UL Solutions Inc.
08/04/2026 | Press release | Distributed by Public on 08/04/2026 15:25
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company's results of operations, financial condition and liquidity and capital resources should be read in conjunction with the Company's condensed consolidated financial statements and the related notes as of June 30, 2026 and for the three and six month periods ended June 30, 2026 and 2025, which are included in this Quarterly Report, as well as the Company's audited consolidated financial statements for the year ended December 31, 2025 included in the Company's Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks and uncertainties about the Company's business and operations. The Company's actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described under "Risk Factors" in Part I Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. See "Cautionary Note Regarding Forward-Looking Statements." Additionally, the Company's historical results are not necessarily indicative of the results that may be expected for any period in the future.
References to "UL Solutions" and the "Company" refer to UL Solutions Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires.
Overview
UL Solutions is a global safety science leader that provides independent third-party testing, inspection and certification ("TIC") services, advisory offerings and software solutions.
The Company reports its financial results through three segments: Industrial, Consumer and Risk & Compliance Software ("R&C Software").
Effective beginning in the first quarter of 2026, the Company reorganized its segments to be consistent with how the Chief Executive Officer currently evaluates business performance and allocates resources. The changes primarily relate to the Company's Advisory business, which was previously included within the Software and Advisory segment and is now included within the Industrial segment. As a result of the reorganization, the Software and Advisory segment was renamed "Risk & Compliance Software" and costs related to the Company's corporate functions were reallocated across its segments. This reorganization had no impact on the Company's consolidated financial position, results of operations or cash flows. The amounts presented for the three and six months ended June 30, 2025 have been recast to reflect the Company's segment reorganization.
The geopolitical environment and attendant increased levels of uncertainty have caused, and may continue to cause, the Company's customers to modify, delay or cancel plans to purchase services. Accordingly, ongoing uncertainty related to the current geopolitical environment and the associated unpredictability of the macroeconomic environment could have an adverse impact on various aspects of the Company's business in the future, including its results of operations and financial condition. The Company is unable at this time to reasonably determine any future negative impacts from reduced or delayed customer testing or product development as a result of uncertainty that may result from the current geopolitical environment.
Recent Developments
Divestiture of Employee Health and Safety Software Business
On April 1, 2026, the Company completed the sale of its Employee Health and Safety software business in the Company's Risk & Compliance Software segment to an affiliate of Peak Rock Capital, a private investment firm. The preliminary purchase price was $202 million in cash consideration, subject to customary post-closing adjustments. The divestiture resulted in a pre-tax gain on sale of $191 million.
Acquisition of Electrical and Electronics Testing LUX Holding SARL
In April 2026, Underwriters Laboratories Holdings B.V. ("ULH"), a wholly owned subsidiary of the Company, and the Company as guarantor, entered into a sale and purchase agreement for the entire issued share capital of Electrical and Electronics Testing LUX Holding SARL, a private limited liability company, and certain of its subsidiaries and related companies (the "E&E Transaction"). The E&E Transaction includes a "locked box" structure, subject to customary leakage prohibitions (with customary permitted leakage). The purchase price will be comprised of an enterprise value of €575 million, subject to certain customary adjustments, and additional consideration of €41 thousand per day from September 1, 2025, through the closing date of the transaction. The sale and purchase agreement provides that, in the event of termination
as a result of ULH's failure to submit certain required regulatory filings within the prescribed deadlines, or certain conditions not being satisfied by October 13, 2027, ULH will pay a break fee of €34.5 million. The break fee is not payable to the extent termination of the sale and purchase agreement results from certain specified breaches by the seller. The Company expects to fund the transaction with cash on hand, including proceeds from its portfolio management activities, and available capacity under its revolving credit facility. The transaction is expected to close in the fourth quarter of 2026, subject to the satisfaction of customary closing conditions, including applicable regulatory approvals.
Sale of DQS Holding GmbH
In April 2026, the Company entered into a definitive agreement with an affiliate of Montagu, a private equity firm, and certain other parties to sell its approximately 28% shareholding of DQS Holding GmbH ("DQS"), a global management system assessment company headquartered in Germany. The Company expects to receive approximately €105 million in cash consideration, subject to customary post-closing adjustments, a portion of which will be held in escrow to cover certain indemnification obligations under the share purchase and transfer agreement. The Company accounts for DQS using the equity method and DQS financial results are not consolidated within the Company's financial statements. The sale is expected to result in a pre-tax gain of approximately $100 million, which will be recorded as non-operating income upon closing of the transaction, which is expected to be completed in the second half of 2026, subject to the satisfaction of customary closing conditions, including applicable regulatory approvals.
Components of the Company's Results of Operations
Revenue
The Company conducts its operations across four major service categories: (1) Certification Testing of products, components and systems according to standards and regulatory requirements and other design and performance specifications; (2) Ongoing Certification Services to validate the continued compliance of previously certified products, components and systems; (3) Non-certification Testing and Other Services, which includes performance testing for customer or other requirements that may not be required by any regulation and may not result in a certification, as well as other services, including advisory and technical services; and (4) Software, comprising software as a service and license-based software solutions, including implementation and training services related to software.
Components of Revenue Change
The Company uses Organic, Acquisition / Divestiture and FX to explain the change in revenue from period to period. Revenue change is calculated as the percentage change in revenue in one period relative to the prior period's revenue and is a key financial measure that the Company uses to manage its business. The Company defines these components of revenue as follows:
"Organic" reflects revenue change in a given period excluding Acquisition / Divestiture and FX in that same period, expressed in dollars or as a percentage of revenue in the prior period.
"Acquisition / Divestiture" is calculated as revenue change in a given period related to acquisitions or disposals of businesses using prior period exchange rates, expressed in dollars or as a percentage of revenue in the prior period. Revenues from an acquisition or disposal are measured as Acquisition / Divestiture for the initial twelve-month period following the acquisition or disposal date. Subsequently, the revenue impact from the acquired or disposed business is measured as Organic.
"FX" reflects the impact that foreign currency exchange rates have on revenue in a given period, expressed in dollars or as a percentage of revenue in the prior period. The Company uses constant currency to calculate the FX impact on revenue in a given period by translating current period revenues at prior period exchange rates, expressed as a percentage of revenue in the prior period.
Cost of Revenue
Cost of revenue includes employee compensation consisting of salaries, incentives, stock-based compensation and other benefits for employees directly attributable to revenue generation across each of the Company's four major service categories. In addition, cost of revenue includes services and materials expenses including occupancy and facility-related costs for laboratories and other buildings where testing and inspection services are performed, customer-related travel costs, expenses related to third-party contractors or third-party facilities and consumable materials and supplies used in testing and
inspection and other costs associated with generating revenue. Cost of revenue also includes depreciation on equipment used in testing and amortization of capitalized software sold to customers.
Selling, General and Administrative Expenses
Selling, general and administrative expenses include employee compensation consisting of salaries, incentives, stock-based compensation and other benefits for sales and indirect administrative functions such as executive, finance, legal, human resources and information technology, not included within cost of revenue. In addition, selling, general and administrative expenses include services and materials expenses such as third-party consultancy costs, facility costs, internal research and development costs as well as legal and accounting fees, travel, marketing, bad debt and non-chargeable materials and supplies. Selling, general and administrative expenses also include depreciation and amortization.
