Financial Performance - Full Year 2020 - Net sales decreased to $1.13 billion from $1.22 billion[9] - Operating income decreased to $131.4 million from $147.1 million[9] - Adjusted EBITDA decreased to $182.2 million from $191.3 million[9] - Adjusted EBITDA margin improved to 16.1% from 15.7%[9] - GAAP EPS decreased to $1.56 from $1.76[9] - Adjusted EPS decreased to $1.67 from $1.79[9] Financial Performance - Q4 2020 - Net sales decreased to $295 million from $314 million[11] - Operating income decreased to $33.8 million from $36.4 million[11] - Adjusted EBITDA decreased to $47.0 million from $48.5 million[11] - Adjusted EBITDA margin improved to 15.9% from 15.4%[11] - GAAP EPS decreased to $0.42 from $0.48[11] - Adjusted EPS decreased to $0.44 from $0.48[11] - Orders increased by $10 million, or 4%, compared to Q3 2020, reaching $276 million[11] - Backlog increased to approximately $330 million by the end of January 2021[11] Segment Performance - Q4 2020 - ESG sales decreased by 6% to $237.6 million from $252.2 million[13] - ESG adjusted EBITDA increased by 1% to $44.2 million from $43.8 million[13] - SSG sales decreased by 8% to $57.2 million from $62.2 million[13] - SSG adjusted EBITDA decreased by 11% to $11.2 million from $12.6 million[13] Financial Position - Cash and cash equivalents of $81.7 million[19] - Debt was reduced by approximately $32 million in Q4, with a total outstanding debt of $210 million[19] - Net debt of approximately $128 million[19] 2021 Outlook - Adjusted EPS is projected to range from $1.73 to $1.85, representing a 4% to 11% increase over 2020[21]

PART I [Business](index=4&type=section&id=Item%201.%20Business) Federal Signal Corporation operates two segments: Environmental Solutions and Safety and Security Systems, manufacturing specialized vehicles and warning systems, with a 2020 backlog of $304 million - The company's business is divided into two reportable segments: the Environmental Solutions Group and the Safety and Security Systems Group[18](index=18&type=chunk) Order Backlog (as of Dec 31) | Year | Backlog (in millions) | | :--- | :--- | | 2020 | $304 | | 2019 | $387 | - As of December 31, 2020, the company employed approximately **3,500 people** across five countries, with about 54% of the total workforce being U.S. hourly workers[33](index=33&type=chunk) - The company highlights its commitment to diversity, noting that two of its seven directors are female, and its CEO is female, placing it in the top 5% of Russell 3000 Index companies; 50% of its executive officers are female[35](index=35&type=chunk)[36](index=36&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from U.S. economic dependence, the COVID-19 pandemic, international operations, and product liability claims - In 2020, approximately **77% of net sales** were generated in the U.S., making the company's financial results highly subject to U.S. economic conditions and municipal government spending[57](index=57&type=chunk) - The COVID-19 pandemic presents significant and unpredictable risks, including potential disruptions to operations, supply chains, customer demand, and the financial health of dealers and municipal customers[58](index=58&type=chunk)[59](index=59&type=chunk) - International operations, which accounted for approximately **23% of net sales** in 2020, expose the company to risks from foreign laws, political instability, tariffs, and currency fluctuations[61](index=61&type=chunk) - The company faces exposure to product liability claims, including lawsuits from firefighters claiming hearing impairment from sirens; while insured, a significant adverse judgment could materially impact financial results[84](index=84&type=chunk) - As of December 31, 2020, goodwill and intangible assets represented **33%** and **13%** of total consolidated assets, respectively, with impairment posing a negative financial impact[86](index=86&type=chunk) [Unresolved Staff Comments](index=14&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[87](index=87&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) As of December 31, 2020, the company operates 15 manufacturing plants globally, totaling 2.8 million square feet, with 48% owned and 52% leased - The company utilizes **15 principal manufacturing plants**: 11 in the U.S., two in Europe, one in Canada, and one in South Africa[88](index=88&type=chunk) Facility Space Breakdown (as of Dec 31, 2020) | Category | Square Feet (millions) | Ownership Status | | :--- | :--- | :--- | | Manufacturing | ~1.9 | 48% Owned | | Sales, Service, Warehousing, Office | ~0.9 | 52% Leased | | **Total** | **~2.8** | | [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding the company's legal proceedings is incorporated by reference from Note 13 to the consolidated financial statements - Details on legal proceedings are provided in Note 13 of the consolidated financial statements[90](index=90&type=chunk) [Mine Safety Disclosures](index=15&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[91](index=91&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=15&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NYSE under "FSS", with two active stock repurchase programs totaling $90.5 million available, and its five-year cumulative return outperformed key indices - The company's common stock is traded on the NYSE under the symbol "**FSS**"[93](index=93&type=chunk) - The Board of Directors authorized two stock repurchase programs: one for up to **$75.0 million** in November 2014 and an additional one for up to **$75.0 million** in March 2020; as of Q4 2020, **$90.5 million** was available for future repurchases[97](index=97&type=chunk)[98](index=98&type=chunk) Five-Year Cumulative Total Return Comparison (Base $100) | Index | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Federal Signal Corp.** | **$100.00** | **$100.52** | **$131.48** | **$131.98** | **$216.33** | **$224.93** | | Russell 2000 | $100.00 | $121.31 | $139.08 | $123.76 | $155.35 | $186.36 | | S&P Midcap 400 | $100.00 | $120.74 | $140.35 | $124.80 | $157.49 | $179.00 | | S&P Industrials | $100.00 | $118.86 | $143.86 | $124.74 | $161.38 | $179.23 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2020 financial performance, highlighting COVID-19 impacts, cost-saving measures, strong adjusted EBITDA margin, increased operating cash flow, and robust liquidity [COVID-19 Update and 2020 Performance](index=17&type=section&id=COVID-19%20Update%20and%202020%20Performance) The company managed COVID-19 impacts with safety measures and cost-saving actions, achieving strong 2020 financial performance and maintaining robust liquidity - In response to the pandemic, the company implemented cost-saving actions including temporary salary reductions for leadership, furloughs for approximately **400 employees**, and permanent reductions impacting about **200 employees**[110](index=110&type=chunk)[112](index=112&type=chunk) Key Financial Highlights for FY 2020 | Metric | Value (in millions) | | :--- | :--- | | Operating Income | $131.4 | | Income from Continuing Operations | $96.1 | | Adjusted EBITDA* | $182.2 | | Adjusted EBITDA Margin* | 16.1% | | Cash Flow from Operations | $136.3 (+32% YoY) | - The company ended 2020 with a strong liquidity position, holding **$82 million** in cash and having **$280 million** of availability under its revolving credit facility[110](index=110&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Consolidated net sales decreased 7% to **$1,130.8 million** in 2020, with operating income down 11% to **$131.4 million**, reflecting declines in both segments despite an improved adjusted EBITDA margin Consolidated Results of Operations (FY 2020 vs. FY 2019) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,130.8M | $1,221.3M | -7% | | Gross Profit | $293.6M | $322.8M | -9% | | Operating Income | $131.4M | $147.1M | -11% | | Income from Cont. Ops. | $96.1M | $108.4M | -11% | | Diluted EPS - Cont. Ops. | $1.56 | $1.76 | -$0.20 | | Adjusted EBITDA | $182.2M | $191.3M | -5% | | Adjusted EBITDA Margin | 16.1% | 15.7% | +0.4% | - The Environmental Solutions Group's net sales decreased by **$77.1 million** (**8%**) and