UL Solutions Inc.

Good day and welcome to the UL Solutions first quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call over to your host, Mr. Mitchell Gee, Senior Vice President of Corporate Finance at UL Solutions. Thank you. You may now begin.

Thank you and welcome everyone to our first quarter 2025 earnings call. 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 ul.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 in estimates and prospects that involve substantial risks, uncertainties, 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 annual report on Form 10-K for the year ended December 31st, 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, a 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. Last month, we celebrated the one-year anniversary of our successful initial public offering, which launched the next chapter of our story that is already more than 130 years in the making. In fact, this very week in 1893, Our founder, William Henry Merrill Jr., first visited the Chicago World's Fair to inspect exhibits for electrical fire risks. This experience led him to launch the Underwriters Electrical Bureau. Over the course of that 130-plus years, we've grown to be a global safety science leader with established customer relationships, recurring revenue, global scale, a healthy balance sheet, and a track record of strategic capital allocation aligned with major growth trends. Our company has endured and prospered. I'm pleased to say that our strong performance in 2024 extended into the first quarter of 2025 with balanced strength across all segments, service offerings, and geographic regions. The megatrends were focused on global energy transition, the electrification of everything, and digitalization, continue to drive robust demand for our industry-leading services. I'll cover three areas before turning the call over to Ryan. Our first quarter performance highlights, notable achievements and activities since we last reported, and finally, some perspective on tariffs. Our strong first quarter performance stems from healthy market demand and focused execution across our global organization. I'm deeply grateful to our employees whose dedication is fundamental to our success. Their unwavering commitment to our mission of safety, scientific excellence, and customer-centric service defines our culture and propels our business. Brian will dive into the numbers in a minute, so let me hit the high notes of our first quarter 2025 results. We delivered consolidated revenues that were up 5.2% versus the first quarter last year, which is up 7.6% on an organic basis. Our industrial segment continued to lead the way, up 8.1% organically, followed closely by consumer at 7.7% and software and advisory at 5.6%. Our results reflected growth across all geographic regions. These balanced results highlight the diversity and strength of our business model. a differentiator, particularly in uncertain times. Profitability improved year over year with adjusted EBITDA growing 22.9% and adjusted EBITDA margin expanding by 320 basis points, reflecting higher revenue, realized operating leverage, and disciplined expense management. We generated over $100 million of free cash flow, and our balance sheet remains strong. Next, let me highlight planned notable capacity expansions that address growth opportunities and megatrends in our key end markets. In January, we announced that we're expanding our HVAC testing facilities in Plano, Texas, and Carugate, Italy, to address the surging demand for more sustainable HVAC systems, such as heat pumps and environmentally friendly refrigerants. The Plano facility expansion will include commercial HVAC performance testing and will fortify our capacity for safety evaluations of low global warming potential refrigerant capabilities. The Carugate facility will provide comprehensive performance testing for European residential and light commercial heat pump manufacturers. Collectively, these expansions will enable us to offer more integrated solutions for manufacturers navigating evolving global regulations, and thereby streamlining testing processes and reducing time to market. We announced in February that we're developing a new global fire science center of excellence at our 110-acre Northbrook, Illinois campus. This center of excellence will enhance our market-leading position in the fire safety, security, and building and construction markets. We'll be constructing new capabilities while also modernizing existing fire science laboratories, providing enhanced research and testing services for commercial and residential fire safety systems, and this includes sprinklers, pipes, firefighting equipment, and exterior walls. The center will also feature a dedicated R&D hub for applied research and science-based guidance, which is designed to help customers minimize risk associated with new product development and accelerate their innovation timelines. In March, we announced plans to develop new advanced automotive electromagnetic compatibility laboratory in Toyota City, Japan. The 25,000 square foot facility will be one of the few EMC laboratories in Japan equipped to conduct high voltage, high current, and high torque testing. This strategic investment addresses the growing EMC automotive testing market, which is projected to reach $2.7 billion by 2030. It also strengthens our support for Japan's automotive industry while complementing our existing global network of automotive EMC testing laboratories. Finally, let me provide some perspective on the potential impacts of tariffs on our business. We are a global leader of critical product safety science offerings, and this means we go where our customers go, to the locations around the world where products are researched and developed and where they are manufactured. In each case, we are well positioned to support our customers' needs with our existing global footprint and capacity. Now, you will recall that we provide initial testing for a product or a component as part of the new product development process. and then we are frequently engaged in ongoing certification for as long as that product or component is in the market. This isn't the first time our customers have faced tariffs, and from time to time, our customers make both R&D and manufacturing decisions to address country-specific risks and other considerations. Tariffs, or the threat of them, may cause customers to redesign their products, and or move product manufacturing to more favorable locations. Should a product design or manufacturing location change, there's often a need for the product to be recertified, which can result in incremental new business for us. Of course, global macroeconomic concerns could change the overall pace of new product demand, innovation, and introduction. Thus far, The pace of new product development has generally proven to be resilient. Additionally, products are becoming more technologically advanced, which adds complexity and can increase testing requirements. We believe we continue to be well-positioned to support customers in navigating times of uncertainty like we are seeing today. Our global and strategic accounts team is staying in close contact with our customers to understand potential impacts and plans. Our customers trust us, and history has shown our global business to be resilient throughout dynamic economic periods. The increasingly uncertain and complex near-term macroeconomic and geopolitical environment presents both potential risks and opportunities for UL solutions. Like many other global businesses, we are carefully monitoring our key performance indicators and the potential impacts. Based on what we know today, including our strong performance in the first quarter, we are reaffirming our full year 2025 outlook. Now I'll turn the call over to Ryan for a detailed review of our first quarter results.