Welcome to the Federal Signal Corporation third quarter earnings call. At this time, all participants are in a listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to Felix Boeschen, Vice President of Strategy and Investor Relations. Thank you, Felix. You may begin.

Good morning, and welcome to Federal Signal's third quarter 2026 conference call. I'm Felix Boeschen, 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 10Q 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 reflect on our updated guidance for 2026. 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 18% year-over-year net sales growth, 19% operating income improvement, a 33% increase in orders, and a 50 basis point improvement in adjusted EBITDA margin during a record-setting third quarter. Consolidated net sales for the quarter were $656 million, an increase of $101 million or 18% compared to last year. Consolidated operating income for the quarter was $111.4 million, up $17.4 million or 19% compared to last year. Consolidated adjusted EBITDA for the quarter was $140.4 million, up $24.2 million or 21% compared to last year. that translates to a margin of 21.4% in Q3 this year of 50 basis points compared to last year. GAAP diluted EPS for the quarter was $1.29 per share of $0.18 per share or 16% from last year. On an adjusted basis, EPS for the quarter was $1.34 per share of $0.20 per share or 18% from last year. Order intake was again strong with Q3 orders of $620 million, representing an increase of $153 million or 33% compared to last year. Backlog at the end of the quarter stood at $967 million. In terms of our group results, ESG's net sales for the quarter were $564 million, an increase of $98 million or 21% compared to last year. ESG's operating income for the quarter was $101.4 million, up $16.1 million or 19% compared to last year. ESG's adjusted EBITDA for the quarter was $126.4 million, up $21.5 million or 20% compared to last year. That translates to an adjusted EBITDA margin of 22.4% in Q3 this year compared to 22.5% in Q3 last year. ESG reported total orders of $530 million in Q3 this year, an increase of $159 million or 43% compared to last year. SSG's net sales for the quarter were $92 million this year, up $2 million or 2% compared to last year. SSG's operating income for the quarter was $22.8 million up $900,000 or 4% from last year. SSG's adjusted EBITDA for the quarter was $23.9 million, up $1 million or 4% from last year. That translates to an adjusted EBITDA margin for the quarter of 26.1%, an increase of 50 basis points compared to last year. SSG's orders for the quarter were $90 million, up 2% sequentially, but down 6% compared to Q3 last year. Corporate operating expenses for the quarter were $12.8 million compared to $13.2 million last year. Turning now to the consolidated income statement where the increase in sales contributed to a $27.7 million improvement in gross profit. Consolidated gross margin for the quarter was 28.9% compared to 29.1% in Q3 last year. as a percentage of net sales are selling, engineering, general, and administrative expenses for the quarter were down 50 basis points from Q3 last year. Other items affecting the quarterly results included a $2.3 million increase in amortization expense, a $400,000 reduction in acquisition and integration related expenses, a $2.5 million increase in interest expense, and a $300,000 increase in other expense. Tax expense for the quarter was $25.5 million, up $3.1 million from the prior year, with the increase primarily due to higher pre-tax income levels. Our effective tax rate for the quarter was 24.3% compared to 24.8% last year. At this time, we expect our fourth quarter effective tax rate to be approximately 25%, excluding any discrete tax items. on an overall GAAP basis, we therefore earned $1.29 per diluted share in Q3 this year, compared with $1.11 per share in Q3 last year. To facilitate earnings comparisons, we typically adjust our GAAP earnings per share for unusual items recorded in the current or prior quarters. In the current year quarter, we made adjustments to GAAP earnings per share to exclude acquisition-related expenses, charges associated with previously discontinued operations, and purchase accounting expense effects. On this basis, our adjusted earnings for the quarter were $1.34 per share compared with $1.14 per share last year. Looking now at cash flow, we generated $91 million of cash from operations during the quarter, an increase of $30 million or 50% from Q3 last year. That brings the total cash generated from operations in the first nine months of this year to $306 million an increase of 94% over the same time period last year. The increase in cash generation is primarily due to higher net income levels and working capital management, including a meaningful benefit from Newey. During the quarter, we completed the acquisition of Western Technology for approximately $9 million and paid approximately $13 million to finalize the purchase price closing adjustments related to the Newey acquisition. We also paid down around $34 million of debt, ending the quarter with $347 million of net debt and availability under our credit facility of $1.04 billion. Our current net debt leverage remains low, even after accounting for the acquisition of Global Vacuum Systems, which we completed yesterday for an initial payment of approximately $29 million. With our financial position remaining strong, We have significant flexibility to invest in organic growth initiatives, pursue additional strategic acquisitions, and return cash to stockholders through dividends and opportunistic share repurchases. On that note, we paid dividends of $9.2 million during the quarter, reflecting a dividend of 15 cents per share, and we recently announced a similar 15 cents per share dividend for the fourth quarter. During the quarter, we also repurchased approximately $5 million of shares, buying back around 44,000 shares at an average price of approximately $114 per share. That concludes my comments, and I would now like to turn the call back to Jennifer.

