UL Solutions tops revenue estimates in first quarter as a public company

By Ciara Linnane

Profit is flat in the first quarter but company is expecting to benefit from the 'electrification of everything'

UL Solutions Inc., a testing, inspection and certification company, on Monday reported a flat profit but topped revenue estimates in its first earnings report since it completed its initial public offering in April.

The Northbrook, Ill.-based company (ULS) had net income of $56 million, or 28 cents a share, for the quarter, compared with $55 million, or 28 cents a share, in the year-earlier period. Revenue rose to $670 million from $629 million.

The FactSet consensus was for EPS of 28 cents and revenue of $668 million.

Looking ahead, the company is expecting full-year mid-single-digit constant currency organic revenue growth to continue. It expects to benefit from the "electrification of everything" trend as well as digitalization and sustainability.

The divestiture of its industrial payments testing business is expected to reduce revenue by about $40 million annually.

By segment, revenue at its industrial business rose to $295 million in the quarter from $270 million a year ago, driven by strong demand for electrical products, renewable energy and component certification testing, as well as increased laboratory capacity.

Consumer segment revenue rose to $286 million from $275 million, and software and advisory revenue rose to $89 million from $84 million.

The company ended the quarter with $344 million in cash, up from $315 million at year-end.

UL Solutions raised $964 million in its IPO at a valuation of $5.6 billion.

The company traces its roots back to 1894 and the World's Fair in Chicago, where founder William Henry Merrill Jr. was sent by his employer, the Boston Board of Fire Underwriters, to assess fire risks.

That work led him to form Underwriters Electrical Bureau to test and certify the safety of products that use electricity.

The original company was set up as a nonprofit, but that changed in 2012, when it was split into a for-profit entity called UL Solutions, which provides testing and certification, and two nonprofits called UL Research Institute and UL Standards & Engagement.

The stock has gained 9.9% in the month to date, while the S&P 500 has gained 6.8%.

-Ciara Linnane

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05-20-24 0745ET

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