Mirion Technologies Q1 2025 Earnings Call Transcript

Skip to Participants
Operator

Ladies and gentlemen, greetings, and welcome to the Million Technologies First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference call, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded.

Operator

It is now my pleasure to introduce your host, Eric Lin, VP of Investor Relations. Please go ahead.

Eric Linn
Vice President - IR at Mirion

Thank you, Ryan, and good morning, and welcome to the Marion's First Quarter twenty twenty five Earnings Conference Call. Joining me this morning are Myrion's Chairman and CEO, Tom Logan and Myrion's CFO, Brian Schopper. Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward looking statements, and actual results may differ materially from those projected in the forward looking statements. The factors that could cause actual results to differ are discussed in our annual reports on Form 10 ks, quarterly reports on Form 10 Q, and in Myrion's other SEC filings under the caption Risk Factors. Quarterly references within today's discussion are related to the first quarter ended 03/31/2025, unless otherwise noted.

Eric Linn
Vice President - IR at Mirion

The comments made during this call will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliation of those non GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of the presentation accompanying today's call. All earnings materials can be found in the Investor Relations section of our website at www.murion.com. With that, let me turn the call to Tom, who will begin on slide three.

Thomas Logan
Founder, CEO & Chairman at Mirion

Eric, thank you, and thank you to everyone on today's call for joining us. And most importantly, thank you to my nearly 3,000 Merion colleagues for delivering a big quarter. We're off to a great start in 2025. We're hitting our marks both financially and operationally. This is most clearly reflected in our first quarter adjusted free cash flow and order growth.

Thomas Logan
Founder, CEO & Chairman at Mirion

We delivered $29,000,000 of adjusted free cash flow, a 62% conversion of adjusted EBITDA. In addition, first quarter orders grew 11.5% driven largely by nuclear power orders. This is our best first quarter performance since going public and I'll share more details with you momentarily. As you may have seen in this morning's press release, we acquired a small software business called OncoSpace. OncoSpace is a cloud native data analytics platform that enables clinicians to confidently design an optimal patient plan for radiation oncology, consistently promote best practice behavior, and share a peer to peer expertise.

Thomas Logan
Founder, CEO & Chairman at Mirion

The software is a great addition to our cancer care portfolio and is expected to enhance our go to market strategy. This acquisition is small but significant, small in initial revenue and adjusted EBITDA contribution, but significant in its potential to catalyze the growth in our radiation therapy software business. I'm excited to welcome the OncoSpace team to Marriott. Beyond this transaction, the M and A deal pipeline remains attractive, but as you'd expect today's uncertain market dynamics have clouded valuations and executability. As a result, we are remaining disciplined with a patient view of likely activity by year end.

Thomas Logan
Founder, CEO & Chairman at Mirion

Let's get into the details now beginning with first quarter performance on Slide four. First quarter organic revenue grew 6% versus the same period last year, aided by double digit revenue growth from the nuclear power end market. First quarter adjusted EBITDA totaled $47,000,000 or 18.2% higher than last year's first quarter. Margins also increased two sixty basis points to 23.1%. The improvement reflects strong operating leverage and procurement savings, key components of our pathway to 30 adjusted EBITDA margins by 2028 as committed to at our December Investor Day.

Thomas Logan
Founder, CEO & Chairman at Mirion

We also repurchased 1,200,000.0 shares in the quarter for $18,600,000 as part of our capital deployment strategy outlined in December. Adjusted EPS in the quarter was $0.10 per share compared to $06 per share in the first quarter twenty twenty four, a 67% increase. As mentioned in my opening comments, the two standout elements for the quarter were adjusted free cash flow and orders. Q1 orders are particularly encouraging given that this is typically our lightest volume quarter. Importantly, this orders number does not account for any of the 300 to $400,000,000 of large one time opportunities that are currently in the pipeline.

Thomas Logan
Founder, CEO & Chairman at Mirion

While global government budget dynamics have likely lengthened bidding cycles, we remain optimistic about our prospects for these contracts. And as mentioned last quarter, we think the 300 to $400,000,000 sizing may be conservative. It is worth noting, we've not lost any of these projects. The strong orders of nuclear power just another proof point of the momentum building in this market. Seemingly on a weekly basis, we see and hear affirmation that nuclear is a critically important component of the solution to the growing supply demand imbalance in the global electricity market.

Thomas Logan
Founder, CEO & Chairman at Mirion

This view is increasingly reflected in the public consciousness. The 2024 National Nuclear Energy Public Opinion Survey shows that more than 75% of Americans support the use of nuclear energy, a record level for the fourth consecutive year. I've personally seen growing bipartisan political support for nuclear energy in The US. Last month, I visited Washington DC for lobbying trip. During the trip, I spent time with legislators and regulators overseeing the nuclear industry.

Thomas Logan
Founder, CEO & Chairman at Mirion

I can confidently say that support for nuclear power is the highest I've seen in my career and my sense of optimism strongly correlates to that dynamic. Now zooming out a bit to talk about Marion's resilient business model on slide five. Given today's uncertain economic backdrop, it's important to remind investors why we believe we are well positioned to traverse the unpredictable road that lies ahead. First, it begins with the customer. Merion is a trusted partner to a global customer base.

