Braden N. Waverley - Interim Chief Financial Officer Dennis J.

Martin - Chief Executive Officer, President and Independent Director Jennifer L. Sherman - Chief Administrative Officer, Senior Vice President, General Counsel and Secretary

Matthew W. McConnell - Citigroup Inc, Research Division Steve Barger - KeyBanc Capital Markets Inc., Research Division Walter S.

Liptak - Global Hunter Securities, LLC, Research Division

Good morning, and welcome to Federal Signal's First Quarter 2013 Conference Call. I'm Braden Waverley, Federal Signal's Interim Chief Financial Officer.

Joining me on the call today are Dennis Martin, President and Chief Executive Officer; and Jennifer Sherman, General Counsel and Chief Administrative Officer. We'll be using some slides in the presentation.

The slides can be found by going to our website, federalsignal.com, clicking on the Investor Call icon and selecting the webcast. We'll also post the slide presentation to our website after the call.

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

We expect to file our Form 10-Q today. And now, I'd like to turn the call over to Dennis Martin.

Thanks, Braden, and thanks to those on the call for joining us today. We look forward to discussing the results of our businesses.

I'll start our presentation with an overview of the quarter. Then Braden will take you through the financial performance details.

Jennifer Sherman, our Chief Administrative Officer with operating responsibility for the Public Safety Systems business, will provide an update on our 2013 corporate initiatives, focusing on critical milestones in achieving profitable growth at Federal Signal. I'll conclude this morning's call by providing you an update on our markets and the 2013 guidance.

Our first quarter results underscore the sustainably profitable business we are creating despite the challenges of uncertain demand in different geographies and customer segments. For the quarter, our operating income, sales and adjusted EPS were all higher compared to the same period last year.

I'd like to highlight some important points from our continuing operations for the quarter. In comparison to last year, our operating income grew to $12 million, representing a 17% increase, while operating income margin expanded to 6.1%, representing the fifth consecutive quarter of year-over-year margin expansion from our consolidated continuing operations.

Led by ESG and SSG, our sales increased by 2% compared with the first quarter of 2012. After 4 quarters of increases, we experienced a 12% decline in interest expense during the first quarter, a trend we expect to take hold through 2013 as we reap the benefits of our successful first quarter debt financing.

Excluding debt settlement charges, earnings per share from continuing operations were $0.12 for the quarter compared to $0.08 last year, marking a 50% increase in adjusted EPS and positioning us to reaffirm our guidance of $0.20 to $0.25 a share in adjusted earnings from continuing operations for the first half of 2013. During the first quarter, we experienced a decline in orders compared to last year, and as indicated on the fourth quarter earnings call, we had exceptionally high order rates in the prior year primarily for our Vactor products.

The same dynamics impacted our first quarter performance as higher lead times due to increasing demand for our Vactor products drove higher levels of advanced orders during the first quarter of 2012. We also experienced lower order rates in our international markets driven, in large part, by a single large order during our prior year period.

While declining in comparison to 2012 year end, our order backlog at the end of the quarter remained healthy at $308 million. I'd like now to provide a brief update on our performance against our established margin targets.

As I discussed on our fourth quarter earnings call, during 2012, we made significant -- we made meaningful and significant progress toward our operating margin targets in each segment. And in the first quarter, our performance at ESG and SSG enabled the corporation to achieve its fifth straight quarter of operating margin expansion from consolidated continuing operations.

Already operating within the established target range, our ESG margins expanded by an additional 30 basis points. While our SSG margins improved, this is a result of restructuring charges taken during the first quarter of 2012.

Through the remainder of 2013, we believe SSG will build on the significant operating margin expansion it has achieved. This progress will be a function of improved demand for our public safety products and continued execution on our U.S.

Public Safety Systems turnaround plan that we did start in 2012, also our 80/20 growth and efficiency initiatives that will continue throughout all of SSG. Bronto operating margins declined modestly during the first quarter compared to last year.

As we've indicated in the past, with it's high unit prices, Bronto is subject to significant quarter-to-quarter variability and margin performance based on its production and shipping schedules. We are confident in the long-term initiatives in place to support margin expansion in the Bronto business, including our 80/20 growth and efficiency initiatives and our continued investment in plant efficiencies.

Taking into consideration our current view of the production and shipping schedule, we believe Bronto will increase its margins sequentially, and on a year-over-year basis during the second quarter of 2013. Before having Braden take you through the financial details, I'd like to share some additional perspective on our primary objective going forward at Federal Signal and at its growth.

