Q1 2024 Mirion Technologies Inc Earnings Call
Operator: Hello and welcome to the Mirion Technologies first quarter 2024 earnings conference call. All participants will be in listen-only mode.
Yeah.
Speaker Change: Hello, and welcome to the myriad Technologies' first quarter 'twenty 'twenty four earnings conference call.
All participants will be in listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to hand the call over to Alex Gaddy, Senior Vice President of Strategy and Investor Relations. Please go ahead.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Speaker Change: Please note this event is being recorded.
I would now like to hand, the call over to Alex Scotty Senior Vice President of strategy and Investor Relations. Please go ahead.
Alex Gaddy: Good morning, everyone, and thank you for joining Mirion's first quarter 2024 earnings call. Reminder, the comments made during this presentation 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 report on Form 10-K and quarterly reports on Form 10-Q that we file from time to time with the SEC under the caption risk factors and in Mirion's other filings with the SEC.
Alex Gaddy: Good morning, everyone and thank you for joining <unk> first quarter 2024 earnings call.
Alex Gaddy: Reminder, that comments made during this presentation 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 report on Form 10-K, and quarterly reports on Form 10-Q that we file from time to time with the SEC under the.
Alex Gaddy: Caption risk factors and in <unk> other filings with the SEC quarterly references within todays discussion are related to the first quarter ended March 31 2024.
Alex Gaddy: Quarterly references within today's discussion are related to the first quarter ended March 31st, 2024. 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 the call today. All earnings materials can be found on Mirion's IR website at ir.com.
Alex Gaddy: The comments made during this call will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles.
Alex Gaddy: Conciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of the presentation accompanying the call today.
Alex Gaddy: All earnings materials can be found on <unk> IR website at IR.
Alex Gaddy: Joining me on the call today are Tom Logan, Chief Executive Officer, and Brian Schopfer, Chief Financial Officer. Now I will turn it over to our CEO, Tom Logan. Tom? Alex, thank you and good morning.
Alex Gaddy: Joining me on the call today are Tom Logan, Chief Executive Officer, and Brian Shopper, Chief Financial Officer, now I will turn it over to our Chief Executive Officer, Tom Logan, Tom Alex. Thank you and good morning, everyone to get US started today I'd like to firstly, Thank my Maryann colleagues.
Thomas D. Logan: Alex, thank you and good morning everyone. To get us started today, I'd firstly like to thank my Mirion colleagues for delivering a very solid start to 2024. Taking a look at our Q1 results, there are a few key highlights that I'd like to point out for you. First, our end markets remain healthy across the enterprise, supported by improving fundamentals, particularly in nuclear power and cancer care. Order growth was relatively flat in Q1, but this isn't surprising given the strength we saw last year and the fact that Q1 is historically our lightest volume quarter.
Alex Gaddy: For delivering a very solid start to 2020 for taking.
Alex Gaddy: Taking a look at our Q1 results. There are a few key highlights I'd like to know trio first our end markets remain healthy across the enterprise supported by improving fundamentals, particularly in nuclear power in cancer care.
Alex Gaddy: Order growth was relatively flat in Q1, but this isn't surprising given the strength, we saw last year and the fact that Q1 is historically, our lightest volume quarter.
Thomas D. Logan: Overall, we continue to see excellent customer engagement. However, timing dynamics impacted quarterly order growth. As an example, we received an approximately $15 million European defense order at the outset of Q2, which is not included in the results shared today.
Alex Gaddy: Overall, we continue to see excellent customer engagement, the timing dynamics impacted quarterly order growth as an example, we received an approximately 15 million dollar European defense order at the outset of Q2, which is not included in the results shared today.
Thomas D. Logan: Second, I am proud to announce the commercialization of our InstaDoseView technology, which we believe will revolutionize the occupational dosimetry space. We have commercially deployed thousands of units during a Q1 soft launch, and customer interest in the product is high. We expect the adoption cycle for InstaDoseView to be lengthy, but we are confident in the distinct differentiation that this product brings to the marketplace. Note that, for competitive reasons, we will not be providing quarterly updates on badge volume going forward.
Alex Gaddy: Second I am proud to announce the commercialization of our instead of those few technology, which we believe will revolutionize the occupational dosimetry space. There's commercially deployed thousands of units during a Q1 soft launch and customer interest in the product is high we expect the adoption cycle for instance, does for you to be.
Alex Gaddy: Lengthy but we are confident in the distinct differentiation that this product brings to the marketplace knows that for competitive reasons, we will not be providing quarterly updates on badge volume going forward.
Thomas D. Logan: Third, in terms of financial performance, we delivered total company organic revenue growth of 5.5% in the quarter, which was in line with our expectations. The technologies business led the way with 8% organic growth. Total company adjusted EBITDA grew by 8% year over year, reaching nearly $40 million for the quarter.
Alex Gaddy: Third in terms of financial performance, we delivered total company organic revenue growth of five 5% in the quarter, which was in line with our expectations.
Alex Gaddy: <unk> technologies business led the way with 8% organic growth.
Alex Gaddy: Company adjusted EBITDA grew by 8% year over year, reaching nearly $40 million for the quarter. We delivered 40 basis points of adjusted EBITDA margin expansion led by our technologies business, which provided 170 basis points of expansion.
Thomas D. Logan: We delivered 40 basis points of adjusted EBITDA margin expansion, led by our technologies business, which provided 170 basis points of expansion. Finally, we have reaffirmed our 2024 financial guidance and continue to project organic revenue growth of 4% to 6% and adjusted EBITDA of $193 to $203 million. Brian will provide more detail on our quarterly financial performance, so I'd like to use most of my time today to discuss areas of critical importance as we think about medium and longer-term growth.
Alex Gaddy: We have reaffirmed our 2024 financial guidance and continue to project organic revenue growth of 4% to 6% and adjusted EBITDA of $193 million to $203 million.
Speaker Change: Brian will provide more detail on our quarterly financial performance I'd like to use most of my time today to discuss areas of critical importance as we think about medium and longer term growth note at the outset that more than two thirds of our topline growth is driven by two super trends, namely nuclear power in cancer care.
Thomas D. Logan: I note at the outset that more than two-thirds of our top-line growth is driven by two super trends, namely nuclear power and cancer care, which we expect to be robust, global, and long in the tooth. Turning first to nuclear power, which is in the midst of a global resurgence. The world's demand for energy is increasing dramatically, with all geographies struggling to find reliable sources of cost-efficient, clean power. The emergence of AI and the attendant growth of high-energy-consuming data centers are putting increased demands on energy infrastructure.
Alex Gaddy: Which we expect to be robust global and long in the tooth turning first to nuclear power, which is in the midst of a global resurgence the worlds demand for energy is increasing dramatically with all geographies are struggling to find reliable sources of cost efficient clean power the emergence of AI.
Alex Gaddy: And the attendant growth of high energy consuming data centers is putting increased demands on energy infrastructure. Additionally, we see continued de carbonization commitments globally and the push for energy independence driving elevated interest in nuclear power as stated before we believe nuclear power is a green energy source.
Thomas D. Logan: Additionally, we see continued decarbonization commitments globally and the push for energy independence driving elevated interest in nuclear power. As stated before, we believe nuclear power is a green energy source and will play a primary role in meeting increased energy demand through both utility-scale reactors and small modular reactors. While the overall demand function for Mirion's nuclear business remains robust, there's an emerging body of public policy that makes us confident in the significant tailwinds and the NBAR.
