U.S. small-cap stock performance is soaring in the second half of 2025, with the benchmark S&P Small Cap 600 Index up 10.7% in the last three months and up 4.1% over the past 30 days. The broader large-cap  S&P 500 Index is up just 8.9% and 1.8% over the same time periods.Small-caps should rise even further if, as expected, the Federal Reserve cuts interest rates at the Fed's Open Markets Committee in mid-September. A .25% cut in the benchmark federal funds rate is a “done deal,” according to a Reuters surv ...

Core Insights - Marubeni Corp. (MARUY) and Federal Signal (FSS) are being compared for their attractiveness to value investors [1] - The analysis utilizes a combination of Zacks Rank and Style Scores to identify value opportunities [2] Valuation Metrics - MARUY has a Zacks Rank of 1 (Strong Buy) while FSS has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision for MARUY [3] - MARUY's forward P/E ratio is 10.10, significantly lower than FSS's forward P/E of 31.42 [5] - The PEG ratio for MARUY is 1.56, while FSS has a PEG ratio of 2.24, suggesting MARUY is more reasonably priced relative to its expected EPS growth [5] - MARUY's P/B ratio stands at 1.44 compared to FSS's P/B of 6.04, further indicating MARUY's relative undervaluation [6] - These metrics contribute to MARUY's Value grade of A and FSS's Value grade of D, making MARUY a more attractive option for value investors [6]

Core Insights - The article discusses the author's background in analytics and accounting, highlighting over 10 years of experience in the investment arena, starting as an analyst and progressing to a management role [1]. Group 1 - The author holds a master's degree in Analytics from Northwestern University and a bachelor's degree in Accounting [1]. - The author has a personal interest in dividend investing and aims to share insights with the Seeking Alpha community [1].

Company Overview - Federal Signal (FSS) currently holds a Momentum Style Score of B, indicating a positive momentum outlook [3] - The company is involved in manufacturing products such as street sweepers and toll booth technology for government, industrial, and commercial customers [4] Performance Metrics - FSS shares have increased by 41.28% over the past quarter and 30.39% over the last year, significantly outperforming the S&P 500, which moved 14.12% and 16.19% respectively during the same periods [7] - Over the past week, FSS shares are up 0.5%, matching the performance of the Zacks Diversified Operations industry [6] Trading Volume - The average 20-day trading volume for FSS is 825,709 shares, which is a useful indicator of market interest and can signal bullish or bearish trends [8] Earnings Outlook - In the last two months, four earnings estimates for FSS have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $3.83 to $3.96 [10] - For the next fiscal year, four estimates have also moved upwards without any downward revisions [10] Investment Recommendation - Given the strong performance metrics and positive earnings outlook, FSS is rated as a 1 (Strong Buy) stock, making it a compelling option for investors seeking momentum picks [12]

Core Insights - Federal Signal (NYSE: FSS) has demonstrated strong operating momentum, indicating positive performance in the specialty equipment manufacturing sector [1] Group 1: Company Performance - Federal Signal has continued to perform well across various operational metrics, showcasing robust growth and efficiency [1] Group 2: Investment Opportunities - The investment group "Value In Corporate Events" focuses on identifying actionable investment opportunities related to IPOs, mergers & acquisitions, and earnings reports, covering approximately 10 major events monthly [1]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Federal Signal Corporation's unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and detailed notes, for the periods ended June 30, 2025 and 2024 [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported significant growth in net sales and net income for Q2 2025, with net sales increasing **15.1%** to **$564.6 million** and net income rising **17.4%** to **$71.4 million** Key Financial Metrics | Financial Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | YoY Change | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $564.6M | $490.4M | +15.1% | $1,028.4M | $915.3M | +12.4% | | **Gross profit** | $169.6M | $144.0M | +17.8% | $300.4M | $260.0M | +15.5% | | **Operating income** | $97.7M | $81.1M | +20.5% | $163.4M | $135.4M | +20.7% | | **Net income** | $71.4M | $60.8M | +17.4% | $117.7M | $112.4M | +4.7% | | **Diluted EPS** | $1.16 | $0.99 | +17.2% | $1.91 | $1.82 | +4.9% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.916 billion** as of June 30, 2025, driven by inventories and acquisitions, while total liabilities and stockholders' equity also grew Key Balance Sheet Items | Balance Sheet Item | June 30, 2025 (Unaudited, Millions USD) | December 31, 2024 (Millions USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $64.7M | $91.1M | | Inventories | $356.5M | $331.0M | | Goodwill | $517.6M | $477.7M | | **Total assets** | **$1,916.0M** | **$1,765.2M** | | Long-term borrowings and finance lease obligations | $258.3M | $204.4M | | **Total liabilities** | **$653.8M** | **$579.1M** | | **Total stockholders' equity** | **$1,262.2M** | **$1,186.1M** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$96.4 