This Annual Report on Form 10-K (“Form 10-K”) is being filed by Federal Signal Corporation and its subsidiaries (referred to collectively as the “Company,” “we,” “our” or “us” herein, unless the context otherwise indicates) with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”), and includes comments made by management that may contain words such as “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “project,” “estimate” and “objective” or similar terminology, or the negative thereof, concerning the Company’s future financial performance, business strategy, plans, goals and objectives. These expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning the Company’s possible or assumed future performance or results of operations and are not guarantees. While these statements are based on assumptions and judgments that management has made in light of industry experience as well as perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances, they are subject to risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different.

Products manufactured and supplied, and services rendered, by the Company are divided into two reportable segments: the Environmental Solutions Group and the Safety and Security Systems Group. The individual operating businesses are organized as such because they share certain characteristics, including technology, marketing, distribution and product application, which create long-term synergies. Corporate contains those items that are not included in the Company’s reportable segments.

Depending primarily on the type and geographic location of the end-customer, the Environmental Solutions Group uses either a dealer network or direct sales to serve customers. The 2017 acquisition of Truck Bodies and Equipment International (“TBEI”) increased the number of dealers within the Company’s network and also added additional direct sales resources. The dealer network serves both municipal and industrial end-markets. Within municipal markets, the majority of the Company’s dealers operate exclusively in their assigned territory. In conjunction with selling vehicles to end-customers, dealer representatives demonstrate vehicle functionality and capability and provide vehicle service. In addition to selling products manufactured by the Company, certain of our businesses distribute and re-sell products manufactured by other companies. The Company believes its regional, national and global dealer networks for vehicles is a distinguishing factor from its competitors. The Company has an ownership interest in certain dealers.

No single customer accounted for 10% or more of the Company’s net sales in any year within the three-year period ended December 31, 2020.2022.

The Company purchases a wide variety of raw materials from around the world for use in the manufacture of its products, although the majority of currentits purchases are currently from North American sources. To minimize risks relating to availability, price and quality of key products and components, the Company is party to numerous strategic supplier arrangements. Although certain materials are obtained from either a single-source supplier or a limited number of suppliers, the Company has generally identified alternative sources to minimize the interruption of its business in the event of supply disruptions. However, the Company may incur supply disruptions and unanticipated costs in transitioning to a new supplier.

Within the Environmental Solutions Group, Elgin is recognized as a market leader among domestic sweeper competitors and differentiates itself primarily on product performance. The Vactor, TRUVAC and Guzzler brands each maintain a leading domestic position in their respective marketplaces by enhancing product performance with leading technology and application flexibility. Jetstream is a market leader in the in-plant cleaning segment of the U.S. waterblast industry, competing on product performance, rapid delivery and solutions services. Joe Johnson Equipment, Inc. with Joe Johnson Equipment (USA), Inc., (collectively, “JJE”), is a leading Canadian-based distributor of maintenance equipment for municipal and industrial markets. TBEI includes a portfolio of regional dump truck body and trailer brands with market leadership positions in distinct geographies and product categories, differentiating itself with its broad regional distribution network, focus on customer responsiveness and operational expertise. MRL is a market-leading manufacturer of road-marking and line-removal equipment. Ground Force and TowHaul are leading manufacturers of specialty vehicles that support the extraction of metals.

The Company is committed to promoting and supporting diversity.diversity, equity and inclusion (“DE&I”). The Company believes that behaving inclusively is the right thing to do. The Company also believes that hearing different voices, and seeking different perspectives and ideas, leads to better results. The Company strives to promote diversity on its Board of Directors, senior

management and in leadership roles throughout the Company. Currently, two of the Company’s seven directors self-identify as members of a minority group.

In addition, two of the Company’s directors are female, placing the Company ahead ofin line with the 20% average for companies in the Russell 3000 Index.

The Company’s commitment to diversityDE&I throughout the organization is further evidenced by its policies related to various aspects of employment, including, but not limited to, recruiting, selecting, hiring, employment placement, job assignment, compensation, access to benefits, selection for training, use of facilities, and participation in Company-sponsored employee activities. During 2021, the Company’s Executive Leadership Team, comprised of business leaders from across the organization, completed a comprehensive DE&I educational awareness training led by an industry expert. In 2022, this same group completed additional training on the importance of building inclusive workplaces. Additionally, the Company piloted DE&I training at a key manufacturing location in 2022.

