Mirion Technologies, Inc.

Greetings and welcome to the Merion Technologies fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Eric Lin, Treasurer and Head of Investor Relations. Thank you, sir. You may begin.

Okay. Thank you, Melissa. Good morning and welcome to Merion's fourth quarter and full year 2025 earnings conference call. Joining me this morning are Merion's founder, chairman, and CEO, Tom Logan, and Merion's CFO and medical group president, Brian Shopper. 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 fourth quarter ended December 31st, 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.merion.com. With that, let me now turn the call over to Tom, who will begin on Panel 3.

Tom Merion. Eric, thank you, and thanks to everyone for joining the call today. 2025 was a strong year for Marion, and it would not have been possible without the hard work, the energy, and the dedication of the entire Marion 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 Certrek 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 and generating capacity in most developed markets new bills 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 the 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 banding 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 and market demonstrated the strongest growth supported by 150 million from our large opportunity pipeline. This was followed by 34 million of Defense and diversified and market orders principally out of the US and with NATO. These two factors were partially offset by a decline in labs and research and 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. healthcare 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 46 cents, slightly below guidance between 48 and 52 cents, largely due to tax dynamics. Panel 6 addresses key drivers for the labs and research and RTQAN markets. We believe that 2025 headwinds reflected demand deferral rather than a secular change in the market. More specifically, in labs and research, DOGE and the government shutdown represent one-time impacts that are expected to equilibrate. In RTQA, the fundamental market growth drivers continue to apply, notably an aging population demographic and 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 five-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 search track discussed on discussed on panel eight. we're broadening our exposure to our most dynamic vertical with these two deals and are confident in the integration campaign. Both acquisitions immediately broaden marion's presence in the North American nuclear power market substantially enhanced 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 Surtrack's revenue comes from the operating fleet. However, both acquisitions strengthen our position in the rapidly evolving SMR space. Both Paragon and Surtrack are the tip of the era 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 and legacy mirroring. We believe much of the work we're doing in this space will translate well to both the Paragon and Certrek 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 a third of all data centers are expected to exceed one gigawatt compared to only 10% of data centers today. For reference, each one gigawatt data center campus uses about a fifth 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 Certrek 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 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 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 50 cents to 57 cents. 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 61 cents or 7 cents 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 Certrek 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 15 cents or two cents 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 de-booking last year. Nuclear power order growth was supported by all three 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 and market organic revenue grew 11% for the year compared to 4.4% for the collective nuclear and safety segment. The nuclear power and 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 2020-26 pipeline. Timing is always the wild card 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 46 cents, a 12% increase despite 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 Sertrac 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 and 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 two-year revenue CAGR 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 of 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 is 20%. Going into 2026, it is expected to be approximately 25% plus. Nuclear and 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 1st, 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, four-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, deflecting 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 asymmetry organic revenue to lower hardware sales. We are encouraged by our InstaView 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 in 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 refinance down to SOFR plus 200. We also issued two 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 margins 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 a 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.

Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the star key. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Andy Kapowitz. with Citigroup. Please proceed with your question.

Good morning, everyone. Good morning, Andy. 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 that it should translate to double-digit growth and backlog in 26? And with nuclear power now almost half of your sales, do you have confidence to sort of say that?

Yeah, 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, you know, 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, you know, to draw a tight correlation between, again, those large projects, which by definition are more than $10 million in revenue. in the expected timing. What I would say is that we like that dynamic a lot. 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.

It's helpful, Tom. This might be for Bynard, Tom. 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 maybe is that comps? Is that you expect a relatively quick recovery in places like Europe and China? Maybe give us a little more color on how medical should pan out in 26 to sort of meet that mid-single digit growth.

Yeah, I think, I mean, obviously as the year goes on, we're a little bit stronger in 25 in the first half of the year in medical, specifically Q2, by the way. We shipped a lot of stuff into China, Andy. So the back half obviously has been easier than the front half. But, you know, the team likes the dynamic they're seeing. in the, even here in the first quarter and, you know, really across, you know, all three businesses. So, you know, that's right now, that's what we're seeing. And, you know, we'll update you when we get through Q1. But I think the point here is that, you know, we've thought quite hard and, you know, we usually don't give quarterly, too much quarterly guidance and we wanted to make sure we got it appropriately here. It's helpful color.

Thanks, guys.

Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question.

Hey, good morning, guys. Hey, Joe. Hey, 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.

Yeah, I mean, look, I'm not going to give you the number. But, you know, I think by, you know, first off, Paragon's, you know, the first quarter will be the lightest quarter as well for Paragon. Yeah. It's not true. So the, yeah, the third and the first quarter will be the kind of, it has similar seasonality to, to Marion where the third and the first, 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 outer season. So that's, that's how I would think about it. I think with the lighter first quarter in Marion and the dilutive nature of the, of the margins on the Paragon side, you know, That I would just, 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 a 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 Miriam business on top of the solution 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. Appreciate that, Brian. And then I guess, look, clearly the orders were excellent this quarter, you know, 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, you know, win rates that you should expect going forward. You feel like your win rates are increasing. Is there any other, you know, color on that pipeline and how you guys are doing commercially?

Yeah, so we, Joe, we don't, you know, historically we don't talk about win rates, but I'll tell you what's really important here, and that is the the impact that both Surtrack 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 its CEO, Doug Van Tassel, 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 roadmap for integrating the company's 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 N-triple-S 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, you know, 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 initiatives, the margins this quarter were really strong. You know, as we kind of think off, like the jumping off point for 2026 full year, is the expectation that your medical business should still see over a full year period, you know, that like 50% type incremental margin, just given the initiatives and traction that you guys are getting?

