OAK BROOK, Ill., Feb. 27, 2024 /PRNewswire/ -- Federal Signal Corporation (NYSE:FSS), a leader in environmental and safety solutions, today reported results for the fourth quarter and year ended December 31, 2023.  Fourth Quarter Highlights Net sales of $448 million, up $57 million, or 15%, from last year; organic growth of $42 million, or 11% Operating income of $63.1 million, up $16.5 million, or 35%, from last year Operating cash flow of $103 million, up $64 million, or 162%, from last year GAAP EPS of ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Federal Signal Corporation designs and supplies integrated solutions for municipal and industrial customers through its Environmental and Safety segments - The company operates through two main segments: **Environmental Solutions Group (ESG)** and **Safety and Security Systems Group (SSG)**[19](index=19&type=chunk) - In 2023, the company completed the acquisitions of **Trackless Vehicles Limited** and **Blasters, Inc.**, expanding its product portfolio[21](index=21&type=chunk) - As of December 31, 2023, the company employed approximately **4,500 people**, with 54% being U.S. hourly employees[36](index=36&type=chunk) [Business Segments](index=5&type=section&id=Item%201.%20Business.Segments) The Environmental Solutions Group produces maintenance vehicles while the Safety and Security Systems Group provides public warning systems - The Environmental Solutions Group is a leading manufacturer of street sweepers, sewer cleaners, industrial vacuum loaders, and other specialty vehicles under brands like Elgin, Vactor, Guzzler, and TRUVAC[22](index=22&type=chunk) - The Safety and Security Systems Group supplies comprehensive systems for community alerting, emergency vehicles, and industrial communications, with products including lightbars, sirens, and public warning systems[23](index=23&type=chunk) [Marketing and Distribution](index=6&type=section&id=Item%201.%20Business.Marketing%20and%20Distribution) The company utilizes a multi-channel approach, including dealer networks and direct sales, to reach its municipal and industrial customers - The Environmental Solutions Group uses both dealer networks and direct sales channels, with the **dealer network being a key competitive advantage**[24](index=24&type=chunk)[25](index=25&type=chunk) - The Safety and Security Systems Group sells through a multi-channel approach including wholesalers, distributors, and direct sales to a variety of customers[26](index=26&type=chunk) [Customers and Backlog](index=6&type=section&id=Item%201.%20Business.Customers%20and%20Backlog) The company has a diversified customer base and saw its total order backlog increase to $1.03 billion in 2023 Order Backlog Comparison | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Backlog** | $1.03 billion | $879 million | - No single customer represented **10% or more of net sales** in the three years ending December 31, 2023[27](index=27&type=chunk) [Human Capital Management](index=7&type=section&id=Item%201.%20Business.Human%20Capital%20Management) The company emphasizes an inclusive culture, employee development, and workplace safety for its 4,500 employees - The company is led by a female CEO, and **50% of its executive officers are female**, which is significantly above the Russell 3000 Index average[41](index=41&type=chunk) - Employees receive **over 10 hours of job training per year on average**, with some business units averaging nearly 80 hours per year[45](index=45&type=chunk) - The company is committed to human rights, aligning with UN principles, and has published a formal human rights policy[38](index=38&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces macroeconomic, operational, and legal risks, including supply chain disruptions and product liability claims - The company is heavily dependent on the U.S. economy and municipal government spending, which accounted for approximately **78% of net sales in 2023**[62](index=62&type=chunk) - Supply chain disruptions continue to pose a risk, with ongoing shortages and extended lead times for key components like chassis and electronics, which could limit production[72](index=72&type=chunk) - The company is exposed to product liability claims, including lawsuits from firefighters alleging **hearing impairment from sirens**[91](index=91&type=chunk) - **Goodwill and intangible assets represent a significant portion of total assets** (29% and 13% respectively as of Dec 31, 2023), and impairment could negatively affect financial results[93](index=93&type=chunk) [Unresolved Staff Comments](index=16&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[95](index=95&type=chunk) [Cybersecurity](index=16&type=section&id=Item%201C.%20Cybersecurity) The company maintains a comprehensive cybersecurity program overseen by the Audit Committee and has experienced no material incidents to date - The company's cybersecurity risk management program is based on standards including the **National Institute of Standards and Technology (NIST) Cybersecurity Framework**[98](index=98&type=chunk) - The Board of Directors has delegated oversight of cybersecurity risk management to the Audit Committee, which receives regular reports from the CIO and CISO[101](index=101&type=chunk) [Properties](index=16&type=section&id=Item%202.%20Properties) The company operates 23 principal manufacturing plants totaling 3.7 million square feet, of which 63% is owned Property Overview (as of Dec 31, 2023) | Metric | Value | | :--- | :--- | | **Principal Manufacturing Plants** | 23 | | **Total Square Footage** | ~3.7 million sq ft | | - Manufacturing | ~2.5 million sq ft | | - Sales, Service, Office | ~1.2 million sq ft | | **Ownership Status** | 63% Owned, 37% Leased | [Legal Proceedings](index=17&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is detailed in Note 13 of the consolidated financial statements - This section incorporates by reference the information in **Note 13 – Legal Proceedings**[105](index=105&type=chunk) [Mine Safety Disclosures](index=17&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[106](index=106&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=17&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE under "FSS" and $53.5 million remains authorized for share repurchases - The company's common stock is listed on the NYSE under the symbol **"FSS"**[108](index=108&type=chunk) - As of December 31, 2023, **$53.5 million remained authorized for share repurchases** under the plan established in March 2020[112](index=112&type=chunk) Q4 2023 Equity Repurchases | Period | Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | October 2023 | 21,083 | $59.5008 | | November 2023 | — | — | | December 2023 | — | — | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company achieved record financial results in 2023, with significant growth in sales, income, and operating cash flow - The company executed its M&A strategy with the acquisitions of **Blasters and Trackless**, marking 11 acquisitions since 2016[124](index=124&type=chunk) 2023 Financial Highlights (YoY) | Metric | 2023 Value | % Change YoY | | :--- | :--- | :--- | | **Orders** | $1.87 billion | +11% | | **Net Sales** | $1.72 billion | +20% | | **Operating Income** | $224.5 million | +40% | | **Net Income** | $157.4 million | +31% | | **Adjusted EBITDA** | $286.0 million | +33% | | **Operating Cash Flow** | $194 million | +171% | [Results of Operations](index=21&type=section&id=Item%207.