Mirion Technologies Stock

Greetings. Welcome to the Mirion Technologies Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Eric Linn, Treasurer and Head of Investor Relations. Thank you. Eric, you may begin.

Thank you, Liz, and good morning, everyone. Welcome to Mirion's Second Quarter 2026 Earnings Conference Call. Joining me this morning are Mirion's Founder, Chairman and CEO, Tom Logan; and Mirion's CFO and Medical Group President, Brian Schopfer.

Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements, and actual results may differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in our annual reports on Form 10-K, quarterly reports on Form 10-Q and in Mirion's other SEC filings under the caption Risk Factors. Quarterly references within today's discussion are related to the second quarter ended June 30, 2026, unless otherwise noted.

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

With that, let me now turn the call over to Tom, who will begin on Panel 3.

Eric, thank you, and good day to everyone joining on the call today. Yesterday, after market closed, we issued our second quarter results. Once again, we demonstrated growing orders and backlog, including key large opportunity order wins. This double-digit order growth is fueling continued backlog expansion as the nuclear power momentum continues to take hold.

We also demonstrated expanding adjusted EBITDA margins from both operating segments and across the total enterprise. Better mix and pricing helped to more than offset the dilutive impacts from M&A and broader inflation headwinds. All of this is setting the stage for a strong second half 2026 acceleration.

We are maintaining our 2026 full year guidance, which implies a meaningful step-up in financial performance for the remainder of the year. Brian will walk you through the details, including expectations for the third quarter and the second half.

We continue to believe that the momentum in nuclear power is building. Nowhere is this more evident than right here in North America. As I've said on prior calls, the nuclear super trend continues to broaden, and this quarter's headlines highlighted on Panel 4 make that abundantly clear.

Here in the U.S., regulatory and policy improvements are supporting momentum within nuclear power. The NRC has proposed updates designed to streamline the licensing process, eliminating unnecessary burdens and increasing regulatory clarity while importantly maintaining safety standards. Pair that with the Department of Energy's $17.5 billion loan program to support new reactor builds, and you can see both the financing and regulatory gateways beginning to open up simultaneously.

We're also encouraged by execution, not just policy. The DOE's Reactor Pilot Program achieved criticality across 4 advanced reactor designs, outperforming its own target of 3 by the July 4 deadline. That's a tangible example that small modular reactor designs are progressing. Importantly, Mirion, Paragon and Certrec were squarely in the mix on each of these advanced reactor designs.

On the demand side, new power deals continue to materialize. Constellation and Walmart announced a new nuclear power agreement, Walmart's first, and amongst the first between a large retailer and a nuclear facility in this country. Additionally, New York State and Canada are advancing their nuclear plans to add additional capacity. Moreover, just last week, the U.S. announced a deal with Saudi Arabia to supply new-new reactors and nuclear technology, creating another avenue of incremental nuclear demand. Each of these examples in just the past few months showcase the well-timed acquisitions of Paragon and Certrec to leverage their market-leading positions within North America.

Looking beyond North America on Panel 5, fresh data from the World Nuclear Association reinforces what we're already seeing take hold: a generational build-out of global nuclear capacity. Today, the world operates at approximately 400 gigawatts of nuclear capacity. Latest projections forecast a tripling of total global capacity by 2050 to nearly 1.5 terawatts. This is a 45% increase compared to projections a decade ago. Even excluding growth from China and Russia, global capacity still grows at a staggering 2x.

Each projection on this panel points in the same direction: increased demand for Mirion s solutions and an expanding installed base that provides recurring demand for decades to come. Recall, approximately 80% of our nuclear power-based revenue comes from today's installed base and is the source of considerable recurring and repeat revenue.

Panel 6 focuses on the near to medium term. Reactors operating today are providing foundational demand growth. At a high level, we're seeing 3 waves of installed base nuclear customer demand.

The first wave is catch-up capital spending. Decades of capital rationing across the operating fleet left operators with a backlog of deferred maintenance and required replacement parts. Add in the funnel of plant restarts we've talked about, and you get an outsized near-term call on commercial-grade dedication, reverse engineering and spare parts out of our PeAks platform.

The second wave is life extensions and extended power upgrades. Once an operator makes the decision to life extend, they have greater visibility to operate for another 10 to 20 years. This triggers upgrade decisions to instrumentation and controls and broader plant ecosystems.

The third wave is emerging, but it's coming: digital transformation. The nuclear workforce is aging out and with it goes decades of tribal knowledge. Replacing these workers are digital natives, increasingly looking toward digital platforms to capture and scale that expertise. Additionally, digital platforms are providing the firepower to optimize outages and assist operators in improving thermal efficiency.

We're already seeing these factors drive order growth as illustrated on Panel 7. Second quarter 2026 backlog totals over $1.1 billion. This is nearly 40% higher versus a year ago. Legacy backlog, excluding backlog additions from the Paragon and Certrec deals, has grown by 17%.

Let's drill into this legacy backlog number a bit to illustrate my broader point about growing nuclear power demand. This subset of the backlog has seen incredible growth, up 31% versus 17% for total legacy Mirion. If you isolate the legacy Mirion installed base, it's even more impressive, up nearly 40% versus Q2 '25.

Panel 8 addresses investor questions on the second half revenue visibility. We continue to have good line of sight to our full year revenue expectations. Between first half actual results and backlog expected to convert to revenue in the second half, approximately 81% of our expected full year revenue is accounted for. Importantly, this 81% shows comparable revenue coverage to prior years. This gives us the confidence to maintain full year revenue expectations. Additionally, Paragon's PeAks business adds a new revenue stream for us that does not appear in backlog. Instead, this revenue is booked in-quarter.

Before I turn it over to Brian to detail the quarter, allow me to spend a minute on AI, shown on Panel 9. This is where an increasing amount of my time is spent today, thinking strategically and guiding our business to harness the incredible potential from artificial intelligence.

We're investing to create early adopter advantage by embedding AI into how we develop products, how we serve customers and how we run our operations. We've organized our AI strategy across 3 distinct pillars with dedicated resources committed to accelerating adoption and deployment across the company.

The first pillar is accelerating product development. AI is fundamentally changing our software development cycles and compressing time to market. Specifically, we're improving data analytics, accelerating real-time feedback loops and improving testing and compliance workflows that would have taken our engineering teams months to execute manually. The ability to move faster while maintaining and, in fact, improving the rigor of our compliance processes, is a genuine game changer.

The second pillar is organization-wide efficiencies. AI is becoming an important tool in this effort, from automating back-office processes like document review to test plan development. We're still in the early innings here, but the trajectory is encouraging, and the internal adoption is gaining traction.

The third pillar, the one I'm most excited about, is AI-powered solutions. We're developing new AI-centric innovations across both segments. And importantly, we are increasingly focused on connecting our hardware devices, think instruments that sit in nuclear power plants and cancer treatment centers around the world to software and data platforms that drive measurable productivity improvements for our customers.

In fact, last week at the AAPM annual meeting in Vancouver, we highlighted our new Plan AI dosimetry platform, which enables dosimetrists to deliver higher-quality patient-specific plans faster. In our RTQA business, we also highlighted our new Daily QA 4 Pro, which consolidates dosimetry and imaging checks into a single indexed imageable solution. reducing room entries, minimizing setup time and standardizing execution across users. Importantly, it is integrated into our existing SunCHECK platform, so physics team can spend less time on logistics and more time on patient care.

Let me turn it over now to Brian to walk through the financials. Brian?

Thank you, Tom, and good morning, everyone. I'll continue the prepared remarks on Slide 10, outlining our financial performance.

Second quarter total revenue was $267 million, an increase of 20% versus last year's second quarter. Organic revenue growth was 1%, in line with our expectations and aligned with what we communicated in April.

Second quarter adjusted EBITDA was $65 million or 27.5% higher than last year. Margins expanded 150 basis points in the quarter, driven by favorable product mix and price across both segments. Excluding the impacts of M&A and a onetime tariff refund, margins would have expanded over 200 basis points. We've received approximately $1 million in tariff refunds to date.

Based on how the stock has traded, we used approximately $25 million of our $100 million share repurchase program in the second quarter to opportunistically buy back approximately 1.4 million shares. This brings our total share buybacks for the year to approximately $40 million, with $40 million still remaining under the program.

We generated $49 million of adjusted free cash flow in the quarter, reflecting higher adjusted EBITDA and a source of cash from net working capital as well as continued tailwinds from our refinancing activities last year.

Lastly, as Tom outlined, orders in the second quarter were strong, up 10% versus last year's second quarter. Once again, nuclear power led the way among our end markets.

Slide 11 details the continued progress against our large opportunity pipeline. In the second quarter, we won a number of opportunities, including the previously disclosed large SMR order at Paragon, the second part of another SMR order and another portion of the radioactive waste handling order within our defense and diversified end market.

Although slightly later than we had expected, we've continued to see good momentum as we turn the page to July, where in the first 2 weeks, we were awarded more than $50 million of large orders, including a large European installed base order and a U.S. Department of Energy order.

Separately, in July, we also unexpectedly experienced a cancellation for a Chinese new build order that was originally booked in 2019. The sites that this project are associated with have seen little progress, and these projects were stalled due to geopolitical tensions that started shortly after they were signed. Normally, with Chinese new builds, we see a much shorter order-to-build cycle.

It is important to note that this project has no impact to our 2026 guidance and an immaterial impact on any of our long-range guides that we have given. In total, our July awards bring our year-to-date performance to approximately $160 million with approximately $280 million of opportunity still available to us.

Slide 12 has the Q2 order book details versus Q2 of last year. Before M&A, core orders grew 10%. Total orders, including a $62 million contribution for Paragon and Certrec, grew 40% in the quarter to $291 million. Nuclear & Safety order growth was driven by the robust growth we saw in the nuclear power end market of approximately 50%, excluding M&A, with half of the dollar growth coming from the operating fleet and the remainder coming from SMRs. The growth within nuclear power was partially offset by declines in labs and research and defense and diversified.

Q2 medical orders declined slightly from last year. Recall, we had a tough comp as we prioritized Asia orders to minimize tariff exposure. Dosimetry orders declined due to a tough euro-based order comp, while nuclear medicine remained flat.

Slide 13 details Q2 order performance versus Q1 this year. Recall, last quarter, we guided 15% to 20% sequential order growth. If we include the 2 large orders that were awarded in early July, net of the Chinese cancellation, orders grew 14%, slightly below this range. Without the China cancellation, we would have been at the high end of the range.

Before digging into the quarterly financial results, first, an update on the nuclear power end market on Slide 14. Nuclear power orders, excluding M&A, grew 50% in the second quarter, with both the operating fleet and SMRs being key drivers. We booked $49 million of SMR orders, inclusive of the 2 large opportunities previously detailed. This is up $42 million over last year, illustrating the continued momentum within the space as well as Paragon's contribution. Overall, nuclear power revenue was flat organically with increases in the installed base and SMRs offset by a decline in new build revenue. We remain confident that nuclear power will see double-digit organic revenue growth for the full year.

Let's get into the quarterly financials beginning on Slide 15. Consolidated second quarter revenue grew 19.7% to $266.8 million. Approximately 18% of the 19.7% growth was attributed to acquisitions, mainly Paragon. Organic revenue growth of 1% was in line with our April guidance.

Second quarter adjusted EBITDA was $65 million or 27.5% better than last year's second quarter. Adjusted EBITDA margins expanded across both segments with favorable contribution from product mix and pricing.

Adjusted EPS totaled $0.12 per share in the quarter. As a reminder, in 2026, we are now including stock-based compensation in our adjusted EPS calculation. Last year's adjusted EPS would have been $0.09 per share using a similar methodology to the one put in place for 2026. We have an adjusted EPS reconciliation slide in the appendix that has the details for your modeling.

Turning to the Nuclear & Safety segment on Slide 16. Second quarter revenue was $186 million, up 31%. Organic revenue was 2.3%, in line with our April guidance. We continue to be pleased with Paragon's financial performance with 15% revenue growth for the quarter and 27% growth year-to-date, highlighting the heightened demand for their products and services.

Under Mirion's ownership, we have continued to see Paragon's adjusted EBITDA margins expand. We expect this trend to continue as we identify and capture further areas of integration and synergy.

As previously mentioned, nuclear power end market revenue growth was flat as growth in the installed base and SMRs was offset by less new build revenue in the period. New build revenue can be lumpy based on project timing.

Adjusted EBITDA grew 35% to $51 million. Margins expanded approximately 70 basis points, reflecting the impacts of favorable product mix in Europe, good cost control across the business and a modest tariff refund here in the U.S. This was partially offset by dilution from the Paragon acquisition.

On to the Medical segment on Slide 17. First quarter revenue was $81 million, down 1%. Organic revenue declined 1%, driven by the nuclear medicine and dosimetry end markets. This is below our previously disclosed April expectations of low single-digit organic growth.

RTQA revenue continues to grow, driven by the OEM sector performance and our growing software business. We previously mentioned in April that in the second quarter of last year, we shipped a large quantity of products into Asia before tariffs went into effect. Excluding this tariff comp headwind, organic RTQA revenue would have grown mid-single digits.

In nuclear medicine, organic revenue declined due to delayed hardware demand. We do expect to see a pickup in the back half of the year in this business. Encouragingly, our nuclear medicine software business generated a strong double-digit order growth in the first half.

Lastly, the dosimetry services end market also had negative organic growth. The large hardware order from last year continues to be a difficult comp and will be in the back half of the year as well. Importantly, excluding this, our core dosimetry services organic revenue grew mid-single digits in Q2.

Medical segment Q2 adjusted EBITDA was $31 million or 3% better than last year. Despite lower revenue, margins expanded in the quarter, reflecting price tailwinds, favorable product mix and software revenue. We saw limited tariff refunds in this segment.

Turning to Slide 18. I want to give an update on our end market expectations within Medical while reiterating our full year segment guidance. Within RTQA, we are raising our outlook to double-digit organic growth for the year, up from our prior mid-single-digit plus guide, reflecting OEM sector dynamics and continued strong performance from our software offerings.

In nuclear medicine, we are lowering our full year guide to mid-single digits, down from our prior double-digit guide, driven by the reduced hardware volume from delayed customer demand. At this point, we see this as a delay, not a decline in demand.

In dosimetry, we now expect organic revenue to be negative for the year, down from our prior flat guide, driven by less hardware revenue. Note, we're also lapping the tough comp from hardware sales in 2025.

We continue to expect total service revenue growth to be low single digits plus, in line with historical guidance. These puts and takes largely offset, and we are maintaining our full year Medical segment guidance.

Turning to adjusted free cash flow on Slide 19. We generated $49 million of adjusted free cash flow in Q2 to end the first half of 2026 with $60 million of adjusted free cash flow. This improvement represents our best first half adjusted free cash flow since going public and is driven by good control of our net working capital with continued improving metrics, lower cash taxes and improvements to our capital structure.

Turning to Slide 20. Our full year 2026 guidance is unchanged from April. Based on what we discussed earlier around our backlog coverage, Slide 21 shows that we're expecting to see an uptick in the second half of the year. On organic revenue growth, the first half came in at 2%, held back by difficult comparables from last year's tariff-related pull-forward on the medical side and a difficult Q1 '25 nuclear power comp.

We expect organic revenue to step up meaningfully in the back half to between 7.5% and 11.2%, driven by the nuclear power end market within Nuclear & Safety and the RTQA end market within Medical.

On margins, first half adjusted EBITDA margins came in at 22.8%, down 23 basis points year-over-year on dilutive M&A and mix impacts from Q1 '26. As is seasonally normal, we expect to see acceleration on margins in the second half of the year, with margin rates expected to be between roughly 27% and 29%, up roughly 150 basis points versus last year as operating leverage kicks in.

Second half adjusted free cash flow is forecasted at $95 million to $115 million, with Q1 having been our lightest quarter and Q4 will be our largest cash generation quarter. At this point, we're trending towards the high end of the range.

Altogether, accelerating organic growth and expanding margins, coupled with strong backlog are why we remain confident in our full year guidance despite a slower first half.

Before we open the call to Q&A, let's spend some time discussing the third quarter guidance on Slide 22. Consolidated third quarter organic revenue growth is expected to be in the high single digits. Nuclear & Safety is expected to be mid-single digits, while we anticipate high single-digit growth in Medical. Consolidated adjusted EBITDA margins are expected to expand compared to last year.

Nuclear & Safety segment adjusted EBITDA margins should contract, reflecting the impacts of the dilution from Paragon, comping a reduction in incentive compensation from 2025 and the mix shift impact of anticipated higher new build revenue in the quarter. As a reminder, new build projects typically have a slightly lower margin than the installed base.

Medical segment adjusted EBITDA margins are expected to expand due to the impact of operating leverage from increasing revenue growth versus the first half of the year.

With that, we're happy to take your questions.

[Operator Instructions] Our first question is from James West from Melius Research.

So curious about what you guys talked about as your large opportunity pipeline. There's a significant amount of potential out there that you've discussed. A lot of it is still available, as you noted in your slide deck and in your comments in this year, but also as we go into '27. And I wonder just if you could characterize a bit for us how much of that potential, I guess, is kind of yours to lose, if you will, or follow-on contracts. I mean how much is that definitely coming to Mirion? How much is kind of up for grabs for others? Just kind of -- just curious, if you have some kind of view on how much we should be thinking about that translating to Mirion.

Yes, James, I'll start and then Brian can add additional color. But the way we look at it is that we've got a right to win on all of this stuff. So the screening methodology that we use here, just again, to provide this color, this broader visibility is that these are opportunities that are greater than $10 million in scope where we think, again, our probability of winning is likely to be greater than 50%, meaning that, again, we feel like we've got a right to win.

I think if we look at the opportunities that actually traded in the last quarter, I believe we won all of them. I don't think we lost anything that actually transacted over that period of time. And so we remain optimistic about our ability to continue that track record. In our view, the -- in general, the biggest risk is timing risk, where, depending on the nature of the project, the sector that it's in, et cetera, they can have a tendency to move to the right.

But I'd also note that this is a replenishing opportunity set that continues to build overall. So we feel very good about it in aggregate.

Right. Okay. That makes perfect sense. And then maybe just a little bit unrelated follow-up though. When I was with you earlier, when we were traveling earlier this year, we talked about the kind of the M&A outlook, and you were very clear that you had a pipeline, and it was strong. And I wonder -- just curious if that has any change there? Or should we be expecting announcements? What's happening with the kind of the target list?

Yes. I would characterize our M&A pipeline as one of continued strength. There are a lot of really interesting assets in the market that we view as being highly complementary strategically to our business model. And this -- M&A, to be clear, has always been an important part of our strategy. We've done roughly 20 deals over the last decade. And our expectation is that we're going to continue to be active in this realm.

Our next question is from Joe Ritchie with Goldman Sachs.

So you guys provided a bunch of good color on like the confidence you have in the guide, going into the rest of the year. I guess maybe just -- if you're just thinking about the Nuclear & Safety segment, I think the implied guidance implies at least like mid-teens type organic growth in the fourth quarter. I just want to just get a sense for how much of that is already in backlog? And then maybe just provide a little bit more color on that ramp between now and the end of the year.

Yes. I think you're -- I mean, this is why we kind of gave a pretty implicit Q3 guide and because you can now squeeze it to the fourth quarter. I think your math is right. I think we put the visibility out there kind of for the rest of the year, we put it in totality. So 81%. So we're sitting kind of exactly where we sat at this point in every other quarter coming out of Q2.

And a reminder, when we look backwards, we're talking about where we actually landed from a revenue perspective over what we thought would trade from a backlog perspective. So it's a pretty apples-to-apples comparison.

So look, we put out the guide. We feel very good about where we are. We have good visibility to the back end of the year. There's clearly some wood to chop both on the execution side, and we still have orders to win. I think the orders that we won in early July also help us along the way.

So we continue to feel good about where we sit, Joe. And we recognize that that's -- a mid-teens guide for the fourth quarter is big. But I would also tell you the comps for us more broadly in the back half of the year are smaller than what we saw kind of in the first half of the year, and I think that gives us a tailwind there, too.

Yes. That's helpful, Brian. Maybe just a broader question for Tom. Just talking about that China debooking, I know it was only $18 million, but it was for contracts that went all the way back to 2019. Can you just kind of maybe just talk about like how you guys think about the backlog that you have today like whether there's any potential risk from like some of these legacy contracts, why now to debook that specific contract this quarter?

Yes. Joe, we continuously scrutinize our backlog and as you're aware, the history of debooking events for us is exceedingly rare. These are very unusual events and typically tied to some broader issue. Shortly after we went public, we had debooking of a Finnish order that was tied to the Ukraine conflict. We had a debooking in Turkey a couple of years later that was related to, what I would call -- characterize as a localized contractual dispute. And then this one came candidly a bit out of the blue. To be clear, when you look at the contractual provisions, there is not an exit provision and obviously we will have extensive discussions and negotiations in and around this.

But having said all of that, this was a contract that essentially was undergirded by a project that was making very little progress. It is a contract that was booked many years ago and has candidly been impacted by some of the changed trading dynamics specifically between the U.S. and China. So looking beyond that, when we look at our backlog quality, our view is it continues to be very high. We don't see any level of elevated risk. We don't see this as being some kind of trigger event that where there are others that fall behind us and again remain confident in the dry powder that we have there overall.

The other thing I would note, you didn't ask this, Joe, but just to note it. When we look at the Chinese market overall, recognize that today if you look at our position in the installed base, we have a meaningful position in 50 out of 60 operating Chinese reactors. And this is an experiential track record that candidly even predates Mirion. It goes back about 30 years. We've been a long-standing fixture in this market. But we've also been very clear that over time over those decades, we have seen a declining wallet share overall in the Chinese market driven by factors that are familiar in every industry.

But importantly, where we stand today, we continue to see a -- what I would characterize as a robust and predictable spare parts market there, again recognizing that position in 50 reactors in China. But if you look back over the last 5 years, it's been averaging about $8 million a year and we have confidence that that will continue. Moreover, when we look at new build dynamics, there are 2 primary streams and I'd argue a third stream of lesser importance in Chinese new build activity. The primary focus now is on an indigenous reactor type called the Hualong reactor where essentially we are locked out. We have no content in that.

The planned feature of the Hualong is that it is a 100% indigenous locally produced Chinese reactor. But to be clear, there continue to be export opportunities in China through derivatives of the Westinghouse AP1000 technology, the Framatome EPR technology and the Rosatom VVER opportunity. And we expect that we're going to continue to have [ BATs ] there and that will continue over our planning horizon. Final thing I'd say about China too is that right now we are very active in 3 advanced reactor applications in China.

China is very active in the SMR market overall and doing some really interesting things with advanced reactor technology and that continues to be an opportunity for us overall. So this debooking was disappointing. There'll be more to the story that will play out over the next few months. But we don't view it as auguring some broader set of issues for us.

Our next question is from Quinn Fredrickson with Baird.

Just building on that last question on SMRs. You clearly have some momentum here based on these large orders and then expecting to move from 2% of revenue to 3% through this year. I think 2030 has been speculated as the time frame when SMRs become more commercially deployed. But just based on that order momentum and the visibility you have today, should we think about the portion of your revenue from SMRs scaling further in '27?

