Federal Signal to Acquire TBEI

Federal Signal to expand focus on maintenance and infrastructure categories, leverage manufacturing expertise and diversify end-markets.

Federal Signal Corporation announced the signing of a definitive agreement to acquire Truck Bodies and Equipment International (“TBEI”), a U.S. manufacturer of dump truck bodies and trailers, for $270 million, subject to post-closing adjustments. This represents a multiple of 7.2x TBEI’s EBITDA for the twelve-month period ending March 31, 2017, before accounting for synergies.

The acquisition will enable the Ferderal Signal to strengthen its market position as a specialty vehicle manufacturer in maintenance and infrastructure markets. This transaction will also allow the company to leverage its expertise in building chassis-based vehicles, significantly expand its exposure to higher growth industrial end-markets and balance the mix of revenues it generates from municipal and industrial markets.

The transaction is expected to be immediately accretive to Federal Signal's margins and earnings per share (“EPS”), excluding transaction costs and before giving effect to anticipated synergies.


  • TBEI is expected to be combined with the businesses within Federal Signal’s Environmental Solutions Group (“ESG”) to create a single platform providing municipal and industrial customers with a complete suite of maintenance and infrastructure equipment and supporting solutions. This platform will expand the will provide a springboard for future organic growth and M&A
  • The transaction diversifies the Federal Signal’s current end markets through an expanded focus on infrastructure, construction, waste, rendering and other industrial end markets
  • Federal Signal expects the acquisition to be modestly accretive to EPS in 2017, increasing to an annual run rate of between $0.07 to $0.12 per share and $0.12 to $0.17 per share by the second and third anniversary of the acquisition, respectively
  • Federal Signal intends to apply its 80/20 principles to TBEI’s operations to further optimize an already strong business
  • Annual run-rate synergies are anticipated to be between $3 and $4 million, phased in over three years. Supply chain, cross-selling products from both ESG and the Safety and Security Systems Group through the TBEI distribution channel, leveraging our existing parts and distribution business and sharing of manufacturing best practices will drive the synergies
  • Federal Signal intends to fund the acquisition through a combination of available cash and borrowings available under its existing credit agreement. Upon closing, the Company anticipates a debt to EBITDA ratio of approximately 2.7x
  • -With the healthy combined cash flow from its legacy businesses and TBEI, Federal Signal expects a rapid reduction in debt levels

During the twelve-month period ending March 31, 2017, TBEI generated revenues of $206 million and an EBITDA margin of approximately 18%. TBEI operates five manufacturing facilities throughout the U.S. and employs approximately 850 people.

“The TBEI business is a strong strategic fit with our ESG businesses and allows us to broaden our focus on maintenance and infrastructure markets. With its large industrial customer base, TBEI will accelerate the achievement of our long-standing objective of balancing the mix of revenue streams between municipal and industrial,” says Jennifer L. Sherman,President and Chief Executive Officer. “TBEI is an outstanding company with clear leadership positions in its end markets, a strong financial profile and a management team that will thrive as part of Federal Signal. This acquisition also represents a significant step towards the attainment of our strategic goal of profitably growing our revenues to over $1 billion.”

TBEI’s President and Chief Executive Officer, Robert Fines, an executive with over 35 years of industry experience, including a variety of management positions within General Electric and Avery Dennison, will be joining Federal Signal’s management team.

Pending customary closing conditions and regulatory approvals, the transaction is expected to close within the

next 90 days.