%20MD&A.Results%20of%20Operations) Net sales grew 20% to $1.72 billion in 2023, driving a 40% increase in operating income and margin expansion to 13.0% Consolidated Results of Operations (in millions) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,722.7 | $1,434.8 | $1,213.2 | | **Gross Profit** | $450.2 | $344.9 | $288.7 | | **Operating Income** | $224.5 | $160.8 | $130.7 | | **Net Income** | $157.4 | $120.4 | $100.6 | | **Diluted EPS** | $2.56 | $1.97 | $1.63 | Adjusted EBITDA Reconciliation (in millions) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Net Income** | $157.4 | $120.4 | $100.6 | | **Adjustments** | $128.6 | $94.6 | $79.9 | | **Adjusted EBITDA** | $286.0 | $215.0 | $180.5 | | **Adjusted EBITDA Margin** | 16.6% | 15.0% | 14.9% | [Segment Analysis](index=23&type=section&id=Item%207.%20MD&A.Segment%20Analysis) Both segments reported strong growth, with the Environmental Solutions Group's operating income up 45% and the Safety and Security Group's up 34% Environmental Solutions Group Performance (in millions) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,437.9 | $1,190.6 | +21% | | **Operating Income** | $209.2 | $144.5 | +45% | | **Operating Margin** | 14.5% | 12.1% | +2.4 p.p. | | **Total Orders** | $1,578.0 | $1,444.2 | +9% | Safety and Security Systems Group Performance (in millions) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $284.8 | $244.2 | +17% | | **Operating Income** | $54.8 | $40.8 | +34% | | **Operating Margin** | 19.2% | 16.7% | +2.5 p.p. | | **Total Orders** | $292.1 | $248.0 | +18% | [Financial Condition, Liquidity and Capital Resources](index=25&type=section&id=Item%207.%20MD&A.Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Liquidity strengthened with operating cash flow rising to $194.4 million and net borrowing availability of $492.7 million at year-end - The company entered into a new **$800 million senior secured credit facility** in October 2022, consisting of a $675 million revolver and a $125 million term loan, maturing in 2027[163](index=163&type=chunk) - As of December 31, 2023, the company had **$492.7 million of net availability for borrowings** under its credit facility[169](index=169&type=chunk) - Capital expenditures for 2024 are anticipated to be in the range of **$35 million to $40 million**[172](index=172&type=chunk) Cash Flow Summary (in millions) | Cash Flow Activity | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $194.4 | $71.8 | $101.8 | | **Net Cash for Investing Activities** | ($83.7) | ($99.7) | ($168.7) | | **Net Cash (for)/from Financing Activities** | ($97.9) | $35.5 | $26.4 | [Critical Accounting Policies and Estimates](index=29&type=section&id=Item%207.%20MD&A.Critical%20Accounting%20Policies%20and%20Estimates) The company's critical estimates relate to goodwill and intangible assets, for which no impairment was recognized in 2023 - Goodwill is tested for impairment annually at the reporting unit level using qualitative or quantitative assessments[183](index=183&type=chunk)[184](index=184&type=chunk) - The 2023 annual impairment test resulted in **no impairment charges** for goodwill or indefinite-lived intangible assets[193](index=193&type=chunk)[199](index=199&type=chunk) - For the reporting unit tested quantitatively in 2023, its **fair value exceeded its carrying value by more than 20%**[192](index=192&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate and foreign exchange risks using derivatives and natural hedges - The company had two interest rate swaps with an aggregate notional amount of **$150.0 million** to fix the interest rate on a portion of its variable-rate debt[202](index=202&type=chunk) - A hypothetical **1% increase or decrease in variable interest rates** would change annual interest expense by approximately **$1.5 million**[202](index=202&type=chunk) - A hypothetical **10% appreciation of the U.S. dollar** against other currencies would reduce full-year net sales by approximately **2%** and operating income by approximately **1%**[203](index=203&type=chunk) [Financial Statements and Supplementary Data](index=32&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the consolidated financial statements and the independent auditor's report from Deloitte & Touche LLP [Report of Independent Registered Public Accounting Firm](index=33&type=section&id=Item%208.%20Financial%20Statements.Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on the financial statements and internal controls, identifying goodwill valuation as a critical audit matter - The auditor, Deloitte & Touche LLP, issued an **unqualified opinion** on both the financial statements and the internal control over financial reporting[209](index=209&type=chunk)[220](index=220&type=chunk) - The audit identified the **valuation of goodwill for one specific reporting unit as a Critical Audit Matter**, citing the high degree of judgment required for assumptions related to projected sales, EBITDA, and market multiples[216](index=216&type=chunk) - The audit of internal controls excluded the recently acquired Trackless, which constituted **2% of total assets and 1% of net sales for 2023**[222](index=222&type=chunk) [Notes to Consolidated Financial Statements](index=41&type=section&id=Item%208.%20Financial%20Statements.Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key financial events, including acquisitions, debt facilities, tax matters, and legal contingencies - Note 2 details the 2023 acquisitions of **Trackless for C$56.3M** plus a contingent earn-out, and **Blasters for $13.0M** plus a contingent earn-out[296](index=296&type=chunk)[304](index=304&type=chunk) - Note 13 discusses the ongoing hearing loss litigation; the company has entered into settlement frameworks to resolve a majority of claims and has **recognized an estimated liability** for the potential settlement amount[441](index=441&type=chunk)[444](index=444&type=chunk) - Note 10 reveals the company filed amended tax returns for 2015-2018 to claim a worthless stock deduction, resulting in a **refund claim of $13.6 million**, which was fully reserved as an unrecognized tax benefit at year-end 2023 but approved for payment in Q1 2024[395](index=395&type=chunk) Net Sales by Segment (in millions) | Segment | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Environmental Solutions** | $1,437.9 | $1,190.6 | $1,004.0 | | **Safety and Security Systems** | $284.8 | $244.2 | $209.2 | | **Total Net Sales** | **$1,722.7** | **$1,434.8** | **$1,213.2** | [Controls and Procedures](index=79&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2023 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2023[505](index=505&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2023, based on the COSO framework (2013)[506](index=506&type=chunk) - The 2023 acquisition of **Trackless was excluded** from management's assessment of internal controls over financial reporting[507](index=507&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=80&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, officers, and governance is incorporated by reference from the 2024 proxy statement - This section incorporates information by reference from the company's **2024 definitive proxy statement**[513](index=513&type=chunk)[514](index=514&type=chunk)[515](index=515&type=chunk) [Executive Compensation](index=80&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2024 proxy statement - This section incorporates information by reference from the company's **2024 definitive proxy statement**[516](index=516&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=80&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the 2024 proxy statement - This section incorporates information by reference from the company's **2024 definitive proxy statement**[517](index=517&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=80&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the 2024 proxy statement - This section incorporates information by reference from the company's **2024 definitive proxy statement**[518](index=518&type=chunk) [Principal Accounting Fees and Services](index=80&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding accountant fees and services is incorporated by reference from the 2024 proxy statement - This section incorporates information by reference from the company's **2024 definitive proxy statement**[518](index=518&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=81&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed with the report - The consolidated financial statements are contained under **Item 8** of this Form 10-K[520](index=520&type=chunk) - All financial statement schedules have been omitted because they are not required or are inapplicable[520](index=520&type=chunk) [Form 10-K Summary](index=81&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[522](index=522&type=chunk)

Financial Performance Highlights - Federal Signal achieved record net sales of $446 million, a $100 million or 29% increase compared to Q3 2022[5] - The company reported organic growth of $80 million, representing a 23% increase[5] - Operating income reached $62.5 million, up $23 million or 58% year-over-year[5] - Adjusted EBITDA was $78.5 million, a $25 million or 47% increase compared to the same period last year[5] - Adjusted EBITDA margin improved to 17.6%, compared to 15.4% in Q3 2022[5] - GAAP EPS and adjusted EPS both reached a record of $0.71, up $0.19 or 37%, and $0.18 or 34%, respectively[5] Orders and Backlog - Orders totaled $450 million, an increase of $68 million or 18% year-over-year[5] - Backlog reached $1.01 billion, up $182 million or 22% compared to Q3 2022[5] Segment Performance - Environmental Solutions Group (ESG) net sales grew by 31% year-over-year[13] - Safety and Security Systems Group (SSG) net sales grew by 19% year-over-year, with a 120-basis point improvement in adjusted EBITDA margin[13] Outlook - The company is raising its full-year adjusted EPS outlook to a new range of $2.44 to $2.52[24] - Federal Signal is also raising the low end of its full-year net sales outlook by $30 million, establishing a new range of $1.68 billion to $1.72 billion, representing a year-over-year growth of 17% - 20%[24]

PART I. [FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Federal Signal Corporation's unaudited financial statements and management's analysis of financial condition [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 for Q3 and YTD periods [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported significant net sales and income growth for Q3 and YTD 2023 compared to the prior year Consolidated Statements of Operations Highlights (in millions, except per share data) | Financial Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $446.4 | $346.4 | $1,274.3 | $1,043.3 | | **Gross profit** | $117.7 | $82.8 | $330.8 | $248.3 | | **Operating income** | $62.5 | $39.5 | $161.4 | $114.2 | | **Net income** | $43.3 | $31.8 | $111.0 | $85.8 | | **Diluted EPS** | $0.71 | $0.52 | $1.81 | $1.40 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets and stockholders' equity increased, with a rise in liabilities from year-end 2022 Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $603.7 | $531.4 | | **Goodwill** | $473.6 | $453.4 | | **Total assets** | $1,654.6 | $1,524.3 | | **Total current liabilities** | $202.6 | $180.5 | | **Long-term borrowings** | $362.0 | $361.5 | | **Total liabilities** | $698.7 | $663.4 | | **Total stockholders' equity** | $955.9 | $860.9 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased for the nine months ended September 30, 2023, leading to a net cash decrease Consolidated Statements of Cash Flows Highlights (Nine Months Ended Sep 30, in millions) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $91.0 | $32.4 | | **Net cash used for investing activities** | ($75.7) | ($50.1) | | **Net cash (used for) provided by financing activities** | ($21.2) | $14.4 | | **Decrease in cash and cash equivalents** | ($6.5) | ($5.0) | | **Cash and cash equivalents at end of period** | $41.0 | $35.5 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, acquisitions, revenue, debt, goodwill, taxes, legal matters, and segment performance - The company operates through two reportable segments: Environmental Solutions Group and Safety and Security Systems Group[25](index=25&type=chunk) - In 2023, the company completed two acquisitions: Trackless Vehicles Limited for **C$56.3 million** plus a contingent earn-out, and Blasters, Inc. for **$13.0 million** plus a contingent earn-out Both are included in the Environmental Solutions Group[32](index=32&type=chunk)[34](index=34&type=chunk)[40](index=40&type=chunk) Net Sales by Geographic Region (Nine Months Ended Sep 30, in millions) | Region | 2023 | 2022 | | :--- | :--- | :--- | | U.S. | $988.0 | $840.1 | | Canada | $180.4 | $131.2 | | Europe/Other | $105.9 | $72.0 | | **Total** | **$1,274.3** | **$1,043.3** | - As of September 30, 2023, the company had **$364.2 million** drawn on its 2022 Credit Agreement, with **$424.6 million** of net availability for borrowings[67](index=67&type=chunk) - The company has an estimated liability recognized for the potential settlement of hearing loss litigation claims under the 2019 Settlement Framework, with any incremental loss not expected to be material[105](index=105&type=chunk)[107](index=107&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting strong net sales and operating income growth driven by volumes, acquisitions, and pricing Key Operating Results (in millions) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $446.4 | $346.4 | +29% | | **Operating Income** | $62.5 | $39.5 | +58% | | **Net Income** | $43.3 | $31.8 | +36% | | **Total Orders** | $450.2 | $382.1 | +18% | - Consolidated backlog at September 30, 2023, was **$1.01 billion**, **a 22% increase** compared to the prior year, indicating