million** for the six months ended June 30, 2025, with significant cash usage for acquisitions and share repurchases Key Cash Flow Activities | Cash Flow Activity | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$96.4** | **$71.9** | | Net cash used for investing activities | ($94.3) | ($23.0) | | Net cash used for financing activities | ($29.8) | ($60.5) | | **Decrease in cash and cash equivalents** | **($26.4)** | **($12.4)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes highlight the **$82.1 million** Hog Technologies acquisition, strong revenue growth, an increased effective tax rate, and a new **$150 million** stock repurchase program - On February 12, 2025, the Company acquired Hog Technologies, a manufacturer of road-marking, line-removal, and waterblasting equipment, for initial cash consideration of approximately **$82.1 million**. The acquisition is part of the Environmental Solutions Group[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - The effective tax rate for the six months ended June 30, 2025, was **24.3%**, compared to **12.5%** in the prior-year period, primarily due to the non-recurrence of a **$15.6 million** discrete tax benefit recognized in 2024[73](index=73&type=chunk) - In April 2025, the Board authorized a new stock repurchase program of up to **$150 million**. During Q2 2025, the company repurchased **280,893 shares** for **$20.0 million**[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 financial performance, noting a **15%** net sales increase, **20%** operating income growth, and a **$1.08 billion** consolidated backlog Q2 2025 Key Performance Indicators | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $564.6M | $490.4M | +15% | | **Operating Income** | $97.7M | $81.1M | +20% | | **Operating Margin** | 17.3% | 16.5% | +80 bps | | **Total Orders** | $540M | $473M | +14% | - The company completed the acquisition of Hog Technologies on February 12, 2025, which is expected to strengthen its position in the specialty vehicles market[189](index=189&type=chunk) - The company anticipates capital expenditures for 2025 to be in the range of **$40 million** to **$50 million**[195](index=195&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q2 2025 net sales increased **15%** to **$564.6 million**, with gross profit up **18%** and operating income growing **20%** to **$97.7 million** - Q2 2025 net sales increased by **$74.2 million (15%)** year-over-year, primarily due to higher sales volumes, including contributions from acquisitions, and pricing actions[145](index=145&type=chunk) - Gross profit margin for Q2 2025 was **30.0%**, an improvement from **29.4%** in Q2 2024, driven by margin expansion in both the Environmental Solutions Group (**+70 bps**) and the Safety and Security Systems Group (**+240 bps**)[149](index=149&type=chunk) - Consolidated operating margin for Q2 2025 improved to **17.3%** from **16.5%** in the prior-year quarter[153](index=153&type=chunk) [Segment Analysis](index=31&type=section&id=Segment%20Analysis) Both segments performed strongly in Q2 2025, with Environmental Solutions Group sales up **18%** and Safety and Security Systems Group sales up **3%**, both showing improved operating margins Q2 2025 Segment Performance | Segment | Q2 2025 Net Sales (Millions USD) | YoY Change | Q2 2025 Operating Income (Millions USD) | YoY Change | Q2 2025 Operating Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | **Environmental Solutions** | $480.5M | +18% | $91.9M | +26% | 19.1% | | **Safety and Security Systems** | $84.1M | +3% | $21.5M | +17% | 25.6% | - Environmental Solutions Group orders increased **11%** in Q2 2025, driven by strong demand for safe-digging trucks, aftermarket offerings, and road-marking equipment in the U.S[163](index=163&type=chunk) - Safety and Security Systems Group orders surged **28%** in Q2 2025, with notable improvements in public safety equipment in both U.S. and non-U.S. markets[175](index=175&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=35&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with **$514.5 million** available, net cash from operations at **$96.4 million**, and compliance with all debt covenants - Net cash provided by operating activities increased to **$96.4 million** for the first six months of 2025, up from **$71.9 million** in the same period of 2024, due to higher net income and working capital improvements[192](index=192&type=chunk) - Key uses of cash in the first half of 2025 included **$82.1 million** for the Hog acquisition, **$39.7 million** for treasury stock purchases, and **$17.1 million** for cash dividends[193](index=193&type=chunk)[194](index=194&type=chunk) - As of June 30, 2025, the company had **$514.5 million** of net availability for borrowings under its 2022 Credit Agreement and was in compliance with all financial covenants[190](index=190&type=chunk)[195](index=195&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes in market risk exposure were reported for the six months ended June 30, 2025, compared to the prior annual report - There have been no significant changes in the Company's exposure to market risk during the six months ended June 30, 2025[198](index=198&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of June 30, 2025, with recent acquisitions excluded from internal control assessment, and no material changes reported - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[199](index=199&type=chunk) - Management's assessment of internal control over financial reporting has not yet been completed for the recent acquisitions of Hog (Q1 2025) and Standard (Q4 2024), and these entities are excluded from the current assessment[200](index=200&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings, including hearing loss litigation with an estimated liability, are incorporated by reference from Note 9 of the financial statements - The company refers to Note 9 for details on legal proceedings, which includes information on the ongoing hearing loss litigation related to the company's sirens[82](index=82&type=chunk)[203](index=203&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported compared to the Annual Report on Form 10-K for December 31, 2024 - There have been no material changes in the Company's risk factors from those described in the Annual Report on Form 10-K for the year ended December 31, 2024[204](index=204&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **280,893 shares** for **$20.0 million** in Q2 2025 under a new **$150 million** stock repurchase program, with **$157.2 million** remaining Stock Repurchase Program Summary | Period | Total Shares Purchased | Average Price Paid Per Share (USD) | Maximum Value Remaining for Repurchase (USD) | | :--- | :--- | :--- | :--- | | **April 2025** | 280,893 | $71.1626 | $157,191,259 | | **May 2025** | — | — | $157,191,259 | | **June 2025** | — | — | $157,191,259 | - In April 2025, the Board authorized an additional stock repurchase program of up to **$150 million**[205](index=205&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $565 million, a 15% increase year over year, with organic sales growth of 9% [5][6] - Operating income rose to $97.7 million, up 20% compared to last year [6] - Adjusted EBITDA for the quarter was $118.2 million, reflecting a 21% increase year over year, with an adjusted EBITDA margin of 20.9%, up 100 basis points [6][7] - GAAP diluted EPS was $1.16, a 17% increase, while adjusted EPS was $1.17, up 23% [7][12] - Cash generated from operations was $60 million, a 47% increase from the previous year [12][13] Business Line Data and Key Metrics Changes - Environmental Solutions Group (ESG) net sales were $481 million, an 18% increase, with operating income up 26% [8][17] - ESG's adjusted EBITDA margin improved to 23.1%, up 150 basis points [9] - Safety and Security Systems Group (SSG) net sales were $84 million, a 3% increase, with operating income up 17% [9][10] - SSG's adjusted EBITDA margin was 26.9%, an increase of 320 basis points [10] Market Data and Key Metrics Changes - Total orders for the quarter were $540 million, a 14% increase year over year, with a backlog of $1.08 billion [8][22] - Orders for publicly funded offerings were up double digits year over year, with strong demand across product categories [24][25] - Industrial orders also saw double-digit growth, despite a decline in third-party refuse truck orders [24] Company Strategy and Development Direction - The company is focused on organic growth initiatives and strategic acquisitions to drive long-term growth [26][28] - The good, better, best product strategy aims to penetrate underserved market segments and expand customer bases [26][62] - The company is actively pursuing M&A opportunities, with a strong pipeline and a reputation as a preferred buyer in the market [28][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong demand for products and services, with a focus on reducing lead times and maintaining healthy order intake [25][30] - The company raised its full-year adjusted EPS outlook to a range of $3.92 to $4.10, and net sales outlook to $2.07 billion to $2.13 billion [30] - Management noted that the recent tax reform could benefit industrial customers and potentially increase equipment purchases [38][39] Other Important Information - The company paid dividends of $8.5 million during the quarter and repurchased approximately $20 million of shares [13] - The company is committed to sustainability, as highlighted in its sixth annual Sustainable Builder Report [104] Q&A Session Summary Question: What were the key drivers of improved margins in ESG? - Management highlighted increased production at major facilities, growth in the aftermarket business, and favorable price-cost dynamics as key drivers [34][35] Question: How might recent tax reforms impact demand? - Management believes bonus depreciation provisions could incentivize industrial customers to purchase new equipment, but does not expect a significant impact on the effective tax rate [38][39] Question: What factors led to the increase in through-cycle margin targets? - Management cited increased production, growing aftermarket business, and realization of synergies from acquisitions as factors [43][44] Question: How is the company managing customer retention in reassigned territories? - Management reported that order intake in reassigned territories was in line with expectations, and they are optimistic about long-term market share growth [45][46] Question: What is the status of the insourcing initiatives? - Management confirmed that the fourth printed circuit board manufacturing line is on track to be operational by year-end, providing flexibility and supporting higher growth volumes [52][53] Question: How is the