OAK BROOK, Ill., Feb. 28,
2017 /PRNewswire/ -- Federal Signal Corporation (NYSE:FSS), a
leader in environmental and safety solutions, today reported
results for the fourth quarter and year ended December 31,
2016.
- GAAP EPS of $0.20 per share for
the quarter and $0.64 for the
year
- Adjusted EPS of $0.16 per share
for the quarter and $0.69 for the
year
- Cash returns to shareholders totaled $54.7 million for the year, up from $26.2 million last year
- 2017 EPS outlook of $0.70 to
$0.78 per share, supported by recent uptick in U.S.
industrial orders
Consolidated net sales for the fourth quarter were $176.1 million, down 6% versus the same quarter a
year ago. Fourth quarter income from continuing operations was
$12.1 million, equal to $0.20 per diluted share, compared to $17.4 million, or $0.27 per share, in the prior-year quarter. The
Company also reported adjusted net income from continuing
operations for the fourth quarter of $9.7
million, equal to $0.16 per
diluted share, compared to $16.0
million, or $0.25 per share,
in the same quarter a year ago.
Consolidated net sales for the year ended December 31, 2016
were $707.9 million, down 8% compared
to the prior year. Income from continuing operations for the year
was $39.4 million, equal to
$0.64 per diluted share, compared to
$65.8 million, or $1.04 per share, in the prior year. Adjusted net
income from continuing operations for the year was $42.0 million, equal to $0.69 per diluted share, compared to $64.7 million, or $1.02 per diluted share, in the prior year.
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. All results discussed herein
are for continuing operations, and previously reported results have
been recast to reflect the Fire Rescue Group as a discontinued
operation following the sale of the Bronto Skylift business in
January 2016. The results of Joe
Johnson Equipment ("JJE") are also included from the time of its
acquisition in June 2016.
Fourth Quarter and Full-Year Results
"Our fourth quarter results helped us deliver solid full-year
earnings towards the higher end of our recent expectations," said
Jennifer L. Sherman, President and
Chief Executive Officer. "Although 2016 was a challenging year for
many industrial companies, with persistent market headwinds, we
responded well and maintained our focus on positioning the Company
for long-term growth. We started the year by selling Bronto and
securing additional financial capacity with the execution of a new
credit facility. We also completed the acquisition and integration
of JJE, which is ahead of our expectations and is executing on
solid growth prospects."
Consolidated fourth quarter operating income was $13.8 million, down from $24.3 million in the fourth quarter of 2015.
Operating income in the current-year quarter includes $0.9 million of expense associated with purchase
accounting effects resulting from the JJE acquisition, $0.2 million of acquisition-related expenses and
$0.1 million of restructuring
charges. Consolidated operating margin, including the
aforementioned items, was 7.8%, compared to 13.0% last year.
Excluding these items, consolidated operating margin for the
quarter was 8.5%, compared to 13.0% last year. The margin decrease
was primarily due to negative operating leverage and changes in
mix, with fewer sales into industrial markets and a higher
percentage of sales of products manufactured by other companies,
which tend to earn a lower margin. Corporate expenses for the
quarter of $5.4 million were down
$1.7 million from the prior-year
quarter.
Consolidated full-year operating income was $57.7 million, down from $103.2 million in the prior year. Consolidated
full-year operating margin, excluding purchase accounting effects,
acquisition-related expenses and restructuring charges of
$3.9 million, $1.4 million and $1.7
million, respectively, was 9.1%, compared to 13.5% in 2015.
The fourth quarter and full-year effective tax rate benefited from
a $2.2 million net release of income
tax valuation allowance. Excluding special tax items, the effective
income tax rate for the year was approximately 34%.
Orders were $165.3 million for the
quarter, down 8% compared to last year. For the full-year, orders
of $674.4 million were down 2%
compared to the prior year. Consolidated backlog was $137 million, down from $149 million at the end of the third quarter.
