SECURITIES AND EXCHANGE COMMISSION
FORM
10-Q(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,
2021 ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
__________ to
__________
Commission File
No.Number: 001-39352GS Acquisition Holdings Corp II
Mirion Technologies, Inc.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Delaware | | 83-0974996 |
(State or other jurisdiction of incorporation or organization) |
| Identification No.) |
| |
200 West Street
New York, New York
| | 10282 |
(Address of principal executive offices) | | (Zip Code)Number) |
(212) 902-1000
1218 Menlo Drive
Atlanta, Georgia 30318
(Registrant’sAddress of Principal Executive Office)
(770) 432-2744
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:Act: | | | | | | | | |
Title of each class | Trading symbol(s) | Trading
Symbol(s)
| | Name of each exchange on which registered |
Units, each consisting of one share of Class A common stock and one-quarter of one redeemable warrant | | GSAH.U | | New YorkCommon Stock, Exchange |
Class A common stock,
$0.0001 par value $0.0001 per share | | GSAH | MIR | New York Stock Exchange |
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 | | GSAHMIR WS | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filerAccelerated Filer | ☒ | ☐Accelerated Filer | | Accelerated filer | | ☐ |
| | | |
Non-accelerated filer Filer | ☐ | ☒Smaller Reporting Company | | Smaller reporting company | | ☐ |
| | | |
| | Emerging Growth Company | | Emerging growth company | | ☒☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Act).
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act): Yes
☒☐ No
☐☒
As of May
13, 2021,2, 2022, there were
75,000,000199,583,232 shares of Class A common stock, $0.0001 par value per share, and
18,750,0008,510,540 shares of Class B common stock, $0.0001 par value per share, issued and outstanding.
INTRODUCTORY NOTE
On October 20, 2021 (the "Closing" or the “Closing Date”), Mirion Technologies, Inc. (formerly known as GS
ACQUISITION HOLDINGS CORPAcquisition Holdings Corp II
or "GSAH") consummated its business combination with GSAH (the "Business Combination") pursuant to the Business Combination Agreement dated June 17, 2021 (as amended, the “Business Combination Agreement”). On the Closing Date, GSAH was renamed Mirion Technologies, Inc.
Unless the context otherwise requires, all references in this Quarterly Report on Form
10-Q to “Mirion,” the “Company,” “we,” “us” or “our” refer to Mirion Technologies, Inc. following the Business Combination, other than certain historical information which refers to the business of Mirion Technologies (TopCo), Ltd. (“Mirion TopCo”) prior to the consummation of the Business Combination.
As a result of the Business Combination, Mirion’s financial statement presentation distinguishes Mirion TopCo as the “Predecessor” for periods prior to the closing of the Business Combination and Mirion Technologies, Inc. as the “Successor” for periods after the closing of the Business Combination. As a result of the application of the acquisition method of accounting in the Successor Period, the financial statements for the Successor Period are presented on a full step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor Period that are not presented on the same full step-up basis due to the Business Combination.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Our public communications and SEC filings may contain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 that reflect future plans, estimates, beliefs, and expected performance. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, our objectives for future operations, the Russian invasion of Ukraine, macroeconomic trends, and our competitive positioning are forward-looking statements. This includes, without limitation, statements under “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, capital structure, indebtedness, business strategy and the plans and objectives of management for future operations, market share and products sales, future market opportunities, future manufacturing capabilities and facilities, future sales channels and strategies. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “seeks,” “plans,” “scheduled,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our strategies or plans we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors:
•changes in domestic and foreign business, market, economic, financial, political and legal conditions;
•risks related to the continued growth of our end markets;
•our ability to win new customers and retain existing customers;
•our ability to realize sales expected from our backlog of orders and contracts;
•risks related to governmental contracts;
•our ability to mitigate risks associated with long-term fixed price contracts, including risks related to inflation;
•risks related to information technology disruption or security;
•risks related to the implementation and enhancement of information systems;
•our ability to manage our supply chain or difficulties with third-party manufacturers;
•risks related to competition;
•our ability to manage disruptions of, or changes in, our independent sales representatives, distributors and original equipment manufacturers;
•our ability to realize the expected benefit from any synergies from acquisitions or internal restructuring and improvement efforts;
•our ability to issue equity or equity-linked securities in the future;
•risks related to changes in tax law and ongoing tax audits;
•risks related to future legislation and regulation both in the United States and abroad;
•risks related to the costs or liabilities associated with product liability claims;
•our ability to attract, train and retain key members of our leadership team and other qualified personnel;
•risks related to the adequacy of our insurance coverage;
•risks related to the global scope of our operations, including operations in international and emerging markets;
•risks related to our exposure to fluctuations in foreign currency exchange rates;
•our ability to comply with various laws and regulations and the costs associated with legal compliance;
•risks related to the outcome of any litigation, government and regulatory proceedings, investigations and inquiries;
•risks related to our ability to protect or enforce our proprietary rights on which our business depends or third-party intellectual property infringement claims;
•liabilities associated with environmental, health and safety matters;
•our ability to predict our future operational results;
•risks associated with our limited history of operating as an independent company;
•the impact of the global COVID-19 pandemic, including the availability, acceptance and efficacy of vaccinations and laws and regulations with respect to vaccinations, on our projected results of operations, financial performance or other financial metrics, or on any of the foregoing risks; and
•other risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2021 and this Quarterly Report on Form 10-Q, including those under the heading “Risk Factors,” and other documents filed or to be filed with the SEC by us.
There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
Forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q or any earlier date specified for such statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
We intend to announce material information to the public through the Mirion Investor Relations website, available at ir.mirion.com, SEC filings, press releases, public conference calls and public webcasts. We use these channels, as well as social media, to communicate with our investors, customers and the public about our company, our offerings and other issues. It is possible that the information we post on our website or social media could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above, including the social media channels listed on our investor relations website, and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations website.
PART
I—I - FINANCIAL INFORMATION
GS Acquisition Holdings Corp II
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO UNAUDITED CONDENSED
BALANCE SHEETS | | | | | | | | |
| | | March 31,
2021 | | | December 31,
2020
(As Restated) | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash | | $ | 1,740,897 | | | $ | 383,246 | |
Prepaid expenses | | | 504,684 | | | | 599,170 | |
| | | | | | | | |
Total current assets | | | 2,245,581 | | | | 982,416 | |
| | | | | | | | |
Deferred tax asset | | | 403,767 | | | | 265,954 | |
Cash and cash equivalents held in Trust Account | | | 750,074,432 | | | | 750,063,158 | |
Accrued dividends receivable held in Trust Account | | | 3,883 | | | | 3,883 | |
| | | | | | | | |
Total assets | | $ | 752,727,663 | | | $ | 751,315,411 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 1,396,003 | | | $ | 965,370 | |
Accrued offering costs | | | 375,000 | | | | 375,000 | |
Income tax payable | | | 114 | | | | 57 | |
Working capital note (see Note 4) | | | 1,500,000 | | | | — | |
Warrant liability | | | 61,475,828 | | | | 71,676,615 | |
| | | | | | | | |
Total current liabilities | | | 64,746,945 | | | | 73,017,042 | |
Deferred underwriting discount | | | 26,250,000 | | | | 26,250,000 | |
| | | | | | | | |
Total liabilities | | | 90,996,945 | | | | 99,267,042 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
Class A common stock subject to possible redemption; 75,000,000 shares at March 31, 2021 and December 31, 2020, respectively | | | 750,000,000 | | | | 750,000,000 | |
Stockholders’ equity: | | | | | | | | |
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding at March 31, 2021 and December 31, 2020, respectively | | | — | | | | — | |
Class A common stock, $0.0001 par value, 500,000,000 shares authorized at March 31, 2021 and December 31, 2020, respectively | | | — | | | | — | |
Class B common stock, $0.0001 par value, 50,000,000 shares authorized, 18,750,000 issued and outstanding at March 31, 2021 and December 31, 2020 | | | 1,874 | | | | 1,874 | |
Additional paid-in capital | | | — | | | | — | |
Accumulated deficit | | | (88,271,156 | ) | | | (97,953,505 | ) |
| | | | | | | | |
Total stockholders’ equity/(deficit) | | | (88,269,282 | ) | | | (97,951,631 | ) |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 752,727,663 | | | $ | 751,315,411 | |
| | | | | | | | |
| | | | | |
as of March 31, 2022 and December 31, 2021 | |
for the three months ended March 31, 2022 and March 31, 2021 | |
for the three months ended March 31, 2022 and March 31, 2021 | |
for the three months ended March 31, 2022 and March 31, 2021 | |
for the three months ended March 31, 2022 and March 31, 2021 | |
| |
See
Mirion Technologies, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In millions, except share data)
| | | | | | | | |
| Successor |
| March 31, 2022 | December 31,
2021 |
| ASSETS | | |
| Current assets: | | |
| Cash and cash equivalents | $ | 84.2 | | $ | 84.0 | |
| Restricted cash | 1.0 | | 0.6 | |
| Accounts receivable, net of allowance for doubtful accounts | 138.6 | | 157.4 | |
| Costs in excess of billings on uncompleted contracts | 60.7 | | 56.3 | |
| Inventories | 123.2 | | 123.6 | |
| Prepaid expenses and other current assets | 28.8 | | 31.5 | |
| Total current assets | 436.5 | | 453.4 | |
| Property, plant, and equipment, net | 125.8 | | 124.0 | |
| Operating ROU assets | 44.2 | | 45.7 | |
| Goodwill | 1,652.5 | | 1,662.6 | |
| Intangible assets, net | 763.5 | | 806.9 | |
| Restricted cash | 2.0 | | 0.7 | |
| Other assets | 24.4 | | 24.7 | |
| Total assets | $ | 3,048.9 | | $ | 3,118.0 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | |
| Current liabilities: | | |
| Accounts payable | $ | 53.1 | | $ | 59.4 | |
| Deferred contract revenue | 72.1 | | 73.0 | |
| Notes payable to third-parties, current | 5.2 | | 3.9 | |
| Operating lease liability, current | 9.0 | | 9.3 | |
| Accrued expenses and other current liabilities | 74.0 | | 75.4 | |
| Total current liabilities | 213.4 | | 221.0 | |
| Notes payable to third-parties, non-current | 805.5 | | 806.8 | |
| Warrant liabilities | 48.2 | | 68.1 | |
| Operating lease liability, non-current | 39.1 | | 40.6 | |
| Deferred income taxes, non-current | 149.4 | | 161.0 | |
| Other liabilities | 36.1 | | 36.5 | |
| Total liabilities | 1,291.7 | | 1,334.0 | |
| Commitments and contingencies (Note 10) | 0 | 0 |
| Stockholders’ equity (deficit): | | |
| Class A common stock; $0.0001 par value, 500,000,000 shares authorized; 199,523,392 shares issued and outstanding at March 31, 2022; 199,523,292 shares issued and outstanding at December 31, 2021 | — | | — | |
| Class B common stock; $0.0001 par value, 100,000,000 shares authorized; 8,560,540 issued and outstanding at March 31, 2022 and December 31, 2021 | — | | — | |
| Additional paid-in capital | 1,853.4 | | 1,845.5 | |
| Accumulated deficit | (149.3) | | (131.6) | |
| Accumulated other comprehensive loss | (34.9) | | (20.7) | |
| Mirion Technologies, Inc. (Successor) stockholders’ equity (deficit) | 1,669.2 | | 1,693.2 | |
| Noncontrolling interests | 88.0 | | 90.8 | |
| Total stockholders’ equity | 1,757.2 | | 1,784.0 | |
| Total liabilities and stockholders’ equity (deficit) | $ | 3,048.9 | | $ | 3,118.0 | |
The accompanying notes toare an integral part of these condensed consolidated financial statementsstatements.
GS Acquisition Holdings Corp II
Table of ContentUNAUDITED CONDENSED STATEMENTS OF OPERATIONS | | | | | | | | |
| | | Three months ended March 31, | |
| | | 2021 | | | 2020 | |
Dividend income | | $ | 11,273 | | | $ | — | |
General and administrative expenses | | | (667,467 | ) | | | — | |
Change in fair value of warrant liability | | | 10,200,787 | | | | — | |
| | | | | | | | |
Income (loss) before income taxes | | | 9,544,593 | | | | — | |
Income tax benefit/(expense) | | | 137,756 | | | | — | |
| | | | | | | | |
Net income | | $ | 9,682,349 | | | $ | — | |
| | | | | | | | |
Weighted average number of shares outstanding of Class A common stock | | | 75,000,000 | | | | — | |
| | | | | | | | |
Basic and diluted net income per share, Class A | | $ | 0.10 | | | $ | — | |
| | | | | | | | |
Weighted average number of shares outstanding of Class B common stock | | | 18,750,000 | | | | 20,125,000 | |
| | | | | | | | |
Basic and diluted net income per share, Class B | | $ | 0.10 | | | $ | (0.00 | ) |
| | | | | | | | |
Sees
Mirion Technologies, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In millions, except per share data)
| | | | | | | | | | | | | | |
| | Successor | | | Predecessor |
| | Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Revenues: | | | | |
| Product | $ | 116.9 | | | | $ | 126.6 | |
| Service | 46.3 | | | | 39.6 | |
| Total revenues | 163.2 | | | | 166.2 | |
| Cost of revenues: | | | | |
| Product | 74.8 | | | | 82.8 | |
| Service | 24.0 | | | | 20.9 | |
| Total cost of revenues | 98.8 | | | | 103.7 | |
| Gross profit | 64.4 | | | | 62.5 | |
| Operating expenses: | | | | |
| Selling, general and administrative | 90.9 | | | | 60.4 | |
| Research and development | 7.1 | | | | 11.0 | |
| Total operating expenses | 98.0 | | | | 71.4 | |
| (Loss) income from operations | (33.6) | | | | (8.9) | |
| Other expense (income): | | | | |
| Third party interest expense | 7.9 | | | | 10.9 | |
| Related party interest expense (Note 8) | — | | | | 32.2 | |
| Foreign currency loss (gain), net | 1.5 | | | | (4.0) | |
| Change in fair value of warrant liabilities | (19.9) | | | | — | |
| Other expense (income), net | — | | | | (0.2) | |
| Loss before benefit from income taxes | (23.1) | | | | (47.8) | |
| Benefit from income taxes | (4.1) | | | | (7.1) | |
| Net loss | (19.0) | | | | (40.7) | |
| Loss attributable to noncontrolling interests | (1.3) | | | | — | |
| Net loss attributable to Mirion Technologies, Inc. (Successor) / Mirion Technologies (TopCo), Ltd. (Predecessor) stockholders | $ | (17.7) | | | | $ | (40.7) | |
| Net loss per common share attributable to Mirion Technologies, Inc. (Successor) / Mirion Technologies (TopCo), Ltd. (Predecessor) stockholders — basic and diluted | $ | (0.10) | | | | $ | (6.18) | |
| Weighted average common shares outstanding — basic and diluted | 180.774 | | | | 6.586 | |
The accompanying notes toare an integral part of these condensed consolidated financial statementsstatements.
GS Acquisition Holdings Corp II
Table of ContentUNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the three months ended March 31, 2020 | |
| | | Class A Common Stock | | | Class B Common
Stock | | | Additional
Paid-in | | | Accumulated | | | Stockholder’s | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Equity | |
Balance, December 31, 2019 | | | — | | | $ | — | | | | 20,125,000 | | | $ | 2,012 | | | $ | 2,988 | | | $ | (636 | ) | | $ | 4,364 | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2020 | | | — | | | $ | — | | | | 20,125,000 | | | $ | 2,012 | | | $ | 2,988 | | | $ | (636 | ) | | $ | 4,364 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | For the three months ended March 31, 2021 | |
| | | Class A Common Stock | | | Class B Common
Stock | | | Additional
Paid-in | | | Accumulated | | | Stockholder’s | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Equity | |
Balance, December 31, 2020 (As restated) | | | — | | | $ | — | | | | 18,750,000 | | | $ | 1,874 | | | $ | — | | | $ | (97,953,505 | ) | | $ | (97,951,631 | ) |
Net income | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,682,349 | | | | 9,682,349 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2021 | | | — | | | $ | — | | | | 18,750,000 | | | $ | 1,874 | | | $ | — | | | $ | (88,271,156 | ) | | $ | (88,269,282 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sees
Mirion Technologies, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
(In millions)
| | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Net loss | $ | (19.0) | | | | $ | (40.7) | |
| Other comprehensive loss, net of tax: | | | | |
| Foreign currency translation, net of tax | (15.7) | | | | (18.1) | |
| Unrecognized actuarial (loss) gain and prior service benefit, net of tax | — | | | | 0.2 | |
| Other comprehensive (loss) income, net of tax | (15.7) | | | | (17.9) | |
| Comprehensive loss | (34.7) | | | | (58.6) | |
| Less: Comprehensive loss attributable to noncontrolling interest | (2.8) | | | | — | |
| Comprehensive loss attributable to Mirion Technologies, Inc. (Successor) / Mirion Technologies (TopCo), Ltd. (Predecessor) stockholders | $ | (31.9) | | | | $ | (58.6) | |
The accompanying notes toare an integral part of these condensed consolidated financial statementsstatements.
GS Acquisition Holdings Corp II
Table of ContentUNAUDITED CONDENSED STATEMENTS OF CASH FLOWS | | | | | | | | |
| | | Three months ended March 31, | |
| | | 2021 | | | 2020 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 9,682,349 | | | $ | — | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | | | | | | | | |
Change in fair value of warrant liability | | | (10,200,787 | ) | | | — | |
Change in operating assets and liabilities: | | | | | | | | |
Decrease in prepaid expenses | | | 94,486 | | | | — | |
Increase in deferred tax assets | | | (137,813 | ) | | | — | |
Increase in accounts payable | | | 430,633 | | | | — | |
Increase in income tax payable | | | 57 | | | | — | |
| | | | | | | | |
Net cash used for operating activities | | | (131,075 | ) | | | — | |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from working capital note | | | 1,500,000 | | | | — | |
| | | | | | | | |
Net cash provided by financing activities | | | 1,500,000 | | | | — | |
| | | | | | | | |
Increase in cash and restricted cash | | | 1,368,925 | | | | — | |
Cash and restricted cash and cash equivalents at beginning of period | | | 750,446,404 | | | | 5,000 | |
| | | | | | | | |
Cash and restricted cash and cash equivalents at end of period | | $ | 751,815,329 | | | $ | 5,000 | |
| | | | | | | | |
Supplemental disclosure of non-cash financing activities | | | | | | | | |
Accrued offering costs | | $ | — | | | $ | 81,857 | |
Sees
Mirion Technologies, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
(In millions, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Predecessor | A Ordinary
Shares | | A Ordinary
Amount | | B Ordinary
Shares | | B Ordinary
Amount | | Additional
Paid-In
Capital | | Receivable from
Employees for
purchase of
Common Stock | | Accumulated
Deficit | | Accumulated Other
Comprehensive
Income (Loss) | | Noncontrolling
Interests | | Total
Stockholders’
Deficit |
| Balance December 31, 2020 | 1,483,795 | | | $ | — | | | 5,353,970 | | | $ | 0.1 | | | $ | 9.6 | | | $ | (2.4) | | | $ | (793.4) | | | $ | 50.5 | | | $ | 2.2 | | | $ | (733.4) | |
| Share-based compensation expense | — | | | — | | | — | | | — | | | (0.1) | | | — | | | — | | | — | | | — | | | (0.1) | |
| Receivable from employees | — | | | — | | | — | | | — | | | — | | | (0.1) | | | — | | | — | | | — | | | (0.1) | |
| Net loss | — | | | — | | | — | | | — | | | — | | | — | | | (40.7) | | | — | | | — | | | (40.7) | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (17.9) | | | — | | | (17.9) | |
| Balance March 31, 2021 | 1,483,795 | | | $ | — | | | 5,353,970 | | | $ | 0.1 | | | $ | 9.5 | | | $ | (2.5) | | | $ | (834.1) | | | $ | 32.6 | | | $ | 2.2 | | | $ | (792.2) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Successor | Class A Common Stock | | Class A Common Stock Amount | | Class B Common Stock | | Class B Common Stock Amount | | Additional Paid-In Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests | | Total Stockholders’ Deficit |
| Balance December 31, 2021 | 199,523,292 | | | $ | — | | | 8,560,540 | | | $ | — | | | $ | 1,845.5 | | | $ | (131.6) | | | $ | (20.7) | | | $ | 90.8 | | | $ | 1,784.0 | |
| Stock-based compensation expense | | | | | | | | | 7.8 | | | | | | | | | 7.8 | |
| Warrant redemptions | 100 | | | | | | | | | | | | | | | | | — | |
| Stock compensation to directors in lieu of cash compensation | | | — | | | | | | | 0.1 | | | | | | | | | 0.1 | |
| Net loss | | | | | | | | | | | (17.7) | | | | | (1.3) | | | (19.0) | |
| Other comprehensive loss | | | | | | | | | | | — | | | (14.2) | | | (1.5) | | | (15.7) | |
| Balance March 31, 2022 | 199,523,392 | | | $ | — | | | 8,560,540 | | | $ | — | | | $ | 1,853.4 | | | $ | (149.3) | | | $ | (34.9) | | | $ | 88.0 | | | $ | 1,757.2 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Mirion Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
| | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| | Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| OPERATING ACTIVITIES: | | | | |
| Net loss | $ | (19.0) | | | | $ | (40.7) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | |
| Accrual of in-kind interest on notes payable to related parties | — | | | | 31.5 | |
| Depreciation and amortization expense | 44.9 | | | | 23.6 | |
| Stock-based compensation expense | 7.9 | | | | (0.1) | |
| Amortization of debt issuance costs | 1.0 | | | | 0.9 | |
| Provision for doubtful accounts | (0.2) | | | | 0.4 | |
| Inventory obsolescence write down | 0.2 | | | | 0.3 | |
| Change in deferred income taxes | (10.4) | | | | (0.7) | |
| Loss (gain) on disposal of property, plant and equipment | (0.7) | | | | (0.3) | |
| Loss (gain) on foreign currency transactions | 1.5 | | | | (4.0) | |
| Change in fair values of warrant liabilities | (19.9) | | | | — | |
| Other | 0.1 | | | | 1.7 | |
| Changes in operating assets and liabilities: | | | | |
| Accounts receivable | 17.6 | | | | (5.5) | |
| Costs in excess of billings on uncompleted contracts | (5.2) | | | | (5.3) | |
| Inventories | (0.9) | | | | 2.0 | |
| Prepaid expenses and other current assets | 1.7 | | | | (6.5) | |
| Accounts payable | (6.8) | | | | 15.7 | |
| Accrued expenses and other current liabilities | (0.9) | | | | (13.8) | |
| Deferred contract revenue | (0.3) | | | | 5.1 | |
| Other assets | — | | | | (0.5) | |
| Other liabilities | 0.8 | | | | 7.1 | |
| Net cash provided by operating activities | 11.4 | | | 10.9 |
| INVESTING ACTIVITIES: | | | | |
| Acquisitions of businesses, net of cash and cash equivalents acquired | — | | | | (15.0) | |
| Purchases of property, plant, and equipment and badges | (8.7) | | | | (8.0) | |
| Sales of property, plant, and equipment | 0.8 | | | | — | |
| Net cash used in investing activities | (7.9) | | | | (23.0) | |
| FINANCING ACTIVITIES: | | | | |
| Principal repayments | (0.4) | | | | (7.5) | |
| Other financing | (0.2) | | | | 0.2 |
| Net cash used in financing activities | (0.6) | | | | (7.3) | |
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (1.0) | | | | (1.6) | |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 1.9 | | | | (21.0) | |
| Cash, cash equivalents, and restricted cash at beginning of period | 85.3 | | | | 108.7 | |
| Cash, cash equivalents, and restricted cash at end of period | $ | 87.2 | | | | $ | 87.7 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Mirion Technologies, Inc.
