Core Viewpoint - UL Solutions is expanding its electromagnetic and wireless testing capabilities in Europe by developing a new laboratory in Neu-Isenburg, Germany, aimed at testing and certifying large-scale industrial equipment and appliances, as well as medical, consumer, and automotive products [1][2][3]. Group 1: Laboratory Development - The new laboratory will be strategically located on UL Solutions' existing campus in Neu-Isenburg, approximately 12 kilometers from Frankfurt, and will enhance the range of testing services available [4]. - The facility will include multiple large-scale chambers designed to accommodate future expansion and meet customer demand [4][6]. - It is projected to be operational by mid-2027 and will be designed as a green building, utilizing renewable energy sources and advanced energy efficiency measures [7]. Group 2: Testing Services Offered - The laboratory will provide a comprehensive range of testing and approval services for larger, complex equipment, including a 10-meter chamber for items up to 4 meters in length and weighing up to 5 tons [6]. - Wireless testing will cover various technologies such as WiFi, Bluetooth, mobile and cellular networks, GPS, and RFID, supporting manufacturers in obtaining regulatory approvals [6]. - Products to be tested include electrical devices, medical equipment, telecommunications devices, and automotive components like radar sensors and infotainment systems [6]. Group 3: Strategic Importance - This investment addresses a local gap in large-scale EMC testing, which has previously forced manufacturers to seek testing services outside the region [5]. - The facility aims to support Europe's energy transition, enable connected data ecosystems, and facilitate next-generation mobility while meeting evolving regulatory requirements [5].

Group 1 - The discussion is focused on UL Solutions, a company operating in the Testing, Inspection, and Certification (TIC) industry [1][2] - The TIC industry is recognized as one of the best business services subsectors for U.S. investors and analysts [2]

Core Insights - UL Solutions Inc. announced that Schneider Electric has achieved the first ECOLOGO Certification for an industrial product, specifically for its PowerPacT™ Molded Case Circuit Breakers [1] Group 1: Company Achievements - Schneider Electric is recognized as a global energy technology leader [1] - The ECOLOGO Certification signifies a commitment to sustainability and environmental responsibility in industrial products [1] Group 2: Industry Impact - ECOLOGO Certifications have been traditionally utilized in various sectors, including cleaning products, electronics, and personal care, indicating a broader trend towards sustainability in industrial applications [1]

Summary of UL Solutions Conference Call Company Overview - **Company**: UL Solutions (NYSE: ULS) - **Industry**: Testing, Inspection, and Certification (TIC) Key Points Business Segments and Revenue - UL Solutions operates in two main segments: industrial tech and consumer tech, with 33% of revenue being recurring from inspection and certification services [4][8][11] - Industrial tech is identified as the core focus, with historical roots in electrical safety [11][12] - Industrial segment has experienced high single-digit revenue growth, driven by mega trends such as energy transition and the proliferation of devices connected to the electrical grid [14][15] Growth Drivers - The industrial segment has seen double-digit revenue growth in 2023 and 2024, attributed to trends in energy generation and innovative uses of electrical energy [14] - Data centers and renewable energy are significant growth drivers, although specific revenue percentages tied to these sectors have not been disclosed [16][17][38] Margin Expansion - EBITDA margin expansion in the industrial segment is attributed to operational efficiencies and pricing initiatives [23][28] - Consumer segment margins have improved but are inherently lower due to higher labor intensity in testing processes [36][37] Market Position and Competitive Advantage - UL Solutions has a strong reputation in the U.S. market, benefiting from its involvement in crafting safety standards and regulations [38][39] - The company has historically outperformed industry growth rates and expects to continue this trend [39][41] Future Investments and Innovations - Plans for new laboratory facilities, including a Fire Research Center of Excellence, are set to enhance UL's capabilities in fire safety [50][72] - The company is focusing on expanding its software and advisory services, particularly in supply chain traceability and ESG reporting [51][75] Challenges and Adaptations - The consumer product division faced challenges due to tariff uncertainties, but clients have adapted to the new normal [33][34] - The company is continuously looking for ways to optimize its lab utilization and operational efficiency [31][32] Conclusion - UL Solutions is positioned for continued growth in the TIC industry, with a strong focus on industrial tech and a commitment to innovation and operational efficiency. The company is adapting to market changes and investing in future capabilities to maintain its competitive edge.