Alex Gaddy: And will play a primary role in meeting increased energy demand through both utility scale reactors and small modular reactors, while the overall demand function for <unk> nuclear business remains robust there is an emerging body of public policy that makes us confident in the significant tailwind.
Alex Gaddy: In the end market.
Thomas D. Logan: Looking at the U.S. for a moment, the federal government has set a net zero target for the year 2050, and it's difficult to see a path where nuclear power doesn't play a meaningful role in meeting that goal. Nuclear power plant operators are performing well financially, which is changing the calculus surrounding capacity utilization, life extension, and even capacity upgrades. Extraordinarily, we saw the restart announcement of the Palisades Nuclear Power Plant in Michigan in Q1, a previously doomed facility.
Alex Gaddy: Looking at the U S for a moment the federal government has set a net zero target for the year 2015, and it's difficult to see a path where nuclear power doesn't play a meaningful role in meeting that goal.
Alex Gaddy: The clear power plant operators are performing well financially, which is changing the calculus surrounding capacity utilization life extension and even capacity operates extraordinarily we saw the restart announcement of the Palisades nuclear power plant in Michigan in Q1, a previously doomed facility we view this.
Thomas D. Logan: We view this as yet another evidentiary point supporting the criticality of nuclear power in the American power market. Beyond life extensions and restarts, the EPA has recently issued sweeping new rules requiring existing coal plants to limit and capture carbon emissions and sets forth strict operating rules for future new coal plants.
Alex Gaddy: As yet another evidentiary point supporting the criticality of nuclear power and the American power market beyond life extensions and restart the EPA has recently issued sweeping new rules, requiring existing coal plants to limit and capture carbon emissions.
Alex Gaddy: Fourth strict operating rules for future new coal plants. Additionally, in April publication from the Doe under the auspices of its cold of nuclear initiative highlights the expected economic and environmental benefits of replacing coal power plants with SM ours or utility scale reactors with 30% of the knee.
Thomas D. Logan: Additionally, an April publication from the DOE under the auspices of its Coal to Nuclear Initiative highlights the expected economic and environmental benefits of replacing coal power plants with SMRs or utility-scale reactors. With 30 percent of the nation's coal plants expected to retire by 2035 and over 300 existing and retired coal plants that have been deemed suitable to be replaced by nuclear plants, nuclear power has a promising opportunity here. Now, while the dynamics I've just touched on are U.S.-centric, they can be broadly extrapolated to global markets as well.
Alex Gaddy: <unk> coal plants expected to retire by 2035 and over 300 existing and retired coal plants that have been deemed suitable to be replaced by nuclear plants nuclear has a promising opportunity here.
Alex Gaddy: Now while the dynamics I've just touched on are U S centric. They can do broadly extrapolated to global markets as well.
Thomas D. Logan: As a reminder, nearly 40% of our total company revenue in 2023 was tied to nuclear power, as we are the leading provider of safety-critical radiation detection and measurement solutions to the global nuclear fleet. Mirion's unmatched product portfolio is reactor technology agnostic and serves all three stages of the plant's life cycle, namely new construction, plant operations, and decommissioning.
Alex Gaddy: As a reminder, nearly 40% of our total company revenue in.
Alex Gaddy: In 2023 was tied to nuclear power as we are the leading provider of safety critical radiation detection and measurement solutions to the global nuclear fleet Maryann unmatched product portfolio as reactor technology agnostic and serves all three stages of the plants lifecycle, namely new construction plant.
Alex Gaddy: Operations and decommissioning work.
Thomas D. Logan: We are in robust strategic engagement with the burgeoning SMR community and are committed to extending our relationships with traditional utility-scale OEMs and utilities worldwide. There's a similar super trend unfolding in the area of cancer care, which represents nearly 30% of our total company revenue. This has been driven by fundamental growth in radiation therapy, which is supported by an aging population and demographic and Developed Markets in improving standards of care in developing markets, as well as the revolution in nuclear medicine catalyzed by the emergence of therapeutic radioligand treatments.
Alex Gaddy: We're in robust strategic engagement with a burgeoning S M. Our community and are committed to extending our relationships with traditional utility scale Oems and utilities worldwide.
Alex Gaddy: Sure.
Alex Gaddy: Or is it similar super trends unfolding in the area of cancer care, which represents nearly 30% of our total company revenue. This has been driven by fundamental growth in radiation therapy, which is supported by an ageing population some.
Alex Gaddy: Some demographic in developed markets and improving standards of care in developing markets as well as the revolution in nuclear medicine catalyzed by the emergence of therapeutic radio ligand treatments.
Thomas D. Logan: More to come on this in future calls, but the opportunity for Mirion to participate and drive future growth is clear, compelling, and significant. Now, turning to commercial and operating themes, I'm focused on improving our execution in the following areas. First, I'm committed to continued improvement within our French business, which will improve our organic growth, margins, and capital efficiency. Second, we are aggressively executing on self-help themes, including extending pricing heuristics, cost-out and procurement programs, internally focused AI automation, and capitalizing upon Mirion's inherent operating leverage.
Alex Gaddy: To come here in future calls, but the opportunity for myriad to participate and drive future growth is clear compelling and significant.
Alex Gaddy: Now turning.
Alex Gaddy: The commercial and operating teams are focused on improving our execution in the following areas first time committed to continued improvement within our French business, which will improve our organic growth margins and capital efficiency.
Alex Gaddy: We are aggressively executing on self help themes, including extending pricing heuristics cost out and procurement programs internally focused AI automation and capitalizing upon maryanne inherent operating leverage let me reiterate here that we remain confidently committed to reaching our five year 30.
Thomas D. Logan: Let me reiterate here that we remain confidently committed to reaching our five-year, 30 percent adjusted EBITDA margin target. Third, the continued evolution and enhancement of the Mirion solution set to our investments in digital capabilities, customer-facing AI, and our robust new product development pipeline. And lastly, supplementing the business through strategic and opportunistic M&A, primarily geared toward new capabilities and defending and extending our category leadership. With that, I will pass the call over to our Chief Financial Officer, Brian Schopfer. Brian? Thanks, Tom.
Alex Gaddy: Percent adjusted EBITDA margin target.
Alex Gaddy: Third the continued evolution and enhancement of the myriad solution set to our investments in digital capabilities customer facing AI and a robust new product development pipeline and lastly, supplementing the business through strategic and opportunistic M&A, primarily geared toward new capabilities in defending and extending our <unk>.
Alex Gaddy: Category leadership with that let me pass the call over to our Chief Financial Officer, Brian Shopper, Brian.
Brian Schopfer: Thanks, and good morning everyone. To kick off my commentary this morning, let's turn to slide four to take a look at our first quarter results. Total company revenue was up 5.8%, and adjusted EBITDA was up 7.9%. Total revenue in the quarter was $192.6 million, and organic growth was 5.5%. Adjusted EBITDA totaled $39.5 million, with margins expanding 40 basis points to 20.5%. Overall, quarterly performance was in line with our expectations, and I'm pleased with the progress shown with regard to margin expansion.
Brian Schopfer: Hey, good morning, everyone to kick off my commentary. This morning, let's turn to slide four to take a look at our first quarter results.
Brian Schopfer: Total company revenue was up five 8% and adjusted EBITDA was up seven 9%.
Brian Schopfer: Total revenue in the quarter was $192.6 million and organic growth was five 5% adjusted EBITDA totaled $39 5 million with margins expanding 40 basis points to 25%.
Brian Schopfer: Overall quarterly performance was in line with our expectations and I am pleased with the progress shown with regard to margin expansion.