Thank you, Ian. As I reflect on the quarter, I am most pleased with the agility and resilience that our businesses exhibited as our teams are executing on our pipeline of strategic initiatives which help drive high-teens organic order growth within our ESG group. I will update you on several of these strategic growth initiatives throughout my remarks. Our third quarter results includes records across consolidated net sales, adjusted EPS, adjusted EBITDA, and adjusted EBITDA margin thanks to outstanding contributions from both of our groups. Within our environmental solutions group, we delivered 21% year-over-year net sales growth and a 20% increase in adjusted EBITDA. adjusted EBITDA margin of 22.4% was in the upper half of our ESG target margin range of 18 to 24%, despite a slightly dilutive impact from recent acquisitions, including the impact of investments we are making at New Way and other businesses to drive long-term profitable growth. Acquisitions were a material contributor to net sales in the quarter with New Way and Mega driving notable increases in sales of refuse trucks and mineral extraction support equipment. Organically, excluding the impact of third-party refuse trucks, ESG net sales grew mid-single digits year over year. Growth in our aftermarket business, leveraging the power of our platform to drive internal profit growth initiatives and proactive management of price cost dynamics were meaningful organic contributors. Demand for our aftermarket offerings remained strong, aided by contributions from recent acquisitions. For the quarter, aftermarket revenue increased 21% year over year, primarily driven by higher demand for aftermarket parts, higher used equipment sales and rental income growth. We continue to experience strong rental demand with rental income up 24% year over year, led by growth in rentals of our safe digging trucks and combination sewer cleaners. As a reminder, our aftermarket ecosystem, which spans parts and services, rental, rent-to-own, and used equipment offerings continues to unlock previously underserved customer cohorts for Federal Signal. As we have previously noted, our teams are executing on a multi-year growth strategy to drive higher aftermarket revenue across the enterprise. As part of this multi-pronged strategy, we are further scaling and investing in our Build More Parts initiative whereby we are vertically integrating certain parts production. We are also expanding our geographic footprint of aftermarket parts and service center locations to better serve our customers and capture more parts opportunities. As an example, during the third quarter, we opened a new branch in Quebec City, Canada. This represents the 20th new service center location we have added since 2019. While just one of many examples of our broader aftermarket strategy, this branch will also allow us to better serve the local Quebec region across our vehicle-based businesses like Vactor, Elgin, Truvac, Trackless, New Way, and Switch and Go by increasing equipment uptime through parts and service proximity. For Federal Signal, this drives higher aftermarket parts penetration rates across existing customers while offering a higher value proposition to drive additional conquest customer sales. We see additional service center footprint opportunities in the coming years through cycles this strategy aims to further mute cyclicality of our earnings streams. In the aggregate, aftermarket represented approximately 26% of ESG revenue in Q3 this year. From a capacity perspective, the combination of large scale capacity expansions that we completed between 2019 and 2022, good access to labor and continued investments in several productivity enhancing projects positioned us well to absorb more volume into our existing footprint. Through cycles, we continue to expect approximately half of our annual capital expenditures to be focused on growth initiatives, while the other half focused on maintenance investments. Shifting to our safety and security systems group, where the team delivered another quarter of solid results with 2% top line growth, a 4% increase in adjusted EBITDA, and a 50 basis point increase and adjusted EBITDA margin. At just over 26%, SSG's adjusted EBITDA margin for the quarter was in the upper half of our recently raised target range of 22 to 28%. Lastly, we had another outstanding quarter of cash generation with 91 million of operating cash flow up 50% year over year. Our cash generation is the fuel for our compounding model acquire, integrate, deliver, and then repeat. On an annual basis, we continue to target 100% cash conversion. Shifting now to current market conditions, the underlying fundamentals across our end markets remain favorable and supportive of strong demand for our equipment and services. As an example, within our vacuum truck end market, we are seeing increased adoption of safe digging trucks in the United States as use cases for the technology proliferate across various applications and demand for investment across North American utility infrastructure projects remaining strong. Within metal extraction support, we are seeing tailwinds from North American mega projects and high commodity prices. Across our diversified mix of publicly funded end markets, we see stable funding mechanisms supportive of replacement demand for our specialty vehicles and public safety equipment. Within aftermarkets, as our install base of equipment has grown, we are experiencing strong underlying demand for our aftermarket parts and services. A higher interest rate environment has also historically increased the value proposition of our rental and used equipment offering and remains an important part of our strategy to mute cyclicality of earnings streams. With that in mind, on an underlying basis, excluding the impact of third-party Labrie refuse orders received in Q3 last year, our orders this quarter increased by 158 million or 34% year-over-year. Within our environmental solutions group, orders were up 43% year-over-year including high teens organic growth. Within product lines, we experienced particular strength in organic orders for vacuum trucks, other specialty equipment and aftermarket offerings led by strong increases in orders for safe digging trucks, road marking trucks, sewer cleaners and metal extraction support equipment. We are also pleased with the progress we've made this year reducing lead times for street sweepers and are encouraged with the sequential improvement in street sweep orders we have seen across each quarter this year. somewhat offsetting these increases was a slight year-over-year reduction in SSG orders driven by lower international orders for public safety equipment compared to Q3 last year when we received a large fleet order in Spain. Despite this year-over-year order decline, demand within SSG remained strong with the Q3 order intake of 90 million representing its third highest quarterly orders on record surpassed only by Q2 and Q3 of last year. Looking ahead, we expect SSG to report organic year-over-year order growth in Q4. In aggregate across the enterprise, we believe our various strategic growth initiatives are resulting in market share gains. Lastly, our backlog stood at $967 million at the end of third quarter, down approximately 