Notes to financial statementsCondensed Consolidated Financial Statements
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1—Description(Unaudited)
1. Nature of OrganizationBusiness and Summary of Significant Accounting Policies
Nature of Business
OperationsOrganization
Mirion Technologies, Inc. (“Mirion”, the “Company” or "Successor" or "us" and
Generalformerly GS Acquisition Holdings Corp II ("GSAH")) is a global provider of radiation detection, measurement, analysis, and monitoring products and services to the medical, nuclear, and defense end markets. We provide products and services through our 2 operating and reportable segments; (i) Medical and (ii) Industrial. The Medical segment provides radiation oncology quality assurance, delivering patient safety solutions for diagnostic imaging and radiation therapy centers around the world, dosimetry solutions for monitoring the total amount of radiation medical staff members are exposed to over time, radiation therapy quality assurance solutions for calibrating and verifying imaging and treatment accuracy, and radionuclide therapy products for nuclear medicine applications such as shielding, product handling, medical imaging furniture, and rehabilitation products. The Industrial segment provides robust, field ready personal radiation detection and identification equipment for defense applications and radiation detection and analysis tools for power plants, labs, and research applications. Nuclear power plant product offerings are used for the full nuclear power plant lifecycle including core detectors and essential measurement devices for new build, maintenance, decontamination and decommission equipment for monitoring and control during fuel dismantling and remote environmental monitoring.
The Company is headquartered in Atlanta, Georgia and has operations in the United States, Canada, the United Kingdom, France, Germany, Finland, China, Belgium, Netherlands, Estonia, and Japan.
On October 20, 2021 (the
“Company”“Closing Date”), the Company, consummated its previously announced business combination (the “Business Combination”)
was incorporated aspursuant to the certain business combination agreement (the "Business Combination Agreement"). As contemplated by the Business Combination Agreement, the Company became the corporate parent of Mirion Technologies TopCo., Ltd. ("Mirion TopCo"). In order to implement a structure similar to that of an “Up-C,” the Company established a Delaware corporation,
on May 31, 2018. The Company was formed for the purpose of effectingMirion IntermediateCo, Inc. (“IntermediateCo”), as a
merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Initial Business Combination”). The Company is an emerging growth company, as defined in Section 2(a)subsidiary of the
Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).All activity for the period from May 31, 2018 (inception) through March 31, 2021 relates to the Company’s formation and its initial public offering (the “Public Offering”) described below and identifying and evaluating prospective acquisition targets for an Initial Business Combination. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest or dividend income on cash and cash equivalents from the proceeds derived from the Public Offering and the Private Placement (as defined below in Note 3). The Company has selected December 31st as its fiscal year end.
Sponsor and Financing
The Company’s sponsor is GS Sponsor II LLC, a Delaware limited liability company (the “Sponsor”).
The registration statement for the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”) on June 29, 2020. On June 30, 2020, the underwriters partially exercised their option to purchase additional Units (as defined below in Note 3). The Company’s Public Offering of 75,000,000 Units, including 5,000,000 Units pursuant to the underwriters’ partial exercise of such option, closed on July 2, 2020 (as described in Note 3). Upon the closing of the Public Offering and the Private Placement, $750,000,000 was placed in a U.S. based trust account (the “Trust Account”) (discussed below). The Company intends to finance its Initial Business Combination with the net proceeds from the Public Offering and the sale of the Private Placement Warrants (as defined below in Note 3).
The Trust Account
The proceeds held in the Trust Account are invested in a money market fund registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and meeting certain conditions under Rule 2a-7.
Except with respect to dividends earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, the proceeds from the Public Offering and the Private Placement will not be released from the Trust Account until the earliest of: (i) the completion of the Initial Business Combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with the Initial Business Combination or to redeem 100% of its public shares if it does not complete the Initial Business Combination within 24 months from the closing of the Public Offering or (B) with respect to any other provision relating to stockholders’ rights or pre-Initial Business Combination activity; and (iii) the redemption of all of the Company’s public shares if the Company has not completed the Initial Business Combination within 24 months from the closing of the Public Offering, subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
The balance in the Trust Account as of March 31, 2021 was $750,078,315, including $3,883 of accrued dividends.
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering and the Private Placement are intended to be generally applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred underwriting discount). There is no assurance that the Company will be able to successfully effect an Initial Business Combination.
The Company, after signing a definitive agreement for an Initial Business Combination, will provide its public stockholders with the opportunity to redeem all or a portion of their shares upon the completion of the Initial Business Combination, either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets, after payment of deferred underwriting commissions, to be less than $5,000,001 following such redemptions. In such case, the Company would not proceed with the redemption of its public shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination.
Company. If the Company holds a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. As a result, such shares of Class A common stock are recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”
Pursuant to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete the Initial Business Combination within 24 months from the closing of the Public Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor, Employee Participation LLC (as defined below in Note 4) and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined below in Note 4) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Public Offering or during any extended time that the Company has to consummate an Initial Business Combination beyond 24 months as a result of a stockholder vote to amend its amended and restated certificate of incorporation. However, if the Sponsor, Employee Participation LLC or any of the Company’s directors or officers hold any shares of Class A common stock in or after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the prescribed time period.
In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, under the circumstances, and, subject to the limitations, described herein.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
and Principles of Consolidation
The
Company’saccompanying unaudited
condensed financial statementsCondensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“
U.S. GAAP”)
for financial statements and
pursuant to the
accounting and disclosure rules and regulations of the
SECU.S. Securities and Exchange Commission (the "SEC") for interim financial
information and the instructions to Form 10-Q. Certain disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required forinformation. The interim
financial statements under U.S. GAAP and the rules of the SEC. These unaudited condensed financial statementsCondensed Consolidated Financial Statements reflect all adjustments that are
in the opinion of
management,a normal recurring nature and that are considered necessary for a fair
statementrepresentation of the results for the
interim periods
presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.The accompanying unaudited condensed financial statementspresented and should be read in conjunction with the Company’s audited financial statementsConsolidated Financial Statements and notes thereto for the period ended December 31, 2021, which include a complete set of footnote disclosures, including our significant accounting policies included in the Company’s restatedour Annual Report on Form 10-K/A10-K. The results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period. The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned and majority-owned or controlled subsidiaries. For consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to noncontrolling interests is reported as “Income (Loss) attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations. All intercompany accounts and transactions have been eliminated in consolidation.
The Company recognizes a noncontrolling interest for the portion Class B common stock of IntermediateCo that is not attributable to the Company. See Note 19, Noncontrolling Interests.
On October 20, 2021, the Board of Directors determined to change Mirion TopCo's fiscal year end from June 30th of each year to December 31st of each year in order to align Mirion’s fiscal year end with GSAH’s fiscal year end.
Predecessor and Successor Reporting
The financial statements separate the Company’s presentation into two distinct periods. The period before the Closing Date of the Business Combination (the "Predecessor Period") depicts the financial statements of Mirion TopCo, and the period
after the Closing (the "Successor Period") depicts the financial statements of the Company, including the consolidation of GSAH with Mirion Technologies, Inc.
The Business Combination was accounted for under ASC 805, Business Combinations. GSAH was determined to be the accounting acquirer. Mirion Technologies, Inc. constitutes a business in accordance with ASC 805 and the business combination constitutes a change in control. Accordingly, the Business Combination is being accounted for using the acquisition method. Under this method of accounting, Mirion TopCo is treated as the “acquired” company for financial reporting purposes and the acquired net assets were stated at fair value, with goodwill or other intangible assets recorded.
As a result of the application of the acquisition method of accounting in the Successor Period, the financial statements for the Successor Period are presented on a full step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor Period.
Segments
The Company manages its operations through 2 operating and reportable segments: Medical and Industrial. These segments align the Company’s products and service offerings with customer use in medical and industrial markets and are consistent with how the Company’s Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), reviews and evaluates the Company’s operations. The CODM allocates resources and evaluates the financial performance of each operating segment. The Company’s segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. Refer to Note 15, Segments, for further detail.
Use of Estimates
Management estimates and judgments are an integral part of financial statements prepared in accordance with GAAP. We believe that the critical accounting policies listed below address the more significant estimates required of management when preparing our consolidated financial statements in accordance with GAAP. We consider an accounting estimate critical if changes in the estimate may have a material impact on our financial condition or results of operations. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustment to these balances in future periods. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include but are not limited to: business combinations, goodwill and intangible assets; standalone selling prices for revenue arrangements with multiple elements and estimated progress toward completion for certain revenue contracts; uncertain tax positions and tax valuation allowances and derivative warrant liabilities.
Significant Accounting Policies
There have been no material changes in our significant accounting policies during the three months ended March 31, 2022, as compared to the significant accounting policies described in Note 1 to the audited Consolidated Financial Statements on Form 10-K for the period ended December 31, 2020.2021.
Emerging Growth Company
Section 102(b)(1)Accounts Receivable and Allowance for Doubtful Accounts
The allowance for doubtful accounts is based on the Company’s assessment of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a classcollectability of customer accounts. The allowance for doubtful accounts was $5.1 million and $5.4 million as of March 31, 2022 and December 31, 2021, respectively.
Prepaid Expenses and Other Current Assets
Other current assets are primarily comprised of various prepaid assets including prepaid insurance, short-term marketable securities, registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. and income tax receivables.
The JOBS Act provides that a company can elect to opt outcomponents of other current assets consist of the extended transition periodfollowing (in millions):
| | | | | | | | |
| Successor |
| March 31, 2022 | December 31, 2021 |
| Prepaid insurance | $ | 3.1 | | $ | 5.3 | |
| Short-term marketable securities | 4.7 | | 4.9 | |
| Income tax receivable | 1.0 | | 2.8 | |
| Other current assets | 20.0 | | 18.5 | |
| $ | 28.8 | | $ | 31.5 | |
Facility and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Equipment Decommissioning Liabilities
The Company has electedasset retirement obligations (“ARO”) consisting primarily of equipment and facility decommissioning costs. ARO liabilities totaled $3.0 million and $3.1 million at March 31, 2022 and December 31, 2021, respectively, and were included in deferred income taxes and other liabilities on the Condensed Consolidated Balance Sheets. Accretion expense related to these liabilities was not material for any periods presented.
Revenue Recognition
The Company recognizes revenue from arrangements that include performance obligations to
opt out of such extended transition period which means that whendesign, engineer, manufacture, deliver, and install products. If a
standardperformance obligation does not qualify for over-time revenue recognition, revenue is
issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standardthen recognized at the
time private companies adopt the new or revised standard.This may make comparisonpoint-in-time in which control of the Company’s financial statements with another public company whichdistinct good or service is neithertransferred to the customer, typically based upon the terms of delivery.
Revenue derived from passive dosimetry and analytical services is of a subscription nature and is provided to customers on an emerging growth company nor an emerging growth company which has opted outagreed-upon recurring monthly, quarterly or annual basis. Revenue is recognized ratably over the service period as the service is continuous, and no other discernible pattern of using the extended transition period difficult or impossible becauserecognition is evident.
Contract Balances
The timing of the potential differences in accounting standards used.Cash and Cash Equivalents
CashCompany's revenue recognition, invoicing, and cash equivalentscollections results in accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts, and deferred contract revenue. Refer to Note 3,
Contracts in Progress for further details. Remaining Performance Obligations
The remaining performance obligations for all open contracts as of March 31, 2022 include cash on handassembly, delivery, installation, and on deposit at banking institutions trainings. The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts was approximately $753.5 million and $747.5 million as well as all highly liquid short-term investments with original maturities of ninety (90) days or less.March 31, 2022 and December 31, 2021, respectively. As of March 31, 2021,2022 the Company held deposits of $1,740,897 in a custodian accountexpects to recognize approximately 41%, 23%, 16%, and $750,074,432 in Goldman Sachs Financial Square Treasury Instruments Fund, a money market fund managed by an affiliate9% of the Sponsor. Money market funds are characterizedremaining performance obligations as Level I investments withinrevenue during the fair value hierarchy under ASC 820 (as defined below). The cash held infiscal years 2022, 2023, 2024 and 2025, respectively.
Disaggregation of Revenues
A disaggregation of the money market accountCompany’s revenues by segment, geographic region, timing of revenue recognition and product category is considered restricted. Dividend income from money market funds is recognized on an accrual basis.Redeemable Shares of Class A Common Stock
As discussedprovided in Note 1, all of the 75,000,000 shares of Class A common stock sold as parts of the Units in the Public Offering contain a redemption feature. In accordance with the Accounting Standards Codification 480-10-S99-3A - “Classification and Measurement of Redeemable Securities”, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. The Company classifies all shares of Class A common stock as redeemable.
Net Income Per Common Share
Net income per share of common stock is computed by dividing net income by the weighted average number of common shares outstanding during the period. The Company applies the two-class method in calculating earnings per share. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
15,
Segment Information. Warrant Liability
As of March 31, 2021,2022, the Company had outstanding warrants to purchase of up to 27,250,00027,249,879 shares of Class A common stock. The weighted average of these shares was excluded from the calculation of diluted net income per share of common stock since the exercise of the warrants is contingent upon the occurrence of future events. As of March 31, 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted net income per share of common stock is the same as basic net income per share of common stock for the period.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Accounting Standards Codification 820 (“ASC 820”), “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets, primarily due to their short term nature.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.
Warrant Liability
The Company accounts for the warrants in accordance with the guidance contained in Accounting Standards CodificationASC 815, (“ASC 815”), “Derivatives and Hedging”, under which the warrants do not meet the criteria for equity treatment and must be recorded as derivative liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the Company’s statementCondensed Consolidated Statements of operations.Operations. The fair value of the Private Placement Warrants (as defined in Note 4) has been estimated using a Black-Scholes-Merton model and the fair value of the Public Warrants (as defined in Note 3) issued in connection with the Public OfferingGSAH's initial public offering has been measured based on the listed market price of such Public Warrants. As the transfer of Private Placement Warrants (seeto anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, we determined that the fair value of each Private Placement Warrant is equivalent to that of
each Public Warrant. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. See Note 6)16, Fair Value Measurements.Income Taxes
Concentrations of Risk
Financial instruments that are potentially subject to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains cash in bank deposit accounts that, at times, may exceed the insured limits of the local country. The Company has not experienced any losses in such accounts.
The Company sells its products and services mainly to large, private and governmental organizations in the Americas, Europe, the Middle East and Asia Pacific regions. The Company performs ongoing evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary. The Company generally does not require its customers to provide collateral or other security to support accounts receivable. As of March 31, 2022 and December 31, 2021, no customer accounted for more than 10% of the accounts receivable balance.
Recent Accounting Pronouncements
Accounting Guidance Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. ASU 2020-04 provides temporary optional expedients and exceptions for applying GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. For all entities, ASU 2020-04 can be adopted after its issuance date through December 31, 2022. The Company is taxed as a corporation for U.S. federal income tax purposes. As a corporation, for tax purposes,currently evaluating the Company is subject to U.S. federalimpact of this ASU.
2. Business Combinations and various state and local income taxes onAcquisitions
On October 20, 2021, Mirion Technologies, Inc. consummated its
earnings. Prior to July 2020, the Company was included with The Goldman Sachs Group Inc. and subsidiaries (the “Group Inc.”) in the consolidated corporate federal income tax return as well as consolidated/combined state and local tax returns. The Company computed its tax liability on a modified separate company basis and will settle such liability with the Group Inc. pursuant to a tax sharing arrangement.To the extent the Company generates tax benefits from losses during such time that it is consolidated with the Group Inc., the amounts will be reimbursed by the Group Inc.,previously announced Business Combination pursuant to the tax sharing arrangement. The Company’s state and local tax liabilities are allocated to reflect its shareBusiness Combination Agreement. On December 1, 2021, the Company acquired 100% of the consolidated/combined stateequity interest of CIRS.
No adjustments to the previously disclosed preliminary fair value of net assets acquired in the Business Combination and
local incomeCIRS acquisition have been recorded in the quarter ended March 31, 2022. The estimated fair values of all assets acquired and liabilities assumed in the acquisitions are provisional and may be revised as a result of additional information obtained during the measurement period of up to one year from the acquisition dates, including but not limited to valuation of tax
liability.Following changesaccounts, property, plant and equipment and intangible assets.
3. Contracts in ownership starting July 2020,Progress
Costs and billings on uncompleted construction-type contracts consist of the following (in millions):
| | | | | | | | |
| Successor |
| March 31, 2022 | December 31, 2021 |
| Costs incurred on contracts (from inception to completion) | $ | 193.4 | | $ | 199.4 | |
| Estimated earnings | 122.5 | | 125.5 | |
| Contracts in progress | 315.9 | | 324.9 | |
| Less: billings to date | (267.3) | | (281.8) | |
| $ | 48.6 | | $ | 43.1 | |
The carrying amounts related to uncompleted construction-type contracts are included in the accompanying Condensed Consolidated Balance Sheets under the following captions (in millions):
| | | | | | | | |
| Successor |
| March 31, 2022 | December 31, 2021 |
| Costs and estimated earnings in excess of billings on uncompleted contracts – current | $ | 60.7 | | $ | 56.3 | |
Costs and estimated earnings in excess of billings on uncompleted contracts – non-current (1) | 6.3 | | 6.5 | |
Billings in excess of costs and estimated earnings on uncompleted contracts – current (2) | (16.2) | | (17.6) | |
Billings in excess of costs and estimated earnings on uncompleted contracts – non-current (3) | (2.2) | | (2.1) | |
| $ | 48.6 | | $ | 43.1 | |
(1)Included in other assets within the Condensed Consolidated Balance Sheets.
(2)Included in deferred contract revenue – current within the Condensed Consolidated Balance Sheets.
(3)Included in other liabilities within the Condensed Consolidated Balance Sheets.
For the three months ended March 31, 2022 the Company deconsolidatedhas recognized revenue of $3.3 million related to the contract liabilities balance as of December 31, 2021.
4. Inventories
The components of inventories consist of the following (in millions):
| | | | | | | | |
| Successor |
| | March 31, 2022 | December 31, 2021 |
| Raw materials | $ | 59.6 | | $ | 56.8 | |
| Work in progress | 29.8 | | 26.6 | |
| Finished goods | 33.8 | | 40.2 | |
| | $ | 123.2 | | $ | 123.6 | |
5. Property, Plant and Equipment, Net
Property, plant and equipment, net consist of the following (in millions):
| | | | | | | | | | | | | | |
| | | Successor |
| | Depreciable
Lives | | March 31, 2022 | December 31, 2021 |
| Land, buildings, and leasehold improvements | 3-39 years | | $ | 45.0 | | $ | 45.0 | |
| Machinery and equipment | 5-15 years | | 28.1 | | 26.7 | |
| Badges | 3-5 years | | 30.0 | | 27.9 | |
| Furniture, fixtures, computer equipment and other | 3-10 years | | 18.3 | | 16.7 | |
| Construction in progress | — | | 15.2 | | 12.2 | |
| | | | 136.6 | | 128.5 | |
| Less: accumulated depreciation and amortization | | | (10.8) | | (4.5) | |
| | | | $ | 125.8 | | $ | 124.0 | |
Total depreciation expense included in costs of revenues and operating expenses was as follows (in millions):
| | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor |
| | March 31, 2022 | | | March 31, 2021 |
| Depreciation expense in: | | | | | |
| Cost of revenues | | $ | 4.2 | | | | $ | 2.9 | |
| Operating expenses | | $ | 1.9 | | | | $ | 2.1 | |
Construction in progress includes capitalized internal use software costs totaling $1.9 million and $1.7 million as of March 31, 2022 and December 31, 2021 respectively.
