Mirion Technologies, Inc. (MIR) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary reveals strong financial performance with strategic acquisitions and partnerships, optimistic guidance, and a share repurchase program. Despite some cautious language in the Q&A, management remains confident in growth opportunities and margin expansion. The market cap suggests moderate volatility, aligning with a positive stock price movement prediction.

Key Financial Performance

Second Quarter Revenue $222.9 million, reflecting a 5.4% increase in organic revenue and a 7.6% increase in total revenue versus Q2 2024. Higher revenue reflects a $2 million tailwind from the Medical segment due to shipment timing from tariff impacts. All 6 end markets from both segments contributed to the growth.

Second Quarter Adjusted EBITDA $51.2 million, up 4.9% versus last year's second quarter. The Medical segment was a positive contributor, while the Nuclear & Safety segment EBITDA was negatively impacted by nonrecurring items.

Adjusted Free Cash Flow $6 million in Q2, representing an 11% conversion of adjusted EBITDA. This was supported by better-than-expected first quarter cash performance.

Second Quarter Orders Grew by 1.6%, primarily driven by the Medical segment. Nuclear & Safety segment orders were lower due to a tough comparison with Q2 2024, which had 17% order growth in the Nuclear Power end market.

Year-to-Date SMR Orders Approximately $9 million booked with 5 different players. Historically, $17 million in aggregate SMR orders have been disclosed, showing accelerating growth in this sector.

Nuclear & Safety Segment Revenue $141.7 million, up 5.8% with organic revenue growth of 2.9%. Year-to-date organic revenue grew 5.2%. Adjusted EBITDA declined slightly to $37.9 million, down 2.6%, due to nonrecurring cost items.

Medical Segment Revenue $81.2 million, up 10.9% with organic revenue growth of 10.1%. Adjusted EBITDA was $30.1 million, up nearly 20%, with margins increasing approximately 280 basis points. Margin improvement was driven by intrinsic operating leverage, procurement, and mix performance.

Adjusted EPS $0.11 per share, a 10% increase compared to last year. Includes 17.3 million additional shares related to convertible notes. Excluding these, adjusted EPS would have been $0.13.

Year-to-Date Adjusted Free Cash Flow $35 million, supported by net working capital improvements, optimized capital structure, and tight controls around CapEx. Year-to-date CapEx totaled $17 million, approximately $7 million lower than the first half of 2024.

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Operating Highlights

Vital Platform: A digital ecosystem designed to simplify monitoring, streamline operations, and improve safety by enabling real-time monitoring and data collection from thousands of instruments and sensors. It replaces over a dozen discrete supervisory software applications and supports workflow optimization.

LightLink technology: Advanced technology replacing legacy photomultiplier tubes with silicon chips, enabling superior radiation detection, improved human factors, and greater ruggedization.

Apex-Guard software: Next-generation digital platform offering comprehensive reporting and improved analytics to enhance workplace efficiency and reliability, particularly in the Nuclear Medicine sector.

Nuclear Power sector: Increased opportunities in the installed base, new utility-scale projects, and small modular reactors (SMRs). Year-to-date, $9 million in SMR-related orders were booked with five different players. Organic growth expectations for the Nuclear Power sector were raised to double digits for 2025.

Certrec acquisition: Acquired Certrec, a provider of regulatory compliance solutions for the U.S. nuclear industry and energy markets. Certrec's business has grown double digits since 2022, and its solutions are relevant to SMRs and the bulk electric system, expanding Mirion's market reach.

Revenue and EBITDA growth: Second quarter revenue reached $222.9 million, a 7.6% increase from Q2 2024, with adjusted EBITDA at $51.2 million, up 4.9%. Medical segment contributed positively, while Nuclear & Safety segment faced nonrecurring cost impacts.

Capital structure optimization: Completed a $400 million convertible note offering and refinanced a $450 million term loan, reducing the total cost of capital and providing flexibility for further capital deployment.

Free cash flow improvement: Generated $6 million in adjusted free cash flow in Q2, with year-to-date free cash flow at $35 million. Improved working capital management and reduced CapEx contributed to this performance.

Focus on Nuclear Power portfolio: Strengthened portfolio through organic growth and M&A, including the Certrec acquisition. Emphasis on modernization upgrades, capacity expansion, and life extension of nuclear facilities.

