MIR - NYSE

Greetings, and welcome to the Mirion Technologies Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Eric Linn, Treasurer and Head of Investor Relations. Thank you. You may begin.

Thank you. Good morning, and welcome to Mirion's Third Quarter 2025 Earnings Conference Call. Joining me this morning are Mirion's Founder, Chairman and CEO, Tom Logan; and Mirion's CFO and Medical Group President, 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, 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-K, quarterly reports on Form 10-Q and in Mirion's other SEC filings under the caption Risk Factors. Quarterly references within today's discussion are related to the third quarter ended September 30, 2025, 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 Tom, who will begin on Slide 3.

Eric, thank you, and good morning to those joining us today. As always, we appreciate your interest in Mirion. This morning, I'll focus my prepared remarks on 3 topics. First, I'll highlight the strong third quarter results and reassert that we remain on track for our 2025 guidance. Next, I'll provide context to the double-digit growth we are seeing year-to-date from the nuclear power end market. And finally, I'll detail progress in 2025 to broaden our nuclear power portfolio through M&A. As mentioned, we are pleased with our third quarter numbers. The business performed well, led again by our nuclear power end market. Not only did this market support a strong quarter, it was also the main driver for order growth. There's been a lot of press recently about the exuberance of some emerging nuclear energy stocks, particularly the non-revenue-generating ones. Mirion runs counter to this narrative. Approximately 80% of our nuclear revenue comes from the installed base, meaning reactors that are operating today. More broadly, approximately 45% of Mirion's enterprise revenue will be generated from this end market with the addition of Paragon Energy Solutions. Recall, we announced this acquisition last month and expect the deal to close by year-end. Momentum continues to build for the nuclear renaissance, and Mirion is extremely well positioned to benefit from it, no matter which form it takes. Now let's get into the details of the quarter on Panel 4. Third quarter revenue totaled $223 million, a nearly 8% increase from last year's third quarter. On an organic basis, revenue grew 4.7%, reflecting mid-single-digit organic growth from both segments. The nuclear power end market organic revenue grew 9% in the quarter and 11% year-to-date. Adjusted EBITDA in the quarter was $52.4 million, up 14.7% versus third quarter last year. Both the Nuclear and Safety and Medical segments contributed to the increase in both dollars and margin expansion. I'd also like to highlight our year-end 2025 expected blended cost of debt of 2.8%. This reflects a 460 basis point improvement over the past year as we took action to diversify our capital structure and reduce interest expense. The 2.8% blended cost of debt is expected to continue into 2026. Third quarter adjusted free cash flow was $18 million, contributing to an impressive $53 million of year-to-date adjusted free cash flow. Strong year-to-date performance gives us the confidence to raise the low end of adjusted free cash flow guidance. We are now expecting 2025 adjusted free cash flow to be between $100 million and $115 million and conversion between 45% and 49% of adjusted EBITDA, a significant improvement versus 2024's conversion of 32% and well on our way to our 2028 target of 60%. Lastly, on the panel, Q3 adjusted orders increased 2.4%. We led with adjusted orders this quarter because it's important to note that this excludes the impact of the Turkey debooking in last year's third quarter. Importantly, nuclear power end markets orders grew double digits in the quarter. Additionally, favorable trends we mentioned last quarter, like accelerating SMR orders continued into the third quarter as well. I'd also note that we've seen meaningful SMR order flow early in Q4. Notably, we also booked our first modest EPR newbuild order under the auspices of the EDF strategic agreement we announced last year. All of this is before we booked a large quantum of the onetime orders we've been foreshadowing for several quarters. We remain optimistic on the rest of this opportunity pipeline. The dominant thread throughout our quarterly results is nuclear power. Panel 5 illustrates several key performance indicators that demonstrate the vibrance of this end market. For example, third quarter nuclear power adjusted orders grew 21% or 16% excluding