6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in millions):
| | | | | | | | |
| Successor |
| | March 31, 2022 | December 31, 2021 |
| Compensation and related benefit costs | $ | 33.1 | | $ | 34.0 | |
| Customer deposits | 8.6 | 8.8 | |
| Accrued commissions | 0.9 | 0.9 | |
| Accrued warranty costs | 5.4 | 5.9 | |
| Non-income taxes payable | 6.2 | 7.5 | |
| Pension and other post-retirement obligations | 0.5 | 0.3 | |
| Income taxes payable | 5.3 | 3.2 | |
| Restructuring | 1.1 | 1.4 | |
| Accrued professional fees related to becoming a public company | 0.7 | 1.8 | |
| Deferred and contingent consideration | 1.6 | 2.0 |
| Other accrued expenses | 10.6 | 9.6 | |
| Total | $ | 74.0 | | $ | 75.4 | |
7. Goodwill and Intangible Assets
Goodwill
Goodwill is calculated as the excess of consideration transferred over the net assets recognized for acquired businesses and represents future economic benefits arising from the Group Inc.other assets acquired that could not be individually identified and separately recognized. The Company assesses goodwill for tax purposesimpairment at the reporting unit level annually on the first day of the fourth quarter and upon the tax sharing arrangement with the Group Inc. was terminated. Beginning July 2020, the Company will file separate corporate federal and state and local income tax returns. To the extent the Company generates tax losses after it ceases being consolidated with the Group Inc., tax benefits from losses will be accrued if it isoccurrence of a triggering event or change in circumstance that would more likely than not reduce the losses may be carried forwardfair value of a reporting unit below its carrying amount.
Goodwill is assigned to reporting units at the date the goodwill is initially recorded and utilized against future expected profits.
Income taxes are provided for usingis reallocated as necessary based on the assets and liabilities method under which deferred tax assets and liabilities are recognized for temporary differences between the financialcomposition of reporting and tax bases of assets and liabilities.
Deferred Income Taxes
The Company follows the asset and liability method of accounting for income taxes under Accounting Standards Codification 740, “Income Taxes.” Deferred tax assets and liabilities areunits over time. No goodwill impairment was recognized for the three months ended March 31, 2022 and 2021, respectively.
The following table shows changes in the carrying amount of goodwill by reportable segment as of March 31, 2022 and December 31, 2021 (in millions): | | | | | | | | | | | | | | | | | |
| Successor |
| Medical | | Industrial | | Consolidated |
| Balance—December 31, 2021 | $ | 712.5 | | | $ | 950.1 | | | $ | 1,662.6 | |
| Translation adjustment | — | | | (10.1) | | | (10.1) | |
| Balance—March 31, 2022 | $ | 712.5 | | | $ | 940.0 | | | $ | 1,652.5 | |
A portion of the goodwill is deductible for income tax purposes.
Intangible Assets
Intangible assets consist of our developed technology, customer relationships, backlog, trade names, and non-compete agreements at the time of acquisition through business combinations. The customer relationships definite lived intangible assets are amortized using the double declining balance method while all other definite lived intangible assets are amortized on a straight-line basis over their estimated futureuseful lives.
Many of our intangible assets are not deductible for income tax consequences attributablepurposes. A summary of intangible assets useful lives, gross carrying value and related accumulated amortization is below (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Successor |
| | | March 31, 2022 |
| Original Average
Life in Years | | Gross Carrying
Amount | | Accumulated
Amortization | | Net Book
Value |
| Customer relationships | 6 - 13 | | $ | 339.5 | | | $ | (33.2) | | | $ | 306.3 | |
| Distributor relationships | 7 - 13 | | 61.0 | | | (3.4) | | | 57.6 | |
| Developed technology | 5 - 16 | | 249.2 | | | (13.5) | | | 235.7 | |
| Trade names | 3 - 10 | | 99.4 | | | (4.6) | | | 94.8 | |
| Backlog and other | 1 - 4 | | 84.9 | | | (15.8) | | | 69.1 | |
| Total | | | $ | 834.0 | | | $ | (70.5) | | | $ | 763.5 | |
| | | | | | | |
| | | December 31, 2021 |
| Original Average
Life in Years | | Gross Carrying
Amount | | Accumulated
Amortization | | Net Book
Value |
| Customer relationships | 6 - 13 | | $ | 341.0 | | | $ | (15.3) | | | $ | 325.8 | |
| Distributor relationships | 7 - 13 | | 61.0 | | | (1.5) | | 59.5 |
| Developed technology | 5 - 16 | | 251.2 | | | (5.9) | | 245.3 |
| Trade names | 3 - 10 | | 100.0 | | | (2.1) | | 97.9 |
| Backlog and other | 1 - 4 | | 85.7 | | | (7.2) | | 78.4 |
| Total | | | $ | 838.9 | | | $ | (32.0) | | | $ | 806.9 | |
Aggregate amortization expense for intangible assets included in cost of revenues and operating expenses was as follows (in millions):
| | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Amortization expense for intangible assets in: | | | | |
| Cost of revenues | $ | 6.7 | | | | $ | 6.9 | |
| Operating expenses | $ | 32.1 | | | | $ | 11.7 | |
8. Borrowings
On June 17, 2021, Mirion and certain selling shareholders (the "Sellers") entered into the Business Combination Agreement with GSAH, a special purpose acquisition company. On October 20, 2021, Mirion consummated the Business Combination pursuant to differences between the financial statementsBusiness Combination Agreement, combining with a subsidiary of GSAH at the Closing, for total consideration of approximately $2.6 billion. The Sellers received cash consideration of approximately $1.3 billion and 30,401,902 shares of Class A and 8,560,540 shares of Class B common stock valued at approximately $0.4 billion on the Closing Date (based upon a $10.45 average price per share of GSAH's Class A common stock on the Closing Date). The Shareholder Notes and Management Notes (each as defined below) were acquired by GSAH at the Closing for a price equal to the full outstanding principal amount together with all accrued but unpaid interest up to but excluding the Closing Date using a portion of the Business Combination Consideration. In connection with the Closing, GSAH contributed the
Shareholder Notes and the Management Notes to Mirion TopCo, and then the Shareholder Notes and Management Notes were extinguished in full. Borrowings under the 2019 Credit Facility (as defined below) as of the Closing Date were paid in full through the cash consideration and new financing obtained through the 2021 Credit Agreement described below.
Third-party notes payable consist of the following (in millions):
| | | | | | | | |
| Successor |
| March 31,
2022 | December 31,
2021 |
| 2021 Credit Agreement | $ | 827.9 | | $ | 828.3 | |
| Canadian Financial Institution | 1.2 | | 1.2 | |
| Other | 1.9 | | 2.3 | |
| Draw on revolving line of credit | — | | — | |
| Total third-party borrowings | 831.0 | | 831.8 |
| Less: notes payable to third-parties, current | (5.2) | | (3.9) | |
| Less: deferred financing costs | (20.3) | | (21.1) | |
| Notes payable to third-parties, non-current | $ | 805.5 | | $ | 806.8 | |
As of March 31, 2022 and December 31, 2021, the fair market value of the Company's 2021 Credit Agreement was $818.6 million and $825.2 million, respectively. The fair market value for the 2021 Credit Agreement was estimated using primarily level 2 inputs, including borrowing rates available to the Company at the respective period ends. The fair market value for the Company’s remaining third-party debt approximates the respective carrying amounts as of existingMarch 31, 2022 and December 31, 2021.
2021 Credit Agreement
In connection with the Business Combination, certain subsidiaries of the Company entered into the 2021 Credit Agreement among Mirion Technologies (HoldingSub2), Ltd., a limited liability company incorporated in England and Wales, as Holdings, Mirion Technologies (US Holdings), Inc., as the Parent Borrower, Mirion Technologies (US), Inc., as the Subsidiary Borrower, the lending institutions party thereto, Citibank, N.A., as the Administrative Agent and Collateral Agent and Goldman Sachs Lending Partners, Citigroup Global Markets Inc., Jefferies Finance LLC and JPMorgan Chase Bank, N.A., as the Joint Lead Arrangers and Bookrunners.
The 2021 Credit Agreement refinanced and replaced the credit agreement from March 2019, by and between, among others, Mirion Technologies (HoldingRep), Ltd. ("Mirion HoldingRep"), its subsidiaries and Morgan Stanley Senior Funding Inc., as administrative agent, certain other revolving lenders and a syndicate of institutional lenders (the “2019 Credit Facility”) which is described in more detail below.
The 2021 Credit Agreement provides for an $830.0 million senior secured first lien term loan facility and a $90.0 million senior secured revolving facility (collectively, the “Credit Facilities”). Funds from the Credit Facilities are permitted to be used in connection with the Business Combination and relation transactions to refinance the 2019 Credit Facility referred to below and for general corporate purposes. The term loan facility is scheduled to mature on October 20, 2028 and the revolving facility is scheduled to expire and mature on October 20, 2026. The agreement requires the payment of a commitment fee of 0.50% per annum for unused revolving commitments, subject to stepdowns to 0.375% per annum and 0.25% per annum upon the achievement of specified leverage ratios. Any outstanding letters of credit issued under the 2021 Credit Agreement reduce the availability under the revolving line of credit.
The 2021 Credit Agreement is secured by a first priority lien on the equity interests of the Parent Borrower owned by Holdings and substantially all of the assets (subject to customary exceptions) of the borrowers and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expectedthe other guarantors thereunder. Interest with respect to apply to taxable incomethe facilities is based on, at the option of the borrowers, (i) a customary base rate formula for borrowings in U.S. dollars or (ii) a floating rate formula based on LIBOR (with customary fallback provisions) for borrowings in U.S. dollars, a floating rate formula based on EURIBOR for borrowings in Euro or a floating rate formula based on SONIA for borrowings in Pounds Sterling, each as described in the years2021 Credit Agreement with respect to the applicable type of borrowing. The 2021 Credit Agreement includes fallback language that seeks to either facilitate an agreement with the Company's lenders on a replacement rate for LIBOR in which those temporary differencesthe event of its discontinuance or that automatically replaces LIBOR with benchmark rates based upon the Secured Overnight Financing Rate ("SOFR") or other benchmark replacement rates upon certain triggering events.
The 2021 Credit Agreement contains customary representations and warranties as well as customary affirmative and negative covenants and events of default. The negative covenants include, among others and in each case subject to certain thresholds and exceptions, limitations on incurrence of liens, limitations on incurrence of indebtedness, limitations on making dividends and other distributions, limitations on engaging in asset sales, limitations on making investments, and a financial covenant that the “First Lien Net Leverage Ratio” (as defined in the 2021 Credit Agreement) as of the end of any fiscal quarter is not greater than 7.00 to 1.00 if on the last day of such fiscal quarter certain borrowings outstanding under the revolving credit facility exceed 40% of the total revolving credit commitments at such time. The covenants also contain limitations on the activities of Mirion Technologies (HoldingSub2), Ltd. as the “passive” holding company. If any of the events of default occur and are expected tonot cured or waived, any unpaid amounts under the 2021 Credit Agreement may be recovereddeclared immediately due and payable, the revolving credit commitments may be terminated and remedies against the collateral may be exercised. Mirion Technologies (HoldingSub2), Ltd. and subsidiaries were in compliance with all debt covenants on March 31, 2022 and December 31, 2021.
Term Loan - The term loan has a seven-year term (expiring October 2028), bears interest at the greater of Adjusted London Interbank Offered Rate ("LIBOR") or settled.0.50%, plus 2.75% and has quarterly principal repayments of 0.25% of the original principal balance. The effect on deferred tax assetsinterest rate was 3.25% as March 31, 2022 and liabilitiesDecember 31, 2021. The Company repaid $0.4 million and $1.7 million for the 3-month period ended March 31, 2022 and for Successor Period ended December 31, 2021, respectively, yielding an outstanding balance of approximately $827.9 million and $828.3 million as of March 31, 2022 and December 31, 2021, respectively.
Revolving Line of Credit - The revolving line of credit arrangement has a five year term and bears interest at the greater of LIBOR or 0%, plus 2.75%. The agreement requires the payment of a changecommitment fee of 0.50% per annum for unused commitments. The revolving line of credit matures in tax rates is recognized in income inOctober 2026, at which time all outstanding revolving facility loans and accrued and unpaid interest are due. Any outstanding letters of credit reduce the periodavailability of the revolving line of credit. There was no outstanding balance under the arrangement as of March 31, 2022 and December 31, 2021. Additionally, the Company has standby letters of credit issued under its 2021 Credit Agreement that includedreduce the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets toavailability under the revolver of $8.0 million and $8.1 million as March 31, 2022 and December 31, 2021, respectively. The amount expected to be realized.Unrecognized Tax Benefits
The Company recognizes tax positions in the financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority basedavailable on the technical meritsrevolver as of March 31, 2022 and December 31, 2021 was approximately $82.0 million and $81.9 million, respectively.
Deferred Financing Costs
In connection with the issuance of the position. A position that meets this standard is measured2021 Credit Agreement term loan, we incurred debt issuance costs of $21.7 million on date of issuance. In accordance with accounting for debt issuance costs, we recognize and present deferred finance costs associated with non-revolving debt and financing obligations as a reduction from the face amount of related indebtedness in our Condensed Consolidated Balance Sheets.
In connection with the issuance of the 2021 Credit Agreement revolving line of credit, we incurred debt issuance costs of $1.8 million. We recognize and present debt issuance costs associated with revolving debt arrangements as an asset and include the deferred finance costs within other assets on our Condensed Consolidated Balance Sheets. We amortize all debt issuance costs over the life of the related indebtedness.
For the 3-month period ended March 31, 2022, we incurred approximately $1.0 million of amortization expense of the deferred finance costs.
2019 Credit Facility
In conjunction with the Business Combination, the 2021 Credit Agreement refinanced and replaced the 2019 Credit Facility.
The 2019 Credit Facility provided for financing of a $450.0 million senior secured term loan facility and a €125.0 million term loan facility, as well as a $90.0 million revolving line of credit. The 2019 Credit Facility was amended to provide an additional $225.0 million, $34.0 million and $66.0 million in gross proceeds from the USD term loan in December 2020, July 2019, and December 2019, respectively.
USD term loan – The term loan had a seven-year term (expiring March 2026), bearing interest at the largest amountgreater of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax returnAdjusted London Interbank Offered Rate (“LIBOR”) or 0%, plus 4.00%, and amounts recognized inhad quarterly principal repayments of 0.25% of the financial statements. There were no unrecognized tax benefitsoriginal principal balance. The interest rate was 4.27% as of March 31, 2021. The Company recognizesrepaid $1.9 million for the 3-month period ended March 31, 2021.
Euro term loan - The Euro portion of the term loan had a seven-year term (expiring March 2026), bearing interest at the greater of European union interbank market (“Euribor”) or 0%, plus 4.25% and has quarterly principal repayments of 0.25% of the original principal balance. As of March 31, 2021, the interest rate was 4.25%. The Company repaid $0.4 million for the three months ended March 31, 2021.
Revolving Line of Credit - The revolving line of credit arrangement had a five-year term and bearing interest at the greater of LIBOR or 0%, plus 4.00%. The agreement requires the payment of a commitment fee of 0.50% per annum for unused commitments. The revolving line of credit matures in March 2024, at which time all outstanding revolving facility loans and accrued and unpaid interest are due. Any outstanding letters of credit reduce the availability of the revolving line of credit.
Deferred Financing Costs
As noted above, the 2021 Credit Agreement refinanced and penaltiesreplaced the 2019 Credit Facility. In conjunction with the Business Combination purchase accounting we wrote off the remaining unamortized original issue discounts (OID) and debt issuance costs of $15.4 million related to unrecognized tax benefits as income tax expense. No amounts were accrued for interest expensethe term loan and penalties$0.4 million related to income tax mattersthe revolving line of credit and recorded as a loss on extinguishment of debt on the last day of the Predecessor Period.
For the 3-month period ended March 31, 2021, we incurred approximately $1.0 million of amortization expense of the deferred finance costs.
NRG Loan - In conjunction with the acquisition of NRG, the Company entered into a loan agreement for €7.2 million ($7.4 million) at the date of the acquisition. This agreement was scheduled to expire in December 2023. The loan bore interest which is Euribor of three months, plus 2.0%, and mandatory costs if any. The remaining balance for this loan was paid off in full during the 3-months ended March 31, 2021.
Canadian Financial Institution - In May 2019, the Company entered into a credit agreement for C$1.7 million ($1.3 million) with a Canadian financial institution that matures in April 2039. The note bears annual interest at 4.15%. The credit agreement is secured by the facility acquired using the funds obtained.
Overdraft Facilities
The Company has overdraft facilities with certain German and French financial institutions. As of March 31, 2022 and December 31, 2021 there were no outstanding amounts under these arrangements.
Accounts Receivable Sales Agreement
We are party to an agreement to sell short-term receivables from certain qualified customer trade accounts to an unaffiliated French financial institution without recourse. Under this agreement, the Company can sell up to €8.0 million ($8.9 million) and €8.0 million ($9.1 million) as March 31, 2022 and December 31, 2021, respectively, of eligible accounts receivables. The accounts receivable under this agreement are sold at face value and are excluded from the consolidated balance if revenue has been recognized on the related receivable. When the related revenue has not been recognized on the receivable the Company considers the accounts receivable to be collateral for short-term borrowings. As of March 31, 2022 and December 31, 2021, there was $0.0 million and approximately $0.4 million, respectively, outstanding under these arrangements included as Other in the Borrowings table above.
Total costs associated with this arrangement were immaterial for the Successor Periods and for all Predecessor Periods presented and are included in selling, general and administrative expense in the Condensed Consolidated Statements of Operations.
Performance Bonds and Other Credit Facilities
The Company has entered into various line of credit arrangements with local banks in France and Germany. These arrangements provide for the issuance of documentary and standby letters of credit of up to €67.5 million ($75.0 million) and €70.3 million ($79.7 million), as of March 31, 20212022 and December 31, 2020. 2021, respectively, subject to certain local restrictions. As of March 31, 2022 and December 31, 2021 there were €43.3 million ($48.1 million) and €37.7 million ($42.7 million), respectively, of the lines had been utilized to guarantee documentary and standby letters of credit, with interest rates ranging from 0.5% to 2.0%. In addition, the Company posts performance bonds with irrevocable letters of credit to support certain contractual obligations to customers for equipment delivery. These letters of credit are supported by restricted cash accounts, which totaled $3.0 million and $1.3 million as of March 31, 2022 and December 31, 2021, respectively.
At March 31, 2022, contractual principal payments of total third-party borrowings are as follows (in millions):
| | | | | |
| Fiscal year ending March 31: | |
| Remainder of 2022 | $ | 6.3 | |
| 2023 | 8.4 | |
| 2024 | 8.3 | |
| 2025 | 8.2 | |
| 2026 | 9.6 | |
| Thereafter | 790.2 | |
| Gross Payments | 831.0 | |
| Unamortized debt issuance costs | (20.3) | |
| Total third-party borrowings, net of debt issuance costs | $ | 810.7 | |
Notes Payable to Related Parties
Concurrent with the Closing, a portion of the Business Combination Consideration was used to extinguish the Shareholder Notes and the Management Notes in full.
Shareholder and Management Notes – Mirion Technologies (HoldingSub1), Ltd., was authorized to issue $900.0 million (plus accrued paid in-kind (PIK) interest) of notes to shareholders (the “Shareholder Notes”) and up to $5.0 million (plus paid in-kind (PIK) cash and interest) of notes to certain members of management (the “Management Notes”). The notes ranked pari passu between each other and other unsecured obligations of the Company. The notes could be prepaid without penalty at the Company’s option and were subordinate in right of payment to any indebtedness of the Company to banks or to other financial institutions (either currently existing or to occur in the future). Certain of the Shareholder and Management Notes were admitted to trading and were on the official listing of The International Stock Exchange (TISE).
During 3-month period ended March 31, 2021, no additional Shareholder Notes were admitted to trading and were on the official listing of TISE. There was no trading activity related to Shareholder and Management Notes during 3-month period ended March, 2021.
The notes bore simple annual interest at 11.5%. For the Shareholder Notes, the interest was added to the principal outstanding on December 31 of each year until extinguished and were referred to as Shareholder Funding Bonds on TISE. For the Management Notes, half of the interest was added to the principal outstanding on December 31 of each year until extinguished and was referred to as Management Funding Bonds on TISE, while the remaining half was payable in cash annually. The listing on the TISE for Shareholder and Management Funding Bonds was an optional election and certain shareholders had elected to opt-out of listing their Shareholder Funding Bonds. All other shareholders and management had elected to list their funding bonds on TISE. The notes were due when the Company completes a public offering, a winding-up, a sale, or on March 30, 2026, whichever occurred first. The redemption price was equal to the outstanding principal plus all accrued and unpaid interest then outstanding.
9. Leased Assets
The Company primarily leases certain logistics, office, and manufacturing facilities, as well as vehicles, copiers and other equipment. These operating leases generally have remaining lease terms between 1 month and 30 years, and some include options to extend (generally 1 to 10 years). The exercise of lease renewal options is at the Company’s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.
The table below presents the locations of the operating lease assets and liabilities on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively (in millions):
| | | | | | | | | | | | | | |
| | | Successor |
| Balance Sheet Line Item | | March 31, 2022 | December 31, 2021 |
| Operating Lease assets | Operating Lease assets | | $ | 44.2 | | $ | 45.7 | |
| Financing Lease assets | Other Assets | | $ | 0.8 | | $ | 0.9 | |
| Operating lease liabilities: | | | | |
| Current operating lease liabilities | Current operating lease liabilities | | $ | 9.0 | | $ | 9.3 | |
| Non-current operating lease liabilities | Operating lease liability, non-current | | 39.1 | | 40.6 | |
| Total operating lease liabilities: | | | $ | 48.1 | | $ | 49.9 | |
| Financing lease liabilities: | | | | |
| Current financing lease liabilities | Accrued expenses and other current liabilities | | $ | 0.6 | | $ | 0.6 | |
| Non-current financing lease liabilities | Deferred income taxes and other long-term liabilities | | 0.2 | | 0.3 | |
| Total financing lease liabilities: | | | $ | 0.8 | | $ | 0.9 | |
The depreciable lives are limited by the expected lease term for operating lease assets and by shorter of either the expected lease term or economic useful life for financing lease assets.