25 million compared to Q3 last year, with 71 million of this reduction associated with the planned decline in third-party Labrie refuse backlog, which was discontinued in the fourth quarter of 2025. At the end of the quarter, our third-party Labrie refuse truck backlog stood at approximately 33 million, about 5 million higher than we had anticipated at the beginning of the quarter due to due to delays in the timing of deliveries. As a reminder, net sales of our backlog intensive products represented approximately 45% of our net sales last year. With that said, given the size of our backlog, we continue to enjoy strong forward visibility for our backlog driven product lines. Shifting now to an update on our multi-year growth strategy, Through cycles, we target annual low double-digit top-line growth split roughly evenly between inorganic and organic growth. At the same time, we are committed to growing profitably and have implemented associated EBITDA margin targets for our groups that we have increased several times over the past years. Starting with our M&A strategy, as Ian just noted, yesterday we announced the acquisition of Global Vacuum Systems, a Texas-based manufacturer of custom liquid vacuum tank or LVT trucks. Code LVTs are equipped with vacuum systems designed to collect and transport regulated or hazardous materials such as liquid waste, sludge, and contaminated debris in compliance with Department of Transportation regulations. The customer base in this market is primarily comprised of commercial customers such as national environmental service providers and waste haulers that serve a broad range of end markets including industrial, oil and gas, environmental services, municipal construction utilities. We see the acquisition as a logical extension of our existing vacuum truck product lines as we identified code LVT offerings as a gap within our current product portfolio in an attractive niche subsector of vacuum trucks with high barriers to entry. From a synergy perspective, by leveraging our existing sales channel across our Vactor, TruVac, Guzzler, West Tech, and New Way brands, we see significant cross-selling opportunities. Additionally, we plan to leverage the power of our platform to drive synergies across aftermarket parts and service support, operations, and new product development. Lastly, the transaction includes the acquisition of Global's 87,000 square foot manufacturing facility in Texas for approximately 15 million, which also provides us with an attractive incremental manufacturing capacity and access to talent given its proximity to Texas A&M University as we grow our vacuum truck portfolio long term. Taking a step back, following the acquisitions of Hogg, New Way, Mega, and Western Technology global marked our fifth acquisition completed within the last two years. While all five of the transactions have varied in size, they are all excellent examples of our M&A growth strategy. Going forward, we continue to expect our acquisitions to vary in size, but we remain committed to achieving mid single digit annual net sales growth contribution from M&A on average over a multi-year period going forward. This is consistent with our annual track record dating back to 2016. Shifting to an update on our various integration efforts, we are excited about the continued progress our teams are making at Niue, MEGA, and Western Technology. We are still in the early stages of our multi-year integration plans for many of these transactions, but so far both Niue and MEGA have exceeded our internal margin and profit contribution expectations every quarter of 2026. Recall in September of last year, when we announced the new way transaction, we outlined 15 to 20 million annual synergies to be achieved by the end of 2028 with synergies split roughly between costs and revenue. We are pleased with the integration progress at Mega, our third acquisition as part of our metal extraction support vertical alongside Ground Force and Toho. At this point, we have successfully merged our mega and ground force sales channel and we are actively pursuing host of efficiency improvement opportunities across the combined vertical including manufacturing, operations, freight, procurement spend, and aftermarket parts. Lastly, one frequent investor question we received is to dissect our targeted annual mid to high single digit organic net sales goal through cycles. Through cycles, We think about our organic growth in three buckets. One, pricing. Two, end market volume growth. And three, execution of various share strategic initiatives, including integration plans aimed at gaining market share and outgrowing our end markets. In any given year, we expect each bucket to contribute one to three percentage points of net sales growth. The last bucket, execution on strategic initiatives. is comprised of numerous bottom-up initiatives across each individual product line and each manufacturing facility across the broader Federal Signal family. To use a baseball analogy, as a team, we are focused on ensuring that each individual product line and each individual facility has enough singles and doubles within their strategic growth pipeline to support our long-term organic growth algorithm. What is exciting and different today compared to just a few years ago is two items. First, we have grown our specialty vehicle platform over the last decade. We are identifying incremental opportunities to leverage our scale across brands. Secondly, our increased scale is allowing us to build out centers of excellence, spanning procurement, our federal single operational system, supply chain optimization, aftermarket dealer development, sales channel alignment, data analytics, and new product development. These centers of excellence are structural drivers that accelerate certain enterprise-wide strategies, providing opportunities for revenue growth and margin expansion. Turning now to our outlook for the rest of the year. Demand for our products and our aftermarket offerings remain strong overall, with our third quarter orders up 33% year-over-year. Within our third quarter performance, our current backlog, and continued execution against our strategic growth initiatives, we are raising our full year adjusted EPS outlook to a new range of $5.20 to $5.32, up from the prior range of $5.12 to $5.30. Primarily due to anticipated delays in deliveries of third-party refuse trucks, We are also narrowing our full year net sales outlook to a new range of between 2.61 billion and 2.64 billion from the prior range of between 2.58 billion and 2.67 billion. Lastly, we are maintaining our CapEx outlook of 45 million to 55 million for the year. In closing, given that this is our last earnings call of this year, as I sit here today, I believe we are well positioned to achieve another record year in 2027 with the pipeline of our strategic growth initiatives, further integration progress across our recently completed acquisitions and additional M&A opportunities. Federal Signal continues to strengthen its resilient operating model underpinned by durable through cycle earnings growth. At this time, I think we're ready for questions. Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Tim Thain with Raymond James. Please proceed with your question.

