UL Solutions (ULS) 20 May 242024 Q1 Earnings call transcript

Greetings, and welcome to the UL Solutions First Quarter 2024 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Mitchell Ji, Senior Vice President, Corporate Finance at UL Solutions. you. Thank

begin. may You

everyone earnings first company. call Welcome call, XXXX our first as to you. quarter our earnings Thank a public

me Financial Scanlon, Ryan Jenny today Executive Joining and Officer; our Robinson, Officer. Chief Chief our are

During of earnings on which our referring presentation, at website today, ul.com. our Relations is section we discussion Investor be to will the our available

Our earnings release is also available on the website.

the statements safe like material about today's Act substantial These call, from discuss implied or things, of forward-looking operations the risks, of on and those could harbor forward-looking Reform remind the Solutions other in we of that within involve Securities everyone to statements. meaning of and I a forward-looking would that that include, factors prospects the to Litigation statements way statements uncertainties results Private provisions UL among cause expressed estimates results may actual XXXX. may other and in differ

Slide Please the presentation on see hereof forward-looking and the as Form any described except forward-looking factors concerning earnings the the reflect no well to by in or disclaimers statements events risk earnings assume required report to that obligation as disclosure in XX-Q. on after quarterly release law. statements update are our statement X our circumstances of We as the date

GAAP presentation. also presentation earnings can measure financial be comparable reconciliation includes to found most the Today's references the the to A non-GAAP measures. to in appendix financial

like now would I the over Jenny. that, turn With call to to

anticipate leading our joining execution to important our mega start industry XXXX, outstanding to thanks ability from from define Good strong that the morning, are driven who everyone, us. today. We tailwinds for a had trends and team by our

safer achieving of expected our working shareholder newly public for mission returns fuel company. results world while a by a attractive Our

Solutions for free global profile, UL profitability a During services growth, a with financial long-term presented durable cash as business generation. positioned well-established company process, expanded we our IPO and

well bode quarter performance. consistent for to and seems results these our be expect our We first future

topics have X call. for today's I

provide this overview call UL our that I'll Solutions. a brief first public company, given earnings of First, is as a

highlight key first our strong performance. I'll Second, to elements contributing quarter

key from the growth Third, quarter. I'll and highlight some achievements customer

Finally, public position financial our as strong company. emphasize and capital allocation a plans I'll our reiterate

you know many don't. of story, our some While

start with UL an X on let's So Slide of Solutions. overview

XXXX. a organized are business on grown Slide leading independent around the testing, XX,XXX at we focused individuals employing global and across CAGR product more which We businesses, certification, X, company, services X have see since X a you talented segments, On have world. can inspection than X.X%

X TIC comprised and the business, called Our and is testing, inspection of industry industrial by consumer. affectionately certification our largest segments,

customers' quickly product solutions our systems manufacture Our and safety, distribute security and TIC on helping new focus array to of on and them the We products required development and product customers, those business provides kick market extensive And processes. with take wide risks. a fewer safely. to sustainability new ecosystems products innovation to

extends power third business second Our data. unleashing of is and TIC and the our by and business advisory, value complements the proposition which the Software of segment

services, Non-certification can you certification and finally, UL see portfolio at services. key service testing Software on X. Ongoing you focus like We categories: themes, on service would Certification services; integrated Our other Slide X which to testing, X spans and Solutions

have believe in TIC company still growth We are by in share of product market largest First, industry. fragmented as growing, that we the a mission-driven revenue. yet X% we large, consolidating highly global a XXXX,

pressing solve their and safety science most to that dedicated safety, Second, will ESG. Solutions sustainability we are UL challenges. to and security help Customers know apply science

Third, our deep. relationships customer run

in our XXXX, our XX%. and a top customers customers Our are. XX,XXX-plus important customers is industries XXX of retention loyal span over more had even we Amongst rate XX how

both Software, are generated being result model of customer services these from business in XX% revenue and streams. our recurring which in Ongoing of revenue relationships Our certification

a requirements. entry Fourth, leader an we significant are in has that industry global

competitive built their have number products of XXX the starts countries. in moat to over that accreditations vast sell a that who with deep moat attract and wide to customers and want We allow us

are balance and sheet are flow, in to we employ Backed healthy and We strong. provides our our generate that a capital we by to returns deploy we strong Finally, our shareholders. cash disciplined strategy fiscally allocation ambitions. fund positioned free for how well capital, flexibility aim

