MIR - NYSE

Greetings. Welcome to Mirion Technologies, Inc. Fourth Quarter and Full Year 2024 Earnings Call. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded. It is now my pleasure to introduce Eric Linn, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Ben. Good morning. Welcome to Mirion Technologies, Inc.'s fourth quarter and full year 2024 earnings conference call. Joining me this morning are Mirion Technologies, Inc. CEO, Thomas Logan, and Mirion Technologies, Inc. CFO, Brian Schopfer. Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements. 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 report on Form 10-K, quarterly reports on Form 10-Q, and in Mirion Technologies, Inc.'s other SEC filings under the caption risk factors. Quarterly references within today's discussion relate to the fourth quarter ended December 31st, 2024, unless otherwise noted. 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.mirion.com. With that, let me now turn the call over to Thomas Logan, who will begin on slide two.

Alright. Thank you, and good morning, everyone. 2024 was a historic year at Mirion Technologies, Inc. I'm pleased to report record fourth quarter and record 2024 performance, as revenue, adjusted EBITDA, and adjusted earnings per share all topped previous highs. Let me offer a big thank you to the Mirion Technologies, Inc. team for delivering outstanding results. Not only did earnings grow, but also the quality of earnings grew as we expanded the adjusted and drove adjusted EPS from $0.34 to $0.41 per share for the year, all through planned operational and commercial actions. Importantly, we also delivered on our guidance for the second year in a row. Despite sizable foreign exchange headwinds, our results were in line with or better than our 2024 guidance. We also took significant steps in 2024 to improve our capital structure. In May, we completed the redemption of outstanding public warrants and repriced our term credit facility. In the fourth quarter, all three tranches of our founder shares fully vested. As a result, we entered 2025 with a much cleaner and simpler capital structure. The progress we made in 2024 is supporting momentum carrying into 2025. Firstly, on our current backlog, we are beginning 2025 with a healthy pipeline of new activity. Approximately 49% of our expected 2025 revenue is already in backlog, which compares favorably with the 46% coverage we had coming into 2024. Beyond the backlog, our book and build flow business is reflecting the positive momentum in both nuclear power and nuclear medicine that you've heard us detail over the past several quarters. Our business generates a high degree of recurring revenue supported by a strong installed base. We are seeing positive developments on the $300 million to $400 million of new order opportunities that we introduced on our October earnings call and I reiterated during our It's still early days on these opportunities, but we like where we stand today. Importantly, we've lost none of these projects to date and are seeing additional bidding opportunities materialize. Conversations are maturing as the year gets underway. We hope to have more details to share as the year progresses. Secondly, we are poised for growth in 2025. Our business model is built for scale, and we expect to take a meaningful step forward in 2025 towards the long-range 2028 plan introduced at our investor day. Also, much of the heavy lifting done in 2024 on self-help, particularly in procurement, will be better reflected in our go-forward results. Thirdly, we are laser-focused on capital allocation. We made this clear at our December investor day. I continue to be encouraged by the robust pipeline of both M&A and organic opportunities that lay ahead. Speaking of our investor day, we continue to receive positive feedback on both the strategy and opportunities available to Mirion Technologies, Inc. One of the topics that comes up frequently in follow-up discussions is the category of one position that Mirion Technologies, Inc. occupies, shown on panel four. For investors, we are a strong play for nuclear exposure. Just a scarcity in the nuclear instrumentation space. Approximately 37% of Mirion Technologies, Inc.'s 2024 revenue was derived from the commercial nuclear power landscape, significantly more than any of our closest competitors. Mirion Technologies, Inc. offers investors cradle-to-grave exposure to the 100-year nuclear power lifecycle. Whether it's today's install days, or new builds, or decommissioning events, various solutions are critical to the nuclear infrastructure. And this isn't just hyperbole. We believe fervently that we have a unique angle on the nuclear power market. We're seeing strong