Q2 2025 Mirion Technologies Inc Earnings Call

Tom Logan: Greetings and welcome to the Mirion Technologies' second quarter 2025 earnings conference 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Eric Linn, Vice President of Investor Relations. Please go ahead.

Greetings and welcome to the Marion technology. Second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. I question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Eric Linn: Thank you, Stacey. Good morning and welcome to Mirion's second quarter 2025 earnings conference call. Joining me this morning are Mirion's Chairman and CEO, Tom Logan, and Mirion's CFO and Medical Group President, Brian Schopfer. Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements, and actual results may differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in our annual report on Form 10-K, quarterly reports on Form 10-Q, and in Mirion's other SEC filings under the captioned risk factors. Quarterly references within today's discussion are related to the second quarter and June 30, 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.

It is now my pleasure to introduce Eric Lynn vice president of investor relations. Please go ahead.

Thank you. Stacy. Good morning, and welcome to Mary on second quarter 2025 earnings conference call.

Joining me this morning are Marion's Chairman and CEO, Thomas Logan, and Marion 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 report on form. 10K.

Quarterly reports on Form 10-Q and the mirror, and Miriam's. Other SEC filings under the Captain Risk Factors.

quarterly references, within today's discussion, are related to the second quarter and the June 30th 2025 unless otherwise noted

Eric Linn: Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of the presentation accompanying today's call. All earnings materials can be found in the Investor Relations section of our website at www.mirion.com. With that, let me now turn the call over to Tom, who will begin on slide three.

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.myon.com.

Tom Logan: Eric, thank you and a warm welcome to everyone on today's earnings call. As always, we appreciate your interest in the company. Taking a look at our Q2 results, we demonstrated continued progress on key financial and strategic objectives, most notably increasing adjusted free cash flow generation, stepping up our M&A game, and optimizing our capital structure. I would like to thank my many Mirion colleagues for delivering another solid quarter. In addition, we have increased key components of our 2025 guidance based upon a bullish outlook for the second half. We will have more on this in a bit. Beyond quarterly results, I will spend some time discussing the growing momentum in the nuclear power sector, specifically how it is increasing Mirion's opportunities across the installed base, new utility scale projects, and small modular reactors, or SMRs.

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

Eric, thank you and a warm welcome to everyone on today's earnings call. As always, we appreciate your interest in the company.

Taking a look at our Q2 results. We demonstrated continued progress on key financial and strategic objectives. Most notably increasing, adjusted free, cash flow generation stepping up our m&a game and optimizing our capital structure.

I'd like to thank my many man colleagues for delivering another solid order. In addition, we've increased key components of our 2025 guidance based upon a bullish outlook. For the second half, we'll have more on this in a bit.

Tom Logan: Regarding M&A, last night, we were very pleased to announce the acquisition of Certrek, a leading provider of regulatory compliance solutions to the U.S. nuclear industry and a wider energy power market. We are incredibly excited to welcome the Certrek team on board and believe that together we can better serve the rapidly growing North American energy markets. Let us turn to panel four to get into the details. Second quarter revenue totaled $222.9 million. This reflects a 5.4% increase in organic revenue and a 7.6% increase in total revenue versus Q2 2024. Higher revenue reflects a $2 million tailwind from our medical segment due to shipment timing from tariff impacts. Importantly, all six end markets from both segments contributed to the growth. Second quarter adjusted EBITDA was $51.2 million, up 4.9% versus last year's second quarter. The medical segment was a positive contributor in the quarter.

Reactors or smrs.

Regarding m&a last night. Uh, we were very pleased to announce the acquisition of cert Trek. A leading provider of Regulatory Compliance solutions to the US nuclear industry and a wider Energy power Market. We are incredibly excited to welcome the S search track team on board and believe that together, we can better serve the rapidly growing North American Energy markets.

Let's turn to panel 4 to get into the details.

Thank you for Revenue, total 222.9 million. This reflects a 5.4% increase in organic revenue and a 7.6% increase in total revenue versus Q2 20224.

Higher Revenue, reflects a million dollar Tailwind from our medical segment due to shipment timing from tariff impacts.

And importantly, all 6, n markets from both segments contributed to the growth.

Tom Logan: Conversely, nuclear and safety segment EBITDA was negatively impacted by non-recurring items. During the quarter, we made significant improvements to our capital structure. In May, we successfully completed a $400 million convertible note offering. Later in the quarter, we refinanced our term loan B with a smaller $450 million term loan. The improved capital structure gives us the flexibility for further capital deployment and lowers our total cost of capital. Next, we generated $6 million of adjusted free cash flow in Q2, an 11% conversion of adjusted EBITDA. This, coupled with better than expected first quarter cash performance, undergirds our increased 2025 adjusted free cash flow guidance. Finally, Q2 orders grew by 1.6%. This growth was primarily from our medical segment. Nuclear and safety segment orders were lower in the quarter, which was not particularly surprising given the tough comp from Q2 of 2024.

Second quarter, adjusted ibida was 51.2 Million up 4.9% versus last year's. Second quarter, the medical segment was a positive contributor in the quarter, conversely nuclear and safety segment ibida was negatively impacted by non-recurring items.

During the quarter, we made significant improvements to our capital structure in may we successfully completed a 400 million convertible. Note offering later in the quarter, we refinanced our Term Loan B, with a smaller, 450 million Term Loan. The improved capital structure gives us the flexibility for further Capital deployment and lowers our total cost of capital.

Next, we generated 6 million of adjusted free cash flow in Q2 at 11% conversion of adjusted debit, though this coupled with better than expected. First quarter cache performance, under Gerdes are increased 2025, adjusted free cash flow guidance.

Tom Logan: As you may recall, we experienced 17% order growth in the nuclear power end market in Q2 of last year. This comp, combined with timing dynamics, resulted in lower nuclear and safety segment orders in Q2 2025. Despite this, we're highly encouraged by growing engagement in the nuclear ecosystem. Year to date, we've booked approximately $9 million in SMR-related orders with five different players. Historically, we've disclosed $17 million in aggregate SMR orders, and we're pleased with the accelerating growth in this sector and continue to strengthen our position. Brian Schopfer will provide more details on our quarterly performance. I'd like to use my time to provide more context around the improving dynamics within nuclear power, beginning on panel five. As you'll see later, we are increasing our 2025 organic growth expectations for the nuclear power sector. We are seeing sizable opportunities across the nuclear landscape.

Finally second quarter orders grew by 1.6% this growth was primarily from our medical segment nuclear and safety segment orders for lower in the quarter, which was not, particularly surprising, given the tough comp from the second quarter of 2024. As you may recall, we experienced 17% order growth in the nuclear power and Market in Q2 of last year. This comp combined with timing Dynamics resulted in lower, nuclear and safety segment orders in Q2 2025, despite this we're highly encouraged by growing engagement in the nuclear ecosystem.

Year to date. We've booked approximately $9 million in SMR related orders with 5 different players. Historically, we've disclosed 17 million in aggregate SMR orders. And we're pleased with the accelerating growth in this sector and continue to strengthen our position.

Brian will provide more details on our quarterly performance. I'd like to use my time to provide more context around the improving dynamics within nuclear power, beginning on panel 5.

Tom Logan: While new builds and SMRs are grabbing the headlines, the installed fleet represents an improving opportunity set for Mirion Technologies. Recall that approximately 80% of the nuclear power end market revenue comes from this installed base, and it's typically accompanied with higher margins. The improving fleet opportunity comes principally in three forms: from modernization upgrades, from expanding nuclear capacity, and from extending operating lifetimes. Modernization CapEx is the greatest near-term opportunity for Mirion Technologies. As illustrated on the slide, nuclear operators are planning to meaningfully increase their capital budgets over the next four years, supporting a growing opportunity for Mirion. The average age today of the operating fleet is around 40 years old. Based on an expected 60 to 80-year operating lifespan, nuclear reactors are today middle-aged. As a result, system upgrades and modernization are required to ensure continued safe and efficient performance.

As you'll see later, we are increasing our 2025 organic growth expectations for the nuclear power sector. We are seeing sizable opportunities across the nuclear landscape. While new builds and SMRs are grabbing the headlines, the installed fleet represents an improving opportunity set for the company.

Recall that Approximately 80% of the nuclear power and Market Revenue comes from this installed base and it's typically accompanied with higher margins.

The improving Fleet opportunity comes the principal in 3 forms from modernization upgrades from expanding nuclear capacity. And from extending operating lifetimes,

Modernization capex is the greatest near-term opportunity for the company as Illustrated on the slide. Nuclear, operators are planning to meaningfully increase their Capital budgets over the next 4 years.

Supporting a growing opportunity for Marriott.

Tom Logan: We expect accelerating reinvestment based upon extensive customer feedback. The slide also highlights additional reinvestment opportunities within the installed base. Decisions to expand nuclear capacity, either through power upgrades or higher capacity factor targets, often require incremental capital investments from customers. We are seeing our customers invest in next-generation nuclear instrumentation and control solutions and bring on additional monitoring to more precisely manage key operating parameters. This gives them the confidence to run at higher utilization levels. The third opportunity comes through extending operating lifetimes, including recently announced restarts. This is perhaps the largest opportunity source for Mirion. Life extensions extend the clock on a nuclear facility and drive spare parts replenishment, system upgrades, software royalties, and services to support operations for an additional 10 to 20 years. Importantly, when an operator plans on decommissioning a power plant, they typically reduce CapEx dramatically three to five years in advance.

The average age today of the operating fleet is around 40 years old, based on an expected 60 to 80-year operating lifespan. Nuclear reactors are, today, middle-aged; as a result, system upgrades and modernization are required to ensure continued safety and performance.

We expect accelerating reinvestment based upon extensive customer feedback.

