Federal Signal's Q2 25 Earnings Show Strong Growth, Acquisition of Hog Technologies Strengthens Growth

Federal Signal Corporation, a global leader in designing and supplying specialized equipment, reported Q2 2025 net sales of $565m, a 15% y/y growth, driven by 14% y/o growth in orders. The company's Environmental Solutions Group delivered 18% y/y growth, while Safety and Security Systems Group saw a 3% y/y increase. Federal Signal completed the acquisition of Hog Technologies for $78.1m, advancing its strategy to scale its specialty vehicle platform and deepen its footprint in infrastructure maintenance.

Federal Signal Corporation (NYSE: FSS), a global leader in designing and supplying specialized equipment, reported Q2 2025 net sales of $565 million, a 15% year-over-year (y/y) growth, driven by a 14% y/y growth in orders [2]. The company's Environmental Solutions Group delivered 18% y/y growth, while the Safety and Security Systems Group saw a 3% y/y increase. The results were supported by production increases, higher sales in aftermarket offerings, and proactive management of price/cost dynamics.

Federal Signal also completed the acquisition of Hog Technologies for $78.1 million, advancing its strategy to scale its specialty vehicle platform and deepen its footprint in infrastructure maintenance. The acquisition included the purchase of Hog’s main manufacturing site in Stuart, Florida for $14.5 million, with the transaction financed through a mix of on-hand cash and draws on its revolving credit line, alongside a separate performance-based earn-out of $15 million tied to FY 25 [2].

The company's operating income experienced a 20% y/y increase, reaching $97.7 million, with margins expanding by 60 basis points to 17.3%. Net income with a 17.4% y/y increase reached $71.4 million. Operating cash flow witnessed a 47% y/y growth, reaching $60 million, driven by robust revenue and earnings growth. The company also declared dividends of $0.14 per share payable on August 28, 2025, to stockholders of record at the close of business on August 15, 2025 [2].

Federal Signal has posted a revenue compound annual growth rate (CAGR) of 15.3% over FY 21-24, reaching $1.9 billion, driven by higher sales volume, positive effects of acquisitions, and pricing. Operating income rose at a CAGR of 29.7%, reaching $283 million, with margins expanding from 10.7% to 15.2%. Net income increased with a CAGR of 29.1% to $216 million, driven by increased operating income and reduced interest expenses [2].

Over the past year, the company's stock has delivered robust returns of approximately 39.4%. Federal Signal is currently trading at a price-to-earnings (P/E) ratio of 32.4x, based on the FY 25 estimated earnings per share (EPS) of $4, which is higher than its 3-year historical average of 27x. The company is monitored by six analysts, with three having 'Buy' ratings and three having 'Hold' ratings, with an average target price of $132, implying 1.7% upside potential from its current price [2].

References:

[1] https://finance.yahoo.com/news/boosted-federal-signal-corp-fss-120858779.html
[2] https://www.marketscreener.com/news/federal-signal-scaling-up-through-acquisitions-ce7c51dbda8dff26