UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ________ to _________
Commission file number 001-42012
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices and zip code) | ||||||||||||||
(847 ) 272-8800
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | o | ||||||||
x | Smaller reporting company | ||||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The registrant had outstanding 62,753,870 shares of Class A common stock, par value $0.001 per share, and 138,130,000 shares of Class B common stock, par value $0.001 per share, as of October 24, 2025.
| UL Solutions Inc. | ||
| Table of Contents | ||
Page | |||||
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations
| UL Solutions Inc. | ||
| Condensed Consolidated Statements of Operations | ||
| (Unaudited) | ||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, except per share data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other (expense) income, net | ( | ||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: net income attributable to non-controlling interests | |||||||||||||||||||||||
| Net income attributable to stockholders of UL Solutions | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
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| UL Solutions Inc. | ||
| Condensed Consolidated Statements of Comprehensive Income | ||
| (Unaudited) | ||
Condensed Consolidated Statements of Comprehensive Income
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income, net of tax: | |||||||||||||||||||||||
Pension and postretirement benefit plans, net of tax of $ | |||||||||||||||||||||||
| Foreign currency translation (loss) gain | ( | ||||||||||||||||||||||
| Total other comprehensive income | |||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Less: comprehensive income attributable to non-controlling interests | |||||||||||||||||||||||
| Comprehensive income attributable to stockholders of UL Solutions | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
3
| UL Solutions Inc. | ||
| Condensed Consolidated Balance Sheets | ||
| (Unaudited) | ||
Condensed Consolidated Balance Sheets
| (in millions, except share and per share data) | September 30, 2025 | December 31, 2024 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance of $ | |||||||||||
Contract assets, net of allowance of $ | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
| Goodwill | |||||||||||
Intangible assets, net of accumulated amortization of $ | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred income taxes | |||||||||||
Capitalized software, net of accumulated amortization of $ | |||||||||||
| Other assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued compensation and benefits | |||||||||||
| Operating lease liabilities - current | |||||||||||
| Contract liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Pension and postretirement benefit plans | |||||||||||
| Operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total Liabilities | |||||||||||
Commitments and contingencies (Note 15) | |||||||||||
| Stockholders’ equity: | |||||||||||
Class A common stock, $ | |||||||||||
Class B common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity before non-controlling interests | |||||||||||
| Non-controlling interests | |||||||||||
| Total Stockholders’ Equity | |||||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | |||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
4
| UL Solutions Inc. | ||
| Condensed Consolidated Statements of Stockholders’ Equity | ||
| (Unaudited) | ||
Condensed Consolidated Statements of Stockholders’ Equity
| (in millions, except per share data) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Non-controlling Interests | Total | |||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Dividend to stockholders of UL Solutions ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends to stockholders of UL Solutions ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Dividend to non-controlling interest | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Dividend to stockholders of UL Solutions ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends to stockholders of UL Solutions ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Dividend to non-controlling interest | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
5
| UL Solutions Inc. | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (Unaudited) | ||
Condensed Consolidated Statements of Cash Flows
| Nine Months Ended September 30, | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Gain on divestiture | ( | ||||||||||
| Stock-based compensation | |||||||||||
| Losses on foreign exchange transactions | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Other, net | |||||||||||
| Changes in assets and liabilities, excluding the effects of acquisitions and divestitures: | |||||||||||
| Accounts receivable | |||||||||||
| Contract and other assets | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued expenses | ( | ||||||||||
| Pension and postretirement benefit plans | ( | ( | |||||||||
| Contract and other liabilities | |||||||||||
| Net cash flows provided by operating activities | |||||||||||
| Investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Acquisitions, net of cash acquired | ( | ( | |||||||||
| Proceeds from divestiture | |||||||||||
| Purchases of investments | ( | ||||||||||
| Sales of investments | |||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Proceeds from long-term debt | |||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Dividends to stockholders of UL Solutions | ( | ( | |||||||||
| Dividends to non-controlling interest | ( | ( | |||||||||
| Employee taxes paid on settlement of stock-based compensation | ( | ||||||||||
| Other financing activities, net | ( | ( | |||||||||
| Net cash flows used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
| Net decrease in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents | |||||||||||
| Beginning of period | |||||||||||
| End of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information | |||||||||||
| Cash paid during the period for interest | $ | $ | |||||||||
| Cash paid during the period for income taxes | |||||||||||
| Cash paid during the period for stock-based compensation | |||||||||||
| Noncash investing and financing activities | |||||||||||
| Capital expenditures funded by liabilities | $ | $ | |||||||||
| Conversion of stock-based compensation awards to equity | |||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
6
| UL Solutions Inc. | ||
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||
| (Unaudited) | ||
Notes to the Condensed Consolidated Financial Statements
1. Significant Accounting Policies
Description of Business
UL Solutions Inc. is a global safety science leader that provides independent third-party testing, inspection and certification services and related software and advisory offerings. Underwriters Laboratories Inc. (“UL Research Institutes”) is the sole member of ULSE Inc. (“UL Standards & Engagement”), which controls the majority of the voting power of the Company’s common stock.
References to “UL Solutions” and the “Company” refer to UL Solutions Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires.
Basis of Presentation
The condensed consolidated financial statements are unaudited and have been prepared in accordance with applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K. It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair statement of the Company’s results of operations, financial position and cash flows. Results of operations for any interim period are not necessarily indicative of future or annual results.
Recently Issued Accounting Standards – Not Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments will be applied prospectively. The ASU will result in additional income tax disclosures within the Company’s financial statements but is not expected to impact the Company’s financial condition, results of operations or cash flows.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which is intended to improve disclosures about a public business entity’s expenses and provide more detailed information to investors about the types of expenses in commonly presented expense captions. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, on either a prospective or retrospective basis, with early adoption permitted. The Company is currently evaluating the impact this ASU may have on its consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments are intended to modernize the recognition and capitalization framework to reflect current software development practices, including iterative and agile methodologies, by removing references to “development stages” and clarifying the threshold to begin capitalizing costs. The amendments in ASU 2025-06 are effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, on either a prospective, modified transition or retrospective basis, with early adoption permitted. The Company is currently evaluating the impact this ASU may have on its consolidated financial statements.
7
2. Earnings Per Share
Basic and diluted earnings per share were calculated as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, except per share data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income attributable to stockholders of UL Solutions | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
| Basic earnings per share attributable to stockholders of UL Solutions | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share attributable to stockholders of UL Solutions | $ | $ | $ | $ | |||||||||||||||||||
3. Revenue
The table below summarizes the major service categories from which the Company derives its revenues:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Certification Testing | $ | $ | $ | $ | |||||||||||||||||||
| Ongoing Certification Services | |||||||||||||||||||||||
| Non-certification Testing and Other Services | |||||||||||||||||||||||
| Software | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Contract Balances
The revenue recognized during the three and nine months ended September 30, 2025, which was included in contract liabilities at December 31, 2024, amounted to $25 million and $112 million, respectively. The revenue recognized during the three and nine months ended September 30, 2024, which was included in contract liabilities at December 31, 2023, amounted to $27 million and $106 million, respectively.
Remaining Performance Obligations
At September 30, 2025, the Company estimates that $189 million in revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The Company expects to recognize approximately 63 % of its unsatisfied (or partially unsatisfied) performance obligations as revenue in the subsequent 12 months, with the remaining balance to be recognized thereafter.
Remaining consideration from contracts with customers is included in the amount presented above and includes contracts with multiple performance obligations and multi-year maintenance agreements, which are typically recognized as the performance obligation is satisfied.
4. Acquisitions and Divestitures
Acquisitions
In July 2024, the Company acquired 100 % of the outstanding stock of TesTneT Engineering GmbH (together with its subsidiaries, “TesTneT”) for approximately $19 million in cash consideration (as adjusted for customary post-closing adjustments). TesTneT is a Germany-based company that provides testing services for various hydrogen storage systems, refueling stations and their components. Goodwill of $14 million represents anticipated future revenue growth and margin
8
expansion opportunities from new customers and has been included within the Company’s Industrial segment. Goodwill related to this acquisition is not deductible for income tax purposes.
In May 2024, the Company acquired 100 % of the outstanding stock of BatterieIngenieure GmbH (together with its subsidiaries, “BatterieIngenieure”) for approximately $12 million in cash consideration (as adjusted for customary post-closing adjustments). BatterieIngenieure is a Germany-based battery testing company that was, at the time of acquisition, in the process of building a laboratory in Aachen, Germany to replace the leased facility it was using and to add testing and simulation capacity. The purchase price is primarily related to property, plant, and equipment of $9 million and goodwill of $8 million. Goodwill represents anticipated future revenue growth and margin expansion opportunities from new customers and has been included within the Company’s Industrial segment. Goodwill related to this acquisition is not deductible for income tax purposes.
