Federal Signal Reports First Quarter Results Including 35% Net Sales Growth, 52% Operating Income Improvement, and Strong Cash Generation; Raises Full-Year Outlook and Increases EBITDA Margin Targets for Safety and Security Systems Group
Rhea-AI Summary
Federal Signal (NYSE:FSS) reported strong Q1 2026 results: net sales $626M (+35%), operating income $99.7M (+52%), adjusted EBITDA $126.3M (+48%), and operating cash flow $101M (+176%).
The company raised 2026 guidance to $2.57B–$2.66B sales and adjusted EPS to $4.80–$5.05, and raised Safety and Security EBITDA margin targets to 22%–28%.
Positive
- Net sales of $626M, +35% year-over-year
- Operating income of $99.7M, +52% year-over-year
- Adjusted EBITDA of $126.3M, +48% year-over-year
- Operating cash flow of $101M, +176% year-over-year
- Raised full-year net sales outlook to $2.57B–$2.66B
- Raised 2026 adjusted EPS outlook to $4.80–$5.05
Negative
- Backlog declined to $1.04B from $1.10B year-over-year
- Total cash and cash equivalents of $71M vs total debt of $552M
News Market Reaction – FSS
In the Apr 29 session, FSS gained 8.72%, reflecting a notable positive market reaction. Argus tracked a peak move of +5.2% during that session. Our momentum scanner triggered 6 alerts that day, indicating moderate trading interest and price volatility.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Oct 30 | Q3 2025 earnings | Positive | -10.8% | 17% sales growth, 24% operating income gain, outlook raised for 2025. |
| Jul 30 | Q2 2025 earnings | Positive | +18.2% | Record Q2 with 15% sales growth and higher EPS; outlook and margin targets raised. |
| Apr 30 | Q1 2025 earnings | Positive | +7.6% | 9% sales growth, record orders and backlog, higher adjusted EPS, outlook raised. |
| Feb 26 | Q4 2024 earnings | Positive | -11.9% | Record 2024 results and higher 2025 guidance following strong Q4 performance. |
| Oct 31 | Q3 2024 earnings | Positive | -3.8% | 6% sales growth, 21% operating income increase, raised EPS outlook and SSS margins. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Earnings releases are generally positive in tone, but price reactions have been mixed, with several prior quarters selling off despite raised guidance and margin improvements.
Recent earnings history shows Federal Signal repeatedly posting double-digit net sales and operating income growth, often accompanied by raised full-year outlooks and higher EBITDA margin targets. Prior updates, such as Q3 2025 and Q4 2024, highlighted expanding margins, higher EPS, and increased sales guidance, yet share reactions have sometimes been negative despite these positives. Today’s Q1 2026 report continues the pattern of strong growth and outlook upgrades within that trajectory.
Key Terms
gaap financial
adjusted eps financial
adjusted ebitda financial
ebitda margin financial
backlog financial
credit facility financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
First Quarter Highlights
- Net sales of
$626 million $162 million 35% , from last year; organic growth of$70 million 15% - Operating income of
$99.7 million $34.0 million 52% , from last year - GAAP Diluted EPS of
$1.14 $0.39 52% , from last year - Adjusted EPS of
$1.18 $0.42 55% , from last year - Orders of
$623 million $55 million 10% , from last year - Operating cash flow of
$101 million $65 million 176% , from last year - Raises 2026 net sales outlook to a new range of
$2.57 billion $2.66 billion $2.55 billion $2.65 billion - Raises 2026 adjusted EPS* outlook to a new range of
$4.80 $5.05 $4.50 $4.80 - Raises EBITDA margin targets for the Safety and Security Systems Group to a new range of
22% to28% , from the prior range of18% to24%
Consolidated net sales for the first quarter were
The Company also reported adjusted net income for the first quarter of
First Quarter Outperformance Represents Strong Start to the Year; Raising EBITDA Margin Targets for the Safety and Security Systems Group
"Our first quarter results exceeded our expectations, with our businesses delivering
In the Environmental Solutions Group, net sales for the first quarter were
Consolidated operating income for the first quarter was
Consolidated adjusted earnings before interest, tax, depreciation and amortization ("adjusted EBITDA") for the first quarter was
In the Environmental Solutions Group, adjusted EBITDA for the first quarter was
Consolidated orders for the first quarter were
Increased Operating Cash Flow Provides Flexibility to Fund M&A, Organic Growth Opportunities, and Cash Returns to Stockholders
Net cash provided by operating activities during the first quarter was
At March 31, 2026, total outstanding debt was
"Our operating cash flow generation during the quarter was up
The Company funded dividends of
Outlook
"Demand for our products and our aftermarket offerings remains strong," noted Sherman. "With our better-than-expected first quarter performance, our current backlog, and continued execution against our strategic initiatives, we are raising our full-year adjusted EPS* outlook to a new range of
CONFERENCE CALL
Federal Signal will host its first quarter conference call on Wednesday, April 29, 2026 at 10:00 a.m. Eastern Time. The call will last approximately one hour. The call may be accessed over the internet through Federal Signal's website at www.federalsignal.com or by dialing phone number 1-877-704-4453 and entering the pin number 13760128. A replay will be available on Federal Signal's website shortly after the call.
