Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the Federal Signal Corporation First Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I'd now like to turn the conference over to Ian Hudson, Chief Financial Officer. Please go ahead.

Ian Hudson

Good morning, and welcome to Federal Signal's first quarter 2023 conference call. Company's Officer. the Hudson, Ian Chief Financial I'm Also Sherman, Officer. our on the is Jennifer call today President with me and Chief Executive

will federalsignal.com, which into presentation to some followed and online The refer signing as to be the We as our Investor going well icon website, slides slides can the on issued the we today release, webcast. by this clicking morning. earnings to Call

our the website. the posted presentation the Investor slide tab under on We have also earnings and release

Before like today some contain language website. our subject documents I'd with news we our forward-looking of Securities filings Safe Signal's today's the the are These that are being, release and you available remind to Federal Commission. and that comments on Harbor may made in to in found statements Exchange

contains some earnings In principles. that non-GAAP measures measures. measures accepted in to we these are our generally US accordance reconcile presentation GAAP Our also with accounting release filings, and not

later In addition, we today. will file our Form XX-Q

begin and some perspective on going the and Jennifer your prepared the her provide am year. results remainder detail to the call performance, address Jennifer over After by market turning for quarter first to comments, out our conditions before I I of our will to on today outlook questions. our providing

expansion, double-digit quarter net orders and consolidated Our with results growth, XXX first sales records margin in release. we point today's the and and basis adjusted earnings for EBITDA In margin year-over-year provided summary, gross quarter in a financial backlog. improvement results new are financial delivered in earnings strong

year. or $XX.X $XX last for Consolidated Organic million XX% quarter the quarter or income last the were XX%. to compared million sales for quarter was million, year. the $XXX $XX sales was to XX% up net million $XX up or million, Consolidated growth operating for compared

adjusted year. for XX.X% for this $X.XX year. XX.X% from $X.XX to up quarter or quarter EPS $X.XX from a million adjusted $X.XX XX% basis, translates up last was Consolidated share, EPS $XX.X That year, quarter of was for in year. GAAP share, million, On or was up up last QX per last XX% or share the per the $XX.X from XX% the to share EBITDA compared margin per an last year. per

last Intake was again previous QX in year surpassing in high, outstanding Order $XXX quarter of orders the record total QX were for orders, we we year. reported increase and million, which of In the company $XX was an to last another year. million the set this QX $XXX the increase quarter year. million, Backlog end or or and $XXX an XX% million X% the for high compared of last compared to at all-time QX

$XX.X terms was higher net XX% adjusted chassis of XX% of EBITDA or for was XX.X%, for quarter represented to group $XXX operating adjusted last of compared points approximately year, million points. for XXX the income $XX.X headwind XX million, revenues, $XX.X an million to year-over-year to of which $XX year. basis quarter year. compared million translates despite or ESG's for the That up quarter our the up sales $XX.X million, ESG's XX% margin an last compared the of to or EBITDA to improvement a basis results, million year. were last last quarter In ESG's compared

quarter points $X.X range EBITDA million last translates year. $XX.X quarter or XX% up upper SSG's compared income of XX.X% up to or million was million compared target reported for million or quarter ESG total $XXX XXX compared towards the of year. an X% to orders sales this or SSG's the $XX.X last the year. year. were was million, $X SSG's adjusted of net for for million million, improvement That the $XX to $X.X in basis an last quarter SSG's new adjusted XX% last QX of million the end year, for to from to margin operating up XX%. and $XX EBITDA up

customer Mexico. expenses SSG's year changes the were adjustments safety from of order orders $XX $XX.X much for the the for quarter $X.X the to in increase from quarter last with equipment compared $XX were of operating fair million fleet of from increase receipt reserves. resulting with about resulting the a value of retirement million last year large post XX% million, Corporate for unfavorable million up or public compared a half to in