The Company believes that identifying and developing the next generation of business leaders is important to its long-term success, and is proud to support its employees in furthering their education with tuition reimbursement plansprograms and training.

The Company provides extensive training to employees within its facilities, ranging from topics such as workplace safety, anti-fraud, anti-discrimination and anti-fraudanti-harassment training, to advanced instruction in lean manufacturing principles and inside sales training programs. On average, the Company’s employees each receive more than 10 hours of job training per year, with some employees of certain business units each averaging nearly 80 hours of training per year.

Through its Tuition Assistance Program, the Company also aims to assist and encourage employees to expand their knowledge, skills, and job effectiveness by continuing their education at local accredited institutions of higher learning. Certain of the Company’s businesses also partner with nearby universities, from time to time, to offer courses and programs directly related to the employee’s growth in the business.

The Company maintains a robust annual performance management process across the organization. Employees start the process by working with their supervisors to set individual performance goals. Progress against those objectives is tracked throughout the year, culminating in the year-end performance review process, which involves the completion of an employee self-assessment and a discussion between the employee and their supervisor on goal accomplishment and defined core competencies. In addition, the Company’s annual talent and succession management processes are designed to identify and develop next-level successors through a variety of assignments and experiential learning.

The Company is committed to the communities in which it operates, and to developing a strong pipeline from which it can recruit new talent. Many of the Company’s businesses from time to time support their local high schools with cooperative learning extension programs at their manufacturing plants, hosting in-person or virtual tours of our facilities, and providing scholarships and “signing-day” offers to high school seniors. The Company’s employees raise funds and donate time to a variety of community engagement initiatives and support expanded outreach to diverse communities.

The Company’s employees also donate time and expertise through volunteering and mentorship programs, and work with local colleges on training programs to teach valuable technical skills that can be applied in the workplace. Many of the Company’s businesses also recruit summer interns from regional universities, providing hands-on experience in a manufacturing setting and building a pipeline for future engineers, information technology specialists and financial analysts. These programs attempt to help the Company’s next generation, and others, understand what career paths may be available to them and to explore future job opportunities with the Company.

The Company considers the safety of its employees a significant focus and strives to have zero workplace injuries. The Company has established an enterprise-wide Safety Council, which includes representatives from several of our manufacturing facilities. The Safety Council meets regularly to collaborate and implement safety improvement measures, including workplace

hazard reduction programs and awards focusing on continuous improvement initiatives and the reduction of incident frequency.

As part of its ongoing commitment to environmental, social and governance initiatives, the Company endeavors to establish environmentally-friendly policies and objectives, and believes that these actions are also consistent with cost-effective operating practices. With the application of these policies, the Company believes it complies with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment. Capital expenditures in 20202022 attributable to compliance with such laws were not material. The Company also believes that the overall impact of compliance with environmental regulations will not have a material adverse effect on our financial position, results of operations or cash flow.

Certain of the Company’s businesses are susceptible to the influences of seasonal factors, including buying patterns, delivery patterns and productivity influences from holiday periods and weather. In general, the Company tends to have lower equipment sales in the first calendar quarter of each year compared to other quarters as a result of these factors. In addition, rental income and parts sales are generally higher in the second and third quarters of the year, because many of the Company’s products are used for maintenance activities in North America, where usage is typically lower during periods of harsher weather conditions.

The following is a list of the Company’s executive officers, including their ages, business experience and positions as of February 1, 2021:2023:

We may occasionally make forward-looking statements and estimates such as forecasts and projections of our future performance or statements of our plans and objectives. These forward-looking statements may be contained in, but are not limited to, filings with the SEC, including this Form 10-K, press releases made by us and oral statements made by our officers. Actual results could differ materially from those contained in such forward-looking statements. Important factors that could cause our actual results to differ from those contained in such forward-looking statements include, but are not limited to, the risks described below. Many of such risks and uncertainties may be exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment that may result.

