Third Quarter 2024 (Comparisons to Third Quarter 2023 unless
otherwise noted)1
- Strong revenue growth of 8.1% to $731 million, including 9.3%
organic growth
- Net income of $94 million or, $0.44 per diluted share
- Adjusted Net Income of $104 million increased 6.1%
- Adjusted EBITDA of $183 million increased 12.3%, Adjusted
EBITDA margin of 25.0% expanded 90 basis points
- Net cash provided by operating activities of $394 million and
Free Cash Flow of $215 million for the first nine months of
2024
UL Solutions Inc. (NYSE: ULS), a global safety science leader in
independent third-party testing, inspection and certification
services and related software and advisory offerings, today
reported results for the third quarter ended September 30,
2024.
“This is our third quarterly report since becoming a public
company and I’m very pleased that our results extended our momentum
from the first half of 2024, with all segments and regions
contributing positively,” said President and CEO Jennifer Scanlon.
“We achieved 9.3% organic revenue growth, Adjusted EBITDA margin
expansion and continued to generate substantial cash flow as we
served our customers in more than 110 countries. Certification
testing in Industrial and Consumer segments showed particular
strength reflecting megatrends and contributions from recent lab
investments.”
Scanlon added that strategic investments to meet growing
customer demand in line with global megatrends were exemplified by
the Company’s largest lab investment to date – the industrial and
EV battery testing facility in Auburn Hills, Michigan.
“This state-of-the-art, 90,000-square-foot facility opened in
August with tremendous commercial interest. We also plan to
construct a new Advanced Automotive and Battery Testing Center in
Pyeongtaek, Gyeonggi-do, Korea, expanding current UL Solutions
battery testing capacity in the region,” Scanlon said. “Our
investment-grade balance sheet, resilient business model, and
strong cash flow profile enable us to expand our capabilities and
offerings in important growth sectors, while maintaining a balanced
approach to capital allocation.”
Chief Financial Officer Ryan Robinson added, “Our strategy of
targeting high-growth sectors in the product TIC industry is
yielding positive results. Strong market tailwinds are driving
demand for our services, contributing to another quarter of robust
performance. Given our strong year-to-date performance, we're
strengthening our full-year financial outlook and are on pace to
complete our first year as a public company on strong footing.”
Third Quarter 2024 Financial Results
Revenue of $731 million compared to $676 million in the third
quarter of 2023, an increase of 8.1%. Organic growth of 9.3% across
all segments, led by Industrial and Consumer segments.
Net income of $94 million compared to $57 million in the third
quarter of 2023, an increase of 64.9%. Net income margin of 12.9%
compared to 8.4% in the third quarter of 2023, an increase of 450
basis points.
Adjusted Net Income of $104 million compared to $98 million in
the third quarter of 2023, an increase of 6.1%. Adjusted Net Income
margin of 14.2% compared to 14.5% in the third quarter of 2023, as
revenue gains were offset by higher compensation costs and interest
expense.
Adjusted EBITDA of $183 million compared to $163 million in the
third quarter of 2023, an increase of 12.3%. Adjusted EBITDA margin
of 25.0% compared to 24.1% in the third quarter of 2023, an
increase of 90 basis points. The margin expansion resulted from
higher revenue and expense management, led by the Consumer
segment.
1This press release includes references to
non-GAAP financial measures. Please refer to “Non-GAAP Financial
Measures” later in this release for the definitions of each
non-GAAP financial measures presented, as well as reconciliations
of these measures to their most directly comparable GAAP
measures.
Third Quarter 2024 Segment Performance
Industrial Segment Results
Industrial revenue of $317 million compared to $290 million in
the third quarter of 2023, an increase of 9.3%, or 11.7% on an
organic basis. Operating income of $90 million compared to $87
million in the third quarter of 2023. Operating income margin of
28.4% compared to 30.0% in the third quarter of 2023. Adjusted
EBITDA of $106 million compared to $96 million in the third quarter
of 2023, an increase of 10.4%. Adjusted EBITDA margin of 33.4%
compared to 33.1% in the third quarter of 2023. Revenue and
Adjusted EBITDA gains were driven by value-based pricing
initiatives, continued demand related to electrical products,
renewable energy and component certification testing, as well as
increased laboratory capacity. Margin improvement was driven by
both higher revenue and higher operational efficiency.