Turning consolidated sales quarter increase year. Consolidated increase XXX margin contributed the income profit. improvement was point to gross $XX.X for XX.X%, the a last the now in statement, gross basis in to a where million over

million As XX expenses, basis a a expense. increase the a results up affecting year. selling, last of were increase engineering, the sales of and points for acquisition-related a in general quarterly quarter, include interest expense, a items expenses in and $X.X percentage $XXX,XXX QX other $XXX,XXX reduction in Other income, amortization increase in from administrative $XXX,XXX

$X.X million $XXX,XXX the year. quarter the was for up expense Tax from prior

$XXX,XXX to effective XX%, a additional we in discreet and due XX.X% stock-based any of increase tax a reduction this changes At compensation associated benefit the between tax in tax recognition time, expect excess and the XX% to be our to reserves. $XXX,XXX with year primarily benefits. rate for full with benefits Our effective excluding tax tax XX% quarter was the activity year, rates compared with last associated

with to exclude share GAAP this adjust GAAP earnings earnings quarter, related our adjusted this typically we were On overall recorded last basis, year. we QX In compared quarters. facilitate we compared the expenses. acquisition year. share earnings quarter therefore per GAAP per $X.XX the an To $X.XX $X.XX per year earned the per for $X.XX earnings share current to for items per share our or comparisons, year basis, share last in in adjustments made prior per with QX unusual On current in share

anticipated fleet level about QX year, at we our cash $XXX of rental We rental meaningful from $X equipment as of during same in despite million. flow, used demand. million which support and last quarter the operations the the cash now facility strength and quarter, investment ended a with Looking credit quarter to availability generated $XXX of million increase in during debt was net the under

net current even funding after Blasters leverage Our Trackless. remains of debt acquisitions the and low ratio

recently dividends $X.XX increasing quarter. a the we With that our XX% organic flexibility to initiatives, invest million pursue and of a a of strong, significant return have opportunistic remaining the dividend are reflecting we during we $X.X the second that strategic in position dividend and financial stockholders On share, and growth dividends to by through $X.XX in to paid sharing announced cash purchases. note, we share acquisitions quarter

comments like turn to over call now to I Jennifer. That and the would concludes my

Jennifer Sherman

Thank Ian. you,

place, This Over included year-end the With acquisitions expansions, building that growth making pillars on geographic we plant for place Federal to in in product call investments product in blocks we we and have year fuel announced significant to years, several our footprint. last those are have long-term the development record Signal. strategic several company. the of new put has expanded that expecting XXXX earnings our offerings be another in

off XX% from margin. price improving to Within point robust and improvement the level QX strong XXX in higher demand are highest year-over-year sales our quarter for sales supply the sales recent adjusted at contributions first history volumes, EPS EBITDA Group, aftermarket production Environmental the year. basis were net We our an and strong company's we levels Solutions net with supported with in of the chain a realization, deliver able acquisitions, increased increase a to start

achieved the at represents fourth two ESG consecutive second QX, daily highest quarter cleaners rates This double production sales and facilities both improved production XXXX. of manufacturing compared build to digit a During largest safe of of growth digit strong contributed increase XXXX. the the XX% our execution in teams double within by sales and XX% increases This street digging sweeper trucks. sewer year-over-year QX their average to of since of in and quarter

essential aftermarket workforce quarter revenues has last and also XX% To first and had parts had times year, strong QX meet customers. business our its quarter with aftermarket parts demand focus equipment in in up strong FS backlog reducing dealers deliver our to year Our over and the our Depot improving another sales. successfully this team minimize parts end for overall a particularly during growing with order lead significant downtime increased to on