Thomas Logan
Founder, CEO & Chairman at Mirion

In most instances, our safety critical solutions are compulsory for customers. We are a leader in 17 of the 19 major product categories we serve and define ourselves as a category of one, the leading player in the detection, measurement and analysis of ionizing radiation. This is all that we do and we're better at this than anybody in the world. We've also proven the resilience of our financial performance by consistently delivering organic growth and consistently outperforming our peer set on a through cycle basis. More than 70% of our revenue is recurring or repeat in nature.

Thomas Logan
Founder, CEO & Chairman at Mirion

Also, approximately 80% of our nuclear power based revenue is tied to the installed base. This was evident in our first quarter orders where 79% of the year over year nuclear power order growth came from the existing nuclear fleet. Importantly, structural tailwinds from nuclear power and cancer care have us better positioned today versus previous cycles. We are highly levered to two generational trends that should be robust. Beyond structural tailwinds, our path to future value creation is predicated on established self help initiatives, including operating leverage, procurement savings, and our proven Merion business system.

Thomas Logan
Founder, CEO & Chairman at Mirion

Our business system has been central to our operating activities for more than fifteen years and informs everything we do from the C suite to the shop floor. One of the factors helping to mitigate potential tariff impacts is the regionalized supply chain we've established. This is table stakes for us and our local for local business model has us well positioned in today's macroeconomic environment. The benefits of this regional supply chain are better illustrated on slide six, where we detail the expected tariff exposure based upon what we know today. As mentioned, we believe we are well positioned to weather the tariff storm impact.

Thomas Logan
Founder, CEO & Chairman at Mirion

More broadly, we have a deep stack of mitigating actions to diffuse our modest net exposure. Not surprisingly, China accounts for the largest exposure between a 7,000,000 to $9,000,000 headwind for 2025. This is largely attributable to medical segment products that have historically been produced in The U. S. And sold into China.

Thomas Logan
Founder, CEO & Chairman at Mirion

Note, the majority of nuclear and safety segment goods that we sell into China originate from Europe and therefore not subject to today's retaliatory tariffs placed on US goods. Outside of China, the 2025 exposure is minimal at a 3,000,000 to $4,000,000 headwind. We're currently evaluating ways to reduce this exposure moving forward. Of note, we've learned in the last twenty four hours that a plurality, potentially a majority of our products that may be exempt from the higher Chinese retaliatory tariffs. If true, this would position us at the upper end of our mitigating strategy range.

Thomas Logan
Founder, CEO & Chairman at Mirion

I caution here that the situation is extraordinarily dynamic and is likely to take some time to stabilize. Mitigating actions totaling 5 to $8,000,000 include alternative sourcing strategies, production shifts, price increases and cost management. Lastly, prevailing foreign exchange represents an additional tailwind upwards of $5,000,000 at current rates to help offset the potential impact from tariffs. Taken together, our net impact to 2025 adjusted EBITDA from today's known tariff rates plus offsets from mitigating actions and FX is between a $3,000,000 tailwind and an $8,000,000 headwind, with the $8,000,000 headwind representing a worst case scenario, again, based upon what we know today. As a result, you saw in yesterday's press release that we are reaffirming our full year 2025 organic revenue growth target, adjusted EBITDA, adjusted EPS and adjusted free cash flow guidance, while increasing our top line revenue growth and revising the corresponding low end of adjusted EBITDA margin guidance to account for the non tariff impacts.

Thomas Logan
Founder, CEO & Chairman at Mirion

We remain confident in our value creation strategy and well positioned to the evolving landscape. Brian will share additional details around our 2025 guidance, as well as share additional color on our first quarter performance. Brian?

Brian Schopfer
Chief Financial Officer at Mirion

Thanks, Tom, and good morning, everyone. Let's pivot to the first quarter financials now on Slide seven. As Tom stated, first quarter orders grew 11.5% compared to the first quarter twenty twenty four, driven by disproportionate demands from the installed base of nuclear reactors. Additionally, we received a $5,000,000 labs and research order reflecting continued engagement from the Department of Energy. Meanwhile, in our Medical segment, orders declined in the quarter.

Brian Schopfer
Chief Financial Officer at Mirion

This was anticipated as a recurring dosimetry services order that usually appears in the first quarter was booked in the fourth quarter twenty twenty four. Offsetting this, we saw our RTQA business deliver strong order growth in the quarter of approximately 12%. First quarter order performance is particularly encouraging because it highlights the continued demand from the nuclear power installed base. Moving to the financial results on Slide eight. First quarter enterprise revenue was $2.00 $2,000,000 or 4.9% better than first quarter twenty twenty four.

Brian Schopfer
Chief Financial Officer at Mirion

Organic revenue growth was 6% with both reporting segments contributing to the year over year improvement. This was partially offset by approximately 110 basis points of FX headwinds. We expect the foreign exchange rate headwind to improve for the remainder of 2025 driven by the weaker dollar. Adjusted EBITDA in the first quarter was $46,700,000 7 point 2 million dollars or 18% better than the first quarter twenty twenty four. This strong performance translated to 23.1% adjusted EBITDA margins or two sixty basis point year over year improvement.