Healthy Financial Position Supports Growth Initiatives and
Strong Cash Returns to Shareholders
The Company funded dividends of $4.1
million and share repurchases of $4.0
million during the fourth quarter, bringing the totals for
the year to $16.9 million and
$37.8 million, respectively. At
December 31, 2016, there was approximately $31 million remaining under our share repurchase
authorization. The Board of Directors also recently declared a
$0.07 per share dividend that will be
payable in the first quarter of 2017.
"Our balance sheet and liquidity remain extremely strong," said
Sherman. "They support our investment priorities, which include
sales efforts and new products to drive organic growth, strategic
acquisitions and cash returns to shareholders. In that regard, we
doubled our cash returns to our shareholders during 2016, funding
over $54 million of dividends and
share repurchases."
Net cash of $9.6 million was
provided by continuing operating activities in the fourth quarter
of 2016, compared to $30.7 million in
the prior-year quarter. The decrease was a result of lower
operating income and deliberate investments in working capital
during the latest quarter. At December 31, 2016, total
debt exceeded total cash and cash equivalents by $13 million and we had $244 million of availability for borrowings.
Consolidated debt at December 31, 2016 was $64 million, compared to $44 million a year ago, while our cash and cash
equivalents at December 31, 2016 totaled $51 million, compared to $76 million a year ago.
Outlook
"We are excited about our strategic initiatives, which position
us well to benefit as our markets strengthen, and we are cautiously
optimistic about the near-term economic outlook," Sherman
continued. "For the full-year 2017, we expect solid top-line growth
and year-over-year earnings improvement. The first quarter is
likely to be soft as a result of a less favorable backlog and
stronger seasonal effects than a year ago. However, our municipal
markets, which represent about 60% of our revenues, remain stable
overall. In addition, since early December, we have seen a strong
increase in U.S. industrial orders and sales opportunities which
should benefit us beginning in the second quarter. With that, we
expect adjusted earnings per share for the year to be between
$0.70 and $0.78."
CONFERENCE CALL
Federal Signal will host its fourth quarter conference call on
Tuesday, February 28, 2017 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 http://www.federalsignal.com or by dialing
phone number 1-888-230-5944 and entering the pin number 2296045. An
archived replay will be available on Federal Signal's website
shortly after the call.
About Federal Signal
Federal Signal Corporation (NYSE: FSS) provides products and
services to protect people and our planet. 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: http://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:
economic conditions in various regions; product and price
competition; supplier and raw material prices; 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.
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in millions, except per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
$
|
176.1
|
|
|
$
|
186.4
|
|
|
$
|
707.9
|
|
|
$
|
768.0
|
|
Cost of