In continue addition the quarter. in contributions with Ground are perform TowHaul growth, expectations. organic the from to first Force during and pleased M&A we to line strong with our

in the is We and start. acquisition team Blasters of January to a strong also completed the off

for still certain and While encouraged components, are we to disruptions hydraulics are by pockets the supply the continued environment, not be out specifically chain and supply-related of there pumps. woods we improving of

chassis. particularly Given our body continues on to Class also production that, a dump within are maximizing capacity. for not factor Chassis build our X businesses that our be availability businesses, constraining we yet

improvement line end top the target delivered Safety Security results on XX% last a also Group compared Our earnings year XX.X%, adjusted XX%. quarter, basis towards XX% XXX of and and of EBITDA announced to impressive the of high range our the to and call during point last including an Systems new margin growth

during equipment value about equipment for order and team as deliver penetrating Allegiant safety the fleet to light new a of success This geographic and mentioned another the able was new Ian the was public product the team line of SSG the introductions a As for awarded in story large order quarter, during Reliant with promptly international was markets third such QX. bars.

departments. with XX% several market in of remained domestic and sales or and new continue focused year. times. were public also Demand Overall, saw equipment QX fleet we municipality throughput increase to share grow year-over-year state in secured lead continuing to this signalling reduce compared increasing local last sales million addition, $X.X to and police a up the we In ease, year recently orders safety and XX% of industrial team chains QX is equipment. to on strong With supply

several in we growth SSG several within to and insourcing University components in our investments organic including suppliers. Over the Park last reliance production the our years, on key purchasing overseas made of business, have reduce facility order meaningful

production the vehicles. work high low both LED truck during our automated for of XXXX, of laser in-house a line, first is MicroPulse responder the we lighting The leverages MicroPulse which example, [ph] Reebok quarter product profile, technology. performing first For launched and

The new those and of both previously line that outsourced. models were product includes production

With with projected models, $X.X operating product line production has income new and of incremental 'XX margins lower generated approximately product XXXX. of the incremental revenues in cost and improved in outsourced models MicroPulse growth further million the from previously production

manufacturing savings recently increase in is quarter have our board on to XXXX. invested line of have our a and third expected public safety demand. The to University production third operational be been new equipment, achieve circuit reduce production meet we volumes printed in of at suppliers, addition, which to line the In Park unable reliance current cost

mitigate meaningful suppliers online Signal. broad to additional production bring including the expect provide shortages, acts component Federal to will and benefits We taken in-source to investments long-term

both are with There levels Demand orders this macroeconomic market we for unprecedented in markets, such new a the for our our municipal local Rescue few products continuing maintenance remains to as variety our and our tailwinds XXXX company aftermarket offerings streets. the and setting for infrastructure purposes, are highlight the from see records. key a and which trends again and governments today. strong and demand, Within billion several earmarked of $XXX of systems Act, including essential of the to benefits territorial state, backlog at Plan sewer quarter, I'll contributing American

demand. In to last the street driven quarter, sweeper compared up orders by municipal year, XX% were first significant primarily

airports. infrastructure, We $X.X to new broadband from Act, bridges, roads, $XXX public investments the in transportation which tailwinds Infrastructure arising has water for billion continue power, earmarked and meaningful and also multi-year expect trillion

For example, a that and manner. safe can increased is digging and convey excavate vacuum, our broadband products and and-or interest generating spend range in demand broad safe efficient of on infrastructure materials additional

funding ESG warning also discuss are we typically product within in we this benefits with offerings, While SSG, seeing source our demand for in particular context of public higher the systems. the

This Act the funding five $X.X warning FEMA disaster Management to years to Agency the but Typically, $XXX hazard five XX% is over Infrastructure Act. for assistance to FEMA by $XX around anticipated Federal the in under fire and programs. year flood Act million period. annually STORM for invest includes billion to projects, allocates to increase FEMA The governments provide tornado local Emergency the or earmarked mitigation over through million annually mitigation

from To that two of warning several hundreds been date, their to warning proposals systems. grants update currently or the counties funding totalling expand country million working this government we expand and source have are communities tornado for systems across have awarding to that received with grants dollars seeking are

hurricanes, keep also tornadoes, national provide frequencies to our we which of With As alerting wildfires, part and as of initial maintenance helping following our proud offering, safe. revenue systems subscription the warning role in and play are sale such disasters provide for longer communities the of higher that term warning ongoing a floods, a recurring services, products stream. equipment, we

large company also the from of Vehicle quarter, for our are shows. newest to in a expected electrification but for batteries. key our for electrification vehicle long-term not other we only and the demand area showcased initiatives Electrification green the drive investment remains EV increase offerings, corresponding lithium trade at demand offerings during product and