global demand today from our installed base representing more than 95% of all operating commercial reactors worldwide. Operators are eager to invest in their existing reactors to extend the useful life or increase capacity. Moreover, new construction is active around the world as profitability dynamics have improved and the need for clean, reliable energy continues to grow. This nuclear power super trend remains strongly intact despite initial concerns around deep-sea a few weeks ago. Hyperscalers are investing heavily in 2025 to continue building out capabilities and capacity. It's estimated that they will increase capital spending by about 44% in 2025, more than $320 billion, and they continue to spend on both utility scale and small modular reactors to secure their future needs. Beyond the hyperscalers, the news reflects continued support and growing momentum for nuclear power. Some recent examples would include in the UK where the government is expected to give developers more freedom over where they can build new reactors in support of growing clean energy demand. In France, as we've been speculating, EDF plans to prepare six sites for new data centers as AI demand is expected to drive infrastructure investment. In fact, ahead of a recent AI summit, French President Emmanuel Macron indicated more than €100 billion in AI projects in-country. Here in the US, President Trump is prioritizing domestic energy sources, including nuclear. South Carolina's governor recently advocated for reviving their nuclear energy sector, including the previously abandoned VC Summer nuclear expansion. The hardware, software, and service solutions we provide are mission-critical to customers we serve. We are the global leader in 17 of the 19 product categories we provide, thanks to a combination of superior quality and service, and a global reach that is unmatched by our competitors. Stated simply, we provide compulsory products to customers in highly regulated industries with a high cost of failure. Our customers recognize our role in their success. We've increasingly formalized strategic alliances across both of our operating segments. For example, in our medical group, we signed a strategic alliance agreement with Siemens Healthineers last year. In nuclear power, we signed an MOU with Electronics Corporation of India, a leader in the Indian market, to support the rapid growth of India's nuclear sector. We also signed a strategic partnership agreement with EDF in 2024. EDF is the largest operator of nuclear power plants in the world, and we're now an exclusive supplier for all of their nuclear new build projects for the next 20 years. Mirion Technologies, Inc. is in a category of one for its pure focus on the detection, measurement, and analysis of ionizing radiation. This isn't just a tagline. It's what we are to the customers we partner with, to the investors we represent, and to the markets we serve. Turning now to the quarter's performance on panel five. Fourth quarter revenue was $254.3 million, a new quarterly record. This performance reflects the demand we continue to see from today's operating nuclear power plants. Approximately 80% of our nuclear revenue historically comes from this installed base. Nuclear reactor operators are investing in their fleets, whether to extend the operating lifetime or expand the capacity. Each of these ambitions creates revenue opportunities for Mirion Technologies, Inc. Fourth quarter performance also reflects attractive radiopharmaceutical demand. We continue to grow this part of the business as therapeutic nuclear medicine is revolutionizing cancer care. Also, we're increasingly finding new ways to market nuclear and safety products to our nuclear medicine customers. Last year alone, we sold more than $15 million of traditionally industrial equipment to medical customers, representing a 38% increase. Fourth quarter adjusted EBITDA was nearly $70 million. Adjusted EBITDA increased 14% compared to the same period last year, and margins expanded 90 basis points driven by procurement initiatives and operating leverage. This showcases strong operating performance driven by our business system, the foundation of our operating activities for more than 15 years. Fourth quarter adjusted EPS was $0.17 a share, a $0.02 improvement over the fourth quarter last year. Both fourth quarter and full year 2024 represent continued solid performance. We're executing on the strategy laid out at our investor day to capitalize upon our unique position. We see significant market opportunities, both organic and inorganic, and our growth drivers remain well on track. Now let me turn it over to Brian Schopfer to discuss the quarterly and full year financial results.

