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Disciplined Growth
Investor Presentation March 2017
Safe Harbor Statement
2
This presentation contains unaudited financial information and forward-looking statements. Statements that are not historical are forward-looking statements and may
contain words such as “may”, “will” ,“believe”, “expect”, “anticipate”, “intend”, “plan”, “project”, “estimate”, and “objective” or similar terminology, concerning the company’s
future financial performance, business strategy, plans, goals and objectives. These expressions are intended to identify forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning the Company’s possible or assumed future performance or
results of operations and are not guarantees. While these statements are based on assumptions and judgments that management has made in light of industry experience as
well as perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances, they are
subject to risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different. Such risks and
uncertainties include, but are not limited to, economic conditions, 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 under Item 1A, Risk Factors, in the Company’s Annual Report on Form 10-K and in other filings with the
Securities and Exchange Commission. Such forward-looking statements are made as of the date hereof and we
undertake no obligation to update these forward-looking statements
regardless of new developments or otherwise.
This presentation also contains certain measures that 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, and to provide an additional measure of performance
which management considers in operating the business.
A reconciliation of these items to the most comparable
GAAP measures is provided in our filings with the SEC
and in the Appendix to this presentation.
About Federal Signal
• Founded in 1901, joined NYSE in 1969
(“FSS”)
• Diversified industrial manufacturer of
specialized environmental cleaning
vehicles such as street sweepers, sewer
cleaners and hydroexcavators; as well as
safety and security products including
audible and visual warning devices
• Headquartered in Oak Brook, Illinois with
10 manufacturing facilities worldwide
• Leading brands of premium,
value-adding products and systems
3
An Experienced Leadership Team
4
Brian Cooper
Chief Financial Officer
Appointed May, 2013
Previously served as Chief Financial Officer of
Westell Technologies, Inc. from 2009-2013
Previously with Fellowes, Inc. (CFO), United
Stationers, Borg-Warner Security and Amoco
Jennifer Sherman
President and Chief Executive Officer
Appointed January, 2016
Previously Chief Operating Officer, Chief
Administrative Officer, Secretary and General
Counsel, with operating responsibilities for the
Company’s Safety and Security Systems Group
Joined Federal Signal in 1994 as Corporate Counsel
Ian Hudson
Vice President, Corporate Controller
Appointed August, 2013
Previously served as Director of Accounting – Latin
America and Asia Pacific at Groupon, Inc.
13+ years public accounting experience with Ernst &
Young, LLP
Svetlana Vinokur
Vice President, Treasurer and Corporate
Development
Appointed April, 2015
Previously served as Assistant Treasurer for Illinois
Tool Works Inc., Finance Head of M&A Strategy at
Mead Johnson Nutrition Company, and senior
associate for Robert W. Baird & Company’s
Consumer and Industrial Investment Banking group
Positioned for Long-Term Growth
Two platforms poised for profitable growth
Attractive mix of municipal and industrial end markets
Revitalized new product development initiative
Active M&A pipeline
Strong balance sheet and cash flow
Ongoing focus on continuous improvement utilizing “80/20” principles
2010 - 2015 2016 2017 and beyond
• Introduced 80/20 and continuous
improvement focus
• Started portfolio realignment with
the divestiture of FSTech Group
• Executed successful turnaround
• Implemented planned CEO transition
• Completed portfolio realignment with
the divestiture of Fire Rescue Group
• Completed two strategic acquisitions –
JJE and Westech
• Strategic debt refinancing
• Poised for sustained long-term
growth
• Delivering on strategic initiatives
• Active M&A process
• Targeting 12% long-term
consolidated operating margin
5
Serves the needs of
municipalities and industrial
verticals for audible and
visual safety and security
notification devices and
systems
Two Attractive Platforms
6
Environmental Solutions Group
(ESG)
Safety and Security Systems Group
(SSG)
$491 M
$217 M
Serves municipal, industrial,
and utility markets for
surface and
sub-surface cleaning,
safe-digging and
infrastructure maintenance
Environmental Solutions Group (ESG)
7
During 2016 we expanded our product portfolio to offer customers a comprehensive solution
of new and used equipment, parts & service and rental offerings
Markets Served Rental/Aftermarket Distribution
Brands
End Markets
and Channels
Aggregate addressable market estimated to be over $2 B; most businesses hold #1 or #2 position
Street
sweeping
Municipal
Dealer
Sewer
cleaning
Municipal
Dealer
Safe
digging
Industrial
Utility
Oil & Gas
Direct / Dealer
Industrial
cleaning
Industrial
Direct
Municipal
Dealer
Application
Municipal
Dealer
Industrial
Utility
Oil & Gas
Direct
Products
Provide parts / service / refurbishment
/ rental offering through the network
of 24 locations in US and Canada
Largest Canadian
distributor of
maintenance
equipment to
municipalities
ESG products
Other OEM’s products
such as snow
equipment and
garbage trucks
ESG: Market Influencers and Where We Play
8
Municipal/Government
Industrial Cleaning
Construction & Industrial
Utility
Oil and Gas
Other (Rental)
2016 End Markets by Users1
75%
25%
2016 Sales by Geography
U.S.