In 2020,2022, we generated approximately 77%80% of our net sales in the U.S. Our ability to be profitable depends heavily on varying conditions in the U.S. governmental and municipal markets, as well as the overall U.S. economy. The industrial markets in which we compete are subject to considerable cyclicality, and move in response to cycles in the overall business environment. Many of our customers are municipal government agencies, and as a result, we are dependent on municipal government spending. Spending by our municipal customers can be affected by federal, state and local political circumstances, budgetary constraints, changing priorities, actual or potential government shutdowns and other factors. The U.S. government and municipalities depend heavily on tax revenues as a source of spending and accordingly, there is a historical correlation that suggests a lag of one to two years between the condition of the U.S. economy and our sales to the U.S. government and municipalities. Therefore, downturns in the U.S. economy are likely to result in decreases in demand for our products. Certain market factors indicate the U.S. economy may experience a significant downturn in the near future. During previous economic downturns, we experienced decreases in sales and profitability, and we expect our business to remain subject to similar economic fluctuations in the future. In addition, the extent of any potential changes to policies and regulations under the newcurrent U.S. administration, and how any such changes may impact the Company’s operations, is currently uncertain.

Our business is subject to fluctuations in demand and changing international economic, legal and political conditions that are beyond our control. In 2020,2022, approximately 23%20% of our net sales were to customers outside the U.S. and we expect a significant portion of our revenues to come from international sales in the foreseeable future. Operating in the international marketplace exposes us to a number of risks, including the need to comply with U.S. and foreign laws and regulations applicable to our foreign operations, such as the Foreign Corrupt Practices Act, the United Kingdom (“U.K.”) Bribery Act and their counterparts in other foreign jurisdictions in which we operate, restrictive domestic and international trade regulations, and changes in these laws, regulations and policies by the U.S. and foreign governments. In addition, we may be exposed to risks and adverse economic effects associated with changes in tax laws, geopolitical conflicts, actual or threatened imposition of tariffs or trade barriers on our products or materials incorporated into our products, actual or threatened trade disputes, including so-called “trade wars,” political and economic instability in the jurisdictions in which we operate, foreign receivables collection risk and local labor market conditions,conditions. Further, government administrations and agencies, the investment community, employees and other stakeholders have had an increased focus on certain climate change and other environmental, social and governance (“ESG”) factors, issues and initiatives. Regulatory and other legal changes in some cases, international hostilities.laws in response to such ESG matters could require material efforts and costs by us to comply with such changes. The costs of compliance with thesethe various laws, regulations and policies canapplicable to us could be significant and penalties for non-compliance could significantly impact our business.

Economic downturns result in tighter credit markets, which could adversely affect our customers’ ability to secure financing or to secure financing at favorable terms or interest rates necessary to proceed or continue with purchases of our products and services. Further, certain government agencies, including the U.S. Treasury, have implemented or signaled the implementation of policies that have resulted and may continue to result in significantly increased interest rates and borrowing costs. Our customers’ or potential customers’ inability to secure financing for projects could result in the delay, cancellation or downsizing of new purchases or the suspension of purchases already under contract, which could cause a decline in the demand for our products and services and negatively impact our financial position, results of operations or cash flow.

The markets in which we operate are highly competitive. Many of our competitors have significantly greater financial resources than we do. The intensity of this competition, which is expected to continue, can result in price discounting and margin pressures throughout the industry and may adversely affect our ability to increase or maintain prices for our products. In addition, certain of our competitors may have lower overall labor or material costs. In some cases, our contracts with municipal and other governmental customers are awarded and renewed through competitive bidding. We may not be successful in obtaining or renewing these contracts, which could have an adverse effect on our financial condition, results of operations or cash flow.

We are engaged in an industry that will be affected by future technological developments. The introduction of products or processes utilizing new technologies, including those resulting from any new ESG regulations, could renderrequire us and our suppliers to make significant changes to existing products or processes obsolete or unmarketable.in order for them to remain marketable and competitive. Our success will depend upon our ability to source, develop and introduce on a timely and cost-effective basis new products, applications and processes

We place a high priority on developing new products and services, as well as enhancing our existing products and services. As a result of these efforts, we may be required to expend substantial research, development and marketing resources, and the time and expense required to develop a new product or service or enhance an existing product or service are difficult to predict. We may not succeed in developing, introducing or marketing new products or services or product or service enhancements. In addition, we cannot be certain that any new or enhanced product or service will generate sufficient revenue to justify the expense and resources devoted to the related product diversification effort.

We rely on national and global dealer networks to market certain of our products and services. As a result, our business with respect to these products and services is influenced by our ability to manage new and existing relationships with dealers. While we have relatively low turnover of dealers, from time to time, we or a dealer may choose to terminate the relationship as a result of difficulties that our dealers experience in operating their businesses due to economic conditions or other factors. While we do not believe our business is dependent on any single dealer, a disruption in our dealer network, or with a significant dealer, or

significant number of dealers, could cause difficulties in marketing and distributing our products and have an adverse effect on our business, financial condition, results of operations or cash flow.

