Positive third quarter outlook for Bronto

31 October 2008

Federal Signal reported that its Fire Rescue division which comprises of Bronto Skylift has higher orders and net sales for the third quarter of 2008 than in 2007: operating income had dropped $1.7 million to $1.2 million due, in part, to expansion costs.

Numbers of orders for Bronto aerial devices have increased over 2007 but the value is lower due to "a generally lower price-mix" said Federal Signal. "In general demand for work platforms from European industrial and rental companies remains below the previous year, offset by growth in other global markets."

Orders for the first three quarters to September 30 are valued at $138.5 million up 1.6% on last year. Backlog to the end of quarter three is valued at $175 million which is 32% higher than 2007.

Net sales for quarter three 2008 were $26.6 million $3.4 million ahead of last year and $95.5 million for the year so far - up 25% and said to be a result of the relative strength of the Euro to the dollar.

During this quarter Federal Signal has completed the 40% capacity expansion of its Bronto plant and is in the process of ramping up production to help meet the increased demand.

The decline in operating income in this quarter is attributed to higher component costs and a high level of subcontracting. Costs associated with the next generation product range and the higher bad debt costs from the company's "failed UK dealer" also affected results for this quarter.

Federal Signal expects that the plant capacity expansion will reduce forth quarter production costs as subcontractor costs are eliminated.

William Osbourne, president and CEO of Federal Signal which also has businesses specialising in safety and security and environmental solutions, said, "Despite operating in a challenging market Federal Signal delivered improved performance during the third Quarter. Out order intake softened, principally in our municipal markets, where we are continuing to experience weak demand for some of our more mature product lines......."International business was flat compared with the prior year, but we are increasingly concerned with the outlook for the global economy. We are taking steps to realign resources and control discretionary spending during these uncertain times.

"Our aggressive debt reduction has positioned the company well. Since January 1, we have reduced net debt by $186 million, leaving us ample committed credit lines with a strong bank group. We have accomplished this while at the same time increasing pension contributions and investing capital to expand facilities with strong markets and backlog. During the quarter we completed the expansion of our Bronto plant ........Our strong balance sheet and diverse market participation position us to weather the current economic turmoil and grow profitably over the long term."

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