Federal Signal likes to believe it keeps people, property, and the environment safe. Through segments include environmental solutions, safety and security systems, fire rescue, the company designs and manufactures products for municipal, governmental, industrial, and commercial customers. Offerings include street sweepers, vacuum trucks, and water blasters for environmental cleanup; emergency communications and public warning systems for public safety; aerial platforms for firefighting and utility maintenance. In 2012 Federal Signal sold its Federal Signal Technologies (FSTech) segment to 3M for about $110 million.
In 2010 Federal Signal had reorganized its operating segments from three to four, adding FSTech, as it expanded its intelligent transportation systems (ITS) business. Environmental solutions accounts for 45% of revenue. Like the fire rescue segment, the environmental solutions segment distributes through dealer networks and a direct sales staff. The environmental solutions dealer channel serves the municipal market, while the direct sales channel addresses the industrial, utility, and construction markets. The safety & security systems segment, 28% of revenue, sells to industrial customers, municipal, and governmental customers through wholesalers and distributors. Fire rescue, 14% of revenue, serves such customers as fire departments, industrial fire services, electric utilities, and maintenance rental companies.
FSTech accounted for 13% of revenue. To focus more on industrial and municipal equipment and safety and security systems, Federal Signal sold FSTech to 3M. The company plans to use proceeds from the sale to pay down debt. FSTech companies sell RFID, automated license plate recognition, and back office management systems to municipal and governmental tollway agencies and tollway system integrators. They are sold domestically through a direct sales force and independent agents and internationally through a network of independent representatives.
Federal Signal has manufacturing operations in North America, Europe, and South Africa. The majority of its sales are made in the US, where its sells such market-leading brands as Bronto Skylift aerial platforms, Elgin street sweepers, and Jetstream water blasters.
Federal Signal's net sales rose about 10% in 2011 compared with 2010 thanks mainly to strong sales of industrial vacuum and sewer cleaner trucks and contributions by two companies that were acquired in 2010, Sirit and VESystems. Environmental solutions' net sales jumped 15% in 2011 vs. 2010 as the result in part of a strong industrial market. Orders surged 40%. Safety & security increased 3% year-over-year in 2011 to support demand for US industrial products, mining products, and exports in Asia and Latin America. Orders increased 9%. Fire rescue's net sales were flat in 2011 compared with 2010, but orders were carried up 36% by demand for fire-lift products in Asia and Australia. FSTech's net sales rose 14% in the full year of 2011 compared to the ten months of 2010 after FSTech was established. Orders doubled in 2011 compared to the prior year.
To expand, the company focuses on a strategy that includes acquisitions and product development. Acquisitions are intended to enhance the company's position in an existing market or expand its market penetration with new products and services. Product development includes R&D expenditures of about $20 million annually. – less