With created lithium. platform the Force a that the of vehicles TowHaul, minerals, With acquisitions metals ion Ground of support we expectations for lithium demand including global extraction of battery is that have and the of positive so, CAGR end next and this or markets a growth we years approximately trajectory will energized in over are end about market. many grow at XX XX% an specialty the

our initiatives. of wanted a update I to to couple a an take minutes few now provide internal on

culture played industry driving organic continue in XX/XX growth Our margins. focus leading key ingrained play our to deeply role a has and in will and improvement on and is our

line specifications to over than in this from achieving simplification lines, example, our line two XX/XX XX/XX dump of $XXX,XXX then for these team body most product expected to is able offerings where an and revenues. savings ordered X,XXX body product product XX% product trucks, improvement This dump combinations its reduce approximately at lines was completed to result to leading comprise annual history initiative bodies less its we was this reduction the able that sales commonly recently team ox The the plant. As through identified standard simplification line skews. in a of to identify XX% analyse of initiative the a for process XXX,

We tasks our with additional of driving the recently a dedicated hired resource on across projects improvement corporate many throughput businesses.

long-term and solutions publishing key signal role In growth a enterprise addition, support creation continue lean implementing our in through acquired value manufacturing will play implement and also standardize playbook this resource system. this businesses. as we will M&A, operating continued With federal at our to

initiative XX% mainly and Moving on strength I believe into revenues opportunities ESG's and business strategic to to grow we additional aftermarkets, Aftermarket quarter, of ours a underserved. by during of the new that to parts remains the expanding approximately geographies see to that sales which that earlier. be represented noted key due we

and many region, the During Vector, will lines major we our regained with QX, facility in Jet our new order in This product large facility open and support already Colorado sales a region. have fleet sweeper municipality was TRUVAC of of street Elgin a Stream. in the including

continuation used noted, Ian In we meaningful rentals addition, high replenish made fleet in demand and QX and to investments rental have as our support in equipment. the for anticipated

a about the geographic of underway business. leverage customers. are the and The On trajectory leading front, Trackless of April. provide a this and excited the tractors the our accelerate is announce channel Trackless to reach well multipurpose we and Trackless value the manufacturer in opportunities the off-road growth distribution M&A the is year-round are of which to expand products integration its closing of to US of to in we Canadian variety attachments, municipal acquisition pleased Trackless

through Federal accumulator leading Signal aftermarket an differentiates of disciplined offerings. specialty M&A supporting of brands vehicles continued growth and as Our

important remains to expect pipeline deal our to growth. we of active Our M&A part very and continue future be

With our again, Turning our performance, outlook quarter the company $X.XX records. full unprecedented the year, range $X.XX. aftermarket to chain to first both the for improving quarter are our our new for setting at now backlog to and to year our of $X.XX prior and of conditions, outlook a orders record EPS products offerings demand of this $X.XX supply range we our backlog, remains new from raising adjusted and levels rest with our

by establishing to $XX billion of range million, new increasing $X.XX the net billion. sales our also of range low are a We outlook full $X.XX year end

I ready think this for At time, questions. we're Operator,

Operator

Our first go [Operator instructions] from question CJS with Securities. Please ahead. comes Chris Moore

Chris Moore

like seal thoughts changing, with costs pricing start maybe XX months Maybe, in backlog some of versus of factor when your freight year backlog improving. obviously and ago, things six are today the date, you terms there's just or months increase, in your

pricing Just, on sits backlash that today of your thoughts from perspective. kind how a

Ian Hudson

actions Yeah, to series inflationary we last response we that I time. saw at obviously, environment year pricing the think of a in took Chris, that

pricing feel So of about backlog. the we good the pretty

the a factor you of at if driving think some margin in that I look price in was improvement. improvement

and backlog. a both We both operating volumes nice also was Chris, our I sales but factor. we of But our increased leverage with some think within had today, feel pricing the price where overall we think of groups, I the comfortable sit

