FEDERAL SIGNAL CORP DE

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide information that is supplemental to, and shall be read together with, the consolidated financial statements and the accompanying notes contained in this Form 10-K. Information in MD&A is intended to assist the reader in obtaining an understanding of (i) the consolidated financial statements, (ii) the Company’s business segments and how the results of those segments impact the Company’s results of operations and financial condition as a whole and (iii) how certain accounting principles affect the Company’s consolidated financial statements.

Current wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide information that is supplemental to, and shall be read together with, the consolidated financial statements and the accompanying notes included in Item 8, Financial Statements and Supplementary Data, in this Form 10-K. Information in MD&A is intended to provide an analysis of our financial condition and results of operations from management’s perspective and assist the reader in obtaining an understanding of (i) the consolidated financial statements, (ii) the Company’s business segments and how the results of those segments impact the Company’s results of operations and financial condition as a whole, and (iii) how certain accounting principles affect the Company’s consolidated financial statements, and to provide discussion of material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative of future operating results or future financial condition.

Previous wording

A discussion of changes in the Company’s financial condition and results of operations during the year ended December 31, 2022 compared to the year ended December 31, 2021 has been omitted from this Form 10-K, but may be found under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023.

Current wording

See below for discussion and analysis of our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024, for a detailed discussion of our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Previous wording

The Company is a leading global manufacturer and supplier of (i) vehicles and equipment for maintenance and infrastructure end-markets, including sewer cleaners, industrial vacuum loaders, safe-digging trucks, street sweepers, waterblasting equipment, road-marking and line-removal equipment, dump truck bodies, trailers, metal extraction support equipment and multi-purpose tractors, and (ii) public safety equipment, such as vehicle lightbars and sirens, industrial signaling equipment, public warning systems and general alarm/public address systems. In addition, we engage in the sale of parts, service and repair, equipment rentals and training as part of a comprehensive aftermarket offering to our customer base. We operate 23 manufacturing facilities in five countries and provide products and integrated solutions to municipal, governmental, industrial and commercial customers in all regions of the world.

Current wording

The Company is a leading global manufacturer and supplier of (i) vehicles and equipment for maintenance and infrastructure end-markets, including sewer cleaners, industrial vacuum loaders, safe-digging trucks, street sweepers, waterblasting equipment, road-marking and line-removal equipment, dump truck bodies, trailers, metal extraction support equipment, and multi-purpose maintenance vehicles, and (ii) public safety equipment, such as vehicle lightbars and sirens, industrial signaling equipment, public warning systems, and general alarm/public address systems. In addition, we engage in the sale of parts, service and repair, equipment rentals, and training as part of a comprehensive aftermarket offering to our customer base. We operate 23 manufacturing facilities in five countries and provide products and integrated solutions to municipal, governmental, industrial, and commercial customers in all regions of the world.

Previous wording

As described in Note 17 – Segment Information to the accompanying consolidated financial statements, the Company’s business units are organized in two reportable segments: the Environmental Solutions Group and the Safety and Security Systems Group.

Current wording

As described in Note 17 – Segment Information in Item 8, Financial Statements and Supplementary Data, in this Form 10-K the Company’s business units are organized in two reportable segments: the Environmental Solutions Group and the Safety and Security Systems Group.

Previous wording

Conditions in our end markets remained strong throughout 2023, with demand for our products and services at unprecedented levels. We continued to execute against our organic growth initiatives, and with contributions from our recent value-added acquisitions and additional efficiency gains resulting from the application of our eighty-twenty initiatives, we were able to sustain a high level of financial performance. As the year progressed, we saw improvement in supply chain conditions, which facilitated increased production levels at several of our facilities and, despite some lingering supply chain-related operational inefficiencies, we were able to deliver record financial results for our stockholders, with double-digit year-over-year top line and earnings growth, margin expansion and significant improvement in cash flow generation.

