Financial Data and Key Metrics Changes - Consolidated revenues increased by 5.2% year-over-year, with organic growth of 7.6% [7][16] - Adjusted EBITDA grew by 22.9% year-over-year, with an adjusted EBITDA margin of 22.8%, up 320 basis points [8][17] - Adjusted net income for Q1 was $80 million, a 31.1% increase from $61 million in the same quarter last year [17] Business Line Data and Key Metrics Changes - Industrial segment revenues rose by 4.4% to $308 million, or 8.1% on an organic basis, driven by ongoing certification services and certification testing [18] - Consumer segment revenues were $304 million, up 6.3% year-over-year, or 7.7% on an organic basis, with strong demand across all service offerings [19] - Software and Advisory segment revenues increased by 4.5% year-over-year to $93 million, with organic growth of 5.6% [21] Market Data and Key Metrics Changes - Growth was observed across all geographic regions, with North America showing particular strength in both industrial and consumer segments [61] - The automotive electromagnetic compatibility laboratory in Japan is expected to address a growing market projected to reach $2.7 billion by 2030 [11] Company Strategy and Development Direction - The company is focusing on capacity expansions in HVAC testing facilities and developing a global fire science center of excellence [9][10] - Strategic investments are being made to align with megatrends such as global energy transition and digitalization [6][30] - The company aims to pursue strategic M&A opportunities to enhance margins and earnings [27] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed the full-year 2025 outlook despite increased macroeconomic uncertainties, expecting mid-single-digit organic revenue growth [25][26] - The company is monitoring key performance indicators closely to navigate potential risks and opportunities [14] Other Important Information - The effective tax rate for 2025 is expected to be approximately 26%, up from 16.9% in 2024 due to new tax regulations [27] - Free cash flow for Q1 was $103 million, up from $84 million in the prior year [24] Q&A Session Summary Question: Impact of tariffs on product redesign and manufacturing - Management noted that customers have been making decisions regarding tariffs for several years, with some already shifting manufacturing locations [34] Question: M&A strategy in uncertain macro backdrop - The company continues to engage in conversations about various acquisition opportunities globally, emphasizing the importance of CapEx as a growth accelerator [36] Question: Anticipated impact of tariffs on guidance - Management affirmed guidance, indicating confidence based on current business visibility and order book [41] Question: Moderation in new product launches - There has been no meaningful impact on innovation, with management maintaining close relationships with customers regarding their product development plans [42] Question: Margin expansion context - Strong operational execution across segments contributed to significant margin improvement, particularly in the Industrial segment [46] Question: Growth by geography - North America, especially in industrial sectors, continues to show strong demand, with notable growth also in Asia [61]

Q1 2025 Financial Highlights - Revenue grew by 5.2%, with organic revenue growth of 7.6%[8] - Adjusted Net Income increased by 31.1%[8] - Adjusted EBITDA increased by 22.9%, with Adjusted EBITDA margin up by 320 bps[8] - Free Cash Flow generated was $306 million for the last twelve months ended March 31, 2025[8] Q1 2025 Revenue Breakdown - Industrial segment revenue increased by 4.4% (8.1% organic) to $308 million[20, 40] - Consumer segment revenue increased by 6.3% (7.7% organic) to $304 million[24, 40] - Software and Advisory segment revenue increased by 4.5% (5.6% organic) to $93 million[27, 40] Q1 2025 Adjusted EBITDA - Adjusted EBITDA increased by 22.9% to $161 million, with a margin of 22.8%[13] Q1 2025 Adjusted Net Income - Adjusted Net Income increased by 31.1% to $80 million, with a margin of 11.3%[16] Full-Year 2025 Outlook - The company is affirming its 2025 outlook, which includes mid-single-digit constant currency organic revenue growth[34, 36] - Adjusted EBITDA margin organic improvement to approximately 24%[36] - Capital expenditures are expected to be 7% to 8% of revenue[36]

