Federal Signal Q3 2014 Earnings Call November 5, 2014 Dennis Martin, President & Chief Executive Officer Brian Cooper, SVP, Chief Financial Officer Jennifer Sherman, Chief Operating Officer Safe Harbor This presentation contains unaudited financial information and various forward-looking statements as of the date hereof and we undertake no obligation to update these forwardlooking statements regardless of new developments or otherwise. Statements in this presentation 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. This presentation also contains references to certain non-GAAP financial information. Such items are reconciled herein and in our earnings news release provided as of the date of this presentation. 2 Q3 Highlights * • Net sales of $219 M, up 5% • Operating income of $25 M, up 32% • Operating margin of 11.4%, up from 9.0% • Interest expense of $0.9 M, down from $1.5 M • Adjusted EPS of $0.24, up 33% from $0.18 • Orders of $225 M, up 14%; backlog of $353 M * Comparisons versus Q3 of 2013 3 Group and Corporate Results $ millions, except % ESG SSG FRG Orders Sales Operating income Q3 2014 140.1 134.1 21.5 Q3 2013 % Chg 112.2 113.1 12.1 25% 19% 78% Operating margin 16.0% 10.7% Orders Sales Operating income 62.4 59.7 9.4 56.7 57.6 7.0 Operating margin 15.7% 12.2% Orders Sales Operating income (loss) 22.3 25.5 (0.2) 28.2 38.6 3.3 Operating margin -0.8% 8.5% 5.8 3.6 61% 224.8 219.3 24.9 197.1 209.3 18.8 14% 5% 32% Corporate expenses Consolidated Orders Sales Operating income Operating margin 11.4% 10% 4% 34% -21% -34% NM 9.0% 4 Income from Continuing Operations $ millions, except % and per share Net sales Gross profit SEG&A expenses Restructuring Operating income Interest expense Other expense, net Income tax expense Income from continuing operations Diluted earnings per share from continuing operations Q3 2014 Q3 2013 Change % Chg 219.3 58.4 209.3 50.5 10.0 7.9 5% 16% 33.4 0.1 24.9 31.7 18.8 1.7 0.1 6.1 5% NM 32% 0.9 0.3 8.5 1.5 0.5 (0.6) 0.3 8.0 -40% NM 15.2 16.8 (1.6) -10% $0.24 $0.26 ($0.02) 5 Adjusted Earnings per Share ($ in millions) Income from continuing operations Add (less): Income tax expense (benefit) Income before income taxes Add (less): Restructuring Debt settlement charges Adjusted income before income taxes Adjusted income tax expense (1) Three Months Nine Months Ended September 30, Ended September 30, 2014 2013 2014 2013 $ 15.2 $ 16.8 $ 39.8 $ 133.5 8.5 23.7 0.5 17.3 18.4 58.2 (100.7) 32.8 0.1 23.8 (8.5) 17.3 (5.6) 58.2 (18.3) (0.6) 8.7 40.9 (13.2) Adjusted net income from continuing operations $ 15.3 $ 11.7 $ 39.9 $ 27.7 EPS from continuing operations (diluted) $ 0.24 $ 0.26 $ 0.62 $ 2.12 Adjusted EPS from continuing operations (diluted) $ 0.24 $ 0.18 $ 0.62 $ 0.44 (1) Adjusted income tax expense for the three and nine months ended September 30, 2013 w as computed by applying the Company's normalized effective tax rate of approximately 32% for 2013, excluding the impacts of the valuation allow ance release and other special tax items during the year ended December 31, 2013. Adjusted income tax expense for the three and nine months ended September 30, 2014 w as recomputed after excluding the impact of restructuring activity. 6 Balance Sheet and Cash Flow * • Q3 Cash flow from continuing operations was $20.9 M  Year to date cash flow from operations of $44.6 M, up 20% • Total debt at 9/30/14 was $68.6 M  Down $23.5 M since 12/31/13  Net debt of $40 M at 9/30/14 • Debt to adjusted EBITDA declined to 0.7x  Compared to 1.1x on 12/31/13 and 1.7x a year ago • Used $1.9 M for dividends, $3.4 M for share repurchases  YTD dividends and share repurchases of $3.8 M and $6.7 M, respectively • Announced additional $75 M share repurchase authorization  Aggregate authorization of $83.3 M equates to ~ 9.4% of market capitalization * As of or for the period ending 9/30/2014 7 Estimated Global Sales Sales of domestic subsidiaries within U.S (in US $) Sales of domestic subsidiaries outside of U.S (in US $)* Sales of non-U.S. subsidiaries outside of U.S (in local currency) ** Sales of non-U.S. subsidiaries to U.S (in US $) 1% 20% 15% 64% * Sales from the U.S. are predominantly denominated in U.S. dollars. ** Sales from and within other currency zones are predominantly in the source-location currencies. 8 CEO Remarks 950 Trailing-Twelve Month Orders by Quarter $ millions 900 850 800 750 Q1 TTM 2013 Q2 TTM 2013 Q3 TTM 2013 Q4 TTM 2013 Q1 TTM 2014 Q2 TTM 2014 Q3 TTM 2014 10.0% Consolidated Operating Margin 9.5% 9.0% 8.3% 8.0% 7.0% 6.4% 6.0% 5.0% 4.8% 4.0% 2011 2012 2013 TTM Q3 2014 9 Internal Growth Investments Vactor expansion Guzzler new product development of vane pump offload system as option suited for a variety of oil and gas applications Global industrial solutions introduced new StreamLine® Modular Series, engineered to support multifunction signaling applications FS Solutions Center Williston, North Dakota 10 Initiatives and Goals • Ongoing Initiatives:     Create disciplined growth Leverage invested capital Diversify customer base Improve manufacturing efficiencies and costs • Long-Range Goals:     Grow revenue faster than GNP, increasing industrial share Continually improve ROIC Achieve consolidated operating margin of 12% Grow EPS at rate in low to mid teens 11 Outlook 2013 2014 Normalized EPS of $0.67 Adjusted for: • 32% tax rate (valuation allowance) • restructuring charges • debt settlement charges EPS target range of $0.87 to $0.91 • • • • Continued momentum FRG/Bronto recovery Backlog provides visibility Raised from a range of $0.83 to $0.87 12 Federal Signal Q3 2014 Earnings Call November 5, 2014 Q&A Dennis Martin, President & Chief Executive Officer Brian Cooper, SVP, Chief Financial Officer Jennifer Sherman, SVP, Chief Operating Officer