Executive Summary

Q2 2025 delivered record revenue of $776M (+6.3% y/y, +5.5% organic) and strong profitability with Adjusted EBITDA of $197M (25.4% margin, +170 bps y/y), while GAAP diluted EPS fell to $0.45 on higher tax rate and lapping a 2024 divestiture gain .
Against S&P Global consensus, ULS beat revenue ($776M vs $771.5M*) and Primary EPS ($0.52 vs $0.47*); results affirm full-year guidance (mid-single-digit organic growth, ~24% Adj. EBITDA margin, capex 7–8% of revenue, ~26% ETR) .
Industrial led with 7.6% revenue growth and a 34.6% Adjusted EBITDA margin; Consumer grew 5.6% with margin improvement; Software & Advisory grew 4.3% but saw advisory softness offsetting software strength .
Management cited tariff-related order timing (April/May soft, June pickup), continued pricing progress, and megatrends (energy transition, electrification, data centers/AI) as core drivers; guidance maintained amid tougher H2 comps .

What Went Well and What Went Wrong

What Went Well

Record Q2 revenue and double-digit Adjusted EBITDA growth; CFO: “expanded our margin by 170 basis points to 25.4%, the highest since becoming a public company” .
Industrial segment strength with operating leverage; Adjusted EBITDA +20.6%, margin up to 34.6% on energy, automation, and capacity additions .
Strategic capacity and product expansion: European battery lab, HVAC testing, and new immersion cooling fluid safety certification for data centers supporting AI growth .
CEO: “Our recurring revenue streams, robust cash flow generation and ability to capitalize on megatrends position us well…” .

What Went Wrong

GAAP net income and diluted EPS declined y/y (NI $97M vs $106M; diluted EPS $0.45 vs $0.50) due to higher tax rate and lapping a $25M non-operating gain from a 2024 divestiture .
Software & Advisory margin compressed (15.3% vs 16.0%) with advisory weakness (U.S. renewables financing and healthy buildings) and higher compensation .
April/May demand softness tied to tariff uncertainty; Consumer organic growth moderated from Q1’s 7.7% to 4.7% in Q2 .

Financial Results

Headline Metrics – Trend and Estimates Comparison

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$739	$705	$776
Revenue YoY %	+8.0%	+5.2%	+6.3%
Diluted EPS (GAAP)	$0.40	$0.33	$0.45
Adjusted Diluted EPS	$0.49	$0.37	$0.52
Net Income Margin %	11.5%	10.1%	12.5%
Adjusted EBITDA ($USD Millions)	$169	$161	$197
Adjusted EBITDA Margin %	22.9%	22.8%	25.4%

Estimates vs Actuals (S&P Global)

Measure	Q4 2024	Q1 2025	Q2 2025
Revenue Estimate ($USD)	$726.5M*	$704.2M*	$771.5M*
Revenue Actual ($USD)	$739M	$705M	$776M
Primary EPS Estimate ($USD)	$0.376*	$0.313*	$0.473*
Primary EPS Actual ($USD)	$0.49*	$0.37*	$0.52*

Note: Values retrieved from S&P Global.*

Key implications: Q2 revenue beat by ~$4.5M and Primary EPS beat by ~$0.05; similar beats occurred in Q1 and Q4, supporting guidance confidence .

Segment Breakdown

Segment	Q4 2024 Revenue ($M)	Q4 Adj. EBITDA Margin %	Q1 2025 Revenue ($M)	Q1 Adj. EBITDA Margin %	Q2 2025 Revenue ($M)	Q2 Adj. EBITDA Margin %
Industrial	$328	32.0%	$308	32.5%	$338	34.6%
Consumer	$309	14.6%	$304	15.8%	$340	19.1%
Software & Advisory	$102	18.6%	$93	14.0%	$98	15.3%

KPIs and Balance Sheet

KPI	Q4 2024	Q1 2025	Q2 2025
Net Cash from Ops ($M)	$524 FY’24	$154 Q1	$301 1H’25
Free Cash Flow ($M)	$287 FY’24	$103 Q1	$208 1H’25
Capex ($M)	$237 FY’24	$51 Q1	$93 1H’25
Total Debt ($M)	$747 (12/31/24)	$657 (3/31/25)	$612 (6/30/25)
Cash & Equivalents ($M)	$298 (12/31/24)	$267 (3/31/25)	$272 (6/30/25)
Dividend per Share	$0.25 Q4 2024 cash paid	$0.13 in Q1	$0.13 declared for Sept. 8

