UL Solutions Inc Management Meetings Reinforce Sustainable Compounding Growth

Research evidence excerpt

UL Solutions Inc Management Meetings Reinforce Sustainable Compounding Growth

Runway from internal initiatives. ULS continuously looks to improve its

margins, with recent focus surrounding improving utilization of assets and labor

resources. Better and centralized benchmarking is helping drive stronger

performance culture, extracting productivity. Management also seems to view

AI as a driver that could help drive some of the efficiency.

M&A Reflects Focus and Discipline

Focus on products and components testing. While the industry has seen a fair

share of (actual and contemplated) M&A recently, ULS reiterated its strategic focus

on products and component testing, with its legacy in electrical and/or higher-risk

products testing. As such, we don't think ULS is interested in larger transactions

that meaningfully expand its scope (ULS would argue dilutes its core).

Eurofins E&E a prime example. We believe the announced acquisition of

Eurofins E&E business is a prime example of ULS' strategic focus. The company is

selective in its M&A process, but also willing to pursue transactions that

complement its products/components focus. The multiple paid (14-

15X synergized) is also higher than smaller bolt-ons, but evidences such

willingness if strategic assets emerge.

Divestitures, pruning also highlight focus. Recent divestiture of EHS software

and pruning of smaller, non-strategic businesses also highlight ULS' focus on

leading in core products/components TIC. We think ULS has a clear view of and is

keenly focused on what it does best, and portfolio actions showcase this focus.

Valuation:

Our $110 price target is based on a ~23X EV/EBITDA multiple applied to our NTM+1

(twelvemonths ended March 2028) EBITDA estimate of $972m.

UL Solutions Inc 24 June 2026 ab 2