About Federal Signal
Federal Signal Corporation (NYSE: FSS) builds and delivers equipment of unmatched quality that moves material, cleans infrastructure, and protects the communities where we work and live. Founded in 1901, Federal Signal is a leading global designer, manufacturer and supplier of products and total solutions that serve municipal, governmental, industrial, and commercial customers. Headquartered in
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This release contains unaudited financial information and various forward-looking statements as of the date hereof and we undertake no obligation to update these forward-looking statements regardless of new developments or otherwise. Statements in this release that are not historical are forward-looking statements. Forward looking statements should not be relied upon as a predictor of actual results. Such statements are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Such risks and uncertainties include but are not limited to: economic and political uncertainty, risks and adverse economic effects associated with geopolitical conflicts including tariffs and other trade conflicts, legal and regulatory developments, foreign currency exchange rate changes, inflationary pressures, product and price competition, supply chain disruptions, availability and pricing of raw materials, interest rate changes, risks associated with acquisitions such as integration of operations and achieving anticipated revenue and cost benefits, work stoppages, increases in pension funding requirements, cybersecurity risks, increased legal expenses and litigation results, and other risks and uncertainties described in filings with the Securities and Exchange Commission.
* Adjusted earnings per share ("EPS") is a non-GAAP measure, which includes certain adjustments to reported GAAP net income and diluted EPS. In the three months ended March 31, 2026 and 2025, we made adjustments to exclude the impact of acquisition and integration-related expenses, net, and purchase accounting effects, where applicable. In prior years, we have also made adjustments to exclude the impact of pension-related charges, debt settlement charges, special tax items, and certain other unusual or non-recurring items. Should any similar items occur in the remainder of 2026, we would expect to exclude them from the determination of adjusted EPS. However, because of the underlying uncertainty in quantifying amounts which may not yet be known, a reconciliation of our Adjusted EPS outlook to the most applicable GAAP measure is excluded based on the unreasonable efforts exception in Item 10(e)(1)(i)(B).
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
| |||
Three Months Ended March 31, | |||
(in millions, except per share data) | 2026 | 2025 | |
Net sales | $ 625.6 | $ 463.8 | |
Cost of sales | 446.2 | 333.0 | |
Gross profit | 179.4 | 130.8 | |
Selling, engineering, general and administrative expenses | 72.0 | 60.2 | |
Amortization expense | 6.5 | 4.3 | |
Acquisition and integration-related expenses, net | 1.2 | 0.6 | |
Operating income | 99.7 | 65.7 | |
Interest expense, net | 6.9 | 3.0 | |
Other expense, net | 0.6 | 0.7 | |
Income before income taxes | 92.2 | 62.0 | |
Income tax expense | 21.8 | 15.7 | |
Net income | $ 70.4 | $ 46.3 | |
Earnings per share: | |||
Basic | $ 1.16 | $ 0.76 | |
Diluted | $ 1.14 | $ 0.75 | |
Weighted average common shares outstanding: | |||
Basic | 60.9 | 61.1 | |
Diluted | 61.5 | 61.8 | |
Cash dividends declared per common share | $ 0.15 | $ 0.14 | |
Operating data: | |||
Operating margin | 15.9 % | 14.2 % | |
Adjusted EBITDA | $ 126.3 | $ 85.1 | |
Adjusted EBITDA margin | 20.2 % | 18.3 % | |
Total orders | $ 622.8 | $ 567.9 | |
Backlog | 1,037.5 | 1,102.0 | |
Depreciation and amortization | 23.8 | 18.7 | |
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
| |||
March 31, | December 31, | ||
(in millions, except per share data) | (Unaudited) | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 71.4 | $ 63.7 | |