Restructuring
On November 4, 2025, the Company announced an expense reduction initiative to further improve the operating model and exit certain lines of business that are no longer considered strategically important to the Company (the "Restructuring Plan"). Costs incurred in connection with the Company's restructuring actions, including the Restructuring Plan, consist of employee-separation costs, facility exit costs, as well as professional services. Refer to Item 1, "Notes to the Condensed Consolidated Financial Statements", Note 16, "Restructuring" for further details.
Operating Income
Operating income is calculated as revenue less cost of revenue, selling, general and administrative expenses and restructuring. Operating income margin is calculated as operating income as a percentage of revenue.
Components of Operating Income Change
The Company uses Organic, Acquisition / Divestiture and FX to explain the change in operating income from period to period. Operating income change is calculated as the percentage change in operating income in one period relative to the prior period's operating income and is a key financial measure that the Company uses to manage its business. The Company defines these components of operating income as follows:
"Organic" reflects total operating income change in a given period excluding Acquisition / Divestiture and FX in that same period, expressed in dollars or as a percentage of operating income in the prior period.
"Acquisition / Divestiture" is calculated as operating income 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 operating income in the prior period. Operating income change from an acquisition or disposal is measured as Acquisition / Divestiture for the initial twelve-month period following the acquisition or disposal date. Subsequently, operating income impact from the acquired or disposed business is measured as Organic. Acquisition / Divestiture also includes the change in due diligence-related costs for merger and acquisition and disposal activities.
"FX" reflects the impact that foreign currency exchange rates have on operating income in a given period expressed in dollars or as a percentage of operating income in the prior period. The Company uses constant currency to calculate the FX impact on operating income in a given period by translating current period operating income at prior period exchange rates, expressed as a percentage of operating income in the prior period.
Interest Expense
Interest expense consists primarily of interest expense on the Company's debt obligations.
Gain on Divestiture
Gain on divestiture consists of the gain recognized upon the sale of a business when the proceeds received exceeds its carrying value.
Other Income (Expense), net
Other income (expense), net consists primarily of non-operating gains and losses, including gains and losses related to foreign exchange transactions and the revaluation performed on designated balance sheet accounts, interest income and non-operating pension and postretirement benefit expenses.
Income Before Income Taxes
Income before income taxes is calculated as revenue less cost of revenue, selling, general and administrative expenses, restructuring, interest expense, gains on divestitures and other income (expense), net.
Income Tax Expense
Income tax expense consists of current and deferred federal and state taxes for the Company's U.S. and foreign jurisdictions.
Net Income
Net income is calculated as revenue less cost of revenue, selling, general and administrative expenses, restructuring, interest expense, gains on divestitures, other income (expense), net and income tax expense. Net income margin is calculated as net income as a percentage of revenue.
Results of Operations
The following tables set forth the Company's condensed consolidated results of operations for the periods presented.
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
| Three Months Ended June 30, | Change | ||||||||||||||||||||||||||||
| (in millions) | 2026 | % Revenue | 2025 | % Revenue | |||||||||||||||||||||||||
| Revenue | $ | 816 | N/A | $ | 776 | N/A | $ | 40 | |||||||||||||||||||||
| Cost of revenue | 399 | 48.9 | % | 394 | 50.8 | % | 5 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 267 | 32.7 | % | 244 | 31.4 | % | 23 | ||||||||||||||||||||||
| Restructuring | - | - | % | (1) | (0.1) | % | 1 | ||||||||||||||||||||||
| Operating income | 150 | 18.4 | % | 139 | 17.9 | % | 11 | ||||||||||||||||||||||
| Interest expense | (5) | (0.6) | % | (10) | (1.3) | % | 5 | ||||||||||||||||||||||
| Gain on divestiture | 191 | 23.4 | % | - | - | % | 191 | ||||||||||||||||||||||
| Other income (expense), net | 2 | 0.2 | % | (4) | (0.5) | % | 6 | ||||||||||||||||||||||
| Income before income taxes | 338 | 41.4 | % | 125 | 16.1 | % | 213 | ||||||||||||||||||||||
| Income tax expense | 84 | 10.3 | % | 28 | 3.6 | % | 56 | ||||||||||||||||||||||
| Net income | $ | 254 | 31.1 | % | $ | 97 | 12.5 | % | 157 | ||||||||||||||||||||
Revenue
| Three Months Ended June 30, | |||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Change | % Change | |||||||||||||||||||
| Industrial | $ | 402 | $ | 373 | $ | 29 | 7.8 | % | |||||||||||||||
| Consumer | 362 | 340 | 22 | 6.5 | % | ||||||||||||||||||
| Risk & Compliance Software | 52 | 63 | (11) | (17.5) | % | ||||||||||||||||||
| Total | $ | 816 | $ | 776 | $ | 40 | 5.2 | % | |||||||||||||||
Revenue increased by $40 million, or 5.2%, for the three months ended June 30, 2026, as compared to the same period in 2025. Revenue increased on an organic basis by $51 million, or 6.6%, due to organic growth across all segments in the second quarter of 2026, driven by the Industrial and Consumer segments in Ongoing Certification Services and Certification Testing revenue. Acquisition / Divestiture decreased revenue by $14 million, or 1.8%, due to the sale of the Employee Health and Safety software business in the Risk & Compliance Software segment.
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition / Divestiture | FX | Total | Organic % Change | Total % Change | |||||||||||||||||||||||||||||
| Revenue change | |||||||||||||||||||||||||||||||||||
| Industrial | $ | 27 | $ | - | $ | 2 | $ | 29 | 7.2 | % | 7.8 | % | |||||||||||||||||||||||
| Consumer | 21 | - | 1 | 22 | 6.2 | % | 6.5 | % | |||||||||||||||||||||||||||
| Risk & Compliance Software | 3 | (14) | - | (11) | 4.8 | % | (17.5) | % | |||||||||||||||||||||||||||
| Total | $ | 51 | $ | (14) | $ | 3 | $ | 40 | 6.6 | % | 5.2 | % | |||||||||||||||||||||||
Cost of Revenue
Cost of revenue increased by $5 million, or 1.3%, for the three months ended June 30, 2026, as compared to the same period in 2025. On an organic basis, costs associated with performance-based incentives increased $6 million primarily due to the Company's annual cash bonus plan. In addition, depreciation and amortization increased organically $4 million related to software placed in service and the completion of additional laboratory capacity. Professional fees also increased organically $3 million, related to a laboratory relocation and outsourced labor associated with higher revenue. The increase was partially offset by a $3 million organic decrease in salary expenses, including headcount reductions from the Restructuring Plan. Acquisition / Divestiture also decreased cost of revenue by $6 million due to the sale of the Employee Health and Safety software business in the Risk & Compliance Software segment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $23 million, or 9.4%, for the three months ended June 30, 2026, as compared to the same period in 2025. On an organic basis, costs associated with employee compensation increased $13 million primarily due to higher costs associated with performance share units of $8 million and the Company's annual cash bonus plan of $7 million, partially offset by a $2 million decrease in salary expenses, including headcount reductions from the Restructuring Plan. In addition, services and materials increased $11 million on an organic basis, including professional fees, which increased $7 million, in part due to expenses associated with higher sales volumes.