sales
|
130.7
|
|
|
131.1
|
|
|
524.8
|
|
|
542.4
|
|
Gross
profit
|
45.4
|
|
|
55.3
|
|
|
183.1
|
|
|
225.6
|
|
Selling, engineering,
general and administrative expenses
|
31.3
|
|
|
31.0
|
|
|
122.3
|
|
|
122.0
|
|
Acquisition and
integration-related expenses
|
0.2
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
Restructuring
|
0.1
|
|
|
—
|
|
|
1.7
|
|
|
0.4
|
|
Operating
income
|
13.8
|
|
|
24.3
|
|
|
57.7
|
|
|
103.2
|
|
Interest
expense
|
0.5
|
|
|
0.6
|
|
|
1.9
|
|
|
2.3
|
|
Debt settlement
charges
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
Other (income)
expense, net
|
—
|
|
|
(0.6)
|
|
|
(1.3)
|
|
|
1.0
|
|
Income before income
taxes
|
13.3
|
|
|
24.3
|
|
|
56.8
|
|
|
99.9
|
|
Income tax
expense
|
1.2
|
|
|
6.9
|
|
|
17.4
|
|
|
34.1
|
|
Income from
continuing operations
|
12.1
|
|
|
17.4
|
|
|
39.4
|
|
|
65.8
|
|
Gain (loss) from
discontinued operations and disposal, net of income tax expense of
$0.3, $6.6, $3.4 and $8.3, respectively
|
0.5
|
|
|
(5.9)
|
|
|
4.4
|
|
|
(2.3)
|
|
Net income
|
$
|
12.6
|
|
|
$
|
11.5
|
|
|
$
|
43.8
|
|
|
$
|
63.5
|
|
Basic earnings per
share:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
0.20
|
|
|
$
|
0.28
|
|
|
$
|
0.65
|
|
|
$
|
1.06
|
|
Earnings (loss) from
discontinued operations and disposal, net of tax
|
$
|
0.01
|
|
|
(0.09)
|
|
|
0.07
|
|
|
(0.04)
|
|
Net earnings per
share
|
$
|
0.21
|
|
|
$
|
0.19
|
|
|
$
|
0.72
|
|
|
$
|
1.02
|
|
Diluted earnings per
share:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
0.20
|
|
|
$
|
0.27
|
|
|
$
|
0.64
|
|
|
$
|
1.04
|
|
Earnings (loss) from
discontinued operations and disposal, net of tax
|
0.01
|
|
|
(0.09)
|
|
|
0.07
|
|
|
(0.04)
|
|
Net earnings per
share
|
$
|
0.21
|
|
|
$
|
0.18
|
|
|
$
|
0.71
|
|
|
$
|
1.00
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
59.5
|
|
|
62.0
|
|
|
60.4
|
|
|
62.2
|
|
Diluted
|
60.4
|
|
|
63.3
|
|
|
61.2
|
|
|
63.4
|
|
Cash dividends
declared per common share
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.28
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Operating
margin
|
7.8%
|
|
|
13.0%
|
|
|
8.2%
|
|
|
13.4%
|
|
Total
orders
|
$
|
165.3
|
|
|
$
|
179.3
|
|
|
$
|
674.4
|
|
|
$
|
686.1
|
|
Backlog
|
137.0
|
|
|
171.3
|
|
|
137.0
|
|
|
171.3
|
|
Depreciation and
amortization
|
6.1
|
|
|
3.2
|
|
|
19.1
|
|
|
12.3
|
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
As of December
31,
|
(in millions, except per share data)
|
2016
|
|
2015
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
50.7
|
|
|
$
|
76.0
|
|
Accounts receivable,
net of allowances for doubtful accounts of $0.8 and $0.8,
respectively
|
81.3
|
|
|
73.0
|
|
Inventories
|
120.1
|
|
|
87.2
|
|
Prepaid expenses and
other current assets
|
7.5
|
|
|
15.1
|
|
Current assets of
discontinued operations
|
—
|
|
|
63.8
|
|
Total current
assets
|
259.6
|
|
|
315.1
|
|
Properties and
equipment, net of accumulated depreciation of $101.3 and $100.2,
respectively
|
42.9
|
|
|
45.0
|
|
Rental equipment, net
of accumulated depreciation of $9.7 and $2.6,
respectively
|
80.8
|
|
|
7.9
|
|
Goodwill
|
236.5
|
|
|
231.6
|
|
Intangible assets,
net of accumulated amortization of $0.5 and $0.4,
respectively
|
10.2
|
|
|
0.2
|
|
Deferred tax
assets
|
8.2
|
|
|
20.1
|
|
Deferred charges and
other long-term assets
|
3.9
