ULS - Earnings call transcript Q2 2024

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Operator

Greetings. Welcome to the UL Solutions Second Quarter 2024 Earnings Call. [Operator Instructions] I will now turn the conference over to your host, Mitchell Ji, Senior Vice President of Corporate Finance.

You may begin.

Mitchell Ji

Thank you. second earnings our to everyone, quarter call. XXXX Welcome,

Scanlon, Executive Financial Officer; me today Ryan Chief Jenny are Chief Joining and our Robinson, Officer. our

our available discussion be at section ul.com. the we earnings website to presentation, During of our which the on today, is Investor Relations referring will

may provisions Our is statements other and the call, today's we on in or way discuss from that include, involve forward-looking actual forward-looking also the factors the our about implied of statements prospects operations section a of of on earnings material I in uncertainties everyone would Litigation harbor risks, cause of among that the differ Securities release other UL within of safe Solutions to meaning expressed results statements. substantial and those that website. XXXX. like statements forward-looking estimates available the Reform IR to and Private remind may Act could things results These

statement of the risk the in in concerning and statements see as the forward-looking our that earnings Slide are disclaimers well as disclosure our factors described the Please presentation release earnings on quarterly X the Form We no statements XX, law. by to March report XX-Q assume the forward-looking or period to except update XXXX. any circumstances events required as on obligation reflect after for hereof, ending date

the appendix reconciliation Jenny. turn Today's financial be now non-GAAP the over presentation to to also I in most earnings the to comparable GAAP to presentation. references call measures. A financial can found With the will includes measure that,

Jennifer Scanlon

drive demand strong We focus margins has expect cover and our I'm our have failure. important been for come. that I we as all These without across joining quarterly topics to really in business. reported to results of a for and hallmark flow solid X meaningful services us. that will company, and mega segments everyone, Safety This we quarter. trends on for keen growth industry-leading core outstanding a another key cash is underpins years report and Good call. business. continue reflect say improved Innovation morning, pleased on results had a today's our to execution science safety geographies, our generated second and I'll public thanks of our

highlight I'll quarter key elements strong our First, performance. second contributing to

highlight and growth I'll Second, some achievements activities customer the key from quarter.

on touch I'll financial Finally, strong and actions. position allocation capital our

could newly sharing my second by start profit, newly quarter say on to for to truly profitable not am are is have our ability me achieved We once for strong team without this execution like focused and Let are results. grateful. echoed our public, thoughts these deliver technically again not that growth. experienced while I I'd results in we whom we by mantra our and accomplished led

culture relentless centricity our and our employees' safety, business. customer and shapes emphasis science Our on enhances

team quarter, revenue. second growth organic X.X%, $XXX achieved the resulting In of in our million of

experience in a We in to improving We quarter segment, Industrial our solid segment. from for & stamina we posted our Advisory. continue Software consumer and benefited trends

basis EBITDA months million X Adjusted flow. all growth in results well of the free margin X.X%. regions by XX.X% expanded in we grew our X service And by all delivered year, segments the adjusted lines. net Importantly, and points. cash income across were with first and balanced $XXX Adjusted geographic increased XXX EBITDA of

hybrid go. Korean much technology. of battery with from of activity, And the online key testing in ramp-up Now solutions safety automotive UL experiencing a ready quarter. last Hills Industrial so latest advanced fully highlight open lab EV is the emphasize point In to achievements Korean work a strong automotive to North is quarter on want key few battery came battery Auburn to our American let Construction and we lab our is and large I progressing our a that at August batteries. a expect backlog schedule more customers battery me in than serving segment, with rapid

in everything of electrification to X already spans the adding large-scale X already and In energy subsequent. and Industrial and impressive opportunities heavy German front simulation set expanded new segment in who automotive testing company, equipment. facilities acquisition power has suite industrial of to active We in X the small with spectrum portfolio. impressive offerings market broad X expand batteries and The battery were European the These testing. This modules battery in from battery our we transfer on our across to industrial a used battery the and testing small system storage acquired expertise consumer acquisitions, battery footprint quarter specialized our testing. M&A May, cell, of engineer needs of performance the global full