Brian Schopfer: Let's now dive into more detail around our segment performance during the first quarter. Let's begin with the medical segment on slide five. Medical revenue grew 0.6% on both a reported and organic basis, and the EC squared acquisitions almost fully offset the Biodex divestiture in terms of revenue contributions. As a reminder, this will be the last quarter of Inorganic Impact from the Biodex Divestment. Medical's top line performance was negatively impacted by approximately $4 million, stemming from the implementation of a new ERP system within our nuclear medicine business. While we did expect an impact from the ERP implementation, the temporal impact was larger than originally anticipated. The implementation was completed in February.
Speaker Change: Let's now dive into more detail around our segment performance during the first quarter, let's begin with the medical segment on slide five.
Brian Schopfer: We do not expect further material ERP-related issues in Q2 or the rest of 2024. Order dynamics and backlog remain strong within nuclear medicine, exemplified by order growth of 17 percent and the doubling of our backlog versus the same period last year. Excluding the impact from the ERP, medical organic growth would have been approximately 7.1 percent. Medical adjusted EBITDA margin was 30.7% in the quarters, generally last compared to the same period last year.
Speaker Change: Medical revenue grew 0.6% on both a reported and organic basis and the easy squared acquisition almost fully offset the biotechs divestiture in terms of revenue contribution.
Speaker Change: As a reminder, this.
Speaker Change: We will be the last quarter of inorganic impact from the biotech divestiture Mehdi.
Speaker Change: Medical topline performance was negatively impacted by approximately $4 million stemming from the implementation of a new ERP system within our nuclear medicine business.
Speaker Change: We did expect an impact from the ERP implementation the temporal impact was larger than originally anticipated.
Speaker Change: Invitation was completed in February we do not expect further material ERP related issues in Q2, where the rest of 2024.
Speaker Change: Order dynamics and backlog remains strong within nuclear medicine, exemplified by order growth of 17% and the doubling of our backlog versus the same period last year.
Speaker Change: Excluding the impact from the ERP medical organic growth would have been approximately seven 1%.
Speaker Change: Medical adjusted EBITDA margin was 37% in the corners generally last compared to the same period last year.
Brian Schopfer: Had we not had the ARP blip, we would have seen solid margin expansion in the segment; margin enhancement remains a key area of focus where we expect year over year margin expansion in medical for the full year. Moving on now to slide six in the technology section.
Speaker Change: Not having ERP blurb, we would events, we would have seen solid margin expansion in the segment.
Speaker Change: Margin enhancement remains a key area of focus where we expect year over year margin expansion.
Speaker Change: In medical for the full year.
Speaker Change: Moving on now to slide six and the technology segment.
Brian Schopfer: Technology's revenue grew by 8.7% for the quarter, with organic growth of 8.4 percent. Top-line growth was broad-based across the segment and supported by strong quarters from our nuclear power and labs businesses. Technologies' adjusted EBITDA was $33.1 million, up 16.1% from the same period last year. The adjusted EBITDA margin expanded 170 basis points to 26.3%. As expected, technology's margins took a step forward in Q1, supported by strong execution. Overall, I am pleased with the progress made against our improvement initiatives, particularly in France, where we are gaining momentum.
Speaker Change: Technologies revenue grew by eight 7%.
Speaker Change: And for the quarter with organic growth of eight 4% top line growth was broad based across the segment and supported by strong quarters from our nuclear power and last businesses technologies. Adjusted EBITDA was $33 1 million up 16, 1% from the same period last year adjusted EBITDA margin expanded 100.
Speaker Change: And 70 basis points to 26, 3%.
Speaker Change: As expected Technologies' margins took a step forward in Q1 supported by strong execution.
Speaker Change: Overall I am pleased with the progress made against our improvement initiatives, particularly in France, where we are gaining momentum.
Brian Schopfer: We still have work to do and expect improvement in the back half of the year, but Q1 was a good first. Turning now to our cash flow performance for Q1. Adjusted free cash flow was negative $4.5 million, and networking capital was a burn in the quarter. This was generally in line with expectations, and while negative in the quarter, performance versus the same period last year was an improvement. More specifically, inventory momentum is improving, as we saw an $11 million reduction versus the same period last year.
Speaker Change: We still have work to do and expect improvement in the back half of the year, but Q1 was a good first step.
Speaker Change: Turning over now to our cash flow performance for Q1.
Speaker Change: Adjusted free cash flow was negative $4 5 million and networking capital was a burn in the quarter. This was generally in line with expectations, while negative in the quarter performance versus the same period last year is an improvement.
Speaker Change: More specifically inventory and momentum is improving as we saw an $11 million $11 million reduction versus the same period last year secondarily. You will also see a larger than normal capex number that is reflective of us executing our instead those few launch plan by having product on hand.
Brian Schopfer: Secondarily, you will also see a larger-than-normal CapEx number, and that is reflective of us executing our InstaDose View launch plan by having product on hand. Absent the CapEx investment and InstaDose, cash flow would have been positive in Q1.
Speaker Change: The Capex investment it has to do is cash flow would've been positive in Q1.
Brian Schopfer: Our target for the first half continues to be cash flow positive for the enterprise. Before diving into our reaffirmed guidance for the year, I wanted to highlight the warrant redemption announcement we made a couple of weeks ago. We've opted to exercise our right, under our warrant agreement, to redeem all of our outstanding public warrants. Warrant holders may choose to exercise their warrants by either paying the exercise price for one full share or redeeming their warrants on a cashless basis at a ratio of 0.22 shares per warrant before May 20th, 2024.
Speaker Change: Our target for the first half continues to be cash flow positive for the enterprise.
Speaker Change: Before diving into our reaffirmed guidance.
Speaker Change: For the year I wanted to highlight the warrant redemption announcement, we made a couple of weeks ago, we've opted to exercise our rights under our warrant agreement to redeem all of our outstanding public warrants warrant holders may choose to exercise their warrants by either paying the exercise price for one full share redeeming their warrants on a cashless basis at a rate.
Speaker Change: <unk> 0.22 shares per one before May 22024.
Speaker Change: This action is a meaningful step in.
Speaker Change: Simplifying our overall capital structure, while eliminating future dilution area faxed or existing shares.
Speaker Change: Shareholders.
Brian Schopfer: This action is a meaningful step in simplifying our overall capital structure while limiting future dilutionary effects for existing shares and shareholders. Finally, I'd like to close out my comments by highlighting our reaffirmed 2024 guidance on slide eight. Given our solid start to 2024, we are maintaining our previously issued financial expectations with organic revenue growth of 4 to 6% for the year, supported by mid-single digit organic growth for most segments. We're also reaffirming our adjusted EBITDA guide of $193 to $203 million.
Speaker Change: Finally, I'd like to close out my comments by highlighting our reaffirmed 2024 guidance on slide eight given our solid start to 2024, we are maintaining our previously issued financial expectations with organic revenue growth of 4% to 6% for the year supported by mid single digit organic growth from both segments. We are also reaffirming our adjusted.
Speaker Change: EBITDA guide of $193 million to $203 million thinking.
Brian Schopfer: Thinking through the cadence for the rest of the year, we are expecting Q2 margin pressure in our technology segment, primarily related to product mix. In addition, we're making investments in supply chain and procurement with the associated costs hitting in the first half and benefits beginning to materialize in the second half and into 2025. We are very excited about this initiative, and we'll talk more later in the year about it. Despite this dynamic, visibility into our margin expansion in the second half is robust and supportive of the overall enterprise expansion target for the year. Adjusted free cash flow remained at $65 to $85 million for the year, and adjusted EPS was in the range of $0.37 to $0.42.