Current wording

Conditions in our end markets remained strong throughout 2024, with robust demand for our products and services. We continued to execute against our organic growth initiatives, and with contributions from our recent value-added acquisitions and additional efficiency gains resulting from the application of our eighty-twenty initiatives, we were able to sustain a high level of financial performance. As the year progressed, we saw improvement in supply chain conditions, which facilitated increased production levels at several of our facilities, and despite some supply chain-related operational inefficiencies early in the year, we were able to deliver record financial results for our stockholders, with 8% net sales growth, double-digit earnings improvement, expansion of margins, and significant improvement in cash flow generation.

Previous wording

•Net sales for the year ended December 31, 2023 were $1.72 billion, the highest level in our history, and an increase of $288 million, or 20% from last year.

Current wording

•Net sales for the year ended December 31, 2024 were $1.86 billion, the highest level in our history, and an increase of $139 million, or 8% from last year.

Previous wording

•Cash flow from continuing operating activities for the year ended December 31, 2023 was $194 million, an increase of $123 million, or 171%, from last year.

Current wording

•Net cash provided by operating activities for the year ended December 31, 2024 was $231 million, an increase of $37 million, or 19%, from last year.

Previous wording

•With our strong balance sheet, positive operating cash flow, and increased capacity under our credit facility, we are well positioned to continue to invest in internal growth initiatives, pursue strategic acquisitions and consider ways to return value to stockholders, as we did during 2023:

Current wording

•With our strong balance sheet, positive operating cash flow, and capacity under our credit facility, we are well positioned to continue to invest in internal growth initiatives, pursue strategic acquisitions, and consider ways to return value to stockholders, as we did during 2024:

Previous wording

◦Our capital expenditures in 2023 were approximately $30 million, and included a number of strategic investments in new machinery and equipment aimed at gaining operating efficiencies and expanding capacity at certain production facilities.

Current wording

◦Our capital expenditures in 2024 were approximately $41 million and included a number of strategic investments in new machinery and equipment aimed at gaining operating efficiencies and expanding capacity at certain production facilities.

Previous wording

◦We continue to invest in new product development and are encouraged that these efforts will provide additional opportunities to further diversify our customer base, penetrate new end-markets and/or gain access to new geographic regions.

Current wording

◦We continue to invest in new product development and anticipate that these efforts will provide additional opportunities to further diversify our customer base, penetrate new end-markets, and/or gain access to new geographic regions.

Previous wording

◦We continued to execute on our disciplined M&A strategy with the acquisitions of Blasters and Trackless. We have now completed 11 acquisitions since 2016.

Current wording

◦We continued to execute on our disciplined M&A strategy with the acquisition of Standard. We have now completed 12 acquisitions since 2016.

Previous wording

◦We demonstrated our commitment to returning value to our stockholders by paying cash dividends of $23.8 million, and spending $5.5 million to repurchase shares under our authorized repurchase program.

Current wording

◦We demonstrated our commitment to returning value to our stockholders by paying cash dividends of $29.3 million and spending $6.7 million to repurchase shares of our common stock under our authorized repurchase program.

Previous wording

*The Company uses adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) and the ratio of adjusted EBITDA to net sales (“adjusted EBITDA margin”) as additional measures which are representative of its underlying performance and to improve the comparability of results across reporting periods. Refer to the Results of Operations section for further discussion regarding these non-GAAP metrics and a reconciliation of each to the most comparable GAAP measure for each of the periods presented.

Current wording

*The Company uses adjusted earnings before interest, tax, depreciation, and amortization (“adjusted EBITDA”) and the ratio of adjusted EBITDA to net sales (“adjusted EBITDA margin”) as additional measures to assist it in comparing its performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes are not representative of its underlying performance and to improve the comparability of results across reporting periods. Refer to the Results of Operations section for further discussion regarding these non-GAAP metrics and a reconciliation of each to the most comparable GAAP measure for each of the periods presented.

