FSS 10-K & 10-Q changes, risk factors and insider trading

In 2024,2025, we generated approximately 79% 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; therefore, 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. InThe JanuaryU.S. 2025,presidential Presidentadministration Trump established an advisory commission, the “Department of Government Efficiency,” to reform federal government processes and reduce expenditures, andhas enacted certain spending freezes,freezes whichand mayother adverselychanges affectto ourfederal municipalgovernment customers.processes, Thereand there is continuing uncertainty regarding federal agency structure and future budget decisions and priorities of the U.S. presidential administration.priorities. 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. 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, tax laws, and regulations, and how any such changes may impact the Company’s financial results and operations, is currently uncertain. For example, the Organization for Economic Co-operation and Development (“OECD”) issued Pillar Two model rules introducing a new global minimum corporate tax of 15%, which became effective in certain countries in 2024. WhileBecause the U.S. has not yet adopted Pillar Two, on January 5, 2026, the OECD issued a non-retroactive “Side-by-Side” safe harbor package for U.S. companies with multinational operations to better align the regime with the U.S. tax system. While Pillar Two rules, various non-U.S. governments have enacted or may in the future enact legislation. Pillar Two does applyapplies to our worldwide operations; however,operations, we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum and therefore have not experienced material increases in our global tax costs. We continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.

Government administrations and agencies, political figures, the investment community, employees, and other stakeholders have previously had an increased focus on sustainability issues and initiatives, including negative reactions to implementation of such initiatives. Changes in laws and regulations in response to such matters could require material efforts and costs by us, and our suppliers, to comply with such changes. The costs of compliance with the various laws, regulations, and policies applicable to us could be significant and penalties for non-compliance could significantly impact our business.

Our business is subject to fluctuations in demand and changes in international economic, legal, and political conditions that are beyond our control. In 2024,2025, approximately 21% of our net sales were to customers outside the U.S., and we expect a significant portion of our net sales 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 the 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, escalation of 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 accounts receivable collection risk, and local labor market conditions. Further, Presidentthe TrumpU.S. presidential administration has indicatedimplemented, thatand hismay administration is likelycontinue to imposeimplement, significant tariffs on imported goods. In February 2026, the U.S. Supreme Court struck down certain of these tariffs, but it is possible the administration may seek to reinstate all or some of such tariffs under alternative legal theories or support. The resulting uncertainty regarding the struck-down tariffs and potential re-implementation may result in additional political and economic instability. The continued imposition of such tariffs may strain international trade relations or impact costs of raw materials.

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 previously implemented policies that have resulted and may continue to result in significantly increased interest rates and borrowing costs. Although the Federal Reserve Board of Governors (“FRB”) cut certain benchmark interest rates twice in the2024 secondand half of 2024,2025, it is uncertain if the FRB will raise or lower interest rates in the future in response to, among other things, continuing inflationary pressures, and, if so, to what level and for how long. 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.

We purchase raw materials, component parts, and finished goods from suppliers to be used in the manufacturing and sale of our products. In addition, we may incorporate vehicle chassis provided directly by our customers in our production process. Although the vast majority of our raw materials and component parts are sourced domestically, certain of our suppliers are based overseas, and certain of our domestic suppliers may source subcomponents from overseas. Global markets for various products and goods have suffered, and could continue to suffer, material disruptions to certain supply chains, in part due to geopolitical conflicts, including the war between Russia and Ukraine andUkraine, the ongoing conflicts in the Middle East.East, continued political unrest in various countries such as Venezuela and ongoing disputes in respect of Greenland. Additionally, the war in Ukraine has led to economic sanctions imposed against Russia by the U.S. and certain European nations, including a prohibition on doing business with certain Russian companies which may lead to retaliatory trade restrictions from Russia. Such sanctions may impact companies in many sectors and lead to disruption and volatility in the U.S. and global markets. For example, theThe U.S. has imposed, or indicated it intends to impose additionalimpose, tariffs on imports from Canada,various Mexico,countries as part of ongoing trade and China.political disputes and conflicts. The imposition of these tariffs and any response from other countries is still evolving, and there is a possibility that such sanctions, tariffs, or trade restrictions may be expanded, or new sanctions, tariffs, or trade restrictions may be imposed by the U.S., Russia, Canada, Mexico, China,U.S. or other countries, which could further disrupt supply chains and increase volatility of pricing. Changes in our relationships with suppliers, shortages in availability of materials, production delays, regulatory restrictions, public health crises, labor stoppages, or other supply chain disruptions, whether due to our suppliers or customers, could have a material adverse effect on our ability to timely manufacture and deliver products to our customers. In addition, our profit margins could decrease if prices of purchased raw materials, component parts, and/or finished goods increase and we are unable to pass on those increases to our customers.

Although supply chain conditions have improved in 2023 and 2024 as compared to priorrecent years, certain of our businesses continuemay toperiodically experience supply challenges and extended lead times for some components and raw materials, including certain classes of chassis that are important to our manufacturing processes, especially in light of geopolitical conflicts discussed elsewhere. When facing supply-related challenges, we may increase our inventory levels and purchase commitments to shorten lead times and to help maintain adequate inventory levels to meet customer expectations. While we actively monitor and take steps in an effort to mitigate supply chain risk, there can be no assurance that our ongoing mitigation plans will prevent disruptions that may arise from shortages of materials that we use in the production of our products.

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 within a specific market, could have an adverse impact on our business within the affected market. For example, any significant consolidation within our dealer network could increase competition for access to distributors or increase the influence of dealers over our pricing strategy. In addition, our dealers require adequate liquidity to finance their operations, including purchases of our products. Dealers are subject to numerous risks and uncertainties that could unfavorably affect their liquidity positions, including, among other things, continued access to adequate financing sources on a timely basis on reasonable terms. These sources of financing are vital to our ability to sell products through our dealer network. Significant or sustained increases in interest rates, including those experienced in 2023, and any future deterioration in the liquidity or credit worthiness of our dealers could have a significant adverse effect on our business. From time to time, we may provide financing assistance to dealers or consider taking ownership positions. The loss or termination of a significant dealer, or a 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.

