Mirion Technologies, Inc.

Ladies and gentlemen, greeting and welcome to the Mirion Technologies third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, This conference is being recorded. Now, my pleasure to introduce your host, Eric Lin. Please go ahead.

Thank you, and good morning. And welcome to Marion's third quarter 2024 earnings conference call. Joining me this morning are Marion's CEO, Tom Logan, and Marion's CFO, Brian Shockberg. 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 Miriam's other SEC filings under the caption risk factors. Quarterly references within today's discussion are related to the third quarter ended September 30, 2024, 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.merion.com. With that, let me now turn the call over to Tom, who will begin on slide three.

Thank you, Eric, and good morning, everyone. I'm pleased to announce that we delivered another strong quarter consistent with expectations. $207 million of third quarter revenue was 8% higher compared to last year's third quarter. Justed EPS was $0.08 per share. Justed EBITDA was $45.7 million with 180 basis points of margin improvement compared to the year-ago period. This keeps us on pace for our previously stated adjusted EBITDA and EPS full year guidance. Big thank you to the Marion team for delivering outstanding performance in the quarter. I'd like to start by talking about the evolving macro environment we compete in. The so-called super trends I've detailed over the past several quarters continue to take shape. Recall that these trends in nuclear power and cancer care are expected to be generational and tenor and provide meaningfully favorable tailwinds to both our strategy and execution. Let's start with nuclear power on slide four. The biggest news in this vertical is accrued from the so-called hyperscalers, a moniker associated with large-scale data center leaders like Microsoft, Google, and Amazon. who announced a spate of nuclear power deals in support of their artificial intelligence business models over the last quarter. These deals include the following. First, the Microsoft deal with Constellation Energy to bring one unit of the decommissioned Three Mile Island nuclear power plant back online. An extraordinary deal because it adds to U.S. nuclear generating capacity, through the second recommissioning event of a defunct nuclear power plant, requires Microsoft to consume 100% of the output of the plant for the next 20 years, and reflects pricing well above PJM prevailing interchange rates. Secondly, Amazon's deals with Talon Energy, Dominion Energy, Energy Northwest, and fourth generation SMR developer X Energy to generate up to five gigawatts of additional nuclear energy in the U.S. by the late 2030s. By way of context, today U.S. capacity is approximately 93 gigawatts of total nuclear energy. Thirdly, the Google deal with SMR developer Kairos to generate 500 megawatts of additional nuclear capacity. And lastly, an announcement by Oracle that they've secured building permits for three SMRs for a large data center at an undisclosed location. These deals are the tip of the iceberg, reflecting the voracious appetite of hyperscalers for reliable and clean baseload electrical energy. This is a major factor in the U.S. Department of Energy view that U.S. nuclear energy capacity could well triple by the year 2050. But to be clear, this is not strictly a U.S. phenomenon, as supply, demand, and regulatory policy frameworks reflect the same impact on the broader global nuclear industry. Political support continues to be favorable. This summer, the president signed legislation to support advanced nuclear reactor development by cutting processing fees and reducing licensing times. In fact, earlier this month, the administration opened up applications for up to $900 million in incremental funding to support SMR technology. As we've disclosed previously, we're working hard to forge strategic relationships with all significant SMR players. And while the initial order volume is modest, approximately $14 million books since 2023, we're becoming more optimistic about both a market validation of these emerging players and an acceleration of the commercial scaling of SMRs. It seems clear that nuclear power is increasingly and appropriately seen as a secondary play on AI. And we're excited by the fact that our nuclear power revenue as a percentage of total sales is proportionally greater than most of the firms seen as pure plays in the nuclear power instrumentation space. Beyond the frothiness of AI, we are seeing solid gains in our core nuclear markets. The global installed base drives roughly three-quarters of our nuclear power revenue, most of which is recurring or repeat in nature. The 12 percent core nuclear order growth, which excludes large orders booked in the third quarter of 23, reflects a continued improvement in the economic health of the global fleet and an increasing desire to run nuclear