Restructuring
The Company did not incur material restructuring charges during either period presented. The Company anticipates the previously announced Restructuring Plan will be substantially completed by the end of the first quarter of 2027, with the remaining charges of approximately $3 million expected to be incurred throughout the remainder of the plan.
Interest Expense
Interest expense decreased by $5 million for the three months ended June 30, 2026, as compared to the same period in 2025. The decrease is primarily due to lower balances in the current period on the Company's credit facilities. For additional information, refer to "-Liquidity and Capital Resources."
Gains on Divestitures
The Company recorded a $191 million gain on divestiture due to the sale of the Employee Health and Safety software business.
Other Income (Expense), net
Other income (expense), net increased by $6 million, in part due to an impairment on an equity investment in a non-consolidated affiliate in the prior period which did not reoccur in the current period.
Income Tax Expense
The effective tax rate for the three months ended June 30, 2026 was 24.9%, which differed from the U.S. federal statutory tax rate of 21%, primarily due to state and local income taxes and foreign tax effects.
The effective tax rate for the three months ended June 30, 2025 was 22.4%, which differed from the U.S. federal statutory tax rate of 21%, primarily due to foreign tax effects, U.S. tax on Global Intangible Low Taxed Income net of related foreign tax credits, and Section 162(m) limitations on current year compensation deductions of certain executive officers, partially offset by excess tax benefits associated with stock-based compensation deductions.
On January 5, 2026, the Organisation for Economic Co-operation and Development ("OECD") released administrative guidance on Pillar Two (a framework of rules which impose a 15% corporate minimum tax and were enacted by several countries in which the Company operates prior to 2026). The administrative guidance mainly introduces a "side-by-side" arrangement that provides safe-harbors against certain aspects of the Pillar Two rules for multinational companies headquartered in countries having an eligible minimum tax system - most notably that of the U.S. Following formal global adoption by OECD member countries, the administrative guidance is effective for fiscal years beginning on or after January 1, 2026, and the Company does not currently expect it to have a material impact on its consolidated financial statements. The Company continues to monitor developments related to the OECD Pillar Two global minimum tax framework, including this new arrangement.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
| Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||
| (in millions) | 2026 | % Revenue | 2025 | % Revenue | |||||||||||||||||||||||||
| Revenue | $ | 1,574 | N/A | $ | 1,481 | N/A | $ | 93 | |||||||||||||||||||||
| Cost of revenue | 776 | 49.3 | % | 759 | 51.2 | % | 17 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 510 | 32.4 | % | 476 | 32.1 | % | 34 | ||||||||||||||||||||||
| Restructuring | - | - | % | (2) | (0.1) | % | 2 | ||||||||||||||||||||||
| Operating income | 288 | 18.3 | % | 248 | 16.7 | % | 40 | ||||||||||||||||||||||
| Interest expense | (13) | (0.8) | % | (22) | (1.5) | % | 9 | ||||||||||||||||||||||
| Gain on divestiture | 191 | 12.1 | % | - | - | % | 191 | ||||||||||||||||||||||
| Other income (expense), net | 2 | 0.1 | % | (7) | (0.5) | % | 9 | ||||||||||||||||||||||
| Income before income taxes | 468 | 29.7 | % | 219 | 14.8 | % | 249 | ||||||||||||||||||||||
| Income tax expense | 116 | 7.4 | % | 51 | 3.4 | % | 65 | ||||||||||||||||||||||
| Net income | $ | 352 | 22.4 | % | $ | 168 | 11.3 | % | 184 | ||||||||||||||||||||
Revenue
| Six Months Ended June 30, | |||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Change | % Change | |||||||||||||||||||
| Industrial | $ | 777 | $ | 713 | $ | 64 | 9.0 | % | |||||||||||||||
| Consumer | 680 | 644 | 36 | 5.6 | % | ||||||||||||||||||
| Risk & Compliance Software | 117 | 124 | (7) | (5.6) | % | ||||||||||||||||||
| Total | $ | 1,574 | $ | 1,481 | $ | 93 | 6.3 | % | |||||||||||||||
Revenue increased by $93 million, or 6.3%, for the six months ended June 30, 2026, as compared to the same period in 2025. Revenue increased on an organic basis by $91 million, or 6.1%, due to organic growth across all segments in 2026, driven by the Industrial and Consumer segments in Ongoing Certification Services and Certification Testing revenue. FX increased revenue by $16 million, or 1.1%, primarily due to the relative strength of the euro and Chinese renminbi. Acquisition / Divestiture decreased revenue by $14 million, or 0.9%, due to the sale of the Employee Health and Safety software business in the Risk & Compliance Software segment.
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition / Divestiture | FX | Total | Organic % Change | Total % Change | |||||||||||||||||||||||||||||
| Revenue change | |||||||||||||||||||||||||||||||||||
| Industrial | $ | 55 | $ | - | $ | 9 | $ | 64 | 7.7 | % | 9.0 | % | |||||||||||||||||||||||
| Consumer | 30 | - | 6 | 36 | 4.7 | % | 5.6 | % | |||||||||||||||||||||||||||
| Risk & Compliance Software | 6 | (14) | 1 | (7) | 4.8 | % | (5.6) | % | |||||||||||||||||||||||||||
| Total | $ | 91 | $ | (14) | $ | 16 | $ | 93 | 6.1 | % | 6.3 | % | |||||||||||||||||||||||
Cost of Revenue
Cost of revenue increased by $17 million, or 2.2%, for the six months ended June 30, 2026, as compared to the same period in 2025. FX increased cost of revenue by $12 million, primarily due to the relative strength of the euro and Chinese renminbi. On an organic basis, costs associated with performance-based incentives increased $6 million primarily due to the Company's annual cash bonus plan. In addition, depreciation and amortization increased organically $5 million related to software placed in service and the completion of additional laboratory capacity. Professional fees also increased organically $5 million, in part due to a laboratory relocation and outsourced labor associated with higher revenue. The increase was partially offset by a $4 million organic decrease in salary expenses, including headcount reductions from the Restructuring Plan. Acquisition / Divestiture also decreased cost of revenue by $6 million due to the sale of the Employee Health and Safety software business in the Risk & Compliance Software segment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $34 million, or 7.1%, for the six months ended June 30, 2026, as compared to the same period in 2025. On an organic basis, employee compensation expenses increased $15 million, primarily due to higher costs associated with performance share units and the Company's annual cash bonus plan. In addition, professional fees increased organically $6 million, in part due to expenses associated with higher sales volumes. FX increased selling, general and administrative expenses by $6 million, primarily due to the relative strength of the euro. Acquisition / Divestiture increased selling, general and administrative expenses by $6 million, primarily in connection with costs for the contemplated E&E Transaction.