•entering markets or lines of business in which we have either limited or no direct experience and thereby becoming more exposed to the risks attendant to the acquired business; and

We may assume liabilities in connection with the acquisition of businesses.businesses, including environmental liabilities which could result in remediation costs and regulatory actions. 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 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.personnel, including those personnel hired in connection with our acquisitions. 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.

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.damage, For example,and we havemay beenbe sued by firefighters seeking damages claiming that exposureexposed to additional claims in connection with our sirensacquisitions. has impaired their hearing and that the sirens are, therefore, defective. In addition, weWe 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 significant governmental regulation of our products, especially in the areas of the environment and employee health and safety. Several significant administrative law cases decided by the U.S. Supreme Court in 2024 may result in additional legal challenges to regulations and guidance issued by federal regulatory agencies. Successful challenges of certain regulations, any increased regulatory uncertainty, or delay or other impacts to the federal agency rulemaking process could adversely impact our business and operations. Increased public awarenessawareness, concern, and concernresponsive backlash regarding climate change and other related 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 other regulations has added and will continue to add to the cost of our products, could increase the capital required to support our 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. For example, on March 6, 2024, the SEC adopted final rules that would require new climate-related disclosure in SEC filings, including certain climate-related metrics, greenhouse gas emissions, and information about climate-related targets and goals. The SEC stayed the final rules pending outcome of legal challenges in the Eighth Circuit Court of Appeals. If implemented, theseThese requirements may increase the cost of our products, which may diminish demand for those products. Additionally, uneven application of environmental, safety, and other regulations could place our products at a cost or features disadvantage, which could reduce our revenues and profitability.

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, refuse collection vehicles, 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. Product offerings also include certain products manufactured by other companies, such as third-party refuse and recycling collection vehicles. 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 2326 manufacturing facilities in five countries and provide products and integrated solutions to municipal, governmental, industrial, and commercial customers in all regions of the world.

Conditions in our end markets remained strong throughout 2024,2025, 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. AsDuring the year progressed,year, we saw improvement in supply chain conditions, which facilitated increased production levels at several of our facilities, andhelping despite some supply chain-related operational inefficiencies early in the year, we were ableus to deliver record financial results for our stockholders, with 8%17% net sales growth, double-digit earnings improvement, expansion of margins, and significant improvement inimproved cash flow generation.

•Orders for the year were $1.85$2.22 billion, the second highest annual orders reported in the Company’s history, contributing to a backlog of $997$1.04 millionbillion at December 31, 2024.2025.

•With our strong balance sheet, positive operating cash flow, and increased capacity under our new 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 20242025:

◦We continued to execute on our disciplined M&A strategy with the acquisitionacquisitions of Standard.Hog, WeNew Way, and Kinloch. As of December 31, 2025, we have now completed 1215 acquisitions since 2016.

Net sales for the year ended December 31, 20242025 increased by $138.8$319.0 million, or 8%,17%, compared to the prior year, primarily due to higher sales volumes, inclusive of the effects of acquisitions, and pricing actions, partially offset by a $11.6 million reduction in chassis sales.actions. The Environmental Solutions Group reported a net sales increase of $119.2$280.4 million, or 8%,18%, primarily due to a $18.9$61.2 million improvement in aftermarket revenues and increases in sales of dump truck bodies of $36.5 million, sewer cleaners of $23.1 million, road-marking and line-removal equipment of $14.1$52.4 million, sewer cleaners of $36.3 million, refuse trucks of $33.6 million, safe-digging trucks of $25.2 million, dump truck bodies of $24.6 million, street sweepers of $13.1$23.0 million, industrial vacuum loaders of $10.5$12.4 million, refuse trucks of $7.2 million, multi-purpose maintenance vehicles of $6.8 million,and metal extraction support equipment of $4.3 million, and hoists of $2.7$10.1 million. Partially offsetting these improvements werewas reductionsan $8.8 million reduction in sales of trailers of $13.4 million and safe-digging trucks of $9.1 million, as well as a $3.3$4.0 million unfavorable foreign currency translation impact. Within the Safety and Security Systems Group, net sales increased by $19.6$38.6 million, or 7%,13%, primarily due to improvements in sales of public safety equipment of $19.5$27.7 million andmillion, warning systems of $2.6$7.4 million, partially offset byand a $2.6$2.8 million reductionfavorable inforeign salescurrency oftranslation industrial signaling equipment.impact.

For the year ended December 31, 2024,2025, cost of sales increased by $56.0$220.8 million, or 4%,17%, compared to the prior year, largely due to an increase of $53.4$201.1 million, or 5%,17%, within the Environmental Solutions Group, primarily related to increased sales volumes, inclusive of the effects of acquisitions, higher material costs, and a $4.6$10.2 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.expense. Within the Safety and Security Systems Group, cost of sales increased by $2.6$19.7 million, or 1%,11%, primarily related to higherincreased sales volumes, partiallyhigher offsetmaterial by favorable product mixcosts, and lowera material$2.2 costs.million unfavorable foreign currency translation impact.

For the year ended December 31, 2024,2025, SEG&A expenses increased by $23.9$21.9 million, or 11%,9%, compared to the prior year, primarily due to increasesa of $13.9$13.5 million inincrease within the Environmental Solutions Group, $7.4a $6.6 million increase in Corporate SEG&A expenses, and a $1.8 million increase within the Safety and Security Systems Group, and $2.6 million in Corporate.Group. As a percentage of net sales, SEG&A expenses were 12.6%11.7% in the current year, compared to 12.2%12.6% in the prior year.

