UL Solutions Inc

Previous wording

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s condensed consolidated financial statements and the related notes as of June 30, 2024 and for the three and six month periods ended June 30, 2024 and 2023, which are included in this Quarterly Report, as well as the Company’s consolidated financial statements and the related notes included in the Company’s final prospectus for its initial public offering (the “IPO”) filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2024 (the “Prospectus”). 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 the Company describes under “Risk Factors” in Part II Item 1A of the Quarterly Report on Form 10-Q for the period ended March 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.

Current wording

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s condensed consolidated financial statements and the related notes as of September 30, 2024 and for the three and nine month periods ended September 30, 2024 and 2023, which are included in this Quarterly Report, as well as the Company’s consolidated financial statements and the related notes included in the Company’s final prospectus for its initial public offering (the “IPO”) filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2024 (the “Prospectus”). 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 the Company describes under “Risk Factors” in Part II Item 1A of the Quarterly Report on Form 10-Q for the period ended March 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.

Previous wording

On July 8, 2024, after the quarter end, 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 will be included in the Industrial segment in subsequent periods.

Current wording

•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.

Previous wording

•In May 2024, the Company acquired 100% of the outstanding stock of Batterielngenieure GmbH (together with its subsidiaries, “Batterielngenieure”) for approximately $11 million. Batterielngenieure is a Germany-based battery testing company that is in the process of building a laboratory in Aachen, Germany to replace the leased facility it is currently using and add testing and simulation capacity. Batterielngenieure is included in the Industrial segment.

Current wording

•In May 2024, the Company acquired 100% of the outstanding stock of Batterielngenieure GmbH (together with its subsidiaries, “Batterielngenieure”) for approximately $11 million. Batterielngenieure is a Germany-based battery testing company that is in the process of building a laboratory in Aachen, Germany to replace the leased facility it is currently using and to add testing and simulation capacity. The results of operations of Batterielngenieure are included in the Industrial segment since the date of acquisition.

Previous wording

•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 $30 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 approximately $25 million, which was recorded within other income, net in the Company’s consolidated results of operations.

Current wording

•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 $30 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 income (expense), net in the Company’s consolidated results of operations.

Previous wording

The Company uses Organic, Acquisition 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:

Current wording

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:

Previous wording

“Organic” reflects revenue change in a given period excluding Acquisition and FX in that same year, expressed in dollars or as a percentage of revenue in the prior period.

Current wording

“Organic” reflects revenue change in a given period excluding Acquisition / Divestiture and FX in that same year, expressed in dollars or as a percentage of revenue in the prior period.

Previous wording

“Acquisition” 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 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.

Current wording

“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.

Previous wording

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.

Current wording

Operating income is calculated as revenue less cost of revenue, selling, general and administrative expenses and goodwill impairment. Operating income margin is calculated as operating income as a percentage of revenue.

Previous wording

The Company uses Organic, Acquisition 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:

Current wording

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:

Previous wording

“Organic” reflects total operating income change in a given period excluding Acquisition and FX in that same period, expressed in dollars or as a percentage of operating income in the prior period.

Current wording

“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.

Previous wording

“Acquisition” 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 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 also includes the change in due diligence related costs for merger and acquisition and disposal activities.

Current wording

“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.

Previous wording

Other income, net consists primarily of non-operating gains and losses, income and expenses related to the revaluation performed on designated balance sheet accounts, gains and losses on foreign currency transactions, investment income, equity in earnings of non-consolidated affiliates and non-operating pension and postretirement benefit expenses.

Current wording

Other income (expense), net consists primarily of non-operating gains and losses, income and expenses related to the revaluation performed on designated balance sheet accounts, gains and losses on foreign currency transactions, investment income, equity in earnings of non-consolidated affiliates, non-operating pension and postretirement benefit expenses and gains on divestitures.

Previous wording

Income before income taxes is calculated as revenue less cost of revenue, selling, general and administrative expenses, interest expense and other income, net.

Current wording

Income before income taxes is calculated as revenue less cost of revenue, selling, general and administrative expenses, goodwill impairment, interest expense and other income (expense), net.