Accounts receivable, net of allowances for doubtful accounts of | 310.1 | 292.2 | |
Inventories | 477.8 | 471.6 | |
Prepaid expenses and other current assets | 17.5 | 26.3 | |
Total current assets | 876.8 | 853.8 | |
Properties and equipment, net of accumulated depreciation of | 287.2 | 274.6 | |
Rental equipment, net of accumulated depreciation of | 210.0 | 202.7 | |
Operating lease right-of-use assets | 29.9 | 28.4 | |
Goodwill | 626.8 | 619.8 | |
Intangible assets, net of accumulated amortization of | 393.9 | 382.9 | |
Deferred tax assets | 9.9 | 10.1 | |
Deferred charges and other long-term assets | 19.9 | 20.3 | |
Total assets | $ 2,454.4 | $ 2,392.6 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Current portion of long-term borrowings and finance lease obligations | $ 3.0 | $ 0.5 | |
Accounts payable | 115.8 | 98.0 | |
Customer deposits | 66.3 | 47.7 | |
Accrued liabilities: | |||
Compensation and withholding taxes | 38.4 | 52.3 | |
Current operating lease liabilities | 8.1 | 7.9 | |
Contingent consideration | 4.1 | 15.0 | |
Other current liabilities | 72.5 | 61.0 | |
Total current liabilities | 308.2 | 282.4 | |
Long-term borrowings and finance lease obligations | 548.6 | 564.6 | |
Long-term operating lease liabilities | 23.1 | 21.6 | |
Long-term pension and other post-retirement benefit liabilities | 41.9 | 43.1 | |
Deferred tax liabilities | 74.2 | 71.9 | |
Other long-term liabilities | 23.9 | 27.0 | |
Total liabilities | 1,019.9 | 1,010.6 | |
Stockholders' equity: | |||
Common stock, | 71.0 | 70.8 | |
Capital in excess of par value | 333.9 | 330.4 | |
Retained earnings | 1,376.5 | 1,315.3 | |
Treasury stock, at cost, 10.0 and 9.9 shares, respectively | (272.5) | (263.5) | |
Accumulated other comprehensive loss | (74.4) | (71.0) | |
Total stockholders' equity | 1,434.5 | 1,382.0 | |
Total liabilities and stockholders' equity | $ 2,454.4 | $ 2,392.6 | |
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| |||
Three Months Ended March 31, | |||
(in millions) | 2026 | 2025 | |
Operating activities: | |||
Net income | $ 70.4 | $ 46.3 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 23.8 | 18.7 | |
Stock-based compensation expense | 2.7 | 2.4 | |
Changes in fair value of contingent consideration | 0.2 | — | |
Payments for acquisition-related activity | (3.5) | — | |
Deferred income taxes | 2.3 | 0.7 | |
Changes in operating assets and liabilities | 5.4 | (31.4) | |
Net cash provided by operating activities | 101.3 | 36.7 | |
Investing activities: | |||
Purchases of properties and equipment | (6.7) | (5.6) | |
Payments for acquisition-related activity, net of cash acquired | (44.9) | (82.1) | |
Net cash used for investing activities | (51.6) | (87.7) | |
Financing activities: | |||
(Decrease) increase in revolving lines of credit, net | (12.8) | 64.2 | |
Purchases of treasury stock | — | (18.5) | |
Redemptions of common stock to satisfy withholding taxes related to stock-based compensation | (8.2) | (8.6) | |
Payments for acquisition-related activity | (11.5) | — | |
Cash dividends paid to stockholders | (9.2) | (8.6) | |
Proceeds from stock-based compensation activity | 0.1 | — | |
Other, net | (0.1) | (11.6) | |
Net cash (used for) provided by financing activities | (41.7) | 16.9 | |
Effects of foreign exchange rate changes on cash and cash equivalents | (0.3) | 0.5 | |
Increase (decrease) in cash and cash equivalents | 7.7 | (33.6) | |
Cash and cash equivalents at beginning of year | 63.7 | 91.1 | |
Cash and cash equivalents at end of period | $ 71.4 | $ 57.5 | |
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES GROUP RESULTS (Unaudited) | |||||
The following tables summarize group operating results as of and for the three months ended March 31, 2026 and 2025: | |||||
Environmental Solutions Group | |||||
Three Months Ended March 31, | |||||
($ in millions) | 2026 | 2025 | Change | ||
Net sales | $ 532.7 | $ 387.4 | $ 145.3 | ||
Operating income | 89.1 | 59.7 | 29.4 | ||
Adjusted EBITDA | 113.3 | 77.5 | 35.8 | ||