Chris Moore

customer time in sense kind pre-order orders, than at this regarding your Record year? what's of last lead it. Do might this Got times? of to point record they backlog, less have time they feel, perception need

Jennifer Sherman

the the at and the industrial of challenges was couple continue and carefully chassis' notable was X of of expecting or strong business sequential kind body saw We of the impact the because on of limited business backlog. side. the size may trends year-over-year have for we're in looked both still stored although and Class that we of orders strong businesses. that QX, But chassis to the still order availability, overall, things our on comparisons we and side Yeah, dump particularly across that given the one be municipal orders a the

Ian Hudson

production And of was we some actively the Chris, our cited times. seen I prepared seen but trying production succession Vector work on levels at what overall some facilities, down and in and times. improvement of seen are supply think second we've encouraging the in those that's we quarter some on lead work there, that and where both I Elgin are one things our to we've that's down the of those meaningful improvement chain levels we to trying of That's that just think lead the we've increased comments

Jennifer Sherman

Yeah.

building we XX% improvement said. were day facility. trucks our at there what on largest add We we're really on sequential Ian focused and and per encouraged had of very kind Just saw

If facility, XX% that you saw just sequential look improvement. at we particular

So, the reducing encouraged times, trends very focused on but order seeing. the by lead we're

Chris Moore

it Thanks helpful. very it. Got That's guys. I'll there. leave

Operator

Shlisky comes Davidson. question Mike D.A. ahead. from with next Our Please go

Michael Shlisky

sounded taking quarter and a chassis was I other had maybe headwind that Hey, that for or question. body it more good ago dump for a my comments answer, is the questions about could the mix was positive Actually, the Ian, on bodies. In dump prepared business you morning I like comment last it having one for thanks bodies, words, mentioned, chassis would chassis your a your imagine. headwind implied and you had dump in positive it o'clock actually two for

up? you better supply in can So square this those two have you Did or chassis quarter worse?

Ian Hudson

the two when what was chassis, -- say the of about XX% two The of were the separate is truck that chassis chassis. chassis. the historically we time where we So we talk might of had talking chassis customer the provide the provides we provides separate the I groups customer In the split other time dump the never XX-XX for about where, the of kind comments, would provide always side about we've prepared XX% business a the business.

couple means because standpoint last pass our investments through. we of a provide what the our margin much chassis customers. of in It's amount two, year more had some is customers, We've we've margin on behalf of to we've that of and on made chassis of so those chassis or supply make strategic actually procuring access don't to from that chassis. the we've we those a but been -- In able increased to last pretty decent

year points revenue the a where comments supplying the in can increase be and chassis year-over-year, on drag on that revenue on that margin. the year, XX are chassis prepared we chassis increase a was a more we about basis caused as that has, over that EBITDA cited EBITDA and the gross we that margin what of headwind So

business. linked it's So the body necessarily not dumb to

Michael Shlisky

Okay.

it's that's really. So mix just

Ian Hudson

Correct.

Michael Shlisky

of All it.

Ian Hudson

more Mix with we for revenue more chassis provide. chassis that

Michael Shlisky

Perfect. Thank you.

Jennifer Sherman

chassis pointed A revenue drag. our $XX different and way, up million year-over-year had a the as Ian business, was that out

Michael Shlisky

ago. SSG I'll already towards put I just few next were different it's another this months My range it. pick ask solid. very And one. out Got you the margins The question, two strong. really ways. That's high can just

the the here? just you thinking maybe Even -- I go are already in the you not what higher an wrong about could range what end additional guess here that and even from out from of put you towards what Or foreseeable future? learned? So in high go range that could segment