operating income decreased by **$15.1 million** (**11%**) in 2020 compared to 2019[119](index=119&type=chunk)[131](index=131&type=chunk)[137](index=137&type=chunk) - The Safety and Security Systems Group's net sales decreased by **$13.4 million** (**6%**) and operating income decreased by **$3.1 million** (**8%**) in 2020 compared to 2019[120](index=120&type=chunk)[138](index=138&type=chunk)[143](index=143&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=24&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company's liquidity strengthened in 2020, with cash increasing to **$81.7 million** and operating cash flow rising 32% to **$136.3 million**, supported by a **$500 million** revolving credit facility Cash and Cash Equivalents (Year-End) | Year | Amount (in millions) | | :--- | :--- | | 2020 | $81.7 | | 2019 | $31.6 | | 2018 | $37.4 | - Net cash provided by continuing operating activities increased by **$32.9 million** (**32%**) to **$136.3 million** in 2020, primarily due to favorable working capital changes and deferral of **$7.3 million** in payroll taxes under the CARES Act[149](index=149&type=chunk) - The company has a **$500 million** revolving credit facility (2019 Credit Agreement) maturing in 2024; as of December 31, 2020, **$209.4 million** was drawn, with **$280.3 million** of net availability[154](index=154&type=chunk)[160](index=160&type=chunk) - Anticipated capital expenditures for 2021 are projected to be in the range of **$20 million** to **$25 million**[163](index=163&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management's critical accounting policies involve significant estimates for goodwill and indefinite-lived intangible asset impairment tests, revenue recognition, and income tax valuation allowances, with no impairments found in 2020 - The annual goodwill impairment test was performed as of October 31, 2020; a quantitative test on one reporting unit indicated its fair value exceeded its carrying value by approximately **50%**, and qualitative tests on other units concluded impairment was not likely[173](index=173&type=chunk)[182](index=182&type=chunk) - Indefinite-lived intangible assets, primarily trade names, were tested for impairment in 2020; a quantitative test on one asset showed its fair value exceeded carrying value by approximately **70%**, and qualitative tests on others showed no likely impairment[184](index=184&type=chunk)[187](index=187&type=chunk) - Revenue is generally recognized at a point in time when control of products or services transfers to the customer, which for most product sales occurs at the time of shipment[190](index=190&type=chunk) - The company maintains a valuation allowance against deferred tax assets when it is more likely than not that they will not be realized; as of December 31, 2020, the total valuation allowance was **$8.8 million**[195](index=195&type=chunk)[197](index=197&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from interest rate and foreign exchange rate changes, with a 1% variable rate change impacting interest expense by **$1.3 million** - A hypothetical **1%** increase or decrease in variable interest rates on the company's total debt would change annual interest expense by approximately **$1.3 million**[201](index=201&type=chunk) - A hypothetical **10%** appreciation of the U.S. dollar against other currencies is estimated to reduce full-year net sales by approximately **2%** and operating income by approximately **1%**[202](index=202&type=chunk) [Financial Statements and Supplementary Data](index=33&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2020, 2019, and 2018, along with Deloitte & Touche LLP's report, covering balance sheets, income statements, cash flows, and detailed notes Consolidated Balance Sheet Data (as of Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | **Total Assets** | **$1,208.8** | **$1,165.5** | | Total Current Assets | $405.5 | $360.7 | | Goodwill | $394.2 | $388.8 | | **Total Liabilities** | **$506.7** | **$523.9** | | Total Current Liabilities | $148.4 | $160.2 | | Long-term Borrowings | $209.8 | $220.3 | | **Total Stockholders' Equity** | **$702.1** | **$641.6** | Consolidated Cash Flow Summary | (in millions) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $136.2 | $103.1 | $92.8 | | Net Cash for Investing Activities | $(34.4) | $(84.4) | $(11.0) | | Net Cash for Financing Activities | $(53.4) | $(24.6) | $(81.2) | | **Increase (Decrease) in Cash** | **$50.1** | **$(5.8)** | **$(0.1)** | - The independent auditor, Deloitte & Touche LLP, identified the valuation of goodwill for one reporting unit as a critical audit matter due to the significant and sensitive assumptions used in the quantitative assessment[214](index=214&type=chunk)[217](index=217&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=79&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[471](index=471&type=chunk) [Controls and Procedures](index=79&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2020, the CEO and CFO concluded disclosure controls and internal control over financial reporting were effective, with no material changes in the most recent quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[473](index=473&type=chunk) - Management assessed internal control over financial reporting as effective as of December 31, 2020, based on the COSO framework (2013)[474](index=474&type=chunk) [Other Information](index=79&type=section&id=Item%209B.%20Other%20Information) The company issued a press release and presentation slides on February 25, 2021, announcing Q4 and full-year 2020 financial results, filed as exhibits to this Form 10-K - On February 25, 2021, the company issued a press release and presentation slides for its Q4 and full-year 2020 financial results, which are filed as exhibits 99.1 and 99.2[477](index=477&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 the company's directors, executive officers, and corporate governance practices is incorporated by reference from the 2021 proxy statement - Information for this section is incorporated by reference from the company's 2021 definitive proxy statement[480](index=480&type=chunk)[481](index=481&type=chunk) [Executive Compensation](index=80&type=section&id=Item%2011.%20Executive%20Compensation) Detailed information regarding executive compensation is incorporated by reference from the company's 2021 definitive proxy statement - Information for this section is incorporated by reference from the company's 2021 definitive proxy statement[483](index=483&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 company's 2021 definitive proxy statement - Information for this section is incorporated by reference from the company's 2021 definitive proxy statement[484](index=484&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 company's 2021 definitive proxy statement - Information for this section is incorporated by reference from the company's 2021 definitive proxy statement[485](index=485&type=chunk) [Principal Accountant Fees and Services](index=80&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees paid to and services provided by the principal accountant is incorporated by reference from the company's 2021 definitive proxy statement - Information for this section is incorporated by reference from the company's 2021 definitive proxy statement[485](index=485&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, financial statement schedules, and exhibits filed as part of the Form 10-K, including consolidated financial statements and an index of all exhibits - This section incorporates the consolidated financial statements from Item 8 and includes Schedule II — Valuation and Qualifying Accounts[487](index=487&type=chunk) - An index of all filed exhibits is provided, including governance documents, material contracts, and Sarbanes-Oxley certifications[488](index=488&type=chunk)[497](index=497&type=chunk) [Form 10-K Summary](index=81&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that no Form 10-K summary is provided - None[489](index=489&type=chunk)

