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 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.

Current wording

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 March 31, 2025 and for the three month periods ended March 31, 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.

Previous wording

UL Solutions manages the company and reports its financial results through two businesses, TIC and S&A, and three segments: Industrial, Consumer and Software and Advisory.

Current wording

UL Solutions reports its financial results through three segments: Industrial, Consumer and Software and Advisory.

Previous wording

Since January 1, 2023, the Company has completed the following acquisitions and divestitures, which impact the comparability of results between periods:

Current wording

Since January 1, 2024, the Company has completed the following acquisitions and divestiture, which impact the comparability of results between periods:

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 to add testing and simulation capacity. The results of operations of Batterielngenieure are included in the Industrial segment since the date of acquisition.

Current wording

•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.

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 $24 million, which was recorded within other income (expense), 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 $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, net in the Company’s consolidated results of operations.

Previous 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.

Current wording

“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.

Previous wording

Cost of revenue includes personnel related expenses 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 facility related costs for laboratories and other buildings where testing and inspection services are performed, depreciation on equipment used in testing, amortization of capitalized software, customer-related travel costs, expenses related to third-party contractors or third-party facilities and consumable materials and supplies used in testing and inspection and other costs associated with generating revenue.

Current wording

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 inspection and other costs associated with generating revenue. Cost of revenue also includes depreciation on equipment used in testing and amortization of capitalized software.

Previous wording

Selling, general and administrative expenses include personnel related expenses consisting of salaries, incentives, stock-based compensation and other benefits for indirect administrative functions such as executive, finance, legal, human resources and information technology, not included within cost of revenue. Additionally, selling, general and administrative expenses include third-party consultancy costs, facility costs, depreciation and amortization, internal research and development costs as well as legal and accounting fees, travel, marketing, bad debt and non-chargeable materials and supplies. The Company expects selling, general and administrative expenses will be impacted by costs associated with being a publicly traded company.

Current wording

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.

Previous 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.

Current 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.

Previous 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.

Current wording

Other expense, 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 and non-operating pension and postretirement benefit expenses.

Previous 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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

Revenue increased by $35 million, or 5.2%, for the three months ended March 31, 2025, as compared to the same period in 2024. Revenue increased on an organic basis by $51 million, or 7.6%, due to organic growth across all segments in the first quarter of 2025, driven by the Industrial and Consumer segments in Certification Testing, Ongoing Certification Services and Non-certification Testing and Other Services revenue. FX decreased revenue by $9 million, or 1.3%, primarily due to the relative weakness of the euro, the Korean won, the Japanese yen and the Chinese renminbi. Acquisition / Divestiture decreased revenue by $7 million, or 1.0%, primarily due to the sale of the payments testing business in the Industrial segment.

Previous 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.

Current wording

Selling, general and administrative expenses increased by $4 million, or 1.8%, for the three months ended March 31, 2025, as compared to the same period in 2024. On an organic basis, employee compensation increased $11 million, primarily due to higher costs associated with performance-based incentives, including the Company’s long-term incentive awards, and base salary increases. FX decreased selling, general and administrative expenses by $2 million, primarily due to the relative weakness of the euro.

Previous 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.”

Current wording

Interest expense decreased by $3 million for the three months ended March 31, 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.”

Previous 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.

Current wording

The effective tax rate for the three months ended March 31, 2025 was 24.5%, 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 Section 162(m) limitations on current year compensation deductions of certain executive officers.

Previous 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.

Current wording

Revenue increased by $13 million, or 4.4%, for the three months ended March 31, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $24 million or 8.1%, primarily due to growth in Ongoing Certification Services revenue of $12 million across most industries due in part to price increases and additional volume. Certification Testing revenue increased $11 million, driven by price increases, continued demand for electrical products and components and component certification testing, and returns on new capacity provided by recent laboratory investments. Acquisition / Divestiture decreased revenue by $7 million, or 2.4%, primarily due to the sale of the payments testing business. FX decreased revenue by $4 million, or 1.4%, primarily due to the relative weakness of the euro, the Korean won and the Chinese renminbi.