|
|
|
3.3
|
|
Long-term assets of
discontinued operations
|
1.1
|
|
|
43.3
|
|
Total
assets
|
$
|
643.2
|
|
|
$
|
666.5
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term borrowings and capital lease obligations
|
0.5
|
|
|
0.4
|
|
Accounts
payable
|
35.3
|
|
|
38.0
|
|
Customer
deposits
|
4.5
|
|
|
3.7
|
|
Accrued
liabilities:
|
|
|
|
Compensation and
withholding taxes
|
13.8
|
|
|
18.6
|
|
Other current
liabilities
|
28.7
|
|
|
27.9
|
|
Current liabilities
of discontinued operations
|
2.1
|
|
|
28.6
|
|
Total current
liabilities
|
84.9
|
|
|
117.2
|
|
Long-term borrowings
and capital lease obligations
|
63.5
|
|
|
43.7
|
|
Long-term pension and
other post-retirement benefit liabilities
|
61.1
|
|
|
55.2
|
|
Deferred
gain
|
10.7
|
|
|
12.6
|
|
Other long-term
liabilities
|
26.9
|
|
|
16.9
|
|
Long-term liabilities
of discontinued operations
|
2.0
|
|
|
15.3
|
|
Total
liabilities
|
249.1
|
|
|
260.9
|
|
Stockholders'
equity:
|
|
|
|
Common stock,
$1 par value per share, 90.0 shares authorized,
65.4 and 64.8 shares issued, respectively
|
65.4
|
|
|
64.8
|
|
Capital in excess of
par value
|
200.3
|
|
|
195.6
|
|
Retained
earnings
|
301.8
|
|
|
274.9
|
|
Treasury stock, at
cost, 5.8 million and 2.6 million shares,
respectively
|
(81.4)
|
|
|
(40.9)
|
|
Accumulated other
comprehensive loss
|
(92.0)
|
|
|
(88.8)
|
|
Total stockholders'
equity
|
394.1
|
|
|
405.6
|
|
Total liabilities and
stockholders' equity
|
$
|
643.2
|
|
|
$
|
666.5
|
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
For the Years
Ended
December 31,
|
(in
millions)
|
2016
|
|
2015
|
Operating
activities:
|
|
|
|
Net income
|
$
|
43.8
|
|
|
$
|
63.5
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Net (gain) loss on
discontinued operations and disposal
|
(4.4)
|
|
|
2.3
|
|
Depreciation and
amortization
|
19.1
|
|
|
12.3
|
|
Deferred financing
costs
|
0.6
|
|
|
0.4
|
|
Deferred
gain
|
(1.9)
|
|
|
(1.9)
|
|
Stock-based
compensation expense
|
4.8
|
|
|
6.8
|
|
Excess tax benefit
from stock-based compensation
|
—
|
|
|
(1.6)
|
|
Pension expense, net
of funding
|
(3.7)
|
|
|
(3.8)
|
|
Deferred income
taxes, including change in valuation allowance
|
7.9
|
|
|
25.9
|
|
Changes in operating
assets and liabilities, net of effects of discontinued
operations:
|
|
|
|
Accounts
receivable
|
(8.0)
|
|
|
(0.3)
|
|
Inventories
|
(2.3)
|
|
|
(3.3)
|
|
Rental
equipment
|
(6.9)
|
|
|
—
|
|
Prepaid expenses and
other current assets
|
1.6
|
|
|
1.0
|
|
Accounts
payable
|
(13.9)
|
|
|
(3.1)
|
|
Accrued
liabilities
|
(7.4)
|
|
|
(7.2)
|
|
Income
taxes
|
(4.4)
|
|
|
(1.5)
|
|
Other
|
1.8
|
|
|
1.6
|
|
Net cash provided by
continuing operating activities
|
26.7
|
|
|
91.1
|
|
Net cash (used for)
provided by discontinued operating activities
|
(2.0)
|
|
|
6.1
|
|
Net cash provided by
operating activities
|
24.7
|
|
|
97.2
|
|
Investing
activities:
|
|
|
|
Purchases of
properties and equipment
|
(6.1)
|
|
|
(9.6)
|
|
Payments for
acquisitions, net of cash acquired
|
(102.6)
|
|
|
—
|
|
Proceeds from sale of
properties and equipment
|
0.3
|
|
|
0.1
|
|
Proceeds from escrow
receivable
|
—
|
|
|
4.0
|
|
Cash collected from
(provided to) customer
|
6.0
|
|
|
(6.0)
|
|
Other, net
|
(0.6)
|
|
|
—
|
|
Net cash used for
continuing investing activities
|
(103.0)
|
|
|
(11.5)
|
|