Core Insights - UL Solutions has opened its first electric motor energy efficiency testing laboratory in Japan, enhancing its position in the motor performance market and addressing the growing demand for efficiency testing services [2][3][4]. Company Developments - The new laboratory is located at the UL Solutions Ise campus and provides Japanese-language support for complex test setups, allowing local producers to demonstrate compliance with both local and international efficiency standards [3][4]. - This facility is the first independent DOE-accredited motor-testing laboratory in Japan, reinforcing UL Solutions' leadership in safety and efficiency testing [5]. Industry Context - Electric motors account for approximately 50% of electricity consumption in industrialized economies, making efficiency improvements crucial for reducing carbon emissions and conserving resources [4]. - The energy-efficient motor market was valued at $48.5 billion in 2022 and is projected to grow at a compound annual growth rate of 9.5%, reaching $119.1 billion by 2032 [6]. - The new laboratory will offer performance testing for various motor types, including servo motors and inverter-duty designs, in response to evolving regulatory requirements [4][6].

Core Points - UL Solutions Inc. has declared a quarterly dividend of $0.13 per share [1] - The dividend payment is scheduled for December 8, with a record date of November 28 [1] - UL Solutions is recognized as a global leader in applied safety science, addressing safety, security, and sustainability challenges [1]

Core Viewpoint - Investors are encouraged to consider UL Solutions Inc. (ULS) due to improving earnings estimates and positive stock momentum [1] Earnings Estimates - Analysts have shown growing optimism regarding UL Solutions Inc.'s earnings prospects, leading to a rising trend in estimate revisions [2] - The consensus earnings estimates for the next quarter and the full year have significantly increased, reflecting strong agreement among analysts [3] Current Quarter Estimates - For the current quarter, UL Solutions Inc. is expected to earn $0.46 per share, which is a decrease of 6.1% compared to the previous year [4] - Over the last 30 days, three estimates have been revised upward, resulting in a 6.37% increase in the Zacks Consensus Estimate [4] Current Year Estimates - The company is projected to earn $1.92 per share for the full year, representing a 12.9% increase from the prior year [5] - In the past month, four estimates have been raised with no negative revisions, pushing the consensus estimate up by 5.77% [5] Zacks Rank - UL Solutions Inc. currently holds a Zacks Rank 2 (Buy), indicating promising estimate revisions and potential for stock performance [6] - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [6] Stock Performance - The stock has gained 20.1% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [7]

Industry Overview - The U.S. Business Services Sector is supported by strong domestic economic fundamentals, encompassing companies that provide consulting, staffing, financial transactions, outsourcing, advertising, waste removal, building maintenance, technology services, and auction/valuation services [1] - The sector has evolved into a mature and resilient ecosystem, with revenues, income, and cash flows now above pre-pandemic levels [2] - The rapid advancement and adoption of artificial intelligence and automation technologies are reshaping the delivery of business services [2] Sector Performance - The Zacks-defined Business Services Sector ranks in the top 38% of the Zacks Sector Rank, indicating an expectation to outperform the market over the next three to six months [3] Recommended Stocks - Five business services stocks with favorable Zacks Rank are recommended: Xylem Inc. (XYL), Thomson Reuters Corp. (TRI), UL Solutions Inc. (ULS), Omnicom Group Inc. (OMC), and Veralto Corp. (VLTO), all carrying a Zacks Rank 2 (Buy) [4] Company Insights Xylem Inc. (XYL) - Xylem experiences steady demand due to the essential nature of its offerings, benefiting from robust demand for smart metering and applications in the U.S. [5] - The Water Infrastructure unit's performance is boosted by growth in transport and treatment application businesses, with an expected revenue growth rate of 3.7% and earnings growth rate of 9.6% for next year [6] Thomson Reuters Corp. (TRI) - Thomson Reuters is a leading provider of value-added information and technology across various sectors, including law, tax, accounting, and healthcare [7] - The company has an expected revenue growth rate of 7.8% and earnings growth rate of 14.2% for next year [8] UL Solutions Inc. (ULS) - UL Solutions provides safety science services across multiple segments, including Industrial, Consumer, and Software and Advisory [9] - The company has an expected revenue growth rate of 5.4% and earnings growth rate of 6.5% for next year [10] Omnicom Group Inc. (OMC) - Omnicom Group's diverse portfolio across traditional and digital marketing segments ensures revenue stability and adaptability [11] - The company has an expected revenue growth rate of 3.2% and earnings growth rate of 6.9% for next year [13] Veralto Corp. (VLTO) - Veralto is positioned for growth through U.S. infrastructure investments and rising semiconductor demand, with a strong focus on water quality and product quality segments [14][15] - The company has an expected revenue growth rate of 5.8% and earnings growth rate of 9.3% for next year [17]