Previous wording

(a)The Company uses adjusted EBITDA and adjusted EBITDA margin as additional measures which are representative of its underlying performance and to improve the comparability of results across reporting periods. We believe that investors use versions of these metrics in a similar manner. For these reasons, the Company believes that adjusted EBITDA and adjusted EBITDA margin are meaningful metrics to investors in evaluating the Company’s underlying financial performance. Adjusted EBITDA is a non-GAAP measure that represents the total of net income, interest expense, pension settlement charges, acquisition and integration-related expenses (benefits), coronavirus-related expenses, purchase accounting effects, other income/expense, income tax expense, and depreciation and amortization expense, where applicable. Adjusted EBITDA margin is a non-GAAP measure that represents the total of net income, interest expense, pension settlement charges, acquisition and integration-related expenses (benefits), coronavirus-related expenses, purchase accounting effects, other income/expense, income tax expense, and depreciation and amortization expense, where applicable, divided by net sales for the applicable period(s). Other companies may use different methods to calculate adjusted EBITDA and adjusted EBITDA margin.

Current wording

(a)The Company uses adjusted EBITDA and adjusted EBITDA margin as additional measures to assist it in comparing its performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes are not representative of its underlying performance and to improve the comparability of results across reporting periods. The Company believes that investors use versions of these metrics in a similar manner. For these reasons, the Company believes that adjusted EBITDA and adjusted EBITDA margin are meaningful metrics to investors in evaluating the Company’s underlying financial performance. Adjusted EBITDA is a non-GAAP measure that represents the total of net income, interest expense, net, pension settlement charges, acquisition and integration-related expenses, net, purchase accounting effects, other expense, net, income tax expense, and depreciation and amortization expense, where applicable. Adjusted EBITDA margin is a non-GAAP measure that represents the total of net income, interest expense, net, pension settlement charges, acquisition and integration-related expenses, net, purchase accounting effects, other expense, net, income tax expense, and depreciation and amortization expense, where applicable, divided by net sales for the applicable period(s). Other companies may use different methods to calculate adjusted EBITDA and adjusted EBITDA margin.

Previous wording

For the year ended December 31, 2023, cost of sales increased by $182.6 million, or 17%, compared to the prior year, largely due to an increase of $162.3 million, or 17%, within the Environmental Solutions Group, primarily related to increased sales volumes, inclusive of the effects of acquisitions, increased chassis costs and a $3.2 million increase in depreciation expense, partially offset by a $6.2 million favorable foreign currency translation impact. Within the Safety and Security Systems Group, cost of sales increased by $20.3 million, or 13%, primarily related to higher sales volumes, benefits from pricing actions and lower freight costs.

Current wording

For the year ended December 31, 2024, cost of sales increased by $56.0 million, or 4%, compared to the prior year, largely due to an increase of $53.4 million, or 5%, within the Environmental Solutions Group, primarily related to increased sales volumes, inclusive of the effects of acquisitions, and a $4.6 million increase in depreciation expense, partially offset by a $3.6 million favorable foreign currency translation impact and reduced chassis costs of $10.7 million. Within the Safety and Security Systems Group, cost of sales increased by $2.6 million, or 1%, primarily related to higher sales volumes, partially offset by favorable product mix and lower material costs.

Previous wording

For the year ended December 31, 2023, gross profit increased by $105.3 million, or 31%, compared to the prior year, primarily due to a $85.0 million improvement within the Environmental Solutions Group and a $20.3 million increase within the Safety and Security Systems Group. Gross profit as a percentage of net sales (“gross profit margin”) for the year ended December 31, 2023 was 26.1%, compared to 24.0% in the prior year, primarily driven by improvements within the Environmental Solutions Group and Safety and Security Systems Group of 220 basis points and 180 basis points, respectively.

Current wording

For the year ended December 31, 2024, gross profit increased by $82.8 million, or 18%, compared to the prior year, primarily due to a $65.8 million improvement within the Environmental Solutions Group and a $17.0 million increase within the Safety and Security Systems Group. Gross profit as a percentage of net sales (“gross profit margin”) for the year ended December 31, 2024 was 28.6%, compared to 26.1% in the prior year, primarily driven by a 240 basis point improvement within the Environmental Solutions Group and a 310 basis point improvement within the Safety and Security Systems Group.

