fss-20240331

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, 2024


☐			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 charter)


Delaware						36-1063330
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1415 West 22nd Street, Oak Brook, Illinois

(Address of principal executive offices)

60523

(Zip code)

(630) 954-2000

(Registrant’s telephone number, including area code)

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	FSS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of March 31, 2024, the number of shares outstanding of the registrant’s common stock was 61,101,063.


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023	3
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements	7
	Note 1 – Summary of Significant Accounting Policies	7

	Note 2 – Acquisitions	8
	Note 3 – Revenue Recognition	10
	Note 4 – Inventories	10
	Note 5 – Debt	11

	Note 6 – Income Taxes	12
	Note 7 – Pensions	13
	Note 8 – Commitments and Contingencies	13
	Note 9 – Earnings Per Share	16
	Note 1 0 – Stockholders’ Equity	16
	Note 1 1 – Segment Information	18
	Note 1 2 – Fair Value Measurements	18



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29

SIGNATURE		30


	Three Months Ended March 31,
(in millions, except per share data)	2024		2023
Net sales	$	424.9	$	385.5
Cost of sales	308.9		289.7
Gross profit	116.0		95.8
Selling, engineering, general and administrative expenses	57.2		52.0
Amortization expense	3.6		3.6
Acquisition and integration-related expenses, net	0.9		0.7

Operating income	54.3		39.5
Interest expense, net	3.2		4.7


Other expense, net	0.2		0.1
Income before income taxes	50.9		34.7
Income tax (benefit) expense	(0.7)		7.3


Net income	$	51.6	$	27.4
Earnings per share:


Basic	$	0.85	$	0.45



Diluted	0.84		0.45
Weighted average common shares outstanding:
Basic	60.9		60.7
Diluted	61.6		61.3


	Three Months Ended March 31,
(in millions)	2024		2023
Net income	$	51.6	$	27.4
Other comprehensive income (loss):
Change in foreign currency translation adjustment	(3.9)		1.5
Change in unrecognized net actuarial loss and prior service cost related to pension benefit plans, net of income tax expense of $0.2 and $0.0 respectively	0.6		—
Change in unrealized gain or loss on interest rate swaps, net of income tax expense (benefit) of $0.2 and $(0.3) respectively	0.5		(0.9)
Total other comprehensive (loss) income	(2.8)		0.6
Comprehensive income	$	48.8	$	28.0


	March 31, 2024		December 31, 2023
(in millions, except per share data)	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	48.9	$	61.0
Accounts receivable, net of allowances for doubtful accounts of $2.4 and $2.5, respectively	191.4		186.2
Inventories	322.7		303.4
Prepaid expenses and other current assets	32.3		19.6



Total current assets	595.3		570.2
Properties and equipment, net of accumulated depreciation of $177.9 and $173.3, respectively	193.0		190.8
Rental equipment, net of accumulated depreciation of $49.2 and $47.5, respectively	143.8		134.8
Operating lease right-of-use assets	20.7		21.0
Goodwill	470.2		472.7
Intangible assets, net of accumulated amortization of $74.3 and $70.7, respectively	204.6		207.5
Deferred tax assets	11.7		12.0
Other long-term assets	12.1		11.5

Total assets	$	1,651.4	$	1,620.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Current portion of long-term borrowings and finance lease obligations	$	5.5	$	4.7
Accounts payable	88.8		66.7
Customer deposits	28.7		27.1


Accrued liabilities:
Compensation and withholding taxes	23.4		42.3
Current income taxes payable	12.9		3.2
Current operating lease liabilities	6.6		6.8
Other current liabilities	45.1		45.0

Total current liabilities	211.0		195.8
Long-term borrowings and finance lease obligations	266.8		294.3
Long-term operating lease liabilities	14.7		14.9
Long-term pension and other postretirement benefit liabilities	44.9		44.2

Deferred tax liabilities	54.1		53.2
Other long-term liabilities	15.5		16.2

Total liabilities	607.0		618.6
Stockholders’ equity:
Common stock, $1 par value per share, 90.0 shares authorized, 70.2 and 70.0 shares issued, respectively	70.2		70.0
Capital in excess of par value	296.8		291.1
Retained earnings	960.1		915.8
Treasury stock, at cost, 9.1 and 9.0 shares, respectively	(198.6)		(193.7)
Accumulated other comprehensive loss	(84.1)		(81.3)
Total stockholders’ equity	1,044.4		1,001.9
Total liabilities and stockholders’ equity	$	1,651.4	$	1,620.5