Revenue Growth - Revenue for the three months ended September 30, 2025, increased by $52 million, or 7.1%, compared to the same period in 2024, reaching $783 million[101] - Organic revenue growth was $46 million, or 6.3%, driven by the Industrial and Consumer segments in Certification Testing, Non-certification Testing, and Ongoing Certification Services[102] - Revenue for the nine months ended September 30, 2025, increased by $133 million, or 6.2%, compared to the same period in 2024, reaching $2,264 million[110] - Organic revenue growth for the nine months ended September 30, 2025, was $137 million, or 6.4%, driven by the Industrial and Consumer segments[111] - Revenue for the three months ended September 30, 2025, increased by $19 million, or 5.9%, compared to the same period in 2024, driven by Non-certification Testing and Other Services revenue growth[129] - For the nine months ended September 30, 2025, revenue increased by $55 million, or 5.9%, with organic revenue growth of $54 million, primarily from Non-certification Testing and Other Services[131] Segment Performance - The Industrial segment reported revenue of $343 million, an increase of $26 million, or 8.2%, while the Consumer segment reported $340 million, up $19 million, or 5.9%[102] - Segment operating income for the Industrial segment increased by $35 million, or 14.0%, for the nine months ended September 30, 2025, driven by organic revenue growth[125] - Certification Testing revenue in the Industrial segment grew by $32 million for the nine months ended September 30, 2025, reflecting strong demand in energy and automation[124] - Industrial segment operating income increased to $104 million for Q3 2025, up from $90 million in Q3 2024, with revenue rising to $343 million from $317 million[147] - Consumer segment operating income rose to $44 million in Q3 2025, compared to $37 million in Q3 2024, with revenue increasing to $340 million from $321 million[147] Expenses and Costs - Cost of revenue increased by $16 million, or 4.3%, to $389 million, with FX contributing an increase of $5 million due to the relative strength of the euro[104] - Selling, general and administrative expenses rose by $10 million, or 4.4%, totaling $238 million, primarily due to increased employee compensation and technology costs[105] - Cost of revenue increased by $58 million, or 5.3%, for the nine months ended September 30, 2025, primarily due to higher employee compensation and professional fees[113] - Selling, general and administrative expenses rose by $18 million, or 2.6%, for the nine months ended September 30, 2025, mainly due to increased employee compensation and technology costs[114] Income and Profitability - Operating income for the three months ended September 30, 2025, was $156 million, representing a margin of 19.9%, compared to $130 million and a margin of 17.8% in the prior year[101] - Net income increased to $106 million, or 13.5% of revenue, compared to $94 million, or 12.9% of revenue, in the same period last year[101] - Adjusted EBITDA for the three months ended September 30, 2025, was $217 million, compared to $183 million in 2024, reflecting an increase in the Adjusted EBITDA margin to 27.7% from 25.0%[142] - Adjusted Net Income for Q3 2025 was $119 million, compared to $104 million in Q3 2024, with an Adjusted Net Income margin of 15.2% versus 14.2%[150] - Adjusted EBITDA for the nine months ended September 30, 2025, was $575 million, up from $487 million in the same period of 2024, reflecting a margin increase to 34.4% from 31.2%[147] Cash Flow and Capital Management - Free Cash Flow for the nine months ended September 30, 2025, was $317 million, up from $215 million in 2024, indicating improved cash generation from core operations[142] - Net cash provided by operating activities increased to $456 million for the nine months ended September 30, 2025, up from $394 million in 2024[162] - Capital expenditures decreased to $139 million for the nine months ended September 30, 2025, down from $179 million in the same period of 2024[165] Debt and Financing - A new $1.0 billion senior unsecured five-year multi-currency revolving credit facility was established, with an initial borrowing of $291 million used to refinance existing debt[83] - The 2025 Credit Facility provides for a $1.0 billion senior unsecured five-year multi-currency revolving credit facility, with an accordion feature allowing for an increase of up to $500 million[168] - The Company borrowed $291 million under the 2025 Credit Facility on October 28, 2025, to refinance outstanding amounts under the previous credit facility[169] - The Company issued $300 million in aggregate principal amount of 6.500% senior notes due 2028 in October 2023[174] Dividends and Shareholder Returns - The regular quarterly dividend was increased to 13 cents per share starting in Q1 2025, up from 12.5 cents per share[176] - In the three months ended September 30, 2025, the Company paid dividends of $26 million, compared to $25 million in the same period of 2024[177] - The Company cannot assure the continuation of dividends in future periods, as it will assess based on its dividend policy[176] Tax and Regulatory Matters - The effective tax rate