Previous wording

Net income is calculated as revenue less cost of revenue, selling, general and administrative expenses, interest expense, other income, net and income tax expense. Net income margin is calculated as net income as a percentage of revenue.

Current wording

Net income is calculated as revenue less cost of revenue, selling, general and administrative expenses, goodwill impairment, interest expense, other income (expense), net and income tax expense. Net income margin is calculated as net income as a percentage of revenue.

Previous wording

Revenue increased by $82 million, or 6.2%, for the six months ended June 30, 2024, as compared to the same period in 2023. Revenue increased on an organic basis by $105 million, or 8.0%, due to organic growth across all segments in 2024, led by the Industrial segment in both Ongoing Certification Services and Certification Testing revenue. FX decreased revenue by $18 million, or 1.4%, primarily due to the relative weakness of the Japenese yen and the Chinese renminbi. Acquisitions and divestitures decreased revenue by $5 million, or 0.4%, primarily due to the sale of the payments testing business in the Industrial segment.

Current wording

Revenue increased by $55 million, or 8.1%, for the three months ended September 30, 2024, as compared to the same period in 2023. Revenue increased on an organic basis by $63 million, or 9.3%, due to organic growth across all segments in the third quarter of 2024, driven by the Industrial and Consumer segments in Certification Testing and Ongoing Certification Services revenue. Acquisitions / Divestitures decreased revenue by $6 million, or 0.9%, primarily due to the sale of the payments testing business in the Industrial segment.

Previous wording

During the three months ended June 30, 2024 and 2023, the Company incurred $2 million and $1 million of expenses, respectively, related to the IPO.

Current wording

During the three months ended September 30, 2024 and 2023, the Company incurred $2 million and $1 million of expenses, respectively, related to the IPO completed in April 2024 and a follow-on public offering completed in September 2024.

Previous wording

Interest expense increased by $5 million for the three months ended June 30, 2024, as compared to the same period in 2023. The increase is primarily due to interest on the Company’s outstanding 6.500% senior notes due 2028 (the “notes”) which were not outstanding in the same period in 2023. For additional information refer to “—Liquidity and Capital Resources.”

Current wording

Interest expense increased by $7 million for the three months ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to interest on the Company’s outstanding 6.500% senior notes due 2028 (the “notes”) which were not outstanding in the same period in 2023. For additional information refer to “—Liquidity and Capital Resources.”

Previous wording

Other income, net increased by $10 million in the three months ended June 30, 2024 as compared to the same period in 2023. The increase was primarily driven by a $25 million gain on divestiture of the Company’s payments testing business in May 2024. The increase was partially offset by $5 million of higher foreign currency exchange losses on intercompany loans and transaction settlements and $5 million of unrealized gains on equity investments in the three months ended June 30, 2023 that did not reoccur in 2024.

Current wording

Other income (expense), net increased by $7 million in the three months ended September 30, 2024 as compared to the same period in 2023. The increase was primarily driven by a $10 million change in foreign currency exchange losses on intercompany loans and transaction settlements.

Previous wording

The effective tax rate for the three months ended June 30, 2024 was 20.9%, which differed from the U.S. statutory 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) of the Internal Revenue Code in the U.S., 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 (“GILTI”) net of related foreign tax credits.

Current wording

The effective tax rate for the three months ended September 30, 2024 was 19.0%, which differed from the U.S. statutory 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 (“GILTI”) net of related foreign tax credits.

Previous wording

The effective tax rate for the three months ended June 30, 2023 was 17.5%, which differed from the U.S. statutory tax rate of 21% primarily due to earnings subject to lower tax rates in foreign jurisdictions, partially offset by U.S. tax on GILTI net of related foreign tax credits.

Current wording

The effective tax rate for the three months ended September 30, 2023 was 24.0%, which differed from the U.S. statutory tax rate of 21% primarily due to the impact of non-deductible goodwill impairment and U.S. tax on GILTI net of related foreign tax credits, partially offset by earnings subject to lower tax rates in foreign jurisdictions and research and development tax credits.