foreign exchange tailwinds, reflecting growth across each key vertical, new builds, SMRs and today's installed base. Third quarter orders include $17 million of SMR-related orders. Year-to-date SMR orders totaled $26 million, a marked acceleration versus the $17 million of orders in prior years. Lastly, nuclear power-related organic revenue grew 9% in the quarter compared to the 4.4% for the Collective Nuclear and Safety segment. Year-to-date, nuclear power organic revenue is on track for the double-digit organic revenue growth we've guided for 2025. We continue to believe that we're still in the early innings of a nuclear super cycle. Panel 6 showcases just a few of the recent headlines that support this belief. Take, for instance, the recent World Nuclear Association headline stating that nuclear reactors set a new record for electricity generation in 2024, and this is for the first time in nearly 2 decades. The average capacity factor was 83% globally in 2024, up from 82% in 2023. And just to note here that the U.S. fleet ran at 92%. So there's plenty of upside for the global fleet. Growth expectations for the overall global nuclear fleet continue to increase. The IAEA recently increased its nuclear capacity forecast, expecting almost 1 terawatt of nuclear capacity by 2050 versus 377 gigawatts today, and this is net of significant expected decommissioning activity over this 25-year time frame. As I've been predicting, we have also seen a spate of recent headlines around potential restarts in the U.S. On Monday, it was announced that Google and NextEra Energy will be partnering to restart the Duane Arnold facility in Iowa to help fuel Google's AI growth. Separately, Santee Cooper is in negotiations with Brookfield Asset Management regarding the potential completion of the 2 previously abandoned AP1000 reactor projects at the VC Summer site in South Carolina. New builds have also gained considerable support from the Trump administration's $80 billion deal announced this Monday to support 8 new Westinghouse AP1000s plus SMRs through financing guarantees and regulatory support. Lastly, global support for nuclear power was recently on display in South Africa, where the first ever G20 high-level meeting on nuclear energy was held. Turning to Panel 7. In all, we're broadening our nuclear power portfolio. In the case of the Certrec acquisition, we're enhancing Mirion's software solution suite by incorporating mission-critical regulatory compliance solutions into our overall offerings. These applications are critical to customers as they seek approval for life extensions for existing facilities and submit applications for new builds and SMRs. In the case of Paragon, we will broaden Mirion's U.S. presence with additional products, software and services, notably including safety-related critical radiation protection systems. Like Mirion's nuclear power end market, 94% of Paragon's revenue stems from the currently installed large-scale reactor base. In both cases, these will be attractive additions to our portfolio, adding energetic business models with built-in customer bases and room for substantial growth. We look forward to closing the Paragon deal and welcoming both Certrec and Paragon's world-class talent to the Mirion family. Before I hand it over to Brian to walk through the details of the quarter, let me spend a minute on Panel 8 sharing a Medical segment update. We're strategically aligned with the cancer care revolution underway today. Recall, 75% of our Medical segment revenue stems from this market. We continue to make steady progress on key strategic elements outlined at our 2024 Investor Day. These include growing our software and service offerings through SunCHECK within our RTQA segment and EC2 within Nuclear Medicine. This important lever has helped expand Medical segment margins year-to-date. Conversely, the current U.S. health care environment is pressuring our U.S. RTQA business. We expect this to be a delay instead of a decline in customer activity due to the safety critical nature of our solution set; however, timing and magnitude of a rebound remain clouded due to government shutdown headwinds. Meanwhile, we're pleased with the continued adoption of our InstadoseVUE digital dosimeters. As a reminder, we introduced our latest digital offering to the market in late 2023. We're making great progress converting existing customers and attracting new customers as well. In fact, third quarter organic revenue from our dosimetry services end market grew 7% with our digital offering leading from the front. With that, I'll turn it over to Brian. Brian?