Non-U.S.
Economic recovery supports state and local
funding for sweepers and sewer cleaners
Funding for sewer cleaners through
water tax revenues adds further stability
Recovering oil & gas markets expected to
benefit hydro-excavation and industrial
cleaning business
Aging infrastructure, pipeline expansion, and
increasing urbanization support long-term
demand for safe digging products
Near-term upsides from prospective
infrastructure spending
Market Dynamics
Source: Management Estimates
1) 2014-15 contribution from oil & gas was significantly higher, estimated at ~10%
Safety and Security Systems Group (SSG)
9
Serves the needs of government and industrial verticals for audible and
visual safety and security notification devices
Public Safety and Security Signaling Systems
Brands
Lights and siren products for Police, Fire and
Heavy Duty (HD) end-markets
Audible and visual
signaling devices
Municipal
Distributor
Industrial
Oil & Gas
Commercial
Heavy Industry
Manufacturing
Indirect
Outdoor Warning
Public Address General Alarming (PAGA)
Security Systems
Municipal
Oil & Gas
Commercial
Direct
Application
End Markets
and Channels
Products
* Management estimates
Addressable
Market *
$1.0 B $600 M $1.8 B
SSG: Market Influencers and Where We Play
10
65%
35%
2016 Sales by Geography
U.S.
Non-U.S.
Municipal/Government
Industrial Cleaning
Construction & Industrial
Utility
Oil and Gas
Other
2016 End Markets by Users
Increased national focus on issues of public
safety and law enforcement, and rising
public expectations for transparency and
accountability driving demand for safety and
security products
Recovery in oil & gas will benefit signaling
products and systems applications for
hazardous areas
Rising occurrence of natural and man-made
disasters
Shift in customer preference towards inter-
connected platforms expected to drive
demand for security systems integration
Market Dynamics
Source: Management Estimates
1) 2014-15 contribution from oil & gas was higher, estimated at ~20%
Federal Signal Strategic Focus
11
Optimize Existing
End-Markets
Invest to grow revenue
faster than GDP
Continue to improve
manufacturing efficiencies
and costs
Leverage our existing
plants and invested capital
Grow in New
End-Markets
Innovate to develop new product
applications for adjacent end-
markets
Build new sources of profitability,
including service, recurring and
after-market revenue streams
Targeting North American utility
and global signaling markets
Execute on
Acquisition Objectives
Complete previously
announced goal of adding
$250 M in revenues through
strategic acquisitions by end of
2018 (~50% complete)
Successfully integrate acquired
businesses
Deliver on strategic objectives
for recent acquisitions
ESG Strategic Initiatives
12
Maintain or achieve leading market
position in all product categories for
North American governmental
market
Refocus on dealer development
Renewed focus on product
development
Increase equipment sales in North
American non-governmental
markets
Utility market initiative
Geographic expansion in Canada
Become a provider of choice for all
customer needs
New rental offering
Used equipment
Parts and service
SSG Strategic Initiatives
13
Defend and expand leading market
share positions in police, signaling
and outdoor warning markets
New products and portfolio
optimization
Grow into heavy duty and fire
adjacencies
“Go to Market” initiatives
Capture higher share of municipal
spending by police departments
Selective expansion into upfitting
Body worn video solutions
Grow security business through
sequential regional roll-out
Chicago focus with subsequent
expansion into select major cities
2016-2020 CAGR ≥ 9%
Our 2020 Revenue Goal
14
$1.0 B+
$708 M
Key Drivers
• Full-year impact of 2016 completed acquisitions
• Modest recovery in our end markets
• GDP growth
• Strategic initiatives that drive growth above
GDP growth rates
• Additional acquisitions, including completion of
our existing $250 M revenue goal by 2018
2016 2020 Goal
Priority Driven Capital Allocation
15
Organic projects leverage existing assets, generally require limited cash
investment
Innovation R&D efforts target new and updated products
Generally, already funded within operating results, cash flow and normal capital
expenditures
Reinvest in the
Business
Opportunistic share buybacks as a return of cash to our shareholders
Spent $37.8 M in 2016 (average price of $12.75/share) vs. $10.6 M in 2015
Remaining repurchase authorization is $31 M
Share
Repurchase
Dividend Policy
Provide a competitive dividend yield while funding business growth
At $0.07 per share, dividend yield is ~2%
