Thank you for standing by. This is the conference operator. Welcome to the Federal Signal Corporation Second Quarter 2022 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Ian Hudson, Chief Financial Officer. Please go ahead.

Good morning, and welcome to Federal Signal's second quarter conference call. I'm Ian Hudson, the company's Chief Financial Officer. Also with me on the call today is Jennifer Sherman, our President and Chief Executive Officer. We will refer to some presentation slides today as well as to the earnings news release, which we issued this morning. The slides can be followed online by going to our website, federalsignal.com, clicking on the Investor Call icon and signing into the webcast. We have also posted the slide presentation and the earnings release under the Investor tab on our website. Before we begin, I'd like to remind you that some of our comments made today may contain forward-looking statements that are subject to the safe harbor language found in today's news release and in Federal Signal's filings with the Securities and Exchange Commission. These documents are available on our website. Our presentation also contains some measures that are not in accordance with U.S. Generally Accepted Accounting Principles. In our earnings release and filings, we reconcile these non-GAAP measures to GAAP measures. In addition, we will file our Form 10-Q later today. I'm going to begin today by providing some detail on our second quarter results before turning the call over to Jennifer to provide her perspective on our performance, market conditions and our outlook for the remainder of 2022. After our prepared comments, Jennifer and I will address your questions. Our consolidated second quarter financial results are provided in today's earnings release. In summary, our financial results for the quarter were strong with double-digit improvement in sales and operating income, improvement in margins and continued momentum in demand. Consolidated net sales for the quarter were $367 million, up $32 million or 10% compared to last year. Consolidated operating income for the quarter was $46.2 million, up $7.7 million or 20% compared to last year. Consolidated adjusted EBITDA for the quarter was $58.2 million, up $6.3 million or 12% compared to last year. That translates to a margin of 15.9% in Q2 this year, up 40 basis points compared to last year. GAAP EPS for the quarter was $0.55 per share, up 15% compared to last year. On an adjusted basis, EPS for the quarter was $0.53 per share, up 6% compared to last year. Order intake for the quarter was again outstanding with orders of $413 million, representing an increase of $53 million, or 15% compared to Q2 last year. Backlog at the end of the quarter was $795 million, another all-time high for the company and an increase of $358 million or 82% compared to Q2 last year. In terms of our group results, ESG's net sales for the quarter were $306 million, an increase of $25 million, or 9% compared to last year. ESG's operating income for the quarter was $39.1 million up $600,000 or 2% compared to last year. ESG's adjusted EBITDA for the quarter was $51.6 million, up $1 million, or 2% compared to last year. That translates to an adjusted EBITDA margin for the quarter of 16.8% compared to 18% last year. ESG's orders for the quarter were $352 million, an improvement of $52 million or 17% compared to last year. Turning now to SSG, who reported net sales of $60 million in Q2 this year, an improvement of $7 million, or 13% compared to last year. SSG's operating income for the quarter was $10.3 million, up $2.5 million, or 32% compared to last year. SSG's adjusted EBITDA for the quarter was $11.4 million, up $2.7 million or 31%. That translates to an adjusted EBITDA margin for the quarter of 18.9% up 260 basis points compared to Q2 last year. SSG's orders for the quarter were $62 million up 1% compared to last year. Corporate operating expenses for the quarter were $3.2 million, compared to $7.8 million in Q2 last year. The reduction in corporate expenses was partly driven by a favorable year-over-year variance of $2.4 million associated with changes in mark-to-market adjustments of post retirement reserves. These market-based adjustments benefited our earnings in Q2 this year, bringing about $0.02 per share, but were unfavorable in Q2 last year. Corporate expenses in Q2 this year also included an acquisition-related benefit of approximately $2 million relating to a post-closing adjustment that was received during the quarter. Turning now to the consolidated income statement where the increase in sales contributed to an improvement in gross profit of $8.2 million, or 10%. Consolidated gross margin for the quarter was 24.5%, up 10 basis points compared to last year. The improvement in gross margin was achieved despite a 30 basis point headwind resulting from an increase in the mix of chassis that we supply. These chassis carry very low margins, but allow us to better manage our production schedules and serve our customers. As a percentage of sales, our selling, engineering, general and administrative expenses for the quarter were down 50 basis points from Q2 last year. During the quarter, we recorded a $1.7 million benefit from acquisition-related activity, compared to $300,000 of expense last year, with the majority of the year-over-year change driven by the receipt of the post-closing adjustment I just referenced. Other items affecting the quarterly results include a $400,000 increase in amortization expense, and an $800,000 increase in interest expense. With recent increases in interest rates, we currently expect an EPS headwind of $0.02 in the second half of the year, compared to our prior outlook. That assumes no significant change in debt levels. Tax expense for the quarter was up $3.1 million, largely due to higher pre-tax income levels, and a $1.5 million reduction in excess tax benefits from stock compensation activity in comparison to Q2 last year. As a result, our effective tax rate for the quarter was 24.9% compared to 21.2% last year, representing a year-over-year EPS headwind of about $0.02. At this time, we continue to expect our full-year effective tax rate to be approximately 25%. On an overall GAAP basis, we therefore earned $0.55 per share in Q2 this year, compared to $0.48 per share in Q2 last year. To facilitate earnings comparisons, we typically adjust our GAAP earnings per share for unusual items recorded in the current or prior-year quarters. In the current year quarter, we made adjustments to GAAP earnings per share to exclude acquisition-related benefits. On this basis, our adjusted earnings for the quarter were $0.53 per share, compared with $0.50 per share last year. Looking now at cash flow, we generated $15 million of cash from operations during the quarter, representing an increase of 16% over Q2 last year, despite incremental investments in chassis and other raw materials. We ended the quarter with $296 million of net debt and availability under our credit facility of $166 million. Our current net debt leverage ratio remains low and essentially unchanged from Q1. With our financial position remaining strong, we have significant flexibility to invest in organic growth initiatives with two strategic acquisitions, and return cash to stockholders through dividends and opportunistic share repurchases. On that note, we paid dividends of $5.4 million during the quarter, reflecting a dividend of $0.09 per share and we recently announced a similar dividend for the third quarter. We also funded $2.5 million of share repurchases during the quarter, bringing the total share repurchases so far this year to approximately $16 million. That concludes my comments. And I would now like to turn the call over to Jennifer.