strong future demand[154](index=154&type=chunk) - The Environmental Solutions Group's net sales increased by **31%** in Q3 2023, driven by strong performance in sewer cleaners, street sweepers, and aftermarket revenues[157](index=157&type=chunk) - The Safety and Security Systems Group's net sales grew by **19%** in Q3 2023, primarily due to improvements in sales of public safety equipment and warning systems[157](index=157&type=chunk) - The company anticipates capital expenditures for 2023 to be in the range of **$27 million to $30 million**[209](index=209&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes in the company's market risk exposure occurred during the nine months ended September 30, 2023 - There have been no significant changes in the Company's exposure to market risk during the nine months ended September 30, 2023[212](index=212&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2023[213](index=213&type=chunk) - The assessment of internal controls over financial reporting for the recently acquired Trackless and Blasters businesses has not yet been completed, as permitted by SEC rules[214](index=214&type=chunk) PART II. [OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section details legal proceedings, risk factors, equity sales, other information, and exhibits [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates legal proceedings information by reference from Note 9 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 9 to the condensed consolidated financial statements[217](index=217&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported from the prior Annual Report on Form 10-K - 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, 2022[218](index=218&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details common stock repurchase activity for Q3 2023, including shares bought and remaining authorization Common Stock Repurchase Activity (Q3 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2023 | — | $— | | August 2023 | 24,474 | $59.5166 | | September 2023 | 47,994 | $58.2742 | - As of September 30, 2023, **$54.8 million** remained available for repurchase under the company's stock repurchase program authorized in March 2020[219](index=219&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This section notes the company issued a press release and presentation slides on November 2, 2023, for Q3 2023 results - The company issued a press release and earnings presentation on November 2, 2023, announcing its Q3 2023 financial results, which are attached as exhibits 99.1 and 99.2[222](index=222&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including governance documents, certifications, and Q3 financial results materials

Financial Data and Key Metrics Changes - Consolidated net sales for the quarter reached $442 million, an increase of $76 million or 21% compared to last year, marking a new quarterly record [19][82] - Adjusted EPS for the quarter was $0.67, up $0.14 or 26% from last year, while GAAP EPS was $0.66, compared to $0.55 last year [83][85] - Consolidated operating income for the quarter was $59.4 million, up $13.2 million or 29% compared to last year [19] - Consolidated gross margin for the quarter was 26.5%, a 200 basis point increase over last year [21] - Cash generated from operations during the quarter was $36 million, up $21 million from Q2 last year [22] Business Line Data and Key Metrics Changes - ESG's net sales for the quarter were $373 million, up $67 million or 22% compared to last year, with an operating income of $56.2 million, up $17.1 million [102] - SSG's net sales for the quarter were $69 million, up $9 million or 15%, with operating income of $14.1 million, up 37% [4] - SSG's adjusted EBITDA for the quarter was $15.2 million, up $3.8 million or 33%, translating to an adjusted EBITDA margin of 21.9%, up 300 basis points compared to last year [4] Market Data and Key Metrics Changes - Municipal orders were up 13% compared to last year, driven by increased demand for sewer cleaners [9] - The company received over $4 million in warning system orders supported by FEMA funding, with several counties awarded grants for tornado warning systems [10] - The Infrastructure Act has earmarked $6.8 billion for FEMA to invest in disaster mitigation programs, contributing to increased demand for warning systems [10] Company Strategy and Development Direction - The company is focused on increasing production levels to reduce backlog and lead times while maintaining healthy order intake [28] - Continued investment in new product development and organic growth initiatives, including the introduction of new features for safety and security products [29][110] - The company is actively pursuing M&A opportunities to enhance growth, with a strong pipeline of potential deals [34][52] Management's Comments on Operating Environment and Future Outlook - Management noted that while supply chain issues are improving, they are not yet maximizing production capacity due to ongoing constraints, particularly in chassis availability [87][66] - The company raised its full-year adjusted EPS outlook to a new range of $2.30 to $2.46, reflecting confidence in continued demand and backlog [93] - Management expects some moderation in SSG orders in the second half of the year due to seasonal factors and a model year changeover [28][154] Other Important Information - The company paid dividends of $6.1 million during the quarter, reflecting an increased dividend of $0.10 per share [6] - The recent acquisition of Trackless is performing well, with integration underway and opportunities to leverage existing distribution channels [13][48] - The company published its latest sustainability report, highlighting progress against sustainability goals established in 2018 [8] Q&A Session Summary Question: What needs to happen in the supply chain to maximize production capabilities? - Management indicated that improvements in chassis availability and consistency in supply chain operations are critical for maximizing production [66] Question: Are SSG orders expected to come down? - Management acknowledged potential moderation in SSG orders in the second half of the year but remains optimistic about healthy order intake [28][154] Question: What types of businesses is the company interested in for M&A? - The company is looking at various opportunities, particularly in specialty vehicles and aftermarket growth, and is encouraged by the current M&A landscape [34] Question: How does the backlog look in terms of pricing compared to previous months? - Management noted strong price realization in the quarter and a healthy mix of municipal and industrial applications in the backlog [120][121] Question: What is the outlook for the infrastructure funding impact? - Management stated that while they have not seen significant orders from the infrastructure bill yet, they are optimistic about future opportunities as the process unfolds [143]

FORM 10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-6003 _____________________________________________ FEDERAL SIGNAL CORPORATIO ...

