Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Mirion Technologies Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alex Gaddy, Vice President of Investor Relations. Please proceed.

Alex Gaddy

thank joining and XXXX Second everyone, Call. Earnings afternoon, you Mirion's for Quarter Good made presentation those during statements, comments that Reminder this results forward-looking differ the and will may materially in from projected statements. actual forward-looking include other under factors and from are in with differ with time filings XX-K quarterly to our results XX-Q in Form SEC Form discussed reports on time could on actual the report that SEC. The Factors that and to Mirion caption cause Risk annual we the the file Quarterly today's ended within discussion references the are second June related quarter to XX, XXXX.

GAAP during today. will those IR measures were at of found generally All in found The call this comments of can measures accordance on be accounting Mirion's financial accepted include non-GAAP that measures made presentation be prepared with financial in accompanying appendix call the comparable the earnings also to Reconciliation certain this website can the principles. materials not directly most ir.mirion.com.

call Kingsley, Brian today Officer. Schopfer, Joining and me are Chief Officer; the on Chairman Board; Logan, Executive Larry the Financial Chief Tom of

Chairman turn our over to Board, the I will Kingsley. Now Larry it of Larry?

Lawrence Kingsley

and your morning, Alex us support and our call quarterly Mirion. good for the remainder we for for well Thank QX afternoon, earnings all Thanks, you This results solid we joining position published for that continued everyone. believe XXXX. of

and XXXX. the forward-looking indicator encouraging entering most for see is of We which to rest the growth, continue year backlog consistent the

we quarter cost we our trends This second moving last reported disruptions. by heading the the traction highlighted expectations expect a supply began on was quarter half. line And gaining this the from of operating second top we for quarters. couple Margin reflects performance Our into performance price momentum both continuation was the of to better-than-expected chain segments. beyond over and greater within as the bolster

the yet achieving product capital Additionally, Cash targeted and approach. with quarters. improving increasing but detail and plan, familiar I in the other not to in I'm later inventory and But net efficiency the on remains have more flow improvements. third and working and velocity we expectations. efficiency into get geographic flow the ease impacts team deeply unfavorable material collection and are I'll confidence anticipate transaction in the mix and the call, fourth turnover, performance the focus

robust company's dynamics vertical The our improving execution backlog, and market favorable bolster confidence.

on behalf executing management confidence well have of full the set the we appropriate business. Board, is Speaking of against priorities for that the

that, has as that private overhang stock. on exited noting another the of we have sponsor controlling their equity worth it's Mirion. the in Lastly, fully prior removed With mid-July, position

call So Tom I'll over Logan. Tom? now the pass CEO, to our

Thomas Logan

begin afternoon, colleagues Larry, work during thank like thanking things for started, the to Mirion I'd you, and their good very by get quarter. To hard everyone. second my

from with highlights the get results, Let's details our around into beginning some the quarter. right

growth. of QX last another order quarter. our period quarter same First, growth the was X% backlog approximately We year expanded consecutive for the booked adjusted position to fourth order solid compared and

Importantly, of projects. smaller have on strength engagement we to recurring and continue larger Technologies customers degree a see from high

for the revenue with delivering of over growth same nearly year. organic compared the group Second, company X.X% quarter, Technologies to for way we last X%. the growth expectations internal The our led organic outpaced total of period

quarter. Third, was the $X.X free million cash in flow second

net quarter challenged the for expense admittedly it both is by Cash and and higher with the this interest our working for was consistent the dynamics While capital a expectations meager year. sum, was flow quarter.