Financial Performance - Net sales decreased by 9% from $309 million to $280 million[4] - Operating income decreased by 12% from $38.6 million to $34.0 million[4, 6] - Adjusted EBITDA decreased by 8% from $49.8 million to $45.9 million[4, 6] - GAAP EPS decreased by 11% from $0.46 to $0.41[4] - Adjusted EPS decreased by 11% from $0.47 to $0.42[4] Orders and Backlog - Orders increased by 32%, or $65 million, compared to Q2 2020, reaching $266 million[4] - Backlog reached $320 million[4] Segment Performance (ESG) - ESG sales decreased by 9% from $254.0 million to $231.0 million[6] - ESG adjusted EBITDA decreased by 5% from $46.0 million to $43.9 million[6] Financial Position - Cash and cash equivalents totaled $66.2 million[12] - Net debt was approximately $173 million[12]

[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)) Presents unaudited consolidated financial statements and detailed notes on accounting policies, debt, and segment data [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company experienced a decline in net sales and net income for both the three and nine months ended September 30, 2020, compared to the prior year, primarily due to lower sales volumes across both segments | Metric | 3 Months Ended Sep 30, 2020 (in millions) | 3 Months Ended Sep 30, 2019 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2019 (in millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net sales | $279.8 | $308.8 | $836.0 | $906.9 | | Gross profit | $72.6 | $82.0 | $217.7 | $241.3 | | Operating income | $34.0 | $38.6 | $97.6 | $110.7 | | Net income | $25.3 | $28.4 | $70.1 | $78.7 | | Basic EPS | $0.42 | $0.47 | $1.16 | $1.31 | | Diluted EPS | $0.41 | $0.46 | $1.14 | $1.28 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three months ended September 30, 2020, increased to **$30.1 million** from **$25.8 million** in the prior year, primarily due to a positive change in foreign currency translation adjustment | Metric | 3 Months Ended Sep 30, 2020 (in millions) | 3 Months Ended Sep 30, 2019 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2019 (in millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net income | $25.3 | $28.4 | $70.1 | $78.7 | | Change in foreign currency translation adjustment | $4.4 | $(3.8) | $(0.5) | $(3.0) | | Total other comprehensive income (loss) | $4.8 | $(2.6) | $(0.8) | $(1.5) | | Comprehensive income | $30.1 | $25.8 | $69.3 | $77.2 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2020, total assets increased to **$1,224.7 million** from **$1,165.5 million** at December 31, 2019, driven by increases in cash, receivables, and inventories | Metric | Sep 30, 2020 (in millions) | Dec 31, 2019 (in millions) | | :----- | :------------------------- | :------------------------- | | Cash and cash equivalents | $66.2 | $31.6 | | Accounts receivable, net | $145.0 | $134.2 | | Inventories | $196.6 | $182.9 | | Total current assets | $417.7 | $360.7 | | Total assets | $1,224.7 | $1,165.5 | | Total current liabilities | $158.6 | $160.2 | | Long-term borrowings and finance lease obligations | $238.7 | $220.3 | | Total liabilities | $544.9 | $523.9 | | Total stockholders' equity | $679.8 | $641.6 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$79.6 million** for the nine months ended September 30, 2020, from **$58.6 million** in the prior year, primarily due to working capital management and CARES Act deferrals | Metric | 9 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2019 (in millions) | | :----- | :---------------------------------------- | :---------------------------------------- | | Net cash provided by operating activities | $79.6 | $58.6 | | Net cash used for investing activities | $(29.2) | $(70.3) | | Net cash (used for) provided by financing activities | $(16.0) | $10.5 | | Increase (decrease) in cash and cash equivalents | $34.6 | $(1.5) | | Cash and cash equivalents at end of period | $66.2 | $35.9 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to **$679.8 million** as of September 30, 2020, from **$641.6 million** at January 1, 2020, driven by net income and stock-based compensation, partially offset by cash dividends and treasury stock repurchases | Metric | Balance at Jan 1, 2020 (in millions) | Balance at Sep 30, 2020 (in millions) | | :----- | :----------------------------------- | :------------------------------------ | | Common Stock | $66.9 | $67.8 | | Capital in Excess of Par Value | $228.6 | $237.4 | | Retained Earnings | $528.2 | $583.8 | | Treasury Stock | $(93.0) | $(119.3) | | Accumulated Other Comprehensive Loss | $(89.1) | $(89.9) | | Total Stockholders' Equity | $641.6 | $679.8 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details accounting policies, acquisitions, revenue, debt, taxes, pensions, commitments, contingencies, and segment data [Note 1 – Summary of Significant Accounting Policies](index=10&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's organizational structure, reportable segments, basis of financial statement presentation, and recent accounting pronouncements - The Company operates in two reportable segments: Environmental Solutions Group and Safety and Security Systems Group, which share technology, marketing, distribution, and product application characteristics[24](index=24&type=chunk) - The Company adopted ASU 2016-13 (Credit Losses) and ASU 2018-13 (Fair Value Measurement) effective January 1, 2020, neither of which had a material impact on its consolidated financial statements[28](index=28&type=chunk)[29](index=29&type=chunk) - The Company early adopted ASU 2020-04 (Reference Rate Reform) effective January 1, 2020, and expects to apply its expedients to existing and new LIBOR-referencing transactions through December 31, 2022, without material impact[32](index=32&type=chunk) [Note 2 – Acquisitions](index=11&type=section&id=Note%202%20%E2%80%93%20Acquisitions) On June 12, 2020, the Company acquired certain assets and operations of Public Works Equipment and Supply, Inc. (PWE) for **$6.2 million** in cash, resulting in **$2.5 million** of goodwill - On June 12, 2020, Federal Signal Corporation acquired Public Works Equipment and Supply, Inc. (PWE) for **$6.2 million** cash, including inventory and fixed assets[36](index=36&type=chunk) - The PWE acquisition resulted in **$2.5 million** of goodwill, which is tax-deductible, and its financial impact was not material to the Company's net sales, results of operations, or total assets[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 3 – Revenue Recognition](index=12&type=section&id=Note%203%20%E2%80%93%20Revenue%20Recognition) Net sales decreased across all geographic regions and major product lines for both the three and nine months ended September 30, 2020, compared to the prior year, with the Environmental Solutions segment seeing the largest decline | Metric | 3 Months Ended Sep 30, 2020 (in millions) | 3 Months Ended Sep 30, 2019 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2019 (in millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Total net sales | $279.8 | $308.8 | $836.0 | $906.9 | | U.S. sales | $219.1 | $252.6 | $650.7 | $705.6 | | Canada sales | $41.6 | $35.6 | $113.4 | $131.2 | | Europe/Other sales | $19.1 | $20.6 | $71.9 | $70.1 | | Environmental Solutions (Vehicles and equipment) | $179.1 | $198.3 | $531.1 | $585.7 | | Safety and Security Systems (Public safety and security equipment) | $29.5 | $31.6 | $97.6 | $98.6 | - Contract liabilities, primarily customer deposits, were **$14.7 million** as of September 30, 2020, up from **$13.9 million** at December 31, 2019, and are generally recognized as net sales within three to six months[42](index=42&type=chunk) [Note 4 – Inventories](index=12&type=section&id=Note%204%20%E2%80%93%20Inventories) Total inventories increased to **$196.6 million** as of September 30, 2020, from **$182.9 million** at December 31, 2019, primarily driven by an increase in finished goods | Component | Sep 30, 2020 (in millions) | Dec 31, 2019 (in millions) | | :-------- | :------------------------- | :------------------------- | | Finished goods | $99.8 | $86.8 | | Raw materials | $79.5 | $79.5 | | Work in process | $17.3 | $16.6 | | Total inventories | $196.6 | $182.9 | [Note 5 – Debt](index=13&type=section&id=Note%205%20%E2%80%93%20Debt) The Company's total long-term borrowings and finance lease obligations increased to **$238.9 million** as of September 30, 2020, from **$220.5 million** at December 31, 2019, primarily under the 2019 Credit Agreement | Metric | Sep 30, 2020 (in millions) | Dec 31, 2019 (in millions) | | :----- | :------------------------- | :------------------------- | | 2019 Credit Agreement | $238.2 | $219.9 | | Finance lease obligations | $0.7 | $0.6 | | Total long-term borrowings and finance lease obligations | $238.9 | $220.5 | - The Company was in compliance with all net leverage ratio and interest coverage ratio financial covenants under the 2019 Credit Agreement as of September 30, 2020[48](index=48&type=chunk) - The Company entered into a **$75.0 million** interest rate swap (2019 Swap) on October 2, 2019, designated as a cash flow hedge, with a maturity date of July 30, 2024, to fix a portion of its variable-rate debt[51](index=51&type=chunk) [Note 6 – Income Taxes](index=14&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) Income tax expense decreased for both the three and nine months ended September 30, 2020, compared to the prior year, primarily due to lower pre-tax income and increased excess tax benefits from stock compensation | Metric | 3 Months Ended Sep 30, 2020 (in millions) | 3 Months Ended Sep 30, 2019 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2019 (in millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Income tax expense | $7.6 | $7.9 | $20.9 | $25.4 | | Effective tax rate | 23.1% | 21.8% | 23.0% | 24.4% | - The Company deferred approximately **$3.3 million** of federal income tax payments from Q2 to Q3 2020, as permitted by the CARES Act, which had limited applicability otherwise[57](index=57&type=chunk) [Note 7 – Pension and Other Post-Employment Plans](index=14&type=section&id=Note%207%20%E2%80%93%20Pension%20and%20Other%20Post-Employment%20Plans) Net periodic pension expense for the U.S. benefit plan was **$0.4 million** for the three months ended September 30, 2020, and **$0.6 million** for the nine months, with the Company contributing **$5.0 million** to its U.S. plan and **$1.0 million** to its non-U.S. plan | Metric | 3 Months Ended Sep 30, 2020 (in millions) | 3 Months Ended Sep 30, 2019 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2019 (in millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | U.S. Benefit Plan Net periodic pension (benefit) expense | $0.4 | $(0.2) | $0.6 | $0.6 | | Non-U.S. Benefit Plan Net periodic pension (benefit) expense | $(0.1) | $0.0 | $(0.1) | $0.2 | - The Company contributed **$5.0 million** to its U.S. defined benefit plan and **$1.0 million** to its non-U.S. defined benefit plan during the nine months ended September 30, 2020[60](index=60&type=chunk) - An estimated liability of **$2.4 million** was recorded for the Company's withdrawal from the Sheet Metal Workers' National Pension Fund in Q2 2020[61](index=61&type=chunk) [Note 8 – Commitments and Contingencies](index=15&type=section&id=Note%208%20%E2%80%93%20Commitments%20and%20Contingencies) The Company has various financial commitments, including **$28.1 million** in outstanding letters of credit and performance bonds, potential repurchase obligations of **$3.9 million**, and product warranty liabilities of **$10.1 million** - The Company had **$28.1 million** in outstanding performance and financial standby letters of credit and bid/performance bonds as of September 30, 2020[62](index=62&type=chunk) - The maximum potential cash payments for equipment repurchase guarantees was **$3.9 million** as of September 30, 2020[63](index=63&type=chunk) | Metric | 2020 (in millions) | 2019 (in millions) | | :----- | :----------------- | :----------------- | | Warranty liabilities at January 1 | $11.2 | $9.8 | | Provisions to expense | $5.2 | $4.9 | | Payments | $(6.3) | $(4.8) | | Warranty liabilities at September 30 | $10.1 | $10.1 | - The Company finalized a global settlement agreement in November 2019 (Framework Agreement) to resolve hearing loss claims for approximately **3,700 firefighters** in various jurisdictions (excluding Cook County and one NYC case), with payments of **$700** per filed lawsuit and **$300** per unfiled claim, subject to eligibility[95](index=95&type=chunk) [Note 9 – Earnings Per Share](index=20&type=section&id=Note%209%20%E2%80%93%20Earnings%20Per%20Share) Diluted EPS for the three months ended September 30, 2020, was **$0.41**, down from **$0.46** in the prior year, and for the nine months, it was **$1.14**, down from **$1.28** | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $0.42 | $0.47 | $1.16 | $1.31 | | Diluted EPS | $0.41 | $0.46 | $1.14 | $1.28 | | Weighted average shares outstanding – Diluted (in millions) | 61.3 | 61.4 | 61.5 | 61.3 | - Options to purchase **0.5 million** shares of common stock were anti-dilutive and excluded from diluted EPS calculations for both the three and nine months ended September 30, 2020[107](index=107&type=chunk) [Note 10 – Stockholders' Equity](index=21&type=section&id=Note%2010%20%E2%80%93%20Stockholders'%20Equity) The Board declared quarterly cash dividends of **$0.08** per common share for Q1, Q2, and Q3 2020, totaling **$14.5 million** for the nine months, and the Company repurchased **498,217 shares** for **$13.7 million** - The Board declared quarterly cash dividends of **$0.08** per common share for Q1, Q2, and Q3 2020, totaling **$14.5 million** for the nine months ended September 30, 2020[109](index=109&type=chunk)[110](index=110&type=chunk) - The Company repurchased **498,217 shares** for **$13.7 million** during the nine months ended September 30, 2020, under its stock repurchase programs, which include a **$75.0 million** authorization from November 2014 and an additional **$75.0 million** from March 2020[112](index=112&type=chunk)[115](index=115&type=chunk) | Component of Accumulated Other Comprehensive Loss (in millions) | Balance at Jan 1, 2020 | Balance at Sep 30, 2020 | | :------------------------------------------------------------ | :--------------------- | :---------------------- | | Actuarial Losses | $(80.4) | $(77.5) | | Prior Service Costs | $(2.4) | $(2.3) | | Foreign Currency Translation | $(7.1) | $(7.6) | | Unrealized Gain (Loss) on Interest Rate Swaps | $0.8 | $(2.5) | | Total | $(89.1) | $(89.9) | [Note 11 – Segment Information](index=24&type=section&id=Note%2011%20%E2%80%93%20Segment%20Information) Both the Environmental Solutions Group and Safety and Security Systems Group experienced decreases in net sales and operating income for the three and nine months ended September 30, 2020, compared to the prior year | Metric (in millions) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | **Net sales:** | | | | | | Environmental Solutions | $231.0 | $254.0 | $678.2 | $740.7 | | Safety and Security Systems | $48.8 | $54.8 | $157.8 | $166.2 | | **Operating income (loss):** | | | | | | Environmental Solutions | $33.0 | $35.9 | $91.0 | $106.4 | | Safety and Security Systems | $7.4 | $8.6 | $25.2 | $26.8 | | Metric (in millions) | As of Sep 30, 2020 | As of Dec 31, 2019 | | :------------------- | :----------------- | :----------------- | | **Total assets:** | | | | Environmental Solutions | $940.9 | $908.1 | | Safety and Security Systems | $226.5 | $222.6 | | Corporate and eliminations | $57.0 | $34.5 | | Total assets | $1,224.7 | $1,165.5 | [Note 12 – Fair Value Measurements](index=24&type=section&id=Note%2012%20%E2%80%93%20Fair%20Value%20Measurements) The Company uses a three-level fair value hierarchy for its assets and liabilities, classifying cash equivalents as Level 1, interest rate swaps as Level 2, and contingent consideration liabilities as Level 3 - The Company classifies cash equivalents as Level 1, interest rate swaps as Level 2, and contingent consideration liabilities as Level 3 in its fair value hierarchy[127](index=127&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) | (in millions) | Level 1 | Level 2 | Level 3 | Total | | :------------ | :------ | :------ | :------ | :---- | | **Assets:** | | | | | | Cash