Dive Brief:
- Specialty truck and equipment manufacturer Federal Signal announced on Thursday a deal to acquire New Way Trucks. Privately owned for more than 40 years, New Way considers itself the largest manufacturer of automated side-loading trucks in the U.S.
- The offer could total up to $480 million, including $30 million for New Way's Iowa and Mississippi manufacturing facilities and $54 million tied to certain financial targets over the next two years. The deal is expected to close by the end of the year.
- Federal Signal highlighted growing MSW volumes and the sector's recession-resilient returns in a brief to investors. It also noted the share of side loaders sold in the refuse collection vehicle sector rose from 29% in 2019 to 37% in 2024, citing National Waste and Recycling Association data.
Dive Insight:
New Way has pursued several alternatives to traditional rear- and front-loading truck models, though those categories constituted 26% and 11% of the company’s revenue in 2024. Last year, the company partnered with Hyzon to pilot one of the country's first hydrogen fuel cell-powered refuse trucks. It also introduced the first automated organics collection truck in 2014, the Roto-Pac, which is also side-loading.
Last year, New Way's revenue totaled about $249 million, according to Federal Signal’s investor presentation. About 45% of its revenue came from municipalities. In addition to its heavy-duty collection trucks, New Way also sells non-CDL refuse vehicles and aftermarket parts.
Federal Signal's initial offer represents an 11x multiple on New Way's projected earnings before income, taxes, depreciation and amortization for 2026. New Way reports its share of refuse collection vehicle sales has grown by about 5% since 2019, in line with the growth of automated side-loaders.
New Way CEO Michael McLaughlin said Federal Signal would accelerate the company's growth while matching its culture.
“The opportunity to join Federal Signal marks an exciting new chapter for our company,” McLaughlin said in a statement. “As a family-owned company, we take great pride in our history of innovation, customer focus, and growth. Serving the local communities in which we operate and our commitment to employees are both of paramount importance to our company, and we believe that Federal Signal shares these values."
Federal Signal highlighted automated side-loaders as a growth point for the refuse vehicle industry. It noted the trucks require just one operator compared to two or three for a traditional rear-loader. Side-loaders are more efficient and allow for more stops per day because operators don't need to get out at each stop. This also improves safety for employees — accidents involving other vehicles remain a major risk for collection workers.
Federal Signal plans to make certain New Way procurement and supply chain processes more efficient following the sale. It noted completing a similar transition with dump truck manufacturer Ox Bodies, which it acquired as part of a larger deal in 2017. The campaign resulted in a 90% reduction in dump body product types and a more than 8% margin improvement for the newly acquired division.
As part of the integration, Federal Signal plans to combine its aftermarket footprint with New Way's to further capture the vehicle parts market. Federal Signal plans to offer New Way products in Canada through its existing distribution network in the country.
“With our deep expertise in selling refuse equipment through our direct distribution channel and our ability to leverage the power of our specialty vehicle platform, we see significant opportunities to capture synergies and accelerate New Way’s growth and margin trajectory in coming years,” Jennifer L. Sherman, president and CEO of Federal Signal, said in a statement.
