Good day and welcome to the Federal Signal First Quarter Call. Today's conference is being recorded. At this time, I'd like to turn the call over to Mr. Brian Cooper, Senior Vice President and Chief Financial Officer. Please go ahead.

Good morning and welcome to Federal Signal's first quarter 2016 conference call. I'm Brian Cooper, the Company's Chief Financial Officer. Joining me on this call are Jennifer Sherman, our President and Chief Executive Officer; and Dennis Martin, our Executive Chairman. We'll refer to some presentation slides today, as well this to the earnings news release which we issued this morning. The slides can be followed online by going through our website federalsignal.com, clicking on the investor call icon and signing into the webcast. We've also posted the slide presentation and the news releases under the Investor tab on 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-Q today. I'm going to start today by addressing our financial results. Jennifer will then provide her perspective on our performance, current market conditions and our outlook for the remainder of 2016. After our prepared comments, Dennis, Jennifer and I will address your questions. Our consolidated first quarter financial results are provided in today’s earnings new release. Please note that the historical and current new information presented in the release exclude the results of the Fire Rescue Group, which was discontinued in connection with the sale of the Bronto Skylift business that was completed in January this year. Overall, our first quarter results were in line with our expectations. Consolidated net sales…

Thank you, Brian. I’d like to start by providing some color on the first quarter. As Brian said, our results for the quarter met our expectations and they reflect the tail of two markets. Our municipal markets which constitute about 60% of our revenues remains sold. I am particularly pleased with the growth and improving profitability of our U.S. and European public safety systems businesses. These are part of our Safety and Security Systems Group that provides lightbars, sirens and related products to municipal customers in the police, fire and heavy-duty markets. Two years ago, we began a significant new product development effort that is results in its introducing several new products. We are starting to see the benefits of this work and we are continuing to gain market share. Notably, we had some significant links from our competitors in this quarter in Miami, Nashville [ph] and Albuquerque. We also continue to see opportunities primarily in the Western United States with our initiative to upfit police vehicle. This key area of focus in recent years gives us control over more of the car content and supports our efforts to expand our relative product offerings. We recently received a nice boost to these efforts when Federal Signal in conjunction with our distributor achieved the Ford Quality Vehicle Modifier Certification for upfitting police vehicles. Results on the municipal sides holds up well in the Environmental Solutions Group too especially when compared to a strong Q1 last year. On the other hand, our industrial markets continue suffer hangover effects from the downturns in the oil and gas markets and we continue to see the impact within the Environmental Solutions Group of an influx of used equipment at drastically reduced prices from entities that are experiencing financial difficulty. Low sales price and depressed rental…

Thank you. [Operator Instructions] And we’ll go first to Steve Barger with KeyBanc Capital Markets.

Good morning, Steve. How are you?

Good. How are you?

Good.

Good. First, I want to go to the guidance, you said this will be a higher percentage in 1Q of the full year which makes sense given the range, but what are the risks to the high end, is that really the industrial business remaining a laagered or is it operational risks?

It’s really orders are industrial businesses.

Any - can you help us think about if order stay low and you start to see the revenue headwinds, what would the negative leverage be there, I think you put up a 23% detrimental in 1Q, can you maintain that?

You know I think it really depends on the market conditions. We are undertaking our number of cost saving initiatives. We’ll continue to monitor those going forward.

Yeah, I mean Steve, if we don’t act the negative leverages well above our gross margin, we are acting so we’re keeping our costs in line and we’ll continue to monitor that. But that’s what we’re trying to manage through.

Understood. And in terms of thinking about working capital, you know normally when revenue comes down, industrial companies release some working cap, is that your expectation for this year?

Not so much. I think we first of all, we’re not expecting the top line to fall up that much. We are planning to make some investments in our inventory in order to capture some additional sales opportunities, so we’re looking at that. And we expect working capital has been pretty efficient over the last couple of years. So we’d expect to the same little less in line.

You know I would add, in the last downturn, we cut a lot of our sales resources, our new product development resources and we are committed to maintaining those investments, particularly around revenue generating activities for the future.

Got it. Is there - I may have missed this, is there a cash cost that you’d expect for restructuring this year?

In the first quarter, we had a charge of 1.2 million and we’ll continue to monitor our businesses as needed for additional opportunities with respect to reductions and force if we need to. We are also exploring voluntary layouts and expense control.

Yeah and that’s an all cash restructuring charge in the first quarter.

Yeah. But you not necessarily forecasting a specific number for the remainder of the year?

We aren’t and we are partly - I mean we are trying to manage to what comes. So as order - depending on where orders go, we will manage up and down our businesses nearly to some other actions. But we are not projecting a specific number.

Okay. And Jennifer you talked -

It’s all respect in our guidance.

