UL Solutions Inc. (ULS) September 2026 Conference Transcript

in different businesses. And by building the capabilities, it's led to margin improvement and productivity.

Understood. Maybe switching to M&A. So you're in the process of closing, I think your first deal since going public, or first deal of size? Of size. Of size of going public, which is obviously the Eurofins acquisition.

But can you tell us how this acquisition aligns with your strategy long term what about this business um excited you um maybe just help us understand the rationale there i like to say if it has the words product tick in it we are going to evaluate it and there have been a number of you know announcements or potential announcements in the marketplace about competitors uh maybe carving out parts of their business or shifts in their focus. So we've had our eye on the Eurofins acquisition for a number of years. This is a business that's a great fit for us because it does exactly what we do in consumer testing around electrical and electronics. They have tended to target a different market, smaller customers that, quite frankly, I don't know that we believed that we could serve profitably and this acquisition proves to us you can serve them profitably uh we're excited then about that opening up you know our offerings to a broader set of what i would say are smaller customers than would be our traditional target markets we're also excited by the european footprint it dramatically expands our presence in europe which is an area that hasn't been as as strong as we would like it to be. And then it also gives us deeper capabilities in medical device testing. They have some accreditations that we don't have, and this will allow us to grow our medical device testing business faster than we otherwise could have.

And then maybe from a broader capital allocation strategy, as you think about returning cash to shareholders, as well as future M&A. How do you evaluate both sides of those?

Yeah, so we're fortunate to generate a large amount of cash flow from operations. And foremost, we want to redeploy that back into the business to continue to generate high returns. Across our portfolio, we have close to a 30% return on invested capital. That includes both organic investments as well as the investments that we've made in M&A so in 2026 we will have a record level of both acquisition related investments and organic investment so we're redeploying that capital better to to serve our customers to continue to advance our mission and grow and evolve the business we're doing that fortunately with a very strong balance sheet so with that investment we're not increasing our our leverage through the through the period will we will evaluate other uses of cash over time balance sheet we pay a cash dividend returning some to shareholders over time but foremost we're focused on continuing to grow the business