UL Solutions’ (ULS) Blowout Profit Number Comes With A Catch
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On August 4, UL Solutions Inc. (NYSE: ULS ) reported second-quarter results for the period ended June 30, and the headline numbers look almost too good to be true. Net income more than doubled, jumping 161.9% to $254 million, while diluted earnings per share nearly tripled to $1.21. But strip out the one-time item behind that surge, and the underlying business grew at a far more modest pace. That gap between the reported number and the adjusted number is the story investors need to understand. The core business did grow, even setting aside the one-time boost. Revenue rose 5.2% year over year to $816 million, with organic revenue growth running hotter at 6.6%, led by the Industrial and Consumer segments. Adjusted EBITDA climbed 11.2% to $219 million, and the margin on that profit measure expanded 140 basis points to 26.8%, with the Consumer segment doing most of the lifting. Adjusted net income, which strips out the one-time gain, still rose 17.3% to $129 million, and adjusted diluted earnings per share grew from $0.52 to $0.59. Cash generation backed up the growth. For the six months ended June 30, UL Solutions produced $379 million in operating cash flow, up from $301 million a year earlier, and free cash flow rose to $241 million from $208 million. The balance sheet moved in the right direction too. Total debt fell to $303 million as of June 30, after the company made $191...
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