The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. The Company used incremental borrowing rates as of July 1, 2021 for leases that commenced prior to that date.
The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of March 31, 2022 and December 31, 2021, respectively, are:
| | | | | | | | | | | |
| | Successor |
| | March 31, 2022 | December 31, 2021 |
| Operating leases | | | |
| Weighted average remaining lease term (in years) | | 7.3 | 7.5 |
| Weighted average discount rate | | 4.18 | % | 4.19 | % |
The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancelable operating leases with terms of more than one year to the total lease liabilities recognized on the Condensed Consolidated Balance Sheets as of March 31, 2022 (in millions):
| | | | | |
| Fiscal year ending December 31: | |
| 2022 | $ | 8.2 | |
| 2023 | 9.6 | |
| 2024 | 8.0 | |
| 2025 | 6.5 | |
| 2026 | 4.9 | |
| 2027 and thereafter | 18.7 | |
| Total undiscounted future minimum lease payments | $ | 55.9 | |
| Less: Imputed interest | (7.8) | |
| Total lease liabilities | $ | 48.1 | |
| |
For the three months ended March 31, 2022, operating lease costs (as defined under ASU 2016-02) were $2.6 million. Operating lease costs are included within costs of goods sold, selling, general and administrative, and research and development expenses on the consolidated statements of income and comprehensive income. Short-term lease costs, variable lease costs and sublease income were not material for the periods presented.
Rental expense for operating lease (as defined prior to the adoption of ASC 2016-02) was approximately $2.8 million for the Predecessor period three months ended March 31, 2021.
Cash paid for amounts included in the measurement of operating lease liabilities was $2.9 million for the three months ended March 31, 2022 and this amount is included in operating activities in the Condensed Consolidated Statements of Cash Flows. Operating lease assets obtained in exchange for new operating lease liabilities were $0.9 million for the three months ended March 31, 2022.
10. Commitments and Contingencies
Unconditional Purchase Obligations
The Company has entered into certain long-term unconditional purchase obligations with suppliers. These agreements are non-cancellable and specify terms, including fixed or minimum quantities to be purchased, fixed or variable price provisions, and the approximate timing of payment. As of March 31, 2022, unconditional purchase obligations were as follows (in millions):
| | | | | |
| Fiscal year ending December 31: | |
| 2022 | $ | 19.8 | |
| 2023 | 7.8 | |
| 2024 | 4.7 | |
| 2025 | 2.8 | |
| 2026 | 2.7 | |
| 2027 and thereafter | 0.3 | |
| Total | $ | 38.1 | |
Litigation
The Company is subject to
income tax examinations by major taxing authorities since inception.Recent Accounting Pronouncements
Management doesvarious legal proceedings, claims, litigation, investigations and contingencies arising out of the ordinary course of business. While the ultimate results of such suits or other proceedings against the Company cannot be predicted with certainty, we believe the resolution of these matters will not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our results of operations, financial condition, or cash flows. If we believe the Company’s financial statements.
Note 3—Public Offering
Uponlikelihood of an adverse legal outcome is probable and the closingamount is reasonably estimable, we accrue a liability in accordance with accounting guidance for contingencies. We consult with legal counsel on matters related to litigation and seek input both within and outside the Company.
11. Income Taxes
The effective income tax rate was 17.7% for the three months ended March 31, 2022 (Successor Period) and 14.9% for the three months ended March 31, 2021 (Predecessor Period). The difference in effective tax rate was primarily attributable to mix of earnings, certain adjustments for the Public Offering, the Company sold 75,000,000 units at an offering price of $10.00 per unit (the “Units”) including 5,000,000 UnitsSuccessor Period as a result of the underwriters’ partial exerciseBusiness Combination, and valuation allowances in the Predecessor Period.
The effective income tax rate for the Successor Period differs from the U.S. statutory rate of 21% due primarily to U.S. federal permanent differences. The effective income tax rate for the Predecessor Period differs from the U.K. statutory rate of 19% due primarily to valuation allowances on certain UK losses.
12. Supplemental Disclosures to Condensed Consolidated Statements of Cash Flows
Supplemental cash flow information and schedules of non-cash investing and financing activities (in millions):
| | | | | | | | |
| Successor |
| Three Months Ended March 31, 2022 | Three Months Ended March 31. 2021 |
| Cash Paid For: | | |
| Cash paid for interest | $ | 6.9 | | $ | 10.0 | |
| Cash paid for income taxes | 2.4 | | 2.8 | |
| Non-Cash Investing and Financing Activities: | | |
| Property, plant, and equipment purchases in accounts payable | 1.0 | | 0.7 | |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balances Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows (in millions).
| | | | | | | | |
| Successor |
| Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| Cash and cash equivalents | $ | 84.2 | | $ | 86.7 | |
| Restricted cash—current | 1.0 | | 0.8 | |
| Restricted cash—non-current | 2.0 | | 0.2 | |
| Total cash, cash equivalents, and restricted cash | $ | 87.2 | | $ | 87.7 | |
Amounts included in restricted cash represent funds with various financial institutions to support performance bonds with irrevocable letters of credit for contractual obligations to certain customers.
13. Stock-Based Compensation
Stock-based compensation is rewarded to employees and directors of the Company and accounted for in accordance with ASC 718, "Compensation—Stock Compensation". Stock-based compensation expense is recognized for equity awards over the vesting period based on their optiongrant-date fair value. Stock-based compensation expense is included within the same financial statement caption where the recipient’s other compensation is reported. The Company accounts for forfeitures as they occur. The Company uses various forms of long-term incentives including, but not limited to purchase additional Units. The Sponsor purchased an aggregateRSUs and PSUs, provided that the granting of 8,500,000 Private Placement Warrants (as defined below) at a price of $2.00 per Private Placement Warrantsuch equity awards is in a private placement that closed simultaneouslyaccordance with the closingCompany Incentive Plan as filed on Form S-8 with the SEC on December 27, 2021.
2021 Omnibus Incentive Plan
We adopted and obtained stockholder approval at the special meeting of the
Public Offering.Each Unit consists of one sharestockholders on October 19, 2021 of the Company’s2021 Plan. We initially reserved 19,952,329 shares of our Class A common stock $0.0001 par value, and one-fourthfor issuance pursuant to awards under the 2021 Plan. The total number of one redeemable warrant, withshares of our Class A common stock available for issuance under the 2021 Plan will be increased on the first day of each whole warrant exercisable for one sharefiscal year following the date on which the 2021 Plan was adopted in an amount equal to the least of (i) three percent (3%) of the outstanding shares of Class A common stock (each, a “Public Warrant” and, collectively,on the “Public Warrants”). One Public Warrant entitleslast day of the holder thereof to purchase one whole shareimmediately preceding fiscal year, (ii) 9,976,164 shares of Class A common stock at a price of $11.50 per share, subject to adjustment. No fractional shares will be issued upon exercise of the Public Warrants and only whole Public Warrants will trade. Each Public Warrant will become exercisable on the later of 30 days after the completion of the Initial Business Combination and 12 months from the closing of the Public Offering and will expire at 5:00 p.m., New York City time, five years after the completion of the Initial Business Combination or earlier upon redemption or liquidation. Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last reported sale price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Public Warrant holders. Additionally, commencing 90 days after the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.10 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their Public Warrants on a cashless basis prior to redemption and receive that(iii) such number of shares of Class A common stock to beas determined by referencethe Committee (as defined and designated under the 2021 Plan) in its discretion. Any employee, director or consultant of the Company or any of its subsidiaries or affiliates is eligible to receive an award under the 2021 Plan, to the extent that an offer of such award is permitted by applicable law, stock market or exchange rules, and regulations or accounting or tax rules and regulations. The 2021 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, PSUs, other share-based awards, or any combination thereof. Each award will be set forth in a table includedseparate grant notice or agreement and will indicate the type and terms and conditions of the award.
The purpose of the 2021 Plan is to motivate and reward employees and other individuals to perform at their highest level and contribute significantly to the success of the Company. During the three months ended March 31, 2022, $1.0 million of stock compensation expense was recorded, of which $0.2 million was related to non-employee directors. There were no new grants during the three months ended March 31, 2022.
In addition, during the three months ended March 31, 2022, certain members of the Company's Directors elected to receive their quarterly retainer fees in the warrant agreement, based on the redemption date and the fair market valueform of Class A common stocks. As such, the Company recorded related stock if and only ifcompensation expense for $0.1 million in the last reported sale pricesame period.
Profits Interests
In conjunction with entering into the Business Combination Agreement, on June 17, 2021 the Sponsor issued 4,200,000 Profits Interests to Lawrence Kingsley, the current Chairman of the Company’sBoard of Mirion, 3,200,000 Profits Interests to Thomas Logan, the Chief Executive Officer of Mirion, and 700,000 Profits Interests to Brian Schopfer, the Chief Financial Officer of Mirion. The Profits Interests are intended to be treated as profits interests for U.S. income tax purposes, pursuant to which Messrs. Logan, Schopfer and Kingsley will have an indirect interest in the founder shares held by the Sponsor.
The Profits Interests are subject to service vesting conditions fifty percent (50%) of the Profits Interests granted to each of Messrs. Logan and Schopfer service-vest on each of the second and third anniversaries of the Closing, and fifty percent (50%) of the Profits Interests granted to Mr. Kingsley service-vest on each of the first and second anniversaries of the Closing) and performance vesting conditions (under which the price per share of Mirion's Class A common stock equalsmust meet or exceeds $10.00exceed certain established thresholds for 20 out of 30 trading days before the fifth anniversary of the Closing Date). The expense will be recognized on a straight-line basis over the related service period for each tranche
of awards.
Of the Profits Interests, 3.2 million have a performance vesting threshold price of $12 per share (as adjusted) onof Mirion Class A common stock, 2.0 million have a threshold price of $14 per share of Mirion Class A common stock, and 3.0 million have a threshold price of $16 per share of Mirion Class A common stock.
During the
trading day prior to the date on which the Company sends the noticethree months ended March 31, 2022, $6.8 million of
redemption to the Public Warrant holders.The Company paid an underwriting commissionstock compensation expense was recorded and no new Profit Interests were issued.
14. Related-Party Transactions
Founder Shares
As of
2.0% of the gross proceeds of the Public Offering (or $15,000,000) to the underwriters at the closing of the
Public Offering, with an additional fee (the “Deferred Underwriting Discount”) of 3.5% of the gross proceeds of the Public Offering (or $26,250,000) payable upon the Company’s completion of the Initial Business Combination. The Deferred Underwriting Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes the Initial Business Combination. The Deferred Underwriting Discount has been recorded as a deferred liability on the balance sheet as of March 31, 2021 as management has deemed the consummation of an Initial Business Combination,
to be probable.The Public Warrants issued as part of the Units are accounted for as liabilities as they contain terms and features that do not qualify for equity classification under ASC 815. The fair value of the Public Warrants at December 31, 2020 was a liability of $48,000,000. At March 31, 2021, the fair value was $41,250,000. The change in fair value of $6,750,000 is reflected in change in fair value of warrant liability.
All of the 75,000,000 shares of Class A common stock sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with ASC 480, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Given that the Class A common stock was issued with other freestanding instruments (i.e., Public Warrants), the initial carrying value of Class A common stock clasified as temporary equity is based on allocated proceeds in accordance with Accounting Standards Codification 470-20, “Debt with Conversion and Other Options”.
Note 4—Related Party Transactions
Founder Shares
In July 2018, the Sponsor purchased 575owned 18,750,000 shares of Class B common stock (the “Founder Shares”the ("Founder Shares") for an aggregate price of $5,000. On April 17, 2020, the Company conducted a 1:5000 stock split, resulting in the Sponsor holding 2,875,000 Founder Shares. Subsequently, on June 11, 2020, the Company conducted a 1:7 stock split, resulting in the Sponsor holding 20,125,000 Founder Shares, as well as increased the authorized shares of Class B common stock to 50,000,000. The unaudited condensed financial statements reflect the changes of these splits retroactively for all periods presented. On June 29, 2020, the Sponsor transferred 1,325,000 of its Founder Shares to GS Acquisition Holdings II Employee Participation LLC (“Employee Participation LLC”), an affiliate of the Sponsor. The 20,125,000 Founder Shares included an aggregate of up to 2,625,000 shares that were subject to forfeiture if the underwriters’ option to purchase additional shares was not exercised in full by the underwriters to maintain the number of Founder Shares equal to 20% of the outstanding shares upon completion of the Public Offering. Following the partial exercise of the option to purchase additional shares, 1,375,000 Founder Shares were forfeited on August 13, 2020, at no cost in order to maintain the number of Founder Shares equal to 20% of the outstanding shares of common stock, upon the completion of the Public Offering. As used herein, unless the context otherwise requires, Founder Shares shall be deemed to include the shares of Class A common stock issuable upon conversion thereof. The Founder Shares are identical to the Class A common stock included in the Units sold in the Public Offering, except that: prior to the Initial Business Combination only holders of the Founder Shares have the right to vote on the election of the Company’s directors and holders of a majority of the outstanding shares of Class B common stock may remove members of the Company’s board of directors for any reason; the Founder Shareswhich automatically convertconverted into 18,750,000 shares of Class A common stock at the timeclosing of the Initial Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights; andCompany. The Founder Shares, are subject to certain vesting and forfeiture conditions and transfer restrictions, as described in more detail below, andincluding performance vesting conditions under which the holdersprice per share of the Founder Shares, as described in more detail below, have agreed to certain restrictions and will have certain registration rights with respect thereto.
The Company’s initial stockholders, officers and directors have agreed not to transfer, assign or sell any Founder Shares held by them until the earlier to occur of: (i) one year after the completion of the Initial Business Combination, (ii) the last sale price ofMirion's Class A common stock equalsmust meet or exceeds $12.00exceed certain established thresholds of $12, $14, or $16 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 out of 30 trading days within any 30-trading day period commencing at least 150 days afterbefore the Initial Business Combination, and (iii) the date following the completionfifth anniversary of the InitialClosing Date of the Business Combination on whichCombination). The Founder Shares will be forfeited to the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the public stockholders having the rightfor no consideration if they fail to exchange their shares of common stock for cash, securities or other property.
vest before October 20, 2026.
Private Placement Warrants
The Sponsor
has purchased an aggregate of 8,500,000 private placement warrants
(the "Private Placement Warrants") at a price of $2.00 per whole warrant ($
17,000,00017.0 million in the aggregate) in a private placement (the “Private Placement”) that closed concurrently with the closing of
the Public OfferingGSAH's initial public offering (the
“Private Placement Warrants”"IPO"). Each Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share, subject to adjustment in certain circumstances, including upon the occurrence of certain reorganization events.
A portion of proceeds from the sale of the Private Placement Warrants were added to the proceeds from the Public Offering deposited in the Trust Account such that at the closing of the Public Offering, $750,000,000 was held in the Trust Account. If the Initial Business Combination is not completed within 24 months from the closing of the Public Offering, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the public shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants
will be are non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
Effective March 30, 2021, the Sponsor agreed not to transfer its Private Placement Warrants.
The Sponsor and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 daysare accounted for as liabilities as they contain terms and features that do not qualify for equity classification under ASC 815. See Note 16, Fair Value Measurements, for the fair value of the Private Placement Warrants at March 31, 2022.
Profits Interests
In connection with the Business Combination Agreement, the Sponsor issued 8,100,000 Profits Interests to certain individuals affiliated with or expected to be affiliated with Mirion after the completionBusiness Combination. The holders of the Initial Business Combination.Profits Interests will have an indirect interest in the Founder Shares held by the Sponsor. The Profits Interests are subject to service and performance vesting conditions, including the occurrence of the Closing, and do not fully vest until all of the applicable conditions are satisfied. In addition, the Profits Interests are subject to certain forfeiture conditions. See Note 13,
Stock-based Compensation, for further detail regarding the Profits Interests.
The holders of the Founder Shares and Private Placement Warrants are and holders of warrants that may be issued upon conversion of working capital loans, if any, will be, entitled to registration rights to require the Company to register the resale of any of its securities held by them (in the case of the Founder Shares only after conversion of suchand the shares to shares of Class A common stock)underlying the Private Placement Warrants upon exercise pursuant to a registration rights agreementthe Amended and Restated Registration Rights Agreement dated June 29, 2020.October 20, 2021 (the "RRA'). These holders are also entitled to certain piggyback registration rights. The RRA also includes customary indemnification and confidentiality provisions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Related Party Sponsor Note
On April 17, 2020, an affiliate of the Sponsor agreed to loan the Company an aggregate amount of up to $300,000 to be used to pay a portion of the expenses related to the Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing, unsecured and payable on the earlier of December 31, 2020 and the closing of the Public Offering. On May 28, 2020 the Company borrowed $300,000 under the Note. On July 2, 2020, the full $300,000 balance of the Note was repaid to an affiliate of the Sponsor.
On November 12, 2020, the Sponsor agreed to loan the Company up to an aggregate of $2,000,000statements filed pursuant to the working capital note (the “Working Capital Note”). Any amounts borrowed under the Working Capital Note are non-interest bearing, unsecured and are due at the earlierterms of the dateRRA, including those expenses incurred in connection with the shelf-registration statement on Form S-1 filed on October 27, 2021 and declared effective on November 2, 2021.
Charterhouse Capital Partners LLP
The Company had entered into agreements with its Predecessor Period primary investor, Charterhouse Capital Partners LLP ("CCP"), which obligated the Company is required to complete its Initial Business Combination pursuant to its amended and restated certificate of incorporation, as amended from time to time, and the closing of the Initial Business Combination. On March 12, 2021, the Company borrowed $1,500,000 under the Working Capital Note.Administrative Support Agreement
The Company has entered into an agreement to pay an affiliatequarterly management fees of the Sponsor a total of $10,000$0.1 million per month for office space, administrativeyear. In return, CCP provided various investment banking services relating to financing arrangements, mergers and supportacquisitions and other services. Upon the earlier of the completion of the Initial Business Combination and the Company’s liquidation, the Company will cease paying these monthly fees. ForDuring the three months ended March 31, 2021 (Predecessor), the Company incurred expenses of $30,000 under this agreement.
Note 5—Stockholders’ Equity
Common Stock
The authorized common stockpaid CCP $0.1 million for professional fees and expense reimbursements. Upon the completion of the Company includes up to 500,000,000 sharesBusiness Combination, the agreement with CCP is complete. Therefore, as of Class A common stock and 50,000,000 shares of Class B common stock. IfMarch 31, 2022 the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business Combination) be required to increase the number of shares of Class A common stock which the Companyhad
no additional payments for professional fees or expense reimbursements. 15. Segment Information
The following table summarizes select operating results for each reportable segment (in millions).
| | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Revenues | | | | |
| Medical | $ | 60.1 | | | | $ | 51.5 | |
| Industrial | 103.1 | | | | 114.7 | |
| Consolidated Revenues | $ | 163.2 | | | | $ | 166.2 | |
| Segment (Loss) Income from Operations | | | | |
| Medical | $ | (3.5) | | | | $ | (2.3) | |
| Industrial | (1.4) | | | | 17.8 | |
| Total Segment (Loss) Income from Operations | (4.9) | | | | 15.5 | |
| Corporate and other | (28.7) | | | | (24.4) | |
| Consolidated Loss from Operations | $ | (33.6) | | | | $ | (8.9) | |
The Company’s assets by reportable segment were not included, as this information is authorized to issue at the same time as the Company’s stockholders vote on the Initial Business Combinationnot reviewed by, nor otherwise provided to, the extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holderschief operating decision maker to make operating decisions or allocate resources.
The following details revenues by geographic region. Revenues generated from external customers are attributed to geographic regions through sales from site locations (i.e., point of the Company’s common stock are entitled to one vote for each shareorigin) (in millions).
| | | | | | | | | | | | | | |
| Revenues |
| Successor | | | Predecessor |
| Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| North America | | | | |
| Medical | $ | 55.6 | | | | $ | 47.2 | |
| Industrial | 42.2 | | | | 43.8 | |
| Total North America | 97.8 | | | | 91.0 | |
| Europe | | | | |
| Medical | 4.5 | | | | 4.3 | |
| Industrial | 53.2 | | | | 61.7 | |
| Total Europe | 57.7 | | | | 66.0 | |
| Asia Pacific | | | | |
| Medical | — | | | | — | |
| Industrial | 7.7 | | | | 9.2 | |
| Total Asia Pacific | 7.7 | | | | 9.2 | |
| Total revenues | $ | 163.2 | | | | $ | 166.2 | |
The following details revenues by timing of the Class B common stock have the right to vote on the election of the Company’s directors prior to the Initial Business Combination. At March 31, 2021, there were 75,000,000 shares of Class A common stock issued and outstanding, of which 75,000,000 shares were subject to possible redemption and are classified outside of permanent equity at the balance sheet, and 18,750,000 shares of Class B common stock issued and outstanding. In connection with issuance of shares of Class A common stock, the Company issued 18,750,000 Public Warrants. recognition (in millions):
| | | | | | | | | | | | | | |
| Revenues |
| Successor | | | Predecessor |
| Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Point in time | $ | 117.0 | | | | $ | 121.4 | |
| Over time | 46.2 | | | | 44.8 | |
| Total revenues | $ | 163.2 | | | | $ | 166.2 | |
The
Company has determined that the Public Warrants are accounted for separately from shares of Class A common stock.Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to timefollowing details revenues by the Company’s board of directors. At March 31, 2021, there were no shares of preferred stock issued or outstanding.