Aggregate acquisition-related costs associated with business combinations are not material for the three and nine months ended September 30, 2025 and 2024, and are included in selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Operations as incurred.
Divestiture
In May 2024, the Company completed the sale of its payments testing business in the Industrial segment to an affiliate of Gallant Capital Partners, a California-based private equity firm, for a base price of $29 million in cash (as adjusted for customary post-closing adjustments) with the potential for additional cash consideration if certain earn-out provisions are met. The divestiture resulted in a pre-tax gain on sale of $24 million, which was recorded within other (expense) income, net in the Company’s Condensed Consolidated Statements of Operations.
5. Other (Expense) Income, net
The components of other (expense) income, net are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Foreign exchange (losses) gains | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Non-operating pension and postretirement benefit expense | ( | ( | ( | ( | |||||||||||||||||||
Gain on divestiture, net of adjustments(a) | ( | ||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ||||||||||||||||||
(a)See Note 4.
6. Fair Value of Financial Instruments
The carrying amount and fair value of the Company’s debt was as follows:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| (in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||
| Term loans | $ | $ | $ | $ | |||||||||||||||||||
| Revolving credit facility | |||||||||||||||||||||||
| Senior notes | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The fair value of the Company’s term loans and revolving credit facility reflect current market conditions and are primarily determined using broker quotes, which are Level 2 inputs in the fair value hierarchy. The fair value of the Company’s senior notes is estimated based on prevailing interest rates and trading activity, which are Level 2 inputs in the fair value hierarchy.
9
7. Investments in Equity Securities
The Company holds investments in equity securities of various companies, certain of which comprise less than 10% of the applicable company’s outstanding equity securities and are included within other assets in the Company’s Condensed Consolidated Balance Sheets. The Company accounts for these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The carrying amount of these investments was $33 million as of September 30, 2025 and $36 million as of December 31, 2024.
The Company owns 70 % of the issued and outstanding equity interests of UL-CCIC Company Limited (“UL-CCIC”), an entity formed under the laws of the People’s Republic of China. The Company determined that it is the primary beneficiary of UL-CCIC and assets of $196 million and $193 million and liabilities of $88 million and $87 million, inclusive of intercompany eliminations, were included in the Company’s Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024, respectively.
8. Goodwill
Changes in the carrying amount of goodwill for the nine months ended September 30, 2025 were as follows:
| (in millions) | Industrial | Consumer | Software and Advisory | Total | |||||||||||||||||||
Balance at December 31, 2024(a) | $ | $ | $ | $ | |||||||||||||||||||
| Measurement period adjustments | |||||||||||||||||||||||
| Effect of changes in foreign exchange rates | |||||||||||||||||||||||
Balance at September 30, 2025(a) | $ | $ | $ | $ | |||||||||||||||||||
(a)Net of accumulated impairment losses of $137
9. Intangible Assets
The following table summarizes intangible assets:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| (in millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Intellectual property and patents | ( | ( | |||||||||||||||||||||||||||||||||
| Trademarks | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
10
10. Pension
The components of net periodic benefit cost for the Company’s U.S. defined benefit pension plan were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of net actuarial loss | |||||||||||||||||||||||
| Net periodic benefit cost | $ | $ | $ | $ | |||||||||||||||||||
During the third quarter of 2025, the Company adopted an amendment related to its U.S. defined benefit pension plan to freeze all future benefit accruals effective December 31, 2025. The freeze resulted in a curtailment, which reduced the projected benefit obligation by $12 million, with a corresponding decrease in accumulated other comprehensive loss on the Company’s Condensed Consolidated Balance Sheet. There was no impact on the Company’s Condensed Consolidated Statement of Operations as a result of the curtailment.
The Company anticipates making approximately $43 million of contributions to its U.S. pension plan in 2025, inclusive of a discretionary contribution of $23 million made in the third quarter of 2025.
11. Income Taxes
The effective tax rate for the three and nine months ended September 30, 2025 was 27.4 % and 24.9 %, respectively, 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 (“GILTI”) net of related foreign tax credits, and limitations on current year compensation deductions of certain executive officers under U.S. Internal Revenue Code Section 162(m).
Several countries in which the Company operates have enacted into their local legislation effective either January 1, 2024, or January 1, 2025, aspects of the Organisation for Economic Co-operation and Development’s Pillar Two rules, which impose a 15% corporate minimum tax. The effective tax rate for the three and nine months ended September 30, 2025 of 27.4 % and 24.9 %, respectively, was higher than the effective tax rate for the three and nine months ended September 30, 2024 of 19.0 % and 19.5 %, respectively, primarily due to the impact of the Qualified Domestic Minimum Top-up Tax, a subset of the Pillar Two rules that became effective on January 1, 2025.
The effective tax rate for the three and nine months ended September 30, 2024 of 19.0 % and 19.5 %, respectively, differed from the U.S. federal statutory tax rate of 21%, primarily due to earnings subject to lower tax rates in foreign jurisdictions and a discrete tax benefit for the release of valuation allowances, partially offset by Section 162(m) limitations on current year compensation deductions of certain executive officers and U.S. tax on GILTI net of related foreign tax credits. The effective tax rate for the nine months ended September 30, 2024 also included a discrete tax expense for the reduction to previously established deferred tax assets of approximately $5 million due to the Company becoming subject to Section 162(m), which limits U.S. public company compensation expenses of certain executive officers that were previously deductible as a private company.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes several corporate tax provisions that apply to the Company, such as the permanent extension of certain expiring provisions of the U.S. Tax Cuts and Jobs Act and modifications to the international tax framework and business interest expense limitations. The Company has assessed the impact of the OBBBA and has determined that there is no material impact to its consolidated financial statements.
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12. Long-Term Debt
The Company’s outstanding debt consisted of the following:
| (in millions) | Currency | Maturity Date | September 30, 2025 | December 31, 2024 | |||||||||||||||||||
| Term loans | USD | January 2027 | $ | $ | |||||||||||||||||||
| Revolving credit facility | USD | January 2027 | |||||||||||||||||||||
| Senior notes | USD | October 2028 | |||||||||||||||||||||
| Other | USD | August 2033 | |||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Less: unamortized debt issuance costs | ( | ( | |||||||||||||||||||||
| Total debt, net of unamortized debt issuance costs | |||||||||||||||||||||||
| Less: current portion of long-term debt | ( | ||||||||||||||||||||||
| Long-term debt | $ | $ | |||||||||||||||||||||
2022 Credit Facility
In January 2022, the Company entered into a credit agreement with Bank of America, N.A. and certain other lenders, which provides for senior unsecured credit facilities in an aggregate principal amount of $1.25 billion (collectively, and as amended, the “2022 Credit Facility”), consisting of term loans and revolving loan commitments. The Company’s wholly owned subsidiary, UL LLC, a Delaware limited liability company (“UL LLC”), provides a guaranty of its obligations thereunder. As of September 30, 2025, the Company was in compliance with all covenants under the 2022 Credit Facility. The interest rate on the term loans was 5.26 % as of September 30, 2025 and 5.58 % as of December 31, 2024. The interest rate on the revolving credit facility was 5.34 % as of September 30, 2025. As described below, in connection with the entry into the 2025 Credit Facility, the Company repaid in full all indebtedness and other obligations outstanding under, and terminated, the 2022 Credit Facility.
Senior Notes
In October 2023, the Company issued $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.
In connection with the issuance of the notes, the Company entered into a registration rights agreement on the same date. In September 2025, pursuant to the registration rights agreement, the Company completed an exchange offer, pursuant to which the Company exchanged all of the outstanding notes for new 6.500 % senior notes due 2028 registered under the Securities Act of 1933, as amended (the “exchange notes”). The terms of the exchange notes are substantially the same as the notes. Subsequent to the balance sheet date, the Company entered into a Credit Agreement on October 28, 2025, and repaid in full all indebtedness and other obligations outstanding under, and terminated, the 2022 Credit Facility. In connection with such termination, the guaranty by UL LLC of the Company’s obligations under the 2022 Credit Facility and the exchange notes was released. Refer to Note 18.