What I would say, Quinn, is that the continuing theme here is that while historically, we have been very cautious about expressing confidence in the SMR timeline overall, the reality continues to move to the left. We are seeing a stronger and stronger opportunity flow in this sector. Our positioning here is somewhat unique when you look at the breadth of our capabilities that are relevant to these players overall. And so our view is that the growth dynamic, without putting specifics on guidance here, but our view is that the growth opportunity here is considerable and the momentum is continuing to build.

So we are increasingly bullish on the sector. We are increasingly bullish on our positioning, our right to win, if you will. And while I'm not necessarily going to call them all now, I do expect this is going to continue to grow at a rate faster than our overall organic growth rate for the rational planning horizon.

And then for my follow-up on Nuclear Medicine. Can you just elaborate on what caused the reduced hardware volume and delayed demand during the quarter and then unpack what gives you confidence in the pickup in the back half that you mentioned?

Yes. I think we've just seen a bit of a pause I think in the first half. I think we're waiting to see some more momentum in the drug pipeline. The team continues to be very bullish about the second half just on what we saw kind of coming out of June. Our Nuclear Medicine software business saw very strong order growth in the first half of the year. I think I talked about double digits and it was strong double digits for what it's worth. We've spent a lot of time in that factory. If you remember, we did an ERP implementation there.

We've consolidated some factories there. That factory is absolutely working better today than it has been so lead times have come down dramatically. So our ability to kind of book and ship in that business in a quarter -- in 2 quarters has dramatically increased. So I think all those dynamics are at play here. And so this is one we continue to watch, this is one we continue to be optimistic about as we come through the back end of the year into '27.

Our next question is from Andy Kaplowitz with Citigroup.

Tom, I just wanted to sort of ask Joe's question in a slightly different way. Nuclear power order growth of 47% ex M&A. But as you know, nuclear power revenue is still -- was still flattish in Q2. So why has the disconnect between the 2 lasted so long here? And if I think about what's ramping up in Q3, I know you said you're starting to lap much easier comparisons in new nuclear. So is it that simple or is there maybe a higher degree of SMR as well as installed base projects that's ramping up too and have you seen any inflection so far here in July?

Yes. So I mean, look, in order to hit the back end numbers, I mean, I think we're expecting a step-up kind of in all 3 pieces of the nuclear power business; SMR, new build and MPP. And just as a reminder, I mean MPP is 80% of our nuclear power revenue. Obviously to hit the back end of the numbers, we need to see that business work. And I think I put some comments in my script, Andy, that the nuclear power growth was very good and it was half on a dollars basis out of the installed base and half out of the SMR space, which you can see much of the SMR stuff came via the large orders. So I think that continues to give us confidence that that business is poised to be able to deliver in the back half of the year.

And again, like Joe asked specifically about Q4, but more broadly, we're sitting at a coverage base that at the midpoint of our guide is the same as where we sat every year basically for the last couple of years. I would tell you if you added the peak's revenue, that gives you another incremental percentage point of coverage for what it's worth on the back end plus the wins we saw in early July although it won't be a lot of revenue that kind of comes through the P&L, that continues to bolster our coverage dynamics. So hopefully, that's a little bit more color that kind of helps give you confidence.

Very helpful. And then, Tom, maybe just big picture. I think over the last couple of quarters, there's been a little bit more fear in the market that the proliferation of, let's call it, short cycle power supply will somehow impact the nuclear cycle. So maybe you talk to a lot of customers, what are you hearing? Are customers at all disturbed about that? What do you think your customers' confidence level is that when they get to finish line on these longer cycle nuclear projects that there'll be enough out there for them, just your opinion?

Yes. I think from a contextual standpoint, Andy, I think there's a broader belief that may be a little bit erroneous that we are fundamentally locked into the data center build-out cycle. And while clearly, new data centers is the biggest call on incremental energy demands in both regulated and deregulated markets overall, we see it as being a bit more binary. And by that, what I mean is that again take a point historically, 5 years ago, more pointedly, 10 years ago when the operators of nuclear power plants were really struggling economically and as a result, were in extreme capital rationing modes really trying to ratchet down on OpEx, et cetera. Today, it's a vastly different picture.

And even if the rate of data center builds slows dramatically, effectively they've made a binary decision that I want to extend the life of my asset base by another 20 years and that's the big trigger for us. Once that decision is made, it drives an intended requirement to invest in numerous systems and subsystems that, in many cases, have replacement cycles of a decade, in some cases, even 2 decades overall.

So firstly, the generalized fear about both supply side and demand side dynamics when you look at the nuclear base, I think have less impact on us overall again because the key decisions are I want to extend the life of my power plant and in the wake of that, I want to operate the capacity. Remembering that 80% of our revenue comes from the global installed base. I think that's the most important foundational belief, foundational understanding that people need to have when they think about our business.

At the margin, more data centers clearly means more incremental generating capacity with probably the small modular reactor market experiencing the greatest alpha as it relates to that overall. But to us, we view that as upside. We view that as optionality and a good deal less important than the growth arc of that installed base.

Our next question is from Chris Moore with CJS Securities.

Maybe talk a little bit about margins. So obviously the Paragon acquisition looks to -- continues to be really attractive. Just wondering if it makes the 30% EBITDA target for '28 a little more challenging just for context. I mean '25 margin is 24.6%. I think midpoint of this year guide is 25.6%, 100 basis point increase. Consensus for next year is 27.1% so it's about 150 basis point increase. So either there needs to be a 300 basis point spike from '27 to '28 or the '27 estimates are too low. So I guess the question really is am I looking at that correctly? And what are the puts and takes in terms of the EBITDA margin increase to be incrementally much more in '27 versus '26 and perhaps again in '28?

Yes. So Chris, just to begin at a high level and talk about the major building blocks that walk us up that essentially that 4.5 points of go get, if you take the midpoint of the guide on year-end '26 EBITDA margins in that 25.5 point range overall. As we've talked about extensively in the past, the biggest building block for us is operating leverage. We have a high degree of operating leverage given the fixed versus variable cost spread that we have. And what that means at the margin is that our contribution margins are higher than our gross margins.

And if we can maintain discipline on our factory overhead and our SG&A growth, then we'll see a greater component of fall-through. And if you sketch that forward, we would anticipate that half or more of that go get simply comes from operating leverage as the top line continues to grow. The second major component for us is procurement. We've made meaningful gains in our procurement efficiency and the associated cost dynamics over the last 2 years.

We still have a strong queue of kind of in-stream opportunities that really reflect kind of a multiyear prosecution of a more optimized state in our supply chain. And our view is that that's another 1 points to 2 points of margin over this period of time just based on what we have line of sight to today and again what is in our queue. The final piece of it really is kind of the self-help stuff beyond procurement. It is the application of our business system, which now is further enabled by what we're doing with AI for internal productivity. And here, it's many, many different things.

It's improving our conversion efficiency. It's improving sales and operational planning. It's continued optimization of our factory footprint recognizing that we in general have more capacity than we need. It's improvement of all the administrative SG&A-related workflows, et cetera, et cetera. And to that end, again if you were to look -- if you had a glimpse of our hierarchy of priorities, again we have confidence that there is a significant queue of opportunities.

But a footnote to all of that is that in the quarter, we took a reserve for some organizational restructuring that is in stream right now that essentially is driven by an opportunity for us in the near term here to continue to evolve and improve the efficiency of our organization as we look at spends in layers, other dynamics that is going to add more of a near-term benefit on the margin radar as we look ahead to '27 overall. So we're still holding to a 30-point target to be clear, it's an audacious target. It's one that we are very motivated to achieve. And notwithstanding the dilutive impacts of some of the M&A deals that we've done, we're eyes open about it.

Got it. Very helpful. Maybe just a quick follow-up on you talked quite a bit about on the AI side. Just wondering is there a significant amount of spend at this point in time on the AI or is there much anticipated to get to where you need to go?

For us right now, as we continue to build our AI capabilities organizationally and here, it's a combination of data infrastructure and building out the engineering capabilities. And then on top of that, it's token spend overall as a company. Right now our spend rate, and this is from a cash standpoint, most of this is OpEx, some of this CapEx is running about $5 million and it's a number that is growing. And obviously a number that we're mindful of when we think about margin dynamics overall. No, it's not an outrageous number, but it is a material number.

Our next question is from Jeff Grampp with Northland Capital Markets.

Just to touch on the '27 pipeline, large opportunity pipeline I think you guys noted in the slide that that's building or growing. I'm just curious today versus this time last year now that we kind of know how the '26 pipeline shook out, like any observations, compare/contrast or themes worth noting at this point understanding it's still a bit early to know anything too definitively?

Yes. Jeff, I think the biggest delta just thematically between today and a year ago is the SMR opportunity set, which again as I noted, we are seeing a lot of tangible engagement here. And the opportunity set related to new build activity in the SMR arena continues to build. But on top of that, we do see meaningful gigawatt scale opportunities and then an assortment of other opportunities relating to federal government work and global analogs for that, that is broadly in line with what we saw a year ago. So the biggest delta would be on the new build front and most pointedly in the SMR area.

Great. I appreciate those details. And my follow-up more near term on the Q3 commentary you guys had. So Nuclear & Safety, I think you were looking at mid-single-digit growth and then within that, power specifically double digits. So I guess implying some of the other contributing factors are a bit slower or lower. Is that isolated to Q3 or can you just touch on those dynamics a bit for the other kind of revenue buildups within the Nuclear & Safety segment?

Yes. I mean I think you have the math right. I think we haven't changed a lot of our full year guides on the Nuclear & Safety side from an end market standpoint. So we continue to think labs and -- we continue to model at least and we'll see how it plays out. Labs and research will be flat for the year. The diversified business will kind of be mid-single digits-ish. And then the nuclear power business, as we commented, is double digits. Obviously the math stated earlier in the Q&A about the fourth quarter kind of teens number implies that the Nuclear & Safety business is a big piece of that. I don't really have anything other to add than that at this time.

Our next question is from Tomo Sano with JPMorgan.

So on July, net bookings were $37 million. Could you give us more color, major contributors? And should we think about this as run rate or timing related? If you could share more color into the second half, I appreciate it.

Yes. Just to clarify, the $37 million net is just the 2 large orders we won in the first 2 weeks of July and the Chinese cancellation that we've already talked about. That doesn't include anything broader from a sub-$10 million order scale or kind of the book-to-bill business.

Brian, if you could talk about some opportunities and momentum into your second half for large opportunity pipeline, I appreciate it.

Yes. I mean you can see it on the right side of that slide. We still largely have about 12 opportunities in queue, 8 we would classify in the new build so that's both utility scale and SMR. So you can see noted, we haven't done this before, but that represents about 15 reactors in there. So it's obviously not 1:1. So again, as Tom mentioned, we like our right to win on every one of those. The timing dynamic between Q3 and Q4, look, I got burned on that in the second quarter. So I'm not going to try to pin it again in the third quarter. But we continue to believe each and every one of these opportunities should and could trade this year and we'll see how that plays out.

Obviously, we continue to see a couple of things in the installed base of size. But I would tell you, there's less kind of $10 million-plus projects in the installed base on a size basis and then the DOE, I would say, represents kind of that last bucket. And we continue to see very good activity on the pipeline side out of the DOE and that's something we're watching on whether that kind of hits us here in '26 or maybe '27. Obviously we're watching the government shutdown dynamics closely too in Washington. So a lot happening. But we continue to believe there's a lot out there for us kind of on the larger scale stuff. And that flow of business continues to have good momentum.

And just one quick follow-up on the capital allocation. As you generate stronger free cash flow and target lower leverage, how are you thinking about the medium-term capital allocations? I think it's Tom, you mentioned about the AI investment and some of the opportunity M&A. And then, Brian, you talked about buybacks. Any update appreciated.

Yes. Tomo, if we did no M&A for the balance of the year looking at our operating plans and our capital spending plans, we'd end the year at about 2.5x leverage, somewhere in that range. Again, we've got a decent pipeline within that. These tend to be smaller-sized deals. So our first priority strategically as we think about capital allocation generally is M&A, but there will invariably be a net reduction in leverage over the course of the year and the degree to which that's impacted by M&A is TBD.

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Tom Logan for closing remarks.

Well, ladies and gentlemen, appreciate your time and attention today. Again, we're happy to report the second quarter performance. Obviously excited about the support that we have for Q3 and Q4 and look forward to reconnecting in 3 months to update our outlook at that point in time. Appreciate your time. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Mirion Technologies' First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Eric Linn, Treasurer and Head of Investor Relations. Thank you. You may begin.

Thank you, Maria. Good morning, and welcome to Mirion's First Quarter 2026 Earnings Conference Call. Joining me this morning are Mirion's Founder, Chairman and CEO, Tom Logan; and Mirion's CFO and Medical Group President, Brian Schopfer.

Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements, and actual results may differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are disclosed in our annual reports on Form 10-K, quarterly reports on Form 10-Q and in Mirion's other SEC filings under the caption Risk Factors.

Quarterly references within today's discussion are related to the first quarter ended March 31, 2026, unless otherwise noted. The comments made during this call will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of the presentation accompanying today's call. All earnings materials can be found in the Investor Relations section of our website at www.mirion.com.

With that, let me now turn the call over to Tom, who will begin on Panel 3.

Eric, thank you very much, and thanks to each of you for joining our first quarter earnings call.

We're off to a strong start in 2026 with significant first quarter order generation. Orders are a bellwether for our business, and they increased 19% in the first quarter to $241 million, excluding M&A-related growth. If we include M&A growth from Paragon and Certrec, orders increased 42% to $288 million. Order volume was notably diverse. Both segments saw meaningful growth, including our RTQA Medical business, which faced headwinds in 2025. This is translating into noticeable backlog expansion. Backlog now totals $1.1 billion, up 19%, excluding M&A or 38%, including M&A.

Our Nuclear Power end market within the Nuclear & Safety segment continues to lead the way. Nuclear Power orders and revenue growth were derived primarily from existing reactors running today and small modular reactors or SMRs. Paragon orders added another $43 million in the quarter. We continue to be impressed by the value created by the Paragon team. Given the nature of their solution set, they're truly the tip of the spear when it comes to momentum from the Nuclear Power installed base. The existing nuclear fleet is approaching middle age and reinvestment is critical to maintain and increase capacity through power upgrades.

We'll spend time this morning detailing progress on our large opportunity order pipeline, but let me tease the discussion by noting we secured $50 million of these large opportunity orders in Q1. Moreover, we won an additional $35 million in SMR-related orders in April. The rest of the pipeline remains intact, and we continue to have high conviction on our right to win.

The accelerating Nuclear Power demand we see is reflective of increasing market tailwinds. The momentum continues to compound and recent geopolitical events reinforce the need for onshore, secure baseload energy. A decade ago, operators were focused on accelerated plant shutdowns with extreme capital rationing impacting OpEx and CapEx budgets. Today, they are focused on 100-year operating cycles as well as plant modernization, both of which profoundly impact capital spending plans. We see this most immediately in Paragon and Certrec with a substantial follow-on opportunity for Mirion instrumentation and controls and digitally enabled radiation protection solutions.

Note that this dynamic is robust and not contingent upon future assumptions about AI-driven demand growth. The limiting factor on AI growth is available compute, which in turn is most profoundly constrained by energy availability. Further, note that greater than 80% of our Nuclear Power revenue accrues from the installed base. New nuclear projects represent upside with strong optionality tied to both SMR and utility scale development plans.

Panel 4 quantifies the impact of just a few recent notable Nuclear Power headlines, which reinforce the surge in global demand for Nuclear Power. First, in the U.S., the Department of Energy's UPRISE initiative aims to boost existing Nuclear Power capacity by 2.5 gigawatts by 2027 and 5 gigawatts by 2029. Power demand is so strained that the DOE and utilities are rapidly accelerating capital deployment to deliver more nuclear output at existing plants. This is part of the Trump administration's broader push to expand U.S. nuclear energy capacity from around 100 gigawatts today to 400 gigawatts by 2050. Additionally, the energy shock driven by recent geopolitical uncertainty has highlighted the risk of reliance on imported fossil fuels in many regions. This is sharpening the focus on energy security, onshoring and decarbonization.

Nuclear Power is increasingly viewed as a core solution across all 3 priorities, especially with countries whose energy needs are becoming strained by a changing world order. In aggregate, these 2 headlines alone will add an estimated 8 to 15 gigawatts of nuclear power generation. Of this added amount, approximately 3 to 5 gigawatts are incremental to the U.S. market, underscoring the importance of our U.S.-based Paragon and Certrec acquisitions. It's also worth noting that U.S. utilities have committed $1.4 trillion in planned capital expenditures through 2030, a 21% increase from projections made just 1 year ago. Companies like Duke Energy are projecting over $100 billion in their planned 5-year capital spend. NextEra is not far behind at approximately $94 billion. Each of these is an existing Mirion customer.

Panel 5 details Paragon's integration progress and first quarter financial contributions. Both the Paragon and Certrec acquisitions are positioning Mirion to address the U.S. market at exactly the right moment. We made these acquisitions before the full scope of the existing fleet capital cycle was broadly visible to the market.

The commercial synergy opportunities are coming into focus as utilities and the federal government are injecting capital into the operating reactor fleet. As a reminder, we have content in every single reactor within North America and approximately 98% of the global operating fleet. The synergy opportunities are significant. For example, Paragon's products and engineering capabilities will allow Mirion to expand our scope to better compete for power operate and digital modernization projects. Certrec' regulatory and workforce software is a compelling solution for today's labor-constrained environment. This addition gives Mirion a software and services revenue layer that compounds within our hardware footprint at every plant.

These combined offerings mean Mirion can now offer customers more integrated solutions that span laboratory instruments, safety and security systems, qualified equipment, radiation protection and regulatory and workforce software. No competitor in the U.S. nuclear market has that breadth. These acquisitions will deliver revenue synergies, customer access synergies and platform synergies at exactly the moment the market is asking for all three. We're already seeing this materializing in Paragon's financial performance.

Paragon's first quarter revenue grew 45%, reflecting a broad-based increase in demand. This accelerating revenue is improving our operating leverage and helping to expand margins. We spoke with you last quarter about the planned cadence of integration efforts. We're pleased to report that we have identified additional synergy opportunities. Legacy teams are collaborating closely and customers are eager to realize the benefits of a combined Mirion, Paragon and Certrec entity. We are prioritizing the customer experience with joint customer engagements across strategic accounts. These collaborations are already resulting in incremental order wins.

For example, we were able to utilize Paragon's existing relationships with key strategic customers to secure a significant order for legacy Mirion products. This is an early example of what will become normal operating procedure for our combined companies. All of these data points are resulting in tangible benefits for Mirion, and this is most evident in our backlog illustrated on Panel 6. Back-to-back strong Q4 and Q1 orders are creating a step change in our backlog. After 2 years of nominal backlog growth, the nuclear dynamic we've been discussing is translating into tangible opportunities for our company. We've consistently reminded investors that it can take several quarters or years for orders to convert into revenue. But clearly, the backlog is meaningfully expanding, which is the precursor to accelerated revenue growth ahead.

Before I turn it over to Brian, Panel 7 summarizes progress continuing across the Medical segment. Our RTQA end market, which accounts for approximately half of the segment's revenue enjoyed promising activity. Recall, in 2025, we experienced several headwinds, both domestically and abroad. Encouragingly, we are beginning to see strengthening hardware activity, while software activity continues to be a bright spot. In the U.S., we booked a sizable radiation tolerant camera order tied to the Varian partnership. This is an important relationship with the leading OEM in the industry. We look forward to supporting this relationship and other key accounts with the kind of new product innovation that helped to secure this important order.

In Nuclear Medicine, we remain on track for double-digit organic revenue growth in 2026. This will be our second consecutive year of double-digit organic Nuclear Medicine growth. Our market-leading position with key hardware offerings like dose calibrators and thyroid uptake systems makes us a critical supplier to the growing radiopharma ecosystem. In addition, we are broadening our international reach to capture infrastructure growth abroad. We believe our ec2 software platform will create growing opportunities across the radiopharmaceutical landscape from drug discovery through clinical administration. This opportunity will grow meaningfully as more targeted radiopharmaceutical therapies advance to the market.

Lastly, Dosimetry Services remains a compelling business. This end market is a reliable franchise growing at GDP plus through the cycle. Meanwhile, it consistently provides strong margins and remains an attractive recurring revenue platform. Our broader push from analog to digital offerings will continue, creating additional margin upside over time. As a side note, we are proud of the fact that the crew on the recent Artemis Lunar mission or a customized version of our digital dosimeters to monitor their radiation safety. More significantly, our digital dosimetry offerings have caught the attention of numerous key nuclear power accounts, creating cross-sell opportunities to expand beyond a historically medically oriented business.

I'll turn it over now to Brian to walk through the financials. Brian?

Thank you, Tom, and good morning to each of you on the call. I'll continue the prepared remarks on Slide 8, outlining our financial performance.

First quarter total revenue was $258 million, an increase of 28% versus last year's first quarter. Organic revenue growth was 3%, in line with our expectations and aligned with what we communicated in February. First quarter adjusted EBITDA was $54 million or 16% better than last year. As foreshadowed back in February, margins contracted in the quarter, reflecting margin dilutive M&A, one-timers in Q1 of the prior year and a mix shift in the legacy Nuclear & Safety segment, mainly related to our sensing business.

We utilized approximately $16 million of our $100 million share repurchase program in the first quarter to buy back approximately 700,000 shares. This is consistent with last year's first quarter to offset the dilutive impact from our annual stock-based compensation program. We generated $11 million of adjusted free cash flow in the quarter. Q1 is historically our lightest cash flow generation quarter. Cash generation around our project business can be lumpy, and that is what we saw in Q1 with less project inflows than a year ago. In the quarters going forward, we have line of sight to a much more robust cash generation profile and a better working capital dynamics. Lastly, as Tom outlined, orders in the first quarter were strong with growth coming from both segments. Slide 9 has the details.

Order performance was the highlight of the quarter. Absent any M&A-related order growth, core orders grew nearly 20%, reflecting growth in both segments. Total orders, including a $47 million contribution from Paragon and Certrec, grew 42% in the quarter to $288 million. In Nuclear & Safety, orders grew across all three end markets, nuclear power, labs and research and defense and diversified. In Nuclear Power, growth primarily reflects two sizable installed base orders within the U.S. operating fleet and a large SMR order. Within Paragon, we booked an incremental large order within the U.S. installed base. The approximately $35 million SMR-related order we were awarded in April will show up in the Q2 orders number.

Labs and research orders grew primarily out of Europe despite comping against the $5 million DOE order from last year. One thing I would point out at Paragon is we saw strong DOE-related order activity in the quarter. Our DOE pipeline across the company is very strong. Lastly, defense and diversified orders grew in the quarter, thanks to a radioactive waste handling order, which was part of our large opportunity pipeline.

In the Medical segment, order growth primarily reflects the radiation-hardened cameras order within the RTQA end market. That gives us good backlog in that new product for the next 3 years.

Slide 10 provides the latest update to our large opportunity pipeline. Two of the 5 large opportunity orders are Paragon related. In the first quarter, we won the first part of an SMR order, part of a radioactive waste handling order in our defense and diversified end market a Paragon large battery qualification order within the installed base and a large medical order for radiation-hardened cameras from our RTQA business.

Interestingly and importantly, both the RTQA and battery orders were not in our pipeline at year-end, which tells you how dynamic the environment continues to be. Separately, in April, we were awarded the first part of another large Paragon SMR order. The rest of the pipeline remains active and continues to represent a significant opportunity for the company, including the remaining components of the three partial orders I mentioned.