This slide also highlights the additional reinvestment opportunities within the installed base. Decisions to expand nuclear capacity, either through power operations or higher capacity factor targets, often require incremental capital investments from customers.

We are seeing our customers invest in next-generation core and x-core instrumentation and bring on additional monitoring to more precisely manage key operating parameters. This gives them the confidence to run at higher utilization levels. The third opportunity comes through extending operating lifetimes, including recently announced restarts. This is perhaps the largest opportunity source for Marriott.

Tom Logan: Thus, decisions to life extend also reverse this subtle dynamic. In July, Vistra received approval from the NRC to extend operations of its perinuclear plant through 2046. This is the most recent example of the appetite to extend the life of existing reactors. Given all this, it should not be surprising then that we have been eager to strengthen our nuclear power-related portfolio. Organically, we've been active this year introducing new products into the market, as shown on panel six. Earlier this week, I hosted our 20th annual Mirion Connect event with more than 400 in attendance. This annual event brings our customers together to share ideas, showcase our latest innovations, and provide continuing education and training. It's also a tremendous opportunity for lead generation. This year marked record attendance as customers are eager to collaborate to solve their most pressing challenges with a far greater sense of urgency.

Drive spare parts replenishment system upgrades software royalties and services to support operations for an additional 10 to 20 years importantly, when an operator plans on decommissioning, a power plant, they typically reduce capex dramatically 3 to 5 years in advance, thus decisions to life extent. Also reverse the subtle dynamic in July, vistra, received approval from the NRC to extend operations of his Perry Nuclear Plant through 2046. This is the most recent example of the appetite to extend the life of existing reactors.

Given all this, it should not be surprising that we have been eager to strengthen our nuclear power-related portfolio. Organically, we've been active this year, introducing new products into the market, as shown on panel 6.

Earlier this week, I hosted our 20th, annual Marion connect event, with more than 400, in attendance, this annual event, brings our customers together to share ideas showcase, our latest Innovations, and provide Continuing Education and Training. It's also a tremendous opportunity for lead generation.

Tom Logan: In this vein, last week we released our Vital platform. This is the digital ecosystem we foreshadowed in our Investor Day in December, and it's a direct response to customer needs. Vital helps operators to simplify monitoring, streamline operations, and improve safety by facilitating real-time monitoring and data collection from thousands of instruments and sensors. Vital is intended to integrate seamlessly, to scale with ease, and support workflow optimization, and it replaces more than a dozen discrete supervisory software applications. It also provides a platform for our expanding digital offerings to interact on a plug-and-play basis. We also highlighted our Lightlink technology at Mirion Connect. This technology allows for superior detection efficiency via the replacement of dated legacy photomultiplier tubes with silicon chips. This advanced technology allows for hyper-accurate radiation detection, improved human factors, and greater ruggedization. We believe it will redefine industry standards in operational productivity and reliability.

This year, marked record attendance as customers are eager to collaborate to solve their most pressing challenges with a far greater sense of urgency in this vein. Last week, we released our Vital platform. This is the digital ecosystem. We foreshadowed in our investor day in December, and it's a direct response to customer. Needs, vital, helps operators, to simplify monitoring streamline operations, and improve safety by facilitating real-time monitoring and data collection. From thousands of instruments and sensors. Vital is intended to integrate seamlessly to scale with ease and support workflow optimization. And it replaces more than a dozen discrete, supervisory software applications.

It also provides the platform for our expanding digital offerings to interact on a plug-and-play basis.

We also highlighted our light Link Technology at mirian. Connect this technology allows for Superior detection, efficiency via the replacement of dated Legacy photo. Multiple the photo multiplier tubes with silicon chips.

Tom Logan: Lastly, we announced our next-generation Apex Guard software application. This digital platform incorporates more comprehensive reporting and improved analytics to drive greater workplace efficiency and inferential reliability. This is particularly relevant for the exploding nuclear medicine sector. These product releases are emblematic of our focus on delivering innovations to meet customers' growing needs. We are also broadening our nuclear power portfolio through M&A. Yesterday, we announced the acquisition of Certrek, shown on panel seven. Approximately 55% of Certrek's revenue comes from nuclear power customers, including the operating fleet, new utility scale projects, and small modular reactors. Today, every U.S. nuclear reactor facility employs at least one Certrek solution. Certrek's business has grown double digits since 2022, and we believe we can enhance that growth with commercial synergies enabled by our vast global network.

This advanced technology allows for hyper accurate. Radiation detection, improved, human factors and greater ruggedized will redefine industry, standards in operational, productivity and reliability.

Lastly we announced our next Generation. Apex guard software application. This digital platform incorporates. More comprehensive reporting and improved analytics to drive drive. Greater workplace, efficiency, and inferential reliability. This is particularly relevant for the exploding Nuclear Med medicine sector,

These product releases are emblematic of our focus on delivering Innovations to meet customers growing needs. We are also broadening our nuclear power portfolio through m&a.

Yesterday, we now see the acquisition of search trek shown on panels 7.

Approximately 55% of Search Rex revenue comes from nuclear power customers, including the operating fleet, new utility-scale projects, and small modular reactors. Today, every U.S. nuclear reactor facility employs at least one Search Rex solution.

Tom Logan: As previously mentioned, nuclear power operators are looking to extend operating lifetimes and expand existing nuclear reactor capacity. Certrek's solutions help support these objectives by streamlining the regulatory burden. Certrek's solution set is also relevant to the SMR sector. Today, there are approximately 127 SMR designs globally, each trying to navigate a complex and burdensome regulatory environment. Certrek's leading position in this space means they will likely benefit regardless of which SMR technologies ultimately prevail. The other 45% of Certrek's revenue comes from the bulk electric system, generally referred to as the grid. This industry is regulated by the North American Electric Reliability Corporation, or NERC, and includes power generating assets above 20 megawatts connected to the power grid. Until recently, this threshold was 75 megawatts. This is an important distinction as this regulatory change expands the number of assets under NERC's purview by approximately 65%.

Rex business has grown double digits since 2022, and we believe we can enhance that growth with commercial synergies enabled by our vast global network.

As previously mentioned, nuclear power operators are looking to extend operating lifetimes and expand existing nuclear reactor capacity.

Search Rex Solutions, help support these objectives by streamlining. The regulatory burden.

Search Rex solution, set is also relevant to the SMR sector. Today, there are approximately 127, SMR designs globally, each trying to navigate a complex and burdensome regulatory environment. Searches leading position. In this space means they will likely benefit regardless of which SMR Technologies, ultimately prevail.

The other 45% of search Rex Revenue comes from the bulk electric system, generally referred to as the grid. This industry is regulated by the North American Electric Reliability Corporation, or NERC, and includes power-generating assets above 20 megawatts connected to the power grid. Until recently, this threshold was 75 megawatts.

Tom Logan: This represents an additional revenue opportunity for Certrek. In short, this is a fast-growing market in which Certrek is extremely well positioned. We look forward to growing our presence in this space. With that, let me turn it over to Brian to discuss the quarter and 2025 guidance. Brian.

Brian Schopfer: Thank you, Tom, and good morning, everyone. I will pick up on slide eight with details on our second quarter order performance. Orders grew 1.6% in the quarter, driven by our medical segment. Nuclear and safety orders were lower year over year due to a tough prior year comp from the nuclear power vertical. Nuclear power-related orders increased 17% in the second quarter last year. These orders can be a little lumpy, and we are expecting an accelerated order book in the second half of the year based upon our current pipeline. Still, year to date, nuclear power orders grew 10%, reflecting the growing momentum in this attractive end market. We are definitely seeing good momentum in the North American and French nuclear power installed base. As Tom discussed, SMR-related activity continues to accelerate. We are highly engaged with key SMR players to support their journey to commercialization.

In 2025 guidance, Brian, thank you, Tom, and good morning everyone. I'll pick up on slide. 8 with details on our second quarter order performance.

Orders grew 1.6% in the quarter driven by our medical segment, nuclear and safety orders were lower year-over-year, due to a tough prior year comp from the nuclear power vertical.

Nuclear power related orders increase 17% in the second quarter last year. These orders can be a little lumpy and we're expecting an accelerated order book in the second half of the Year based upon our current pipeline.

Through 10% reflecting the growing momentum in the attractive and Market.

We are definitely seeing good momentum in North America, as well as in the French nuclear power installed base.

As Tom discussed, SMR-related activity continues to accelerate.

Brian Schopfer: This is a rapidly evolving area, and we are excited to be squarely in the mix. On the medical side, all three end markets, our TQA, nuclear medicine, and dosimetry, saw order growth in the quarter. This dynamic is particularly impressive in nuclear medicine, where we are lapping a 16% organic order increase in the second quarter of 2024. Slide nine provides an update on the large one-time 2025 order pipeline that we have discussed over the past few quarters. This pipeline is bigger than what we have seen in the past years and indicative of the tailwinds across these key end markets. Today, our pipeline stands at approximately $350 million. We continue to believe we will win our fair share of opportunity set in play. Encouragingly, the project pipeline for 2026 continues to build, and we like our competitive positionings a lot.

We are highly engaged with key SMR players to support their journey to commercialization. This is a rapidly evolving area and we're excited to be squarely in the mix. On the medical side. All 3 and markets are tqa, nuclear medicine and asymmetry saltwater growth in the quarter. This Dynamic is particularly impressive in nuclear medicine, where we are. Lapping a 16% organic order increase in the second quarter of 2024.

Slide 9 provides an update on the large 1-time 2025 order pipeline that we've discussed over the past few quarters.

This pipeline is bigger than what we've seen in the past years and indicative of the Tailwind across these key. And markets today, our pipeline stands at an approximately 350 million.

We continue to believe we will win our fair share of opportunity set in play.