Thank you, Thomas, and thank you all for joining our call. I'll review the detailed financial results beginning on slide six. Fourth quarter enterprise revenue grew 10.4% to $254.3 million compared to the prior year's fourth quarter of $230.4 million. Fourth quarter organic growth was similar at 10.3% as FX headwinds largely offset 0.5% of the inorganic growth. Strong fourth quarter organic revenue performance continues to be driven primarily by growth in nuclear power of approximately 7%, nuclear medicine up an impressive 21%, and 14% of dosimetry growth. It is worth noting that in the fourth quarter of 2023, we had double-digit growth in nuclear power, giving us a very tough comp that we grew on top of. Full year enterprise revenue grew 7.5% to $860.8 million versus 2023. Organic growth was 6.6% in 2024. This was better than our guidance of between 5% and 6%, which we had tightened back in October. As a reminder, we grew over 9% organically in 2023. In the nuclear and safety group, nuclear power activity was up 8.5% in the year, primarily due to strength out of Europe in safety-critical products to Korea. The medical group, nuclear medicine was the biggest organic contributor, growing 7.5% for the year. We had double-digit growth in all quarters for nuclear medicine after the first quarter ERP implementation and are expecting double-digit growth in 2025 in this end market. Enterprise inorganic growth was 1%, reflecting the EC2 acquisition completed in late 2023, offset by the divestiture of the rehab business. Q4 and full year adjusted EBITDA was $69.6 million and $203.6 million, respectively. We ended the year with six consecutive quarters of margin expansion compared to the same periods in the prior year. As mentioned, 2024 adjusted EBITDA was at the high end of our December guidance of between $195 million and $205 million and above the original guidance we gave at the beginning of the year. 2024 adjusted EBITDA margin was 23.7%. This represents approximately 110 basis points of margin improvement for the year. We're making steady progress towards the 2028 30% adjusted EBITDA margin target outlined at our December Investor Day. Fourth quarter adjusted earnings per share was $0.17, contributing to a full year adjusted EPS of $0.41. The warrant takeout in the second quarter and the founder share vestings during the fourth quarter impacted EPS by only $0.01 for the full year. Turning to the nuclear and Safety Group on Slide seven, fourth quarter segment revenue grew 13.2% to $168.8 million. Fourth quarter organic growth was 13.9%. Organic growth demonstrated continued strength from our nuclear power business, mainly out of the French and safety-critical products businesses. This was coupled with good growth across all other end markets we play in. Full year nuclear and safety group revenue totaled $561.1 million, an 8.7% increase compared to 2023. Nuclear-related activity from Europe and Korea was a key driver to annual growth. Full year organic revenue grew 8.8%, beating our expectations of mid-single-digit plus growth. The two-year organic growth stack is an impressive 18.9%. Fourth quarter adjusted EBITDA for our nuclear and safety division grew 20% to $52.8 million. Adjusted EBITDA margin also expanded by strong operating leverage, the beginning signs of our procurement initiatives, and better mix are showing through in the results. Recall, this time last year, we were discussing some challenges in our French business. I'm happy to say that these are largely behind us, as the organization and process changes put in place in 2024 by the team delivered the intended results, and this region is back to a more normalized performance. A special thanks to our French colleagues for all their hard work in 2024 to deliver a solid performance. Full year nuclear and safety adjusted EBITDA was $159.8 million, or 18% better than last year. Margins were 28.5%. Half of the margin improvement was operating leverage, with the rest coming from management actions on procurement processes started midyear and our increased focus on factory floor initiatives. This helped to offset an increased bonus accrual in the fourth quarter in this segment. Slide eight provides additional details on our 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, driven by our nuclear medicine and dosimetry businesses and offset by our radiation therapy quality assurance or RTQA business. As a reminder, we delivered nearly 10% organic growth in this segment, so comps were tough, particularly in the RTQA business. There were three headwinds in the quarter for medical. Radiation therapy was a headwind to organic growth, primarily driven by China, which impacted total medical revenue by approximately 210 basis points. The purposeful exit of our lasers business was a 110 basis point headwind, and we saw an additional headwind from merging our Wisconsin and Virginia business during the quarter of approximately 60 basis points. It is also worth noting that we have implemented a new ERP in this combined business in Q1 2025. Inorganic fourth quarter revenue grew 1.5%, reflecting a partial quarter's impact of the EC2 acquisition. Recall, we closed on the EC2 acquisition in November 2023. Full year medical segment revenue was $299.7 million, or 5.3% higher compared to 2023. The $15.2 million increase versus full year 2023 largely reflects the full year impact of our EC Squared acquisition and growth in our nuclear medicine and dosimetry businesses. Total growth was split roughly evenly between organic and inorganic growth at 2.6% and 2.7%, respectively. 