Tom, thank you, and good morning, everyone. Let's continue to Slide 9, detailing our orders performance. As Tom noted earlier, the nuclear power end market continues to be a bright spot for us. Third quarter orders grew 2.4% versus an adjusted base. This normalizes for the $21 million Turkey-related debooking disclosed in last year's third quarter and Certrec orders added as part of the acquisition in late July. On a reported basis, the order book grew 14.5%. The Nuclear and Safety segment order book grew $9.5 million on an adjusted basis, reflecting 21% growth from the nuclear power end market alone. Importantly, this incorporates growth across all 3 verticals. Interestingly, within the U.S. nuclear power end market, year-to-date orders are up 44% most of which is related to the SMR activity. We see the U.S. market as the bellwether with the European and Asian markets as lagging followers. We also experienced healthy order uptick in our defense and diversified end market from a nonnuclear decommissioning order as well as a European-based military safety equipment order. This continues our long track record of serving the NATO armed forces. This was partially offset by our labs and research end market. As mentioned previously, demand from the U.S. Department of Energy has been muted since the launch of DOGE and the government shutdown. We also commented on the September investor call, order flow coming from China for laboratory instruments has slowed. We see this as a transitory dynamic and are optimistic about the equilibriation of demand due to the safety critical nature of our products. Through October, we continue to see orders from the labs, but we are seeing signs of funding strain in this market as we discussed a few weeks back. Within our Medical segment, adjusted orders declined $4.7 million. The RTQA end markets performance more than offset continued growth in our nuclear medicine end market. The dosimetry services business was relatively flat in the quarter. Digging into RTQA orders, it is a bit of a mixed bag. In the U.S., particularly and to a lesser extent, in China and Japan, RTQA hardware orders were down in the quarter; however, on a year-to-date basis, orders are closer to flat. This again stems from changing funding and trade dynamics, which are expected to normalize in the year ahead. Meanwhile, rest of World RTQA continues to see steady growth and be a bright spot. RTQA software and services remains a bright spot and a contributing factor to margin performance year-to-date. Taking a step back, what's particularly impressive about the third quarter order book is that it only includes approximately $10 million of large orders. A diverse composition of flow orders continues to drive the business. We expect a good Q4 as it comes to bookings, particularly in the nuclear power end market. Slide 10 contributes an update on the large opportunity pipeline. Through October, we've been awarded $65 million from this pipeline. As mentioned, $10 million is reflected in our third quarter order book, while the other $55 million was awarded in October and will be reflected in our fourth quarter order book. As we approach year-end, $285 million of the opportunity pipeline is still to be awarded. $175 million of the $285 million should be awarded by year-end, while the other $110 million is now likely to be awarded in 2026. A large portion of the projects pushed to 2026 are U.S. government related and are being impacted by the shutdown. Encouragingly, we continue to see new potential large projects materialize that are not included in the snapshot. To be clear, we have consistently communicated that we do not expect to be awarded every order, but maintain our strong conviction that we have a right to win on all of these opportunities. Now let's pivot to the P&L slide on Slide 11. Consolidated revenue for the company totaled $223.1 million, up 7.9% or $16.3 million over last year's third quarter. Nearly $12 million of the approximately $16 million increase came from our Nuclear and Safety segment. Adjusted EBITDA grew 14.7% or $6.7 million to $52.4 million, with both segments meaningfully contributing to the increase. Approximately $3 million of the adjusted EBITDA increase is related to greater volumes, followed by approximately $2 million of net price inflation, meaning we got $2 million more price than cost and approximately $2 million of procurement initiatives. As you can tell, we're making strong progress on consolidating our supplier base, and it's beginning to improve margin performance. As you will see on the coming slides, both segments contributed to the approximately 140 basis points of margin expansion. Lastly, adjusted EPS totaled $0.12 per share, a 50% increase versus the third quarter of last year. If you keep the share count constant to last year's third quarter, our adjusted EPS would have been $0.15 per share or nearly double last year's adjusted EPS. Our adjusted EPS performance is a culmination of our progress across all parts of the business from growing EBITDA to the tax projects we have discussed to lower net interest costs. Recall, our third quarter 2025 diluted share count reflects vested founder shares and the potential impact of our convertible notes. As a reminder, we put cap calls in place that limit the impact of both converts until a fairly material appreciation in the stock price. We have tables in the appendix that demonstrates this. The equity issuance we did in September to fund the expected Paragon acquisition is an immaterial impact in the third quarter since we didn't transact until late in September. We've included a detailed table in the appendix of our earnings call slides to bridge the differences and lay out all the movements that have taken place between 2024 and 2025. Slide 12 illustrates our Nuclear and Safety segment financial performance. Revenue for this segment grew 9% or $11.9 million to $144.6 million. Organic growth for the segment was 4.4% and reflects nuclear power end market growth of 9% and defense and diversified end market growth of 7% partially offset by our Labs and Research business. As we indicated a few weeks back when we announced Paragon, we now expect the Nuclear Safety segment's organic revenue growth to be mid-single digits, driven by double-digit nuclear power end market growth. Adjusted EBITDA was $40.6 million or a 16.3% or $5.7 million increase over last year's third quarter. Adjusted EBITDA margins totaled 28.1% or 180 basis points higher than last year. This is a result of operational leverage, procurement initiatives and lower incentive compensation. Year-to-date, Nuclear Safety segment margins have expanded approximately 80 basis points. Moving on to Slide 13. Medical segment revenue totaled $78.5 million, up 5.9% or $4.4 million versus last year. Organic revenue grew mid-single digits at 5.2%, in line with the guidance shared on our July earnings call. We remain on track for full year organic growth of mid-single digits for the entire Medical segment. Adjusted EBITDA was $28.2 million or nearly 10% better than last year. Margins also improved, up 120 basis points to 35.9%. This reflects healthy operating leverage and favorable mix, particularly from our dosimetry services end market. Year-to-date, our medical margins have expanded approximately 240 basis points. We do expect fourth quarter margin expansion in this business, but not at these levels. Adjusted free cash flow, shown on Slide 14, totaled $18 million in the third quarter and $53 million year-to-date. This equates to a 35% year-to-date conversion of adjusted EBITDA. This was driven by adjusted EBITDA growth, lower interest expense and lower CapEx, partially offset by a use of cash from net working capital. We are materially ahead of where we were at this time last year, which gives us good confidence on our year-end targets. Before we move to Q&A, let me touch on our full year guidance on Slide 15. The one item we've updated is our adjusted free cash flow guidance. We increased the low end from $95 million to $100 million and now expect adjusted free cash flow to be between $100 million and $115 million, equating to a conversion of adjusted EBITDA between 45% and 49%. With that, operator, please queue the line for questions.

