UL Solutions Inc.

1. Significant Accounting Policies

Description of Business

UL Solutions Inc. (together with its consolidated subsidiaries, “UL Solutions” and the “Company”) 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.

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 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 expense 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.

2. Earnings Per Share

Basic and diluted earnings per share were calculated as follows:

3. Revenue

The table below summarizes the major service categories from which the Company derives its revenues:

Contract Balances

The revenue recognized during the three and six months ended June 30, 2025, which was included in contract liabilities at December 31, 2024, amounted to $51 million and $87 million, respectively. The revenue recognized during the three and six months ended June 30, 2024, which was included in contract liabilities at December 31, 2023, amounted to $49 million and $79 million, respectively.

Remaining Performance Obligations

At June 30, 2025, the Company estimates that $203 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 61% 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 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 six months ended June 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:

(a)See Note 4.

6. Fair Value of Financial Instruments

The carrying amount and fair value of the Company’s debt was as follows:

The fair value of the Company’s term loans reflects current market conditions and is 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.

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 June 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 $168 million and $193 million and liabilities of $83 million and $87 million, inclusive of intercompany eliminations, were included in the Company’s Condensed Consolidated Balance Sheets at June 30, 2025 and December 31, 2024, respectively.

8. Goodwill

Changes in the carrying amount of goodwill for the six months ended June 30, 2025 were as follows:

(a)Net of accumulated impairment losses of $137 million as of June 30, 2025 and December 31, 2024.

9. Intangible Assets

The following tables summarize intangible assets:

Intangible asset amortization expense, reported within selling, general and administrative expenses within the Condensed Consolidated Statements of Operations, was $3 million for both of the three month periods ended June 30, 2025 and 2024, and was $6 million for both of the six month periods ended June 30, 2025 and 2024.

10. Pension

The components of net periodic benefit cost for the Company’s U.S. defined benefit pension plan were as follows:

For the three and six months ended June 30, 2025, expenses related to various defined contribution plans were $14 million and $29 million, respectively. For the three and six months ended June 30, 2024, expenses related to various defined contribution plans were $13 million and $25 million, respectively.

11. Income Taxes

The effective tax rate for the three and six months ended June 30, 2025 was 22.4% and 23.3%, 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 net of related foreign tax credits, and Section 162(m) limitations on current year compensation deductions of certain executive officers, partially offset by excess tax benefits associated with stock-based compensation deductions.

Several countries in which the Company operates have enacted aspects of the Organisation for Economic Co-operation and Development’s Pillar Two rules, which impose a 15% corporate minimum tax, into their local legislation effective either January 1, 2024, or January 1, 2025. The effective tax rate for the three and six months ended June 30, 2025 of 22.4% and 23.3%, respectively, was higher than the effective tax rate for the three and six months ended June 30, 2024 of 20.9% and 19.8%, 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 six months ended June 30, 2024 was 20.9% and 19.8%, respectively, which 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 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 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 is currently assessing the impact the OBBBA may have on its consolidated financial statements.

12. Long-Term Debt

The Company’s outstanding debt consisted of the following:

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 $1,250 million (collectively, and as amended, the “Credit Facility”), 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 June 30, 2025, the Company was in compliance with all covenants under the Credit Facility. The interest rate on the term loans was 5.55% as of June 30, 2025 and 5.58% as of December 31, 2024.

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. and are unconditionally guaranteed by UL LLC. Borrowings under the notes bear a fixed interest rate of 6.500% per annum.

13. Accumulated Other Comprehensive Loss

The following tables summarize the changes in accumulated other comprehensive loss.

14. Stock-based Compensation

Stock-based compensation expense was as follows:

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 six months ended June 30, 2025, the Company incurred expenses of $6 million and $11 million, respectively, to access the library of standards owned and maintained by UL Standards & Engagement. In the three and six months ended June 30, 2024, the Company incurred expenses of $5 million and $10 million, respectively, to access the library of standards owned and maintained by UL Standards & Engagement.

In the three and six months ended June 30, 2025, the Company declared and paid regular cash dividends to stockholders, resulting in payments of $18 million and $36 million to UL Standards & Engagement, respectively. In the three and six months ended June 30, 2024, the Company declared and paid regular cash dividends to stockholders, resulting in payments of $20 million and $45 million to UL Standards & Engagement, respectively.

17. Segment Information

The following table provides revenue, significant segment expenses and operating income, by segment for the three months ended June 30, 2025 and 2024:

The following table provides revenue, significant segment expenses and operating income, by segment for the six months ended June 30, 2025 and 2024:

Capital expenditures of the Company’s segments were as follows:

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.