Paid dividends of $16.9 M in 2016 compared to $15.6 M in 2015
Acquisitions
Desire to add $250 M from acquisitions to our revenue run-rate by end of 2018
Focused primarily on acquisitions that fit closely within our existing products and
services, manufacturing competencies, channels and customers
1
2
3
4
Capex
12%
Acquisitions
45%
Dividends
17%
Share
Repurchase
26%
Cash Deployment
(2014-16)1
1) Chart depicts use of cash for each category, relative
to the total cash used on all four activities, for the
cumulative period 2014-16; excludes investment in
rental fleet, which are reported as part of operating
cash flows
Renewed Focus on Product Development
16
1
Kicked off innovation refocus in late 2013
Re-allocated engineering resources toward innovation
Implemented innovation development processes and project management –
several projects underway that have originated from
customer & market-based needs assessment
Created first ESG Innovation Project Team in 2014
Successful launch of the ParaDIGm vacuum excavator
Most successful new product launch in over a decade
Initial market demand exceeding expectations
Announced a Winner of 2016 Chicago Innovation Awards
Spending will vary year-to-year with project staging
R&D spend is focused on product line extensions, cost optimization, product portfolio redesign
and other current business model demands
Sample of New Product Development Initiatives
Environmental Solutions Group
(ESG)
Safety and Security Systems Group
(SSG)New Markets
Optimize
Existing
Markets
• ParaDIGm
• Water recycler
• Vehicle-based monitoring and
reporting solutions
• Trailer-mounted jetter
• Improved air sweeper offerings
• Global Series signaling devices
• Body-worn video solutions
1
• Smart warning systems capitalizing on
IoT technologies
• Re-architected signaling products to
enhance production and performance
17
• Niche market leader (product, geography, end-market)
• Sustainable competitive advantage
• Deep domain expertise (technology, application, manufacturing)
• Strong management team
• Leverages FSC’s distribution and manufacturing capabilities
• Solid growth potential
• Through-the-cycle margins comparable to or higher than FSC’s target operating margins
• Ideally, identifiable synergies and recurring revenue opportunities
• Return on capital greater than our cost of capital, appropriately adjusted for risk
M&A Target Evaluation
Target companies that accelerate Federal Signal current strategic initiatives or provide a platform for
growth in adjacent markets or new geographies
B
us
in
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Fi
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ar
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18
2
* Estimated % of JJE 2015 revenues based on unaudited
financial statements prepared in accordance with ASPE.
Completed Acquisition
Acquired valuable expertise in rentals, used
equipment, parts and service
Platform for industrial sales into Canada
Significantly expands our footprint from 13 to
21 service centers throughout North America
Strong management team
Integration largely complete
Performing in line with expectations
19
2
Joe Johnson Equipment (“JJE”) –
Platform for Industrial and Geographic Growth
Returning Value to Shareholders
20
Cash Returns to Stockholders Declining Debt and Leverage
…while maintaining a strong Balance Sheet
43
5.9x
2.9x
1.3x
0.5x 0.4x
0.8x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
2011 2012 2013 2014 2015 2016
To
ta
l D
eb
t
/
A
dj
us
te
d
EB
IT
D
A
0.0
10.3 10.6
37.8
5.6
15.6
16.9
0
10
20
30
40
50
60
2013 2014 2015 2016
$
in
m
ill
io
ns
Share Repurchases Dividends
2016: In Review
Steady progress over last 5 years via:
80/20 implementation
Pricing improvements
Efficiencies from leveraging volume
2016 Business Highlights
Public Safety Systems continued to profitably
gain market share
Elgin sweeper business posted second highest
year ever, in terms of profitability
Continued stability in municipal demand for
other Federal Signal products
Weakness in incoming industrial orders due to
downswing in end markets related to oil & gas
Negative impact on margins from volume de-
leverage
21
Targeting 12% Company Operating Margin
Revenue
428 474
537 534 491
240 239
243 234 217
668 713
779 768
708
2012 2013 2014 2015 2016
$
in
m
ill
io
ns
ESG SSG
6.6%
8.7%
11.4%
13.5%
9.1%
2012 2013 2014 2015 2016
A
dj
us
te
d
O
pe
ra
ti
ng
M
ar
gi
n
%
2017 Outlook
22
+ Stable municipal demand
+ Improving recent order patterns and sales funnels, with
benefits beginning in Q2
+ Full year of Paradigm sales into utility and construction
end-markets