Every operation is focused on achieving sustainable and profitable growth. As you're all aware, much of the last 2 years has been dedicated to restructuring and focusing our 80/20 initiatives on driving efficiencies.

Going forward, we will continue to focus these same 80/20 disciplines to identify then invest in those high-value products, customers and resources that can accelerate the profit trajectory of our business. It doesn't mean we'll abandon lower-value activities.

It does mean our focus will emphasize high-value. By focusing 80/20 on value growth, in addition to operating efficiencies, we will more quickly identify and apply the resources to our most promising opportunities for Federal Signal and make Federal Signal a stronger, larger, more profitable enterprise.

Jennifer will elaborate on some of these initiatives in more detail later in the call. Now, I'd like to turn the call back to Braden.

Thanks, Dennis. I will now provide a review of our financial results for the quarter, which are included in today's press release.

Please note that our financial results only reflect the company's continuing operations and have been recast to reflect FSTech as a discontinued operation. Reviewing our P&L for the first quarter, sales of $200 million were up 2% versus last year.

Currency had no material impact on total sales during the quarter. Gross margin increased to 23.4%, while our SG&A, as a percentage of sales, was equal to the prior year period at 17.4%.

The improvement in gross margin was a function of increased sales volume at our Vactor business, as well as improved manufacturing efficiencies and product mix at both Vactor and Bronto. Operating income increased by $1.8 million versus last year, while operating margin from consolidated continuing operations improved by 80 basis points to 6.1%.

Results from the first quarter of 2012 include a restructuring charge of $900,000 within SSG or 40 basis points of operating income margin for the period. Currency had no material impact on consolidated operating income versus last year.

Interest expense was $4.5 million for the quarter versus $5.1 million last year due to the $75 million payment of debt during the third quarter of 2012 and the significantly lower interest rates associated with the company's March 2013 refinancing of debt. Based upon the existing credit agreement, the company anticipates that pricing on its debt will decline further to LIBOR plus 2.5% shortly after the filing of the first quarter 10-Q.

Consistent with communications during our fourth quarter conference call, the company incurred debt settlement costs of $8.7 million associated with the refinancing of its debt during the first quarter, $4.5 million of which was a cash payment. These settlement costs had an impact of $0.14 per share.

The company recognized an income tax provision of $200,000 during the quarter primarily related to tax expense at non-U.S. operations.

Our effective tax rate for the first quarter was negative 22% because of the recognition of a tax provision on a pretax loss. The company reported a loss per share from continuing operations of $0.02 compared to reported earnings per share of $0.05 during the first quarter of 2012.

Excluding the effect of debt settlement costs in both the first quarter of 2013 and the first quarter of 2012, earnings per share were $0.12 compared to $0.08 in the prior year period. On Slide 5, we show the results by segment for the first quarter.

Our Environmental Solutions Group, or ESG, had another quarter of revenue growth and margin expansion. Revenue was up 3%, operating income increased by 6%, while operating margin expanded to 11.4% versus 11.1% in the prior year.

ESG's order volumes were $101 million during the quarter, down 18% in total compared to last year. The largest component of the order decline was from customers outside of the United States.

The prior year period benefited from a single large order from a customer in the Asia Pacific market. The remainder of the decline in orders was attributable mainly to a decrease in vacuum truck orders in the U.S.

market. This in comparison to exceptionally high dealer orders for these products during the first quarter of 2012.

ESG's backlog at the end of the quarter was $193 million, a $6 million decrease versus the end of the first quarter in 2012. Bronto's orders declined 8% to $34 million compared to the same period last year due primarily to a decline in demand for fire lift products from customers in Asia.

The decline was partially offset by improved industrial product orders. Unit prices that can exceed $1 million and shifts in order activity continue to have a significant impact on Bronto's quarter-to-quarter performance as new orders actually increased 40% on a sequential basis from the fourth quarter of 2012 to the first quarter of 2013.

Sales declined 7% during the first quarter compared to last year, while operating margin declined slightly to 2.4%. The decline in operating margin and income was primarily attributable to higher expenses supporting planned higher growth in the future.

Bronto exited the quarter with a backlog of $85 million, 3% lower than the end of the first quarter of 2012. During the quarter, our Safety and Security Systems Group, or SSG, experienced an 8% decline in orders to $57 million.

Approximately half of the reduction in orders was attributable to continued weak demand in European markets and a decline in orders from non-U.S. public safety customers.

Within the U.S. market, decreased order activity for outdoor Warning Systems was partially offset by increased municipal demand within police markets.