Restructuring
The Company did not incur material restructuring charges during either period presented. The Company anticipates the previously announced Restructuring Plan will be substantially completed by the end of the first quarter of 2027, with the remaining charges of approximately $3 million expected to be incurred throughout the remainder of the plan.
Interest Expense
Interest expense decreased by $9 million for the six months ended June 30, 2026, as compared to the same period in 2025. The decrease is primarily due to lower balances in the current period on the Company's credit facilities. For additional information refer to "-Liquidity and Capital Resources."
Gains on Divestitures
The Company recorded a $191 million gain on divestiture due to the sale of the Employee Health and Safety software business.
Other Income (Expense), net
Other income (expense), net, increased by $9 million, in part due to an impairment on an equity investment in a non-consolidated affiliate in the prior period which did not reoccur in the current period.
Income Tax Expense
The effective tax rate for the six months ended June 30, 2026 was 24.8%, which differed from the U.S. federal statutory tax rate of 21%, primarily due to state and local income taxes and foreign tax effects.
The effective tax rate for the six months ended June 30, 2025 was 23.3%, which differed from the U.S. federal statutory tax rate of 21%, primarily due to foreign tax effects, U.S. tax on Global Intangible Low Taxed Income net of related foreign tax credits, and Section 162(m) limitations on current year compensation deductions of certain executive officers, partially offset by excess tax benefits associated with stock-based compensation deductions.
On January 5, 2026, the Organisation for Economic Co-operation and Development ("OECD") released administrative guidance on Pillar Two (a framework of rules which impose a 15% corporate minimum tax and were enacted by several countries in which the Company operates prior to 2026). The administrative guidance mainly introduces a "side-by-side" arrangement that provides safe-harbors against certain aspects of the Pillar Two rules for multinational companies headquartered in countries having an eligible minimum tax system - most notably that of the U.S. Following formal global adoption by OECD member countries, the administrative guidance is effective for fiscal years beginning on or after January 1, 2026, and the Company does not currently expect it to have a material impact on its consolidated financial statements. The Company continues to monitor developments related to the OECD Pillar Two global minimum tax framework, including this new arrangement.
Industrial
The Industrial segment provides TIC and advisory services to help ensure customers' industrial products meet or exceed international standards for product safety, performance and sustainability. The Industrial segment provides services that address needs across a number of end markets, including energy, industrial automation, engineered materials (plastics and wire and cable) and built environment, and across a variety of stakeholders, including manufacturers, building and asset owners, end users and regulators.
The following tables summarize the change in Industrial's revenue and operating income for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Change | % Change | 2026 | 2025 | Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 402 | $ | 373 | $ | 29 | 7.8 | % | $ | 777 | $ | 713 | $ | 64 | 9.0 | % | |||||||||||||||||||||||||||||||
| Employee compensation | 193 | 177 | 16 | 9.0 | % | 369 | 342 | 27 | 7.9 | % | |||||||||||||||||||||||||||||||||||||
| Services and materials | 90 | 80 | 10 | 12.5 | % | 171 | 156 | 15 | 9.6 | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 16 | 16 | - | - | % | 32 | 32 | - | - | % | |||||||||||||||||||||||||||||||||||||
| Restructuring | - | - | - | - | % | 1 | - | 1 | - | % | |||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 103 | $ | 100 | $ | 3 | 3.0 | % | $ | 204 | $ | 183 | $ | 21 | 11.5 | % | |||||||||||||||||||||||||||||||
| Segment operating income margin | 25.6 | % | 26.8 | % | 26.3 | % | 25.7 | % | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition/ Divestiture | FX | Total | Organic | Acquisition/ Divestiture | FX | Total | |||||||||||||||||||||||||||||||||||||||
| Revenue change | $ | 27 | $ | - | $ | 2 | $ | 29 | $ | 55 | $ | - | $ | 9 | $ | 64 | |||||||||||||||||||||||||||||||
| Segment operating income change | $ | 2 | $ | 1 | $ | - | $ | 3 | $ | 20 | $ | 1 | $ | - | $ | 21 | |||||||||||||||||||||||||||||||
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Revenue
Revenue increased by $29 million, or 7.8%, for the three months ended June 30, 2026, as compared to the same period in 2025. On an organic basis, revenue increased $27 million, or 7.2%, due to growth in Ongoing Certification Services revenue of $16 million, driven by continued demand for materials and energy and automation. Certification Testing revenue also increased $10 million, driven by continued demand for energy and automation.
Segment Operating Income
Segment operating income increased by $3 million, or 3.0%, for the three months ended June 30, 2026, as compared to the same period in 2025, primarily due to the $27 million increase in organic revenue noted above. This was offset by a $25 million organic increase in expenses, primarily due to higher employee compensation of $14 million related to costs associated with performance-based incentives and $6 million due to professional fees.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Revenue
Revenue increased by $64 million, or 9.0%, for the six months ended June 30, 2026, as compared to the same period in 2025. On an organic basis, revenue increased $55 million, or 7.7%, due to growth in Ongoing Certification Services revenue of $28 million, driven by continued demand for materials and energy and automation. Certification Testing revenue also increased $21 million across most industries, in part due to continued demand for energy and automation. FX increased revenue by $9 million, or 1.3%, primarily due to the relative strength of the euro and Chinese renminbi.
Segment Operating Income
Segment operating income increased by $21 million, or 11.5%, for the six months ended June 30, 2026, as compared to the same period in 2025, primarily due to the $55 million increase in organic revenue noted above. This was partially offset by a $35 million organic increase in expenses, primarily due to higher employee compensation of $20 million related to higher costs associated with performance-based incentives, as well as base salary increases, and $8 million due to higher professional fees.
Consumer
The Consumer segment provides a variety of global product market acceptance and risk mitigation services for customers in the consumer products end market, including consumer electronics, medical devices, information technologies, appliances, HVAC, lighting, retail (softlines and hardlines) and emerging consumer applications. The primary services offered by this segment include safety certification testing, ongoing certification, global market access, testing for connectivity, performance and quality and critical systems advisory and training.
The following tables summarize the change in Consumer's revenue and operating income for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Change | % Change | 2026 | 2025 | Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 362 | $ | 340 | $ | 22 | 6.5 | % | $ | 680 | $ | 644 | $ | 36 | 5.6 | % | |||||||||||||||||||||||||||||||
| Employee compensation | 199 | 197 | 2 | 1.0 | % | 377 | 378 | (1) | (0.3) | % | |||||||||||||||||||||||||||||||||||||
| Services and materials | 96 | 87 | 9 | 10.3 | % | 186 | 170 | 16 | 9.4 | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 20 | 20 | - | - | % | 41 | 39 | 2 | 5.1 | % | |||||||||||||||||||||||||||||||||||||
| Restructuring | - | (1) | 1 | (100.0) | % | (1) | (2) | 1 | (50.0) | % | |||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 47 | $ | 37 | $ | 10 | 27.0 | % | $ | 77 | $ | 59 | $ | 18 | 30.5 | % | |||||||||||||||||||||||||||||||
| Segment operating income margin | 13.0 | % | 10.9 | % | 11.3 | % | 9.2 | % | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition/ Divestiture | FX | Total | Organic | Acquisition/ Divestiture | FX | Total | |||||||||||||||||||||||||||||||||||||||
| Revenue change | $ | 21 | $ | - | $ | 1 | $ | 22 | $ | 30 | $ | - | $ | 6 | $ | 36 | |||||||||||||||||||||||||||||||
| Segment operating income change | $ | 12 | $ | (2) | $ | - | $ | 10 | $ | 28 | $ | (8) | $ | (2) | $ | 18 | |||||||||||||||||||||||||||||||
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Revenue
Revenue increased by $22 million, or 6.5%, for the three months ended June 30, 2026, as compared to the same period in 2025. On an organic basis, revenue increased $21 million, or 6.2%, primarily due to growth in Certification Testing revenue of $10 million, driven primarily by continued demand for consumer technology. Non-certification Testing and Other Services revenue also increased $5 million, driven primarily by demand for retail. Ongoing Certification Services revenue increased $4 million across most industries, in part due to continued demand for appliances and HVAC.
