- Full-Year Net Sales: $2.18B, up 17% YoY with $205M organic growth (11%).
- Record Earnings: $4.23 EPS, a 27% increase from 2024, driven by 20% adjusted EBITDA margin in Q4.
- Segment Performance: Safety & Security Group saw 43% adjusted EBITDA growth and 360 bps margin improvement.
- 2026 Guidance: $2.55–2.65B net sales; $4.50–4.80 EPS, with 5–9% organic growth and $15–20M synergy capture by 2028.
- Cash Flow: $255M operating cash flow (103% conversion) and $80M third-party refuse backlog to resolve over four quarters.
Segment Performance
The Environmental Solutions Group delivered a 27% year-over-year net sales growth, a 31% increase in adjusted EBITDA, and a 70 basis point improvement in adjusted EBITDA margin. The Safety and Security Systems Group achieved a 23% top-line growth, a 43% increase in adjusted EBITDA, and a 360 basis point improvement in adjusted EBITDA margin. These strong segment performances contributed to the company's overall growth.
Cash Flow and Outlook
Federal Signal generated $255,000,000 of cash from operations for the full year, with a cash conversion of 103%. Looking ahead to 2026, the company expects net sales of between $2,550,000,000 and $2,650,000,000 and adjusted EPS between $4.50 and $4.80 per share. At the midpoint, the revenue guide represents 17% to 22% year-over-year growth, with 5% to 9% organic growth. Analysts estimate next year's revenue growth at 9.3%.
Valuation and Growth Prospects
With a P/E Ratio of 29.44 and an EV/EBITDA of 22.86, the market appears to be pricing in a certain level of growth for Federal Signal. The company's ROE of 19.09% and ROIC of 12.23% indicate a strong ability to generate returns on equity and invested capital. As the company continues to drive its growth initiatives forward, including the integration of New Way and new product development, investors will be watching to see if the company can meet its guidance and continue its growth trajectory. The actual EPS for the quarter came in at $0.989, slightly below estimates of $1.08.