	Three Months Ended March 31, 2024
(in millions)	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balance at January 1, 2024	$	70.0	$	291.1	$	915.8	$	(193.7)	$	(81.3)	$	1,001.9
Net income					51.6						51.6
Total other comprehensive loss									(2.8)		(2.8)
Cash dividends declared ($0.12 per share)					(7.3)						(7.3)
Stock-based payments:
Stock-based compensation			4.4								4.4
Stock option exercises and other	0.1		1.4				(1.2)				0.3
Performance share unit transactions	0.1		(0.1)				(3.6)				(3.6)
Stock repurchase program							(0.1)				(0.1)
Balance at March 31, 2024	$	70.2	$	296.8	$	960.1	$	(198.6)	$	(84.1)	$	1,044.4


	Three Months Ended March 31, 2023
(in millions)	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balance at January 1, 2023	$	69.5	$	271.8	$	782.2	$	(178.6)	$	(84.0)	$	860.9
Net income					27.4						27.4
Total other comprehensive income									0.6		0.6
Cash dividends declared ($0.09 per share)					(5.5)						(5.5)
Stock-based payments:
Stock-based compensation			2.0								2.0
Stock option exercises and other	0.1		1.0				(1.2)				(0.1)
Performance share unit transactions	0.1		(0.1)				(3.3)				(3.3)
Balance at March 31, 2023	$	69.7	$	274.7	$	804.1	$	(183.1)	$	(83.4)	$	882.0


(in millions)
Purchase price, inclusive of closing adjustments	$	41.9
Estimated fair value of additional consideration (a)	4.3
Total consideration	46.2


Accounts receivable	4.7
Inventories	15.0
Prepaid expenses and other current assets	0.1
Rental equipment	1.6
Properties and equipment	4.4



Customer relationships (b)	11.1
Trade names (c)	4.6

Accounts payable	(1.5)
Accrued liabilities	(0.5)



Net assets acquired	39.5

Goodwill (d)	$	6.7


(in millions)	March 31, 2024		December 31, 2023

2022 Credit Agreement (a)	$	270.9	$	297.4
Finance lease obligations	1.4		1.6
Total long-term borrowings and finance lease obligations, including current portion	272.3		299.0
Less: Current maturities	4.7		3.9
Less: Current finance lease obligations	0.8		0.8
Total long-term borrowings and finance lease obligations	$	266.8	$	294.3


	U.S. Benefit Plan				Non-U.S. Benefit Plan
	Three Months Ended March 31,					Three Months Ended March 31,
(in millions)	2024		2023				2024		2023

Interest cost	1.4		1.5				0.4		0.4
Amortization of actuarial loss	0.5		0.3				0.2		0.2

Expected return on plan assets	(1.8)		(1.9)				(0.5)		(0.5)
Net periodic pension expense (benefit)	$	0.1	$	(0.1)			$	0.1	$	0.1


(in millions) (a)	Actuarial Losses		Prior Service Costs		Foreign Currency Translation		Interest Rate Swaps		Total
Balance at January 1, 2024	$	(69.7)	$	(2.0)	$	(10.1)	$	0.5	$	(81.3)
Other comprehensive income (loss) before reclassifications	0.1		—		(3.9)		1.2		(2.6)
Amounts reclassified from accumulated other comprehensive loss	0.5		—		—		(0.7)		(0.2)
Net current-period other comprehensive income (loss)	0.6		—		(3.9)		0.5		(2.8)
Balance at March 31, 2024	$	(69.1)	$	(2.0)	$	(14.0)	$	1.0	$	(84.1)


(in millions)	March 31, 2024		December 31, 2023
Finished goods	$	118.7	$	116.1
Raw materials	169.8		154.6
Work in process	34.2		32.7
Total inventories	$	322.7	$	303.4


Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item in Condensed Consolidated Statements of Operations
	2024		2023
(in millions) (a)
Amortization of actuarial losses of defined benefit pension plans	$	(0.7)	$	(0.5)	Other expense, net

Interest rate swaps	0.9		0.7		Interest expense, net
Total before tax	0.2		0.2
Income tax expense	—		(0.1)		Income tax (benefit) expense
Total reclassifications for the period, net of tax	$	0.2	$	0.1

SEC Form 10-Q filed by Federal Signal Corporation