2024 was a year of resilience for our medical business. We saw our China RTQA business end the year down approximately 40%. Without those headwinds, our medical group would have grown approximately 5% organically. Combining this with the closure of the lasers business, we have seen the medical business grow approximately 5.5% organically for the year. As I know some of you are still new to the story, the lasers business was a money-losing product line and will be an addition by subtraction as it is exited. Turning to EBITDA, Medical Group adjusted EBITDA was $33.2 million in the quarter, a 6.1% increase compared to the prior year. Adjusted EBITDA margins expanded 30 basis points to 38.8%. Full year adjusted EBITDA was $104.6 million, with margins improving by 50 basis points to 34.8%. In medical, in the fourth quarter, we saw a large bonus accrual release, which partially offset operating inefficiencies for our Wisconsin and Virginia move coupled with some mix headwinds. Now turning to the order book and backlog starting on slide nine. Before we jump into the full year view on orders, let's make sure we touch on how we did in the fourth quarter. With the reminder that we were comping a 30% order growth number from the fourth quarter of 2023. Orders were up 6% in the quarter over the fourth quarter last year. That number, when adjusted for currency and M&A, is actually up approximately 6.8%. If you normalize for the noise on the new builds in the quarter and last year's fourth quarter, Q4 orders were up roughly 5%. I realize that is a lot of moving parts, but regardless, it was a good quarter recognizing we also saw some things slip out of the year that we'd expected to close. As you know, large orders tend to be a bit lumpy in our business. That is what we attempted to illustrate on the slide to provide insight into the underlying orders dynamics. On an annual basis, after adjusting for large orders and a one-time debooking, as already mentioned in the third quarter, the underlying 2024 adjusted order book grew by approximately 3%. This reflects the strength in the book and bill business. Slide ten summarizes our backlog trend. Fourth quarter backlog was $812 million. After adjusting for the strength in the U.S. dollar in the quarter and the previously mentioned Turkey debooking, our adjusted backlog was approximately flat compared to the same period last year. As Thomas mentioned, the current backlog gives us visibility to approximately 49% of the midpoint of 2025 revenue guidance, it is ahead of where we were at this time last year. Next, on the balance sheet and free cash flow on slide eleven. As a reminder, 2024 was a busy year for us. We improved net leverage by another half turn, removed the warrants from our capital structure, fully vested all three tranches of founder shares, and refinanced the debt. We ended 2025 with 2.5 times debt to trailing twelve months adjusted EBITDA, slightly better than our anticipated 2.6 leverage guide on our third quarter earnings call. This represents almost a full two turns of deleveraging over the past two years. As we detailed at our investor day, aggressive deleveraging has bolstered our financial strength and sets the stage for further M&A in 2025. M&A is in our DNA, and we're in the process of evaluating several compelling opportunities. Adjusted free cash flow for the quarter was $53 million and $65 million for the full year. Full year adjusted free cash flow was in line with guidance. Our adjusted free cash flow conversion for the year was 32% of adjusted EBITDA. We are not satisfied and continue to see opportunities to accelerate and bring forward our free cash flow conversion in 2025 and are committing to a 50% increase to adjusted free cash flow in 2025 at the midpoint of our guide. There are a few moving pieces to adjusted free cash flow, so let's spend a few seconds on each. First, adjusted free cash flow was negatively impacted by higher CapEx. Based on the high end of the range at the beginning of the year, we spent a bit more on CapEx than we anticipated. This was primarily due to our dosimetry badge launch and continued investments in our e-commerce and software platforms. These investments are meant to speed up adoption in gross. Although software is still a small piece of the total business, we're expecting to see double-digit revenue growth next year in our medical business specifically. And look forward to updating you on our progress during the June quarter. Additionally, we are committing to an approximately 18% reduction in CapEx in 2025 from 2024. Second, net working capital is a use of cash versus a source of cash expected. Net working capital operating days did reduce by about nine days, and our inventory reduced by approximately $7 million on an FX adjusted basis. Conversely, cash taxes were better by $14 million versus initial guidance of $37 million. But there is some timing impact of cash taxes in 2024 versus 2025 equaling about $6 million that we will end up seeing in 2025. We did make headway, but not as much as we hoped. Opportunities lie ahead. To summarize 2024, we delivered on both our initial guidance and the latest guidance and posted another year of record performance. We're continuing this momentum into 2025 and feel increasingly confident in the 2025 guidance we unveiled at our December Investor Day. Slide twelve reconfirms our 2025 guidance. Our adjusted EPS guidance assumes an effective rate of between 25% and 27%, materially down from 2024. We're modeling cash taxes of approximately $40 million and an average share count of approximately 227 million shares. The 2025 share count increased versus 2024, mainly due to the founder shares vesting in the fourth quarter and the taking out of the warrants in the second quarter. This is a $0.05 per share headwind to our adjusted EPS guide in 2025 due to these two factors. As a reminder, adjusted EBITDA and margin guidance is between $215 million and $230 million and 24.5% and 25.5%, respectively. We expect to see adjusted EBITDA margin expansion in every quarter. Total revenue growth for 2025 is expected to be between 4% and 6% and includes an approximately 190 basis point foreign exchange headwind. Organic revenue growth is expected to total between 5.5% and 7.5%. In 2025, we expect the organic growth rate to build as the year goes on, peaking in the third quarter and normalizing in the fourth quarter. Lastly, adjusted free cash flow is expected to be between $85 million and $110 million. Adjusted free cash flow conversion is expected to be between 39% and 48% of adjusted EBITDA, and we will continue to see a better quarterly cadence. With that, I'll ask the operator to open the line for questions.