July, a energy our technology decarbonization expertise global will in deepens to in play a and efforts. in hydrogen company we TesTneT in based believe transportation And ability system testing in Germany acquired global testing. We enhances significant and the to leader called from transition systems. impact another our role and lower component hydrogen This acquisition emissions Engineering, energy clean

capabilities support on to are as continues towards sustainable drive industry In transition capital this expand friendly more to environmentally through customers' to solutions our area. we have our strategic HVAC excited in important the investments needs. We to initiatives refrigerants, the focused segment, our and consumer

of and in refrigerants research position the leadership safe for our of future helped to performance. next the thought HVAC solidify foundational generation Our the transition safety

reception segment, of and transition has expansion a services, planned positive, the We our for new balanced & completed continues Sustainability are Software our of Performance are an growth. Texas In capacity our demand. half we we key making to demand Center the expected contributor. good in strong we Advisory of demand, of HVAC a be year. the a seeing second with in been for Plano, and was while progress chambers durable in also overwhelmingly driver Excellence surge Customer to and energy last

Finally, let comment our on activities. capital me allocation

cash put disciplined and capital an approach us in balance our model enviable focused flow position sheet, generation to business to regard and allocation. work hard with Our robust investment-grade

During the active on to end, its we quarter multiple and subsequent were fronts.

mentioned. we as as First, I divestiture acquisitions just X a completed well the

advanced testing we automotive to automotive expand capacity and plans an The center half to we other battery region testing in Korea to construct lab and announced the Korea serve expected capabilities our This to charger in our new used our offerings. battery last will the of industry. complete, Second, the EV current XXXX. suite technology which add organically, leverages when year. in new testing the is Battery open lab second further of in and lab, It Advanced opened

as company of cash June. shareholders public $X.XXX of returned form we quarterly share in our per the to in Third, dividend first regular a

strong We and a are to conservative sheet maintaining leverage committed with ratings. balance investment grade

continue expect to capital to return We to excess shareholders.

who will greater Now the outlook. I'm results detail over to call to and our going provide our Ryan, on turn

Ryan Robinson

you, for team results, and hello, our delivering with more provide I Thank performance full also Jenny, then strong on our financial to our closing members quarter. first I'll detail year everyone. outlook. of discuss want some all comments another our thank on before segment's

cash are of growth, our earnings to in adjusted solid line proud report expansion continuation We and second margin release strong EBITDA generation. a top

lines. it's all of organic encouraging As across growth segments, service again occurred Jenny and our geographies that to once see mentioned,

growth. segments. increase me million year up dive revenues organic particular let of and both the million up up were share, prior over XXXX advisory $X of quarter $X.XX X% strength X.X%. reflected second quarter. additional $XXX including strength from into diluted and adjusted growth Now the the The X.X% or quarter, diluted Consolidated share of details on interest of expense. of XXX points was pretax million, which EBITDA in Adjusted X XX.X%, from million or in in for the improvement a despite all same an consumer the segment, year-over-year across EBITDA period basis on per adjusted delivered for per organic $X.XX quarter $XXX quarter segments. income $XX the the margin XX.X% the Adjusted $XX of XX.X% million software Adjusted was the industrial second year strength ago net was

our a then for in income affected items, occurred these financials. second items our As and statement in non-GAAP not reminder, X are in particular, adjusted IPO the quarter

whose matured cash-settled rates. settled or our were all converted virtually CSARs, or have appreciation depreciation rights, either stock First,

As a mark-to-market no These the awards occur volatility, 'XX, the expense created value closing in by longer these recorded $X EBITDA at volatility. the longer no result expense we adjusted of of QX IPO reduced IPO, will the as the have converted established awards will historically million of million. pretax value upon which mark-to-market a they $X closing, which was have

assets we in have taxes post companies value QX a limitation income public resulted IPO, on provision since tax deferred the Second, some tax which executive in of $X of for of million. the deductibility increase an the reduced compensation,

services. of tremendous let transition by Industrial. everything with and innovation driving demand turn for and our The electrification are performance to starting Now our segment, megatrends energy of me the

strongest spreading segment of this X the $XXX Internet basis XX.X% X.X% the to the on factors segment help the million in While to Things infrastructure, Revenues growth of XXXX. is industrial organic quarter for compared the second or segments across Industrial rose the of these as an the quarter. delivered

payments materials, This CSAR of including driven robust building which conversion adjusted and for products. Adjusted compensation to the services EBITDA by business by $X million FX basis May M&A to XX.X%, declined impacts. automation while ongoing margin and were diligence for in the demand X.X% as as our closed Those gains for expense of in XX driven testing well sale EBITDA some certification the as by higher expenses. testing increased million quarter energy impressive Industrial certification offset engineered the costs, was IPO segment $XX and X points as well partially increases