Jennifer Sherman

some previous We've Look, performance talked we SSG's I a that made by out quarter, chain fluctuate in and order we're there. as insourcing improvement. they continue quarters the call time encouraged confident spent by they kind done, QX. also a quarter ahead. we've encouraged calls, fleet are some and but on quarter of during large And helped the about of we were can really them on couple range seen has which operate the really we've supply saw about a that which to they'll to we're had that and talking within difference in what

Michael Shlisky

to the enough. Fair network. dealer about Okay. one me, ask for last one wanted maybe And, just

adequate Given in the that floor challenges experiencing or then anyone's decent decisions? any lending for higher interest are dealerships financial there And just rates? the distress at rates are secondly, plan we're seeing your even lending, maybe out finding moment? type is inventory any affecting dealers that any at experiencing inventory of potentially And general, or financing there are

Jennifer Sherman

dealers and very we well couple several are capitalized. a have financed is Yeah, One well that large very things.

and amount And monitor short closely. positive our answer to that's haven't products that, the we your well is public tailwind. respect issues have it financed fortunate of given to In our to available we addition very to been We're dealer funding dealers. for any network seen question that's really with the a

Michael Shlisky

it leave much. Thank there. you so I'll Outstanding.

Operator

Our Felix go James. next ahead. from with Please question Raymond comes Boeschen

Felix Boeschen

sales ESG comments you Can on with maybe big comment appreciate down you equipment XX% but us? quarter. I you for much rental in-house against just Hey, facilities, quarter also did Just sequential biggest two the if could or production over ESG. worked note EBIT for an revenue how away what maybe might have square sort the and of I in a impacted were that just output improvement the that at

Ian Hudson

talking sequentially? So, you're Felix,

Felix Boeschen

Yes,

Ian Hudson

sorry, a QX I is There Yeah, business than aftermarket of in piece that. less that, QX QX. think in aftermarket versus so, was

you just other during rental QX. wouldn't We about The the fleet the $XX been to would have million QX. into piece production units any of think about of be, it in I as putting rental gross We fleet that was in the added fleet. pointed the the was really during in

probably the factor. biggest that's So

a We bit at step chassis also of a had with down TBI the situation. supply

So bit down that a versus little QX, in was QX.

Felix Boeschen

it. the Super just then of And Got the you opportunities today, to of helpful. do and about size relative how expecting sort h you're feel half into the rental XXXX year into presumably the back

Jennifer Sherman

strong. through Given experiencing, lead we're public several their funding supplement that be rental. times we're the some rental as contractors, fleets demand Infrastructure bid the and Act, to of continues execute these through Also seeing they on

So encouraged we're we're by seeing. very what

Felix Boeschen

Got their Jennifer, I centric last mind of if vehicle is And vocations. versus some my holding some but then I'm TBI more one, locations? color don't just around could, up municipal it. maybe how maybe specific you maybe orders giving if in curious

Jennifer Sherman

sitting bodies the OX the [ph] we a on initiative example gave terms record good where and could focused what that's backlogs. they're We -- improvement in Yeah. A-XX of and on example of do,

where is In the addition some X that, to chassis we're things. side Class on softness of really seeing

on Excuse me, Class our availability That's what is. enterprise. we're of things are are the the takes chassis reliant and body depending dump rest X seen where of of two chassis, we've those businesses softness seeing some down various puts on the side on across and So year-over-year.

Ian Hudson

in breakdown, strength kind XX% is a think street the was I of look we last orders. fact was you of is the to as and year-over-year. Jennifer American QX some of Plan the That's, which lot the sweeper orders, about mentioned, driven of highest Felix, tied the up of And, Act. the Yeah. I funding municipal year talked Rescue record if that by prior that think Yeah, at terms

year, we of pretty QX when this -- are strong pretty of a QX last exiting year it's that was to even So comp.

down which still about of that, line it The didn't we intake, probably with that year-over-year touch, year-over-year level. million any drop product in product was see was but a down was off down and even But the at of about good that's largest was order even in a all with major terms year-over-year lines. orders XX%, $XX pretty