Operating data: | |||||
Operating margin | 16.7 % | 15.4 % | 1.3 % | ||
Adjusted EBITDA margin | 21.3 % | 20.0 % | 1.3 % | ||
Total orders | $ 534.3 | $ 480.1 | $ 54.2 | ||
Backlog | 965.9 | 1,033.1 | (67.2) | ||
Depreciation and amortization | 22.6 | 17.6 | 5.0 | ||
Safety and Security Systems Group | |||||
Three Months Ended March 31, | |||||
($ in millions) | 2026 | 2025 | Change | ||
Net sales | $ 92.9 | $ 76.4 | $ 16.5 | ||
Operating income | 23.6 | 15.8 | 7.8 | ||
Adjusted EBITDA | 24.7 | 16.8 | 7.9 | ||
Operating data: | |||||
Operating margin | 25.4 % | 20.7 % | 4.7 % | ||
Adjusted EBITDA margin | 26.6 % | 22.0 % | 4.6 % | ||
Total orders | $ 88.5 | $ 87.8 | $ 0.7 | ||
Backlog | 71.6 | 68.9 | 2.7 | ||
Depreciation and amortization | 1.1 | 1.0 | 0.1 | ||
Corporate Expenses
Corporate operating expenses were
SEC REGULATION G NON-GAAP RECONCILIATION
The financial measures presented below are unaudited and are not in accordance with
Adjusted Net Income and Earnings Per Share ("EPS"):
The Company believes that modifying its 2026 and 2025 net income and diluted EPS provides additional measures to assist it in comparing its performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes are not representative of its underlying performance and to improve the comparability of results across reporting periods. Adjusted net income and Adjusted EPS are both non-GAAP measures. During the three months ended March 31, 2026 and 2025 adjustments were made to reported GAAP net income and diluted EPS to exclude the impact of acquisition and integration-related expenses, net, and purchase accounting effects, where applicable.
Three Months Ended March 31, | |||
(in millions) | 2026 | 2025 | |
Net income, as reported | $ 70.4 | $ 46.3 | |
Add: | |||
Income tax expense | 21.8 | 15.7 | |
Income before income taxes | 92.2 | 62.0 | |
Add: | |||
Acquisition and integration-related expenses, net | 1.2 | 0.6 | |
Purchase accounting effects (a) | 1.8 | 0.3 | |
Adjusted income before income taxes | 95.2 | 62.9 | |
Adjusted income tax expense (b) | (22.5) | (15.9) | |
Adjusted net income | $ 72.7 | $ 47.0 | |
Three Months Ended March 31, | |||
(dollars per diluted share) | 2026 | 2025 | |
EPS, as reported | $ 1.14 | $ 0.75 | |
Add: | |||
Income tax expense | 0.36 | 0.25 | |
Income before income taxes | 1.50 | 1.00 | |
Add: | |||
Acquisition and integration-related expenses, net | 0.02 | 0.01 | |
Purchase accounting effects (a) | 0.03 | 0.01 | |
Adjusted income before income taxes | 1.55 | 1.02 | |
Adjusted income tax expense (b) | (0.37) | (0.26) | |
Adjusted EPS | $ 1.18 | $ 0.76 | |
(a) | Purchase accounting effects in the three months ended March 31, 2026 and 2025 relate to adjustments to exclude the step-up in the valuation of inventory acquired in connection with acquisitions that was sold subsequent to the acquisition date and the depreciation of the step-up in the valuation of acquired rental equipment, where applicable. Such costs are included as a component of Cost of sales on the Condensed Consolidated Statements of Operations. |
(b) | Adjusted income tax expense for the three months ended March 31, 2026 and 2025 was recomputed after excluding the tax impacts of acquisition and integration-related expenses, net, and purchase accounting effects. |
Adjusted EBITDA and Adjusted EBITDA Margin:
The Company uses adjusted EBITDA and the ratio of adjusted EBITDA to net sales ("adjusted EBITDA margin"), at both the consolidated and segment level, as additional measures to assist in comparing its performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes are not representative of its underlying performance and to improve the comparability of results across reporting periods. We believe that investors use versions of these metrics in a similar manner. For these reasons, the Company believes that adjusted EBITDA and adjusted EBITDA margin, at both the consolidated and segment level, are meaningful metrics to investors in evaluating the Company's underlying financial performance.