adjusted and new our previous and XXXX. bringing guidance updated raised range. revenue increased the towards end of our our expectations, our we've EBITDA have upper tightened for financial the Finally, midpoint We ranges

million $XX for to year. guidance $XX the to of million flow updated We also adjusted full free the cash range

generation our our order approvals driven prepare some we procedural growth by of dosimetry, industrials, quality Medical by growth has diversified segment, center. end strategy driven assurance see results, radiopharmaceutical first therapy Instadose nuclear markets. to X, we within half stable seeing Now in third we in diagnostic comps from see defense continue to with order medicine, the market patient orders If growth financial we Radiation technology positive highlight and tough to trends like results volume. our quarterly delving including and continue investment our I'd research, the turn half And before into In and the performance and launch marketing performance our our X%, new customer we're Slide our strength. robust, and first and and engagement national we labs to digital been was finally, to from macro strong within and by year-over-year XXXX. to medicine In power both nuclear offset businesses. tailwinds, nuclear account sales of in growing good platform as therapeutic continue our enjoy European the

the encouraged well. as we In dynamics Technologies segment, by remain market

expectations XX% growth base, with year, is segment the in In last beyond. installed the see order also coming the strong comps and with first coupled European tough. second favorable, order over notable half first As and contributions business, were nuclear the in performance were and space first strengthening the from cadence. markets. half new our defense American power lab build dialogue for to and so a labs delivered Overall, our within half, demand in reminder, half a we we we defense the improving Both support strong North environment expect

flip our Slide second X quarter to Let's detail. discuss in results to more now over

X.X% noted, organic both previously on second revenue the consolidated delivered segments. by As in solid we organic basis supported in growth almost a growth quarter

added we CIRS domestic was side, with our within phantoms assurance market Performance the continued Sun by Medical radiation in business. therapy quality organic internationally quarter. growth Nuclear legacy both the a end spurred the X% in during strength businesses and the revenue nearly growth demand in delivered slowdown encouraging the and recent offsetting momentum On

performance here revenue was strong Technologies Segment Additionally, over growth. for the QX products. X% and was positive as across delivered we geographies segment organic

Brian to couple I'd A make before on. of final highlights jumps like

to on flow cash we year, the opportunity second inventory at and First, a to cash my margins. lies operational the On very free primary transition the of of top both is half clear flow, improve turns. as our agenda with excellence focus

the frequent supply to to directed mitigant During dislocation, often and we reserves inventory and the organization chain as the up a I build unpredictable pandemic subsequent global strategic supplier experienced. de-commits

Now across we base see can stability and to footing off our war supply greater a degree. this significant come

process Consequently, from industrial bolstered we as an both capabilities our a have as well organizational standpoint. planning

production turns is group in improvements of Our to and distribution planning. near-term teams tiger drive to aggressively, organized planning, Xx. goal drive we've And our median to this roughly get to after peer inventory scheduling demand

not a impact company been back integration in to results the progress SIS we've making lapped numbers, reflected costs, half to stable of our public company confident I'm year. of and have will expect planning horizon. compression as see the the yet the is Public meaningful transitory be within cost on impact great seen incremental now result margins, our While of margin On we in and backlog. are down. the SIS the our costs effects it neutral of price We're and the integration

a it into and taken the aggressive backlog beginning simultaneously labor greater of reduction inputs. to seeing in through realization XXXX turn in flows inflationary action the see material we're price as while rates price Finally,

is in ahead. the that this our quarters my expansion of of reflective margin view continue and long we of years will All history

over Brian? Brian mic now our pass Officer, to me the Chief Schopfer. Let Financial

Brian Schopfer

million, good To I'll X and look by my to to the commentary, results. Thanks, grew Quarterly everyone. turn Tom, take revenue revenue up quarter, please deeper X%. XX.X%. the afternoon, was X.X%. adjusted margins second to with you quarter was company begin basis growth ask a Slide organic was was XXX EBITDA at $XX.X while Total points in EBITDA contracting XX.X% and million, $XXX.X to Adjusted

and margin what in we product software the impacted lower stemming true-up prior saw again and as geographic rate contribution mix As expected, of QX. a and the headwinds, the first a well international saw quarter. anticipated, acquisition as from as distribution Medical in margin Margin channel and year our sales We in incentive as was performance. QX total percent SIS higher compensation profile a

these headwinds as to improvements initiatives We second and to cost-out abate materialize. begin from expect in mix benefits are expected third the the in quarter half