Consumer Segment Results
Consumer revenue of $321 million compared to $295 million in the
third quarter of 2023, an increase of 8.8%, or 9.2% on an organic
basis. Operating income of $37 million compared to operating loss
of $5 million in the third quarter of 2023. Operating income margin
of 11.5% compared to operating loss margin of 1.7% in the third
quarter of 2023. Adjusted EBITDA of $62 million compared to $50
million in the third quarter of 2023, an increase of 24.0%.
Adjusted EBITDA margin of 19.3% compared to 16.9% in the third
quarter of 2023. Revenue and Adjusted EBITDA gains were driven by
retail and electromagnetic compatibility testing. Margin
improvement was driven by both higher revenue and higher
operational efficiency.
Software and Advisory Segment Results
Software and Advisory revenue of $93 million compared to $91
million in the third quarter of 2023, an increase of 2.2% on a
total and organic basis. Operating income of $3 million compared to
$7 million in the third quarter of 2023. Operating income margin of
3.2% compared to 7.7% in the third quarter of 2023. Adjusted EBITDA
of $15 million compared to $17 million in the third quarter of
2023, a decrease of 11.8%. Adjusted EBITDA margin of 16.1% compared
to 18.7% in the third quarter of 2023. Revenue gains were driven by
increased software revenue. The change in margin was primarily
driven by higher compensation expenses associated with company-wide
performance-based incentives.
Liquidity and Capital Resources
For the first nine months of 2024, the Company generated $394
million of net cash provided by operating activities, an increase
from $341 million for the same period in 2023. Net cash provided by
operating activities for the first nine months of 2024 was impacted
by lower payments related to the Company’s cash-settled stock
appreciation rights.
The Company continues to make strategic capital investments in
energy transition opportunities to meet increased demand, and
capital expenditures were $179 million, an increase from $156
million for the same period in 2023. Free Cash Flow for the first
nine months was $215 million, compared to $185 million through the
third quarter of 2023.
The Company paid a dividend of $25 million during the three
months ended September 30, 2024.
As of September 30, 2024, total debt was $802 million, prior to
unamortized debt issuance costs, a decrease from December 31, 2023
due to $110 million of net repayments on the Company's revolving
credit facility.
The Company ended the quarter with cash and cash-equivalents of
$327 million compared to $315 million at December 31, 2023.
In September 2024, the Company completed a follow-on public
offering of an aggregate of 23,000,000 shares of Class A common
stock consisting entirely of secondary shares sold by the selling
stockholder. The Company did not sell any shares in the offering
and did not receive any proceeds from the sale of the shares.
Full-Year 2024 Outlook
The Company’s key points on 2024 outlook include:
- Increasing to mid-to-high single digit constant currency,
organic revenue growth
- Q4 constant currency, organic revenue growth expected to be in
the mid-to-high single digit range
- Reiterating full-year Adjusted EBITDA margin improvement
- Capital expenditures expected to be 8.0 to 8.5% of revenue
- Continuing to pursue acquisitions and portfolio
refinements
The Company’s 2024 outlook is based on a number of assumptions
that are subject to change and many of which are outside the
control of the Company. If actual results vary from these
assumptions, the Company’s expectations may change. There can be no
assurance that the Company will achieve the results expressed by
this outlook.
Conference Call and Webcast
UL Solutions will host a conference call today at 8:30 am ET to
discuss the Company’s financial results. The live webcast of the
conference call and accompanying presentation materials can be
accessed through the UL Solutions Investor Relations website at
ir.ul.com. For those unable to access the webcast, the conference
call can be accessed by dialing 877-269-7751 or 201-389-0908. An
archive of the webcast will be available on the Company’s website
for 30 days.
About UL Solutions
A global leader in applied safety science, UL Solutions Inc.
transforms safety, security and sustainability challenges into
opportunities for customers in more than 100 countries. UL
Solutions Inc. delivers testing, inspection and certification
services, together with software products and advisory offerings,
that support our customers’ product innovation and business growth.