Operating income for the year ended December 31, 20242025 increased by $56.9$59.5 million, or 25%,21%, compared to the prior year, largely due to the $82.8$98.2 million improvement in gross profit and a $0.2 million reduction in amortization expense,profit, partially offset by the $23.9$21.9 million increase in SEG&A expenses andexpenses, a $2.2$13.4 million increase in acquisition and integration-related costs.costs, net, and a $3.4 million increase in amortization expense. Consolidated operating margin for the year ended December 31, 20242025 was 15.1%,15.6%, compared to 13.0%15.1% in the prior year.

Interest expense, net for the year ended December 31, 20242025 decreasedincreased by $7.2$1.6 million, or 37%,13%, compared to the prior year, largely due to reductions inhigher average debt levels.levels associated with the funding of acquisitions in 2025.

During the year ended December 31, 2024, the Company announced a limited-time voluntary lump-sum pension offering to eligible participants of its U.S. defined benefit plan. In 2024, the Company paid a total of $6.8 million in lump-sum benefit payments, using assets of the plan. As total settlement payments during the year ended December 31, 2024 exceeded the sum of the service and interest cost, the Company was required to remeasure the liabilities of the benefit plans and recognized a pension settlement charge of $3.8 million. For further discussion, see Note 11 – Pension and Other Post-RetirementPost-Employment Plans in Item 8, Financial Statements and Supplementary Data.

For the year ended December 31, 2024,2025, Other expense, net, decreasedincreased by $0.6$1.1 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.

The Company recognized income tax expense of $77.9 million for the year ended December 31, 2025, compared to $47.6 million for the year ended December 31, 2024, compared to $45.6 million for the year ended December 31, 2023.2024. The increase in income tax expense in 20242025 was primarily due to higher earnings,pre-tax partiallyincome offsetlevels byand the aforementionednon-recurrence of a $15.9 million discrete tax benefits,benefit, which aggregatedwas recognized in the prior-year period in connection with the amendment of certain U.S. federal and state tax returns to $15.9claim million,a andworthless thestock recognition of $5.1 million in excess tax benefits associated with stock-based compensation activity.deduction. Including these items, the Company’s effective tax rate for the year ended December 31, 20242025 was 18.0%,24.0%, compared to 22.5%18.0% 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.2024. For further discussion, see Note 10 – Income Taxes in Item 8, Financial Statements and Supplementary Data.

Net income for the year ended December 31, 20242025 increased by $58.9$30.3 million, or 37%,14%, compared to the prior year, largely due to the increased operating income and the reductionsnon-recurrence of pension settlement charges recognized in the prior year, partially offset by a $30.3 million increase in income tax expense and the increases 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.net.

(ab)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 $0.9 million and $0.2 million for the yearyears ended December 31, 2024.2025 and 2024, respectively.

Net sales increased by $119.2 million, or 8%, for the year ended December 31, 2024,2025 by $280.4 million, or 18%, compared to the prior year, primarily due to higher sales volumes, inclusive of the effects of acquisitionsacquisitions, and pricing actions, partially offset by lower chassis sales of $11.6 million.actions. U.S. net sales increased by $102.7$219.7 million, or 9%,17%, largelyprimarily due to a $12.9$55.5 million increase in aftermarket revenues and increases in sales of road-marking and line-removal equipment of $46.3 million, dump truck bodies of $31.9$32.4 million, sewer cleaners of $21.3$31.2 million, safe-digging trucks of $21.0 million, street sweepers of $12.0$17.7 million, industrial vacuum loaders of $10.5$12.4 million, road-marking and line-removal equipment of $10.1 million, refuse trucks of $8.0 million, metal extraction support equipment of $3.1 million, and hoists of $2.8$7.9 million. Partially offsetting these improvements were reductions in shipments of trailers of $13.4$8.8 million and safe-diggingmulti-purpose trucksmaintenance vehicles of $7.7$3.4 million. Non-U.S. net sales increased by $16.5$60.7 million, or 6%,21%, largelyprimarily due to a $6.0 million improvement in aftermarket revenues and increases in sales of multi-purposethird-party maintenancerefuse vehiclestrucks of $4.9$25.7 million, dump truck bodies of $4.6 million, road-marking and line removal equipment of $4.0 million, sewer cleaners of $1.8 million, and metal extraction support equipment of $1.2$11.3 million, road-marking and line-removal equipment of $6.1 million, aftermarket offerings of $5.7 million, street sweepers of $5.3 million, sewer cleaners of $5.1 million, safe-digging trucks of $4.2 million, and waterblasting equipment of $3.9 million. Partially offsetting these improvements werewas reductionsa $7.8 million reduction in dump truck body shipments of waterblasting equipment of $2.0 million and safe-digging trucks of $1.4 million, as well as a $3.3$4.0 million unfavorable foreign currency translation impact.

Cost of sales increased by $53.4$201.1 million, or 5%,17%, for the year ended December 31, 2024,2025, primarily related to increased sales volumes, inclusive of the effects of acquisitions, higher material costs, and a $4.6$10.2 million increase in depreciation expense,expense. partially offset by a $3.6 million favorable foreign currency translation impact and reduced chassis costs of $10.7 million. Including these factors, grossGross profit margin for the year ended December 31, 20242025 was 26.0%,26.4%, compared to 23.6%26.0% in the prior year, with the improvement primarily attributable to improved operating leverage from higher sales volumes,volumes and benefits from pricing actions, partially offset by higher material costs and ahigher reductiondepreciation in lower margin chassis sales.expense.