equivalents | $34.4 | $— | $— | $34.4 | | **Liabilities:** | | | | | | Contingent consideration | $— | $— | $4.4 | $4.4 | | Interest rate swap | $— | $3.4 | $— | $3.4 | - The contingent consideration liability for the MRL acquisition, valued using an income approach with unobservable inputs, was **$4.4 million** as of September 30, 2020[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&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's analysis of financial performance, liquidity, and capital resources, including COVID-19 impacts [Executive Summary](index=27&type=section&id=Executive%20Summary) Federal Signal Corporation is a global manufacturer and supplier of vehicles and equipment for maintenance and infrastructure (Environmental Solutions Group) and safety, security, and communication equipment (Safety and Security Systems Group) - Federal Signal Corporation is a leading global manufacturer and supplier for maintenance and infrastructure (Environmental Solutions Group) and safety, security, and communication equipment (Safety and Security Systems Group)[138](index=138&type=chunk)[139](index=139&type=chunk) - The Company provides a comprehensive aftermarket offering including parts, service, repair, equipment rentals, and training, operating **15** principal manufacturing facilities in five countries[138](index=138&type=chunk) [COVID-19 Update](index=27&type=section&id=COVID-19%20Update) The Company's businesses are deemed essential, allowing most operations to continue despite the COVID-19 pandemic, with proactive measures taken for employee safety and cost savings - The Company's businesses are considered essential, allowing facilities to remain substantially operational despite COVID-19, with a primary focus on employee safety through PPE, social distancing, and enhanced cleaning[141](index=141&type=chunk) - Labor availability issues and supply chain disruptions impacted production in Q2 and Q3, but procurement teams mitigated risks by securing safety stock and identifying alternate suppliers[142](index=142&type=chunk) - Sales and marketing activities improved in Q3 as government restrictions eased, leading to a **$64.5 million (32%)** sequential increase in orders compared to Q2[143](index=143&type=chunk) - The Company implemented cost-saving actions including temporary salary reductions, furloughs, permanent reductions in force, and limited discretionary spending to mitigate financial impacts[148](index=148&type=chunk) [Operating Results (Consolidated)](index=28&type=section&id=Operating%20Results%20(Consolidated)) Consolidated net sales decreased by **9%** for the three months and **8%** for the nine months ended September 30, 2020, primarily due to lower sales volumes in both segments, leading to declines in operating income, net income, and diluted EPS | Metric | 3 Months Ended Sep 30, 2020 (in millions) | 3 Months Ended Sep 30, 2019 (in millions) | Change (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2019 (in millions) | Change (in millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------- | :---------------------------------------- | :---------------------------------------- | :------------------- | | Net sales | $279.8 | $308.8 | $(29.0) | $836.0 | $906.9 | $(70.9) | | Operating income | $34.0 | $38.6 | $(4.6) | $97.6 | $110.7 | $(13.1) | | Net income | $25.3 | $28.4 | $(3.1) | $70.1 | $78.7 | $(8.6) | | Diluted EPS | $0.41 | $0.46 | $(0.05) | $1.14 | $1.28 | $(0.14) | | Total orders | $265.8 | $328.8 | $(63.0) | $771.0 | $935.8 | $(164.8) | | Backlog | $319.7 | $366.9 | $(47.2) | $319.7 | $366.9 | $(47.2) | - Consolidated operating margin for the three months ended September 30, 2020, was **12.2%** (down **0.3%** YoY) and for the nine months was **11.7%** (down **0.5%** YoY)[149](index=149&type=chunk)[150](index=150&type=chunk) [Net sales (MD&A Analysis)](index=30&type=section&id=Net%20sales%20(MD%26A%20Analysis)) Net sales decreased by **$29.0 million (9%)** for the three months and **$70.9 million (8%)** for the nine months ended September 30, 2020, primarily due to lower sales volumes in both segments - Environmental Solutions Group net sales decreased by **$23.0 million (9%)** in Q3 2020, primarily due to reduced shipments of industrial vacuum loaders (**$10.4M**), road-marking equipment (**$6.1M**), street sweepers (**$5.1M**), dump truck bodies (**$2.9M**), and waterblasting equipment (**$2.3M**)[158](index=158&type=chunk) - Safety and Security Systems Group net sales decreased by **$6.0 million (11%)** in Q3 2020, mainly due to lower sales of industrial signaling equipment and public safety equipment[158](index=158&type=chunk) - For the nine months, Environmental Solutions Group net sales decreased by **$62.5 million (8%)**, with significant declines in safe-digging trucks (**$18.2M**), industrial vacuum loaders (**$13.8M**), and street sweepers (**$10.7M**), partially offset by a **$15.1 million** increase from MRL acquisition-related road-marking equipment[159](index=159&type=chunk) [Cost of sales (MD&A Analysis)](index=30&type=section&id=Cost%20of%20sales%20(MD%26A%20Analysis)) Cost of sales decreased by **$19.6 million (9%)** for the three months and **$47.3 million (7%)** for the nine months ended September 30, 2020, primarily reflecting lower sales volumes across both segments - Cost of sales decreased by **$19.6 million (9%)** in Q3 2020, with Environmental Solutions Group down **$17.6 million (9%)** and Safety and Security Systems Group down **$2.0 million (6%)**, both primarily due to lower sales volumes[160](index=160&type=chunk) - For the nine months, cost of sales decreased by **$47.3 million (7%)**, with Environmental Solutions Group down **$44.8 million (8%)** due to lower sales volumes and favorable foreign currency, partially offset by MRL acquisition costs[161](index=161&type=chunk) [Gross profit (MD&A Analysis)](index=31&type=section&id=Gross%20profit%20(MD%26A%20Analysis)) Gross profit decreased by **$9.4 million (11%)** for the three months and **$23.6 million (10%)** for the nine months ended September 30, 2020, with gross margin declining due to lower sales volumes and unfavorable sales mix - Gross profit decreased by **$9.4 million (11%)** in Q3 2020, with Environmental Solutions Group down **$5.4 million** and Safety and Security Systems Group down **$4.0 million**[163](index=163&type=chunk) - Gross margin for Q3 2020 was **25.9%** (down from **26.6%**) and for the nine months was **26.0%** (down from **26.6%**), primarily due to lower sales volumes and unfavorable sales mix in the Safety and Security Systems Group[163](index=163&type=chunk)[164](index=164&type=chunk) [Selling, engineering, general and administrative expenses (MD&A Analysis)](index=31&type=section&id=Selling%2C%20engineering%2C%20general%20and%20administrative%20expenses%20(MD%26A%20Analysis)) SEG&A expenses decreased by **$4.6 million (11%)** for the three months and **$10.7 million (8%)** for the nine months ended September 30, 2020, largely due to cost-saving actions implemented in response to the COVID-19 pandemic - SEG&A expenses decreased by **$4.6 million (11%)** in Q3 2020, driven by reductions in both Safety and Security Systems Group (**$2.8M**) and Environmental Solutions Group (**$2.5M**), partially offset by a **$0.7 million** increase in Corporate SEG&A[165](index=165&type=chunk) - For the nine months, SEG&A expenses decreased by **$10.7 million (8%)**, primarily due to cost-saving actions related to COVID-19, with reductions across Safety and Security Systems Group, Corporate, and Environmental Solutions Group[166](index=166&type=chunk) [Operating income (MD&A Analysis)](index=31&type=section&id=Operating%20income%20(MD%26A%20Analysis)) Operating income decreased by **$4.6 million (12%)** for the three months and **$13.1 million (12%)** for the nine months ended September 30, 2020, reflecting reduced gross profit across both segments, partially offset by lower corporate expenses for the nine-month period - Operating income decreased by **$4.6 million (12%)** in Q3 2020, with Environmental Solutions Group down **$2.9 million** and Safety and Security Systems