Brian Schopfer
Chief Financial Officer at Mirion

The margin improvement reflects the high operating leverage in our business as well as procurement and Myriad business system initiatives underway. Adjusted EPS totaled $0.10 per share, an increase of $04 per share 67% versus first quarter twenty twenty four. Moving to the segments beginning on Slide nine. Within our Nuclear Safety segment, first quarter revenue totaled $133400000.07600000.0 dollars or 6% better than first quarter twenty twenty four. Organic revenue increased 7.6% in line with the targeted full year mid single digit plus organic revenue growth we unveiled in February.

Brian Schopfer
Chief Financial Officer at Mirion

We saw continued strength across the segment, particularly from Nuclear Power, which grew 17.6%, both from the current installed base, but also from new builds. We continue to expect the full year to represent high single digit growth in the Nuclear Power market. Our sensing business, which incorporates in core and X core radiation detectors and electrical penetrations delivered strong revenue in the quarter within the nuclear power end market. Offsetting this strength was a reduction in our labs and research business, down approximately 19% in the quarter. Two drivers.

Brian Schopfer
Chief Financial Officer at Mirion

First, we're comping 15% growth in 2024 in this quarter in this end market. Second, this is where we may be seeing some limited impact from Doge, either from timing or enhanced contractual scrutiny. Regardless, Labs and Research and Defense of Diversified tend to be lumpier and more varied on a quarter to quarter basis. As a reminder, within our Nuclear and Safety segment, the nuclear power end market accounts for approximately 60% of the segment's revenue, while Labs and Research and Defense are diversified through 20 each. Nuclear and Safety segment first quarter adjusted EBITDA was $39,200,000 6 point 1 million dollars or 18.4% better than the first quarter twenty twenty four.

Brian Schopfer
Chief Financial Officer at Mirion

Adjusted EBITDA margins improved three ten basis points to 29.4% driven by operating leverage and ongoing procurement and Myriad business system initiatives. Recall, we are streamlining our procurement process to drive efficiencies and to leverage our scale to improve cost and working capital performance. These efforts are increasingly reflected in our results with more to come over the coming quarters. Moving to the Medical segment on Slide 10. Medical segment first quarter revenue totaled $68,600,000 or $1,800,000 or 2.7% better than the first quarter twenty twenty four.

Brian Schopfer
Chief Financial Officer at Mirion

Organic revenue was 3%. The nuclear medicine end market was the primary contributing factor to first quarter revenue growth. Notably, even if we normalize for the ERP implementation in nuclear medicine during the first quarter of twenty twenty four, the business still would have grown double digits. Several extraordinary items resulted in a $1,000,000 revenue headwind for this segment in the quarter. These include the previously announced closure of our lasers business in 2024 that is still reflected in the first quarter twenty twenty four results.

Brian Schopfer
Chief Financial Officer at Mirion

China was down approximately $2,000,000 in revenue versus the first quarter last year and the net effect of two ERP system installations, one in the first quarter of twenty twenty four and the other in the first quarter of twenty twenty five. If you exclude this $1,000,000 headwind or normalize for it, organic revenue would have been approximately 4.5% and approaching our targeted mid single digit full year organic growth target. We are encouraged by the good order growth we saw in Q1 in our RTQA business. We continue to enjoy backlog in our Nuclear Medicine business. Medical segment first quarter adjusted EBITDA was $23,200,000 2 point 7 million dollars or 13.2% better than first quarter twenty twenty four.

Brian Schopfer
Chief Financial Officer at Mirion

Medical segment adjusted EBITDA margins also improved by three ten basis points to 33.8%, half of which reflects the absence of the Nuclear Medicine ERP system implementation headwind from last year. Another highlight for the quarter was adjusted free cash flow shown on Slide 11. We delivered $29,000,000 of adjusted free cash flow or 62% conversion of adjusted EBITDA. This not only reflects our improved earnings profile, but also networking capital improvement from project cash timing and better DSO. Better net cash interest expense and a focus on more efficient CapEx.

Brian Schopfer
Chief Financial Officer at Mirion

For example, CapEx improved by $4,000,000 versus last year as we lapped a significant launch investment in our InstaDose VUE dosimetry badge. We remain committed to the 18% reduction in CapEx for the full year 2025 from 2024. Although not on the slide, we also did repurchase 1,200,000.0 shares as part of the 100,000,000 share repurchase plan we put in place in December. The program is principally intended to mitigate the dilutive impact of shares issued under the company's 2021 Omnibuds Incentive Plan and to provide management with capital structure flexibility. This leads nicely into our full year guidance outlined on Slide 12.

Brian Schopfer
Chief Financial Officer at Mirion

As mentioned, we're maintaining our organic revenue growth, adjusted EBITDA, adjusted EPS and adjusted free cash flow guidance. Despite the puts and takes of potential tariff impacts, mitigating factors and updated foreign exchange rates, our initial guidance here still holds. We're revising total revenue higher to account for the emerging tailwind from FX at quarter end rates, recognizing that the dollars fallen a bit further since quarter end. You can see the potential impact of current trading ranges on our tariff analysis. As a reminder, total revenue growth is now between 57% better than our initial guidance of between 46%.