The UL Mark serves as a recognized symbol of trust in our
customers’ products and reflects an unwavering commitment to
advancing our safety mission. We help our customers innovate,
launch new products and services, navigate global markets and
complex supply chains, and grow sustainably and responsibly into
the future. Our science is your advantage.
Investors and others should note that UL Solutions intends to
routinely announce material information to investors and the
marketplace using SEC filings, press releases, public conference
calls, webcasts and the UL Solutions Investor Relations website. We
also intend to use certain social media channels as a means of
disclosing information about us and our products to consumers, our
customers, investors and the public on our X account
(@UL_Solutions) and our LinkedIn account (@ULSolutions). The
information posted on social media channels is not incorporated by
reference in this press release or in any other report or document
we file with the SEC. While not all of the information that the
Company posts to the UL Solutions Investor Relations website or to
social media accounts is of a material nature, some information
could be deemed to be material. Accordingly, the Company encourages
investors, the media, and others interested in UL Solutions to
review the information shared on our Investor Relations website at
ir.ul.com and to regularly follow our social media accounts. Users
can automatically receive email alerts and information about the
Company by subscribing to “Investor Email Alerts” at the bottom of
the UL Solutions Investor Relations website at ir.ul.com.
Forward-Looking Statements
Certain statements in this press release, which are not
historical facts, are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
include statements regarding management’s objectives and the
Company’s plans, strategy, outlook and future financial
performance. In some cases, you can identify forward-looking
statements by the use of words such as “may,” “could,” “seek,”
“guidance,” “predict,” “potential,” “likely,” “believe,” “will,”
“expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,”
“aim,” “objectives,” “target,” “outlook,” “guidance” and
variations, or the negative, of these terms and similar
expressions. Such forward-looking statements are necessarily based
upon estimates and assumptions that, while management considers
reasonable, are inherently uncertain.
There are many risks, uncertainties and other factors that could
cause actual results to differ materially from those expressed or
implied by the forward-looking statements made in this press
release, including, but not limited to, the following:
falsification of or tampering with our reports or certificates;
increases in self-certification of products in industries in which
we provide services or corresponding decreases in third-party
certifications; any conflict of interest or perceived conflict of
interest between our testing, inspection and certification services
and our enterprise and advisory services; increased competition in
industries in which we participate; ineffectiveness of our
portfolio management techniques and strategies; adverse market
conditions or adverse changes in the political, social or legal
condition in the markets in which we operate; failure to
effectively implement our growth strategies and initiatives;
increased government regulation of industries in which we operate;
adverse government actions in respect of our operations, including
enforcement actions related to environmental, health and safety
matters; failure to retain and increase capacity at our existing
facilities or build new facilities in a timely and cost-effective
manner; failure to comply with applicable laws and regulations in
each jurisdiction in which we operate, including environmental laws
and regulations; fluctuations in foreign currency exchange rates;
imposition of or increases in customs duties and other tariffs;
deterioration of relations between the United States and countries
in which we operate, including China; changes in labor regulations
in jurisdictions in which we operate; changes in labor relations
and unionization efforts by our employees; failure to recruit,
attract and retain key employees, including through the
implementation of diversity, equity and inclusion initiatives, and
the succession of senior management; failure to recruit, attract
and retain sufficient qualified personnel to meet our customers’
needs; past and future acquisitions, joint ventures, investments
and other strategic initiatives; increases in raw material prices,
fuel prices and other operating costs; changes in services we
deliver or products we use; inability to develop new solutions or
the occurrence of defects, failures or delay with new and existing
solutions; increase in uninsured losses; ineffectiveness of
deficiencies in our enterprise risk management program; volatility
in credit markets or changes in our credit rating; actions of our
employees, agents, subcontractors, vendors and other business
partners; failure to maintain relationships with our customers,
vendors and business partners; consolidation of our customers and
vendors; disruptions in our global supply chain; changes in access
to data from external sources; pending and future litigation,
including in respect of our testing, inspection and certification
services; allegations concerning our failure to properly perform
our offered services; changes in the regulatory environment for our
industry or the industries of our customers; delays in obtaining,
failure to obtain or the withdrawal or revocation of our licenses,
approvals or other authorizations; changes in our accreditations,
approvals, permits or delegations of authority; issues with the
integrity of our data or the databases upon which we rely; failure
to manage our SaaS hosting network infrastructure capacity or
disruptions in such infrastructure; cybersecurity incidents and
other technology disruptions; risks associated with intellectual
property, including potential infringement; compliance with
agreements and instruments governing our indebtedness and the
incurrence of new indebtedness; interest rate increases; volatility
in the price of our Class A common stock; actions taken by, and
control exercised by, ULSE Inc., our parent and controlling
stockholder; ineffectiveness in, or failure to maintain, our
internal control over financial reporting; negative publicity or
changes in industry reputation; changes in tax laws and
regulations, resolution of tax disputes or imposition of audit
examinations; failure to generate sufficient cash to service our
indebtedness; constraints imposed on our ability to operate our
business or make necessary capital investments due to our
outstanding indebtedness; natural disasters and other catastrophic
events, including pandemics and the rapid spread of contagious
illnesses; and other risks discussed in our filings with the
Securities and Exchange Commission (the “SEC”), including our
Registration Statement on Form S-1, as amended (File No.