Thank you, Ian. Our business was again able to deliver strong operational performance during the quarter despite the ongoing challenges associated with the current supply chain environment where shortages of hydraulic components, pumps, cylinders, and certain electrical components continued to make production challenging. I'm continuously impressed by the creative and nimble solutions our teams identify in response to these supply chain challenges. For example, our teams have secured alternative suppliers, purchased certain buffer inventory, sought to insource or reengineer products where possible, and modified production schedules based on component availability. Despite the challenges we faced during the quarter, our teams were successful in delivering double-digit top-line growth, gross margin improvement, and a consolidated EBITDA margin, which was at the high end of our target range and up 40 basis points compared to last year. We continue to see increased demands for rental parts and used equipment sales, with the current tightness in the supply chain and extended lead times for new equipment delivery. In the first half of this year, our aftermarket revenues totaled $161 million, a 12% improvement over last year, with additional benefits from our pricing actions and contributions from our recent acquisitions. Our Environmental Solutions Group reported a $25 million year-over-year sales increase. Although inflationary pressure persists, our second quarter results included the effects of improved price cost realization, both sequentially and on a year-over-year basis, with the improvement most notable within our dump truck and trailer businesses. We currently expect margins in the second half of the year to be higher than the first half of the year as more of our higher price backlog ships. Our Safety and Security Systems Group had an outstanding quarter with double-digit top-line improvement and a 170 basis point increase in gross margins, largely due to increased sales volumes and higher price realization. With our efforts to expand our supply base and execution of our ETI principles to insource production of certain materials, component availability for these products has improved in recent months, which resulted in an increase in shipments compared to last year, most notably within our public safety businesses. Operationally, we benefited from limited coronavirus-related disruption during the quarter. Although coronavirus-related absences were relatively low during the second quarter, we are continuing to monitor case levels associated with emerging variants. Other highlights of the quarter included the publication of our latest sustainability report, demonstrating our ongoing commitment to environmental, social, and governance initiatives. In the report, we highlight the ways in which we make a difference to our customers, our communities, and our environment. We know that as a global manufacturer of critical infrastructure and safety products, we have the responsibility to do the right thing. Operate sustainably, with a long-term fact-based view on issues regarding the environment, society, and corporate governance, and positively impact our employees, customers, partners, and stakeholders. These efforts also position us well in the communities in which we operate and serve as a differentiating factor in our ability to attract labor at most of our facilities. Turning now to market conditions, where demand for our products and aftermarket offerings remained unprecedented. The order momentum has been across the board with year-to-date orders from both municipal and industrial customers each up around 20% year-over-year. On the municipal front, recent discussions with several of our dealer partners have echoed this positive sentiment, with many seeing robust demand across virtually all product lines. The $350 billion American Rescue Plan Act, which is earmarked funding for state, local, and territorial governments for a variety of purposes, including the maintenance of essential infrastructure, such as sewer systems and street sweeping, is continuing to benefit our municipal markets across the country. For example, we are seeing incremental order strength beginning with smaller municipalities purchasing both new and used street sweeping and sewer cleaning equipment in several states, where the equipment purchases are directly attributed to this public funding source. With the second $170 billion tranche expected to be distributed later this year, including multi-year appropriation and spending deadlines, we expect to see a prolonged meaningful tailwind from the stimulus package. On the industrial side, demand remains high, particularly for our safe digging products, with orders in the first half up $26 million or 69% year-over-year. During the quarter we saw strong demand for our trailer products, but some softer orders for dump trucks associated with tightness in customer chassis supply. We remain bullish on the potential impact of the $1.2 trillion infrastructure bill, which has $550 billion for new investments in roads, bridges, power, water, and broadband