13. Accumulated Other Comprehensive Loss
The following tables summarize the changes in accumulated other comprehensive loss.
| Three Months Ended September 30, 2025 | |||||||||||||||||
| (in millions) | Foreign Currency Translation | Pension and Postretirement Plans | Total | ||||||||||||||
| Balance at June 30, 2025, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
| Amounts before reclassifications | ( | ||||||||||||||||
| Total other comprehensive (loss) income, before tax | ( | ||||||||||||||||
| Tax effect | ( | ( | |||||||||||||||
| Total other comprehensive (loss) income, net of tax | ( | ||||||||||||||||
| Balance at September 30, 2025, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
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| Three Months Ended September 30, 2024 | |||||||||||||||||
| (in millions) | Foreign Currency Translation | Pension and Postretirement Plans | Total | ||||||||||||||
| Balance at June 30, 2024, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
| Amounts before reclassifications | |||||||||||||||||
| Amounts reclassified out | |||||||||||||||||
| Total other comprehensive income, net of tax | |||||||||||||||||
| Balance at September 30, 2024, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||
| (in millions) | Foreign Currency Translation | Pension and Postretirement Plans | Total | ||||||||||||||
| Balance at December 31, 2024, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
| Amounts before reclassifications | |||||||||||||||||
| Amounts reclassified out | ( | ( | |||||||||||||||
| Total other comprehensive income, before tax | |||||||||||||||||
| Tax effect | ( | ( | |||||||||||||||
| Total other comprehensive income, net of tax | |||||||||||||||||
| Balance at September 30, 2025, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||
| (in millions) | Foreign Currency Translation | Pension and Postretirement Plans | Total | ||||||||||||||
| Balance at December 31, 2023, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
| Amounts before reclassifications | ( | ||||||||||||||||
| Amounts reclassified out | |||||||||||||||||
| Total other comprehensive income, net of tax | |||||||||||||||||
| Balance at September 30, 2024, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
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14. Stock-based Compensation
Stock-based compensation expense was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||
| Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
| Stock-based compensation expense, net | $ | $ | $ | $ | |||||||||||||||||||
| Stock-based compensation expense by type of award | |||||||||||||||||||||||
| Restricted stock units | $ | $ | $ | $ | |||||||||||||||||||
| Performance share units | |||||||||||||||||||||||
| Stock options | |||||||||||||||||||||||
| Stock-settled stock appreciation rights | |||||||||||||||||||||||
| Employee stock purchase plan | |||||||||||||||||||||||
Cash-settled awards | |||||||||||||||||||||||
| Stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
15. Commitments and Contingencies
The Company is, in the ordinary course of business, party to certain claims, litigation, audits and investigations. The Company will record an accrual for a loss contingency when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company believes it has established adequate accruals for liabilities that are probable and reasonably estimable and that may be incurred in connection with any such currently pending or threatened matter, none of which are material. In the Company’s opinion, the settlement of any such currently pending or threatened matter is not expected to have a material impact on the Company’s financial position, results of operations, or cash flows.
16. Related Party Transactions
In the three and nine months ended September 30, 2025, the Company incurred expenses of $5 million and $16 million, respectively, to access the library of standards owned and maintained by UL Standards & Engagement. In the three and nine months ended September 30, 2024, the Company incurred expenses of $6 million and $16 million, respectively, to access the library of standards owned and maintained by UL Standards & Engagement.
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17. Segment Information
The following table provides revenue, significant segment expenses and operating income, by segment for the three months ended September 30, 2025 and 2024:
| Industrial | Consumer | Software and Advisory | Total | ||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Employee compensation | |||||||||||||||||||||||||||||||||||
| Services and materials | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Operating income | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table provides revenue, significant segment expenses and operating income, by segment for the nine months ended September 30, 2025 and 2024:
| Industrial | Consumer | Software and Advisory | Total | ||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Employee compensation | |||||||||||||||||||||||||||||||||||
| Services and materials | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Operating income | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Capital expenditures of the Company’s segments were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Industrial | $ | $ | $ | $ | |||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Software and Advisory | |||||||||||||||||||||||
| Total segments | |||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Assets by segment are not disclosed as the Company does not allocate assets to segments for internal reporting presentations provided to the Company’s chief operating decision maker.
18. Subsequent Events
Restructuring Initiative
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”). The Company expects to incur pre-tax expenses associated with the Restructuring Plan of approximately $42 -$47 million in the aggregate, consisting of $37 -$42 million in cash charges relating to employee separation expenses and approximately $5 million in other cash charges, primarily relating to contract cancellations. The majority of costs associated with the Restructuring Plan are expected to be recorded in the fourth quarter of 2025 in the Consumer and Industrial segments. The Company anticipates the Restructuring Plan will be substantially completed by the end of the first quarter of 2027.
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2025 Credit Facility
On October 28, 2025, UL Solutions Inc. entered into a Credit Agreement (the “Credit Agreement”), by and among the Company 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 provides for a $1.0 billion senior unsecured five-year multi-currency revolving facility (the “2025 Credit Facility”), with a $25 million sub-limit for the issuance of letters of credit. The Credit Agreement includes 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. The Borrowers’ obligations (other than the Company’s) under the Credit Agreement are guaranteed by the Company.
On October 28, 2025, the Company borrowed $291 million under the 2025 Credit Facility. The initial borrowing was used to refinance the outstanding amounts under the 2022 Credit Facility. Additional amounts, if any, borrowed under the 2025 Credit Facility are anticipated to be used for general corporate purposes.
Borrowings under the 2025 Credit Facility bear interest at a rate per annum equal to, at the applicable Borrower’s option, (a) a specified benchmark rate for the applicable currency (which, in the case of U.S. Dollar loans, shall be the Term SOFR or Daily SOFR (in each case as defined in the Credit Agreement), at the applicable Borrower’s option), plus a margin that ranges from 0.875 % to 1.375 % per annum or (b) for U.S. Dollar loans made to the Company only, a base rate (which is equal to the highest of (i) the Bank of America prime rate, (ii) the U.S. federal funds rate plus 0.5 % per annum, or (iii) the Term SOFR or Daily SOFR rate plus 1.0 %) plus a margin that ranges from 0.0 % to 0.375 % per annum. The 2025 Credit Facility matures on October 28, 2030 and may be prepaid without fees or penalties, subject to reimbursement of the lenders’ customary breakage and redeployment costs in applicable cases.
The 2025 Credit Facility also includes a financial covenant, tested quarterly, which requires the Company to maintain a consolidated net leverage ratio of not greater than 3.5 to 1.0, calculated on a consolidated basis for each consecutive four fiscal quarter period, with an increase in the maintenance level to 4.0 to 1.0 for each of the four test periods immediately following any permitted acquisition that involves the payment of aggregate consideration in excess of $100 million, subject to a two fiscal quarter rest period between increases for separate acquisitions. The calculation of the consolidated net leverage ratio permits the netting of up to $250 million of unrestricted cash from funded debt.
The 2025 Credit Facility includes customary representations and warranties, covenants and events of default, subject to certain customary exceptions, materiality thresholds and grace periods. The covenants include, among other things, financial reporting, maintenance of line of business, notices of default and other material changes, as well as limitations on investments and acquisitions, mergers and transfers of all or substantially all assets, dividends and distributions, burdensome contracts with affiliates, liens and indebtedness. Future borrowings under the 2025 Credit Facility are subject to the satisfaction of customary conditions, including the absence of any default or event of default and the accuracy of representations and warranties.
On October 28, 2025, in connection with the entry into the Credit Agreement described above, the Company repaid in full all indebtedness and other obligations outstanding under, and terminated, the 2022 Credit Facility.
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ITEM 2. 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 September 30, 2025 and for the three and nine month periods ended September 30, 2025 and 2024, which are included in this Quarterly Report, as well as the Company’s audited consolidated financial statements for the year ended December 31, 2024 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, 2024. 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 and related software and advisory (“S&A”) offerings.
UL Solutions reports its financial results through three segments: Industrial, Consumer and Software and Advisory.
Since January 1, 2024, the Company has completed the following acquisitions and divestiture, which impact the comparability of results between periods:
•In July 2024, the Company acquired 100% of the outstanding stock of TesTneT Engineering GmbH (together with its subsidiaries, “TesTneT”) for approximately $19 million. TesTneT is a Germany-based company that provides testing services for various hydrogen storage systems, refueling stations and their components. The results of operations of TesTneT are included in the Industrial segment since the date of acquisition.
•In May 2024, the Company acquired 100% of the outstanding stock of BatterieIngenieure GmbH (together with its subsidiaries, “BatterieIngenieure”) for approximately $12 million. BatterieIngenieure is a Germany-based battery testing company that was, at the time of acquisition, in the process of building a laboratory in Aachen, Germany to replace the leased facility it was using and to add testing and simulation capacity. The results of operations of BatterieIngenieure are included in the Industrial segment since the date of acquisition.
•In May 2024, the Company completed the sale of its payments testing business to an affiliate of Gallant Capital Partners, for a base price of $29 million. The business performed Software and Non-certification Testing and Other Services and the results of operations were included in the Industrial segment until the date of divestiture. The divestiture resulted in a pre-tax gain on sale of $24 million, which was recorded within other (expense) income, net in the Company’s consolidated results of operations.
