FEDERAL SIGNAL CORP /DE/FSS

FEDERAL SIGNAL CORP /DE/ Earnings Per Share Disclosure

10-KFiled Feb 25, 20262 min read
EARNINGS PER SHARE
The Company computes earnings per share (“EPS”) in accordance with ASC 260, Earnings per Share, which requires that non-vested restricted stock containing non-forfeitable dividend rights should be treated as participating securities pursuant to the two-class method. Under the two-class method, net income is reduced by the amount of dividends declared in the period for common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. The amounts of distributed and undistributed earnings allocated to participating securities for the years ended December 31, 2025, 2024, and 2023 were insignificant and did not materially impact the calculation of basic or diluted EPS.
Basic EPS is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding for the year.
Diluted EPS is computed using the weighted average number of shares of common stock and non-vested restricted stock awards outstanding for the year, plus the effect of dilutive potential common shares outstanding during the year. The dilutive effect of common stock equivalents is determined using the more dilutive of the two-class method or alternative methods. We use the treasury stock method to determine the potentially dilutive impact of our employee stock options and restricted stock units, and the contingently issuable method for our performance-based restricted stock unit awards.
For the years ended December 31, 2025, 2024, and 2023, options to purchase 0.1 million, 0.1 million, and 0.1 million shares of the Company’s common stock, respectively, had an anti-dilutive effect on EPS, and accordingly, are excluded from the calculation of diluted EPS.
The following table reconciles net income to basic and diluted EPS:
For the Years Ended December 31,
(in millions, except per share data)202520242023
Net income$246.6 $216.3 $157.4 
Weighted average shares outstanding — Basic60.8 60.9 60.7 
Dilutive effect of common stock equivalents0.7 0.8 0.8 
Weighted average shares outstanding — Diluted61.5 61.7 61.5 
Earnings per share:
Basic$4.06 $3.55 $2.59 
Diluted4.01 3.50 2.56 

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 26, 2025
2023Feb 27, 2024
2022Mar 1, 2023
2021Mar 1, 2022
2020Feb 25, 2021
2019Feb 27, 2020
2018Feb 28, 2019
2017Feb 28, 2018
2016Feb 28, 2017
2015Feb 29, 2016

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

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