Thank you. Good morning. Good morning. Thank you. And apologies, I missed a little bit in the beginning, so please forgive me if this is redundant. But maybe, Jennifer, you could just give more color to the extent, again, that I didn't miss it. In terms of the order activity within ESG, any notable standouts as you think about maybe if you've segmented between your contractor versus your governmental customer base, just any kind of high-level comments, again, just in terms of underlying order trends. And then part B in question two is as you think about not asking for 27 guidance, but as you think about that construct of organic growth, and I guess I'm specifically curious about pricing, kind of that one to three range that we think about historically. On the one hand, you do have, you know, the world's contending with higher costs pretty much across the board. So presumably a little bit more pressure as you go into next year. But I also, you know, know there's a balance there just given how much pricing has been taken in some of the product categories in recent years. So just thinking about how you kind of balance that equation. So thank you.

Yeah, sure. You know, I'll start with, you know, both are publicly funded and our industrial orders were strong in the quarter. From a product perspective within ESG, out of our big product categories, vacuum trucks, aftermarket, and other specialty equipment orders were up pretty nicely year over year in the quarter. If you double click into the products outside of aftermarket, we really saw strength across safe digging trucks, sewer cleaners, metal extraction, and road marking. So what was encouraging, again, is, again, another great quarter for our aftermarket business. And then it was a number of product categories within ESG that saw nice organic growth. Offsetting some of that strength was slightly lower orders for dump trucks. on a year-over-year basis, although year-to-date, those orders were up nicely. So pretty pleased with the overall progress. With respect to 27, I think we're, as I said here right now, we're well-positioned to have another year of growth in 27. As you know, through the cycles, we target low-digit annual growth, but low-digit, I'm top line annual growth split 50-50 between M&A and organic. As I talked about in the prepared remarks, we feel pretty good about the fundamentals of our end markets. And we're pretty excited about the pipeline that currently exists of internal initiatives we have underway with particular emphasis on the power of the platform. And what I'm continuing to see is the scale of that power of the platform provides opportunities for both revenue growth and EBITDA margin growth. The only other thing I would note that we've talked about a lot in the past is, you know, as you look at the organic growth algorithm in 27, you have to factor in the discontinuance of that livery business. You know, we originally thought we were going to deliver about $80 million of trucks in 26. We've delivered about 50 million. We have about 33 million to go. and as we kind of look at Q4, we think some of that $33 million is going to slip into 2027. We saw about $5 million move from Q3 out of Q3 and that was really kind of the primary driver of the basis for our revised revenue guide for Q4.

