Ul Solutions Inc. · NYSE:ULS
Ul Solutions — Investor Presentation (November 2024)
32 slides from Ul Solutions's investor presentation, November 2024
Slide 1: Investor Presentation November 2024
UL SOLUTIONS INC. Investor Presentation November 2024
Slide 2: Forward looking statements
Forward looking statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, about UL Solutions' (the "Company") financial results and estimates and business prospects that involve substantial risks and unc
Slide 3: UL Solutions overview
UL Solutions overview Revenue Breakdown (2023) • A leading global business services company focused on Segments Customer Geographies3 independent testing, inspection and certification (TIC) • Dedicated to safety science since 18941 13% 4% 13% • Strong brand recognition and differentiation through en
Slide 4: UL Solutions has an integrated service portfolio
UL Solutions has an integrated service portfolio High percentage of recurring revenue and differentiated value proposition 27% 33% 30% 10% Certification testing Ongoing certification Non-certification testing Software services and other services • Industry standards, • Monitoring • Performance testi
Slide 5: UL Solutions is a global leader
UL Solutions is a global leader with #1 product TIC market share (by revenue)1 Global TIC market 1. Mission-driven growth company $38B Global product TIC market ~$38B Dedicated to applied safety Product TIC 7% 2. science and ESG ~$61B Nonproduct TIC 3. Long-term customer relationships — 27% reinforc
Slide 6: Segment overview
Segment overview Strong fundamentals drive growth in all segments Testing, Inspection and Certification Industrial Consumer Software and Advisory Primary end markets Power and energy products, industrial Consumer products and electronics, automation, materials and plastics, medical devices, electric
Slide 7: Megatrends driving growth
Megatrends driving growth Energy Transition New Mobility Sustainability and ESG New Technology, Supply Chain Risks Regulatory Compliance Connectivity and Digitalization 7
Slide 8: Industrial segment overview
Industrial segment overview Markets $1,146M 43% 2023 revenue UL Solutions 2023 revenue Energy and Automation Materials 30.3% Power, automation and electrical products, renewable energy, and large batteries used in industrial, energy, utility and automotive Wire, cable and plastics used in industrial
Slide 9: Consumer segment overview
Consumer segment overview Markets $1,172M 44% 2023 revenue UL Solutions 2023 revenue Consumer Technology Mobility 13.6% Consumer electronics, IT equipment, medical devices and components such as Electric and autonomous vehicles, and critical software and systems used in medical, 2023 Adjusted EBITDA
Slide 10: Software and Advisory segment overview
Software and Advisory segment overview $360M 13% Unifying platform with three core domains 2023 revenue UL Solutions 2023 revenue 15.8% 2023 Adjusted EBITDA margin1 3.4% 4.9% 2023 revenue growth 9M’24 revenue growth Software and advisory solutions to help customers meet regulatory, supply chain and
Slide 11: Key attributes of our financial model
Key attributes of our financial model Stable base of Constant Strong free cash Healthy balance recurring revenue revenue growth flow generation sheet • Stable, predictable • Market leading Revenue • Consistent • Conservative revenue streams that are CAGR from 20112 – 2023: operating margins leverage
Slide 12: Compelling financial profile
Compelling Scale $2.7B 140+ financial profile 2023 revenue Locations across more than 35 countries3 Growth 6.9% 56 acquisitions 20111 – 2023 from 2010 – 2024 YTD to total revenue CAGR supplement strong organic drivers Profitability $304M | 11.4% $563M | 21.0% 2023 Adjusted Net Income2 | 2023 Adjuste
Slide 13: Exceptional financial momentum with strong free cash flow generation
UL Solutions exhibits exceptional financial momentum with strong free cash flow generation Compelling organic growth profile with significant upside Strong business services Total revenue Adj. EBITDA1 financial profile Adj. EBITDA margin 1 CAGR: Long-term stable 6.9% $2,678 recurring revenue $2,517
Slide 14: Capital allocation strategy and financial policy
Capital allocation strategy and financial policy Capital allocation priorities Reinvest in the business Maintain strong balance sheet Return capital to shareholders • Organic capex to support • Conservative leverage • Intend to pay regular dividends innovation, productivity and top- consistent with
Slide 15: UL Solutions growth strategy
UL Solutions growth strategy 1. Pursue organic 2. Expand margin 3. Be the acquirer opportunities of choice • Increase existing and new • Automate and digitize work that • Continue proven, value-enhancing customer wallet share provides innovation in customer track record of tuck-ins services and oper
Slide 16: Acquisitions are an important part of UL Solutions' growth
Acquisitions are an important part of UL Solutions’ growth Acquisitions since 2010 More than $1.3B deployed towards 56 Industrial Consumer Software acquisitions 2010 – YTD 2024 and Advisory Acquisitions executed at attractive 12 24 20 multiples in critical end markets Select acquisitions Dedicated t