and leader, and global company's products we sustainability. manufacture their safety strengthen products, help security science our the As customers enhance safer product their

markets. evolving investing are in people our We enhance for in and global relentless pursuit, to risks continuously in that capabilities the processes our

present me my Now the thoughts quarter. on let

robust performance not business, all could have led of quarter the in achieved execution achieved growth first focused Our organic our am all strength whom without our results regions. experienced these truly I for We organic, demonstrated revenue and bolstered grateful. team, by by segments

our Our shapes centricity, employees' safety, relentless emphasis and and on culture business. customer science our enhances

of quarter experienced Our million. consumer of and Industrial for organic We trends resulting our team strength in USD delivered improving in revenue in our first particular segment. growth segment XXX the X.X%,

experienced company, partially Importantly, impacts. by which experienced geographic reality all we we offset growth the across FX that all segments regions, as was X in a global

XX% margin Adjusted EBITDA adjusted points. and expanded EBITDA by grew basis XXX

million work hard in XX% adjusted net of increase income free a cash Our and in $XX resulted generated flow.

of achievements energy a X, let quarter. few propelled The me transition growth. Slide on megatrends Next, this highlight

automotive online latest solutions States, UL fully United This battery industrial technology China facility laboratories in with this and safety customers customer-centric EV in enjoys new to battery came large provides Korean other Europe and Our access the laboratory our Korean battery improved unifying technology, advanced the solutions. quarter.

processes license speed on us simulation This remarkable relies digital a implications model. to Siemens, that innovation and accounts, product customers' wide-ranging accomplishment our market. has potentially for that future our product of One global achieve and with dramatically improve largest certification first could worked to

of investment important This new our the is extended and America. our sector serve North segment, capacity provides X retailers is lab also lab and with retail United in greater the lab A opened In Retail of largest the history. our laboratories XXX,XXX square space the most advanced foot team retail consumer and North in to retail Arkansas. Excellence in consumer customers. in testing our Center States our capabilities serves most American in This products our

As software efforts across offerings part our Ultrus, industries. and a customers and brand unifies better our has new broadened brand. flagship meet already portfolio software launched need generation Since the our funnel. ongoing can and we've around new over what and our chain challenges. solutions. help our awareness this serves integrated with of bold Ultrus customers offerings XX,XXX that regulatory our eliminate helped new cumbersome opportunity of understand how we align supply want, lead software to Ultrus software to world Bringing customers our and January, they revenue-generating our has point under and customers individual strategy clarity to XX% sustainability

Finally, approach generation allocation cash allocation. let to We capital our and history a boast strong capital comment on flow philosophy. of disciplined having me sheet, robust balance a

us position deploy foundation a variety and shareholder of expect history we Our to in ways that generate capital returns. to

report today's analyze in in we invest As to highlights, the constantly options business. segment we

We productivity shortage of ideas for CapEx and no extends customers' revenue have organic growth. our our our that augments supports innovation,

M&A our will disciplined enhance or a evaluate continue to manner, market-leading set global extend We of ensuring our capabilities investments opportunities a our in footprint. focused

shareholders. and grade with strong conservative We to sheet leverage and are ratings, to committed balance investment maintaining capital expect return we a to excess

plans. greater on detail call me turn our to the our provide who Ryan, will let and over results Now

report I to and hello, performance. strong want cash release provide generation. our segment segments Thank in team in company, that continuation quarter. first adjusted detail as the encouraging you, a and financial thank It's our see geographies. all to for growth, Jenny, I discuss members first of all to our across growth proud of occurred We're on delivering expansion a our strong our then solid everyone. of will of another more results, all public EBITDA our

including details was in growth Now over strength industrial me on quarter. the million dive the year $XXX particular were organic EBITDA X.X% let of The of quarter XX.X% strength an year-over-year industrial into growth. of delivered which XX% Adjusted prior for and million, in consumer. improvement quarter reflected the Consolidated revenues the X.X%. the of $XXX organic segment, increase up

net Adjusted in expenses. and XXX segment the from on strength was XX.X%, incentive a consumer year Adjusted EBITDA ago reduction expansion period up quarter of points first or from adjusted or per $X.XX share, basis the million up margin a quarter long-term in diluted particular share first the same from $XX XX.X% million the for diluted XXXX. was $XX $X.XX income per adjusted

costs. settled had private was appreciation XXXX. benefit compensation For rights million quarter, quarter cash driven increase QX a items the XXXX, lower X care benefit in In first expenses the that employee QX of health comparisons. under were first a by of this from than million expenses Offsetting comparative XXXX $XX higher $X expense structure, company higher we our affected

performance turn me segment, let Now to with our starting by Industrial.