Speaker Change: Thinking through the cadence for the rest of the year, we're expecting Q2 margin pressure in our technology segment, primarily related to product mix. In addition, we're making investments in supply chain and procurement with the associated costs hitting in the first half benefits beginning to materialize in the second half and into 2025.
Speaker Change: We are very excited about this initiative and we will talk more later in the year about it despite the dynamic visibility into our margin expansion in the second half is robust and supportive of the overall enterprise expansion target for the year.
Speaker Change: Adjusted free cash flow remains at $65 to $85 million for the year and adjusted EPS in the range of 37 to 42 cents.
Brian Schopfer: Overall, the first quarter was a good start to the year, and I am encouraged heading into the rest of 2025. With that, I'll now pass things back to Alex to open the call up for Q&A. Thank you, Brian.
Speaker Change: Overall, the first quarter was a good start to the year and I am encouraged heading into the rest of 2024.
Speaker Change: With that I'll now pass things back to Alex to open the call up for Q&A.
Alex: Brian and Tom that concludes our formal comments for this morning. So let me pass things back over to the operator to open up the session for Q&A.
Alex Gaddy: Thank you, Brian and Tom. That concludes our formal comments for this morning. Let me pass things back over to the operator to open up the session for Q&A.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble the roster, and our first question will come from Chris Moore of CJS Securities. Please go ahead.
Alex: We will now begin the question and answer session.
Alex: I ask a question you May press Star then one on your telephone keypad.
Alex: If you are using a speakerphone please pick up your handset before pressing the keys.
Alex: To withdraw your question. Please press Star then two at.
Speaker Change: At this time, we will pause momentarily to assemble the roster.
Alex: Okay.
Alex: And our first question will come from Chris Moore of CJS Securities. Please go ahead.
Christopher Paul Moore: Hey, good morning guys. Thanks for taking the time to ask a couple questions. Good morning. Good morning.
Christopher Paul Moore: Hey, good morning, guys. Thanks for taking a couple of questions.
Christopher Paul Moore: Yeah, maybe we'll just start on the nuclear power as, you know, Tom was talking about it. All you hear about these days is the need for electrification, and nuclear power is more and more, I think, viewed as part of the equation. You mentioned a new restart in Michigan. I think there was a long-awaited new reactor that came online in Georgia recently as well. I guess I'm just trying to understand what's going on within the U.S. Obviously, SMRs seem like they're an easier sell. What are you hearing in terms of new utility scale bills?
Christopher Paul Moore: Hey, Chris Good morning, good morning.
Christopher Paul Moore: Maybe we'll just start off on the nuclear as you know Tom was talking about it all you hear about these days is they need for electrification nuclear power more and more is I think viewed as part of the equation you mentioned a new we start in Michigan I think it was a long awaited new reactor that came online in Georgia recently as well.
Christopher Paul Moore: <unk>.
Speaker Change: Yes, I'm just trying to understand within the U S. Obviously U S. M ours seem like Theyre, an easier sell what are you hearing in terms of of new utility scale build.
Thomas D. Logan: Yeah, Chris, I think the view on new utility scales built in the U.S. is still one of caution. I think if I were to put together the hierarchy of effects that I would expect to see in the U.S. market, it would go something like this. Firstly, if you look at plants that were deemed marginal five years ago or ten years ago that are still in operation and were, you know, kind of easing up toward a decommissioning event, I think the majority of those, if not the entirety of that group, are now viewed as candidates for life extension, and with that, typically, there is some amount of capital spending associated with doing that, oftentimes additional permitting requirements, etc.
Speaker Change: Yes, Chris I think the the view on new utility scale build in the U S. Still is one of caution I think if I were to put together the hierarchy of effects that I would expect to see in the in the U S market. It would go something like us firstly.
Christopher Paul Moore: If you look at plants that were deemed marginal five years ago or 10 years ago that are still in operations and we're kind of easing up toward a decommissioning event.
Christopher Paul Moore: The majority of those if not the entirety of that group.
Christopher Paul Moore: Is now viewed as candidates for for life extension and with that typically there is some.
Christopher Paul Moore: Amount of of capital.
Christopher Paul Moore: Spending associated with that with we're doing that oftentimes additional permitting requirements et cetera, Secondly, I would highlight the DSM, our initiatives, which continue to to really gain steam yes.
Christopher Paul Moore: It's funny it's <unk>.
Thomas D. Logan: It seems like maybe within the last six months, the world has kind of awakened to the fact that it's really catalyzed by the incredible growth of AI-related data centers. The world simply doesn't have enough electrical generating capacity. And as we look at the, you know, kind of the extrapolated requirements well into the future of a more robust AI-driven economy, it's very, very clear that the demands for nuclear power both nuclear, both utility scale, and SMRs are going to mount.
Christopher Paul Moore: Seems like maybe within the last six months the world has kind of awakened to the fact that they're really catalyzed by the incredible growth of of AI related data centers. The world simply doesn't have enough electrical generating capacity and as we look at the you know kind of extrapolated our requirements.
Christopher Paul Moore: Well into the future kind of a more robust AI driven economy, its very very clear that the demand for nuclear power, but nuclear both utility scale and SM ours.
Christopher Paul Moore: We are going to amount and I think in this country, it's a combination of that phenomenon.
Thomas D. Logan: And I think in this country, it's a combination of that phenomenon coupled with the policy goals of decarbonization that ultimately are going to drive us into a period where I think growth meaningfully exceeds what people may have projected even five years ago in the American market.
Christopher Paul Moore: Coupled with the policy goals of de Carbonization that ultimately are going to drive us into a period, where I think growth.
Christopher Paul Moore: Meaningfully exceeds what people may have projected even five years ago in the American market.
Christopher Paul Moore: It's extremely helpful, it makes perfect sense with everything I'm hearing. A backlog, 841 million, down a little sequentially, up 100 million year over year. Maybe you could just talk a little bit about this split between the segments, how that's changed. I know it's probably more on the nuclear side. And then trying to get a sense as to how much of that backlog likely relates to nuclear power.
Speaker Change: That's extremely helpful and that makes that makes perfect sense with everything I'm hearing.
Speaker Change: Sure.
Speaker Change: Our backlog of $841 million down a little sequentially up 100 million year over year, maybe can you just talk a little bit about the split between the segments. How that's changed I know, it's probably more on the nuclear side, but and then you know trying to get a sense as to how much of that backlog likely recognize this year.
Brian Schopfer: Chris, thanks for the question. Look, you know, Tom and I are not, the sequential backlog is not something we're worried about. I think we love the dynamics as we head into Q2. You know, we've had a bunch of calls in the last couple weeks with our team, and there is very positive sentiment across, across the business. So we look last quarter to quarter as we think about it as a more We're going to talk a little bit about the next 12 months of revenue, 45 to 50% of that's already in backlog. I don't think that dynamic has changed a whole lot. It's probably closer to the higher end of the range versus the lower end of the range.
Speaker Change: Okay.
Speaker Change: Chris Thanks for the question look.
Speaker Change: Yes.
Christopher Paul Moore: We're not.
Speaker Change: <unk> backlog is not something we're worried about I think we love the dynamics as we head into Q2.
Christopher Paul Moore: We've had a bunch of calls last couple of weeks with our team.
Christopher Paul Moore: Very positive Saturday and across across the business.