333-275468) and our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2024, as well as other factors described from time
to time in our filings with the SEC.
All forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
the cautionary statements set forth above. We caution you not to
place undue reliance on any forward-looking statements, which are
made only as of the date of this press release. We do not undertake
or assume any obligation to update publicly any of these
forward-looking statements to reflect actual results, new
information or future events, changes in assumptions or changes in
other factors affecting such forward-looking statements, except to
the extent required by law. If we update one or more
forward-looking statements, no inference should be drawn that we
will make additional updates with respect to those or other
forward-looking statements.
Non-GAAP Measures
In addition to financial measures based on accounting principles
generally accepted in the United States of America (“GAAP”), this
presentation includes supplemental non-GAAP financial information,
including the presentation of Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted Net Income, Adjusted Net Income margin, Adjusted
Diluted Earnings Per Share, Free Cash Flow and Free Cash Flow
margin. Management uses non-GAAP measures in addition to GAAP
measures to understand and compare operating results across periods
and for forecasting and other purposes. Management believes these
non-GAAP measures reflect results in a manner that enables, in some
instances, more meaningful analysis of trends and facilitates
comparison of results across periods. These non-GAAP financial
measures have no standardized meaning presented in U.S. GAAP and
may not be comparable to other similarly titled measures used by
other companies due to potential differences between the companies
in calculations. The use of these non-GAAP measures has
limitations, and they should not be considered as substitutes for
measures of financial performance and financial position as
prepared in accordance with GAAP. See “Non-GAAP Financial Measures”
below for definitions of these non-GAAP measures, and
reconciliations to their most directly comparable GAAP
measures.
Source Code: ULS-IR
UL Solutions Inc.
Condensed Consolidated Statements of
Operations
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions,
except per share data)
2024
2023
2024
2023
Revenue
$
731
$
676
$
2,131
$
1,994
Cost of revenue
373
344
1,088
1,031
Selling, general and administrative
expenses
228
206
696
644
Goodwill impairment
—
37
—
37
Operating income
130
89
347
282
Interest expense
(14
)
(7
)
(42
)
(23
)
Other income (expense), net
—
(7
)
18
8
Income before income taxes
116
75
323
267
Income tax expense
22
18
63
53
Net income
94
57
260
214
Less: net income attributable to
non-controlling interests
6
4
15
12
Net income attributable to stockholders
of UL Solutions
$
88
$
53
$
245
$
202
Earnings per common share:
Basic
$
0.44
$
0.27
$
1.23
$
1.01
Diluted
$
0.44
$
0.27
$
1.22
$
1.01
Weighted average common shares
outstanding:
Basic
200
200
200
200
Diluted
202
200
201
200
UL Solutions Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in millions,
except per share data)
September 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
327
$
315
Accounts receivable, net
354
362
Contract assets, net
223
179
Other current assets
73
97
Total current assets
977
953
Property, plant and equipment, net
602
555
Goodwill
651
623
Intangible assets, net
61
72
Operating lease right-of-use assets
183
151
Deferred income taxes
120
110
Capitalized software, net
133
139
Other assets
150
133
Total Assets
$
2,877
$
2,736
Liabilities and Stockholders’
Equity
Current liabilities:
Current portion of long-term debt
$
37
$
—
Accounts payable
138
169
Accrued compensation and benefits
223
281
Operating lease liabilities - current
37
39
Contract liabilities
253
162
Other current liabilities
57
58
Total current liabilities
745
709
Long-term debt
760
904
Pension and postretirement benefit
plans
222
232
Operating lease liabilities
153
120
Other liabilities
101
93
Total Liabilities
1,981
2,058
Total Stockholders’ Equity
896
678
Total Liabilities and Stockholders’
Equity
$
2,877
$
2,736
UL Solutions Inc.
