UL Solutions Inc.(US:ULS)2025-11-04 21:46Revenue 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]