Felix Boeschen

the appreciate time. Really it. Got

Operator

Steve question next ahead. comes Our instructions] from Capital Please Markets. [Operator with Barger go KeyBanc

Steve Barger

As existing to revenue and you trucks will but I'm I rest your the year ESG presumably guidance you be levels? for fairly quarter quarter the that per will capacity, for of on your really quarter focus these the your wondering, low do day, be about build strong demand level think expect as increase this revenue, to

Ian Hudson

Yeah, expect that see QX, to would up. think because we'll strongly and which Steve, I those aftermarket business, of be we pick tend in like the QX to

business think be for of revenue we'd aftermarket So by I and strength expect of driven because you EPS that's to both in in QX terms and have the activities. three of our highest the the year primarily solid months a lot

year, the then but step QX to we QX always QX strong, the we'd highest would QX be, the a up is point. quarter lowest. expect of and Then we that expect QX to expect would be cadence we'd of relatively kind be see your to then, high And our think I point, be So to would the in

Steve Barger

you improved has in away. But running given just goes aftermarket backlog, QX see supply at high your drop chain significant as off even if expect wouldn't a capacity, you'd presumably be right. to But

Ian Hudson

Yeah, agreed. Yeah.

Steve Barger

Okay.

Your, obviously deals, on niches. strategy on surveying bolt your has been good focused M&A

is ability the out and dealer multiples growth network? reasonable given your there, leverage to As how see you driving are deal you that just about visibility environment and multiples? you funding looks the how What think about changing And you think the higher?

Jennifer Sherman

depends seen down come the we on we're multiples and synergy It pretty all over last actually when developed year. the conservative again, we've numbers those but numbers,

that come sell sellers the in Federal to chain reputation we I to call, us a a developed about preferred which reasonable particularly supply talked a Signal, pandemic we to combination looking multiples. last want we've buyer. marketplace said, we're as think candidly seen transactions in we've we have more a challenges, number of also, we've good and have And the of the markets, the and being the pretty primary market in at,

Steve Barger

bit third keep demand to strong, lease supply to a talked about are you or times? fleet lead you quarter to With inclined investment? in more fleet make to normal balance lease party going and as to last you then that the higher Or how reduce customers capacity that the happy and production that. are improves you investment And this work chain Good. Okay. allocating the

Ian Hudson

Yeah, just starts their to the for for investment have you come, really year April, heavy I picking May doing when the and think up. added the really time, was want is the units fleet Steve, QX to of that kind rental the season reasons

think the sense during revenue and our terms lowest is heavy one the So of and was factors in EPS. of that's QX, QX I production why of

So, be some go QX investment place. course throughout as that takes but of year, think the the of is the there bulk may when I we incremental

Jennifer Sherman

And we're times reducing increasing very production. with lead those focused unit we're on very

Steve Barger

Right. Yeah. absorption. operating also generates, that revenue, but obviously And the as good offset better leverages you,

Jennifer Sherman

matters. Volume

Operator

question from Liptak next comes with Partners. Seaport Walter ahead. Please Our go

Walter Liptak

for newly and an see Or you thanks. next Hi, at quarter. an it's just to is interesting I that's and XX/XX morning is some is But to ongoing initiative congrats businesses? [ph] about ask to happening. to the was Good there great the question to body the this about of work decided effort guys the this SKU bring that's call to I about hear wanted just XX/XX the reduction more first of stories one and out? have been really acquired

Jennifer Sherman

part out trying a is of that our and note think effort one it's be we across was and Welt, has corporate really of Yeah, individual I the hired that such team things, businesses a now job XX/XX come is important And of type supply each pandemic there's we this improvement margin many working will also a I we message these dedicated OX was a our in we've what chain, XX/XX what's refocused is such go [ph] as the so that culture as teams, a part on this to our team a to of forward. enterprise. done, good just factor projects with example on couple our these believe driving and of

Walter Liptak

I material and some up prices there hear. seeing of Good great. inflation some selling are do of to on the there's wondered, you coming That's follow kind costs to down. and out mix want inflation a I and a

