Oak Brook, Illinois, April 30, 2024 — Federal Signal Corporation (NYSE:FSS) (the “Company”), a leader in environmental and safety solutions, today reported results for the first quarter ended March 31, 2024. 

First Quarter Highlights

• •    Net sales of $425 million, up $39 million, or 10%, from last year; organic growth of $28 million, or 7%
  •    Operating income of $54.3 million, up $14.8 million, or 37%, from last year
  •    GAAP EPS of $0.84, up $0.39, or 87%, from last year
  •    Adjusted EPS of $0.64, up $0.18, or 39%, from last year
  •    Record orders of $503 million, up $28 million, or 6%, from last year 
  •    Record backlog of $1.10 billion, up $132 million, or 14%, from last year
  •    Operating cash flow of $31 million, up $24 million, or 341%, from last year
  •    Raises 2024 adjusted EPS* outlook to a new range of $2.95 to $3.15, from the prior range of $2.85 to $3.05

Consolidated net sales for the first quarter were $425 million, an increase of $39 million, or 10%, compared to the prior-year quarter. Net income for the first quarter was $51.6 million, or $0.84 per diluted share, compared to $27.4 million, or $0.45 per diluted share, in the prior-year quarter.

The Company also reported adjusted net income for the first quarter of $39.5 million, or $0.64 per diluted share, compared to $27.9 million, or $0.46 per diluted share, in the prior-year quarter. 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.

Customer Demand Remains at Record Levels; Double-Digit Improvement in Net Sales and Earnings

“Our businesses were able to deliver double-digit year-over-year net sales and earnings growth, gross margin expansion, and a 250-basis point improvement in adjusted EBITDA margin during the first quarter,” commented Jennifer L. Sherman, President and Chief Executive Officer. “Within our Environmental Solutions Group, despite an isolated third-party component supply issue at our vacuum truck facility, we were able to deliver 11% year-over-year net sales growth and a 30% increase in adjusted EBITDA. Strong aftermarket demand, continued price realization, contributions from our recent acquisitions and production increases in our dump truck body businesses were meaningful year-over-year growth drivers. Our Safety and Security Systems Group also delivered impressive results, with 6% top line growth and an adjusted EBITDA margin of approximately 21%. Our first quarter results also benefited from an insurance recovery of approximately $2 million. Demand for our products and aftermarket offerings remains strong, with our order intake this quarter representing the highest quarterly orders in our history, contributing to a record backlog of $1.10 billion at the end of the quarter.”

In the Environmental Solutions Group, net sales for the first quarter were $354 million, up $35 million, or 11%, compared to the prior-year quarter. In the Safety and Security Systems Group, net sales were $71 million, up $4 million, or 6%, compared to the prior-year quarter.

Consolidated operating income for the first quarter was $54.3 million, up $14.8 million, or 37%, compared to the prior-year quarter. Consolidated operating margin for the first quarter was 12.8%, up from 10.2% in the prior-year quarter.

Consolidated adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) for the first quarter was $70.6 million, up $16.1 million, or 30%, compared to the prior-year quarter, and consolidated adjusted EBITDA margin was 16.6%, up from 14.1% in the prior-year quarter.

In the Environmental Solutions Group, adjusted EBITDA for the first quarter was $66.5 million, up $15.3 million, or 30%, compared to the prior-year quarter, and its adjusted EBITDA margin was 18.8%, up from 16.1% last year. In the Safety and Security Systems Group, adjusted EBITDA for the first quarter was $14.8 million, up $1.6 million, or 12%, compared to the prior-year quarter, and its adjusted EBITDA margin was 20.9%, up from 19.8% last year.

Consolidated orders for the first quarter were $503 million, a new record for the Company and an increase of $28 million, or 6%, compared to the prior-year quarter. With the strong momentum in customer demand, consolidated backlog at March 31, 2024 was $1.10 billion, an increase of $132 million, or 14%, from last year.

Increased Operating Cash Flow Further Strengthens Financial Position, Providing Flexibility to Fund Growth Opportunities and Cash Returns to Stockholders

Operating cash flow during the first quarter was $31 million, an increase of $24 million, or 341%, from the prior-year quarter.

At March 31, 2024, consolidated debt was $272 million, total cash and cash equivalents were $49 million and the Company had $516 million of availability for borrowings under its credit facility.

“Our improved operating cash generation this quarter facilitated the repayment of approximately $24 million of debt during the quarter,” said Sherman. “Our current financial position provides us with significant flexibility to invest in organic growth initiatives, pursue additional strategic acquisitions, and fund cash returns to stockholders through dividends and opportunistic share repurchases.”

The Company funded dividends of $7.3 million during the first quarter, reflecting an increased dividend of $0.12 per share, and recently announced a similar $0.12 per share dividend that will be payable in the second quarter of 2024.

Outlook

“Demand for our products and our aftermarket offerings remains strong, with both our orders and backlog this quarter again setting new Company records,” noted Sherman. “With our first quarter performance, our record backlog and continued execution against our strategic and operational initiatives, we are raising our full-year adjusted EPS* outlook to a new range of $2.95 to $3.15, from the prior range of $2.85 to $3.05. We are also reaffirming our full-year net sales outlook of between $1.85 billion and $1.90 billion.”

CONFERENCE CALL

Federal Signal will host its first quarter conference call on Tuesday, April 30, 2024 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 www.federalsignal.com or by dialing phone number 1-877-704-4453 and entering the pin number 13746143. A replay will be available on Federal Signal’s website shortly after the call.

About Federal Signal

Federal Signal Corporation (NYSE: FSS) builds and delivers equipment of unmatched quality that moves material, cleans infrastructure, and protects the communities where we work and live. 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: 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 and political uncertainty, risks and adverse economic effects associated with geopolitical conflicts, legal and regulatory developments, foreign currency exchange rate changes, inflationary pressures, product and price competition, supply chain disruptions, availability and pricing of raw materials, interest rate changes, risks associated with acquisitions such as integration of operations and achieving anticipated revenue and cost benefits, work stoppages, increases in pension funding requirements, cybersecurity risks, increased legal expenses and litigation results 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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* Adjusted earnings per share (“EPS”) is a non-GAAP measure, which includes certain adjustments to reported GAAP net income and diluted EPS. In the three months ended March 31, 2024, we made adjustments to exclude the impact of acquisition and integration-related expenses, net, and certain special tax items. In prior years, we have also made adjustments to exclude the impact of environmental remediation costs of a discontinued operation, purchase accounting effects and certain other unusual or non-recurring items. Should any similar items occur in the remainder of 2024, we would expect to exclude them from the determination of adjusted EPS. 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).