Very good. Thank you, Jennifer.

Our next question comes from Chris Moore with CJS Securities. Please go ahead.

Hey, good morning, guys. Thanks for taking a couple. So understanding the role that Libri had, so ESG organic growth would have been mid-single digits. I guess what was it actually, and the midpoint of revenue got at $2.625 million. What would that roughly imply from a organic growth level for the year.

Yeah, the guide, Chris, you know, I think the guide would imply, you know, I think for Q4 particularly, the range is 659 to 689. That's what's implied in the guide. So we're implying, you know, year-over-year Q4 growth of 10% to 15%. of which we'd expect about half to be organic, similar to what we've experienced over the last few years. During, I think the other part of your question was during the quarter, it was, we were probably in the five to six percent range, a little lower than what we've experienced at the beginning of the year. That was embedded in the guidance and it was really mostly a function of our higher build rates during Q1 of 26. It's a result of the comparison in Q1 of 2025 because we had a sizable step up in production in Q1 and Q2 at many of our factories in order to reduce some of the lead time. the organic growth rates were a little higher in the first half of the year than we experienced in Q3 but still on a full year basis I still think we're expecting that high single digit organic growth as we've experienced in the last couple of years.

Perfect. That sounds good. And obviously generating a lot of cash just maybe from a nine month period $305 million cash flow from operations. What are the puts and takes that 27 could be in the same range? I'm just trying to understand if 26 is an anomaly or if this strong cash flow is something that can stay at a reasonably close level moving forward.

Yeah, I think, Chris, we continue to target that cash conversion of 100% for the last I think the average for the last five years has been a little higher than that, closer to 105%. We're certainly higher than that this year, and one of the factors that has contributed to the really strong cash flow in the first nine months of the year is the impact of the New Way acquisition, which at the time of acquisition, they had more elevated levels of working capital than we would typically see in the rest of our businesses, and the teams have just done an outstanding job reducing some of those working capital metrics, focusing on collection of receivables, working down some of the inventory levels. And that's been a really nice tailwind to cash generation. So that's something that probably is more abnormal, I would say, in 2026. But with that said, our businesses continue to generate strong cash flow. and we'd expect, continue to expect cash conversion north of 100%.