Brian Schopfer: Moving to the financial results on slide ten. Second quarter consolidated revenue was $222.9 million, up 7.6% versus Q2 2024. Organic revenue grew 5.4% over the same time period. As expected, FX was a positive contributor to revenue growth given the weaker U.S. dollar environment versus the euro. Within the nuclear and safety segment, we saw organic revenue growth across each end market. The nuclear power installed base revenue growth was the largest driver in the segment, reinforcing the importance of this sector to our growth expectations. In the medical segment, organic revenue grew across all three medical end markets. Adjusted EBITDA grew as well, up 4.9% to $51.2 million. While adjusted EBITDA dollars grew, margins contracted slightly due to a couple of non-recurring items in our nuclear and safety segment. We experienced FX-related transactional headwinds in France. In addition, project cost increases for a nuclear project in the U.K.

Encouragingly the project pipeline for 2026 continues to build and we'd like our competitive positioning a lot.

Moving to the financial results on slide 10 second quarter Consolidated, Revenue was 222.9 Million up 7.6% versus Q2 2024. Organic Revenue, grew 5.4% over the same time period. As expected FX was a positive contributor to revenue, growth. Given the weaker US dollar environment versus the Euro

Within the nuclear and safety segment. We saw organic Revenue growth across each end Market.

The nuclear power installed base Revenue. Growth was the largest driver in the segment, reinforcing the importance of this sector to our growth expectations.

In the medical segment, organic revenue grew across all three medical markets.

Adjusted Eva grew as well. Up 4.9% to 51.2 million while adjusted ebit of dollars. Grew margins, contracted slightly due to a couple of non-recurring items in our nuclear and safety segment.

We experienced FX related transactional. Headwinds in France.

Brian Schopfer: negatively impacted project margins in the second quarter. Lastly, on this slide, adjusted EPS was $0.11 per share, a 10% increase compared to last year. Note that this includes 17.3 million additional shares related to the convertible notes. If you exclude the convertible notes, the warrant redemptions in Q2 2024, and the founder shares that vested in late 2024, our adjusted EPS would have been $0.13. This provides a more apples-to-apples comparison. Regarding the convertible note shares, from a GAAP perspective, we're required to use the fully diluted share count. You can see on slide 29 in the appendix how the convertible and cap call structure impacts share count at certain share prices. Most importantly, there is zero dilution until the share price approaches $35, and even at $60 per share, the effective dilution is approximately 40% of the GAAP number.

In addition, project cost increases for a nuclear project in the UK negatively impacted project margins in the second quarter.

Lastly, on this slide, adjusted EPS was $0.11 per share, a 10% increase compared to last year. Note that this includes 17.3 million additional shares related to the convertible notes.

If you exclude, the convertible notes. The warrant redemptions in Q2 24 in the founder shares that vested in late, 2024 are adjusted, EPS would have been 13 cents.

This provides a more apples to apples comparison.

Regarding the convertible note, shares.

From a gap perspective were required to use the fully diluted share count. You could see on slide 29 in the appendix, how the convertible and cap call structure impacts share count at certain share prices,

Brian Schopfer: Moving to the segments beginning on slide 11, the nuclear and safety segment revenue grew 5.8% to $141.7 million. Organic revenue grew 2.9% in the quarter. Year to date, organic revenue grew 5.2% through the first half of the year. Labs and research has been softer than expected, reflecting DOGE and budget uncertainty confronting the U.S. Department of Energy, as well as tariff uncertainty from China. More significantly, our nuclear power end market is exhibiting double-digit year-to-date revenue growth. Adjusted EBITDA declined slightly to $37.9 million, down 2.6% versus the second quarter last year. Adjusted EBITDA margins contracted in the quarter, reflecting a few non-recurring cost items we already discussed. Moving next to the medical segment on slide 12, segment revenue grew 10.9% to $81.2 million. Organic revenue grew 10.1% in the quarter.

Most importantly, there is zero dilution until the share price approaches $35 and even at $60 per share, the effective dilution is approximately 40% of the Gap. Number moving to the segments, beginning on slide 11, the nuclear and safety segment Revenue, grew 5.8% to 141.7 million, organic Revenue, grew 2.9% in the quarter year to date. Organic Revenue, grew 5.2% through the first half of the year.

Labs and research has been softer than expected reflecting Doge. And budget uncertainty confronting the US Department of energy as well as tariff uncertainty from China.

Significantly more significantly, our nuclear power and market is exhibiting double-digit year-to-date revenue growth.

medical segment on slide 12 segment, Revenue grew 10.9% to 81.2 million

Brian Schopfer: Revenue was $2 million higher due to some accelerated shipments, mostly in RTQA, to get ahead of expected tariff implementations early in the second quarter. This was partially offset by the lapping of our LASER business closure. This will be the last quarter for a LASER's business adjustment. If we normalize for these, each medical end market performed well in the quarter. Medical segment adjusted EBITDA was $30.1 million, up nearly 20% versus last year. Adjusted EBITDA margins increased approximately 280 basis points. This margin performance was in line with the expectations we shared on our Q1 earnings call. Margin improvement reflects the power of our intrinsic operating leverage we've been discussing. In addition, procurement and mixed performance positively impacted margins in the quarter. Let's spend a few minutes on adjusted free cash flow on slide 13.

Organic Revenue grew 10.1% in the quarter.

Revenue was 2 million higher due, to some accelerated shipments, mostly in RT, QA to get ahead of expected tariff. Implementations early in the second quarter,

This was partially offset by the lapping of our laser business closure.

This will be the last quarter for a Laser's business adjustment. If we normalize for these each medical and Market performed well in the quarter,

Medical segment. Adjusted Eva was 30.1 Million up nearly 20% versus last year. Adjusted, even a margins increased approximately 280 basis points.

This margin performance was in line with the expectations, we shared on our first quarter earnings call.

Margin Improvement, reflects the power of our intrinsic operating leverage. We've been discussing in addition procurement and mixed performance positively impacted margins in the corner.

Brian Schopfer: We continue to improve adjusted free cash flow in the Q2, adding another $6 million to end the first half of 2025 with $35 million of adjusted free cash flow. Most importantly, we're improving our conversion as well. Beyond higher earnings, the biggest drivers continue to be networking capital improvements and optimized capital structure and tight controls around CapEx. For instance, our networking capital, project cash flow management, and improved collection performance contributed positively to the first half of the year. We continue to expect improved productivity in networking capital through year-end. Within our capital structure, a lower SOFR rate environment over the past 12 months was a tailwind for interest expense, as was the debt refinancing we did in 2024. Separately, we successfully launched a convertible note in the Q2 and amended and extended our existing term loan, pushing its maturity to 2032 and significantly reducing the principal amount.

Let's spend a few minutes on adjusted free. Cash flow on slide 13. We continue to improve adjusted free cash flow in the second quarter adding another 6 million dollars.

To end the first half of 2025, we generated $35 million of adjusted free cash flow.

Most importantly, we're improving our conversion as well beyond higher earnings. The biggest drivers continue to be networking. Capital Improvements and optimize capital structure and tight controls around capex.

For instance, our networking Capital project cash flow management and improved collection performance contributed positively to the first half of the year. We continue to expect improved productivity and networking Capital through year end.

Brian Schopfer: These actions will be more impactful in the back half of 2025 and fully reflected in 2026. Lastly, year-to-date CapEx totaled $17 million, approximately $7 million lower than the first half of 2024. We're on track for 2025 CapEx of $40 million and an 18% reduction versus 2024. Before we open the call to Q&A, slide 14 details our updated 2025 guidance. We have raised and tightened key 2025 metrics, including total revenue growth, adjusted EBITDA, adjusted free cash flow, and adjusted EPS. We slightly lowered organic revenue growth, but most importantly, we raised organic revenue growth within the nuclear power end market. Let's get into the details. Moving top to bottom on the slide, organic revenue growth was revised lower to reflect U.S. government budgetary headwinds impacting our labs and research business we already discussed.

Within our capital structure, a lower sofa rate environment over the past. 12 months was a Tailwind for interest expense. As was the debt, refinancing we did in 2024 separately, we successfully launched a convertible note in the second quarter, and amended an extended, our existing Term Loan pushing its maturity to 2032. And significantly reducing the principal amount. These actions will be more impactful in the back half of 2025 and fully reflected in 2026.

Lastly year to date capex totaled 17 million approximately 7 million lower than the first half of 2024. We're on track for 2025 capex of 40 million and it and 18% reduction versus 2024.

Before we open the call to Q&A, slide 14 details our updated 2025 guidance.

We have raised and tightened key 20125 metrics, including total revenue growth, adjusted ebaa adjusted free cash flow and adjusted APS.

We slightly lowered, organic Revenue growth. But most importantly, we raised organic gravity growth within the nuclear power and Market.

Brian Schopfer: Recall that this end market within our nuclear and safety segment includes business from the U.S. Department of Energy and universities. As a result, we lowered labs and research expectations from low single-digit organic revenue growth to modestly negative growth in this end market. These reductions are being largely offset by increased organic growth expectations from our nuclear power end market. We now expect 2025 double-digit organic growth from nuclear power versus high single-digit previously. Next, total revenue growth is expected to be 7% to 9%, up from 5% to 7% previously. This reflects a 125 basis point tailwind from foreign exchange and a 100 basis point improvement from the acquisition of Certrek. These tailwinds more than offset the slight adjustment to 2025 organic revenue growth. Adjusted EBITDA is now expected to be between $223 million and $233 million, up from $215 million to $230 million.

Let's get into the details, moving top to bottom on the slide. Organic revenue growth was revised lower to reflect U.S. government budgetary headwinds impacting our labs and research business. We already discussed.

The market within our nuclear and safety segment includes business from the U.S. Department of Energy and universities.

