Good day, everyone. Welcome to the Federal Signal Corporation's Fourth Quarter 2011 Earnings Conference Call. Today's event is being recorded. For opening remarks and introductions, I'll turn the call over to Mr. Bill Barker, Senior Vice President and Chief Financial Officer.

Thank you. Good morning, and welcome to Federal Signal's fourth quarter 2011 conference call. I'm Bill Barker, Federal Signal's Chief Financial Officer. Joining me on the call today is 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, www.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 the 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-K shortly. And now, I'd like to turn the call over to Dennis Martin.

Thank you, Bill. And thanks to those on the call for joining us today. We continue to see good signs of progress in the fourth quarter. Our strong order trend continued and our backlog continued to build. Each of our 4 business groups ended 2011 with an order backlog that was at least 40% higher than the prior year. ESG orders were extremely strong. Its year-end backlog more than doubled and was $100 million higher than a year ago. Q4 revenue increased by 20% versus last year. And our Q4 operating income, excluding impairment and restructuring charges in both years, increased by over $12 million versus last year. Earnings per share for the quarter, excluding charges, was $0.06. We continue to see strong markets for our safety and security products and receive sizable orders from the nuclear industry, as well as strong international orders for our industrial warning systems. We generated positive cash flow and reduced our net debt in the quarter. And as we recently announced, we completed the refinancing of our balance sheet a few weeks ago. Each of these points has positioned the company well as we head into 2012. Bill will cover the financials in more detail in a few minutes, and I'll give you some thoughts on our future a bit later. But first, I'd like to give you my perspective on the quarter. Demand for the majority of our products remains robust. We continue to see very strong orders for each business in the ESG group. Total ESG orders for the quarter were up 74%. And for the full year, orders were up 40%. In the SSG group, Q4 orders increased 23%, led by our industrial systems and alerting and notification businesses. Bronto Q4 orders remained solid despite the challenges in the European economy.…

Thanks, Dennis. I'll give a fairly brief review of our financial results for the quarter which are included in today's press release. Looking at our P&L for the fourth quarter, sales of $223 million were up 20% versus last year. Gross margin was down a point, primarily due to product mix at Bronto. However, our SG&A ratio was significantly reduced versus last year from 27% to 20% due to 3 factors: the absence of nonrecurring items we incurred last year, such as separation costs related to the former CEO and costs related to settlement of a portion of recurring loss litigation; lower ongoing corporate costs in 2011 due to the corporate restructuring actions; and strong Q4 top line revenue growth that enabled us to leverage our SG&A cost base. As Dennis mentioned, operating income before impairment and restructuring costs improved by $12.6 million. Our reported EPS for the quarter was a loss of $0.27. But excluding this year's noncash impairment charge, Q4 EPS would have been $0.06. On Slide 4, we show the results by segment for the quarter. For purposes of comparability, I have excluded restructuring and impairment charges on both years. Our Environmental Solutions Group, or ESG, had a very strong quarter with continued strong growth in orders and revenue and a significant increase in operating profit and margin. Orders increased 74% versus last year with strong orders growth across all lines of business, Elgin street sweepers, Vactor sewer cleaners and hydro-excavators, Guzzler industrial vacuum trucks and Jetstream high-pressure waterblasters. Revenue was up 30% versus last year. And operating income more than tripled with operating margin increasing 2.8% last year to 7.2% this year. ESG's continued strong orders increased its yearend backlog to $183 million, which is $100 million higher than a year ago and over $50 million…

Thanks, Bill. As we begin 2012, I feel good about the state for most of our businesses. Our orders and backlog are in good shape, as our market-leading positions, our superior products and our reputation for quality have enabled us to benefit from the improving market conditions. In addition, we've been able to expand in some growing market segments for several of our businesses, including Jetstream waterblasters, Vactor hydro-excavators, Bronto Skylifts and our industrial safety and security business. We are making good progress on margin improvements and efficiency in many of our businesses. The stronger level of demand have enabled us to implement 80/20 business simplification actions and focus on our more profitable products and customers. And our working capital metrics, such as inventory turns, DPO and DSO, have all improved. As a result, we expect each business unit to generate improved levels of profitability in 2012. However, at this point, we will not be providing guidance for 2012 beyond Q1. As we have discussed, our new debt agreement enables us to prepay the term loan, on which we are currently paying 12% interest at par with the proceeds of certain asset sales. We are currently in the process of evaluating a variety of scenarios regarding the potential sale of assets. And the resolution of this process will have an impact on our earnings guidance for 2012 and beyond. Once we've reached a resolution of our evaluation process, which we expect to be within the next several months, we will set up another call to discuss earnings guidance and our outlook for the company. You'll recall in our Q4 2010 conference last year that I outlined that my sole objective is to improve shareholder value. In order to accomplish this, I said I would focus on 4 things: cash management, including reducing working capital; margin improvement in all the businesses; achieving financial results that we commit to; and transparency and cooperation with shareholders. And we are sticking to those plans. We continue to focus on cash management with a particular focus on improving inventory turns and reducing inventory level. By effectively applying 80/20 tools, we are cutting out slow-moving and unprofitable part numbers. Aggressive working capital targets are included in the bonus objective of each group president and down through each organization. And similarly, margin improvement is being achieved through operating improvements at every business. And we're implementing our profitable growth strategy by customer, by product and by segment. And at this point, I'd like to open up the call -- the line for questions.

[Operator Instructions] We'll go to Charles Brady of BMO Capital Markets.

With regard to the backlog, how much of that backlog is the next 12 months? And I guess, specifically on FSTech and the large 3-year order, how is that going to be recognized to the revenue line over the 3 years? Is it kind of evenly split?