Our long-term strategy includes exploring acquisitions of companies or businesses to facilitate our growth, enhance our global market position and broaden our product offerings. Such acquisitions may help us expand into adjacent markets, add complementary products and services or allow us to leverage our distribution channels. In connection with this strategy, we could face certain risks and uncertainties in addition to those we face in the day-to-day operations of our business. We also may be unable to identify suitable targets for acquisition or to make acquisitions at favorable prices. If we identify a suitable acquisition candidate, our ability to successfully implement the acquisition would depend on a variety of factors, including our ability to obtain financing on acceptable terms. In addition, our acquisition activities could be disrupted by overtures from competitors for the targeted companies, governmental regulation and rapid developments in our industry that decrease the value of a potential target’s products or services.

We may assume liabilities in connection with the acquisition of businesses. There may be liabilities that we fail or are unable to discover in the course of performing due diligence investigations on the acquired businesses, or that may be more material than we discovered.expected. In these circumstances, we cannot assure that our rights to indemnification will be sufficient in amount, scope or duration to fully offset the possible liabilities associated with the businesses or property acquired. Further, these liabilities could result in unexpected legal or regulatory exposure, unexpected increases in taxes or other adverse effects on our business. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our financial condition, results of operations or cash flow.

Our ability to operate our businesses and implement our strategies depends in part on the efforts of our executive officers and other key employees. In addition, our future success will depend on, among other factors, our ability to attract and retain qualified personnel. The loss of the services of any key employee or the failure to attract or retain other qualified personnel could have a material adverse effect on our business or business prospects.

As a portion of our workforce is unionized, we are subject to risk of work stoppages and other labor relations matters. As of December 31, 2020,2022, approximately 16%10% of our U.S. hourly workers were represented by labor unions and were covered by collective bargaining agreements with various unions. Any strikes, threats of strikes or other organized disruptions in connection with the negotiation of new labor agreements or other negotiations could materially adversely affect our business as well as impair our ability to implement further measures to reduce costs and improve production efficiencies. In addition, the stoppage of work for a prolonged period of time at one, or several, of our principal manufacturing facilities, due to public health concerns, or any other reason, could materially adversely affect our business.

Our funding obligations and pension expense for our defined benefit pension plans are driven by the performance of assets set aside in trusts for these plans, the discount rate used to value the plans’ liabilities, actuarial assumptions and experience and legal and regulatory funding requirements. Changes in these factors could have an adverse impact on our financial condition, results of operations or cash flow. In addition, a portion of our pension plan assets are invested in equity securities, which can experience significant declines if financial markets weaken. The level of the funding of our defined benefit pension plan liabilities was approximately 84%86% as of December 31, 2020.2022. Funding of the Company’s U.S. defined benefit pension plan is determined in accordance with guidelines set forth in the Employee Retirement Income Security Act. The current year funding status was impacted by a lower discount rate than in the prior year. Our future pension expenses and funding requirements could increase significantly due to the effect of adverse changes in the discount rate, asset values or the estimated expected return on plan assets. In addition, we could become legally required to make increased cash contributions to the pension plans, and these contributions could be material and negatively affect our cash flow.

We have observedrely upon information technology systems and networks, some of which are managed by third parties, to support a global increasevariety of business processes and activities, and to comply with regulatory, legal and tax requirements. Additionally, in the ordinary course of business, we collect and store sensitive information relating to our businesses, customers, suppliers and employees. Sensitive information may also be stored by our vendors and on the platforms and networks of third-party providers. The secure operation of these information technology systems and networks and processing and maintenance of this information is critical to the Company’s business operations and strategy.

These information technology systems and networks may be susceptible to damage, disruptions or shutdowns due to hardware failures, computer viruses, cybersecurity attacks, telecommunication failures, user errors, catastrophic events or other factors. Further, information technology security threats are growing in frequency and more sophisticated cyber-attacks. Our business could be impacted by such disruptions, which in turn could pose a risksophistication. Accordingly, we have implemented and continue to the security of our systems and networks and the confidentiality, accessibility and integrity of information stored and transmitted on those systems and networks. We have adoptedimplement measures to address cyber-attackscybersecurity attacks and mitigate potential risks to our systems from these information technology-related disruptions. However, givenDespite the unpredictability of the timing, nature and scope of such disruptions,information security measures we have taken, our systems and networks remain potentially vulnerable to attacks. Dependingattacks, as do those of our vendors and third-party providers. Cybersecurity attacks on their nature and scope, such attacksthe Company, our vendors or our third-party providers could potentially lead toresult in the compromising of confidential information, misuse of our systems and networks, manipulation and destruction of data, misappropriation of assets or

production stoppages and supply shortages, which in turn could adversely affect our reputation, financial condition, results of operations or cash flow.

