Federal Signal CEO: Q4 sales will increase more than 10%
Federal Signal Corp. (NYSE: FSS) CEO Bob Welding said lower third-quarter results were due to low demand and production of the company’s rescue and rehabilitation vehicles. However, Welding said the company expects record fourth-quarter sales. The chief executive made the comments during a midday conference call.
“Fourth quarter is typically our strongest, both from a new order and a revenue standpoint and this year should be no different,” he said. “We’re expecting orders to be up over 10% from last year, which would set a new high for us.”
Welding cautioned that uncertainty in the United States economy may affect actual revenue. Welding’s expectations would mean at least $318.24 million, from $289.4 million a year earlier.
Welding said that during the third quarter, 40% of the firm’s new orders cam from customers outside the United States, compared with 33% during fiscal 2005.
“This profile suggests that Federal Signal is better positioned than most companies to withstand an economic slowdown,” he said. “The vast majority of our products and services address the highest-priority needs of governments, municipalities and high-profile workplaces around the world. Increasingly, we are not concentrated in one economy.”
Before the opening, Federal Signal reported third-quarter profit of $4.8 million, or $0.10 per share, below analyst estimates of $0.21 per share and from $9.5 million, or $0.20 per share, a year earlier. The Oak Brook, Ill.-based firm’s quarterly revenue totaled $307.3 million, missing Wall Street projections of $312.66 million and compared with $312.7 million during the prior-year period.
“In spite of a respectable new order intake that was up 9% compared to a year ago and a revenue increase of over 6%, our operating income was down significantly,” Welding said. “The unfavorable comparison is attributable primarily to our domestic fire and rescue apparatus operations.”
After missing second-quarter earnings targets, Federal Signal announced in July a planned $10 million in cuts to its E-One rescue vehicles segment. During the third-quarter conference call, Kushner said the company will achieve the planned cuts by the end of calendar 2007.
In November, Welding said Federal Signal will be in discussions with potential acquirers for the firm’s industrial tool segments.
During the third quarter ended Sept. 30, Federal Signal’s operating expenses rose to $61.1 million, from $52.7 million a year earlier.
In midday trading, FSS shares are down 14.25%, or $2.15, at $12.94. Over the last 52 weeks, shares have ranged from $12.62 to $17.