Christopher Paul Moore: So we look last quarter to quarter as we think about it as a normal.
Christopher Paul Moore: Longer cycle business timing matters.
Christopher Paul Moore: I think that is a little bit last quarter to quarter on when things get blocked you heard Tom talk about almost $15 million $15 million order getting booked early in Q2 so.
Christopher Paul Moore: So we like it historically, what we said is if you look at the next 12 months of revenue, 45% to 50% of that.
Christopher Paul Moore: That's already in backlog.
Christopher Paul Moore: That dynamic has changed a whole lot, it's probably closer to the higher end of the range versus the lower end of the range.
Brian Schopfer: We continue to like what we see and hear, and we'll focus on executing what's ahead of us.
Christopher Paul Moore: And we continue to be we continue to like what we see it here and we'll focus on executing what's ahead of us.
Speaker Change: Got it helpful. Maybe the last one for me maybe could you just provide a little more specifics on the current challenges on the French purchased the business that you talked a little bit about.
Christopher Paul Moore: Got it. Helpful. Maybe the last one for me, maybe can you just provide a little more specifics on the current challenges in the French Bridge business that you talked a little bit about?
Brian Schopfer: Yeah, look, look, I, I, look, we talked, we talked, me and him, full progress in the first quarter. We're all super engaged. Tom's headed to Europe next week. I'm headed there in a couple weeks.
Speaker Change: Yeah, well look I what.
Speaker Change: We thought we saw the meeting.
Speaker Change: Full progress in the first quarter.
Speaker Change: All Super engaged outside of Europe next week, a couple of weeks.
Brian Schopfer: So we continue to be very involved. We're happy with what the French team is doing and the broader European team, frankly. Part of the good news for the first quarter for us is that it wasn't only the French business that saw margin expansion. We actually saw it kind of across the segment in the technologies business. So we like our setup. We're confident in the plan, and the team is executing it. It takes a little bit of time, specifically in Europe, to kind of see everything play out, but we feel good about where we sit today.
Speaker Change: So we continue to guide us.
Speaker Change: We'll be very involved we're happy with what the French team is doing in the broader European team frankly.
Speaker Change: What are the good news for the first quarter for us as it wasn't only the French business that saw margin expansion, we actually saw it kind of across the segment and the technologies business.
Speaker Change: So we like we like our setup, we're confident in the plan and the team is executing it takes a little bit of time, specifically in Europe to kind of see everything play out.
Speaker Change: But we feel we feel good about where we sit today.
Christopher Paul Moore: Chris, I would add to that too, noting that in France specifically, our largest and cherished customer is EDF, the operator of all the nuclear power stations in Europe. It is widely known that EDF had a difficult year last year because of a widespread number of outages that were related to certain component issues within their power plant infrastructure and that had an impact overall on demand patterns in the year and kind of had a knock-on effect on us, again, because this is the dominant customer we have in the region.
Speaker Change: Chris I would add to that too.
Christopher Paul Moore: In France, specifically our largest.
Christopher Paul Moore: And cherished customers Etfs.
Christopher Paul Moore: The operator of evolve at a nuclear power stations in Europe, I think it was.
Christopher Paul Moore: Widely known that Etfs had a difficult year last year because of widespread.
Christopher Paul Moore: Red number of outages that were related to a certain component.
Christopher Paul Moore: Issues within their power plant infrastructure and that had an impact overall on demand patterns in the year end.
Christopher Paul Moore: A knock on effect on US again, because this is the dominant customer we have in the in the region candidly I think we were a little bit slow to adjust to some of that.
Thomas D. Logan: Candidly, I think we were a little bit slow to adjust to some of that, but we're all over it now. You know, we've made some operating model changes in the arena, and it's all the self-help things that we've talked about. It's being a little bit smarter about pricing in the market, our business system, and the inherent focus there on, you know, all of the classical elements of a big ERP, which would include procurement, production, scheduling, distribution, etc., basic blocking and tackling. The team is doing a great job. I'm actually headed over there this afternoon to catch up with them and, uh, encourage them and, uh, you know, continue to see how we can go.
Christopher Paul Moore: We're all over it we've made some some operating model changes in the in the arena and it's all the self help things that.
Christopher Paul Moore: We've talked about it being a little bit smarter about about pricing in the market.
Christopher Paul Moore: It is it is continuing to drive.
Christopher Paul Moore: Extensively.
Christopher Paul Moore: <unk> system and the inherent Harris focus there on.
Christopher Paul Moore: All of the classical elements of a big ERP, which would include procurement production scheduling distributional et cetera. It's.
Speaker Change: Basic blocking and tackling the team is doing a great job I'm actually headed over there this afternoon.
Speaker Change: To catch up with them and encourage them and continue.
Speaker Change: Continue to see how we can go further faster, but we feel like we're we're definitely on the rails or.
Thomas D. Logan: We had a good first quarter, too, with the fans.
Speaker Change: We already have a good first half.
Speaker Change: We had a good we had a good first quarter two with the French did that French customer Tom is talking about so I think we feel pretty good about what we said.
Christopher Paul Moore: Got it. I appreciate it, guys. I will leave it there.
Speaker Change: Got it I appreciate it guys I'll leave it there.
Operator: The next question comes from Vlad Bystricky of Citigroup. Please go ahead.
Speaker Change: The next question comes from <unk> <unk> of Citigroup. Please go ahead.
Speaker Change: Okay.
Vlad Bystricky: Hey, good morning guys. Thanks for taking my call. Thank you. Goodbye.
Speaker Change: Hey, good morning, guys. Thanks for thanks for taking my call.
Speaker Change: Good morning, Glenn.
Vlad Bystricky: Okay, so maybe just to start off, follow up on Chris's question about backlog. I guess, can you just give a little more color into how you're thinking about or how we should think about orders and backlog this year? You know, given your expectations around potential new build nuclear work and your comments around nuclear sentiment, you know whether you would expect at year end to have a grown overall backlog.
Speaker Change: Hey.
Speaker Change: So maybe just to start off a follow up on Chris's question about.
Speaker Change: Around backlog I guess can you just give a little more color into how youre thinking about or how we should think about orders and backlog this year end.
Speaker Change: Given your expectations around potential Newbuild nuclear work.
Speaker Change: And your comments around nuclear sentiment.
Speaker Change: Whether you would expect at year end to have grown overall backlog.
Speaker Change: [laughter] well.
Brian Schopfer: Look, I think... It's a good question.
Speaker Change: Look I think.
Brian Schopfer: I think that we need to, you know, we're always a bit careful, honestly, about flat about talking about kind of quarter to quarter dynamics just because, you know, these projects, some of the bigger projects that really move the backlog move around a bit. I think, I think what I am willing to say is I'm encouraged about where we sit. I think we think that if things go right, we will see backlog expansion this year by the end of the year.
Speaker Change: It's a good glass Jan I think that we need to we're always a bit careful honestly about flat about talking about kind of quarter to quarter dynamics, just because these projects some of the bigger projects that really moved the backlog move.
Speaker Change: Move around a bit.
Speaker Change: I think I think what I, what I am willing to say is I'm encouraged about.
Speaker Change: Where we sit.
Speaker Change: I think we think that.
Speaker Change: If things go right.
Speaker Change: We would see backlog expansion this year.
Speaker Change: By the end of the year, but I think that depends on a few things we're working on in the pipeline and.