X.X% consumer for XXXX improvement higher well quarter by testing Consumer the automotive strong for for and up on driven Now testing compatibility connected technology, other as in and devices non-certification basis. turning $XXX demand. as retail to the product organic Consumer million, demand or particularly improved from services was electromagnetic were segment. X.X% Revenues EMC The or an

increase versus XX.X% improvements EBITDA testing. in to cost the quarter strength improve in of HVAC was million, driven XXXX the Adjusted addition, an year. Consumer higher basis $XX year-over-year, structure. revenues actions Adjusted an for was our increase by last XXX and quarter XX.X% taken management for quarter in led EBITDA in In points margin of the to of second and certification expense

more past consumer cost-efficient This the improvements large million than in As laboratories we in year, including detailed several CSAR margin. on the X offset to of relocating larger, within the cost conversion last improvements $X contributed consumer. call, completed the locations, which into structure cost more

segment driven an increase Our The quarter for driven EBITDA including a basis. advisory. by Revenues year-over-year, advisory software segment million, of and million, an and on improvement & organic compared XX% margin year. basis an Adjusted is last of and increase was by demand the $XX quarter actions. X.X%, for X.X% structure of increase revenues for as Software second was higher $XX for both for third of improvement an XXX software higher the Advisory that points XX%, EBITDA year-over-year quarter were improvement services. to Adjusted was the cost

the of in in each the to X both in and expenditures this Turning delivered first We million the towards half were from were higher generated in periods. XXXX. million cash operating to months. $XXX last of generation $XXX $XXX primarily geared million activities our half of year compared return year investments Capital first of first cash and growth

to We leverage $XXX first strength reflecting continue a in We equivalents in payments. of half cash in finished investment $XXX net in to cash our part opportunities, and reflected sheet the Free incentive XX-month for the million adjusted investments trailing on of important quarter EBITDA. debt The $XXX balance UL million of and is energy was our cash XXXX, cash area compared flow focus ratings. to Solutions. make balance grade of the X.Xx net with sheet lower transition million

cash to to robust organic generation great and shareholder believe balance returns. acquisitions best-in-class flow pursue give flexibility a of invest accretive produce value-enhancing our We and to number sheet in us initiatives, ways

constant year continue a full basis, organic currency in we our to expect be to turning growth Now range. outlook. to the mid-single-digit On

to electrification strong the the We of digitalization expect growth along This organic continuing megatrends. tailwinds from is in and everything sustainability half by in be range. also with second driven the mid-single-digit

the expect $XX than in less acquisitions revenue DI to addition, of be Jenny the for X and TesTneT In impact we purposes, modeling discussed XXXX. million

and X In addition battery alternative incremental around expanded to us broader companies this technologies. revenue, fuel capabilities give and these a footprint

focus a to margin in expect for adjusted through drive full areas of XXXX beyond year company. We the key EBITDA and combination improvement

share where look First growth, and market mid-single investments product is our organic scale we to market and top delivering grow as for the our to line business digits expand grows. the take expect to

and and Second, by people are our automation productivity we our metrics. the facilities work increased utilization of and streamlining driving through standardizing to digitization processes our and of and higher our

Finally, as accretion. we look in eye and continue earnings areas strategic towards with we will at M&A, margin focus of an

expenditures to reflecting to and now continue evaluate to XXXX. have up pursue in in This in expect of to our growth the plan We CapEx acquisition of high-return opportunities. we is acquisitions We X X.X% capital continue be our revenue the pipeline X.X% of range will slightly, opportunities. closed investment to

of which deliver goals proud the I'm to year position delivered results quarter the XXXX, and summary, the In believe We full second our and our we in in active us of than profile. faster beyond. growing of This cash-generating our on we and enhancing the capital. first for while half well deployment in strong the positions us share profitability to gaining our business strong are already yet market, be improving selective