Recently, 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
Restructuring Initiative
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”). The Company expects to incur pre-tax expenses associated with the Restructuring Plan of approximately $42-$47 million in the aggregate, consisting of $37-$42 million in cash charges relating to employee separation expenses and approximately $5
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million in other cash charges, primarily relating to contract cancellations. The majority of costs associated with the Restructuring Plan are expected to be recorded in the fourth quarter of 2025 in the Consumer and Industrial segments. The Company anticipates the Restructuring Plan will be substantially completed by the end of the first quarter of 2027.
2025 Credit Facility
On October 28, 2025, UL Solutions Inc. entered into a Credit Agreement (the “Credit Agreement”), by and among the Company and certain of its non-U.S. subsidiaries as co-borrowers, Bank of America, N.A., as administrative agent, and the lenders party thereto. The Credit Agreement provides for a $1.0 billion senior unsecured five-year multi-currency revolving facility (the “2025 Credit Facility”), with a $25 million sub-limit for the issuance of letters of credit. The Credit Agreement includes 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. On October 28, 2025, the Company borrowed $291 million under the 2025 Credit Facility. The initial borrowing was used to refinance the outstanding amounts under a credit agreement entered into in January 2022 with Bank of America, N.A. and certain other lenders, which provided for senior unsecured credit facilities in an aggregate principal amount of $1.25 billion (collectively, and as amended, the “2022 Credit Facility”). Additional amounts, if any, borrowed under the 2025 Credit Facility are anticipated to be used for general corporate purposes. For additional information regarding the 2025 Credit Facility and the 2022 Credit Facility, see “—Liquidity and Capital Resources” below.
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
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inspection and other costs associated with generating revenue. Cost of revenue also includes depreciation on equipment used in testing and amortization of capitalized software.
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.
Operating Income
Operating income is calculated as revenue less cost of revenue and selling, general and administrative expenses. 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.
Other (Expense) Income, net
Other (expense) income, 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, non-operating pension and postretirement benefit expenses and gains on divestitures.
Income Before Income Taxes
Income before income taxes is calculated as revenue less cost of revenue, selling, general and administrative expenses, interest expense and other (expense) income, 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.
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Net Income
Net income is calculated as revenue less cost of revenue, selling, general and administrative expenses, interest expense, other (expense) income, net and income tax expense. Net income margin is calculated as net income as a percentage of revenue.
Results of Operations
The following table sets forth the Company’s condensed consolidated results of operations for the periods presented.
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
| Three Months Ended September 30, | Change | ||||||||||||||||||||||||||||
| (in millions) | 2025 | % Revenue | 2024 | % Revenue | |||||||||||||||||||||||||
| Revenue | $ | 783 | N/A | $ | 731 | N/A | $ | 52 | |||||||||||||||||||||
| Cost of revenue | 389 | 49.7 | % | 373 | 51.0 | % | 16 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 238 | 30.4 | % | 228 | 31.2 | % | 10 | ||||||||||||||||||||||
| Operating income | 156 | 19.9 | % | 130 | 17.8 | % | 26 | ||||||||||||||||||||||
| Interest expense | (10) | (1.3) | % | (14) | (1.9) | % | 4 | ||||||||||||||||||||||
| Income before income taxes | 146 | 18.6 | % | 116 | 15.9 | % | 30 | ||||||||||||||||||||||
| Income tax expense | 40 | 5.1 | % | 22 | 3.0 | % | 18 | ||||||||||||||||||||||
| Net income | $ | 106 | 13.5 | % | $ | 94 | 12.9 | % | 12 | ||||||||||||||||||||
Revenue
| Three Months Ended September 30, | |||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Industrial | $ | 343 | $ | 317 | $ | 26 | 8.2 | % | |||||||||||||||
| Consumer | 340 | 321 | 19 | 5.9 | % | ||||||||||||||||||
| Software and Advisory | 100 | 93 | 7 | 7.5 | % | ||||||||||||||||||
| Total | $ | 783 | $ | 731 | $ | 52 | 7.1 | % | |||||||||||||||
Revenue increased by $52 million, or 7.1%, for the three months ended September 30, 2025, as compared to the same period in 2024. Revenue increased on an organic basis by $46 million, or 6.3%, due to organic growth across all segments in the third quarter of 2025, driven by the Industrial and Consumer segments in Certification Testing, Non-certification Testing and Other Services and Ongoing Certification Services revenue. FX increased revenue by $6 million, or 0.8%, primarily due to the relative strength of the euro.
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| (in millions) | Organic | FX | Total | Organic % Change | Total % Change | |||||||||||||||||||||||||||
| Revenue change | ||||||||||||||||||||||||||||||||
| Industrial | $ | 23 | $ | 3 | $ | 26 | 7.3 | % | 8.2 | % | ||||||||||||||||||||||
| Consumer | 17 | 2 | 19 | 5.3 | % | 5.9 | % | |||||||||||||||||||||||||
| Software and Advisory | 6 | 1 | 7 | 6.5 | % | 7.5 | % | |||||||||||||||||||||||||
| Total | $ | 46 | $ | 6 | $ | 52 | 6.3 | % | 7.1 | % | ||||||||||||||||||||||
Cost of Revenue
Cost of revenue increased by $16 million, or 4.3%, for the three months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, depreciation and amortization increased $3 million related to the completion of additional laboratory capacity and software ready for its intended use. In addition, occupancy costs increased $3 million on an organic basis related to higher rent expense and utility costs. FX increased cost of revenue by $5 million, primarily due to the relative strength of the euro.
20
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $10 million, or 4.4%, for the three months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, employee compensation increased $6 million, related to base salary increases and higher costs associated with performance-based incentives, including the Company’s long-term incentive awards. In addition, technology costs increased $4 million on an organic basis, primarily associated with cloud computing service arrangements.
Interest Expense
Interest expense decreased by $4 million for the three months ended September 30, 2025, as compared to the same period in 2024. The decrease is primarily due to lower balances in the current period on the Company’s term loan and revolving loan commitments. For additional information refer to “—Liquidity and Capital Resources.”
Income Tax Expense
The effective tax rate for the three months ended September 30, 2025 was 27.4%, 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 limitations on current year compensation deductions of certain executive officers under U.S. Internal Revenue Code Section 162(m).
Several countries in which the Company operates have enacted into their local legislation effective either January 1, 2024, or January 1, 2025, aspects of the Organisation for Economic Co-operation and Development’s Pillar Two rules, which impose a 15% corporate minimum tax. The effective tax rate for the three months ended September 30, 2025 of 27.4% was higher than the effective tax rate for the three months ended September 30, 2024 of 19.0%, primarily due to the impact of the Qualified Domestic Minimum Top-up Tax, a subset of the Pillar Two rules that became effective on January 1, 2025.
The effective tax rate for the three months ended September 30, 2024 of 19.0% differed from the U.S. federal statutory tax rate of 21%, primarily due to earnings subject to lower tax rates in foreign jurisdictions and a discrete tax benefit for the release of valuation allowances. This was partially offset by Section 162(m) limitations on current year compensation deductions of certain executive officers and U.S. tax on Global Intangible Low Taxed Income net of related foreign tax credits.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes several corporate tax provisions that apply to the Company, such as the permanent extension of certain expiring provisions of the U.S. Tax Cuts and Jobs Act and modifications to the international tax framework and business interest expense limitations. The Company has assessed the impact of the OBBBA and has determined that there is no material impact to its consolidated financial statements.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||
| (in millions) | 2025 | % Revenue | 2024 | % Revenue | |||||||||||||||||||||||||
| Revenue | $ | 2,264 | N/A | $ | 2,131 | N/A | $ | 133 | |||||||||||||||||||||
| Cost of revenue | 1,146 | 50.6 | % | 1,088 | 51.1 | % | 58 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 714 | 31.5 | % | 696 | 32.7 | % | 18 | ||||||||||||||||||||||
| Operating income | 404 | 17.8 | % | 347 | 16.3 | % | 57 | ||||||||||||||||||||||
| Interest expense | (32) | (1.4) | % | (42) | (2.0) | % | 10 | ||||||||||||||||||||||
| Other (expense) income, net | (7) | (0.3) | % | 18 | 0.8 | % | (25) | ||||||||||||||||||||||
| Income before income taxes | 365 | 16.1 | % | 323 | 15.2 | % | 42 | ||||||||||||||||||||||
| Income tax expense | 91 | 4.0 | % | 63 | 3.0 | % | 28 | ||||||||||||||||||||||
| Net income | $ | 274 | 12.1 | % | $ | 260 | 12.2 | % | 14 | ||||||||||||||||||||
21
Revenue
| Nine Months Ended September 30, | |||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Industrial | $ | 989 | $ | 926 | $ | 63 | 6.8 | % | |||||||||||||||
| Consumer | 984 | 929 | 55 | 5.9 | % | ||||||||||||||||||
| Software and Advisory | 291 | 276 | 15 | 5.4 | % | ||||||||||||||||||
| Total | $ | 2,264 | $ | 2,131 | $ | 133 | 6.2 | % | |||||||||||||||
Revenue increased by $133 million, or 6.2%, for the nine months ended September 30, 2025, as compared to the same period in 2024. Revenue increased on an organic basis by $137 million, or 6.4%, due to organic growth across all segments in 2025, driven by the Industrial and Consumer segments in Certification Testing, Ongoing Certification Services and Non-certification Testing and Other Services revenue. Acquisition / Divestiture decreased revenue by $8 million, or 0.4%, primarily due to the sale of the payments testing business in the Industrial segment.