Sounds good. I will leave it there. I appreciate it, guys. Thanks, Russ.

Our next question comes from Ross Barenbleck with William Blair. Please proceed with your question.

Hey, good morning, guys.

Morning, Russ.

You know, for a seasonally weak quarter, that was your strongest in a couple of years. especially for ESG.

I mean, do you get the sense it's more macro driven or some of your internal efforts?

And just in the back of that, I mean, were you kind of seeing the strongest visibility as we look after the 27 and beyond, as we think about some of the product categories like metal, metals, roads, safe digging?

Yeah, I think both were strong. But, you know, what I was particularly encouraged was in the success that we're making on these internal growth initiatives. particularly around the power of the platform. And again, I would say we're in early days there with a lot of opportunity. And again, it was the year over year pretty dramatic improvement in growth in orders within ESG across many of our product categories, sewer cleaners, mineral extraction, aftermarket, Roadmarking, Hydros, that I think gives us confidence that 2027 will be another record year at Federal Signal.

Okay. Got a couple inbound this morning. Any chance you can help us put a little bit more precision on bridging the gap to the high teens organic ESG orders in the mid-single digit? Just some of the parts there.

Ross, I'm sorry, you broke up on the first part of the question.

Oh, sorry. Yeah, no, we've had several in-bounds this morning asking if you could help us bridge the gap on the high-teens organic ESG orders and the mid-single-digit sales, just, you know, the bits and parts on how we get there.

Oh, sure. So when we think about kind of the mid-single-digit organic growth, you know, price was about 3% during the quarter. Then we had, you know, the remainder would be a combination of volumes and mix. So that's the breakdown of the organic sales component. On the order front, that was just, as I think Jennifer alluded to, it was really strength across many different product lines that we saw, the organic order growth. And so within the SG, I think our orders were up 43%. and then if you break down, kind of if you're looking at the orders, then there would be in that kind of the high teens.

Yeah, and Ross, obviously most of that would be New Way contribution. You know, Western on the SSG side really had nominal contributions to orders.

Okay. Yeah, that makes sense. And then just maybe one more. With the parts build out with the service centers, you noted that this is your 20th since 2019. can you just give us a sense of when that penetration stands today? Are we halfway through that process? Are you still pretty good on where we're sitting on the service centers?

Yeah, you know, I think it's, you know, the service centers that I referenced support our sales of direct products and we have quite a bit of white space both in Canada and in certain regions of the U.S. And, you know, I think the other thing that's really important to understand is as we add new products, both organically and through M&A, there's opportunities to leverage those service centers for those products where we sell to us.

Okay. So it sounds like there's still some room to go here.

Absolutely.

Fantastic. All right. I'll pass along. Thank you.

Our next question comes from Steve Barger with eBank Capital Markets. Please proceed with your question.

Good morning, Steve. Thanks. Good morning. This is Jacob. I'm for Steve. Thank you for taking our questions. So first one on refuse. Yesterday and then also just this morning, both of your largest refuse competitors indicated that order patterns are shaping up pretty nicely ahead of a potential recovery in 27. So, I mean, hopefully you're seeing a similar trend at Newway. So I guess the question is, is that true? And if so, could you provide any insight that you have into the timing of an inflection and maybe what the growth setup is looking like there?

Yeah. You know, as when, you know, I'll start with when we announced the acquisition last September, you know, we were pretty clear that we thought the industry would be down double digits this year. And that was something we'd factored into our deal model for Newway. and it's really been tracking the first couple quarters. We were pleased with the order patterns. We're pleased with the traction that we're getting on the strategic initiatives. I think as we talked about the synergies, we said that we expected to achieve the cost synergies first, the revenue synergies later. during that three-year period. And, you know, we expect the industry consistent with what you said to normalize in 2027 and then grow from there. You know, we're really encouraged by the progress we're making. You know, we like the stability of the refuse industry long-term, you know, which is similar to some of our other ESG specialty vehicle businesses with respect to consistent replacement demand, heavy usage, and significant opportunities, we believe, for further aftermarket growth. Finally, we saw a nice sequential pickup in orders in Q3 from Q2, consistent with what you said.