Revenue Performance - Revenue for Q1 2025 was $705 million, a 5.2% increase from $670 million in Q1 2024, with organic growth of 7.6% across all segments[3] - Revenue for the three months ended March 31, 2025, was $705 million, an increase of 5.2% compared to $670 million in 2024[48] - Certification Testing revenue was $189 million in Q1 2025, up from $176 million in Q1 2024, reflecting a growth of 7.4%[35] - Ongoing Certification Services revenue increased to $245 million in Q1 2025 from $233 million in Q1 2024, a rise of 5.2%[35] - The Industrial segment reported revenue of $308 million, a 4.4% increase, with organic growth of 8.1%[7] - The Consumer segment achieved revenue of $304 million, a 6.3% increase, with adjusted EBITDA rising 37.1% to $48 million[9] - The Software and Advisory segment's revenue was $93 million, a 4.5% increase, with adjusted EBITDA growing 30.0% to $13 million[10] Profitability Metrics - Net income rose to $71 million, an 18.3% increase from $60 million in Q1 2024, resulting in a net income margin of 10.1%, up 110 basis points[4] - Net income attributable to stockholders of UL Solutions for Q1 2025 was $67 million, up from $56 million in Q1 2024, representing a 19.6% increase[32] - Adjusted Net Income for Q1 2025 was $80 million, up 31.1% from $61 million in Q1 2024[48] - The company reported a basic earnings per share of $0.34 for Q1 2025, compared to $0.28 for Q1 2024, marking a 21.4% increase[32] - Adjusted Diluted Earnings Per Share increased to $0.37 in Q1 2025, compared to $0.28 in Q1 2024, representing a growth of 32.1%[52] - The company reported a net income margin of 10.1% for Q1 2025, up from 9.0% in Q1 2024[48] Cash Flow and Capital Expenditures - Free cash flow for Q1 2025 was $103 million, compared to $84 million in Q1 2024[12] - Free Cash Flow for the three months ended March 31, 2025, was $103 million, a 22.6% increase from $84 million in 2024[55] - The company generated $154 million in net cash flows from operating activities in Q1 2025, compared to $141 million in Q1 2024, an increase of 9.2%[34] - Net cash provided by operating activities was $154 million in Q1 2025, compared to $141 million in Q1 2024, reflecting a margin of 21.8%[55] - Capital expenditures are projected to be 7% to 8% of revenue for 2025[16] Debt and Liabilities - Total debt as of March 31, 2025, was $657 million, a decrease from the previous quarter due to $90 million in net repayments[13] - The company reported a total liabilities of $1,894 million as of March 31, 2025, compared to $1,869 million at the end of 2024, an increase of 1.3%[33] Future Outlook - The company expects mid-single digit constant currency organic revenue growth and an adjusted EBITDA margin improvement to approximately 24% for the full year 2025[16] Segment Performance - Adjusted EBITDA increased by 22.9% to $161 million, with an adjusted EBITDA margin of 22.8%, expanding 320 basis points[6] - Adjusted EBITDA for Q1 2025 was $161 million, compared to $131 million in Q1 2024, reflecting a 22.8% margin versus 19.6% margin in the prior year[41] - Operating income margin for the Industrial segment improved to 26.9% in Q1 2025 from 25.4% in Q1 2024[45] - Adjusted EBITDA margin for the Consumer segment increased to 15.8% in Q1 2025, up from 12.2% in Q1 2024[45] - Segment operating income for the Consumer segment rose to $26 million in Q1 2025, compared to $17 million in Q1 2024[45] - The Software and Advisory segment reported revenue of $93 million in Q1 2025, a slight increase from $89 million in Q1 2024[45]

Company Overview - UL Solutions Inc. (ULS) is expected to report a year-over-year increase in earnings, with a projected EPS of $0.32, reflecting a +14.3% change, and revenues of $703.87 million, up 5.1% from the previous year [3][12] Earnings Expectations - The upcoming earnings report is anticipated to be released on May 6, and the stock may rise if the actual results exceed expectations, while a miss could lead to a decline [2][12] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4][10] Earnings Surprise Prediction - The Zacks Earnings ESP model shows that the Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent changes in analyst views [10][11] - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [8][9] Historical Performance - In the last reported quarter, UL Solutions Inc. exceeded the expected EPS of $0.38 by delivering $0.49, resulting in a surprise of +28.95% [12] - Over the past four quarters, the company has beaten consensus EPS estimates three times [13] Industry Comparison - Thomson Reuters (TRI), a peer in the Zacks Business - Services industry, is expected to report an EPS of $1.06, reflecting a year-over-year decline of -4.5%, with revenues projected at $1.92 billion, up 1.8% [17] - Despite a recent downward revision of 2.6% in EPS estimates for Thomson Reuters, it has an Earnings ESP of 0.47%, indicating a likelihood of beating the consensus EPS estimate [18]