Disciplined Growth Safe Harbor Statement This presentation also contains certain measures that are not in accordance with U.S. generally accepted accounting principles ("GAAP"). The non-GAAP financial information presented herein should be considered supplemental to, and not a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company has provided this supplemental information to investors, analysts, and other interested parties to enable them to perform additional an ...

| --- | --- | --- | --- | --- | |-------|-------|-------|-------------------------|----------------------------------------------------| | | | | | | | | | | | | | | | | | High Single Digit Revenue Growth | | | | | | | | | | | EBITDA Margin Targets: | ESG: 15-18% SSG: 17-21% (new) Consolidated: 12-16% | $100 on December 31, 2017 and assumes reinvestment of all dividends through December 31, 2022. Cumulative Returns to Stockholders (Couple of % points > GDP) Long-Term Organic Revenue Growth Cash Conversion: ~ ...

[Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements about future performance, strategy, and objectives, subject to material risks and uncertainties - This Form 10-Q contains forward-looking statements regarding the Company's future financial performance, business strategy, plans, goals, and objectives, which are subject to risks and uncertainties that may cause actual results to differ materially[7](index=7&type=chunk)[8](index=8&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) The Company files various reports with the SEC, including 10-K, 10-Q, and 8-K, available on its website and the SEC's website - The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other reports with the SEC, making them available free of charge on its website and the SEC's website[9](index=9&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis [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 key statements and detailed notes on accounting policies and financial position [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement provides a summary of the Company's revenues, expenses, and net income for the reported periods Condensed Consolidated Statements of Operations | Metric (in millions, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $385.5 | $330.2 | | Gross profit | $95.8 | $75.7 | | Operating income | $39.5 | $28.5 | | Income before income taxes | $34.7 | $27.6 | | Net income | $27.4 | $20.5 | | Basic EPS | $0.45 | $0.34 | | Diluted EPS | $0.45 | $0.33 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents the Company's net income and other comprehensive income components, leading to total comprehensive income Condensed Consolidated Statements of Comprehensive Income | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Net income | $27.4 | $20.5 | | Total other comprehensive income | $0.6 | $1.5 | | Comprehensive income | $28.0 | $22.0 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement details the Company's assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Total current assets | $566.3 | $531.4 | | Total assets | $1,584.3 | $1,524.3 | | Total current liabilities | $203.1 | $180.5 | | Total liabilities | $702.3 | $663.4 | | Total stockholders' equity | $882.0 | $860.9 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $7.1 | $7.0 | | Net cash used for investing activities | $(19.4) | $(34.3) | | Net cash provided by financing activities | $3.1 | $26.1 | | Decrease in cash and cash equivalents | $(9.1) | $(1.3) | | Cash and cash equivalents at end of period | $38.4 | $39.2 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in the Company's equity accounts, including common stock, retained earnings, and treasury stock Condensed Consolidated Statements of Stockholders' Equity | Metric (in millions) | Balance at January 1, 2023 | Balance at March 31, 2023 | | :------------------- | :------------------------- | :------------------------ | | Common Stock | $69.5 | $69.7 | | Capital in Excess of Par Value | $271.8 | $274.7 | | Retained Earnings | $782.2 | $804.1 | | Treasury Stock | $(178.6) | $(183.1) | | Accumulated Other Comprehensive Loss | $(84.0) | $(83.4) | | Total Stockholders' Equity | $860.9 | $882.0 | - Net income for the three months ended March 31, 2023, contributed **$27.4 million** to retained earnings[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the Company's key accounting principles and the basis of financial statement preparation - The Company's products and services are divided into two reportable segments: Environmental Solutions Group and Safety and Security Systems Group[24](index=24&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP, with no new accounting pronouncements or changes to significant accounting policies expected to have a material impact[25](index=25&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) [Note 2 – Acquisitions](index=10&type=section&id=Note%202%20%E2%80%93%20Acquisitions) This note details recent business acquisitions, including purchase price and financial impact - On January 3, 2023, the Company acquired Blasters, Inc. for an initial cash consideration of **$13.4 million**, plus a contingent earn-out of up to **$8.0 million**, to bolster its position in specialized vehicles for maintenance and infrastructure markets[31](index=31&type=chunk)[33](index=33&type=chunk) Acquisition Details | Acquisition Details (in millions) | Amount | | :------------------------------ | :----- | | Purchase price, inclusive of preliminary closing adjustments | $13.4 | | Estimated fair value of additional consideration | $4.0 | | Total consideration | $17.4 | | Goodwill recognized | $4.5 | - Blasters generated **$5.9 million** in net sales and **$0.6 million** in operating income for the period between the acquisition date and March 31, 2023, and its results are included in the Environmental Solutions Group[32](index=32&type=chunk)[39](index=39&type=chunk) [Note 3 – Revenue Recognition](index=12&type=section&id=Note%203%20%E2%80%93%20Revenue%20Recognition) This note provides a breakdown of net sales by geographic region and major product line Net Sales by Geographic Region and Major Product Line | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | **Geographic Region:** | | | | U.S. | $309.1 | $264.4 | | Canada | $43.9 | $42.3 | | Europe/Other | $32.5 | $23.5 | | **Major Product Line:** | | | | Environmental Solutions - Vehicles and equipment | $245.3 | $217.4 | | Environmental Solutions - Parts | $54.8 | $40.8 | | Environmental Solutions - Rental income | $11.0 | $9.7 | | Safety and