Group down **$1.2 million**, and a **$0.5 million** increase in Corporate expenses[167](index=167&type=chunk) - For the nine months, operating income decreased by **$13.1 million (12%)**, driven by reductions in Environmental Solutions Group (**$15.4M**) and Safety and Security Systems Group (**$1.6M**), partially offset by a **$3.9 million** decrease in Corporate expenses[168](index=168&type=chunk) [Interest expense (MD&A Analysis)](index=31&type=section&id=Interest%20expense%20(MD%26A%20Analysis)) Interest expense decreased by **$0.9 million** for the three months and **$1.6 million** for the nine months ended September 30, 2020, primarily due to lower interest rates compared to the prior year - Interest expense decreased by **$0.9 million** in Q3 2020 and **$1.6 million** for the nine months, largely due to lower interest rates[169](index=169&type=chunk) [Other (income) expense, net (MD&A Analysis)](index=31&type=section&id=Other%20(income)%20expense%2C%20net%20(MD%26A%20Analysis)) The Company recognized **$0.1 million** in other income for the three months ended September 30, 2020, compared to **$0.2 million** in other expense in the prior year, while for the nine months, other expense increased to **$2.1 million** due to a multi-employer pension plan withdrawal - Other income of **$0.1 million** was realized in Q3 2020, a **$0.3 million** improvement from the prior-year quarter's **$0.2 million** expense[170](index=170&type=chunk) - For the nine months, other expense totaled **$2.1 million**, an increase of **$1.6 million** from the prior year, primarily due to a **$2.5 million** charge related to a multi-employer pension plan withdrawal[170](index=170&type=chunk) [Income tax expense (MD&A Analysis)](index=32&type=section&id=Income%20tax%20expense%20(MD%26A%20Analysis)) Income tax expense decreased by **$0.3 million** for the three months and **$4.5 million** for the nine months ended September 30, 2020, mainly due to lower pre-tax income and increased excess tax benefits from stock compensation - Income tax expense decreased by **$0.3 million** in Q3 2020 and **$4.5 million** for the nine months, primarily due to lower pre-tax income and **$0.7 million** (Q3) and **$2.3 million** (9M) more excess tax benefits from stock compensation[171](index=171&type=chunk)[172](index=172&type=chunk) - The effective tax rate for Q3 2020 was **23.1%** (vs. **21.8%** in prior year, which included a **$0.6M** audit benefit) and for the nine months was **23.0%** (vs. **24.4%**)[171](index=171&type=chunk)[172](index=172&type=chunk) [Net income (MD&A Analysis)](index=32&type=section&id=Net%20income%20(MD%26A%20Analysis)) Net income decreased by **$3.1 million** for the three months and **$8.6 million** for the nine months ended September 30, 2020, primarily driven by reduced operating income and increased other expenses (for the nine-month period), partially offset by lower interest and income tax expenses - Net income decreased by **$3.1 million** in Q3 2020, primarily due to reduced operating income, partially offset by lower interest expense and increased other income[173](index=173&type=chunk) - For the nine months, net income decreased by **$8.6 million**, mainly due to reduced operating income and increased other expense, partially offset by lower interest and income tax expenses[174](index=174&type=chunk) [Environmental Solutions Group (Segment Results)](index=32&type=section&id=Environmental%20Solutions%20Group%20(Segment%20Results)) The Environmental Solutions Group experienced a decline in total orders and net sales for both the three and nine months ended September 30, 2020, primarily due to reduced demand for various equipment types in the U.S. and unfavorable foreign currency impacts | Metric (in millions) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change | | :------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Net sales | $231.0 | $254.0 | $(23.0) | $678.2 | $740.7 | $(62.5) | | Operating income | $33.0 | $35.9 | $(2.9) | $91.0 | $106.4 | $(15.4) | | Operating margin | 14.3% | 14.1% | 0.2% | 13.4% | 14.4% | (1.0)% | | Total orders | $220.0 | $270.2 | $(50.2) | $615.2 | $767.1 | $(151.9) | | Backlog | $292.6 | $337.8 | $(45.2) | $292.6 | $337.8 | $(45.2) | - U.S. orders for Environmental Solutions decreased by **$66.3 million (30%)** in Q3 2020, driven by reductions in street sweepers (**$20.6M**), road-marking equipment (**$17.1M**), sewer cleaners (**$14.9M**), and safe-digging trucks (**$9.4M**)[176](index=176&type=chunk) - For the nine months, U.S. orders decreased by **$140.7 million (23%)**, with significant declines in safe-digging trucks (**$45.2M**), sewer cleaners (**$40.9M**), and street sweepers (**$25.1M**)[181](index=181&type=chunk) - Non-U.S. sales increased by **$6.6 million (18%)** in Q3 2020, primarily due to a **$6.3 million** increase in aftermarket demand, largely from higher used equipment sales[177](index=177&type=chunk) [Safety and Security Systems Group (Segment Results)](index=34&type=section&id=Safety%20and%20Security%20Systems%20Group%20(Segment%20Results)) The Safety and Security Systems Group experienced decreases in total orders, net sales, and operating income for both the three and nine months ended September 30, 2020, with gross margin declining due to unfavorable sales mix | Metric (in millions) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change | | :------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Net sales | $48.8 | $54.8 | $(6.0) | $157.8 | $166.2 | $(8.4) | | Operating income | $7.4 | $8.6 | $(1.2) | $25.2 | $26.8 | $(1.6) | | Operating margin | 15.2% | 15.7% | (0.5)% | 16.0% | 16.1% | (0.1)% | | Total orders | $45.8 | $58.6 | $(12.8) | $155.8 | $168.7 | $(12.9) | | Backlog | $27.1 | $29.1 | $(2.0) | $27.1 | $29.1 | $(2.0) | - U.S. orders for Safety and Security Systems decreased by **$7.9 million** in Q3 2020, primarily due to reductions in public safety equipment (**$3.7M**), warning systems (**$2.3M**), and industrial signaling equipment (**$1.9M**)[188](index=188&type=chunk) - Gross margin for Q3 2020 was **36.7%** (down from **40.0%**) and for the nine months was **37.7%** (down from **39.4%**), primarily due to unfavorable sales mix[190](index=190&type=chunk)[195](index=195&type=chunk) - SEG&A expenses decreased by **$2.8 million (21%)** in Q3 2020 and **$4.6 million (12%)** for the nine months, largely due to COVID-19 cost-saving actions[191](index=191&type=chunk)[196](index=196&type=chunk) [Corporate Expenses (MD&A)](index=35&type=section&id=Corporate%20Expenses%20(MD%26A)) Corporate operating expenses increased by **$0.5 million** to **$6.4 million** in the three months ended September 30, 2020, due to higher post-employment expenses, but decreased by **$3.9 million** to **$18.6 million** for the nine months due to COVID-19 cost-saving actions - Corporate operating expenses increased to **$6.4 million** in Q3 2020 (from **$5.9M**), primarily due to higher post-employment expenses[198](index=198&type=chunk) - For the nine months, corporate operating expenses decreased by **$3.9 million** to **$18.6 million**, mainly due to reductions in post-employment expenses, incentive-based compensation, and employee costs from COVID-19 cost-saving actions[199](index=199&type=chunk) [Seasonality of Company's Business](index=35&type=section&id=Seasonality%20of%20Company's%20Business) The Company's business experiences seasonal influences, typically with lower equipment sales in Q1 and higher rental income and parts sales in Q2 and Q3, though COVID-19 may alter these trends - The Company typically experiences lower equipment sales in Q1 and higher rental income and parts sales in Q2 and Q3 due to seasonal factors and weather conditions impacting North American maintenance activities[200](index=200&type=chunk) - The COVID-19 pandemic may cause the Company's 2020 results to deviate from typical seasonal trends[200](index=200&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=35&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The Company maintains a strong liquidity position with **$66.2 million** in cash and cash equivalents and **$250.6 