Federal Signal (FSS) investor relations material

Deal rationale and strategic fit

• Acquisition of a leading U.S. refuse collection vehicle manufacturer expands the specialty vehicle portfolio and establishes a new growth vertical in a recession-resilient industry.

• New Way's leadership in automated side loaders and strong municipal/non-CDL customer base aligns with strategic goals and provides a foundation for continued outperformance.

• The deal leverages existing distribution and manufacturing capabilities, with key management and over 750 employees retained post-transaction.

• Cultural fit and shared values, including family ownership and employee focus, were key factors in the transaction.

• Capitalizes on secular trends in labor efficiency, safety, and regulatory-driven demand for automated side loaders.

Financial terms and conditions

• Initial purchase price of $396 million on a cash-free, debt-free basis, plus $30 million for manufacturing facilities and real estate rights.

• Contingent earn-out of up to $54 million based on financial targets over two years.

• Purchase price represents approximately 11x projected 2026 EBITDA ($30–$35 million) and 7x projected 2028 EBITDA, inclusive of synergies.

• Present value of anticipated tax benefits estimated at $60 million.

• Financed with cash on hand and existing credit facility; pro forma net debt leverage ratio expected below 1.5x.

Synergies and expected cost savings

• Targeting $15–$20 million in annual run-rate synergies by 2028, spanning operational efficiencies and revenue growth.

• Operational synergies include procurement savings, supply chain optimization, and application of best practices.

• Aftermarket parts revenue targeted to rise from 11% to mid-to-high teens of sales by 2028.

• New product development, cross-selling, and sales channel optimization expected to unlock further growth.

• Enhanced customer service and dealer development to drive recurring revenue and market penetration.