Thank you. Before pressing the star keys. Our first question is from Chris Moore with CJS Securities. Please proceed.

Hey, good morning, guys. Thanks for taking a couple of questions.

Good morning, Chris.

Maybe I'll just start with where Brian left. The EBITDA margin improvement each quarter, so normally, the third quarter, you know, last few years has not been, you know, has been down a little bit. So we're saying that Q3 is better than Q2 this year. Just wanna make sure I have that correctly.

Yeah. What I'm actually talking about is quarter each quarter over the prior year quarter, not sequentially.

Fair enough. That makes more sense. Got it. Awesome. Given, you know, the changing dynamics in the whole nuclear power space, how are you thinking about nuclear as a percentage of Mirion Technologies, Inc.'s total revenue over time?

Yeah, Chris. I'll take that. The interesting thing is that we noted that in 2024, nuclear represented about 37% of our total revenue. If you take the midpoint of our guidance and kinda look forward in 2025, that number grows. But in the face of what is clearly a very, very durable trend as it relates to the growth in nuclear power, not only spurred on by the discussions about hyperscalers but a number of other key themes. I think there's an increasing sense of scarcity value in and around exposure to nuclear because it's not a space where there are a lot of highly investable opportunities. And so within that, given that factor and also given the fact that candidly valuation multiples have really broadly equilibrated between med tech and nuclear power, you know, for us, that really just encourages us to continue to take a very balanced approach as we look at both organic growth opportunities and inorganic growth opportunities. But I think the net effect of all of that is that our exposure to nuclear continues to increase at its core because, as we've guided, nuclear power is growing at upper single digits since I've grown the company as a whole. But beyond that, if you were to look through, again, our pipeline of both organic and M&A opportunities, it is rich with nuclear power-related stuff. So I think at the end of the day, there's an opportunity for us to drive up that percentage.

Got it. Very helpful. Just last one for me. Lots of talk on the nuclear side. What are the biggest wildcards in 2025 for medical?

I think there are a couple. Right now, you know, Brian articulated very clearly. We've been talking about this for a while that the biggest headwind that we faced in medical last year was in the Chinese market where because of the continued tail of the anti-corruption activities that's had a fairly significant impact on med tech in general, but certainly the build-outs of new radiation therapy clinics. You know, many of the leading OEMs in the space had projected that that would reverse last year. It did not. But to be clear, you know, our guidance is or what's embedded in our guidance for the year is no improvement in the Chinese market. So that would be wildcard number one is that if we do see a reversion back to what had been the mean, in terms of growth in RTQA in China, that could be upside. I think another significant wildcard would relate to the conflict in Ukraine. That if we see an accelerated settlement and to be clear, you know, I think talks are absolutely going on right now, in a variety of dimensions. But if we were to see settlement of that conflict earlier in the year, and by that, I mean, come summertime, then there's an enormous need for effectively a, you know, a Marshall Plan-like approach to rebuilding Ukraine. And some of that will involve the many nuclear power plants in the region. So as soon as that conflict settles, we think there will be an opportunity for us to be part of the solution in terms of helping to rebuild Ukraine. And then beyond that, you know, presumably, with conflict resolution, there is some pathway to normalization of trade between Russia and the US. Under any circumstances, we don't really see that happening this year. But as that dynamic improves, that might open things up a bit more. I guess the final thing I would say would relate to, you know, just kind of the macro picture overall, and that would include the combination of yield curve dynamics, foreign exchange dynamics, tariff dynamics, etcetera. Which can go either way. But I think we've taken a neutral to conservative approach on all of those things. To the extent we see any favorable movement there, obviously, that could help us with.

Very helpful. Jump back in line. Thanks, guys.

Our next question is from Joe Ritchie with Goldman Sachs. Please proceed.

Hey. Good morning, guys.

Hey, Joe.

Thanks for the clarification on the Q4 organic orders, plus seven on a plus thirty comp. That's pretty good. Congrats on the end of the year. I guess maybe my first question is just on this book and bill flow business that is, you know, growing fairly steadily. Thomas, can you just maybe just kinda talk to us a little bit about that near-term opportunity and what you're hearing more specifically around that business?