Net cash provided by
(used for) discontinued investing activities
|
86.2
|
|
|
(1.3)
|
|
Net cash used for
investing activities
|
(16.8)
|
|
|
(12.8)
|
|
Financing
activities:
|
|
|
|
Increase in revolving
lines of credit, net
|
64.8
|
|
|
—
|
|
Payments on long-term
borrowings
|
(43.4)
|
|
|
(5.8)
|
|
Payments of debt
financing fees
|
(1.1)
|
|
|
—
|
|
Purchases of treasury
stock
|
(37.8)
|
|
|
(10.6)
|
|
Redemptions of common
stock to satisfy withholding taxes related to stock-based
compensation
|
(2.7)
|
|
|
(3.2)
|
|
Cash dividends paid
to stockholders
|
(16.9)
|
|
|
(15.6)
|
|
Proceeds from stock
compensation activity
|
0.5
|
|
|
1.0
|
|
Excess tax benefit
from stock-based compensation
|
—
|
|
|
1.6
|
|
Other, net
|
(0.5)
|
|
|
(0.4)
|
|
Net cash used for
continuing financing activities
|
(37.1)
|
|
|
(33.0)
|
|
Net cash provided by
discontinued financing activities
|
0.7
|
|
|
—
|
|
Net cash used for
financing activities
|
(36.4)
|
|
|
(33.0)
|
|
Effects of foreign
exchange rate changes on cash and cash equivalents
|
(1.8)
|
|
|
(0.8)
|
|
(Decrease) increase
in cash and cash equivalents
|
(30.3)
|
|
|
50.6
|
|
Cash and cash
equivalents at beginning of year
|
81.0
|
|
|
30.4
|
|
Cash and cash
equivalents at end of year
|
50.7
|
|
|
81.0
|
|
Less: Cash and cash
equivalents of discontinued operations at end of year
|
—
|
|
|
(5.0)
|
|
Cash and cash
equivalents of continuing operations at end of year
|
$
|
50.7
|
|
|
$
|
76.0
|
|
FEDERAL SIGNAL
CORPORATION AND SUBSIDIARIES
|
GROUP
RESULTS
|
|
The following tables
summarize group operating results as of and for the three and
twelve months ended December 31, 2016 and 2015:
|
|
Environmental
Solutions Group
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
($ in
millions)
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
Net sales
|
$
|
121.6
|
|
|
$
|
124.3
|
|
|
$
|
(2.7)
|
|
|
$
|
490.7
|
|
|
$
|
534.1
|
|
|
$
|
(43.4)
|
|
Operating
income
|
10.2
|
|
|
22.3
|
|
|
(12.1)
|
|
|
54.1
|
|
|
96.9
|
|
|
(42.8)
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
8.4%
|
|
|
17.9%
|
|
|
(9.5)%
|
|
|
11.0%
|
|
|
18.1%
|
|
|
(7.1)%
|
|
Total
orders
|
$
|
120.3
|
|
|
$
|
120.2
|
|
|
$
|
0.1
|
|
|
$
|
474.8
|
|
|
$
|
449.2
|
|
|
$
|
25.6
|
|
Backlog
|
116.6
|
|
|
133.4
|
|
|
(16.8)
|
|
|
116.6
|
|
|
133.4
|
|
|
(16.8)
|
|
Depreciation and
amortization
|
4.9
|
|
|
1.8
|
|
|
3.1
|
|
|
14.5
|
|
|
7.3
|
|
|
7.2
|
|
Safety and
Security Systems Group
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
($ in
millions)
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
Net sales
|
$
|
54.5
|
|
|
$
|
62.1
|
|
|
$
|
(7.6)
|
|
|
$
|
217.2
|
|
|
$
|
233.9
|
|
|
$
|
(16.7)
|
|
Operating
income
|
9.0
|
|
|
9.1
|
|
|
(0.1)
|
|
|
27.0
|
|
|
32.3
|
|
|
(5.3)
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
16.5%
|
|
|
14.7%
|
|
|
1.8%
|
|
|
12.4%
|
|
|
13.8%
|
|
|
(1.4)%
|
|
Total
orders
|
$
|
45.0
|
|
|
$
|
59.1
|
|
|
$
|
(14.1)
|
|
|
$
|
199.6
|
|
|
$
|
236.9
|
|
|
$
|
(37.3)
|
|
Backlog
|
20.4
|
|
|
37.9
|
|
|
(17.5)
|
|
|
20.4
|
|
|
37.9
|
|
|
(17.5)
|
|
Depreciation and
amortization
|
1.1
|
|
|
1.3
|
|
|
(0.2)
|
|
|
4.4
|
|
|
4.8
|
|
|
(0.4)
|
|
Corporate Expenses
Corporate operating expenses were $5.4
million and $7.1 million for
the three months ended December 31, 2016 and 2015,
respectively.