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition / Divestiture | FX | Total | Organic % Change | Total % Change | |||||||||||||||||||||||||||||
| Revenue change | |||||||||||||||||||||||||||||||||||
| Industrial | $ | 69 | $ | (8) | $ | 2 | $ | 63 | 7.5 | % | 6.8 | % | |||||||||||||||||||||||
| Consumer | 54 | — | 1 | 55 | 5.8 | % | 5.9 | % | |||||||||||||||||||||||||||
| Software and Advisory | 14 | — | 1 | 15 | 5.1 | % | 5.4 | % | |||||||||||||||||||||||||||
| Total | $ | 137 | $ | (8) | $ | 4 | $ | 133 | 6.4 | % | 6.2 | % | |||||||||||||||||||||||
Cost of Revenue
Cost of revenue increased by $58 million, or 5.3%, for the nine months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, employee compensation expenses increased $23 million, related to base salary and headcount increases. In addition, on an organic basis, professional fees increased $7 million related to outsourced labor associated with higher revenue and occupancy costs increased $10 million related to higher rent expense and utility costs. Depreciation and amortization increased $12 million on an organic basis related to the completion of additional laboratory capacity and software placed in service.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $18 million, or 2.6%, for the nine months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, employee compensation expenses increased $19 million, primarily due to base salary increases. In addition, technology costs increased $11 million on an organic basis, primarily associated with cloud computing service arrangements. The increase was partially offset by a $5 million organic decrease in professional fees related to the Company’s public offerings and higher accounting and legal costs in the prior year.
Interest Expense
Interest expense decreased by $10 million for the nine months ended September 30, 2025, as compared to the same period in 2024. The decrease is primarily due to lower balances in the current period on the Company’s term loan and revolving loan commitments. For additional information refer to “—Liquidity and Capital Resources.”
Other (Expense) Income, net
Other (expense) income, net decreased by $25 million primarily due to a $24 million gain on divestiture of the Company’s payments testing business in May 2024.
22
Income Tax Expense
The effective tax rate for the nine months ended September 30, 2025 was 24.9%, which differed from the U.S. statutory 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 limitations on current year compensation deductions of certain executive officers under U.S. Internal Revenue Code Section 162(m).
Several countries in which the Company operates have enacted into their local legislation effective either January 1, 2024, or January 1, 2025, aspects of the Organisation for Economic Co-operation and Development’s Pillar Two rules, which impose a 15% corporate minimum tax. The effective tax rate for the nine months ended September 30, 2025 of 24.9% was higher than the effective tax rate for the nine months ended September 30, 2024 of 19.5%, primarily due to the impact of the Qualified Domestic Minimum Top-up Tax, a subset of the Pillar Two rules that became effective on January 1, 2025.
The effective tax rate for the nine months ended September 30, 2024 of 19.5% differed from the U.S. federal statutory tax rate of 21%, primarily due to earnings subject to lower tax rates in foreign jurisdictions and a discrete tax benefit for the release of valuation allowances. This was partially offset by a discrete tax expense for the reduction to previously established deferred tax assets of approximately $5 million due to the Company becoming subject to Section 162(m), which limits compensation expenses of certain executive officers that were previously deductible as a private company, as well as Section 162(m) limitations on current year deductions, and U.S. tax on Global Intangible Low Taxed Income net of related foreign tax credits.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes several corporate tax provisions that apply to the Company, such as the permanent extension of certain expiring provisions of the U.S. Tax Cuts and Jobs Act and modifications to the international tax framework and business interest expense limitations. The Company has assessed the impact of the OBBBA and has determined that there is no material impact to its consolidated financial statements.
Industrial
The Industrial segment provides TIC 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 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 343 | $ | 317 | $ | 26 | 8.2 | % | $ | 989 | $ | 926 | $ | 63 | 6.8 | % | |||||||||||||||||||||||||||||||
| Employee compensation | 155 | 150 | 5 | 3.3 | % | 455 | 444 | 11 | 2.5 | % | |||||||||||||||||||||||||||||||||||||
| Services and materials | 71 | 65 | 6 | 9.2 | % | 208 | 199 | 9 | 4.5 | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 13 | 12 | 1 | 8.3 | % | 41 | 33 | 8 | 24.2 | % | |||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 104 | $ | 90 | $ | 14 | 15.6 | % | $ | 285 | $ | 250 | $ | 35 | 14.0 | % | |||||||||||||||||||||||||||||||
| Segment operating income margin | 30.3 | % | 28.4 | % | 28.8 | % | 27.0 | % | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Organic | FX | Total | Organic | Acquisition/ Divestiture | FX | Total | |||||||||||||||||||||||||||||||||||||
| Revenue change | $ | 23 | $ | 3 | $ | 26 | $ | 69 | $ | (8) | $ | 2 | $ | 63 | ||||||||||||||||||||||||||||||
| Segment operating income change | $ | 14 | $ | — | $ | 14 | $ | 36 | $ | (1) | $ | — | $ | 35 | ||||||||||||||||||||||||||||||
23
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenue
Revenue increased by $26 million, or 8.2%, for the three months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $23 million, or 7.3%, primarily due to growth in Certification Testing revenue of $13 million across most industries, driven primarily by continued demand for energy and automation. Ongoing Certification Services revenue increased $9 million across most industries due in part to price increases. FX increased revenue by $3 million, or 0.9%, primarily due to the relative strength of the euro.
Segment Operating Income
Segment operating income increased by $14 million, or 15.6%, for the three months ended September 30, 2025, as compared to the same period in 2024, primarily due to the $23 million increase in organic revenue noted above. This was partially offset by a $9 million organic increase in expenses, primarily due to higher employee compensation of $3 million related to base salary and headcount increases. Depreciation and amortization also increased $2 million on an organic basis primarily related to the completion of additional laboratory capacity.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Revenue
Revenue increased by $63 million, or 6.8%, for the nine months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $69 million, or 7.5%, primarily due to growth in Certification Testing revenue of $32 million across most industries, driven by continued demand for energy and automation, price increases, and new capacity provided by recent laboratory investments. Ongoing Certification Services revenue increased $30 million across most industries due in part to price increases and additional volume. Acquisition / Divestiture decreased revenue by $8 million, or 0.9%, primarily due to the sale of the payments testing business.
Segment Operating Income
Segment operating income increased by $35 million, or 14.0%, for the nine months ended September 30, 2025, as compared to the same period in 2024, primarily due to the $69 million increase in organic revenue noted above. This was partially offset by a $33 million organic increase in expenses, primarily due to higher employee compensation of $13 million related to base salary and headcount increases. Depreciation and amortization also increased $7 million on an organic basis primarily related to the completion of additional laboratory capacity. In addition, technology costs increased $4 million on an organic basis, primarily associated with cloud computing service arrangements.
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, including new mobility, smart products and 5G. 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.
24
The following tables summarize the change in Consumer’s revenue and operating income for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 340 | $ | 321 | $ | 19 | 5.9 | % | $ | 984 | $ | 929 | $ | 55 | 5.9 | % | |||||||||||||||||||||||||||||||
| Employee compensation | 189 | 182 | 7 | 3.8 | % | 559 | 536 | 23 | 4.3 | % | |||||||||||||||||||||||||||||||||||||
| Services and materials | 87 | 82 | 5 | 6.1 | % | 256 | 242 | 14 | 5.8 | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 20 | 20 | — | — | % | 59 | 59 | — | — | % | |||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 44 | $ | 37 | $ | 7 | 18.9 | % | $ | 110 | $ | 92 | $ | 18 | 19.6 | % | |||||||||||||||||||||||||||||||
| Segment operating income margin | 12.9 | % | 11.5 | % | 11.2 | % | 9.9 | % | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition/ Divestiture | FX | Total | Organic | Acquisition/ Divestiture | FX | Total | |||||||||||||||||||||||||||||||||||||||
| Revenue change | $ | 17 | $ | — | $ | 2 | $ | 19 | $ | 54 | $ | — | $ | 1 | $ | 55 | |||||||||||||||||||||||||||||||
| Segment operating income change | $ | 8 | $ | (1) | $ | — | $ | 7 | $ | 21 | $ | (3) | $ | — | $ | 18 | |||||||||||||||||||||||||||||||
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenue
Revenue increased by $19 million, or 5.9%, for the three months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $17 million, or 5.3%, primarily due to Non-certification Testing and Other Services revenue growth of $10 million in consumer technology driven by increased demand for electromagnetic compatibility testing for consumer electronics and in retail.