understood that that is helpful thank you and then the second one from us is I know you talked in the prepared remarks about having capacity to grow into with the current footprint could you maybe provide any insight into the utilization rate of that current capacity or maybe differently if you prefer what sort of revenue levels just roughly you can support if you filled that out and then the final one here is just where do you want or need more capacity to support your medium-term growth goals yeah so right now I'll say a couple things you know we announced

on yesterday, the acquisition of Global. It picked up an $80,000 plus manufacturing facility we bought as part of that transaction. Our intention is to leverage that capacity to support the growth of our vacuum truck businesses. So we're very encouraged about that. As we talked about previously, we also have additional excess capacity as part of the new way transaction. and then we continue to build out capacity by this year. We're building two different warehouses on the property of current existing facilities, so building out more capacity. With all that being said, excluding the global transaction, we're running around mid-70s and I think that sets us up for, we have the capacity we need, particularly with the addition of global and once we complete those warehouses to support the year over year growth for 27, 28. And we'll continue to look at through acquisitions and through this kind of warehousing model and some small additions at existing facilities. I think we've got a pretty good plan to support the growth. We also can leverage those service centers too.

That's really helpful, Colleen. Thank you very much.

Our next question comes from Walt Liptak with Seaport Research. Please proceed with your question.

Hi, good morning. Good quarters. Good quarter, guys. I wanted to ask about the selling price increases. You know, you've got inflationary pressure in the first half and in the second half accelerating. You know, I wonder if you could talk a little bit about how you're dealing with that, especially in the ESG part of the business. I just point out to me, it looks like the operating leverage was really good, but maybe a step down from the first half.

Yeah, so just maybe taking a step back and just in terms of, you know, our raw materials and our major exposures, really steel. And so we tend to lock our pricing on steel on a six month basis. So typically that's to align with with our lead times. So we you know, we typically will experience some inflation on this during Q4. We factored some of that into the guidance. We've also, you know, we expect that to continue into 27. And that is something that we are contemplating, you know, when we set the pricing of our products today. So as it relates to other cost increases, we're monitoring, I think like most companies, we're monitoring the freight market. For us, that's a low single-digit percentage of our overall cost stack. and often that's a pass-through for the customer. Overall for the quarter, pricing was about three, three and a half percent. We were net price cost positive in both absolute dollars and it was also slightly margin-incretive on a year-over-year basis. So the other thing I would say is that where we probably have a higher concentration of steel in some of our dump truck products, that's where the lead times are a little shorter than some of the other ESG businesses so we can react a lot quicker to inflationary pressures through pricing as we've demonstrated in previous years as well. So I think that's the approach. The locking of the steel gives us some pretty good visibility to the cost and that's something we can consider into the pricing of our product.

Okay, great. Just switching gears to a comment, Jennifer, that you made. You talked about, I think within ESG, something called conquest customers. I think that's a new term. I wonder, is that just something that you brought up for the first time on a call? I wonder if you can talk a little bit about what that means.

You know, particularly with some of our AI initiatives, and as we leverage channel across the enterprise you know we've identified certain customers with particularly on the direct side with either our new equipment offerings our used offerings or rental offerings and that we can really provide a complete package to them and you know our teams are aggressively working to gain market share. And where I'm pleased is we have, if you look at the orders for ESG, some of that growth was with customers that we define as conquest that we haven't done business with before. So just very solid execution on the market growth initiatives. And part of that's represented by these conquest sales. And, you know, we are encouraged by what we saw and how that sets us up for 2027.

Okay, great. It makes sense. Maybe a last one for me. You know, the stock hasn't been doing great, but you've got $152 million of buyback authorization left. I wonder if you know about the timing like are you trying to be opportunistic with this? How should we think about your buyback?

Yeah well I think you know as you may have seen during the quarter we had about five million of buybacks during the quarter. There is obviously in terms of our allocation priorities we have organic growth in M&A and then the dividends and opportunistic share buybacks and I think it's as we've demonstrated in the past, when we feel it's the right time to be opportunistic, we'll certainly look into that.

And as you referenced, you know, the strong gas generation, you know, we're in an excellent position to be able to execute against those buybacks.

Okay, great. Thank you.

