margin of 11.2%, up from 10.8% in the prior year[128]. - Federal Signal Corporation reported net sales of $1,434.8 million for the year ended December 31, 2022, representing a 18.2% increase from $1,213.2 million in 2021[221]. - The company's gross profit for 2022 was $344.9 million, up from $288.7 million in 2021, indicating a gross margin improvement[221]. - Operating income increased to $160.8 million in 2022, compared to $130.7 million in 2021, reflecting a growth of 23%[221]. - Income from continuing operations was $120.4 million in 2022, compared to $100.6 million in 2021, marking a 19.4% increase[221]. - Basic earnings per share rose to $1.99 in 2022, up from $1.65 in 2021, representing a 20.6% increase[221]. - The company reported a net income of $120.4 million for 2022, compared to $100.6 million in 2021, showing a growth of 19.4%[221]. - Net income for 2022 was $120.4 million, an increase of 19.4% compared to $100.6 million in 2021[224]. Orders and Backlog - Backlog as of December 31, 2022 was $879 million, an increase of $250 million, or 40%, compared to the end of the previous year[118]. - Total orders in the Environmental Solutions Group increased by $146.9 million, or 11%, with a backlog of $824 million at year-end[137][141]. - Operating income in the Safety and Security Systems Group increased by $8.1 million, or 24.8%, with total orders rising by $6.5 million, or 3%[142][143]. - Backlog was $55 million at December 31, 2022, compared to $53 million at December 31, 2021[147]. Expenses and Costs - Cost of sales increased by $165.4 million, or 18%, largely due to increased sales volumes and higher material costs[125]. - SEG&A expenses rose by $22.5 million, or 15%, but decreased as a percentage of net sales from 12.3% to 12.0%[127]. - Interest expense surged by $5.8 million, or 129%, due to higher average debt levels and interest rates[129]. - Income tax expense for the year was $30.5 million, leading to an effective tax rate of 20.2%, compared to 14.5% in 2021[132]. - Cost of sales rose by $21.5 million, or 16%, primarily due to higher sales volumes and increased material costs, resulting in a gross profit margin of 37.1%[145]. Cash Flow and Investments - Net cash provided by operating activities totaled $71.8 million in 2022, a decrease from $101.8 million in 2021, primarily due to increases in working capital[153]. - Net cash used for investing activities totaled $99.7 million in 2022, including $53.0 million in capital expenditures[154]. - The company invested $49.8 million in acquisition-related activities in 2022, compared to $131.8 million in 2021, a decrease of 62.3%[229]. - The company declared cash dividends of $21.8 million in 2022, slightly down from $22.0 million in 2021[231]. Assets and Liabilities - As of December 31, 2022, cash and cash equivalents totaled $47.5 million, with $19.4 million held by foreign subsidiaries[152]. - Total current assets rose to $531.4 million in 2022, up from $431.0 million in 2021, reflecting a growth of 23.3%[227]. - Total assets reached $1,524.3 million in 2022, up from $1,366.1 million in 2021, representing an increase of 11.6%[227]. - Long-term borrowings and finance lease obligations increased to $361.5 million in 2022 from $282.2 million in 2021, a rise of 28.1%[227]. - The company has long-term debt of $361.0 million, with interest payments totaling $94.8 million, of which $19.9 million is due within one year[168]. - The fair value of the company's total debt obligations was $363.0 million as of December 31, 2022[194]. - The company had a liability of approximately $1.2 million for unrecognized tax benefits as of December 31, 2022[171]. Acquisitions - The company completed its ninth acquisition since 2016 with the acquisition of TowHaul[120]. - Federal Signal Corporation's acquisition of TowHaul Corporation on October 3, 2022, contributed approximately 1% to total assets and net sales[215]. - The acquisition of TowHaul on October 3, 2022, generated net sales of $7.2 million and operating income of $2.3 million during the year ended December 31, 2022[286]. - The initial cash consideration for the TowHaul acquisition was approximately $43.3 million, which is subject to certain post-closing adjustments[287]. - The acquisition of Deist in December 2021 involved a cash payment of $38.1 million, with a contingent earn-out payment of up to $7.5 million based on financial targets[295]. - The acquisition of Ground Force on October 4, 2021, had a cash consideration of $43.1 million, funded through existing cash and borrowings[302]. - The acquisition of OSW on February 17, 2021, involved a cash payment of $53.2 million, funded through existing cash and borrowings[309]. Research and Development - The Company reported research and development expenditures of $11.5 million in 2022, slightly up from $11.4 million in 2021 and down from $12.2 million in 2020[276]. Other Financial Metrics - The company maintained effective internal control over financial reporting as of December 31, 2022, according to the audit opinion[213]. - The company had no goodwill impairments in 2022, 2021, or 2020, with fair values exceeding carrying values by more than 20%[184]. - The fair value of indefinite-lived intangible assets tested for impairment exceeded their carrying value by more than 50% in 2022[189]. - The weighted average interest rate on long-term borrowings was 5.5% at December 31, 2022[165]. - A hypothetical 1% increase or decrease in variable interest rates would change annual interest expense by approximately $2.9 million[194]. - Approximately 80% of the company's net sales are conducted in U.S. dollars, with a 10% appreciation of the U.S. dollar estimated to reduce full-year net sales by approximately 1%[195].