Before I dig into the quarter's financial results, let me spend a moment detailing the Nuclear Power end market on Slide 11. Nuclear Power orders, excluding M&A, grew 15% in the first quarter, including the large partial SMR order. SMR orders continue to impress. We booked approximately $15 million of orders in the quarter, followed by the $35 million large opportunity we were awarded in April. Momentum continues within this segment of Nuclear Power.

Let's get into the quarterly financials beginning on Slide 12. Consolidated first quarter revenue grew 27.5% to $258 million. Approximately 21% of the 27.5% growth was attributed to acquisitions, primarily Paragon. Organic revenue growth of 3% was in line with expectations. Recall, on our February earnings call, we noted that we expected organic revenue growth to be in the low single digits for the first quarter.

First quarter adjusted EBITDA was $54 million or 16% better than last year's first quarter. Also, as foreshadowed on our February earnings call, adjusted EBITDA margins contracted. This was primarily due to the margin dilutive impact from M&A as well as some mix impacts, coupled with one-timers in the legacy business. We expect to see margin expansion in the next 3 quarters within the legacy business, offset by Paragon.

Adjusted EPS totaled $0.10 per share in the quarter. In 2026, we are now including stock-based comp in our adjusted EPS calculation. Last year's adjusted EPS would have been $0.08 per share, using a similar methodology to the one put in place for 2026. We have an adjusted EPS reconciliation slide in the appendix that has the details for your model.

Turning to the Nuclear & Safety segment on Slide 13. First quarter revenue was $186 million, up 39%. Organic revenue was 2.6%, better than our expectations of flat year-over-year noted in February. A few things of particular interest in the first quarter. First, Nuclear Power-related revenue, excluding M&A, increased 4% versus last year. I would note that for the first quarter, we were comping 18%. We saw growth in both our installed base markets of North America and Europe, while this was offset by less new build revenue in Asia, mainly China and Korea. We still expect to see double-digit revenue growth in the Nuclear Power end market for the full year.

Second, we are seeing SMR-related revenue accelerate. This accounts for 2% of total Mirion revenue and is expected to increase to greater than 3% of total Mirion revenue by year-end. Third, we saw better-than-expected labs and research end market organic revenue growth, thanks to strong performance out of North America. Fourth, in our defense end market, we saw higher NATO and U.S. military and civil defense revenue. As a reminder, the defense end market can be lumpy, but activity has certainly picked up.

Adjusted EBITDA grew nearly $8 million or 19% to $47 million. As we've already discussed, Nuclear & Safety adjusted EBITDA margins contracted. Half of the contraction was M&A related. The other half was mostly due to mix shifts inclusive of the sensing business, the number of one-timers in the prior year and some mix more broadly within our North America business. Lastly, it is worth noting that we were comping over 300 basis points of margin expansion in Q1 2025, the largest of any quarter in 2025 for this segment.

Now let's move to the Medical segment on Slide 14. First quarter revenue was $72 million, up 5%. Organic revenue growth was approximately 4%, in line with the expected mid-single-digit organic revenue growth noted on the February earnings call. Our RTQA end market posted double-digit organic revenue growth, driven by an easier comp lapping last year's ERP implementation headwinds, favorable software performance and a month's worth of production from the large camera order we received.

In Nuclear Medicine, we expect much of the organic revenue growth to occur in the back half of the year. Meanwhile, our Dosimetry Services end market posted a slight reduction in organic growth. This business had a difficult comp due to a large hardware order last year, which we have discussed before. Excluding this, our core Dosimetry Services organic revenue would have grown low single digits in Q1. Medical segment Q1 adjusted EBITDA was $25 million or 6% better than last year. As expected, margins expanded in the quarter, reflecting operating leverage and pricing tailwinds.

Turning to adjusted free cash flow on Slide 15. We generated $11 million of adjusted free cash flow in the first quarter. The difference versus last year is primarily due to timing affecting net working capital. While net working capital was a large use of cash in the quarter, we saw the structural enhancements we made to our balance sheet bear fruit in the quarter via the interest expense line. We remain on track for our full year adjusted free cash flow guidance and believe Q1 marks a trough. We continue to see large opportunities for improvement in AR, inventory and our project cash flows.

More broadly, on 2026 guidance on Slide 16. Everything remains unchanged from our February earnings call disclosures with the exception of a small adjustment to adjusted EPS to account for the onetime CEO retention grant of performance vesting stock options disclosed earlier this month. Before we open the call to your questions, I'll provide some details about second quarter expectations.

First, on orders. Second quarter orders will be higher compared to the first quarter. We expect another quarter of strong order growth, where sequentially from Q1 to Q2, we expect to see 15% to 20% order growth. Consolidated second quarter organic revenue growth is expected to be in the low single digits. This is also the case in each operating segment. As a reminder, on the top and bottom line, we shipped quite a bit of product in the second quarter of 2025 into China before the tariffs went into effect. So this quarter has that as a headwind.

Consolidated adjusted EBITDA margins should be relatively flat versus Q2 2025. Nuclear & Safety segment adjusted EBITDA margins should also be relatively flat despite the margin dilutive impacts from the Paragon acquisition. Excluding Paragon's margin dilutive impact, Nuclear & Safety segment adjusted EBITDA margins are expected to expand. Regarding Paragon, we expect second quarter revenue to be slightly lower than first quarter, but still posting double-digit revenue growth versus last year. We maintain our prior expectations of approximately 25% full year revenue growth for Paragon, and we continue to expect low 20s EBITDA margins.

Lastly, Medical segment margins should expand slightly. Recall, Medical segment margins in last year's second quarter expanded almost 300 basis points. So we're lapping another tough comp in that segment.

With that, let's open the call to your questions. Operator?

[Operator Instructions] Our first question comes from James West with Melius Research.

Tom, you gave some macro comments in your prepared remarks. I'd love to hear a little bit of expansion there given -- I saw in February, you were already pretty bullish. And then, of course, we had the Middle East conflict and the DOE has been very active, as you're well aware, in shepherding nuclear. I'd love to hear if there's been -- and I'm sure there has been, but what you're seeing in terms of an acceleration of kind of the nuclear build-out in the United States and also the nuclear renaissance that we're seeing more globally.

Yes, James. So I think there are three important dimensions to it overall. Far and away, the single most important is the dynamic being experienced right now by the installed base, recognizing that, today, if you look at the American nuclear fleet, they're running at very high capacity factors, typically in the low 90% range overall. Globally, we just got -- had recent statistics updated that last year, the global fleet ran at about an 82% capacity factor. And the bottom line is that a few important things have profoundly changed psychology for the owners of those assets overall.

Firstly, as I noted in my commentary, only a few years ago, the posture was very defensive. Many nuclear power plants were operating at very thin margins or even negative margins. And there was a general orientation toward premature decommissioning of nuclear power plants, but an incredibly defensive CapEx and OpEx posture overall to kind of minimize the attendant expense.

What we're seeing now is the exact opposite. Given the fact that even with AI demand as it is today, the world simply does not have enough electrical generating capacity, and that will always be the constraining factor in any reasonable scenario overall. It's created a very compelling economic incentive for operators to fundamentally change the way they manage these assets. And the biggest single impact is that even though we're seeing life extensions in the American market to -- from 60 years of permitted operating life to 80 years, the majority of operators are really thinking 100. And so if you imagine a psychology shift going from a shutdown posture to one where I want to operate these assets for another 40 years, that profoundly impacts the solutions that they need to shore up these power plants. Most immediately, we see that in Certrec and Paragon through their various activities, which are essential for the daily operation of the power plant.

But what we're seeing just beyond that is that there is a compelling need and a compelling opportunity to broadly upgrade instrumentation and control systems, which include in-core detection, neutron flux measurement, radiation monitoring systems and reactor protection systems. And beyond that, there's a need to upgrade and consolidate and digitally enable radio protection systems. And so we're beginning to see the leading edge of that demand right now not only in the American market, but broadly on a global basis. And this is just a -- I can't overstate how profoundly this impacts the overall opportunity set as it relates to the global operating fleet.

But beyond that, clearly, we are seeing a lot more action in advanced reactors, the so-called small modular reactors. We obviously see that in our order book. But more broadly, if you look at the leading players here, if we were to take the top 20 best capitalized SMR plays with the highest level of technological readiness, we almost run the tables with that group in terms of our position of prominence, orders booked and the level of engagement. So we're very bullish on that sector. It continues to move to the left, and most recently undergirded by the IPO of energy which has traded very, very well over the last week.

And then beyond that, you have the utility scale. The activity that we've cited previously with Westinghouse, having plans to build 14 AP1000s internationally, 9 in Ukraine, 3 in Poland, 2 in Bulgaria, an early commit by the Indians to build another 6, potentially 10 additional AP1000s in the American market. Obviously, we'll play in all of that.

And then beyond that, you have EDF Framatome, which has immediate plans in the near term to initiate 3 projects in France at Penly, at Bugey and Gravelines. And again, given the strategic alliance we have with EDF Framatome, we expect to play there.

And then beyond that, it's Rosatom, it is KHNP KEPCO, the Koreans continued activity in China. So what we're seeing overall is also an acceleration in new build commits. And obviously, that bolsters the whole nuclear thesis for us.

That's very helpful, Tom. And maybe for Brian, the Medical business came in pretty strong this quarter. I know '25 was a more difficult year with a lot of headwinds. Are the -- is this a one-off? Or are the headwinds now behind us and we should expect this kind of performance from Medical going forward?

Yes. I mean, look, we're sticking to our guidance on the Medical side for the year. So where we were at the beginning of the year to where we are today, I would say we're -- we haven't changed any of the numbers, but I think we continue to be more optimistic in our viewpoints that this business has green shoots sprouting. We're still watching the Asian markets, which is where we've had many of our challenges in the U.S. market. But our software business continues to perform well. Our services business continues to perform well. The order we got with Varian really kind of bolsters some backlog for this year and the next couple of years, and it's good business for us.

So I would say we haven't changed our guidance range, but I would say our confidence level is better than it was even 3 months ago.

Our next question comes from Joe Ritchie with Goldman Sachs.

So I thought the -- look, the order backlog commentary was really good, not just this quarter, but just the start to the second quarter. I was wondering if you could maybe just give a little bit more detail. Obviously, the $35 million SMR orders in there for 2Q. But just maybe some more details around that 15% to 20% sequential move that you expect in orders in the second quarter would be helpful.

I think it's indicative of everything Tom actually just talked about, which is the nuclear market continues to be good for us. We're clearly expecting another quarter or a few on the larger side. Right now, the timing of those are always a little bit hard to predict, but that has to be in there for us to hit those numbers. But again, the order dynamics are playing -- continue to play to our favor. I don't want to get into anything project-specific because these things move a bit. But I do think it's very constructive that the teams believe that we will see kind of sequential order growth year-over-year. I think if you look at last year, we were a little bit flat orders Q1 to Q2 as well. So this is obviously a step change there. Paragon contributes to that as well. So I think the flywheel is beginning to spin. I think we're still early innings.

Maybe one other comment, Joe -- the other positive is last year, we saw the large orders all end in Q4. I think what people should focus on is we're seeing that much earlier in the year this year. One, that gives us revenue opportunity this year for sure. But much of these larger orders probably end up more in '27 than '26, candidly from a kind of materiality standpoint. But two, there isn't a wait-and-see game on whether this is happening. Like this is going to happen every quarter. You're going to see some things tick off the box from that pipeline. And I think that's very constructive. I think it's healthy. And I think it does show that the dynamic is positive.

And I would just reiterate something I said. I mean, two orders that were above $10 million that we booked in the first quarter, we did not have in our pipeline at the end of the year. So that -- I think that's very constructive about what else we're seeing.

So the other thing I'd tag in on is that Doug VanTassell, the CEO of Paragon and I have been doing a systematic roadshow with Chief Nuclear Officer spanning the American fleet. And I will tell you the dialogue there is incredible. And the -- again, I cannot overstate the importance of the integrated Mirion and Paragon sales team. The Paragon sales team, these guys are apex predators. They have a maniacal focus on customer satisfaction. And we're seeing that the added dialogue, the increased customer intimacy is really kind of opening the aperture as we think about the opportunity set, both in the near term and the long term.

Yes, that's super helpful. And obviously, Paragon off to a great start for you guys. I guess maybe just my follow-on question, and it does actually segue well from what you just said earlier, Brian, regarding like the backlog conversion. So it's really two questions, right? If you think about the guidance and how you've set up the guidance for 2026, like maybe just talk a little bit about what the confidence you have in hitting kind of the ramp in EBITDA as the year progresses? And then secondly, because the backlog is now that step changing, like how much visibility are you now starting to get into 2027 given maybe some of these things are a little bit longer cycle?

Yes. I think a couple of things. I think if we had a different viewpoint on our EBITDA revenue guidance, we would have made a change in the quarter. That's what we've always done as we see it, we call it. So I think we continue to be confident in our guide. I think as you think about '27, I continue -- I think '26 is really a bit back-end loaded. That's clear because we've -- you've seen first quarter, I gave you guidance on second quarter. But I also think that plays into how we're starting to see and think about '27 shaping up. I'm not going to obviously guide that now. But I think we're very constructive on what we're seeing kind of beyond '26. And I think that shows in the backlog. You're going to see -- I mean, if you just do the math, by the way, you'll see backlog growth again in the second quarter. I think that sets us up well.

Our next question comes from Andy Kaplowitz with Citigroup.

Maybe a bit of a follow-up on that. You didn't change anything in terms of your line of sight on your expected segment revenue growth for the year. But in Nuclear & Safety, you started out flat as expected in Nuclear Power. So maybe just talk about the visibility toward getting back to double digits, as you said you will. Do you basically have the order coverage given Q1 and your commentary on Q2? Or do you still need to see some bigger Nuclear Power orders to reach that double-digit growth in 2026?

Yes. I mean, look, I think the comps that gets a bit easier as the quarters go on the Nuclear Power side by quarter. Q1 was our largest Nuclear Power kind of comp for '25. So I think that's one. I think the -- if you look at the order -- just even the large order dynamics and what we're seeing, I mean, it's definitely Nuclear Power heavy. So we continue to like double-digit growth in '26 for Nuclear Power.

And by the way, that's pre-Paragon double-digit growth. We're talking about in Paragon where a lot of the revenue is Nuclear Power as well, although we commented the DOE stuff, we're starting to see sprouts for sure. They have very good order growth there. We're talking Paragon 25% kind of organic growth for them if we own them in '25 -- '26. So I think we feel good about the dynamics happening within the Nuclear Power segment across both brands.

Very helpful. And then kind of similar in Medical, you didn't change your expectation for RTQA in '26, but you did mention green shoots in Q1 in hardware. And obviously, the large camera order associated with Varian seems quite interesting. I think you announced a closer relationship with Varian, maybe it was 1.5 years ago or something like that. So maybe give us more color in whether RTQA now should see more opportunities with Varian and should see accelerating growth from here?

Maybe I'll take and you could chime in. I mean, look, it's the first quarter. I think we want to see how the year continues to progress. But again, that RTQA order wasn't on our radar 6 months ago. And so I think that gives us kind of added visibility. Let's get through the second quarter, which is our toughest comp by far in the RTQA business because of the China shipments, et cetera. But like I said, I think to -- in an earlier comment, I think we have more conviction around our Medical number today than we did even in February.

Our next question comes from Tomo Sano with JPMorgan.

I wanted to ask you about the Paragon, which has shown strong contract wins and growth. Can you update us on integration progress, cultural alignment and specifically any [indiscernible] cost synergies realized so far? And also, does the 30% plus adjusted EBITDA margin target for 2028 remain intact post acquisitions? Any color appreciated.

Yes, let me start, Tomo. So firstly, on the cultural alignment, I think this was really a critical determinant in our ability to acquire Paragon to begin with because there's such a high degree of compatibility culturally between the two organizations. They're very entrepreneurial, very risk-on, very engaged, very motivated to build a great business and the cultural symbiosis between Paragon and Mirion is extraordinarily high. And to a very gratifying extent, we are seeing that resonate in the early days of the integration, where the two organizations have come together broadly, very collaboratively. And I think as we walk together on both sides of the table, we're all more excited about the art of the possible here, what we can do together and kind of the goodness of fit overall.

In terms of the synergy profile, generally, our playbook is that our first standing rule is the hippocratic oath, which is first, do no harm. And so we're very careful when we acquire a new asset to walk together to learn from one another, to be very careful about identifying the opportunity set. But in the wake of that, priority #1 is infrastructure. It's connecting the central nervous system of the company, standardizing health and welfare benefits, HR processes, IT, financial and accounting standards and processes and the like.

Immediately following that, the focus is on commercial synergies, recognizing this was the single biggest pillar in our investment thesis here. And as we've stated, I think, clearly, that's paying off faster than we anticipated. We see a significant opportunity to enhance and increase the commercial leverage on both sides of the table. And clearly, that's beginning to spill into backlog already.

Beyond that, we have cost optimization and beyond that, we have the technological leverage as we embed the augmented capabilities of each organization into our R&D pipeline and really kind of evolve how we're thinking about new product solutions and the enhanced technological building blocks that will go into that.

So in the near term, no. We are not calling out any specific cost synergies. But I would tell you, our track record here is great. Maybe the best most recent example just based on scale, would be the acquisition of Sun Nuclear, which we acquired in 2020. And in that case, we took a great company, very vibrant company that had strong performance, and we've added about 10 points of margin to that business since we've owned it.

Clearly, our expectation is that Paragon will become accretive. Clearly, our drive and our motivation is to make that happen sooner rather than later. And to be clear, that's a shared objective. It's not just Mirion wants this and Paragon is reluctantly following. I think we're all in on driving toward this, and our goal is to make it happen very quickly.

The final point is on the 30-point EBITDA target by '28, which we announced at our Investor Day a couple of years ago. we continue to stand by it. This year, I think we've guided 25- to 26-point EBITDA margins. Obviously, we're trying to drive toward the upper end of that range. And if you accept that, that leaves the go-get of another 4 points of margin expansion over the next 2 years. Half or more of that, we expect will come from absorption as we continue to drive greater volume against a largely fixed cost structure and one that inflates at a much slower rate than our pricing capabilities on the top line.

And if you look at the remaining 2 points, that final go-get is going to be driven by self-help. And here it's going to be continued improvement in procurement processes, conversion processes, continuing to rationalize our industrial footprint overall improving pricing heuristics. But the big lever here clearly is going to be AI. We're investing very heavily in AI right now, which arguably in the near term, and this is reflected in our guide is margin dilutive. But the rest of it is simply a choice. Anytime I want to, I can find the balance of that go get. It's a decision entirely within our control organizationally. And again, given the enhanced capabilities that we see both for cost and efficiency improvements internally, but also in terms of evolving our customer-facing products that we're pretty bullish on our ability to get there.

And just one follow-up. For your Nuclear Medicine business, could you discuss the current sales momentum and outlook as well as the margin profile and the key drivers for both growth and profitability going forward, please?

That's a big follow-up, Tomo. But what I kind of -- what I said in my prepared remarks is, we thought the organic growth in that business would be a bit more back-end loaded. Look, this is another -- this is just like this is a great margin story. We bought these three businesses and put them together between 2020 and 2023, I think we bought ec2. And even combined, it was a single-digit kind of EBITDA business that today is accretive to Mirion's margin profile. We continue to like our ability to expand margins there over time. New products is something we're working on. Now that's more a '27 probably introduction than a '26. Operationally, we are very focused on procurement, continuing to streamline the workforce there and our ability to grow is our #1 priority.

So we continue to like that business. It is a bit back-end loaded this year. But we continue to be confident in our ability to grow that business double digits.

Our next question comes from Quinn Fredrickson with Baird.

I wanted to ask about the green shoots in RTQA commentary. Brian, you started talking about the Asian markets in response to an earlier question. Just how are trends playing out in those markets specifically relative to your expectations? And are you starting to see the benefits of some of the actions you've taken there playing out yet?

Yes. Again, I think I characterize those as green shoots, right? We're seeing some positive momentum. I like what Mark and the team have done to set us on the right foot. It will take quarters to kind of see this come to fruition. Those markets don't move always as fast. I think we're probably a little bit more optimistic about China. I think we're still a little bit hesitant on what we're seeing in Japan. But I think we have a good game plan, and we're absolutely moving forward.

I think the order with Varian kind of gives us some nice underlying stability in that RTQA that candidly, that product line was not -- it's new. So that's all incremental growth year-over-year for us. And we continue to watch the U.S. market. I mean I think we were pleased with what we saw in the first quarter. Again, software services led the way. But our hardware business did better than what we expected in the first quarter. But we're not ready to move the numbers. I think we want to see a bit more production out of that business.

And then I wonder if you could give us a little more color on the $35 million April SMR order. That seems to be a pretty sizable order for an SMR, and you said there's more still to come. Is that across multiple SMRs or a higher revenue opportunity per megawatt with Paragon? Just any additional context you could share there?

Yes, Quinn, it's with a single leading SMR player, and it is supportive of, again, kind of the central nervous system of the power plant supporting instrumentation and control. It's a nice win. We/Paragon have been working on this for quite a while.

But again, when you look at the activity in this market overall, what we're seeing is, again, a general movement to the left of the dynamics, particularly for these first-of-a-kind orders. And we continue to be more constructive on the SMR market overall. We've highlighted previously that based upon intrinsic scale diseconomies in specifically instrumentation and control, generally speaking, the revenue opportunity per megawatt of output of an SMR is quite a bit higher than it would be for utility scale. We cited a loosey-goosey estimate of about 60% higher on previous calls, and we continue to sustain that point of view.

Yes. I would just say that the 60% was pre-Paragon. So we haven't done the math or we haven't guided to what the Paragon. But you can see kind of the scale here.

Our next question comes from Jeff Grampp with Northland Capital Markets.

I wanted to circle back on Paragon here and hoping if you guys can elaborate a bit more on this tip of the spear kind of language you position them as. I'm curious, does that positioning give you guys a differentiated view or read into the growth potential underlying Nuclear Power that perhaps other offerings within let's call it legacy Mirion maybe perhaps wasn't available to the company pre-Paragon, or just any other kind of comments around what that kind of tip of the spear position facilitates for Mirion more broadly?

Yes, I'll take that one. So if you look at the legacy Paragon business, basically, they've been in the business of keeping power plants operating. They provide critical spare parts, which in many cases, are no longer supplied by the original OEM. So in some cases, that means reverse engineering previously offered electromechanical components in a power plant. In some cases, it means taking a commercially available part that does not have a nuclear qualification. This could be a backup generator, a chiller, batteries, other components. And Paragon puts that through a very formal commercial-grade dedication, which makes it a nuclear qualified component.

Beyond that, they also offer essentially a brokerage platform for available spare parts within the industry. And those three core activities, again, kind of keep the fleet operating. They're a very, very critical supplier to the industry overall. And given the nature of this business, I think it's intuitive that the level of customer intimacy and dialogue has to be very high. And that latter piece is really kind of the critical catalyst for the greater demand traction we're seeing overall with Mirion products.

Conversely, if you look at legacy Mirion products, we have been focused on instrumentation and control through in-core and core detectors through neutron flux monitoring systems, through radiation monitoring systems and also radio protection in a variety of form factors, software systems and services overall. That platform or that historical offering has also been augmented by complementary capabilities that Paragon has in I&C.

