Slide 1: UL Solutions Inc. Earnings Presentation Q1 2024
UL SOLUTIONS INC. EARNINGS PRESENTATION Q1 2024 May 20, 2024 UL SOLUTIONS INC.
Slide 2: Forward Looking Statements
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 unc
Slide 3: Presenters
Jennifer Scanlon President and Chief Executive Officer Company Overview and Highlights Ryan Robinson Executive Vice President and Chief Financial Officer Financial Review and Outlook PRESENTERS 3
Slide 4: Welcome to the First UL Solutions Earnings Call: Strong Q1 2024
Strong Q1 2024: 6.5% Revenue growth, 7.5% Organic1 3.4% Net income growth, 13.0% Adjusted Net Income2 increase Adjusted EBITDA2 up 18.0% Megatrends continue to propel growth, led by the “Electrification of Everything” NYSE: ULS Completed upsized IPO and listed on April 12 WELCOME 4 TO THE FIRST UL S
Slide 5: UL Solutions at a Glance
~$2.7B 2023 revenue $563M 2023 Adjusted EBITDA1 15,000+ UL Solutions employees serving customer needs 80,000+ customers including approximately 60% of the Fortune 500 and Global 500 Served customers in 110+ countries 35+ Industries served Our trusted and iconic UL Mark has appeared on billions of pr
Slide 6: UL Solutions Overview
44% 43% 13% Segments UL SOLUTIONS OVERVIEW 1 As part of the nonprofit Underwriters’ Electrical Bureau, a predecessor to Underwriters Laboratories and UL Solutions. 2 Revenue for 2011 includes $81 million for UL-CCIC Company Limited, a joint venture interest of UL Solutions that was originally repo
Slide 7: UL Solutions Is a Global Leader
UL SOLUTIONS IS A GLOBAL LEADER Source: 2022 market data based on UL Solutions estimates. 1 Outsourced product TIC market. 7 7% 27% 66% $38B Global product TIC market UL Solutions Next top 10 All others Global TIC market ~$142B Insourced TIC (product and nonproduct) ~$61B Nonproduct TIC ~$38B Produc
Slide 8: Recent Updates
RECENT UPDATES 8 Industrial Consumer Software & Advisory Korea Battery Lab North America Retail Center of Excellence ULTRUSTM Largest laboratory investment in the retail and consumer products sectors in our history 100,000-square-foot space serving North American retail industry customers New brand
Slide 9: Q1 2024 Revenue +7.5% Organic
Q1 2024 REVENUE +7.5% ORGANIC1 1Refer to Organic, FX and Acquisition definitions in Appendix. 9 Q1 2023 Industrial Organic1 Consumer Organic1 S&A Organic1 Q1 2024 Organic1 FX1 Acquisition1 Q1 2024 $1M $629 $4 $676 $670$16 $27 ($7M) $ in millions
Slide 10: Q1 Adjusted EBITDA Performance +18.0%
Q1 ADJUSTED EBITDA1 PERFORMANCE +18.0% 1Adjusted EBITDA is a non-GAAP measure. Refer to the Appendix to this presentation for definition and reconciliation to the most directly comparable GAAP financial measure 2Refer to Organic, FX and Acquisition definitions in Appendix. 10 Q1 2023 Organic2 Revenu
Slide 11: Q1 Adjusted Net Income Performance +13%
Q1 ADJUSTED NET INCOME1 PERFORMANCE +13% 1Adjusted Net Income and Adjusted Net Income margin are non-GAAP financial measures. Refer to the Appendix to this presentation for definitions and reconciliations to their most directly comparable GAAP financial measures. 2Other includes FX, acquisitions or
Slide 12: Industrial
INDUSTRIAL 1Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Refer to the Appendix to this presentation for definitions and reconciliations to their most directly comparable GAAP financial measures. 9.3% Revenue Growth (+10.0% Organic) • Robust industrial electrical product, renewab
Slide 13: Consumer
CONSUMER 1Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Refer to the Appendix to this presentation for definitions and reconciliations to their most directly comparable GAAP financial measures. 13 4.0% Revenue Growth (+5.8% Organic) • Strength in EMC (electromagnetic compatibilit
Slide 14: Software and Advisory
SOFTWARE AND ADVISORY 1Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Refer to the Appendix to this presentation for definitions and reconciliations to their most directly comparable GAAP financial measures. 14 6.0% Revenue Growth (+4.8% Organic) • Advisory, led by renewables, buo
Slide 15: LTM Cash Flow
LTM CASH FLOW 1Free Cash Flow, Free Cash Flow margin, Adjusted EBITDA and Net Leverage are non-GAAP measures. Refer to the Appendix to this presentation for definitions and reconciliations to their most directly comparable GAAP financial measures. 2Last 12 months as of March 31, 2023 3Last 12 months
Slide 16: Full-Year 2024 Outlook
FULL-YEAR 2024 OUTLOOK 16 • Mid-single digit steady constant currency, organic1 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 wi
Slide 17: Summary
SUMMARY 17 Strong Q1 resulted from focused execution – All operating segments and geographies contributed to revenue growth – Improvement in Adjusted EBITDA margins1 was driven by outsized Industrial revenue growth and Consumer efficiencies, aided by reduced long-term incentive expense – Our new ULT
Slide 18: Appendix
@ Solutions APPENDIX
Slide 19: Components of Revenue Change
COMPONENTS OF REVENUE CHANGE Three Months Ended March 31, 2024 (in millions, unless otherwise stated) 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
Slide 20: Adjusted EBITDA and Adjusted EBITDA Margin (Non-GAAP Measure)
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN1 2 (NON-GAAP MEASURE) Twelve Months Ended December 31, Three Months Ended March 31, (in millions, unless otherwise stated) 2023 2024 2023 Net income $ 276 $ 60 $ 58 Depreciation and amortization expense 154 41 36 Interest expense 35 15 8 Other expense (inco
Slide 21: Adjusted EBITDA and Margin by Segment (Non-GAAP Measure)
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN1 2 (NON-GAAP MEASURE) BY SEGMENT 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
Slide 22: Adjusted Net Income definition
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 Adjuste
Slide 23: Adjusted Diluted Earnings Per Share definition
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 applic
Slide 24: Free Cash Flow (Non-GAAP Measure)
FREE CASH FLOW1 (NON-GAAP MEASURE) Three Months Ended March 31, LTM2 March 31, (in millions, unless otherwise stated) 2024 2023 2024 2023 Net cash provided by operating activities $ 141 $ 161 447 $ 428 Capital expenditures (57) (63) (209) (184) Free Cash Flow1 $ 84 $ 98 $ 238 $ 244 Revenue $ 670 $ 6
Slide 25: Net Leverage (Non-GAAP Measure)
1The 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