Brian Schopfer
Chief Financial Officer at Mirion

This still includes an approximately 40 basis point foreign exchange headwind at the EUR 1.08 to USD, better than the 190 basis point headwind from our previous guidance. The biggest FX driver is our update from assumed EUR 1.04 to USD rate to $1.08 at the March. Adjusted EBITDA is still expected to land between $215,000,000 and $230,000,000 However, the low end of adjusted EBITDA margin was slightly tweaked to incorporate the new revenue guidance and to recognize there may be some margin leakage due to tariffs. We are sticking to our adjusted free cash flow guide recognizing that we got off to a strong start in Q1. Where we sit today, the second quarter will be our lightest cash flow quarter of the year, mainly driven by timing of cash tax payments and networking capital being a seasonal use of cash.

Brian Schopfer
Chief Financial Officer at Mirion

It is worth reminding everyone that the midpoint of full year adjusted free cash flow guidance is a 50% increase year over year. Adjusted EPS guidance of between $0.45 and $0.50 remains intact and assumes an effective tax rate of between twenty five percent and twenty seven percent down from 2024. Cash taxes of approximately $40,000,000 and an average share count of approximately $227,000,000 shares, all are unchanged. Remember, the 2025 share count increase versus 2024, reflecting the founder shares vesting in the fourth quarter and the taking out of the warrants in the second quarter. This is a $05 per share headwind to our adjusted EPS guide in 2025 due to these two factors.

Brian Schopfer
Chief Financial Officer at Mirion

While we are confident in our full year guide, let's set some margin expectations for Q2. We expect Medical margins to be up year over year, but slightly less than they were up in the first quarter. Any tariff impacts on the Medical segment will be more backend weighted in the year. On the Newborn Safety side, we expect flattish 2Q margins year over year due to mix and timing around tariff mitigation plans. We're expecting to see some revenue move from Q2 to Q3 in this segment as we implement tariff mitigation strategies.

Brian Schopfer
Chief Financial Officer at Mirion

Concurring with Tom's earlier comments, I remain enthusiastic for the financial and operating performance of the business. We're off to a strong start in 2025 and are making great progress towards our 2028 financial targets. With that, I'll turn it back to the operator to open the line for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. The first question comes from the line of Rob Mason from Baird.

Operator

Please go ahead.

Rob Mason
Senior Research Analyst at Robert W. Baird

Yes. Good morning. Tom, your commentary, I mean, I know this is a developing situation, but what you're seeing on the ground there in China around the tariffs, potential reprieve around that. Can you elaborate a little more on just what would be driving that when you might think you would have some more clarity on it?

Thomas Logan
Founder, CEO & Chairman at Mirion

Yes, Rob, good morning. Just to reiterate a couple of comments that I made. Firstly, that most of our exposure today comes from medical equipment produced in The US, predominantly radiation therapy equipment, but some nuclear medicine equipment that then is shipped to China. It's obviously a very dynamic situation and the landscape is changing, but what we are learning is that there are three or four classification codes under which our products are shipped, where there's an emerging body of thought and evidence that they'll be exempt from the retaliatory tariffs with a likelihood that there will still be a 20% baseline tariff. But to the extent we can prove this out and it is in fact validated, obviously that would be a great benefit to us and change our view a bit on the aggregate range of that net tariff exposure.

Rob Mason
Senior Research Analyst at Robert W. Baird

Certainly, sure. Just as a follow-up as well, again, the order number looked really strong absent any any influence from the 300 to 400,000,000 that we're referencing frequently. Just you you did mention, you know, some potential exposure there to government procurement process in that envelope. Any way that you can quantify that and what you're actually seeing, what percent is exposed and where is that coming from, what you're seeing?

Thomas Logan
Founder, CEO & Chairman at Mirion

Yeah, it's a bit challenging, Rob, recognizing that this pipeline that we've referenced is a combination of government and commercial projects overall and scattered around the globe. So this is not all about Doge or not all about U. S. Government dynamics, but we clearly have a confirmation bias where we are looking for evidence that Doge related activities are having some impact on these and or other just kind of routine flow government business. And today, we're really not seeing an absence, the commentary that Brian made that there may be some evidence that some of the tepid order dynamics in labs may be theoretically related to Doge.

Thomas Logan
Founder, CEO & Chairman at Mirion

But beyond that, not seeing anything. We are actively looking for it. But to be clear, we're not hearing any commentary from the program managers of these government funded projects, it continues to be a relatively constructive environment for us. But obviously, we're being quite vigilant and monitoring any changes and any flow through.

Rob Mason
Senior Research Analyst at Robert W. Baird

Maybe just if I could sneak one quick one in. Talked about almost weekly occurrence of news flow around nuclear power. Japan recently talked about restarting a reactor. Can you just update us on what your Japan exposure might be?