Previous wording

Revenue increased by $41 million, or 6.0%, for the three months ended June 30, 2024, as compared to the same period in 2023. Revenue increased on an organic basis by $58 million, or 8.4%, due to organic growth across all segments in the second quarter of 2024, led by the Industrial segment in both Ongoing Certification Services and Certification Testing revenue. FX decreased revenue by $11 million, or 1.6%, primarily due to the relative weakness of the Japanese yen and Chinese renminbi. Acquisitions and divestitures decreased revenue by $6 million, or 0.9%, primarily due to the sale of the payments testing business in the Industrial segment.

Current wording

Revenue increased by $137 million, or 6.9%, for the nine months ended September 30, 2024, as compared to the same period in 2023. Revenue increased on an organic basis by $168 million, or 8.4%, due to organic growth across all segments in 2024, driven by the Industrial and Consumer segments in Certification Testing and Ongoing Certification Services revenue. FX decreased revenue by $20 million, or 1.0%, primarily due to the relative weakness of the Japanese yen and the Chinese renminbi. Acquisitions / Divestitures decreased revenue by $11 million, or 0.6%, primarily due to the sale of the payments testing business in the Industrial segment.

Previous wording

Cost of revenue increased by $12 million, or 3.4%, for the three months ended June 30, 2024, as compared to the same period in 2023, due to increased compensation expenses of $7 million, primarily due to base salary increases and higher healthcare costs. In addition, depreciation and amortization increased $6 million related to the completion of additional laboratory capacity and software placed in service. FX decreased cost of revenue by $6 million primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Current wording

Cost of revenue increased by $57 million, or 5.5%, for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to increased compensation expenses of $36 million, related to base salary increases, higher healthcare costs and higher costs associated with performance-based incentives, including the Company’s annual cash bonus plan. In addition, depreciation and amortization increased $20 million related to the completion of additional laboratory capacity and software placed in service. FX decreased cost of revenue by $10 million, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Previous wording

Selling, general and administrative expenses increased by $29 million, or 6.6%, for the six months ended June 30, 2024, as compared to the same period in 2023, due to increased compensation expenses of $15 million, primarily due to base salary increases and long-term incentive costs under the Pre-IPO Performance Cash awards. In addition, professional fees increased $8 million related to higher costs related to the IPO and higher accounting and legal costs, and bad debt expenses increased $7 million due to the impact of higher write-offs in 2024. Acquisitions and divestitures increased selling, general and administrative expenses by an additional $5 million, primarily related to due diligence related costs. FX decreased selling, general and administrative expenses by $5 million, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Current wording

Selling, general and administrative expenses increased by $52 million, or 8.1%, for the nine months ended September 30, 2024, as compared to the same period in 2023, due to increased compensation expenses of $41 million, primarily due to higher costs associated with performance-based incentives, including the Company’s long-term incentive awards and sales incentive plans, base salary increases and higher healthcare costs. In addition, bad debt expenses increased $7 million due to the impact of higher write-offs in 2024 and professional fees increased $5 million related to higher costs related to the Company’s public offerings and higher accounting and legal costs. FX decreased selling, general and administrative expenses by $6 million, primarily due to the relative weakness of the Chinese renminbi and Japanese yen.

Previous wording

During the six months ended June 30, 2024 and 2023, the Company incurred $4 million and $1 million of expenses, respectively, related to the IPO.

Current wording

During the nine months ended September 30, 2024 and 2023, the Company incurred $6 million and $2 million of expenses, respectively, related to the IPO completed in April 2024 and a follow-on public offering completed in September 2024.

Previous wording

Interest expense increased by $12 million for the six months ended June 30, 2024, as compared to the same period in 2023. The increase is primarily due to interest on the Company’s outstanding senior notes which were not outstanding in the same period in 2023. For additional information refer to “—Liquidity and Capital Resources.”

Current wording

Interest expense increased by $19 million for the nine months ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to interest on the Company’s outstanding senior notes which were not outstanding in the same period in 2023. For additional information refer to “—Liquidity and Capital Resources.”

Previous wording

Other income, net increased by $2 million in the six months ended June 30, 2024 as compared to the same period in 2023. The increase was primarily due to a $25 million gain on divestiture of the Company’s payments testing business in May 2024. The increase was partially offset by $10 million of higher foreign currency exchange losses on intercompany loans and transaction settlements and $5 million of unrealized gains on equity investments in the six months ended June 30, 2023 that did not reoccur in 2024.