million** available under its revolving credit facility as of September 30, 2020 - As of September 30, 2020, the Company had **$66.2 million** in cash and cash equivalents and **$250.6 million** available for borrowings under its **$500 million** revolving credit facility[201](index=201&type=chunk)[202](index=202&type=chunk) - Net cash provided by operating activities increased to **$79.6 million** for the nine months ended September 30, 2020 (from **$58.6M** in prior year), driven by working capital timing, lower rental fleet investment, and CARES Act deferrals (**$4.8M** payroll tax)[203](index=203&type=chunk) - Net cash used for investing activities decreased to **$29.2 million** (from **$70.3M** in prior year), with capital expenditures at **$24.3 million** and **$6.2 million** paid for the PWE acquisition[204](index=204&type=chunk) - Net cash used for financing activities was **$16.0 million** (vs. **$10.5M** provided in prior year), including **$14.5 million** in cash dividends, **$13.7 million** in share repurchases, and **$9.0 million** for stock-based compensation tax withholdings[205](index=205&type=chunk) - The Company anticipates 2020 capital expenditures to be in the range of **$30 million** to **$35 million**[206](index=206&type=chunk) [Contractual Obligations and Off-Balance Sheet Arrangements](index=36&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) There have been no material changes to the Company's contractual obligations and off-balance sheet arrangements during the nine months ended September 30, 2020 - No material changes occurred in the Company's contractual obligations and off-balance sheet arrangements during the nine months ended September 30, 2020[207](index=207&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no significant changes in the Company's exposure to market risk during the nine months ended September 30, 2020 - No significant changes in market risk exposure occurred during the nine months ended September 30, 2020[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's management concluded that its disclosure controls and procedures were effective as of September 30, 2020, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of September 30, 2020, by management, including the CEO and CFO[210](index=210&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2020[211](index=211&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The information regarding legal proceedings is incorporated by reference from Note 8 – Commitments and Contingencies in Part I of this Form 10-Q - Legal proceedings information is incorporated by reference from Note 8 – Commitments and Contingencies[214](index=214&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the Company's risk factors from its 2019 Form 10-K, except for the significant and highly uncertain adverse impact of the COVID-19 pandemic on its business, financial condition, and operating results - No material changes to risk factors from the 2019 Form 10-K, except for the highly uncertain and potentially material adverse impact of the COVID-19 pandemic[215](index=215&type=chunk)[216](index=216&type=chunk) - The COVID-19 pandemic's impact depends on factors like its duration, governmental actions (e.g., restrictions, mandates), effects on customers and supply chain, labor availability, demand volatility, and financial market stability[216](index=216&type=chunk) - The COVID-19 pandemic may heighten many existing risks described in the Company's 2019 Annual Report on Form 10-K[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During July 2020, the Company repurchased **7,227 shares** of common stock for **$0.2 million** at an average price of **$27.71** per share under its publicly announced stock repurchase programs | 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 | | :----- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :-------------------------------------------------------------------------------- | | July 2020 | 7,227 | $27.71 | 7,227 | $90,524,049 | | August 2020 | — | — | — | $90,524,049 | | September 2020 | — | — | — | $90,524,049 | - The Company has two active stock repurchase programs, authorized in November 2014 and March 2020, each for up to **$75.0 million** of common stock[218](index=218&type=chunk)[219](index=219&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities - No defaults upon senior securities were reported[220](index=220&type=chunk) [Item 4. Mine Safety Disclosures](index=39&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[221](index=221&type=chunk) [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) On October 29, 2020, the Company issued a press release announcing its Q3 2020 financial results and posted earnings call presentation slides on its website, which are attached as Exhibits 99.1 and 99.2 to this Form 10-Q - The Company issued a press release and posted earnings call presentation slides on October 29, 2020, announcing Q3 2020 financial results, attached as Exhibits 99.1 and 99.2[222](index=222&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, financial results press release, earnings call presentation slides, and XBRL interactive data files - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), the Q3 2020 financial results press release (99.1), earnings call presentation slides (99.2), and various XBRL taxonomy documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[225](index=225&type=chunk) [SIGNATURE](index=41&type=section&id=SIGNATURE) [SIGNATURE](index=41&type=section&id=SIGNATURE) The report was signed on October 29, 2020, by Ian A. Hudson, Senior Vice President and Chief Financial Officer of Federal Signal Corporation - The report was signed by Ian A. Hudson, Senior Vice President and Chief Financial Officer, on October 29, 2020[228](index=228&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements for Q2 and H1 2020, including operations, balance sheets, cash flows, and equity, with explanatory notes Condensed Consolidated Statements of Operations Highlights (in millions) | Metric | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $270.1 | $324.3 | $556.2 | $598.1 | | **Gross profit** | $70.3 | $89.0 | $145.1 | $159.3 | | **Operating income** | $31.3 | $46.3 | $63.6 | $72.1 | | **Net income** | $21.4 | $32.8 | $44.8 | $50.3 | | **Diluted EPS** | $0.35 | $0.54 | $0.73 | $0.82 | Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $73.6 | $31.6 | | Total current assets | $406.8 | $360.7 | | Total assets | $1,211.2 | $1,165.5 | | Total current liabilities | $160.7 | $160.2 | | Total liabilities | $555.8 | $523.9 | | Total stockholders' equity | $655.4 | $641.6 | Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $65.0 | $25.8 | | Net cash used for investing activities | $(21.2) | $(9.4) | | Net cash used for financing activities | $(1.5) | $(15.4) | [Note 2 – Acquisitions](index=12&type=section&id=Note%202%20%E2%80%93%20Acquisitions) Details the June 2020 acquisition of Public Works Equipment and Supply (PWE) assets, part of Environmental Solutions Group, deemed immaterial - The company acquired PWE for cash consideration of **$6.2 million**, which resulted in the recognition of **$2.5 million** in goodwill, deductible for tax purposes[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3 – Revenue Recognition](index=13&type=section&id=Note%203%20%E2%80%93%20Revenue%20Recognition) Disaggregates net sales by geographic region and product line for two segments, highlighting US dominance and Environmental Solutions as primary driver Net Sales by Segment (YTD 2020 vs YTD 2019, in millions) | Segment | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | | Environmental Solutions | $447.2 | $486.7 | | Safety and Security Systems | $109.0 | $111.4 | | **Total net sales** | **$556.2** | **$598.1** | [Note 5 – Debt](index=14&type=section&id=Note%205%20%E2%80%93%20Debt) Outlines the company's debt structure, primarily 2019 Credit Agreement borrowings, with compliance and significant availability as of June 30, 2020 - As of June 30, 2020, the company had **$243.9 million** drawn under its 2019 Credit Agreement, with **$244.9 million** of availability for