to renewable in growth million building impressive for or electrical energy the the end the mentioned segment on $XXX of were and first previously, as product Industrial the strength by driven robust segment in we for of Revenues the was As driver as to certification rose XXXX. demand quarter. gains and as basis X.X% quarter strongest compared organic testing component an well products markets. Those XX.X%

faster part services segment to certification increased services. declined experienced XX and Adjusted saw and in increase And the testing for the than compensation industries quarter, growth across in We EBITDA in XX.X% non-certification in to in rose Industrial due margin price million X.X% growth to increased the $XX while also fees adjusted EBITDA as points increases. most Ongoing cost other revenue. we professional basis

or to improvement EMC for for Consumer consumer up retail for The X.X% connected and quarter other XXXX for particularly Consumer organic services testing the technology, X.X% Now and electromagnetic driven as from as by or automotive million, devices improved demand. $XXX the compatibility higher on an strong in turning demand basis. well testing were non-certification was segment. Revenues

devices addition, in led improvement testing. strength in In medical certification to

an a to versus in in first bad structure was XXXX laboratories which relocating of the year. several margin debt XX.X% an improvement. driven XXX for increase cost X completed in margin was quarter cost basis higher last larger, million, an revenues, to in contributed management Adjusted more expense. and improve our XX.X%, increase was by Adjusted year, $XX EBITDA structure in of incentives, including which reduction of actions the by improvements long-term increase the Consumer cost-efficient past offset locations, into taken quarter year-over-year, EBITDA for quarter points expense Consumer the

were improvement is of services, segment Software Advisory Revenues generation customers was Advisory. on an year-over-year an in organic for basis. and driven X.X%, energy including segment that X.X% million, particularly third for renewable $XX Our increase the by industry. The

EBITDA the flat offset year-over-year points basis $XX was as of compared was in quarter last first XX.X%, more than million, the Advisory for revenues expenses. of Adjusted EBITDA higher year. quarter to XX increases as quarter for margin in Software decline and Adjusted the a compensation by were

We quarter. our due reflects plan compared of higher record the year, delivered to XXXX. generation. XXXX In the instrument $XXX in generation part The quarter paid paid activities we We cash working the first in XXXX, operating incentive second outflow first generated decline in the entered building the of timing our cash to $XXX flow Turning million million quarter. of cash out capital to in strong quarter. out Last on payments. the a long-term incentive we in of same from

million from the $XX were million $XX expenditures the Capital period. in down year-ago quarter in

growth to We continue Solutions. XXXX. first the million transition opportunities, focused the compared in $XX for Free important quarter area of for was million cash to flow energy for make quarter UL investments $XX a

of sheet our $XXX and is our investment-grade of equivalents the XX-month balance balance net the in finished debt sheet The X.Xx million to strength EBITDA. quarter We leverage of cash with a trailing reflected ratings. net and adjusted credit on

and of to number pursue in generation flexibility sheet great balance best-in-class to us initiatives, and shareholder cash value-enhancing robust acquisitions organic accretive invest ways produce to a Our flow give returns.

mid-single Now On organic currency by our growth Digitization Sustainability Electrification driven of continuing tailwinds Everything to full the be digits megatrends. a in continue to from outlook. year the and the basis, we strong constant and to range, turning expect

We expect the combination EBITDA company. drive for and key to adjusted of a focus XXXX areas beyond through margin in improvement

market mid-single where hold. digits product top First in our for scale delivering to our for line business expand share investments organic to and as in look market that area growth, our is we to grow take

utilization driving by of we higher productivity and our and through metrics. through people the and Second, are automation our our facilities processes digitalization increased and and our standardizing streamlining of work,

we M&A, at on on with earnings areas to path look and focus an eye we concentrate accretion. rapid as margin a will Finally, of strategic

tuck-in of will We continue evaluate pipeline our to acquisition opportunities.

continue X% capital in expenditures X% expect to to We of XXXX. revenue to be approximately