And so when you put these things together, Firstly, because, again, of the greater intimacy of the Paragon sales team, we're seeing a clearer higher resolution demand signal overall from the power plants, compared with what we've historically experienced based upon a fundamentally different sales model at legacy Mirion. And that's certainly elevating our view, elevating our level of bullishness as to what's happening in the industry. But beyond that, it also gives us much earlier dialogue about those complementary areas of overlap on that Venn diagram, particularly in instrumentation and control. So we're thrilled by this acquisition. We're thrilled to bring our two companies together. This is a great pickup for us.

Our next question comes from Nick Amicucci with Evercore ISI.

Just wanted to -- kind of the backlog commentary as well. Obviously, Paragon, a little bit dilutive on the adjusted EBITDA margin this quarter. But just as we think about these new orders rolling in, how can we think about the margin profile within backlog currently? I mean you kind of spoke to it, I believe, on the 2028 kind of target, but I just want to kind of level set there.

Yes. Thanks, Nick. Look, I would characterize the margins in backlog as exactly as we would have expected and give us the ability to hit the numbers we're talking about. We definitely and really think about our margin backlog more as contribution margin versus what the base margin is. But I don't think there's anything too scary in there that we're worried about from a margin perspective going forward.

The only maybe comment I would make is some of the project business can be a little bit lower margin. But I think the teams have done a very nice job really working hard to make sure that the incremental margin on those bigger projects actually benefits Mirion over the long term. So we're focused on margins, and we're focused on cash as it comes to these larger business projects.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Tom Logan for closing comments.

Well, ladies and gentlemen, we appreciate your time and attention this morning. We appreciate your support.

Again, an important quarter for the company. We feel great about the order momentum. We continue to have confidence in our outlook for the year. We continue to have confidence in our drive toward the 30-point EBITDA target. As I've noted historically, we built this company in an environment of very difficult headwinds and always found a way to grow the top line and add value in a way that outpaced the markets, the peer set in general. It is tremendously exciting right now to have not only tailwinds, but generational tailwinds supporting the business overall.

So we're excited to continue to show what we can do, and we'll look forward to speaking to all of you on our Q2 call. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Thank you for joining us again. We're very excited to have Mirion Technologies with us. We've got Tom Logan, who is the CEO and Founder; and Brian Schopfer, who is the CFO.

So while I walk over to join you guys, Tom, like it's been about 4.5 years since you became public. Maybe talk about -- and you've come a long way, right? I mean there's a lot going on. I think a lot to be proud of. But what are you most excited about right now? What are you most proud of? And has there anything that's been a bit more challenging than you thought over the last 4.5 years?

Thanks for that set up Andy. I think if any of us look at the last 4 years, it's been a bit of a crazy ride from a macro standpoint with just how much the world has changed the evolving geopolitics and dynamics in the world overall changes in technological base.

But to answer your question, if I had to point to one thing, I think the -- without a doubt, we are most excited about the growth in the Nuclear Power segment. This is critically important to us as a company. Today, about 47% of our revenue is tied to the commercial nuclear power industry, and that's subdivided between the installed base, which we cover on a global basis.

So I think we have a presence, a foothold, in more than 95% of the global operating base. It's the utility scale new builds. It's the small modular reactors, all of which are being propelled by essentially an unsolvable global electrical generating capacity shortage. And this, in our view, is a generational tailwind.

We're incredibly excited to be kind of surfing this wave with the position that we have. And that would be top of my list. Behind that would be the implications of AI, which certainly correlates strongly to that trend overall, but just the implications that has for the world in general, but specific implications for us are incredibly exciting.

I got a lot of questions for you on AI, but I'll save that just a little later. So -- but maybe, Tom and Brian, just because it's topical, right, you reported earnings last week, provided guidance for '26, reflects some expectation for accelerating organic growth in both segments for the company overall. And you do have some cross currents that you know about, whether it's DOGE, I guess that's done, like government shutdowns and nuclear lab, slower spend. So maybe talk about the visibility this year and if you've kind of discounted like slower environment in some of these areas?

Yes. So I'll lead in and then Brian can augment. But the -- if we were to look forensically at last year, we -- firstly, overall, we think it was a great year for the company in terms of total growth, the margin expansion, free cash flow conversion, record orders, ending the year with record backlog. And where we had some, as you called it, cross currents, firstly, would be in our laboratory business overall, and that's principally a DOE-related business.

And as many have experience to -- who play on that particular field, funding dynamics were very uncertain. You mentioned, DOGE, certainly, that had an impact on decision-making authority and capability and willingness, it led to contract deferrals, it led to a dynamic of uncertainty in general. But the fundamentals of that market for us are very strong.

We view that as kind of an episodic event, a transitory event, if you will. And when we look at the long-term view on how that business evolves, we feel very good about it. And in particular, we feel very good about the level of engagement that we have with the DOE and with kind of that broader lab space.

The second crosscurrent would be in our radiation therapy business. This is a business where we provide software services and capital equipment into the -- essentially into the cancer care market, dominated by external beam therapy overall. And here, we had a couple of events internationally. We saw continued softness in the Chinese market, which historically has been an important growth vector for us in that space.

We had a transitional issue in Japan, where our long-standing distribution partner in that market was acquired by a large trading company. And just through that integration process, candidly, kind of took their eye off the ball and we've done a lot to fix and remediate that. We continue to feel very bullish on that market overall.

And then the third element narrowly was in the U.S. hardware market. So to be clear, our software business in radiation therapy had a great year. Services was very, very strong. But in the U.S. health care market, because of the fear, uncertainty and doubt related to reimbursement dynamics, operating margins for health care providers led to a bit of a clamp down in capital spending.

But again, if you look at the fundamental demand drivers for that market, aging Western population, increasing or raising standards of care in developing markets, the macro picture continues to be intact. So on the guidance issue, we've looked through all of those issues, pressure tested them and feel confident about the range we put out in that business for the year. It's a business we still like very much. It's a very attractive diversification channel or element of our broader portfolio, which certainly is led by Nuclear Power, but we feel good about it.

Did you want to second?

Go ahead.

So Brian, you know I'm going to come back to the well on the backlog question because I asked you last week, and I said I was going to. So I'll just ask it to you like this, right? Like you had a nice uptick in Q4. You added Paragon with $134 million. So that's all good. I know it's difficult to predict the timing of larger awards. But maybe can you give a thought process to, if we're sitting here next year, would you be disappointed backlog is not materially up?

Great question. So first off, I would just characterize it like this. I think we put out a $400 million kind of larger order pipeline that we have. $200 million of that is stuff that shifted from last year. There was another $200 million incremental. I candidly think that number probably evolves and continues to grow as we go through the year.

But timing on these things, Andy, unfortunately, if I told you what I thought it would be wrong to get from now. I think one of the positives I'd point to is -- one of the other things I said last week was we'd already won a $10 million-plus SMR order in January. So that would have been in the $400 million, a check mark of one. It's small. But the point is, I think we're optimistic that this isn't a December loaded pipeline like we saw last year.

And I would just maybe finish my comments with saying we only lost 2 deals last year of larger magnitude. One was to an incumbent on the defense side and the other was in the Asian markets where maybe it's a little bit more competitive. Our right to win on every one of these projects plus ones that are coming, I would say, is very high, and we continue to be very optimistic about how that will evolve through the year.

Yes. No, that's helpful. Look, I think if there is a bear case on commercial nuclear, it's that is very long dated, right? Like and that it just takes time to develop. And so that's why kind of we ask you these kind of questions. So I'll ask you, because you've gone to Nuclear & Safety being flattish in Q1. So then I get the question, well, is that because it's such a long-dated business. Well, everybody knows that labs is weak in Q1, still and all that stuff, but they still kind of say, because I think, what, 75% plus of the business is replacement or recurring or whatever, how can it be flat? Like why is there a sensors comp?

Let me give you some -- an optimistic perspective.

I love optimism. I am optimist. I got ...

So that business we have has pretty much the exact same backlog going into last year as we have going into this year. So we don't have -- our backlog is not down, and we need orders.

In terms of coverage.

Coverage and dollars. So it's all about timing in that business. When do things need to be delivered? When do we manufacture those? That business inherently, by the way, comes with amazing operating leverage. Those things play into when we're able to make product, when we're able to deliver product and then what that does to our margins and our revenue in the first quarter.

It just happens last first quarter. We had major product come in, in delivery and the dynamics a little bit later in the year this year versus what we saw last year. So it's just timing. This isn't a -- the quarter-to-quarter dynamics can evolve and change in the business, especially underneath the business. And it's not something Tom and I are particularly worried about.

And Tom, I'm sure you talk to customers all the time. So like you've been consistently saying since I've known you, right, basically, installed base, double-digit growth, very possible, if not likely, so is that still what you see in the installed base?

Absolutely, Andy. The -- so if we look at last year, our organic growth in the Nuclear business was 11%.

Yes.

We also acquired a company called Paragon Energy Solutions last year, and they're in many respects, more of a leading indicator terms of what that dynamic is within the installed base. Last year, they grew organically at 20%. This year, we expect they'll grow 25%. And so yes, the fundamentals driving that, I think, are very, very clear that the combination of very strong economic incentives plus what I would characterize as an increasing level of political pressure is really causing the operators of power plants, not only in the U.S. but on a global basis, to drive toward life extension, capacity upgrades and digital modernization.

And the fundamental mind shift here is that a decade ago, people were thinking about shutting down plants prematurely. Now they're thinking not only how do I life extend an asset for 20 years, but many are thinking beyond that, that this could go another 40 years or so. And that's what's driving this accelerating cadence in support for that sector.

Yes. So Tom, this market, as we know, like doesn't change that quickly, right? So versus last year, when we're sitting here, of those 3 things that you talked about, has one gotten ahead of the other accelerated like versus your own expectations?

Well, what I would say is they're all accelerating, but they're accelerating at different rates as they will. So again, if you look at the installed base, I think Paragon, which largely in support of that, the operating fleet in the U.S. So it's a very clear indication that, that market is strong and arguably accelerating.

If you look at the small modular reactor market. Last year, we booked $37 million of orders in SMRs. Prior to that, our cumulative total orders in the SMRs were $17 million. So again, it shows you that the activity in that market is picking up. And then finally, if you look at utility scale, last year, we signed a deal with EDF that will take us in as a sole source supplier in the next 8 to 14 reactors. They'll then build in France as well as the export market.

We are very close to all of the other leading reactor designers, Westinghouse, the broad base of international suppliers. And through any lens that where you look at the development plans for gigawatt scale nuclear reactors, it's moving up into the right. Different rate, but it's ultimately leads to that recurring and repeat revenue base that really drives that business for us.

Just because I know you're always talking to your customers, for instance, EDF for Westinghouse. Are they starting to move more now, like would you say?

They're moving at a very rapid pace. So again, if you look at the development plans, I think one of the broader issues going to be resource constraints. It's clear that from a policy standpoint here in the U.S., there is a strong incentive to build 10 new Westinghouse AP1000s. Two, 3 years ago, that was not in the cards. So that is a substantial change overall and the support to go with that.

If you look at what's happening in France, there are tangible plans for the next 3 EPRs in France, many more from an export standpoint. And if you look more globally, again, at the line of sight to projects in Poland, in North Africa in the Arab Gulf region and potentially in the Ukraine, as and when a peace settlement is achieved, I'm very, very bullish about what that looks like.

Yes. I would just real quick, just to add, and before you go on. First off, we've already seen, albeit small, but orders on the French side on the new reactors right? So these aren't huge, but you're starting to see some spend trickle in. I think that's important. As we look at our new build opportunity from a pipeline standpoint, there's 0 in there for AP1000s in the U.S. everything we're looking at on the new build side at a large scale is outside the U.S. So I think that's important and we're not banking on that coming through this year. But if it does, it's not in our plans.

And then your commentary on SMRs, Tom, like so I mean, is that a function, obviously, I think Paragon has good exposure to SMR. So maybe that helps you a bit more. But do we start to burn revenue on SMRs then in 2 years, something like that? Like how do we think about when that $37 million is going to turn into something bigger in revenue?

So what I would say is that I continue to be surprised and delighted by the dynamic in the space right now. It is, to your point, with the acquisition of Paragon, our coverage of the broad-based SMR population, which numbers well over 100 discrete projects in the world. But in particular, if you look at the best capitalized most likely to succeed in terms of technological readiness level, we nearly run the tables with that group in terms of where we have exposure and a very high level of engagement and it's in a comprehensive fashion.

And so the activity there is considerable. To be clear, I think we'll go through a cycle here where right now, all of the focus is on first-of-a-kind instances. Of these reactor types, much of which will be developed as they are being built in terms of the comprehensive specs. Invariably, I think most would expect there will be some type of shakeout in this market where the true long-term leaders will begin to emerge.

So I expect we'll see it continue to build up as these first-of-a-kind events happen. I expect we'll begin to see them better -- gain better insights at that point in terms of what the long-term arc of development looks like and who's going to lead it.

And if I were just being an analyst, I'd plug like if it's 17, 37, I might say, like 90 or something like that. Should I do that?

No, we're not going to give that a number.

But be aware of linear extrapolation.

All right. Fair.

But there -- I will say there is SMR in that large order pipeline for sure including the one we want in January.

The $10 million one.

We're seeing some.

90 here we come. Okay. Sorry, I was just kidding. So then I did want to ask you about Paragon a little bit more because we're still learning it as it's now being incorporated in the business and you mentioned 25% growth. So where is that coming from because it is growing faster than your core business?

Yes. So there -- the core business of Paragon is really replacement parts for the operating fleet in North America, which increasingly is confronted with a part obsolescence issues and supply chain constraints. And their core expertise is in fabricating and/or sourcing electromechanical parts to support the operating fleet.

And so as, again, these operators are trying to run at higher capacity factors to operate their reactors, life extend and modernize. There's an increase in call for what they do overall. But importantly, on top of that, they also have a very strong position in instrumentation and control, which is extremely complementary with our core capabilities and really kind of bolsters our position, if you think of the -- this is the central nervous system of a nuclear power plant, which is very important strategically as we look ahead and think about the evolution and augmentation of those capabilities is something that will be very, very important to us longer term.

Got it. That's helpful. And then I wanted to ask you about margins in Nuclear & Safety because they did tick up 40 bps, 29.4%. It was good to see, but at the same time, maybe more moderate expansion than medical despite more growth. So what's going on there? And how are you thinking about the portfolio for margins in that side of the business?

Yes. What I would say is a bit as expected, a couple of headwinds. Firstly, the -- if you look at the aggregate organic growth in that space, again, given the relative weakness of the lab space overall. One of the key drivers of margin expansion is absorption. We lever very, very well with volume, higher the volume, the more margin expansion drive we get out of that. In addition, you had tariffs, which was a new headwind overall.

So we're actually quite pleased with the margin expansion, which in the main was driven by procurement optimization. We think there's a lot of gas in the tank. As we look ahead, we've talked a lot about our commitment to drive toward 30-point EBITDA margins by 20 continue to feel good about that as a target to be clear. It's not going to be a gimme putt. We have a lot of work to do to get from here to there.

But the way we get there is, again, through absorption, through continued optimization of procurement, conversion, distribution capabilities and importantly, increasingly through AI, which I think the consciousness particularly within the industrial tech sector is rapidly rising, particularly in the wake of the release of Claude Code as people begin to understand how profound the implications of AI will be on internal productivity holding aside customer-facing AI. So we have many arrows in the quiver. We are hyper committed to that, driving hard internally and feel that we've got a pathway to get there.

So I wanted to -- I mean, that was kind of my next question about the 30%. Do you still feel like you can do it even though Paragon is going to maybe dilute you right before it gets better, like ...

We do. For all the reasons I just articulated as well as the fact that we have a long history. We've done nearly 20 acquisitions in the last decade. And if you look at our scorecard in terms of driving margin expansion, it's a very solid record. We have, again, a strong view regarding our ability to make Paragon firstly, margin neutral and then ultimately, margin accretive. And I think we can drive that at a good clip. So yes, that has an effect on our pathway overall. But on the other hand, the tailwinds that support that broader target continue to be real viable and I think get us there.

And maybe just to add some -- a proof point to that. I mean Paragon to me reminds me of Sun Nuclear when we bought it back in 2020. Almost the exact same setup, $100 million business in the low 20s EBITDA. Today, it's more than $150 million, but the EBITDA margins are in the mid-30s. That's pretty good expansion in 5 years, candidly.

And it's really just about operating discipline, levering on the fixed cost base you have, making sure you're pushing price. We're doing the procurement synergies, et cetera. So there's a lot of parallels here. And I think if you want proof, let's look at history and see what we've done on an asset that's fairly similar in size and scale.

Yes. So I want to open up to the audience, but you've talked about AI a few times. So let's just talk about it. So first of all, I think you and I have talked about AI long ago now. I think you have a particular interest in AI and sort of what it does for the company. So maybe you can talk about for the initiatives you've had to sort of drive as you've said, productivity internally and stuff because I think you've been sort of early to that. But then also, you know I get the question about disruption, right? So how are you protecting Mirion from disruption? Maybe can you tell us how much software exposure you really have so we can clear all that up.

So firstly, in terms of how I think about AI, I really view it in 2 channels, the internal channel and the customer-facing channel overall. As we look at the internal channel, last year, we launched 17 internal AI applications with another 7 in development, and they're all over the map, ranging from the ability to take a 100-page RFQ and ingest the data and optimize the design layout for radiation monitoring system to translation to legal support, contractual review, all over the map, but clear immediate and intangible impact on productivity overall.

The funnel for those internal applications continues to swell and the enabling tools, particularly as we think about Claude Code and the other functional derivatives of that in the market almost make your head spin. I think we're all trying to understand it. We're all trying to get our heads around the implications. This is a major, major theme, not only for Mirion, but for all of industrial tech, and I would argue for equities in general.

The productivity and margin accretion that will accrue from this and accrue far more quickly than people believe is profound. On the customer-facing side, I want to be a little bit careful about what I say, but I'll just give some thematic guide in terms of how we think about very tangible example is that we bought a company called Certrec last year, which has essentially 100% share of outsourced regulatory and compliance support in the American nuclear industry. And in addition, they're a material player in the bulk electrical grid in general.

They deliver the support in the main through a SaaS software platform that they developed over the span of a decade or so. And importantly, they possess 15 terabytes of historical data. Every filing every design drawing ever made for any nuclear power plant in the U.S. And so they are better at guiding compliance efforts, both routine and episodic in nuclear power than candidly, many of the fleet operators as well.

I think it's intuitive when you think about what that data set looks like. The leverage that we will gain from ingesting that data and essentially AI enabling that, which will allow us to serve our customers better, provide greater utility to them and improve our operating efficiency overall.

The other theme I would throw out there is, again, just keying on the integration of Mirion and Paragon as we think about that central nervous system of nuclear power plants. It's very, very clear. And we've done a lot of work on physics constrained neural networks and neural radiance and computer vision that support this overall. But the evolving theme of being able to take our native position in the installed base in terms of installed instrumentation and detectors and to leverage that ultimately to help our customers to gain more thermal output out of their power plants, to reduce downtime, to potentially help with load balancing.

All of those things are very, very clear. And those are examples of the things that we are focused on as we look ahead. But to be clear, there are many, many more. Now in terms of our exposure from a software standpoint, recognizing the big revaluation of the cloud-based software players here overall. I think there's an important distinction here. Firstly, our software exposure overall is

Somewhere between 5% and 7%.

Yes. So it's modest and growing, but the key distinction here and the thing that I think protects us from disruption, again, is that native installed base, where because of the regulatory climate, that we compete in, the criticality of safety in not only Nuclear Power, but really every vertical that we play in that core platform and connectivity gives us a significant advantage relative to some early-stage company that may come in and say, "Hey, I can do great things with AI. I'd love to play around on your reactor." I think there's a big distinction there. And that's a really important not only moat for us, but I think an opportunity for us.

Tom, to the extent you want to disclose, like -- because again, I think you've been very on top of the efficiency side. Can you give us an example or quantify at all like what AI has meant to Mirion in 2025?

I think the needle is just beginning to move. I think we're all trying to really grasp the implications not only of AI, but what we talk about internally is the singularity. The confluence of AI, robotics and big data and the leverageability of that big data overall.

And so in 2025, it's been a really important year for us in terms of how we have advanced our hierarchy of priorities, both internally and externally. How we have developed our capabilities most dramatically through the naming of our inaugural Chief AI Officer to really drive this effort directly. We've begun to see some productivity benefits, which I think, are going to swell in a meaningful fashion over time. So a year where, again, we move the needle, but it's just the beginning of what we think will be a rich vein.

Got it. Any audience questions? Anybody want to ask a question? Any questions? Okay.

So maybe let's move to medical then. So again, here, rebound to mid-single digit organic that's expected. Maybe you can sort of talk about that confidence in getting there. Obviously, you mentioned sort of the radiation therapy business, like -- do you see the U.S. getting any better on the hardware side? Or how do you think about that?

He looked at me. No, go ahead.

What I would say is that, again, you have to start with the macro and again, fundamentally, as the population demographic in the U.S. and in the developed world ages, more people are going to get cancer. As we see standards of care rise in the developing world, we're going to see more radiation therapy clinics overall.

Specifically in the U.S., we've been through a disruptive year with DOGE, with health care dynamics overall. We assume a degree of normalization, if not an equilibrium, we expect a degree of normalization. But importantly, most businesses don't grow in a ratable linear fashion. They grow, plateau, grow, plateau, grow, plateau.

And if you were to look at our radiation therapy business, again, which we acquired in 2000, that was their history, long-term CAGR of double digits, but the strongest growth cycles typically correlate with new product launches. And again, noting that services and software in this business were strong last year. This is a year in 2026, where we've got a great new product pipeline. We're very excited about what we're going to launch this year. And we think that will be another important factor in undergirding that forecast.

Yes. I think we continue to bolster the team on the commercial side as well. We've done some reorganization our former Chief Revenue Officer has come back into the business on a full-time basis running our international business, which has always been an epicenter of growth for us. So we're very excited to have him back kind of fully engaged.

We have an AI product actually being introduced into the market in the first half of the year, along with a number of new products. So I think we're focused on doing the right thing. And I think that will be beneficial. I would remind you, in the rest of the business, Nuclear Medicine is going to grow double digits. That's what we've committed to. It grew double digits last year.

And we have a little bit of a headwind on the dosimetry business issue with more hardware sales last year than our services business. So we're lapping that. We just -- it's just that business, it can be a little bit more lumpy. But we like the dynamic we're seeing on the Insta VUE product ramp.

We're actually seeing good inbounds on the Nuclear Power from a nuclear power customer base on our Insta VUE product, which I think we're encouraged about. But it takes time in that business to see the growth rates go because you're talking -- you need high quantities at lower dollars from a per batch perspective. So Yes, we're very focused on turning the ship, but we don't want to get too far ahead of ourselves.

Got it. And you feel good about nuclear medicine like still incubation days, big growth phase? Like how do you ...

Yes, we do. The -- again, if you look at the nuclear medicine market, the key driver here is the revolution that's taking place and what's generally referred to as theranostics or radioligand therapy or radiopharmaceutical therapy which fundamentally is the linkage of more powerful therapeutic radioisotopes with a binding agent, typically a ligand with a specific type of cancer, specific cancer culture.