power plants hotter, longer, and with an uprated capacity. Finally, on the new build front, we are extremely pleased with the level of customer engagement and the quantum of opportunities in our bid pipeline. Last night, we announced that Marianne was awarded strategic contracts with the Sizewell Sea new nuclear power station project in the United Kingdom. This project has a similar design to the Hinkley Point C Nuclear Power Station project, where we have a significant position of incumbency. While these large projects don't occur ratably, we are excited by the fact that today we have $300 million to $400 million of new order opportunities in our bid pipeline, which we expect to be awarded by year-end 2025. And while we don't expect to run the tables here, we feel very good about our prospects. Now let's turn to the second super trend on slide five, which is the growth in the cancer care market. Recall that our medical group is comprised of three primary business lines, radiation therapy quality assurance, nuclear medicine, and dosimetry services. Within this group, the biggest macro changes have been in the nuclear medicine market, where the revolution in radiopharmaceutical therapy is creating a significant opportunity for Miriam. As we've discussed previously, the catalyst for this dynamic is the introduction of a new generation of therapeutic and diagnostic drugs that are often referred to collectively as theranostics, which hold the promise of precisely targeting cancer cells and delivering radioactive payloads, which destroy the cancer cells from within with minimal collateral damage to healthy tissues. We see the momentum building in the space in a number of dimensions. First, industry conference attendance is well up and becoming increasingly dominated by radiopharmaceutical drug makers. Second, there is much higher deal-making energy overall in the space. Third, the first two blockbuster drugs in the sector are experiencing significant growth. Pluvicto, a prostate cancer therapeutic developed by Novartis, has seen sales growth of approximately 50% year-over-year, and Pilarified, a prostate cancer diagnostic, has seen growth of approximately 30%. And finally, Murion has seen year-to-date unit growth in dose calibrator shipments, our franchise product in the space, of 18% versus 2023. As I've noted in the past, we've devoted enormous energy toward evolving our strategic position in the nuclear medicine value chain. We are increasingly confident that our portfolio of legacy nuclear medicine instruments, data management software, and balance of clinic radiation measurement equipment will in aggregate yield a compelling solution set for both incumbent and emerging participants in the space. We are looking forward to unpacking our approach comprehensively at our December 3rd Investor Day event. In the radiation therapy space, we announced a strategic alliance agreement with Siemens Healthineers for radiation therapy solutions. We believe this agreement will expand the global reach of our SunCheck software platform via the Health and Air Salesforce and as further validation of our market leadership position in independent RTQA solutions. RTQA growth notably has been flat this year, largely due to first half yen weakness, which negatively impacted Japanese market dynamics. as well as the ongoing Chinese anti-corruption campaign, which has stifled new radiation therapy clinic growth in the region. We've seen a recovery in the Japanese market in Q3, and we remain optimistic that a combination of trade compliance process and stimulus activities will improve Chinese market dynamics in 2025. The last highlight I'd like to note is around operational performance. We continue to drive hard on improving procurement strategy and leveraging our business system to yield improvements in margins and working capital velocity. And these efforts are beginning to bear fruit. The Q3 medical EBITDA margin is up 50 basis points to 34.7% versus 2023. And the technology's EBITDA margin is up 370 basis points for the same period. Networking capital days improved by approximately 10 since Q3 of last year. In addition, the creation of our chief revenue officer office, coupled with enhanced inside sales and e-commerce capabilities, will enhance and standardize our commercial proficiency across both segments. We expect to address our progress against key operational indicia again at our investor conference in December. Now, before I turn it over to Brian to share additional insights, details from the quarter. I'd like to take just a moment to thank Jerry Estes, who led our investor relations efforts previously, for a job well done over the past three years. Jerry is taking on a new role within our dosimetry business, and I have no doubt that he'll make as much of a positive impact there as he did during his time in IR. Thanks, Jerry. With that, I'll turn it over to Brian to share more of the details from the quarter. Brian?