Core Insights - Evnia has formed a strategic partnership with UL Solutions to enhance environmental compliance and ecofee management for companies, particularly in relation to Extended Producer Responsibility (EPR) [1][2] - The collaboration aims to provide companies with optimized solutions to navigate the evolving regulatory landscape, especially for U.S.-based firms facing new EPR laws [2][3] - UL Solutions will leverage its expertise in North American retail product compliance to assist companies in meeting EPR requirements and product compliance obligations [2][3] Company Overview - Evnia is a North American leader in ecofee management and EPR programs, with 20 years of experience in helping businesses simplify their environmental obligations [4] - UL Solutions is a global leader in applied safety science, providing testing, inspection, and certification services, along with software products and advisory offerings to support customer innovation and growth [5]

Group 1 - The core thesis for UL Solutions (ULS) is based on the belief that the business is positioned to benefit from multiple long-term secular tailwinds [1] - The investment approach emphasizes a blend of value investing principles and a focus on long-term growth, aiming to buy quality companies at a discount to their intrinsic value [1] - The strategy involves holding investments for the long term to allow for compounding of earnings and shareholder returns [1]

Company Overview - UL Solutions provided TIC services to over 80,000 customers across more than 110 countries in 2024, maintaining over 650 technical accreditations and 76 commercial software solutions[21]. - UL Solutions employs approximately 14,813 full-time employees, with a technical team of about 9,800 scientists and engineers, boasting an average tenure of nine years[37]. - The company operates in 26 countries with 91 sites, indicating a significant international presence[92]. - The company has opened additional laboratories in Mexico, South Korea, Vietnam, and Taiwan since 2022[78]. - The company has opened new laboratories in Mexico, Vietnam, Taiwan, South Korea, and the United States since 2022, and is constructing new facilities in Italy, China, Singapore, and the United States[116]. Revenue Generation - The company generated revenue through four major service categories: Certification Testing (27%), Ongoing Certification Services (33%), Non-certification Testing and Other Services (30%), and Software (10%) in 2024[33][34][35][36]. - Approximately 59.0% of the company's revenue was generated from customers outside the United States in 2024[78]. - Revenue from fixed-price agreements represented the majority of total revenue for the year ended December 31, 2024[136]. Growth Strategy - UL Solutions aims to enhance its core businesses by increasing wallet share with current and new customers, focusing on evolving customer needs and accelerating cross-sell and up-sell activities[27]. - The company intends to pursue targeted, accretive M&A to grow its core and expand into attractive adjacencies and end markets, leveraging its strong balance sheet and free cash flow[31]. - The company's growth strategy includes pursuing strategic transactions and acquisitions, but it may face challenges in finding suitable targets[60]. - Future growth will depend on developing new customer relationships and expanding services, requiring enhancements to operational and financial systems[120]. - The company plans to pursue strategic acquisitions, but finding suitable targets at favorable prices may be challenging[121]. Competitive Landscape - The global TIC industry remains highly fragmented, with UL Solutions competing against both large public firms and private players, emphasizing its independent third-party status and technical expertise as competitive advantages[43]. - The company's business is highly competitive, and failure to innovate or respond to market changes could adversely affect its financial condition[59]. - The TIC industry is highly competitive and fragmented, with potential loss of market share if service quality issues arise[63]. - The company competes on quality, service, reputation, and cost, and must maintain a favorable geographic dispersion to retain market share[74]. Risks and Challenges - The company faces significant risks related to cybersecurity, which could adversely affect its business and operations[59]. - The company is subject to various international, federal, state, and local laws regarding environmental health and safety, which could increase operating costs[49]. - Global economic instability, including inflation and rising interest rates, may negatively affect customer purchasing behavior[84]. - The company faces risks related to compliance with anti-corruption laws, which could result in substantial fines and harm its reputation[81]. - Increased trade tariffs and restrictions, particularly with mainland China, could raise service costs and reduce customer demand[87]. - The company is subject to various risks associated with international operations, including compliance with complex laws and regulations[79]. - The company may incur significant additional costs if it fails to meet ESG standards or stakeholder expectations, potentially impacting its reputation and financial condition[105]. - The company faces increasing scrutiny related to ESG issues, which may result in increased costs and impact financial condition[102]. Technology and Innovation - The company is digitizing information gathering and analysis to provide cohesive TIC software solutions, enhancing customer experience and operational efficiencies[43]. - The introduction of AI technologies may disrupt the TIC industry, potentially reducing demand for services[64]. - The company is investing in expanding AI capabilities in its products and services, but faces significant competition and regulatory challenges[65]. - The evolving regulatory landscape regarding AI may require substantial resources to ensure compliance, impacting operational efficiency[68]. - The company’s ability to implement new technologies and adapt to evolving customer and regulatory requirements is critical for maintaining market reputation and financial performance[206]. Customer Relations - Customer satisfaction is crucial, as any decline could adversely affect the company's financial condition and results of operations[208]. - Customer satisfaction is crucial for maintaining agreements and generating recurring revenue, but there is no guarantee that customers will continue purchasing services[209]. - Customer retention rates may decline due to factors such as service satisfaction, pricing, and competition, potentially harming revenue and operating results[210]. - Acceptance of third-party test results could negatively impact demand for services and lead to reputational damage if products fail to meet expectations[211]. Compliance and Legal Issues - The company is subject to fines of up to RMB 50 million or 5% of the prior year's total annual revenue for non-compliance with the Personal Information Protection Law (PIPL)[159]. - Under the Data Security Law, penalties for breach can result in fines of up to RMB 10 million (approximately $1.39 million) for serious violations[163]. - The Cybersecurity Law requires operators of critical information infrastructure to store personal information within China, with penalties for non-compliance reaching up to RMB 1 million[160]. - The company must obtain approval from the State Administration for Foreign Exchange (SAFE) to use cash generated from its China-based operations for dividends or capital expenditures outside China[168]. - The company is required to implement standard contractual clauses for transferring personal information outside of China, with specific thresholds for compliance[159]. Operational Challenges - The company has experienced laboratory equipment shortages due to global supply chain disruptions, which may impact revenue growth and profitability[116]. - The company's selling cycle for certain services can take between six months to one year, leading to long lead times before revenue is realized[118]. - The company may face adverse effects on its business if it fails to meet contractual schedule requirements or performance standards[117]. - The company has implemented measures to protect data confidentiality, integrity, and availability, but cannot guarantee their effectiveness[177]. - Company may incur significant costs related to ransomware attacks, including ransom payments and compliance with various laws[184]. Environmental and Safety Concerns - The company operates in hazardous environments, which poses risks of injury and environmental liability[101]. - The company has significant operations involving hazardous materials, subject to strict environmental laws, which could result in substantial fines or operational shutdowns for violations[171].