Segment Operating Income
Segment operating income increased by $10 million, or 27.0%, for the three months ended June 30, 2026, as compared to the same period in 2025, primarily due to the $21 million increase in organic revenue noted above. This was partially offset by a $9 million organic increase in expenses, primarily due to higher costs associated with performance-based incentives of $8 million. The increase was partially offset by a $5 million organic decrease in salary expenses, including headcount reductions from the Restructuring Plan.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Revenue
Revenue increased by $36 million, or 5.6%, for the six months ended June 30, 2026, as compared to the same period in 2025. On an organic basis, revenue increased $30 million, or 4.7%, primarily due to growth in Certification Testing revenue of $15 million, driven primarily by continued demand for consumer technology. Ongoing Certification Services revenue also increased $9 million across most industries, in part due to continued demand for appliances and HVAC. FX increased revenue by $6 million or 0.9%, primarily due to the relative strength of the Chinese renminbi and euro.
Segment Operating Income
Segment operating income increased by $18 million, or 30.5%, for the six months ended June 30, 2026, as compared to the same period in 2025, primarily due to the $30 million increase in organic revenue noted above. In addition, salary expense decreased $9 million organically, including headcount reductions from the Restructuring Plan. This was partially offset by a $9 million organic increase in costs associated with performance-based incentives. Acquisition / Divestiture also decreased operating income by $8 million, primarily in connection with costs for the contemplated E&E Transaction.
Risk & Compliance Software
The R&C Software segment provides complementary software solutions that extend the value proposition of TIC services the Company offers. The software, data, and insight offerings enable the Company's customers to manage complex regulatory requirements, deliver supply chain transparency and operationalize sustainability.
The following tables summarize the change in R&C Software's revenue and operating income for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Change | % Change | 2026 | 2025 | Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 52 | $ | 63 | $ | (11) | (17.5) | % | $ | 117 | $ | 124 | $ | (7) | (5.6) | % | |||||||||||||||||||||||||||||||
| Employee compensation | 37 | 44 | (7) | (15.9) | % | 78 | 86 | (8) | (9.3) | % | |||||||||||||||||||||||||||||||||||||
| Services and materials | 5 | 7 | (2) | (28.6) | % | 12 | 12 | - | - | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 10 | 10 | - | - | % | 20 | 20 | - | - | % | |||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | - | $ | 2 | $ | (2) | (100.0) | % | $ | 7 | $ | 6 | $ | 1 | 16.7 | % | |||||||||||||||||||||||||||||||
| Segment operating income margin | - | % | 3.2 | % | 6.0 | % | 4.8 | % | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition/ Divestiture | Total | Organic | Acquisition/ Divestiture | FX | Total | ||||||||||||||||||||||||||||||||||
| Revenue change | $ | 3 | $ | (14) | $ | (11) | $ | 6 | $ | (14) | $ | 1 | $ | (7) | |||||||||||||||||||||||||||
| Segment operating income change | $ | 4 | $ | (6) | $ | (2) | $ | 8 | $ | (7) | $ | - | $ | 1 | |||||||||||||||||||||||||||
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Revenue
Revenue decreased by $11 million, or 17.5%, for the three months ended June 30, 2026, as compared to the same period in 2025. Acquisition / Divestiture decreased revenue by $14 million, or 22.2%, due to the sale of the Employee Health and Safety software business. On an organic basis, revenue increased $3 million, or 4.8%, driven by demand for software subscriptions, primarily for providing supply chain insights to the retail industry.
Segment Operating Income
Segment operating income decreased by $2 million for the three months ended June 30, 2026, as compared to the same period in 2025. This was primarily due to a $6 million decrease in operating income from the divested Employee Health and Safety software business, partially offset by the $3 million increase in organic revenue noted above.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Revenue
Revenue decreased by $7 million, or 5.6%, for the six months ended June 30, 2026, as compared to the same period in 2025. Acquisition / Divestiture decreased revenue by $14 million, or 11.3%, due to the sale of the Employee Health and Safety software business. On an organic basis, revenue increased $6 million, or 4.8%, driven by demand for software subscriptions, primarily for providing supply chain insights to the retail industry.
Segment Operating Income
Segment operating income increased by $1 million for the six months ended June 30, 2026, as compared to the same period in 2025, primarily due to the $6 million increase in organic revenue noted above. This was offset by a $7 million decrease in operating income from the divested Employee Health and Safety software business.
Non-GAAP Financial Measures
In addition to financial measures determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"), the Company considers a variety of supplemental non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income margin, Adjusted Diluted Earnings Per Share, Free Cash Flow and Free Cash Flow margin. Management uses non-GAAP financial measures in addition to GAAP measures to understand and compare operating results across periods and for forecasting and other purposes. Management believes these non-GAAP financial measures provide useful information to investors and reflect results in a manner that enables, in some instances, more meaningful analysis of trends and facilitates comparison of results across periods. 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 due to potential differences between the companies in calculations.
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. The Company uses Free Cash Flow and Free Cash Flow margin as additional liquidity measures and believes they provide 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, gains on divestitures, other (income) expense, net, 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 gains on divestitures, other (income) expense, net, 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.
The table below presents these non-GAAP measures with the most directly comparable GAAP measures.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | 254 | $ | 97 | $ | 352 | $ | 168 | |||||||||||||||
| Net income margin | 31.1 | % | 12.5 | % | 22.4 | % | 11.3 | % | |||||||||||||||
| Adjusted EBITDA | $ | 219 | $ | 197 | $ | 416 | $ | 358 | |||||||||||||||
| Adjusted EBITDA margin | 26.8 | % | 25.4 | % | 26.4 | % | 24.2 | % | |||||||||||||||
| Adjusted Net Income | $ | 129 | $ | 110 | $ | 236 | $ | 190 | |||||||||||||||
| Adjusted Net Income margin | 15.8 | % | 14.2 | % | 15.0 | % | 12.8 | % | |||||||||||||||
| Diluted Earnings per Share | $ | 1.21 | $ | 0.45 | $ | 1.66 | $ | 0.78 | |||||||||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.59 | $ | 0.52 | $ | 1.09 | $ | 0.89 | |||||||||||||||
| Net Cash provided by Operating Activities | $ | 379 | $ | 301 | |||||||||||||||||||
| Net cash provided by operating activities margin | 24.1 | % | 20.3 | % | |||||||||||||||||||
| Free Cash Flow | $ | 241 | $ | 208 | |||||||||||||||||||
| Free Cash Flow margin | 15.3 | % | 14.0 | % | |||||||||||||||||||
Adjusted EBITDA
The Company defines Adjusted EBITDA as net income adjusted for depreciation and amortization expense, interest expense, gains on divestitures, other (income) expense, net, income tax expense, as well as stock-based compensation expense for equity-settled awards, material asset impairment charges and restructuring expenses, as applicable. Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of revenue.