On this, got it, okay. Jennifer, you talked a little bit about this, but can you discuss inquiry levels in the ESG segment on the municipal side, on the industrial side, basically just what are your dealers telling you as they have move through 2Q so far?

With respect to the municipal side and ESG, you know the orders are maintaining relatively steady, we are with our dealers in a large trade show at the end of February and the outlook was solid. On the industrial side, it’s more uncertain. You know there’s been a number of a large auction so there has been its influx of used equipment into the market and you know it’s very difficult to understand when it’s going to work its way through the market because the number of our competitors, a number of the end users are having financial difficulties related to oil and gas. And we are continuing to see sell off to the equipment and reduce prices. The other thing I would add on the municipal market as we talked about in the past, is the orders tend depend on the large suite orders, so we are monitoring those closely.

And when you think about the - some of the new products for hydro-excavation, I think you mentioned specifically, how do you think about revenue potential there, what is the size of the market opportunity for that?

You know we set as a goal on the SSG side of the business a 30% goal of new product introductions from the last three years. On the ESG side of the business, the product lifecycles area much longer although we have a similar goal. So it’s a very beginning with respect to our initiatives in the utility market. We are just filling into production for our paradigm vehicle in July of this year and we think it’s going to take some time. We are encouraged by the initial response but I guess its kind we’re in the first inning right now.

How did you arrive the 30% number, did you - is that based on a market study where you feel that you have a slate of opportunities and that’s what you can handle or is that something that’s more internally generated where you are trying to drive demand?

It’s really internally generated in terms of driving demands going forward.

And I guess to that same thought, can you describe pricing in the market right now on the municipal side and the industrial side? Are you seeing competitors stay rational?

On the municipal side, yes. On the industrial side, some of the auctions that I talked about previously particularly in those areas that have strong oil and gas end markets, we have seen dramatically reduced prices.

And those are reflecting some of our product lines not necessarily all of them. And that’s mostly ESG.

Right. Okay, I’ll get back in line and see if anybody else has a question.

Thank you, Steve.

[Operator Instructions] And we do have a follow-up question from Steve Barger with KeyBanc Capital Markets.

Welcome back, Steve.

Thanks a lot. Are there synergy opportunities between Joe Johnson and Westech via broader distribution or shared services, is there - have you thought about benefits related to that beyond just the revenue?

Yeah, we’ve looked at you know consolidation of facilities although it’s relatively small and we’ve also - an important driver is be able to use the Joe Johnson platform to drive additional sales of Westech equipment.

But more broadly, I think Steve, the opportunities are with other parts of Federal Signal, so we have opportunities to expand our sales of industrial products, Westech is one of those. And that’s one of things we’re looking forward to. A lot of these synergies with respect to Joe Johnson are really revenue synergies, there are few on the cost side.

And Jennifer on your comments, you mentioned recurring revenue and ability to leverage the channel is kind of acquisition metrics, are there other specific goals or requirements you have when you are reviewing a deal?

Absolutely, you know we are looking at what’s core in terms of both manufacturing capabilities, we’ve talked previously about channel. We talked about having acceptable IRR is important. And let me also talk about management bandwidth, so timing of acquisitions and when we pursue those acquisitions is something that we monitor closely. We are pleased thus far with the integration efforts that have occurred regarding Joe Johnsons but as you know it takes a lot of work.

Right, so I guess to the bandwidth point, is there - do you feel like you wouldn’t be able to do another fairly large acquisition at this point until that’s more fully integrated or are you limited or I should say, are you not limited right now in terms being able to do another deal?

You know I think that you know depending on the opportunity, we do have bandwidth particularly on our SSG side and we’re actively in the market looking at opportunities and you know we feel like we got a strong team that we can put in place.

Are you - as you review your pipeline, do you have more opportunities on the ESG or the SSG side?

You know it’s equally slipped.

Yeah, I’d say it’s pretty balanced, Steve.

And I’ve asked this is the past with probably with review, can you tell us what the size, range of the deals that are active on your desk are in terms of revenue?

You know they really vary you know typically they can be small like the Westech acquisition, so there are some product lines, type opportunities, they were taking a look at and there is some larger deals. But when we see larger deals, we are looking at deals under $100 million in revenue.

It typically, yeah.

Understood. Okay, I think that’s all I have today.

Thank you, Steve.

[Operator Instructions] And we have no further questions in the queue at this time.

Okay, well thank you. In closing, I would like to reiterate that we are confident in the long term prospects for our businesses in our markets. We are excited about our pending Joe Johnson Equipment acquisition and look forward to welcoming their team to the Federal Signal family. With the acquisition, we aim to provide even better service to our customers and to growing with new products. All of this depends on the continued support of our stockholders, employees, distributors, dealers and customers and we thank them all. Thank you very much for joining us today.

And that does conclude today’s conference. Thank you for your participation.