Good day and welcome to the Federal Signal Corporation, fourth quarter conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Brian Cooper, Senior Vice President and Chief Financial Officer. You may begin.

Good Morning and welcome to Federal Signal's fourth quarter 2013 conference call. I'm Brian Cooper, the company's Chief Financial Officer. Also on this call with me are Dennis Martin, President and Chief Executive Officer; and Jennifer Sherman, Chief Administrative Officer and General Counsel. We'll refer to some presentation slides today, as well as to the news release, which we issued this morning. The slides can be followed online by going to our website, federalsignal.com, clicking on the Investor Call icon and selecting the webcast. We have also posted the slide presentation to our website. Before we begin, 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. Our presentation also contains some measures that are not in accordance with U.S. Generally Accepted Accounting Principles. In our news release and filings, we reconcile these non-GAAP measures to GAAP measures. In addition, we will file our Form 10-K today. I’m going to start by addressing our financial results. I will then hand the call over to Dennis, who will provide his perspective on our performance and direction and then Jennifer will wrap up our prepared comments with an update on our corporate initiatives. Our fourth quarter and full year financial results are provided in today’s news release and I will focus on fourth quarter highlights. As you can see our, Q4 results were excellent. Orders were up 14% and backlog remains healthy. Gross profit increased 13% on $220 million of net sales and operating income was up 65%. Consolidated operating margin reached a recent high of 9.8% compared to 6% in last year’s quarter. We…

Thanks Brian and let me add my welcome to our call toady. As you have seen, we have had a very strong fourth quarter and I would like to provide some additional color. As Brian mentioned, our results reflect excellent performance from the environmental systems and safety and security systems groups, as well as a soft quarter at the Fire Rescue Group. Let me focus first on the Environmental Systems Group. Our 14% increase in sales was broad based, as all of the ESG businesses were up in Q4 compared to last year. The increase was supposed by strong demand in the market place for our products. On our municipal side, this includes street sweepers and sewer cleaners, while the municipal spending remains well below its peak in some of our businesses, we saw steady increases for our sales of these products through the year. On the industrial side, energy and utility markets drove demand for our Hydro Excavation Units, vacuum trucks and Water Blasting Tools. Our backlog is near last years level. As we discussed previously, we have been adding manufacturing capacity to help us capture additional opportunities, while managing our backlog through appropriate levels. In a few minutes Jennifer will talk a little more about our initiatives in that area. ESGs record operating margin of 14.6% in Q4 reflects work done over the last few years on 80/20 initiatives in pricing, but more importantly reflects incremental capacity that we have created already with the operating leverage we’ve been able to generate from it. The story for Safety and Security Systems Group during the fourth quarter is a little different. Top line was down about 2% compared to last year’s quarter. Municipal market demand for SSG, police, fire and emergency products has increased gradually and we believe that we…

Thank you Dennis. As we entered 2014, we’ve established a number of inter related initiatives that we will pursue to create profitable growth. Our first imitative is to stimulate organic growth in our businesses. This organic growth will be complimented by targeted acquisitions that either leverage our core competencies or give us access to adjacent or international markets. We have refocused our engineering teams around new product development and implemented processes to fast track introduction of new products. For example, we have introduced a new innovating canter located within our corporate head quarters. Our cross functional team of engineers and sales and marketing individuals will work to develop new products and identify new end users and adjacent markets for our existing products. We expect that over the long term these growth initiatives will deliver the following. First, consistent high single-digit annual operating income and EPS growth and second, sequential improvement in the share of revenue from new markets and products. Our second initiative is our commitment to leverage our invested capital to support profitable growth. We are in the process of implementing capacity expansion within our ESG businesses to meet customer demand and support growth. This includes the addition of new production lines at Vactor and Elgin and the expansion of our Jetstream facility to supplement its capacity. We have implemented a flexible manufacturing model between our Elgin, Vactor and FS Solutions facilities, that allows us to optimize manufacturing activities among the various sites in order to meet specific customer demand. At our SSG facility, the various lean initiatives, we have consolidated operations and created additional capacity to support our growth initiatives. We’ve made a number of investments across the company and new paint systems and other capital equipment that we believe will future improve our efficiencies. We will track…

Thanks Jennifer. In closing I want to emphasize that we are committed to growing in our markets and leveraging the profitability of our businesses. Our outstanding fourth quarter and annual results are the product of the hard work of our employees, the dedication of our distributors and our dealers and the depth of our relationship with our customers. With that, we are ready to open the phone line for any questions that you might have.

Thank you. (Operator Instructions). And we will take our first question from Robert Kosowsky with Sidoti.

Hi, good morning. How are you all doing?

Good morning Rob.

Good morning.

I was just wondering if you could talk about the sustainability of margins that was on ESG and safety, because they obviously were very strong in this quarter and I’m wondering if there were any transient factors that really bumped them up or how we should think about your ability to hit these margins again in the next few quarters.