The table below reconciles net income to Adjusted EBITDA.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | 254 | $ | 97 | $ | 352 | $ | 168 | |||||||||||||||
| Depreciation and amortization expense | 46 | 46 | 93 | 91 | |||||||||||||||||||
| Interest expense | 5 | 10 | 13 | 22 | |||||||||||||||||||
| Gain on divestiture | (191) | - | (191) | - | |||||||||||||||||||
| Other (income) expense, net | (2) | 4 | (2) | 7 | |||||||||||||||||||
| Income tax expense | 84 | 28 | 116 | 51 | |||||||||||||||||||
| Stock-based compensation | 23 | 13 | 35 | 21 | |||||||||||||||||||
| Restructuring | - | (1) | - | (2) | |||||||||||||||||||
| Adjusted EBITDA | $ | 219 | $ | 197 | $ | 416 | $ | 358 | |||||||||||||||
| Revenue | $ | 816 | $ | 776 | $ | 1,574 | $ | 1,481 | |||||||||||||||
| Net income margin | 31.1 | % | 12.5 | % | 22.4 | % | 11.3 | % | |||||||||||||||
| Adjusted EBITDA margin | 26.8 | % | 25.4 | % | 26.4 | % | 24.2 | % | |||||||||||||||
The table below reconciles segment operating income to segment Adjusted EBITDA.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Industrial | |||||||||||||||||||||||
| Segment operating income | $ | 103 | $ | 100 | $ | 204 | $ | 183 | |||||||||||||||
| Depreciation and amortization expense | 16 | 16 | 32 | 32 | |||||||||||||||||||
| Stock-based compensation | 11 | 5 | 16 | 8 | |||||||||||||||||||
| Restructuring | - | - | 1 | - | |||||||||||||||||||
| Adjusted EBITDA | $ | 130 | $ | 121 | $ | 253 | $ | 223 | |||||||||||||||
| Revenue | $ | 402 | $ | 373 | $ | 777 | $ | 713 | |||||||||||||||
| Operating income margin | 25.6 | % | 26.8 | % | 26.3 | % | 25.7 | % | |||||||||||||||
| Adjusted EBITDA margin | 32.3 | % | 32.4 | % | 32.6 | % | 31.3 | % | |||||||||||||||
| Consumer | |||||||||||||||||||||||
| Segment operating income | $ | 47 | $ | 37 | $ | 77 | $ | 59 | |||||||||||||||
| Depreciation and amortization expense | 20 | 20 | 41 | 39 | |||||||||||||||||||
| Stock-based compensation | 10 | 6 | 15 | 10 | |||||||||||||||||||
| Restructuring | - | (1) | (1) | (2) | |||||||||||||||||||
| Adjusted EBITDA | $ | 77 | $ | 62 | $ | 132 | $ | 106 | |||||||||||||||
| Revenue | $ | 362 | $ | 340 | $ | 680 | $ | 644 | |||||||||||||||
| Operating income margin | 13.0 | % | 10.9 | % | 11.3 | % | 9.2 | % | |||||||||||||||
| Adjusted EBITDA margin | 21.3 | % | 18.2 | % | 19.4 | % | 16.5 | % | |||||||||||||||
| Risk & Compliance Software | |||||||||||||||||||||||
| Segment operating income | $ | - | $ | 2 | $ | 7 | $ | 6 | |||||||||||||||
| Depreciation and amortization expense | 10 | 10 | 20 | 20 | |||||||||||||||||||
| Stock-based compensation | 2 | 2 | 4 | 3 | |||||||||||||||||||
| Adjusted EBITDA | $ | 12 | $ | 14 | $ | 31 | $ | 29 | |||||||||||||||
| Revenue | $ | 52 | $ | 63 | $ | 117 | $ | 124 | |||||||||||||||
| Operating income margin | - | % | 3.2 | % | 6.0 | % | 4.8 | % | |||||||||||||||
| Adjusted EBITDA margin | 23.1 | % | 22.2 | % | 26.5 | % | 23.4 | % | |||||||||||||||
| Adjusted EBITDA | $ | 219 | $ | 197 | $ | 416 | $ | 358 | |||||||||||||||
Adjusted Net Income
The Company defines Adjusted Net Income as net income adjusted for gains on divestitures, other (income) expense, net, stock-based compensation expense for equity-settled awards, material asset impairment charges and restructuring expenses, as applicable, adjusted to give effect to the income tax impact of such adjustments. Adjusted Net Income margin is calculated as Adjusted Net Income as a percentage of revenue.
The table below reconciles net income to Adjusted Net Income.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | 254 | $ | 97 | $ | 352 | $ | 168 | |||||||||||||||
| Gain on divestiture | (191) | - | (191) | - | |||||||||||||||||||
| Other (income) expense, net | (2) | 4 | (2) | 7 | |||||||||||||||||||
| Stock-based compensation | 23 | 13 | 35 | 21 | |||||||||||||||||||
| Restructuring | - | (1) | - | (2) | |||||||||||||||||||
|
Tax effect of adjustments(a)
|
45 | (3) | 42 | (4) | |||||||||||||||||||
| Adjusted Net Income | $ | 129 | $ | 110 | $ | 236 | $ | 190 | |||||||||||||||
| Revenue | $ | 816 | $ | 776 | $ | 1,574 | $ | 1,481 | |||||||||||||||
| Net income margin | 31.1 | % | 12.5 | % | 22.4 | % | 11.3 | % | |||||||||||||||
| Adjusted Net Income margin | 15.8 | % | 14.2 | % | 15.0 | % | 12.8 | % | |||||||||||||||
(a)The Company computed the tax effect of adjustments to net earnings by applying the statutory tax rate in the relevant jurisdictions to the taxable income or expense items that are adjusted in the period presented. If a valuation allowance exists, the rate applied is zero.
Adjusted Diluted Earnings Per Share
The Company defines Adjusted Diluted Earnings Per Share as diluted earnings per share attributable to stockholders of UL Solutions adjusted for gains on divestitures, other (income) expense, net, stock-based compensation expense for equity-settled awards, material asset impairment charges and restructuring expenses, as applicable, adjusted to give effect to the income tax impact of such adjustments.