Current wording

Other income (expense), net increased by $10 million in the nine months ended September 30, 2024 as compared to the same period in 2023. The increase was primarily due to a $24 million gain on divestiture of the Company’s payments testing business in May 2024. The increase was partially offset by $7 million of unrealized gains on equity investments in the nine months ended September 30, 2023 that did not reoccur in 2024.

Previous wording

The effective tax rate for the six months ended June 30, 2024 was 19.8%, which differed from the U.S. statutory 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) of the Internal Revenue Code in the U.S., 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 GILTI net of related foreign tax credits.

Current wording

The effective tax rate for the nine months ended September 30, 2024 was 19.5%, which differed from the U.S. statutory 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) of the U.S. Internal Revenue Code, which limits U.S. public company 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 GILTI net of related foreign tax credits.

Previous wording

The effective tax rate for the six months ended June 30, 2023, was 18.2%, which differed from the U.S. statutory tax rate of 21% primarily due to earnings subject to lower tax rates in foreign jurisdictions, partially offset by U.S. tax on GILTI net of related foreign tax credits.

Current wording

The effective tax rate for the nine months ended September 30, 2023, was 19.9%, which differed from the U.S. statutory tax rate of 21% primarily due to earnings subject to lower tax rates in foreign jurisdictions and research and development tax credits, partially offset by the impact of non-deductible goodwill impairment and U.S. tax on GILTI net of related foreign tax credits.

Previous wording

Several countries in which the Company operates have adopted aspects of Pillar Two rules which impose a 15% corporate minimum tax into their local legislation effective January 1, 2024. In accordance with Financial Accounting Standards Board guidance which states that the Pillar Two minimum tax should be reflected as a period cost in the period the law is effective rather than enacted, the Company has reflected the impact of the Pillar Two rules that are effective January 1, 2024 in its financial results for the six months ended June 30, 2024, and the impact is immaterial. The Company is continuing to evaluate aspects of the legislation that will be effective January 1, 2025 and the potential impact on future periods as such changes could result in an increase in its effective tax rate in 2025 and/or other future periods.

Current wording

Several countries in which the Company operates have adopted aspects of Pillar Two rules which impose a 15% corporate minimum tax into their local legislation effective January 1, 2024. In accordance with Financial Accounting Standards Board guidance which states that the Pillar Two minimum tax should be reflected as a period cost in the period the law is effective rather than enacted, the Company has reflected the impact of the Pillar Two rules that are effective January 1, 2024 in its financial results for the nine months ended September 30, 2024, and the impact is immaterial. The Company is continuing to evaluate aspects of the legislation that will be effective January 1, 2025 and the potential impact on future periods as such changes could result in an increase in its effective tax rate in 2025 and/or other future periods.

Previous wording

Revenue increased by $22 million, or 7.5%, for the three months ended June 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $34 million or 11.6%, primarily due to growth in Ongoing Certification Services revenue of $16 million across most industries due to price increases. Certification Testing revenue increased $14 million, driven by continued demand for electrical product, renewable energy and component certification testing, as well as returns on new capacity provided by recent laboratory investments. Acquisitions and divestitures decreased revenue by $7 million, or 2.4%, primarily due to the sale of the payments testing business. FX decreased revenue by $5 million, or 1.7%, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Current wording

Revenue increased by $27 million, or 9.3%, for the three months ended September 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $34 million or 11.7%, primarily due to growth in Ongoing Certification Services revenue of $17 million across most industries due in part to additional volume and price increases. Certification Testing revenue increased $15 million, driven by continued demand for electrical products and components, renewable energy and component certification testing, as well as returns on new capacity provided by recent laboratory investments. Acquisitions / Divestitures decreased revenue by $6 million, or 2.1%, primarily due to the sale of the payments testing business.