and our to path security We delivering are sustainability customers' science-based creating most partner. and our trusted on safety, value shareholder being

for turn me closing call let her Jenny to remarks. Now back the

Jennifer Scanlon

In the second sets improvement, performed which impressive beyond. our delivering to top us Ryan. a first solid year we in up growth of summary, proud strong year as and in public are results team and our we company deliver quarter, line Thanks, how margin believe full

believe highly in of that are industry, on markets trends mega that driven we by a favor our long-term focused be fragmented suite will We leader unique a offerings. product

outsized all Our to ability gain investment-grade and robust for accelerate to to position focused and M&A our -- shareholders. returns share to strong we profile compliance sustainability. have sheet help flow targeted us believe safety, the execution balance We ensure and and cash deliver share long-term strategy

have journey many this company, areas some for events public notable because on awards you it I a life amazing we expertise to work and of helps occasionally, being we or continue science. bring safety in highlight the of will As of important so some technical

concern So in to of the environmental fountains today, I'm decades. everything used from has refrigerants, This going growing drinking been chillers. to for those talk impact industrial about a

challenge within As White come. for Rogers, refrigerants engineer will transformations be major In concern. discuss principal to refrigerants continuous for this climate safety the invited emerge, to damaging Brian phasing was important down March, a to Solutions industry the outdated and years in HVAC UL House

are been hard knowledge to highest up indeed, are for to and With meetings I'm thrilled for and outcomes has offer open XXXXs up Operator, that, This to in these issue for at one that IPO deep. I saying to Solutions for entire Solutions. questions. extremely momentum by the we on the needed this holds working consumers on the of can wrap late we what since challenges UL be the help invited to levels the are and please excited our is which many society. solve examples safety leading the experts will just the our let's future building our shape April for call we UL safety had

Operator

[Operator from comes with Instructions] of line Yee Our first question Stephanie the JPMorgan.

Stephanie Yee

Congrats strong on a quarter.

Jennifer Scanlon

Stephanie. Thanks,

Stephanie Yee

digits. growth revenue at high it consider single So would in half, I look be the which to when X%, was organic I first

full growth mid-single are of is Could some is -- maintained -- kind you growth. back back expecting like comparison the particular in guide year-over-year year because You half can you deceleration for digits? that conservative half is in you tough digits there in that reasons a issue segment your any highlight. to expected at be the Or mid-single

Jennifer Scanlon

Well, absolutely, Stephanie.

last a half first if of begin second we And in more we the saw you the of bit comps growth you look accelerate half X% at half back because to pleased are highlighted, As half year. our year, the some growth second organically. with challenging last drivers are

in QX and was growth QX year was X.X% Our last organic X.X%.

deliver. realistic guidance we So expect giving we're to that comfortable

Stephanie Yee

still the the trends you within It retail. some improving seems mentioned those expect Okay. especially EMC of consumer, continue Do you half are improving to like trends back That's And in strong. trends helpful. year?

Jennifer Scanlon

be we seeing consumer business. driver continues are talked our those of that in consumer to of business And that We -- in global some R&D reinvesting mentioned, potential HVAC warming as confidence in type about customers' in type the and for I innovation. the test we

making confidence think space consumer that R&D the and innovation. customers we and our see investments that So in in they're

Operator

of comes Goldman George Our from Tong with Sachs. next line the question

Keen Fai Tong

the elaborate to and in becoming side despite you're growth year? Industrial year they revenue accelerated the prior considerably seeing the difficult. Organic in Can on on of some the persist period to XX.X% which quarter comps you tailwinds should the the the second around in more the segment the industrial of into extent half

Jennifer Scanlon

great great about, Absolutely, driven in George. the we warehouse Korea demand that of stamina seeing suppression battery online came tremendous demand market see we're fire-resistive like around talk And we've products. an the everything. that megatrends the those in and and We and environment, lab there is increase that. I controls. It's in industrial. power by built from fire containment In and seen demand and electrification solutions mentioned things

through the in and is So are are pieces those different that industrial there. those there's electrification that lot this everything that really of a flow -- by demand reflected out megatrends trends that of

Ryan Robinson

And you're to that, right. on just add George,

period organic are of for of The second a growth growth We we last double-digit in year. the lapping had Industrial. where consecutive double-digit organic quarters X quarter