Yeah. I'll talk qualitatively and then, Brian can kind of fill in the gaps overall. But fundamentally, this is what we've been talking about for the better part of the last two years. Given the fact that the core nuclear power-related exposure we have relates to the installed base. So that's about 80% of our nuclear power revenue, which in turn is just under 40% of our total revenue. There's a significant dynamic there where as the base continues to become more profitable, it drives fatter capital spending budgets. Drives fatter operating budgets. And then also, particularly as we get into outage-related season or outage season in spring and fall, drives some very short order cycle business. And so I think what we saw last year was a continued improvement in that core dynamic where, you know, we saw an increase in that general flow business. Much of which was driven by the core health in nuclear. But it's not just there. We also saw a pickup in certain elements of our medical business, most strikingly in nuclear medicine. Where the very nature of what we saw there is characterized by shorter order cycle times. And so there again, we saw a favorable dynamic that helped drive the cadence there.

Yeah. I think that's all right. I think what was encouraging to us specifically in the fourth quarter is we kinda saw it in both regions, both in Europe and also in North America. And I think the North America business had been a bit slower on the nuclear side in the first half of the year. And, you know, I think that's encouraging to us, Joe.

Got it. That's helpful, guys. And then I wanted to touch on that EDF announcement, $100 billion in tendering for new AI-driven data centers. I'm just curious, you know, I know, obviously, this is a longer-term opportunity, just given the strategic partner. Ultimately, like, what does this mean for you guys? And then, you know, is there any way to kinda think about a timeline on when you start to see some orders associated with this?

Yeah. I think it really builds off the just the incredible dynamics that we have in that market overall on a very important long-standing relationship with EDF. You know, the most important factor, Joe, is the strategic deal that we signed last year where we effectively are the sole source supplier for certain content for the next one to two dozen EPR reactors built both inside of France as well as on an export basis. You know, that's important, obviously, from an overall long-term growth standpoint. But as with the broader dynamic that we talked about with the installed base, EDF a year ago had a very tough time because of widespread outages related to a variety of operational issues that they had as a firm. They've recovered from that. They continue to move through that recovery. And I think what this AI deal presages overall is the notion that, you know, you're gonna see continued strength in capital spending into their installed base of more than fifty reactors in France, then uptime will be ever more critical. The capacity factors will be ever more critical. The potential upgrades will be ever more critical. And I think all of those things will inure to our benefit, again, just given the strength of the relationship that we have and cherish with EDF.

Great. If I can maybe sneak one more. Thomas, you gave kinda some color on potential swing factors as we progress through the year. I'm curious. I didn't hear you talk about, you know, what's going on in the US and DOE and ultimately what that potentially could mean for your defense business. Just any color around that and how you guys are thinking about the range of outcomes there?

Yeah. There are two big wildcards there that, you know, we obviously expected a question on. One would relate to tariffs, so we can come back to that. The other is, you know, just relating to overall budgetary dynamics. And our view is that if you look at really the government sources of funding and revenue, for us, it's principally in two channels. It's DOE related, which is largely focused on laboratory equipment, and remediation services and capital equipment at big sites like Oak Ridge and Savannah River and other places. And then secondly, it is the Department of Defense. So it is the military spending on a variety of programs that we support and some that we hope to support in the future. Right now, every indication is that as we look at the new head of the new energy secretary, but also the changes within the DOD, our view is that notwithstanding the DOE's efforts to root out waste and fraud and inefficiency, overall, we don't expect that to in any way jeopardize the core relations, the core dynamics that we see in that realm. So right now, we're cautiously optimistic that not only do we continue to, again, service the contracts that we have today, but we hope there's some upside in the air. The other thing to note too on the tariff dynamics is that, you know, we've taken a hard look at what our aggregate exposure is from a general trade flow sample and understand that as a company, about 50% of our commercial sales are outside of the US. But if you look at the matching, effectively, the organic hedging between our production activities and our commercial activities, it's very strong. There's a very strong natural balance there. And so if you want, at the areas where we expect to see the greatest tariff exposure bilaterally, it would be Canada, Mexico, China, and the EU overall. And if you aggregate all of those again, bilaterally going both ways, so the gross number, not a net number, that total represents about 13% of our revenue overall. So it's a considerably smaller exposure than you might assume just given the international footprint of a company and the international flows. But there, when you think about it, more deeply, you know, we're obviously trying to get ahead of any potential tariff activities and do everything we can to understand the basis, the dynamics, the timing, all of those factors. But we're also trying to take a much more comprehensive view that it's not just about tariffs, it's also about FX, it's about tax differentials, particularly like corporate income tax that may widen. It's about terms of trade and, ultimately, you know, longer term, our ability to continue to, you know, kind of defuse the threat of tariffs by shifting our supply chain to narrow that differential even more. So right now, huge array of unknowns in and around what the tariff impact could be. I would put forth, though, that our view is that our exposure is probably less than many might infer, given the international footprint of the business.

