Federal Signal to acquire New Way Trucks for $396 million

DOWNERS GROVE, Ill. - Federal Signal Corporation (NYSE:FSS), a $7.39 billion market cap company with a "GREAT" financial health score according to InvestingPro, announced Wednesday it has signed a definitive agreement to acquire refuse collection vehicle manufacturer New Way Trucks for an initial purchase price of $396 million, plus $30 million for manufacturing facilities in Iowa and Mississippi.

The transaction, expected to close during the fourth quarter of 2025, establishes a new vertical within Federal Signal’s specialty vehicle portfolio and expands the company into the waste and recycling industry. The acquisition comes as Federal Signal demonstrates strong momentum, with a remarkable 55.66% price return over the past six months and trading near its 52-week high of $130.30.

New Way Trucks, a family-owned business, manufactures automated side loaders, rear loaders, and front loaders at its U.S. production facilities, serving both municipal and private-hauler customers. The company is recognized as a leading manufacturer of automated side loaders in the U.S.

"The acquisition of New Way establishes a new vertical within our specialty vehicle portfolio and represents a meaningful expansion into the recession-resilient waste and recycling industry," said Jennifer L. Sherman, President and CEO of Federal Signal.

The deal includes a potential contingent earn-out of up to $54 million based on achievement of financial targets over a two-year period. When adjusted for anticipated tax benefits estimated at approximately $60 million, the initial purchase price represents approximately 11 times New Way’s projected 2026 EBITDA.

Federal Signal plans to finance the acquisition through a combination of cash on hand and its existing credit facility, with an anticipated pro-forma net debt leverage ratio below 1.5 times upon completion. The company’s strong financial position is evident in its healthy current ratio of 2.6 and moderate debt levels. Get deeper insights into Federal Signal’s financial health and access exclusive analysis through InvestingPro’s comprehensive research reports, available for over 1,400 US stocks.

The company expects the transaction to be neutral to earnings per share in 2026 and accretive in subsequent years, with anticipated EPS accretion between $0.40 and $0.45 in 2028, including annual run-rate synergies of $15-20 million. With 5 analysts recently revising earnings estimates upward and a solid track record of maintaining dividend payments for 12 consecutive years, Federal Signal continues to demonstrate strong growth potential.

New Way employs more than 750 people who will join Federal Signal following the acquisition, according to the press release statement.

In other recent news, Federal Signal Corporation reported its second-quarter earnings for 2025, which surpassed market expectations. The company announced an adjusted earnings per share of $1.17, exceeding the forecasted $1.06 and marking a 10.38% surprise. Revenue also outperformed predictions, reaching $565 million compared to the anticipated $537.3 million, a 5.16% beat. These results highlight Federal Signal’s strong performance in the recent quarter. The earnings announcement reflects positively on the company’s financial health and operational execution. Investors and analysts are likely to view these developments as a sign of Federal Signal’s robust market position. The company’s ability to exceed both earnings and revenue forecasts may influence future analyst ratings. Such financial achievements are crucial for maintaining investor confidence and market competitiveness.

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