Keen Fai Tong

margin And about some efficiency Great. to consumer turning of of expanded and Can the then that expansion sustainable That's margin expansion continue the XXX you're the initiatives a pace undertaking year-over-year is margins helpful. on EBITDA to bps business, going that -- talk whether you basis. forward. to margins unlock

Jennifer Scanlon

of across IT to we actions We occupancy, are expansion management segment. margins had XXXX. and margin opportunities. consumer additional look continue seeing we labs, durable, are when expense there there's costs, new cost the in better Indeed, And the efficiencies, -- are a improved that structure number you in believe

Operator

Blair. Our next Nicholas question of comes Andrew line from William with the

Andrew Nicholas

and software on advisory. first ask to wanted I

in attribute product again would momentum quarters. of how Ultrus other that about growth talked you you've segment just the with of over to that the much particular. versus in any shifts I'm last curious, the You several force quarter or execution quarter sales some improved made strategic past that this and

Jennifer Scanlon

of force see to we is And commercial of software between Software pipeline. mentioned there. and the in what the business. the growth that Ultrus using growth focused in a purchased and we've XXX sustainability believe tied modules particularly we and had favorable in products. within the Ultrus, I both transformation been that say, Well, execution We've customers the did marketplace undergoing umbrella. Ultras the the this I additional software of really both results releases think we're to within Advisory. those in quarter top should a see propel number extend We and is indications, side advisory [indiscernible] are advisory, and the proposition X/X sales in balanced past that we help the equally & to of seeing software, of the helping the or those Ultrus, But continue our value very value from favorable about we're

Andrew Nicholas

what wondering Throughout with maybe similar topic. for maybe would then And And battery the about going remarks, you like have labs, experiencing pretty more otherwise different feels in on have Great. if the just HVAC to and forward, it's Korea, the initiatives immediate expected. ramp-up labs I'm if whether is seen my quick willingness uptick prepared in your with new talked your you kind in consistent historically advanced in is follow-up, center that maybe a or activity. invest of new than lab Texas affects it just I

would be great. any there context So

Jennifer Scanlon

investment we really it you we because calling is want start see a out have potential around that breaking appreciate really to I on lab. Andrew, demand we philosophy before a capital reflects even ground that that

ask And if number growth. footprint, us extend these, to a saw come our many to their in us capacity so that And we willing our to we're our of of cases. we'll and customers accommodate

I lab that about it Korea talked will seeing to battery last come quarter. that within the year, that for came capacity American we're like So backlog was we the close pretty about that in online first excited We're lab think August. online the North that

our capital. philosophy we the ways and So which deploy it is in of reflective

capital talk conversations. we that that growth research our when market-based are in So based on capital, fact we about grounding and growth customer

Ryan Robinson

are in particular, to we've the a revenue early just and but in China, Yes. locations and casings in then on in that batteries, It's made large relatively demand, in technology. we charging America batteries, technologies things the evaluate. America that North would days in open Korea, and particularly plastics investments like related investment. And North which for make definitely gave are many build the to new confidence that, other saw additional to so capacity yet, I that the we customer the And in growth and don't used continue Korea, batteries surrounding have us in we'll in

Operator

from the line comes question of Bank with next Heather America. Our of Balsky

Unknown Analyst

pushback an This Balsky. pricing? in if Heather is Emily could pricing on the initiatives, your [indiscernible] you're you're what on you if on us update give getting Wondering for seeing market, any

Jennifer Scanlon

We continue to we that price strong. quarterly. upward. services be And I implemented on that of to And Promoter our Net trend at point response perceived value they really rate conduct be remains is pipeline we've most Scores, look that our data across our look offer. the The perceive and that the continue customers we to we express commercial that which eye entire software continue focused close and from to and set closely teams value continue to is strong, on, our deploying that quote our we configuration the keep a and evidence that

is leads a continue that So strong really holding pricing me believe that in way. to to

Unknown Analyst

about Okay. M&A to Is German bit approach? a opportunities, a the you X in are And you a next geographic approach? in guess you the I your or Is capabilities Like us acquisitions seeing question, capacity seeing? what little what had market? the talk quarter. you're Could it it