We our thought share be also to mechanical would assist of a it items helpful couple in outlook. to modeling

for segment allows product of focus divestiture our we on to the base $XX a million. annualized in the divestiture revenue business approximately its business On million. payments of The completed our Industrial May testing $XX That sale X, Industrial safety services. segment of price had core

statement in second will in our Additionally, items the IPO X income particular. quarter affect

either all appreciation First, converted matured stock-settled rights. virtually cash-settled appreciation rights were have or to

of the IPO QX in closing, $X adjusted recorded result be a million. will value As the reduce will a EBITDA by million $X at XXXX, expense pretax which

was These no have awards the longer have as they IPO, awards expense the the converted established created mark-to-market will historically mark-to-market value volatility of volatility. upon

public of Second, IPO, income have the of we some million. which in in companies an have compensation, post taxes since limitation the deferred provision result for value tax will executive the a reduced increase on deductibility QX tax of $X assets

Solutions, on Now back we long-term big for our value picture. are UL focused stakeholders. creating to the At

and business on world-class continuing achieve most ambition our trusted our to we're and of and Product sustainability being to Inspection Certification science-based security businesses Advisory Testing, demonstrate, partner. our our As build safety, customers' results and Software our

the Let for back call closing remarks. me her turn Jenny to

Thanks, beyond. are to team of year results the post Ryan. how In solid our and to full for in forward quarter, summary, we the performed continuing look proud and we first

are trend of public, our results not profitability over the profit newly are we term. and we for our While long ongoing newly reflect

fragmented We demands and more regulators are a ensure industry being that's to complex a from compliance sustainability. to and inflection highly safety, leader point customers share by driven gain at ever an in positioned

second are iconic brand differentiated identified And today offerings. by capabilities none. Our and our easily are to

decades, balance built and predictability. and to all retention for robust deliver flows, outsized drive relationships sheet rates revenue strong cash even Our stakeholders. our look customer Through long-term returns we over years, high

Solutions. We are the leap to what have public the thrilled the to and UL excited holds I'm made for markets for future

questions. open the for let's Operator, please call

Our from [Operator the comes Stephanie Instructions] question Yee Stanley. line of Morgan first with

the if Yee us This battery wondering tracking? Congrats lab first from you Michigan JPMorgan. an I the could update on give was is how Stephanie is quarter. on

address EV to come Yes. about Industrial by continue the battery lab We're year. to and investment our safety end thrilled progress on long-term it we of make the plans And that of expect and to build-out industry. online this and the

Okay.

bit was guidance how great. gave the a of Sounds appreciate the And to year. in full margins little more if can you be much improve for wondering you you I specific in I XXXX? expect terms

Yes.

to got we're some great footprint log the of key expansion progression areas progress. there over And got we've a that margin that Our we is intend right ensure We've long to term. a excellence center are types as in continuing really locations. strategy of the right

of balance our instance single margins making in the Mexico we're some really and both in progress the expecting our adding extend of our help efficacy around that lab So of We're our every sales we've teams continuation on quote, States, price work strategy global configuration our Salesforce offer. of year United and help the go-to-market that the we and to right type capacities, done our this the world to for rightsizing. service

productivity of all and our better extend we all that to finding ways to we ways transmit extend and continuing the our that across on by have data certifications tests better utilize all and of productivity. and we're conduct find the then to And our inspections labs

we So targeting each and year. EBITDA each the long but over over we each haven't margins, step term, are of XX% listed way

line next Goldman Our Tong the from with of Sachs. question George comes

as Congrats a print company. on quarterly your public first

growth contributed you business. to as tailwind quarter to Consumer pricing and a Can that in in Industrial mentioned the how well discuss in Advisory? Software much You and as pricing represented the in industrial growth

we software, recurring are service of X they ongoing Solutions and comprise revenue -- as X categories, certification our the appreciate George. services them you that primary know, Thank XX% services, very streams UL provides many question. you and they're of revenue and about We largely in them, report updated much, And annually.