Your next question comes from Kyle Menges with Citigroup. Please proceed with your question.

Thank you. I wanted to follow up on the dump truck orders. Sounds like they were down a little bit year over year. Maybe it's a tough comp and then also perhaps is that really where uncertainty around EPA 27 and chassis going into 27, is that really where that's showing up? and just would love to hear some color on what you're seeing and hearing from customers in that market as we approach year end and start to look into 2027. Yeah.

So, you know, I guess I would note that, you know, they were down year over year, but up year to date. You know, with respect, we really haven't seen a material pre-buy activity and we would typically see it in one of the areas, as you noted, is dump trucks. and, you know, frankly, there's still uncertainty around some of the chassis regulations for this year. You know, I think it's important to understand we're chassis agnostic. We understand that there are a variety of different chassis OEM strategies in response to some of the proposed regulations and, you know, we're happy to work with all them. You know, and our objective always is to meet our customer needs. with that in mind, you know, we are looking forward to the finalization of those regulations as we think that it'll give our customers more clarity on their desired chassis choices.

Got it. That's helpful, Jen. And then a follow-up on Newway. Just would love to hear any early feedback on reception, I guess, in Canada. And then I think from my understanding, you've got a couple new products that you might be fast tracking development of in new way to maybe more effectively compete in that market. And we'd just love to hear an update on that and maybe timeline of when those products could move from development into commercialization.

Yeah, let me just start with kind of a general shout out to the new way team because they've just done, you know, you know, we've had, you know, four full three full quarters and a partial quarter and just you know really off to a strong start you know in terms of building a team you know just just really an outstanding base that we started with we've added some people particularly in the second half of this year we're aggressively as you referenced looking fast tracking some new product development I was down at our Boonesville plant a couple weeks ago, an opportunity to meet that team, actually see some of the new products in action, and just encouraged by what I saw. These are demo-intensive products. So we're in the middle of our multi-quarter Canadian penetration strategy. We've seen some early customer success with some initial orders, but it's probably a bit too early to give a defined update. But the customer reception is good. and, you know, we're excited to introduce these new products to them and, you know, really leverage the service centers and teams that we have in place in both Canada and the States. And, you know, we are encouraged by, you know, really started to work with those existing New Way dealers. In fact, they're in our offices today and planning for 2027. So just overall, a very positive report.

Great to hear. Thank you, guys.

Once again, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Greg Burns with Sidoti and Company. Please proceed with your question.

Good morning, Greg. a lot of talk about your organic or market share kind of growth initiatives this quarter and obviously some strong order growth across a lot of product lines but maybe looking back year to date and maybe prospectively where have you been gaining the most share and where do you see the most opportunities what markets do you see the most opportunities in for you to gain share going forward?

Yeah again I repeat, where I'm always encouraged is just the broad-based share gain across several federal signal businesses. You know, after markets at a particularly strong quarter with parts, rental, and used equipment all being up very meaningfully. We talked about sewer cleaners, hydros, just a lot of opportunity there in terms of some of these mega projects. in both utility and some of the data center work that's going on. And we see those as multi-year opportunities. The mineral extraction, you know, that ground force and mega teams have just done a super job in terms of integration and pursuing new end markets, particularly some of the success they've had with water trucks. Road marking, you know, we put those three companies together, Hogg, MRM, Blasters, and this year, you know, the teams, they really aligned those sales teams and we've seen some good positive momentum there. And, you know, while maintaining, you know, that business has got a really nice aftermarket tail also. You know, and SSG, you know, I look, you know, they're outstanding in terms of new product development. As I mentioned in my prepared remarks, you know, we expect our fourth quarter to be up year over year. And I see some good momentum there. So overall, it's the strength of the results across several business units. And again, you know, supplying equipment to a diversity of end markets.

All right. Great. Thank you.

And we have reached the end of the question and answer session. I would now like to turn the floor back over to Jennifer Sherman, President and Chief Executive Officer, for closing remarks.

Thank you. In closing, as we enter this Thanksgiving season, I want to take a moment to thank our dedicated employees and loyal customers and dealers and distributors and shareholders. Thank you for joining us today and we will talk to you soon.

This does conclude today's teleconference. You may now disconnect your lines. Thank you for your participation