The blockbuster drug and really the leading drug right now in this market is the Novartis drug Pluvicto, which is for prostate cancer. That really is the bellwether in this market. But behind that, there's incredible excitement about what's in the FDA approval pipeline, continued evolution in the way that people are thinking about different classes of therapeutic isotopes, beta emitters versus alpha emitters.

And importantly, our position is broad and it's deep in terms of not only the processing equipment, things like dose calibration instruments and shielding, and a variety of other elements in that play, the laboratory instruments, but also the clinical instrumentation. But on top of that, our software position, where we are a leader in the data management software and nuclear medicine connecting isotope producers, drugmakers, radiopharmacies, CDMOs, the contract manufacturers and clinicians.

Importantly, we have just moved one of our leading executives, Sheila Webb, who heretofore has been our Chief Digital Officer, into a leadership position, overseeing both of those 2 business to really integrate them further, recognizing the growth dynamic in this market overall, but also the unique capabilities that we bring to bear here.

Interesting. And Brian, you did have good margin in medical north of 42%, quite high in Q4. If hardware does improve again in '26, is that a mix issue? I mean, how do we think about margin improvement in medical? Because it has been pretty good.

Yes. I mean, look, I expect growth in margins next year, but definitely not at the rate what we saw in '25. That mix will be a headwind for us. But the team is focused on this. I mean I'm proud in the face of what was a tough growth year, what they did on -- for us on margins every quarter they delivered.

So we continue to believe we can grow and grow margins in that space, but growth matters more than anything else. The beauty is the leverage in that business because our gross margins are so is very good for us. So yes, I expect growth, but I don't think you'll see it at the rate that we saw last year, no.

Got it. And Brian, I got to give you kudos for free cash flow conversion. I used to ask you about that. I can't really ask you about that anymore. You've done -- improved pretty significantly, 57% of EBITDA versus 32%, I think, in '24. But you're not again, if I'm picking something, you're not really forecasting much improvement from here. So maybe talk about now are you just stable at this higher level? Like how do you think about it?

I mean, look, we continue to believe 60% is a good target and beyond. We've made this year in '25, we made a ton of structural improvements that hold over into '26. And I think the reality is we're going to deliver what, 25% growth or something like that on the free cash flow metrics at the midpoint, that's pretty good. We'll do everything we can to do better. That's our job. But I like the trend we're going on and I mean there is plenty of stuff for us to do to continue to improve that from a productivity standpoint across basically every metric on the balance sheet.

Got it. And then Tom, I think you guys have talked about your -- you've done a lot of a couple of deals. I think you're up to 3.2x EBITDA leverage, right? A little bit above your target. And maybe should we expect some sort of pause here how you wait?

I think the likelihood, Andy, is that if you were to look at -- firstly, if we went pencils down on M&A, then we'd be...

It wouldn't be you.

Would be back below 2.5x in a -- within a 12-month period of time. But to be clear, there's more we'd like to do. I noted last year that we're kind of doubling down on our nuclear exposure. Again, 47% of our revenue, I think we're one of the better plays sector growth in nuclear power for all the reasons we've talked about. I'd like to nudge that number up a little bit more.

But if you were to look within our M&A pipeline right now, I think it's a year that will be characterized by small ball. I don't expect to see larger deals of the size of Paragon or bigger. But I do expect that we will be active probably in some smaller, more digestible deals that will allow us to continue to deleverage as we do that.

And I would just remind you, too, Andy, that yes, the leverage number is at 3.2%, but our cost of debt is sub-3 down from 7.5%. So yes, a little bit higher leverage. I understand that screens that way, but the actual cost of that's at a pretty good number.

Yes. No, that makes sense. Are there any places in nuclear that you'd like to have, but you don't have where you feel pretty ...

Our core focus is on instrumentation and control and radio protection. And we have important niches in other segments, including regulatory compliance, security, laboratory instruments, radiation-tolerant cameras. And so I think we really look at those core areas of focus as well as the adjacencies, just for goodness of fit.

We're not looking to expand more broadly into things like pumps and valves and other infrastructure components, but rather how do we build out our current position, make it stronger, more robust, more scalable globally.

And then just last question. What are the top 2 or 3 innovations and structural changes affecting your company over the next 5 years? Are there any emerging industry trends that are perhaps being overlooked in the current discourse?

Yes, a couple of things. Firstly, I think the continued stress on electrical generating capacity is going to become more profound. It will become more politically charged given the backlash that will come from retail rate payers. And so the drive to move faster to augment grid capabilities, augment generating capacity will continue to accelerate and continue to add to the spin-up of the flywheel and nuclear power overall.

Secondly, AI, I think we've covered that incredibly important trend. Really one of the most impactful, if not the most impactful revolutions in human history. Harnessing that, understanding it, directing it, surviving it will be very important overall. In terms of things that, again, I think are important to call out, looking at Mirion in terms of how we play these trends, what we represent.

Again, I think if you look at our exposure to nuclear power in comparison with other names that are often looked at as ways to play the nuclear industry. I think we're one of the best. We play the full 100-year life cycle of a nuclear power plant in fuel cycle and decommissioning and everything that goes in and around that. We have a very high degree of recurring revenue and repeat revenue that comes from the installed base overall. We are strongly represented not only in the U.S. but globally in utility scale or gigawatt scale, new build opportunities.

We are also broadly secured or represented in the emerging small modular market overall. So recognizing, again, we're still a relatively young public company. We're still working hard to get our name out there and really tell our story, but that's the key point I would leave behind.

Well, thank you very much, Tom, Brian. Appreciate it. Thank you.

Thank you.

Greetings, and welcome to the Mirion Technologies Fourth Quarter 2025 Earnings Call. [Operator Instructions]

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Eric Linn, Treasurer and Head of Investor Relations. Thank you, sir. You may begin.

Okay. Thank you, Melissa. Good morning, and welcome to Mirion's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me this morning are Mirion's Founder, Chairman and CEO, Tom Logan; and Mirion's CFO and Medical Group President, Brian Schopfer. Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements, and actual results may differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in our annual reports on Form 10-K, quarterly reports on Form 10-Q and in Mirion's other SEC filings under the caption Risk Factors. Quarterly references within today's discussion are related to the fourth quarter ended December 31, 2025, unless otherwise noted.

The comments made during this call will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of the presentation accompanying today's call. All earnings materials can be found in the Investor Relations section of our website at www.mirion.com. With that, let me now turn the call over to Tom, who will begin on Panel 3.

Eric, thank you, and thanks to everyone for joining the call today. 2025 was a strong year for Mirion, and it would not have been possible without the hard work, the energy and the dedication of the entire Mirion team, and I thank you all for your efforts and results. We booked record orders in 2025, totaling more than $1 billion. This was largely driven by the nuclear power market strength we've been highlighting throughout the year.

This includes $150 million from our large opportunity pipeline. Favorable macro conditions in both nuclear power and nuclear medicine supported meaningful growth in 2025. Nuclear power organic revenue grew more than 11% in the year, while Nuclear Medicine organic revenue grew more than 13%. Both of these end markets are expected to enable double-digit organic growth coming into 2026.

As you may recall, in 2025, we articulated a strategic priority to increase our nuclear power exposure. To that end, we acquired Certrec in July. And in December, we closed on the acquisition of Paragon Energy Solutions. Both of these acquisitions augment our North American nuclear power exposure and take our nuclear power revenue to roughly 40% of the total.

Importantly, this revenue accrues from fuel cycle, new plant construction, plant operations and decommissioning. Thus, we cover the breadth of the century-long cradle-to-grave lifespan of a modern large-scale reactor. Importantly, approximately 80% of our revenue comes from the installed base, which is being both pushed and economically incentivized to life extend, operate and modernize driving an attendant increase in demand for the solutions Mirion provides.

We believe this dynamic is robust and not dependent upon any particular view on new build or SMR dynamics, given the profound shortage in generating capacity in most developed markets. New builds and SMR should be thought of as attractive incremental opportunities on top of the flow from the operating fleet, and we remain highly bullish on this sector. These key themes are expected to further evolve in 2026. Our large opportunity pipeline is growing and is expected to support favorable order dynamics in the year.

We have a right to win on more than $400 million of large opportunity projects that are expected to be awarded in 2026, inclusive of $200 million of projects carrying over from the 2025 pipeline. Lastly, on this panel, I note our 2026 full year guidance, which reflects the strong fundamentals underpinning our forecast, supporting growing revenues, expanding margins and enhanced adjusted free cash flow. I'll detail a few of these points beginning on Panel 4. As mentioned, we booked a record nearly $1.1 billion of orders in 2025. This represents a 26% increase versus 2024. 2025 order growth plus the addition of Paragon's backlog resulted in a 36% increase in our backlog versus last year.

The nuclear power end market demonstrated the strongest growth, supported by $150 million from our large opportunity pipeline. This was followed by $34 million of defense and diversified end market orders, principally out of the U.S. and with NATO. These 2 factors were partially offset by a decline in Labs and Research end market orders. As I mentioned in our last call, DOGE and the lengthy 43-day government shutdown negatively impacted DOE orders in Q4.

Our Medical segment also faced some headwinds in 2025, largely due to tough comps from the prior year, coupled with transitory macro headwinds. To elaborate, nuclear medicine orders increased 31% in 2024, making for a difficult comp in 2025.

Despite this, nuclear medicine orders were down only 6% in 2025. Dosimetry orders grew 19% last year due to a large hardware order booked in 2024, making for a tough comp in 2025. RTQA full year orders were lower versus 2024 due to a sluggish Japanese market and negative capital spending dynamics in the U.S. health care market. On Panel 5, we summarize our performance compared to 2025 guidance.

Top line performance was softer than guidance due to the RTQA and labs and research weakness. Despite the revenue miss, adjusted EBITDA was on target and demonstrated expanding margins. In addition, free cash flow was more than twice 2024's performance and beat guidance from both an absolute and conversion ratio standpoint.

Adjusted EPS was $0.46, slightly below guidance of between $0.48 and $0.52 largely due to tax dynamics. Panel 6 addresses key drivers for the Labs and Research and RTQA end markets. We believe that 2025 headwinds reflect a demand deferral rather than a secular change in the market. More specifically, in Labs and Research, DOGE and the government shutdown represent onetime impacts that are expected to equilibrate.

In RTQA, the fundamental market growth drivers continue to apply, notably an aging population demographic in developed economies and an increased push for higher standards of care in developing economies are both expected to lead to overall demand growth. Our RTQA and nuclear medicine solutions benefit from this dynamic and comprise around 75% of the segment's revenue. Panel 7 demonstrates our strong historical track record. We've delivered double-digit 5-year revenue and adjusted EBITDA CAGRs of 11% and 12%, respectively. Moreover, adjusted free cash flow strengthened dramatically in 2025, doubling last year's performance and achieving our 2026 conversion target a year early.

We expect to make continued progress on all of these KPIs in 2026. 2026 performance will be augmented by the recent acquisition of Paragon and Certrec discussed on Panel 8. We are broadening our exposure to our most dynamic vertical with these 2 deals and are confident in the integration campaign.

Both acquisitions immediately broaden Mirion's presence in the North American nuclear power market, substantially enhance customer intimacy and represent a significant opportunity for us to take their capabilities global by leveraging our strong international presence.

Similar to Mirion, most of Paragon and Certrec's revenue comes from the operating fleet. However, both acquisitions strengthen our position in the rapidly evolving SMR space. Both Paragon and Certrec are the tip of the arrow with SMR developers supporting licensing, regulatory guidance and reactor instrumentation design. This has immediately improved the top of funnel opportunity set for Mirion as a whole and increases drag along traction for legacy Mirion solutions.

We now have contractual commitments in place with more than 20 SMR developers and our reach is expanding. We're working hard to run the tables to land and expand our position with all key players. As you can see on this panel, we have quantified attractive synergy opportunities and are moving ahead rapidly. In 2026, we will move beyond foundational work such as finance, HR and IT integration and shift our focus to material synergy drivers like commercial integration, improved pricing heuristics and supply chain optimization.

In the case of the latter, we saw nearly 100 basis points of adjusted EBITDA margin improvement in 2025 alone from procurement process improvement in legacy Mirion. We believe much of the work we're doing in this space will translate well to both the Paragon and Certrec business models. Looking further out, commercial leverage and AI-informed product evolution represent the tail of the integration opportunity set, and we are increasingly enthusiastic about the potential. Paragon also contributes to our large opportunity project pipeline. Panel 9 illustrates that at this time, we see more than $400 million of large opportunities with the potential to transact in 2026. The chart identifies $200 million plus of new large projects on top of the $200 million of carryover from 2025.

Notably, nearly half of these new opportunities come from Paragon. While these projects are definitionally $10 million or higher, the broader nuclear power space continues to support growth opportunities for Mirion. Panel 10 shows headlines from just the past month or so, whether it's an $80 billion deal for new nuclear power plants in the U.S. or new hyperscaler partnerships, the momentum in the market continues to build. It is abundantly clear that power availability is becoming increasingly critical to the global economy.

Panel 11 illustrates that by 2035, nearly 1/3 of all data centers are expected to exceed 1 gigawatt compared to only 10% of data centers today. For reference, each 1 gigawatt data center campus uses about 1/5 of New York City's entire electrical load. Power generation and grid capacity are increasingly becoming the bottlenecks for data center growth and nuclear power is likely to remain a critical component of the long-term solution. Before I turn it over to Brian to walk through the financials, allow me to detail our 2026 guidance on Panel 12. The headlines here are growing revenues, expanding margins and increasing adjusted free cash flow. 2026 total revenue is expected to grow between 22% and 24%. This includes tailwinds from FX and acquisition-related growth from Certrec and Paragon.

Absent these tailwinds, you arrive at our 2026 organic revenue growth guidance of between 5% and 7%. Adjusted EBITDA guidance is between $285 million and $300 million. This equates to adjusted EBITDA margins between 25% and 26%. And this margin range represents approximately 90 basis points of margin expansion expected for the year, notwithstanding the dilutive margin impact from the Paragon deal.

We expect to help Paragon become margin accretive within our planning horizon, again, as we capture clearly identified synergies. 2026 adjusted free cash flow should range from $155 million to $175 million. This expected growth is attributable mainly to the full year impact of growing earnings and capital structure improvements, which will more than offset a modest increase in expected CapEx to fund AI and other critical strategic initiatives. Finally, 2026 adjusted earnings per share should range from $0.50 to $0.57. This includes an expected 275 million fully diluted shares, reflecting a full year's impact from the Paragon-related capital raise in September of 2025.

Also new this year, we are now including stock-based comp within our adjusted EPS. If you were to exclude it similar to last year, our 2026 midpoint guidance would have been $0.61 or $0.07 higher. Brian will share more details on this and the broader financials. Brian?

Thank you, Tom, and thank you all for joining our call. I'll review the detailed financial results beginning on Slide 13. Fourth quarter enterprise revenue grew 9% to $277.4 million compared to the prior year's fourth quarter of $254.3 million. Over half of the year-over-year improvement came from M&A. Both Paragon's December results and a full quarter of Certrec are reflected in the numbers. FX was a tailwind to total Q4 revenue, contributing 3.4% of the 9% increase versus Q4 '24. As a reminder, about 36% of our 2025 revenue is euro-denominated. Fourth quarter organic growth was 0.5% negatively impacted by tough comps within both segments, as we highlighted on last year's fourth quarter call. The Nuclear and Safety segment organic growth in 2024 was 13.9%, making for a tough comp. In Medical, Nuclear Medicine was up 21% in Q4 '24, while dosimetry was up 14% in Q4 '24. Adjusted EBITDA was $77.6 million, up 11.5% versus Q4 '24. Adjusted EBITDA margins expanded 60 basis points despite margin dilutive impacts from Paragon being included for December 2025, our largest month.

Excluding Paragon, adjusted EBITDA margins would have been 28.6% or 120 basis points higher than last year. Q4 adjusted EPS was $0.15 or $0.02 lower than Q4 '24. This reflects the addition of approximately 30 million shares to our diluted share count from the convertible notes and approximately $20 million from the weighted impact of the equity raise supporting the Paragon acquisition that we did at the end of Q3.

We've included a slide in the appendix that illustrates how the converts work at different stock prices. Q4 adjusted free cash flow was $78 million, contributing to a full year's $131 million adjusted free cash flow generation and 57% conversion. Full year performance outperformed the 2025 initial guide. Q4 orders increased 62%, reflecting $140 million of large opportunity orders awarded in Q4 from the nuclear power end market. Even excluding these orders, our Q4 order book was strong at up 11%. Slide 14 showcases key nuclear power metrics for the year. Adjusted nuclear power orders grew 52% in 2025. This excludes any acquisition-related orders as well as the turkey debooking last year.

Nuclear power order growth was supported by all 3 verticals: new utility scale reactors, the installed base and SMRs. For instance, we booked $39 million of SMR-related orders in 2025 compared to $17 million in '23 and '24 combined. This momentum continued into 2026, where we've already seen approximately $10 million of SMR orders just in January. Nuclear power end market organic revenue grew 11% for the year compared to 4.4% for the Collective Nuclear and Safety segment.

The nuclear power end market organic revenue growth is expected to post double-digit growth again in 2026. Slide 15 has the Q4 order book details. As mentioned, we booked $140 million of large orders in the quarter, including the $55 million Asia installed base order disclosed on our October earnings call. Outside of nuclear power, our defense and diversified end markets saw a doubling of orders in Q4, primarily in the U.S. and with NATO. Medical segment orders declined in the quarter. Recall, we had tough comps in both the nuclear medicine and dosimetry end markets. Slide 16 bridges our large opportunity pipeline. Tom covered much of this in his prepared remarks already. Here, you can see how we arrived at the $200 million of previously communicated large opportunities that make up a portion of the more than $400 million 2026 pipeline.

Timing is always the wildcard here, and we believe our right to win is strong on all these projects. Let's get into the P&L on Slide 17. We'll focus on full year results since we detailed Q4 already. Full year revenue totaled $925.4 million, up 7.5% versus 2024. More than half of the growth is organic. The rest comes from equal parts M&A and FX. Nuclear power and nuclear medicine were meaningful contributors to organic revenue growth for the year.

Full year adjusted EBITDA totaled $227.9 million, up 12% compared to 2024. Margins expanded 90 basis points for the full year, reflecting procurement initiatives and operating leverage, partially offset by tariff and the impact from the Paragon acquisition, which closed in December 2025. Full year adjusted EPS was $0.46, a 12% increase despite an approximately 50 million share increase in 2025 from the convertible notes and the equity raise associated with the Paragon purchase. Slide 18 provides a 30,000-foot view of the moving pieces impacting 2025 revenue versus our initial guidance from December 2024. Overall, FX and acquisitions were both tailwinds to revenue.

Recall, we initially baked in a $1.05 euro to USD rate while we ended the year at approximately $1.17. In addition, the acquisitions of Certrec and Paragon in the back half of 2025 contributed favorably to total revenue growth. Conversely, top line performance was negatively impacted by organic headwinds of approximately 250 basis points. The U.S. government shutdown and DOGE initiatives primarily impacted our labs and research end market in the Nuclear Safety segment.

Additionally, as we've been discussing, our RTQA market was sluggish, mainly related to hardware headwinds in North America, China and Japan, partially offset by our performance in software and services. For example, our RTQA services business reported a 2-year revenue CAGR of 12% from 2023 to 2025. Now let's turn to the segments beginning on Slide 19. Nuclear and Safety segment Q4 revenue was $194.9 million, up 15.5%. Organic revenue increased 3.1% as the segment was lapping a tough 13.9% comp from last year. Q4 2025 organic revenue growth was aided by over 12% nuclear power end market growth, partially offset by continued softness in Labs and Research and to a lesser extent, from the Defense and Diversified end market off a large 2024 comp. The Labs business was definitely impacted by the 43-day government shutdown. We continue to believe this is a delay rather than a decline.

We expect it to take some time to get back to a more normalized state, as you can see in our organic revenue growth guide in the back of the deck. Total year Nuclear and Safety segment revenue was $614.6 million, up 9.5% compared to 2024. Full year organic growth reflects 11% nuclear power growth, partially offset by an 8.5% decline from the global labs and research end market. More specifically, our U.S. labs business connected mainly to the DOE was down approximately 15% for the year.

Additionally, the defense component of our Defense and diversified end market declined, while the industrials component grew. More importantly, had we owned Paragon in 2025, their year-over-year growth was 20%. Going into 2026, it is expected to be approximately 25% plus. Nuclear Safety segment Q4 adjusted EBITDA was $60 million or 13.6% higher than last year. Q4 margins declined 50 basis points. As we've discussed, we closed the Paragon acquisition on December 1, which impacted Q4 margins. Excluding Paragon's December results, Q4 margins would have instead expanded 50 basis points, reflecting operating leverage, lower incentive compensation and procurement initiatives. Full year adjusted EBITDA for the Nuclear and Safety segment was $177.7 million or 11.2% higher than last year.

Full year margins also increased, up 40 basis points. Again, excluding Paragon's December results, full year margin expansion would have been 70 basis points or a 30 basis point swing. Next, on to the Medical segment on Slide 20. Q4 Medical segment revenue declined 3.5% to $82.5 million. On the October earnings call, we expected flattish Q4 revenue. Q4 RTQA organic revenue growth -- revenue declined 4%. The difference was the RTQA end market was negatively impacted by Asia and Europe hardware headwinds.

Additionally, as mentioned earlier, nuclear medicine and dosimetry were bumping up against tough comps. Full year Medical segment revenue grew 3.7% to $310.8 million, reflecting double-digit organic revenue growth from the nuclear medicine end market, offset by lower RTQA organic revenue. We expect double-digit organic revenue growth in 2026 from the nuclear medicine end market as well as a rebound to mid-single-digit plus organic revenue growth from RTQA. RTQA should see a rebound in Europe hardware sales and continued adoption of our software platform globally as well as a number of new product launches. Meanwhile, we expect flattish 2026 dosimetry organic revenue due to lower hardware sales.

We are encouraged by our InstaVUE adoption, particularly what we are hearing from the nuclear power end market. Medical segment adjusted EBITDA grew in Q4 despite softer revenue versus last year. Q4 grew 5.1% to $34.9 million and expanded margins 350 basis points, primarily due to procurement savings of approximately 100 basis points and 250 basis points mainly from OpEx in-year initiatives.

Meanwhile, full year adjusted EBITDA grew 11.2% to $116.3 million. Full year adjusted EBITDA margins expanded 260 basis points from procurement and similar OpEx in-year initiatives. It was a tough year for Medical on the top line, but I am encouraged by the margin expansion and the team's focus on cost and productivity. Turning to Slide 21. You can see the marked improvement in adjusted free cash flow this year. 2025 adjusted free cash flow totaled $131 million, approximately double 2024's $65 million. 2025's performance represents a 57% conversion of adjusted EBITDA. 2025 step change performance reflected improved earnings, reduced net interest expense from capital structure improvements and lower CapEx. Recall, we reduced our Term Loan B size from $695 million to $450 million and refinanced down to SOFR plus 200. We also issued 2 convertible notes at 0.25% and 0% coupons in 2025.

These actions reduced our 2025 pro forma total cost of debt to 2.9% versus 7.4% in 2024. In 2026, we expect to increase our adjusted free cash flow while maintaining a similar conversion rate, consistent with our long-term guidance. Before we open the lines for Q&A, let me share some additional detail for 2026. From a full year 2026 perspective, we expect Q1 to be the lightest quarter for both revenue and adjusted EBITDA.