SEG&A expenses increased by $13.9$13.5 million, or 12%,11%, for the year ended December 31, 2024,2025, primarily due to additional costs from acquired businesses, as well as increases in sales commissions and incentive-basedhigher compensationemployee-related expense.expenses. As a percentage of net sales, SEG&A expenses were 8.2%7.7% in the current year, compared to 7.9%8.2% in the prior year.

Operating income increased by $52.0$63.4 million, or 25%,24%, for the year ended December 31, 2024,2025, largely due to a $65.8$79.3 million increase in gross profit and a $0.2$1.0 million reduction in amortizationacquisition-related expense,costs, partially offset by the $13.9$13.5 million increase in SEG&A expenses and a $0.1$3.4 million increase in acquisition-relatedamortization costs.expense.

NetTotal salesorders increased by $19.6$57.5 million, or 7%,19%, for the year ended December 31, 2024, inclusive of the effects of higher sales volumes and pricing actions.2025. U.S. salesorders increased by $28.9$41.2 million, or 16%,20%, compared to the prior year, driven by improvements in salesorders offor public safety equipment of $24.4$33.0 million, warning systems of $7.0 million, and industrial signaling equipment of $2.4$1.2 million. Non-U.S. orders increased by $16.3 million, or 16%, primarily due to improvements in orders for public safety equipment of $21.5 million and warninga $2.6 million favorable foreign currency translation impact. Partially offsetting these improvements were reductions in orders for warnings systems of $2.1$6.8 million.million Non-U.S. sales decreased by $9.3 million, or 8%, largely due to reductions inand industrial signaling equipment of $5.0$1.0 million and public safety equipment of $4.9 million, partially offset by a $0.5 million improvement in sales of warning systems.million.

Cost of sales increased by $2.6$19.7 million, or 1%,11%, for the year ended December 31, 2024,2025, primarily related to higherincreased sales volumes, partiallyhigher offsetmaterial by favorable product mixcosts, and lowera material$2.2 costs.million unfavorable foreign currency translation impact. Gross profit margin for the year ended December 31, 20242025 was 42.0%,42.8%, compared to 38.9%42.0% in the prior year, with the increase primarily attributable to improved operating leverage from higher sales volumes, favorable sales mix, lower material costs,volumes and benefits from pricing actions.actions, partially offset by higher material costs.

SEG&A expenses increased by $7.4$1.8 million for the year ended December 31, 2024,2025, primarily due to higher salesemployee-related commissions and incentive-based compensation expense.costs. As a percentage of net sales, SEG&A expenses were 20.9%19.0% in the current year, compared with 19.7%20.9% in the prior year.

For the year ended December 31, 2024,2025, corporate operating expenses increased by $4.7$21.0 million compared to the prior year, primarily due to a $2.1$14.4 million increase in acquisition-related expenses, includingwhich theincluded impactan aggregate expense of the non-recurrence of a $2.1$6.8 million benefitto recognized in 2023 associated with a reduction inincrease the estimated fair value of contingent consideration,consideration for the acquisitions of Hog and Standard, as well as higheracquisition-related expenses incurred in connection with the acquisitions of New Way and Hog. In addition, corporate operating expenses for the year ended December 31, 2025 include year-over-year increases in post-retirement expense, information technology costs, stock compensation,compensation expense, and incentive-based compensation, andas informationwell technology costs inas the current year. Partially offsetting these increases were lower post-retirement expenses and the recognitionnon-recurrence of a $1.8 million gain associated with an insurance recovery in 2024.the prior year.

The Company’s cash and cash equivalents totaled $63.7 million as of December 31, 2025 and $91.1 million as of December 31, 2024 and $61.0 million as of December 31, 2023.2024. As of December 31, 2024,2025, $22.6$20.1 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.

Net cash provided by operating activities totaled $254.7 million in 2025 and $231.3 million in 2024 and $194.4 million in 2023.2024. The increase in cash generated by operating activities in 20242025 compared to the prior year was primarily due to working capital improvements and higher net income,income partially offset by increasedthe rentalnon-recurrence fleetof investmentsa toU.S. supportfederal demandworthless forstock rentalsdeduction andrefund usedof equipmentapproximately and$14.0 highermillion incomereceived taxin payments,the incentive-basedprior compensation payments, and pension contributions.year.

Net cash used for investing activities totaled $527.9 million in 2025 and $78.9 million in 2024 and $83.7 million in 2023.2024. In both years, cash was used to fund the purchase of properties and equipment, with capital expenditures of $27.6 million in 2025 and $40.6 million in 20242024. During 2025, the Company completed the acquisitions of Hog for initial consideration of $82.5 million, New Way for an initial payment of $403.6 million, net of cash acquired, and $30.3certain millionassets inand 2023.operations of Kinloch for $14.9 million. During 2024, the Company completed the acquisition of Standard for initial consideration of $39.7 million. During 2023, the Company made payments of $41.9 million to acquire Trackless Vehicles Limited, Trackless Vehicles Asset Corp, and the wholly-owned subsidiary Work Equipment Ltd. (collectively, “Trackless”) and $13.0 million to acquire Blasters, Inc. and Blasters Technologies, LLC (collectively, “Blasters”) .

On October 21,29, 2022,2025, the Company entered into the 20222025 Credit Agreement, by and among the Company and certain of its foreign subsidiaries (collectively, the “Borrowers”),Company, Wells Fargo Bank, National Association, as administrative agent, swingline lender, and an issuing lender, BofA Securities, Inc., PNC Capital Markets LLC, Truist Bank, and U.S. Bank National Association and Truist Bank as syndication agents, and the other lenders and parties signatory thereto.