We rely on a combination of patents, trademarks, copyrights, nondisclosure agreements, information technology security systems, physical security and other measures to protect our proprietary intellectual property and the intellectual property of certain customers and suppliers. However, we cannot be certain that our efforts to protect these intellectual property rights will be sufficient. Intellectual property protection is subject to applicable laws in various jurisdictions where interpretations and protections differ or can be unpredictable and costly to enforce. Further, our ability to protect our intellectual property rights may be limited in certain foreign jurisdictions that do not have, or do not enforce, strong intellectual property rights. Any failure to protect or enforce our intellectual property rights could have a material adverse effect on our competitive position, financial condition, results of operations or cash flow.

We are exposed to product liability and warranty claims in the normal course of business in the event that our products actually or allegedly fail to perform as expected, or the use of our products results, or is alleged to result, in bodily injury and/or property damage. For example, we have been sued by firefighters seeking damages claiming that exposure to our sirens has impaired their hearing and that the sirens are, therefore, defective. In addition, we are subject to other claims and litigation from time to time, as further described in the accompanying notes to our consolidated financial statements. We could experience material product liability or warranty costs in the future and incur significant costs to defend ourselves against these claims. While we carry insurance and maintain reserves for product liability claims, our insurance coverage may be inadequate if such claims do arise, and any defense costs and liability not covered by insurance could have a material adverse impact on our financial condition, results of operations or cash flow. A future claim could involve the imposition of punitive damages, the award of which, pursuant to state laws, may not be covered by insurance. In addition, warranty and certain other claims are not typically covered by insurance. Any product liability or warranty issues may adversely impact our reputation as a manufacturer of high-quality, safe products and may have a material adverse effect on our business.

We, like other manufacturers, continue to face heavy governmental regulation of our products, especially in the areas of the environment and employee health and safety. Increased public awareness and concern regarding climate change and other ESG matters at numerous levels of government in various jurisdictions may lead to additional international, national, regional and local legislative and regulatory responses, and compliance with any new rules could be difficult and costly. These regulations could include environmental requirements applicable to manufacturing and vehicle emissions and regulations impacting our supply chain both nationally and internationally. Complying with environmental, safety and safetyother ESG requirements has added and will continue to add to the cost of our products, and could increase the capital required to support our business.business and could affect the products and services that we offer. While we believe that we are in compliance in all material respects with these laws and regulations, we may be adversely impacted by costs, liabilities or claims with respect to our operations under existing laws or those that may be adopted. These requirements are complex, change frequently and have tended to become more stringent over time. Therefore, we could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions as a result of violation of, or liabilities under, environmental laws and safety regulations. Further, climate change regulations at the federal, state or local level or in international jurisdictions could require us to limit emissions, change our manufacturing processes or product offerings, or undertake other activities which may require us to incur additional expense. These requirements may increase the cost of our products, which may diminish demand for those products. In addition,

Additionally, uneven application of environmental, or safety and other ESG regulations could place our products at a cost or features disadvantage, which could reduce our revenues and profitability. A failure, or perceived failure, to respond to investor or customer expectations related to ESG concerns in areas such as climate change and supply chain management could materially adversely affect our business and reputation.

None.

The information concerning the Company’s legal proceedings included in Note 13 – Legal Proceedings to the accompanying consolidated financial statements is incorporated herein by reference.

Not applicable.

The Company’s common stock is listed and traded on the New York Stock Exchange under the symbol “FSS”.

As of January 31, 2021,February 28, 2023, there were 1,4891,492 holders of record of the Company’s common stock.

Information concerning the Company’s equity compensation plans is included under Item 12 of Part III of this Form 10-K.

There were no sales of unregistered securities by the Company during the year ended December 31, 2020.2022.

