Oak Brook, Illinois, November 2, 2017 — Federal Signal Corporation (NYSE:FSS), a leader in environmental and safety solutions, today reported results for the third quarter ended September 30, 2017.

• Orders of $230 million, up $44 million, or 23%, from last year, including organic growth of $13 million, or 7%

• Net sales of $249 million, up $62.0 million, or 33% compared to last year

• GAAP earnings per share of $0.21, up from $0.12 last year

• Adjusted earnings per share of $0.24, up from $0.17 last year

• Raising full-year outlook to a range of $0.79 to $0.82, from a range of $0.77 to $0.80

Consolidated net sales for the third quarter were $248.7 million, up $62.0 million, or 33% versus the same quarter a year ago. Third quarter income from continuing operations was $12.5 million, equal to $0.21 per diluted share, compared to $7.5 million, equal to $0.12 per share, in the prior-year quarter.

The Company also reported adjusted net income from continuing operations for the third quarter of $14.4 million, equal to $0.24 per diluted share, compared to $10.5 million, or $0.17 per diluted share, in the same quarter a year ago. The Company is reporting adjusted results to facilitate comparisons of underlying performance on a year-over-year basis. A reconciliation of these and other non-GAAP measures is provided at the conclusion of this news release.

Q3 Earnings Exceed Expectations; Significant Increases in Orders, Sales and Income Driven by Organic Growth and M&A

“We are pleased to report another outstanding quarter, with results that exceeded both revenue and earnings expectations,” commented Jennifer L. Sherman, President and Chief Executive Officer. “Our net sales, orders and income were each up significantly in comparison to the prior year, driven by organic growth and acquisitions.”

Consolidated orders were $229.6 million for the quarter, up $43.5 million, or 23%, compared to the prior-year quarter. The Environmental Solutions Group reported orders of $178.2 million in the third quarter of 2017, an increase of $42.2 million, or 31%, compared to the prior-year quarter. The improvement was driven by organic order growth of approximately $11 million, or 9%, primarily represented by higher orders for sewer cleaners and vacuum trucks, and the acquisition of TBEI. Orders within our Safety and Security Systems Group were up $1.3 million. Consolidated backlog at September 30, 2017 was $204 million, up $55 million, or 37%, compared to last year.

In the Environmental Solutions Group, net sales were up $64.2 million, or 48%, due to the addition of $47.2 million in net sales from the TBEI acquisition and organic sales improvement of $17.0 million, or 13%, driven by higher domestic shipments of sewer cleaners, vacuum trucks and street sweepers. Sales in the Safety and Security Systems Group decreased by $2.2 million, or 4%.

Consolidated third quarter operating income was $22.2 million, up $8.7 million, or 64%, compared to the prior-year quarter, primarily driven by a $8.7 million increase within the Environmental Solutions Group. Consolidated operating margin was 8.9%, up from 7.2% in the prior-year quarter.

Consolidated adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) for the third quarter of 2017 was $33.3 million, up $11.0 million, or 49%, compared to the prior-year quarter, and consolidated adjusted EBITDA margin was 13.4% compared to 11.9% last year.

Adjusted EBITDA in the Environmental Solutions Group was up $10.9 million, or 55%, to $30.7 million, and its adjusted EBITDA margin was 15.5%, up from 14.7% last year. Within the Safety and Security Systems Group, adjusted EBITDA was $7.3 million, compared to $8.0 million last year, and its adjusted EBITDA margin was 14.5%, compared to 15.3% last year.

Cash Flow Facilitates Additional Debt Pay Down in Q3

Net cash of $6.3 million was provided by continuing operating activities in the third quarter of 2017, bringing the total of net cash provided by continuing operating activities in the first nine months of 2017 to $52.1 million, an increase of $35.0 million compared to the same period in 2016. At September 30, 2017, consolidated debt was $283 million, total cash and cash equivalents were $28 million and the Company had $99 million of availability for borrowings under its credit facility.

“Since we closed the TBEI acquisition at the beginning of June, we have paid down almost $30 million of debt, reducing our debt leverage ratio at the end of the quarter to 2.3 times adjusted EBITDA, which is down from 2.7 times adjusted EBITDA at the completion of transaction,” said Sherman.

The Company also funded dividends of $4.2 million during the third quarter, and the Board of Directors recently declared a $0.07 per share dividend that will be payable in the fourth quarter.

Outlook

“Our third quarter performance was stronger than we anticipated, due in part to some earlier-than-expected deliveries,” Sherman noted. “Our North American municipal markets continue to be steady overall, and sales into industrial markets have improved. Although we are still in early days, we are encouraged by TBEI's contributions to date. With our third quarter performance and the strength of our backlog, particularly for sewer cleaners and vacuum trucks, we are raising our full-year 2017 adjusted EPS outlook^* to a new range of $0.79 to $0.82, from a range of $0.77 to $0.80.”

* Adjusted EPS is a non-GAAP measure, which includes certain adjustments to reported GAAP net income and diluted EPS. Our outlook assumes certain adjustments to exclude the impact of restructuring activity, executive severance costs, acquisition and integration-related expenses, purchase accounting effects and pension settlement charges, where applicable. However, because of the underlying uncertainty in quantifying amounts which may not yet be known, a reconciliation of our Adjusted EPS outlook to the most applicable GAAP measure is excluded based on the unreasonable efforts exception in Item 10(e)(1)(i)(B).

CONFERENCE CALL

Federal Signal will host its third quarter conference call on Thursday, November 2, 2017 at 10:00 a.m. Eastern Time. The call will last approximately one hour. The call may be accessed over the internet through Federal Signal’s website at https://www.federalsignal.com or by dialing phone number 1-800-289-0496 and entering the pin number 2729350. A replay will be available on Federal Signal’s website shortly after the call.

About Federal Signal

Federal Signal Corporation (NYSE: FSS) provides products and services to protect people and our planet. Founded in 1901, Federal Signal is a leading global designer, manufacturer and supplier of products and total solutions that serve municipal, governmental, industrial and commercial customers. Headquartered in Oak Brook, Ill., with manufacturing facilities worldwide, the Company operates two groups: Environmental Solutions and Safety and Security Systems. For more information on Federal Signal, visit: https://www.federalsignal.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

This release contains unaudited financial information and various forward-looking statements as of the date hereof and we undertake no obligation to update these forward-looking statements regardless of new developments or otherwise. Statements in this release that are not historical are forward-looking statements. Such statements are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Such risks and uncertainties include but are not limited to: economic conditions in various regions; product and price competition; supplier and raw material prices; risks associated with acquisitions such as integration of operations and achieving anticipated revenue and cost benefits; foreign currency exchange rate changes; interest rate changes; increased legal expenses and litigation results; legal and regulatory developments and other risks and uncertainties described in filings with the Securities and Exchange Commission.

Contact: Ian Hudson, Chief Financial Officer, +1-630-954-2000, ihudson@federalsignal.com

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