Previous wording

Segment operating income increased by $3 million, or 3.7%, for the three months ended June 30, 2024, as compared to the same period in 2023 primarily due to the $34 million increase in organic revenue noted above partially offset by a $24 million increase in expenses. Expenses increased due to higher compensation expenses of $13 million primarily due to long-term incentive costs related to the Company’s CSARs and Performance Cash awards, base salary and headcount increases and higher healthcare costs. Additionally, professional fees increased $3 million related to, in part, outsourced labor associated with higher revenue. Acquisitions and divestitures decreased segment operating income by $5 million, primarily due to the sale of the payments testing business and due diligence related costs.

Current wording

Segment operating income increased by $3 million, or 3.4%, for the three months ended September 30, 2024, as compared to the same period in 2023 primarily due to the $34 million increase in organic revenue noted above partially offset by a $29 million increase in expenses. Expenses increased due to higher compensation expenses of $22 million primarily due to higher costs associated with performance-based incentives, a prior year CSAR benefit under the Company’s pre-IPO LTIP which did not reoccur in 2024, as well as base salary and headcount increases.

Previous wording

Revenue increased by $47 million, or 8.4%, for the six months ended June 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $61 million or 10.9%, primarily due to growth in Ongoing Certification Services revenue of $28 million across most industries due to price increases. Certification Testing revenue increased $27 million, driven by continued demand for electrical product, renewable energy and component certification testing, as well as returns on new capacity provided by recent laboratory investments. FX decreased revenue by $8 million, or 1.4%, primarily due to the relative weakness of the Japanese yen and Chinese renminbi. Acquisitions decreased revenue by $6 million, or 1.1%, primarily due to the sale of the payments testing business.

Current wording

Revenue increased by $74 million, or 8.7%, for the nine months ended September 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $95 million or 11.2%, primarily due to growth in Ongoing Certification Services revenue of $46 million across most industries due in part to additional volume and price increases. Certification Testing revenue increased $42 million, driven by continued demand for electrical products and components, renewable energy and component certification testing, as well as returns on new capacity provided by recent laboratory investments. Acquisitions / Divestitures decreased revenue by $12 million, or 1.4%, primarily due to the sale of the payments testing business. FX decreased revenue by $9 million, or 1.1%, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Previous wording

Segment operating income increased by $6 million, or 3.9%, for the six months ended June 30, 2024, as compared to the same period in 2023 primarily due to the $61 million increase in organic revenue noted above partially offset by a $44 million increase in expenses. Expenses increased due to higher compensation expenses of $21 million primarily due to base salary and headcount increases and higher healthcare costs. Additionally, professional fees increased $6 million primarily related to outsourced labor associated with higher revenue, ongoing software projects and higher costs related to the IPO. Depreciation and amortization increased $4 million related to the completion of additional laboratory capacity. Acquisitions and divestitures decreased segment operating income by $8 million, primarily due to the sale of the payments testing business and due diligence related costs.

Current wording

Segment operating income increased by $8 million, or 3.3%, for the nine months ended September 30, 2024, as compared to the same period in 2023 primarily due to the $95 million increase in organic revenue noted above partially offset by a $73 million increase in expenses. Expenses increased due to higher compensation expenses of $44 million primarily due to base salary and headcount increases, higher costs associated with performance-based incentives and higher healthcare costs. Additionally, professional fees increased $8 million primarily related to outsourced labor associated with higher revenue, ongoing software projects and higher costs related to the Company’s public offerings. Depreciation and amortization increased $6 million related to the completion of additional laboratory capacity. Acquisitions / Divestitures decreased segment operating income by $11 million, primarily due to the sale of the payments testing business and due diligence related costs.

Previous wording

The following table summarizes the change in Consumer’s revenue and operating income for the periods presented:

Current wording

The following table summarizes the change in Consumer’s revenue and operating income (loss) for the periods presented:

Previous wording

Revenue increased by $13 million, or 4.2%, for the three months ended June 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $19 million, or 6.1%, primarily due to Non-certification Testing and Other Services revenue growth of $11 million in consumer technology driven by higher electromagnetic compatibility testing for automotive and consumer electronics and improved retail demand. Certification Testing revenue increased $4 million, driven by strength in HVAC. FX decreased revenue by $6 million, or 1.9%, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Current wording

Revenue increased by $26 million, or 8.8%, for the three months ended September 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $27 million, or 9.2%, primarily due to Non-certification Testing and Other Services revenue growth of $13 million in retail due to increased capacity and demand and in consumer technology driven by higher electromagnetic compatibility testing for automotive and consumer electronics. Certification Testing revenue increased $9 million due to new customer opportunities in consumer technology as well as strength in HVAC as a result of low global warming potential refrigerant regulations.

