Mirion Technologies, Inc. 2026 Q3 Earnings Call

Thank you, and good morning. Welcome to Mirion's third 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 third quarter ended September 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 page three.

Eric, thank you, and good morning, everyone. Yesterday, after market close, we issued our third quarter results, and I'm pleased to report a quarter that reflects the continued positive momentum in our markets. Strong orders, including $140 million of large opportunity wins, revenue growth that demonstrates backlog conversion, and full-year guidance that has us expecting mid to high teens organic revenue growth in Q4. Let's start with orders, which remain the key bellwether for our business. Here, we delivered yet another strong quarter, up 62% year-over-year, excluding M&A, to $340 million. The nuclear power end market led the way with an impressive 105% increase, also excluding M&A. On the revenue performance, you'll recall that in July, I told you we were gearing up for a strong second half acceleration.

Third quarter organic revenue grew 6.5%, and we are tracking towards mid to high teens organic revenue growth in the fourth quarter. Our expanding backlog is doing what is expected, converting into accelerated revenue. That momentum, together with the visibility we now have through nine months, informs our revised full year 2026 guidance, which Brian will walk through. I would also note that we expect net leverage to improve to approximately 2.6 times by year-end, which reflects both the earnings growth and the cash generation that is expected in our fourth quarter. Let me emphasize that our debt structure is very low cost, with an average coupon of below 3%, or less than half of what it would be if it were in the form of straight debt. Thus, our effective leverage exposure is arguably substantially lower than many people believe when looking at screens.

On the subject of guidance, and before we go to panel four, I'd like to address our previously announced 2028 margin target, which we now believe is too aggressive. Our medical organic growth has been tempered over the last few years due to external factors, and we believe that margin expansion at Paragon will be behind initial expectations. Additionally, I'm prioritizing significant investments in AI and cybersecurity to capture the full potential from accelerating demand in our end markets. We have a long history of driving margin growth. However, we are in the midst of a generational opportunity, and it would be short-sighted on our part to prioritize a near-term margin target to the detriment of an opportunity that we believe will drive long-term shareholder value. Instead, we are committed to annual margin expansion driven by operating leverage, software, procurement, and self-help initiatives.

Now let's turn to panel four, which illustrates our Q3 order book details versus Q3 of last year. Before M&A, core orders grew 62%. Total orders, including a $46 million contribution from Paragon and Certrec, grew 85% to $386 million, despite the Chinese de-booking previously discussed on our Q2 call. Nuclear and Safety orders, excluding the Chinese de-booking and M&A, increased approximately $130 million, driven by a doubling of orders in the nuclear power end market. Labs and research orders nearly doubled, helped by two large Department of Energy orders. Defense and diversified orders grew double digits, and medical orders increased approximately $19 million versus last year due to strong intake in the RTQA end market. Overall, the medical segment demonstrated order growth across all three end markets. Panel five puts the broader order trajectory in context.

This chart shows trailing 12-month orders excluding M&A, and I think the picture speaks for itself. You can see the step-up beginning in the fourth quarter of last year, which further accelerates into Q3. On a trailing 12-month basis, orders have grown 37%, excluding M&A. This growth primarily reflects nuclear power end market growth, and importantly, the installed base was the largest year-over-year contributor. Recall that we have a presence in more than 98% of the world's nuclear reactors, and approximately 80% of our nuclear power revenue comes from today's operating fleet. This is not growth built on unpredictable new build timelines, it is growth built on reactors that are running today. It's also reflective of what I described last quarter, shown on panel six, as the waves of installed base customer demand.

The catch-up capital spending after decades of profound capital rationing, the life extensions and power uprates that represent near-term capacity increases, and the digital transformation that is beginning to take root. What I would highlight today is that all three waves are now beginning to materialize. The first wave is catch-up capital spending. Per the August NEI report, U.S. fleet capital spending dollars per megawatt hour reached $9.7 in 2025. That is up from $7.8 in 2024 and $6.4 in 2021. The second wave is life extensions and power uprates. In recent weeks, we saw uprate announcements totaling approximately 1.5 gigawatts, 890 megawatts across Constellation's units in Illinois, Pennsylvania, and New Jersey, 433 megawatts across Vistra's fleet in Pennsylvania and Ohio, and 190 megawatts, Calvert Cliffs in Maryland.

Alongside those uprates, 96% of U.S. reactors have now been approved for 20-year life extensions, and the required downstream investment work is already underway, and there may be even more runway. In July, the NRC proposed a rule that would allow license renewals of up to 40 years, double today's 20-year limit. If finalized, operators could plan for decades of additional operation, and every added year of operation means continued demand for the instrumentation, software, and services that we provide. The final wave is digital transformation. We were previously awarded an order to digitally upgrade part of the reactor protection systems at the first operating unit of a large installed nuclear power plant. That equipment has now shipped, with installation beginning in November, and we expect to see additional opportunity with follow-on units.

This is a clear example of digital transformation moving from concept to commitment across our installed base, and we are still very early in this wave. Importantly, these three waves are not contingent upon future events, most specifically data center growth. Fleet operators have already made long-term commitments based upon a profound change in market dynamics, which are almost certainly likely to continue given the significant deficit in global electrical generating capacity. What will likely follow is a multi-year, possibly multi-decade capital growth cycle that will affect every category of instrumentation, software, and services that we provide to nuclear power plant operators. Let me pivot now to our backlog on panel 7, which illustrates the positive trend in revenue recognition. Total backlog now stands at $1.25 billion, up from $816 million a year ago.

That growth includes Paragon and Certrec, but even excluding M&A, we are seeing a sizable increase in expected backlog conversion in each of the subsequent years. Current year backlog recognition is projected to be $292 million, versus $212 million last year. 2027 backlog is $443 million versus $285 million. Put those together, and we have approximately $735 million of backlog to be recognized in Q4 2026 and full year 2027, more than $200 million greater than this time last year. This is the heart of the story, total backlog growth driving an increase in near-term revenue recognition. I will conclude my prepared remarks on panel 8, which shows the improving revenue visibility that backlog is providing. At the midpoint of our revised guidance, we now have 95% revenue coverage for the full year. That compares to 94% at this point in each of the last three years. Here is the math. Year-to-date revenue through September is $802 million.

We have $292 million of backlog expected to convert in the fourth quarter, and together, that is approximately $1.09 billion against the midpoint of our full-year revenue guidance of $1.15 billion. The remaining go-get is on the order of $60 million, and most of that reflects intra-quarter medical business, which is the kind of revenue we have historically delivered, and Paragon's book-and-ship business that does not appear in backlog. The combination of year-to-date performance and the fourth quarter backlog meaningfully de-risks the full year. To summarize, we are delivering impressive orders performance, converting expanding backlog into revenue, and remain on track for mid to high teens organic revenue growth in Q4. We believe the generational tailwinds in nuclear power are only beginning to show up in our results and will set us up for strength in 2027.

With that, let me turn it over to Brian to walk through the financials and the details of our revised guide.