Thomas Logan
Founder, CEO & Chairman at Mirion

Our Japanese exposure is relatively minimal as it relates to their nuclear industry. In aggregate, it's just under 2% of our total revenue, but much of that relates to scientific instruments, some medical exposure, medical market exposure, etcetera. And this is because historically within Japan, there's been a very tightly bound Keiretsu network supporting the nuclear fleet, really supporting the nuclear infrastructure. I will say that we've chipped away at this and increasingly, are being what I would characterize as more assertive in that marketplace. So it is a marketplace that represents upside opportunity for us.

Thomas Logan
Founder, CEO & Chairman at Mirion

And the importance of what you stated, really reflects not only the continued momentum in Japan to restart a significant tranche of their idled nuclear base, but also the desire to do more to take it further. And so, again, we see that more as upside than anything else.

Rob Mason
Senior Research Analyst at Robert W. Baird

Very good, thank you.

Operator

Thank you. The next question comes from the line of Joe Ritchie from Goldman Sachs. Please go ahead.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

Thank you. Good morning, everybody. Hey, Joe. Hey, guys. So I'm just curious, it's a nice start to the year.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

Great to see the orders. Just on that 300,000,000 to $400,000,000 pipeline, I think kind of like the expectation was that you'd see like the vast majority of those decisions being made sometime like in 2025. Has the timeline on that shifted at all just given the current backdrop? And then also, are we like, is this like, just like a handful of projects or like anything you can tell us about, like, kind of like the sizing on projects that are out there?

Thomas Logan
Founder, CEO & Chairman at Mirion

Yes, so in aggregate, we hold to the view that a majority of these contracts will be awarded within calendar year 2025. Obviously reserving for the possibility that there may be some spillage into the back end of the year. In aggregate, are projects that we would define as being notably larger than what we would typically expect in our flow business. So typically that would mean an 8 figure or higher handle on the deal overall. And again, as we've noted previously, it's a mix of nuclear and other projects, U.

Thomas Logan
Founder, CEO & Chairman at Mirion

S. And international and scope. Ryan, anything you want to add to that?

Brian Schopfer
Chief Financial Officer at Mirion

No, I would just say, where we've seen maybe a few things move to the right, maybe out of the 25, I think we've seen candidly more stuff drop into the pipeline in the '25. I mean, look, our commentary in the last two quarters has been, we hold the range, but we see kind of more in the funnel than that. We did not have any expectations to close anything in the first quarter. So to date, I think I would tell you we're pretty on track.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

Okay, great. And then helpful to get to 2Q color. Thank you for that. Curious, like, it seems like you're already starting to see some of the benefit from your procurement savings. The incremental margins this quarter were really good in both segments.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

Just maybe kind of help me understand, like, I know we have the color for the second quarter, but for the second half of the year, should we be expecting then incremental margins on your volume to be better than what you have historically said? So, in medical at 50% to 60% range and nuclear that 40% to 50% range. How do we think about that into the second half of the year?

Brian Schopfer
Chief Financial Officer at Mirion

Yes, I mean, look, we've tried to stick to keeping kind of our annual guidance, Joe. I did obviously give you some color on the second quarter. Look, I think that the first quarter incrementals were very strong. Obviously, we do have a pay raise cycle that goes into effect kind of in the second quarter. What I would tell you is, we still believe there is margin expansion every quarter.

Brian Schopfer
Chief Financial Officer at Mirion

I would tell you that, I think the third quarter is probably our best margin expansion quarter and the others are kind of similar in size. And I think the incrementals you'll see, they are a little bit lumpy by business by quarter. You heard me talk about kind of my expectations in the second quarter on nuclear and safety are more for flattish margins. Just as we move some stuff probably from Q2 to Q3 to help mitigate some of the tariffs. But we also have some mixed dynamics in the second quarter.

Brian Schopfer
Chief Financial Officer at Mirion

We talked about this a little bit last year as well. So, I mean, that's probably as much as I want to give at this point, but we do feel good about margin expansion company wide each quarter the rest of the year.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

Okay, great. One last one for you. Just free cash flow, nice start to the year, just all the working capital benefits. Second quarter, it sounds like you're indicating because of a couple of cash taxes and a few other items that you might see, like, I guess, negative free cash flow in the second quarter. I just want to make sure I understood that correctly.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

And then, how are you then thinking about working capital going forward?

Brian Schopfer
Chief Financial Officer at Mirion

I'm not sure I said it would be negative. I just said it'd be the lightest cash flow quarter of the year. And look, I mean, I don't think it's if you look back at the second quarter's over, let's say the last two years, it's probably somewhere in those ranges candidly, maybe on the lower end of those ranges versus the higher end of those ranges. Look, we had a very good first quarter. Collective teams across the company did absolutely fantastic.

Brian Schopfer
Chief Financial Officer at Mirion

Collections were good. There's still tons of opportunity here for us, on the collection side, as the procurement stuff comes that should help on the payable side. We're very focused specifically in Europe on project cash flow timing. I like the third and fourth quarter to see continued pickup on net working capital. Seasonally, we're negative net working capital in the second quarter.

