Mirion Technologies, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 was a historic year with record fourth quarter and full year performance, including revenue, adjusted EBITDA, and adjusted EPS growth. Earnings grew, and the quality of earnings improved through planned operational and commercial actions.
• In 2024, significant steps were taken to improve the capital structure, including completing warrant redemption, repricing the term credit facility, and founder shares vesting.
• Began 2025 with a healthy backlog, where approximately 49% of expected 2025 revenue is in backlog. Positive momentum in nuclear power and nuclear medicine, with a strong installed base supporting recurring revenue.
• Formed strategic alliances, such as with Siemens Healthineers in medical and EDF in nuclear power. Progress towards the 2028 30% adjusted EBITDA margin target outlined at the December Investor Day.
• Highlighted strong operating performance in the nuclear and safety group, with improvement in the French business after organizational and process changes in 2024.

Segment Performance

• Nuclear and Safety Group: Fourth quarter segment revenue grew 13.2% to $168.8 million, with organic growth of 13.9%. Full year nuclear and safety group revenue totaled $561.1 million, an 8.7% increase compared to 2023, with organic revenue growth of 8.8%. Fourth quarter adjusted EBITDA grew 20% to $52.8 million, and full year adjusted EBITDA was $159.8 million, 18% better than 2023.
• Medical Segment: Fourth quarter Medical segment revenue was $85.5 million, a $4.2 million or 5.2% increase versus the fourth quarter of 2023. Organic revenue grew 3.7% in the quarter. Full year medical segment revenue was $299.7 million, 5.3% higher compared to 2023. Fourth quarter Medical Group adjusted EBITDA was $33.2 million, a 6.1% increase, and full year adjusted EBITDA was $104.6 million.

Guidance

• Adjusted EPS: Assumes an effective rate of between 25% and 27%, cash taxes of approximately $40 million, and an average share count of approximately 227 million shares. The 2025 share count increased due to founder shares vesting and warrant takeout, resulting in a $0.05 per share headwind.
• Adjusted EBITDA and Margin: Guidance between $215 million and $230 million and 24.5% and 25.5%, respectively, with expected margin expansion in every quarter.
• Revenue Growth: Total revenue growth expected to be between 4% and 6%, including an approximately 190 basis point foreign exchange headwind. Organic revenue growth expected to total between 5.5% and 7.5%.
• Adjusted Free Cash Flow: Expected to be between $85 million and $110 million, with conversion between 39% and 48% of adjusted EBITDA.

Risks

• Foreign Exchange Headwinds: Sizable foreign exchange headwinds impacted results in 2024 and could affect 2025 performance.
• Conflict Impact: Impact of conflicts like Ukraine, where an accelerated settlement could create opportunities but uncertainty exists in the short term.
• Tariffs and Regulation: Tariff dynamics and regulatory changes affecting defense and other business segments, including potential impacts on DOE and DOD contracts.
• Macro Factors: Yield curve dynamics, foreign exchange, and other macro factors can go either way and impact results.

Question and Answer

• Q: Chris Moore on EBITDA margin improvement and nuclear percentage of revenue A: Thomas Logan discussed that nuclear represented about 37% of 2024 revenue, expected to grow, and the company takes a balanced approach to organic and inorganic growth for nuclear exposure.
• Q: Chris Moore on medical wildcards A: Thomas Logan mentioned the Chinese RTQA market, impact of Ukraine conflict, and macro factors like yield curve and tariffs as wildcards for medical.
• Q: Joe Ritchie on book and bill flow, EDF announcement, US DOE defense business A: Thomas Logan talked about the positive momentum in book and bill flow, the strategic deal with EDF, and risks related to DOE defense business including tariffs and budgetary dynamics.
• Q: Vlad Bystricky on DOE impacts on nuclear medicine, $300M-$400M pipeline A: Thomas Logan stated no material impact from new administration on nuclear medicine reimbursements and provided insights on the timing and gating factors of the $300M-$400M pipeline orders.
• Q: Yuan Zhi on Russia/Ukraine business restart and US regulation A: Thomas Logan discussed the potential timeline for restarting business in Russia and Ukraine once conflicts are settled and the positive outlook on US regulation supporting nuclear power development.
• Q: Shivan Chervastava on EBITDA margin extension and Siemens Healthineers relationship A: Brian Schopfer mentioned operating leverage and procurement as drivers of margin extension, and Thomas Logan talked about early traction and potential upside from the strategic alliance with Siemens Healthineers.