Oak Brook, Illinois, July 27, 2022 — Federal Signal Corporation (NYSE:FSS) (the “Company”), a leader in environmental and safety solutions, today reported results for the second quarter ended June 30, 2022.

Second Quarter Highlights

• Net sales of $367 million, up $32 million, or 10%, from last year

• GAAP EPS of $0.55, up $0.07, or 15%, from last year

• Adjusted EPS of $0.53, up $0.03, or 6%, from last year

• Orders of $413 million, up $53 million, or 15%, from last year

• Record backlog of $795 million, up $358 million, or 82%, from last year

• Raises mid-point of 2022 adjusted EPS* outlook by establishing a new range of $1.85 to $2.00, updated from the previous range of $1.80 to $2.00

Consolidated net sales for the second quarter were $367 million, up $32 million, or 10%, compared to the prior-year quarter. Net income for the second quarter was $33.5 million, or $0.55 per diluted share, up from $29.7 million, or $0.48 per diluted share, in the prior-year quarter.

The Company also reported adjusted net income for the second quarter of $32.2 million, or $0.53 per diluted share, up from $30.6 million, or $0.50 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 Sales Growth and Improved Margins Despite Ongoing Supply Chain Challenges; Orders Remain Strong

“Our businesses were again able to deliver strong operational performance during the quarter, despite the ongoing challenges associated with the current supply chain environment,” commented Jennifer L. Sherman, President and Chief Executive Officer. “With improved price realization, strong aftermarket demand and contributions from our recent acquisitions, our results included double-digit top line growth and gross margin improvement. Notably, our EBITDA margin for the quarter was at the high end of our target range, and up 40 basis points compared to last year.”

In the Environmental Solutions Group, net sales for the second quarter were $306 million, up $25 million, or 9%, compared to the prior-year quarter. In the Safety and Security Systems Group, net sales were $60 million, up $7 million, or 13%, compared to the prior-year quarter.

Consolidated operating income for the second quarter was $46.2 million, up $7.7 million, or 20%, compared to the prior-year quarter. Consolidated operating margin for the second quarter was 12.6%, up from 11.5% in the prior-year quarter.

Consolidated adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) for the second quarter was $58.2 million, up $6.3 million, or 12%, compared to the prior-year quarter, and consolidated adjusted EBITDA margin was 15.9%, up from 15.5% in the prior-year quarter.

In the Environmental Solutions Group, adjusted EBITDA for the second quarter was $51.6 million, up $1.0 million, or 2%, compared to the prior-year quarter, and its adjusted EBITDA margin was 16.8%, compared to 18.0% last year. In the Safety and Security Systems Group, adjusted EBITDA for the second quarter was $11.4 million, up $2.7 million, or 31%, compared to the prior-year quarter, and its adjusted EBITDA margin was 18.9%, up from 16.3% last year.

Consolidated orders for the second quarter were $413 million, up $53 million, or 15%, compared to the prior-year quarter. Consolidated backlog at June 30, 2022 was $795 million, a new record for the Company, and an increase of $358 million, or 82%, from last year.

Positive Cash Generation and Strong Financial Position, Providing Flexibility to Fund M&A, Organic Growth and Cash Returns to Stockholders

Operating cash flow during the second quarter was $15 million, up $2 million or 16%, from the prior-year quarter. At June 30, 2022, consolidated debt was $327 million, total cash and cash equivalents were $31 million and the Company had $166 million of availability for borrowings under its revolving credit facility.

“Our operating cash flow remains healthy, despite incremental strategic investments in chassis and other raw materials in order to serve our customers,” said Sherman. “With the strength of our current financial position, we have significant flexibility to pursue strategic acquisitions, invest in organic growth initiatives and return cash to stockholders through dividends and opportunistic share repurchases.”

The Company funded dividends of $5.4 million during the second quarter, reflecting a dividend of $0.09 per share, and the Board of Directors recently declared a similar dividend that will be payable in the third quarter. The Company also funded share repurchases of $2.5 million during the second quarter.

Outlook

“The momentum in demand for our products and our aftermarket offerings that we have seen in recent quarters continued in the second quarter, with a 15% year-over-year order improvement contributing to another record backlog,” noted Sherman. “Although we expect the volatile supply chain environment to continue, we are encouraged with how our teams have navigated through these challenges so far this year. The recent increases in interest rates are expected to represent an EPS headwind of $0.02 in comparison to our prior outlook. Notwithstanding this impact, with our performance in the first half of the year, our record backlog and current expectations of component availability, we are raising the mid-point of our full-year adjusted EPS* outlook by establishing a new range of $1.85 to $2.00, updated from the previous range of $1.80 to $2.00.”

CONFERENCE CALL

Federal Signal will host its second quarter conference call on Wednesday, July 27, 2022 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 1-855-327-6837 and entering the pin number 10019765. 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: direct and indirect impacts of the coronavirus pandemic and the associated government response, risks and adverse economic effects associated with emerging geopolitical conflicts, product and price competition, supply chain disruptions, work stoppages, availability and pricing of raw materials, cybersecurity risks, 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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* Adjusted earnings per share (“EPS”) is a non-GAAP measure, which includes certain adjustments to reported GAAP income from continuing operations and diluted EPS. In 2021, we made adjustments to exclude the impact of acquisition and integration-related (benefits) expenses, pension-related charges, coronavirus-related expenses and purchase accounting effects, where applicable. Should any similar items occur in 2022, 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).