UL Solutions Inc. Reports Strong First Quarter 2024 Results
UL Solutions Inc. (NYSE: ULS) reported strong results for Q1 2024 ending March 31st. Revenue grew by 6.5% to $670 million, with 7.5% organic growth. Net income rose to $60 million, translating to $0.28 per diluted share. Adjusted net income increased by 13% to $61 million, and adjusted EBITDA grew by 18% to $131 million, expanding the margin to 19.6%. The company completed an upsized IPO on April 12th, 2024. Despite a decrease in operating cash flow to $141 million and free cash flow to $84 million, UL Solutions maintained strong cash generation and ended the quarter with $344 million in cash and equivalents. Each business segment, especially Industrial and Consumer, showed robust growth, with significant gains in revenue and EBITDA. However, the Software and Advisory segment reported a small operating loss. The company forecasts mid-single-digit organic revenue growth for 2024, driven by trends like electrification and digitalization.
- Revenue increased by 6.5% to $670 million.
- Organic growth reached 7.5%.
- Net income rose by 3.4% to $60 million.
- Adjusted net income increased 13% to $61 million.
- Adjusted EBITDA grew by 18% to $131 million.
- Adjusted EBITDA margin expanded by 200 basis points to 19.6%.
- Net cash provided by operating activities was $141 million.
- Free cash flow was $84 million.
- Ended Q1 2024 with $344 million in cash and equivalents.
- Industrial segment revenue grew by 9.3% to $295 million.
- Consumer segment revenue increased by 4% to $286 million.
- Consumer segment Adjusted EBITDA rose by 66.7% to $35 million.
- Completed an upsized initial public offering in April 2024.
- Net income margin decreased by 20 basis points to 9.0%.
- Operating cash flow decreased from $161 million to $141 million.
- Free cash flow declined from $98 million to $84 million.
- Total debt was $885 million as of March 31, 2024.
- Software and Advisory segment reported an operating loss of $1 million.
- Operating income margin for the Industrial segment decreased by 1.3%.
Insights
UL Solutions Inc.'s first quarter results for 2024 show significant financial growth and stability. The company reported a 6.5% increase in revenue to $670 million, with an even stronger 7.5% organic growth. This growth is particularly notable given the varied macroeconomic conditions. Net income of $60 million represents a modest increase of 3.4%, reflecting steady profitability. The adjusted figures reveal a more pronounced improvement with Adjusted Net Income up by 13.0% and Adjusted EBITDA up by 18.0%.
From a retail investor's viewpoint, these metrics indicate a robust underlying business that is navigating market demands effectively. The expansion of the Adjusted EBITDA margin by 200 basis points to 19.6% suggests that the company's cost management and operational efficiencies are yielding positive results. The decrease in net income margin by 20 basis points could be seen as a minor area of concern but is outweighed by the overall financial health and growth metrics.
Additionally, the company’s Free Cash Flow of $84 million and strong balance sheet, with net cash provided by operating activities at $141 million, highlight its good cash management practices. This financial strength positions UL Solutions well for future growth and potential acquisitions, in line with their capital allocation strategy.
The recent initial public offering (IPO) also stands out as a major milestone. Pricing at the higher end of the range and listing on April 12, 2024, could indicate strong market confidence and demand for the company's shares.
Rating: 1
UL Solutions Inc. operates in the safety science sector, providing testing, inspection, certification services and related software and advisory offerings. The company's diverse portfolio across different segments has contributed to balanced revenue growth. The Industrial segment's revenue growth of 9.3% and operating income margin of 25.4% indicate strong demand in electrical product, renewable energy and component certification testing.
In the Consumer segment, a significant increase in Adjusted EBITDA margin from 7.6% to 12.2% shows improved operational efficiency and expense management. This segment's revenue was driven by electromagnetic compatibility testing and improved retail demand, which are likely trends continuing into the foreseeable future.
The Software and Advisory segment presents a mixed picture. While revenue increased by 6.0%, the operating loss of $1 million raises questions about cost management and pricing strategies in this division. However, this is somewhat mitigated by the flat Adjusted EBITDA, indicating stable underlying operations.