I So some the board in are could -- and XXXX you of are price you're where were seeing little a products Are if bit going? able just is that wonder or pricing to kind prices on, comment difficult? where there you selling across inflation get more

Jennifer Sherman

like kind that month we've come month. seen down seen vary steel Yeah, But, talking many that about. that we've wage inflation, on addition some type of to steel, to the of that depending companies, you're can in

steel at the we business move numbers. we've fixed we've We been as each have the before in it that successful and across that talked business market monitor price price percentage of a is large to depends increases forward about as our our and something reflected conditions, of as one businesses businesses

Walter Liptak

a follow last then and just up. one great maybe Okay, another you,

have a Why I multiples You commented to if wonder that you are lower some is are there that it's bit about are of about that equity great some the do more coming a capital? a multiples had you raise why little you funds coming thought are I and private are if think that lower? liquidating down multiples why and thought wondered

Jennifer Sherman

types I the rates think looking interest and models interest the role at. we're that transactions the in equities important on impact plays an private expense of have

more become more And of that price. more we buyer. with about more it's price. In a preferred It's than we've our many as of addition before, not talked about transactions, acquisitions, to as do all about and much we've

with and have in to example. developed a the that transactions teams done. the proud some Trackless great integration. think usually us of we've term, as And I'm the is long I benefit seen And that we've I M&A that of that think our will respect reputation execution

Walter Liptak

much. great. very sounds That Thanks Okay.

Operator

Stonegate comes Dave Markets. next with Storms question Capital Please ahead. go from Our

David Storms

how morning. good improvements improvements in you've lot much Thank Is to you and by do supply that a out that that terms the the regards With runway can driven you that talked see driven there? you break chain operational is by improvements? initiative the about and through left XX/XX production that of, mentioned you've

Jennifer Sherman

also, of on We've refocus I been driver. earlier out chain seen the of there's chain we've the supply gotten our critical teams improvements, are, pandemic XX/XX a nightmare supply obviously been and and some We've initiative. a as is that's mentioned

various that the enterprise. of benefits businesses across seen we've So at

XXXX there's our it, still opportunities. businesses a facility those continue levels We talked believe kind and to unit to, still believe, invested we're margin and expansion we couple to largest for opportunity in QX excited did of production We room our of businesses. for chain more. our of expansion there's that more were as at about about supply improves of as type we But, we're back back our of kind

David Storms

as of grown the the then rest in through or concert sales increased are They And aftermarket that the And you sales XXXX? you. rest to thank the demand an expected has of see with mentioned you relation helpful, coming also Ian any this at any then rentals. through expense in Do year. of sales? Very

Ian Hudson

no, Yeah, product of we're we expecting demand strong offerings. think our for I all

about the contribution level year. also think of in revenues of aftermarket, whole I That at in of look year XX% the if you and was QX the about QX. same as it was last for ESGs last of

pace well on sales side, And keeping growth customers. That's think they're that we I has think offerings used lead think expect. seen can where positions equipment we'd growth, So with where offer that been the we what aftermarket. at have our our having I I serve in new to times equipment, us and that with rentals, really the the we've

used, to various So, ability I sell the new, think potential us rentals really think to positions that the the for well. think sell as bill provide we having projects, and about infrastructure to the I

David Storms

you. Thank helpful. very That's

Operator

to the concludes Sherman, question-and-answer over to conference Chief Officer This would for closing turn any session. I our Executive remarks. like Jennifer

Jennifer Sherman

markets. confident our in the our that and reiterate to businesses for like long-term are I'd closing, prospects we In

the like dealers of and joining you express Our us are talk to and foundation strong delivering distributors, growth soon. is execution to to would today, our Thank initiatives. profitable our for our support. you we'll on for and employees, strategic focused we stockholders, continued through We thanks their long-term customers

Operator

attending concluded. for now The conference Thank has today's you presentation.

disconnect. may You now

Federal Signal (FSS) 2 May 232023 Q1 Earnings call transcript