The first question is from Andy Kaplowitz from Citigroup.

So there's obviously been a flurry of news announcements around commercial nuclear lately, as you mentioned, Tom. So with the understanding that nuclear is obviously very long lead, you haven't yet added to your $350 million large project opportunity funnel that you gave out quite some time ago. But Brian, you talked about Mirion booking projects that are not part of the funnel. So should we really just be focused on your commercial nuclear backlog? And Tom, would you expect a material acceleration in that backlog given the uptick in activity you mentioned?

Yes. What I would say, Andy, is our view that is that when you look at the core dynamics of the market right now, I think there are 3 important drivers. One is the installed base. As we've talked about previously, the desire to run these reactors hotter and at greater capacity factors, meaning greater capacity utilization correlates strongly with CapEx. So as that quest continues, noting that I put out there the World Nuclear Association report that the global fleet ran at about 83%, 90% is considered to be good. The U.S. fleet runs at 92%. I think there is a reasonable likelihood that we're going to see a continued uptrend in capacity factors across the global fleet. And that augurs well for our flow business in support of that fleet overall. Secondly, you have new utility scale builds. And as we've seen in this flurry of news reports, and obviously, we see it on the ground day in and day out, there clearly is an acceleration in the planning and execution of more global utility scale projects. We expect that, that will build over time. Obviously, again, as we've been stated emphatically historically, the timing can be very, very difficult to predict as to when a new project commences. But the good news is that in this country as well as in others, there is an unprecedented level of government support to streamline the regulatory time line and burden and to provide additional financial support and essentially risk mitigation for sponsors of these plants. So we do expect that trend to continue. And then finally, you have the SMR projects, which given the enormous focus on AI-driven data center build-out is increasingly becoming a more viable market. And in general, again, while timing is very difficult to predict, we do see that moving to the left. So as we look ahead, it is a reasonable supposition that over time, we will see the nuclear power-related backlog beginning to grow. We will be conservative about how we disclose that over time, but I think that will be an important tell in terms of how this market will evolve over time. Finally, Andy, I would say that the flow business that does not necessarily become visible in backlog because it tends to transact quickly, has been a very important driver of the overall nuclear power dynamic. We expect that, again, as that correlates with capacity factors, that will continue to swell.

Maybe just 2 things to add to Tom's comments. Just one on the installed base. Paragon is definitely additive to that narrative, right? They're very strong in the U.S. installed base, 94% of their revenue in '25 will come from that. And I think we indicated on the call that, that their business has definitely grown double digits over the last couple of years. And then maybe on the new builds, just a reminder, there are no U.S. new builds in any of the numbers we've put out there. So just that's something that, again, very hard to predict. That will take time to come through but that is not in any of our planning assumptions through '28.