The company's focus on megatrends such as the “Electrification of Everything,” digitalization and sustainability is strategic. These are key growth drivers in the current market landscape. The planned divestiture of the industrial payments testing business and continued pursuit of tuck-in acquisitions are strategic moves to streamline operations and enhance core competencies.
Rating: 1
UL Solutions Inc. is capitalizing on several emerging technology trends, positioning its business to address evolving market demands. The company's growth is partly fueled by advancements in technology and market trends like energy transition and connected technologies. This is evident in the 7.5% organic growth of their revenue, driven by sectors such as renewable energy and electrical product certification.
The emphasis on megatrends like the “Electrification of Everything” and digitalization reflects UL Solutions' strategic alignment with significant industrial shifts. These trends necessitate rigorous testing and certification services, for which UL Solutions is well-positioned due to its extensive expertise and infrastructure.
The company's commitment to continuous investment in technology and processes highlights a proactive approach to maintaining and enhancing its service capabilities. This includes expanding laboratory capacity and improving operational efficiencies.
Investors can view UL Solutions as a forward-thinking entity that is not just keeping pace with technological advances but is actively leveraging them to drive growth. This strategic focus on technological alignment with market needs supports sustained long-term growth prospects.
Rating: 1
First Quarter 2024 (Comparisons to First Quarter 20231)
-
Strong revenue growth of
6.5% to$670 million 7.5% organic growth -
Net income of
$60 million $0.28 -
Adjusted Net Income of
$61 million 13.0% -
Adjusted EBITDA of
$131 million 18.0% , Adjusted EBITDA margin of19.6% expanded 200 basis points -
Net cash provided by operating activities of
$141 million $84 million - Completed upsized initial public offering at the higher end of the price range and listed on April 12th, 2024
“UL Solutions is a trusted provider of science-based solutions that help our customers ensure their products meet important safety standards worldwide, and our first quarter results reflect continued strong demand for our market-leading services,” said President and CEO Jennifer Scanlon. “All three segments across all regions provided balanced contributions, highlighting how our strategy and diverse portfolio produce steady and predictable growth in our business.”
Scanlon continued, “We are continuously investing in our people, technology and processes to enhance our capabilities in our constantly evolving markets. The world is complex and demanding, and as the product testing, inspection and certification industry’s role continues to grow, we will look to expand our leadership position.”
Chief Financial Officer Ryan Robinson added, “Technology advancements and market trends such as energy transition and connected technologies are driving change across the end markets we serve, as we achieved organic revenue growth of
First Quarter 2024 Financial Results
Revenue of
Net income of
Adjusted Net Income of
Adjusted EBITDA of
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. |
First Quarter 2024 Segment Performance
Industrial Segment Results
Industrial revenue of
Consumer Segment Results
Consumer revenue of
Software and Advisory Segment Results
Software and Advisory revenue of
Liquidity and Capital Resources
For the first three months of 2024, the Company generated
The Company continues to make strategic capital investments in energy transition opportunities to meet increased demand, and for the first three months of 2024 capital expenditures totaled
As of March 31, 2024, total debt was
The Company ended the quarter with cash and cash-equivalents of
In April 2024, the Company completed its upsized initial public offering of Class A common stock consisting entirely of secondary shares sold by the selling stockholder. UL Solutions did not sell any shares in the offering and did not receive any proceeds from the sale of the shares. At the time of the initial public offering, the Company had 200,000,000 and 200,022,486 basic and diluted shares outstanding, respectively.