Segment Operating Income
Segment operating income increased by $7 million for the three months ended September 30, 2025, as compared to the same period in 2024, primarily due to the $17 million increase in organic revenue noted above. This was partially offset by a $9 million organic increase in expenses, primarily due to higher employee compensation of $5 million, related to base salary increases.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Revenue
Revenue increased by $55 million, or 5.9%, for the nine months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $54 million, or 5.8%, primarily due to Non-certification Testing and Other Services revenue growth of $32 million in consumer technology driven by increased demand for electromagnetic compatibility testing for consumer electronics and in retail.
Segment Operating Income
Segment operating income increased by $18 million for the nine months ended September 30, 2025, as compared to the same period in 2024, primarily due to the $54 million increase in organic revenue noted above. This was partially offset by a $33 million organic increase in expenses, primarily due to higher employee compensation of $23 million, related to base salary increases. In addition, technology costs increased $6 million on an organic basis, primarily associated with cloud computing service arrangements.
25
Software and Advisory
The Software and Advisory segment provides complementary software and advisory solutions that extend the value proposition of TIC services the Company offers. The software and technical advisory 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 Software and Advisory’s revenue and operating income for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 100 | $ | 93 | $ | 7 | 7.5 | % | $ | 291 | $ | 276 | $ | 15 | 5.4 | % | |||||||||||||||||||||||||||||||
| Employee compensation | 64 | 63 | 1 | 1.6 | % | 198 | 191 | 7 | 3.7 | % | |||||||||||||||||||||||||||||||||||||
| Services and materials | 15 | 16 | (1) | (6.3) | % | 47 | 47 | — | — | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 13 | 11 | 2 | 18.2 | % | 37 | 33 | 4 | 12.1 | % | |||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 8 | $ | 3 | $ | 5 | 166.7 | % | $ | 9 | $ | 5 | $ | 4 | 80.0 | % | |||||||||||||||||||||||||||||||
| Segment operating income margin | 8.0 | % | 3.2 | % | 3.1 | % | 1.8 | % | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Organic | Acquisition/ Divestiture | FX | Total | Organic | Acquisition/ Divestiture | FX | Total | |||||||||||||||||||||||||||||||||||||||
| Revenue change | $ | 6 | $ | — | $ | 1 | $ | 7 | $ | 14 | $ | — | $ | 1 | $ | 15 | |||||||||||||||||||||||||||||||
| Segment operating income change | $ | 7 | $ | (1) | $ | (1) | $ | 5 | $ | 6 | $ | (2) | $ | — | $ | 4 | |||||||||||||||||||||||||||||||
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenue
Revenue increased by $7 million, or 7.5%, for the three months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $6 million, or 6.5% driven by demand for software, including retail product compliance, and demand for advisory services.
Segment Operating Income
Segment operating income increased by $5 million for the three months ended September 30, 2025, as compared to the same period in 2024, primarily due to the $6 million increase in organic revenue noted above and higher employee utilization.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Revenue
Revenue increased by $15 million, or 5.4%, for the nine months ended September 30, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $14 million, or 5.1% driven by demand for software, including retail product compliance.
Segment Operating Income
Segment operating income increased by $4 million for the nine months ended September 30, 2025, as compared to the same period in 2024, primarily due to the $14 million increase in organic revenue noted above. This was partially offset by an $8 million organic increase in expenses, primarily driven by higher employee compensation of $6 million related to base salary increases.
26
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 and Free Cash Flow. 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 as an additional liquidity measure and believes it provides 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, other expense (income), 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 other expense (income), 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income | $ | 106 | $ | 94 | $ | 274 | $ | 260 | |||||||||||||||
| Net income margin | 13.5 | % | 12.9 | % | 12.1 | % | 12.2 | % | |||||||||||||||
| Adjusted EBITDA | $ | 217 | $ | 183 | $ | 575 | $ | 487 | |||||||||||||||
| Adjusted EBITDA margin | 27.7 | % | 25.0 | % | 25.4 | % | 22.9 | % | |||||||||||||||
| Adjusted Net Income | $ | 119 | $ | 104 | $ | 309 | $ | 259 | |||||||||||||||
| Adjusted Net Income margin | 15.2 | % | 14.2 | % | 13.6 | % | 12.2 | % | |||||||||||||||
| Diluted Earnings per Share | $ | 0.49 | $ | 0.44 | $ | 1.27 | $ | 1.22 | |||||||||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.56 | $ | 0.49 | $ | 1.44 | $ | 1.21 | |||||||||||||||
| Net Cash provided by Operating Activities | $ | 456 | $ | 394 | |||||||||||||||||||
| Free Cash Flow | $ | 317 | $ | 215 | |||||||||||||||||||
27
Adjusted EBITDA
The Company defines Adjusted EBITDA as net income adjusted for depreciation and amortization expense, interest expense, other expense (income), 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income | $ | 106 | $ | 94 | $ | 274 | $ | 260 | |||||||||||||||
| Depreciation and amortization expense | 46 | 43 | 137 | 125 | |||||||||||||||||||
| Interest expense | 10 | 14 | 32 | 42 | |||||||||||||||||||
| Other expense (income), net | — | — | 7 | (18) | |||||||||||||||||||
| Income tax expense | 40 | 22 | 91 | 63 | |||||||||||||||||||
| Stock-based compensation | 15 | 10 | 36 | 16 | |||||||||||||||||||
| Restructuring | — | — | (2) | (1) | |||||||||||||||||||
| Adjusted EBITDA | $ | 217 | $ | 183 | $ | 575 | $ | 487 | |||||||||||||||
| Revenue | $ | 783 | $ | 731 | $ | 2,264 | $ | 2,131 | |||||||||||||||
| Net income margin | 13.5 | % | 12.9 | % | 12.1 | % | 12.2 | % | |||||||||||||||
| Adjusted EBITDA margin | 27.7 | % | 25.0 | % | 25.4 | % | 22.9 | % | |||||||||||||||
28
The table below reconciles segment operating income to segment Adjusted EBITDA.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Industrial | |||||||||||||||||||||||
| Segment operating income | $ | 104 | $ | 90 | $ | 285 | $ | 250 | |||||||||||||||
| Depreciation and amortization expense | 13 | 12 | 41 | 33 | |||||||||||||||||||
| Stock-based compensation | 6 | 4 | 14 | 6 | |||||||||||||||||||
| Adjusted EBITDA | $ | 123 | $ | 106 | $ | 340 | $ | 289 | |||||||||||||||
| Revenue | $ | 343 | $ | 317 | $ | 989 | $ | 926 | |||||||||||||||
| Operating income margin | 30.3 | % | 28.4 | % | 28.8 | % | 27.0 | % | |||||||||||||||
| Adjusted EBITDA margin | 35.9 | % | 33.4 | % | 34.4 | % | 31.2 | % | |||||||||||||||
| Consumer | |||||||||||||||||||||||
| Segment operating income | $ | 44 | $ | 37 | $ | 110 | $ | 92 | |||||||||||||||
| Depreciation and amortization expense | 20 | 20 | 59 | 59 | |||||||||||||||||||
| Stock-based compensation | 6 | 5 | 16 | 8 | |||||||||||||||||||
| Restructuring | — | — | (2) | (1) | |||||||||||||||||||
| Adjusted EBITDA | $ | 70 | $ | 62 | $ | 183 | $ | 158 | |||||||||||||||
| Revenue | $ | 340 | $ | 321 | $ | 984 | $ | 929 | |||||||||||||||
| Operating income margin | 12.9 | % | 11.5 | % | 11.2 | % | 9.9 | % | |||||||||||||||
| Adjusted EBITDA margin | 20.6 | % | 19.3 | % | 18.6 | % | 17.0 | % | |||||||||||||||
| Software and Advisory | |||||||||||||||||||||||
| Segment operating income | $ | 8 | $ | 3 | $ | 9 | $ | 5 | |||||||||||||||
| Depreciation and amortization expense | 13 | 11 | 37 | 33 | |||||||||||||||||||
| Stock-based compensation | 3 | 1 | 6 | 2 | |||||||||||||||||||
| Adjusted EBITDA | $ | 24 | $ | 15 | $ | 52 | $ | 40 | |||||||||||||||
| Revenue | $ | 100 | $ | 93 | $ | 291 | $ | 276 | |||||||||||||||
| Operating income margin | 8.0 | % | 3.2 | % | 3.1 | % | 1.8 | % | |||||||||||||||
| Adjusted EBITDA margin | 24.0 | % | 16.1 | % | 17.9 | % | 14.5 | % | |||||||||||||||
| Adjusted EBITDA | $ | 217 | $ | 183 | $ | 575 | $ | 487 | |||||||||||||||
Adjusted Net Income
The Company defines Adjusted Net Income as net income adjusted for other expense (income), 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.