Helpful color. And then, Tom or Brian, how do we -- how are you thinking about your medical business in the current environment? You said pressure in RTQA, but you still delivered over 5% organic revenue growth in medical in Q3. So is that how we should think about the near and medium-term growth in medical, while there's still some uncertainty out there? I know, Brian, you said you expect spend to normalize, but is there any visibility to that normalization?

Yes, Andy, so if you look at the medical business writ large, we continue to love this business overall. The dominant demand drivers that we've talked about ad nauseam, including an aging of the population demographic in the developed West, greater incidence rate of cancers of all forms and the push to create a higher standard of care in the lesser developed markets are all themes that are robust and continue to be in place. What we've seen in RTQA is strength coming out of international single-payer systems that have not been exposed to the kind of budgetary and DOGE-related dynamics that we've seen in the U.S. market. As I noted, as Brian noted, we do expect those factors to equilibrate. The demand hasn't changed. The need for the solutions that we offer here has not changed. And so our view is a constructive one that we will find an equilibrium sooner rather than later. And as we achieve that, we would expect the RTQA business to be back on trend. In terms of nuclear medicine, again, the core dynamics there continue to be very favorable. The activity, the excitement, the tangibility of the growth of the radioligand market continues. Again, we have a superb positioning in this market overall. And we're confident that over time, the numbers will be trending in a direction that's consistent with what we've guided historically. Lastly, on our medical dosimetry business, as noted, strong revenue growth in the quarter, 7%. The digital product line is coming off the peg. We feel good about the dynamic there. So to be clear, even though we spent most of our commentary on nuclear power, we still love the medical business. We'll see it as an important contributor to the story overall.

I would just say in the very short term, and I think we talked a little bit about this last time. I mean, if you think about the Q4 kind of revenue number, it's probably flattish for us on a pretty big comp. We had a very big -- I think we were up 14% last Q4 in dosimetry, which is a very tough comp on product sales. So Tom's comments are all exactly what we're seeing and talking about in the medical side over probably the next 12 to 18 months. But as you think about the next quarter, I think we do expect flattish, and that should not be a surprise because that's what we talked about last quarter.

The next question is from Joe Ritchie from Goldman Sachs.

So just a few quick ones. The first one is just like, look, really interesting to see the $55 million award come through in the third quarter. It's interesting that with just 2 months left in the year, you still have that $175 million pipeline. I guess just, Tom, maybe what kind of -- what degree of confidence do you have that the $175 million will be awarded, fully recognizing that you'll have some share of that if it does get awarded?

Yes. To be clear, firstly, Joe, just a minor correction, the $55 million traded or was booked in Q4 was booked in October. But as we look at the pipeline, clearly, we've parsed between stuff that is largely impacted by government funding dynamics that we think spills into 2026 versus what we think trades in 2024. And from a confidence standpoint, again, with the caveat that on these large opportunities, the timing is always unpredictable. I would tell you that our conviction improves. As Brian noted, we feel like we have a strong right to win on this opportunity set overall. So we feel pretty good about.

Got it. Great. Yes. And thanks for the clarification. I did mean 4Q. So I'm going to ask you the same question I asked you last quarter, given the flow of projects has been coming in around $200 million, you booked $55 million already in the fourth quarter. You've got this pipeline out there. Why can't we have a quarter that's above $300 million?

I think you can. I mean, look, I think we will see -- I think we could see strong double-digit order growth in the fourth quarter for sure.

Okay. Great. And then lastly, I just want to understand this SMR opportunity a little further. So you mentioned that you booked the $10 million project in 3Q. I just had another company talk about 30-plus SMRs potentially being constructed in the next 5 years. When I think about like the $10 million that you booked, is it like simplistically, is this like maybe think about it as like a 250 type megawatt SMR? Is it for the full project? Is it for a portion of the project? I'm just trying to understand how to think about the related opportunity for you going forward.