Previous wording

For the year ended December 31, 2023, SEG&A expenses increased by $38.4 million, or 22%, compared to the prior year, primarily due to increases of $16.8 million, $6.3 million and $15.3 million within the Environmental Solutions Group, the Safety and Security Systems Group and Corporate, respectively. As a percentage of net sales, SEG&A expenses increased from 12.0% in the prior year, to 12.2% in the current year.

Current wording

For the year ended December 31, 2024, SEG&A expenses increased by $23.9 million, or 11%, compared to the prior year, primarily due to increases of $13.9 million in the Environmental Solutions Group, $7.4 million in the Safety and Security Systems Group, and $2.6 million in Corporate. As a percentage of net sales, SEG&A expenses were 12.6% in the current year, compared to 12.2% in the prior year.

Previous wording

Operating income for the year ended December 31, 2023 increased by $63.7 million, or 40%, compared to the prior year, largely due to the $105.3 million improvement in gross profit, partially offset by the $38.4 million increase in SEG&A expenses, a $2.3 million increase in amortization expense and a $0.9 million increase in acquisition-related costs. Consolidated operating margin for the year ended December 31, 2023 was 13.0%, compared to 11.2% in the prior year.

Current wording

Operating income for the year ended December 31, 2024 increased by $56.9 million, or 25%, compared to the prior year, largely due to the $82.8 million improvement in gross profit and a $0.2 million reduction in amortization expense, partially offset by the $23.9 million increase in SEG&A expenses and a $2.2 million increase in acquisition and integration-related costs. Consolidated operating margin for the year ended December 31, 2024 was 15.1%, compared to 13.0% in the prior year.

Previous wording

For the year ended December 31, 2023, Other expense (income), net, increased by $2.2 million compared to the prior year, primarily due to a $1.0 million increase in net periodic pension expense, a $0.8 million increase in estimated environmental remediation costs associated with a business discontinued in 2009, and a $0.4 million increase in foreign currency transaction losses.

Current wording

For the year ended December 31, 2024, Other expense, net, decreased by $0.6 million compared to the prior year, primarily due to the non-recurrence of an $0.8 million environmental remediation charge recorded in the prior-year period associated with a business discontinued in 2009, partially offset by higher net periodic pension expense.

Previous wording

The Company recognized income tax expense of $45.6 million for the year ended December 31, 2023, compared to $30.5 million for the year ended December 31, 2022. The increase in income tax expense in the current year was primarily due to higher earnings and the non-recurrence of certain discrete tax benefits recognized in the prior year associated with the release of valuation allowances, partially offset by a $1.5 million increase in the amount of excess tax benefits from stock compensation activity compared to the prior year. In the year ended December 31, 2022, the Company recognized a $2.6 million tax benefit from the release of a valuation allowance that had previously been recorded against deferred tax assets associated with foreign tax credits in the U.S., primarily due to tax planning. The Company also recognized a $1.1 million tax benefit during the year ended December 31, 2022 associated with the release of a valuation allowance in the U.K., as the associated deferred tax assets were considered more-likely-than-not to be realized primarily due to increased projections of future taxable income. Including these items, the Company’s effective tax rate for the year ended December 31, 2023 was 22.5%, compared to 20.2% in 2022. For further discussion, see Note 10 – Income Taxes to the accompanying consolidated financial statements.

Current wording

The Company recognized income tax expense of $47.6 million for the year ended December 31, 2024, compared to $45.6 million for the year ended December 31, 2023. The increase in income tax expense in 2024 was primarily due to higher earnings, partially offset by the aforementioned discrete tax benefits, which aggregated to $15.9 million, and the recognition of $5.1 million in excess tax benefits associated with stock-based compensation activity. Including these items, the Company’s effective tax rate for the year ended December 31, 2024 was 18.0%, compared to 22.5% in 2023. The Company’s income tax expense and effective tax rate for the year ended December 31, 2023 also included the effects of the recognition of $3.9 million in excess tax benefits associated with stock-based compensation activity. For further discussion, see Note 10 – Income Taxes in Item 8, Financial Statements and Supplementary Data.