infrastructure, public transport, and airports. Our equipment sales and rentals of material hauling, road marking, street sweeping, sewer cleaning, safe digging, and industrial cleaning equipment stand to benefit from this investment, as our equipment is integral to the process of improving and expanding this infrastructure. Given that these funds have not yet been distributed, we have not yet seen any impact to date in our orders. Although we continue to monitor the developments closely. I now want to take a few minutes on some of our growth initiatives. Starting with an update on new product development initiatives. Our R&D teams remain committed to providing solutions to solve our customers' problems by incorporating state-of-the-art technology enhancements into developing new products. With a focus on features and functionality, our solutions aim to simplify ease of operation and training, reduce operating costs, and maximize asset utilization. A recent example of this approach is the launch of the Broom Badger, a compact, highly maneuverable street sweeper manufactured by Elgin Sweeper. In launching our Broom Badger, we have developed a new sweeper that replaces a product which we previously sourced from a third party with an innovative street sweeper, which incorporates multiple enhancements based on extensive customer feedback. Of growing importance to the needs of our customer, this new product does not require that the operator have a commercial driver's license, which can be more challenging to obtain, due in part to the legalization of marijuana that has occurred in many states. Internally and externally, the product launch has truly been a collaborative effort, and we look forward to growing our share in the marketplace. We also continue our efforts to enhance our Truvac safe digging product offerings with the recent introduction of the APXX, a heavy-duty vacuum excavator designed for the toughest conditions. With its innovative design, the APXX maximizes legal payload and aims to make customers' time on the job more profitable, while providing operators with high levels of comfort and protection from the elements to support productivity in cold climates. Other recent examples include reducing operating costs by developing single engine platform solutions for our street sweeping, through cleaning, and road marking businesses, and reducing equipment downtime and troubleshooting by offering onboard diagnostics in the control systems of our sewer cleaners and safe digging trucks. We continue to identify ways to integrate electrification into our suite of products and offer solutions to our customers on their path towards reducing their carbon footprint and improving air quality without compromising performance. We continue to collaborate with multiple chassis OEMs and have recently taken delivery of our first fully electric chassis and plan to begin field testing in an all-electric truck mounted sweeper later this year. In addition, we are experiencing high demand from our dealer network for demonstrations of our plug-in hybrid electric products, specifically the Broom Bear and the three-wheel Pelican. Our aftermarket business has grown to represent approximately 30% of ESG's revenues, and we see additional opportunities to grow that business by expanding into new geographies, which we believe to be underserved. In connection with those expansion efforts, we've acquired certain distribution rights from dealers in Colorado, Montana, and Wyoming. By establishing a presence in these territories, for a relatively low investment, we expect to increase sales of our products and grow our parts, service, and rental revenue. On the M&A front, we are making good progress integrating our recent acquisitions, Ground Force and Dyes, and we are pleased with our contributions in the second quarter. Our deal pipeline remains very active, and we continue to expect M&A to be an important part of our future growth. With our investments in new product development, the potential for M&A, our recently completed capacity expansions with several facilities, relatively good access to labor, and multi-year tailwinds from recent economic stimulus and infrastructure legislation, we are well positioned for long-term growth. Turning now to our outlook for the rest of the year. The momentum and demand for our products and our aftermarket offerings that we have seen in recent quarters continued in the second quarter with a 15% year-over-year improvement contributing to another record backlog. Although we expect the volatile supply chain environment to continue, we are encouraged with how our teams have navigated through these challenges so far this year. Notwithstanding the EPS headwind in the second half of the year associated with higher interest expense, with our performance in the first half of the year, our record backlog, and current expectations of component availability, we are raising the midpoint of our full-year adjusted EPS outlook by establishing a new range of $1.85 to $2, updated from the previous range of $1.80 to $2. At this time, I think we're ready for questions.