So price metrics. suited volume they're to less

first Non-certification other from of our level. contributions revenue services volume. services and we volume level price on and both that in we'll than testing consolidated at quarter, And rather mostly XX% comment segment our and a The X% paid a similar price had testing Of testing we're at focus the from particular deliverables grew and with keep are specific about for. Certification those

you could and Got it. renewables momentum That's you're And you're seeing Industrial can revenue the trends on help growth that segment, elaborate electrification then sustain the seeing? within that helpful. positive in

George. on happy I'm Yes, to comment that,

and I that itself distinguishes As our on certify integrated global our of global we're strategy, science-based focused network building batteries labs earlier, laboratories. believe our solutions. across mentioned of battery because acquiring this and and really EV test And we're excited we about both both of solutions industrial set leadership that and

needs they in sustainable ways these products both and in at look ties transition transmit fashion. customers' a the store, they are ways that challenges which and which then which they they energy energy into and in way we designed as And our So manufactured. both the in use generate, the more

staying R&D manufacturing that all to sites customers' over the with our for value. centers us think our We extend great a world close opportunity is to capabilities our and their

Heather comes line America. Balsky Our from next of Bank of with question the

the could about trends this To start, thoughts fairly maybe did hoping quarter. see I Where internally talk those on was and sales strong. you were you planning out performance, of for what was organic rest the especially year? persisting you growth It your versus

Yes.

as Electrification the these world. it's skis or regions, jet and are battery just speed energy strength fact of tractors, sorts the all that our battery strategy, set networks the look all the We're in look excitement And of continued then industrial all buses, really in that you our in We you of when you markets we're say, all We that our in reflective seeing by all not of reflective we Everything. see just industrial over we to way And of the with life. businesses products help growing our capabilities and electrification, really all the charging that are range and lawnmowers, continue and pleased have to at look encouraged, strength. markets, over customers automation in or of EVs. areas. charging trucks, It's or need world at

follow-up That's just a And really actually is my helpful. housekeeping question.

the -- costs quarter? you you back remind Can ] For this was those IPO -- from last remarks. this your how you 'XX? were CSAR impact year, [ just And adjusted talked Ryan, your and about the These much topic. scripted are XQ probably also, in favorite it on then touches in us what And on adding are number?

difference So slight expenses expense year year public We're $XX last execution a million was year-end quarter this as last and and first of were transaction the million. specifically the we'll a cost adjusted QX the QX adding between back quarter in million. being $XX costs but quarter the year. to a have, and mark-to-market difference from to about It related company first to CSAR And $X specifically for of are just that's year difference. valuation was not a million. a benefit other continue first transaction There that this IPO-related costs EBITDA million part $X $X in a

to we don't And those we when need look forward updates.

So thank you very much.

Your Andy question next of Baird. with from the line comes Wittmann

I where See to go. want Great.

you Any just in about $X of I Let's would wondering those expected I plan modeling was be Is up should health or mentioned were that comments individual was or in know your helpful. there there something script, Ryan, the drove you guess, changing claims said talk if think, some this that I that's year-over-year. your that, your million there that? how care were large about. just it costs. we

people-based an higher material And not are business, of cost benefit are the was United quarter. first it pharmaceutical. the contributor. as felt in first States. trends Yes, medical the in think what anticipated. overall the consistent industry, And Thank Yes. increase. as that contributor in than increase quarter. a There's that did sharply as We with compensation, in a We much, employee our see health very particularly both in more only well reporting across The we we our Andy. are costs generally costs part others largest care, had benefit was to an the structure, employee you care

to it's the be, this advisers what and out we to in reach space, to continue not forecast care we're we alone health difficult will situation. cost in And It's our utilization but something monitor. as

that. bit, little Obviously, Got you it. helpful it just noncore. Maybe That's appreciate here. I the a Jenny, saw could you talk as context. about divestiture

at about here, other look that noncore, you talk it you considering? you can why as divestitures might think? options be Just potential there was that Is other one, you for do

a you. to then quick And and for just Ryan third one want sneak

that Just share cash stock with in for I vested just share would comments all the that if that the pro but you that. have some to sure third your to rest we wanted share count, the to settled sorry, you you if second year. talk count. for sure thought the the know that from release I be the had guess, IPO the just the helpful. changes just one, I press about had could want of quarter to on I that CSAR we sure or make for in I switch the would, that make forma, the want make count.

