UL Solutions Inc. Reports Strong Fourth Quarter and Full Year 2024 Results

Fourth Quarter 2024 (Comparisons to Fourth Quarter 2023 unless otherwise noted)(1)

   -- Strong revenue growth of 8.0% to $739 million, including 9.5% organic 
      growth 
 
   -- Net income of $85 million increased 37.1%, Net income margin of 11.5%, 
      expanded 240 basis points 
 
   -- Diluted earnings per share of $0.40 increased 37.9%, Adjusted Diluted 
      Earnings Per Share of $0.49 increased 69.0% 
 
   -- Adjusted EBITDA of $169 million increased 27.1%, Adjusted EBITDA margin 
      of 22.9% expanded 350 basis points 

Full Year 2024 (Comparisons to Full Year 2023 unless otherwise noted)(1)

   -- Strong revenue growth of 7.2% to $2.9 billion, including 8.7% organic 
      growth 
 
   -- Net income of $345 million increased 25.0%, Net income margin of 12.0%, 
      expanded 170 basis points 
 
   -- Diluted earnings per share of $1.62 increased 24.6%, Adjusted Diluted 
      Earnings Per Share of $1.70 increased 18.1% 
 
   -- Adjusted EBITDA of $656 million increased 16.5%, Adjusted EBITDA margin 
      of 22.9% expanded 190 basis points 
 
   -- Net cash provided by operating activities of $524 million and Free Cash 
      Flow of $287 million for the year ended December 31, 2024 
 
   -- Successfully completed Initial Public Offering in April 
 
   -- Introduces 2025 growth outlook 
NORTHBROOK, Ill.--(BUSINESS WIRE)--February 20, 2025-- 

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 fourth quarter and full year ended December 31, 2024.

"I'm incredibly proud of our team for the strong fourth quarter results that capped off a remarkable first year as a public company, with sustained momentum across all segments, service lines and regions," said President and CEO Jennifer Scanlon. "Robust organic revenue growth, margin expansion and strong cash flow generation underscored the resilience and predictability of our business model, along with the growth drivers propelling us forward."

Scanlon continued, "Our close customer relationships and recent investments in advanced testing facilities worldwide are already delivering results for UL Solutions as we help companies in many industries navigate complex regulatory requirements and their own business challenges. As safety science evolves and new technologies emerge, we remain committed to our mission of working for a safer, more secure and sustainable world."

"For the full year we generated robust net cash provided by operating activities of $524 million, Free Cash Flow of $287 million and finished with strong liquidity and an investment grade balance sheet," said Chief Financial Officer Ryan Robinson. "Looking ahead to 2025, we expect to achieve mid-single digit constant currency organic revenue growth while further improving our Adjusted EBITDA margins. We will continue investing to expand our capabilities that align with global megatrends while maintaining our disciplined approach to capital allocation."

(1) This 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.

Fourth Quarter 2024 Financial Results

Revenue of $739 million compared to $684 million in the fourth quarter of 2023, an increase of 8.0%. Organic growth of 9.5% across all segments, led by Industrial and Consumer segments.

Net income of $85 million compared to $62 million in the fourth quarter of 2023, an increase of 37.1%. Net income margin of 11.5% compared to 9.1% in the fourth quarter of 2023, an increase of 240 basis points. The margin expansion resulted from higher revenue and improved operating leverage, led by the Industrial segment.

Adjusted Net Income of $102 million compared to $62 million in the fourth quarter of 2023, an increase of 64.5%. Adjusted Net Income margin of 13.8% compared to 9.1% in the fourth quarter of 2023, an increase of 470 basis points.

Diluted earnings per share of $0.40 compared to $0.29 in the fourth quarter of 2023, an increase of $0.11. Adjusted Diluted Earnings Per Share of $0.49 compared to $0.29 in the fourth quarter of 2023, an increase of $0.20.