Sales increased 4% during the quarter to $59 million and operating margin increased to 9.4%, primarily attributable to restructuring charges of $900,000 during the prior year period. Backlog at SSG at the end of the first quarter was $29 million representing a decrease of $8 million compared to the end of the first quarter of 2012.

This reduction in backlog is primarily attributable to the fulfillment of large outdoor warning system orders. Corporate operating expenses were $6.8 million during the quarter, down 4% from the prior year period.

This decline was attributable to lower salaries and benefits. Turning to Slide 6, net cash used for continuing operations was $13.2 million for the quarter.

This compares to net cash provided of $11 million during the same prior year period. This change in operating cash flow is primarily attributable to increased working capital and the payment of annual incentive compensation during the first quarter.

Given the large increases in accounts receivable at the end of the first quarter, as well as the balance of finished goods at the end of the quarter, the company anticipates a significant improvement in working capital and net cash provided by continuing operations. Achieving ongoing improvement in working capital management remains a primary focus of our management teams in 2013.

Slide 7 shows the company's balance sheet as of the end of the first quarter along with a comparison to year end 2012. Other current assets of $255 million at the end of the quarter include a current inventory balance of $126 million and an accounts receivable balance of $104 million.

The increase in inventory is a function of our Bronto and ESG segments, primarily reflecting increases in finished goods for near-term fulfillment of backlogs. Accounts receivable increased by 8% during the quarter, resulting principally from our ESG segment.

Net debt increased by $21 million during the first quarter, mainly as a result of increased working capital requirements, payments of annual incentive compensation and payments of debt financing fees associated with our refinancing initiatives. Net debt has decreased by $72 million since the end of the first quarter of 2012.

As a final point, the company will not pay a dividend in the first quarter. The company will continue to review the status of the dividend payment each quarter.

This concludes the financial summary. Jennifer Sherman will now provide an update on the company's 2013 corporate goals.

Thank you, Braden. During our last call in March, I outlined our corporate goals for 2013, underscoring the fact that these initiatives were strategic in nature and that success would be a function of long-term execution.

We also committed to provide you with regular updates on our progress. This morning, I would like to pick up on Dennis' comments and share some examples of how our work toward a number of these goals focuses Federal Signal on achieving profitable growth.

Let me start with our efforts to diversify our customer base. As many of you are aware, historically more than half of our sales have been to municipal customers.

We will continue to complement our strong foundation in municipal markets with accelerated new customer acquisitions in commercial and industrial markets. During our strategic planning period, we would like to expand our industrial customer sales to 60% of our total base.

This is a reflection of where we see growth opportunities on a global basis. One of our most promising opportunities for growing our industrial market presence is our Jetstream business.

Over the course of the last year, we expanded our engineering headcount at Jetstream for the purpose of creating products to address international markets and new customer segments in North America. In addition, we're in the process of planning capacity expansion at our Jetstream operations.

These focused investments will serve to not only diversify Federal Signal's customer base. They will profitably grow our business, where our market share opportunities are greatest.

Our integrated security systems business continues to be one of our most successful examples of profitably growing our company organically. With much of the product, integration talent and service capabilities already residing in our integrated security systems business segment, accelerating this growth is a function of investments in sales and distribution.

We initiated these investments in 2012, and we'll be continuing them in 2013, targeting evolving global security applications. Our sales pipelines of global opportunities are building each quarter, and their ultimate fulfillment will not only grow revenues but advance our Safety and Security Group to its operating margin target range of 14% to 16%.

Our focus on improved manufacturing efficiencies is critical to delivering our large backlogs with increasing profitability and flexibility, particularly in our ESG and Bronto businesses. As we discussed on our fourth quarter call, we have made targeted capital commitments to our Vactor and Bronto businesses, and we'll continue to do so in 2013.

The addition of team members at Vactor, along with these capital investments, puts us in a position to drive up near-term throughput while simultaneously increasing the flexibility of our production to respond to different levels of demand while maintaining profitability. Each of these highlighted initiatives will drive our long-term growth objectives of the company, diversifying our customer base through engineering and capacity expansion at Jetstream, achieving profitable organic growth at our integrated Systems business through enhancing our sales and distribution capabilities; and improving our manufacturing efficiencies at Vactor and Bronto.

They are results of applying our 80/20 disciplines to growth opportunities in our company and are consistent with our 2013 corporate goals. Underlying all of these objectives is our heightened commitment to talent management at Federal Signal.

