[Management View]
Federal Signal reported record-setting performance in Q3 2025, with consolidated net sales reaching $555 million, a 17% increase YoY. The company emphasized successful execution on throughput initiatives, margin expansion, and strong aftermarket demand. Strategic priorities include transitioning from third-party refuse manufacturing to New Way and leveraging recent acquisitions for growth.

[Outlook]
The company raised its full-year adjusted EPS outlook to $4.09-$4.17 and net sales to $2.1-$2.14 billion. The New Way acquisition is expected to close in Q4 2025, with no anticipated disruption from the federal government shutdown. Federal Signal plans to continue investing in growth initiatives and strategic acquisitions.

[Financial Performance]
Federal Signal achieved a 24% increase in operating income and a 25% rise in adjusted EBITDA YoY. The Environmental Solutions Group (ESG) and Safety and Security Systems Group (SSG) both reported double-digit revenue growth. The company executed a new five-year $1.5 billion credit facility to support growth and acquisitions.

[Q&A Highlights]
Question 1: What was the M&A contribution from Hog and Standard at ESG in the quarter?
Answer: Hog contributed approximately $20 million, and Standard added about $10 million in net sales for the quarter.

Question 2: Can you frame the backlog contribution from third-party refuse and expectations for margin lift?
Answer: The transition from third-party refuse to New Way is expected to continue, with 85% of the backlog reduction driven by third-party refuse. This transition should be margin accretive over time.

Question 3: What feedback have you received from the dealer channel regarding the New Way acquisition?
Answer: The feedback has been overwhelmingly positive, with expanded opportunities through dealer network integration.

Question 4: How will the New Way acquisition impact EPS and margin expansion?
Answer: The acquisition is expected to be accretive to EPS by 40-45 cents in fiscal 2028, with gradual synergy realization.

Question 5: Have you seen any impact from the federal government shutdown on funding or orders?
Answer: No meaningful disruption is expected, as the company has limited direct exposure to U.S. federal contracting.

Question 6: How do you view the competitive environment following the Terex-Rev merger?
Answer: Federal Signal believes New Way is well-positioned with its ASL product line and municipal channel strength.

Question 7: Can you maintain growth momentum in ESG without New Way?
Answer: The company is well-positioned for another record year in 2026, driven by strategic initiatives and backlog visibility.

Question 8: What is the status of the Build More Parts initiative?
Answer: The initiative is in early stages, with potential for significant growth, particularly with the refuse business.

Question 9: What are the current lead times for major product lines?
Answer: Sewer cleaners are at 11 months, three-wheel sweepers at 5-6 months, and four-wheel sweepers at 12-18 months, with efforts to reduce lead times ongoing.

[Sentiment Analysis]
Analysts and management maintained a positive tone, focusing on strategic growth initiatives and the successful integration of acquisitions. The sentiment was optimistic regarding future performance and the impact of the New Way acquisition.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|-------------------------|---------|---------|------------|
| Net Sales | $555M | $474M | +17% |
| Operating Income | $94M | $75.9M | +24% |
| Adjusted EBITDA | $116.2M | $93M | +25% |
| GAAP Diluted EPS | $1.11 | $0.87 | +28% |
| Adjusted EPS | $1.14 | $0.88 | +30% |
| Order Intake | $467M | $426M | +10% |
| Backlog | $992M | $1,033M | -4% |

[Risks and Concerns]
Risks include the transition from third-party refuse manufacturing, potential delays in the New Way acquisition, and macroeconomic factors affecting demand. The company is mitigating these risks through strategic planning and diversification.

[Final Takeaway]
Federal Signal's Q3 2025 performance highlights its strong execution on strategic initiatives, resulting in record net sales and adjusted EBITDA. The company is well-positioned for continued growth, supported by the New Way acquisition and robust demand across its product lines. Management remains focused on leveraging acquisitions and internal growth initiatives to drive long-term value.