+ Full year impact from 2016 acquisitions
Adjustments to include items related to acquisitions
Depreciation to increase by ~$8 M to $10 M
– Reflects full year of JJE and depreciation of rental fleet
Nominal increases in capital expenditures vs. 2016
(excluding investment in rental fleet)
Income tax rate of ~34%
Adjusted EPS ranging from $0.70 to $0.78
– Uncertain oil & gas markets, which impacts our hydro-
excavation products and signaling business
– Continued strength of US dollar benefiting foreign
competitors and reducing value of overseas earnings
– Entered 2017 with reduced backlog carrying lower gross
margin
Key Assumptions
Tailwinds Headwinds
Additional SEG&A expenses, including R&D, in support of long-
term strategic initiatives. Net reduction of ~$0.02 to $0.03
reflected in 2017 Adjusted EPS outlook
Interest expense reflects no significant change in current debt
levels
Soft Q1 EPS expected at ~14-16% of annual EPS
Positioned for Long-Term Growth
Two platforms poised for profitable growth
Attractive mix of municipal and industrial end markets
Revitalized new product development initiative
Active M&A pipeline
Strong balance sheet and cash flow
• Achieve at least $1.0 B of revenue by 2020
• Deliver on strategic initiatives
• Maintain active M&A initiative
23
2017 and Beyond
Appendix
24
I. Company Products (Pictured)
II. Total Debt to Adjusted EBITDA
III. Adjusted Operating Margin
IV. Estimated Global Sales
V. Investor Information
Appendix I: Environmental Solutions Group
25
Appendix I: Safety and Security Systems Group
26
Appendix I: Integrated Systems Division
27
Enterprise Integrated Command Solution
Sensors/Detectors
Control Modules/Nodes
Public Address
Cameras
Intercoms
Visual Signals
Telephony
Audible Devices Outdoor Warning
Sensors/Detectors
SmartMsg
Enabled Systems
Control Modules/Nodes
Control Modules/Nodes
Networked PAGASYS Rack
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. 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 twelve month periods ended:
($ in millions) 2011 2012 2013 2014 2015 2016
Total Debt 217.4$ 157.8$ 92.1$ 50.2$ 44.1$ 64.0$
Income from continuing operations 8.1 15.5 152.5 59.7 65.8 39.4
Add:
Interest expense 16.2 21.3 8.9 3.6 2.3 1.9
Debt settlement charges - 3.5 8.7 - - 0.3
Acquisition and integration related expenses - - - - - 1.4
Restructuring - 1.4 0.7 - 0.4 1.7
Purchase accounting effects - - - - - 3.9
Other (income) expense, net - 0.9 0.1 1.7 1.0 (1.3)
Income tax expense 2.0 1.4 (108.6) 23.7 34.1 17.4
Depreciation and amortization 10.5 10.6 11.0 11.5 12.3 19.1
Adjusted EBITDA 36.8$ 54.6$ 73.3$ 100.2$ 115.9$ 83.8$
Total debt to adjusted EBITDA ratio 5.9 2.9 1.3 0.5 0.4 0.8
Appendix II: Total Debt to Adjusted EBITDA
28
The Company references adjusted operating margin in these materials. Adjusted operating margin is a non-GAAP measure that represents total consolidated operating income (as reported) plus acquisition and integration related
expenses, restructuring charges and purchase accounting effects and divides the sum by total sales, as reported. The Company believes that adjusted operating margin is representative of the Company’s underlying performance and
improves the comparability of operating results between reporting periods. The following table summarizes the Company’s adjusted operating margin, and reconciles the amounts to the most applicable GAAP measure in the of the five
years in the period ended December 31, 2016:
($ in millions) 2012 2013 2014 2015 2016
Total Sales, as reported 668.1$ 712.9$ 779.1$ 768.0$ 707.9$
Operating income, as reported 42.6 61.6 88.7 103.2 57.7
Add:
Acquisition and integration related expenses - - - - 1.4
Restructuring 1.4 0.7 - 0.4 1.7
Purchase accounting effects - - - - 3.9
Adjusted Operating Income 44.0$ 62.3$ 88.7$ 103.6$ 64.7$
Operating Margin, as reported 6.4% 8.6% 11.4% 13.4% 8.2%
Adjusted Operating Margin 6.6% 8.7% 11.4% 13.5% 9.1%
Appendix III: Adjusted Operating Margin
29
72%
12%
16%
Sales by domestic subsidiaries within U.S.
Sales by domestic subsidiaries outside of U.S. *
Sales by non-U.S. subsidiaries outside of U.S. **
Sales allocations for period ending December 31, 2016
* 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.
Appendix IV: Estimated Global Sales (in $US)
30
31
Stock Ticker NYSE: FSS
Website www.federalsignal.com/investors
Headquarters 1415 W. 22nd Street, Suite 1100
Oak Brook, IL 60523
Investor Relations Contacts:
Telephone: 630-954-2000
Brian Cooper BCooper@federalsignal.com
SVP, Chief Financial Officer
Svetlana Vinokur SVinokur@federalsignal.com
VP, Treasurer and
Corporate Development
Appendix V: Investor Information