The table below reconciles diluted earnings per share to Adjusted Diluted Earnings Per Share.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Diluted earnings per share | $ | 1.21 | $ | 0.45 | $ | 1.66 | $ | 0.78 | |||||||||||||||
| Gain on divestiture | (0.94) | - | (0.94) | - | |||||||||||||||||||
| Other (income) expense, net | (0.01) | 0.02 | (0.01) | 0.04 | |||||||||||||||||||
| Stock-based compensation | 0.11 | 0.06 | 0.17 | 0.10 | |||||||||||||||||||
| Restructuring | - | - | - | (0.01) | |||||||||||||||||||
|
Tax effect of adjustments(a)
|
0.22 | (0.01) | 0.21 | (0.02) | |||||||||||||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.59 | $ | 0.52 | $ | 1.09 | $ | 0.89 | |||||||||||||||
(a)The Company computed the tax effect of adjustments to net earnings by applying the statutory tax rate in the relevant jurisdictions to the taxable income or expense items that are adjusted in the period presented. If a valuation allowance exists, the rate applied is zero.
Free Cash Flow
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. Free Cash Flow margin is calculated as Free Cash Flow as a percentage of revenue.
The table below reconciles net cash provided by operating activities to Free Cash Flow.
|
Six Months Ended June 30, |
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| (in millions) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $ | 379 | $ | 301 | |||||||
| Capital expenditures | (138) | (93) | |||||||||
| Free Cash Flow | $ | 241 | $ | 208 | |||||||
| Revenue | $ | 1,574 | $ | 1,481 | |||||||
| Net cash provided by operating activities margin | 24.1 | % | 20.3 | % | |||||||
| Free Cash Flow margin | 15.3 | % | 14.0 | % | |||||||
Liquidity and Capital Resources
Overview
The Company's primary sources of liquidity are cash and cash equivalents on hand and short-term investments, cash flows from operating activities and cash available to be borrowed under the 2025 Credit Facility (as defined below). The Company believes the combination of cash and cash equivalents on hand and short-term investments, the generation of cash from operating activities, funds available under the 2025 Credit Facility, and the Company's ability to access the capital markets provide sufficient liquidity to meet the Company's cash requirements for working capital, capital expenditures, service of indebtedness and to address other needs for the next twelve months and the foreseeable future thereafter, as well as to finance acquisitions, make contributions to the Company's pension and postretirement plans and pay dividends to stockholders, as the Company's board of directors deems appropriate.
The Company's cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those referenced in the section titled "Risk Factors" in Part I Item 1A of the Company's Annual Report on Form 10-K. In addition, the Company cannot predict whether or when it may enter into acquisitions, joint ventures or dispositions, make contributions to the Company's pension and postretirement plans, pay dividends, or what impact any such transactions could have on the Company's financial condition, results of operations or cash flows.
As of June 30, 2026, the Company had $434 million in cash and cash equivalents and $995 million of unused availability under the 2025 Credit Facility and access to an accordion feature permitting an increase in the 2025 Credit Facility by an aggregate amount of up to $500 million, subject to the consent of any lenders providing such increase, the absence of any default or event of default and entry into customary documentation with respect to such increase.
Cash Flows
The following table is a summary of the Company's cash flow activity:
|
Six Months Ended June 30, |
|||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $ | 379 | $ | 301 | |||||||
| Net cash provided by (used in) investing activities | $ | 70 | $ | (107) | |||||||
| Net cash used in financing activities | $ | (308) | $ | (221) | |||||||
Cash flows from operating activities
Net cash provided by operating activities was $379 million for the six months ended June 30, 2026, an increase of $78 million compared to net cash provided by operating activities of $301 million for the same period in 2025. The increase was primarily driven by higher net income after non-cash adjustments due to business performance and higher contract liabilities as a result of increased payments from customers.
Cash flows from investing activities
Net cash provided by investing activities was $70 million for the six months ended June 30, 2026, an increase of $177 million compared to net cash used in investing activities of $107 million for the same period in 2025. The increase in cash provided by investing activities was primarily driven by $199 million in proceeds from the divestiture of the Company's Employee Health and Safety software business during the current period, partially offset by a $45 million increase in capital expenditures compared to the same period in 2025.
Cash flows from financing activities
Net cash used in financing activities was $308 million for the six months ended June 30, 2026, an increase of $87 million compared to net cash used in financing activities of $221 million for the same period in 2025. The increase in cash used in financing activities was primarily driven by a $56 million increase in repayments net of proceeds on the Company's credit facilities and a $19 million increase in employee taxes paid on settlement of stock-based compensation compared to the same period in 2025.
Capital Expenditures
The Company makes strategic investments in capital expenditures to enable growth by expanding testing capacity to meet increased demand, to enable new capabilities and product offerings and to increase the efficiency of the Company's processes. Capital expenditures include the building and refurbishment of laboratories and office space, the replacement and upgrade of existing laboratory and IT equipment at the end of its useful life, and investments in technology for internal-use and sale to customers through product development of new software and enhancements of existing software. Cash paid for capital expenditures increased $45 million, to $138 million for the six months ended June 30, 2026, compared to $93 million for the same period in 2025.
Long-Term Debt
2025 Credit Facility
In October 2025, the Company entered into a credit agreement, by and among UL Solutions Inc. and certain of its non-U.S. subsidiaries as co-borrowers (collectively, the "Borrowers"), Bank of America, N.A., as administrative agent, and the lenders party thereto (the "Credit Agreement"). The Credit Agreement provides for a $1.0 billion senior unsecured five-year multi-currency revolving facility (collectively, and as amended, the "2025 Credit Facility"). The Borrowers' obligations (other than the Company's) under the Credit Agreement are guaranteed by the Company. As of June 30, 2026, the Company was in compliance with all covenants under the 2025 Credit Facility.
Senior Notes
The Company has outstanding $300 million in aggregate principal amount of 6.500% senior notes due 2028 (the "notes"). The notes are senior unsecured obligations of UL Solutions Inc. Borrowings under the notes bear a fixed interest rate of 6.500% per annum.
Dividends
The Company increased the regular quarterly dividend to 14.5 cents per share beginning in the first quarter of 2026, an increase from the previous 13 cents per share. The Company will periodically assess the size of the regular quarterly dividend based on the Company's dividend policy and certain factors described in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations-Dividends" in Part II Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. The Company cannot give any assurance that the Company will continue to declare dividends in any particular amounts, or at all, in the future.
In the three and six months ended June 30, 2026, the Company paid dividends to stockholders of $29 million and $58 million, respectively. In the three and six months ended June 30, 2025, the Company paid dividends to stockholders of $26 million and $52 million, respectively.
Contractual Obligations
The Company has purchase obligations related to agreements to purchase goods and services that are enforceable and legally binding, and that specify all significant terms, including the goods to be purchased or services to be rendered, the price at which the goods or services are to be rendered, and the timing of the transactions. Purchase obligations exclude liabilities that are included on the Company's Condensed Consolidated Balance Sheets and include commitments for outsourced services, facilities, capital expenditures, cloud service arrangements and various other types of noncancelable contracts.
Refer to the Company's consolidated financial statements for the year ended December 31, 2025 included in the Company's Annual Report on Form 10-K for information about the Company's noncancelable purchase obligations.