Charlie, it's Bill. If you look at the backlogs for Bronto, ESG and SSG, we would expect almost all of that to shift this year. FSTech on the big order, the $68 million order, that's pretty evenly split over the next 3 years. In their backlog, there's a couple of other big orders. So it's probably about, I would say if you take the $70 million to $80 million, that's going to be longer for that backlog. That will probably spread over 2 or 3 years. But the other business, we should all shift this year.

And then as you look to the margin that's in the current backlog or I guess, more particularly, the margins that you're getting on current bookings, how would that compare to margins you saw in Q4?

Last year, we mentioned to you Charlie that we were setting objectives on our margins, and we feel like we're still in line with our margins that we expected. So we feel good about it.

Okay. And can you fill us in on FSTech? It sounds like obviously the profitability has pushed out a little bit. Can you give us a timeline of when that ought to turn profitable, is it Q2?

Charlie, as Dennis said, we're considering a lot of different scenarios here. We're not going to give guidance when we talk about for Q1. We can talk about the backlog and the expectations but at this point, we're not going to talk much more about -- too much going on in the current quarter.

Will all the startup costs that FSTEch is incurring for upcoming projects be expensed by the end of Q1?

I think by the end of the first half.

We'll go next to Deane Dray of Citi.

James Bank filling in for Deane. Dennis, if I could, essentially just going back to those prior questions, the margin targets you're basically reaffirming with the exception of FSTech?

Yes, I think that's right, James. It's Bill. The targets we put out before were basically sort of 10% loss for ESG and Bronto. It's more in the mid-teens, and we feel we got a pretty good line of sight there. FSTech is still a little bit of an open question for us.

Right. So if I could maybe even go to FSTech or potential divestiture candidates, would this be something in terms of a whole segment or business, pieces of a segment? I guess, what I'm asking is what's the criteria here, something that's salable or an underperforming piece or maybe a high-value piece?

We really can't go there. There are many things being considered.

Okay, fair enough. And if you could just help me, what was the FX impact in the quarter?

Yes. It's very minimal in the quarter actually, virtually nothing on orders revenue or income. If you look at the average exchange rate from quarter-over-quarter, not much there. For the full year, it was about a 1% benefit or for across-the-board orders revenue and income but in Q4, really, no impact.

So almost all of the 19-plus percent was organic?

I'm sorry, the 19-plus percent?

So year-over-year sales growth is organic?

Yes.

All right. And while I know you won't comment beyond the first quarter, but I was wondering if you could maybe help us, given the fact that the first quarter is practically over here and maybe just give a little more color on the trends that you're seeing in municipal markets, both here as well as in Europe?

The municipal market in Europe is still very flat. In the U.S., we've seen good activity on the ESG municipal side. The police side is still -- it's moving some but it's not really exploding or expanding rapidly. The Bronto business, which has impacted us obviously by municipals in Europe is slow, but they're seeing good activity on a global basis. So we've seen an uptick generally in that market other than police and fire, domestic.

And we continue to see strong demand but more on the commercial side than on the industrial side particularly for the safety and security products as we talked about. So we really haven't seen much change with the dynamics that we talked about in the fourth quarter in terms of market and demand. And we expect to see good revenue growth in the quarter and continued good orders strength.

We'll go next to Walt Liptak with Barrington Research.

Okay, so I just want to make sure I understand this. So you're in discussions right now for asset sales, but we don't get a view on what segments are maybe coming out of -- or how much cash flow you may be taking in?

If you look at our public announcement, Walt, we announced that we have a financial plan that allows us to sell certain assets. And if you go back to our third quarter last year -- conference call, we said we'd evaluate businesses, and businesses that do not meet our criteria for advancing shareholder value beyond this year will be considered. So we have a lot of things we're looking at but we, really, at this point can't get into much detail on what those pieces are.

Okay. It sounds as if you may be fairly far along. Do you expect during the first half that you would have an asset sale done?

I'm sorry, what did you say, the first half?

Yes, the first half.

We certainly hope that we would have our process concluded about what we're going to do, whether or not if we do decide to go down that path, what the closing schedule will be is still open. But as Dennis said, we do expect to be back to the -- and set up another call in the next several months to talk about the decisions we've made and what that looks like going forward. But in terms of actually getting a deal done, if there is one, we can't really talk about that yet.

Okay. In the environmental group, the order pickup, it looked like largely U.S.-based. Can you give us some color on -- is this replacement demand? Are these part sales that are coming in stronger than expected?

Actually, it's all of the above. It is domestic. We have some going into Canada, but it is -- it's part sales and it also is new equipment and on the industrial side especially. Industrial side is very active right now. So anything that's surrounding the ore refining, the refracturing they're doing in mining, I mean, all those things are really driving demand. Our vac business is doing well. Jetstream is doing well, so just a good, heavy industrial mix with a good lift in the municipal.

Okay. And kind of going back to the full year, I guess, the guidance that you can provide. How about revenue for the first quarter? You said breakeven on EPS, but would you expect revenue to be about flat with where it is at the end of the fourth quarter?

Yes, I think that's a pretty good call, Walt. It's probably flat with Q4. And if we stayed there, that would be up about 20% to 25% versus last year in the first quarter. So I think that's a pretty reasonable number.

Okay. And then other items for 2012, what kind of tax rate are you expecting?

I think 25% is a reasonable proxy to use.

[Operator Instructions] At this time, I'll turn the conference over to Dennis Martin for any additional remarks.

Well, thank you for joining our call and for your questions, and we'll talk with you as soon as we can. Thank you. Have a good day.

That does conclude today's conference. Thank you for your participation.