Note 6—product category (in millions):
| | | | | | | | | | | | | | |
| Revenues |
| Successor | | | Predecessor |
| Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Medical segment: | | | | |
| Medical | $ | 60.1 | | | | $ | 51.5 | |
| Industrial segment: | | | | |
| Reactor Safety and Control Systems | 30.8 | | | | 36.9 | |
| Radiological Search, Measurement, and Analysis Systems | 72.3 | | | | 77.8 | |
| Total revenues | $ | 163.2 | | | | $ | 166.2 | |
16. Fair Value Measurements
The Company applies fair value accounting to all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. The fair value of
a financial instrument is the
amount that would be receivedCompany’s cash and cash equivalents, restricted cash, accounts receivable, and other current assets and liabilities approximates their carrying amounts due to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (i.e., the exit price).relatively short maturity of these items. The fair value hierarchy under ASC 820 prioritizesof third-party notes payable approximates the carrying value because the interest rates are variable and reflect market rates.
Fair Value of Financial Instruments
The Company categorizes assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets based upon the level of judgment associated with inputs to valuation techniques used to measure their fair value. The hierarchy givesIt is not practicable due to cost and effort for the highest priorityCompany to estimate the fair value of notes issued to related parties primarily due to the nature of their terms relative to the entity’s capital structure.
Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy:
Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs are quoted prices in active markets for similar assets or liabilities (Level 1 measurements) andor inputs that can be corroborated by observable market data for substantially the lowest priority to unobservable inputs (Level 3 measurements). The three levelsfull term of the fair value hierarchyassets or liabilities.
Level 3 – Inputs are as follows:Basis for Fair Value Measurement
unobservable and require significant management judgment or estimation. | | |
Level 1: | | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
| |
Level 2: | | Quoted prices in markets that are not active or financial instruments for which significant inputs to models are observable (including but not limited to quoted prices for similar securities, interest rates, foreign exchange rates, volatility and credit risk), either directly or indirectly; |
| | |
Level 3: | | Prices or valuations that require significant unobservable inputs (including the Management’s assumptions in determining fair value measurement). |
The following table presents information aboutsummarizes the Company’sfinancial assets and liabilities of the Company that are measured at fair value on a recurring basis at(in millions):
| | | | | | | | | | | | | | | | | |
| Successor |
| Fair Value Measurements at March 31, 2022 |
| Level 1 | | Level 2 | | Level 3 |
| Assets | | | | | |
| Cash, cash equivalents, and restricted cash | $ | 87.2 | | | $ | — | | | $ | — | |
| Discretionary retirement plan | 3.5 | | | 0.9 | | | — | |
| Liabilities | | | | | |
| Discretionary retirement plan | 3.5 | | | 0.9 | | | — | |
| Public warrants | 33.2 | | | — | | | — | |
| Private placement warrants | — | | | 15.0 | | | — | |
| | | | | |
| Fair Value Measurements at December 31, 2021 |
| Level 1 | | Level 2 | | Level 3 |
| Assets | | | | | |
| Cash, cash equivalents, and restricted cash | $ | 85.3 | | | $ | — | | | $ | — | |
| Discretionary retirement plan | 3.7 | | | 0.8 | | | — | |
| Liabilities | | | | | |
| Discretionary retirement plan | 3.7 | | | 0.8 | | | — | |
| Public warrants | 46.9 | | | — | | | — | |
| Private placement warrants | — | | | 21.2 | | | — | |
As of March 31,
20212022 and December
31, 2021 by level within the fair value hierarchy: | | | | | | | | | | | | | | | | |
| | | March 31, 2021 | | | Quoted Prices in
Active Markets
(Level 1) | | | Significant Other
Observable Inputs
(Level 2) | | | Significant Other
Unobservable Inputs
(Level 3) | |
Assets: | | | | | | | | | | | | | | | | |
Money market funds held in Trust Account | | $ | 750,074,432 | | | $ | 750,074,432 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | |
Warrant Liability – Public Warrants | | $ | 41,250,000 | | | $ | 41,250,000 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Warrant Liability – Private Placement Warrants | | $ | 20,225,828 | | | $ | — | | | $ | — | | | $ | 20,225,828 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Description | | December 31, 2020 | | | Quoted Prices in
Active Markets
(Level 1) | | | Significant Other
Observable Inputs
(Level 2) | | | Significant Other
Unobservable Inputs
(Level 3) | |
Assets: | | | | | | | | | | | | | | | | |
Money market funds held in Trust Account | | $ | 750,063,158 | | | $ | 750,063,158 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | |
Warrant Liability – Public Warrants | | $ | 48,000,000 | | | $ | 48,000,000 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Warrant Liability – Private Placement Warrants | | $ | 23,676,615 | | | $ | — | | | $ | — | | | $ | 23,676,615 | |
| | | | | | | | | | | | | | | | |
For the period ended March 31, 2021, the fair value of Public Warrants issued in connection with the Public OfferingGSAH's IPO have been measured based on the listed market price of such Public Warrants, a Level 1 measurement.
As the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, we determined that the fair value of each Private Placement Warrant is equivalent to that of each Public Warrant. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
For the
periodthree months ended March 31,
2021,2022, the Company recognized
aan unrealized gain
in the statement of operations resulting from a decrease in the fair value of the warrant
liabilityliabilities of
$10,200,787$19.9 million, which is presented
in the Condensed Consolidate Statements of Operations as change in fair value of warrant
liability.The estimated fair valueliabilities.
17. Loss Per Share
A reconciliation of the Private Placement Warrants was determinednumerator and denominator used in the calculation of basic and diluted loss per common share is as follows (in millions, except per share amounts):
| | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Net loss attributable to Mirion Technologies, Inc. (Successor) / Mirion Technologies (TopCo), Ltd. (Predecessor) shareholders | $ | (17.7) | | | | $ | (40.7) | |
| Weighted average common shares outstanding – basic and diluted | 180.774 | | | | 6.586 | |
| Net loss per common share attributable to Mirion Technologies, Inc. (Successor) / Mirion Technologies (TopCo), Ltd. (Predecessor) — basic and diluted | $ | (0.10) | | | | $ | (6.18) | |
| Anti-dilutive employee share-based awards, excluded | 0.988 | | | 0.3 |
Net loss per share of common stock is computed using a Black-Scholes-Merton model with Level 3 inputs. Inherentthe two-class method required for multiple classes of common stock and participating securities based upon their respective rights to receive dividends as if all income for the period has been distributed. Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding, adjusted for the outstanding non-vested shares. Diluted loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method based on the nature of such securities. For periods in a Black-Scholes-Merton modelwhich the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are assumptions relatednot assumed to expected life (term), expected stock price, volatility, risk-free interest rate and dividend yield.have been issued if their effect is anti-dilutive. The Company estimatesincurred a net loss for the volatilitythree months ended March 31, 2022 and 2021, respectively; therefore, none of itsthe potentially dilutive common shares were included in the diluted share calculations for those periods as they would have been anti-dilutive.
Successor Period
Upon the closing of the Business Combination, the following classes of common stock were considered in the loss per share calculation.
Class A Common Stock
Holders of shares of our Class A common stock warrants basedare entitled to one vote for each share held of record on implied volatility fromall matters on which stockholders are entitled to vote generally, including the Company’s traded warrants and from historical volatilityelection or removal of select peer companies’directors. The holders of our Class A common stock that matchesdo not have cumulative voting rights in the expectedelection of directors. Holders of shares of our Class A common stock are entitled to receive dividends when and if declared by our Board out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of our Class A common stock will be entitled to receive pro rata our remaining lifeassets available for distribution. Class A common stock issued and outstanding is included in the Company’s basic loss per share calculation, with the exception of Founder Shares discussed below.
Class B Common Stock
Holders of shares of our Class B common stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. If at any time the ratio at which shares of IntermediateCo Class B common stock are redeemable or exchangeable for shares of our Class A common stock changes from one-for-one as the number of votes to which our Class B common stockholders are entitled will be adjusted accordingly. The holders of our Class B common stock do not have cumulative voting rights in the election of directors. Except for transfers to us pursuant to the IntermediateCo Charter or to certain permitted transferees set forth in our Charter, paired interests may not be sold, transferred or otherwise disposed of.
Holders of shares of our Class B common stock are not entitled to economic interests in us or to receive dividends or to receive a distribution upon our liquidation or winding up. However, if IntermediateCo makes distributions to us other than solely with respect to our Class A common stock, the holders of paired interests will be entitled to receive distributions pro rata in accordance with the percentages of their respective shares of IntermediateCo Class B common stock.
Our Class B common stock has voting rights but no economic interest in the Company and therefore are excluded from the calculation of basic and diluted earnings per share.
Warrants
As described above, the Company has outstanding warrants to purchase up to 27,249,879 shares of Class A common stock. One whole warrant entitles the holder thereof to purchase one share of Mirion Class A common stock at a price of $11.50 per share. The Company’s warrants are not included in the Company’s calculation of basic loss per share and are excluded from the calculation of diluted loss per share because their inclusion would be anti-dilutive.
Founder Shares
Founder shares are subject to certain vesting events and forfeit if a required vesting event does not occur within five years of the warrants.closing of the Business Combination. The risk-free interest rate isfounder shares are subject to vesting in three equal tranches, based on the U.S. Treasury zero-coupon yield curve onvolume-weighted average price of our Class A common stock being greater than or equal to $12.00, $14.00 and $16.00 per share for any 20 trading days in any 30 consecutive trading day period. Holders of the grant date for a maturity similarfounder shares are entitled to vote such founder shares and receive dividends and other distributions with respect to such founder shares prior to vesting, but such dividends and other distributions with respect to unvested founder shares will be set aside by the Company and shall only be paid to the expected remaining lifeholders of the warrants. The expected lifefounder shares upon the vesting of such founder shares.
As the holders of the warrantsfounder shares are not entitled to participate in earnings unless the vesting conditions are met, the 18,750,000 founders shares have been excluded from the calculation of basic earnings per share. The founders shares are also excluded from the calculation of diluted earnings per share because their inclusion would be anti-dilutive.
Stock-Based Awards
Each stock-based award represents the right to receive a Class A common stock upon vesting of the awards. Per ASC 260, Earnings Per Share ("EPS"), shares issuable for little or no cash consideration upon the satisfaction of certain conditions (i.e. contingently issuable shares) should be included in the computation of basic EPS as of the date that all necessary conditions have been satisfied. As such, any stock-based awards such as Restricted Stock Units (RSUs) that vest in the Successor Period will be included in the Company's basic loss per share calculations as of the date when all necessary conditions are met.
Predecessor Period
In the Predecessor Periods presented, the rights, including the liquidation, dividend rights, sharing of losses, and voting rights of Mirion TopCo's A Ordinary Shares B Ordinary Shares were identical. As the rights of both classes of shares were identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share attributed to common stockholders is assumedtherefore the same for A Ordinary Shares and B Ordinary Shares on an individual or combined basis.
The Company’s participating securities included the Company’s non-vested A Ordinary Shares, as the holders were entitled to be equivalentnon-forfeitable dividend rights in the event a dividend was paid on ordinary shares. The holders of non-vested A Ordinary Shares did not have a contractual obligation to their remaining contractual term. share in losses.
18. Restructuring
The dividend rate is based onCompany incurs costs associated with restructuring initiatives intended to improve operating performance, profitability, and working capital levels. Actions associated with these initiatives may include improving productivity, workforce reductions, and the historical rate, whichconsolidation of facilities.
As of March 31, 2022, the Company
anticipates remaining at zero.has identified restructuring actions which will result in additional charges of approximately $1.5 million, primarily in the next 12 months.
The Company’s restructuring expenses are comprised of the following (in millions):
| | | | | | | | | | | | | | | | | |
| Successor |
| Three Months Ended March 31, 2022 |
| Cost of revenue | | Selling, general
and administrative | | Total |
| Severance and employee costs | $ | 0.1 | | | $ | 0.9 | | | $ | 1.0 | |
Other(1) | 0 | | 1.0 | | | 1.0 | |
| Total | $ | 0.1 | | | $ | 1.9 | | | $ | 2.0 | |
| | | | | |
| | | | | | | | | | | | | | | | | |
| Predecessor |
| Three Months Ended March 31, 2021 |
| Cost of revenue | | Selling, general
and administrative | | Total |
| Severance and employee costs | $ | 1.9 | | | $ | — | | | $ | 1.9 | |
Other(1) | — | | | 0.1 | | | 0.1 | |
| Total | $ | 1.9 | | | $ | 0.1 | | | $ | 2.0 | |
(1) Includes facilities, inventory write-downs, outside services, and IT costs.
The Company does not allocate restructuring charges to segment income; instead, these costs are included in Corporate & other.
The following table
provides quantitative information regarding Level 3 fair value measurements inputs: | | | | | | | | |
| | | As of
March 31,
2021 | | | As of
December 31,
2020 | |
Stock price | | $ | 10.43 | | | $ | 10.90 | |
Strike Price | | $ | 11.50 | | | $ | 11.50 | |
Term (in years) | | | 5.63 | | | | 5.75 | |
Volitility | | | 28.00 | % | | | 28.30 | % |
Risk-free interest rate | | | 1.07 | % | | | 0.47 | % |
Dividend yield | | | 0.00 | % | | | 0.00 | % |
Fair value | | $ | 2.38 | | | $ | 2.79 | |
The changesummarizes the changes in the fair valueCompany’s accrued restructuring balance, which are included in Accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets (in millions).
| | | | | |
| Successor |
| Balance at December 31, 2021 | $ | 1.4 | |
| Restructuring charges | 2.0 | |
| Payments | (2.3) | |
| Adjustments | — | |
| Balance at March 31, 2022 | $ | 1.1 | |
19. Noncontrolling Interests
On October 20, 2021, Mirion Technologies, Inc. consummated its previously announced Business Combination pursuant to the Business Combination Agreement.
Before the Closing of the warrants measuredBusiness Combination, the Sellers had the option to elect to have their equity consideration issued as either shares of Class A common stock or Paired Interests. The Sellers receiving shares of Class B common stock also received 1 share of IntermediateCo Class B common stock per share of Class B common stock as a Paired Interest. Each of the shares of Class A common stock and each Paired Interest were valued at $10.00 per share for purposes of determining the aggregate number of shares issued to the Sellers. Holders of shares of our Class B common stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. If at any time the ratio at which shares of IntermediateCo Class B common stock are redeemable or exchangeable for shares of the Company’s our Class A common stock changes from one-for-one, as the number of votes to which our Class B common stockholders are entitled will be adjusted accordingly. The holders of our the Company’s Class B common stock do not have cumulative voting rights in the election of directors. Except for transfers to us pursuant to the IntermediateCo Charter or to certain permitted transferees set forth in our Charter, paired interests may not be sold, transferred or otherwise disposed of.
The holders of IntermediateCo Class B common stock have the right to require IntermediateCo to redeem all or a portion of their IntermediateCo Class B common stock for, at the Company’s election, (1) newly issued shares of the Company’s Class A common stock on a one-for-one basis or (2) a cash payment equal to the product of the number of shares of IntermediateCo Class B common stock subject to redemption and the arithmetic average of the closing stock prices for a share of the Company’s Class A common stock for each of three (3) consecutive full trading days ending on and including
the last full trading day immediately prior to the date of redemption (subject to customary adjustments, including for stock splits, stock dividends and reclassifications). This redemption right is available upon the expiration of certain lockup restrictions after April 18, 2022.
At the Closing Date, the Company owned 100% of the voting shares (Class A) of IntermediateCo and approximately 96% of the non-voting Class B shares. The Company recognizes a noncontrolling interest for the 8,560,540 shares, representing approximately 4% of the non-voting Class B shares, of IntermediateCo that are not attributable to the Company.
As of March 31, 2022, noncontrolling interest was $88.0 million reflected in the Condensed Consolidated Statements of Stockholders’ Equity (Deficit).
20. Subsequent Events
On May 2, 2022, 1 of the Company’s customers announced that it had terminated a contract with Level 3 inputsa Russian state-owned entity to build a nuclear power plant in Finland. The remaining performance obligation related to this contract within our backlog was approximately $67 million, of which approximately 80% was scheduled to be recognized as revenue over the next five years. The contract’s deferred contract revenue liability balance within our Industrial segment was $6.4 million as of March 31, 2022. There were no outstanding accounts receivable or costs in excess of billings on uncompleted contracts.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of Mirion’s financial condition and results of operations together with the consolidated financial statements and related notes of Mirion Technologies, Inc. that are included elsewhere in this Quarterly Report on From 10-Q as well as our audited statements and the notes related thereto for the year ended December 31, 2021 that are included in our Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section entitled “Risk Factors” included in this Quarterly Report on Form 10-Q as well as Annual Report on Form 10-K. Unless the context otherwise requires, references in this section to “we,” “us,” “our,” “Mirion” and “the Company” refer to the business and operations of Mirion Technologies TopCo, Ltd. and its consolidated subsidiaries prior to the Business Combination and to Mirion and its consolidated subsidiaries, following the consummation of the Business Combination. Unless the context otherwise requires or unless otherwise specified, all dollar amounts in this section are in millions.
Overview
We are a global provider of products, services, and software that allow our customers to safely leverage the power of ionizing radiation for the greater good of humanity through critical applications in the medical, nuclear and defense markets, as well as laboratories, scientific research, analysis, and exploration.
We provide dosimetry solutions for monitoring the total amount of radiation medical staff members are exposed to over time, radiation therapy quality assurance solutions for calibrating and verifying imaging and treatment accuracy, and radionuclide therapy products for nuclear medicine applications such as shielding, product handling, medical imaging furniture, and rehabilitation products. We provide robust, field-ready personal radiation detection and identification equipment for defense applications and radiation detection and analysis tools for power plants, labs, and research applications. Nuclear power plant product offerings are used for the full nuclear power plant lifecycle including core detectors, essential measurement devices for new build, maintenance, decontamination and decommission, and equipment for monitoring and control during fuel dismantling and remote environmental monitoring.
We manage and report results of operations in two business segments: Medical and Industrial.
•Our revenues were $163.2 million for the three months ended March 31, 2022 and $166.2 million for the three months ended March 31, 2021, is summarizedof which 36.8% and 31.0% was generated in the Medical segment for the three months ended March 31, 2022 and March, 31, 2021, respectively, and 63.2% and 69.0% was generated in the Industrial segment for the three months ended March 31, 2022 and March 31, 2021, respectively.
•Backlog (representing committed but undelivered contracts and purchase orders, including funded and unfunded government contracts) was $753.5 million and $747.5 million as follows: | | | | |
Value of warrant liability measured with Level 3 inputs at December 31, 2020 | | $ | 23,676,615 | |
Change in fair value of warrant liability measured with Level 3 inputs | | | (3,450,787 | ) |
Transfer in/out | | | — | |
| | | | |
Value of warrant liability measured with Level 3 inputs at March 31, 2021 | | $ | 20,225,828 | |
| | | | |
Note 7—Subsequent Events
Management has performed an evaluation of subsequent events through the date of issuance of the financial statements, noting no items which require adjustment or disclosure.
March 31, 2022, and December 31, 2021, respectively. ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
References in this Quarterly ReportThe Mirion Business Combination
The Business Combination closed on Form 10-Q (this “Quarterly Report”October 20, 2021 (the “Closing Date”) to “we,” “us,” “our” or the “Company” are to, and GS Acquisition Holdings Corp II. ReferencesII ("GSAH") was renamed Mirion Technologies, Inc. Our Class A common stock is listed on the NYSE under the ticker symbol “MIR.”
The Business Combination has been accounted for under ASC 805, Business Combinations. GSAH has been determined to be the accounting acquirer. Mirion constitutes a business in accordance with ASC 805 and the Business Combination constitutes a change in control. Accordingly, the Business Combination has been accounted for using the acquisition method. Under this method of accounting, Mirion is treated as the “acquired” company for financial reporting purposes and our “management”net assets are stated at fair value, with goodwill or our “management team” referother intangible assets recorded.
As a result of the Business Combination, Mirion’s financial statement presentation distinguishes Mirion TopCo as the “Predecessor” for periods prior to
our officersthe closing of the Business Combination and
directors. The following discussion and analysis should be readMirion Technologies, Inc. as the “Successor” for periods after the closing of the Business Combination. As a result of the application of the acquisition method of accounting in
conjunction with our condensedthe Successor Period, the financial statements
and related notes thereto included elsewhere in this Quarterly Report.Forward-Looking Statements
This Quarterly Report includes forward-looking statements. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regardingfor the Company’s financial position, business strategy and the plans and objectives of management for future operations,Successor Period are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. We have based these forward-looking statementspresented on our current expectations and projections about future events. Forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in the Risk Factors section of our final prospectus for our Public Offering (as defined below) and in our other Securities and Exchange Commission (“SEC”) filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whetherfull step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor Period that are not presented on the same full step-up basis due to the Business Combination.
Key Factors Affecting Our Performance
We believe that our business and results of operations and financial condition may be impacted in the future by various trends and conditions, including the following:
•Global risk—Our business depends in part on operations and sales outside the United States. Risks related to those international operations and sales include new information,foreign investment laws, new export/import regulations, and additional trade restrictions (such as sanctions and embargoes). New laws that favor local competitors could prevent our ability to compete outside the United States. Additional potential issues are associated with the impact of these same risks on our suppliers and customers. If our customers or suppliers are impacted by these risk factors, we may see the reduction or cancellation of customer orders, or interruptions in raw materials and components.
•Tariffs or Sanctions—The United States imposes tariffs on imports from China and other countries, which has resulted in retaliatory tariffs and restrictions implemented by China and other countries. There are, at any given time, a multitude of ongoing or threatened armed conflicts around the world. As one example, sanctions by the United States, the European Union, and other countries against Russian entities or individuals related to the Russia-Ukraine conflict, along with any Russian retaliatory measures could increase our costs, adversely affect our operations, or impact our ability to meet existing contractual obligations.