Previous wording

Net income for the year ended December 31, 2023 increased by $37.0 million, or 31%, compared to the prior year, largely due to the increased operating income, partially offset by increases in income tax expense, interest expense and other expense of $15.1 million, $9.4 million and $2.2 million, respectively.

Current wording

Net income for the year ended December 31, 2024 increased by $58.9 million, or 37%, compared to the prior year, largely due to the increased operating income and the reductions in interest expense, net, and other expense, net, partially offset by the $3.8 million pension settlement charge and a $2.0 million increase in income tax expense.

Previous wording

Adjusted EBITDA for the year ended December 31, 2023 was $286.0 million, compared to $215.0 million in the prior year. Adjusted EBITDA margin for the year ended December 31, 2023 was 16.6%, compared to 15.0% in the prior year.

Current wording

Adjusted EBITDA for the year ended December 31, 2024 was $350.6 million, compared to $286.0 million in the prior year. Adjusted EBITDA margin for the year ended December 31, 2024 was 18.8%, compared to 16.6% in the prior year.

Previous wording

The following table summarizes the Company’s adjusted EBITDA and adjusted EBITDA margin and reconciles net income to adjusted EBITDA for each of the three years in the period ended December 31, 2023:

Current wording

The following table summarizes the Company’s adjusted EBITDA and adjusted EBITDA margin and reconciles net income to adjusted EBITDA for the years ended December 31, 2024 and December 31, 2023:

Previous wording

(b)Purchase accounting effects represent the step-up in the valuation of equipment acquired in recent business combinations that was sold during the periods presented.

Current wording

(a)Purchase accounting effects represent the step-up in the valuation of equipment acquired in recent business combinations that was sold during the periods presented. Excludes purchase accounting expense effects included within depreciation and amortization of $0.2 million for the year ended December 31, 2024.

Previous wording

Cost of sales increased by $162.3 million, or 17%, for the year ended December 31, 2023, primarily related to increased sales volumes, inclusive of the effects of acquisitions, increased chassis costs and a $3.2 million increase in depreciation expense, partially offset by a $6.2 million favorable foreign currency translation impact. Including these factors, gross profit margin for the year ended December 31, 2023 was 23.6%, compared to 21.4% in the prior year, with the improvement primarily attributable to improved operating leverage from higher sales volumes and benefits from pricing actions, partially offset by an increase in lower margin chassis sales.

Current wording

Cost of sales increased by $53.4 million, or 5%, for the year ended December 31, 2024, primarily related to increased sales volumes, inclusive of the effects of acquisitions, and a $4.6 million increase in depreciation expense, partially offset by a $3.6 million favorable foreign currency translation impact and reduced chassis costs of $10.7 million. Including these factors, gross profit margin for the year ended December 31, 2024 was 26.0%, compared to 23.6% in the prior year, with the improvement primarily attributable to improved operating leverage from higher sales volumes, benefits from pricing actions, and a reduction in lower margin chassis sales.

Previous wording

SEG&A expenses increased by $16.8 million, or 17%, for the year ended December 31, 2023, primarily due to additional costs from acquired businesses, as well as increases in sales commissions and incentive-based compensation expense. As a percentage of net sales, SEG&A expenses were 7.9% in the current year, compared to 8.1% in the prior year.

Current wording

SEG&A expenses increased by $13.9 million, or 12%, for the year ended December 31, 2024, primarily due to additional costs from acquired businesses, as well as increases in sales commissions and incentive-based compensation expense. As a percentage of net sales, SEG&A expenses were 8.2% in the current year, compared to 7.9% in the prior year.

Previous wording

Operating income increased by $64.7 million, or 45%, for the year ended December 31, 2023, largely due to a $85.0 million increase in gross profit, partially offset by the $16.8 million increase in SEG&A expenses, a $2.3 million increase in amortization expense and a $1.2 million increase in acquisition-related costs.