Guidance Changes

Metric	Period	Previous Guidance (Q1)	Current Guidance (Q2)	Change
Organic Revenue Growth (constant FX)	FY 2025	Mid single digit	Mid single digit	Maintained
Adjusted EBITDA Margin	FY 2025	~24%	~24%	Maintained
Capex (% of Revenue)	FY 2025	7%–8%	7%–8%	Maintained
Effective Tax Rate	FY 2025	~26%	~26%	Maintained
Capital Allocation	FY 2025	Pursue acquisitions/portfolio refinements	Continue acquisitions/portfolio refinements	Maintained
Dividend	Quarterly	$0.13 (paid Q1)	$0.13 declared Aug 19	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs & Order Timing	Q4: Pull-forward in ongoing certification (+1% consolidated growth impact) ; Q1: Consumer benefited ahead of tariffs, expected moderation	April/May soft, June pickup; customers building confidence; Industrial power/automation strong; Consumer tech/retail rebound	Short-term timing effects normalizing; demand resilient
AI/Data Centers	Q4: Data centers power demand, electrification theme	New immersion cooling fluid certification; data center construction market +12% CAGR; positioning across ~70 standards	Rising opportunity; broader TIC footprint
Pricing & CPQ	Q4: Even mix of price/volume in testing streams	Even contributions price vs volume; CPQ/process analytics, pricing CoE advancing	Sustained pricing discipline
Software & Advisory	Q4: Software acceleration; retail product compliance & ESG momentum	Software +6% organic; advisory softness (renewables financing, healthy buildings); ISSB/CSRD drivers; ULTRUS releases in July	Mixed: software improving, advisory soft
FX & Tax	Q4: 2025 FX headwind ~1% revenue; ETR to ~26% (OECD Pillar Two)	FX offset largely by local expense; ETR ~26% reaffirmed	Known headwind; managed
Capacity Expansions	Q4: Battery labs (Auburn Hills, Korea), Mexico expansions	Europe battery lab (Aachen), HVAC in Italy; ongoing lab investments in Korea/Japan/Mexico/Northbrook	Continued targeted investments

Management Commentary

CEO: “Our record second-quarter revenue reflects the resilience and durability of our business model and our strategic positioning in high-growth markets.” .
CFO: “We achieved 5.5% organic revenue growth, 13.9% year-over-year Adjusted EBITDA growth, and expanded our margin by 170 basis points to 25.4%, the highest since becoming a public company.” .
CEO on AI/data centers: “TIC services for data centers represents an important large and growing market… we are very well positioned to capitalize on the rapid growth of data centers by helping address the safety, sustainability and security concerns…” .
CFO on guidance posture: “We face increasingly challenging comparisons in the 2025 versus the 2024… we are pleased to affirm our 2025 full year outlook.” .

Q&A Highlights

Tariffs and client behavior: Pull-forward in Industrial (Q4) and Consumer (Q1); moderation in Q2; June improvement as clarity increased; retesting/recertification often required with redesigns or manufacturing moves .
Segment margins runway: Opportunity across segments; Industrial margin expansion supported by operating leverage and lapping prior-year IPO/M&A expenses .
Pricing contribution: Even mix of price and volume in testing; continued CPQ and pricing CoE rollout to drive value-based pricing .
Advisory softness: U.S. renewables financing and commercial real estate pressure; software organic +6%, ESG demand expected to pick up with evolving EU CSRD/ISSB .
FX & tax: FX headwind largely offset by local costs; ETR ~26% due to OECD Pillar Two .

Estimates Context

Q2 2025 beats: Revenue $776M vs $771.5M*; Primary EPS $0.52 vs $0.47* — reflecting stronger organic growth and operating leverage, especially in Industrial. Bold beat on EPS and revenue supports guidance maintenance.
Prior quarters: Q1 2025 revenue $705M vs $704.2M* and Primary EPS $0.37 vs $0.31*; Q4 2024 revenue $739M vs $726.5M* and Primary EPS $0.49 vs $0.38* — consistent positive variance pattern.
Note: Values retrieved from S&P Global.*

Where estimates may need to adjust: Advisory softness and higher ETR could cap GAAP EPS upside, but sustained Industrial/Consumer momentum and pricing discipline may prompt upward revisions to revenue/adjusted margin trajectories .

Key Takeaways for Investors

Q2 print was clean: strong top-line and margin expansion; beats vs S&P Global on revenue and EPS; guidance maintained despite tougher H2 comps — constructive for near-term sentiment .
Industrial execution remains the core engine (operating leverage, capacity additions, energy/automation) with margin gains likely to persist, supporting consolidated margin trajectory .
Data center/AI demand is a multi-year catalyst; ULS is broadening services (immersion cooling fluid certification) to capture TIC wallet share across ~70 standards .
Pricing/process upgrades (CPQ, analytics, CoE) continue to compound price realization without noticeable customer pushback, underpinning margin resilience .
Advisory softness is a watch item; software momentum (ULTRUS enhancements, ISSB/CSRD alignment, Japan partnership with Fujitsu) offsets and positions S&A for medium-term recovery .
Balance sheet strength (deleveraging, FCF growth) enables continued organic capex (7–8% of revenue) and strategic M&A while funding dividends ($0.13/qtr) .
Near-term trading implication: Expect constructive reaction to beats and affirmed guide; medium-term thesis grounded in secular megatrends (electrification, energy transition, digitalization) and ongoing productivity-driven margin expansion .

UL Solutions Inc. (ULS)·Q2 2025 Earnings Summary