Super helpful. Thanks, Thomas.

Our next question is from Vlad Bystricky with Citigroup. Please proceed.

Morning, guys. Thanks for taking my call here. So maybe I'll start off with just a follow-up. Hey, Brian. Maybe just to follow-up on Joe's question around DOE and government expenditures and potential impacts there. Obviously, you talked about it on the nuclear side, but is there, you know, on the nuclear medicine side, any risk of reimbursements impacting, you know, providers' willingness or ability to invest in, you know, your product suite?

Yeah. We don't think so, Vlad. On the nuclear medicine side, last year, we talked about how certain CMS reimbursement codes relating to very expensive diagnostic agents that are part of this overall theranostic movement had been approved, which effectively creates a stronger degree of incentive and momentum in that area of the business overall. The other important and so we expect that dynamic to continue. We don't expect the new administration to come in and have any kind of immediate and material impact on how CMS thinks about reimbursement codes in nuclear medicine. The same would be true for radiation therapy where, you know, there's an ongoing dynamic relating to, you know, the entire tableau of reimbursement codes that is just kind of endemic within the business. Again, we're not anticipating any material changes there in the year ahead that would be driven by the new administration and or DOE specifically.

Great. That's helpful, Thomas. Appreciate it. And then maybe just circling back to the $300 million to $400 million pipeline of larger one-time orders. Just any color you can give on how you're thinking about the timing of those starting to come through, whether we could see, you know, a good portion or all of those booked by year-end 2025? And then just what are some of the gating factors for those orders to go forward as you talk to your customers?

There's really not a lot of change there. Other than, you know, what we noted last quarter when we announced this and provided this context is that we indicated that these opportunities would likely trade in the main over the subsequent five quarters, you know, that continues to be the case. So we're just a quarter down on it overall. The changes that we've seen are that I think the opportunity set has broadened as it relates to these large, in some cases, quite large projects. Yeah. We're working very hard on all fronts. We haven't lost a deal yet. We like where we sit. But the inherent nature of, you know, large projects, particularly large nuclear projects, is that the timing is hard to pin down in terms of trying to bucket things in a particular quarter. And, you know, we continue to hold to that guidance. So we expect that the core of these over the balance of 2025. Yeah. We hope to get our share or better of this set like where we sit today.

Appreciate that, Thomas. I'll hop back in queue.

Our next question is from Yuan

Congrats on a record quarter, and thank you for taking our questions. I have two questions, if I may. First, I'm curious about the timeline for you to restart business in Russia and Ukraine once peace is brought back to the area, the timeline for both nuclear medicine side as well as the nuclear power side.

Yes. So our view there, Yuan, is that the timeline will be obviously dictated by settlement terms overall. And our view is that there is a real need, particularly as it relates to nuclear power-related instrumentation, in both markets, in both Ukraine and Russia. We would assume, again, you know, this is a hypothetical and we're all speculating. But we would assume that Ukraine opens prior to normalization of trade with Russia. And, you know, we're ready, willing, and able to do whatever we can do, whatever is required to, you know, not only help shore up the existing nuclear infrastructure, but we also expect that when, you know, pending conflict resolution, that there will be significant new build activity, you know, really characterized by Western reactors in Ukraine. And, of course, we hope to participate in that as well.

Got it. The second question is around regulation updates in the US. Curious what are you hearing from your customers? For example, we have a new DOE secretary in the office. We have states such as Texas and Arizona who welcome nuclear power. There are some state-level legislation and initiatives. Just want to hear what you are hearing from customers.

