Downers Grove, Illinois, July 25, 2024 — Federal Signal Corporation (NYSE:FSS) (the “Company”), a leader in environmental and safety solutions, today reported results for the second quarter ended June 30, 2024. 

Second Quarter Highlights

• Net sales of $490 million, up $48 million, or 11%, from last year
• Operating income of $81.1 million, up $21.7 million, or 37%, from last year
• GAAP EPS of $0.99, up $0.33, or 50%, from last year
• Adjusted EPS of $0.95, up $0.28, or 42%, from last year
• Backlog of $1.08 billion, up $73 million, or 7%, from last year
• Raises 2024 adjusted EPS* outlook to a new range of $3.20 to $3.35, from the prior range of $2.95 to $3.15

Consolidated net sales for the second quarter were $490 million, an increase of $48 million, or 11%, compared to the prior-year quarter. Net income for the second quarter was $60.8 million, or $0.99 per diluted share, compared to $40.3 million, or $0.66 per diluted share, in the prior-year quarter.

The Company also reported adjusted net income for the second quarter of $58.8 million, or $0.95 per diluted share, compared to $41.4 million, or $0.67 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.

Double-Digit Organic Improvement in Net Sales and Earnings; Customer Demand Remains High

“Our businesses were able to deliver double-digit year-over-year organic net sales and earnings growth, gross margin expansion, and a 280-basis point improvement in adjusted EBITDA margin during the second quarter,” commented Jennifer L. Sherman, President and Chief Executive Officer. “Within our Environmental Solutions Group, we were able to deliver 10% year-over-year net sales growth and a 25% increase in adjusted EBITDA, with increased production at several of our businesses and continued price realization representing meaningful year-over-year growth drivers. Our Safety and Security Systems Group also delivered impressive results, with 18% top line growth and an adjusted EBITDA margin of 23.7%.”

In the Environmental Solutions Group, net sales for the second quarter were $409 million, up $36 million, or 10%, compared to the prior-year quarter. In the Safety and Security Systems Group, net sales were $82 million, up $12 million, or 18%, compared to the prior-year quarter.

Consolidated operating income for the second quarter was $81.1 million, up $21.7 million, or 37%, compared to the prior-year quarter. Consolidated operating margin for the second quarter was 16.5%, up from 13.4% in the prior-year quarter.

Consolidated adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) for the second quarter was $97.7 million, up $22.2 million, or 29%, compared to the prior-year quarter, and consolidated adjusted EBITDA margin was 19.9%, up from 17.1% in the prior-year quarter.

In the Environmental Solutions Group, adjusted EBITDA for the second quarter was $88.2 million, up $17.5 million, or 25%, compared to the prior-year quarter, and its adjusted EBITDA margin was 21.6%, up from 19.0% last year. In the Safety and Security Systems Group, adjusted EBITDA for the second quarter was $19.3 million, up $4.1 million, or 27%, compared to the prior-year quarter, and its adjusted EBITDA margin was 23.7%, up from 21.9% last year.

Consolidated orders for the second quarter were $473 million, compared to $480 million in the prior-year quarter. Consolidated backlog at June 30, 2024 was $1.08 billion, an increase of $73 million, or 7%, 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 second quarter was $41 million, an increase of $5 million, or 13%, from the prior-year quarter.

At June 30, 2024, consolidated debt was $255 million, total cash and cash equivalents were $49 million and the Company had $533 million of availability for borrowings under its credit facility.

“The improved cash flow facilitated additional debt repayment of approximately $17 million during the quarter,” said Sherman. “With our operating cash flow generation in the first half of 2024 increasing by 67% compared to last year, our financial position has been strengthened further, providing 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 $7.4 million during the second quarter, reflecting a dividend of $0.12 per share, and recently announced a similar $0.12 per share dividend that will be payable in the third quarter of 2024.

Outlook

“Demand for our products and aftermarket offerings remains high, with our strong order intake this quarter contributing to a backlog of $1.08 billion,” noted Sherman. “With our second quarter performance, our current backlog and continued execution against our strategic initiatives, we are raising our full-year adjusted EPS* outlook to a new range of $3.20 to $3.35, from the prior range of $2.95 to $3.15. 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 second quarter conference call on Thursday, July 25, 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 13747736. 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 Downers Grove, 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 and six months ended June 30, 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).