•Medical end market trends—Growth and operating results in our Medical segment are impacted by:
•Changes to global regulatory standards, including new or expanded standards;
•Increased focus on healthcare safety;
•Changes to healthcare reimbursement;
•Potential budget constraints in hospitals and other healthcare providers;
•Medical/lab dosimetry growth supported by growing and aging demographics, increased number of healthcare professionals, and penetration of radiation therapy/diagnostics; and
•Medical radiation therapy quality assurance (“RT QA”) growth driven by growing and aging population demographics, low penetration of RT QA technology in emerging markets, and increased adoption of advanced software and hardware solutions for improved outcomes and administrative and labor efficiencies.
•Business combinations—A large driver of our historical growth has been the acquisition and integration of related businesses. Our ability to integrate, restructure, and leverage synergies of these businesses will impact our operating results over time.
•Environmental objectives of governments—Growth and operating results in our Industrial segment are impacted by environmental policy decisions made by governments in the countries where we operate. Our nuclear power customers may benefit from decarbonization efforts given the relatively low carbon footprint of nuclear power to other existing energy sources. In addition, decisions by governments to build new power plants or decommission existing plants can positively and negatively impact our customer base.
•Government budgets—While we believe that we are poised for growth from governmental customers in both of our segments, our revenues and cash flows from government customers are influenced, particularly in the short-term, by budgetary cycles. This impact can be either positive or negative.
•Nuclear new build projects—A portion of our backlog is driven by contracts associated with the construction of new nuclear power plants. These contracts can be long-term in nature and provide us with a strong pipeline for the recognition of future eventsrevenues in our Industrial segment. We perform our services and provide our products at a fixed price for certain contracts. Fixed-price contracts carry inherent risks, including risks of losses from underestimating costs, operational difficulties and other changes that may occur over the contract period. If our cost estimates for a contract are inaccurate or if we do not execute the contract within our cost estimates, we may incur losses or the contract may not be as profitable as we expected. In addition, even though some of our longer-term contracts contain price escalation provisions, such provisions may not fully provide for cost increases, whether from inflation, the cost of goods and services to be delivered under such contracts or otherwise.Overview
•Research and development—A portion of our operating expenses is associated with research and development activities associated with the design of new products. Given the specific design and application of certain of these products, there is some risk that these costs will not result in successful products in the market. Further, the timing of these products can move and be challenging to predict.
•COVID-19—COVID-19 may affect revenue growth in certain of our businesses, primarily those serving our medical end markets, and it is uncertain how materially COVID-19 will affect our global operations generally if these impacts were to persist or worsen over an extended period of time. The extent and duration of the impacts are uncertain and dependent in part on customers returning to work and economic activity ramping up. The impact
of COVID-19 on our customers has affected our sales operations in certain ways, including increased customer disputes regarding orders, delayed customer notices to proceed with production, delayed payment from customers and, on rare occasions, customers have refused to pay for their orders entirely. Further, access to customer sites for sales was limited in some cases.
Non-GAAP Financial Measures
We report our financial results in accordance with generally accepted accounting principles in the United States. (“GAAP”). However, management believes certain non-GAAP financial measures provide investors and other users with additional meaningful information that should be considered when assessing our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating, and planning decisions, and in evaluating our performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our GAAP results. The non-GAAP financial measures we present may differ from similarly captioned measures presented by other companies. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
We use the non-GAAP financial measures “Adjusted revenues,” “Adjusted net (loss) income,” "Adjusted EPS," “EBITDA,” “EBITA,” “Adjusted EBITDA, “Free Cash Flow,” and “Adjusted Free Cash Flow.” See the “Quarterly Results of Operations” and “Cash flows” sections below for definitions of our non-GAAP financial measures and reconciliation to their most directly comparable GAAP measures.
See the "Basis of Presentation" section below regarding the Successor and Predecessor periods. The following tables present a blank checkreconciliation of certain non-GAAP financial measures for the three months ended March 31, 2022 (Successor) and for the three months ended March 31, 2021 (Predecessor).
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| Three Months Ended | | | Three Months Ended |
| March 31, 2022 | | | March 31, 2021 |
| (In millions, except per share amounts) | Revenues | | Net Income (Loss) | | | Revenues | | Net Income (Loss) |
| Total GAAP | $ | 163.2 | | | $ | (19.0) | | | | $ | 166.2 | | | $ | (40.7) | |
| Revenue reduction from purchase accounting | — | | | — | | | | 4.3 | | | 4.3 | |
| Cost of revenues impact from inventory valuation purchase accounting | | | 6.3 | | | | | | 4.7 | |
| Foreign currency (gain) loss, net | | | 1.5 | | | | | | (4.0) | |
| Amortization of acquired intangibles | | | 38.8 | | | | | | 18.6 | |
| Stock-based compensation expense | | | 7.8 | | | | | | (0.1) | |
| Change in fair value of warrant liabilities | | | (19.9) | | | | | | — | |
| Non-operating expenses | | | 9.4 | | | | | | 16.1 | |
| Tax impact of adjustments above | | | (7.4) | | | | | | (9.0) | |
| Adjusted | $ | 163.2 | | | $ | 17.5 | | | | $ | 170.5 | | | $ | (10.1) | |
| | | | | | | | |
| Weighted average common shares outstanding — basic and diluted | | | 180.774 | | | | | | n.m.(1) |
| Dilutive Potential Common Shares - RSU's | | | — | | | | | | |
| Adjusted weighted average common shares — diluted | | | 180.774 | | | | | | n.m |
| | | | | | | | |
| Net loss per common share attributable to Mirion Technologies, Inc. (Successor) | | | $ | (0.10) | | | | | | n.m |
| Loss attributable to noncontrolling interests | | | (0.01) | | | | | | |
| Revenue reduction from purchase accounting | | | — | | | | | | |
| Cost of revenues impact from inventory valuation purchase accounting | | | 0.04 | | | | | | |
| Foreign currency (gain) loss, net | | | 0.01 | | | | | | |
| Amortization of acquired intangibles | | | 0.22 | | | | | | |
| Stock-based compensation expense | | | 0.04 | | | | | | |
| Change in fair value of warrant liabilities | | | (0.11) | | | | | | |
| Debt extinguishment | | | — | | | | | | |
| Non-operating expenses(1)(2)(3)(4)(5) | | | 0.05 | | | | | | |
| Tax impact of adjustments above | | | (0.04) | | | | | | |
| Adjusted EPS | | | $ | 0.10 | | | | | | n.m |
| | | | | | | | |
| (1) Note that n.m. stands for not meaningful. | | | | | | | | |
| | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| (In millions) | Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Net loss | $ | (19.0) | | | | $ | (40.7) | |
| Interest expense, net | 7.9 | | | | 43.1 | |
| Income tax (benefit) provision | (4.1) | | | | (7.1) | |
| Amortization | 38.8 | | | | 18.6 | |
| EBITA | $ | 23.6 | | | | $ | 13.9 | |
| Depreciation - Mirion Business Combination step-up | 1.6 | | | | — | |
| Depreciation - all other | 4.6 | | | | 5.0 | |
| EBITDA | $ | 29.8 | | | | $ | 18.9 | |
| Stock-based compensation expense | 7.8 | | | | (0.1) | |
| Change in fair value of warrant liabilities | (19.9) | | | | — | |
| Foreign currency (gain) loss, net | 1.5 | | | | (4.0) | |
| Revenue reduction from purchase accounting | — | | | | 4.3 | |
| Cost of revenues impact from inventory valuation purchase accounting | 6.3 | | | | 4.7 | |
Non-operating expenses(1)(2) | 9.4 | | | | 16.1 | |
| Adjusted EBITDA | $ | 34.9 | | | | $ | 39.9 | |
(1)Pre-tax non-operating expenses of $9.4 million for the three months ended March 31, 2022 include $3.6 million in costs to achieve integration and operational synergies, $2.8 million related to the Business Combination and incremental one-time costs associated with becoming public, $2.0 million of restructuring costs, and $1.0 million of costs to achieve information technology system integration and efficiency.
(2)Pre-tax non-operating expenses of $16.1 million for the three months ended March 31, 2021 include $5.6 million related to the Business Combination and incremental public company incorporatedcosts, $5.0 million in costs to achieve integration and operational synergies, $2.3 million of restructuring costs, $1.6 million of mergers and acquisition expenses, and $1.5 million of costs to achieve information technology system integration and efficiency.
The following tables present a reconciliation of non-GAAP Adjusted Revenue and Adjusted EBITDA by segment for the three months ended March 31, 2022 (Successor) and the three months ended March 31, 2021 (Predecessor):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 (Successor) |
| (In millions) | Medical | | Industrial | | Corporate & Other | | Consolidated |
| Revenues | $ | 60.1 | | | $ | 103.1 | | | $ | — | | | $ | 163.2 | |
| Revenue reduction from purchase accounting | — | | | — | | | — | | | — | |
| Adjusted Revenues | $ | 60.1 | | | $ | 103.1 | | | $ | — | | | $ | 163.2 | |
| | | | | | | |
| Income from operations | $ | (3.5) | | | $ | (1.4) | | | $ | (28.7) | | | $ | (33.6) | |
| Amortization | 17.3 | | | 21.5 | | | — | | | 38.8 | |
| Depreciation - core | 2.6 | | | 1.9 | | | 0.1 | | | 4.6 | |
| Depreciation - Mirion Business Combination step-up | 1.2 | | | 0.4 | | | — | | | 1.6 | |
| Cost of revenues impact from inventory valuation purchase accounting | 0.9 | | | 5.4 | | | — | | | 6.3 | |
| Stock-based compensation | 0.1 | | | 0.1 | | | 7.6 | | | 7.8 | |
| Non-operating expenses | — | | | — | | | 9.4 | | | 9.4 | |
| Adjusted EBITDA | $ | 18.6 | | | $ | 27.9 | | | $ | (11.6) | | | $ | 34.9 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2021 (Predecessor) |
| (In millions) | Medical | | Industrial | | Corporate & Other | | Consolidated |
| Revenues | $ | 51.5 | | | $ | 114.7 | | | $ | — | | | $ | 166.2 | |
| Revenue reduction from purchase accounting | 4.3 | | | — | | | — | | | 4.3 | |
| Adjusted Revenues | $ | 55.8 | | | $ | 114.7 | | | $ | — | | | $ | 170.5 | |
| | | | | | | |
| Income from operations | $ | (2.3) | | | $ | 17.8 | | | $ | (24.4) | | | $ | (8.9) | |
| Amortization | 8.3 | | | 10.3 | | | — | | | 18.6 | |
| Depreciation - core | 2.5 | | | 2.4 | | | 0.1 | | | 5.0 | |
| Revenue reduction from purchase accounting | 4.3 | | | — | | | — | | | 4.3 | |
| Cost of revenues impact from inventory valuation purchase accounting | 4.7 | | | — | | | — | | | 4.7 | |
| Share-based compensation | — | | | — | | | (0.1) | | | (0.1) | |
| Non-operating expenses | — | | | — | | | 16.1 | | | 16.1 | |
| Other Income / Expense | — | | | — | | | 0.2 | | | 0.2 | |
| Adjusted EBITDA | $ | 17.5 | | | $ | 30.5 | | | $ | (8.1) | | | $ | 39.9 | |
Our Business Segments
We manage and report our business in two business segments: Medical and Industrial.
Medical includes products and services for radiation therapy and personal dosimetry. This segment’s principal offerings are:
•Radiation Therapy Quality Assurance Solutions for calibrating and/or verifying imaging, treatment machine, patient treatment plan, and patient treatment accuracy (hardware and software);
•Dosimetry Solutions for monitoring the total amount of radiation medical staff members are exposed to over time; and
•Radionuclide Therapy Solutions, which includes products for nuclear medicine in radiation measurement, shielding, product handling, medical imaging furniture and rehabilitation.
Industrial includes products and services for defense, nuclear energy, laboratories and research and other industrial markets. This segment’s principal offerings are:
•Reactor Safety and Control Systems, which includes radiation monitoring systems and reactor instrumentation and control systems that ensure the safe operation of nuclear reactors and other nuclear fuel cycle facilities; and
•Radiological Search, Measurement and Analysis Systems, which includes solutions to locate, measure and perform in-depth scientific analysis of radioactive sources for radiation safety, security, and scientific applications
Recent Developments
Russia and Ukraine
The United States, the European Union, the United Kingdom and other governments have implemented major trade and financial sanctions against Russia and related parties in response to Russia's invasion of Ukraine. We do business with Russian customers both within and outside of Russia and with customers who have contracts with Russian counterparties. The conflict’s impact on the Company is predominantly in our Industrial segment where the Company has certain projects involving Russian customers or other Russian counterparties. For the 12 months ending December 31, 2022 and for subsequent years, we expect to derive approximately 5% of our revenue from Russian customers and projects involving Russian counterparties and technology. As of March 31, 2022, while we had not received any cancellation notices for these projects, we experienced delays in recognizing project revenue during the three months ended March 31, 2022 due to the trade and financial sanctions made to date. See further discussion in the "Results of Operations" section below. In addition, while none of these customers have asked for advanced payment refunds, they could seek to recover these payments depending on future developments.
On May 2, 2022, one of our customers announced that it had terminated a contract with a Russian state-owned entity to build a nuclear power plant in Finland. The contract represents a remaining performance obligation in our backlog of approximately $67 million, of which approximately 80% was scheduled to be recognized as revenue over the next five years. As of March 31, 2022, the contract's deferred contract revenue liability within our Industrial segment was $6.4 million.
The Company will continue to monitor the social, political, regulatory and economic environment in Ukraine and Russia, and will consider actions as appropriate.
Supply Chain
The global supply chain continued to be stressed by increased demand, along with pandemic-related and other global events that caused increased disruptions to the Company during the three months ended March 31, 2022. The most notable impacts to the Company were delays in sourcing key devices and components needed for our products, resulting in delays in revenue recognition, and increased costs in materials and freight. The Company mitigated a portion of these cost impacts with price increases on certain products. While we experienced some improvements in shipping delivery and associated labor availability during the three months ended March 31, 2022, the supply chain disruption continues to be a challenge and a risk of negatively impacting our future operating margins.
Public Company Costs
As a public company listed on the NYSE, we expect to continue hiring additional staff and implementing new processes and procedures to address requirements in connection with being a public company. To date, we have incurred and expect to continue to incur substantial expenses for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external costs for investor relations, accounting, audit, legal and other functions.
Basis of Presentation
Financial information presented was derived from our historical consolidated financial statements and accounting records, and they reflect the historical financial position, results of operations and cash flows of the business in conformity with U.S. GAAP for financial statements and pursuant to the accounting and disclosure rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned or controlled subsidiaries. For consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to noncontrolling interests is reported as “Income (Loss) attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations. All intercompany accounts and transactions have been eliminated in consolidation.
As a result of the Business Combination, the Company’s financial statement presentation distinguishes Mirion TopCo as the “Predecessor” through the Closing Date. The Company, which includes the combination of GSAH and Mirion subsequent to the Business Combination, is the “Successor” for periods after the Closing Date. As a result of the application of the acquisition method of accounting in the Successor Period, the financial statements for the Successor Period are presented on a full step-up basis as a Delaware corporationresult of the Business Combination, and are therefore not comparable to the
financial statements of the Predecessor Periods that are not presented on the same full step-up basis due to the Business Combination.
Certain Factors Affecting Comparability to Prior Period Financial Results
Prior to the Business Combination, GSAH operated as a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(an “Initial Business Combination”).We intend to effectuate an Initialor assets. As a result, operations were minimal before the Business Combination using cash fromand are not presented in the proceedsPredecessor Periods presented prior to the Business Combination. After the Business Combination our results of our initial public offering (the “Public Offering”) that closed on July 2, 2020 (the “Closing Date”)operations are not directly comparable to historical results of the operations for the periods presented, primarily because, in connection with the Business Combination, certain assets and liabilities had fair value adjustments applied to the private placement of warrants to purchase shares of our Class A common stock (“Private Placement Warrants”) that closedPredecessor’s consolidated financial statements on the Closing Date, most notably:
•Inventory;
•Property, plant, and from additional issuancesequipment;
•Goodwill;
•Intangible assets; and
•Taxes.
As a result, historical results of
if any, our capital stockoperations and
our debt,other financial data, as well as period-to-period comparisons of these results, may not be comparable or
a combinationindicative of
cash, stock and debt.Atfuture operating results or future financial condition.
Results of Operations
For the Successor Period Three Months Ended March 31, 2022 and the Predecessor Period Three Months Ended March 31, 2021
The following tables summarizes our results of operations for the periods presented below (in millions):
| | | | | | | | | | | | | | |
| Unaudited |
| Successor | | | Predecessor |
| Three Months Ended
March 31, 2022 | | | Three Months Ended
March 31, 2021 |
| Revenues | $ | 163.2 | | | | $ | 166.2 | |
| Cost of revenues | 98.8 | | | | 103.7 | |
| Gross profit | 64.4 | | | | 62.5 | |
| Selling, general and administrative expenses | 90.9 | | | | 60.4 | |
| Research and development | 7.1 | | | | 11.0 | |
| Loss from operations | (33.6) | | | | (8.9) | |
| Interest expense, net | 7.9 | | | | 43.1 | |
| Foreign currency loss (gain), net | 1.5 | | | | (4.0) | |
| Change in fair value of warrant liabilities - (gain)/loss | (19.9) | | | | — | |
| Other expense (income), net | — | | | | (0.2) | |
| Loss before benefit from income taxes | (23.1) | | | | (47.8) | |
| Benefit from income taxes | (4.1) | | | | (7.1) | |
| Net loss | (19.0) | | | | (40.7) | |
| Loss attributable to noncontrolling interests | (1.3) | | | | — | |
| Net loss attributable to stockholders | $ | (17.7) | | | | $ | (40.7) | |
Overview
Revenues were $163.2 million for the three months ended March 31, 2022 and $166.2 million for the three months ended March 31, 2021. The decrease of $3.0 million from the three months ended March 31, 2021was primarily driven by timing of project execution, delays caused by the Russia and Ukraine conflict, and supply chain-caused delays, offset by 2021 we had current assetsacquisitions and organic growth in the Medical segment. Cost of $2,245,581revenues was $98.8 million for the three months ended March 31, 2022 and current$103.7 million for the three months ended March 31, 2021, which decreased 4.7%, reflecting the
decrease in revenues. Gross profit increased by $1.9 million from the three months ended March 31, 2021. There was a net loss attributable to stockholders of $17.7 million for the three months ended March 31, 2022 and $40.7 million for the three months ended March 31, 2021. There was a $23.0 million decrease in net loss attributable to stockholders as a result of the lower Cost of revenues of $4.9 million, decreased net third party interest expense of $3.0 million, decreased related party interest expense of $32.2 million, and a gain recognized on the change in fair value of warrant liabilities of $64,746,945. Further, we expect to continue to incur significant costs$19.9 million. Offsetting these impacts were the negative impact of foreign currency exchange of $5.5 million, a net decrease in income tax benefit of $3.0 million, higher selling, general and administrative expenses of $30.5 million, primarily driven by the impact of acquisitions in the pursuitMedical segment, and increased compensation, facility costs, and professional fees with higher headcounts, and stock-based compensation expense. The impact of ourpurchase accounting related to the fair value adjustment of deferred revenue for the SNC acquisition plans. We have reviewed, and continue to review, a number of opportunities to enter into an Initial Business Combination with operating businesses, but we are not able to determine at this time whether we will complete an Initial Business Combination with any of the target businesses that we have reviewed or with any other target business.Results of Operations
Forreduced revenue for the three months ended March 31, 2021 and 2020, we had net incomeby $4.3 million. The impact of $9,682,349, of which $10,200,787 ispurchase accounting related to the change in the fair value of inventory increased cost of revenues by $6.1 million for the warrant liability and $0, respectively. Our business activities from inception tothree months ended March 31, 2021 consisted primarily of our formation2022 and completing our Public Offering, and since the offering, our activity has been limited to identifying and evaluating prospective acquisition targets$4.7 million for an Initial Business Combination.
Liquidity and Capital Resources
Prior to the closing of the Public Offering, our only source of liquidity was an initial sale of shares (the “Founder Shares”) of Class B common stock, par value $0.0001 per share, to our sponsor, GS Sponsor II LLC, a Delaware limited liability company (the “Sponsor”), and the proceeds of a promissory note (the “Note”) from an affiliate of the Sponsor, in the amount of $300,000. The Note was repaid upon the closing of the Public Offering.
The registration statement relating to our Public Offering was declared effective by the SEC on June 29, 2020. On June 30, 2020, the underwriters exercised a portion of their option to purchase additional units. Our Public Offering of 75,000,000 units (the “Units”), including 5,000,000 Units pursuant to the underwriters’ partial exercise of such option, closed on July 2, 2020. Simultaneously with the closing of the Public Offering, we closed the private placement of an aggregate of 8,500,000 warrants (the “Private Placement Warrants”), each exercisable to purchase one share of our Class A common stock, par value $0.0001 per share, at an exercise price of $11.50 per share, to the Sponsor, at a price of $2.00 per Private Placement Warrant, generating proceeds of $17,000,000. On the Closing Date, we placed $750,000,000 of proceeds (including $26,250,000 of deferred underwriting discount) from the Public Offering and the Private Placement Warrants into a U.S.-based trust account, with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”) and held 2,000,000 of such proceeds outside the Trust Account.
At March 31, 2021, we had cash held in a custodian account of $1,740,897 and working capital of ($62,501,364).