The 20222025 Credit Agreement is a senior secured credit facility whichthat provides the BorrowersCompany access to an aggregate original principal amount of up to $800$1.5 million,billion, consisting of (i) a revolving credit facility in an amount up to $675$1.1 millionbillion (the “Revolver”) and (ii) a delayed draw term loan facility in an original amount of up to $125$400 million.million (the “Term Loan”), which was drawn down on November 25, 2025 in connection with the acquisition of New Way. The Revolver provides for borrowings in the form of loans or letters of credit up to the aggregate availability under the facility, with a sub-limit of $100 million for letters of credit. Borrowings can be made in denominations of U.S. dollars, Canadian dollars, euros, or British pounds (with borrowings in non-U.S. currencies subject to a sublimit of $300$550 million). In addition, the Company may expand its borrowing capacity under the 20222025 Credit Agreement by an aggregate amount of up to the sum of (x) the greater of (i) $400$500 million and (ii) 100% of Consolidated EBITDA for the applicable four-quarter period preceding such expansionexpansion, notice,and (y) the amount of additional indebtedness (if any) that could be incurred without causing the Consolidated Total Net Leverage Ratio for the applicable four-quarter period preceding such expansion, on a pro forma basis, to exceed 2.75 to 1.00, subject to the approval of the applicable lenders providing such additional borrowingsborrowings. Such expansion may be in the form of increases to theirthe revolving facility commitment,commitments, or funding of incremental term loans. Borrowings under the 20222025 Credit Agreement may be used for working capital and general corporate purposes, including acquisitions. The 20222025 Credit Agreement matures on October 21,29, 2027.2030.

The obligations of the Company under the 2025 Credit Agreement are guaranteed by the Company’s material domestic subsidiaries provide guarantees for all obligations of the Borrowers under the 2022 Credit Agreement, which isand secured by a first priority security interest in (i) substantially all existing orand hereafter acquired domestic property and assets of the Company and material domestic subsidiaries, (ii) the stock or other equity interests in each of the material domestic subsidiaries, and (iii) 65% of outstanding voting capital stock of certain first-tier foreign subsidiaries, subject to certain exclusions.

Borrowings under the 20222025 Credit Agreement bear interest, at the Company’s option, at a base rate or an Adjusted Eurocurrency Rate (as defined in the 20222025 Credit Agreement) in the case of borrowings in euros or an adjusted RFR (as defined in the 20222025 Credit Agreement) in the case of borrowings in U.S. dollars, Canadian dollars, andor British pound sterling,pounds, plus, in each case, an applicable margin. The applicable margin ranges from zero to 0.75% for base rate borrowings and 1.00% to 1.75% for Adjusted Eurocurrency Rate and RFR borrowings. The Company must also pay a commitment fee to the lenders ranging between 0.10% to 0.25% per annum on the unused portion of the RevolverRevolver, along with other standard fees. Applicable margin, issuance fees, and other customary expenses are payable on outstanding letters of credit.

The Company is subject to certain net leverage ratio and interest coverage ratio financial covenants under the 20222025 Credit Agreement that are to be measured at each fiscal quarter-end.quarter-end for the most recently ended four-quarter period. The Company was in compliance with all such covenants as of December 31, 2024.2025. The 20222025 Credit Agreement also includes certain “covenant holiday” periods, which allow for the temporary increase of the minimummaximum net leverage ratio following the completion of a permitted acquisition, or a series of acquisitions, when the aggregate consideration over a period of twelve months exceeds $75 million. In addition, the 20222025 Credit Agreement includes customary negative covenants, subject to certain exceptions, restricting or limiting the Company’s and its subsidiaries’ ability to, among other things: (i) make non-ordinary course dispositions of assets; (ii) make certain fundamental business changes, such as mergers, consolidations,consolidations or any similar combination; (iii) make restricted payments, including dividends and stock repurchases; (iv) incur indebtedness; (v) make certain loans and investments; (vi) create liens; (vii) transact with affiliates; (viii) enter into certain sale/leaseback transactions; (ix) make negative pledges; and (x) modify subordinated debt documents.

UnderThe the 20222025 Credit Agreement,Agreement permits restricted payments, including dividends and stock repurchases, shallunder becertain permittedcircumstances, including, but not limited to if: (i) the Company’s leverage ratio is less than or equal to 3.25x; (ii) the Company is in compliance with all other financial covenants; and (iii) there are no existing defaults under the 20222025 Credit Agreement. If its leverage ratio is more than 3.25x, the Company is still permitted to fund (1) up to $35$50 million of dividend payments and stock repurchasesrepurchases, in total, annually; and (2) additional incremental other cash payments up to the greater of $65$100 million or 5% of consolidated total assets (as defined in the 2025 Credit Agreement) for the term of the 20222025 Credit Agreement.

The 20222025 Credit Agreement contains customary events of default. If an event of default occurs and is continuing, the BorrowersCompany may be required immediately to repay all amounts outstanding under the 20222025 Credit Agreement and the commitments from the lenders may be terminated.

The 20222025 Credit Agreement amended and restated the SecondThird Amended and Restated Credit Agreement (as amended, the “20192022 Credit Agreement”), which provided the Company with an aggregate original principal amount of up to $800 million, consisting of (i) a $500 million revolving credit facility.facility in an amount up to $675 million and (ii) a term loan facility in an original amount of up to $125 million.

As of December 31, 2024,2025, there was $90.6$164.0 million of cash drawn on the Revolver, $120.3$400.0 million outstanding under the termTerm loan facility,Loan, and $10.1$10.7 million of undrawn letters of credit under the 20222025 Credit Agreement, with $574.3$925.3 million of net availability for borrowings.

Aggregate maturities of long-term borrowings and finance lease obligations are $19.4 million in 2025, $10.5$0.5 million in 2026, and $193.8$10.4 million in 2027, and $0.1$20.3 million in 2028.2028, $20.3 million in 2029, $514.2 million in 2030, and $0.9 million thereafter. The weighted average interest rate on long-term borrowings was 5.3%4.8% at December 31, 2024.2025.