Well, I think, as Jennifer pointed out, we’re looking at a potential 18% increase on earnings on a normalized basis for 2014, which clearly takes that into account Rob. There was nothing unusual in the quarter other than very strong business at ESG and improved business at SSG. SSG is the one business that will go up and down by quarter because of the large orders, but I think in the overall we think it will sustain as I said to 18% growth.

Okay, that’s very helpful. And then also on the ESG side, backlog is your last year’s levels. Can you talk about how much back order vacuum truck, I guess orders you had last year versus this year. I’m just trying to get a better gauge of apples to apples backlog growth, teasing out the fact you did have some backorder last year at this time.

Yes, we don’t generally break out the exact numbers of the vacuum trucks, but I’ll just say that the level of sustaining, the level in the market place is sustaining what it has for the last year, so it’s very strong.

Okay. I guess within the municipal side, is it both on the vacuum truck and street sweeper side. Are both good?

We’re seeing better activity on the vacuum truck side for sure and the sweeper is actually bulk, so the answer is yes. They are both doing better and are certainly at the peak levels of four years ago, but they are both stronger. We think the municipalities are starting to release more funds. So far this year we haven’t seen any street sweeper activity, because as you know out there its ice, so. Hopefully pretty soon we’ll see the street sweeper activity pick up. Its good, I mean it’s pretty balanced.

Mainly salt spreaders right now.

Salt spreaders, right. There you go.

And then finally just a numbers question, how should we look at the differed taxes line item on the cash flow statement for 2014?

Well, it’s really obviously a non-cash item. There’s a lot of things that are flowing through that this year, so the simple way to say it is we are reflecting all those tax items in the earnings and then we’re removing them to get to the cash flow on lot of the taxes. All the U.S. taxes that we will be paying will end up flowing through that in the future through use of our tax assets.

Okay, but I guess looking forward to 2014, I’m just wondering how big of a source of cash the differed tax line item is going to be or if there will be a source of cash just given your tax structure right now, which just seems like it would be.

I can’t give you a number on that, but I mean if you are trying to calculate something, I mean its really the difference between our sort of mid-teens cash tax rate and the 32% rate we expect to see on the financial books.

Okay, that’s helpful and good luck.

Thanks. I appreciate it.

Thank you.

Thank you.

(Operator Instructions) And we’ll go next to Steve Barger with KeyBanc Capital Markets.

Hey, good morning guys.

Good morning Steve.

Good morning.

Hey Steve.

Following up on that margin question, can you talk about capacity utilization in ESG in the quarter and the year and then given where your backlog is, do you think you can start to run the plants at a level where you have more stable absorption across the year?

Yes, yes, yes, yes, how is that? As we worked our way through last year we actually offered the manufacturing capacity out for that Vactor, by utilizing the Elgin facility and by utilizing the FS Solution Centers, it actually picked up 17% or 18% in capacity last year doing that. During this year Steve, starting April 1 or so, we’re actually opening a brand new production line, an additional production line in Vactor to produce and reduce the backlog, given that of our normal activity and we’ve actually cleared the production line space and additional production line space in Elgin to produce Vactor products or additional Elgin products that we need, but that will utilize the Elgin facility better. So we’ll be running a lot more efficiently at Vactor, again pretty close to capacity. We saw a third shift capacity. But with the new line and then Elgin will come up, because it really has more capacity we can utilize.

And as you talk to the dealers on the ESG side, what is the kind of tone as they put together their forecast for 2014. Are they more optimistic at this point of the year than they were a year ago? Can you talk about how they see the market shaping up?

Yes, I think that our 18% normalized increase that we’re projecting for ’14 really reflects the feedback we’re getting from the dealers. As we said, the market has not returned completely on the municipal side, but they are certainly field driven. They see the same horizon we do. They can see pretty much nine months to a year and they feel pretty good about that. The wild card this year is going to be the return of the seeping season on the Belgium side, because it has been – its March and we’re still covered with snow on the ground. So it will be interesting to see how that comes back and that has actually been a slow start. We’re seeing it both from the parts business and on the machine business, but I think they feel good. I think nobody sees a straight up line, but I think they feel like the cities are doing better and they are willing to spend some of the money and we’re doing some things to attract that.

Got it. When you think about the guidance, just starting at about $0.79 and then moving back up into operating income, how much of price is contemplated in the year-over-year growth that you see in operating income?

I mean we don’t break it out like that, but obviously price is always part of our 80/20 and other initiatives in the businesses, so I mean that is a piece of it. It varies by business and in some businesses we have more opportunities to work on additional content or otherwise to improve our margins.

Yes, I think the mix is a bigger factor Steve. I’d say 1%, 1.5%, perhaps on real price in materials are holding and then in some case dropping. So I think we’ll have a net effect of two points maybe in price overall, but really the mix of the products makes such a great difference you know, especially if it keeps…

Got it. So when you said in the release that upside could be driven by market conditions, is that really a function of getting the right mix or is it just seeing a broader based improvement relative to what your current forecast looks at?

I think a little of both, but an example at Bronto really starts to peak up. There could be more upside there and then certainly the mix.