The following table provides a summary of the Company’s repurchase activity for its common stock during the three months ended December 31, 2020:2022:

The following graph compares the cumulative five-year total return to stockholders of the Company’s common stock relative to the cumulative total returns of the Russell 2000 index, the S&P Midcap 400 index, the S&P Industrials index, and the S&P Industrials600 Capital Goods index. The graph assumes that the value of the investment in the Company’s common stock, and in each index, was $100 on December 31, 20152017 and assumes reinvestment of all dividends through December 31, 2020.2022.

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.

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 and trailersmetal extraction support equipment, 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 1521 manufacturing facilities in five countries and provide products and integrated solutions to municipal, governmental, industrial and commercial customers in all regions of the world.

Despite the challenges created by a volatile supply chain and the coronavirus pandemic, the Company was able to sustain a high level of financial performance and make progress against several long-term objectives in 2020.2022. Included among the Company’s highlights in 20202022 were the following:

The following table summarizes our Consolidated Statements of Operations as of, and for the years ended, December 31, 2020, 20192022, 2021 and 2018,2020, and illustrates the key financial indicators used to assess our consolidated financial results:

A discussion of changes in the Company’s financial condition and results of operations during the year ended December 31, 20192021 compared to the year ended December 31, 20182020 has been omitted from this Annual Report on 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, 2019,2021, filed with the SEC on February 27, 2020.March 1, 2022.

Net sales for the year ended December 31, 2020 decreased2022 increased by $90.5$221.6 million, or 7%18%, compared to the prior year. Withinyear, inclusive of the effects of acquisitions and pricing actions. The Environmental Solutions Group reported a net sales decreased by $77.1 million, or 8%, largely due to decreases in shipmentsincrease of safe-digging trucks, industrial vacuum loaders, sweepers, dump bodies, waterblasting equipment, sewer cleaners, trailers and snow removal equipment of $26.4 million, $22.0 million, $20.7 million, $7.8 million, $7.5 million, $6.7 million, $4.7 million and $3.2 million, respectively. Partially offsetting these reductions was an increase in shipments of road-marking and line removal equipment and refuse equipment of $12.4 million and $8.0 million, respectively. Within the Safety and Security Systems$186.6

Group, net sales decreased by $13.4 million, or 6%19%, primarily due to reductionsa $30.6 million improvement in aftermarket revenues and increases in sales of dump truck bodies, metal extraction support equipment, sewer cleaners, safe-digging trucks, trailers, street sweepers, road-marking and line-removal equipment, hoists and industrial vacuum loaders of $40.9 million, $33.1 million, $32.6 million, $18.3 million, $12.2 million, $11.5 million, $11.3 million, $8.7 million and $6.1 million, respectively. Partially offsetting these improvements was a $9.1 million reduction in shipments of refuse trucks and a $5.7 million unfavorable foreign currency translation impact. Within the Safety and Security Systems Group, net sales increased by $35.0 million, or 17%, primarily due to improvements in sales of public safety equipment, industrial signaling equipment and warning systems and public safety equipment of $7.9$28.1 million, $4.0$9.4 million and $1.7$3.8 million, respectively.respectively, partially offset by a $6.3 million unfavorable foreign currency translation impact.

For the year ended December 31, 2020,2022, cost of sales decreasedincreased by $61.3$165.4 million, or 7%18%, compared to the prior year, largely due to a decreasean increase of $58.0$143.9 million, or 8%18%, within the Environmental Solutions Group, primarily attributablerelated to lowerincreased sales volumes, additional costs from prior-year acquisitions, higher material costs, and a $0.9 million increase in depreciation expense, partially offset by a $5.4 million favorable foreign currency translation impact of $1.4 million, partially offset by the recognition of additional cost of sales from the MRL acquisition.impact. Within the Safety and Security Systems Group, cost of sales decreasedincreased by $3.3$21.5 million, or 2%16%, largely dueprimarily related to lowerhigher sales volumes.volumes and increased material costs, partially offset by a $4.8 million favorable foreign currency translation impact.

For the year ended December 31, 2020,2022, gross profit decreasedincreased by $29.2$56.2 million, or 9%19%, compared to the prior year, primarily due to reductions of $19.1a $42.7 million and $10.1 millionimprovement within the Environmental Solutions Group and a $13.5 million increase within the Safety and Security Systems Group, respectively.Group. Gross marginprofit as a percentage of net sales (“gross profit margin”) for the year ended December 31, 20202022 was 26.0%24.0%, compared to 26.4%23.8% in the prior year, primarily driven by reductionsimprovements within the Environmental Solutions Group and Safety and Security Group and Environmental SolutionsSystems Group of 22030 basis points and 1020 basis points, respectively.