Full-Year 2024 Outlook
Our key points on 2024 outlook include:
-
Mid-single digit steady constant currency, organic revenue growth is expected to continue
- “Electrification of Everything” along with Digitalization and Sustainability megatrends are fueling growth in all segments
-
Divestiture of Industrial payments testing business will reduce revenue by approximately
$40 million
- Adjusted EBITDA margin improvement expected from increased productivity
-
Capital expenditures expected to remain at approximately 7
-8% of revenue - Tuck-in acquisition opportunities continue to be pursued
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
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
UL Solutions Inc. |
||||||||
Condensed Consolidated Statements of Operations |
||||||||
(Unaudited) |
||||||||
Three Months Ended March 31, |
||||||||
(in millions, except per share data) |
2024 |
2023 |
||||||
Revenue |
$ |
670 |
|
$ |
629 |
|
||
Cost of revenue |
|
351 |
|
|
335 |
|
||
Selling, general and administrative expenses |
|
228 |
|
|
219 |
|
||
Operating income |
|
91 |
|
|
75 |
|
||
Interest expense |
|
(15 |
) |
|
(8 |
) |
||
Other (expense) income, net |
|
(3 |
) |
|
5 |
|
||
Income before income taxes |
|
73 |
|
|
72 |
|
||
Income tax expense |
|
13 |
|
|
14 |
|
||
Net income |
|
60 |
|
|
58 |
|
||
Less: net income attributable to non-controlling interests |
|
4 |
|
|
3 |
|
||
Net income attributable to stockholder of UL Solutions |
$ |
56 |
|
$ |
55 |
|
||
|
|
|
||||||
Earnings per common share: |
|
|
||||||
Basic |
$ |
0.28 |
|
$ |
0.28 |
|
||
Diluted |
$ |
0.28 |
|
$ |
0.28 |
|
||
|
|
|
||||||
Weighted average common shares outstanding: |
|
|
||||||
Basic |
|
200 |
|
|
200 |
|
||
Diluted |
|
200 |
|
|
200 |
|
||
UL Solutions Inc. |
||||||
Condensed Consolidated Balance Sheets |
||||||
(Unaudited) |
||||||
(in millions, except per share data) |
March 31, 2024 |
December 31, 2023 |
||||
Assets |
|
|
||||
Current assets: |
|
|
||||
Cash and cash equivalents |
$ |
344 |
$ |
315 |
||
Accounts receivable, net |
|
429 |
|
362 |
||
Contract assets, net |
|
193 |
|
179 |
||
Other current assets |
|
85 |
|
97 |
||
Total current assets |
|
1,051 |
|
953 |
||
Property, plant and equipment, net |
|
555 |
|
555 |
||
Goodwill |
|
618 |
|
623 |
||
Intangible assets, net |
|
66 |
|
72 |
||
Operating lease right-of-use assets |
|
147 |
|
151 |
||
Deferred income taxes |
|
112 |
|
110 |
||
Capitalized software, net |
|
136 |
|
139 |
||
Other assets |
|
134 |
|
133 |
||
Total Assets |
$ |
2,819 |
$ |
2,736 |
||
Liabilities and Stockholder’s Equity |
|
|
||||
Current liabilities: |
|
|
|
|
||
Accounts payable |
$ |
156 |
$ |
169 |
||
Accrued compensation and benefits |
|
170 |
|
281 |
||
Operating lease liabilities - current |
|
37 |
|
39 |
||
Contract liabilities |
|
385 |
|
162 |
||
Other current liabilities |
|
81 |
|
58 |
||
Total current liabilities |
|
829 |
|
709 |
||
Long-term debt |
|
867 |
|
904 |
||
Pension and postretirement benefit plans |
|
227 |
|
232 |
||
Operating lease liabilities |
|
116 |
|
120 |
||
Other liabilities |
|
97 |
|
93 |
||
Total Liabilities |
|
2,136 |
|
2,058 |
||
Total Stockholder’s Equity |
|
683 |
|
678 |
||
Total Liabilities and Stockholder’s Equity |
$ |
2,819 |
$ |
2,736 |
||
UL Solutions Inc. |
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(Unaudited) |
||||||||
Three Months Ended March 31, |
||||||||
(in millions) |
2024 |
2023 |
||||||
Operating activities |
|
|
||||||
Net cash flows provided by operating activities |
$ |
141 |
|
$ |
161 |
|
||
|
|
|
||||||
Investing activities |
|
|
||||||
Capital expenditures |
|
(57 |
) |
|
(63 |
) |
||