The Company paid interest of $14.3 million in 2025 and $15.3 million in 2024, $22.8 million in 2023, and $9.4 million in 2022.2024.

The Company paid cash dividends to stockholders of $34.1 million in 2025 and $29.3 million in 2024, $23.8 million in 2023, and $21.8 million in 2022. Additionally, on February 21, 2025, the Board declared a quarterly cash dividend of $0.14 per common share payable on March 27, 2025 to stockholders of record at the close of business on March 14, 2025.2024. The declaration of future dividends is subject to the discretion of the Board and depends on various factors that our Board deems relevant to its analysis and decision making, including our net income, financial condition, and cash requirements.

(d) The Company expects to contribute up to $3.6$4.6 million to the U.S. defined benefit pension plan in 2025.2026. ContributionsThe Company does not currently expect to make any contributions to the non-U.S. defined benefit pension plan in 2025 are expected to be insignificant.2026. Future contributions to the plans will be based on such factors as (i) annual service cost, (ii) the financial return on plan assets, (iii) interest rate movements that affect discount rates applied to plan liabilities, and (iv) the value of benefit payments made. Due to the high degree of uncertainty regarding the potential future cash outflows associated with these plans, the Company is unable to provide a reasonably reliable estimate of the amounts and periods in which any additional liabilities might be paid beyond 2025.2026.

In 2024,2025, the Company performedapplied a combination of qualitative andthe quantitative impairment testsapproach to assess the goodwill of its reporting units for potential impairment.impairment, Forand one reporting unit, a quantitative impairment test was performed, usingused a combination of the income and market approaches to determine the fair value of its reporting unit.units. The valuationvaluations waswere prepared by a third-party valuation specialist. One measure of the sensitivity of assumptions used in the impairment analysis is the amount by which theeach reporting unit “passed” (fair value exceeds the carrying value). The fair valuevalues of the reporting unitunits exceeded itstheir carrying valuevalues by more than 30%.60%. Therefore, no impairment was recognized. For its other reporting units, the Company applied the qualitative approach and concluded that it was not “more likely than not” that the fair value of the reporting units was less than their carrying values. Accordingly, further quantitative testing was not required to be performed.

Net sales for the three months ended MarchJune 31,30, 2026 increased by $161.8$105.6 million, or 35%,19%, compared to the prior-year quarter, primarily due to higher sales volumes, inclusive of the effects of acquisitions, and pricing actions. Our Environmental Solutions Group reported a net sales increase of $145.3$97.2 million, or 38%,20%, due to increases in sales of other specialty equipment of $106.6$47.7 million, aftermarket offerings of $17.2$28.4 million, vacuum trucks of $10.3$10.7 million, and dump truck bodies and trailers of $8.2$10.5 million, as well as a $3.0 million favorable foreign currency translation impact.million. Within our Safety and Security Systems Group, net sales increased by $16.5$8.4 million, or 22%,10%, primarily due to improvements in sales of public safety equipment of $13.1$7.5 million and industrial signaling equipment of $1.4$0.9 million, as well as a $1.9 million favorable foreign currency translation impact.million.

Operating income for the three months ended MarchJune 31,30, 2026 increased by $34.0$20.5 million, or 52%,21%, compared to the prior-year quarter, primarily driven by a $48.6$34.2 million improvement in gross profit, partially offset by aan $11.8$11.4 million increase in Selling, Engineering, General and Administrative (“SEG&A”) expenses, a $2.2$2.1 million increase in amortization expense, and a $0.6$0.2 million increase in acquisition and integration-related expenses, net. Consolidated operating margin for the three months ended MarchJune 31,30, 2026 was 15.9%,17.6%, compared to 14.2%17.3% in the prior-year quarter.

Income before income taxes for the three months ended MarchJune 31,30, 2026 increased by $30.2$18.0 million, or 49%,19%, compared to the prior-year quarter. The increase resulted from the higher operating income and a $0.1 million reduction in other expense,income, partially offset by a $3.9$2.5 million increase in interest expense, net.

NetIncome before income taxes for the threesix months ended MarchJune 31,30, 2026 increased by $24.1$48.2 millionmillion, or 31%, compared to the prior-year quarter,period. largelyThe dueincrease toresulted from the aforementionedhigher increaseoperating income and a $0.1 million reduction in incomeother before taxes,expense, partially offset by a $6.1$6.4 million increase in incomeinterest taxexpense, expense.net.

Total orders for the three months ended MarchJune 31,30, 2026 were $623$637 million, an increase of $55$97 million, or 10%,18%, compared to the prior-year quarter. Our Environmental Solutions Group reported total orders of $534$548 million in the three months ended MarchJune 31,30, 2026, an increase of $54$107 million, or 11%,24%, in comparison to the prior-year quarter. Orders in the three months ended MarchJune 31,30, 2026 within our Safety and Security Systems Group were $89 million, ana increasereduction of $1$10 million, or 1%,10%, compared to the prior-year quarter.

Our consolidated backlog at MarchJune 31,30, 2026 was $1.04$1.00 billion, compared to $1.10$1.08 billion at MarchJune 31,30, 2025.

Net sales for the three months ended MarchJune 31,30, 2026 increased by $161.8$105.6 million, or 35%,19%, compared to the prior-year quarter, primarily due to higher sales volumes, inclusive of the effects of acquisitions,acquisitions and pricing actions. The Environmental Solutions Group reported a net sales increase of $145.3$97.2 million, or 38%,20%, due to increases in sales of other specialty equipment of $106.6$47.7 million, aftermarket offerings of $17.2$28.4 million, vacuum trucks of $10.3$10.7 million, and dump truck bodies and trailers of $8.2$10.5 million, as well as a $3.0 million favorable foreign currency translation impact.million. Within the Safety and Security Systems Group, net sales increased by $16.5$8.4 million, or 22%,10%, primarily due to improvements in sales of public safety equipment of $13.1$7.5 million and industrial signaling equipment of $1.4$0.9 million, as well as a $1.9 million favorable foreign currency translation impact.million.