Thank you. We will now begin the question-and-answer session. The first question is from Mike Shlisky with D.A. Davidson. Please go ahead.

Good morning, Mike.

Can you hear me, okay? Hey, good morning. Can you hear me, okay?

Yes.

Great, hey quickly. First, I had a quick housekeeping question, Ian for you. Can you maybe give us a little more detail on that post-closing adjustment that you outlined a couple of times during your comments, was that an earn-out that was not earned? And was that a cash inflow, I'm just not sure what went on there?

Yes, so Mike, it was for the related to the OSW acquisition and it was a post-closing adjustment about it was a debt-like item. And we worked through it with the other side and ended up receiving $2 million of cash that did come in during the quarter. So that was for the accounting rules, because it was outside of the year window for purchase accounting, it flows through the P&L. And so that flows through the accounting, sorry, the acquisition-related benefit line on our P&L. And so we've excluded that from our adjusted EPS and adjusted EBITDA, but that's the accounting rule that required us to take that through the P&L this quarter.

Got it, got it. Thank you. I also want to discuss quickly the safety and security products results in the quarter looks really strong and can you guys provide a little bit more detail as to approximately about performing the quarter that made it such a great result?

Sure, it's really across all of our major product lines. They've invested heavily in new product development at those businesses, particularly in our public safety systems business. And they were able to have very strong P6 in particular. And they were able to ship a number of major projects to customers. But we've seen a lot of benefits from 80-20 initiatives that have taken place within that business unit and we're encouraged by the improvement.

Great, maybe lastly here, I want to ask about heavy truck chassis availability. Wasn't much comments during the prepared remarks, but maybe just start tearing some possibilities improving one of the major Class 8 truck producers, seeing some fewer red tag chassis et cetera. Can you give me an update on maybe how you're faring more recently and how things are looking in Q3 here for heavy truck chassis worldwide? Thank you.

Sure, sure. So it's kind of a tale of two cities. So I'll start with TBEI and our TBEI businesses, we do not supply the chassis, our customers supply the chassis. And that has been a more challenging situation because often there isn't a named customer. So we haven't seen the chassis improvements that we were hoping; if we do see chassis improvements that would be upside for that particular business. For our Vactor, Elgin, MRL businesses, we have we're on allocation. But in general, we're receiving the chassis that have been allocated to us. So that has not been a challenge during Q2 as it was, for example, in Q4 of last year. To be clear, we'd like a whole lot more chassis than we're getting. But at this point in time, we're at least receiving what they told us they were going to send.

Got it. That's perfect. I'll pass it on. Thank you so much.

Thank you.

The next question is from Felix Boeschen with Raymond James. Please go ahead.

Good morning, Felix.

Hi guys, good morning everybody. Hey, thank you for taking the time. I was hoping to actually follow-up on the chassis availability procurement strategy. Ian, I think you mentioned that 30 basis point headwinds relative to you procuring chassis and running those through the P&L. I guess my question is, broadly do you think that's going to continue into the second half and into 2023, is that maybe a permanent shift and how you procure chassis, just any color on that would be super helpful.

So the drag that we referenced, the 30 basis point drag, that's year-over-year, so in fact, when you think of our EBITDA in Q2, the drag was actually 80 basis points. For the quarter it was 50 or 60 in Q2 last year, so that's what we talked about the year-over-year impact. I think for the next certainly for the next several quarters, while we're in the current situation, I think what we're strategically trying to do is make sure that we can serve our customers, right, and if they're struggling to find chassis, and we have access to chassis, I think that's something we want to work with our customers to assist them in that regard. So I think in the current environment, it may continue but long-term, I think we would likely revert back to more of the 50/50 split that we've historically seen.