As a result, we lowered labs and research expectations from low single digit, organic Revenue growth to modestly negative growth in this end Market. These reductions are being largely offset by increased organic growth, expectations from our nuclear power and Market we now, expect 2025 double digit, organic growth from nuclear power versus high single digit previously.

Next total revenue growth is expected to be 7 to 9%.

From 5 to 7% previously.

Brian Schopfer: This reflects the previously mentioned revenue drivers as well as revised cost inputs from tariffs and foreign exchange. Adjusted free cash flow is forecasted at $95 million to $115 million, representing both an increase to total dollars and the expected conversion rate. The increase reflects higher expected EBITDA, lower cash taxes, and net interest expense savings. Project cash flow timing in the second half will likely cause networking capital to be a use of cash for the full year. Lastly, adjusted EPS is expected to be between $0.48 and $0.52 per share and reflects the full GAAP impact of the additional shares related to the convertible note. We've included in the appendix a slide that illustrates changes to 2025 guidance over the past four disclosures.

This reflects a 125 basis. Point Tailwind from foreign exchange, and a 100 basis point improvement from the acquisition of cert Trek. These Tailwinds, more than offset the slight adjustment to 2025 organic Revenue growth, adjusted. Ibaa is now expected to be between 223 and 233 million up from 215 to 230 million.

This reflects the previously mentioned revenue drivers as well as revised cost inputs from tariffs and foreign exchange.

Adjusted free cash flow is forecasted at 95 to 115. Million representing both an increased total dollars and the expected conversion rate.

Increased reflects higher expected IA, lower cash taxes. And net. Interest expense savings project. Cash flow timing. In the second half will likely cause networking Capital to be a use of cash for the full year.

Lastly, adjusted EPS is expected to be between 48 and 52 cents, per share and reflects the full Gap impact of the additional shares related to the convertible note.

Brian Schopfer: For the third quarter, we're expecting nuclear and safety segment adjusted EBITDA margins to be flattish year over year before rebounding nicely in our seasonally strong fourth quarter. In our medical segment, adjusted EBITDA margins should show slight year-over-year expansion. Medical segment organic revenue growth should return to mid-single digits, accounting for the shipment timing of sales volumes related to potential tariff impacts in the second quarter. With that, we're happy to take your questions.

we've included in the appendix, a slide that illustrates changes to 2025 guidance over the past 4 disclosures

In our medical segment adjusted. Eva margins should show slight year-over-year expansion. Medical segment organic Revenue growth should return to Mid single digits accounting for the shipment timing of sales, volumes related to potential tariff impacts in the second quarter with that. We're happy to take your questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. Your first question comes from Chris Moore with CJS Securities. Please go ahead.

Thank you. We will now be conducting a question-and-answer session.

if you would like to,

Please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Chris Moore: Hey, good morning, guys. Thanks for taking the call.

Your first question comes from Chris Moore with CJ C. CJ's Securities. Please go ahead.

Tom Logan: Hey, Chris.

Chris Moore: Good morning. Maybe just start on the new nuke side. Obviously, it takes many years to get a new nuclear plant from concept to energy production. Can you at all quantify the number of new opportunities you are looking at now, say, versus two years ago?

Hey, good morning, guys. Thanks for taking a cup of coffee.

Good morning. Um, and maybe just start on on that on the new nuke side. So obviously it takes, you know, many years to get a new nuclear plant from concept to energy production

Can you, you know, at all quantify the number of of New Opportunities you're looking at? Now, say versus 2 years ago,

Tom Logan: Yeah, I mean, broadly speaking, Chris Moore, what I would tell you is that both the quantum of new projects and the desired timing of those projects continues to accelerate. I think historically, we have touted the strategic alliance we forged with EDF in France that could span well over 20 years and cover all of their new EPR reactors, of which many are planned for France, the balance of Europe, and other parts of the world. But we are encouraged of late by what is happening here in the U.S. I think if we had been having this conversation certainly two years ago, even a year ago, we still would have been skeptical about the prospects for new utility scale nuclear in the U.S.

Tom Logan: But right now, it is being openly discussed that Westinghouse, one of the leaders in the global reactor design space, is talking about up to 10 new AP1000 reactors in the U.S. with starts prior to 2030. This is very encouraging. Again, it is kind of the tip of the iceberg because you have to go well beyond utility scale, well beyond Westinghouse and EDF, and look at the many other players globally. The Russian firm Rosatom, the Koreans, certainly the Chinese, all players in that utility scale space. But on top of that, you again have this array of SMR players, the 127 discrete projects that we talked about.

Yeah, I mean, broadly speaking. Uh, Chris, what I would tell you is that both the Quantum of new projects and the desired timing of those projects continues to accelerate. You know, I think historically we have, uh, we have touted the Strategic Alliance, we forged with EDF and France. Uh, that could span well over 20 years and cover all of their new epr reactors, uh, of which many are planned for France, the balance of Europe and other parts of the world. Um, but we're encouraged of Late by What's Happening Here in the US. I think if we had been having this conversation certainly 2 years ago, even a year ago, we still would have been skeptical about the, the prospects for new utility scale nuclear in the US. But right now, it is, uh, being openly discussed that Westinghouse, you know, 1 of the leaders in the, uh, in the global reactor design space is talking about up to 10.

New, uh, AP 10000 reactors in the US, uh, with starts prior to 2030. So this is very encouraging, and again, it's kind of the tip of the iceberg because you have to go well beyond utility scale, well, beyond Westinghouse in the EDF. And and look at the many other players globally. Uh, the the Russian firm, Rosa Tom, uh, the the Korean certainly, the Chinese all players in that utility scale, Place, uh, space.

Tom Logan: What is happening today that may be a little bit different is that not only are we seeing an accelerating pathway, again, just driven by the extreme urgency caused by this AI-catalyzed shortage of electrical power, but also caused by meaningful shifts in policy stance, particularly in the U.S., is that people are moving faster and more deliberately and with greater confidence. As a consequence, right now, we are engaged in many strategic discussions that go beyond simply project-related or transactionally oriented deals to frame agreements where all of the major players are looking to consolidate supply chains, link up with strategic partners that can really carry them through the next decade and beyond. This is what I am more excited about than anything in this space. Again, just the magnitude and the intensity of the activity here is innovating.

but on top of that you again, have this uh, this uh, array of SMR players, you know, the 127 discrete projects that that we talked about and what's happening today that uh

Maybe a little bit different is that not only uh are we seeing an accelerating pathway again? Just driven by the extreme urgency uh caused by this AI catalyzed shortage of electrical power but also caused by meaningful. Uh, uh, shifts in policy stance, particularly in the US,

is that people are moving faster and more deliberately and with greater confidence. And so as a consequence right now, we are engaged in many uh strategic discussions that go beyond simply uh, project related uh or transactionally oriented deals.

Tom Logan: While I am not going to give you a specific number, I would tell you that, again, the quantum is growing, timelines are accelerating, and I think the tangibility of what is there continues to solidify. We are pretty fired up about this.

Uh, to frame agreements where, uh, all of the major players are looking to consolidate supply chains, linked up with strategic partners that can really carry them through the next decade and beyond. And this is what I'm more excited about than anything in this space. Again, just the magnitude and the intensity of the activity here is, uh, is innovating. So, well, I'm not going to give you a specific number. I would tell you that the, um, again, the quantum is growing. Uh, timelines are accelerating. And I think the tangibility of what's there.

Continues to solidify. So we're, we're pretty pretty fired up about this.

Chris Moore: Really helpful. Maybe just a follow-up. Could you talk a little bit more about the Certrec acquisition, how it fits in with the core business and synergies, and why you are so excited?

Really helpful.

Tom Logan: Yeah, Certrek is an unbelievable company. It's founder-led. Ted Enos built the business and has run it throughout its lifetime, and it really is a unique asset that today really defines the space that they're in. We touched on some of the key financial metrics in terms of how it's performing: $17 million in revenue, very, very attractive margin profile, incredible customer retention, 110% net revenue retention overall. Their platform includes 15 different SaaS applications, and they play today within a total addressable market that's just shy of $900 million. What's also very, very interesting about Certrek is that they possess 15 terabytes of unique industry data, which is an extraordinary number overall.

Maybe just a follow-up. Could you talk a little bit more about the the search trek acquisition? You know, how it fits in with with the core business and, you know, synergies and why you're so excited?

Tom Logan: I think it's self-evident to everybody that when you think about the AI potential that that represents, not only in terms of further streamlining their core software and services delivery today, but also what it means in terms of streamlining and accelerating regulatory approval processes, that is incredibly attractive and one of perhaps the less visible assets with us. The attractiveness to us, firstly, is that the majority of their revenue is in nuclear power. This year, about 50% of their revenue will come from the installed base, about 6% will come from nuclear new builds. This is obviously core to our strategic focus right now. We love it because, again, the recurring revenue, SaaS-based software, massive, massive, massive AI potential here. On top of that, the other 42% of the business, this NERC-FERC business that extends to the broader electrical grid, is also relevant and important to us overall.

Million in Revenue, uh, very very attractive margin profile. Incredible, um, customer retention 110%, net revenue, retention overall, their platform includes 15 different SAS applications, and they play today within a total addressable Market, that's just shy of 900 million. Um, what's also very very interesting about search trek is that they possess 15 terabytes of unique industry data, which is an extraordinary number. Uh overall. And I think it's self-evident to everybody that when you think about the the AI potential that that represents

Not only in terms of um, of uh, you know, further streamlining, uh their their core.

Software and services delivery today, but also what it means in terms of streamlining and accelerating regulatory approval, uh, processes. You know that is, uh, incredibly attractive and, um, you know, 1 of the, um, you know, 1 of perhaps the less visible assets with us, the attractiveness to us. Firstly, is that, uh, the majority of their revenue is in nuclear power.