Jennifer Scanlon

a of that world. and evaluate M&A got It's the number we all of active number opportunities a over great We've because we question are in a globally. prospects

years. philosophy acquirer bit to in we in Germany our of XXX closed the is this We've be a M&A choice. That said, X that coincidental business it's So quarter. been

own as opportunity started return. So a then business, many them for of some these them and employees great to entrepreneurs founders you and and even their it's all launched know of us.

can property access harder philosophy can M&A intellectual don't would where capabilities that otherwise where organically, gain of of set pursue set to is customers that we we or us build a it. we a have we for or gain to our So be

Ryan Robinson

each prioritize businesses. all of our maintain and seek and businesses, our we We of establish leadership to in

have X year, fit we've those And components divested the sometimes, portfolio businesses. we objectives. a And don't that roughly in last

both it ways. goes So

Operator

next the question comes with Stephanie from of line Our Moore Jefferies.

Unknown Analyst

I harder to see tariffs last an versus and a Obviously, maybe who election years. wanted couple we've take stance year, is a there here. potential seen new could on high-level on question might what the a we of take a it's President the current administration in

So on negative could to your or your moving manufacturing with change, terms implications? So this are locations, contingency potentially think if impact to get customers this potential positive maybe color preparation, I'd guys it's you different love thoughts in any what you plans, potentially there? neutral, of how saying

Jennifer Scanlon

trajectory a how question, it's year trend a base, China field Vietnam, we and a off very base. much we're X the X/X manufacturing seeing customers' because much slope. India to world's higher of upward that and times decreases continues what a site locations a we increases, Mexico, by manufacturing but is of It's roughly slope is track typically visits world monitor a increases, site of something at high our number is. low What visiting but the great our lower those the closely engineers of over are country all visits, at

can the over do to would where locations. grow assembly of as many China that put I that's, So what this components then what from we're customer But have say, world the they second and assembly and they be coming you the really them some can cases, means chains, moved is decide supply all about seeing. in continues when China think

our demonstrate close years needs. we they labs to customers we continues Vietnam Mexico and serve just the to it where be value in their offer expand us, For are ago like and to to to ready that did X

Unknown Analyst

that's And consumer a it. segment. I just as then on follow-up, No, helpful. the Great. appreciate touching

Texas you're over I'd opportunities next similar rehighlighted You the or for -- up course in that secondly, little made you sites next in is us additional and love give view within that I'd HVAC next-gen could that a a talked a that of maybe really running other in nice HVAC, seeing further particularly new avenue good color Are on expansion, about Plano the of thoughts then there growth refrigerants. HVAC testing to and And site love areas And maybe XX be your investments you've first. segment? for within where to you growth a so. consumer, bit maybe to maybe months next from.

Ryan Robinson

say, would global concern it's about particularly in efficiency. changing HVAC, and energy I a refrigerants

in that to of natural So U.S. changing the been role gas the there's they Europe, regulatory innovation. discussion demands, in about cooking leads are product

The being large chips I'd So things. we're but relatively earlier different things in not time. growth those those us in leading high-tech prepared innovation, would have this as for overall design are other say testing and specific to early to performance announce growth there's influenced by of laptops any at equipment, point. AI I other things over a that say additional capacity products but leads consumer is business like for and to changes, technology which business are in days days, requirements, we

Jennifer Scanlon

that. to add I'll Yes,

that tech as mentioned, well ecosystem, broader side need embedded consider and amount our particular. of our a wiring I as return and in AI, read kilowatts energy innovation centers seeing in confidence also, as industrial there's seeing, automation in AI those and in that's our data Ryan and servers, data XXX single I are broadly recently, just both in businesses strength We're consumer would that up to Korea, that energy. cabling consumer testing a industrial AI the needed. as for affects that to and of link type in more center. was that AI PCs we're there's also AI reflected AI and type or back mentioned, tremendous We the and to power we And like across some of R&D, Japan consumer that products

pieces these the in we side. great anchored way. trends seeing all But So fit together are some a consumer that in are really great

Operator

of from Our next Rosenbaum Shlomo line Stifel. comes question the with

Shlomo Rosenbaum

bit there there of if little parse maybe organic quantitatively those way was really for coming the qualitatively some much a pricing you're a for really of a mentioned you industrial focus good from just is not how initiatives. about wanted on I that do first, the there call demand and to much beforehand strong initiatives might was out And growth the growth can be you talking Is about? volumes? how value-based us coming think just from

Ryan Robinson

Yes.

and service would industrial, evenly And I growth, business certification And our good services. out specific the by volume. in say Jenny resistance to about fairly service within value-based general don't roughly it So disproportionately particular certification was taken. give with with ongoing don't as that lines more concern price initiatives balanced mentioned, relation saw pricing pricing, around we've we lines. seeing both We metrics X% But across those the we're is trends segment. between testing, us growth break

Shlomo Rosenbaum

Jenny, great. for this question. then, a bigger last solid picture X very Okay. the That's And There's is growth been maybe Great. quarters.