For the year ended December 31, 2020,2022, SEG&A expenses decreasedincreased by $14.4$22.5 million, or 8%15%, compared to the prior year, primarily due to reductions in SEG&A expensesincreases of $16.9 million, $5.4 million and $0.2 million within the Environmental Solutions Group, the Safety and Security Systems Group the Environmental Solutions Group and Corporate, of $7.3 million, $3.9 million and $3.2 million, respectively. As a percentage of net sales, SEG&A expenses decreased from 14.2%12.3% in the prior year, to 14.0%12.0% in the current year.

Operating income for the year ended December 31, 2020 decreased2022 increased by $15.7$30.1 million, or 11%23%, compared to the prior year, primarily driven by reductions of $15.1largely due to the $56.2 million and $3.1 million within the Environmental Solutions Group and Safety and Security Systems Group, respectively,improvement in gross profit, partially offset by the $22.5 million increase in SEG&A expenses, a $2.5$2.0 million decreaseincrease in Corporate expenses.amortization expense and a $1.6 million reduction in acquisition-related benefits. Consolidated operating margin for the year ended December 31, 20202022 was 11.6%11.2%, compared to 12.0%10.8% in the prior year.

Interest expense for the year ended December 31, 2020 decreased2022 increased by $2.2$5.8 million, or 28%129%, compared to the prior year, largely due to loweran increase in average debt levels and higher interest ratesrates.

During the year ended December 31, 2021, the Company recognized a pension settlement charge of $10.3 million in comparisonconnection with the purchase of a group annuity contract from an insurance company, under which approximately $25 million of the projected benefit obligation of the Company’s U.S. defined benefit plan was transferred to the prior year.insurance company. For further discussion, see Note 11 – Pension and Other Post-Employment Plans to the accompanying consolidated financial statements.

For the year ended December 31, 2020,2022, Other (income) expense, net, totaled $1.1$0.5 million of expense,income, largely due to the recognition of a $2.3$0.6 million charge associated withof net periodic pension benefit. For the withdrawal from a multi-employer pension plan, partially offset by $0.5year ended December 31, 2021, Other (income) expense, net, totaled $1.7 million of income, largely due to the recognition of $1.1 million of net periodic pension benefit and $0.4$0.3 million of foreign currency transaction gains. For the year ended December 31, 2019, Other expense, net, totaled $0.6 million

Income from continuing operations for the year ended December 31, 2020 decreased2022 increased by $12.3$19.8 million, or 11%20%, compared to the prior year, largely due to the aforementioned reduction inincreased operating income and the $0.5non-recurrence of the pension settlement charge recognized in the prior year, partially offset by a $13.5 million increase in otherincome tax expense, partially offset by the $2.2$5.8 million increase in interest expense, a $1.2 million reduction in interest expense,other income and the $1.7a $0.1 million decrease in income tax expense.

Adjusted EBITDA for the year ended December 31, 2020 decreased by $9.12022 was $215.0 million, or 5%, compared to $180.5 million in the prior year. Adjusted EBITDA margin for the year ended December 31, 20202022 was 16.1%15.0%, up from 15.7%compared to 14.9% in the prior year.

The following table summarizes the Environmental Solutions Group’s operating results as of, and for the years ended, December 31, 2020, 20192022, 2021 and 2018:2020:

Total orders decreasedincreased by $198.0$146.9 million, or 11%, for the year ended December 31, 2022, inclusive of the effects of acquisitions and pricing actions. U.S. orders increased by $122.3 million, or 11%, primarily due to improvements in orders for safe-digging trucks, street sweepers, sewer cleaners, industrial vacuum loaders and refuse trucks of $53.3 million, $33.2 million, $22.3 million, $12.2 million and $8.6 million, respectively. Additionally, aftermarket demand increased by $32.7 million. Partially offsetting these improvements were reductions in orders for dump truck bodies and metal extraction support equipment of $27.1 million and $5.1 million, respectively. Non-U.S. orders increased by $24.6 million, or 11%, primarily due to improvements in orders for metal extraction support equipment, street sweepers, snow removal equipment, refuse trucks, and aftermarket demand of $31.4 million, $4.0 million, $3.0 million, $2.8 million and $2.1 million, respectively. Partially offsetting these improvements were reductions in orders for safe-digging trucks and industrial vacuum loaders of $10.1 million and $4.8 million, respectively, as well as a $6.2 million unfavorable foreign currency translation impact.

