free stats
Last Updated - July 29, 2014

Products 


Services


Popular Links



Advertising Links


Posted February 28, 2008 EST

Home >  Article
Fire Truck Manufacturer E-One Is Up For Sale
United States (Florida) - E-One's parent company Federal Signal Corp. announced Wednesday that it is having discussions with prospective buyers. After careful consideration, our board has decided to consider strategic alternatives with respect to our E-One business, Federal Signal interim president James Goodwin said Wednesday during a conference call with investors and analysts.

"Although the business is showing positive trends from the recovery plan, we have yet to generate positive shareholder returns. Accordingly, we have engaged an investment bank to review strategic alternatives, and I am pleased to report that we have indications of interest from several potential suitors," Goodwin said.

Just the fact that Goodwin mentioned the possible sale probably means it could happen quickly, said analyst Walter Liptak, who covers the company for Chicago-based Barrington Research. The company isn't known for talking about major actions unless they're about to happen, he said.

"It sounds like it's imminent," he said.

E-One could go to a truck manufacturer, such as Volvo or Navistar, but a private equity firm is a more likely buyer, Liptak said.

E-One marketing coordinator Amanda Davis released a statement Wednesday about the pending sale.

"We are potentially entering a new chapter in E-One and are excited about the opportunities that new ownership brings. Companies are bought and sold every day, and we have been encouraged by the quality of companies expressing interest in E-One," the statement indicated.

The sale announcement comes on the heels of a relatively strong quarter for E-One. Federal Signal's Fire Rescue Group, which includes both E-One and Finland-based Bronto Skylift, saw orders increase by 20 percent in the quarter, with U.S. sales (primarily E-One) up 4 percent.

With new dealers in place in major markets such as Texas, January E-One sales are even stronger, up 51 percent from the same month last year, Goodwin noted.

That flies in the face of a troubled fire apparatus market that has seen small companies go out of business in the past year. Major E-One competitor American LaFrance, which built a new plant in the Charleston, S.C., area last year, filed for bankruptcy protection in January.

"They're bucking the trend," Liptak said of E-One. "Their orders are growing."

In Wednesday's conference call, Goodwin acknowledged E-One's recent improvement.

"While our E-One division has struggled in the past several years, the business has been re-energized under the leadership of [E-One president] Peter Guile," Goodwin said. "Peter has worked closely with our current dealer partners as well as expanding our dealer network across North America."

Guile took over the presidency of E-One in July, replacing Marc Gustafson, who had held the post for nearly three years.

Federal Signal announced earnings per share of 17 cents for the quarter and 62 cents for the year, both above analysts' expectations. The company had record orders totaling $379 million in the fourth quarter.

Net income from continuing operations for the quarter was down sharply from the previous year, at $7.9 million, or 17 cents a share, compared with $13.1 million, or 27 cents a share, for the fourth quarter of 2006. The company blamed E-One for the drop, citing operating losses that resulted from low production rates and low order numbers in the first half of the year.

Federal Signal doesn't report separate numbers for E-One or Bronto, but noted in a press release Wednesday that the Fire Rescue Group lost $11 million for the year due to lower sales volume at E-One.

"The increased production of Bronto aerial devices and favorable currency effects only partly offset the loss at E-One," the release noted.

Net sales for the group for the year declined 14 percent from 2006, and losses at E-One "more than offset" strong growth in Bronto sales, it continued.

Bronto sales were up 50 percent for the year, and the company's entire 2008 production run is already sold, Goodwin said. The Bronto plant in Finland is undergoing an expansion that will add some 40 percent more capacity, Goodwin said in the conference call. He also made it clear the sale of E-One won't include Bronto.

Even with E-One's struggles, the Fire Rescue Group still accounts for more than a quarter of Federal Signal's $1.2 billion in net sales. The group brought in $330 million in net sales last year, and Liptak estimated E-One accounted for about two-thirds of that figure.

Wall Street apparently liked Wednesday's earnings report. Federal Signal stock closed at $12.50 a share Wednesday, a 13.6 percent increase from the day before. In comparison, Oshkosh Corp., the parent company of E-One competitor Pierce Manufacturing, closed down 1.07 percent for the day.

E-One was founded in Ocala in 1974 by Robert Wormser. Federal Signal has owned the company since 1979.

Written by Ocala Star-Banner

Courtesy of © 2008, YellowBrix, Inc. - YellowBrix


Bookmark and Share