X.X% at ebbs the looking You're industry. flows be tends or in higher. and There to

historic look would typical in a back company to eke always like look would and upswing growth but really an of what's times, bad out you have now, it growth, more up even you're you when some followed cycle like it strong of -- what at the to we seems it If the at for down, seems terms company's growth in like by seems perspective normalization? goes that

Jennifer Scanlon

we industries. about great is XX over serve Thanks, Shlomo. UL What's

effect disproportionate industry in have cycle a on a us. particular So doesn't any

about So I might that's a kind down compounded at wave X% of of sine that growth decade, you way slope, be think for that over but we mild like when it. rate seen we've and again, the that feels -- we've launch last for there almost the visibility got software And normal many years, and back a upward think particular that annual of up so to cyclicality effect in the ongoing of quarters, in XX% certification revenue, projects then any revenue. can and because the the cross those industrial that industry. Really, any in to good of trends our multiple even the services that's recurring linked look

Shlomo Rosenbaum

what Ryan, that can the was? just I could just other million was What got housekeeping in us income And sneak Great. excluded? $XX Maybe, thing. that tell you one in

Ryan Robinson

related which May a X. That on Yes. payments closed gain was to our testing sale business,

that was things. $XX announced a then net other few was we about and million, and the with it offset So gain

quarter -- We gains also last investment second of in smaller had gains the year. some investment small

-- So both year. the big was in you that It see can was quarter the it's driver this periods. in up second just

Operator

Our line of next comes from Fargo. Wells question Haas with Jason the

Jason Haas

In response it say and heard to an the had earlier looks category, you it software stand-alone both question, software when growth strong advisory. look I at across we if like further was that's just and But you that software flat. so, that drove implication segments And the software growth And recorded Is the talk the from in other that? could could down? was what drive here? what there through in software advisory

Ryan Robinson

offsets on software the big don't the of or total -- payments and driver question. the is Jason, table was that revenue we a components a by FX had that the we or out primary acquisition revenue. was sold but -- Those streams. thing business basis, break software of organic -- the that, I revenue would that Yes, line good say testing that service

Jason Haas

it. potentially Chevron helpful. that recent what change industry I any you be That certification sense. to the for regulations could a the positive could And That's had thought that ruling curious overall? Got negative the was any if put industry potentially or mean then makes could really for

Jennifer Scanlon

The regulations industry global interesting federal, around going local, we're across Chevron truly, business that ruling the attention government that to and But I'm state, are types be our drive an of the and level of, close regulations, could is paying every they're say, one both you world. to.

and to products make have access because them it security So those capital investments have reflect to to that safety, and manufacturers sustainability important we drivers in they ability need regulation of the around the confidence continue helps their the market. to appreciate their types market being see as global

So the on -- we it on is is us. way see don't but any see some effects it having interesting. may effects we It have society, Chevron

Operator

Our with line next comes the question Arthur from Truslove Citi. of

Arthur Truslove

the question bridges industrial first The the I divisions. consumer around and margin was the in had just both

employee impact points? Consumer you if you mentioned the say slightly was IPO-related guess million out stripping by expenses. margin there increase adjustments could that And just of of what I the one-off I division, offset these CSAR within think was So the $X other were

I wondered for help mean, strip of just on hoc actually division. third you could once it an kind impacts revenue clearly, rate XX.X. for is Second about annual that underlying margin these think of XX but therefore, the same, to those. the And matters. if the deliver are XX.X revenue year. that you out understand happened related of basis you expect the full I is you fell right, there cost in what question, Industrial to ad Is to from that then the staff you question mentioned able to million XX about -- run German million to the subsidiaries me

