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    ULS
    Earnings call· Jun 2026(Q2 FY26)

    UL Solutions Q2 FY26 earnings call ULS

    Aug 4, 2026 Source

    Executive summary

    UL Solutions Q2 FY26 — Record Revenue and Strong Organic Growth

    UL Solutions delivered a strong Q2 FY26, achieving record revenue and significant organic growth, driven by strategic execution and alignment with durable mega trends like energy transition and electrification. The company expanded adjusted EBITDA margins and EPS, reflecting operating leverage and productivity initiatives, despite a dynamic operating environment and increased performance-based compensation costs. Management remains confident in its full-year outlook, continuing to invest in growth opportunities and portfolio optimization.

    Highlights

    5

    • Consolidated revenue grew 5.2% to $816 million, including organic revenue growth of 6.6%.

    • Adjusted EBITDA grew 11.2% to a quarterly record of $219 million, with adjusted EBITDA margin expanding 140 basis points to 26.8%.

    • Adjusted diluted earnings per share increased 13.5% to $0.59.

    • Free cash flow was up 19.8% year-over-year to $436 million on a trailing 12-month basis, with margin improving to 13.9%.

    • Cost of revenue as a percentage of revenue improved 190 basis points year-over-year.

    Concerns

    4

    • Adjusted EBITDA margin in Industrial segment decreased 10 basis points to 32.3% due to higher employee compensation costs tied to performance-based incentives.

    • Risk & Compliance segment revenues decreased 17.5% year-over-year to $52 million due to the divestiture of the EHS software business.

    • Advisory business within Industrial segment experienced headwinds, particularly in solar and wind.

    • Selling, general and administrative expenses as a percentage of revenue increased 130 basis points, primarily reflecting higher employee compensation and professional fees.

    Guidance & targets

    9
    CategoryTargetConfidence
    2026 consolidated organic revenue growth
    mid-single-digit range
    high materiality
    High
    FX impact on revenue
    negligible
    low materiality
    High
    2026 adjusted EBITDA margin improvement
    approximately 27%
    high materiality
    High
    Full-year 2026 effective tax rate
    approximately 26%
    medium materiality
    High
    Full-year 2026 capital expenditures
    approximately 8.5% of revenue
    medium materiality
    High
    Restructuring plan completion
    by the end of the first quarter of 2027
    medium materiality
    High
    Restructuring plan remaining pretax charges
    approximately $3 million
    low materiality
    High
    Eurofins Electrical & Electronics business acquisition closing
    in the fourth quarter of 2026
    high materiality
    High
    DQS Holding GmbH sale closing
    in the second half of 2026
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Industrial
    Growth across ongoing certification services and certification testing, strength in materials and energy and automation. Headwinds in Advisory business (solar and wind exposure).
    Organic revenue growth: 7.2%Adjusted EBITDA: $130 millionAdjusted EBITDA growth: 7.4%Adjusted EBITDA margin change: -10 bps
    		$402 million7.8%—32.3%
    Consumer
    Driven by strength in certification testing in consumer technology, non-certification testing and other services in retail, and ongoing certification in appliances and HVAC. Favorable business mix from exiting lower-margin service lines. Prior-year quarter experienced tariff-related uncertainty affecting new product launches.
    Organic revenue growth: 6.2%Adjusted EBITDA: $77 millionAdjusted EBITDA growth: 24.2%Adjusted EBITDA margin change: +310 bps
    		$362 million6.5%—21.3%
    Risk & Compliance
    Decline reflects the divestiture of EHS software business (closed April 1). Organic growth driven by increased demand for supply chain insights for the retail industry. Benefit of a leaner cost structure on a smaller revenue base.
    Organic revenue growth: 4.8%Adjusted EBITDA: $12 millionAdjusted EBITDA growth: -14.3%Adjusted EBITDA margin change: +90 bps
    		$52 million-17.5%—23.1%

    Operational metrics

    20
    Consolidated Revenue
    $816 million+5.2% YoY
    Q2 FY26
    Consolidated Organic Revenue Growth
    6.6%
    Q2 FY26
    Adjusted EBITDA
    $219 million+11.2% YoY
    Q2 FY26

    Quarterly record

    Adjusted EBITDA Margin
    26.8%+140 bps YoY
    Q2 FY26
    Adjusted Net Income
    $129 million+17.3% YoY
    Q2 FY26
    Adjusted Diluted EPS
    $0.59+13.5% YoY
    Q2 FY26
    Operating Income
    $150 million+7.9% YoY
    Q2 FY26
    Free Cash Flow Margin
    13.9%up from 12.3% YoY
    TTM June 30, 2026
    Capital Expenditures
    $138 millionvs $93 million prior year
    H1 FY26
    Cash and Cash Equivalents
    $434 million
    June 30, 2026
    Total Debt
    $303 milliondown from $494 million at end of 2025
    June 30, 2026
    Net Repayments on Revolving Credit Facility
    $191 million
    Q2 FY26
    Quarterly Dividend
    $0.145 per share
    Q2 FY26

    Consistent with increased dividend announced at start of year

    Total Dividend Paid
    $29 million
    Q2 FY26
    Restructuring Plan Revenue Reduction
    approximately 1%
    FY26