Security Systems - Public safety and security equipment | $40.2 | $36.1 | | Safety and Security Systems - Industrial signaling equipment | $18.6 | $14.2 | | Safety and Security Systems - Warning systems | $7.9 | $5.7 | | **Total net sales** | **$385.5** | **$330.2** | - Contract liabilities (customer deposits) were **$29.8 million** as of March 31, 2023, up from **$28.9 million** at December 31, 2022, and are generally recognized as net sales within three to six months[44](index=44&type=chunk) [Note 4 – Inventories](index=12&type=section&id=Note%204%20%E2%80%93%20Inventories) This note presents the composition of the Company's inventory, including finished goods, raw materials, and work in process Inventory Components | Inventory Component (in millions) | March 31, 2023 | December 31, 2022 | | :------------------------------ | :------------- | :---------------- | | Finished goods | $107.0 | $97.5 | | Raw materials | $175.0 | $164.3 | | Work in process | $35.6 | $30.9 | | **Total inventories** | **$317.6** | **$292.7** | [Note 5 – Debt](index=13&type=section&id=Note%205%20%E2%80%93%20Debt) This note details the Company's borrowings, finance lease obligations, and compliance with debt covenants Debt Components | Debt Component (in millions) | March 31, 2023 | December 31, 2022 | | :--------------------------- | :------------- | :---------------- | | 2022 Credit Agreement | $373.6 | $361.0 | | Finance lease obligations | $1.9 | $2.0 | | **Total borrowings and finance lease obligations** | **$375.5** | **$363.0** | - The Company was in compliance with all net leverage ratio and interest coverage ratio financial covenants under the 2022 Credit Agreement as of March 31, 2023[50](index=50&type=chunk) - Net availability for borrowings under the 2022 Credit Agreement was **$415.2 million** as of March 31, 2023[51](index=51&type=chunk) - The Company uses an interest rate swap with a notional amount of **$75.0 million**, designated as a cash flow hedge, to fix the floating interest rate component on a portion of its variable-rate debt[52](index=52&type=chunk) [Note 6 – Goodwill and Other Intangible Assets](index=14&type=section&id=Note%206%20%E2%80%93%20Goodwill%20and%20Other%20Intangible%20Assets) This note provides information on the Company's goodwill and other intangible assets, including changes from acquisitions Goodwill and Other Intangible Assets | Metric (in millions) | March 31, 2023 | January 1, 2023 | | :------------------- | :------------- | :-------------- | | Goodwill | $458.4 | $453.4 | | Acquisitions (Goodwill) | $4.5 | N/A | | Total intangible assets, net | $212.8 | $208.2 | - Goodwill increased by **$4.5 million** due to the Blasters acquisition, allocated to the Environmental Solutions Group[38](index=38&type=chunk)[58](index=58&type=chunk) - Amortization expense for the three months ended March 31, 2023, was **$3.6 million**, up from **$3.3 million** in the prior-year quarter[60](index=60&type=chunk) [Note 7 – Income Taxes](index=15&type=section&id=Note%207%20%E2%80%93%20Income%20Taxes) This note presents the Company's income tax expense and effective tax rate, with explanations for period-over-period changes Income Tax Expense and Effective Tax Rate | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----- | :-------------------------------- | :-------------------------------- | | Income tax expense (in millions) | $7.3 | $7.1 | | Effective tax rate | 21.0% | 25.7% | - The lower effective tax rate in Q1 2023 was primarily due to a **$0.9 million** increase in excess tax benefits from stock-based compensation and a **$0.5 million** benefit from changes in tax reserves[63](index=63&type=chunk) [Note 8 – Pensions](index=15&type=section&id=Note%208%20%E2%80%93%20Pensions) This note details the net periodic pension benefit or expense for the Company's U.S. and non-U.S. plans Net Periodic Pension (Benefit) Expense | Metric (in millions) | Q1 2023 (U.S. Benefit Plan) | Q1 2022 (U.S. Benefit Plan) | Q1 2023 (Non-U.S. Benefit Plan) | Q1 2022 (Non-U.S. Benefit Plan) | | :------------------- | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | Net periodic pension (benefit) expense | $(0.1) | $(0.1) | $0.1 | $(0.1) | [Note 9 – Commitments and Contingencies](index=15&type=section&id=Note%209%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines the Company's outstanding commitments, guarantees, warranty liabilities, and legal proceedings - The Company had **$30.5 million** in outstanding performance and financial standby letters of credit and bid/performance bonds as of March 31, 2023[66](index=66&type=chunk) - The maximum potential cash payments for equipment repurchase guarantees amounted to **$1.9 million** as of March 31, 2023[67](index=67&type=chunk) Warranty Liabilities | Warranty Liabilities (in millions) | March 31, 2023 | March 31, 2022 | | :------------------------------- | :------------- | :------------- | | Balance at January 1 | $9.3 | $9.7 | | Provisions to expense | $1.8 | $1.4 | | Payments | $(2.0) | $(1.8) | | Balance at March 31 | $9.2 | $9.3 | - The Company is involved in hearing loss litigation, with a global settlement agreement finalized in November 2019 for approximately **2,160 firefighters** in various jurisdictions (excluding Cook and Lackawanna Counties)[108](index=108&type=chunk) - Under the global settlement, the Company would pay **$700** per eligible firefighter who filed a lawsuit and **$300** per eligible claimant who has not yet filed, provided they meet specific hearing loss criteria[108](index=108&type=chunk) - An estimated liability for the potential settlement amount has been recognized, and the incremental loss is not expected to be material[110](index=110&type=chunk) [Note 10 – Earnings Per Share](index=21&type=section&id=Note%2010%20%E2%80%93%20Earnings%20Per%20Share) This note provides the calculation of basic and diluted earnings per share for the reported periods Earnings Per Share Calculation | Metric (in millions, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $27.4 | $20.5 | | Weighted average shares outstanding – Basic | 60.7 | 60.7 | | Dilutive effect of common stock equivalents | 0.6 | 0.7 | | Weighted average shares outstanding – Diluted | 61.3 | 61.4 | | Basic EPS | $0.45 | $0.34 | | Diluted EPS | $0.45 | $0.33 | [Note 11 – Stockholders' Equity](index=21&type=section&id=Note%2011%20%E2%80%93%20Stockholders'%20Equity) This note details changes in stockholders' equity, including dividends and share repurchase activities - The Board declared a quarterly cash dividend of **$0.09 