The rest of 2026 phasing, we expect to be consistent with prior years. For Q1 2026, total organic revenue growth is expected to be low single digits. Medical organic revenue growth should be mid-single digits, while Nuclear and Safety will likely be flat. Within Nuclear and Safety organic growth, our sensing business volume within nuclear power will be lower from a tough comp in 2025 due to project timing. This impacts both revenue and margins. Total Q1 2026 enterprise EBITDA margin should contract compared to Q1 2025 despite expected margin expansion in the Medical segment. Remember, Q1 now includes the full impact of Paragon, which is dilutive to overall margins. We expect to return to margin expansion in the back half of the year and for the full year.

As Tom mentioned, 2026 adjusted EPS now includes stock-based compensation. We made the change to be more reflective of the true cost of doing business. In addition to the full year guidance that Tom walked you through, there are additional modeling assumptions in the appendix. With that, I'll ask the operator to open the line for questions.

[Operator Instructions] Our first question comes from the line of Andy Kaplowitz with Citigroup.

Tom, just thinking about your large opportunity pipeline, I know large project timing tends to be difficult. But if I go back to last year at this time, it was $300 million to $400 million, and now it's greater than $400 million, it's up mid-teens. It's obviously noticeable that your backlog ex Paragon moved up nicely in Q4 '25. But can we take your pipeline and say it should translate to double-digit growth in backlog in '26? And with nuclear power now almost half of your sales, do you have confidence to sort of say that?

Yes, Andy, I think you hit the nail on the head that large project timing, particularly when you're talking about new reactor builds and things where there's enormous complexity overall really gates the timing dynamics. And we try and surround that in terms of how we place probability estimates around timing and quantum of bid awards and the probability of success, et cetera.

But at the end of the day, it remains a dynamic target overall. So I'm hesitant to say that to draw a tight correlation between, again, those large projects, which, by definition, are more than $10 million in revenue and the expected timing. What I would say is that we like that dynamic a lot. When we look at the quality, and as Brian noted, our right to win within that grouping of large projects, coupled with the underlying dynamics, particularly in the nuclear power vertical overall, we feel good about how that ultimately drives an accelerating rate of growth.

That's helpful, Tom. And then this might be for Brian or Tom, like I was intrigued by the Q1 guidance in the sense that you've got Medical back up to mid-single digits. Obviously, it's a little bit weaker to end the year. So like maybe, is that comps? Is that you expect a relatively quick recovery in places like Europe and China? Maybe you can give us a little more color on how Medical should pan out in '26 to sort of meet that mid-single-digit growth?

Yes. I think -- I mean, obviously, as the year gets -- goes on, we're a little bit stronger in '25 in the first half of the year in Medical, specifically Q2, by the way, with -- we shipped a lot of stuff into China, Andy. So the back half, obviously, is a bit easier than the front half. But the team likes the dynamic they're seeing in the -- even here in the first quarter and really across all 3 businesses.

So that's -- right now, that's what we're seeing. And we'll update you when we get through Q1. But I think the point here is that we thought quite hard, and we usually don't give quarterly -- too much quarterly guidance, and we wanted to make sure we guided appropriately here.

Our next question comes from the line of Joe Ritchie with Goldman Sachs.

Maybe just touching on Q1 for a minute just to make sure that we're dialed in because you have the accretion also from Paragon coming through. I don't know if there's any seasonality in the business. But I mean I guess we're getting to a number, like an EBITDA number kind of like in that mid to high 50s. I just want to make sure that we're thinking about it directionally right.

Yes. I mean, look, I'm not going to give you the number. But I think by -- first off, Paragon's -- the first quarter will be the lightest quarter as well for Paragon. So yes, the third and the first quarter will be the kind of -- it has similar seasonality to Mirion, where the first and the third quarter are lighter than the second and the fourth quarters.

Obviously, the nuclear power business, that kind of matches the outage season. So that's how I would think about it. I think with the lighter first quarter in Mirion and the dilutive nature of the margins on the Paragon side, that I would -- we just -- I would think pretty hard about how we're modeling margin expansion in Q1.

And like I mentioned, our sensing business had a very strong Q1 last year, and that business levers tremendously. So with a little bit of lighter volume there, you're probably -- you're definitely going to see a little bit of a contraction on the margin side in the legacy Mirion business on top of the dilution for Paragon. So that's kind of the color I'd probably give around Q1 without giving you a number.

Okay. No, that's helpful. I appreciate that, Brian. And then I guess, look, clearly, the orders were excellent this quarter, better than what we anticipated even when you gave that funnel at the end of last quarter.

Tom, maybe just kind of -- I know you touched on this $400 million pipeline, the large project pipeline for 2026. Just help with your customer conversations, win rates that you should expect going forward? Do you feel like your win rates are increasing? Just any other color on that pipeline and how you guys are doing commercially?

Yes. So we -- Joe, we -- you know historically, we don't talk about win rates, but I'll tell you what's really important here, and that is the impact that both Certrec and Paragon are having in the way we engage with customers overall. And I'll focus mainly on Paragon, but the themes are broadly equivalent. So Paragon was founded and grown by CEO, Doug VanTassell, who's an absolute rock star. He's really highly, highly known and respected within the nuclear industry. And their commercial model historically has required a much higher degree of customer intimacy than Mirion's go-to-market model, in part because of fundamental differences in the solutions that they were selling versus what we've been selling.

And as Doug and I have developed a strong partnership and really focused on the road map for integrating the companies, one of the first early opportunities that we see and are obviously working hard to take advantage of is that commercial traction, where the combination of the Paragon customer intimacy with a much broader solution set that is quite unique in many dimensions, we believe, helps us gain even more traction, not only from the operating fleet, which again, is about 80% of our total nuclear power revenue, but more broadly as we're engaging with the reactor designers, the so-called NSSS firms on new utility scale projects, and we're engaging with literally all of the SMR players on their various campaigns overall. So that dynamic again, we think is going to be a net positive. We hope and expect that we're going to see that begin to emerge as we gain additional traction. And ultimately, again, if we were talking about absolute win rates, which we're not, I would expect those to improve.

Great. Super helpful. If I could maybe squeeze one more. Just, Brian, on Medical, you mentioned the OpEx initiative. The margins this quarter were really strong. As we kind of think of like the jumping off point for 2026 full year, is the expectation that your Medical business should still see over a full year period that like 50% type incremental margin just given the initiatives and traction that you guys are getting?

Yes. Look, I expect pretty good margin expansion again in '26. It won't be as high though as what we saw in '25 for sure. So that's probably how I'm thinking about it. Again, I think the 50% incremental is good. It maybe is a touch high, but it's still going to be very strong and robust.

Our next question comes from the line of Tomo Sano with JPMorgan.

So with 2026 guidance for adjusted EBITDA margins at 25% to 26%. So is the past 30% plus EBITDA margins by 2028 still intact? Should we expect about 200 bps of margin expansion in 2027 and 2028 to reach that target?

Tomo, I'm not letting go of that. I mean the -- noting that the headwinds that impact us on that have been, to some degree, tariffs, to some degree, the near-term dilutive -- margin dilutive impact of the Paragon deal overall. But the countervailing or counterbalancing tailwinds are, firstly, it's growth. Absorption is our best trend here. And given the very high degree of operating leverage we have in the business as we continue to drive a more robust top line dynamic, absorption will be very important. Secondly, it's the continuation of self-help. We noted 100 bps of margin improvement from procurement this year. We're not done in that area. There's much more to be done, both with legacy Mirion as well as with the newly acquired companies. But beyond that, it's our entire business system as we think about continuous improvement and greater efficiency overall.

But the third element, which is becoming far more tangible, and I'm sure you're talking about on a lot of calls, is AI. AI is profoundly important as we think about both customer-facing applications and the implication that has on both margin profile and top line growth. As we harness this, it we believe, will give us the ability to mix up to a degree.

But it's also the internal productivity. Last year, we launched 17 internal AI bespoke applications that were focused on productivity enhancement with another, I believe, 7 in development. And that cadence of change is improving. We are resourcing up in AI.

We've hired our inaugural Chief AI and Digital Officer, Shahmeer Mirza who's got a very clear and compelling vision as to what we can do, what we must do from both a customer-facing and an internal productivity standpoint. And we're pretty bullish about it overall. So to be clear, this is not a gimme putt to get to 30-point EBITDA margins. We have a lot of wood to chop. But having said all that, I continue to see a pathway and Brian and I continue to encourage and motivate the organization to get after it.

Thank you, Tom. And a follow-up on AI. With announcement of executive appointments you just described, what are the key KPIs in short to midterm goals for your AI and digital strategies, please?

Yes. They're really under development right now, understanding that Shahmeer has only been on board now for a few months. And so we're not yet in a position where we're going to put that out within the investor community overall. But what I will tell you is that we see very, very compelling opportunities to harness as we think about customer-facing applications to harness our native position, recognizing that we are in almost every operating nuclear power plant in the world. It's in the upper 90% range overall. And increasingly, I think there's a point of view and a defensible point of view that having that core sensor presence will be critically important as we think about things that ultimately in this space may impact the overall efficiency of a power plant, how hot it can be run, how to more effectively manage load balancing, how to accelerate start-ups in the wake of shutdowns, et cetera.

So there's a huge body of work that we're doing, not only in the nuclear vertical, but in medical, in labs and research, we're very advanced in defense, et cetera. So it really is going to impact and inform our agenda from a customer-facing standpoint in all key verticals, but internally as well. We've really developed considerable momentum in terms of incorporating both bespoke tools that our team has developed.

But beyond that, just leveraging the capabilities that are increasingly embedded within all the various third-party software applications that we use overall. So summary of all of that is that we're not yet ready to guide the key metrics in and around AI, but I think it is important to note that our effort here is significant and that our momentum is building, and we see great promise here.

Our next question comes from the line of Rob Mason with Baird.

Brian, I think I heard you correctly when you were describing Paragon, you're expecting 25% growth kind of pro forma for '26 in that business. And as I recall, when you acquired it, it'd be growing kind of low teens. A couple of questions, just what accounts for kind of the acceleration there? And then to the extent that I know, Tom, you referenced this kind of tip of the spear, that level of step-up in growth, what kind of implications could that have on the broader Mirion nuclear power business over the next couple of years?

Maybe I'll take the first part and you take the second part. I mean, just quickly, first off, Paragon has good coverage. It actually have better comforts than Mirion does on for next year as we think on a forward basis. So I think one of the things that's driving it is just the order growth we saw in '25.

I think the other thing is they're definitely expanding a bit their markets in '26 into kind of the DOE landscape, which is a vertical that didn't have as much revenue growth in last year. So I think those 2 things kind of coupled together is what gives us confidence in kind of hitting those numbers. But it's an exceptional team, and they continue to put good wins on the board.

Yes. Just Rob, in terms of talking about the strategic implications, I think they're profound. Again, Paragon is an amazing company, amazing people. very, very high cultural affinity, goodness of fit with Mirion, but also the strategic alignment is extraordinary. I mean we've articulated what are kind of the obvious and key areas of focus in terms of bringing the 2 companies together from a synergy standpoint, particularly as it relates to commercial traction overall, our ability to help them drive more international growth, their ability to help us, again, create a stronger bond and connection, more customer intimacy within North America overall. But the longer-term implications strategically basically are, number one, we think we can get more wallet share out of the installed base on a combined basis.

We think 1 plus 1 will be 2 plus here. Secondly, with the SMR community, Paragon has been very assertive, very effective in prosecuting that marketplace overall, as have we, but the combination of the 2 companies in that particular field are really, really important, not only as it relates to the SMR players themselves, but also as it relates to the broader industry, both the operating fleet and the evolving utility scale reactors.

One of the classical innovation issues articulated in the innovator's dilemma, classic Silicon Valley book is the issue that companies oftentimes will tend to focus on the immediate needs of their best customers today.

And one of the interesting things about the SMRs is given the advanced technologies they're deploying, given the rapidity with which they are driving toward big audacious outcomes, it is forcing a different level of innovation within the industry. And I like our position here. I like where we sit in terms of how this is evolving overall. And while it's a wildly difficult market to predict, we do believe there will be successful SMRs that are emerging probably faster than people expect. And we think the innovation that we are participating in and to some degree is driving will then cascade more broadly into both the operating fleet and some of the utility scale reactors. So I mean, the implications here, we think, are significant. We're thrilled that we were able to close this deal and feel pretty good about the art of the possible here overall.

That's helpful, Tom. Just real quickly as a follow-up, maybe just to extend the question to the existing fleet on the reactor side, it's a pretty active year for the NRC on life extensions in the U.S., maybe not a surprise, but you could see less friction in that happening. How does that level of activity, that level of life extension activity, how does that manifest for you in terms of orders? I mean did we see that already in backlog? Or is that part of the pipeline that you look ahead? Or just how does that manifest?

Yes. I think to some degree, yes. I mean, obviously, we posted 11% growth in nuclear power last year. And certainly, some of that was informed by those themes. But the key dynamics here, the one you cited, which is life extensions, but in addition, you have to contemplate upgrades, so increasing the licensed output of a nuclear power plant. And then on top of that, a fundamental need for modernization, particularly as it relates to instrumentation and control systems overall.

All of those themes are critically important for the global fleet, not just the North American fleet overall. And it continues to build. The most stark examples would be the previously decommissioned power plants that are coming back online, which would include Palisades, Three Mile Island and Duane Arnold.

There our content is significant in each of those. And it's not fully traded. That continues to evolve. And so I think this dynamic is going to continue to build. I think it's axiomatic, again, just given the critical shortage of global electrical generating capacity. It's hard to think of an edge case where that dynamic goes away overall. And I think that's fundamentally favorable for us and the solution sets that we provide to the marketplace.

Our next question comes from the line of Jeff Grampp with Northland Capital Markets.

I was just curious, with respect to the '26 guide, is there much of, if any, contribution from the $150 million of large orders that you booked in '25? Or is most of that expected more to be in '27 and beyond?

Yes. Great question. There's definitely some of the large orders in '25 that we booked at the end of Q4. But I would tell you, and we've historically talked about this. I mean that first year of these larger contracts tends to be the lightest year and then that tends to ramp kind of more in, call it, after 18 months or so into year 2, 3, 4. So yes, there's a little bit, but I wouldn't say it is the biggest piece of those businesses from an annual.

Understood. That's helpful. And my follow-up, I want to reference Slide 23, I believe it is. You guys called out SMR being a bigger factor to the growth in 2026. Is there any way to contextualize that a bit more? And just, I guess, taking a step back, like how material do you guys see SMRs becoming to Mirion's growth story over the coming years?

Yes. It's -- Jeff, it is difficult to contextualize recognizing the sheer volume of SMR projects globally where the -- depending on how you're screening it is well over 100 discrete projects overall. We've indicated that we're -- we have awarded contractual relationships with more than 20 of these guys so far. And we -- as noted, we hope to continue to drive further.

We want to cover everybody. We want to have a relationship with every key SMR sponsor overall. In terms of hard metrics, probably the leading metric is just the orders that we've taken from an SMR standpoint. We highlighted in the presentation the extraordinary growth that we saw in 2025 in terms of order intake overall. But beyond that, again, it's very, very hard to quantify specific KPIs in terms of this marketplace beyond orders, beyond engagement overall.

Yes. I would say on a total basis, it's sub 3% of our total revenue as we look forward for '26, and it was sub 2% last year, maybe even sub-1.5% in '25. So yes, there's growth for sure, but it's not meaningful in the grand scheme of things, but it's absolutely something that we continue to be excited about, and it's something that continues to clearly propel orders. So maybe that's some additional color as we think about '26.

Our next question comes from the line of Chris Moore with CJS Securities.

Yes. Just obviously, from an M&A standpoint, Paragon has gotten most of the headlines. Maybe you could just talk a little bit about the Certrec acquisition. You owned it for a little more than 6 months. Just kind of what you've seen to this point in time, anything that perhaps investors don't fully appreciate? It's obviously much smaller than Paragon, but it also broadens your nuclear power portfolio and access as we're just talking about SMRs, et cetera. Just maybe a little bit more there?

Yes. Chris, fundamentally, what Certrec does is outsourced regulatory compliance. About half of their business is supported by a SaaS platform that they've developed, which is really the industry standard in North America, very strong dominant position, not only in nuclear power, but more broadly as we think about the bulk electrical grid. And that is supported by an incredible treasure trove of data.

They have over 15 terabytes of licensing and regulatory data supporting their customers. So literally, every permit, design drawings, every regulatory action impacting the industries they support. And it gives the engineers and the operators at customer sites, the ability to quickly discern what kind of regulatory issues they may have. If they have a component failure, they have the ability to see how others have handled that. If they have a routine regulatory filing that can be automated. And we love those component. Again, it's an amazing platform, amazing people. And the focus that we have here has multiple dimensions, but there are 2 that I'll call out. One is that in particular, with the data-rich environment that they have here, we've been hyper focused on the AI leveraging of that data set.

15 terabytes is an ocean of data in our industry, and there's a lot that we can do to improve the velocity of that data, improve the quality of the information, the feedback, the tool set that we are providing to our customers. And then secondly, the ability to drive it more expansively as we look again at Mirion's strength globally overall. So it's a jewel of a business. We're thrilled to have that as part of the Mirion DNA. And I think it's going to be an important AI story for us prospectively.

Our final question this morning comes from the line of Yuan Zhi with B. Riley Securities.

Maybe we can change gears to nuclear medicine. Novartis is building their fourth radiopharmaceutical manufacturing site in the U.S. in Florida as part of their U.S. investment. I'm wondering what kind of economics is there for Mirion when such a large-scale manufacturing site is built. Tom or Brian, if you could also comment on your high-level plans for nuclear medicine in 2026.

Yes. Nuclear medicine, again, is an exciting vertical. You saw that we press released today, Yuan, that we've taken one of our best and brightest executives, Shelia Webb, who heretofore has been our Chief Digital Officer. and we have moved her over to run the entirety of our nuclear medicine business. So both the software component, ec2 as well as the legacy hardware business, which is the dose calibration instruments, the clinical instruments like thyroid uptake systems, the whole ecosystem within that overall.

We see a powerful and compelling opportunity to continue to drive a higher degree of integration to continue to rapidly evolve the capabilities of our software platform overall and do so in a way that it creates more traction, more at that for the hardware overall. But Shelia is also working more broadly with the team, been very proactive in forging strategic relationships with major players in the nuclear medical infrastructure. So as we think about all the key players, the drug makers, the isotope producers, the CDMOs, the radiopharmacies, the clinicians and IDNs.

She has been leaning into that overall. And our focus has really been on building out the strategic traction with major players here to try and drive, again, just higher velocity of the opportunity set on both the hardware and software side in total. And I like the direction that's heading. Again, we continue to see this as a very exciting market. We think this modality in cancer care is relevant and a real game changer, and we like where we sit.

I think the other thing on Novartis that we're super focused on the nuclear medicine side is that pull-through of the technology, Nuclear and Safety product lines in.

Shelia brings us that advantage because she knows both businesses. And I think as you asked specifically about Novartis, I think that's really where we're going to get -- be able to kind of move the needle here.

Yes. And as you think about that, just tagging on to what Brian said, they have 3 major production facilities in the U.S. Yuan, they're building 2 more. These facilities require a lot of equipment that is relevant to us relating to laboratory QC equipment like gamma spec instrumentation, radiation monitoring for area monitors and affluent classical health physics instrumentation like survey instruments and dosimeters, dose of record for legal dosimetry, dose calibration instruments, et cetera. So it's -- they're obviously a significant player. We hope to support them in the most comprehensive way possible.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Logan for any final comments.

Ladies and gentlemen, thank you for listening in today. Again, we're excited about the -- ending what has been a really important year for Mirion overall in terms of our continued strategic evolution as a business, in terms of key operational and financial milestones that we've articulated. But more fundamentally, we continue to be very constructive about vertical market dynamics, about our capabilities overall. So we look forward to sharing the journey with you over the upcoming quarters and wish you all well. Thank you very much.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Mirion Technologies Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Eric Linn, Treasurer and Head of Investor Relations. Thank you. You may begin.

Thank you. Good morning, and welcome to Mirion Third Quarter 2025 Earnings Conference Call. Joining me this morning are Mirion's Founder, Chairman and CEO, Tom Logan, and Mirion CFO and Medical Group President, Brian Schopfer.

Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements, and actual results may differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in our annual reports on Form 10-K quarterly reports on Form 10-Q and in Mirion's other SEC filings under the caption Risk Factors. Quarterly references within today's discussion are related to the third quarter ended September 30, 2025, and unless otherwise noted.

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

With that, let me now turn the call over to Tom, who will begin on Slide 3.

Eric, thank you, and good morning to those joining us today. As always, we appreciate your interest in Marion. This morning, I'll focus my prepared remarks on 3 topics: First, I'll highlight the strong third quarter results and reassert that we remain on track for our 2025 guidance.

Next, I'll provide context to the double-digit growth we are seeing year-to-date from the nuclear power end market. And finally, I'll detail progress in 2025 to broaden our nuclear power portfolio through M&A. As mentioned, we are pleased with our third quarter numbers. The business performed well, led again by our nuclear power end market. Not only did this market support a strong quarter, it was also the main driver for order growth. There's been a lot of press recently about the exuberance of some emerging nuclear energy stocks, particularly the non-revenue-generating ones.

Mirion runs counter to this narrative. Approximately 80% of our nuclear revenue comes from the installed base, meeting reactors that are operating today. More broadly, approximately 45% of Mirion's enterprise revenue will be generated from this end market with the addition of Paragon Energy Solutions. Recall, we announced this acquisition last month and expect the deal to close by year-end. Momentum continues to build for the nuclear renaissance and Mirion is extremely well positioned to benefit from it, no matter which form it takes.

Now let's get into the details of the quarter on Panel 4. Third quarter revenue totaled $223 million, a nearly 8% increase from last year's third quarter. On an organic basis, revenue grew 4.7%, reflecting mid-single-digit organic growth from both segments. The Nuclear Power end market organic revenue grew 9% in the quarter and 11% year-to-date.

Adjusted EBITDA in the quarter was $52.4 million, up 14.7% versus third quarter last year. Both the Nuclear & Safety and Medical segments contributed to the increase in both dollars and margin expansion.

I'd also like to highlight our year-end 2025 expected blended cost of debt of 2.8%. This reflects a 460 basis point improvement over the past year as we took action to diversify our capital structure and reduce interest expense. The 2.8% blended cost of debt is expected to continue into 2026.

Third quarter adjusted free cash flow was $18 million, contributing to an impressive $53 million of year-to-date adjusted free cash flow. Strong year-to-date performance gives us the confidence to raise the low end of adjusted free cash flow guidance. We are now expecting 2025 adjusted free cash flow to be between $100 million and $115 million and conversion between 45% and 49% of adjusted EBITDA, a significant improvement versus 2024s conversion of 32% and well on our way to our 2028 target of 60%.

Lastly, on the panel, Q3 adjusted orders increased 2.4%. We led with adjusted orders this quarter because it's important to note that this excludes the impact of the Turkey debooking in last year's third quarter. Importantly, nuclear power end markets orders grew double digits in the quarter. Additionally, favorable trends we mentioned last quarter, like accelerating SMR orders continued into the third quarter as well. I'd also note that we've seen meaningful SMR order flow early in Q4.