Guidance updates: Raised 2025 guidance for total revenue growth (7%-9%), adjusted EBITDA ($223M-$233M), and adjusted free cash flow ($95M-$115M). Adjusted EPS guidance increased to $0.48-$0.52 per share.

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Risk or Challenges

Nuclear & Safety segment EBITDA: Negatively impacted by nonrecurring items, including FX-related transactional headwinds in France and project cost increases for a nuclear project in the U.K., leading to margin contraction.

Nuclear & Safety segment orders: Lower year-over-year due to tough prior year comparison and timing dynamics, despite growing engagement in the nuclear ecosystem.

Labs & Research end market: Softer than expected performance due to U.S. Department of Energy budget uncertainty and tariff uncertainty from China.

U.S. government budgetary headwinds: Impacting Labs & Research business, leading to a reduction in organic revenue growth expectations for this end market.

Tariff impacts: Accelerated shipments in the Medical segment to get ahead of expected tariff implementations, indicating potential future disruptions.

Project pipeline timing: Large one-time 2025 order pipeline timing could impact revenue realization, though the pipeline is larger than in past years.

Capital structure: While improved, reliance on convertible notes and term loans could pose risks if market conditions change or interest rates rise.

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Guidance & Outlook

2025 Guidance Update: Key 2025 metrics, including total revenue growth, adjusted EBITDA, adjusted free cash flow, and adjusted EPS, have been raised and tightened. Organic revenue growth expectations for the Nuclear Power end market have been increased to double-digit growth, up from high single digits previously. Total revenue growth is now expected to be 7% to 9%, up from 5% to 7% previously. Adjusted EBITDA is forecasted at $223 million to $233 million, up from $215 million to $230 million. Adjusted free cash flow is projected at $95 million to $115 million, reflecting an increase in total dollars and conversion rate. Adjusted EPS is expected to be between $0.48 and $0.52 per share.

Nuclear Power Sector Outlook: The company anticipates significant opportunities in the Nuclear Power sector, including modernization upgrades, capacity expansion, and operating lifetime extensions. Nuclear operators are expected to increase capital budgets over the next four years, creating growth opportunities for Mirion. The company has booked approximately $9 million in SMR-related orders year-to-date and expects accelerating growth in this sector. Double-digit organic growth is expected in the Nuclear Power end market for 2025.

Medical Segment Outlook: The Medical segment is expected to return to mid-single-digit organic revenue growth in the third quarter, following shipment timing adjustments in the second quarter. Adjusted EBITDA margins for the Medical segment are anticipated to show slight year-over-year expansion.

Capital Expenditures and Cash Flow: 2025 CapEx is projected at $40 million, an 18% reduction compared to 2024. Adjusted free cash flow guidance has been increased, supported by higher expected EBITDA, lower cash taxes, and net interest expense savings. Net working capital is expected to be a use of cash for the full year due to project cash flow timing in the second half.

Certrec Acquisition Impact: The acquisition of Certrec is expected to contribute a 100 basis point improvement to total revenue growth in 2025. Certrec's solutions are relevant to both the Nuclear Power and bulk electric system markets, with significant growth potential in the SMR sector and expanded regulatory coverage in the grid market.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you quantify the number of new nuclear opportunities you're looking at now compared to two years ago?

A:Management noted that the quantum of new projects and the desired timing of those projects continues to accelerate. They highlighted strategic alliances, such as with EDF in France, and mentioned that Westinghouse is discussing up to 10 new AP1000 reactors in the U.S. with starts prior to 2030. However, they did not provide a specific number.

Q:Can you elaborate on the Certrec acquisition and its synergies with the core business?

A:Certrec is a founder-led company with $17 million in revenue, attractive margins, and 110% net revenue retention. It has 15 SaaS applications and 15 terabytes of unique industry data. Management emphasized its AI potential, recurring revenue, and relevance to nuclear power and the broader electrical grid. Certrec's solutions address risks of human error, regulatory compliance, and grid security, aligning with the company's focus on nuclear power and digital evolution.

Q:Should we think about 8 points of growth coming from the installed base this year, and how bankable is the growth rate from the installed base beyond this year?

A:Management did not provide a specific growth number but emphasized strong fundamentals in the nuclear power market, driven by insufficient electrical capacity, favorable policy shifts, and increased profitability of nuclear plants. They highlighted modernization investments and life extensions as key drivers of growth, describing the trend as generational.

