commentary LightRock on 09 Jun 2008 09:22 am
Is E-One Too Sick To Get Well?
LightRock takes a look at the latest report:
In Saturday’s Ocala Star-Banner, an article by Rick Cundiff (HERE) provides details of the fire apparatus manufacturer’s current financial health. Previous to parent company Federal Signal’s most recent SEC filings, E-One’s financials had not been reported on a “stand alone” basis, instead being buried within the results of Federal’s Fire Rescue Group, which also includes Bronto Skylift.
In the most recent filing, Federal considers E-One to be a “discontinued operation” which means that E-One’s performance will no longer be included in reports of the parent company’s financial results. As a part of restating their results for the last year — and showing E-One’s performance absent the “cover” provided by Bronto — Federal Signal reported that E-One lost nearly $25 million on sales of less than $218 million.
Many fire apparatus industry observers were taken aback by both the size of the loss (especially on a percentage basis) and by how low the overall sales numbers of E-One have become. Federal Signal has had E-One on the block for sale for some time. However, despite talk about an imminent sale, nothing has materialized thus far.At this juncture, it is worth noting that in the past there been other distressed fire apparatus manufacturers – Grumman is one example – that simply closed their doors after a buyer couldn’t be found. With the kind of results that have now been publicly reported, it is worth considering that a similar fate could befall E-One.
Besides the bad news on the financial front, E-One has lost many of their top dealers to competitors. Being considered a “discontinued operation” by your current owners can’t be confidence inspiring for the remaining dealers or E-One’s employees. Any potential buyer would have to dig the company out of a pretty deep hole. Keep in mind that on $218 million in sales, to get from where they are now to let’s say 5% profitability, is an over $35 million swing. Not easy given the current state of the overall economy and the competitive landscape in the fire apparatus industry.
on 09 Jun 2008 at 6:06 pm 1.Patrick said …
Here in the Houston area E-One did booming business in the ’90’s. Sold close to 100 trucks to HFD alone, but I think all those sales were their undoing. Everyone in the area was quickly exposed to how crappy their product was and they didn’t have too many repeat buyers. I do wish Grumman still made fire trucks though.
on 11 Jun 2008 at 11:32 am 2.David said …
The issues encountered on the trucks in Houston were not the results of a poor quality vehicle, but rather an environment not suited for these types of units. The “damage” enecountered on the Houston trucks were caused by extremely poor roads and very abusive drivers. Any fire fighter knows that you do not try to take rough railroad tracks on a large aerial device at full speed. These were good trucks, they were poorly used. Some of these trucks have been sold used to other departments and are now doing very well. The product is only as good as you take care of it…