Yeah. I mean, what we're hearing is excitement. That, again, the, you know, if you look at just the blizzard of announcements, and we just touched on a few reminders today, but they're, you know, the favorable announcements as it relates to nuclear power in this instance, you know, specifically just in the US, has been incredible over the course of the last year. Really, the new news is discussion of the potential in our prepared remarks, which is a two-reactor Westinghouse AP1000 unit, that would be great, obviously, very pro-nuclear. Governor Abbott in Texas has been very clear that he wants Texas to be the epicenter of an American nuclear renaissance, characterized by, you know, creating a really favorable environment for the development, the growth of SMR applications. But beyond that, utility scale as well. And our view is that there will be, you know, a number of other favorable movements. We expect the Duane Arnold power plant in Iowa will be brought back to life at some point, similar to Three Mile Island. And we expect the regulatory environment to be, you know, to be very pro-nuclear. Importantly, you know, the incoming energy secretary is an energy guy overall, an oil and gas strong oil and gas background, but he also happens to sit on the board of Oklo, which is the Sam Altman SMR play. And so, obviously, envision infer that is pro-nuclear. And so at both the federal level as well as the state level, you know, we see continued support. I think, really, the key issue is the posture of the NRC and other regulators in terms of, yeah, to what degree do we see a greater move toward streamlining regulation, particularly as it relates to new designs and new builds so we can potentially cut years off the timeline and really kind of accelerate, for this, you know, kind of hoped for by the administration and by us, American nuclear renaissance.

Got it. That's very helpful.

As a reminder, this concludes our question and answer session. Our next question is from Shivan Chervastava with W. Baird. Please proceed.

Hey. Good morning, guys. Shivan on for Rob. Just kinda wondering here. On your 2025 guide that you kind of outlined, 80 to 200 bps of adjusted EBITDA margin extension. Can you just provide some color on where that growth is coming from? Is it gross margin, OpEx leverage, or, and just to indicate, you know, is there particular parts of the business that would be driving that growth?

Yeah. I mean, look, I think it's consistent with what we talked about on our investor day. Operating leverage continues to be our best friend. We believe all the work we've done on the procurement side will absolutely continue to come through and show through. The Wisconsin Virginia move will begin to show up in the P&L results for sure. So, you know, I think it's a good mix of operating leverage, procurement, and a number of self-help things, including the work we're seeing on the factory floor. Look. I think from a modeling perspective, I think we're modeling a bit more margin expansion in medical than in the nuclear and safety business. But I think we're, you know, as we did this year, we're pretty optimistic about what we think the art of the possible is in nuclear safety. So, you know, I think it's broad-based. And it's consistent with our discussions in December.

Got it. Got it. Okay. And if I can get another one in, if you guys could speak to any early traction to your Siemens Healthineers relationship and kinda how that's factored into your outlook, that'll be helpful.

Yeah. I mean, it's, we, obviously, with, you know, and just as a reminder to the listeners of the call, the deal we've entered into basically carries more of our product, particularly our industry-leading workflow and data management software product called SunCheck in the RTQA space, radiation therapy quality assurance space. It essentially carries that into the price book of Siemens Healthineers. And what that means is a practical matter is that their global sales force is featuring that as their core RTQA software platform. It's a brand new, you know, effectively a brand new deal, and we've been working very, very closely with Healthineers to train their sales team and really kind of help gin up momentum. To be clear, we've assumed almost nothing in terms of incremental traction coming out of this this year. You know, to the extent that we see a meaningful amount of commercial traction occurring from this relationship, the strategic alliance, then we would view that as upside.

And I would just remind you in my comments, we talked about double-digit growth on the software side in medical specifically. So, you know, that's a good kind of underlying base case for the business. Anything Thomas just talked about would grow on top of that.

Gotcha. Gotcha. Okay. That's helpful. I'll hand it back.

With no further questions in the queue, I would like to turn the conference back over to Mirion Technologies, Inc. CEO, Thomas Logan.

Well, I'd like to end today by thanking again the Mirion Technologies, Inc. team for delivering record year performance. Just super, super proud of the achievements this year and the momentum that my many colleagues have ginned up to carry us into 2025 and beyond. These collective efforts really are the heartbeat of this business. To all on the call today, appreciate your participation. You know, it's my view that we're well set up for success. Our foundation is strong. Market dynamics continue to be compelling. We think 2025 is shaping up to be another year of growth and continued performance evolution in the business. And I do believe the market is increasingly understanding the unique attributes of our company. Again, the fact that we are the only pure play on the detection, measurement, and analysis of ionizing radiation category one, as we like to say. And that coupled with the vertical market exposure we have and really kind of the attractive diversification benefits inherent in that, I think, make us a really interesting company to watch. The color we provided at our investor day in December really is shaping the narrative. And I'm excited to continue the dialogue with many of you as the year progresses. So appreciate your attention today. And we'll look forward to speaking to you in the next quarter.