Notably, we also booked our first modest EPR newbuild order under the auspices of the EDF strategic agreement we announced last year. All of this is before we booked a large quantum of the onetime orders we've been foreshadowing for several quarters. We remain optimistic on the rest of this opportunity pipeline. The dominant thread throughout our quarterly results is nuclear power.

Panel 5 illustrates several key performance indicators that demonstrate the vibrance of this end market. For example, third quarter nuclear power adjusted orders grew 21% and or 16% excluding foreign exchange tailwinds, reflecting growth across each key vertical. New builds, SMRs and today's installed base.

Third quarter orders include $17 million of SMR related orders. Year-to-date SMR orders totaled $26 million, a market acceleration versus the $17 million of order in prior years.

Lastly, nuclear power-related organic revenue grew 9% in the quarter compared to the 4.4% for the collective Nuclear & Safety segment. Year-to-date, Nuclear Power organic revenue is on track for the double-digit organic revenue growth we've guided for 2025.

We continue to believe that we're still in the early innings of a nuclear super cycle.

Panel 6 showcases just a few of the recent headlines to support this belief. Take, for instance, the recent World Nuclear Association headline stating that nuclear reactor set a new record for electricity generation in 2024 and this is for the first time in nearly 2 decades. The average capacity factor was 83% globally in 2024, up from 82% in 2023. And just a note here, that the U.S. fleet ran at 92%. So there's plenty of upside for the global fleet.

Growth expectations for the overall global nuclear fleet continued to increase. The IAEA recently increased its nuclear capacity forecast, expecting almost a terawatt of nuclear capacity by 2050 versus 377 gigawatts today. and this is net of significant expected decommissioning activity over this 25-year time frame.

As I've been predicting, we have also seen a spate of recent headlines around potential restarts in the U.S. On Monday, it was announced that Google and NextEra Energy will be partnering to restart the Duane Arnold facility in Iowa to help fuel Google's AI growth. separately, Santee Cooper is in negotiations with Brookfield Asset Management regarding the potential completion of the 2 previously abandoned AP1000 reactor projects at the VC Summer site in South Carolina.

New builds have also gained considerable support from the Trump administration's $80 billion deal announced this Monday to support 8 new Westinghouse AP1000s plus SMRs through financing guarantees and regulatory support.

Lastly, global support for Nuclear Power was recently on display in South Africa with the first-ever G20 high-level meeting on nuclear energy was held.

Turning to Panel 7. In all, we're broadening our nuclear power portfolio. In the case of the Certrec acquisition, we're enhancing Mirion's software solution suite by incorporating mission-critical regulatory compliance solutions into our overall offerings. These applications are critical to customers as they seek approval for life extensions for existing facilities and submit applications for new builds and SMR. In the case of Paragon, -- we will broaden Mirion's U.S. presence with additional products, software and services, notably including safety-related critical radiation protection systems.

Like Mirion's nuclear power end market, 94% of Paragon's revenue stems from the currently installed large-scale reactor base. In both cases, these will be attractive additions to our portfolio, adding energetic business models with built-in customer bases and room for substantial growth. We look forward to closing the Paragon deal and welcoming both Certrec and Paragon's world-class talent to the Mirion family.

Before I hand it over to Brian to walk through the details of the quarter, let me spend a minute on Panel 8 sharing a Medical segment update. We are strategically aligned with the cancer care revolution underway today. Recall, 75% of our Medical segment revenue stems from this market. We continue to make steady progress on key strategic elements outlined at our 2024 Investor Day.

These include growing our software and service offerings through SunCHEKC within our RTQA segment and EC Squared within nuclear medicine. This important lever has helped expand Medical segment margins year-to-date. Conversely, the current U.S. health care environment is pressuring our U.S.RTQA business.

We expect this to be a delay instead of a decline in customer activity due to the safety critical nature of our solution set. However, timing and magnitude of a rebound remain clouded due to government shutdown headwinds. Meanwhile, we're pleased with the continued adoption of our Instant view digital dose meters.

As a reminder, we introduced our latest digital offering to the market in late 2023. We're making great progress converting existing customers and attracting new customers as well. In fact, third quarter organic revenue from our dosimetry services end market grew 7% with our digital offering leading from the front.

With that, I'll turn it over to Brian. Brian?

Tom, thank you. and good morning, everyone. Let's continue to Slide 9, detailing our orders performance. As Tom noted earlier, the nuclear power end market continues to be a bright spot for us. Third quarter orders grew 2.4% versus an adjusted base. This normalizes for the $21 million Turkey related debooking disclosed in last year's third quarter and Certrec orders added as part of the acquisition in late July.

On a reported basis, the order book grew 14.5%. The Nuclear and Safety segment order book grew $9.5 million on an adjusted basis, reflecting 21% growth from the nuclear power end market alone. Importantly, this incorporates growth across all 3 verbs. Interestingly, within the U.S. nuclear power and market, year-to-date orders are up 44%, and most of which is related to the SMR activity.

We see the U.S. market as the bellwether with the European and Asian markets as lagging followers. We also experienced healthy order uptick in our defense and diversified end market from a nonnuclear decommissioning order as well as a European-based military safety equipment order. This continues our long track record of serving the NATO Armed Forces. This was partially offset by our labs and research end market.

As mentioned previously, demand from the U.S. Department of Energy has been muted since the launch of DOGE and the government shutdown. We also commented on the September investor call. Order flow coming from China for laboratory instruments has slowed. We see this as a transitory dynamic and are optimistic about the equilibration of demand due to the safety critical nature of our products.

Through October, we continue to see orders from the labs, but we are seeing signs of funding strain in this market, as we discussed a few weeks back. Within our Medical segment, adjusted orders declined $4.7 million. The RTQA end markets performance more than offset continued growth in our nuclear medicine end market.

The dosimetry services business was relatively flat in the quarter. Digging into our RTQA orders, it is a bit of a mixed bag. In the U.S. particularly, and to a lesser extent, in China and Japan, our RTQA hardware orders were down in the quarter. However, on a year-to-date basis, orders are closer to flat. This again stems from changing funding and trade dynamics, which are expected to normalize in the year ahead.

Meanwhile, Rest of World RTQA continues to see steady growth and be a bright spot. RTQA software and services remains a bright spot and a contributing factor to margin performance year-to-date. Taking a step back, what's particularly impressive about the third quarter order book is that it only includes approximately $10 million of large orders, a diverse composition of flow orders continues to drive the business. We expect Q4 as it comes to bookings, particularly in the nuclear power end market.

Slide 10 contributes an update on the large opportunity pipeline. Through October, we've been awarded $65 million from this pipeline. As mentioned, $10 million is reflected in our third quarter order book, while the other $55 million was awarded in October and will be reflected in our fourth quarter order book. As we approach year-end, $285 million of the opportunity pipeline is still to be awarded, $175 million of the $285 million should be awarded by year-end. While the other $110 million is now likely to be awarded in 2026.

A large portion of the projects pushed to 2026 are U.S. government related and are being impacted by the shutdown. Encouragingly, we continue to see new potential large projects materialize that are not included in the snapshots. To be clear, we have consistently communicated that we do not expect to be awarded every order, but maintain our strong conviction that we have a right to win on all of these opportunities.

Now let's pivot to the Panel slide on Slide 11. Consolidated revenue for the company totaled $223.1 million, up 7.9% or $16.3 million over last year's third quarter. nearly $12 million of the approximately $16 million increase came from our Nuclear and Safety segment. Adjusted EBITDA grew 14.7% and or $6.7 million to $52.4 million, with both segments meaningfully contributing to the increase.

Approximately $3 million of the adjusted EBITDA increase is related to greater volumes, followed by approximately $2 million of net price inflation, meaning we got $2 million more priced than cost and approximately $2 million of procurement initiatives. As you can tell, we're making strong progress on consolidating our supplier base and it's beginning to improve margin performance. As you will see on the coming slides, both segments contributed to the approximately 140 basis points of margin expansion.

Lastly, adjusted EPS totaled $0.12 per share, a 50% increase versus the third quarter of last year. If you keep the share count constant to last year's third quarter, our adjusted EPS would have been $0.15 per share or nearly double last year's adjusted EPS. Our adjusted EPS performance is a culmination of our progress across all parts of the business, from growing EBITDA to the tax projects we have discussed to lower net interest costs.

Recall, our third quarter 2025 diluted share count reflects vested founder shares and the potential impact of our convertible notes. As a reminder, we put cap calls in place that limit the impact of both converts until a fairly material appreciation in the stock price. We have tables in the appendix that demonstrates this.

The equity issuance we did in September to fund the expected Paragon acquisition is an immaterial impact in the third quarter since we didn't transact until late in September. We've included a detailed table in the appendix of our earnings call slides to bridge the differences and lay out all the movements that have taken place between 2024 and 2025.

Slide 12 illustrates our Nuclear and Safety segment financial performance. Revenue for this segment grew 9% or $11.9 million to $144.6 million. Organic growth for the segment was 4.4%. It reflects nuclear power end market growth of 9% and defense and diversified end market growth of 7%, partially offset by our labs and research business.

As we indicated a few weeks back when we announced Paragon, we now expect the Nuclear & Safety segment's organic revenue growth to be mid-single digits driven by double-digit nuclear power end market growth. Adjusted EBITDA was $40.6 million or 16.3% or $5.7 million increase over last year's third quarter. Adjusted EBITDA margins totaled 28.1% or 180 basis points higher than last year. This is a result of operational leverage, procurement initiatives and lower incentive compensation. Year-to-date, New Green Safety segment margins have expanded approximately 80 basis points.

Moving on to Slide 13. Medical segment revenue totaled $78.5 million, up 5.9% or $4.4 million versus last year. Organic revenue grew mid-single digits at 5.2%, in line with the guidance shared on our July earnings call. We remain on track for full year organic growth of mid-single digits for the entire Medical segment.

Adjusted EBITDA was $28.2 million or nearly 10% better than last year. Margins also improved, up 120 basis points to 35.9%. This reflects healthy operating leverage and favorable mix, particularly from our dosimetry services end market. Year-to-date, our medical margins have expanded approximately 240 basis points.

We do expect fourth quarter margin expansion in this business, but not at these levels. Adjusted free cash flow shown on Slide 14, a totaled $18 million in the third quarter and $53 million year-to-date. This equates to a 35% year-to-date conversion of adjusted EBITDA. This was driven by adjusted EBITDA growth, lower interest expense and lower CapEx, partially offset by a use of cash from net working capital.

We are materially ahead of where we were at this time last year, which gives us good confidence on our year-end targets.

Before we move to Q&A, let me touch on our full year guidance on Slide 15. The 1 item we've updated is our adjusted free cash flow guidance. We increased the low end from $95 million to $100 million and now expect adjusted free cash flow to be between $100 million and $115 million, equating to a conversion of adjusted EBITDA between 45% and 49%.

With that, operator, please queue the line for questions.

[Operator Instructions]. The first question is from Andy Kaplowitz from Citigroup.

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

Yes. What I would say, Andy, is our view that is that when you look at the core dynamics of the market right now, I think there are 3 important drivers. One is the installed base as we've talked about previously the desire to run these reactors hotter and at greater capacity factors, meaning greater capacity utilization correlates strongly with CapEx. So as that quest continues, noting that I put out there the World Nuclear Association, report that the global fleet ran at about 83%, 90% is considered to be good. The U.S. fleet runs at 92%.

I think there is a reasonable likelihood that we're going to see a continued uptrend in capacity factors across the global fleet, and that augurs well for our flow business in support of that fleet overall.

Secondly, you have new utility scale builds. And as we've seen in this flurry of news reports and obviously, we see it on the ground day in and day out. There clearly is an acceleration in the planning and execution of more global utility scale projects. We expect that, that will build over time.

Obviously, again, as we've been stated emphatically historically, the timing can be very, very difficult to predict. As to when a new project commences. But the good news is that in this country as well as in others, there is an unprecedented level of government support to streamline the regulatory time line and burden and to provide additional financial support and essentially risk mitigation for sponsors of these plants. So we do expect that trend to continue.

And then finally, you have the SMR projects, which given the enormous focus on AI-driven data center build-out is increasingly becoming a more viable market. And in general, again, while timing is very difficult to predict, we do see that moving to the left. So as we look ahead, it is a reasonable supposition that over time, we will see the nuclear power-related backlog beginning to grow.

We will be conservative about how we disclose that over time, but I think that will be an important tell in terms of how this market will evolve over time. Finally, Andy, I would say that the flow business that does not necessarily become visible in backlog because it tends to transact quickly, has been a very important driver of the overall nuclear power dynamic. We expect that, again, as that correlates with capacity factors that will continue to slow.

Maybe just 2 things to add to Tom's comments, just 1 on the installed base. Paragon is definitely additive to that narrative, right? They're very strong in the U.S. installed base, 94% of their revenue in 25% will come from that. And I think we indicated on the call that, that's their business has definitely grown double digits over the last couple of years.

And then maybe on the new builds, just a reminder, -- there are no U.S. newbuilds in any of the numbers we've put out there. So just that's something that, again, very hard to predict. That will take time to come through, but that is not in any of our planning assumptions through '28.

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

Yes, Andy. So if you look at the medical business, very large, we continue to love this business overall. The dominant demand drivers that we've talked about ad nauseam, including an aging of the population demographic in the developed West greater incidence rate of cancers of all forms and the push to create a higher standard of care in the lesser developed markets, are all themes that are robust and continue to be in place.

What we've seen in RTQA is strength coming out of international single payer systems that have not been exposed to the kind of budgetary and DOGE related dynamics that we've seen in the U.S. market. as I noted, as Brian noted, we do expect those factors to equilibrate. The demand hasn't changed. The need for the solutions that we offer here has not changed.

And so our view is a constructive one that we will find an equilibrium sooner rather than later. And as we achieve that, we would expect the RTQA business to be back on trend. In terms of nuclear medicine, again, the core dynamics there continue to be very favorable.

The activity, the excitement, the tangibility of the growth of the radio ligand market continues. Again, we have a superb positioning in this market overall. And we're confident that over time, the numbers will be trending in a direction that's consistent with what we've guided historically.

Lastly, on our medical dosimetry business, as noted, strong revenue growth in the quarter, 7%. The digital product line is coming off the peg, we feel good about the dynamic there. So to be clear, even though we spent most of our commentary on nuclear power. We still love the medical business. You'll see it as an important contributor to the story overall.

I would just say [indiscernible] time, I mean if you think about the Q4 kind of revenue number, it's probably flattish for us on a pretty big comp. We had a very big -- I think we were up 14% last Q4 in dosimetry, which is a very tough comp on product sales.

So Tom's comments are all exactly what we're seeing and talking about in the medical side over probably the next 12 to 18 months. But as you think about the next quarter, I think we do expect flattish and that should not be a surprise because that's what we talked about last quarter.

The next question is from Joe Ritchie from Goldman Sachs.

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

Yes. To be clear, firstly, Joe, just a minor correction, the $55 traded or was booked in Q4 it was booked in October. But as we look at the pipeline, clearly, we parsed between stuff that is largely impacted by government funding dynamics that we think spills in the 2026 versus what we think trades in 2024. And from a confidence standpoint, again, with the caveat that on these large opportunities, the timing is always unpredictable.

I would tell you that our conviction improves. As Brian noted, we feel like we have a strong right to win on this opportunity set overall. So we feel pretty good about.

Got it. Great. Yes, thanks for the clarification. I did mean 4Q. So I'm going to ask you the same question I asked you last quarter. Given the flow of projects that's been coming in around $200 million, you [ got ] $5 million already in the fourth quarter. You've got this pipeline out there. Why can't we have a good quarter that's above $300?

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

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

Yes. So the overall opportunity set is expanding, Joe. Firstly, the -- noting that right now, what you're seeing, I think there are over 120 discrete SMR projects in various forms of development around the world. Some of them merely kind of PowerPoint presentations, others fairly mature in terms of the design evolution.

So what we're seeing now and what we're going to continue to see for the next probably a few years will be the development of the first-of-a-kind instances. That are really going to prove the viability of the fleet. We do expect that there will be a consolidation, a shakeout, if you will, in this space. And that from that, there will be clearly identified strong leaders that emerge and really begin to gain scale economies and momentum overall.

Our focus right now is that we want to be part of the overall solution set with all of them. And here, I would note that with the incipient Paragon acquisition, coupled with the Certrec addition and some of the other moves that we've made to augment our portfolio. we are extremely well positioned within this community in a broad fashion. It's not only our traditional book of business in and around things like radiation monitoring systems and neutron flux measurement systems and health physics, products, et cetera.

But now it's expanded to more comprehensive physical and cybersecurity, a much broader position in instrumentation and control with a far more compelling cogent and coherent ecosystem, of solutions in that arena. We are a critical partner a strong plurality of these players as it relates to the regulatory support through Certrec and so we expect the ecosystem to continue to build.

We expect that the foot rate will continue, recognizing that I think many of these players, maybe most of these players view this as analogous to the commercial space market, and they all want to be SpaceX. And so we like where we sit. Again, we're going to be conservative about how we call the ball in terms of how this market evolves. But to be clear, as it, in general, becomes more tangible. And as we continue to augment our relevance, our solution set into the space, we think it will be an important addition to growth in the long term.

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

The next question is from Rob Mason from Baird.

When we entered this year, this fiscal this fiscal year, there was commentary just around your backlog and what that represented in terms of next 12 months. conversion, revenue coverage. As you think about exiting 25, how would you think that metric looks on a relative basis to how we entered the year? And I'm just curious if the 75 million of bolus of large orders that awards that are still out there, does that really influence that metric for the next 12 months?

Yes. So a couple of things. I mean, this comment really pertains to the kind of the current business, right? Obviously, we'll add Paragon on top of this, and that will have its own dynamics. I would say that Q4 is always a large order booking month quarter for us. And so it goes Q4, so it goes kind of that metric. We've always said somewhere between 45% and 50% is the next 12 months coverage number. And we'll continue to assess that as we go through the quarter.

As you think about the $175 million, look, there's definitely revenue in '26 for some of that. But all of those contracts will trade over multiple years. So these are not kind of 1 year, we're going to take that type of revenue. We tend to see kind of a smaller portion of the revenue in year 1, that kind of ramps in Q3, maybe it comes down a little bit in 4 or 5 depending on the time period. So that's kind of high level how we're thinking about it. I think, look, we'll talk about our coverage dynamic once we report our Q4 numbers.

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

Yes. What I would say, Rob, is that historically, Westinghouse has been critically important customer to Mirion, and we've worked hard to continue to improve our relevance and augment our solution set to them overall. We're quite happy with the NFMS agreement that we talked about in the past. And with Paragon, we think, again, the relevance and attractiveness the potential solution set that we can bring to bear, not only for Westinghouse, but truly all of the NFMS, all of the strike that -- [ NSSS ] or nuclear reactor designers globally will continue to swell.

So we're working hard to really represent our capabilities in a fulsome way. And as it relates to the future of both system upgrades as we look at life extensions and uprates is favorable, but we also expect that our positioning for new build activity will become more favorable as well.

The next question is from Tomo Sano from JPMorgan.

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

Yes. Maybe taking the -- I mean, as you think about the $285 million, I mean, there's lots of factors that can delay awards. I mean some of it's making sure we cut a deal that we're happy with. We're less interested in cutting a deal just ahead a quarter than we are making sure we have a contract in a relationship that we can live with going forward. So I think that's kind of how we think about this, and we're fairly disciplined on margin rates and cash profiles, et cetera.

So there's -- approvals on their side. those negotiations take time. It is the holiday season. I mean those are all things that can impact it. But again, I mean, to I think Joe's point, I mean, we're sitting 2 months out. And we continue to kind of work very, very hard, as you noticed, we had a team in Asia yesterday that or actually last week that signed the deal.

So there's lots of activity going on, and we'll continue to press hard to get everything we can close kind of by year-end and worst case before kind of mid-February.

On the SMR question, I don't think there's any more SMR. There actually aren't any more SMR orders in those larger that $10 million to $15 million kind of size pipeline that we've talked about. But there's tons of stuff we're working on more broadly than that.

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

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

Very helpful. And just 1 follow-up on the talent and supply chain resilience. So to capture large pipeline, what steps are you taking to secure critical talent, including BCMA and then strengthen our supply chains, including some of the specialized components like German name, please?

Yes. So on that front, Toma, firstly, as we noted, one of the most important strategic elements of the recent M&A activity. And here, I would highlight both Certrec and Paragon is the talent acquisition. In each instance, we have just world-class teams that are going to meaningfully augment our corporate gene pool. And give us capabilities that heretofore have been lacking in some dimension or another. This is a great place to work.

We're pleased with our historical retention dynamic. I guess you might imagine, we're very focused on continuing that track record as we move ahead. But to be clear, we feel happy and confident with the talent that we have in the barn today that that's more than adequate to drive our future growth, our future aspirations.

In terms of the physical supply chain, here, we're -- again, we tend to be very conservative. And so as an example, when looking at precious metals or critical commodities, relating to orders that are likely to trade longer term. We tend to defease that risk upfront by acquiring all or a significant quantum of the exposure there. And do that with cash funded customer advances overall.

So in terms of our exposure to precious metals like rhodium, other elements like germanium, et cetera, we, over time, have developed pretty decent heuristics for managing and mitigating the supply risk.

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

The next question is from Chris Moore from CJS Securities.

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

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

The next question is from Yuan Zhi from B. Riley.

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

Yes. I mean, overall, it has driven more than anything else Yuan, by the aggregate noise. The cuts in Medicaid have been the most pronounced, the most defined and that has had a modest impact, recognizing that the majority of cancer treatment is actually funded out of Medicare versus Medicaid overall. But to be clear, if you look at the profitability of the U.S. health care system overall operating margins, and just, again, kind of the noise and kind of strategic has around the space.

All of those factors tend to put any entity on a more defensive CapEx footing. And I think that's what we're seeing. Again, we noted that when we look at the demand dynamics out of single payer end markets. Those have continued to be strong and in normalized ranges. Again, noting that the demand dynamics have not changed in the U.S. market.

We do expect to achieve a level of equillibrium at that point, get back on trend here.

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

Yes. So the dynamic here continues to change, particularly with the more recent acquisitions. Again, Paragon Sure, but also the Collins Aerospace, cyber and physical security business that we acquired as well. Historically, and I guess, most recently, dating back to our 2024 Investor Day, we've talked about the the front-end opportunity for a nuclear reactor that and given the specific example of the Hinkley Point CDL in our plant being built in the U.K. where in the front end of that, we booked somewhere between $80 million and $90 million of backlog, and that's for a 2-reactor project.

Our -- with the incremental capabilities, I would say that, that dynamic is improving. And if anything, we would expect the quantum of the front-end opportunity to increase and [indiscernible] to reserve on giving you a specific number as it relates to new builds and Westinghouse. But I would tell you that it's attractive or an attractive opportunity. And obviously, we're going to work hard to do everything we can to secure the trust confidence and ultimately, the commitment from Westinghouse as they move down this pathway.

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

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

Yes. Again, Jeff, we're going to reserve on that for the time being. Firstly, we want to get the Paragon acquisition closed, and our mode of operation is that whenever we acquire a new company, our first and most important rule is the hippocratic first do-no-harm and so we're going to spend a lot of time learning from them and they'll learn from us, and we're going to work jointly to figure out best integration pathway and ultimately, how that informs the relevant product categories, the way we position those in the marketplace and the way that we commercially prosecute growth.