None of these is achievable without our engaged Federal Signal team members. At this point, I'm going to turn the call back over to Dennis, who will provide you with our earnings outlook for 2013 and some additional perspectives on our markets.

Thank you, Jennifer. Since we last spoke with you in the middle of March, many of the macroeconomic uncertainties we referenced are continuing.

A portion of our order decline during the first quarter reflected these uncertainties in our international markets. However, we experienced a modest recovery in year-over-year orders during the month of March and continue to see progress in the sales pipelines in a number of our businesses.

This progress, combined with our still healthy backlogs and continued focus on our operational initiatives, puts us in a position to extend our guidance to the full year. As I mentioned earlier in the call, we are reaffirming our first half guidance of $0.20 to $0.25 in adjusted earnings per share, excluding the impact of debt settlement charges.

Turning to the full year, our estimate for adjusted earnings per share is in the range of $0.55 to $0.65, also including (sic) [excluding] the impact of debt settlement charges. I'd like to now provide you an update of factors impacting our guidance.

Our earnings guidance takes into consideration previously communicated estimates for annualized savings in interest expense due to our first quarter debt refinancing. We anticipate this annualized reduction to be approximately $10 million compared to our previous financing arrangement.

Consistent with past communications, hearing loss litigation defense presents a material financial exposure that can impact our earnings. While we have won every trial for the last 3 years, including the most recent Cook County trial in December of 2012, we have pending cases in the courts in Illinois and Pennsylvania.

Due to a number of recent developments, we see the primary impact from hearing loss litigation coming in the second half of this year. Third, while our still healthy backlog levels at Bronto and ESG support our earnings guidance, the timing of large orders, production and shipping schedule of those can impact our earnings in any quarter.

During our fourth quarter call, I provided you with an update on our U.S. municipal and industrial markets, our European markets and our other international export markets.

Since that time, the primary trend remained unchanged and continued to be characterized by a high degree of uncertainty. These conditions create the potential for significant variance at market demand, and it is factored into our guidance.

This requires us to regularly revisit our estimates. Finally, I'd like to provide a brief update on what we've been seeing in the market since the fourth quarter call.

Recovery in the U.S. municipal market continues to be fragile, and we did experience a decline in municipal orders during the first quarter despite the encouraging progress in our U.S.

public safety police business. We believe some of this decline is attributable to the season factors and still see signs of near-term modest recovery in the municipal market.

Specifically in our street sweeper business, we saw a delay in orders due in part to the extended winter season. Our plan for increasing our concentration of the U.S.

industrial market continued to progress during the first quarter. While market conditions remain uncertain, nothing has fundamentally changed in our belief that our Jetstream, Vactor and industrial safety system businesses are well positioned to capture long-term opportunities.

During the quarter, we saw meaningful growth in sales quotation pipelines across all these businesses. Our operations most impacted by the conditions in Europe are Bronto and VAMA, and the outlook has not changed materially since our fourth quarter call.

Our management team in Europe continues to make progress in diversifying their customer base and driving production efficiencies. While this execution has mitigated the effect of the challenging market conditions in Europe, we do see customer demand remaining weak through 2012.

And despite a decline in orders during the first quarter, our long-term view of the company's opportunities and international markets remains unchanged. As we mentioned earlier, a significant portion of this quarter's year-over-year decline in the international markets was attributable to a single order at ESG during the prior year.

Given the strength of our brands and distribution channels in many of these geographies, we fully expect our orders to improve as market conditions recover in Asia Pacific, the Middle East and Latin American markets. Overall, we are pleased with the performance of the corporation during the quarter.

And while market conditions have remained challenging, our teams have continued to execute efficiently on 80/20 growth and efficiency in network initiatives. Production efficiencies have improved, and in each of our 2013 corporate goals we have made progress.

Thanks for your time this morning. At this point, I'd like to open the phone line for questions.

So a pretty strong start to the year. At $0.12 of EPS, you're basically halfway to your first half guidance.

But there's typically a pretty nice seasonal sequential increase into 2Q. So with that reiterated guidance, are you planning conservatively or is there a reason why there might not be that 1Q to 2Q sequential increase that we typically see from you guys?

Yes, it's a good point, Matt. And actually, it was brought up on our fourth quarter call as to whether or not we'd see a more level-loaded first half, by one of the questioners.

And we did indicate that certainly compared to fiscal '12, we would see a bit more level-loaded quarter. Last year, on an adjusted basis, if you will recall, we went from $0.08 to $0.15.