Financial Data and Key Metrics Changes - For the full year 2024, the company reported revenues of $2.9 billion, an increase of 7.2% compared to 2023, and an 8.7% increase on an organic basis [13] - Adjusted EBITDA for the full year grew by 16.5%, with an adjusted EBITDA margin expansion of 190 basis points [15] - Free cash flow for the full year was $287 million, up from $252 million in 2023 [33] Performance by Business Segment - The Industrial segment led growth with a full year increase of 9.4%, including 11.9% organic growth [14] - The Consumer segment grew by 5.6%, with 6.9% organic growth [14] - The Software & Advisory segment reported 5% top line growth, with 4.4% organic growth [14] Market Data and Key Metrics Changes - Consolidated revenue for Q4 2024 was $739 million, up 8.0% year-over-year, with organic growth of 9.5% [22] - The Industrial segment achieved 13.9% organic growth in Q4, marking seven consecutive quarters of double-digit organic revenue growth [25] - The Consumer segment's revenue was $309 million, up 5.5% from the previous year, with a 6.5% organic growth [28] Company Strategy and Industry Competition - The company focuses on megatrends such as global energy transition, electrification, and digitalization to drive growth [10] - The management emphasizes a disciplined capital allocation strategy, including investments in acquisitions and organic growth initiatives [18] - The company aims to maintain an investment-grade rating while pursuing strategic M&A opportunities [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth despite potential normalization in ongoing certification services due to tariff anticipation [56] - The company expects mid-single-digit organic revenue growth for 2025, following an 8.7% growth in 2024 [36] - The effective tax rate for 2025 is anticipated to be approximately 26%, up from 16.9% in 2024, due to changes in tax regulations [39] Other Important Information - The company opened new labs and made two acquisitions in 2024 to align with growth trends [35] - The U.S. Federal Communications Commission appointed the company as the lead administrator for the Cyber Trust Mark program, enhancing its role in cybersecurity [42] Q&A Session Summary Question: Can you comment on your 2025 outlook by each of your three segments? - Management sees opportunities in all three segments, with continued growth expected [48] Question: What are the expectations for the Industrial segment's strength in 2025? - Management noted ongoing certification services may normalize, but the underlying megatrends remain strong [52][56] Question: How do tariffs impact the business? - Historically, tariffs have not materially affected the business; instead, they often lead to increased testing demand as manufacturers adjust their strategies [68] Question: Can you elaborate on the margin guidance for 2025? - The company aims for approximately 24% adjusted EBITDA margin, reflecting ongoing operational improvements [77] Question: What is the impact of foreign exchange on margins? - A 1% headwind is expected from foreign exchange, but it is largely offset by reduced expenses [126] Question: What are the drivers of growth in the software business? - The software business is seeing growth due to strong demand for compliance and sustainability solutions [148]

Earnings Presentation Q4 2024 UL SOLUTIONS INC. February 20, 2025 © 2025 UL LLC. All Rights Reserved. Forward looking statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, about UL Solutions' (the "Company") financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "may," "will," "should," "would," "l ...