Q:Has the $350 million pipeline shifted to the right, and is there potential for a $300 million-plus order quarter?

A:Management acknowledged some timing shifts in the pipeline, particularly for government-related projects, but expressed confidence in monetizing a decent chunk of the pipeline. They stated it is unlikely to see a $300 million order quarter but emphasized the pipeline's consistency and growth potential.

Q:Are there lingering margin issues or cost issues associated with the project cost increase in France?

A:Management explained that the cost increase was due to accounting adjustments for large projects and does not indicate lingering margin issues. They reaffirmed confidence in the project's margin rates and operational progress in Europe.

Q:Would you be disappointed if your commercial nuclear backlog isn't higher by year-end?

A:Yes, management stated they would be disappointed if the commercial nuclear backlog isn't higher by year-end, given the current opportunities.

Q:Will SMR orders become a more meaningful part of the order ramp-up over the next 6 to 12 months?

A:Management remains cautious about SMR orders, noting that the sector is accelerating faster than expected but will undergo consolidation. They emphasized the importance of strategic alliances and first-of-a-kind reactors before broader proliferation.

Q:What is the resiliency of the medical and labs businesses given concerns about hospital reimbursement?

A:Management stated that radiation therapy markets have held up well due to higher Medicare reimbursement and the efficiency of their solutions. They are monitoring the market closely but have not seen signs of erosion in growth rates.

Q:Are Nuclear Medicine customers sensitive to pricing, and what is the supply-demand dynamic?

A:Management noted strong demand and margin improvement in Nuclear Medicine, driven by pricing power and a higher proportion of software sales. They highlighted the theranostic revolution as a key growth driver.

Q:What is the growth from conventional nuclear power in the order book, excluding SMR?

A:Management indicated positive order growth in the Nuclear Power segment, even excluding SMR, but did not provide specific numbers due to order lumpiness.

Q:Can you quantify the opportunity from life extensions in the installed base?

A:Management did not provide specific metrics due to variability across reactor types and fleet sizes. They noted that life extensions typically trigger modernization CapEx, including upgrades to radiation monitoring systems.

Q:What is the opportunity from the partnership with Westinghouse?

A:The partnership focuses on retrofitting the Westinghouse fleet with digital neutron flux measurement systems, representing a share gain opportunity. Management sees a sizable opportunity in the U.S. and globally.

Q:What is the progress on procurement and margin expansion targets?

A:Management reaffirmed their commitment to a 30% EBITDA margin target by 2028, citing operating leverage, procurement, and digital evolution as key drivers. They also highlighted AI as an emerging factor for efficiency and margin improvement.

Q:Review of Unclear Management Responses

A:Management avoided providing specific numbers for several questions, including the exact growth rate from the installed base, the quantum of new nuclear opportunities, and the growth from conventional nuclear power excluding SMR. They also used cautious language regarding SMR orders and life extension opportunities, emphasizing variability and uncertainty.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

MIR Transcript

Mirion Technologies, Inc. (MIR) Q3 2025 Earnings Call Transcript

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The earnings call summary and Q&A session indicate positive sentiment: increased guidance for 2025, strong nuclear and medical segment outlooks, and strategic partnerships. Despite some uncertainties in timing and specifics, the overall confidence in market opportunities, especially in nuclear power and SMR projects, is evident. The raised guidance and strategic acquisitions further support a positive outlook. Given the market cap, a 2% to 8% stock price increase is expected.

Mirion Technologies, Inc. (MIR) Q2 2025 Earnings Call Transcript

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The earnings call highlights strong financial performance with significant growth in adjusted EBITDA and EPS, driven by nuclear power orders. The share repurchase plan reflects confidence in the company's financial health. Despite some risks like foreign exchange and procurement delays, optimistic guidance on margin expansion and potential tariff exemptions in China mitigate concerns. The positive sentiment is supported by strong financial metrics and strategic moves, suggesting a likely stock price increase of 2% to 8% over the next two weeks.

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The earnings call shows strong financial performance with significant growth in adjusted EBITDA, EPS, and orders. Despite potential tariff impacts, the regionalized supply chain and optimistic outlook on nuclear power provide resilience. The share repurchase plan and improved margins further boost sentiment. While there are some uncertainties in government contracts and project timelines, the overall positive financial metrics and strategic initiatives suggest a likely stock price increase in the coming weeks.

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