positive margin on was dilutive impact in quarter the but X% overall contribution cost basis. price price an rate Our with

into our the around was with better performance Medical in growth of organic segment on Medical revenue than the performance during the was the starting X. Let's with Slide quarter, now X.X%. detail line expectations. Medical segment more top up quarter, dive X.X% quarter second during

average seen moderate quarters of XX% quarters. As the previously we've last X Medical over mentioned, the versus is reporting expected growth that and in third to in the fourth

contraction compared within completed of XX.X% quarter, software was adjusted our percentage year. Biodex of international As the This divestiture impacted last X% EBITDA the same by a assurance a in which the rehab revenue was over performance the overall reminder, basis reported business. higher business, mix radiation a period XX quality point therapy and Biodex business rehab impacted the Medical margin physical by a in we revenue the offset divestiture Medical lower of was quarter. by margin to revenue. the

and basis Technologies in by in Moving well grew margin of growth and mix labs as margins geographic segment. by market momentum quarter the XXX a SIS XX.X%, and in continued contribution X in the was EBITDA the points research basis product was Slide broad-based X.X% performance X.X%. and Technologies EBITDA our North segment $XX.X during power points Technologies across on revenue Europe. from strength to million, in of SIS this America representing the EBITDA by XX.X% adjusted to impacted with quarter. acquisition. XXX driven led adjusted the as growth by quarter. Adjusted Revenue organic larger contracted nuclear end

points from this incentive true-up not XQ of Additionally, to related lower 'XX impact approximately that true-up prior business we lower negative France a during compensation related did to onetime our repeat year-over-year in from nuclear in year projects -- the basis -- XXX a year. saw

to during quarter. cash flow was now Slide Adjusted Turning the free million $X.X X.

slightly our working our especially are As in the plan positions. to leverage in in We're is we've the cash in and put Albeit down net we process at flow are planned, is have standard calls, at functions than in continuing take on performance, good progress and finished primarily shorter-term we expect. the terms of confidence we globally, capital Net to and inventory beginning sales prior quarter and in June operations actions invest motion. of discussed efficiency, seeing path X.Xx. place slower not hold, well approach This both journey, set we've the the a planning talent. but

half to leverage lower an mindset. of or execution-focused Looking ahead we second the X.Xx committed remain target the of with to year, achieving our

let Finally, updated XX. guidance you financial Slide XXXX me our on walk through

tightened we As have noted line our earlier, raised and top Tom guidance.

Medical, from a growth on Technologies, $XX revenue digits Organic with million We X% cash flow $XXX million, is high-single XX% and Adjusted to expected $XX from reported X% $XXX million of to and adjusted digits XX%. at are million is XX% expecting to between guidance between year. for expected EBITDA full growth. organic basis X% revenue with free the growth mid-single margins

to fourth quarter. net the of of continue working the majority a guidance, the with We in positive midpoint expect capital expected contribution at

of I'm direction. work With still pass for the let that, delivering we me Overall, call this I'm solid but do in cash, confident really proud Mirion to to We close out. the right another are Tom got to headed on back quarter. team the

Thomas Logan

you. thank Brian,

up this reiterate as conclude I'd prepared things few to a Q&A, opening Before are comments our like for there items afternoon. we

dynamics First, across supported by of backlog robust our expectations for our the second was demand markets. and quarter, top position our performance end ahead favorable line

in tighter was to P&L second year, were second expecting in discussed. within previously but margins half our quarter to the Second, expectations. performance improve We're dynamics our as the last compared

cash remain capital free our to a focused improving and the we source highly working flow to Third, net full continue year. of expect cash be for on

we of into the guidance Finally, the and are updated have confident back year accordingly. our half heading

are forward for are pass me executing third open over this Q&A. strong, look updating with now our things to fall. end demand is markets you Our we to let up it But and quarter results I healthy, to well. Alex

Alex Gaddy

comments for Q&A this Operator, ahead Thank the formal and go you, start session. concludes That let's our afternoon. Tom.

Operator

[Operator Instructions].