We certainly don't see anything in percentage terms like that kind of a sequential increase in EPS. We started the year with a pretty healthy backlog, and as a result, we think that's going to create some sort of a smoothing effect from Q1 to Q2.

So the short answer to your question is there is the opportunity for an uptick in Q2, but we don't think we're being too conservative.

Okay, great. That's helpful.

And do you have any timing associated with that goal for 60% industrial sales? Or if you don't have a specific timeline in mind, do you have kind of a growth rate that you expect out of your industrial businesses over the next few years?

Like, any context around that target would be helpful.

Sure, Matt. Starting about a 1.5 years ago, we really took a look at the high value businesses that were industrial and began to invest in terms of engineering and sales teams.

And so really in the planning period, we're talking about is the 3-year strategic planning period. And we're seeing good building and quotations and focus on those areas.

So it will be a long-term objective. It won't just be during this 3-year planning horizon.

Okay, great. Then finally for me, could you differentiate demand in U.S.

versus Europe? Maybe quantify the degree to what Europe sales declined?

And then maybe the low tax rates suggest that Europe might have been about breakeven in the quarter. Am I correct with that assumption?

Well, if we do -- I would tell you this. If you look at distribution of income outside the United States that to your point, Matt, generate the tax liabilities or generate the tax provision that we'll make in any given quarter, those are primarily a function of our Bronto and VAMA businesses.

The disclosure of our segments do incorporate Bronto. So in the aggregate sense, because we booked a provision, we did have some overseas profits, largely attributable to our European businesses.

With regard to the order, your question on orders outside the United States versus Europe, and I think that was where you were headed, overall orders outside of the U.S., both international export orders and softness in Europe did have a pretty significant effect on the overall decline in orders. We do not break that number out by geography more specifically than that.

All right. Well -- but I mean, generally, were they materially weaker than the U.S.?

The international orders were a significant driver of our year-on-year decline.

I just want understand some of the assumptions. I think you said the end market uncertainty is factored into the guidance.

Does that mean you assumed that current international activity stays flat with where it is for the rest of the year to get to that $0.55 to $0.65 range?

We do. At this point, we do, yes.

Got you. So obviously, any improvement would potentially provide upside to what that range suggests?

That's right, yes.

Okay. And how did April trend compared to 1Q?

I think you said that March was up year-over-year on orders. Is it your confidence in -- is there something that you're seeing from an inflection point standpoint?

Or is this just confidence in driving the things that you can control internally that allowed you to put out the full year outlook?

Yes, let me start with that one just with regard to assumptions. We did, to our point, we did see a modest improvement in order rates during the month of March in the context of the overall first quarter decline of 14%.

Steve, we're really not in a position to comment on April at this point in time, but we do see significant opportunities coming from both those internal initiatives, as we discussed earlier, and some of the growth outlook points that Dennis outlined, particularly in regard to the improving sales order quotation pipelines that we're seeing really across the company. Other important assumptions, as you think about the fiscal year, would be the fact, and we talked about this in the fourth quarter, about $13 million to $15 million capital expenditure over the course of the year as well as right now we would estimate full year tax rate to be about 15%.

15%, okay. And so to that CapEx point, on the last call, we talked about how 2012's free cash flow from continuing ops is around $36 million.

I think the expectation was that 2013 could exceed that through the margin improvement and the benefit from working cap. Is that still the general roadmap or the way that you're thinking about things?

We are still working toward continued improvement in working capital and cash flow generation. And really, as the fourth quarter illustrated, we can have very dramatic turnarounds from a working capital standpoint in the business, and that has fundamentally not changed.

The overall thesis of Federal Signal to generate positive cash flow from operations remains intact. We had a considerable number of planned and understood cash obligations in the first quarter.

Sure. And you talked about inventory increasing due to finished goods.

Is that finished goods increase accounting for more than the $6 million increase in inventory from year end?

The majority of the increase is attributable to -- from December 31 to March 31, the majority of the increase is a function of finished goods inventory, a little bit of an increase in work-in-progress, and raw material inventory actually declined.

Okay. And for the finished goods, is that stuff all scheduled to ship in 2Q or does some of that ship in the back half?

Yes, I mean this is Bronto ESG. We don't build it unless we have customers, so a lot of that will actually flow in Q2.

The Bronto, the Bronto, we actually bumped up a little bit ahead of the summer as we're doing a relay out of the plant in the summer. But it's all for stated orders.

Okay. And do you have a target for year-end inventory?

We're not guiding the balance sheet at this point, Steve.

Okay. And going back to the free cash flow plan.

Capital allocation, should we expect that deleveraging is the primary use?