Current wording

Operating income increased by $52.0 million, or 25%, for the year ended December 31, 2024, largely due to a $65.8 million increase in gross profit and a $0.2 million reduction in amortization expense, partially offset by the $13.9 million increase in SEG&A expenses and a $0.1 million increase in acquisition-related costs.

Previous wording

Backlog was $967 million at December 31, 2023, compared to $824 million at December 31, 2022.

Current wording

Backlog was $940 million at December 31, 2024, compared to $967 million at December 31, 2023.

Previous wording

Total orders increased by $44.1 million, or 18%, for the year ended December 31, 2023. U.S. orders increased by $16.9 million, or 11%, compared to the prior year, driven by improvements in orders for public safety equipment, warning systems and industrial signaling equipment of $10.8 million, $4.9 million and $1.2 million, respectively. Non-U.S. orders increased by $27.2 million, or 31%, primarily due to a $23.9 million improvement in orders for public safety equipment, inclusive of a large fleet order from a customer in Mexico, as well as a $2.8 million improvement in orders for warning systems.

Current wording

Total orders increased by $14.1 million, or 5%, for the year ended December 31, 2024. U.S. orders increased by $28.3 million, or 16%, compared to the prior year, driven by improvements in orders for public safety equipment of $22.9 million and industrial signaling equipment of $5.9 million, partially offset by a $0.5 million reduction in orders of warning systems. Non-U.S. orders decreased by $14.2 million, or 12%, primarily due to a $16.6 million reduction in orders for public safety equipment in comparison to the prior-year period, which included large fleet orders from customers in Mexico and Europe, as well as a $2.5 million reduction in orders for industrial signaling equipment. Partially offsetting these reductions was a $4.9 million improvement in orders for warning systems.

Previous wording

Net sales increased by $40.6 million, or 17%, for the year ended December 31, 2023, inclusive of the effects of higher sales volumes and pricing actions. U.S. sales increased by $21.8 million, or 14%, driven by improvements in sales of public safety equipment, industrial signaling equipment and warning systems of $12.6 million, $4.7 million and $4.5 million, respectively. Non-U.S. sales increased by $18.8 million, or 21%, largely due to improvements in sales of public safety equipment, industrial signaling equipment and warning systems of $10.1 million and $6.3 million and $2.3 million, respectively.

Current wording

Net sales increased by $19.6 million, or 7%, for the year ended December 31, 2024, inclusive of the effects of higher sales volumes and pricing actions. U.S. sales increased by $28.9 million, or 16%, driven by improvements in sales of public safety equipment of $24.4 million, industrial signaling equipment of $2.4 million, and warning systems of $2.1 million. Non-U.S. sales decreased by $9.3 million, or 8%, largely due to reductions in industrial signaling equipment of $5.0 million and public safety equipment of $4.9 million, partially offset by a $0.5 million improvement in sales of warning systems.

Previous wording

Cost of sales increased by $20.3 million, or 13%, for the year ended December 31, 2023, primarily related to higher sales volumes. Gross profit margin for the year ended December 31, 2023 was 38.9%, compared to 37.1% in the prior year, with the improvement primarily attributable to improved operating leverage from higher sales volumes, benefits from pricing actions and lower freight costs.

Current wording

Cost of sales increased by $2.6 million, or 1%, for the year ended December 31, 2024, primarily related to higher sales volumes, partially offset by favorable product mix and lower material costs. Gross profit margin for the year ended December 31, 2024 was 42.0%, compared to 38.9% in the prior year, with the increase primarily attributable to improved operating leverage from higher sales volumes, favorable sales mix, lower material costs, and benefits from pricing actions.

Previous wording

SEG&A expenses increased by $6.3 million for the year ended December 31, 2023, primarily due to higher sales commissions and incentive-based compensation expense. As a percentage of net sales, SEG&A expenses were 19.7% in the current year, compared with 20.4% in the prior year.

Current wording

SEG&A expenses increased by $7.4 million for the year ended December 31, 2024, primarily due to higher sales commissions and incentive-based compensation expense. As a percentage of net sales, SEG&A expenses were 20.9% in the current year, compared with 19.7% in the prior year.