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
Nine Months Ended September
30,
(in
millions)
2024
2023
Operating activities
Net cash flows provided by operating
activities
$
394
$
341
Investing activities
Capital expenditures
(179
)
(156
)
Acquisitions, net of cash acquired
(26
)
(18
)
Proceeds from divestitures
30
4
Other investing activities, net
—
52
Net cash flows used in investing
activities
(175
)
(118
)
Financing activities
Repayments of long-term debt, net
(110
)
—
Dividends to stockholders of UL
Solutions
(75
)
(60
)
Dividend to non-controlling interest
(15
)
(14
)
Other financing activities, net
(2
)
(1
)
Net cash flows used in financing
activities
(202
)
(75
)
Effect of exchange rate changes on cash
and cash equivalents
(5
)
(13
)
Net increase in cash and cash
equivalents
12
135
Cash and cash equivalents
Beginning of period
315
322
End of period
$
327
$
457
UL Solutions Inc.
Supplemental Financial
Information
Revenue by Major Service Category and
Revenue Growth Components
(Unaudited)
Revenue by Major Service Category
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in
millions)
2024
2023
2024
2023
Certification Testing
$
206
$
182
$
585
$
531
Ongoing Certification Services
238
217
705
653
Non-certification Testing and Other
Services
220
207
639
605
Software
67
70
202
205
Total
$
731
$
676
$
2,131
$
1,994
Revenue Change Components
Three Months Ended September
30, 2024
(in
millions)
Organic1
Acquisition /
Divestiture2
FX3
Total
Organic % Change
Total % Change
Revenue change
Industrial
$
34
$
(6
)
$
(1
)
$
27
11.7
%
9.3
%
Consumer
27
—
(1
)
26
9.2
%
8.8
%
Software and Advisory
2
—
—
2
2.2
%
2.2
%
Total
$
63
$
(6
)
$
(2
)
$
55
9.3
%
8.1
%
Revenue Change Components
Nine Months Ended September
30, 2024
(in
millions)
Organic1
Acquisition /
Divestiture2
FX3
Total
Organic % Change
Total % Change
Revenue change
Industrial
$
95
$
(12
)
$
(9
)
$
74
11.2
%
8.7
%
Consumer
62
(1
)
(11
)
50
7.1
%
5.7
%
Software and Advisory
11
2
—
13
4.2
%
4.9
%
Total
$
168
$
(11
)
$
(20
)
$
137
8.4
%
6.9
%
_________
- Organic reflects revenue change in a given period excluding
Acquisition / Divestiture and FX in that same period, expressed in
dollars or as a percentage of revenue in the prior period.
- Acquisition / Divestiture is calculated as revenue change in a
given period related to acquisitions or disposals of businesses
using prior period exchange rates, expressed in dollars or as a
percentage of revenue in the prior period. Revenues from an
acquisition or disposal are measured as Acquisition / Divestiture
for the initial twelve month period following the acquisition or
disposal date. Subsequently, the revenue impact from the acquired
or disposed business is measured as Organic.
- FX reflects the impact that foreign currency exchange rates
have on revenue in a given period, expressed in dollars or as a
percentage of revenue in the prior period. The Company uses
constant currency to calculate the FX impact on revenue in a given
period by translating current period revenues at prior period
exchange rates, expressed as a percentage of revenue in the prior
period.