    Full year impact from business exits

    Revenue Reduction from Business Exits
    $6 million
    Q2 FY26

    About $5 million in Q1 FY26; almost all in Consumer segment

    Employee Compensation Expense
    $13 millionYoY increase
    Q2 FY26

    Organic basis, due to performance-based incentives (annual bonus plan and performance stock units)

    Stock-Based Compensation Expense
    $10 millionYoY increase
    Q2 FY26

    Largest factor in increase for adjusted EBITDA add-back, based on performance related to consolidated revenue and operating income

    Professional Fees
    $7 millionYoY increase
    Q2 FY26

    Organic basis, due to volume of activities and M&A support

    Certification Testing Growth
    over 10%
    Q2 FY26

    Primarily volume-driven

    Product announcements

    1
    ProductTypeDetails
    AI-powered capability within ULTRUS UL 360launch

    Deals & partnerships

    3
    EurofinsAcquisition of Electrical & Electronics business

    Expected to close in Q4 2026.

    DQS Holding GmbHSale of UL Solutions' position in DQS

    Proceeding as expected, on track for closing in H2 2026.

    EHS software businessDivestiture of EHS software business

    Closed on April 1, 2026. This business produced $14 million in revenue in Q2 FY25.

    Risks & headwinds

    4
    Higher employee compensation costs tied to performance-based incentivesQ2 FY26

    Adjusted EBITDA margin in Industrial segment decreased 10 basis points to 32.3%

    Mitigation: Part of pay-for-performance orientation, offset by operating leverage and productivity initiatives.

    Headwinds in Advisory businessQ2 FY26, expected to continue into H2

    Drag on growth in Industrial segment, particularly in solar and wind exposure.

    Mitigation: Management expects overall Industrial segment strength to continue.

    Dynamic operating and geopolitical environmentOngoing

    Not quantified, but noted as presenting important considerations for customers.

    Mitigation: Benefit from durable secular trends, complex product ecosystems, faster innovation cycles, and focus on safety science expertise.

    Increased SG&A expensesQ2 FY26

    SG&A as a percentage of revenue increased 130 basis points

    Mitigation: Primarily due to performance-based incentives and professional fees related to M&A and other projects.

    What to watch in Q3 FY26

    5

    Eurofins E&E Acquisition Closing

    Q4 FY26
    CurrentPending
    TargetClosed

    Why it matters

    Completion of this acquisition is a key part of the company's portfolio optimization strategy and will impact future financial results.

    We continue to expect to close the acquisition of Eurofins' Electrical & Electronics business in the fourth quarter of 2026

    Q&A highlights

    6

    Asked about the second-half margin cadence given strong first-half expansion and confidence in the full-year guide.

    Management affirmed confidence in the full-year adjusted EBITDA margin guide of approximately 27%, noting that the first-half performance allowed them to sharpen the guidance. Ryan Robinson mentioned that the second-half cadence would be similar between Q3 and Q4, with some integration-related expenses for the Eurofins acquisition and higher performance-based compensation offsetting continued operating leverage.

    “We're making progress on many near-term items in our portfolio, which include some acquisition costs, and together with other considerations in our business, led us to confirm the outlook.”

    asked by Stephanie Benjamin Moore · answered by Ryan Robinson

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance and Strategic Execution

    UL Solutions delivered a strong Q2 FY26, achieving record revenue of $816 million, with 6.6% organic growth and 11.2% adjusted EBITDA growth to $219 million, expanding margins by 140 basis points. This performance reflects operating leverage, higher employee productivity, and benefits from the ongoing restructuring plan, even while absorbing planned revenue reductions from business exits. The company emphasizes its focus on building a more scalable and efficient organization.

    02

    Product Innovation and Certifications

    The company launched an AI-powered capability within ULTRUS UL 360 to assist organizations in calculating product carbon footprints for Scope 3 reporting, addressing evolving regulatory demands. Additionally, UL Solutions issued its first hazardous location robotic certification for the new UL 6260 standard to ExRobotics, supporting the industry shift towards robotic inspection in high-risk environments.

    03

    Global Expansion and Capacity Investment

    UL Solutions opened a new Automotive Technology and Innovation Center in Toyota City, Japan, to support the automotive market's shift towards electrified, connected, and software-driven vehicles, offering advanced EMC testing for high-voltage and high-speed rotational systems. This expansion is part of broader investments in laboratory capacity globally, including a large fire lab in Northbrook, to meet customer demand and support emerging technologies.

    04

    Portfolio Optimization and Capital Deployment

    The company is on track to close the acquisition of Eurofins' Electrical & Electronics business in Q4 2026 and the sale of its position in DQS in H2 2026, aligning with its strategy to sharpen its portfolio. These actions, alongside disciplined capital allocation, aim to fund growth opportunities and maintain a strong balance sheet, with $191 million in net repayments on its revolving credit facility in the quarter.

    05

    Resilience in a Dynamic Environment

    Despite geopolitical complexities, UL Solutions continues to benefit from durable secular trends such as the energy transition, electrification, increasing automation, and the growth of AI data centers. These trends drive demand for safety science expertise, testing, and certification services, reinforcing the company's value proposition and strategic alignment.

    06

    Industry Recognition for Safety Leadership

    UL Solutions was awarded the prestigious Robert W. Campbell Award from the National Safety Council, recognizing its commitment to workplace safety leadership and embedding safety as a core cultural value. This honor affirms the company's mission of advancing safety, from its operations to the solutions it delivers.

    AI-generated summary of the company’s earnings call. Not investment advice.