Yes, absolutely.

like broader we TIC product -- that me you we and matters our plays strengths and context product lot recent on TIC. really consumers It our on and we've and leadership, the it's and some to our then cyclical. It's it's are less just customers. great emphasized It's something industrial a focus Let in science-based But that growth. give divestiture growth. to

planning testing our was our long-range in of long-term business. area, look execute which and So we this choices, at investment payment particular as a

broader our So as chips owner. that different security area to as cards picture a future would that the strategy important and warrant for as of be an it's investment you technology, on being if we didn't it testing credit to

focusing sense that to business to interested divest area. on a growth made in that is that us for it So group

now on any divestitures our the much to have them us, teams, growth, I'd business development focus and future. not we for additional expecting truly, into But right prefer are

final question the then And share about count. on

related in event to And subsequent March many the our related we'll including public initial the things that, [indiscernible] math XX-Q. note I there file between the to expiration those that conversions. coincidently, was have say an soon offering, and maturity. would in CSAR details will even a We XX

So that we exact the way easiest impact subsequent I'd the of instruments kind the note. assist give everyone of to down share say the detail. incentive the you count with will walking differences, in that's

question Our from Andrew line William next the comes Blair. of with Nicholas

is start This Andrew on you're in today. [ what Daniel maybe the momentum ] mid-XXXX some To business. seems Maxwell off, continued there's there maybe from for consumer like seeing It experiences.

So if general you life can frame upside maybe to relatedly of of number or what you're terms sentiment the change of months? and in over customer downside there last you're seeing any couple terms in cycles there what seeing the of or product SKUs and

I areas innovation start. of we're and our level business, of devices market. of more areas, testing services that and particularly and retail-focused a say return I testing in seeing our seeing a seeing continued think, SKUs development, every in Ryan new medical in is, those world. I'll Yes, number devices, from Also indicated. wireless we're really of what to in the we're market again every in growth customers And in the product around growth would non-certification in as amount the

Texas. our to lab new a think our We've in something of then returns we're capital. HVAC a RCP United talked note, And the Bentonville, invested in down good those And number Center of we've of all consumer finally, here States. We about in different retail capacity added I places. on that of like in We seeing year got -- EMC Excellence capacity all Arkansas. CapEx, some in added last

in there's So and real some some now. consumer right tailwinds strength

Great. to across opportunities different one or you're M&A the seeing more the and That's helpful. my for there? maybe that's bit then either Any sticking you're segment seeing out, changes geographically. any And wise if tuck-ins, markets? maybe is on little And that attractive area for pipeline a then valuations follow-up, specific

energy on Thank we're a that used. several of transition. how themes things particular, and spoken our including how you including Yes, energy much, investment Industrial to we've leadership in position say, generated, would stored our pipeline extend acquisitions, is includes we the how areas. is key very segment continue to, it's it's related That how tuck-in to acquisitions focused Daniel. transmitted, energy I pursue to in and

continue we be to So active.

not with financial on front. have We strategic attractive It and valuation an the both is material seen changes sector participants.

there valuations. a on change, would material So has I say, to been not point out

to on our product one there or customers. elements of our product value in piece of And adjacent would product extend our I focus are could services would emphasis our TIC important what areas businesses support advisory most software that -- some the other strength the like is as that add, interesting I our TIC call TIC

got opportunities always a So we've wide of evaluate. lens that we continue to

Our of ] comes [ from with next Stephanie Moore the question line Jefferies.

highlighted on Arkansas. I retail Center you opened the wanted you to of that touch American Excellence that North in

decentralized. and scale a but you top just given the past maybe great. As you expansion a line that be can the think Anything from about only the have there, this in margin standpoint, maybe mean the how opportunity or of this new massive could strategies also differs would center, you from maybe there more what not outline this opportunities, bit

a visit a Absolutely. what X-story a do and structures. supposedly really happens metals testing we product how fun to wide to or such the jewelry range from because room long to It's to burn of rain really having to facility tents waterproof see handles other

the decisions suppliers make to about how are visits products anything from number locations witness our What's witness them both important our a to also and testing insofar customers to board it on this do or we that any their where types customers about or and design capabilities for that's really appropriate of their their helps that are one roof, can opportunity but actually take merchandising is of else strategy. provides elements across under great which other different them products, as our being or this were lab great their consolidate able experience customer used or

an it's lab. So really exciting

is And as the take able we'll and opportunity the equipment were and do we I from to locations, as to continue consolidate correct. other so timing said, and a few

exciting improved an that's our it's definitely capacity. our So space and utilization

follow-up a maybe question. just And it. Got it. Got

you in the performance the Software increases higher out On just quarter, think Advisory -- and I some some for compensation. margin business called

of kind rationalize that the saw margin we to step XQ the trying Just down to performance XQ. XQ, in

whether If us a give costs. bit you as onetime could seasonality it's color year around progresses, more just some the other

consistent get is profile a that of probably trying sense Just segment? a for to more margin what

included for that question. you changes medical. in we very would broadly benefit much say the employee call the expenses I of one Thank compensation those

change in million You make the in difference can on is that $X dollar million $X can basis, big see margin segment. a a or

do that and So software factor. segment, I anticipate margins. We're our contributes segment, growth energy. would renewable to high in say related expansion margin that particularly incremental grows was in advisory We the particularly as seeing primary