Citigroup. with first Our from question comes

Unidentified Analyst

next give back, pipeline And M&A and stepping in on few thinking us seeing next M&A quarters Can just bigger going forward maybe your you're what potential about into picture. broadly, how So an the you update year? over you're more today?

Thomas Logan

Sure.

some for what an to we've execute And our actually. smaller I we our opportunity to the interest Let last pipeline X.Xx remain down me leverage potential M&A at has us planning are end which our our The us. extremely and or is that that updated there changed consistently, cover guided be vigorous bringing of little to the of -- that, continue call, confident . think deals view that year. horizon. essentially we great to at is very on to And below over In committed

any not interest some to of from downward while allows standpoint. that specific managing falling to And markers are strengthen a remain our do active that again M&A of great in within continue our the So ability us bucket, in timing to leverage an we arc quite us overall. in be strategic simultaneously to outreach that and confident

Unidentified Analyst

color, generation on into implementing on But can beyond? getting Tom. or that then inventory focused maybe be and processes cash year improving dynamics. you and just us expected and in helpful that. digging working the color actions cash net about you down. on give give capital confidence some specifics That's Okay. still XH And for you're turns you that I working I appreciate of to know cash talked capital a source maybe flow the free and

Thomas Logan

Yes.

then degree chime I've here XX within organization. in industrial in in business, -- order versus doing pressurization that the been long for of a start, been Brian But capital, in almost capital of I working invite carrying cost something of here. lost the me And this Let always interplay overall. requires time. to with technology between stock-out working the potential any , dynamic think is a that the and inventory, with as I've impact years. exists general I'll is particularly economic the a a And role

erratic. we comments, segments as effect of last-minute supplier I we we've historically, -- dynamic. and what through knock-on very more post-pandemic as scripted cancellations did, business we, think supplier my good shock and de-commits that like, in in I learned this which our that the at went became as behavior supply been And managing But had others experienced order overall. the was a certain clearly stated

accommodate to inventory we better economic a the really so the buffers our likely chain. strategic understanding of of organization, that potential to and again, through avoid, began mitigate of And to the toll build to well, situations, stock-out dynamics future generate supply

we're is evolution what of a And seeing direction. continued today, favorable

I quality, I much is had on been post-pandemic buffer combination take handle we our strategies targeted this things think this how we're approach have inventories. way tightening resource very It's into that activities looser us what basis. about, And much period. on the flowing ability of where getting during ultimately risk focus But attacking overall envelope supply organization a The through we we're ground more to strategic a scheduling on gives planning, we lies. chain again shock a conventional. and caliber planning. game, better to in can where had then after is really think the distribution again, a that that supply it the demand a our production those multidimensional procurement of improving And all the and a of implemented

of And will we're -- all we comments, cadence. back normal overall that kind year. noted we gives what dynamics beyond year, the over have and confidence the that, on that cash mobilized us the confident the in will the to to for of the a the as positive the teams flow focus Again, really of full half enure effect escalate broad-based that that's

Operator

next The comes Ritchie Goldman from Joe Sachs. with question

Joseph Ritchie

things just of guys just had the out -- we about So think of second like the just the accelerate revenue year. there's curious just last of think the the because the half you of the at see in the the a year. shipments orders should profile the end of cadence great the played and quarter like growth second. year, year. you outsized for on last When for kind And to first of the way kind whether half fourth anything Technologies about of of I'm

Brian Schopfer

think take I this. Yes, I'll

as the are I with third for overall in think And I guide really see We that good quarter a the know. our quarter, double-digit we third and of quarter. very kind don't year. expectations the Joe. guidance, a line type really around very robust But quarter think quarterly then give organically, fourth third you

Joseph Ritchie

Got it. ahead, Yes. Go Tom.

Thomas Logan

-- look just coverage, at about when market very positive the and was the intake, we're going to dynamics, order that context et Technologies say the that I sorry. we within cetera, year-over-year. again, Joe, backlog add to dynamic of

think I strong. -- our here it's So position is

Brian Schopfer

Our high-single mid- kind than be to coverage, year. to better sat of where to point, coverage Tom's continues last digits, we

confidence we're us gives where in that So segment. in sitting that

Joseph Ritchie

Yes.

