Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mirion Technologies Inc (MIR, Financial) reported an 8% increase in third-quarter revenue compared to the previous year, reaching $207 million.
- The company achieved a 180 basis point improvement in adjusted EBITDA margins, maintaining its full-year guidance for adjusted EBITDA and EPS.
- Mirion Technologies Inc (MIR) is benefiting from favorable macro trends in nuclear power and cancer care, with strategic alliances in the SMR space and growth in nuclear medicine.
- The company secured strategic contracts with the Sizewell C Nuclear Power Station project in the UK, adding to its strong pipeline of new order opportunities.
- Operational improvements are yielding results, with medical EBITDA margins up 50 basis points and technology EBITDA margins up 370 basis points year-over-year.
Negative Points
- Mirion Technologies Inc (MIR) experienced a 30% decline in third-quarter order rates compared to the previous year, although this was due to large one-time orders in the prior year.
- The company faced a de-booking of orders related to a project in Turkey due to a contractual dispute, impacting its backlog.
- RTQA growth was flat due to JPY weakness and anti-corruption campaigns in China, affecting new clinic growth.
- Despite strong revenue growth, the company adjusted its free cash flow guidance to the lower end of its previous range.
- The backlog growth was only 2% higher year-over-year, raising concerns about the correlation between backlog dynamics and top-line growth.
Q & A Highlights
Q: Can you explain the de-booking process and what happened with the specific order that was de-booked this quarter?
A: Thomas Logan, CEO: The de-booking was related to a project in Turkey involving electrical penetration assemblies. Due to a contractual dispute, we lost business on two units to a regional competitor. We are working to regain some or all of this business. It's unusual for us to see a de-booking like this. Brian Schopfer, CFO: We are disciplined about what we put into backlog, ensuring contractual obligations are clear. We remain confident in our backlog's strength and conversion to revenue.
Q: Regarding the Sizewell C project, was the $30 million order that moved from Q2 to Q3 related to this contract?
A: Thomas Logan, CEO: Yes, the majority of the $30 million order that shifted from Q2 to Q3 was related to the Sizewell C project. Brian Schopfer, CFO: There is more to come on this contract as the project progresses.
Q: How do you view the impact of hyperscalers' nuclear power deals on your business over the next 12 months?
A: Thomas Logan, CEO: Our focus is on broadening strategic alliances with SMR players. We expect additional funding and commitments on SMR buildouts, with opportunities in reactor instrumentation, control software, and balance of plant applications. The biggest action will likely be in reactor instrumentation and control.
Q: What is the long-term growth outlook for your radiopharmaceutical business?
A: Thomas Logan, CEO: We believe radiopharmaceutical therapy is a revolution in cancer care, with a robust FDA approval pipeline for theranostic drugs. The market is expected to grow significantly, driven by expensive drugs and volumetric growth. Our focus is on leveraging our data management platform and instruments to create a compelling ecosystem.
Q: Can you provide more details on the $300 million to $400 million in new nuclear project bids?
A: Thomas Logan, CEO: The bid pipeline is unusually large, with projects ranging from $100 million to smaller amounts, heavily concentrated in the nuclear industry. We expect these bids to trade between now and the end of 2025. Brian Schopfer, CFO: The pipeline is geographically diverse, with a significant portion in the US, followed by Europe and the Arab Gulf region.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