Other investing activities, net |
|
— |
|
|
(12 |
) |
||
Net cash flows used in investing activities |
|
(57 |
) |
|
(75 |
) |
||
|
|
|
||||||
Financing activities |
|
|
||||||
(Repayments of) proceeds from long-term debt, net |
|
(25 |
) |
|
30 |
|
||
Dividend to stockholder of UL Solutions |
|
(25 |
) |
|
(20 |
) |
||
Other financing activities, net |
|
1 |
|
|
— |
|
||
Net cash flows (used in) provided by financing activities |
|
(49 |
) |
|
10 |
|
||
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents |
|
(6 |
) |
|
— |
|
||
|
|
|
||||||
Net increase in cash and cash equivalents |
|
29 |
|
|
96 |
|
||
|
|
|
||||||
Cash and cash equivalents |
|
|
||||||
Beginning of period |
|
315 |
|
|
322 |
|
||
End of period |
$ |
344 |
|
$ |
418 |
|
||
UL Solutions Inc. |
||||||
Supplemental Financial Information |
||||||
Revenue by Major Service Category and Revenue Growth Components |
||||||
(Unaudited) |
||||||
Revenue by Major Service Category |
Three Months Ended March 31, |
|||||
(in millions) |
2024 |
2023 |
||||
Certification Testing |
$ |
176 |
$ |
161 |
||
Ongoing Certification Services |
|
233 |
|
219 |
||
Non-certification Testing and Other Services1 |
|
194 |
|
182 |
||
Software1 |
|
67 |
|
67 |
||
Total |
$ |
670 |
$ |
629 |
||
__________ |
||
1. |
The Company has reclassified revenue transactions related to advisory services that were previously included within the Software and Advisory service category (now known as Software) to the Non-certification Testing and Other Services category (previously known as Non-certification Testing, Inspections and Audit) for the three months ended March 31, 2023 to conform to the current period's presentation. |
|
Revenue Change Components |
Three Months Ended March 31, 2024 |
|||||||||||||||||||
(in millions) |
Organic1 |
Acquisition2 |
FX3 |
Total |
Organic % Change |
Total % Change |
||||||||||||||
Revenue change |
|
|
|
|
|
|
||||||||||||||
Industrial |
$ |
27 |
$ |
1 |
|
$ |
(3 |
) |
$ |
25 |
10.0 |
% |
9.3 |
% |
||||||
Consumer |
|
16 |
|
(1 |
) |
|
(4 |
) |
|
11 |
5.8 |
% |
4.0 |
% |
||||||
Software and Advisory |
|
4 |
|
1 |
|
|
— |
|
|
5 |
4.8 |
% |
6.0 |
% |
||||||
Total |
$ |
47 |
$ |
1 |
|
$ |
(7 |
) |
$ |
41 |
7.5 |
% |
6.5 |
% |
||||||
__________ |
||
1. |
Organic reflects revenue change in a given period excluding Acquisition and FX in that same period, expressed in dollars or as a percentage of revenue in the prior period. |
|
2. |
Acquisition 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 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. |
|
3. |
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 and Free Cash Flow, 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 March 31, |
||||||||
(in millions, unless otherwise stated) |
2024 |
2023 |
||||||
Net income |
$ |
60 |
|
$ |
58 |
|
||
Depreciation and amortization expense |
|
41 |
|
|
36 |
|
||
Interest expense |
|
15 |
|
|
8 |
|
||
Other expense (income), net |
|
3 |
|
|
(5 |
) |
||
Income tax expense |
|
13 |
|
|
14 |
|
||
Restructuring |
|
(1 |
) |
|
— |
|
||
Adjusted EBITDA1 |
$ |
131 |
$ |
111 |
||||
Revenue |
$ |
670 |
|
$ |
629 |
|
||
Net income margin |
|
9.0 |
% |
|
9.2 |
% |
||
Adjusted EBITDA margin2 |
|
19.6 |
% |
|
17.6 |
% |
||
__________ |
||
1. |
The Company defines Adjusted EBITDA as net income adjusted for depreciation and amortization expense, interest expense, other expense (income), 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. |
|
2. |
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 March 31, |
||||||||
(in millions, unless otherwise stated) |
2024 |
2023 |
||||||
Industrial |
|
|
||||||
Segment operating income |
$ |
