Federal Signal (US:FSS)2021-05-07 02:33Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2021 were $279 million, down from $286 million in Q1 2020, representing a decrease of approximately 2.4% [8] - Consolidated operating income decreased to $27.8 million from $32.3 million year-over-year [8] - Consolidated adjusted EBITDA for the quarter was $41.2 million, down from $43.9 million, translating to a margin of 14.8% compared to 15.3% last year [9] - Net income for the quarter was $22.2 million, compared to $23.4 million in the prior year, resulting in GAAP EPS of $0.36 versus $0.38 [9][13] - Order intake reached a record $384 million, an increase of $80 million or 26% compared to Q1 2020 [9] Business Line Data and Key Metrics Changes - ESG net sales were $228 million, down from $233 million, with operating income at $27.1 million compared to $29.4 million last year [10] - EFC reported orders of $324 million, an increase of $87 million or 37% year-over-year [10] - SSG's net sales were $51 million, down from $53 million, with operating income slightly decreasing to $7.2 million [11] Market Data and Key Metrics Changes - Demand for sewer cleaners increased by 30% year-over-year, with orders almost doubling from the previous quarter [20] - The dump bodies and trailer businesses reported strong organic order growth of 28% across end markets [22] - The backlog at the end of the quarter reached a record $410 million, up $9 million from Q1 2020 and $106 million or 35% from the end of 2020 [9] Company Strategy and Development Direction - The company remains optimistic about safe digging prospects and infrastructure spending, with a focus on organic growth initiatives and strategic acquisitions [27][33] - The acquisition of OSW is expected to provide long-term value creation through operational improvements and synergies [32] - The company is actively pursuing M&A opportunities, with a robust pipeline of potential targets [33][55] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing COVID-related disruptions but highlighted improving conditions and strong order intake driven by economic stimulus [19][20] - The company maintains an adjusted EPS outlook for the year of $1.73 to $1.85, despite short-term production challenges due to chassis supply issues [38] - Management expressed confidence in the ability to ramp up production once current supply chain constraints ease [38] Other Important Information - The company generated $26 million in cash from operations, an improvement of $21 million over Q1 last year [15] - The effective tax rate for the quarter was 18.4%, down from 23.5% in the prior year [13] - The company paid dividends of $5.5 million during the quarter, reflecting an increased dividend of $0.09 per share [15] Q&A Session Summary Question: Impact of chassis production on guidance - Management indicated that the chassis supply situation is short-term, with proactive measures taken to secure additional chassis [44][46] Question: Order pull-forward due to supply chain issues - Management confirmed that there was no significant order pull-forward observed, with strong orders continuing into April [51][52] Question: M&A pipeline and opportunities - The M&A pipeline is active, with a range of potential deals from small acquisitions to transformational opportunities [54][55] Question: Margin profile of dump trailer business - Management noted that the margin profile varies, with opportunities for improvement through operational efficiencies and synergies from acquisitions [78][80]