Yes, and just to add a little more color to that, our production schedules as you can imagine, our facilities are dynamic and constantly changing to reflect the realities of each month's supply chain challenges, including chassis. And so by in a situation where we own the chassis, as we have to move the production schedule around, it gives us a lot more flexibility. Certainly, we're not waiting on someone else to deliver the chassis. And generally customers would prefer to buy the chassis if they could, because there's a cost savings. In this environment, though it's different. So yes, it will continue through this year, but I think as supply chain normalizes, we'll see customers revert back to wanting to purchase their own chassis.

Okay, okay, super helpful color. And then I wanted to follow-up on the aftermarket business, obviously another very strong quarter, you mentioned specifically opening some new locations in I think Colorado, Wyoming, and Montana. Jennifer, I was hoping you could maybe expand on that sort of what you think the impact might be over the next couple of years rationale. And if you could talk about how the rental fleet maybe plays into that?

Yes, so those particular territories were underserved. It creates an opportunity for us, not only for Elgin and Vactor, but also for those products that we sell direct. That would include our Guzzler product line, our MRL product line, and others. We believe that as we move forward, we're going to be able to duplicate the success that our JJE team has had in terms of growing new equipment, parts, service, rentals, and frankly, be able to better serve our customers there.

Okay, and then just my last one, you talked about the American Rescue Plan in the second half of those funds have yet to be released. So it sounds like a lot of that would be incremental, but I'm maybe curious if you could talk about sort of municipal demand in general. And if you could maybe talk about the sales cycle, how long it takes from really trying to figure out is out of that first tranche, how much is already in the backlog versus what might still be on the comp, if that makes sense?

Yes, absolutely. So depending on the product line, the sales process can take up to a year, it often goes through a public bid process. And it depends if they buy off a state contract that exists, or otherwise. So we haven't seen a lot of it and our backlog is just, as talking to our dealers anecdotally, the funds that are available is opening up new customers that frankly in many situations couldn't afford our equipment, or it allows an existing customer to augment their fleet with additional equipment. So to date, we haven't seen a lot in the backlog. More to come as we move forward and it works its way through these in most situations public bid processes.

I'll stop there. I appreciate the time today.

Thank you.

Thanks.

The next question comes from Walt Liptak with Seaport. Please go ahead.

Good morning, Walt.

Thanks, good morning guys. Great quarter. Hey, just as a follow-on to the last one. And regarding the road bill, that you brought up and come into that the money's not flowing yet. I wonder if you could give us any insight into what you think the timing might be. I think one of the things that's different this time is you own MRL. What are they saying about, within the road bill, and maybe the timing of when that money is going to flow?

So with respect to the infrastructure bill, that was passed late last year, the appropriation schedules are still working out the details. We do believe, however, as we noted in our prepared comments that almost every one of our product lines in the ESG, in our ESG businesses is positively impacted; our dump truck business, our road striping business, sewer cleaning, street sweeping. So we're very encouraged and excited about the opportunities. And given the capacity expansions that we've made and our relatively good access to labor, if we get some relief from supply chain, we will be in an excellent position to respond to that incremental demand.

Okay, great. You guys pointed out the orders in ESG, the $352 million roughly that look really good. And call about a few things, I wonder if you could maybe a little more slowly go into some of the details of the mix of products. And I think I heard you say that the safe digging products, you saw growth of 69%, I'm not sure if I heard that right. But what were those numbers and where are you seeing the safety in demand?

Yes, so Walt, so the biggest drivers Walt of the order improvement would be, it's kind of four large categories, I would say sweepers were up 50% year-over-year, that's about 20%. So $20 million improvement. Aftermarket was up 10%, safe digging in the quarter was up 46% for the first half of the year, that's where the 69% that we cited that's in the first half of the year. So safe digging orders, first half they were up 69%. And then we saw in Q2, we saw some really strong growth in orders for our trailer products. So those were up about $17 million year-over-year, and that's a growth rate in excess of 150%. So those four categories of product line were the main drivers of the improvement that we saw Q2 year-over-year.

There are also some other positive metrics that we look at, for example, TRUVAC demos were up 10% year-over-year in Q2.

Okay, that sounds great. I wonder if you can just comment on the pricing of the new orders, is there enough pricing in there to capture the inflation that you've seen and the backlog, if I recall, last couple of quarters, there were still some backlog that had been repriced or maybe had not been repriced, I'm wondering if you could just refresh us on the pricing that you think you've gotten the backlog?