Yes. So the overall opportunity set is expanding, Joe. Firstly, the -- noting that right now, what you're seeing, I think there are over 120 discrete SMR projects in various forms of development around the world. Some of them merely kind of PowerPoint presentations, others fairly mature in terms of the design evolution. So what we're seeing now and what we're going to continue to see for the next probably few years will be the development of the first-of-a-kind instances that are really going to prove the viability of the fleet. We do expect that there will be a consolidation, a shakeout, if you will, in this space. And that from that, there will be clearly identified strong leaders that emerge and really begin to gain scale economies and momentum overall. Our focus right now is that we want to be part of the overall solution set with all of them. And here, I would note that with the incipient Paragon acquisition, coupled with the Certrec addition and some of the other moves that we've made to augment our portfolio, we are extremely well positioned within this community in a broad fashion. It's not only our traditional book of business in and around things like radiation monitoring systems and Neutron Flux measurement systems and health physics products, et cetera. But now it's expanded to more comprehensive physical and cybersecurity, a much broader position in instrumentation and control with a far more compelling cogent and coherent ecosystem of solutions in that arena. We are a critical partner to a strong plurality of these players as it relates to the regulatory support through Certrec. And so we expect the ecosystem to continue to build. We expect that the foot race will continue, recognizing that I think many of these players, maybe most of these players view this as analogous to the commercial space market, and they all want to be SpaceX. And so we like where we sit, again, we're going to be conservative about how we call the ball in terms of how this market evolves. But to be clear, as it, in general, becomes more tangible and as we continue to augment our relevance, our solution set into the space, we think it will be an important addition to growth in the long term.

Maybe just to make sure we put a fine point on a couple of things you asked. One, no, this is not our full suite of products with that player. And I think we talked about seeing even momentum here in Q4. It's actually with different players than the $10 million that we booked. And I think we continue to definitely be exciting. But yes, this is -- the portfolio definitely comes in pieces in the order book, and this is just a piece of the portfolio that got awarded this quarter.

The next question is from Rob Mason from Baird.

When we entered this year, this fiscal year, there was commentary just around your backlog and what that represented in terms of next 12 months conversion revenue coverage. As you think about exiting '25, how do you think that metric looks on a relative basis to how we entered the year? And I'm just curious if the $175 million of bolus of large orders that awards that are still out there, does that really influence that metric for the next 12 months?

Yes. So a couple of things. I mean, this comment really pertains to the kind of the current business, right? Obviously, we'll add Paragon on top of this, and that will have its own dynamics. I would say that Q4 is always a large order booking month quarter for us, and so goes Q4, so goes kind of that metric. We've always said somewhere between 45% and 50% is the next 12 months coverage number. And we'll continue to assess that as we go through the quarter. As you think about the $175 million, look, there's definitely revenue in '26 for some of that. But all of those contracts will trade over multiple years. So these are not kind of one year, we're going to take that type of revenue. We tend to see kind of a smaller portion of the revenue in year 1, that kind of ramps in 2, 3, maybe it comes down a little bit in 4 or 5 depending on the time period. So that's kind of high level how we're thinking about it. And I think, look, we'll talk about our coverage dynamic once we report our Q4 numbers.

Sure, sure. Just as a follow-up, regarding some of the news flow of late, the Westinghouse name has been prominent in some of these, and you had that strategic partnership that you announced earlier in the year. At the time, that seemed to be more around the installed base opportunity. But I'm just curious if you could inform us on how does that relationship work on the new build side? And if you could fold Paragon's potential relationship there as well into the commentary. I'm just curious what their history would be with that player also.

Yes. What I would say, Rob, is that historically, Westinghouse has been a critically important customer to Mirion, and we've worked hard to continue to improve our relevance and augment our solution set to them overall. We're quite happy with the NFMS agreement that we talked about in the past. And with Paragon, we think, again, the relevance and attractiveness of the potential solution set that we can bring to bear, not only for Westinghouse, but truly all of the NFMS, all of the -- strike that [indiscernible] or nuclear reactor designers globally will continue to swell. So we're working hard to really represent our capabilities in a fulsome way. And as it relates to the future of both system upgrades as we look at life extensions and upgrades is favorable, but we also expect that our positioning for new build activity will become more favorable as well.

The next question is from Tomo Sano from JPMorgan.

I'd like to ask SMR as well. Could you talk about the pipeline for SMR projects within $285 million and beyond? And if -- it would be great if you could touch on what factors could accelerate or delay these awards, please?