per common share** (**$5.5 million** total) for Q1 2023, and a **$0.10** dividend for Q2 2023[116](index=116&type=chunk) - No shares were repurchased under the **$75.0 million** stock repurchase program during the three months ended March 31, 2023, compared to **$13.6 million** in repurchases in the prior-year quarter[117](index=117&type=chunk)[118](index=118&type=chunk) Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss (in millions) | Balance at January 1, 2023 | Balance at March 31, 2023 | | :----------------------------------------------- | :------------------------- | :------------------------ | | Total | $(84.0) | $(83.4) | [Note 12 – Segment Information](index=23&type=section&id=Note%2012%20%E2%80%93%20Segment%20Information) This note provides financial data for the Company's Environmental Solutions and Safety and Security Systems segments Segment Performance | Metric (in millions) | Q1 2023 (Environmental Solutions) | Q1 2022 (Environmental Solutions) | Q1 2023 (Safety and Security Systems) | Q1 2022 (Safety and Security Systems) | | :------------------- | :-------------------------------- | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net sales | $318.8 | $274.2 | $66.7 | $56.0 | | Operating income | $37.6 | $26.8 | $12.1 | $7.9 | | Operating margin | 11.8% | 9.8% | 18.1% | 14.1% | | Total assets (March 31, 2023) | $1,265.5 | N/A | $283.3 | N/A | [Note 13 – Fair Value Measurements](index=23&type=section&id=Note%2013%20%E2%80%93%20Fair%20Value%20Measurements) This note describes the Company's fair value hierarchy and measurements for financial assets and liabilities - The Company uses a three-level fair value hierarchy: Level 1 for cash equivalents, Level 2 for interest rate swaps, and Level 3 for contingent consideration liabilities due to unobservable inputs[127](index=127&type=chunk)[128](index=128&type=chunk)[131](index=131&type=chunk) Fair Value Measurements | Fair Value Measurement (in millions) | Level 1 | Level 2 | Level 3 | Total | | :--------------------------------- | :------ | :------ | :------ | :---- | | **Assets:** | | | | | | Cash equivalents | $16.3 | — | — | $16.3 | | **Liabilities:** | | | | | | Contingent consideration | — | — | $6.0 | $6.0 | | Interest rate swaps | — | $0.8 | — | $0.8 | - Contingent consideration liability increased to **$6.0 million** at March 31, 2023, from **$2.7 million** at January 1, 2023, primarily due to the Blasters acquisition[134](index=134&type=chunk) [Note 14 – Subsequent Events](index=25&type=section&id=Note%2014%20%E2%80%93%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On April 3, 2023, the Company acquired Trackless Vehicles Limited for an initial purchase price of **C$54.0 million** (approximately **$40.0 million**), plus a contingent earn-out of up to **C$6.0 million** (approximately **$4.4 million**)[135](index=135&type=chunk) - Trackless is a leading Canadian manufacturer of multi-purpose, off-road municipal tractors and attachments, expected to be included within the Environmental Solutions Group[136](index=136&type=chunk)[137](index=137&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, and liquidity for the three months ended March 31, 2023, highlighting key operating results, segment-specific performance, corporate expenses, seasonality, and capital resources [Executive Summary](index=26&type=section&id=Executive%20Summary) This summary provides an overview of the Company's business, key financial highlights, and operational performance - Federal Signal Corporation is a leading global manufacturer and supplier of specialized vehicles and equipment for maintenance and infrastructure, and public safety equipment, operating in two reportable segments[140](index=140&type=chunk)[141](index=141&type=chunk) Key Financial Highlights | Metric (in millions) | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Net sales | $385.5 | $330.2 | $55.3 | 16.7% | | Operating income | $39.5 | $28.5 | $11.0 | 38.6% | | Total orders | $474.7 | $452.6 | $22.1 | 4.9% | | Backlog | $967.6 | $751.2 | $216.4 | 28.8% | [Operating Results (Consolidated)](index=27&type=section&id=Operating%20Results%20(Consolidated)) This section analyzes the Company's consolidated net sales, gross profit, operating income, and net income for the period Consolidated Operating Results | Metric (in millions, except per share) | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :----------------------------------- | :------ | :------ | :--------- | :--------- | | Net sales | $385.5 | $330.2 | $55.3 | 16.7% | | Cost of sales | $289.7 | $254.5 | $35.2 | 13.8% | | Gross profit | $95.8 | $75.7 | $20.1 | 26.6% | | Gross profit margin | 24.9% | 22.9% | 2.0 pp | | | SEG&A expenses | $52.0 | $43.6 | $8.4 | 19.3% | | Operating income | $39.5 | $28.5 | $11.0 | 38.6% | | Operating margin | 10.2% | 8.6% | 1.6 pp | | | Interest expense | $4.7 | $1.3 | $3.4 | 261.5% | | Income before income taxes | $34.7 | $27.6 | $7.1 | 25.7% | | Income tax expense | $7.3 | $7.1 | $0.2 | 2.8% | | Net income | $27.4 | $20.5 | $6.9 | 33.7% | | Diluted earnings per share | $0.45 | $0.33 | $0.12 | 36.4% | [Environmental Solutions Group Analysis](index=28&type=section&id=Environmental%20Solutions%20Group%20Analysis) This section provides a detailed analysis of the Environmental Solutions Group's sales, operating income, and backlog performance Environmental Solutions Group Performance | Metric (in millions) | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Net sales | $318.8 | $274.2 | $44.6 | 16.3% | | Operating income | $37.6 | $26.8 | $10.8 | 40.3% | | Operating margin | 11.8% | 9.8% | 2.0 pp | | | Total orders | $395.8 | $387.6 | $8.2 | 2.1% | | Backlog | $901.8 | $690.1 | $211.7 | 30.7% | - U.S. sales increased by **$37.0 million**, driven by sewer cleaners, street sweepers, safe-digging trucks, and aftermarket revenues, while non-U.S. sales increased by **$7.6 million**, primarily from aftermarket revenues and metal extraction support equipment[161](index=161&type=chunk) - Gross profit margin improved to **22.0%** (from **20.2%**) due to improved operating leverage from higher sales volumes, pricing actions, and a more favorable sales mix, partially offset by higher material costs[162](index=162&type=chunk) [Safety and Security Systems Group Analysis](index=30&type=section&id=Safety%20and%20Security%20Systems%20Group%20Analysis) This section provides a detailed analysis of the Safety and Security Systems Group's sales, operating income, and backlog performance Safety and Security Systems Group Performance | Metric (in