UL Solutions Inc.

Good day and welcome to UL Solutions Second Quarter 2025 Earnings Conference Call. All participants will be in 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 touchstone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Eugene Bentano, Vice President Invest Relations. Please go ahead.

Thank you. Welcome everyone to our second quarter 2025 earnings call. Joining me today are Jenny Scallen, 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 U.R. Solutions results of operations and 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 the Form 10-K for the year ended December 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. A reconciliation of the most comparable GAAP financial measures 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 pleased to say that the momentum we built over our first year as a public company continued in the second quarter of 2025, with growth across all segments and service offerings, despite uncertainties for our customers globally. That's an important statement and frankly a theme we've delivered in the last several quarters, positive contributions across segments, service lines, and geographies. That balance reflects the durability of our business model and global scale of our offerings, as well as the benefit of focusing the business on higher growth megatrends, including the global energy transition, the electrification of everything, and digitalization. I'll cover three areas and then I'll turn the call over to Ryan. First, our second quarter performance highlights. Second, notable achievements and activities since we last reported. And finally, some perspectives on market conditions and our resiliency in the current macro environment. Our strong second quarter performance stems from enduring customer demand in our business across a wide range of market conditions. Based on our first half results and our current visibility into customers' ongoing new product development needs, we are affirming our full year 2025 outlook. I want to recognize our exceptional team members whose expertise and commitment drive our continued success. Their dedication to our mission of advancing safety science and delivering outstanding customer service remains the foundation of our strong performance and represents a true competitive advantage. Ryan will dive into the numbers in a minute, so let me hit the high notes of our second quarter 2025 results. I'm particularly proud that we delivered record quarterly consolidated revenues that were up .3% as compared to the second quarter last year and up .5% on an organic basis. On an organic basis, our industrial segment once again led the way, up 7% followed by consumer, up .7% and software and advisory, up 3.2%. These results were achieved against a dynamic geopolitical and regulatory environment that impacted our customers' behavior. Profitability improved year over year with adjusted EBITDA growing .9% and adjusted EBITDA margin expanding by 170 basis points to the highest level since we became public in April of last year. Higher revenue and realized operating leverage were the key drivers. We generated 208 million of free cash flow through the first half of 2025 and our balance sheet remains robust. Next, let me highlight notable planned, ongoing and recently completed capacity expansions that address growth opportunities and mega trends in our key end markets. During the quarter, we successfully launched our European Advanced Battery Testing Laboratory in Aachen, Germany, representing an important expansion of our battery technology testing capabilities and European footprints. This purpose-built facility replaced a smaller facility from the 2024 Battery Engineer acquisition. It positions us strategically close to key European automotive customers and provides access to the region's deep engineering talent pool. This investment demonstrates our commitment to helping the automotive and power sectors safely innovate in a world increasingly reliant on battery storage while strengthening our global network of specialized testing facilities that spans North America, Europe, and Asia-Pacific. We also announced a significant expansion of our HVAC testing facility in Cariugate, Italy to address rapidly growing European demand for comprehensive heat pump testing driven by the adoption of environmentally friendly refrigerants and evolving regulations. The expansion adds critical capabilities and positions us as a comprehensive service provider for manufacturers navigating the EU's climate initiatives, all while helping customers reduce testing lead times and accelerate market access. By offering both performance and safety testing at one central European laboratory, we expect to enable faster time to market for products subject to safety and efficiency requirements in the high-growth sustainable technology sector. We launched a new testing and certification service for emerging cooling fluids used in data centers, addressing the critical safety and efficiency needs of data center facilities housing AI and other high-performance computing equipment. According to third-party research, power consumption by data centers is expected to increase from 4.4 percent of total U.S. electricity demand in 2023 to 12 percent by 2028. Operators urgently need safe and energy-efficient cooling solutions to maximize performance and reliability. Our new engineering evaluation and certification for immersion cooling fluids complements our existing programs for immersion tanks and systems. It's important to note that TICS services for data centers represents an important large and growing market for us as technologies continue to advance in computing and AI. The Grandview research group expects the data center construction market to grow at a 12 percent CAGR over the next five years. We believe that we are very well positioned to capitalize on the rapid growth of data centers by helping address the safety, sustainability, and security concerns inherent in these complex environments. In fact, many of our operating units have service offerings in this space. The list is large as there are approximately 70 applicable standards to which we test, certify, and inspect. Our -to-market strategy highlights the broad and deep expertise we have in the full life cycle of data center infrastructure and system needs. Finally, let me provide an updated perspective on the resilience of our business model and how we are positioned to win even in periods of uncertainty. As a global leader of critical product safety science offerings, we support our customers wherever they research, develop, and manufacture products worldwide. Our existing global footprint and testing capacity position us well to meet customer needs effectively across all locations. Our business model provides initial testing during new product development followed by ongoing certification throughout a product's life cycle in the market, creating sustained revenue streams and deep customer relationships. Our customers are still bringing new products to market. We experienced an initial slowdown in customer projects when tariffs levels were first announced early in the second quarter, as companies paused to assess the potential impact of the tariffs as well as other geopolitical issues. This pause was followed by accelerated ordering in June, demonstrating both the essential nature of our services and our customers' commitment to maintaining product development timelines. As a reminder, these dynamics may create incremental opportunities for us as tariffs drive customers to redesign products or relocate manufacturing, both of which often require recertification. Now, let me turn the call over to Ryan for a detailed review of our second quarter results.