Tom Logan: Fundamentally, when you look at the value proposition that Certrek brings to bear, at their core, the problems they're trying to solve, the customer pain points are that today, absent a solution like theirs, there's significant risk of human error. There is an immense volume of complex standards to track, to understand, and to apply. You have a situation where industry experts that really have the legacy knowledge are retiring, and insufficient expertise is a real threat on the customer side. The solution that Certrek offers essentially is the ability for their customers to outsource non-core mission-critical functions, to decrease the risk of license revocation, fines, etc., to increase communication efficiency with regulators, and fundamentally to ensure grid continuity, sufficiency, and security. So we're excited about it, firstly, because, again, it fits squarely within our focus on nuclear power delivery.

This year, about 50% of the revenue will come from the installed base about 6%. Will come from nuclear new builds. And, uh, you know, this is obviously core to our strategic Focus right now. Uh, and we love it because again, the recurring Revenue SAS based software, massive, massive, massive, uh, AI potential here. But on top of that, the, uh, the other 42% of the business, this, uh, this nerc ferc business that, uh, that extends to the broader electrical grid, is also relevant and important to us overall fundamentally. When you look at um, the value proposition that search Rex, uh search like brings to Bear, you know, at at their core, the problems, they're trying to solve the, the customer pain points are that today, you know, absent, a solution like theirs, their significant risk of human error. There is an immense volume of complex standards to uh to track

To understand and to apply, you have a situation where industry experts that really have the legacy knowledge are retiring.

And insufficient expertise, you know, is a real threat on the uh on the customer side.

The solution that Cert Trek offers is essentially the ability for their customers to outsource non-core, mission-critical functions.

Tom Logan: It fits squarely within our focus on continuing the digital evolution and particularly the AI-enabled digital revolution that's taking place in our various markets. Finally, working together with the Certrek team, we think there is a huge opportunity for us to tap into our vast commercial network to provide them stronger and more efficient infrastructure. Again, recognizing their margin profile, their incredible capabilities as a team, we think this is going to be a great asset for us overall.

Chris Moore: Perfect. I will leave it there. Thanks, guys.

To decrease the risk of license revocation finds Etc uh to increase communication efficiency with with regulators and fundamentally to ensure grid continuity, sufficiency and security. So we're excited about a firstly because again, it's just squarely within our focus on uh on nuclear power delivery, it fits squarely within our focus on continuing the digital Evolution and particularly the AI enabled digital Revolution, that's taking place in our various markets and finally, you know, working together with the cert Trek team, we think there is a, uh, a huge opportunity, uh, for us to tap into our vast commercial network uh, to provide them stronger and more efficient infrastructure and again, recognizing their margin profile. Um, their incredible capabilities as a team. We think this is going to be a, a great asset for us overall.

Perfect. All right, we'll leave it there. Thanks guys.

Operator: Next question, Joe Ritchie with Goldman Sachs. Please go ahead.

Joe Ritchie: Hey, guys.

Tom Logan: Yeah.

Yeah.

Joe Ritchie: Yeah, so my first question, look, it was good to see the nuclear power growth rate raised for the year. I guess if I go back to slide five, you talk about like 80% of your revenue coming from your installed base. I know this is simplistic, but should we be thinking about kind of like, I do not know, eight points of growth coming from the installed base this year? What I am really trying to get at is you talked about extensively having conversations with your customers. I think what I am trying to figure out, and I think what investors are trying to figure out, is like how bankable is the growth rate from the installed base, not just this year, but really, really beyond this year.

Tom Logan: Yeah, here, Joe, we have to approach it axiomatically because the dynamics are changing rapidly and broadly. The key fundamentals here are that, A, there is insufficient electrical generating capacity globally to support current needs, and those needs continue to grow at a very high rate, again, based upon the work of hyperscalers in support of AI overall. Secondly, policy shifts clearly have favored nuclear power, not just in the U.S., but around the world. Market dynamics have adjusted to make nuclear power plants very profitable. Fundamentally, over what has been about a five-year period, we have seen a shift from kind of tepid fundamentals in that market to very, very strong fundamentals. Recognizing that over the last 20-plus years, this has been a tough market. Over much of that time, nuclear power stations were losing money, and many were targeted for early decommissioning.

Yes. So um, my first question, look it. It was good to see the nuclear power um, growth rate raised for the year. I guess if I go back to slide 5, right? Um, you know, you talked about like 80% of your Revenue coming from your installed base. I know this is simplistic but, you know, should we be thinking about kind of like, I don't know, 8 points of growth, you know, coming from, you know, the installed base this year and what I'm really trying to get at is, is you you talked about extensively, you know, having conversations with your customers and I think um you know what, I'm trying to figure out and I think it would investors are trying to figure out is like, how bankable is the growth rate from the installed base? Not just this year but really, really Beyond this year

There, uh, is insufficient electrical generating capacity globally to support current needs. And those needs continue to grow at a, uh, at a very high rate, again, based upon the, uh, the work of hyperscalers in support of of AI overall, secondly, policy shifts. Clearly have favored, uh, nuclear power, not just in the US. Uh, but but around the world.

Um, the market dynamics have adjusted to make nuclear power plants very profitable and so fundamentally over.

But it's been about a 5 year period. We have seen a shift from um, you know, kind of

Tepid fundamentals in that market to very, very strong fundamentals.

Tom Logan: As a consequence, we have a buildup of underinvestment in those power plants where people were operating under extreme capital rationing modes. The first thing that's happening is that as we see capital budgets swelling, operators are investing in current infrastructure to modernize it, bring it back up to snuff, and then to prepare for the things that we touched on, which is the broader modernization, trying to operate plants at higher capacity factors, contemplating uprates and life extensions across the board. Not only does this reverse that dynamic of extreme capital rationing, but it also, over time, is shifting their footing toward more growth capital to enable these things. Those are the fundamentals that are essentially underpinning the overall operating fleet.

And recognizing that over the last 20 plus years, this has been a tough market. Over much of that time, nuclear power stations were losing money, and many were targeted for early decommissioning.

So as a consequence we have a a buildup of underinvestment in those power plants where, you know, people were operating under extreme Capital, rationing modes.

And so the first thing that's happening is that, um, you know, as we see Capital budgets swelling, operators are investing in current infrastructure to modernize it, bring it back up to Snuff and then to prepare for the things that we touched on which is the the broader modernization trying to operate plants at higher capacity, factors contemplating uprights and uh and Life Extensions across the board. Not only does this reverse that Dynamic of extreme Capital rationing

Tom Logan: At the end of the day, when you look at the broad array of solutions, not just instrumentation, but software, and now with the Vital platform, Vital-enabled software and services, the fundamentals are like nothing that we have seen literally in a generation. From our standpoint, as we look at this, while we're not going to quantify a specific number in terms of longer-term growth rates in the space, clearly it is moving up and to the right, and our expectation is that this is a generational trend that we're going to work very, very hard to exploit continuously.

Brian Schopfer: Yeah, maybe just one added color without giving you the exact numbers, Joe. One of the things I pointed out in my commentary is we saw, we've seen year-to-date good growth out of both North America and France. These are both installed base markets for us. Today, I think we're encouraged by the new build opportunities in both markets with what EDF's announced in France and Tom Logan's comments on Westinghouse. But today, they're basically installed base markets for us. So I think you can read that as you will.

But it also uh over time is shifting their footing toward more growth Capital uh to enable these things. And so those are the fundamentals that are essentially underpinning the the overall operating Fleet and at the end of the day, when you look at the broad array of of solutions not just instrumentation uh but software and now with the vital platform, vital enabled software and services. Um you know the fundamentals are like nothing that we have seen literally in a generation and so from our standpoint as we look at this while we're not going to quantify a specific number in terms of of uh longer term growth rates um in the space. Uh clearly it is moving up into the right and our expectation is that this is a generational Trend uh that we're um you know we're going to work very very hard to exploit uh continuously. Yeah maybe just 1.

You know, added color without giving you the exact numbers Joe, you know, 1 of the things I I pointed out in my commentary is, you know, we saw we've seen year to date good growth out of both North America and France. These are both, uh, installed base markets for us. Um, today, uh, you know, I think we're encouraged by the new build opportunities in both markets, uh, with what edf's announced in France and, you know, Tom's comments on Westinghouse. But but today, they're basically installed this Market's for us. So, you know, I think you can, uh, read that as you will.

Joe Ritchie: No, that's helpful qualitative color, guys. Shifting to orders and the $350 million pipeline that you guys have discussed, I fully recognize also the second quarter you guys had a tough comp. What we're trying to understand is, has the $350 kind of pushed to the right a little bit? Is the opportunity still substantial into the second half of the year? Specifically, I'm going to go back to numbers, but could there be a quarter where you guys see like a $300 million plus order quarter because of this large opportunity that you had?

No, that's that's helpful qualitative color. Uh guys I guess shifting to uh orders and the you know, 350 million dollar you know pipeline that you guys have discussed.

Tom Logan: We are unlikely to see a $300 million order quarter. But having said that, again, as Brian Schopfer said, we like where we sit in this opportunity set overall. Some of it has shifted to the right, mainly the government-related stuff because of DOE-related noise and budgetary uncertainty. There is some possibility that given the government year-end at the end of September, that we may see a little bit of more accelerated order intake in that sector overall. But bear in mind that when you look at the composition, what is in there, it is government-related and new project-related in the main. There is always some risk of timing slippage in these arenas. But what we have said is that we expect to win our fair share of this.