So of advisory seeing on wind support as in and and the Industrial software as well energy and products in transition, renewable solar. the theme in wind projects we're side for

answer and your anticipate as expansion to continue segment. Software the margin question, we grow we So Advisory

add. Yes. to And line just one more

business with not Advisory margins through. We it the has and Software are in satisfied the today. that our drop is And greatest

EBITDA So expect Software pursue with and our our expansion Advisory. emphasis Ultrus growth in relentlessly we launch, the of on margin in and revenue and to particular,

the line of Truslove Our Citi. next question with Arthur comes from

I few Well me, done may. from on the first if quarter. A

of think as productivity so that should Or is part we XXX to as year? persist obviously So not? expecting level EBITDA progression, the points you level And division the one, we well. has about consumer revenue margin basis that a points of how work through obviously, that and the first the Are at basis your year? of kind through XXX-odd played

in you of the question, your but you mid-single-digit organic a company. obviously, just a do guidance is started exactly year boring the one, for public digit by bit QX. And a say if as What be would single X.X% did growth. Obviously, single you for could mid-single-digit mean low digit, digit? really are sort of you ranges mid-single -- what X.X% helpful. just that high digit, Is what Second mid-single --

And you reasonable then things one Clearly, see quarter. number that as persist a comes the XX% -- it of first sort organic for industrial, final the very think you might growth Are see me. level that year? Or why down? of to today, in reasons the you from rest strong, that, can is

Consumer consumers with margin And as good up X.X% said, much, And in organic team $XX growth China. lab in major North improve relocations, lab Jenny Arthur. questions. the Excellence a very in move Great. operations, basis the including That of pleased took Thank was Center as the the are steps you Shenzhen well XXX Really to point expansion. Retail of we efficiency the million. adjusted South to American large X as

roughly to I that mentioned. that Also said, some Now the which half severance benefited in expense that increase last the in consumer had CSAR difference year, this comparison QX of costs, year. was

were material significant those related operating all majority in drove changes margin So but QX improvements the to the of items. the XXXX expansion,

to do we of margin of we clarify in ongoing year. first some last items improvement, but want kind quarter So extraordinary anticipate did the the

mid-single regard is are say brackets the on those. exactly digit mid-single what what does right meaning like X.X% then And edge of the in to would I of digits.

third your performance. So connects this edges I that language. Honestly, exact that what revenue of to the and means year the also haven't that say falls out about would those of the within question remainder for we Industrial written

year. progress we anticipate quarter, forward of through we strong vitality our serving looking steeper in last fourth our business customers. the We're to do year of As year, rest had and We But compares. the some executing instance, our of for is really strong. a the

that to revenue the about growth. comment mid-single-digit us So led

question Haas next from of Our Fargo. line Wells comes Jason with the

that your Curious last to follow answer to question. up on

that so you've of moderate on have Or seen period, the of growth in In far terms XQ? trend gone the to seen top you've saw quarter-to-date what to compares? you continue at the rates in organic maybe levels

our I you long, those projects the at recognition our about to over is our think are projects. way business, duration revenue look of and when it is, the think Industrial best particularly

capacity, balance really feel as the our in results the we and saw throughput about that we first to continue we And good our so quarter.

Yes. And general, we on just in activity commenting refrain in this quarter. from

Got it.

that I you on expecting what That's in some Okay. are And to growth looks so -- year-over-year up forward. like wanted the imagine was Software It flat in also business we XQ. business. get from the was it from I that disclosures, fair. going follow then revenue

some So your inflection you other from some to if or expect about you talk in could Ultrus growth initiatives see when of there?

want segment Software distinction line. I Software service Advisory to And clarify and our the between and our Yes.

