UL Solutions Expands Margin as Organic Growth Accelerates
Second-quarter adjusted EBITDA rose 11.2% to $219 million as margin reached 26.8%.
UL Solutions (ULS), the safety-science company, posted faster organic growth and wider profitability in the second quarter, even as reported revenue growth slowed from the prior period.
Revenue rose 5.2% from a year earlier to $816 million, compared with 7.5% growth in the first quarter. Organic growth accelerated to 6.6% from 5.7%, while revenue increased 7.7% sequentially. Adjusted diluted earnings rose 13.5% to $0.59 a share from a year earlier, up from $0.50 in the first quarter.
Organic growth contributed $51 million of the $40 million year-over-year revenue increase, and favorable currency added $3 million. A divestiture reduced revenue by $14 million.
Industrial revenue increased 7.8% to $402 million, including 7.2% organic growth, while Consumer revenue rose 6.5% to $362 million, including 6.2% organic growth. Certification Testing and Ongoing Certification Services supplied much of the momentum, growing 10.2% and 8.0%, respectively.
Consumer led the improvement in profitability. The segment’s adjusted EBITDA rose 24.2% to $77 million and its margin widened 310 basis points to 21.3%. Industrial adjusted EBITDA increased 7.4% to $130 million, while its margin edged down 10 basis points to 32.3%.
Risk & Compliance Software revenue fell 17.5% to $52 million after the Employee Health and Safety software divestiture removed $14 million of revenue, though organic growth was 4.8%. The segment’s adjusted EBITDA declined 14.3% to $12 million, while margin increased 90 basis points to 23.1% as costs fell alongside the divested business.
GAAP net income increased to $254 million from $97 million a year earlier, largely reflecting a $191 million gain on the software-business sale. Adjusted net income, which excluded that gain, rose 17.3% to $129 million and its margin expanded 160 basis points to 15.8%. First-half free cash flow increased 15.9% to $241 million as higher capital spending tempered a 25.9% rise in operating cash flow.
UL Solutions’ full-year outlook calls for mid-single-digit constant-currency organic revenue growth and an adjusted EBITDA margin of about 27.0%. The company expects its roughly $670 million acquisition of Eurofins’ Electrical & Electronics business to close in the fourth quarter and add about $200 million of 2026 revenue; management excluded the transaction from the current organic-growth and margin outlook.