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Mirion Technologies Inc (MIR) (Q1 2024) Earnings Call Transcript Highlights: Solid Start with ...

GuruFocus Research
·4-min read

  • Total Company Revenue: Increased by 5.8%.

  • Organic Revenue Growth: 5.5% for the quarter.

  • Adjusted EBITDA: Grew 7.9% to $39.5 million.

  • EBITDA Margin: Expanded by 40 basis points to 20.5%.

  • Medical Segment Revenue: Grew 0.6% on both reported and organic basis.

  • Medical Adjusted EBITDA Margin: 30.7%, generally flat compared to last year.

  • Technologies Segment Revenue: Increased by 8.7%, with organic growth of 8.4%.

  • Technologies Adjusted EBITDA: $33.1 million, up 16.1% from last year.

  • Technologies EBITDA Margin: Expanded by 170 basis points to 26.3%.

  • Adjusted Free Cash Flow: Negative $4.5 million for Q1.

  • 2024 Financial Guidance: Reaffirmed, with organic revenue growth of 4% to 6% and adjusted EBITDA of $193 million to $203 million.

  • Adjusted EPS Guidance: $0.37 to $0.42 for the year.

Release Date: May 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Mirion Technologies Inc reported a solid start to 2024 with total company organic revenue growth of 5.5% in Q1, aligning with expectations.

  • The company's technologies business led with an 8% organic growth, contributing significantly to the overall performance.

  • Adjusted EBITDA grew by 8% year-over-year, reaching nearly $40 million for the quarter, with a 40 basis point expansion in adjusted EBITDA margin.

  • Mirion Technologies Inc successfully commercialized their instant dose view technology, indicating strong customer interest and potential market leadership in occupational dosimetry.

  • The company reaffirmed its 2024 financial guidance, projecting organic revenue growth of 4% to 6% and adjusted EBITDA of $193 million to $203 million, reflecting confidence in continued strong performance.

Negative Points

  • Order growth was relatively flat in Q1, attributed to the strong performance in the previous year and seasonal variations.

  • The medical segment experienced only a 0.6% growth on both a reported and organic basis, impacted negatively by about $4 million due to ERP system implementation issues.

  • Adjusted free cash flow was negative $4.5 million in Q1, with net working capital being a burn for the quarter.

  • There are ongoing challenges in the French business segment, requiring continued strategic focus and improvement to enhance organic growth margins and capital efficiency.

  • The company anticipates Q2 margin pressure in the technologies segment primarily due to product mix and ongoing investments in supply chain and procurement.

Q & A Highlights

Q: Can you discuss the current state and future expectations for utility-scale nuclear power builds in the US? A: Thomas Logan, CEO, noted caution in the US regarding new utility-scale builds. He emphasized the focus on life extensions for existing plants and the growing momentum around Small Modular Reactors (SMRs), driven by increasing energy demands and decarbonization goals. Logan highlighted that strategic partnerships are becoming crucial in accommodating expected industry growth.

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Q: How is the backlog distributed across segments, and what portion do you expect to recognize this year? A: Brian Schopfer, CFO, explained that while quarter-to-quarter backlog dynamics can vary due to the timing of larger projects, approximately 45% to 50% of the next 12 months' revenue is already in the backlog. He expressed confidence in the positive sentiment across the business and the ongoing customer engagements.

Q: Could you provide more details on the challenges and improvements in the French business segment? A: Brian Schopfer acknowledged significant progress in the French segment during Q1, with plans for continued engagement and improvement. Thomas Logan added that adjustments were made to better align with demand patterns, particularly from major customers like EDF, which faced challenges last year.

Q: What are your expectations for orders and backlog growth this year, especially with potential new nuclear builds? A: Brian Schopfer conveyed a cautious but optimistic outlook, suggesting that if certain projects in the pipeline materialize as expected, there could be an increase in backlog by year-end. However, he emphasized the unpredictable nature of project timing in the nuclear industry.

Q: Can you elaborate on the factors driving the 17% order growth in nuclear medicine this quarter? A: Thomas Logan highlighted the rapid growth in the nuclear medicine space, particularly in radioligand therapy for cancer treatment. He credited the growth to Mirion's strong market position and recent acquisitions that enhance their data management and workflow solutions, expecting continued robust growth in this segment.

Q: What is the expected impact of SMRs on your order profile in the coming years? A: Thomas Logan predicted a material but not significant impact from SMRs on Mirion's order profile over the planning horizon. He noted the increasing viability of SMRs and the company's engagement in significant discussions within the industry, reflecting a positive outlook for this technology.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.