Previous 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.

Current wording

Segment operating income increased by $8 million, or 10.7%, for the three months ended March 31, 2025, as compared to the same period in 2024 primarily due to the $24 million increase in organic revenue noted above. This was partially offset by a $14 million organic increase in expenses, primarily due to higher employee compensation of $6 million related to higher costs associated with performance-based incentives and base salary and headcount increases. Depreciation and amortization also increased $3 million primarily related to the completion of additional laboratory capacity.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Revenue increased by $18 million, or 6.3%, for the three months ended March 31, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $22 million, or 7.7%, primarily due to Non-certification Testing and Other Services revenue growth of $13 million in consumer technology driven by increased demand for electromagnetic compatibility testing for automotive and consumer electronics and in retail. Certification Testing revenue increased $5 million due to consumer technology growth and strength in HVAC. FX decreased revenue by $4 million, or 1.4%, primarily due to the relative weakness of the Korean won, the euro, the Japanese yen and the Chinese renminbi.

Previous 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.

Current wording

Segment operating income increased by $9 million for the three months ended March 31, 2025, as compared to the same period in 2024 primarily due to the $22 million increase in organic revenue noted above. This was partially offset by a $13 million organic increase in expenses, primarily due to higher employee compensation of $11 million, related to base salary and headcount increases and higher costs associated with performance-based incentives.

Previous wording

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

Current wording

The following table summarizes the change in Software and Advisory’s revenue and operating loss for the periods presented:

Previous 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.

Current wording

Revenue increased by $4 million, or 4.5%, for the three months ended March 31, 2025, as compared to the same period in 2024. On an organic basis, revenue increased $5 million, or 5.6% driven by demand for software, including retail product compliance.

Previous wording

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 financial and operating measures in assessing the performance of the Company’s business. The key non-GAAP measures the Company uses are Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income margin, Adjusted Diluted Earnings Per Share and Free Cash Flow, which management believes provide useful information to investors. 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.

Current wording

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.

Previous wording

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 the Company believes these measures provide additional information to investors about certain non-cash items and unusual items that are not expected to continue at the same level in the future. Further, the Company believes these non-GAAP financial measures provide a meaningful measure of business performance and provide a basis for comparing its performance to that of other peer companies using similar measures. The Company uses Free Cash Flow as an additional liquidity measure and believes it provides useful information to investors about the cash generated from its core operations that may be available to repay debt, make other investments and return cash to stockholders.

Current wording

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.

Previous wording

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.

Current wording

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, 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, 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.

Previous wording

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.

Current wording

The Company defines Adjusted EBITDA as net income adjusted for depreciation and amortization expense, interest expense, other expense, 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.

Previous wording

The table below reconciles segment operating income to segment Adjusted EBITDA.

Current wording

The table below reconciles segment operating income (loss) to segment Adjusted EBITDA.

Previous wording

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, each net of tax. Adjusted Net Income margin is calculated as Adjusted Net Income as a percentage of revenue.

Current wording

The Company defines Adjusted Net Income as net income adjusted for other expense, net, stock-based compensation expense for equity-settled awards, material asset impairment charges and restructuring expenses, as applicable, each net of tax. Adjusted Net Income margin is calculated as Adjusted Net Income as a percentage of revenue.

Previous wording

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.

Current wording

The Company defines Adjusted Diluted Earnings Per Share as diluted earnings per share attributable to stockholders of UL Solutions adjusted for other expense, net, stock-based compensation expense for equity-settled awards, material asset impairment charges and restructuring expenses, as applicable.

Previous wording

(b)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.

Current wording

(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.

Previous wording

The Company’s primary sources of liquidity are cash and cash equivalents on hand, cash flows from operating activities and cash borrowed under 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 $1,250 million (collectively, the “Credit Facility”). The Company believes the combination of cash and cash equivalents on hand, the generation of cash from operating activities, funds available under the Credit Facility and 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.