Previous wording

Operating income increased by $14.0 million, or 34%, for the year ended December 31, 2023, primarily due to a $20.3 million increase in gross profit, partially offset by the $6.3 million increase in SEG&A expenses.

Current wording

Operating income increased by $9.6 million, or 18%, for the year ended December 31, 2024, primarily due to a $17.0 million increase in gross profit, partially offset by the $7.4 million increase in SEG&A expenses.

Previous wording

Backlog was $59 million at December 31, 2023, compared to $55 million at December 31, 2022.

Current wording

Backlog was $57 million at December 31, 2024, compared to $59 million at December 31, 2023.

Previous wording

Corporate operating expenses were $39.5 million, $24.5 million and $22.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

Corporate operating expenses were $44.2 million in 2024 and $39.5 million in 2023.

Previous wording

For the year ended December 31, 2023, corporate operating expenses increased by $15.0 million compared to the prior year, with the increase primarily due to higher post-retirement expenses and increases in incentive-based compensation, stock compensation, medical and IT costs, partially offset by a $0.3 million decrease in acquisition-related expenses. During the year ended December 31, 2023, the Company recognized a $2.1 million benefit associated with a reduction in the estimated fair value of contingent consideration. During the year ended December 31, 2022, the Company received a favorable settlement of $1.9 million in a post-closing adjustment dispute associated with the 2021 acquisition of OSW Equipment & Repair, LLC. These acquisition-related benefits have been included as a component of Acquisition and integration-related expenses (benefits), net on the Consolidated Statements of Operations.

Current wording

For the year ended December 31, 2024, corporate operating expenses increased by $4.7 million compared to the prior year, primarily due to a $2.1 million increase in acquisition-related expenses, including the impact of the non-recurrence of a $2.1 million benefit recognized in 2023 associated with a reduction in the estimated fair value of contingent consideration, as well as higher stock compensation, incentive-based compensation, and information technology costs in the current year. Partially offsetting these increases were lower post-retirement expenses and the recognition of a $1.8 million gain associated with an insurance recovery in 2024.

Previous wording

The Company uses its cash flow from operations to fund growth and to make capital investments that sustain its operations, reduce costs, or both. Beyond these uses, remaining cash is used to pay down debt, repurchase shares, fund dividend payments and make pension contributions. The Company may also choose to invest in the acquisition of businesses. In the absence of significant unanticipated cash demands, we believe that the Company’s existing cash balances, cash flow from operations and borrowings available under the 2022 Credit Agreement will provide funds sufficient for these purposes. The net cash flows associated with the Company’s rental equipment transactions are included in cash flow from operating activities.

Current wording

The Company uses its cash flow from operations to fund growth and to make capital investments that sustain its operations, reduce costs, or both. Beyond these uses, remaining cash is used to pay down debt, repurchase shares, fund dividend payments, and make pension contributions. The Company may also choose to invest in the acquisition of businesses. In the absence of significant unanticipated cash demands, we believe that the Company’s existing cash balances, cash flow from operations, and borrowings available under the 2022 Credit Agreement will provide funds sufficient for these purposes. The net cash flows associated with the Company’s rental equipment transactions are included in cash flows from operating activities.

Previous wording

The Company’s cash and cash equivalents totaled $61.0 million, $47.5 million and $40.5 million as of December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, $27.8 million of cash and cash equivalents was held by foreign subsidiaries. Cash and cash equivalents held by subsidiaries outside the U.S. typically are held in the currency of the country in which it is located. The Company uses this cash to fund the operating activities of its foreign subsidiaries and for further investment in foreign operations. Generally, the Company has considered such cash to be indefinitely reinvested in its foreign operations and the Company’s current plans do not demonstrate a need to repatriate such cash to fund U.S. operations. However, in the event that these funds were needed to fund U.S. operations or to satisfy U.S. obligations, they generally could be repatriated. The repatriation of these funds may cause the Company to incur additional U.S. income tax expense and withholding taxes, as applicable, dependent on income tax laws and other circumstances at the time any such amounts were repatriated.