75 |
|
$ |
72 |
|
||
Depreciation and amortization expense |
|
11 |
|
|
8 |
|
||
Adjusted EBITDA1 |
$ |
86 |
|
$ |
80 |
|
||
Revenue |
$ |
295 |
|
$ |
270 |
|
||
Operating income margin |
|
25.4 |
% |
|
26.7 |
% |
||
Adjusted EBITDA margin2 |
|
29.2 |
% |
|
29.6 |
% |
||
Consumer |
|
|
||||||
Segment operating income |
$ |
17 |
|
$ |
3 |
|
||
Depreciation and amortization expense |
|
19 |
|
|
18 |
|
||
Restructuring |
|
(1 |
) |
|
— |
|
||
Adjusted EBITDA1 |
$ |
35 |
|
$ |
21 |
|
||
Revenue |
$ |
286 |
|
$ |
275 |
|
||
Operating income margin |
|
5.9 |
% |
|
1.1 |
% |
||
Adjusted EBITDA margin2 |
|
12.2 |
% |
|
7.6 |
% |
||
Software and Advisory |
|
|
||||||
Segment operating loss |
$ |
(1 |
) |
$ |
— |
|
||
Depreciation and amortization expense |
|
11 |
|
|
10 |
|
||
Adjusted EBITDA1 |
$ |
10 |
|
$ |
10 |
|
||
Revenue |
$ |
89 |
|
$ |
84 |
|
||
Operating loss margin |
|
(1.1 |
)% |
|
— |
% |
||
Adjusted EBITDA margin2 |
|
11.2 |
% |
|
11.9 |
% |
||
|
|
|
||||||
Adjusted EBITDA1 |
$ |
131 |
|
$ |
111 |
|
||
__________ |
||
1. |
See definition on previous page. |
|
2. |
See definition on previous page. |
|
The table below reconciles net income to Adjusted Net Income.
Three Months Ended March 31, |
||||||||
(in millions, unless otherwise stated) |
2024 |
2023 |
||||||
Net income |
$ |
60 |
|
$ |
58 |
|
||
Other expense (income), net |
|
3 |
|
|
(5 |
) |
||
Restructuring |
|
(1 |
) |
|
— |
|
||
Tax effect of adjustments2 |
|
(1 |
) |
|
1 |
|
||
Adjusted Net Income1 |
$ |
61 |
|
$ |
54 |
|
||
Revenue |
$ |
670 |
|
$ |
629 |
|
||
Net income margin |
|
9.0 |
% |
|
9.2 |
% |
||
Adjusted Net Income margin3 |
|
9.1 |
% |
|
8.6 |
% |
||
__________ |
||
1. |
The Company defines Adjusted Net Income as net income adjusted for other expense (income), 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. |
|
2. |
The Company computed the tax effect of adjustments to net earnings by applying the statutory tax rate in the relevant jurisdictions to the income or expense items that are adjusted in the period presented. If a valuation allowance exists, the rate applied is zero. |
|
3. |
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 March 31, |
||||||||
|
2024 |
2023 |
||||||
Diluted earnings per share2 |
$ |
0.28 |
|
$ |
0.28 |
|
||
Other expense (income), net |
|
0.02 |
|
|
(0.03 |
) |
||
Restructuring |
|
(0.01 |
) |
|
— |
|
||
Tax effect of adjustments3 |
|
(0.01 |
) |
|
0.01 |
|
||
Adjusted Diluted Earnings Per Share1 2 |
$ |
0.28 |
|
$ |
0.26 |
|
||
__________ |
||
1. |
The Company defines Adjusted Diluted Earnings Per Share as diluted earnings per share attributable to stockholder of UL Solutions adjusted for other expense (income), 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. |
|
2. |
Diluted earnings per share and Adjusted Diluted Earnings Per Share have been adjusted for the period ended March 31, 2023 to reflect a 2-for-1 forward split of the Company's Class A common stock effected on November 20, 2023. |
|
3. |
See definition on previous page |
|
The table below reconciles net cash provided by operating activities to Free Cash Flow for the periods presented.
Three Months Ended March 31, |
||||||||
(in millions) |
2024 |
2023 |
||||||
Net cash provided by operating activities |
$ |
141 |
|
$ |
161 |
|
||
Capital expenditures |
|
(57 |
) |
|
(63 |
) |
||
Free Cash Flow1 |
$ |
84 |
|
$ |
98 |
|
||
__________ |
||
1. |
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. |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240520700559/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
Source: UL Solutions Inc.
FAQ
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