The following table summarizes the Safety and Security Systems Group’s operating results as of, and for the years ended, December 31, 2020, 20192022, 2021 and 2018:2020:

Total orders decreasedincreased by $23.9$6.5 million, or 10%3%, for the year ended December 31, 2020.2022. U.S. orders decreasedincreased by $15.4$18.7 million, or 11%13%, compared to the prior year, primarily due to reductionsdriven by improvements in orders for public safety equipment, warning systems and industrial signaling equipment public safety equipment and warning systems of $7.8$8.4 million, $5.6$8.1 million and $2.0$2.2 million, respectively. Non-U.S. orders decreased by $8.5$12.2 million, or 10%12%, primarilylargely due to reductionsa $13.8 million reduction in orders for public safety equipment, primarily associated with the timing of a large fleet order in the prior year, as well as a $5.8 million unfavorable foreign currency translation impact, partially offset by a $7.5 million improvement in orders for industrial signaling equipment.

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 20192022 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.

The following table summarizes the Company’s contractual obligations and payments due by period as of December 31, 2020:2022:

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company considers the following policies to be the most critical in understanding the judgments that are involved in the preparation of the Company’s consolidated financial statements and the uncertainties that could impact the Company’s financial condition, results of operations or cash flow.

Goodwill represents the excess of the cost of an acquired business over the amounts assigned to its net assets. Goodwill is not amortized but is tested for impairment at a reporting unit level on an annual basis or more frequently if indicators of impairment exist. The Company performed its annual goodwill impairment test as of October 31, 2020.2022.

An intangible asset determined to have an indefinite useful life is not amortized. Indefinite-lived intangible assets are tested for impairment on an annual basis at year-end, or more frequently if an event occurs or circumstances change that indicate the fair value of an indefinite-lived intangible asset could be below its carrying amount. The Company’s indefinite-lived intangible assets include trade names associated primarily with the MRL, TBEI and JJE acquisitions that were completed in 2019, 2017 and 2016, respectively.acquisitions.

The Company is subject to market risk associated with changes in interest rates and foreign exchange rates. To mitigate this risk, the Company may utilize derivative financial instruments, including interest rate swaps and foreign currency forward contracts. The Company does not hold or issue derivative financial instruments for trading or speculative purposes and is not party to leveraged derivatives contracts.

The Company has certain debt instruments which subject it to market risk associated with movements in interest rates. The fair value of the Company’s total debt obligations held at December 31, 20202022 was $210.0$363.0 million. From time to time, the Company may enter into interest rate swaps as a means of fixing the floating interest rate component on its variable-rate debt. At December 31, 2020,2022, the Company had one interest rate swap outstanding. That swap had a notional amount of $75.0 million, and fixed the floating interest rate component on $75.0 million of the Company’s variable-rate debt. See Note 9 – Debt to the accompanying consolidated financial statements for a description of the Company’s debt agreements and interest rate swaps that were in place during 2020.2022. A hypothetical 1% increase or decrease in variable interest rates on the Company’s total debt obligations as of December 31, 20202022 would increase or decrease annual interest expense by approximately $1.3$2.9 million.

Although the majority of the Company’s sales, expenses and cash flow are transacted in U.S. dollars, the Company has exposure to changes in foreign exchange rates, primarily the Canadian Dollar, Euro and British pound. The impact of currency movements on the Company’s financial results is largely mitigated by natural hedges in its operations. The Canadian operations of JJE primarily conduct business in Canadian dollars. Almost all other sales of product from the U.S. to other parts of the world are denominated in U.S. dollars. Sales from and within other currency zones are predominantly transacted in the currency of the country sourcing the product or service. Approximately 77%80% of the Company’s net sales are conducted within the U.S. and are transacted in U.S. dollars. The Company estimates that a 10% appreciation of the U.S. dollar against other currencies would reduce full-year net sales by approximately 2%1% and operating income by approximately 1%.

We have audited the accompanying consolidated balance sheets of Federal Signal Corporation and subsidiaries (the “Company”) as of December 31, 20202022 and 2019,2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2020,2022, and the related notes and the financial statement schedule listed in the Index at Part IV, Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020,2022, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Critical Audit Matter

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.