millions) | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Net sales | $66.7 | $56.0 | $10.7 | 19.1% | | Operating income | $12.1 | $7.9 | $4.2 | 53.2% | | Operating margin | 18.1% | 14.1% | 4.0 pp | | | Total orders | $78.9 | $65.0 | $13.9 | 21.4% | | Backlog | $65.8 | $61.1 | $4.7 | 7.7% | - Non-U.S. orders increased by **$12.9 million**, largely due to an **$11.6 million** improvement in public safety equipment orders, including a large fleet order from a customer in Mexico[166](index=166&type=chunk) - Gross profit margin improved to **38.4%** (from **36.1%**) due to improved operating leverage from higher sales volumes and benefits from pricing actions[168](index=168&type=chunk) [Corporate Expenses](index=30&type=section&id=Corporate%20Expenses) This section discusses the trends and changes in the Company's corporate operating expenses Corporate Operating Expenses | Metric (in millions) | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Corporate operating expenses | $10.2 | $6.2 | $4.0 | 64.5% | - The increase in corporate operating expenses was primarily due to higher post-retirement and incentive-based compensation expenses[171](index=171&type=chunk) [Seasonality of Company's Business](index=30&type=section&id=Seasonality%20of%20Company's%20Business) This section describes the typical seasonal patterns affecting the Company's equipment sales, rental income, and parts sales - The Company's business is subject to seasonal factors, typically experiencing lower equipment sales in the first calendar quarter and higher rental income and parts sales in the second and third quarters[172](index=172&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=31&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) This section assesses the Company's cash position, operating cash flow, investing activities, and financing activities - The Company believes its existing cash balances, cash flow from operations, and available borrowings under its credit facility will be sufficient to meet its operating needs, capital needs, and financial commitments[173](index=173&type=chunk)[179](index=179&type=chunk) Cash and Cash Equivalents | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Cash and cash equivalents | $38.4 | $47.5 | - Net cash provided by operating activities was **$7.1 million** in Q1 2023, consistent with the prior-year period[175](index=175&type=chunk) - Net cash used for investing activities was **$19.4 million** in Q1 2023, including **$13.4 million** for the Blasters acquisition[176](index=176&type=chunk) - Net cash provided by financing activities was **$3.1 million** in Q1 2023, including **$12.6 million** in increased debt borrowings[177](index=177&type=chunk) - Capital expenditures for 2023 are anticipated to be in the range of **$25 million** to **$30 million**[178](index=178&type=chunk) [Contractual Obligations and Off-Balance Sheet Arrangements](index=31&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) This section discusses any material changes to the Company's contractual obligations and off-balance sheet arrangements - There have been no material changes in the Company's contractual obligations and off-balance sheet arrangements during the three months ended March 31, 2023, as described in the 2022 Form 10-K[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there were no significant changes in the Company's exposure to market risk during the first quarter of 2023 - No significant changes in the Company's exposure to market risk occurred during the three months ended March 31, 2023[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the Company's disclosure controls were effective as of March 31, 2023, with no material changes to internal control identified, except for the unassessed Blasters acquisition - The Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2023[182](index=182&type=chunk) - Management has not yet fully assessed the internal control over financial reporting for the recently acquired Blasters, but no other material changes in internal control were identified[183](index=183&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the detailed information on legal proceedings from Note 9 – Commitments and Contingencies in Part I of this Form 10-Q - Information on legal proceedings is incorporated by reference from Note 9 – Commitments and Contingencies[186](index=186&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported in the Company's risk factors during the first quarter of 2023, as previously described in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes in the Company's risk factors as described in its Annual Report on Form 10-K for the year ended December 31, 2022[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase any shares under its stock repurchase program during the three months ended March 31, 2023, with the maximum dollar value of shares remaining available for purchase at $59,052,829 Stock Repurchase Program Activity | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :----- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :--------------------------------------------------------------------------------- | | January 2023 | — | $— | — | $59,052,829 | | February 2023 | — | $— | — | $59,052,829 | | March 2023 | — | $— | — | $59,052,829 | - No shares were repurchased under the stock repurchase program during the three months ended March 31, 2023[188](index=188&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[189](index=189&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[190](index=190&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) The Company issued a press release and posted earnings call presentation slides on May 2, 2023, announcing its financial results for the first quarter of 2023, which are filed as Exhibits 99.1 and 99.2 - The Company issued a press release and posted earnings call presentation slides on May 2, 2023, announcing Q1 2023 financial results, filed as Exhibits 99.1 and 99.2[191](index=191&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, CEO and CFO certifications, and various XBRL interactive data files - Exhibits include Restated Certificate of Incorporation, Amended and Restated By-laws, CEO and CFO Certifications (Sections 302 and 906), First Quarter Financial Results Press Release (99.1), First Quarter Earnings Call Presentation Slides (99.2), and various XBRL documents[193](index=193&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-6003 FEDERAL SIGNAL CORPORATION (Exact name of registrant as specified in its cha ...