And so guys the you what's Technologies. maybe can strength driving elaborate on in

concern, on that digits. destocking your So I guess, perspective your growth to there's mid- that's specifically you from high-single of and organic basically business comments around a as I'm And distribution from not you lot a any through talking what I'm guys portion curious, just independent saw about pick sells overlay up the can the across industrial business seeing occurring. just well? channel. the expectations of I that you're just And channel then

Thomas Logan

Yes.

of that in So us business every certainly, And the company. view most is What we the thing health important recognizing that -- very Technologies in that an underlying what say overall, We've markets. feel ours installed is nuclear seeing the would the is has tell have demonstrated as you customer company of a dynamics, the is major well. I'd mix the is segment at we historically, in And we operating -- to markets, been nuclear that, that kind the of franchise our the when of healthy base. unique given cyclicality. are -- little way all we look I key our is the markets a-cyclical kind the is and in business, that been which

the point level view and to activity there engagement of continues so overall. And of that reflect

last that the to might offer new and that that to NATO a we over is military our we translate the relates strength the our expectation it accruing that risk or and an build degree, the lot a area given few Defense that, as over overall, market that that solutions horizon, of into engagement in quarters, pickup sector Ukraine, war we of a see we has provide. it from see demand to defense we green stemming planning given seen some gear particularly this benefit is expect in relates been is to to -- activity. a again, some the in civil expect talked an attendant about that seeing overall. And from Europe our also we've expectation where, as greater have for in we're that. And What a the

We seen first half industrials have defense look of very is strong, some growth you and -- overall, reflective XX% if at of diversified activity there. order

an Some Again, as theme. $XX of civil quarter. a defense which reflective think of of of I booked that's cycle. And million that overall noted in that example, is the kind outside we second we've European order

I the lend the on applications offer note space And seeing The would life solutions nuclear radiochemistry also of final very demand overall, This labs half we're themselves from and university-funded mining, in overall. that and we but like, thing dynamic that's new driven our first a the were order where strong labs some labs, of like kind conventional of where high coming and degree materials is government increases. sciences of by growth only that demand base not is well productivity a XX%. to research, our by

the stance we've we're confidence customers, as trends today. in again, back we're into beyond. seeing or indication relates And carrying of these kind had half market we and to the the any the reversal that history of we've in year those of So say a change not as it a our come of given -- I'd segments, of early it

Brian Schopfer

channels specific, to to is tend sell thing typically products, The stock right? specific, maybe, through be one that distribution we our customer that application cetera. don't ordered, I'd et They Joe, add

more we've and segment that risk specifically sell the have Technologies product are that's not So through, the in shopped channels that's now channels broadly in something there. how the but people our that to waiting even historically worked,

think Technologies the model something to that's on is the at I isn't about So all. that else think side just business

Joseph Ritchie

out and more maybe one super specifically could how margins going? the both forward? color from in, you and just high integration just SIS. talk squeeze If That's impact, kind SIS think both quarter. level you to trend is called that about you. this as the just I question mix Can Yes. on margin then helpful also going around How And is expected in of you of about Technologies

Brian Schopfer

company type integration, that is with super the asset mean, stuff. business happy were X think the integration closed both all where now I at candidly, integrate. and a little line, what going. -- on say, top factories to I bit bottom integration line margin a level. right, always I on more, the That I the We us where at Biodex, hard thoughtful. off, was which Yes. would to It's years one, First accretive we and look of similar we're took was that size that the a we

We're side, the this very purposely it's is did On time. out on about think but So one, business on investment June as some takes of the keeping well. Technologies that long-term a in the kind more of we're the different. enabler business of making little of because an us to for cost the little digital medium software. We platforms, cost around as our take This you right?