Brian Schopfer: But I think that, you know, depends on a few things we're working on in the pipeline. And, you know, I just, you know, some of that stuff moves. So if it doesn't happen, I don't think that's a worrying issue for us, because it's probably just moved a little bit to the right as some of these things do. But the order dynamics are great. The customer engagement is great, and yeah, I think we should expect to see some backlog growth by year end. But I'm less concerned if that happens then and Aaron in the first half of next year.
Speaker Change: Some of that stuff moves so if it doesn't happen I don't think that's a concerning issue for us because it's probably just moved a little bit to the right and some of these long steel, but what are the dynamics are great customer engagement is great.
Speaker Change: I think we would expect to see some backlog growth by year end, but.
Speaker Change: Im less concerned if that happens that.
Speaker Change: And are in the first half of next year, Hey, Brian Let me, let me tag on to Brian's comments I'd say a couple a couple of additional things firstly.
Thomas D. Logan: Let me add to Brian's comments and say a couple of additional things. First, let me reiterate what Brian said, and that is that we take a very, very cautious approach to projecting backlog, particularly as it relates to nuclear build, new build activity, simply because the timing can be very difficult to pin down. And also, we take a very conservative approach to note that given what I think all participants in the nuclear industry see as a, you know, a maxed out nuclear industry where strategic partnerships and alliances are far more important.
Speaker Change: Yes, let me reiterate what Brian said and that is that we are we take a very very cautious approach to projecting backlog, particularly as it relates to nuclear build new newbuild activity simply because the timing can be very difficult to pin down and also we take a very conservative.
Probabilistic approach to what we think will win and what ultimately the quanta.
Thomas D. Logan: Some of you.
Thomas D. Logan: Of a project order aggregation might look like and generally.
Speaker Change: Our actual performance from a from a bid and backlog standpoint has exceeded that.
Thomas D. Logan: At that point of view, but again.
Speaker Change: Here is to be very conservative and that's just not something we would guide but the other thing that I think it was maybe more important.
Speaker Change: Is to note that people that give them.
Speaker Change: What I think all participants in the nuclear industry C. As a you know.
Speaker Change: A maxed out nuclear industry, where strategic partnerships and alliances are far more important I can.
Thomas D. Logan: I can tell you the energy that we and I are spending focused on more strategic relationships with the most significant players in the industry. That's gone up considerably as compared to where it has been historically. And that's really where the energy is being spent. It's how do we really forge longer-term strategic relationships that can accommodate what we all anticipate as being a period of strong growth and a rising tide that will lift all boats.
Thomas D. Logan: Can tell you the energy that we.
Thomas D. Logan: And I am spending.
Speaker Change: Focused on on more strategic relationships with the most significant players in the industry.
Thomas D. Logan: Gone up.
Thomas D. Logan: You know considerably as to versus where it has been historically and that's really where the energy is being spent it's on how do we really forge longer term strategic relationships that can accommodate what we all anticipated as being a period of.
Thomas D. Logan: Strong growth in a rising tide that will lift all boats.
Thomas D. Logan: Sure.
Vlad Bystricky: Okay, that's helpful, COA guys. I appreciate it.
Speaker Change: Got it that's helpful color guys I appreciate it and then.
Speaker Change: Maybe just.
Vlad Bystricky: I'm thinking about the year, if you can give us any more color into how youre thinking about seasonality or the cadence.
Vlad Bystricky: <unk> is usually stronger than <unk>.
Vlad Bystricky: And then, maybe just, you know, as I'm thinking about the year, if you can give us any more color into how you think about seasonality or the cadence. I know 2Q is usually stronger than 1Q. So, do you see any sort of normal seasonality there this year? And then, you know, mixed in with that $4 million of nuclear-related revenue, should we expect that sort of flowing through readily? Or is there some larger catch-up here in 2Q? Just how should we think about that $4 million coming back? Yeah, I don't...
Vlad Bystricky: So do you see sort of normal seasonality there.
Vlad Bystricky: This year and then mixed in with that $4 million of nuclear related revenue should we expect that sort.
Vlad Bystricky: Sort of flowing through Ratably or is there some larger catch up here in <unk>, just how should we think about that.
Vlad Bystricky: $4 million coming back.
Brian Schopfer: Yeah, I don't, I don't think the season is out yet. The company changes time.
Vlad Bystricky: I don't I don't think.
Brian Schopfer: The seasonality.
Brian Schopfer: I mean, I did say in my comments that I expect a little bit of margin pressure in the second quarter, mainly on the technology side and then on some of the investment we're making in the supply chain, which, by the way, we're super excited about. We think this has a very, you know, nice impact on us in the back half of the year, but probably more in the 25, as we think about that.
Brian Schopfer: Any changes I mean, I did say in my comments I expect a little bit of margin pressure in the second quarter.
Brian Schopfer: Mainly on the technology side, and then in some of the vascular.
Brian Schopfer: Why change, which by the way where we're super excited about we think this is a very.
Brian Schopfer: But we'll take some of that cost here in the second quarter. But then I think the back half of the year from a margin standpoint looks, looks very good. And the cadence isn't, you know, any different really than last year. But the business from a growth perspective is much more even, right? We saw five and a half percent in the first quarter. You know, I think we like that type of range, kind of each quarter. With a little bit of margin pressure in the second quarter, but the back end is definitely set up to be, to be a margin expansion in a pretty robust way.
Brian Schopfer: Nice impact to us.
Brian Schopfer: In the back half of the year, but probably more in the 25 as we think about that but it will take some of that cost here in the second quarter, but then I think the back half of the year from a margin standpoint looks looks very good and the cadence isn't any different really than last year, but the business from a growth perspective is much more even right. We saw five 5% in the first.
Brian Schopfer: <unk> I think we like though that.
Brian Schopfer: That type of range kind of each quarter.
Brian Schopfer: With a little bit of margin pressure in the second quarter, but the back end is is definitely set up to be to be a margin expansion in a pretty robust way.
Vlad Bystricky: Great. Thanks, Ryan. I'll hop back in queue.
Speaker Change: Great. Thanks, Brian hop back in queue.
Operator: As a reminder, if you would like to ask a question, please press star, then 1. And our next question will come from Andy Kaplowitz of Citigroup. Please go ahead.
Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one.
Operator: And our next question will come from Andy Kaplowitz of Citigroup. Please go ahead.
Andrew Alec Kaplowitz: Hey, good morning, guys.
Operator: Randy.
Andrew Alec Kaplowitz: Brian, I wanted to ask you about free cash flow. You did have, you know, a better, I guess, lower cash burn than last year's first quarter. But, you know, it kind of seems like two steps forward, one step back, you know, in terms of cash generation. So what happened in the quarter, and what is your conviction that you can get to the target, you know, in the half of the year? And I did notice, you know, the first half, you expect positive free cash flow. So it seems like you get a lot of that back.
Andrew Alec Kaplowitz: Brian I wanted to ask about free cash flow you did have.
Andrew Alec Kaplowitz: Better I guess lower our cash burn in last year's first quarter, but kind of seems like two steps forward one step back in terms of cash generation.
Andrew Alec Kaplowitz: What happened in the quarter and what is your conviction that you can get to the target.
Andrew Alec Kaplowitz: They have for the year and I didn't notice under the first half you expect positive free cash flow. So it seems like you'd get a lot of that back in Q2.
Brian Schopfer: Yeah, I mean, look, we held our guidance so that our conviction is clearly strong that we'll be within that range. I think, look, I'd actually think the first quarter was a good step forward for us. As I talked about in my comments, you know, we made a strategic investment on the incidental side in the CapEx number, so it's an elevated CapEx number for the quarter for us, specifically in the first quarter. I think absent that, you would have seen a positive cash flow number versus the negative one you saw.
