Federal Signal Turns To Profit, Lifts Full-year Earnings View; Shares Climb

(RTTNews) - Environmental and safety solutions company Federal Signal Corp. (FSS) Friday reported a turn around to profit in the second quarter, reflecting mainly higher revenues and a fall in interest expense due to combined benefits of the recent refinancing and lower debt levels. Adjusted earnings as well as revenues topped analysts expectations.

The company also lifted its full-year outlook for adjusted earnings per share from continuing operations, above consensus. The shares are currently up about 15 percent in the morning trade.

Dennis Martin, president and chief executive officer of the company stated, "This was a very strong quarter, with both our Environmental Solutions Group and our Fire Rescue Group performing nicely...This is also our first full quarter benefiting from our debt refinancing, which helped reduce interest expense by 62% compared to our first quarter this year."

Interest expense was $1.7 million for the quarter, down 69 percent from the second quarter in 2012.

For the second quarter, the company posted a net profit of $117.5 million or $1.87 per share, compared with a net loss of $16.5 million or $0.26 per share last year. The prior-year had a loss from discontinued operations and disposal, net of tax totaling $0.41 per share.

Recent-quarter results also reflected a non-cash benefit from the release of $102 million of valuation allowance against deferred tax assets.

Excluding the tax item, as well as the impact of restructuring benefits, adjusted earnings per share from continuing operations were $0.23 per share for the recent quarter, while the company posted $0.15 per share a year ago.

On average, three analysts polled by Thomson Reuters expected earnings per share of $0.14 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter climbed 9 percent to $222.6 million from prior year's $204.4 million. Analysts expected the company to report revenues of $208.80 million.

Consolidated operating margin improved to 8.2 percent from 7.7 percent reported last year.

Federal Signal said its orders improved 1 percent to $209.7 million. Backlog was $294.9 million, down 8 percent from the prior-year quarter.

For full year 2013, the company now expects adjusted earnings per share from continuing operations to be in the range of $0.62 to $0.72, up from the prior outlook of $0.55 to $0.65 per share.

Analysts expect the company to report earnings of $0.59 per share for the year.

The guidance excludes effects of debt settlement charges, restructuring charges and the change in valuation allowance, the firm added.

FSS is currently trading at $11.03, up 15.38 percent on the NYSE.