UL Solutions Inc.
Supplemental Financial
Information
Non-GAAP Measures
(Unaudited)
Non-GAAP Financial Measures
In addition to financial measures determined in accordance with
GAAP, the Company considers a variety of financial and operating
measures in assessing the performance of its business. The key
non-GAAP measures the Company uses are Adjusted EBITDA, Adjusted
EBITDA margin, Adjusted Net Income, Adjusted Net Income margin,
Adjusted Diluted Earnings Per Share, Free Cash Flow and Free Cash
Flow margin, which management believes provide useful information
to investors. These measures are not financial measures calculated
in accordance with GAAP and should not be considered as a
substitute for net income, operating income, diluted earnings per
share, net cash provided by operating activities or any other
measure calculated in accordance with GAAP, and may not be
comparable to similarly titled measures reported by other
companies.
The Company uses Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted Net Income, Adjusted Net Income margin and Adjusted
Diluted Earnings Per Share to measure the operational strength and
performance of its business and believes these measures provide
additional information to investors about certain non-cash items
and unusual items that the Company does not expect to continue at
the same level in the future. Further, management believes these
non-GAAP financial measures provide a meaningful measure of
business performance and provide a basis for comparing the
Company’s performance to that of other peer companies using similar
measures. The Company uses Free Cash Flow as an additional
liquidity measure and believes it provides useful information to
investors about the cash generated from the Company’s core
operations that may be available to repay debt, make other
investments and return cash to stockholders.
There are material limitations to using these non-GAAP financial
measures. Adjusted EBITDA does not take into account certain
significant items, including depreciation and amortization,
interest expense, other expense (income), income tax expense,
stock-based compensation expense for equity-settled awards,
material asset impairment charges and restructuring expenses which
directly affect the Company’s net income, as applicable. Adjusted
Net Income and Adjusted Diluted Earnings Per Share do not take into
account certain significant items, including other expense
(income), stock-based compensation expense for equity-settled
awards, material asset impairment charges and restructuring
expenses which directly affect the Company’s net income and diluted
earnings per share, as applicable. Free Cash Flow adjusts for cash
items that are ultimately within management’s discretion to direct
and therefore may imply that there is less or more cash that is
available than the most comparable GAAP measure. Free Cash Flow is
not intended to represent residual cash flow for discretionary
expenditures since debt repayment requirements and other
non-discretionary expenditures are not deducted. These limitations
are best addressed by considering the economic effects of the
excluded items independently, and by considering these non-GAAP
financial measures in conjunction with net income, operating
income, diluted earnings per share and net cash provided by
operating activities as calculated in accordance with GAAP.
See additional information below regarding the definitions of
these non-GAAP financial measures and reconciliations of each
non-GAAP financial measure to its most directly comparable GAAP
measure.
The table below reconciles net income to Adjusted EBITDA for the
periods presented.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions,
unless otherwise stated)
2024
2023
2024
2023
Net income
$
94
$
57
$
260
$
214
Depreciation and amortization expense
43
37
125
111
Interest expense
14
7
42
23
Other expense (income), net
—
7
(18
)
(8
)
Income tax expense
22
18
63
53
Stock-based compensation
10
—
16
—
Goodwill impairment
—
37
—
37
Restructuring
—
—
(1
)
—
Adjusted EBITDA1
$
183
$
163
$
487
$
430
Revenue
$
731
$
676
$
2,131
$
1,994
Net income margin
12.9
%
8.4
%
12.2
%
10.7
%
Adjusted EBITDA margin2
25.0
%
24.1
%
22.9
%
21.6
%
__________
- The Company defines Adjusted EBITDA as net income adjusted for
depreciation and amortization expense, interest expense, other
expense (income), net, income tax expense, as well as stock-based
compensation expense for equity-settled awards, material asset
impairment charges and restructuring expenses, as applicable. The
Company believes that the presentation of Adjusted EBITDA provides
additional information to investors about certain non-cash items
and unusual items that are not expected to continue at the same
level in the future. Further, the Company believes Adjusted EBITDA
provides a meaningful measure of business performance and provides
a basis for comparing its performance to that of other peer
companies using similar measures. There are material limitations to
using Adjusted EBITDA. Adjusted EBITDA does not take into account
certain significant items, including depreciation and amortization,
interest expense, income tax expense, stock-based compensation
expense for equity-settled awards, material asset impairment
charges and restructuring expenses which directly affects the
Company's net income, as applicable. These limitations are best
addressed by considering the economic effects of the excluded items
independently, and by considering Adjusted EBITDA in conjunction
with net income as calculated in accordance with GAAP.