Slide 17: Q3 2024 Highlights
Q3 2024 Highlights Extending the momentum from the first half of 2024: • 8.1% Revenue growth, 9.3% Organic1 • 6.1% Adjusted Net Income2 increase • Adjusted EBITDA2 up 12.3% • Generated Free Cash Flow2 of $282M for the last twelve months ended September 30, 2024 1Refer to Organic definition in the A
Slide 18: North America Advanced Battery Lab opening in Michigan
North America Advanced Battery Lab opening in Michigan draws customers, media, officials • August opening showcased cutting-edge EV/industrial battery-testing capabilities near world's premier auto innovation hub • 90,000-square-foot facility augments existing testing network in Northbrook, IL; Frem
Slide 19: Q3 2024 Revenue +9.3% organic
Q3 2024 Revenue +9.3% organic1 $ in millions 1 1 1 1 1 1 1 Refer to Organic, FX and Acquisition / Divestiture definitions in Appendix. 19
Slide 20: LTM Cash Flow
LTM Cash Flow LTM Cash Flow Operating Cash Flow % in millions Capital Expenditures Free Cash Flow1 • Generated Free Cash Flow1 of $282M for the last twelve months ended September 30, 2024, an increase of $63M (+28.8%) vs the last twelve months ended September 30, 2023 • YTD Free Cash Flow1 benefited
Slide 21: Summary
Summary Mission-driven growth company, in the fragmented and consolidating testing, inspection 1 and certification industry 2 Dedication to applied safety science and ESG underpins our reputation as a trusted partner Long-term customer relationships — supported by disciplined account management and
Slide 22: Appendix
Appendix 22
Slide 23: Components of revenue change
Components of revenue change Three Months Ended September 30, 2024 Acquisition / (in millions) Organic1 Divestiture2 FX3 Total Organic % Change Total % Change Revenue change Industrial $ 34 $ (6) $ (1) $ 27 11.7 % 9.3 % Consumer 27 — (1) 26 9.2 % 8.8 % Software and Advisory 2 — — 2 2.2 % 2.2 % Total
Slide 24: Components of revenue change
Components of revenue change Nine Months Ended September 30, 2024 Acquisition / (in millions) Organic1 Divestiture2 FX3 Total Organic % Change Total % Change Revenue change Industrial $ 95 $ (12) $ (9) $ 74 11.2 % 8.7 % Consumer 62 (1) (11) 50 7.1 % 5.7 % Software and Advisory 11 2 — 13 4.2 % 4.9 %
Slide 25: Components of revenue change
Components of revenue change Twelve Months Ended December 31, 2023 Acquisition / (in millions) Organic1 Divestiture2 FX3 Total Organic % Change Total % Change Revenue change Industrial $ 105 $ 4 $ (7) $ 102 10.1 % 9.8 % Consumer 48 9 (13) 44 4.3 % 3.9 % Software and Advisory 10 2 — 12 2.9 % 3.4 % To
Slide 26: Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA and Adjusted EBITDA margin (non-GAAP measure)1 2 Three Months Ended Nine Months Ended September 30, September 30, (in millions, unless otherwise stated) 2024 2023 2024 2023 Net income $ 94 $ 57 $ 260 $ 214 Depreciation and amortization expense 43 37 125 111 Interest expense 14 7 42 2
Slide 27: Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA and Adjusted EBITDA margin (non-GAAP measure)1 2 Twelve Months Ended December 31, (in millions, unless otherwise stated) 2023 2022 2021 Net income $ 276 $ 309 $ 238 Depreciation and amortization expense 154 135 142 Interest expense 35 17 1 Other expense (income), net (13) 12 12 Incom
Slide 28: Adjusted EBITDA and Adjusted EBITDA margin by segment
Adjusted EBITDA and Adjusted EBITDA margin (non-GAAP measure)1 2 by segment Twelve Months Ended December 31, (in millions, unless otherwise stated) 2023 Industrial Segment operating income $ 308 Depreciation and amortization expense 38 Restructuring 1 Adjusted EBITDA1 $ 347 Revenue $ 1,146 Operating
Slide 29: Adjusted Net Income and Adjusted Net Income margin
Adjusted Net Income and Adjusted Net Income margin (non-GAAP measure)1 2 Three Months Ended Nine Months Ended September 30, September 30, (in millions, unless otherwise stated) 2024 2023 2024 2023 Net income $ 94 $ 57 $ 260 $ 214 Other expense (income), net — 7 (18) (8) Stock-based compensation 10 —
Slide 30: Adjusted Net Income and Adjusted Net Income margin
Adjusted Net Income and Adjusted Net Income margin (non-GAAP measure)1 2 Twelve Months Ended December 31, (in millions, unless otherwise stated) 2023 Net income $ 276 Other expense (income), net (13) Goodwill impairment 37 Restructuring 4 Tax effect of adjustments3 – Adjusted Net Income1 $ 304 Reven
Slide 31: Free Cash Flow (non-GAAP measure)
Free Cash Flow (non-GAAP measure)1 Nine Months Ended LTM2 September 30, September 30, (in millions, unless otherwise stated) 2024 2023 2024 2023 Net cash provided by operating activities $ 394 $ 341 $ 520 $ 421 Capital expenditures (179) (156) (238) (202) Free Cash Flow1 $ 215 $ 185 $ 282 $ 219 Reve
Slide 32: Free Cash Flow (non-GAAP measure)
Free Cash Flow (non-GAAP measure)1 Twelve Months Ended December 31, (in millions, unless otherwise stated) 2023 2022 2021 Net cash provided by operating activities $ 467 $ 372 $ 421 Capital expenditures (215) (164) (107) Free Cash Flow1 $ 252 $ 208 $ 314 Revenue $ 2,678 $ 2,520 $ 2,517 Net cash prov