Revenue Growth - Fourth Quarter 2024 revenue reached $739 million, an increase of 8.0% compared to $684 million in Q4 2023, with organic growth of 9.5% across all segments[4] - For the full year 2024, total revenue was $2.9 billion, reflecting a 7.2% increase, with organic growth of 8.7%[7] - Revenue for Q4 2024 was $739 million, a 8.1% increase from $684 million in Q4 2023[29] - The company reported a total revenue growth of 7.2% for the year ended December 31, 2024, compared to the previous year[34] - Revenue for Q4 2024 reached $739 million, a 8.1% increase from $684 million in Q4 2023, with total revenue for 2024 at $2,870 million, up from $2,678 million in 2023[43] Net Income and Margins - Net income for Q4 2024 was $85 million, a 37.1% increase from $62 million in Q4 2023, resulting in a net income margin of 11.5%, up 240 basis points[5] - Net income attributable to stockholders rose to $81 million in Q4 2024, compared to $58 million in Q4 2023, marking a 39.7% increase[29] - Net income for Q4 2024 was $85 million, up 37.1% from $62 million in Q4 2023, with a full-year net income of $345 million compared to $276 million in 2023[43] - The net income margin improved to 11.5% in Q4 2024 from 9.1% in Q4 2023, while the adjusted net income margin increased to 13.8% from 9.1% in the same period[49] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $169 million, a 27.1% increase from $133 million in Q4 2023, with an adjusted EBITDA margin of 22.9%, expanding 350 basis points[8] - Adjusted EBITDA for the year ended December 31, 2024, was not specified but is a key non-GAAP measure used by management to assess performance[38] - Adjusted EBITDA for Q4 2024 was $169 million, representing a 27.1% increase from $133 million in Q4 2023, with a full-year adjusted EBITDA of $656 million compared to $563 million in 2023[43] Segment Performance - The Industrial segment reported revenue of $328 million, an 11.6% increase, with an adjusted EBITDA margin of 32.0%, up from 26.9% in Q4 2023[9] - The Consumer segment achieved revenue of $309 million, a 5.5% increase, with an adjusted EBITDA margin of 14.6%, up from 12.3% in Q4 2023[10] - The Industrial segment reported revenue of $328 million in Q4 2024, up from $294 million in Q4 2023, with an adjusted EBITDA margin of 32.0% compared to 26.9% in the prior year[47] - The Consumer segment's revenue increased to $309 million in Q4 2024 from $293 million in Q4 2023, with an adjusted EBITDA margin of 14.6%, up from 12.3%[47] - The Software and Advisory segment generated revenue of $102 million in Q4 2024, compared to $97 million in Q4 2023, maintaining an adjusted EBITDA margin of 18.6%[47] Cash Flow and Operating Activities - The company generated $524 million in net cash from operating activities for the year, up from $467 million in 2023[12] - Free Cash Flow for 2024 was $287 million, compared to $252 million in 2023[13] - Free cash flow for the year ended December 31, 2024, was $524 million, up from $467 million in 2023[31] - Free Cash Flow for 2024 was $287 million, an increase from $252 million in 2023, with a Free Cash Flow margin of 10.0% compared to 9.4% in 2023[57] Future Outlook - The company expects mid-single digit constant currency organic revenue growth for 2025[16] - Capital expenditures are projected to be 7% to 8% of revenue, with continued focus on acquisitions and portfolio refinements[23] Assets and Equity - Total assets increased to $2.8 billion as of December 31, 2024, compared to $2.736 billion at the end of 2023[30] - The total stockholders' equity increased to $931 million as of December 31, 2024, from $678 million at the end of 2023[30] Earnings Per Share - The company reported a diluted earnings per share of $0.40 for Q4 2024, up from $0.29 in Q4 2023, with adjusted diluted earnings per share rising to $0.49 from $0.29[54] Interest Expense - Interest expense increased to $13 million in Q4 2024 from $12 million in Q4 2023, while total interest expense for the year was $55 million, up from $35 million in 2023[43]