Federal Signal Corporation

and welcome to the Federal Signal Corporation third quarter earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Felix Boshin, Vice President of Corporate Strategy and Investor Relations. Thank you. You may begin.

Good morning, and welcome to Federal Signal's third quarter 2025 conference call. I'm Felix Boschen, the company's vice president of corporate strategy and investor relations. Also with me on the call today is Jennifer Sherman, our president and chief executive officer, and Ian Hudson, our chief financial officer. We will refer to some presentation slides today, as well as to the earnings release, which we issued this morning. The slides can be followed online by going to our website, federalsignal.com, clicking on the investor call icon and signing into the webcast. We've also posted the slide presentation and the earnings release under the investor tab on our website. Before we begin, I'd like to remind you that some of our comments made today may contain forward-looking statements that are subject to the safe harbor language found in today's news release and in federal signals filings with the Securities and Exchange Commission. These documents are available on our website. Our presentation also contains some measures that are not in accordance with U.S. generally accepted accounting principles. In our earnings release and filings, we reconcile these non-GAAP measures to GAAP measures. In addition, we will file our Form 10-Q later today. Ian will start today by providing details on our third quarter financial results. Jennifer will then provide her perspective on our performance, provide an update on our multi-year growth initiatives, and update our guidance for 2025. After our prepared comments, we will open the line for any questions. With that, I would now like to turn the call over to Ian.

Thank you, Felix. Our consolidated third quarter financial results are provided in today's earnings release. In summary, we delivered strong financial results for the quarter with 17% year-over-year net sales growth, double-digit operating income improvement, a 130 basis points increase in adjusted EBITDA margin, and a record third quarter order intake. Consolidated net sales for the quarter were $555 million, an increase of $81 million, or 17% compared to last year. Organic net sales growth for the quarter was $51 million, or 11%. Consolidated operating income for the quarter was $94 million, up $18.1 million, or 24% compared to last year. Consolidated adjusted EBITDA for the quarter was $116.2 million, up $23.2 million, or 25% compared to last year. That translates to a margin of 20.9% in Q3 this year, up 130 basis points compared to last year. Gap diluted EPS for the quarter was $1.11 per share, up $0.24 per share, or 28% from last year. On an adjusted basis, EPS for the quarter was $1.14 per share, up $0.26 per share, or 30% from last year. Border intake was again strong in the quarter at $467 million, an increase of $41 million, or 10% compared to last year. Backlog at the end of the quarter stood at $992 million, down 4% compared to Q3 last year. In terms of our group results, ESG's net sales for the quarter were $466 million, an increase of $67 million, or 17% compared to last year. ESG's operating income for the quarter was $85.3 million, up $13.8 million, or 19% compared to last year. ESG's adjusted EBITDA for the quarter was $104.9 million, up $17.7 million, or 20% compared to last year. That translates to a margin of 22.5% in Q3 this year, up 60 basis points compared to last year. ESG reported total orders of $371 million in Q3 this year, an increase of $18 million, or 5% compared to last year. SSG's net sales for the quarter were $90 million this year, up $14 million, or 18% compared to last year. SSG's operating income for the quarter was $21.9 million, up $5.1 million or 30% from last year. SSG's adjusted EBITDA for the quarter was $22.9 million, up $5.1 million or 29% from last year. That translates to a margin for the quarter of 25.6%, an increase of 220 basis points compared to last year. SSG's orders for the quarter were $96 million, up $23 million, or 31% in comparison to order intake in Q3 last year. Corporate operating expenses for the quarter were $13.2 million, compared to $12.4 million last year, with the increase primarily due to higher acquisition and integration-related expenses. Turning now to the consolidated income statement, where the increase in sales contributed to a $21.1 million improvement in gross profit. Consolidated gross margin for the quarter was 29.1% compared to 29.6% in Q3 last year. As a percentage of net sales, our selling, engineering, general, and administrative expenses for the quarter were down 160 basis points from Q3 last year. Other items affecting the quarterly results included a $1 million increase in acquisition and integration-related costs, a $700,000 increase in amortization expense, a $400,000 increase in other expenses, and a $200,000 reduction in interest expense. Tax expense for the quarter was $22.4 million, up $3.7 million from the prior year, with the increase primarily due to higher pre-tax income levels. Our effective tax rate for the quarter was 24.8% compared to 25.8% last year. At this time, we expect our fourth quarter effective tax rate to be between 25% and 26%, excluding any discrete items. On an overall gap basis, we therefore earned $1.11 per share in Q3 this year, compared with 87 cents per share in Q3 last year. To facilitate earnings comparisons, we typically adjust our gap earnings per share for unusual items recorded in the current or prior quarters. In the current year quarter, we made adjustments to gap earnings per share to exclude acquisition-related expenses and purchase accounting expense effects. On this basis, our adjusted earnings for the quarter were $1.14 per share compared with $0.88 per share last year. Looking now at cash flow, we generated $61 million of cash from operations during the quarter, bringing our year-to-date operating cash generation to $158 million, an increase of $17 million, or 12%, compared to the first nine months of last year. With the improved cash flow, we paid down approximately $55 million of debt during the quarter, ending the quarter with $159 million of net debt and availability under our previous credit facility, of $570 million. Our current net debt leverage ratio remains low. Yesterday, we executed a new five-year $1.5 billion credit facility, replacing the $800 million credit facility that was previously in place. The new credit facility increases our revolver to $1.1 billion and also includes a $400 million term loan facility which is expected to be drawn down upon completion of the new way acquisition. The new credit facility provides greater financial flexibility to invest in internal growth initiatives and pursue additional strategic acquisitions across our ESG and SSG groups. The terms of our new facility are more favorable to the company, reflecting our strong cash flow and balance sheet. This marks another important milestone for the company as we continue to execute on our strategic long-term growth objectives. We also remain committed to investing in organic growth initiatives and returning cash to stockholders through dividends and opportunistic share repurchases. On that note, we paid dividends of $8.5 million during the quarter, reflecting a dividend of 14 cents per share, and we recently announced a similar dividend for the fourth quarter. That concludes my comments, and I would now like to turn the call over to Jennifer.