Mirion Technologies, Inc. Q3 FY2024 earnings call

• Nuclear power: Hyperscalers like Microsoft, Amazon, Google, and Oracle have announced nuclear power deals, indicating strong demand. SMRs are gaining traction with potential funding and commitments, and there's a $300 million to $400 million bid pipeline for large nuclear projects. - Cancer care: Nuclear medicine market is growing with Theranostics, seeing increased industry conference attendance, deal making, and growth in Pluvicto and PYLARIFY sales. Mirion's nuclear medicine business had 18% unit growth in dose calibrator shipments. RTQA showed recovery in Japan. - Operational performance: Q3 Medical EBITDA margin up 50 basis points to 34.7%, Technologies EBITDA margin up 370 basis points. Net working capital days improved by ~10 since Q3 2023. Creation of Chief Revenue Officer Office to enhance commercial proficiency.

The Technologies group had revenue of $132.7 million, which was 8.4% higher compared to the prior year, with margins up 370 basis points. The Medical group had revenue of $74.1 million, a 7.7% increase, with organic growth of 3.2%. The nuclear medicine business contributed significantly to the Medical group's revenue, and the ec2 acquisition added to inorganic growth. The Technologies group's growth was driven by nuclear power activity, while the Medical group saw growth in nuclear medicine despite headwinds in RTQA from China and lasers closure, with Japan's market rebounding in Q3.

• Adjusted EBITDA and EPS guidance remains unchanged at $195 million to $205 million and $0.37 to $0.42 per share, respectively. - Revenue growth range tightened to 6% to 7% (previously 5% to 7%), organic revenue growth expected at top end of previous range (5% to 6%). - Adjusted free cash flow range tightened to $65 million to $75 million (previously $65 million to $85 million).

• De booking of an order in Turkey due to a contractual dispute with a regional competitor. The order was for electrical penetration assemblies for a project with four reactors, and there's an expectation to potentially regain some or all of the business.

Q: Can you talk about the de booking of the order in Turkey and the process of booking into backlog?

A: Tom explained it was due to a contractual dispute with a regional competitor in a project in Turkey for electrical penetration assemblies. Brian discussed the discipline of what's put into backlog, requiring a clear contractual obligation.

Q: Chris Moore asked about the average size of new bids in the $300 million to $400 million bid pipeline.

A: Tom said the bids are all over the map, ranging from over $100 million to below, with heavy concentration in nuclear industry but diversified geographically (more than half in US, balance in Europe and Arab Gulf).

Q: Andy Kaplowitz asked about backlog expectations and geographies/market share of the bid pipeline.

A: Brian said they think backlog will be flattish by year end, with opportunity to beat. Tom said more than half of the bid pipeline quantum accrues from US related opportunities, balance split between Europe and Arab Gulf.

Q: Yuan Zhi asked about breaking down backlog by segments and the relationship with EDF for the Sizewell C contract.

A: Brian said backlog is 75% Technologies, 25% Medical. Tom explained the EDF relationship is important, Sizewell C is a follow-on to Hinkley Point C work, and they have a strategic frame agreement with EDF, with Sizewell falling outside that but leveraging prior work.