Brian Schopfer
Chief Financial Officer at Mirion

I think that holds true here. And our biggest kind of one of our biggest cash tax quarters is the second quarter just with The US taxes and etcetera. So I think we feel good, but I don't think I said it would be negative.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

Yeah, no, that was me projecting, but appreciate the

Brian Schopfer
Chief Financial Officer at Mirion

You can put that in your model.

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

All

Joe Ritchie
Joe Ritchie
Managing Director at Goldman Sachs

right. Thanks, guys.

Thomas Logan
Founder, CEO & Chairman at Mirion

Thanks, Joe.

Operator

Thank you. The next question comes from the line of Vlad Blistecki from Citigroup. Please go ahead.

Vlad Bystricky
Vlad Bystricky
Analyst at Citigroup

Hey, Hey, good morning, guys. Thanks for taking my question here. So maybe first just on China Medical, the potential tariff clarification that you mentioned is encouraging. But could you just step back and talk about underlying demand trends in China Medical broadly? And as a follow-up to that, how you're thinking about the risks of any potential anti American backlash in that market or whether you've seen any evidence of that developing?

Thomas Logan
Founder, CEO & Chairman at Mirion

Yeah, so Vlad, I mean, I'll start with a caveat that it's hard to say, obviously there's a lot of battle haze right now. And we're trying to be careful about our guidance, careful about describing how we see things. But it's important to contextualize the answer as well. That's something we've been talking about for the last two years. The last year you may recall, we saw a slowdown in the Chinese component of our growth, particularly in radiation therapy.

Thomas Logan
Founder, CEO & Chairman at Mirion

And this was driven by a generalized slowdown in med tech overall exports into China because of their pronounced anti corruption programs where it just induced incredible caution into the marketplace. And this began out in '24, it began the prior year, but it's had a long tail and had a big impact on the things like the build out of new radiation therapy clinics, which is really the key demand driver for our growth into that marketplace overall. In hindsight, it's a bit of a godsend though, because of the cautionary stance that we took in terms of framing our operating plans for 2025 and guiding that view overall. Again, we took a cautious view toward China in general because of this tail. And I think that certainly helps in terms of the aggregate exposure that we're facing this year.

Thomas Logan
Founder, CEO & Chairman at Mirion

At the end of the day, I think what it comes down to for Chinese economic decisions, particularly today, we're all hopeful that some type of constructive deal is brokered, the clarity emerges and that China and The U. S. Work together as partners to reduce the trade imbalance overall. But our interpretation of this whole trade code dynamic is at the end of the day, there's a cold rationality that prevails. And there are certain things that The US has to source from China.

Thomas Logan
Founder, CEO & Chairman at Mirion

And there are certain things that China has to source from The US. And I think that's reflected in this instance by these trade code exemptions. And so, again, this is very dynamic. We're still trying to prove this out and we're being very careful about this overall. But if that is true, then that would suggest that we have reason to believe that the environment in China, maybe a little bit more constrained going from 0% tariffs, potentially to 20% tariffs.

Thomas Logan
Founder, CEO & Chairman at Mirion

But again, that that is a reflection of national need as it relates to the products, software and solutions that we're selling into that market overall. Longer term, if there is some type of sentiment that builds up, not just in the China block, but in any other trading block Europe, Latin America, etcetera. We have within our planning queue, a number of actions that we think we can take to further defies that risk and really kind of build on this local for local construct that's endemic in our structure today.

Vlad Bystricky
Vlad Bystricky
Analyst at Citigroup

That's helpful color, Tom. And I guess we'll just have to watch the tweets going forward. Just

Vlad Bystricky
Vlad Bystricky
Analyst at Citigroup

I think, Tom,

Vlad Bystricky
Vlad Bystricky
Analyst at Citigroup

I heard you say that 79% of the 1Q nuclear order growth came from the existing fleet as opposed to new build, which is quite encouraging. Maybe could you just characterize how you're thinking about where customers are in terms of their current upgrade cycle and how you're thinking about potential longevity of this capital investment into the existing fleet?

Thomas Logan
Founder, CEO & Chairman at Mirion

Yes, I think it's still early days, Vlad. And the dynamic just for all listening is that the installed base really is the most important element of our nuclear business. And it typically represents 80% of our nuclear revenue overall. What is changing, just to walk people through the logic is that there's a growing supply demand or demand supply imbalance in global electrical generating capacity. We are seeing an immediate spike in year over year demand for electricity is more pronounced in the American market than in many.

Thomas Logan
Founder, CEO & Chairman at Mirion

But in general, we are seeing an acceleration of demand, which in aggregate was up about 4% last year versus the prior year. And that's versus what had been for much of the decade between 2010 and 2020, a rate of about 1% to 2% annual growth and an environment where most of the nuclear power plant operators were losing money. So what's happening today is that the demand for electricity is mounting particularly clean base load energy, which only nuclear power can supply. And the most visible motive behind that is the AI driven data center growth, but it goes well beyond that. It's the general electrification of the economy, the EV market as it emerges, etcetera.