At this point in time, to the extent that the company generates free cash flow, the plan is to allocate it to debt reduction.

I wanted to ask just a couple on Dennis' comments. The interest expense you mentioned, $10 million savings, could you give us a quarterly number?

I'm at I think a little bit above $3 million per quarter, but I just want to check the number.

Yes. Walt, we've really restricted our guidance on interest expense to the full year numbers, kind of like the way we've treated capital expenditures and tax rates.

That $10 million number is an approximation of our year-on-year savings that we see from interest expense, and they don't include the refinancing cost or the cost associated with initiating the new credit agreement, which were approximately $2 million. So as you look at our interest expense over the course of the first quarter, we really only incurred a small portion of the benefit of those lower rates during the back half of March subsequent to the actual refinancing, and it's really Q2 through Q4 that we'll get the full benefit of these lower rates.

So hopefully, that helps in the context of that $10 million.

Okay. Well, let me just ask you this way so we can move on.

You did $21 million of interest expense in 2012. So you're saying that your interest expense, all-in excluding that charge, is going to be $10 million lower, so roughly $11 million?

In that range.

Over the next year, though. This year, we have all the expenses.

Okay, got it. And then second half, do you have a ballpark on the hearing loss expenses?

Our hearing loss expenses have varied significantly from year-to-year, and we typically don't disclose that number.

Okay. But that will be tax expense -- or I mean, a cash expense?

Yes.

Okay. And then I wanted to ask about Bronto and the profitability outlook.

The backlog that's there, is the profit -- what does the profit margin look like in the backlog and what does the pipeline look like for incoming orders through the year?

Walt, the backlog is pretty strong. But as far as the order in-rate inflow, it's really a month-to-month.

We have a backlog that's out through October. But it's going to vary from quarter to quarter depending how many machines actually get out to the door and get billed.

There's a lot of pricing pressure on Bronto, and we've been able to be competitive. So it's really a mixed bag in terms of trying to forecast or at least outwardly what we think it's going to be.

Yes, Dennis' comments incorporated, Walt -- sorry, just to -- I also want to make sure that the point was clear in our prepared remarks. We feel very good about the second quarter.

We do anticipate that we'll see a year-over-year improvement in operating margins in Bronto, and we have very good visibility, obviously, into the production schedule for the second quarter. To Dennis' point, getting out beyond that, our production schedules do take us past the middle of the year, but getting out beyond that, we do get more speculative given some of the broader market considerations we outlined on the call.

Okay. And if Bronto were to pick up in the second half of the year and you got some nice orders, you would think that those would be Asia-related?

Yes, it's hard to predict, but generally, Europe is down. So it would be Asia Pacific, U.S.

market. We have some activity in the U.S.

market, but not Europe.

Okay. And then Dennis, I wonder if I could ask you just about doing the 80/20 and restructuring given the mixed municipal markets and what we should expect.

Obviously, we have some of your margin targets, but is it -- we're seeing the margins pick up now. Would we see a lot more of it?

Or how should we think about the 80/20 that's going on and what things might look like as business picks up?

Yes, I think when we gave you the year estimate on EPS, we're kind baked in our thoughts. But primarily we still have a pretty good amount of 80/20 on the expense side that we can do.

We're doing product line simplification still pretty actively in our PSS business. The focus on the productivity and the efficiencies in the plants still will continue to give us improving margins, we think.

But probably the biggest thing is the effort we've made in the last 1.5 years on adding engineering and sales forces in those active areas where we're highly profitable. We did talk specifically about Jetstream.

Jetstream is one of our most profitable businesses, and it's also one where we have a very small market share internationally, fair market share domestically, so we see growth. The Safety and Security, every day a new event occurs that's tragic, and the demand for those products seems to be really -- obviously, the interest has peaked.

So as we continue to go through the year, there will be both benefit of high-value new products end markets in the high-margin areas as well as the sustained work on the cost savings.

Okay, great. Can you give is a ballpark about the revenue size for Jetstream and the Safety business?

Yes, we don't break those out. We don't break those out, Walt, in terms of the part of the other divisions.

Okay. But you highlight them because they're big enough to move the needle?

We highlight them because of the high-value opportunity that we see and we put a lot of resources into growing them, so...

Right, and Jetstream is part the ESG segment and the Systems opportunities represent a subsegment of SSG.

Well, thanks again for joining our call today and for supporting Federal Signal. We have a lot of good things going on, and we're going to stay active and continue to try to drive value.

So thanks again. Enjoy your day and your week.