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to our Initial Business Combination, due to the new Working Capital Note (as defined below). However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an Initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Initial Business Combination. Moreover, we may need to obtain additional financing either to complete our Initial Business Combination or because we become obligated to redeem a significant number of our shares of Class A common stock upon completion of our Initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination (including from our affiliates or affiliates of our Sponsor).
On November 12, 2020, the Sponsor agreed to loan us up to an aggregate of $2,000,000 pursuant to the working capital note (the “Working Capital Note”). Any amounts borrowed under the Working Capital Note are non-interest bearing, unsecured and are due at the earlier of the date we are required to complete our Initial Business Combination pursuant to our amended and restated certificate of incorporation, as amended from time to time, and the closing of the Initial Business Combination. On March 12, 2021, we borrowed $1,500,000 under the Working Capital Note.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.
Contractual Obligations
At March 31, 2021, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. On June 29, 2020, we entered into an administrative support agreement pursuant to which we have agreed to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon the earlier of the completion of the Initial Business Combination and the Company’s liquidation, we will cease paying these monthly fees. For the three months ended March 31, 2021, resulting in net increased cost of revenues by $1.4 million. The impact of purchase accounting related to the Company incurred expensesfair values of $30,000 under this agreement.
intangible assets and property, plant, and equipment for the Business Combination resulted in increased amortization and depreciation expense and increased net loss by $19.0 million and $1.6 million, respectively.
Revenues
Revenues were $163.2 million for the three months ended March 31, 2022 and $166.2 million for the three months ended March 31, 2021. Revenues decreased $3.0 million from the three months ended March 31, 2021. The underwritersnet decrease was caused primarily by the Russia-Ukraine conflict, project execution timing and supply chain-caused delays.
Medical segment revenues increased $8.6 million, primarily driven by results of acquisitions in the Medical segment contributing $4.3 million (of which $3.7 million was generated by CIRS and $0.6 million by other acquisitions) for the three months ended March 31, 2022 and increased revenues of $3.5 million due to price increases and organic growth. Also driving the increase was the impact of the Public Offeringdeferred revenue fair value adjustment for the SNC acquisition, which reduced revenues by $4.3 million for the three months ended March 31, 2021. Offsetting the increase in Medical segment revenues period over period were the impact of supply chain issues of $3.0 million, which affected our shipments in the three months ended March 31, 2022, and a negative foreign exchange currency impact of approximately $0.5 million.
Industrial segment revenues decreased $11.6 million, primarily driven by delays caused by the Russia-Ukraine conflict with impact of $2.1 million, contract execution timing and supply chain issues with an impact of $6.2 million, and foreign exchange rate fluctuations of $4.4 million, offset by a $1.1 million increase in other revenues.
By segment, revenues for the three months ended March 31, 2022 and 2021 were $60.1 million and $51.5 million in the Medical segment, respectively, and $103.1 million and $114.7 million in the Industrial segment, respectively. Movements in revenues by segment are entitleddetailed in the “Business Segments” section below.
Cost of revenues
Cost of revenues was $98.8 million for the three months ended March 31, 2022 and $103.7 million for the three months ended March 31, 2021. Cost of revenues as a percentage of revenues was 60.5% for the three months ended March 31, 2022, 62.4% for the three months ended March 31, 2021. The decrease in the three months ended March 31, 2022 was driven by a decrease in manufacturing supplies, materials, and overhead costs due to underwriting discountsdelays in contracts and commissionsan overall revenue decrease in the Industrial segment. Offsetting the decrease in cost of 5.5%revenues period over period was the cost of revenues related to acquisitions in our Medical segment. Cost of revenues related to acquisitions made in 2021 (CIRS) resulted in $1.5 million of incremental cost of revenues for the three months ended March 31, 2022. In addition, cost of revenues for the three months ended March 31, 2022 includes $6.1 million due to purchase accounting related to the fair value of inventory from the Business Combination, $0.2 million of increased amortization expense resulting from increased intangible assets from the Business Combination, and $1.4 million of increased depreciation expense resulting from increased fair values of property, plant, and equipment from the Business Combination. Cost of revenues for the three months ended March 31, 2021 includes $4.7 million due to purchase accounting related to the fair value of inventory from previous acquisitions.
Selling, general and administrative expenses
Selling, general and administrative (“SG&A”) expenses were $90.9 million for the three months ended March 31, 2022 and $60.4 million for the three months ended March 31, 2021, resulting in an increase of $30.5 million. The primary drivers behind the increase in SG&A expenses were the $2.3 million impact of the CIRS acquisition in the Medical segment, a $3.9 million increase in compensation, facility costs, and professional services associated with an increase in number of
employees (partially due to a reorganization of research and development departments) and incremental public company costs, as well as a $7.8 million increase in stock-based compensation expense related to the Profits Interests ($6.8 million) and stock awards issued under the 2021 Omnibus Incentive Plan ($1.0 million) (see Note 13, Stock-based compensation, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). In addition, SG&A for the three months ended March 31, 2022 includes $19.2 million of increased amortization expense resulting from increased intangible assets from the Business Combination. Offsetting the increase in SG&A period over period were a $2.8 million decrease in legal and professional fees related to the Business Combination and incremental public company costs, and a $1.6 million decrease in mergers and acquisitions expenses.
Research and development
Research and development (“R&D”) expenses were $7.1 million for the three months ended March 31, 2022 and $11.0 million for the three months ended March 31, 2021, resulting in a decrease of $3.9 million. The decrease in R&D expense was primarily a result of a reduction in R&D program spend ($1.7 million) at Corporate and in the Industrial segment and a reorganization of personnel to non-R&D departments ($1.7 million) in the Medical segment for the three months ended March 31, 2021.
Income (loss) from operations
Loss from operations was $33.6 million for the three months ended March 31, 2022 and $8.9 million for the three months ended March 31, 2021, which 2.0% ($15,000,000)resulted in an increased loss of $24.7 million. On a segment basis, loss from operations in the Medical segment for the three months ended March 31, 2022 and 2021 was $3.5 million and $2.3 million, respectively, which includes $5.2 million and $4.3 million, respectively, in purchase accounting impacts described in revenues, cost of revenues, and SG&A above. (Loss) income from operations in the Industrial segment for the three months ended March 31, 2022 and three months ended March 31, 2021 was $(1.4) million and $17.8 million, respectively, which includes $17.0 million in purchase accounting impacts described in cost of revenues and SG&A above for the three months ended March 31, 2022. Corporate expenses were $28.7 million and $24.4 million for the three months ended March 31, 2022 and 2021, respectively. See “Business segments” and “Corporate and other” below for further details.
Interest expense, net
Interest expense, net, was $7.9 million for the three months ended March 31, 2022 and $43.1 million for the three months ended March 31, 2021. $32.2 million of the decrease is a non-cash decrease in interest related to the Shareholder Notes which were paid atin full in connection with the closing of the Business Combination. $3.0 million is a decrease in interest due to lower interest rates associated with 2021 Credit Agreement compared to 2019 Credit Facility which was paid in full in connection with the closing of the Business Combination. For more information, see Note 8, Borrowings, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Foreign currency loss (gain), net
We recorded a loss of $1.5 million for the three months ended March 31, 2022 and a gain of $4.0 million for the three months ended March 31, 2021 from foreign currency exchange. The change in net foreign currency losses is due to appreciation in European and Canadian local currencies in relation to the U.S. dollar and primarily related to our Euro debt in the prior year comparable period.
Change in fair value of warrant liabilities
We recognized an unrealized gain of $19.9 million resulting from a decrease in the fair value of the Public OfferingWarrant and 3.5%Private Placement Warrant liabilities during the three months ended March 31, 2022. See Note 16, Fair Value Measurements, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Income taxes
Income tax benefit was $4.1 million for the three months ended March 31, 2022 and $7.1 million for the three months ended March 31, 2021. Income tax benefit in the three months ended March 31, 2022 differed from income tax benefit in the three months ended March 31, 2021, primarily due to the mix of earnings, certain adjustments for the Successor Period as a result of the Business Combination, and valuation allowances in the Predecessor Period.
Business segments
The following provides detail for business segment results for the three months ended March 31, 2022 and 2021. Segment (loss) income from operations includes revenues of the segment less expenses that are directly related to those revenues but excludes certain charges to cost of revenues and SG&A expenses predominantly related to corporate costs, shared overhead and other costs related to restructuring activities and costs to achieve operational initiatives, which are included in Corporate and Other in the table below. Interest expense, loss on debt extinguishment, foreign currency loss (gain), net, and other expense (income), net, are not allocated to segments.
For reconciliations of segment revenues and operating (loss) income to our consolidated results, see Note 15, Segment Information, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Medical
| | | | | | | | | | | | | | |
| Unaudited |
| Successor | | | Predecessor |
| (In millions) | Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Revenues | $ | 60.1 | | | | $ | 51.5 | |
| Loss from operations | $ | (3.5) | | | | $ | (2.3) | |
| Loss from operations as a % of revenues | (5.8) | % | | | (4.5) | % |
Medical segment revenues were $60.1 million for the three months ended March 31, 2022 and $51.5 million for the three months ended March 31, 2021, which is an increase of $8.6 million. Revenues increased primarily due to the impact of acquisitions contributing $4.3 million (of which $3.7 million by CIRS and $0.6 million by other acquisitions), the impact of prior year purchase accounting adjustment related to the SNC acquisition which resulted in a revenue reduction of $4.3 million, and an increased revenue of $3.5 million due to price increases and organic growth. Offsetting the increase in Medical segment revenues period over period were a reduction in revenues due to the supply chain issue by $3.0 million and a negative foreign currency exchange impact by approximately $0.5 million.
Loss from operations, which excludes non-operational costs, was $3.5 million and $2.3 million for the three months ended March 31, 2022 and 2021, respectively, representing an increase in loss from operations of $1.2 million. The increase in loss from operations period over period was largely due to increasing operating expenses ($26,250,000)5.2 million) and a reduction in revenues due to the supply chain issue ($3.0 million), which was deferred.offset by an increase in revenues from our organic growth ($2.6 million). Furthermore, a $4.3 million reduction in revenue in the three months ended March 31, 2021 due to purchase accounting related to the SNC acquisition no longer impacted the current period.
Industrial
| | | | | | | | | | | | | | |
| Unaudited |
| Successor | | | Predecessor |
| (In millions) | Three Months Ended
March 31, 2022 | | | Three Months Ended
March 31, 2021 |
| Revenues | $ | 103.1 | | | | $ | 114.7 | |
| (Loss) Income from operations | (1.4) | | | | 17.8 | |
| (Loss) Income from operations as a % of revenues | (1.4) | % | | | 15.5 | % |
Industrial segment revenues were $103.1 million for three months ended March 31, 2022 and $114.7 million for the three months ended March 31, 2021, representing a decrease of $11.6 million. The decrease is primarily driven by delays caused by the Russia-Ukraine conflict with impact of $2.1 million, project execution timing and supply chain issues with impact of $6.2 million, and foreign exchange rate fluctuations of $4.4 million, offset by a $1.1 million increase in other revenues.
Loss from operations, which excludes non-operational costs, was $1.4 million for the three months ended March 31, 2022 and Income from operations was $17.8 million for the three months ended March 31, 2021. Loss from operations, which excludes non-operational costs, decreased $19.2 million period over period driven primarily by higher cost of revenues including $5.4 million of inventory step-up and higher amortization of $11.2 million, both related to the Business Combination purchase accounting.
Corporate and other
Corporate and other costs include costs associated with our corporate headquarters located in Georgia, as well as centralized global functions including Executive, Finance, Legal and Compliance, Human Resources, Technology, Strategy, and Marketing and other costs related to company-wide initiatives (e.g., Business Combination transaction expenses, merger and acquisition activities, restructuring and other initiatives).
Corporate and other costs were $28.7 million for the three months ended March 31, 2022 and $24.4 million for the three months ended March 31, 2021, which represents an increase of $4.3 million. The increase versus the comparable period was predominantly driven by an increase in stock-based compensation expense of $7.6 million (see Note 13, Stock-based compensation) and an increase of $0.9 million in compensation expense, $1.3 million increase in facility costs and $1.5 million increase in professional services mostly due to becoming a public company, offset by $6.7 million decrease in other costs related to company-wide initiatives ($2.8 million in legal and professional fees related to Business Combination, $1.9 million in operations and information technology integrations, $0.3 million in restructuring costs, and $1.6 million in merger and acquisition costs). For reconciliations of segment operating income and corporate and other costs to our consolidated results, see Note 15, Segment Information, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Quarterly Results of Operations
The following table sets forth selected unaudited quarterly financial data for the current Successor quarter, our last seven completed fiscal quarters (Predecessor) and for the transition periods from July 1, 2021 through October 19, 2021 (Predecessor Stub Period) and from October 20, 2021 through December 31, 2021 (Successor). The information for each of these periods reflects all adjustments that are of a normal, recurring nature and that we consider necessary for a fair presentation of our operating results for such periods. The results of operations presented should be read in conjunction with our audited consolidated financial statements and notes thereto appearing elsewhere in this document and are not necessarily indicative of our operating results for any future period. Revenues for certain quarters/periods are impacted by the capital spending patterns of government customers, which are influenced by budgetary considerations and driven by timing of fiscal year-ends.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| (In millions) | March 31, 2022 | From October 20, 2021 through December 31, 2021 | | | From July 1, 2021 through October 19, 2021 | | September 30, 2021 | | June 30, 2021 | | March 31, 2021 | | December 31, 2020 | | September 30, 2020 | | June 30, 2020 |
| Revenues | $ | 163.2 | | $ | 154.1 | | | | $ | 168.0 | | | $ | 144.3 | | | $ | 180.0 | | | $ | 166.2 | | | $ | 150.8 | | | $ | 114.6 | | | $ | 141.2 | |
Adjusted revenues(1)(2) | $ | 163.2 | | $ | 156.4 | | | | $ | 172.5 | | | $ | 148.0 | | | $ | 183.7 | | | $ | 170.5 | | | $ | 150.8 | | | $ | 114.6 | | | $ | 141.4 | |
| Net loss | $ | (19.0) | | $ | (23.0) | | | | $ | (105.7) | | | $ | (46.7) | | | $ | (53.9) | | | $ | (40.7) | | | $ | (23.4) | | | $ | (40.4) | | | $ | (24.5) | |
Adjusted net income (loss)(1)(3) | $ | 17.5 | | $ | 25.6 | | | | $ | (33.9) | | | $ | (20.1) | | | $ | (23.3) | | | $ | (10.1) | | | $ | (0.4) | | | $ | (20.9) | | | $ | (5.4) | |
| Net loss per common share attributable to Mirion Technologies, Inc. (Successor) | $ | (0.10) | | $ | (0.12) | | | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A |
Adjusted EPS(1)(4) | $ | 0.10 | | $ | 0.14 | | | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A |
EBITA(1)(5) | $ | 23.6 | | $ | 8.4 | | | | $ | (38.8) | | | $ | 8.5 | | | $ | 22.7 | | | $ | 13.8 | | | $ | 16.4 | | | $ | 8.8 | | | $ | 25.9 | |
EBITDA(1)(5) | $ | 29.8 | | $ | 13.7 | | | | $ | (32.6) | | | $ | 13.6 | | | $ | 29.7 | | | $ | 18.8 | | | $ | 21.0 | | | $ | 13.1 | | | $ | 30.4 | |
Adjusted EBITDA(1)(5) | $ | 34.9 | | $ | 44.5 | | | | $ | 31.2 | | | $ | 30.9 | | | $ | 50.0 | | | $ | 39.8 | | | $ | 38.3 | | | $ | 24.1 | | | $ | 40.9 | |
(1)Adjusted revenues, Adjusted net (loss) income, Adjusted EPS, EBITA, EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. Adjusted revenues, Adjusted net (loss) income, Adjusted EPS, EBITA, EBITDA, and Adjusted EBITDA are included in this document because they are key metrics used by management to assess our financial performance. We believe that these measures are useful because they provide investors with information regarding our operating performance that is used by our management in its reporting and planning processes. These measures may not be comparable to similarly titled measures and disclosures reported by other companies.
Adjusted revenues are defined as U.S. GAAP revenues adjusted to remove the impact of purchase accounting on the recognition of deferred underwriting discountrevenue. We have acquired businesses whose net tangible assets include deferred revenue. In accordance with GAAP reporting requirements, we recorded adjustments reducing deferred revenue under arrangements predating the business combination to fair value for all business combinations occurring prior. Therefore, our GAAP revenues after the date of acquisition will not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value. Therefore, Adjusted revenues reverses the impact of this deferred revenue write-down to provide another view of the revenue run-rate in a given period and providing meaningful information for comparative results in future periods.
Adjusted net (loss) income is defined as U.S. GAAP net income adjusted for foreign currency gains and losses, amortization of acquired intangible assets, the impact of purchase accounting on the recognition of deferred revenue, changes in the fair value of warrants, certain non-operating expenses (certain purchase accounting impacts related to revenues and inventory, restructuring and costs to achieve operational synergies, merger and acquisition expenses and IT project implementation expenses), and income tax impacts of these adjustments. Adjusted EPS is defined as adjusted net (loss) income divided by weighted average common shares outstanding — basic and diluted.
EBITA is defined as income before net interest expenses (including loss on debt extinguishment), income tax (benefit) provision, and amortization. EBITDA is defined as income before net interest expense (including loss on debt extinguishment), income tax (benefit) provision, and depreciation and amortization. EBITA and EBITDA are not terms defined under U.S. GAAP and do not purport to be alternatives to net income as measures of operating performance or to cash flows from operating activities as measures of liquidity. Additionally, EBITA and EBITDA are not intended to be measures of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements.
Adjusted EBITDA is defined as EBITDA excluding the items described in the table below. Adjusted EBITDA is used by management as a measure of operating performance. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about our results of operations that management utilizes on an ongoing basis to assess our core operating performance.
EBITA, EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. You should not consider our EBITA, EBITDA and Adjusted EBITDA as alternatives to operating income or net income, determined in accordance with U.S. GAAP.
(2)The following table reconciles Adjusted revenues to the most directly comparable U.S. GAAP financial performance measure, which is revenues:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| (In millions) | March 31, 2022 | | From October 20, 2021 through December 31, 2021 | | | From July 1, 2021 through October 19, 2021 | | September 30, 2021 | | June 30, 2021 | | March 31, 2021 | | December 31, 2020 | | September 30, 2020 | | June 30, 2020 |
| Revenues | $ | 163.2 | | | $ | 154.1 | | | | $ | 168.0 | | | $ | 144.3 | | | $ | 180.0 | | | $ | 166.2 | | | $ | 150.8 | | | $ | 114.6 | | | $ | 141.2 | |
| Revenue reduction from purchase accounting | — | | | 2.3 | | | | 4.5 | | | 3.7 | | | 3.7 | | | 4.3 | | | — | | | — | | | 0.2 | |
| Adjusted revenues | $ | 163.2 | | | $ | 156.4 | | | | $ | 172.5 | | | $ | 148.0 | | | $ | 183.7 | | | $ | 170.5 | | | $ | 150.8 | | | $ | 114.6 | | | $ | 141.4 | |
(3)The following table reconciles Adjusted net income (loss) to the most directly comparable U.S. GAAP financial performance measure, which is net loss:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| (In millions) | Three Months Ended March 31, 2022 | | From October 20, 2021 through December 31, 2021 | | | From July 1, 2021 through October 19, 2021 | | September 30, 2021 | | June 30, 2021 | | March 31, 2021 | | December 31, 2020 | | September 30, 2020 | | June 30, 2020 |
| Net loss | $ | (19.0) | | | $ | (23.0) | | | | $ | (105.7) | | | $ | (46.7) | | | $ | (53.9) | | | $ | (40.7) | | | $ | (23.4) | | | $ | (40.4) | | | $ | (24.5) | |
| Revenue reduction from purchase accounting | — | | | 2.3 | | | | 4.5 | | | 3.7 | | | 3.7 | | | 4.3 | | | — | | | — | | | 0.2 | |
| Cost of revenues impact from inventory valuation purchase accounting | 6.3 | | | 15.8 | | | | — | | | — | | | — | | | 4.7 | | | 0.5 | | | — | | | 0.5 | |
| Foreign currency loss (gain), net | 1.5 | | | 1.6 | | | | (0.6) | | | (1.4) | | | 1.1 | | | (4.0) | | | 8.2 | | | 8.1 | | | 3.4 | |
| Amortization of acquired intangibles | 38.8 | | | 32.0 | | | | 19.7 | | | 16.1 | | | 18.6 | | | 18.6 | | | 13.5 | | | 12.2 | | | 12.4 | |
| Stock/share-based compensation | 7.8 | | | 5.3 | | | | 9.3 | | | — | | | — | | | (0.1) | | | 0.1 | | | — | | | — | |
| Change in fair value of warrant liabilities | (19.9) | | | (1.2) | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Debt extinguishment | — | | | — | | | | 15.9 | | | — | | | — | | | — | | | — | | | — | | | — | |
| Non-operating expenses | 9.4 | | | 7.0 | | | | 34.7 | | | 15.0 | | | 15.6 | | | 16.1 | | | 8.5 | | | 2.9 | | | 6.4 | |
| Tax impact of adjustments above | (7.4) | | | (14.2) | | | | (11.7) | | | (6.8) | | | (8.4) | | | (9.0) | | | (7.8) | | | (3.7) | | | (3.8) | |
| Adjusted net income (loss) | $ | 17.5 | | | $ | 25.6 | | | | $ | (33.9) | | | $ | (20.1) | | | $ | (23.3) | | | $ | (10.1) | | | $ | (0.4) | | | $ | (20.9) | | | $ | (5.4) | |
| Weighted average common shares outstanding — basic and diluted | 180.774 | | | 180.773 | | | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A |
| Adjusted EPS | $ | 0.10 | | | $ | 0.14 | | | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A |
(4)The following table reconciles Adjusted EPS to the most directly comparable U.S. GAAP financial performance measure, which is Net loss per common share attributable to Mirion Technologies, Inc. (Successor):
| | | | | | | | |
| Successor* |
| (Amounts per share, except for outstanding shares in millions) | Three Months Ended March 31, 2022 | From October 20, 2021 through December 31,
2021 |
| Net loss per common share attributable to Mirion Technologies, Inc. (Successor) | $ | (0.10) | | $ | (0.12) | |
| Loss attributable to noncontrolling interests | (0.01) | | (0.01) | |
| Revenue reduction from purchase accounting | — | | 0.01 | |
| Cost of revenues impact from inventory valuation purchase accounting | 0.04 | | 0.09 | |
| Foreign currency loss (gain), net | 0.01 | | 0.01 | |
| Amortization of acquired intangibles | 0.22 | | 0.18 | |
| Stock-based compensation | 0.04 | | 0.03 | |
| Change in fair value of warrant liabilities | (0.11) | | (0.01) | |
| Non-operating expenses | 0.05 | | 0.04 | |
| Tax impact of adjustments above | (0.04) | | (0.08) | |
| Adjusted EPS | $ | 0.10 | | $ | 0.14 | |
| | |
| Weighted average common shares outstanding — basic and diluted | 180.774 | | 180.773 | |
| Dilutive Potential Common Shares - RSU's | 0.000 | 0.003 | |
| Adjusted weighted average common shares — diluted | 180.774 | | 180.776 | |
* Note that Predecessor quarters have not been presented as Adjusted EPS is not meaningful for periods prior to the Business Combination due to the change in the capital structure.