Yes, so Walt, something obviously we're looking at very closely, we saw sequential improvement in price cost in Q2, we had a favorable impact on a year-over-year basis of about $4 million. As we move forward, we're continuing to expect favorable year-over-year impacts. But the situation continues to evolve. And obviously, we're watching it closely. I think Jennifer mentioned in her prepared remarks that we're expecting to see second half VA margins to improve over the first half of the year. And we're still expecting the second half of this year to be up over the second half of last year. So continuing expect strong margin performance for the year and improved price realization as we move forward.

Okay, great. Okay. Thank you very much.

Thank you.

The next question is from Chris Moore with CJS Securities. Please go ahead.

Good morning, Chris.

Good morning, everyone. Thank you for taking my questions. I wanted to follow up on the pricing of the backlog. Historically, it has been difficult to redesign the government backlog. I've heard there were some exceptions to this in Q2. Did you experience that as well?

Yes, we were able. We went back and for some of our product clients through a combination of surcharges and repricing, we did reprice some of our municipal backlog, just to reflect the reality of the marketplace that we're living in right now.

Makes sense. In terms of the revenue guide, maybe just talk a little bit about the mix of volume versus price at the midpoint of guidance?

Yes, I think Chris, it would be generally similar to what we've seen so far. This year, a price realization during Q2 was about 6% to 7%. So I think, when you look at our year-over-year, top line growth that we've guided, I think on the organics that we obviously have the acquisitions contributions, but then the organic piece, I think, is going to be a fairly even split between price and volume.

Got it. And just may more big picture. And obviously, they're interrelated, but which would concern you more, a meaningful further increase in interest rates or a modest recession?

We appreciate both scenarios, but I believe each warrants a specific response regarding significant increases in interest rates. What sets Federal Signal apart is the availability of government funding, which we expect will provide a multi-year benefit as we progress. Additionally, our primary product line, sewer cleaners, is mainly financed through water taxes, which means we don't anticipate the fluctuations that might affect other product lines. Our performance during the pandemic demonstrated our resilience. However, some of our customers are struggling to attract labor, which will be crucial for the success of the infrastructure bill. If a recession occurs, it may lead to a more flexible labor market, potentially increasing demand for our products supported by federal funds. Concerning rising interest rates, we currently view our equipment as essential, and the federal funding will be a key differentiator moving forward. While executing during a downturn is challenging, I have confidence in our teams and processes. If necessary, we're prepared to perform, as evidenced by our successful execution during the pandemic, and we are committed to continuing that trend.

Got it. Very helpful. I will leave it there. Thanks guys.

Thank you.

The next question is from Greg Burns with Sidoti and Company. Please go ahead.

Good morning, Greg.

Morning. Morning. How much of the debt is variable?

We have an interest rate swap that fixes about $75 million of our debt, while the remainder will be variable.

Okay, and it seems like you're doing a good job of improving your production capacity. But when we look at the backlog and the demand in orders that you're seeing if supply wasn't a constraint, how much additional revenue could you support in a quarter, like how much production capacity is sitting idle right now?

Depending on the facility, capacity could range from 20% to 40%. This improvement stems from the investments we made between 2019 and 2021. As mentioned, we significantly expanded Vactor with a $25 million investment, which is our largest plant. We also expanded Lake Crystal, Rugby, and MRL, along with making some investments in our leads facility in Alabama. All these expansions contribute to a strong backlog, and we are in a relatively good position concerning labor. However, we are seeking some relief from supply chain issues.

Okay, and then I guess…

The answer is, is that I think we're incredibly well positioned as this incremental orders come in from various federal bills that we've cited.

Yes, okay. And then typically the business has a little bit of quarterly seasonality. But with the backlog you have, do you expect that to be kind of smoother, you just or whatever you could, how much ever you could produce demand, like should the seasonality a little while to the backlog normalizes be less muted, or more muted?

It's typically, typically, because of rentals and where we primarily rent, Q2 and Q3 are stronger quarters for aftermarkets group.

But as it relates directly to the new equipment sales, you're right, that should be fairly even with the backlogs we have. There isn't much weather doesn't play much of a factor there. Unless there's some dramatic weather that prevents some shipments towards the end of the quarter or something to that effect. But you're right on the new equipment sales, it should be fairly evenly spread, provided the supply chain holds.

Okay, great. All right. Thank you.