Corporate operating expenses were $23.4
million and $26.0 million for
the years ended December 31, 2016 and 2015, respectively. The
year-over-year decrease of $2.6
million was primarily due to lower employee incentive and
stock compensation costs, partially offset by a $0.9 million increase in professional service and
legal fees incurred in connection with acquisition and
integration-related activity.
SEC REGULATION G NON-GAAP RECONCILIATION
The financial measures presented below are unaudited and are not
in accordance with U.S. generally accepted accounting principles
("GAAP"). The non-GAAP financial information presented herein
should be considered supplemental to, and not a substitute for, or
superior to, financial measures calculated in accordance with
GAAP. The Company has provided this supplemental information
to investors, analysts, and other interested parties to enable them
to perform additional analyses of operating results, to illustrate
the results of operations giving effect to the non-GAAP adjustments
shown in the reconciliations below, and to provide an additional
measure of performance which management considers in operating the
business.
Adjusted net income and earnings per share from continuing
operations ("EPS"):
The Company believes that modifying its 2016 and 2015 net income
and diluted EPS provides additional measures which are
representative of the Company's underlying performance and improve
the comparability of results between reporting periods. During the
three and twelve months ended December 31, 2016 and 2015,
adjustments were made to reported GAAP net income and diluted EPS
to exclude the impact of restructuring activity, acquisition and
integration-related expenses, purchase accounting effects and debt
settlement charges, where applicable. In addition, during the three
and twelve months ended December 31, 2016 and 2015,
adjustments were made to reported GAAP income tax expense to
exclude certain special tax items.
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in
millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Income from
continuing operations
|
$
|
12.1
|
|
|
$
|
17.4
|
|
|
$
|
39.4
|
|
|
$
|
65.8
|
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
1.2
|
|
|
6.9
|
|
|
17.4
|
|
|
34.1
|
|
Income before income
taxes
|
13.3
|
|
|
24.3
|
|
|
56.8
|
|
|
99.9
|
|
Add:
|
|
|
|
|
|
|
|
Restructuring
|
0.1
|
|
|
—
|
|
|
1.7
|
|
|
0.4
|
|
Acquisition and
integration-related expenses
|
0.2
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
Purchase accounting
effects (a)
|
0.9
|
|
|
—
|
|
|
3.9
|
|
|
—
|
|
Debt settlement
charges
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
Adjusted income
before income taxes
|
$
|
14.5
|
|
|
$
|
24.3
|
|
|
$
|
64.1
|
|
|
$
|
100.3
|
|
Adjusted income tax
expense (b) (c)
|
(4.8)
|
|
|
(8.3)
|
|
|
(22.1)
|
|
|
(35.6)
|
|
Adjusted net income
from continuing operations
|
$
|
9.7
|
|
|
$
|
16.0
|
|
|
$
|
42.0
|
|
|
$
|
64.7
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(dollars per
diluted share)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
EPS, as
reported
|
$
|
0.20
|
|
|
$
|
0.27
|
|
|
$
|
0.64
|
|
|
$
|
1.04
|
|
Add:
|
|
|
|
|
|
|
|
Income tax
expense
|
0.02
|
|
|
0.11
|
|
|
0.29
|
|
|
0.54
|
|
Income before income
taxes
|
0.22
|
|
|
0.38
|
|
|
0.93
|
|
|
1.58
|
|
Add:
|
|
|
|
|
|
|
|
Restructuring
|
0.00
|
|
|
—
|
|
|
0.03
|
|
|
0.00
|
|
Acquisition and
integration-related expenses
|
0.00
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Purchase accounting
effects (a)
|
0.02
|
|
|
—
|
|
|
0.06
|
|
|
—
|
|
Debt settlement
charges
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Adjusted income
before income taxes
|
$
|
0.24
|
|
|
$
|
0.38
|
|
|
$
|
1.05
|
|
|
$
|
1.58
|
|
Adjusted income tax
expense (b) (c)
|
(0.08)
|
|
|
(0.13)
|
|
|
(0.36)
|
|
|
(0.56)
|
|
Adjusted
EPS
|
$
|
0.16
|
|
|
$
|
0.25
|
|
|
$
|
0.69
|
|
|
$
|
1.02
|
|
|
|
(a)
|
Purchase accounting
effects relate to adjustments to exclude the step-up in the
valuation of acquired JJE equipment that was sold subsequent to the
acquisition in the three and twelve months ended December 31,
2016, as well as to exclude the depreciation of the step-up in the
valuation of the rental fleet
acquired.