Current wording

The Company’s primary sources of liquidity are cash and cash equivalents on hand, cash flows from operating activities and cash borrowed under 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 $1,250 million (collectively, and as amended, the “Credit Facility”). The Company believes the combination of cash and cash equivalents on hand, the generation of cash from operating activities, funds available under the Credit Facility and 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.

Previous wording

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 II Item 1A of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. 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.

Current wording

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.

Previous wording

As of September 30, 2024, the Company had $327 million in cash and cash equivalents and $744 million of unused availability under the Credit Facility and access to an accordion feature permitting an increase in the 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.

Current wording

As of March 31, 2025, the Company had $267 million in cash and cash equivalents and $745 million of unused availability under the Credit Facility and access to an accordion feature permitting an increase in the 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.

Previous wording

Net cash provided by operating activities was $394 million for the nine months ended September 30, 2024, an increase of $53 million compared to net cash provided by operating activities of $341 million for the same period in 2023. The increase was primarily driven by lower payments on the Company’s CSARs during the nine months ended September 30, 2024 compared to the same period in 2023.

Current wording

Net cash provided by operating activities was $154 million for the three months ended March 31, 2025, an increase of $13 million compared to net cash provided by operating activities of $141 million for the same period in 2024. The increase was primarily driven by higher net income due to business performance during the three months ended March 31, 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 first quarter of 2024.

Previous wording

Net cash used in investing activities was $175 million for the nine months ended September 30, 2024, an increase of $57 million compared to net cash used in investing activities of $118 million for the same period in 2023. The increase in cash used in investing activities was primarily driven by a $49 million net decrease in sales of short-term investments, a $23 million increase in capital expenditures and an $8 million increase in cash paid for acquisitions during the current period, partially offset by a $26 million increase in proceeds from divestitures during the current period.

Current wording

Net cash used in investing activities was $50 million for the three months ended March 31, 2025, a decrease of $7 million compared to net cash used in investing activities of $57 million for the same period in 2024. The decrease in cash used in investing activities was primarily driven by a $6 million decrease in capital expenditures.

Previous wording

Net cash used in financing activities was $202 million for the nine months ended September 30, 2024, an increase of $127 million compared to net cash used in financing activities of $75 million for the same period in 2023. The change was primarily driven by a $110 million net increase in repayments of long-term debt during the current period and a $15 million increase in dividends to stockholders of UL Solutions during the current period.

Current wording

Net cash used in financing activities was $135 million for the three months ended March 31, 2025, an increase of $86 million compared to net cash used in financing activities of $49 million for the same period in 2024. The change was primarily driven by a $65 million increase in repayments net of proceeds on the Company’s Credit Facility compared to the same period in 2024 and the timing of a $17 million dividend paid to the non-controlling interest, which was paid in the first quarter of 2025 compared to the second quarter of 2024.

Previous wording

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 and enhancements of existing software. Cash paid for capital expenditures increased $23 million, to $179 million for the nine months ended September 30, 2024, compared to $156 million for the same period in 2023.

Current wording

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 and enhancements of existing software. Cash paid for capital expenditures decreased $6 million, to $51 million for the three months ended March 31, 2025, compared to $57 million for the same period in 2024.

Previous wording

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 $1,250 million (collectively, the “Credit Facility”), consisting of term loans and revolving loan commitments. As of September 30, 2024, the Company was in compliance with all covenants under the Credit Facility.

Current wording

In January 2022, the Company entered into the 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 $1,250 million, consisting of term loans and revolving loan commitments. The Company’s wholly owned subsidiary, UL LLC, a Delaware limited liability company, provides a guaranty of its obligations thereunder. As of March 31, 2025, the Company was in compliance with all covenants under the Credit Facility.

Previous wording

In October 2023, the Company issued $300 million in aggregate principal amount of senior notes due 2028. The notes are senior unsecured obligations of UL Solutions Inc. and are unconditionally guaranteed by UL LLC.

Current wording

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. and are unconditionally guaranteed by UL LLC.