The next question comes from Marco Rodriguez with Stonegate Capital Markets. Please go ahead.

Good morning, Marco.

Good morning, everyone. Thanks for taking my questions. I don't know if I missed this. But on your growth rates for revenue orders and backlogs. Did you break down? What was the organic portion of that?

Yes, so on the order front, of the 15% order improvement about 9% was organic, and then with a fairly even split between volume and price, and then the acquisitions would be about 6%. On revenue, the acquisitions added about $25 million, $26 million of revenue growth.

Got it very helpful. And then in terms of just coming back to the supply chain issues, I think we've covered the chartered situation pretty, pretty well. But in the last quarter, you guys were talking about just other sort of parts. Were also causing some issues when it came to manufacturing efficiencies and things. Can you kind of give us an update on that side of the supply chain?

Yes, there hasn't been a lot of change. We continue to see shortages of hydraulic components, pump cylinders, and certain electrical components. And that's created pretty fluid production schedules. At our facilities, we're constantly changing the production schedule to reflect the reality of each month's supply chain challenges. I would note, our ESG group is about the same. Our SSG group has seen some improvement. There's still room to go.

Sure, sure. And then in the presentation on your website, you do talk about some automation initiatives. Can you maybe describe a little bit more what you're thinking about in terms of automating? And then how should we be thinking about this as it relates to any sort of CapEx spend or P&L spend and timing?

Guys, I think that's Marco, some of the investments we're making in things like robotic welding machines in certain locations, really, to improve efficiencies. That's typically something that we always consider as part of our 80/20 approach. I'd say from a CapEx standpoint, outside of the university's park facility purchase that was in Q1, which is going to result and in our CapEx we are looking higher than typical years. Our typical run rate on CapEx is $25 million to $30 million that would contemplate investments of the nature we just talked about. Many of our facilities, we would consider investing in machinery that improves our production processes. So that would be contemplated in that $25 to $30 million.

Got it. And last quick question, just kind of following-up on some of the questions on pricing adjustments. I understand that everyone is operating in an environment there were prices are continually going up. And people have been pretty much reserved to that fact. And it's been a little bit easier perhaps, for yourself and others to push through those pricing adjustments. So I'm just kind of curious if you're maybe starting to see any sort of push back, any sort of changes in sentiment as it relates to that?

In general, now, there's very high demand for our equipment. And we've been relatively successful passing on surcharges and price increases.

Excellent. Great. Thanks a lot for your time, guys. I really appreciate it.

Thank you.

The next question is a follow-up from Walt Liptak with Seaport. Please go ahead.

Hi, thanks. Yes, I just wanted to ask a follow-up, I think it was on Mike's question about SSG, and you called out some larger project systems that help the quarter, I just want to confirm that that's what you said. And then, of those orders continued to come in. If I recall, those are a little bit lumpy. And I wonder if there's a trend in there?

Yes, most of the improvement was actually driven by our public safety equipment. So both here in the U.S. as well as over in business in Spain. So the majority of the improvement that we saw around the top-line was driven by those businesses. What Jennifer mentioned was, even with that said, there was improvement with our other product line systems as well as the industrial signaling equipment. So the growth was across the board. But what had driven the systems improvement was to your point, a couple of larger projects, which we typically see, but I don't think what we saw this quarter was anything out of the ordinary in terms of the historical patterns that we've seen. So the backlog for that business is still pretty solid. And I think you'll see the backlog for that entire business, SSG is about almost double what it was at the same point of last year. So we've seen some really, really good interest and demand for our products within all of SSG.

Okay, great. Thank you.

This concludes the question-and-answer session. I would like to turn the conference back over to Jennifer Sherman for any closing remarks.

In closing, I would like to reiterate that we are confident in the long-term prospects for our businesses in our markets. Our foundation is strong, and we are focused on delivering profitable long-term growth through the execution of our strategic initiatives. Demand for our products is at an all-time high, with federal stimulus and infrastructure legislation, offering potential for further multi-year momentum. I would also like to thank all of our employees with a special shout-out to our purchasing, engineering, and operations teams that are businesses for their commitment, creativity, and dedication, addressing this challenging supply chain environment. In addition, I would like to express our thanks to our stockholders, distributors, dealers, and customers for their continued support. Thank you for joining us today, and we'll talk to you soon.

This concludes today's conference call. You may disconnect your lines. Thank you for participating. Have a pleasant day.