- Adjusted EBITDA margin is calculated as Adjusted EBITDA as a
percentage of revenue.
The table below reconciles segment operating income to segment
Adjusted EBITDA for the periods presented.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions,
unless otherwise stated)
2024
2023
2024
2023
Industrial
Segment operating income
$
90
$
87
$
250
$
242
Depreciation and amortization expense
12
9
33
26
Stock-based compensation
4
—
6
—
Adjusted EBITDA1
$
106
$
96
$
289
$
268
Revenue
$
317
$
290
$
926
$
852
Operating income margin
28.4
%
30.0
%
27.0
%
28.4
%
Adjusted EBITDA margin2
33.4
%
33.1
%
31.2
%
31.5
%
Consumer
Segment operating income (loss)
$
37
$
(5
)
$
92
$
31
Depreciation and amortization expense
20
18
59
55
Stock-based compensation
5
—
8
—
Goodwill impairment
—
37
—
37
Restructuring
—
—
(1
)
—
Adjusted EBITDA1
$
62
$
50
$
158
$
123
Revenue
$
321
$
295
$
929
$
879
Operating income (loss) margin
11.5
%
(1.7
)%
9.9
%
3.5
%
Adjusted EBITDA margin2
19.3
%
16.9
%
17.0
%
14.0
%
Software and Advisory
Segment operating income
$
3
$
7
$
5
$
9
Depreciation and amortization expense
11
10
33
30
Stock-based compensation
1
—
2
—
Adjusted EBITDA1
$
15
$
17
$
40
$
39
Revenue
$
93
$
91
$
276
$
263
Operating income margin
3.2
%
7.7
%
1.8
%
3.4
%
Adjusted EBITDA margin2
16.1
%
18.7
%
14.5
%
14.8
%
Adjusted EBITDA1
$
183
$
163
$
487
$
430
__________
- See definition on previous page.
- See definition on previous page.
The table below reconciles net income to Adjusted Net
Income.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions,
unless otherwise stated)
2024
2023
2024
2023
Net income
$
94
$
57
$
260
$
214
Other expense (income), net
—
7
(18
)
(8
)
Stock-based compensation
10
—
16
—
Goodwill impairment
—
37
—
37
Restructuring
—
—
(1
)
—
Tax effect of adjustments2
—
(3
)
2
(1
)
Adjusted Net Income1
$
104
$
98
$
259
$
242
Revenue
$
731
$
676
$
2,131
$
1,994
Net income margin
12.9
%
8.4
%
12.2
%
10.7
%
Adjusted Net Income margin3
14.2
%
14.5
%
12.2
%
12.1
%
__________
- The Company defines Adjusted Net Income as net income adjusted
for other expense (income), net, stock-based compensation expense
for equity-settled awards, material asset impairment charges and
restructuring expenses, as applicable, each net of tax. The Company
believes that the presentation of Adjusted Net Income provides
additional information to investors about certain non-cash items
and unusual items that are expected to continue at the same level
in the future. Further, the Company believes Adjusted Net Income
provides a meaningful measure of business performance and provides
a basis for comparing its performance to that of other peer
companies using similar measures. There are material limitations to
using Adjusted Net Income. Adjusted Net Income does not take into
account certain significant items, including other expense
(income), stock-based compensation expense for equity-settled
awards, material asset impairment charges and restructuring
expenses which directly affect the Company's net income, as
applicable. These limitations are best addressed by considering the
economic effects of the excluded items independently, and by
considering Adjusted Net Income in conjunction with net income as
calculated in accordance with GAAP.