Speaker Change: Yeah, I mean look we held our guidance that our conviction is currently.
Brian Schopfer: Strong that we'll be within that range I think well guide actually I think the first quarter was a good step forward for us.
Brian Schopfer: I talked about.
Brian Schopfer: In my comments, we made a strategic investment audience it outside in the Capex numbers that's all.
Brian Schopfer: I made a capex number for the quarter for us specifically in the first quarter.
Brian Schopfer: I think absent that you would've saw a positive cash flow number versus versus going back into what you saw.
Brian Schopfer: So we feel good, and like I said, we did our first cash flow positive for us, which is different than it was last year, and we're set up well. I would reiterate that... We are spending, and we continue to spend a ton of time with the team on this. This continues to be a very high priority for us in the company. There is still a lot of room for us to continue to improve.
Brian Schopfer: So we feel we feel good and like I said I mean, we think.
Brian Schopfer: First ask cash flow positive for us, which is different than it was last year.
Brian Schopfer: We're set up well.
Brian Schopfer: I would reiterate that.
Brian Schopfer: We are spending we continue to spend a ton of time.
Brian Schopfer: With the team on this.
Brian Schopfer: This continues to be a very high priority.
Brian Schopfer: Ready for us.
Brian Schopfer: In a company there is still a lot of room here for us to continue to improve I'll mention the $11 million in inventory reduction year over year. So that's beginning to take fold.
Brian Schopfer: I mentioned the $11 million in inventory reduction year over year, so that's beginning to take hold as well, maybe a little bit slower than we'd like, but we feel very good about where we're sitting, and we like our free cash flow guide for the year right now.
Brian Schopfer: As well, maybe a little bit slower than we'd like but we feel very good about where we are setting up.
Brian Schopfer: But we like our free cash flow guide for the year right now.
Andrew Alec Kaplowitz: It's helpful Brian and then I'm sorry if I missed this detail but you know the European integration I just want to sort of ask you you know it happens a lot for our industrial companies in general so we understand that at the same time you know it always is a little surprising when you have it like are there anything else is there anything else to focus on you know any other European integrations that we need to sort of care about it's this really more of a one-off and then your commentary around getting the four million back you know does it really come sooner versus later given the strong orders in nuclear medicine
Speaker Change: That's helpful. Brian and then I'm, sorry, if I missed this detail, but you know the ERP integration I just wanted to sort of ask you.
Andrew Alec Kaplowitz: You know it happens a lot for our industrial companies in general So we understand it at the same time.
Andrew Alec Kaplowitz: It always is a little surprising when you have it like are there anything is there anything else to focus on any other ERP integrations that we need to so we care about is this really more of a one off and then your commentary around getting the 4 million back does it really come sooner versus later given the strong orders in nuclear medicine.
Brian Schopfer: Yeah, look, we, you know, this is a blip. I mean, we didn't have some chipping challenges for a couple weeks as we put it in. March was strong. April was good, and on track.
Andrew Alec Kaplowitz: Yes.
Andrew Alec Kaplowitz: Look we are.
Brian Schopfer: This is a blip I mean, we did we had some challenges for a couple of weeks as we put it in March with strong April was good and on track. So we feel good about.
Brian Schopfer: So we feel good about our progress and that kind of coming back. You know, look, I think we'll, you know, we're evaluating, do we do one more this year, which is pretty, it's in a smaller business, smaller than the nuclear medicine business even. I think we learned a lot from this, so there's a double-down effort on this. It is, it would not be going into one. [inaudible] Half of it will come back in the second quarter, and the rest probably in the third quarter. And that's more just a capacity and kind of process thing more than anything else. The orders are robust, and continue to be robust, and we feel really good about where that business sits.
Brian Schopfer: Our progress in that kind of coming back.
Brian Schopfer: Yeah look I think we will.
Brian Schopfer: We are evaluating do we do one more this year, which is pretty it's a smaller business is smaller than the nuclear medicine business even.
Brian Schopfer: I think we learned a lot from this so.
Brian Schopfer: Doubled out effort on this it would not be going into the water.
Brian Schopfer: But the bigger guys also is just silicon here.
Brian Schopfer: So, yes, I think well see one more later in the year against smaller I think as you think about the cadence of it coming back I expect.
Brian Schopfer:
Brian Schopfer: I expect.
Brian Schopfer: Half of it to come back in the second quarter and the rest probably in the third quarter.
Brian Schopfer: And that's more than just a capacity and guide us.
Brian Schopfer: I think more than anything else the owners are robust to continue to be robust.
Brian Schopfer: And we feel really good about what our business sense.
Andrew Alec Kaplowitz: It's helpful, and then maybe just one question for Tom, like there's been sort of an increasing crescendo around SMRs, and they still have time to sort of make their way into the market, obviously, but how does that impact sort of the order profile? Could we start to see more along that, maybe even as early as 25 or 26? I know you've had some already, but, like you know, is it meaningful to the order profile over the next couple years? I would say, uh, uh.
Speaker Change: That's helpful. And then maybe just one for Tom like Theres been sort of an increasing crescendo in round seminars and they still have time to sort of make their way into the market, obviously, but like how does that impact sort of the order profile could we start to see more along that maybe even as early as 25% 26, I know you've had some are ready.
Andrew Alec Kaplowitz: But like you know.
Speaker Change: Is it meaningful to the quarter profile over the next couple of years time.
Thomas D. Logan: I would say, Andy, that it will be material but not significant. So I think last year we booked about ten million dollars in SMR orders. I don't know that we've disclosed what we anticipate this year, but as we look at the activity and look at the nature of the discussions that we're engaged in, my expectation continues to get kind of moved up in terms of, you know, how solid the demand is likely to be here and the viability, in particular, of some of the top players in the space overall. So my view is that, yes, over our planning horizon, we will see material growth and SMR orders, but again, I wouldn't characterize it as necessarily being significant.
Speaker Change: I would say.
Thomas D. Logan: Andy that it will be material, but not significant so I think last year, we booked about $10 million in some of our orders.
Thomas D. Logan: I don't know that we've disclosed.
Thomas D. Logan: Anticipated this year, but as we as we look at the activity.
Thomas D. Logan: And look at the nature of the discussions that we're engaged in my expectation.
Thomas D. Logan: Continues to get kind of moved up in terms of how solid the the demand is likely to be here and the viability in particular of of some of the top players in the space. Overall. So my view is that yes over our planning horizon, we will see.
Thomas D. Logan: Within the nuclear a vertical we will see a material growth in some of our orders.
Thomas D. Logan: But again I wouldn't characterize it as necessarily being significant.
Speaker Change: Thank you.
Operator: The next question comes from Yuan Z. of B. Reilly Securities. Please go ahead. Thank you.
Speaker Change: The next question comes from of B Riley Securities. Please go ahead.
Yuan Z.: Good morning, Tom and Brian. Good morning, everyone. Thank you for taking our questions.
Yuan Z.: Good morning, Brian.
Yuan Z: Good morning.
Yuan Z.: I'm just curious about what factors contributed to the order growth for nuclear medicine in this quarter. The order grew 17% quarter over quarter, and the backlog doubled year over year. Should we anticipate a similar growth trend throughout the year?
Yuan Z.: Well. Thank you for taking my question I'm just curious.
Yuan Z.: What happens to the other growth for the future of monitoring this quarter, the entre growth, 17% of our quarter and the backlog doubled year over year.