Cost of sales increased by $113.2$71.4 million, or 34%,18%, for the three months ended MarchJune 31,30, 2026 compared to the prior-year quarter, largely due to an increase of $105.4$65.3 million, or 37%,19%, within the Environmental Solutions Group, primarily related to higher sales volumes and the addition of cost of sales from recent acquisitions.acquisitions and higher material costs. Within the Safety and Security Systems Group, cost of sales increased by $7.8$6.1 million, or 17%,13%, primarily related to higher sales volumes.volumes and increased material costs.

Gross profit increased by $48.6$34.2 million, or 37%,20%, for the three months ended MarchJune 31,30, 2026 compared to the prior-year quarter, primarily due to a $39.9$31.9 million improvement within the Environmental Solutions Group and a $8.7$2.3 million improvement within the Safety and Security Systems Group. Gross profit as a percentage of revenues (“gross profit margin”) for the three months ended MarchJune 31,30, 2026 was 28.7%,30.4%, compared to 28.2%30.0% in the prior-year quarter, primarily due to a 200 basis point improvement within the Safety and Security Systems Group and a 5090 basis point improvement within the Environmental Solutions Group, partially offset by a 160 basis point reduction within the Safety and Security Systems Group.

SEG&A expenses for the three months ended MarchJune 31,30, 2026 increased by $11.8$11.4 million, or 20%,17%, compared to the prior-year quarter, primarily due to ana $8.4$7.7 million increase within the Environmental Solutions Group, a $0.9$1.7 million increase within the Safety and Security Systems Group, and a $2.5$2.0 million increase in Corporate SEG&A expenses. As a percentage of net sales, SEG&A expenses were 11.5%11.7% in the current-year quarter, compared to 13.0%11.8% in the prior-year quarter.

Operating income for the three months ended MarchJune 31,30, 2026 increased by $34.0$20.5 million, or 52%,21%, compared to the prior-year quarter, primarily driven by a $48.6$34.2 million improvement in gross profit, partially offset by aan $11.8$11.4 million increase in SEG&A expenses, a $2.2$2.1 million increase in amortization expense, and a $0.6$0.2 million increase in acquisition and integration-related expenses, net. Consolidated operating margin for the three months ended MarchJune 31,30, 2026 was 15.9%,17.6%, compared to 14.2%17.3% in the prior-year quarter.

Interest expense, net, for the three months ended MarchJune 31,30, 2026 increased by $3.9$2.5 million compared to the prior-year quarter, largely due to higher average debt levels.

Other expense, net, for the three months ended MarchJune 31,30, 2026 decreasedwas byflat $0.1 millionas compared to the prior-year quarter, primarily due to higher foreign currency transaction gains.quarter.

The Company recognized income tax expense of $21.8$25.3 million for the three months ended MarchJune 31,30, 2026, compared to $15.7$22.0 million in the three months ended MarchJune 31,30, 2025, with the increase primarily due to the effects of higher pre-tax income levels, partially offset by a $1.1 million increase in excess tax benefits associated with stock-based compensation activity. The Company’s effective tax rate for the three months ended MarchJune 31,30, 2026 was 23.6%,22.7%, compared to 25.3%23.6% in the prior-year quarter.

Net income for the three months ended MarchJune 31,30, 2026 increased by $24.1$14.7 million compared to the prior-year quarter, largely due to the $34.0$20.5 million increase in operating income and the $0.1 million reduction in other expense,income, partially offset by a $6.1$3.3 million increase in income tax expense and a $3.9$2.5 million increase in interest expense, net.

The following table summarizes the Environmental Solutions Group’s operating results as of and for the three and six months ended MarchJune 31,30, 2026 and 2025:

Total orders for the three months ended MarchJune 31,30, 2026 increased by $54.2$106.7 million, or 11%,24%, compared to the prior-year quarter, inclusive of the effects of acquisitions. U.S. orders increased by $69.2$82.0 million, primarily due to improvements in orders for other specialty equipment of $67.1$35.6 million, inclusive of higher refuse truck orders associated with the New Way acquisition and thehigher acquisitionmetal ofextraction asupport $15.8equipment millionorders U.S.partially order backlog attributabledue to the Mega transaction,acquisition, as well as a $12.9 million increaseincreases in orders for dump truck bodies and trailers of $17.2 million, aftermarket offerings.offerings Partiallyof offsetting$16.5 thesemillion, and vacuum trucks of $12.7 million. Non-U.S. orders increased by $24.7 million, largely due to improvements were reductions in orders for other specialty equipment of $8.9 million, aftermarket offerings of $7.8 million, vacuum trucks of $8.6$4.9 millionmillion, and dump truck bodies and trailers of $2.2$3.1 million. Non-U.S. orders decreased by $15.0 million, largely due to reductions in orders for other specialty equipment of $19.0 million, primarily driven by lower third-party refuse truck orders, and vacuum trucks of $2.6 million. Partially offsetting these reductions were improvements in orders for aftermarket offerings of $2.5 million, dump truck bodies and trailers of $1.8 million, and a $2.3 million favorable foreign currency translation impact.