Thomas Logan
Founder, CEO & Chairman at Mirion

So what is clear and what will be, I think, an extent trend for quite a while is this view that there is a very clear and compelling economic incentive for the operators of nuclear power plants to run them at a higher capacity factor, that being the term of art for capacity utilization within the industry, to extend the life of plants through permit extensions. So the majority of American power plants will be life extended to eighty years, some will be life extended to one hundred years. It is bringing back previously shutdown kind of pre decommissioned reactors, including the Palisades Reactor, the 3 Mile Island reactor, and potentially now the Duane Arnold reactor coming back online. It is resuscitating projects that had been terminated, like the VC summer project in North Carolina or South Carolina. And then it's operates, so it's adding capacity to the existing fleet.

Thomas Logan
Founder, CEO & Chairman at Mirion

And so while people tend to focus on new build activity as they're looking at the nuclear market, whether it's through small modular reactors or utility scale. For us, what matters more is the health of that installed base. And when they have the incentive that they do today to operate with greater uptime, extend life, operate capacity, etcetera, then that obviously drives looser capital spending budgets. It green lights projects that are supportive of those three overarching objectives, which would include many of the solutions that we sell. And so long answer, but the summary of all of that is we expect this we think we're just in the beginning of this cycle and we expect to see really healthy CapEx coming out of the global fleet for many, many years to come.

Brian Schopfer
Chief Financial Officer at Mirion

And I would also just remind you, Vlad, that we had just committed to in December kind of high single digit growth through our long range guidance. So we're expecting that this year. That means we need to see that also for the next couple of years.

Vlad Bystricky
Vlad Bystricky
Analyst at Citigroup

That's encouraging and really helpful color, guys. Maybe just one last one for me and I'll get back into the queue. On the acquisition you announced, know it's fairly small, but maybe could you just characterize how that came about? Was that proprietary?

Thomas Logan
Founder, CEO & Chairman at Mirion

Just any color on it. Yeah, this was a proprietary and again, kind of consistent with that crowdsourcing approach that we take internally. Again, a small deal, but I think it'll be proved to be very important strategically in terms of how it flushes out some of the capabilities that we have in our flagship RTQA workflow software platform called Sunshine. And we're really excited about it, not only in terms of the capability that the acquisition brings to bear, but the team. It's a great team.

Thomas Logan
Founder, CEO & Chairman at Mirion

And I think we're going to see some good leverage down the road from this. So a nice deal, nice pickup. It's not really going to move the needle meaningfully in the short term. But the main point is that our pipeline continues to be good. Obviously, this is an environment where a lot of people are being very cautious, sellers are being cautious.

Thomas Logan
Founder, CEO & Chairman at Mirion

I think sellers of private companies have not quite yet capitulated in terms of multiple reductions that we've seen driven by the public industrial tech sector. But I think all of that will sort out. We continue to actively work on it. But to be clear, we're going to be very disciplined and we're going to be patient as always in this room.

Brian Schopfer
Chief Financial Officer at Mirion

And maybe just two other comments. This is like a sub million of revenue deal for us this year. Really small, probably breakeven. I think the other thing that this is one of the more creative deals we've done where there's almost no upfront cash and it's kind of a earn as you go stream. I think that is also just kind of proving that we are flexible in how we do deals and we want to make sure that it's a win win for everyone.

Vlad Bystricky
Vlad Bystricky
Analyst at Citigroup

Awesome. Thanks, guys.

Operator

Thank you. The next question comes from the line of Chris Moore from CJS Securities. Please go ahead.

Chris Moore
Senior Analyst at CJS Securities

Hey. Good morning, guys. Maybe just a bigger picture pricing power question. You know, if there are surprises, you know, after this ninety day hiatus is over, Are there certain areas, products, services, where you consider Myrion to have kind of stronger pricing power and maybe might be a little less uncertainty there?

Thomas Logan
Founder, CEO & Chairman at Mirion

Yeah, Chris, this is a super important question because when most people are talking about tariffs or doge, they're talking about it narrowly. The approach that we're trying to take is very expansive where to begin with the FX dynamics, which are strongly correlated to this kind of global reset more broadly are obviously an important and very visible economic element. But the other element that I think is less visible to people that we are hyper, hyper focused on right now is competitive advantage. Recognizing that in some instances based on anticipated future tariff constructs, we will gain economic advantage versus our competitors. And in some instances, we will lose that economic or a degree of economic advantage relative to competitors.

Thomas Logan
Founder, CEO & Chairman at Mirion

What I would tell you is that in general, we like where we sit, meaning that in aggregate, we feel like our competitive advantage will be strengthened based upon likely kind of long term sustained tariff scenarios overall. And to the extent that does in fact happen, obviously, that gives us pricing power the ability to really optimize between hoped for incremental share gains plus margin expansion. So something again that is we're thinking about a lot, doing a lot of analytics and feel like there's probably an upside opportunity for us here down the road.

Chris Moore
Senior Analyst at CJS Securities

Got it. That's very helpful. All the other ones I had were asked already. I will jump back in line. Thanks, guys.

Thomas Logan
Founder, CEO & Chairman at Mirion

Okay, Chris. Thanks.

Operator

Thank you. The next question comes from the line of Yuan Ji from B. Riley Securities. Please go ahead.