Recent Accounting Pronouncements
For a discussion of new accounting pronouncements recently adopted and not yet adopted, see Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report.
Critical Accounting Policies and Estimates
The Company prepares its condensed consolidated financial statements in accordance with GAAP. While the majority of the Company's revenue, expenses, assets and liabilities are not based on estimates, there are certain accounting principles that require management to make judgments and estimates regarding matters that are uncertain and susceptible to change. Critical accounting policies are defined as those policies that are reflective of significant judgments, estimates and uncertainties, which could potentially result in materially different results under different assumptions and conditions. Management regularly reviews the estimates and assumptions used in the preparation of the financial statements for reasonableness and adequacy. The Company's estimates are based on historical experience, current conditions and various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions. To the extent that there are differences between estimates and actual results, the Company's future financial statement presentation, financial condition, results of operations and cash flows may be affected.
There have been no material changes to the Company's critical accounting policies and estimates as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report may be forward-looking statements. Statements regarding the Company's future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding the Company's expected growth, future capital expenditures and the Restructuring Plan, including the Company's estimates of the charges and expenditures in connection therewith and the timing thereof and the Company's estimates of the benefits of such Restructuring Plan, and statements regarding the Company's acquisitions, divestitures and other strategic transactions, including expected timing, closing, proceeds, financing, synergies and financial impact, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "would," "likely," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continues" and variations of these terms and similar expressions, or the negative of these terms or similar expressions (although not all forward-looking statements may contain such words). The Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause the Company's actual results to differ materially from those expressed or implied in these forward-looking statements, including, but not limited to, the following:
•any failure on the Company's part to protect and maintain its brand and reputation, or the impact on its brand or reputation of third-party events or actions outside of its control;
•risks associated with the Company's information technology and software, including those relating to any future data breach or other cybersecurity incident;
•the potential disruption of the industries in which the Company operates by technological advances in artificial intelligence;
•the Company's ability to innovate, adapt to changing customer needs and successfully introduce new products and services in response to changes in the Company's industries and technological advances;
•the Company's ability to compete in its industries and the effects of increased competition from its competitors;
•risks associated with conducting business outside the United States, including those relating to fluctuations in foreign currency exchange rates; the imposition of tariffs and enhanced trade, import or export restrictions or changes in U.S. trade policy or similar government actions; and global, regional or political instability and geopolitical tensions;
•risks related to sustainability;
•risks associated with the Company's operations in China, which subject the Company and UL-CCIC Company Limited, the Company's joint venture with the China Certification & Inspection (Group) Co., Ltd. ("CCIC"), to China's complex and rapidly evolving laws, which may be interpreted, applied or enforced inconsistently or in ways inconsistent with its current operations, as well as risks associated with the fact that the Chinese government has the power to exercise significant oversight and discretion over, and intervene in and influence, its business operations in China;
•the relationship between the United States and China and between the Company and CCIC, as well as changes in U.S. and Chinese regulations affecting the Company's business operations in China;
•any failure on the Company's part to attract, hire or retain its key employees, including its senior leadership and its skilled and trained engineering, technical and professional personnel;
•the level of the Company's customers' satisfaction and any failure on its part to properly and timely perform its services, meet its contractual obligations or fulfill its customers' needs;
•changes to the relevant regulatory frameworks or private sector requirements, including any requirement that the Company accept third-party test results or certifications of components, end products, processes or systems or any changes that result in a reduction in required inspections, tests or certifications or harmonized international or cross-industry benchmarks and standards;
•the Company's ability to adequately maintain, protect and enhance its intellectual property, including its registered UL-in-a-circle certification mark and other certification marks;
•the Company's ability to implement its growth strategies and initiatives successfully;
•the Company's reliance on third parties, including subcontractors and outside laboratories;
•the Company's ability to obtain and maintain the requisite licenses, approvals, accreditations and delegations of authority necessary to conduct its business;
•the outcomes of current and future legal proceedings;
•the Company's level of indebtedness and future cash needs;
•a change in the assumptions the Company uses to value its goodwill or intangible assets, or the impairment of its goodwill or intangible assets;
•the Company's ability to generate sufficient cash to service its indebtedness and invest in the ongoing needs of its business;
•the increased expenses and responsibilities associated with being a public company;
•the significant influence that UL Standards & Engagement has over the Company, including pursuant to its rights under the Company's amended and restated certificate of incorporation and the Stockholder Agreement, dated as of April 2, 2024, by and between the Company and UL Standards & Engagement;
•natural disasters and other catastrophic events, including pandemics and the rapid spread of contagious illnesses;
•changes in tax laws in jurisdictions in which the Company operates or adverse outcomes resulting from examination of the Company's or its affiliates' tax returns;
•risks that the Company may be unable to implement the Restructuring Plan on the anticipated timing, that local law and consultation requirements, including for potential position eliminations, extend the restructuring process further in certain countries or causes the actual charges and expenditures that the Company incurs in connection with the Restructuring Plan, and the timing thereof, to differ materially from estimates, that the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Restructuring Plan and that the Company may not be able to realize the anticipated benefits of the Restructuring Plan;
•the occurrence of any event, change, or other circumstance that could give rise to the termination of the E&E Transaction and the payment of a break fee; the possibility that one or more closing conditions to the E&E Transaction, including the receipt of certain regulatory approvals, may not be satisfied or waived, in a timely manner or at all, including the risk that a governmental entity may prohibit, delay, or refuse to grant approval for the consummation of the E&E Transaction, or may require conditions, limitations, or restrictions in connection with such approvals; the risk that the E&E Transaction may not be completed within the expected timeframe, or at all; unexpected costs, charges or expenses resulting from the E&E Transaction; uncertainty regarding the expected
financial performance following completion of the E&E Transaction; the Company's ability to achieve its short-term and long-term operating targets following completion of the E&E Transaction; the effects that the announcement or pendency of the E&E Transaction may have on the Company; the acquired business' and the Company's respective businesses and ability to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom the acquired business or the Company do business; the effects that termination of the E&E Transaction may have on the Company or its business; failure to successfully complete the E&E Transaction; legal proceedings that may be instituted related to the E&E Transaction; the Company's ability or failure to successfully integrate the acquired business with existing operations; and the Company's ability to realize anticipated synergies or obtain the results anticipated;
•the other factors discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" herein and in the "Risk Factors" in Part I Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the section titled "Risk Factors" in Part I Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 and the Company's subsequent filings with the SEC. If one or more events related to these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Many of the important factors that will determine these results are beyond the Company's ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. If the Company updates one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements. New factors emerge from time to time, and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to the Company, or others acting on the Company's behalf, are expressly qualified in their entirety by the cautionary statements above.
In addition, statements that "the Company believes" and similar statements reflect the Company's beliefs and opinions on the relevant subject. These statements are based upon information available to the Company as of the date of this Quarterly Report, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and the Company's statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should read this Quarterly Report and the documents that the Company references in this Quarterly Report with the understanding that the Company's actual future results, levels of activity, performance and achievements may be materially different from what the Company expects.
UL Solutions Inc. published this content on August 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 04, 2026 at 21:25 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]