- The Company computed the tax effect of adjustments to net
earnings by applying the statutory tax rate in the relevant
jurisdictions to the taxable income or expense items that are
adjusted in the period presented. If a valuation allowance exists,
the rate applied is zero.
- Adjusted Net Income margin is calculated as Adjusted Net Income
as a percentage of revenue.
The table below reconciles diluted earnings per share to
Adjusted Diluted Earnings Per Share.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Diluted earnings per share2
$
0.44
$
0.27
$
1.22
$
1.01
Other expense (income), net
—
0.03
(0.09
)
(0.04
)
Stock-based compensation
0.05
—
0.08
—
Goodwill impairment
—
0.19
—
0.19
Restructuring
—
—
(0.01
)
—
Tax effect of adjustments3
—
(0.02
)
0.01
(0.01
)
Adjusted Diluted Earnings Per Share1 2
$
0.49
$
0.47
$
1.21
$
1.15
__________
- The Company defines Adjusted Diluted Earnings Per Share as
diluted earnings per share attributable to stockholders of UL
Solutions adjusted for other expense (income), net, stock-based
compensation expense for equity-settled awards, material asset
impairment charges and restructuring expenses, as applicable. The
Company believes that the presentation of Adjusted Diluted Earnings
Per Share provides additional information to investors about
certain non-cash items and unusual items that are expected to
continue at the same level in the future. Further, the Company
believes Adjusted Diluted Earnings Per Share provides a meaningful
measure of business performance and provides a basis for comparing
its performance to that of other peer companies using similar
measures. There are material limitations to using Adjusted Diluted
Earnings Per Share. Adjusted Diluted Earnings Per Share does not
take into account certain significant items, including other
expense (income), stock-based compensation expense for
equity-settled awards, material asset impairment charges and
restructuring expenses which directly affect the Company's diluted
earnings per share, as applicable. These limitations are best
addressed by considering the economic effects of the excluded items
independently, and by considering Adjusted Diluted Earnings Per
Share in conjunction with diluted earnings per share as calculated
in accordance with GAAP.
- Diluted earnings per share and Adjusted Diluted Earnings Per
Share have been adjusted for the period ended September 30, 2023 to
reflect a 2-for-1 forward split of the Company's Class A common
stock effected on November 20, 2023.
- See definition on previous page.
The table below reconciles net cash provided by operating
activities to Free Cash Flow for the periods presented.
Nine Months Ended
September 30,
(in
millions)
2024
2023
Net cash provided by operating
activities
$
394
$
341
Capital expenditures
(179
)
(156
)
Free Cash Flow1
$
215
$
185
Revenue
$
2,131
$
1,994
Net cash provided by operating activities
margin
18.5
%
17.1
%
Free Cash Flow margin2
10.1
%
9.3
%
__________
- The Company defines Free Cash Flow as cash from operating
activities less cash outlays related to capital expenditures. The
Company defines capital expenditures to include purchases of
property, plant and equipment and capitalized software. These items
are subtracted from cash from operating activities because they
represent long-term investments that are required for normal
business activities. The Company uses Free Cash Flow as an
additional liquidity measure and believes it provides useful
information to investors about the cash generated from its core
operations that may be available to repay debt, make other
investments and return cash to stockholders. There are material
limitations to using Free Cash Flow. Free Cash Flow adjusts for
cash items that are ultimately within management’s discretion to
direct, and therefore, may imply that there is less or more cash
that is available than the most comparable GAAP measure. Free Cash
Flow is not intended to represent residual cash flow for
discretionary expenditures since debt repayment requirements and
other non-discretionary expenditures are not deducted. These
limitations are best addressed by considering the economic effects
of the excluded items independently, and by considering Free Cash
Flow in conjunction with net cash provided by operating activities
as calculated in accordance with GAAP.
- Free Cash Flow margin is calculated as Free Cash Flow as a
percentage of revenue.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105813262/en/
Media: Kathy Fieweger Senior Vice President -
Communications Kathy.Fieweger@ul.com +1 312-852-5156
Investors: Dan Scott / Rodny Nacier, ICR Inc.
IR@ul.com
UL Solutions (NYSE:ULS)
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UL Solutions (NYSE:ULS)
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