UL Solutions Inc.

Hello, and welcome to the UL Solutions third quarter 2024 earnings conference call. Currently, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, you may press star, then the zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Kevin Arndt, Associate General Counsel at UL Solutions. Thank you. You may begin, Mr. Arndt.

Thank you. Welcome, everyone, to our third quarter 2024 earnings call. I am filling in for Mitchell G. this quarter, who is on family leave. Joining me today are Jenny Scanlon, our Chief Executive Officer, and Ryan Robinson, our Chief Financial Officer. During our discussion today, we will be referring to our earnings presentation, which is available on the investor relations section of our website at ewell.com. Our earnings release is also available on the website. I would like to remind everyone that on today's call, we may discuss forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things, statements about UL Solutions results of operations and estimates and prospects that involve substantial risk, uncertainty, and other factors that could cause actual results to differ in a material way from those expressed or implied in the forward-looking statements. Please see the disclosure statement on slide two of the earnings presentation, as well as the disclaimers in our earnings release concerning forward-looking statements and the risk factors that are described in our quarterly report on Form 10-Q for the quarter ended March 31, 2024. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law. Today's presentation also includes references to non-GAAP financial measures. Reconciliation to the most comparable GAAP financial measure can be found in the appendix to the earnings presentation. With that, I would now like to turn the call over to Jenny.

Good morning, everyone, and thanks for joining us. I'm very pleased to say that our strong performance in the first half of 2024 extended into Q3 with robust growth, including higher revenue, improved adjusted EBITDA margins, and solid cash flow. These results showcase ongoing strength in our core business and our strategic focus on key megatrends that we anticipate will drive long-term demand for our industry-leading services. I'll cover three main topics before turning it over to Ryan. First, I'll highlight our strong Q3 performance. Second, notable growth achievements and customer activities. And finally, our financial position and capital allocation strategies. Our strong third quarter results are due to overall healthy demand for our services and focused execution by our entire team. I'm deeply appreciative of our employees whose dedication has been crucial to our success. Their unwavering commitment to safety, scientific excellence, and a customer-centric approach not only defines our culture, but also propels our business. Q3 revenue reached $731 million, reflecting 8.1% overall growth, with organic growth of 9.3%. Our industrial and consumer segments showed notable strength, growing by 11.7% and 9.2%, respectively, on an organic basis, while our software and advisory segment underperformed our expectations. Our results reflected growth across all geographic regions. Adjusted EBITDA for the third quarter grew 12.3%, and adjusted EBITDA margin expanded by 90 basis points. Our hard work resulted in a 6.1% increase in adjusted net income, and we generated $215 million of free cash flow year to date. Next, Let me highlight a few key achievements and drivers of performance this quarter and subsequent to its end. In August, we opened our cutting-edge large-scale battery testing lab in Auburn Hills, Michigan. This facility, our largest laboratory investment to date, is one of the most comprehensive electric and hybrid vehicle and industrial battery testing centers in the country. It began operations with a strong backlog of industrial battery testing projects. As I mentioned on our last earnings call, battery testing for UL Solutions covers a wide array of energy storage systems that goes well beyond EV and hybrid automotive batteries. The energy transition covers a multitude of energy transfer and storage needs from small consumer to large-scale industrial batteries used to power heavy equipment. We recently hosted a customer event in Auburn Hills and also had a large presence at the Battery Show, generating overwhelming interest from automotive and industrial customers. The Battery Show is the largest North American trade show and conference focused on advanced battery technology and electric and hybrid vehicle drive trains. Activity at the state-of-the-art lab continues to increase, and we anticipate it will contribute to our growth from 2025 onwards. In our consumer space, we continue to be pleased with the ways our mission comes to life. Our mission matters. We've done a lot of work around lithium ion battery safety in the past couple of years and have demonstrated progress. For example, the City of New York has banned the sale and rental of e-mobility devices that have not been certified for safety, which of course is what we do. Recent published reports about New York City indicate there has been a significant reduction in both deaths and injuries due to lithium-ion battery fires as compared to the same period in 2023. In fact, the city's fire commissioner said that while lithium battery fires remain a threat, he saw progress in fighting that threat and working toward zero deaths. Our work and safety-based solutions are key to this effort, and we are proud of our impact. Now let me comment on our capital allocation activities. Our hard work and resilient business model, backed by an investment-grade balance sheet, allow us to generate robust cash flow. We continue to take a disciplined approach to capital allocation. Key actions this quarter included completing the acquisition of TestNet, an anchor of our future hydrogen strategy, and returning value to shareholders through our regular quarterly dividend of 12.5 cents per share, paid in September. Additionally, we successfully completed a follow-on offering of 23 million shares, including a fully exercised green shoe on behalf of UL Standards and Engagement, significantly increasing our public float. We are committed to maintaining a strong balance sheet with conservative leverage and investment grade ratings, and we expect to continue to return excess capital to shareholders over time. Now let me turn the call over to Ryan, who will provide greater detail on our results and our outlook.