Yes. Maybe taking a step -- I mean, as you think about the $285 million, I mean, there's lots of factors that can delay awards. I mean some of it's making sure we cut a deal that we're happy with. We're less interested in cutting a deal just to hit a quarter than we are making sure we have a contract and a relationship that we can live with going forward. So I think that's kind of how we think about this, and we're fairly disciplined on margin rates and cash profiles, et cetera. So there's approvals on their side, those negotiations take time. It is the holiday season. I mean those are all things that can impact it. But again, I mean, to I think Joe's point, I mean, we're sitting 2 months out. And we continue to kind of work very, very hard. As you noticed, we had a team in Asia yesterday that -- or actually last week that signed the deal. So there's lots of activity going on, and we'll continue to press hard to get everything we can closed kind of by year-end and worst case before kind of mid-February. On the SMR question, I don't think there's any more SMR. There actually aren't any more SMR orders in those larger that $10 million to $15 million kind of size pipeline that we've talked about. But there's tons of stuff we're working on more broadly than that.

Tom, I'd tag on a couple of things. Firstly, not to Scoop Brian, but to Scoop Brian, we booked another SMR-related order yesterday for about $5.5 million. So the momentum continues to swell there. And I'd also note that the government support here is very, very important. The deal that was announced Monday for this $80 billion package of financing guarantees and regulatory support is inclusive of SMRs. Beyond that, the funding that's flowed from not only the Department of Energy in the U.S., but also the Department of War, formerly the Department of Defense is very, very meaningful as it relates to the evolution and the rapidity within which this market evolves. So again, as Brian noted, in that big opportunity set, because our threshold bar is set high, that tends to exclude the majority of SMR opportunities. And we're happy overall with the way this market is evolving.

Tomo, I mean, just it's worth pointing out, we booked $26 million of SMR orders to date in the prior 2 years -- year-to-date. In the prior 2 years, I think that number was only $17 million combined. And that doesn't include the $5.5 million that Tom just mentioned. So I mean, clearly, there is lots going on, and I think we're super proud of everything the team is doing.

Very helpful. And just one follow-up on the talent and supply chain resilience. So to capture large pipeline, what steps are you taking to secure critical talent, including recent M&A and then strength your supply chains, including some of the specialized components like [indiscernible], please?

Yes. So on that front, Tomo, firstly, as we noted, one of the most important strategic elements of the recent M&A activity and here I would highlight both Certrec and Paragon is the talent acquisition. In each instance, we have just world-class teams that are going to meaningfully augment our corporate gene pool and give us capabilities that heretofore have been lacking in some dimension or another. This is a great place to work. We're pleased with our historical retention dynamic. As you might imagine, we're very focused on continuing that track record as we move ahead. But to be clear, we feel happy and confident with the talent that we have in the barn today that that's more than adequate to drive our future growth, our future aspirations. In terms of the physical supply chain, here, we're -- again, we tend to be very conservative. And so as an example, when looking at precious metals or critical commodities relating to orders that are likely to trade longer term, we tend to defease that risk upfront by acquiring all or a significant quantum of the exposure there and do that with cash-funded customer advances overall. So in terms of our exposure to precious metals like rhodium, other elements like germanium, et cetera, we, over time, have developed pretty decent heuristics for managing and mitigating that supply risk.

Yes. I think part of what we're doing on all the supply chain work we've basically been doing for the last 18 months is not just about cost out, right? It's about shoring up the supply base, bringing together to find larger suppliers. It's about finding a second and third supplier in some cases, and it's about payment terms. So we're tackling many things on top of just the cost structure as we've gone through that process.

The next question is from Chris Moore from CJS Securities.

This is Will on for Chris. Can you just talk broadly about how your pricing power is holding up? And is it trending differently in nuclear safety versus medical?

Look, I mean, I made a comment on third quarter, right? Price/cost this quarter was $2 million positive to us. So I think we feel good about what we're doing internally pricing. We've invested quite a bit in our pricing heuristic methodologies, et cetera. And I would say that we're probably a bit less aggressive right now on the medical, specifically the U.S. side than we are on the other side of the house. But we like the dynamic, and we like our portfolio and the moats that have been created around that product portfolio over the last 22 years.

The next question is from Yuan

Congrats on a good quarter. Can you expand on the U.S. health care environment? Is it due to the government grants or Medicare, Medicaid reimbursement delaying patients seeking treatment there?