Consolidated adjusted EBITDA is a non-GAAP measure that represents the total of net income, interest expense, net, acquisition and integration-related expenses, net, purchase accounting effects, other expense, net, income tax expense, and depreciation and amortization expense, as applicable. Consolidated adjusted EBITDA margin is a non-GAAP measure that represents the total of net income, interest expense, net, acquisition and integration-related expenses, net, purchase accounting effects, other expense, net, income tax expense, and depreciation and amortization expense, as applicable, divided by net sales for the applicable period(s).
Segment adjusted EBITDA is a non-GAAP measure that represents the total of segment operating income, acquisition and integration-related expenses, net, purchase accounting effects, and depreciation and amortization expense, as applicable. Segment adjusted EBITDA margin is a non-GAAP measure that represents the total of segment operating income, acquisition and integration-related expenses, net, purchase accounting effects, and depreciation and amortization expense, as applicable, divided by segment net sales for the applicable period(s). Segment operating income includes all revenues, costs, and expenses directly related to the segment involved. In determining segment operating income, neither corporate nor interest expenses are included. Segment depreciation and amortization expense relates to those assets, both tangible and intangible, that are utilized by the respective segment.
Other companies may use different methods to calculate adjusted EBITDA and adjusted EBITDA margin.
Consolidated
The following table summarizes the Company's consolidated adjusted EBITDA and adjusted EBITDA margin and reconciles net income to consolidated adjusted EBITDA for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31, | |||
($ in millions) | 2026 | 2025 | |
Net income | $ 70.4 | $ 46.3 | |
Add: | |||
Interest expense, net | 6.9 | 3.0 | |
Acquisition and integration-related expenses, net | 1.2 | 0.6 | |
Purchase accounting effects * | 1.6 | 0.1 | |
Other expense, net | 0.6 | 0.7 | |
Income tax expense | 21.8 | 15.7 | |
Depreciation and amortization | 23.8 | 18.7 | |
Consolidated adjusted EBITDA | $ 126.3 | $ 85.1 | |
Net sales | $ 625.6 | $ 463.8 | |
Consolidated adjusted EBITDA margin | 20.2 % | 18.3 % | |
* Excludes purchase accounting expense effects included within depreciation and amortization of |
Environmental Solutions Group
The following table summarizes the Environmental Solutions Group's adjusted EBITDA and adjusted EBITDA margin and reconciles operating income to adjusted EBITDA for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31, | |||
($ in millions) | 2026 | 2025 | |
Operating income | $ 89.1 | $ 59.7 | |
Add: | |||
Acquisition and integration-related expenses, net | — | 0.1 | |
Purchase accounting effects * | 1.6 | 0.1 | |
Depreciation and amortization | 22.6 | 17.6 | |
Adjusted EBITDA | $ 113.3 | $ 77.5 | |
Net sales | $ 532.7 | $ 387.4 | |
Adjusted EBITDA margin | 21.3 % | 20.0 % | |
* Excludes purchase accounting expense effects included within depreciation and amortization of |
Safety and Security Systems Group
The following table summarizes the Safety and Security Systems Group's adjusted EBITDA and adjusted EBITDA margin and reconciles operating income to adjusted EBITDA for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31, | |||
($ in millions) | 2026 | 2025 | |
Operating income | $ 23.6 | $ 15.8 | |
Add: | |||
Depreciation and amortization | 1.1 | 1.0 | |
Adjusted EBITDA | $ 24.7 | $ 16.8 | |
Net sales | $ 92.9 | $ 76.4 | |
Adjusted EBITDA margin | 26.6 % | 22.0 % | |
View original content:SOURCE Federal Signal Corporation