You know fully recognized also the second quarter, you guys had a tough comp. Um I guess what I'm what we're trying to understand is is like has the 350 kind of pushed to the right a little bit um is the opportunity still substantial into the second half of the year and I guess specifically I'm going to go back to numbers but like you know could there be a quarter where you guys see, you know like a hundred million dollar plus order quarter because of this, you know, large opportunity that you have. So I I think we're unlikely to see a uh, a hundred million dollar order quarter but having said that the uh,

You know, again this is Brian said we like where we sit in this, this opportunity set overall, you know, some of it has shifted to the right, mainly the uh, the government related stuff because of, uh, Doge related noise. And, uh, and budgetary uncertainty. You know, there is some possibility that given the government year end and at, at the end of September that we may see, you know, a little bit of, uh, of um, you know, more accelerated order intake in that sector overall. But bear in mind that, you know, when you look at the composition of what what's in there, it is government related and new project related in the main and there's always some risk of of timing slippage in these arenas.

Tom Logan: Again, we like where we sit today. We cannot control the timing, but bear in mind that, again, these are large orders that we have called out that go above and beyond the core flow orders in the business. Ultimately, we do expect to monetize a decent chunk of this.

Brian Schopfer: I think the other maybe a couple of things is, one, you know it has been a fairly consistent number. This quarter we gave a number versus a range just because we felt like that was more appropriate. Two, you know I made this comment a quarter ago. Things are moving, have moved in and out. So new things have come in, other things have moved out. I think that is actually encouraging, not discouraging. I also would tell you we like what we are seeing in 2026 on some of these larger projects. We have not decided if we are going to quantify kind of what those numbers look like. But I would say, you know the 2026 pipeline on larger deals continues to build. Every week and every month, you know there is new stuff kind of being added.

What we've said is that uh, you know, we expect to win our fair share of this. Uh again we like where we sit today, can't control the timing but um, you know, bear in mind that again, these are large orders that we have called out to go above and beyond the core flow, uh, orders in the business and, uh, and ultimately, you know, we do expect to monetize a, a decent chunk of this.

A couple things is 1.

Brian Schopfer: Again, timing kind of continues to be a little bit the wild card. But we feel we continue to talk about it, which means we feel we continue to feel pretty good about it.

You know, it's been a fairly consistent number. I mean, this this quarter we gave her a number versus a range just because like we felt like that was more appropriate. Um, to, you know, I made this comment a quarter ago. You know, things things are moving have moved in and out. So new things have come in other things. Have have moved out, I think that's actually encouraging. Not discouraging. And I also would tell you we like what we're seeing in the 26 on some of these larger projects. Uh we haven't decided if we're going to quantify kind of what those numbers look like. But but I would say you know, the 26 Pipeline on larger deals continues to build and um, every week and every month, you know, there's there's new stuff kind of being added again timing. Kind of continues to be a little bit, the Wild Card. Uh but we feel, you know, we continue to talk about it, which means we feel. We continue to feel pretty good about it.

Joe Ritchie: Got it. If I could just sneak in one more for you, Brian. Just the margins on nuclear and safety and specifically the project cost increase in France. I understand the FX transactional piece of the issue. What I am trying to understand is whether there is a lingering margin issue or cost issue associated with that project that maybe kind of hampers margins through the rest of the year. I am just trying to understand the implications of it.

Brian Schopfer: No, the challenge with just the accounting on the large projects is if you are significantly way through the project and there are some costs that come, you have to take a significant amount of that cost all at one time in a quarter. It just shows up weird in a quarter as you are chewing those things up, Joe Ritchie. We are more worried about project margins. This project actually will end up with kind of margin rates we expected when we started the project. That has ebbed and flowed over the five-plus years that we have been executing on it. We are super proud of the team in France. We have seen just an amazing kind of up and to the right out of that business since two years ago. We have a lot of confidence in everything they are doing.

Got it. If I could just sneak in 1 more for you. Brian. Just the um, the the margins on nuclear and safety and specifically, the project cost increase in France, uh, understand like the FX transactional piece of the, of the, of the issue. Uh, what I'm, what I'm trying to understand is whether there is kind of like a lingering margin issue or cost issue associated with that project that we, that maybe kind of, you know, hampers margins, you know, through the rest of the year. I'm just trying to understand like the the implications of it know that the the challenge with just the accounting of the large projects is, you know, if you're significantly way through the project and there's some costs that come you have to take a significant amount of that cost all at 1 time in a quarter. So it, it just shows up weird in in a quarter. Um, as you're touring those things up Joe, um, you know, last you know, more than we're worried about project margins. This this this project actually will end up with kind of

Margin rates we expected when we started the project. Um, that's Ed and flowed over the 5 plus years that we've that we've been executing on it. So, uh, look, we are super proud of the team in France. Um, we've seen just an amazing kind of

Brian Schopfer: We are excited about both the operational and the commercial direction that is happening in Europe more than probably as much as anywhere else, candidly, and in some instances more. I think we are making great progress operationally. I think you will continue to see that in the numbers. I would tell you we are not backing off our 30% number. We are still very squarely committed to that by 2028.

Up into the right out of that business, since 2 years ago, um, we have a lot of confidence in, in everything they're doing and, um, we're, we're excited about, uh, both the operational and the commercial Direction that's happening in Europe. Um, more than probably, you know, as much as anywhere else candidly and, and in some, in some instances more. So, I think we're making great progress, operationally, and I think you'll continue to see that in the numbers. Um, I would tell you we're not we're not backing off our 30% number. We're, we're still very squarely committed to that, uh, by by 28.

Operator: Next question, Andy Kaplowitz with Citigroup. Please go ahead.

Next question, Andy Kapitz with Citigroup. Please go ahead.

Andy Kaplowitz: Hey, good morning, everyone.

Tom Logan: Morning, Andy.

Brian Schopfer: Morning, Andy.

Hey, good morning, everyone.

Andy Kaplowitz: Tom or Brian, maybe I will try Joe Ritchie's question in a slightly different way. If we are sitting here at the end of the year, would you be quite disappointed if your backlog, or at least your commercial nuclear backlog, is not higher than it is today?

Morning, Annie. Good morning. Annie

So I'm Brian, maybe I'll try Joe's question in a slightly different way. If we're sitting here at the end of the year, would you be quite disappointed if your backlog? Or at least your commercial nuclear backlog isn't higher than it is today?

Tom Logan: I think we would, yeah. I think again, given what we're seeing, Andy, that would be a surprise to all of us. So yeah, the short answer is yes, we would be disappointed.

No, I think we would. Yeah, I think the, again, given, uh, given.

What we're seeing Andy?

Um, that would be a a that would be a surprise to all of us. So yeah, the short answer is, yes, we would be disappointed.

Andy Kaplowitz: Easy enough. Tom, maybe just the SMR orders. Obviously, there's still kind of small numbers, but there's obviously been a ton of noise around SMR lately, as you kind of pointed out. Do SMR orders become a more meaningful part of your order ramp-up, even over the next 6 to 12 months? We all kind of thought it was next decade, but it does seem like there's some real activity here over the next few years. Does it become meaningful faster now, at least in the order profile?

Tom Logan: Andy, we continue to be cautious here. Again, recognizing that this is an industry, a space, a sector that will go through some level of consolidation. Clearly, we are not going to have 127 viable SMR players 10 years from now. So we expect that right now, as we kind of churn through this wave of first-of-a-kind reactors, this is the time when strategic alliances are being forged.

Easy enough. And then Tom, maybe just the SMR orders. Like, obviously they're still kind of small numbers, but there's obviously been a ton of noise around SMR lately as you kind of pointed out. So does SMR orders. Do they become a more meaningful part of your order ramp up? You know, even over the next 6 to 12 months, like we all kind of thought it was, you know, next decade. But it does seem like there's some real activity here over the next few years. So it doesn't becoming meaningful faster. Now at least in the order profile.

Uh, Andy, we continue to be cautious here again, recognizing that, um, there, you know, this is an industry, a space, a sector that will go through some level of consolidation. You know, clearly, we're not going to have 127 viable SMR players ten years from now.

Tom Logan: know, we are working hard to make sure that we get our fair share or better of positioning in the leading players in the space overall. Clearly, it has accelerated faster than I would have guessed a year ago. We like the cadence of what we are seeing. We love the engagement that we are enjoying right now, experiencing with these players. But we are going to continue to be cautious about this. Again, you know, we have got to get through first of a kind, see how those work out. Where the real growth begins is when you then get into the broader proliferation and extension of those, the first of the kind types. Again, we continue to be cautious. We are happy that we are seeing an acceleration, but I am not going to call for some dramatic spike above and beyond where we are.

That this is a time when strategic alliances are being forged, uh, you know, we're working hard to make sure that we get our, our fair share, or better of um of positioning in uh, in the the leading players.

In the space overall. Clearly it has it has accelerated faster than I would have guessed a year ago and so we like the Cadence of what we're seeing. We love the engagement uh that uh we're enjoying right now experiencing with these players, but we're going to continue to be cautious about this. Again, you know, we've got to get through, first of a Kind, see how those work out and um um you know where the real growth begins.

Stacey: Tough one, Tom. Given concern about hospital reimbursement, you mentioned DOGE. It is obviously not surprising they are seeing some modest impact on Mirion. Maybe you could talk about the resiliency of your medical and lab businesses moving forward, that you will not see incremental negative revisions to your growth forecast. Is this kind of you adjust and then you move forward in medical overall, still, call it a mid-single-digit plus business?

Is that when you then get into the uh the broader proliferation um and extension of those the first of a Kind type. So again we continue to be cautious, we're happy that we are seeing an acceleration but I'm not going to call for some, you know, dramatic Spike Above and Beyond Where We Are.

Supplementing, maybe giving concern about hospital reimbursement. You mentioned Doge; it's obviously not surprising. When you're seeing some modest impact on Marion. But maybe you could talk about the resiliency of your medical and labs businesses moving forward, that you won't see incremental sort of negative revisions to your growth forecasts. I mean, is this kind of you, you adjust, and then you move forward in medical overall?