Yeah, 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 may be as a touch high, but it's still going to be very strong and robust.

Thank you. Our next question comes from the line of Tomo Osano with J.P. Morgan. Please proceed with your question.

Good morning, everyone. Hey, Tomo.

Hey, Tomo.

Thank you for taking my questions. So with 2026 guidance for adjusted EBITDA margins at 25% to 26%, so is the path to 30% plus EBITDA margins by 2028 still intact? Should we expect about 200 BIPs? of margin expansion in 2027 and 2028 to reach that target?

CHAIR POWELL. And, 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 friend here. 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 BIPs of margin improvement from procurement this year. We're not done in that area. There's much more to be done both with legacy, Marion, as well as with the newly acquired companies. But, you know, 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. You know, 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, seven 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, Shamir 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, Don. And a follow-up on AI with announcement of executive appointments you just described. And what other key KPIs and short to midterm goals for your AI and digital strategies, please?

Yeah, they're really under development right now, understanding that Shamir 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 startups 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. 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.

Thank you. Our next question comes from the line of Rob Mason with Baird. Please proceed with your question.

Yes, good morning. 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, you know, it'd be growing kind of low teens. A couple of questions. Just, you know, 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, you know, 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'll take the second part. I mean, just quickly, first off, you know, Paragon has good coverage. They actually have better coverage than Mirion does for next year, as we think, you know, on a forward basis. So I think one of the things that's driving it is just the order growth they 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 they didn't have as much revenue growth in last year. So I think, you know, those two things kind of coupled together is what gives us, you know, confidence in kind of hitting those numbers. But they've, you know, it's an exceptional team and they continue to put good wins on the board.

Yeah, just in, 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 our know what are kind of the obvious and and key areas of focus in terms of bringing the two companies together from a synergy standpoint particularly as it relates to commercial traction overall our ability to 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, you know, basically are, number one, we think we can get more wallet share out of the installed base on a combined basis. We think one plus one will be two 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 is of the two 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. You know, one of the classical innovation issues articulated in the Innovator's Dilemma, you know, 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, you know, while it's a wildly difficult market to predict, you know, 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 Did we see that already in backlog, or is that part of the pipeline that you look ahead, or just what is that?

Yeah, 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 up rates, so increasing the you know, 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 Dwayne Arnold. Their 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. You know, 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, you know, that dynamic goes away overall. And I think that's fundamentally favorable for us and the solution sets that, you know, we provide to the marketplace.

Thank you. Our next question comes from the line of Jeff Gramp with Northland Capital Markets. Please proceed with your question.

Morning, guys. Thanks for the time. I was curious, with respect to the 26 guide, is there much, 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?

Yeah, 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 – Colin, after 18 months or so into year two, three, four. So, yes, there's a little bit, but I wouldn't say it is the biggest piece of those businesses from an annual perspective.

Understood. That's helpful. And my follow-up, I want to reference slide 23, I believe it is. You guys call out SMRs 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 Marion's growth story over the coming years?

Yeah, Jeff, it's, you know, it is difficult to contextualize recognizing the sheer volume of SMR projects globally where, you know, depending on you know, how you're screening it as well over a hundred, uh, discrete projects, uh, overall, you know, we've indicated that we're, we have awarded, uh, contractual relationships with, uh, with more than 20 of these guys so far. And, um, you know, we, uh, as noted, we hope to continue to, to drive further. We want to cover everybody. We want to have a, uh, you know, a relationship with every key SMR sponsor, uh, overall you know in terms of hard metrics probably the the leading metric is just the orders that we've uh 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 you know specific kpis in terms of this marketplace beyond orders beyond engagement overall?

Yeah, I would say on a total basis, it's sub 3% of our total revenue as we look forward for 26. And it was, you know, sub 2% last year, maybe even sub 1.5% in 25. So yeah, 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, you know, maybe that's some additional color as we think about 26.

Thank you. Our next question comes from the line of Chris Moore with CJS Securities. Please proceed with your question.

Hey, good morning, guys. Yeah, just obviously from an M&A standpoint, Paragon's gotten most of the headlines. Maybe you could just talk a little bit about the Surtrack acquisition. You owned it for a little more than six months. Just, you know, 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, you know, access, as we were just talking about, SMRs, et cetera, just maybe a little bit more there.

Yeah, Chris, fundamentally what Certrek does is outsource 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 market. 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 this company. Again, it's an amazing platform, amazing people. And the focus that we have here has multiple dimensions, but there are two that I'll call out. One is that, you know, 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. Perfect.

I think we're at the witching hour. I'll leave it there. Thanks, guys.

Thank you. Our final question this morning comes from the line of Yuan Ji with B. Reilly Securities. Please proceed with your question.

Good morning. Maybe we can change gear 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 economic is there for Miriam 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.

Yeah, 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, Sheila 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, EC Squared, as well as the legacy hardware business, which is, you know, the dose calibration instruments, the clinical instruments like thyroid uptake systems, the whole ecosystem within that overall. We see a powerful and compelling industry. 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-bats for the hardware overall. But Shiel is also, you know, 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 radio pharmacies, the clinicians and IDNs, you know, she has been leaning into that overall. And our focus has really been on building out the, you know, 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, on the nuclear medicine side, is that pull-through of the technology, nuclear safety product lines in. Sheila brings us that advantage because she knows both businesses. I think as you asked specifically about Novartis, I think that's really where we're going to be able to kind of move the needle here.

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

Yeah, got it. Thanks for the additional comment.

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 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'll 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.