Yes. I mean, overall, it is driven more than anything else, Yuan, by the aggregate noise. The cuts in Medicaid have been the most pronounced, the most defined. And that has had a modest impact, recognizing that the majority of cancer treatment is actually funded out of Medicare versus Medicaid overall. But to be clear, if you look at the profitability of the U.S. health care system, overall operating margins, and just, again, kind of the noise and kind of strategic haze around the space. All of those factors tend to put any entity on a more defensive CapEx footing. And I think that's what we're seeing. Again, we noted that when we look at the demand dynamics out of single-payer end markets, those have continued to be strong and in normalized ranges. Again, noting that the demand dynamics have not changed in the U.S. market. We do expect to achieve a level of equilibrium and at that point, get back on trend here.

Got it. It's great to see the U.S. government putting real money to invest into the Westinghouse nuclear reactors. Can you maybe talk about the economic contribution to your side? Let's say, if we build a nuclear reactor for $10 billion, what the percentage will go to, let's say, your NIS systems or go to your Paragon services, et cetera?

Yes. So the dynamic here continues to change, particularly with the more recent acquisitions. Again, Paragon, Certrec, but also the Collins Aerospace cyber and physical security business that we acquired as well. Historically, and I guess, most recently dating back to our 2024 Investor Day, we've talked about the front-end opportunity for a new nuclear reactor that -- and given the specific example of the Hinkley Point C deal in our plant being built in the U.K., where on the front end of that, we booked somewhere between $80 million and $90 million of backlog, and that's for a 2-reactor project. Our -- with the incremental capabilities, I would say that, that dynamic is improving. And if anything, we would expect the quantum of the front-end opportunity to increase. And so I'm going to reserve on giving you a specific number as it relates to new builds in Westinghouse. But I would tell you that it's attractive or an attractive opportunity. And obviously, we're going to work hard to do everything we can to secure the trust, confidence and ultimately, the commitment from Westinghouse as they move down this pathway.

The next question is from Jeff Grampp from Northland Capital Markets.

Just to kind of -- just to put a finer point on that last topic, Tom, I'm curious relative to the Analyst Day metrics you guys put out on kind of $1 per megawatt of a revenue opportunity, given the data you guys have gathered since then as well as potentially any benefits from Certrec or Paragon that might help be additive to that number. Is that still a decent proxy as best you guys can tell? Or any better update that we should keep in mind as we look forward would be helpful.

Yes. Again, Jeff, we're going to reserve on that for the time being. Firstly, we want to get the Paragon acquisition closed. And our mode of operation is that whenever we acquire a new company, our first and most important rule is the hippocratic first, do no harm. And so we're going to spend a lot of time learning from them, and they'll learn from us, and we're going to work jointly to figure out best integration pathway and ultimately, how that informs the relevant product categories, the way we position those in the marketplace and the way that we commercially prosecute growth. Having said all of that, and again, recognizing this is not just Paragon, but it Certrec, it's SIS. But beyond that, it's also expanded organic capabilities that we've developed internally. I think that the numbers move up over time. I would tell you that I also continue to believe strongly that the premium in terms of dollars per megawatt will be -- of output will be higher in the SMR market. Historically, we've talked about that being 60% or so higher than it is for utility scale. I think those numbers continue to hold for the time being. But what I'd like to do is to come back early in the new year when we're talking about Q4 results and maybe do an update at that time or the subsequent quarter.

Understood. I appreciate those details. And for my follow-up, with respect to these larger onetime orders, are you seeing or do you expect any material difference from a margin profile to the extent these become a larger piece of the revenue pie looking ahead?

Look, I think we're very focused on our 30% EBITDA margin target. That is something we are internally continue to be committed to. Look, we've always said, to the extent any of that stuff is new builds, that does come with lower margin than kind of the installed base work. But we're not moving off of our 30% EBITDA commitment at this time.

There are no further questions at this time. I would like to turn the floor back over to Thomas Logan for closing comments.

Thank you, operator, and thanks to everyone for your continued interest in Mirion and listening to the call today. We're progressing quarter-by-quarter on our journey towards becoming a great compounder. Mirion increasingly is a destination investment for revenue-generating exposure to global nuclear power tailwinds. And with our acquisition of Paragon, we will be a top-tier supplier to the global nuclear power industry while remaining true to our core mission of harnessing our knowledge of ionizing radiation for the greater good of humanity. We'll look forward to sharing another update in the business on our fourth quarter earnings call in February. And until then, we appreciate you joining us today, and I hope you have a great day.