Federal Signal Corp. (FSS, Financial) reported first-quarter revenue of $464 million, slightly surpassing the anticipated $462.63 million. The company's strategic emphasis on operational efficiency and customer service yielded a 9% increase in net sales compared to the previous year. Furthermore, there was a significant improvement in operating income and gross margins, alongside a 170-basis point rise in adjusted EBITDA margin for this period.
The Environmental Solutions Group within FSS achieved a 9% increase in net sales and a 17% rise in adjusted EBITDA, driven by enhanced production in various sectors, higher aftermarket sales, effective price and cost management, and contributions from recent acquisitions. Additionally, the Safety and Security Systems Group recorded an 8% increase in revenue, boasting an adjusted EBITDA margin of 22%.
Demand for FSS’s products and aftermarket offerings remained robust, achieving the highest order intake for a quarter in the company's history. This has led to an unprecedented backlog of $1.10 billion by the end of the quarter.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Federal Signal Corp (FSS, Financial) is $101.80 with a high estimate of $115.00 and a low estimate of $82.00. The average target implies an upside of 34.55% from the current price of $75.66. More detailed estimate data can be found on the Federal Signal Corp (FSS) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Federal Signal Corp's (FSS, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Federal Signal Corp (FSS, Financial) in one year is $83.39, suggesting a upside of 10.22% from the current price of $75.66. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Federal Signal Corp (FSS) Summary page.
FSS Key Business Developments
Release Date: February 26, 2025
- Net Sales (Full Year 2024): $1.86 billion, an increase of $139 million or 8% compared to last year.
- Operating Income (Full Year 2024): $281.4 million, up $56.9 million or 25% from last year.
- Adjusted EBITDA (Full Year 2024): $350.6 million, up $64.6 million or 23% from last year; margin of 18.8%, up 220 basis points.
- GAAP Diluted EPS (Full Year 2024): $3.50 per share, up $0.94 or 37% from last year.
- Adjusted EPS (Full Year 2024): $3.34 per share, up $0.76 or 29% from last year.
- Orders (Full Year 2024): $1.85 billion, second highest in company history; backlog of approximately $1 billion.
- Net Sales (Q4 2024): $472 million, an increase of $24 million or 5% compared to last year.
- Operating Income (Q4 2024): $70.1 million, up $7 million or 11% compared to last year.
- Adjusted EBITDA (Q4 2024): $89.3 million, up $11.8 million or 15% compared to last year; margin of 18.9%, up 160 basis points.
- GAAP Diluted EPS (Q4 2024): $0.81 per share, up $0.06 or 8% from last year.
- Adjusted EPS (Q4 2024): $0.87 per share, up $0.13 or 18% from last year.
- Orders (Q4 2024): $446 million, compared to $465 million in Q4 last year.
- Cash Flow from Operations (Q4 2024): $91 million; full year operating cash generation of $231 million, up $37 million or 19% from last year.
- Net Debt (End of 2024): $133 million; availability under credit facility of $574 million.
- Dividends (Q4 2024): $7.3 million, reflecting a dividend of $0.12 per share; announced increase to $0.14 per share for Q1 2025.
- Share Repurchases (Q4 2024): $2.2 million funded.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Federal Signal Corp (FSS, Financial) achieved record net sales of approximately $1.86 billion for 2024, marking an 8% increase from the previous year.
- The company reported a significant increase in operating income, up 25% to $281.4 million compared to last year.
- Adjusted EBITDA for the year rose by 23% to $350.6 million, translating to a margin of 18.8%, an improvement of 220 basis points.
- Federal Signal Corp (FSS) successfully completed the acquisition of Hog Technologies, which is expected to enhance their road marking and water blasting business.
- The company announced a 17% increase in dividends, reflecting strong financial health and commitment to returning value to shareholders.
Negative Points
- Orders for the fourth quarter of 2024 were $446 million, down from $465 million in the same quarter last year.
- The company faced a $7 million headwind from fewer chassis pass-through sales in the fourth quarter.
- There was a $3.8 million pre-tax non-cash pension settlement charge recognized during the quarter.
- Federal Signal Corp (FSS) expects a higher effective tax rate of approximately 26% in 2025, up from 18% in 2024.
- Extended lead times for products like street sweepers and sewer cleaners have impacted orders, with backlogs stretching into 2026.