Okay. I don’t have my model in front of me, but just kind of doing the quick math, it looks like working cap as a percentage of revenue is about 18% right now. Is that a sustainable number or do you think you can even improve that going forward or however you measure working capital?

It’s a sustainable number for sure. I think the challenge in bringing it down will be we’re trying to grow businesses, we don’t want to take inventories down too low in the supply businesses and things like that, so inventory is the biggest driver for us. The other things tend to flow from that and that’s really coming out of our 80/20 efforts as much as anything. So it really comes back to the operations and that’s a gradual steady sort of process for us.

And we still see Steve pretty good opportunity with 80/20 and the lean and as Brian said, flow of inventories at Bronto particularly this year, because they just completed their expansion and that can get back to normal production. The Elgin team has gone to one-piece flow and really are accelerating the reduction of excess inventories. SSG has had tremendous operating improvements and flow in the sub layouts. In the new product line, based on production line at Vactor were really flow products that we have been traditionally making in days. So we think that as Brian said, while we are growing and going to be adding capital, we think it will be more efficiently used perhaps than we did in the past.

Yes, and one more thing Steve, I think I should probably tell you. We have compensation incentives that are tied to our use of working capital. It is a focus within the company and everybody knows that, so we’re working on that all the time.

Got it, that’s good. In the past I think that there had been issues with having too many skews I guess or too much optionality on the production line. Have you been successful in trying to commonize the product line as you know, Dennis I asked this just in the context of talking about your flow manufacturing. Have you gotten rid of specials?

Right. The answer is we’ve been a lot better at managing it and we’ve actually in the ESG side come up with a good strategy to produce specials for the customers that have that high demand, but not do it on the production line. So we’ve been able to produce high quality specials say in our FS Solution Houston facility. In this last year we produced about 20 machines there that would have taken three or four times the build time in the factory and just not disrupted the factory, by building in a single location. So the 80/20 management of the skus and all the businesses has really helped and also setting up the sales and the one-piece flow and that kind of thing. So we feel like we’re making good progress on that and there’s still opportunity.

We’ve made significant progress on our SSG side. We’ve contributed to the improvement in margin. For example in our PSS business the number of skus is down on a year-over-year basis over 30%.

Wow, okay.

So it’s a critical focus for our businesses.

I think its down about 60% in two years.

Correct.

Pretty close to 60%, and Steve what we’re doing is just focusing our customers on a high volume, actually more innovative better products. So we’re taking care of the customer need. We’re just trying not to do quite some of these variations.

Understood. And last one and I’ll get back in line and I apologize, I don’t have the slides in front of me, because I’m traveling, but I think you talked about targeted acquisitions. Is there anything in the pipeline and I guess as you think about acquisitions, what are the metrics? Presumably they’d be accretive on an EPS basis, but do you have a metric internally to make it accretive to return on capital in the segment, in which the acquisition takes place or anything like that. Just how are you thinking about making sure there’s really a value add here?

All right, we’re thinking about it exactly that way as you pointed it out and to answer your question. When you do acquisitions, I think you know this from your experience. You might look at 100 before you even get close to one and we have some good opportunities that we are thinking about looking at and our real commitment on that is that we will stay within our core growth markets if there is an acquisition that makes sense. So I think we will demonstrate very strong discipline in making sure that it meets the return on the potential capital requirements for the company and again, I think each one will be just weighed out on its own.

Very good. Thanks for the time.

Thanks Steve.

Thanks.

Thank you.

(Operator Instructions) We’ll take our next question from Robert Kosowsky with Sidoti.

Yes, just a quick question on the specialty business or the safety business. Do you have any good outlook or kind of I guess leads on bigger warning system implementations coming down the pipe?

Yes, there’s a couple of different pieces of that business, but we just did a complete review of our global team on the industrial safety business, which provides the systems and refineries, oil rigs and heavy process plants and we reviewed with them the list of projects that our end users like Shell, BP and others have and the integrators and engineering companies are working on and there’s a substantial list of projects over the next five to seven years. So we feel like its really plays in our suite spot, but with those large projects, you just never know when they are going to release the money or as we saw this week in Russia, things happened that slowed things down before they speed up and so there’s a good strong pipeline for those products.

Okay, that’s very good and then finally on the Fire Truck side or the Fire Rescue side. It seemed like Asian demand being weak was negative for you this quarter and I’m wondering if that’s something that you think is just weakness in China that’s filtering in or do you see that also having a decent pipeline longer term.

Yes, I’m not sure we called out that Asia was weak for us. Just shipments were delayed just basically because of timing. So it is a wild card; it is a big part of our business and we watch it every quarter, but we so far don’t see any trend that would suggest a change in the business activity that we’ve had for the last few years.

Okay, thank you very much and good luck.

Well, thank you.

Thanks Rob.

And it appears we have no further questions in queue at this time. I would like to turn the conference back over to Mr. Dennis Martin.

Again I want to thank everybody for attending our call and for the good questions and we look forward to talking to you in very few weeks as we get on the call for the first quarter. Thank you very much and have a good day.

That does conclude today’s conference. We thank you for your participation.