Yuan Zhi
Managing Director at B.Riley Securities

Thank you for taking our questions, Tom and Brian. We So we have that $21,000,000 deboking from Turkey in 1Q twenty twenty four. Can we anticipate the backlog to grow in the near term?

Brian Schopfer
Chief Financial Officer at Mirion

Look, I don't like to comment on quarter to quarter orders and backlog. I think as it relates to that specific project, the team continues to work on winning some of that back. And I think when we're ready when we have more to say there, we'll talk about it. Look, we had a strong first quarter on the order side. Obviously, FX rates are beginning to favor our backlog, which about half the backlog does sit in euros.

Brian Schopfer
Chief Financial Officer at Mirion

So the strong move here in April with the euro, the weaker dollar, I guess, should help us over time. But look, we've talked a lot about the 300 to $400,000,000 today. As that comes in, of course, we would expect backlog growth between now and the end of the year because there's some larger projects obviously in that queue. So look, we like where we sit. We like the dynamics.

Brian Schopfer
Chief Financial Officer at Mirion

We think we had a very good first quarter commercially. And we look forward to updating you in Q2 and the back half of the year on how we're progressing.

Yuan Zhi
Managing Director at B.Riley Securities

Yeah. Got it. And maybe a quick follow-up to Joe's question earlier. What is the exact timing on those one time orders in total of 300,000,000 to $400,000,000 Should we anticipate them more in the second half? Or is it like even out in the next two, three quarters?

Brian Schopfer
Chief Financial Officer at Mirion

Yeah. Look, again, like, I don't we're not going to talk about precise timing, but I would tell you it's back half loaded.

Yuan Zhi
Managing Director at B.Riley Securities

Yeah. Yeah. And maybe one last question for me. For those in the backlog, how should we think about the push and pull in terms of timing? What if some projects have been delays?

Yuan Zhi
Managing Director at B.Riley Securities

Is that a big risk in your assumptions?

Brian Schopfer
Chief Financial Officer at Mirion

Look, we spent a lot of time in the backlog and teams looking at the project pieces this quite a bit. I think one of these bigger projects are longer cycle. They take years and years and years to push through the revenue stream. And so I think we're always looking and accounting for that as we put our forecast together. So there's always risk.

Brian Schopfer
Chief Financial Officer at Mirion

It's just kind of inherent in the new build nuclear game of maybe things moving to the right. But I think a lot of the work currently going on from a project basis is actively happening. And I think we feel very good about our forecast for the year.

Thomas Logan
Founder, CEO & Chairman at Mirion

Yuan, I'll have to say randomly too that I was convinced you would ask a question either about the BlueVicto broader approval or our Apex Guard software release. So, I got that one wrong.

Yuan Zhi
Managing Director at B.Riley Securities

Sorry, we just got more questions on the other part, but yeah, we can save the PluVicto related questions for

Yuan Zhi
Managing Director at B.Riley Securities

the callback.

Operator

Thank you for taking our questions.

Brian Schopfer
Chief Financial Officer at Mirion

Okay. Thanks, Iwan.

Operator

Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference over to Thomas Logan, Chairman and CEO of Meryon for his closing remarks.

Thomas Logan
Founder, CEO & Chairman at Mirion

Thank you, Ryan. And ladies and gentlemen, thank you for listening in today. And as always, thank you for your support. Just to close by reiterating, it was a strong quarter, great start to the year, the team executed extremely well. We're in a remarkable environment.

Thomas Logan
Founder, CEO & Chairman at Mirion

This is a it's a fascinating time to be alive, very challenging from a business standpoint. But I would say that historically, are the times where we've been at our best, where we have excelled, we have a battle hardened team that has weathered a lot of macro variability and challenges and their track record of second to none. And I'm proud to take the field with them each and every day. We're going to continue to drive hard on execution in Q2. And we'll look forward to speaking with you again in a quarter and seeing many of you in the various investor conferences and NDRs that we have scheduled for the quarter.

Thomas Logan
Founder, CEO & Chairman at Mirion

But thanks again today and we'll talk soon.

Operator

Thank you. Ladies and gentlemen, the conference of Meryon Technologies has now concluded. Thank you for your participation. You may now disconnect your lines.

Analysts

Key Takeaways

  • Myrion delivered a stellar Q1 with 11.5% order growth, 6% organic revenue growth, adjusted free cash flow of $29M (62% of EBITDA), and 260bps margin expansion to 23.1%, marking its best first quarter since going public.
  • The company acquired OncoSpace, a cloud-native radiation oncology analytics platform, to bolster its cancer care software portfolio and drive growth in its radiation therapy software business.
  • Nuclear power continues to be a major growth driver with 17.6% end-market order growth—79% of which came from the existing installed base—underpinned by strong bipartisan support and global demand for clean baseload energy.
  • Myrion expects a net tariff impact on 2025 adjusted EBITDA of between a $3M tailwind and an $8M headwind after mitigation actions and FX benefits, and it reaffirmed full-year 2025 guidance while increasing its total revenue growth outlook.
AI Generated. May Contain Errors.
Earnings Conference Call
Mirion Technologies Q1 2025
00:00 / 00:00

Transcript Sections