Yuan Z.: Thinking about growth trends throughout the year.
Thomas D. Logan: Well, I would say that when we look at the nuclear medicine space, as you know, this Space, above all others, I think is likely to grow at the fastest rate. There is a revolution taking place in radioligand therapy that will have a massive impact on cancer treatment modalities throughout the world, and we believe we're well-positioned to participate in this, through a combination of our legacy position as a market leader in dose calibration instruments and a variety of compounding, transport, and clinical assessment instrumentation in the nuclear medicine space.
Speaker Change: Well the.
Thomas D. Logan: I would say that when we look at the nuclear medicine space.
Thomas D. Logan: As you know this.
Thomas D. Logan: Space above all others I think is likely.
Thomas D. Logan: Two to grow at the fastest rate there is a a revolution taking place in the end.
Thomas D. Logan: Our radio ligand therapy.
Thomas D. Logan: That will.
Thomas D. Logan: Have a massive impact on cancer treatment modalities.
Thomas D. Logan: Around the world and we believe we're well positioned to to two.
Thomas D. Logan: Participate in this.
Thomas D. Logan: Through a combination of our legacy position as market leader in those calibration instruments in a variety of compounding and transport and clinical assessment instrumentation in the nuclear.
Thomas D. Logan: Earlier medicine space secondly, through the acquisition of the EC squared software platform, which is the leading data management and workflow software platform in the nuclear medicine space in North America.
Thomas D. Logan: Secondly, through the acquisition of the EC2 software platform, which is the leading data management and workflow software platform in the nuclear medicine space in North America. And then, thirdly, through the ability for us to leverage the first two items to really bring to the market a much broader solution set that encompasses much of our legacy instrumentation that historically has been deployed exclusively on the technology side. So when you look at the combination of a market that I think axiomatically is going to increase at a very strong rate, coupled with the strengthening position that we have in that space, our view is that the growth prospects here will be positive. And I wouldn't necessarily be specific about the first part of your question, but I would tell you that we're very bullish about the long-term prospects in this space.
Thomas D. Logan: And then thirdly through the ability for us to leverage the first two items to really bring to the market a much broader solution set that encompasses much of our legacy instrumentation that historically has been deployed exclusively on the technology side. So when you look at the combination of a <unk>.
Thomas D. Logan: Market that I think axiomatically is going to increase at a very strong rate coupled with the.
Thomas D. Logan: The strengthening position that we have in that space you know our view is that the growth prospects here.
Thomas D. Logan: Will be positive and you know.
Thomas D. Logan: I wouldn't necessarily.
Thomas D. Logan: To be specific about.
Thomas D. Logan: The first part of your question, but I would tell you that we're very bullish about the long term prospects in this space.
Yuan Z.: Got it, got it, that's very helpful. And another question we have is that recently you mentioned that about 60%, 60% of your life sciences lab-related activity is DOE funded and focused on environmental remediation and government waste sites. Do you see this continuing to be the main driver of that category, or how should we look at this going forward? Thank you.
Speaker Change: Got it got it that's very helpful. And another question. We have is recently you mentioned that about 60% there what percent of your life Sciences lab ready as an outfit activity.
Yuan Z.: And focusing on the environmental environment, all renovation and the government waste side do you see this continue to be the main driver of that category or how should we look at this going forward. Thank you.
Thomas D. Logan: We see that as a very solid foundation and for, you know, many decades that has been the case, and we don't see that, you know, that base, that foundation, that historical presence. Not only in the American DOE space but globally in many of the comp... [inaudible] develop and field very, very accurate spectroscopic instruments that have a very high degree of resolution and are incredibly important for understanding the composition of unknown samples.
Yuan Z.: We see that as a very solid foundation in and for many decades that has been the case and we don't we don't see that.
Thomas D. Logan: That base that foundation that historical presence.
Thomas D. Logan: Not only American Doa space, but globally in many of the many of the car.
Thomas D. Logan: <unk> analogs, we see that continuing but when we look at at what is beyond that in the life Sciences space, where.
Thomas D. Logan: You know kind of the core of what we do there is to.
Thomas D. Logan: Developed and field.
Thomas D. Logan: Very very accurate spectroscopic instruments that are that have a very high degree of resolution and are incredibly important for understanding the composition of unknown samples, but we see the ability to extend that further and a good example would would be nuclear medicine, whereas we are seeing an evolution.
Thomas D. Logan: We see the ability to extend that further, and a good example would be nuclear medicine, where we are seeing an evolution in therapeutic strategies, in particular a shift toward an acutely elevated focus on alpha emitters, where there is a tremendous opportunity, I think, to bring our unparalleled gamma spectroscopy capabilities to bear in a way that would actually improve clinical efficiency and safety. So our view is that over time, we see many opportunities to really kind of build beyond that base, that historical DOE-related base in this space overall. God, thank you so much.
Thomas D. Logan:
Thomas D. Logan: And therapeutic strategies in particular, a shift toward a.
Thomas D. Logan: And acutely elevated focus on Alpha E matters, where there is a tremendous opportunity I think to bring our unparalleled gamma spectra.
Thomas D. Logan: Gamma spectroscopy capabilities to bear in a way that would actually improve clinical efficiency and safety. So our view is that over time.
Thomas D. Logan: That we see many opportunities to really kind of.
Thomas D. Logan: Build beyond that base that historical deal related base in this in this space overall.
Yuan Z.: God, thank you so much for taking our questions.
Speaker Change: Scott. Thank you so much like an hour.
Thomas D. Logan: This concludes our question and answer session. I would like to turn the conference back over to Tom Logan for any closing remarks.
Yuan Z.: This concludes our question and answer session I would like to turn the conference back over to Tom Logan for any closing remarks.
Thomas D. Logan: Ladies and gentlemen, thank you for participating today. Let me just wrap up with a few closing comments. Firstly, we continue to see very strong demand and engagement across our end markets. We're well positioned to take advantage of these positive macro trends driving growth, and we're committed to superior execution. Our financial performance for Q1 was in line with our expectations, and I'm proud of the execution within our technologies business and the resulting, adjust it to reflect even the margin expansion we reported today.
Thomas D. Logan: Ladies and gentlemen, thank you for participating today and let me just wrap up with a few closing comments. Firstly, we continue to see very strong demand and engagement across our end markets. We're well positioned to take advantage of these positive macro trends driving growth and we're committed to superior execution.
Thomas D. Logan: Our financial performance for Q1 was in line with our expectations and I'm proud of the execution within our technologies business and the resulting <unk>.
Thomas D. Logan: Adjusted EBITDA margin expansion, we reported today, we remain focused on improving our free cash flow dynamics heading into the rest of 'twenty four and beyond we continue to expect to be cash flow positive in the first half of the year and have reiterated our cash flow guide for the full year overall I'm proud of our first quarter results and believe the business is solidly on track to deliver the year.
Thomas D. Logan: We remain focused on improving our free cash flow dynamics heading into the rest of 2024 and beyond. We continue to expect to be cash flow positive in the first half of the year and have reiterated our cash flow guidance for the full year. Overall, I'm proud of our first quarter results and believe the business is solidly on track to deliver this year. We look forward to updating you with our second quarter results in a few months. So, again, thank you for participating today. And operator, that will conclude the call.
Thomas D. Logan: We look forward to updating you with our second quarter results in a few months. So again, thank you for participating today and operator that will conclude the call.
Operator: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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Operator: Okay.
Operator: [music].
Operator: Yes.
Operator: [music].