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The table below reconciles net income to Adjusted Net Income.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, unless otherwise stated) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income | $ | 106 | $ | 94 | $ | 274 | $ | 260 | |||||||||||||||
| Other expense (income), net | — | — | 7 | (18) | |||||||||||||||||||
| Stock-based compensation | 15 | 10 | 36 | 16 | |||||||||||||||||||
| Restructuring | — | — | (2) | (1) | |||||||||||||||||||
Tax effect of adjustments(a) | (2) | — | (6) | 2 | |||||||||||||||||||
| Adjusted Net Income | $ | 119 | $ | 104 | $ | 309 | $ | 259 | |||||||||||||||
| Revenue | $ | 783 | $ | 731 | $ | 2,264 | $ | 2,131 | |||||||||||||||
| Net income margin | 13.5 | % | 12.9 | % | 12.1 | % | 12.2 | % | |||||||||||||||
| Adjusted Net Income margin | 15.2 | % | 14.2 | % | 13.6 | % | 12.2 | % | |||||||||||||||
(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 other expense (income), 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Diluted earnings per share | $ | 0.49 | $ | 0.44 | $ | 1.27 | $ | 1.22 | |||||||||||||||
| Other expense (income), net | — | — | 0.03 | (0.09) | |||||||||||||||||||
| Stock-based compensation | 0.08 | 0.05 | 0.18 | 0.08 | |||||||||||||||||||
| Restructuring | — | — | (0.01) | (0.01) | |||||||||||||||||||
Tax effect of adjustments(a) | (0.01) | — | (0.03) | 0.01 | |||||||||||||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.56 | $ | 0.49 | $ | 1.44 | $ | 1.21 | |||||||||||||||
(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.
The table below reconciles net cash provided by operating activities to Free Cash Flow.
| Nine Months Ended September 30, | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 456 | $ | 394 | |||||||
| Capital expenditures | (139) | (179) | |||||||||
| Free Cash Flow | $ | 317 | $ | 215 | |||||||
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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 borrowed under the 2025 Credit Facility. 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, as well as 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 September 30, 2025, the Company had $255 million in cash and cash equivalents, $44 million in short-term investments, and $699 million of unused availability under the 2022 Credit Facility and access to an accordion feature permitting an increase in the 2022 Credit Facility by an aggregate amount of up to $625 million (of which up to $400 million may consist of term loans), 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. Subsequent to the balance sheet date, the 2022 Credit Facility was replaced with the 2025 Credit Facility which provides for a $1.0 billion senior unsecured five-year multi-currency revolving credit facility and an accordion feature permitting an increase 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:
| Nine Months Ended September 30, | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 456 | $ | 394 | |||||||
| Net cash used in investing activities | $ | (183) | $ | (175) | |||||||
| Net cash used in financing activities | $ | (314) | $ | (202) | |||||||
Cash flows from operating activities
Net cash provided by operating activities was $456 million for the nine months ended September 30, 2025, an increase of $62 million compared to net cash provided by operating activities of $394 million for the same period in 2024. The increase was primarily driven by higher net income after non-cash adjustments due to business performance during the nine months ended September 30, 2025 compared to the same period in 2024 and employee contributions to the Company’s employee stock purchase plan which was not in place during the same period in 2024.
Cash flows from investing activities
Net cash used in investing activities was $183 million for the nine months ended September 30, 2025, an increase of $8 million compared to net cash used in investing activities of $175 million for the same period in 2024. The change was primarily driven by a $43 million increase in purchases of investments net of sales for the nine months ended September 30, 2025 compared to the same period in 2024 and proceeds from the divestiture of the Company’s payments testing business of $30 million for the nine months ended September 30, 2024. The change was partially offset by a $40 million decrease in capital expenditures and a $25 million decrease in cash paid for acquisitions compared to the same period in 2024.
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Cash flows from financing activities
Net cash used in financing activities was $314 million for the nine months ended September 30, 2025, an increase of $112 million compared to net cash used in financing activities of $202 million for the same period in 2024. The change was primarily driven by a $90 million increase in repayments net of proceeds on the Company’s 2022 Credit Facility compared to the same period in 2024 and $14 million in employee taxes paid on settlement of stock-based compensation for the nine months ended September 30, 2025 which did not occur for the same period in 2024.
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 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 functionality. Cash paid for capital expenditures decreased $40 million, to $139 million for the nine months ended September 30, 2025, compared to $179 million for the same period in 2024, which included construction of a new battery testing laboratory in Auburn Hills, Michigan.
Long-Term Debt
2022 Credit Facility
In January 2022, the Company entered into the 2022 Credit Facility with Bank of America, N.A. and certain other lenders, which provides for senior unsecured credit facilities in an aggregate principal amount of $1.25 billion, consisting of term loans and revolving loan commitments. The Company’s wholly owned subsidiary, UL LLC, a Delaware limited liability company (“UL LLC”), provides a guaranty of its obligations thereunder. As of September 30, 2025, the Company was in compliance with all covenants under the 2022 Credit Facility. As described below, in connection with the entry into the 2025 Credit Facility, the Company repaid in full all indebtedness and other obligations outstanding under, and terminated, the 2022 Credit Facility.
2025 Credit Facility
In October 2025, the Company entered into a Credit Agreement, by and among the Company 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 provides for $1.0 billion senior unsecured five-year multi-currency revolving loan commitments, with a $25 million sub-limit for the issuance of letters of credit. The 2025 Credit Facility includes 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. The Borrowers’ obligations (other than the Company’s) under the Credit Agreement are guaranteed by the Company.
On October 28, 2025, the Company borrowed $291 million under the 2025 Credit Facility. The initial borrowing was used to refinance the outstanding amounts under the 2022 Credit Facility. Additional amounts, if any, borrowed under the 2025 Credit Facility are anticipated to be used for general corporate purposes.
Borrowings under the 2025 Credit Facility bear interest at a rate per annum equal to, at the applicable Borrower’s option, (a) a specified benchmark rate for the applicable currency (which, in the case of U.S. Dollar loans, shall be the Term SOFR or Daily SOFR (in each case as defined in the Credit Agreement), at the applicable Borrower’s option), plus a margin that ranges from 0.875% to 1.375% per annum or (b) for U.S. Dollar loans made to the Company only, a base rate (which is equal to the highest of (i) the Bank of America prime rate, (ii) the U.S. federal funds rate plus 0.5% per annum, or (iii) the Term SOFR or Daily SOFR rate plus 1.0%) plus a margin that ranges from 0.0% to 0.375% per annum. The 2025 Credit Facility matures on October 28, 2030 and may be prepaid without fees or penalties, subject to reimbursement of the lenders’ customary breakage and redeployment costs in applicable cases.
The 2025 Credit Facility also includes a financial covenant, tested quarterly, which requires the Company to maintain a consolidated net leverage ratio of not greater than 3.5 to 1.0, calculated on a consolidated basis for each consecutive four fiscal quarter period, with an increase in the maintenance level to 4.0 to 1.0 for each of the four test periods immediately
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following any permitted acquisition that involves the payment of aggregate consideration in excess of $100 million, subject to a two fiscal quarter rest period between increases for separate acquisitions. The calculation of the consolidated net leverage ratio permits the netting of up to $250 million of unrestricted cash from funded debt.
The 2025 Credit Facility includes customary representations and warranties, covenants and events of default, subject to certain customary exceptions, materiality thresholds and grace periods. The covenants include, among other things, financial reporting, maintenance of line of business, notices of default and other material changes, as well as limitations on investments and acquisitions, mergers and transfers of all or substantially all assets, dividends and distributions, burdensome contracts with affiliates, liens and indebtedness. Future borrowings under the 2025 Credit Facility are subject to the satisfaction of customary conditions, including the absence of any default or event of default and the accuracy of representations and warranties.
Senior Notes
In October 2023, the Company issued $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.