Current wording

The Company’s cash and cash equivalents totaled $91.1 million as of December 31, 2024 and $61.0 million as of December 31, 2023. As of December 31, 2024, $22.6 million of cash and cash equivalents was held by foreign subsidiaries. Cash and cash equivalents held by subsidiaries outside the U.S. typically are held in the currency of the country in which it is located. The Company uses this cash to fund the operating activities of its foreign subsidiaries and for further investment in foreign operations. Generally, the Company has considered such cash to be indefinitely reinvested in its foreign operations and the Company’s current plans do not demonstrate a need to repatriate such cash to fund U.S. operations. However, in the event that these funds were needed to fund U.S. operations or to satisfy U.S. obligations, they generally could be repatriated. The repatriation of these funds may cause the Company to incur additional U.S. income tax expense and withholding taxes, as applicable, dependent on income tax laws and other circumstances at the time any such amounts were repatriated.

Previous wording

Net cash provided by operating activities totaled $194.4 million, $71.8 million and $101.8 million in 2023, 2022 and 2021, respectively. The increase in cash generated by operating activities in 2023 compared to the prior year was primarily due to working capital improvements and higher net income, partially offset by increased rental fleet investments to support strong demand for rentals and used equipment and higher income tax payments.

Current wording

Net cash provided by operating activities totaled $231.3 million in 2024 and $194.4 million in 2023. The increase in cash generated by operating activities in 2024 compared to the prior year was primarily due to working capital improvements and higher net income, partially offset by increased rental fleet investments to support demand for rentals and used equipment and higher income tax payments, incentive-based compensation payments, and pension contributions.

Previous wording

Net cash of $97.9 million was used for financing activities in 2023, whereas in 2022 and 2021, $35.5 million, and $26.4 million, respectively, was provided by financing activities. In 2023, the Company paid down $64.1 million of borrowings under its revolving credit facility and $0.8 million under its term loan facility, funded cash dividends and share repurchases of $23.8 million and $5.5 million, respectively, and redeemed $7.0 million of stock in order to remit funds to tax authorities to satisfy employees’ tax withholdings following the vesting of stock-based compensation and the exercise of stock options. The Company also received $3.9 million from stock option exercises. In 2022, the Company borrowed $81.2 million under its revolving credit facility, primarily to fund acquisitions, and received $0.2 million from stock option exercises. The Company also funded cash dividends and share repurchases of $21.8 million and $16.1 million, respectively, and redeemed $6.2 million of stock in order to remit funds to tax authorities to satisfy employees’ tax withholdings following the vesting of stock-based compensation and the exercise of stock options. In 2021, the Company borrowed $70.5 million under its revolving credit facility, primarily to fund acquisitions, and received $4.2 million from stock option exercises. The Company also funded cash dividends and share repurchases of $22.0 million and $15.4 million, respectively, and redeemed $10.7 million of stock in order to remit funds to tax authorities to satisfy employees’ tax withholdings following the vesting of stock-based compensation and the exercise of stock options.

Current wording

Net cash used for financing activities was $121.0 million in 2024 and $97.9 million in 2023. In 2024, the Company paid down $76.5 million of borrowings under its revolving credit facility and $3.9 million under its term loan facility, funded cash dividends of $29.3 million and share repurchases of $6.7 million, and redeemed $6.1 million of common stock in order to remit funds to tax authorities to satisfy employees’ tax withholdings following the vesting of stock-based compensation and the exercise of stock options. The Company also received $2.0 million from stock option exercises in 2024. In 2023, the Company paid down $64.1 million of borrowings under its revolving credit facility and $0.8 million under its term loan facility, funded cash dividends of $23.8 million and share repurchases of $5.5 million, and redeemed $7.0 million of common stock in order to remit funds to tax authorities to satisfy employees’ tax withholdings following the vesting of stock-based compensation and the exercise of stock options. The Company also received $3.9 million from stock option exercises in 2023.