Federal Signal Corporation is making a significant move to bolster its presence in the waste management sector through the strategic acquisition of Scranton Manufacturing Company Inc., widely recognized as New Way Trucks. This substantial deal, valued at $396 million, also includes an additional $30 million for key facilities in Iowa and Mississippi, alongside potential performance-based earnouts of up to $54 million. This acquisition marks a pivotal expansion for Federal Signal, incorporating New Way's expertise into its specialty vehicle division and strengthening its Environmental Solutions Group.
Federal Signal Expands into Refuse Collection with New Way Trucks Acquisition
In a major corporate development announced on Wednesday, September 25, 2025, Federal Signal Corporation (NYSE: FSS) revealed its intent to acquire Scranton Manufacturing Company Inc., the parent company of New Way Trucks. New Way Trucks, a privately-owned entity, has distinguished itself as one of the fastest-growing manufacturers of refuse collection vehicles across the United States. Its product portfolio encompasses a comprehensive range of rear, front, and automated side loaders, catering to both municipal and private sector clients. The acquisition, pending regulatory approvals, is anticipated to finalize in the fourth quarter of 2025.
Jennifer L. Sherman, the Chief Executive Officer of Federal Signal, emphasized that this acquisition will establish a new, dedicated vertical within the company's specialty vehicle operations. She expressed optimism regarding the considerable opportunities for synergy realization and the acceleration of New Way's growth and profit margins. Federal Signal intends to leverage its proven chassis and inventory management methodologies to optimize New Way's operational efficiency. The transaction will be financed through a combination of cash reserves and existing borrowing capacities, with a projected net debt leverage of less than 1.5 times. The acquisition price is estimated at approximately 11 times New Way's forecasted 2026 EBITDA, which is expected to decrease to roughly seven times by 2028 as integration benefits are fully realized. Beyond financial considerations, Federal Signal anticipates that this deal will significantly reinforce its Environmental Solutions Group and foster long-term organic growth opportunities.
From a financial perspective, Federal Signal projects the acquisition to be neutral to its earnings in 2026, primarily due to initial integration expenses and interest costs. However, it is expected to become accretive to earnings by 2028, with an anticipated increase in earnings per share of 40 to 45 cents. The company also projects annual cost synergies ranging from $15 million to $20 million by the close of 2028. As of June 30, 2025, Federal Signal held a robust cash and cash equivalents balance of $65 million. Following the announcement, Federal Signal's shares experienced a 2.54% decline, closing at $121.32 on Wednesday.
This acquisition highlights Federal Signal's strategic vision for growth within the industrial sector, specifically targeting the expanding waste management market. By integrating New Way Trucks' innovative product lines and established market presence, Federal Signal is poised to become a more formidable force in providing essential infrastructure and environmental services. The long-term benefits, including enhanced market position, operational synergies, and projected earnings growth, suggest a promising future for the combined entity, offering a valuable case study in strategic corporate expansion within a vital industry.