for the nine months ended September 30, 2025, was 24.9%, up from 19.5% in the same period in 2024, primarily due to the impact of new corporate tax rules[116] - The Company has assessed the impact of the One Big Beautiful Bill Act and determined no material impact on its consolidated financial statements[119] Market Risks - The Company is exposed to market risks related to interest rate fluctuations on its credit facilities, which carry variable interest rates[191] - The calculation of the consolidated net leverage ratio permits netting of up to $250 million of unrestricted cash from funded debt[172] - The Company is subject to foreign currency exchange rate risk associated with the translation of local currencies into U.S. dollars[196] - Foreign currency risk is associated with revenues and expenses denominated in currencies other than the U.S. dollar, primarily the euro, Chinese renminbi, and Japanese yen[194] - The increased interest payments on the Company's variable-rate debt are not material to the Company's overall liquidity position[192] - Fluctuations in interest rates have not had a material impact on the Company's financial condition[192]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2025 was $783 million, up 7.1% year-over-year and 6.3% on an organic basis [13][14] - Adjusted EBITDA grew 18.6% to $217 million, with an Adjusted EBITDA margin of 27.7%, an increase of 270 basis points from the previous year [14][20] - Adjusted net income for Q3 was $119 million, up 14.4% from last year, with adjusted diluted earnings per share increasing to $0.56 from $0.49 [14][20] Business Line Data and Key Metrics Changes - Industrial segment revenues rose 8.2% to $343 million, with organic growth of 7.3%, driven by certification testing and ongoing services [15] - Consumer segment revenues were $340 million, up 5.9% overall and 5.3% organically, with strong demand in non-certification testing [16] - Software and advisory segment revenues increased 7.5% to $100 million, with organic growth of 6.5%, particularly strong in advisory services [17] Market Data and Key Metrics Changes - The company experienced balanced contributions from all three segments, with notable strength in energy and automation within the industrial sector [15][16] - Growth was observed across various geographic markets, with significant demand in the U.S., Greater China, and ASEAN regions [42] Company Strategy and Development Direction - The company is focusing on transformative industry trends, including energy transition and digital transformation, to drive sustainable growth [5][10] - A restructuring initiative was announced to streamline operations, reduce expenses, and focus on core growth areas, which is expected to generate annual savings [9][20] - The launch of Landmark Artificial Intelligence Safety Certification Testing was highlighted as a strategic move to build public trust in AI technologies [23] Management's Comments on Operating Environment and Future Outlook - Management noted a resilient demand for services despite geopolitical uncertainties, with a strong outlook for continued growth [10][24] - The full-year 2025 guidance was strengthened, expecting organic revenue growth of 5.5%-6.0% and an Adjusted EBITDA margin improvement to approximately 25% [20][22] Other Important Information - The company generated $317 million in free cash flow year-to-date, up 47% from the previous year, and maintained a robust balance sheet with $255 million in cash [17][18] - A new credit facility was established to enhance financial flexibility and support ongoing investments [18] Q&A Session Summary Question: Impact of macroeconomic conditions in China - Management acknowledged ongoing uncertainty due to tariffs but noted a shift towards a new normal with customers adapting to supply chain diversification [26][28] Question: Performance of the software and advisory business - Management indicated that the strong performance was due to high project completion rates, leading to increased staff utilization [29][30] Question: Tariff impacts and revenue consistency - Management reported a steady performance in Q3, with ongoing certification services showing growth despite previous volatility [34][35] Question: Details on the restructuring plan - Management clarified that the restructuring would involve exiting non-strategic service lines, allowing for a focus on higher quality growth areas [36][37] Question: Regional growth dynamics in industrial business - Management confirmed growth across all regions, with particular strength in the U.S. and Greater China, especially in data center-related services [41][42] Question: Utilization of new battery testing labs - Management expressed satisfaction with the investments in battery testing labs, noting a shift towards industrial energy storage systems [45][46] Question: Historical sources of excess costs - Management indicated that the restructuring would focus on reducing costs in testing and certification businesses, with an emphasis on process improvements [78][79] Question: Outlook for M&A opportunities - Management stated a disciplined approach to M&A, remaining active in pursuing opportunities aligned with core growth areas [93]