Adjusted EBITDA of $169 million compared to $133 million in the fourth quarter of 2023, an increase of 27.1%. Adjusted EBITDA margin of 22.9% compared to 19.4% in the fourth quarter of 2023, an increase of 350 basis points. The margin expansion resulted from higher revenue and improved operating leverage, led by the Industrial segment.

Fourth Quarter 2024 Segment Performance

Industrial Segment Results

Industrial revenue of $328 million compared to $294 million in the fourth quarter of 2023, an increase of 11.6%, or 13.9% on an organic basis. Operating income of $88 million compared to $66 million in the fourth quarter of 2023. Operating income margin of 26.8% compared to 22.4% in the fourth quarter of 2023. Adjusted EBITDA of $105 million compared to $79 million in the fourth quarter of 2023, an increase of 32.9%. Adjusted EBITDA margin of 32.0% compared to 26.9% in the fourth quarter of 2023. Revenue gains were driven by continued demand related to electrical products, renewable energy and component certification testing and services, as well as increased laboratory capacity. Adjusted EBITDA gains and margin improvement were driven primarily by higher revenue and improved operating leverage.

Consumer Segment Results

Consumer revenue of $309 million compared to $293 million in the fourth quarter of 2023, an increase of 5.5%, or 6.5% on an organic basis. Operating income of $22 million compared to $14 million in the fourth quarter of 2023. Operating income margin of 7.1% compared to 4.8% in the fourth quarter of 2023. Adjusted EBITDA of $45 million compared to $36 million in the fourth quarter of 2023, an increase of 25.0%. Adjusted EBITDA margin of 14.6% compared to 12.3% in the fourth quarter of 2023. Revenue and Adjusted EBITDA gains were driven by retail and consumer technology. Margin improvement was driven by both higher revenue and improved operational efficiency.

Software and Advisory Segment Results

Software and Advisory revenue of $102 million compared to $97 million in the fourth quarter of 2023, an increase of 5.2% on a total and organic basis. Operating income of $5 million compared to $6 million in the fourth quarter of 2023. Operating income margin of 4.9% compared to 6.2% in fourth quarter of 2023. Adjusted EBITDA of $19 million compared to $18 million in the fourth quarter of 2023, a increase of 5.6%. Adjusted EBITDA margin of 18.6% was flat compared to the fourth quarter of 2023. Revenue gains were driven by increased software revenue. Margins were flat, primarily driven by higher services and materials expenses associated with professional fees.

Liquidity and Capital Resources

For the year ended December 31, 2024, the Company generated $524 million of net cash provided by operating activities, an increase from $467 million for the same period in 2023. Net cash provided by operating activities for the year ended December 31, 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 $237 million, an increase from $215 million for the same period in 2023. Free Cash Flow for the year ended December 31, 2024 was $287 million, compared to $252 million for the same period in 2023.

The Company paid a dividend of $25 million during the three months ended December 31, 2024.

As of December 31, 2024, total debt was $747 million, prior to unamortized debt issuance costs, a decrease from December 31, 2023 due to $165 million of net repayments on the Company's revolving credit facility and term loan.

The Company ended the quarter with cash and cash-equivalents of $298 million compared to $315 million at December 31, 2023.

Full-Year 2025 Outlook

The Company's key points on 2025 outlook include:

   -- Mid single digit constant currency organic revenue growth 
 
   -- Adjusted EBITDA margin organic improvement to approximately 24%, in line 
      with long term target 
 
   -- Capital expenditures expected to be 7% to 8% of revenue 
 
   -- Effective tax rate estimated to be approximately 26% 
 
   -- Continuing to pursue acquisitions and portfolio refinements 

The Company's 2025 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.

The Company does not provide guidance for net income margin, the most directly comparable GAAP measure to Adjusted EBITDA margin, and similarly cannot provide a reconciliation between its forecasted Adjusted EBITDA margin and net income margin without unreasonable effort due to the unavailability of reliable estimates for certain components of net income and the respective reconciliations. These forecasted items are not within the Company's control, may vary greatly between periods and could significantly impact future financial results.

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