Tom Logan: Yeah, this is an area where I think we've highlighted over the last three quarters that we are watching this. Clearly, there is a lot of battlefield haze right now within the medical community overall, just given the uncertainty around budgetary dynamics. DOGE was a part of that. Certainly, in the recent tax bill, the cutbacks to Medicaid are a part of that overall. We have been pushing the team very, very hard for the better part of the last year to give us the best possible insights in and around this market and really to be looking around corners for signs of what you articulated. What we are seeing so far is that our markets have held up pretty well, in part because radiation therapy in general tends to have a higher proportion of reimbursement dollars coming from Medicare versus Medicaid and from private insurance overall.

Still you know caught a mid single digit plus business.

This is an area where I think we've highlighted over the last three quarters that, um, you know, we're watching this clearly.

Uh, is a lot of uh of uh Battlefield Haze right now within within the medical community. Overall, just given the uncertainty uh, around budgetary Dynamics. Doge was a was a part of that. Uh, certainly in the in the recent tax bill uh the cutbacks to Medicaid uh are are a part of that overall. And so we have been pushing the team very, very hard for the better part of the last year.

To give us the best possible insights in, and around this market, and really to be looking around corners.

For signs of of what you articulated. Um, and what we're seeing so far,

is it? Our markets have held up pretty well in part because

Tom Logan: Secondly, given the imperative to improve efficiency within radiation therapy clinics, that plays well with our solution set. Our product offerings are all about efficiency and accuracy and help drive greater patient throughput in these facilities. The central part of that is our SunCheck software platform, which at its heart is a workflow platform that drives great efficiency in that environment. On top of that, it is all of our hardware applications that, in a very efficient fashion across different RT platforms, not just Varian, but Elekta and others, help support that kind of efficiency. To be clear, we continue to be very watchful around this market and the dynamics. We are pushing the team hard to give us any early signs that there may be a change or an erosion in the rate of growth. I would tell you that today we have not seen that as of yet.

Uh, radiation therapy in general tends to have a higher proportion of reimbursement dollars coming from Medicare versus Medicaid and from private insurance overall. But secondly, given the the imperative to, uh, improve efficiency within radiation therapy clinics.

Um, you know, that plays well, with our solution. Set. Our product offerings are all about efficiency, and accuracy, and help Drive greater patient throughput in these facilities. The central part of that is our sunshack software platform, uh, which at its heart, is a workflow platform that that drives great efficiency in that environment. But on top of that, it's, it's all of our, um, you know, our um, uh, um, uh, Hardware applications that in a very efficient fashion, uh, across different, uh, RT platforms. So not just varying, but Electa and others help support that kind of efficiency. So, to be clear, you know, we continue to be very watchful around this Market.

And the, uh, and the dynamics, we are pushing the team hard to give us any early signs that there may be a change or an erosion in the rate of growth. I would tell you that today we have not seen that as of yet.

Operator: Next question comes from Yuan Zhi with B. Riley Securities. Please go ahead.

Eric Linn: Good morning. Thank you for taking our questions. Can you help us understand the current supply and demand dynamic with your nuclear medicine customers? Are they sensitive to pricing due to the current bonding status, or is the demand growing much faster than the supply right now?

Next question comes from Yoni with B. Riley Securities. Please go ahead.

Uh, good morning. Thank you for taking our questions.

Uh, so

Yeah, can you help us understand the current supply and demand dynamics with nuclear medicine? Are customers sensitive to pricing due to the current bonding status, or is the demand growing much faster than the supply right now?

Tom Logan: Yuan, what I would say is that if you look at, there are really two components associated with our nuclear medicine business. One is our core hardware offerings where the franchise product there would be dose calibration instruments. Above and beyond that is clinical instruments, transport equipment, compounding equipment, syringe shields, and the like. But really think of dose calibration instruments as being the bellwether. The second major component is our software platform, our EC2 software platform, which uniquely is connecting drug makers and isotope producers and CDMOs and radiopharmacies and clinics. When we look at the overall growth rates and the demand that we're seeing, we do like our positioning.

Tom Logan: If you look at the margin profile of this business overall, it continues to improve, which is emblematic of a combination of both pricing power as well as the fact that we are mixing up in this space principally through a higher proportion of software sales overall. The fundamentals here continue to be tracking with our expectations that, as you know better than most, the Theranostic movement, the Theranostic revolution is real. We're seeing a lot of activity in and around that. Our view is that if the trends continue, as we believe they will, that will continue to drive margin accretion in our business and support the kind of longer-term growth that we've called for.

Weather. And then the second major component is our software platform, our ECS squared software platform which uniquely is connecting uh, drug makers and isotope producers and cdmos and radio's and, uh, and Clinics. When we look at the uh, the overall growth rates and and the demand that we're seeing, um, you know, we we do like our positioning, uh, if you look at the the margin profile of this business overall, it continues to improve which is emblematic of a combination of both pricing power. Uh, as well as you know, the fact that we are mixing up in this space. Principally through uh you know, higher proportion of software sales overall. But the fundamentals here, continue to be tracking with our expectations that their as as you know better than than most um you know, the the thionic movement, the thionic revolution,

It's real, and we're seeing a lot of activity in and around that. So, you know, our view is that if the trends continue as we believe they will.

that will continue to drive margin accretion in our business and support the kind of longer-term growth that we've called for.

Eric Linn: Got it. Thanks for the helpful comments there. It is also great to see the strong FMR backlog growth in 2025. Sorry, I have to ask this question here in a slightly different way. If we exclude FMR in the order books in both Q2 2024 and Q2 2025, what is the growth from the conventional nuclear power in the order?

Also, great to see the strong, uh, ASMR backlog growth in 2025. Sorry, I have to ask. This question is slightly different. If we exclude SMR and the other books, in both Q2 2024 and Q2 2025, what is the growth from the conventional nuclear power in the other group?

Um,

that's uh,

Tom Logan: I got to see if I have the data in front of me, Yuan. I think if you look at it from a quarter or year-to-date perspective, I would tell you that we are, sorry, I got the wrong page. Apologies. If you look at it from a year-to-date perspective, we still have positive order growth in the nuclear power segment. Again, you got to be a little bit careful trying to parse things in and out here because of the lumpiness of some of the orders, which is why I don't want to give a precise number because at the end of the day, that could change with when we win a large order in the third or fourth quarter. We still feel very good about the order dynamics, even if you exclude the larger SMR order that we're seeing in the underlying base.

I got to see if I have the data in front of me. Um, you want? I think if you look at it from a uh a a a quarter or a year to date perspective, um you know, I would tell you that

We are.

Sorry I got the wrong page, apologies. Uh, if you look at it from a from a year, year to date perspective, you know, we're we still have positive um, order growth in the nuclear power segment. Again, you got to be a little bit careful, kind of trying to parse things in and out here because of the lumpiness of some of the orders. Uh which is why like I don't want to give up precise number because at the end of the day, you know, that

Tom Logan: Most importantly, our revenue numbers are double digits. I would tell you that we have very little SMR revenue running through the P&L today. That is, I think, the most encouraging thing.

That could, that could change with with when we win a large order in, uh, in a in the third or fourth quarter. So, um, you know, we still feel very good about the order Dynamics, even if you exclude, the, the larger SMR order, uh, that we're seeing kind of in the underlying base. And most importantly, I mean, our Revenue numbers are, are double digits, and I would tell you that with very little SMR Revenue running through the p&l, uh, today. So, um, that is, I think the most encouraging thing.

Eric Linn: Yeah, got it.

Yep, got it.

Operator: Next question, Rob Mason with Baird. Please go ahead.

Eric Linn: Yeah, good morning. Thanks for taking the question. Tom, I wanted to go back to your conversation around the unstalled base in nuclear power where you talked about the larger buckets of opportunities, but you mentioned life extensions, perhaps the largest opportunity for Mirion. Is there a more quantitative way that we can think about that? You've been helpful in the past talking about content per reactor on new builds, maybe on a per megawatt basis. And I'm sure there's much more variability around life extensions. But is there a metric that we can think about to properly size what that opportunity could be?

And with their, please go ahead.

Oh yeah, good morning. Thanks for taking the question. Um, Tom I wanted to go back to your conversation around the, um, the install base and nuclear power where you, you know, you, you talked about the larger buckets of opportunities, but you you mentioned, um, Life Extensions, you know, perhaps the largest opportunity for Mary can, is there a, um, is there a

You know, more quantitative way, that we can think about that you've been helpful in the past talking about, you know, content per reactor, uh, on new builds. Um, maybe on a per megawatt basis and I'm sure there's a much more variability, um, you know, around Life Extensions. But is there, is there a metric that we can?

You know, think about what that opportunity could be.

Tom Logan: Rob, we've not guided a specific metric because this is something that can vary depending on the type of reactor. Is it a pressurized water reactor? Is it a boiling water reactor? Is it a heavy water reactor? There's variability in and around all of those things. To some degree, there's also variability induced by the size of the fleet. If you look at somebody like Constellation Energy, the number one operator of nuclear power plants in the U.S. versus others who may be operating a single power plant, it varies depending on how those fleets are being managed overall. What we have said, and what I would reiterate here, is that when you are looking at a life extension event, that typically that is a trigger for a higher degree of modernization CapEx, relating not only to instrumentation but also to software.

Uh, Rob, we've not guided a specific metric because this is something that can vary depending on...

Uh, the type of reactor is it a pressurized water? Reactor. Is it a a Boiling Water? Reactor, is it a heavy Water Reactor? And so there's variability in and around all of those things and to some degree, it's also uh, there's also variability induced by the size of the fleet, you know? So if you look at somebody like constellation the, you know, the number 1, um, operator of nuclear power plants in the US versus others who may be operating a single power plant, you know, it varies depending on how that, how those fleets are being managed, uh, overall.