Having said all of that, and again, recognizing this is not just Paragon, but as Certrec, it's SIS, but beyond that, it's also expanded organic capabilities that we've developed internally. I think that the numbers move up over time. I would tell you that I also continue to believe strongly that the premium in terms of dollars per megawatt will be -- of output will be higher in the SMR market.

Historically, we've talked about that being 60 percent or so higher than it is for utility scale. I think those numbers continue to hold for the time being. But what I'd like to do is to come back early in the new year when we're talking about Q4 results and maybe do an update at that time or the subsequent quarter.

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

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

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

Thank you, operator, and thanks to everyone for your continued interest in Mirion and listening to the call today. we're progressing quarter-by-quarter on our journey towards becoming a great compounder. Mirion increasingly is a destination investment for revenue-generating exposure to global nuclear power tailwinds.

And with our acquisition of Paragon, we will be a top-tier supplier to the global nuclear power industry. while remaining true to our core mission of harnessing our knowledge of ionizing radiation for the greater good of humanity.

We'll look forward to sharing another update on the business on our fourth quarter earnings call in February. And until then, we appreciate you joining us today, and I hope you have a great day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Mirion Technologies Acquisition of Paragon Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Eric Linn, Treasurer and Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, and good morning. Welcome to Mirion's investor call to discuss our announced acquisition of Paragon Energy Solutions. Joining me this morning are Mirion's Chairman and CEO, Tom Logan; and Mirion's CFO and [ Medical ] Group President, Brian Schopfer.

Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements, and actual results may differ materially from those projected in the forward-looking statements.

The comments made during this call will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles. All investor materials can be found in the Investor Relations section of our website at www.mirion.com.

With that, let me now turn the call over to Tom Logan.

Eric, thank you, and good morning to everybody joining us on such short notice today. We're excited to announce a definitive agreement to acquire Paragon Energy Solutions. This morning, we issued a press release outlining the details of the transaction. Panel 3 articulates the highlights.

Most fundamentally, this is a highly strategic transaction, supporting our quest to become the leading cradle-to-grave play in the nuclear industry. The acquisition will materially enhance our scope in the U.S. nuclear power segment, significantly strengthen our position with key SMR players and meaningfully broaden the solutions that we offer to our international nuclear customers. All of this as the public and private sector support for nuclear power continues to increase.

As with any successful business, the most important asset is human capital. Paragon brings with it best-in-class talent. Their world-class team reflects extraordinary industry knowledge and experience with an exceptional history of superior performance. Moreover, their positive results-oriented entrepreneurial culture is strongly aligned with ours. We look forward to joining forces with them and know that we will be the better for it.

Also, the addition of Paragon's complementary portfolio of products and services into our global network represents strong synergy potential. Brian will share details on the quantum of the opportunities in a bit. Lastly, this deal supports long-term organic growth as accretive to earnings in year 1 and retains balance sheet flexibility.

As mentioned, Paragon has a strong presence in the North American nuclear market highlighted on Panel 4. Paragon is present in 100% of reactors in the region. In total, Paragon serves 140-plus nuclear reactors around the world. These reactors are served by a highly skilled team of approximately 150 engineers and technicians. Notably, Paragon has made numerous recent key SMR hires, effectively doubling the SMR team to help facilitate relationships in this rapidly growing space.

In addition to world-class talent, this acquisition adds critical systems technology to the Mirion product portfolio. Beyond a well-established position within the existing fleet, Paragon is designed in with multiple well-capitalized SMR OEMs today. Combining our complementary portfolios will create an enhanced solution set for our customers in both nuclear power and DOE segments.

Panel 5 outlines the highlights of each portfolio. A great example of what Paragon brings to the table is their Reactor Protection System technology or RPS. This product is the brains of reactor safety system and is designed to automatically shut down the reactor and initiate safety protocols if hazardous conditions are detected.

Paragon's branded RPS system called HIPS is the only modern RPS designed specifically to meet the unique needs of SMRs and the only new design approved by the U.S. NRC in the last decade. HIPS is already spec-ed into multiple leading SMR OEM designs and is an attractive solution for digital upgrades at existing utility scale reactors.

Expanding our SMR partnership opportunities was a key catalyst for this acquisition. This deal is expected to double our potential SMR-related revenue in the future and sets us up for accelerated growth as the SMR fleet gains scale.

As you're aware, SMR support from hyperscalers and more recently, the Trump administration has hastened the development of this revolutionary market. It is estimated that U.S. SMR capacity could total 6 to 10 gigawatts by 2040, implying approximately 20 SMR reactors in process or completed by 2030.

Many of Paragon's products are designed in parallel with SMR customers' reactor design development and like Mirion's products, are critical to safe and efficient operations. The combination will give us substantial content and strategic relationships with key SMR players.

Importantly, while we're excited by the growing SMR partnerships that Paragon has developed, it's important to note that approximately 94% of their revenue comes from the installed base. Jointly, we see significant opportunity to grow this end market through capacity upgrades, life extensions and digital modernization.

Beyond our RPS design, Paragon also specializes in designing, building and qualifying critical replacement parts and equipment. The latter includes electrical and mechanical components such as electrical panels, switchgears, chillers, heat exchangers and many others. They are essential to nuclear facility supply chains and provide Paragon with a highly recurring base of business.

Paragon also specializes in complex equipment and part engineering solutions. Oftentimes, clients call Paragon first to help with custom engineering work to machine spare parts or reverse engineer obsolete electronic components. In total, Paragon brings a spare parts offering of more than 20,000 specific components.

Before I turn it to Brian to discuss financials, allow me to speak briefly on how the deal enhances our nuclear power exposure, as shown on Panel 6. This deal will increase our total anticipated nuclear power-related revenue to 45% of consolidated revenue, up significantly from the 37% previously disclosed at our 2024 Investor Day.

Let me turn it over to Brian now to discuss the financial details of the deal. Brian?

Thanks, Tom, and good morning, everyone. Let's discuss some of the key transaction details beginning on Slide 7. As noted in the press release, the purchase price of $585 million represents approximately 18x Paragon's expected 2026 EBITDA. Post synergies, the valuation is approximately 14x 2026 EBITDA. This reflects expected cost and commercial benefits of approximately $10 million on an annualized basis. More on this in a few minutes.

From a diluted EPS perspective, today's deal is expected to add $0.02 to $0.03 per share during the first full year post close. From an adjusted EBITDA perspective, we expect pro forma Nuclear & Safety segment margin expansion post synergy realization.

In terms of capital allocation, this deal delivers shareholder value creation. First, it supports long-term growth and creates an upside opportunity to Mirion's long-term organic growth profile. Second, it delivers on our commitment to enhance our nuclear power position by expanding our U.S. presence and augmenting our product and services portfolio.

The acquisition is supported through a financing commitment from Goldman Sachs. Permanent financing is expected to include a mix of equity, debt or equity-linked financing to maintain a pro forma net debt to adjusted EBITDA ratio of 3.5x or lower, with strong deleveraging expected post close.

Recall our Investor Day, we are targeting long-term net debt to adjusted EBITDA of below 2.5x. Finally, we are expecting to close the deal by year-end, subject to customary closing conditions.

Before we take your questions, Slide 8 has details on expected synergy opportunities. Through the diligence process, we've identified a mix of commercial and cost synergies totaling approximately $10 million annualized by year 5.

As Tom described, cross-selling creates significant upside opportunities to work more closely with customers. Paragon's RPS offering can create incremental opportunities for Mirion's product portfolio to help meet customer needs.

More broadly, our combined companies will create more frequent touch points with customers. Based on the nature of Paragon's services and equipment, they are more frequently on site at the nuclear power plants.

On the cost side, we see an opportunity for knowledge share to drive efficiencies. For example, a lot of the work we're doing internally with procurement can be applied to Paragon. Additionally, we plan to implement our Mirion business system at Paragon over the first 18 months of the integration.

From a talent perspective, we believe Paragon's team of engineers can enhance the innovation underway at Mirion. This also reduces the need for future hiring to scale up to meet growing nuclear power [ end-market ] demand. These are just a few early opportunities ahead. We'll identify more opportunities as the teams are able to work more closely together.

With that, operator, please open the lines for questions.

[Operator Instructions] Our first question comes from the line of Joe Ritchie with Goldman Sachs.

This is Andy on for Joe. Congrats on the deal. Good to see the capital momentum going on. I just had two questions on the broader portfolio. Firstly, you closed Certrec earlier in the year within nuclear as well. Can you elaborate on how these two acquisitions possibly complement each other? And if there are, what the other focus areas for capital deployment going forward would be based on gaps that you see within the nuclear portfolio?

I'm sorry, I was on mute. Let me address that.

Firstly, noting that the complementarity between the Paragon portfolio and the Mirion portfolio is exceedingly high, I think we've articulated well the very attractive dynamics associated with their recurring business and how we see their deep commercial entrenchment within the installed base as being a net positive factor in driving greater pull-through of the broader Mirion portfolio, not only into the nuclear power sector, but also into the DOE sector.

But as we look ahead, the real strategic attractiveness of the deal ties in with the work that Paragon has done in and around really the central nervous system of nuclear power plants, both through the Reactor Protection Systems, HIPS that we've talked about as well as the developments they've done in Neutron Flux Measurement Systems.

I think the key takeaway there is that with the combined capabilities of the two companies, we think there's an enormous opportunity to add value by technologically taking best-of-breed in the evolution of the product line, but also in terms of the customer-facing AI opportunity that this represents.

So again, the strategic goodness of [ hit ] here is extraordinary. Again, it increases our optionality substantially in the SMR space and our broad presence, the breadth of our presence in that space. But it also will drive far greater customer intimacy within the American installed base, and that will be extremely attractive.

Now in terms of how we think about broader M&A themes, as we've noted, I think consistently through the majority of our calls, we continue to be very active in cultivating our M&A pipeline. We are very pleased with the quality of that pipeline right now. And without getting into any specifics, we do continue to see attractive adjacencies, not only in the nuclear power market where our focus has been a bit over-indexed, but also in nuclear medicine and other arenas.

That's super helpful. And just a quick follow-up. Since you took down the guide for the year in terms of organic outlook, could you provide some color on what you're seeing within [ dosimetry ] and also on the ground in China? That would be helpful.

What we're seeing broadly is that we've had very, very strong performance in this dosimetry product line. And this really relates specifically to one of the NATO armed forces where the -- today, we serve 22 of the NATO armed forces. And we've been experiencing a fairly robust demand for essentially militarized dosimeters, green gear used by these forces throughout the European theater overall.

That demand continues to be very strong. This is simply a deferral of a specific large customer order that we fully expect to book and does not in any way undermine the health of that segment overall.

In terms of China, we have seen a slowdown in order flow coming from China, specifically in our laboratory instruments sector. This is not -- candidly, not surprising, given the trade dynamics that are at play right now.

And we're being cautious here in terms of how we try and guide the outlook there. We continue to be optimistic that, that is a market that is not moving away from us, but rather, again, that this is a deferral dynamic that's largely caught up in broader freight issues.

The final piece of the puzzle, too, is we noted that we also saw a deferral of orders associated with one of our big gold mining customers, where we do a lot of really interesting work with gamma spectroscopy applied to assay processes within gold mining. And again, we see this as a deferral dynamic rather than, again, some fundamental erosion, certainly, given the run-up in pricing in the gold market overall, the dynamics at play within that industry continue to be very healthy overall.

So again, all of this is driven by a desire for us to be conservative in how we're guiding the overall views, noting that nuclear power continues to be an extremely strong market for us and performing well, and we're really pleased to add to our overall nuclear exposure and to experience the attendant lift in our overall organic growth rates.

Our next question comes from the line of Vlad Bystricky with Citigroup.

Congratulations on the deal. So I guess, before I get into some specifics on Paragon, maybe just following up on the question around the guidance. So you lowered the organic revenue, but I didn't see any commentary around the EBITDA outlook. So just any comments or colors that you want to give there?

Maybe I'll take that one. I mean, look, we last updated our other guidance on July 31, 2025 and have not updated since. So that's kind of all we're going to say about the rest right now.

Okay. Got it. So just on Paragon, it looks obviously very strategic and very interesting. Can you just talk about -- so I see the 13% revenue CAGR over the past few years. Can you talk about sort of how much of that is organic or was organic versus whether there's been M&A tailwinds in that?

Yes, maybe I'll take that. I mean the 13% number is kind of the core organic number of the business. They have done some acquisitions over that time, but that's really representative of the business we're buying and how strong those organic tailwinds have been over the last kind of 3 years.

Great. That's helpful, Brian. I appreciate it. And then just in terms of the margin profile of Paragon and what it means for Mirion overall, it looks like it comes in a little dilutive to nuclear segment margins. So I guess, how does that impact how you're thinking about the margin profile over the next couple of years and the longer-term 30% target for Mirion overall?

Yes. Look, it's not abnormal for us to buy assets that don't look and feel like Mirion's P&L structure today. Actually, that's one of the I think the advantages that we've had over the years, is our ability to take companies that have P&L structures that are different and help move them into a direction that ultimately becomes accretive to us, Vlad.

So I think we're very confident in our ability to integrate. I think we're very confident in our ability to drive value creation through that integration.

I would remind you that pre this deal, historically, we've kind of bought -- pre this deal and Certrec, historically, we've bought at kind of 13x pre-synergy and have been able to synergize at down to 7. So there's quite a bit of value capture there, obviously.

Obviously, assets have gotten a bit more expensive. There's a lot more competition in the market trying to buy assets like this. We think we are uniquely positioned because of our size and scale and our ability to integrate to drive synergies.

So I think over time, we're very confident that this will look and feel like everything else we're doing in that segment. And we are -- we continue to be confident in driving towards that 30% EBITDA margin that we've been talking about.

And Vlad, if I could just tag on to that as well, I would note that Paragon has been very forward-looking in terms of their investment in human capital, particularly in and around the building a very, very strong position in the SMR space. And this is going to provide great benefit to Mirion overall.

Again, as I highlighted in my commentary, the human capital element of this deal is one of the most attractive components of it to us. And as Brian noted, we're confident in our ability, working jointly with the Paragon team, to really monetize and synergize the vast opportunities that we see ahead of us.

Yes. Look, operating leverage has always been our friend. I don't think that will be any different here.

Our next question comes from the line of Rob Mason with Baird.

I offer my congrats on the deal as well. Maybe I'll start on Paragon. Just could you, Tom, maybe frame -- it's been helpful in the past to get a sense of what your content opportunity is within the reactor base. Is there an analog that you could layer on to Paragon, similar to how you've talked about it with Mirion just in terms of what the content opportunity is?

Again, as we noted, Rob, the vast majority of their business is tied to the -- supporting the existing fleet. And the majority of that is, again, associated with the specialized engineering, the spare parts that they provide to keep the existing fleet operating, particularly in the face of a dramatic upsurge in demand, the desire to drive toward higher capacity factors, life extensions, power [ upgrades ], et cetera.

So they are really a core player in that market overall, recognizing that the majority of American reactors were built in the 1970s and 1980s. There are many, many analog systems and subcomponents that need to be supported where the original OEM is no longer in that business.

And so that is, again, an incredible recurring revenue dynamic that they've driven, ultimately creating more than 20,000 Paragon-specific part numbers that support the fleet overall. And so that dynamic is very, very important. Again, it's just kind of the core base of their business.

But the second element of it, and the element I think that represents the greater optionality, is the work they've done again around Neutron Flux Monitoring Systems and Reactor Protection Systems with a clear focus on SMRs, but also a great deal of relevance in the existing utility scale or gigawatt scale market overall and clearly, as the SMR movement, continues to move to the left and become far more tangible.

And to be clear, recently, I was part of the U.S. trade mission to the IAEA last week. Prior to that, a few weeks prior, we had the big annual nuclear power trade show. And the tangibility of what's happening in the SMR space continues to exceed our expectations. So they're very, very well positioned in that.

And so when you look at the SMR dynamic on a combined basis, this really gives us great strength in a majority and a strong majority of the leading SMR players. But on top of that, it also broadens the solution set that we'll be able to carry to legacy, again, utility scale operators, not only in the U.S., but leveraging our global network to help bring some of that Paragon content into the broader international markets where we have great strength.

Yes. So yes, it clearly broadens your scope to serve SMRs. I'm curious, does it change the way you're thinking about timing on material revenue in SMR?

We're obviously going to be careful about guiding that because there continues to be a high degree of volatility in and around that market. But the guidepost here, Rob, are that if you look externally at estimates, the most recent estimate came out of the IAEA, where they do an annual nuclear power forecast. They put this out 2 weeks ago.

And their projection -- take it with a grain of salt, but their projection is that there will be 1 terawatt of nuclear generating capacity by 2050. And of that total quantum that somewhere between 5% and kind of the mid-20% range will be supported by SMRs.

I think if you look at the news feed on what's happening in the industry, the -- one of the key takeaways from this U.S. trade mission where Chris Wright, the Energy Secretary was there; David Wright, the Chairman of the NRC, a huge array of Department of Commerce players; the support for this movement from the U.S. government is incredible.

And so we like the dynamic. Again, we're going to be very careful about how we guide growth in the space. But to be clear, this substantially enhances our optionality in SMRs, and that's strategically very important to us.

Yes. Maybe just to tag on with a little bit of number color, I mean, if you look at Mirion today, our SMR revenue on an annual basis is less than 0.5%. So it's very small. If you combine that kind of with what, let's say, [ Nucleion ] has done on an LTM basis, you're still less than 1%.

I think the point of that is there's -- there will be continued significant opportunity to kind of grow that number over time. And I think that's what we're focused on.

But the point being, it's very, very small in the grand scheme of things today. And SMRs are exciting, as Tom just alluded, this also fits very well with our existing fleet kind of core that really drives the engine of our nuclear safety business on top of that. So I think we get both things here as part of that asset. I think that's really, really exciting.

And Rob, for the avoidance of doubt, [ Nucleion ] was the code name for Paragon.

Sorry, Paragon.

Our next question comes from the line of Chris Moore with CJS Securities.

So maybe just focus on the revenue. So trying to get a sense as to, maybe a little more breakdown, how much of Paragon revenue is recurring or reoccurring at this point?

Yes. Look, we haven't disclosed that. I think our view is more that it's really tied to the existing fleet more than anything else. And the nature of the revenue being tied to the existing fleet kind of gives you that continuous bite at the apple, whether it's on the parts side and services side or in Mirion's case and a little bit in Paragon's case, but definitely in Certrec's case; the software side.

So I think that's the focus, Chris, is that reoccurring replacement nature of the business is very consistent between Paragon and Mirion.

Got it. And maybe back to a prior question, so the revenue CAGR was 13% from '22 to '25. It sounds like the majority of that was organic. Is that fair? And is -- I mean, are they thinking double-digit organic growth for a little bit from here? Or just kind of any thoughts -- any further thoughts on organic growth from Paragon?

Yes. Look, I think we're super excited. I mean we talked -- back in July, we talked about double-digit nuclear power growth at Mirion. I think this business is at or better than the growth rates we're seeing kind of in our nuclear business.

So I think we're super excited about the organic growth profile, both within the existing fleet, but also in the SLR base.

Our final question this morning comes from the line of Yuan Zhi with B. Riley Securities.

Tom and Brian, maybe can you talk about Paragon's near-term growth drivers? Do you anticipate an inflection point in the near term to drive the top line growth higher than 13%?

Yes, Yuan. The starting point again is the -- as with Mirion, we frequently note that 80% of our nuclear power-related revenue comes from the installed base. With Paragon, clearly, that number is higher. We noted 94% overall.

And so the inflection point and the most important theme in the near term, again, it's just the strength of the sector overall that power plant operators are very profitable now, and that's a stark contrast from the dynamics that have existed for much of the last 30 years or so.

And so there is a strong incentive financially for owners of these assets to operate them at higher capacity utilization or capacity factors to life extend them and in some cases, bringing decommissioned plants back online to operate capacity and throughout all of that, to drive a level of digital modernization coupled with emerging AI opportunities in the space overall. So that is the most important dynamic.

We've seen an acceleration in flow business in support of this -- we expect that, that dynamic will continue and probably will continue to improve overall. So again, #1 most important factor is just that dynamic at play within the installed base.

But on top of that, as we see increased expectations of gigawatt-scale development globally, but also in the U.S., where there's a focus on building 10 gigawatt-scale reactors in the U.S. in the near term. As that accelerates and on top of that, as the SMR-related activity accelerates, then that represents not only a strong opportunity to become embedded in those new facilities, enjoying that front-end concentration of revenue, but then to add to that downstream recurring and replacement revenue dynamic that in the case of utility scale plants is essentially 100 years in duration. So those are the two most important dynamics.

Got it. And maybe can you clarify how this acquisition will impact your developing U.S. market shares and the relationships that you may not have advantage in the past?

Yes. The -- one of the advantages that Paragon brings to the fabric of Mirion is the customer intimacy. As both Brian and I alluded to, they've got an incredible commercial team. And given the nature of what they do, which is different from what our core business in the sector has been historically, it really requires, again, a very high level of customer touch.

And accordingly, they -- what they will bring to the table is really expanded, enhanced relationships, if you will, with many of the leading power plant operators in the U.S., a much greater degree of knowledge in and around capital spending dynamics.

And ultimately, we think the pull-through as it relates to legacy Mirion products that go beyond the scope of what Paragon does today is likely to be meaningful. So again, there's a very high degree of complementarity, and we think that is really one of the key elements of the synergy story as we look ahead.

We have one more follow-up from the line of Rob Mason with Baird.

Just point of clarification around the guidance revision on core sales. It sounded like as you described where you're seeing the headwinds, this all falls within the Nuclear & Safety segment, but I just wanted to make sure that was the case.

That's correct.

I'm sorry?

Yes, that's correct.

That's correct.

Okay. And then just you didn't allude -- I didn't hear you allude to at least any kind of U.S. -- kind of U.S. government spend impact in that Labs & Research segment, but any update that you can provide there?

Yes. Again, Rob, the -- I think in our last quarterly call, we indicated that the lab space in Nuclear & Safety would be down year-over-year, and that's entirely due to DOGE-related activities, where there have been headcount cuts of relevance to the space that we play in overall, some budgetary cuts. And so that's the dynamic that we've experienced there.

So essentially 100% of that specific call out relates to government budgetary dynamics. We're not through the -- through Q3 yet. Government year-end is September 30. There's always a little bit of volatility in and around that because there is a use it or lose it dynamic associated with capital budgets for government agencies. And we'll talk about that in our Q3 earnings call a few weeks down the road.

Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Logan for any final comments.

Thank you, operator, and thanks to everybody for joining us this morning. Today is a really important strategic milestone for us towards creating a great public company. We're really pleased with this deal. We're really excited to welcome the Paragon team again into the fabric of Mirion. And we expect to do great things together.

We're also pleased that we're kind of back in the game from an M&A standpoint after having worked very hard to deleverage our balance sheet over the last couple of years. We're very encouraged by our continuing pipeline of M&A opportunities. And we're excited to show what we can do as we integrate this asset and move ahead.

So I appreciate the time and attention today, and we'll look forward to speaking to all of you in our Q3 earnings call in a few weeks. Thank you, and good day.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.