Federal Signal Raises 2026 Adjusted EPS Outlook as Q3 Orders Rise 33%

Federal Signal Corporation (FSS ) on October 29, 2026, reported financial results for the third quarter ended September 30, 2026, with net sales of $656 million, up $101 million, or 18%, from the prior-year quarter, and raised its full-year 2026 adjusted earnings per share outlook to a range of $5.20 to $5.32 from the prior range of $5.12 to $5.30, according to the company’s third-quarter earnings release.

Net income for the quarter was $79.6 million, or $1.29 per diluted share, compared with $68.1 million, or $1.11 per diluted share, a year earlier. The company also reported adjusted net income of $82.6 million, or $1.34 per diluted share, versus $69.7 million, or $1.14 per diluted share, in the prior-year quarter. Operating income was $111.4 million, up $17.4 million, or 19%, and operating margin was 17.0%, up from 16.9%. Orders were $620 million, up $153 million, or 33%, and net cash provided by operating activities was $91 million, up $30 million, or 50%.

“Our businesses were able to deliver 18% year-over-year net sales growth, 19% operating income improvement, a 33% increase in orders, and a 50-basis point increase in adjusted EBITDA margin during a record-setting third quarter,” commented Jennifer L. Sherman, President and Chief Executive Officer.

Consolidated adjusted EBITDA was $140.4 million, up $24.2 million, or 21%, and consolidated adjusted EBITDA margin was 21.4%, up from 20.9% in the prior-year quarter. Consolidated backlog at September 30, 2026, was $967 million, compared with $992 million in the prior-year quarter.

Segment Performance

In the Environmental Solutions Group, net sales were $564 million, up $98 million, or 21%, and adjusted EBITDA was $126.4 million, up $21.5 million, or 20%, with an adjusted EBITDA margin of 22.4%, compared with 22.5% a year earlier. Sherman said orders in the group rose 43% year over year, including organic growth in the high teens, while net sales and adjusted EBITDA each increased by more than 20%, with contributions from recent acquisitions, higher sales of aftermarket offerings, and proactive management of price/cost dynamics.

In the Safety and Security Systems Group, net sales were $92 million, up $2 million, or 2%, and adjusted EBITDA was $23.9 million, up $1.0 million, or 4%, with an adjusted EBITDA margin of 26.1%, up from 25.6%. Sherman said the group delivered strong results, with 2% top-line growth and an adjusted EBITDA margin of approximately 26%.

Detailed segment tables in the full earnings release, including financial statements, show Environmental Solutions orders of $529.7 million, versus $371.1 million a year earlier, and Safety and Security Systems orders of $90.4 million, versus $95.8 million. Corporate operating expenses were $12.8 million, compared with $13.2 million in the prior-year quarter.

Cash Flow, Acquisitions and Outlook

At September 30, 2026, total outstanding debt was $420 million, total cash and cash equivalents were $74 million, and the company had $1.04 billion of availability for borrowings under its credit facility.

During the quarter, the company completed the acquisition of Western Technology for approximately $9 million and paid approximately $13 million to finalize purchase-price closing adjustments related to the New Way acquisition. In addition, as announced October 28, 2026, the company completed the acquisition of Global Vacuum Systems for an initial purchase price of approximately $29 million.

The company funded dividends of $9.2 million during the third quarter, reflecting a dividend of $0.15 per share, and recently announced a similar $0.15 per-share dividend that will be payable in the fourth quarter of 2026. It also repurchased approximately $5 million of its stock during the quarter.

Sherman said cash generated from operations in the first nine months of 2026 reached $306 million, up $148 million, or 94%, from the prior-year period. The cash-flow statement included in the release shows nine-month net cash provided by operating activities of $305.6 million, versus $157.5 million a year earlier, and nine-month purchases of treasury stock of $5.1 million, versus $39.7 million.

For the full year 2026, the company narrowed its net sales outlook to a range of $2.61 billion to $2.64 billion, from the prior range of $2.58 billion to $2.67 billion. Sherman said the narrowing was primarily due to anticipated delays in deliveries of third-party refuse trucks, and said demand for the company’s products and aftermarket offerings remains strong overall. Sherman cited the company’s third-quarter performance, its current backlog, and continued execution against strategic initiatives as the basis for the higher adjusted EPS outlook.

For the nine months ended September 30, 2026, net sales were $1,951.3 million, versus $1,583.4 million a year earlier, and net income was $236.1 million, or $3.84 per diluted share, versus $185.8 million, or $3.02. Nine-month orders were $1,879.6 million, versus $1,574.5 million.

Adjusted results exclude acquisition and integration-related expenses, charges associated with previously discontinued operations, purchase accounting effects, and certain special income tax items, where applicable. According to the release’s non-GAAP reconciliation, the $2.1 million of charges associated with previously discontinued operations in the third quarter of 2026 primarily relate to estimated costs for a legal dispute associated with a business that was discontinued in 2012.

Federal Signal is scheduled to host its third-quarter conference call on October 29, 2026, at 10:00 a.m. Eastern Time, with a replay available on the company’s website shortly after the call.