Net sales for the three months ended MarchJune 31,30, 2026 increased by $145.3$97.2 million, or 38%,20%, compared to the prior-year quarter, primarily due to higher sales volumes, inclusive of the effects of acquisitions,acquisitions and pricing actions. For the three months ended MarchJune 31,30, 2026, U.S. sales increased by $123.2$98.9 million due to increases in sales of other specialty equipment of $93.1$58.1 million, primarily driven by higher sales of refuse trucks due to the New Way acquisition and higher sales of metal extraction support equipment partially due to the Mega acquisition, as well as increases in sales of aftermarket offerings of $12.9$22.7 million, vacuum trucks of $8.7 million, and dump truck bodies and trailers of $8.5$10.4 million, and vacuum trucks of $7.7 million. Non-U.S. sales increaseddecreased by $22.1$1.7 million, primarily due to increasesa $10.4 million reduction in sales of other specialty equipmentequipment, partially offset by increases in sales of $13.5 million, aftermarket offerings of $4.3$5.7 million,million and vacuum trucks of $1.6 million, and a $3.0 million favorable foreign currency translation impact.million.

Cost of sales for the three months ended MarchJune 31,30, 2026 increased by $105.4$65.3 million, or 37%,19%, compared to the prior-year quarter, primarily related to higher sales volumes, the addition of cost of sales from recent acquisitions, higher material costs, and a $1.5$0.7 million increase in purchase accounting expense effects. Gross profit margin for the three months ended MarchJune 31,30, 2026 was 26.1%,28.4%, compared to 25.6%27.5% in the prior-year quarter.quarter, with the increase primarily due to favorable sales mix, production efficiencies, and benefits from pricing actions.

SEG&A expenses for the three months ended MarchJune 31,30, 2026 increased by $8.4$7.7 million, or 24%,22%, compared to the prior-year quarter, primarily due to the addition of SEG&A expenses from recent acquisitions, higher employee-related costs, and increasedhigher salesmarketing commissions.expenses. As a percentage of net sales, SEG&A expenses were 8.1%7.5% in the current-year quarter, compared to 9.0%7.4% in the prior-year quarter.

Operating income for the three months ended MarchJune 31,30, 2026 increased by $29.4$22.0 million, or 49%,24%, compared to the prior-year quarter, largely due to a $39.9$31.9 million improvement in gross profit, partially offset by the $8.4$7.7 million increase in SEG&A expenses andexpenses, a $2.2$2.1 million increase in amortization expense.expense, and a $0.1 million increase in acquisition and integration-related expenses, net.

Backlog was $966$935 million at MarchJune 31,30, 2026, compared to $1.03$1.00 billion at MarchJune 31,30, 2025.

The following table summarizes the Safety and Security Systems Group’s operating results as of and for the three and six months ended MarchJune 31,30, 2026 and 2025:

Total orders for the three months ended MarchJune 31,30, 2026 increaseddecreased by $0.7$9.7 million, or 1%,10%, compared to the prior-year quarter. U.S. orders increaseddecreased by $6.4$5.4 million, primarily due to improvements in orders for warning systems of $3.3 million, public safety equipment of $1.9 million, and industrial signaling equipment of $1.2 million. Non-U.S. orders decreased by $5.7 million, primarily due to decreasesreductions in orders for public safety equipment. Non-U.S. orders decreased by $4.3 million, primarily due to a $6.5 million reduction in orders for public safety equipment, partially offset by increases in orders for industrial signaling equipment of $6.2$0.8 million and warning systems of $1.4$0.8 million, partiallyas offsetwell byas a $1.3$0.6 million favorable foreign currency translation impact.

Net sales for the three months ended MarchJune 31,30, 2026 increased by $16.5$8.4 million, or 22%,10%, compared to the prior-year quarter, inclusive of the effects of higher sales volumes and pricing actions. U.S. sales increased by $13.8$11.1 million, primarily driven by increases in sales of public safety equipment of $13.2$8.1 million and warning systems of $0.6$3.0 million. Non-U.S. sales increaseddecreased by $2.7 million, primarily due to reductions in warning systems of $3.5 million and public safety equipment of $0.6 million, partially offset by a $1.4$0.9 million increase in sales of industrial signaling equipment and a $1.9$0.5 million favorable foreign currency translation impact.

Cost of sales for the three months ended MarchJune 31,30, 2026 increased by $7.8$6.1 million, or 17%,13%, compared to the prior-year quarter, primarily related to higher sales volumes.volumes and increased material costs. Gross profit margin for the three months ended MarchJune 31,30, 2026 was 43.6%,43.1%, compared to 41.6%44.7% in the prior-year quarter, with the improvementdecrease primarily attributable to improvedunfavorable sales mix and higher material costs, partially offset by operating leverage from higher sales volumes and benefits from pricing actions.

SEG&A expenses for the three months ended MarchJune 31,30, 2026 increased by $0.9$1.7 million, or 6%,11%, compared to the prior-year quarter, primarily due to higher employee-related costs and marketing expenses. As a percentage of net sales, SEG&A expenses were 18.2%19.2% in the current-year quarter, compared to 20.9%19.1% in the prior-year quarter.

Operating income for the three months ended MarchJune 31,30, 2026 increased by $7.8$0.6 million, or 49%,3%, compared to the prior-year quarter, primarily due to a $8.7$2.3 million improvement in gross profit, partially offset by the $0.9$1.7 million increase in SEG&A expenses.

Backlog was $72$67 million at MarchJune 31,30, 2026, compared to $69$83 million at MarchJune 31,30, 2025.

Corporate operating expenses for the three months ended MarchJune 31,30, 2026 were $13.0$17.8 million, compared to $9.8$15.7 million in the prior-year quarter, with the increase primarily due to ahigher $0.7post-retirement million increase in acquisitionexpenses and integration-relatedmedical expenses,costs, net,partially asoffset wellby as higher legal,lower stock compensation, and incentive-based compensation costs.

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, like the acquisition of all of the outstanding equity interests of Mega that was completed on January 16, 2026.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 2025 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.