In connection with the issuance of the notes, the Company entered into a registration rights agreement on the same date. In September 2025, pursuant to the registration rights agreement, the Company completed an exchange offer, pursuant to which the Company exchanged all of the outstanding notes for new 6.500% senior notes due 2028 registered under the Securities Act of 1933, as amended (the “exchange notes”). The terms of the exchange notes are substantially the same as the notes. Subsequent to the balance sheet date, the Company entered into a Credit Agreement on October 28, 2025, and repaid in full all indebtedness and other obligations outstanding under, and terminated, the 2022 Credit Facility. In connection with such termination, the guaranty by UL LLC of the Company’s obligations under the 2022 Credit Facility and the notes was released. Refer to Item 1, Note 18, “Subsequent Events”.
Dividends
The Company increased the regular quarterly dividend to 13 cents per share beginning in the first quarter of 2025, an increase from the previous 12.5 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, 2024. 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 nine months ended September 30, 2025, the Company paid dividends to stockholders of $26 million and $78 million, respectively. In the three and nine months ended September 30, 2024, the Company paid dividends to stockholders of $25 million and $75 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, 2024 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.
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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, 2024.
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 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 indicated 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 TIC or S&A industries 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; and global, regional or political instability;
•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 fulfil its customers’ needs;
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•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;
•failure to generate sufficient cash to service the Company’s indebtedness;
•a change in the assumptions the Company uses to value its goodwill or intangible assets, or the impairment of its goodwill or intangible assets;
•constraints imposed on the Company’s ability to operate its business or make necessary capital investments due to the Company’s outstanding indebtedness;
•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 with 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 we operate or adverse outcomes resulting from examination of our or our 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, extends 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; and
•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, 2024.
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, 2024 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.
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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.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk in the ordinary course of business. Market risk represents the risk of loss that may impact the Company’s financial position due to adverse changes in financial market prices and rates, such as interest and foreign currency exchange rates and equity prices. The Company’s market risk exposure is primarily a result of exposure to potential changes in interest rates or inflation and the resulting impact on investment income and interest expense. The Company does not hold financial instruments for trading purposes.
Interest Rate Risk
The Company’s operating results are subject to risk from interest rate fluctuations on its credit facilities, which carry variable interest rates. Borrowings under the 2022 Credit Facility bore interest at a rate per annum equal to, at the Company’s option, (a) in the case of U.S. dollar loans, the Term SOFR (as defined in the 2022 Credit Facility) plus a Secured Overnight Financing Rate (“SOFR”) adjustment of 0.1% plus a margin, and for all other currencies, a specified benchmark rate for the applicable currency plus, in certain instances, a specified spread adjustment plus a margin (loans with a rate based on this clause (a), “benchmark rate loans”) or (b) for U.S. dollar loans only, the base rate plus a margin (loans with a rate based on this clause (b), “base rate loans”). Borrowings under the 2025 Credit Facility bear interest at a rate per annum equal to, at the applicable Borrower’s option, (a) a specified benchmark rate for the applicable currency (which, in the case of U.S. Dollar loans, shall be the Term SOFR or Daily SOFR (in each case as defined in the Credit Agreement), at the applicable Borrower’s option), plus a margin that ranges from 0.875% to 1.375% per annum or (b) for U.S. Dollar loans made to the Company only, a base rate (which is equal to the highest of (i) the Bank of America prime rate, (ii) the U.S. federal funds rate plus 0.5% per annum, or (iii) the Term SOFR or Daily SOFR rate plus 1.0%) plus a margin that ranges from 0.0% to 0.375% per annum.
Because the Company’s borrowings bear interest at a variable rate, the Company is exposed to market risks relating to changes in interest rates. The Company is also exposed to interest rate risk associated with its cash and cash equivalents and short-term investments balances. The Company does not currently use derivative financial instruments in its investment portfolio.
During the first nine months of 2025, the variable interest rates applicable to both benchmark rate loans and base rate loans under the 2022 Credit Facility generally fluctuated in line with interest rate changes in the marketplace and are expected to continue fluctuating with any future Federal Reserve Board interest rate changes and future changes to the SOFR Index. In addition, increases in interest expense are considered with other expense increases that may be passed, in whole or in part, along to the Company’s customers; however, the Company does not expect increases in interest expenses to materially impact pricing strategy in the near term. The increased interest payments on the Company’s variable-rate debt are not material to the Company’s overall liquidity position and have not impacted, and are not expected to have an impact on, the Company’s ability to make timely payments under the 2025 Credit Facility or its other obligations. Furthermore, while interest rates impact management’s evaluation of capital expenditure projects, the overall cash flows required to support the Company’s planned investments have not been materially impacted. Thus, fluctuations in interest rates have not had a material impact on the Company’s financial condition.
The interest rates for the Company’s term loan and revolving credit facility as of September 30, 2025 were 5.26% and 5.34%, respectively, which were floating rates based on the Term SOFR (as defined in the 2022 Credit Facility) plus a SOFR adjustment of 0.10%. A hypothetical 100 basis point change in interest rates affecting the 2022 Credit Facility would result in a change to the annual interest expense of approximately $2 million, based on outstanding borrowings at September 30, 2025. A hypothetical 100 basis point change in interest rates affecting the Company’s cash and cash equivalents or short-term investments would not have a material impact on the Company’s financial statements. Notwithstanding the Company’s efforts to manage interest rate risk, there can be no assurances that the Company will be adequately protected against the risks associated with interest rate fluctuations.
Foreign Currency Risk
With global operations, the Company has foreign currency risk related to its revenues and expenses denominated in currencies other than the U.S. dollar, primarily the euro, the Chinese renminbi, the Japanese yen, the New Taiwan dollar, the Korean won, the British pound sterling, the Mexican peso and the Singapore dollar. Foreign currency gains (losses) are
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recorded in net income as transactions occur. Changes in exchange rates may substantially affect, either positively or negatively, the revenues and expenses, as expressed in U.S. dollars, of the Company’s foreign subsidiaries with functional currencies other than the U.S. dollar. Assuming a hypothetical change of 10% in the average foreign currency exchange rate for the nine months ended September 30, 2025, the effect on operating income would not be material. The Company is also subject to foreign currency exchange rate risk associated with the translation of local currencies of its foreign subsidiaries into U.S. dollars.
The Company’s results of operations are exposed to foreign currency exchange risk related to intercompany loan and operating balances between subsidiaries that are denominated in currencies other than the U.S. dollar, primarily the euro, Korean won and the Japanese yen. A transaction made in a currency that differs from the local entity’s functional currency is first remeasured at the entity’s functional currency. Subsequent foreign currency exchange rate changes result in foreign currency gains (losses) that are recognized in net income. If the transaction is already denominated in the entity’s functional currency, only the translation to U.S. dollar reporting is necessary. The remeasurement process required by GAAP for such intercompany loan and operating balances will give rise to foreign exchange gains (losses), which could materially impact the Company’s results of operations.
ITEM 4. Controls and Procedures
Evaluation of disclosure controls and procedures
The Company has conducted an evaluation, under the supervision and with the participation of management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of September 30, 2025, the Company’s disclosure controls and procedures were effective such that the information required to be disclosed in the Company’s SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.
Changes in Internal Controls Over Financial Reporting
No changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2025, that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is, in the ordinary course of business, party to certain claims, litigation, audits and investigations. Discussion of these and other legal matters is incorporated by reference from Part I, Item 1, Note 15, “Commitments and Contingencies,” of this Quarterly Report and should be considered an integral part of Part II, Item 1, “Legal Proceedings.”
ITEM 1A. Risk Factors
See 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, 2024. There have been no material changes to the Company’s risk factors as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 5. Other Information
During the three months ended September 30, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
ITEM 6. Exhibits
| Exhibit No. | Description | |||||||
10.1† | ||||||||
10.2† | ||||||||
10.3† | ||||||||
Credit Agreement, dated as of October 28, 2025, among UL Solutions Inc., UL International (UK) Limited, Underwriters Laboratories Holdings B.V., UL GmbH and UL International-Singapore Private Limited, as borrowers, Bank of America, N.A., as administrative agent, and the other agents and lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on October 28, 2025). | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
| 101* | The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL) includes (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income; (iii) the Condensed Consolidated Balance Sheets; (iv) the Condensed Consolidated Statements of Stockholders’ Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements. | |||||||
| 104* | Cover Page Interactive Data File (embedded within the iXBRL document). | |||||||
* Filed herewith.
**Furnished herewith. The certifications attached as Exhibits 32.1 and 32.2 to this Quarterly Report are deemed furnished and not filed with the SEC and are not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in such filing.
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† Indicates a management contract or compensatory plan or arrangement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| UL Solutions Inc. | ||||||||
Date: November 4, 2025 | ||||||||
| By | /s/ Ryan D. Robinson | |||||||
| Ryan D. Robinson | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| (Duly authorized officer and principal financial officer of the Registrant) | ||||||||
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