but About our segment, comprises managed software that segments. all services software. Software there XX% by other managed by is our of So and XX% under of Advisory of revenue reported the and that is that's that

solutions Software managed really versus of point by customers discuss at the Ultrus set by broader the and that's to those solutions. our software launched we're end it software individual slightly. the grow encouraged emphasizing & sales our segment, there Advisory January, did was with that capabilities of a So opportunities the have and teams out

pursue. software We prospects other look allowing rates, at churn the we're by pieces growth Ultrus encouraged is to that us renewals, and revenue, new

from Our Stifel. the Rosenbaum with of comes Shlomo next question line

any bit in you've kind have know a contribution a and growth? are their about I drivers I of but break changes of kind to getting expect out trends by you're seeing. Jenny, down harder, quarter. units, have strong housekeeping the what in little of areas bit to you then but maybe to the of pretty of It's talk for first the that comps little year be expecting question to seen a that just revenue rest areas it quarter. what don't a could are or one the And about any the ones. just you of you by versus step up general you in couple step terms

supply for transformation to I'm energy chains sustainability operating of I strength from reporting. that going sustainable sources board think That general of general what is associated the regions more what across our one to seeing well physical this in for with products. transparency the Everything, every we're across to and the the one the our need ultimately ties in of that digital and demand every connection Electrification as as units call this

we're residential solar across So and the strength systems. and change just, as renewable heating which to again, has in we and and storage, the and storage handle in energy general grid cooling wind to sources broader look board, way and the energy environments, industrial seeing space, commercial

driving that are And trends that are mega fueling pieces the just these all of our areas of emphasis.

about And slowing believe trends. these I'm So that any reason don't see they're to excited down.

a couple then, Great. modeling. Ryan, stuff Okay. like of for housekeeping And just

something divestiture the First to any or annualized the show prefer quarter. year? that last out that to with net Or you're going then going to the might a EBITDA adding going income? I to to are in what if what back be of be be queue? the separated get up to of acquisition And that's is say, with we going you that How the or be was that away view it's Is somewhere breakout the didn't going on all, to see intangible strategy? that going of was amortization that EBITDA

Yes.

had picture revenue say contribution I So positive would small but of which a is divestiture, a basis, the it's the big modestly on $XX in million trailing UL. margin,

think down, manage of that. to didn't it adjusting we offset will expenses So worthy we

regard And And expense then mentioned, we be the detail amortization, a It Industrial among overhead in that. and there'll segments. in the on to will could lot the more allocation in that among some as divestiture, impact segment. was the I information have allocation on X

well. we'll help that as material, So understand people that's if

today? Is Q coming out

out soon. It out will be It soon. will be

question comes UBS. from the [Operator Josh Instructions] with Our Chan line of next

to of how going your we recurring Could in RySo raise talk your you should Kind forward? earlier. just about ability pieces to the ability price you services to of mentioned price testing that with business? raise your think the

those being are visits in X annual contracts accordance world product that with on for that a manufactured to engineers to works, our make field recurring look regard locations that our products that the certified. Those we market to bears of standards contracts required are in UL customers, the you the it. and an the life mark are when ensure those at our Ongoing times our the customers' manufacturing the With Yes. revenue year way all are to a certification services, over typically

work with that through. With contracts the timing contracts, those of of reset extending price as and recurring and the year we're gives pricing software increases add each the us our fourth the regard appropriate to services, those in opportunity revenue customers that's to in any So our quarter moves. that go length of XX% when of we software the

sales. that at as Is timing a Service so typically, same and then part that all those of of doesn't it happens Software helpful? the while happen the new in And the quarter, as renewals

is I could really that really Yes, ask for my margin. appreciate about it. segment I helpful. follow-up, Industrial then the And

You lower I little probably because was of mentioned assume year, expansion year versus in last compensation, that for full bit this expect quarter you it the but that a margins.

changes the Industrial what talk drive you to expansion So just margin that could in through year? for full

margin. for year full the expect Yes. industrial We do expansion

revenue is Our quarters. first quarter overall slightly other lower the than

year, XX% expenses last revenue, full about but of it instance, was continuing. for are our So year our

benefit initiatives employee of on had like industrial anticipate health on the for you're basis investments a to care things or case we costs related services the We correct. growth in the changes that smaller So impact professional first to quarter. in increase. an of the have, in and margin full But costs, some year

turn back Thank for we've Scanlon gentlemen, allowed comments. of our I'll any you. and Ladies final come to for questions. end Ms. the it to time

you Thank us on to forward joining look we our you, today. appreciate for your progress and updating everyone, support, We next quarter.

very you Thank everyone. much,

Thank call. concludes today's conference you. This

you at participation. lines this your disconnect may for Thank time. You your