(5)The following table reconciles EBITA, EBITDA and Adjusted EBITDA to the most directly comparable U.S. GAAP financial performance measure, which is net loss:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| (In millions) | March 31, 2022 | | From October 20, 2021 through December 31, 2021 | | | From July 1, 2021 through October 19,
2021 | | September 30, 2021 | | June 30, 2021 | | March 31, 2021 | | December 31, 2020 | | September 30, 2020 | | June 30, 2020 |
| Net loss | $ | (19.0) | | | $ | (23.0) | | | | $ | (105.7) | | | $ | (46.7) | | | $ | (53.9) | | | $ | (40.7) | | | $ | (23.4) | | | $ | (40.4) | | | $ | (24.5) | |
| Interest expense, net | 7.9 | | | 6.2 | | | | 52.8 | | | 43.8 | | | 43.7 | | | 43.0 | | | 38.5 | | | 38.0 | | | 38.7 | |
| Income tax (benefit) provision | (4.1) | | | (6.8) | | | | (5.6) | | | (4.7) | | | 14.4 | | | (7.1) | | | (12.2) | | | (1.0) | | | (0.7) | |
| Amortization | 38.8 | | | 32.0 | | | | 19.7 | | | 16.1 | | | 18.5 | | | 18.6 | | | 13.5 | | | 12.2 | | | 12.4 | |
| EBITA | 23.6 | | | 8.4 | | | | (38.8) | | | 8.5 | | | 22.7 | | | 13.8 | | | 16.4 | | | 8.8 | | | 25.9 | |
| Depreciation | 6.2 | | | 5.3 | | | | 6.2 | | | 5.1 | | | 6.9 | | | 5.0 | | | 4.6 | | | 4.3 | | | 4.5 | |
| EBITDA | 29.8 | | | 13.7 | | | | (32.6) | | | 13.6 | | | 29.6 | | | 18.8 | | | 21.0 | | | 13.1 | | | 30.4 | |
| Stock compensation expense | 7.8 | | | 5.3 | | | | 9.3 | | | — | | | — | | | (0.1) | | | 0.1 | | | — | | | — | |
| Change in fair value of warrant liabilities | (19.9) | | | (1.2) | | | | — | | | — | | | | | | | | | | | |
| Debt extinguishment | — | | | — | | | | 15.9 | | | — | | | — | | | — | | | — | | | — | | | — | |
| Foreign currency loss (gain), net | 1.5 | | | 1.6 | | | | (0.6) | | | (1.4) | | | 1.1 | | | (4.0) | | | 8.2 | | | 8.1 | | | 3.4 | |
| Revenue reduction from purchase accounting | — | | | 2.3 | | | | 4.5 | | | 3.7 | | | 3.7 | | | 4.3 | | | — | | | — | | | 0.2 | |
| Cost of revenues impact from inventory valuation purchase accounting | 6.3 | | | 15.8 | | | | — | | | — | | | — | | | 4.7 | | | 0.5 | | | — | | | 0.5 | |
| Non-operating expenses | 9.4 | | | 7.0 | | | | 34.7 | | | 15.0 | | | 15.6 | | | 16.1 | | | 8.5 | | | 2.9 | | | 6.4 | |
| Adjusted EBITDA | $ | 34.9 | | | $ | 44.5 | | | | $ | 31.2 | | | $ | 30.9 | | | $ | 50.0 | | | $ | 39.8 | | | $ | 38.3 | | | $ | 24.1 | | | $ | 40.9 | |
Liquidity and Capital Resources
Overview of Liquidity
Our primary future cash needs relate to working capital, operating activities, capital spending, strategic investments, and debt service.
Mirion management believes that net cash provided by operating activities, augmented by long-term debt arrangements, will provide adequate liquidity for the next 12 months of independent operations, as well as the resources necessary to invest for growth in existing businesses and manage its capital structure on a short- and long-term basis. Access to capital and availability of financing on acceptable terms in the future will be paidaffected by many factors, including our credit rating, economic conditions, and the overall liquidity of capital markets. There can be no assurance of continued access to capital markets on acceptable terms.
At March 31, 2022 and December 31, 2021 we had $84.2 million and $84.0 million, respectively, in cash and cash equivalents, which include amounts held by entities outside of the United States of approximately $68.0 million and $69.5 million, respectively, primarily in Europe and Canada. Non-U.S. cash is generally available for repatriation without legal restrictions, subject to certain taxes, mainly withholding taxes. We are asserting indefinite reinvestment of cash for non-U.S. subsidiaries. The Company has alternative repatriation options other than dividends should the need arise. The 2021 Credit Agreement provides for up to $90.0 million of revolving borrowings.
There is a discussion in Note 8, Borrowings, of the condensed consolidated financial statements included elsewhere in this Form 10-Q of the long-term debt arrangements issued by Mirion. For more information on our lease commitments, See
Note 9, Leased Assets, of the condensed consolidated financial statements and for other commitments and contingencies, see Note 10, Commitments and Contingencies of the condensed consolidated financial statements.
Debt Profile
2021 Credit Agreement
On the Closing Date, certain subsidiaries of the Company entered into a credit agreement (the “2021 Credit Agreement”) among Mirion Technologies (HoldingSub2), Ltd., a limited liability company incorporated in England and Wales, as Holdings, Mirion Technologies (US Holdings), Inc., as the Parent Borrower, Mirion Technologies (US), Inc., as the Subsidiary Borrower, the lending institutions party thereto, Citibank, N.A., as the Administrative Agent and Collateral Agent and Goldman Sachs Lending Partners, Citigroup Global Markets Inc., Jefferies Finance LLC and JPMorgan Chase Bank, N.A., as the Joint Lead Arrangers and Bookrunners. The 2021 Credit Agreement refinanced and replaced an earlier credit facility (the "2019 Credit Facility").
The 2021 Credit Agreement provides for an $830.0 million senior secured first lien term loan facility and a $90.0 million senior secured revolving facility (collectively, the “Credit Facilities”). Funds from the Credit Facilities are permitted to be used in connection with the Business Combination and related transactions, to refinance the 2019 Credit Facility referred to above and for general corporate purposes. The term loan facility is scheduled to mature on October 20, 2028 and the revolving facility is scheduled to expire and mature on October 20, 2026. The agreement requires the payment of a commitment fee of 0.50% per annum for unused revolving commitments, subject to stepdowns to 0.375% per annum and 0.25% per annum upon the achievement of specified leverage ratios. Any outstanding letters of credit issued under the 2021 Credit Agreement reduce the availability under the revolving line of credit.
The 2021 Credit Agreement is secured by a first priority lien on the equity interests of the Parent Borrower owned by Holdings and substantially all of the assets (subject to customary exceptions) of the borrowers and the other guarantors thereunder. Interest with respect to the
underwriters uponfacilities is based on, at the
completionoption of the
Initial Business Combination.borrowers, (i) a customary base rate formula for borrowings in U.S. dollars or (ii) a floating rate formula based on LIBOR (with customary fallback provisions described below) for borrowings in U.S. dollars, a floating rate formula based on EURIBOR for borrowings in Euro or a floating rate formula based on SONIA for borrowings in Pounds Sterling, each as described in the 2021 Credit Agreement with respect to the applicable type of borrowing. The 2021 Credit Agreement includes fallback language that seeks to either facilitate an agreement with our lenders on a replacement rate for LIBOR in the event of its discontinuance or that automatically replaces LIBOR with benchmark rates based on the Secured Overnight Financing Rate ("SOFR") or other benchmark replacement rates upon triggering events.
The 2021 Credit Agreement contains customary representations and warranties as well as customary affirmative and negative covenants and events of default. The negative covenants include, among others and in each case subject to certain thresholds and exceptions, limitations on incurrence of liens, limitations on incurrence of indebtedness, limitations on making dividends and other distributions, limitations on engaging in asset sales, limitations on making investments, and a financial covenant that the “First Lien Net Leverage Ratio” (as defined in the 2021 Credit Agreement) as of the end of any fiscal quarter is not greater than 7.00 to 1.00 if on the last day of such fiscal quarter certain borrowings outstanding under the revolving credit facility exceed 40% of the total revolving credit commitments at such time. The covenants also contain limitations on the activities of Mirion Technologies (HoldingSub2), Ltd. as the “passive” holding company. If any of the events of default occur and are not cured or waived, any unpaid amounts under the 2021 Credit Agreement may be declared immediately due and payable, the revolving credit commitments may be terminated and remedies against the collateral may be exercised.
Cash flows
Three Months ended March 31, 2022 (Successor) compared to three Months Ended March 31, 2021 (Predecessor)
| | | | | | | | | | | | | | |
| Unaudited |
| Successor | | | Predecessor |
| (In millions) | Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Net cash provided by operating activities | $ | 11.4 | | | | $ | 10.9 | |
| Net cash used in investing activities | $ | (7.9) | | | | $ | (23.0) | |
| Net cash provided by financing activities | $ | (0.6) | | | | $ | (7.3) | |
Non-GAAP:
| | | | | | | | | | | | | | |
| Unaudited |
| Successor | | | Predecessor |
| (In millions) | Three Months Ended March 31, 2022 | | | Three Months Ended March 31, 2021 |
| Net cash provided by operating activities | $ | 11.4 | | | | $ | 10.9 | |
| Purchases of property, plant, and equipment and badges | (8.7) | | | | (8.0) | |
Free cash flow(1) | $ | 2.7 | | | | $ | 2.9 | |
| Cash used for non-operating expenses | 7.3 | | | | 6.9 | |
Adjusted free cash flow(1) | $ | 10.0 | | | | $ | 9.8 | |
(1)Free cash flow and Adjusted free cash flow are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. We believe that Free cash flow and Adjusted free cash flow are important because they provide management with measurements of cash generated from operations that is available for payment obligations and investment opportunities, such as repaying debt and funding acquisitions.
Free cash flow is defined as U.S. GAAP net cash provided by operating activities adjusted to include the impact of purchases of property, plant, and equipment and purchases of badges. Adjusted free cash flow is defined as Free cash flow adjusted to include the impact of cash used to fund non-operating expenses (as previously defined). We believe that the inclusion of supplementary adjustments to Free cash flow applied in presenting Adjusted free cash flow is appropriate to provide additional information to investors about our cash flows that management utilizes on an ongoing basis to assess our ability to generate cash for use in acquisitions and other investing and financing activities.
Free cash flow and Adjusted free cash flow may not be comparable to similarly titled measures used by other companies. You should not consider our Free cash flow or Adjusted free cash flow as alternatives to net cash provided by (used for) operating activities in accordance with U.S. GAAP.
Net Cash Provided by Operating Activities
Net cash provided by operating activities was$11.4 million for the three months ended March 31, 2022 (Successor) and $10.9 million for the three months ended March 31, 2021 (Predecessor), representing an increase of $0.5 million.
The increase is partially due to a decrease in net loss of $21.7 million. Non-cash add-backs to net income included an increase of depreciation and amortization by $21.3 million and an increase in share-based compensation expense by $8.0 million, partially offset by a decline in the fair value of warrant liabilities by $19.9 million and a decline in deferred income taxes by $9.7 million. Cash from working capital decreased by $8.2 million period over period. Within working capital, accounts payable decreased by $22.5 million and other liabilities decreased by $6.3 million, partially offset by accounts receivable increased by $23.1 million as a result of higher billings.
Net Cash Used in Investing Activities
Net cash used in investing activities was $7.9 million for the three months ended March 31, 2022 (Successor) and $23.0 million for the three months ended March 31, 2021 (Predecessor). The difference is driven primarily by the payment of deferred consideration of $15.0 million related to the SNC acquisition during the three months ended March 31, 2021. Additionally, $0.7 million relates to an increase of purchases of property, plant, and equipment and badges offset by cash provided from the sale of property, plant and equipment of $0.8 million in the three months ended March 31, 2021.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $0.6 million during the three months ended March 31, 2022 (Successor) and $7.3 million during the three months ended March 31, 2021 (Predecessor). The Predecessor financing activities primarily related to $(7.5) million of principal repayments during the three months ended March 31, 2021.
Critical Accounting
Policies/Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and liabilities, disclosureexpenses and related disclosures. Such estimates are based on historical experience and on various other factors that management believes are reasonable under the circumstances, the results of contingentwhich form the basis for making judgments about the carrying value of assets and liabilities atthat are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.
During the datethree months ended March 31, 2022, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of theFinancial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 1 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and expenses duringQualitative Disclosures about Market Risk
We have no material changes to the disclosures on this matter made in our Annual Report on Form 10-K for the periods
reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:Net Income Per Common Share
Net income per share of common stock is computed by dividing net income by the weighted average number of common shares outstanding during the period. We apply the two-class method in calculating earnings per share. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
As ofended March 31, 2021, we had outstanding warrants to purchase2022 and December 31, 2021.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of
up to 27,250,000 shares of Class A common stock. The weighted average of these shares was excluded from the calculation of diluted net income per share of common stock since the exercise of the warrants is contingent upon the occurrence of future events. As of March 31, 2021, we did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into shares of common stockDisclosure Controls and
then share in our earnings. As a result, diluted net income per common share is the same as basic net income per common share for the periods.Redeemable Shares of Class A Common Stock
All of the 75,000,000 shares of Class A common stock sold as parts of the Units in the Public Offering contain a redemption feature. In accordance with the Accounting Standards Codification 480-10-S99-3A (“ASC 480”), “Classification and Measurement of Redeemable Securities”, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. The Company classifies all shares of Class A common stock as redeemable.
Warrant Liability
We account for the warrants in accordance with the guidance contained in Accounting Standards Codification 815 (“ASC 815”), “Derivatives and Hedging”, under which the warrants do not meet the criteria for equity treatment and must be recorded as derivative liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised, and any change in fair value is recognized in our statement of operations. The fair value of the Private Placement Warrants have been estimated using a Black-Scholes-Merton model and the fair value of Public Warrants issued in connection with the Public Offering have been measured based on the listed market price of such Public Warrants.
Procedures Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our financial statements.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
As of March 31, 2021, we were not subject to any material market or interest rate risk. The net proceeds of the Public Offering and the Private Placement Warrants, including amounts in the Trust Account, on the date the Public Offering closed, were invested in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
We have not engaged in any hedging activities since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
ITEM 4. | CONTROLS AND PROCEDURES.
|
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that material information required to be disclosed in companyour reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive
Officer
and Chief Financial Officer,
and Secretary (who also serves as
our Principal Executive Officer and Principal Financial and Accounting Officer),appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-1513a-15(e) and 15d-1515d-15(e) under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021.2022. Based upon histheir evaluation, our Chief Executive Officer hasand Chief Financial Officer concluded that, the Company’sas of March 31, 2022, our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d-15(e) under the Exchange Act) were not effective, aseffective.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of March 31, 2021 becauseachieving their objectives and management necessarily applies its judgement in evaluating the cost-benefit relationship of the material weaknesspossible controls and procedures.
Changes in
our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control around the interpretation and accounting for certain complex features of the Class A common stock and Warrants issued by the Company was not effectively designed or maintained. This material weakness resulted in the restatement of the Company’s financial statements for the year ended December 31, 2020, its balance sheet as of July 2, 2020, and its interim financial statements for the quarter ended September 30, 2020. Additionally, this material weakness could result in a misstatement of the warrant liability, Class A common stock and related accounts and disclosures that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis.During the most recently completed fiscal quarter, there has beenInternal Control Over Financial Reporting
There were no
change inchanges to our internal control over financial reporting
(as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended March 31, 2022 that
hashave materially affected, or
isare reasonably likely to materially affect, our internal control over financial reporting.
PART
II—II - OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS.
|
None.
Factors
ITEM 1. LEGAL PROCEEDINGS
Due to the nature of our activities, we are at times subject to pending and threatened legal actions that could cause our actual resultsarise out of the ordinary course of business. For information regarding legal proceedings and other claims in which we are involved, see “Note 10. Commitments and Contingencies” in the notes to differ materially from thosethe financial statements included in this Quarterly Report areon Form 10-Q. The disposition of any such currently pending or threatened matters is not expected to have a material effect on
our business, results of operations or financial condition. However, the results of legal actions cannot be predicted with certainty. Therefore, it is possible that our business, results of operations and financial condition could be materially adversely affected in any particular period by the unfavorable resolution of one or more legal actions. Regardless of the risks describedoutcome, litigation can have an adverse impact on our business because of defense and settlement costs, diversion of management resources and other factors. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect our consolidated financial statements.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our restated Annual Report on Form 10-K/A10-K for the year ended December 31, 2020. Any of these factors2021, as further updated and supplemented below, which could result in a significant or material adverse effect onmaterially affect our business, results of operations, orand financial condition. These risks are not the only risks facing our Company. Additional risk factorsrisks and uncertainties not presentlycurrently known to us, or that we currently deem to be immaterial, could also materially adversely affect our business, financial condition or future results.
The military conflict between Russia and Ukraine and the sanctions imposed as a result have adversely affected and may further adversely affect our business, results of operations, and financial condition.
We do business with Russian customers both within and outside of Russia and with customers who have contracts with Russian counterparties. Uncertain geopolitical conditions, the invasion of Ukraine, sanctions, and other potential impacts on this region’s economic environment and currencies may cause demand for our products and services to fluctuate or customer projects to be delayed, impact our ability to supply or source products from this geographic region, or limit certain customers’ ability to satisfy obligations to us. On May 2, 2022, one of the Company's customers announced that it had terminated a contract with a Russia state-owned entity to build a nuclear power plant in Finland. Also, we have experienced delays in revenue recognition for the three month period ended March 31, 2022 due to export controls and other sanctions instituted to date. Additional contracts or projects may be subject to delays or terminations as the situation evolves. In addition, while none of these customers have asked for advanced payment refunds, they could seek to recover these payments depending on future developments. The Russian-Ukraine conflict may also
impairescalate or expand in scope and the broader consequences of this conflict cannot be predicted, nor can we predict the conflict's ultimate impact on the global economy or our business,
or results of
operations.As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factorsoperations, and financial condition. The Russia-Ukraine conflict may also heighten other risks disclosed in our restated Annual Report on Form 10-K/A10-K for the yearperiod ended December 31, 2020. However, we may disclose changes2021, including through increased inflation, limited availability of certain commodities, supply chain disruption, disruptions to such factorsour global technology infrastructure, including cyber-attacks, increased terrorist activities, volatility or disclose additional factors from timedisruption in the capital markets, and delays or cancellations of customer projects, each of which could materially adversely affect our business, results of operations, and financial condition.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
1. Financial Statements
See Index to timeConsolidated Financial Statements appearing in our future filings withItem 1 “Financial Statements and Supplementary Data” of this Annual Report.
2. Exhibits
The exhibits listed on the
SEC.ITEM 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|
Not applicable.
accompanying Exhibit Index are filed or incorporated by reference as part of this Quarterly Report.
EXHIBIT INDEX
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|
None.
ITEM 4. | MINE SAFETY DISCLOSURES.
|
Not applicable.
ITEM 5. | OTHER INFORMATION.
|
None.
| | |
Exhibit
No. Number | | Description of Exhibits
Exhibit Title |
| 3.1 | |
31.1*3.2 | |
| 31.1* | |
| 31.2* | |
| 32.1** | | |
| 32.2** | |
| 101.INS* | |
101.INS* | | XBRL Instance Document. |
| 101.SCH* | |
101.SCH* | | XBRL Taxonomy Extension Schema Document. |
| 101.CAL* | |
101.CAL* | | XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF* | |
101.DEF* | | XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB* | |
101.LAB* | | XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* | |
101.PRE* | | XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| | | | | |
| * | Filed herewith. |
| ** | The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” or purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, irrespective of any general incorporation language contained in such filing. |
Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | |
| Name | Title | GS Acquisition Holdings Corp IIDate |
| | |
Date: /s/ Thomas D. Logan Thomas D. Logan | Chief Executive Officer and Director (principal executive officer) | May 17, 2021 | | | | /s/ Tom Knott
4, 2022 |
| | | | Name: | | Tom Knott |
/s/ Brian Schopfer Brian Schopfer | | | | Title: | | Chief Executive Officer, Chief Financial |
| Officer (principal financial officer) | | | | | | Officer and Secretary (Principal Executive Officer and Principal Financial and Accounting Officer)May 4, 2022 |
18