good, better, best strategy impacting growth? - Management indicated that this strategy is crucial for achieving low double-digit growth and expanding market share [62][63] Question: What is the current M&A landscape? - Management noted a very active M&A environment and a solid pipeline of opportunities, particularly for the SSG business [70][100]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $565 million, a 15% increase year over year, with organic sales growth of 9% [5][6] - Operating income rose to $97.7 million, up 20% compared to last year, while adjusted EBITDA increased by 21% to $118.2 million [6][12] - GAAP diluted EPS was $1.16, a 17% increase, and adjusted EPS was $1.17, up 23% year over year [6][11] - Cash generated from operations was $60 million, a 47% increase from Q2 last year [11][20] Business Line Data and Key Metrics Changes - Environmental Solutions Group (ESG) net sales were $481 million, an 18% increase, with operating income up 26% to $91.9 million [7][15] - Safety and Security Systems Group (SSG) net sales were $84 million, a 3% increase, with operating income rising 17% to $21.5 million [8][19] - ESG's adjusted EBITDA margin improved by 150 basis points to 23.1%, while SSG's adjusted EBITDA margin increased by 320 basis points to 26.9% [8][19] Market Data and Key Metrics Changes - Total orders for the quarter were $540 million, a 14% increase year over year, with a backlog of $1.08 billion [7][21] - Orders for publicly funded offerings were up double digits year over year, indicating broad-based strength across product categories [21][22] - Industrial orders also saw double-digit growth, despite a decline in third-party refuse truck orders [22] Company Strategy and Development Direction - The company is focused on organic growth initiatives and strategic acquisitions to drive long-term growth [24][26] - The good, better, best product strategy aims to penetrate underserved market segments and expand customer bases [24][62] - Increased EBITDA margin targets for both ESG and SSG reflect confidence in operational efficiencies and market opportunities [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strong customer demand and order levels, with expectations for continued growth [20][21] - The company anticipates benefits from recent tax reforms, particularly in terms of equipment purchases for industrial customers [36][37] - The outlook for 2025 has been raised, with adjusted EPS guidance increased to a range of $3.92 to $4.10 [28] Other Important Information - The company paid dividends of $8.5 million during the quarter and repurchased approximately $20 million of shares [12] - The company is committed to maintaining a strong cash conversion rate and has a target of 100% cash conversion on a net income basis [20] Q&A Session Summary Question: What were the key drivers of improved margins in ESG? - Management highlighted increased production efficiency at major facilities and growth in the aftermarket business as key drivers [33][34] Question: How might recent tax reforms impact demand? - Management believes bonus depreciation provisions could incentivize industrial customers to purchase new equipment [36] Question: Can you provide an update on the reassigned territories? - Order intake in reassigned territories has met expectations, with long-term opportunities for increased market share [44] Question: What is the status of the insourcing initiatives? - The company is on track to add a fourth printed circuit board manufacturing line, which is expected to enhance flexibility and support growth [52] Question: How does the good, better, best strategy impact growth? - This strategy is expected to help the company achieve low double-digit growth by opening new customer bases and increasing market share [62][63]

Core Viewpoint - Federal Signal (FSS) reported quarterly earnings of $1.17 per share, exceeding the Zacks Consensus Estimate of $1.06 per share, and up from $0.95 per share a year ago [1][2] Earnings Performance - The earnings surprise for the quarter was +10.38%, with the company also surpassing earnings expectations in the previous quarter by +4.11% [2] - Over the last four quarters, Federal Signal has consistently exceeded consensus EPS estimates [2] Revenue Performance - The company posted revenues of $564.6 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.96%, compared to $490.4 million in the same quarter last year [3] - Federal Signal has topped consensus revenue estimates only once in the last four quarters [3] Stock Performance - Federal Signal shares have increased approximately 13.5% since the beginning of the year, outperforming the S&P 500's gain of 8.3% [4] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $1.03 for the coming quarter and $3.83 for the current fiscal year [5][8] - The Zacks Rank for Federal Signal is currently 2 (Buy), indicating expected outperformance in the near future [7] Industry Context - The Diversified Operations industry, to which Federal Signal belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [9]

Federal Signal Q2 2025 Earnings Call July 30, 2025 Jennifer Sherman, President & Chief Executive Officer Ian Hudson, SVP, Chief Financial Officer Felix Boeschen, VP, Corporate Strategy & Investor Relations Safe Harbor This presentation 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 presentation that are not historica ...