quarter really numbers. the reflected second that be So in wouldn't

half see to back the here into expect through in that We for and flow sure. 'XX

growth of on kind purposely across I long-term us that, And quickly? that our but we're patient being we invest. and therefore, we that asset. think Yes, we're standard It do Tom a continuing I think And because has side great kind with perspectives. of here. this could profile value more get our to to thoughtful think to we're cost-out portfolio. margin hurts we is trying a can the Mirion over time But to commented more the very be

Operator

The Securities. Moore from Chris with comes CJS next question

Christopher Moore

cost specifically the pricing, later a Maybe, wildcards there there out bit cadence. of talk any on kind a potential little price Brian, perspective? from Are maybe you in fiscal could more just 'XX

Brian Schopfer

opportunity that, for there's across I us how out, very inventory looking I've continuously think continuously say, we're to going we'll model look, the I half the Yes. to as company. year, And through for said, we're kind back And better the stuff Well, of an than well. price that. think basically see we're cost we're as we the cost -- do but I'll at neutral plays continue doing,

dual application there's think I there. So

the For all at That's both company we're X% at price in the candidly company, -- board. levels the level. across year segment expecting this and the

So I don't see there. any in surprises coming

this of I adequately where teams in about hoping as price-wise. expecting very see -- hoping, the some half us markets. what goes. good good are the the But we're very think feel done not that We year back about thinking and improvement have but to we're -- feel we about the we

We need evaluate more segments. we in continue or price we to both push where can do

has -- second, done I think bit another of team of Technologies third round the quarter. in the a here even kind done a

that time. over we'll see So through flow

where So I we're at. good think we about feel

Christopher Moore

little it. first maybe little Dosimetry a were there will not of Instadose likely a visibility a you'd 'XX, think, to still when I pace up, be? bit? Very Got out, pick helpful. perhaps want where orders it half second half. Or X% further point is in that the Is there

Thomas Logan

But commercialize overall. of as expect our certainly And is story or generation a we here, digital we better. component third that technology, guiding of this Chris, the is Certainly, look some what key that related you at that at we're certainly growth not in how business mid-single-digit guided market right we historically growth I'd say 'XX have uplift the now. overall. overall, if Instadose

point. be this not think we're at does shot needle. But clear, calling the move I it So the to

Christopher Moore

start are is new And while But it. just takes in of the one that -- they maybe perspective, an it that income and kind there point Helpful. further a plant of you ago? construction, last out have nuclear today seeing than embedded along obviously, before months perspective. terms how it's might statement in Got been things can progress a XX anything tangible from perhaps from

Thomas Logan

expectations. that is the consistent schedule and those, firstly, and new on in projects to well, have large, evolving main today, with backlog as relates it mean we by thing I Yes. here are build --

busy, But that actively add seeing. activity I would our project-related been the very So it what really to is be we're nothing by engaged there. relates say that continue base customer would very with activity, very to as I global and we've that encouraged new again,

And we will market market so we a further expect think has has really it's that a nuclear alive. And come that legs. bolster that this

And have position we the so we're that have right happy to now.

Operator

Tom I Thank call would you. for time, closing At to like Logan turn to the comments. Mr. this back

Thomas Logan

we company. have very a this degree high us, is call, story stated in but the Well, our XX story, for time attention just by familiar me, we company. to leadership throughout our number this a firstly things. of top have We And my and We as let key to about particular, the over a years conclude of guiding our flow gentlemen, ability me today and fall. feel about that translating and as ladies to noted we results line thanking you that quarter posting dynamic. We feel into much as intake the third in are and show-me you deliver the and, how to that a for in we understand order look Today, and your good always, results confidence report out performance. of forward the the support we're of good margins market cash are very on

and then, attention, very look to And of the we'll next time for so your call. an I much until you again, wish of thank enjoyment and last forward summer, you our all vestiges and

Operator

today's does Thank you. This teleconference. conclude

this time, for lines thank your a your at great and day. may and have You you disconnect participation,

Mirion (MIR) 2 Aug 232023 Q2 Earnings call transcript