Ryan Robinson

much you for Arthur, Thank very in those I'll Yes. questions, the reverse order. take and

in a run to make estimate. the growth on you're operating did income $XX a X regard which the when year comments for million But in yes, the offset continue. is margin, margin to acquisitions, improvement, regard on applies adjusted some strong we this to core And growth. reasonable for particular, EBITDA margin. expense So I'll rate you items, right, revenue margin, expect adjust and both industrial roughly operating we In full saw

So decline table, impact related was share on CSAR related the the of to EBITDA $X majority drivers we of out basis acquisition the were which to expense, $X points the margin the nonrecurring on break million the XX transaction of million expenses, that and primary of adjusted

been on isolate the we basis energy which better that points those and earnings And has impact, all and have operating for last have would $X X Industrial CSAR acquisitions income roughly increase within of higher, the several an a incremental recently you portfolio completed transition. to and now is the the impact, X XX in million divestiture acquisition exclude release, comparable the position and if basis. been would fixed months

Now with also level, another adjustment. the EBITDA adjusted there's

that are public a company. Now we

stock-based back We compensation. are adding

points, So if do compensation, the give measures you adjustment about adjust for not it's different. for those back stock-based things slightly out Also, that. credit the but that but XX I said, for are basis also

occupancy regard in were more IT that leveraging salaries, then and to increases. primary drivers costs the And consumer, than incentive offset those

both was bore compensation, on and $X that that So operating And those mention should million mentioned CSAR the income adjusted add-back of also Consumer stock-based that I an FX $X impact. million this of had offset of -- adjusted include also expense that by of EBITDA. basis, million XX $X mostly basis an of $X EBITDA to segments, headwinds FX doesn't points I doesn't million

Arthur Truslove

leverage EBITDA So conclusion, That's industrial and essentially, be the rest of key pricing takeaway basis, expenses. would if strip be about the adjusted that that's the underlying on driven the all issues the margin and bps up with key XX would out you and by it. the an

Ryan Robinson

correct. That's items correct. of of the impact. X That's the are CSAR and primary And million the acquisition expense the share $X

Operator

Chan the from comes Josh of question next with line Our UBS.

Joshua Chan

on a strong quarter. Congrats

there be think Some your labs reason you're are once the than they're than more to is any labs? prior. now at utilized larger fully of could other larger the building profitable that And that labs potentially

Ryan Robinson

say the Yes. I have lab technology. of investments, this high -- would we some the is flow-through economic some large do battery of large

mentioned, I new. As relatively those are

So flow-through. are intensive the we're total we of seek that capital in we But some be over The that. in our rewarded underwrite that way investment contribute dynamics the investments. for the but we pricing there's the seeing definitely economic to that capital good time. opportunity think There utilization to more capacity than businesses, market for will

Joshua Chan

That sticking margins. And with follow-up, makes sense. my -- Okay. then my for

a could first margin any range see full of the fits there the guess, any wanted that margins year. if there to still in characterization I way for in were there's you're the second and to the nicely that your Just margin expectation in way So improvement because half half? kind that half? of up improvement quantify the of be ballpark year, to outcomes second the to wide guiding is

Ryan Robinson

up months, adjusted adjusted position a total. X not more a position year-over-year but not in or We're comment. guidance do points to on basis At appreciate in provide Yes. Yes. EBITDA to the on guidance. basis, margins. improvement full by I XXX EBITDA a We this point we're expect segment specific provide year through in more

Jennifer Scanlon

implementations we we've any from technology continuous event expect that Lean we completed in don't commented And Josh, are focused as that Sigma, Six improvement, but value change very a that past, recent dramatic has in on step singular ongoing margin, years. we've in getting there the is

steady I of as initiatives business just expansion trend margin fruition. various So would come to continue expect every to a in these

Operator

will And reached of over to call for we the remarks. closing the the Scanlon turn have And Jenny session. now question-and-answer end I

Jennifer Scanlon

next your you really to Well, support, thank and we quarter. We you, everyone, for look joining us forward appreciate progress today. our updating on

Ryan Robinson

all. you, Thank

Operator

and participation. line for you time. today's disconnect And this may your Thank conference, concludes this you your at

UL Solutions (ULS) 31 Jul 242024 Q2 Earnings call transcript