|
|
|
(b)
|
Adjusted income tax
expense for the three and twelve months ended December 31,
2016 excludes a $2.2 million net benefit resulting from changes in
deferred tax valuation allowances in Canada and the U.K. Adjusted
income tax expense for the three and twelve months ended
December 31, 2016 also excludes the tax effects of
restructuring activity, acquisition and integration-related
expenses, purchase accounting effects and debt settlement charges,
where applicable.
|
|
|
(c)
|
Adjusted income tax
expense for the three and twelve months ended December 31,
2015 excludes a $1.4 million net benefit from special tax items,
comprising of a $4.2 million net tax benefit associated with tax
planning strategies, offset by a $2.4 million adjustment of
deferred tax assets and $0.4 million of expense associated with a
change in the enacted tax rate in the U.K. Adjusted income tax
expense for the twelve months ended December 31, 2015 also
excludes the tax effects of restructuring activity.
|
Total debt to adjusted EBITDA ratio:
The Company uses the ratio of total debt to adjusted EBITDA as
one measure of its long-term financial stability. The ratio of debt
to adjusted EBITDA is a non-GAAP measure that represents total debt
divided by the trailing 12-month total of income from continuing
operations before interest expense, debt settlement charges,
acquisition and integration-related expenses, restructuring
charges, purchase accounting effects, other (income) expense,
income tax expense, and depreciation and amortization expense. In
calculating the ratio, the Company believes that adjusted EBITDA is
representative of the Company's underlying performance and further
improves the comparability of results between reporting periods.
The Company uses the ratio to calibrate the magnitude of its debt
and its debt capacity against adjusted EBITDA, which is used as an
operating performance measure. We believe that investors use a
version of this ratio in a similar manner. In addition, financial
institutions (including the Company's lenders) use the ratio in
connection with debt agreements to set pricing and covenant
limitations. For these reasons, the Company believes that the ratio
is a meaningful metric to investors in evaluating the Company's
long-term financial performance and stability. Other companies may
use different methods to calculate total debt to EBITDA. The
following table summarizes the Company's ratio of total debt to
adjusted EBITDA and reconciles income from continuing operations to
adjusted EBITDA as of and for the trailing 12-month periods ended
December 31, 2016 and 2015:
|
Trailing
Twelve
Months Ending
December 31,
|
($ in
millions)
|
2016
|
|
2015
|
Total debt
|
$
|
64.0
|
|
|
$
|
44.1
|
|
|
|
|
|
Income from
continuing operations
|
$
|
39.4
|
|
|
$
|
65.8
|
|
Add:
|
|
|
|
Interest
expense
|
1.9
|
|
|
2.3
|
|
Debt settlement
charges
|
0.3
|
|
|
—
|
|
Acquisition and
integration-related expenses
|
1.4
|
|
|
—
|
|
Restructuring
|
1.7
|
|
|
0.4
|
|
Purchase accounting
effects
|
3.9
|
|
|
—
|
|
Other (income)
expense, net
|
(1.3)
|
|
|
1.0
|
|
Income tax
expense
|
17.4
|
|
|
34.1
|
|
Depreciation and
amortization
|
19.1
|
|
|
12.3
|
|
Adjusted
EBITDA
|
$
|
83.8
|
|
|
$
|
115.9
|
|
|
|
|
|
Total debt to
adjusted EBITDA ratio
|
0.8
|
|
|
0.4
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/federal-signal-reports-fourth-quarter-earnings-300414555.html
SOURCE Federal Signal Corporation