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Federal Signal (FSS) to Acquire Deist, Reports Q3 Earnings

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Federal Signal Corporation (FSS - Free Report) recently entered into a deal to buy substantially all operations and assets of each of Deist Industries, Inc., Roll-Off Parts, LLC, Bucks Fabricating, LLC as well as Switch-N-Go, LLC (altogether “Deist”). As noted, the initial purchase price has been set at $32.5 million. The deal also includes a contingent earn-out payment of a maximum of $7.5 million, subject to the fulfillment of certain financial targets.

Federal Signal’s shares gained 2.9% yesterday to eventually close the trading session at $47.32.

Pennsylvania-based Deist is engaged in providing interchangeable truck body systems for class 3-7 vehicles. The company’s offerings also include a complete line of waste hauling products that comprises the likes of specialty roll-off and front/rear loading containers. Over the past year, it generated about $41 million of revenues along with a double-digit EBITDA margin.

Benefits of the Buyout

The acquisition will enable Federal Signal to strengthen its position in the landscaping and waste hauling space. The company expects the buyout to help it expand its product line and offer advanced new products and solutions to its customers, with improved product distribution.

The buyout, which is expected to be completed by 2021-end, subject to certain regulatory approvals, is expected to be accretive in the first year of the completion.


Simultaneously, Federal Signal announced third-quarter 2021 results. In the quarter, the company’s adjusted earnings came in at 48 cents per share, beating the Zacks Consensus Estimate of 46 cents by 4.4%. The bottom line also increased 14.3% from the year-ago figure of 42 cents. Its net sales were $298 million, increasing 7%. However, the top line missed the Zacks Consensus Estimate of $324 million.

In the quarters ahead, the company expects to benefit from higher orders for its products, driven by strengthening end markets. However, it anticipates supply chain constraints to continue adversely impacting its production, which, in turn, might hurt its profitability. For 2021, it predicts adjusted earnings to lie in the range of $1.68-$1.78.

Zacks Investment ResearchImage Source: Zacks Investment Research

In the past three months, the Zacks Rank #3 (Hold) company’s share price increased 17.9% against the industry’s decline of 7.3%.

Stocks to Consider

Some better-ranked stocks from the same space are Carlisle Companies Incorporated (CSL - Free Report) , Crane Co. (CR - Free Report) , and LSB Industries, Inc. (LXU - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Carlisle delivered an earnings surprise of 38.89%, on average, in the trailing four quarters.

Crane delivered an earnings surprise of 22.02%, on average, in the trailing four quarters.

LSB Industries delivered an earnings surprise of 15.86%, on average, in the trailing four quarters.

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