borrowings[48](index=48&type=chunk) - The company entered into a new interest rate swap (the "2019 Swap") in October 2019 with a notional amount of **$75.0 million** to fix the interest rate on a portion of its variable-rate debt, maturing in July 2024[50](index=50&type=chunk) [Note 6 – Income Taxes](index=15&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) Reports decreased income tax expense for Q2 and H1 2020 due to lower pre-tax income and stock compensation benefits, with CARES Act deferrals Effective Tax Rate Comparison | Period | 2020 | 2019 | | :--- | :--- | :--- | | Three Months Ended June 30 | 22.2% | 26.1% | | Six Months Ended June 30 | 22.9% | 25.8% | - Under the CARES Act, the company deferred approximately **$3.3 million** of federal income tax payments from Q2 2020 to Q3 2020[56](index=56&type=chunk) [Note 8 – Commitments and Contingencies](index=16&type=section&id=Note%208%20%E2%80%93%20Commitments%20and%20Contingencies) Details financial commitments, warranty liabilities, and legal proceedings, notably a 2019 global settlement for firefighter hearing loss claims - The company has outstanding performance and financial standby letters of credit and bonds totaling **$26.6 million** as of June 30, 2020[62](index=62&type=chunk) - A global settlement agreement was executed on November 4, 2019, to resolve hearing loss claims from approximately **3,700 firefighters** in most jurisdictions. The company has recognized an estimated liability for the potential settlement amount[94](index=94&type=chunk) [Note 10 – Stockholders' Equity](index=22&type=section&id=Note%2010%20%E2%80%93%20Stockholders%27%20Equity) Covers changes in stockholders' equity, including dividend declarations and stock repurchases, with Q2 2020 repurchases suspended due to COVID-19 - The Board of Directors declared a quarterly cash dividend of **$0.08 per common share** in both Q1 and Q2 2020[109](index=109&type=chunk)[110](index=110&type=chunk) - In the first six months of 2020, the company repurchased **490,990 shares** for **$13.5 million**. However, no shares were repurchased in Q2 2020 as the program was temporarily suspended due to economic uncertainty from the COVID-19 pandemic[114](index=114&type=chunk) [Note 11 – Segment Information](index=26&type=section&id=Note%2011%20%E2%80%93%20Segment%20Information) Breaks down net sales and operating income for Environmental Solutions and Safety and Security segments, noting decline in the former and stability in the latter Segment Performance (Q2 2020 vs Q2 2019, in millions) | Metric | Environmental Solutions | Safety and Security Systems | | :--- | :--- | :--- | | **Net Sales Q2 2020** | $214.2 | $55.9 | | **Net Sales Q2 2019** | $267.2 | $57.1 | | **Operating Income Q2 2020** | $28.6 | $10.4 | | **Operating Income Q2 2019** | $44.8 | $9.5 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Q2 and H1 2020 financial performance, focusing on COVID-19's impact on sales, orders, and profitability, especially in Environmental Solutions, alongside cost-saving and liquidity - The COVID-19 pandemic significantly impacted Q2 2020 results, leading to a **17% decrease in net sales** and a **32% decrease in operating income** compared to Q2 2019[146](index=146&type=chunk)[148](index=148&type=chunk) - Total orders in Q2 2020 were **$201.3 million**, a decrease of **35%** from the prior-year quarter, reflecting weakened demand due to the pandemic[153](index=153&type=chunk) - The company implemented several cost-saving actions, including temporary salary reductions for leadership, furloughs for approximately **400 employees**, and limited discretionary spending[146](index=146&type=chunk) - Despite operational challenges, the company maintained a strong financial position with **$73.6 million** in cash and **$244.9 million** of borrowing availability as of June 30, 2020[144](index=144&type=chunk) [Environmental Solutions Segment Analysis](index=34&type=section&id=Environmental%20Solutions) Environmental Solutions Group saw Q2 net sales fall **20%** to **$214.2 million** and operating income drop, with orders declining **38%** due to pandemic impact Environmental Solutions Q2 Performance (in millions) | Metric | Q2 2020 | Q2 2019 | Change | | :--- | :--- | :--- | :--- | | Net sales | $214.2 | $267.2 | $(53.0) | | Operating income | $28.6 | $44.8 | $(16.2) | | Total orders | $157.7 | $253.2 | $(95.5) | - The sales decrease was driven by lower shipments of safe-digging trucks (**$21.2 million**), sewer cleaners (**$12.5 million**), and street sweepers (**$6.9 million**), partially offset by a **$13.2 million** increase from the MRL acquisition[176](index=176&type=chunk) [Safety and Security Systems Segment Analysis](index=36&type=section&id=Safety%20and%20Security%20Systems) Safety and Security Systems Group showed resilience with Q2 net sales down **2%** to **$55.9 million**, operating income up **9%** due to cost savings Safety and Security Systems Q2 Performance (in millions) | Metric | Q2 2020 | Q2 2019 | Change | | :--- | :--- | :--- | :--- | | Net sales | $55.9 | $57.1 | $(1.2) | | Operating income | $10.4 | $9.5 | $0.9 | | Total orders | $43.6 | $54.8 | $(11.2) | - The increase in operating income was primarily due to a **$1.9 million** reduction in SEG&A expenses resulting from cost-saving actions[190](index=190&type=chunk)[191](index=191&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=38&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Company maintained strong liquidity, with H1 2020 operating cash flow improving to **$65.0 million** due to working capital and CARES Act deferrals - The year-over-year improvement in operating cash flow was driven by working capital timing, lower rental fleet investment, and deferrals of **$3.3 million** in federal income tax and **$2.3 million** in payroll tax payments under the CARES Act[202](index=202&type=chunk) - In H1 2020, the company borrowed a net **$27.7 million** on its revolving credit facility to bolster its cash position amid COVID-19 uncertainty[204](index=204&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&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, 2020, compared to the 2019 10-K [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[210](index=210&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, emphasizing the highly uncertain and potentially material adverse impact of the COVID-19 pandemic on business and financial results - The COVID-19 pandemic is identified as a material risk factor with a highly uncertain and potentially material adverse impact on the company's business, financial condition, and operating results[216](index=216&type=chunk) - Key uncertainties include the pandemic's duration, government responses, effects on customers and suppliers, the ability to maintain production capacity, and volatility in product demand[217](index=217&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on stock repurchase activity, noting no Q2 2020 repurchases and **$90.7 million** remaining under authorized programs Stock Repurchase Activity (Q2 2020) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2020 | — | $ — | | May 2020 | — | $ — | | June 2020 | — | $ — | - As of June 2020, the maximum dollar value of shares that may yet be purchased under the company's plans is **$90,724,309**[218](index=218&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including Sarbanes-Oxley certifications, Q2 financial results press release, and earnings call presentation

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 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 CORPORATI ...

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, 2019 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 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 _____________________________________________ https://files.reportify.cc/media/produ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ FORM 10-Q (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, 2019 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 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 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 ...