Previous wording

Revenue increased by $24 million, or 4.1%, for the six months ended June 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $35 million, or 6.0%, primarily due to Non-certification Testing and Other Services revenue growth of $20 million in consumer technology driven by higher electromagnetic compatibility testing for automotive and consumer electronics and improved retail demand. Certification Testing revenue increased $9 million due to medical growth and strength in HVAC. FX decreased revenue by $10 million, or 1.7%, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Current wording

Revenue increased by $50 million, or 5.7%, for the nine months ended September 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $62 million, or 7.1%, primarily due to Non-certification Testing and Other Services revenue growth of $33 million in retail due to increased capacity and demand and in consumer technology driven by higher electromagnetic compatibility testing for automotive and consumer electronics. Certification Testing revenue increased $18 million due to medical growth and strength in HVAC. Ongoing Certification Services revenue increased $11 million due to consumer technology driven by higher electromagnetic compatibility testing for automotive and consumer electronics as well as strength in HVAC. FX decreased revenue by $11 million, or 1.3%, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Previous wording

Segment operating income increased by $19 million for the six months ended June 30, 2024, as compared to the same period in 2023 primarily due to the $35 million increase in organic revenue noted above partially offset by a $15 million increase in expenses. Expenses increased due to higher compensation expenses of $4 million, primarily due to higher healthcare costs. Additionally, professional fees increased $3 million primarily related to ongoing software projects and higher costs related to the IPO. Depreciation and amortization increased $3 million related to the completion of additional laboratory capacity and software placed in service.

Current wording

Segment operating income increased by $61 million for the nine months ended September 30, 2024, as compared to the same period in 2023 primarily due to the $62 million increase in organic revenue noted above and a goodwill impairment charge of $37 million in the mobility industry in the nine months ended September 30, 2023, which did not reoccur in 2024. This was partially offset by a $38 million increase in organic expenses primarily due to higher compensation expenses of $22 million, related to higher costs associated with performance-based incentives and higher healthcare costs. Additionally, professional fees increased $5 million primarily related to ongoing software projects and higher costs related to the Company’s public offerings and depreciation and amortization increased $5 million related to the completion of additional laboratory capacity and software placed in service.

Previous wording

Revenue increased by $6 million, or 6.8%, for the three months ended June 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $5 million, or 5.7%, driven by demand for software and sustainability advisory services.

Current wording

Revenue increased on a total and organic basis by $2 million, or 2.2%, for the three months ended September 30, 2024, as compared to the same period in 2023 driven by demand for software, including retail product compliance and sustainability solutions.

Previous wording

Revenue increased by $11 million, or 6.4%, for the six months ended June 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $9 million, or 5.2%, driven by $6 million of software revenue growth and advisory revenue growth of $3 million related to, in part, demand for sustainability services.

Current wording

Revenue increased by $13 million, or 4.9%, for the nine months ended September 30, 2024, as compared to the same period in 2023. On an organic basis, revenue increased $11 million, or 4.2%, driven by $8 million of software revenue growth and advisory revenue growth of $3 million related to, in part, demand for sustainability services.

Previous wording

Segment operating income increased by $5 million for the three months ended June 30, 2024, as compared to the same period in 2023 primarily due to the $19 million increase in organic revenue noted above partially offset by a $12 million increase in expenses. Expenses increased due to higher compensation expenses of $11 million, primarily due to long-term incentive costs related to the Company’s CSARs and Performance Cash awards, and higher healthcare costs. FX decreased segment operating income $2 million, primarily due to the relative weakness of the Japanese yen and Chinese renminbi.

Current wording

Segment operating income decreased by $4 million for the nine months ended September 30, 2024, as compared to the same period in 2023 primarily due to a $15 million increase in expenses, partially offset by the $11 million increase in organic revenue noted above. Expenses increased due to higher compensation expenses of $11 million primarily due to higher costs associated with company-wide performance-based incentives.