Event, um, that typically is a trigger for.

Tom Logan: This is where there are certain product categories like radiation monitoring systems, which typically have about a 20-year replacement cycle, give or take a few years again, depending on facts and circumstances. Oftentimes, when an operator is making a decision to life extend a power plant, that's when they'll say, "Okay, we need to upgrade our core RMS systems." Again, it varies across the board. I'm hesitant to give you any specific guidance on the numbers are in this range and you can put that into your model.

A higher degree of modernization, capex. You are relating not only to instrumentation, but also to software. This is where there are certain product categories, like radiation monitoring systems, which typically have about a 20-year replacement cycle, give or take a few years depending on facts and circumstances.

But often times when an operator is making a decision to life, extend a power plant. That's when they'll say, okay, we need to upgrade our our, our core RMS systems. So again, it varies across the board, uh, so I'm hesitant to give you any specific guidance on. You know, it's the numbers are in this range and and you can put that into your model

Eric Linn: Sure. Maybe this is somewhat related. During the quarter, you did announce the partnership with Westinghouse around some of your instrumentation in particular. My sense was historically that fleet, Westinghouse fleet, you had not had as high representation there. Am I right in thinking about this is more around potential share gain on top of replacement activity for you within that fleet? Is there any way to put some broader numbers around what that opportunity could be?

Tom Logan: Yeah, that's 100% accurate that this is an opportunity to essentially upgrade the fleet that Westinghouse covers with a digital neutron flux measurement system. These instruments, just for the uninitiated, are essentially measuring a variety of parameters inside the reactor core and immediately outside of the reactor core, the most important of which is neutron flux, which is essentially the volume of neutrons that pass through a defined volume in a given period of time. It's essential to understand those dynamics because that provides a lot of insights about the operating quality and the safety of the combustion that's taking place inside that reactor overall. Our digital solution is unique. Westinghouse obviously sees it as a great opportunity in their broader service and maintenance business to utilize this as a core offering in upgrading reactors overall. We see a sizable opportunity to retrofit the installed base within the U.S.

Sure, uh, well maybe this is, uh, somewhat related. The, um, you know, during the quarter you did announce the partnership with Westinghouse, um, around a, you know, some of your inspiring instrumentation, in particular. My sense was historically that Fleet had, you know, Westinghouse Fleet had—had you not had as high, um, representation there. So, um, you know, am I right in thinking about, you know, this is more around potential share gain on top of replacement activity for you within that Fleet? And is there any way to, you know, put some, you know, broader numbers around what that opportunity could be? Yeah, that's 100% accurate that this...

This is an opportunity to essentially.

Um, um, upgrade the, uh, the fleet that Westinghouse covers.

With a digital, uh, neutron flux measurement system. And these instruments just, um,

For the uninitiated, or essentially measuring.

Uh, a variety of parameters inside the reactor core and immediately outside of the reactor core, the most important of which is neutron flux, which is the, you know, essentially the volume of neutrons that pass through a defined volume in a given period of time. It's essential to understand, uh, those dynamics because that provides a lot of insights about the operating quality and the safety of the, uh, the combustion that's taking place inside that reactor overall.

Tom Logan: and, more broadly, not just through the Westinghouse deal, to leverage this technology on a global basis overall. In our view, this is an opportunity for share pickup. It's not merely replacing our legacy products with something newer and better.

Our digital solution, um, is unique, uh, Westinghouse. Obviously sees it as a, a great opportunity, um, in their broader uh service and maintenance business to utilize this as a um, as um, you know, kind of a, a, a core offering in upgrading reactors overall. We see a sizeable opportunity, uh, to retrofit the installed base within the US. And, you know, more broadly, not just through the Westinghouse deal, you know, to uh, to leverage this technology on a, on a global basis.

This overall. So in our view, this is uh, this is an opportunity for share pickup. It's not merely replacing our Legacy products with, with, with something newer, and better.

Eric Linn: Very good. Maybe just last question. Brian, in talking about the margin expansion, I guess, in medical, you mentioned procurement is one of the contributors. That was obviously something that was part of the algorithm that you unveiled at the Investor Day around 2030 margins. Could you just update us more broadly, where you are in that effort relative to, I guess the target that you issued at that time? How should we think about just phasing in of that procurement?

Tom Logan: Yeah, yeah. As I think I said to Joe Ritchie, I think we are still very committed to the 30% even-of-margin target. Obviously, this year, our guide still indicates more than 100 basis points of margin expansion. That is our expectation. Obviously, that means it needs to pick up from here. That is what we are very focused on. Even an acquisition like Certec, although not contemplated then, helps with this journey. They actually have better even-of-margins than we do as a company. So that is helpful. I think we are still, I know we are still, we are still very committed to it. The idea generation and the tactical pipeline is still very robust. We like what we are doing on the procurement side.

Um, very good. Uh, maybe just last question, uh, Brian in um, talking about the margin expansion, I guess in medical you mentioned procurement, uh, is 1 of the contributors could. And that was obviously something that was, um, part of the algorithm and that you unveiled, um, at the investor day around 2030 margins, but you could, you just update us more broadly, you know, where you are in that effort, um, relative to, you know, the I guess the Target that you issued at that time. And how should we think about just phasing in of that procurement? Yeah, um, yeah, and but like, like I think I said to Joe, I think, um, you know, we're still very committed to the 30% even in March of Target. Um obviously you know this year you know, our guide still indicates, kind of um more than 100 basis points of margin expansion. That's our expectation. Obviously, that means it needs to pick up from here and uh, that's what

Tom Logan: One of the things that we have announced internally, and we should talk about it a little bit here, is some of the variabilization of both our software and IT labor in a deal that we did, a partnership deal with a large partner in this space called Cognizant that we are super excited about. We think it will add a ton of value for us, both on the cost side, but actually even more importantly on the speed-to-market side for new software products. That is something that we continue to implement here over the next couple of quarters. So we feel good. I think one of the things you saw in the medical space this quarter is just that operating leverage. When you get into these high single-digit and in this case, double-digit kind of quarters, the P&L structure really plays to our favor, specifically in that business.

T, uh, labor. Um, in a deal that we, uh, we did a partnership deal with a large. Um,

Tom Logan: We saw 200 basis point margin expansion plus across every one of the businesses we have within our medical business in the second quarter. So we are excited about where we are going. I would tell you, we continue to have a lot of conviction around our targets. Yeah.

You know, partner in this space, uh, called cognizant, um, that we're super excited about and we we think we'll add a ton of value for us both on the cost side but actually even more importantly on the speed, the market side for for new software products. Um, and and that's something that we uh we continue to uh, to to implement here, over the next couple quarters. So we feel good, I think 1 of the things you saw in the medical space, this quarter is just that operating leverage. I mean, when you get, when you get into these high single digits and and in this case, double digit, kind of quarters it, the p&l structure really plays to our favor specifically in that business. And uh, and in in in you know we saw

200 basis point margin expansion across every one of the, uh, the businesses we have within our medical business in the second quarter. So, we're excited about where we're going and, um, you know,

Stacey: Rob, just to tag on to Brian's comments too, historically, we have been very clear that the pathway to 30-point margins is a combination of operating leverage, which is the biggest single lever, and that is what has carried us historically. It is price, it is procurement, it is continued footprint rationalization. It is the fact that with our clear focus on digital, we expect that we are going to continue to mix up overall from a margin standpoint. But there is something new that is emerging here that I think is worth touching on, and that is AI. In this recent announcement where I have stepped away from running the medical group, Brian has picked that up. A major factor behind that is that I am dedicating a substantial proportion of my cycles, if you will, toward AI. We see two enormous opportunity sets in that regard.

We're we're even I would tell you we we continue to have a lot of conviction around our targets. Yeah. Rob. Just to tag on to Brian's comments too, you know. Historically the you know we've been very clear that the pathway to 30 point margins is a combination of operating leverage which is you know the biggest single lever and that's what's carried us historically its price its procurement it is continued footprint rationalization

Um, it's the fact that with our clear focus on digital, we expect that we're going to continue to mix up overall from a margin standpoint.

But there's something new that's emerging here that I think is worth touching on, and that's AI. Um,

Stacey: One is internal, where part of it is the future of work. I know that today, a third or more of my job can be done better with AI and independent autonomous agents than I can do it personally. I know that to be true for just about every non-shop floor position within our business. We know that AI represents, not in the future, but today, an opportunity for us to substantially improve not only our efficiency, but also our net output capabilities from a human capital standpoint. Additionally, internally, there are more and more near-term opportunities to harness AI for supply chain management, for conversion activities. Think of it in terms of master production scheduling, for distribution capabilities, for product design capabilities, etc. We are in the process of really winnowing our hierarchy of priorities to make sure that we are getting after this aggressively.

you know, in this recent announcement where I've stepped away from running the Medical Group, Brian has picked that up a major factor behind that is that I'm dedicating a substantial uh proportion of my of, you know, my Cycles. If you will tour Ai and we see 2 Enos opportunities. That's in that regard. 1 is internal where um, you know, part of it is the future of work. I know that today, uh, a third or more of my job can be done better, uh, with AI and independent autonomous agents. Uh, then I can do it personally. I know that to be true for, you know, just about every, uh, non-shopping for us to substantially improve our, uh, not only our efficiency, but also our net output capability.

Qualities from a human capital standpoint. Additionally internally, there are, you know, more and more um near-term opportunities.

Stacey: The second bigger bucket is the customer-facing stuff, where clearly, we see enormous opportunities to improve the utility that we are bringing to our customers through AI solutions. Again, we are taking this very seriously, devoting substantial resources to it. All of this, at the end of the day, when you come back to the margin equation, is an additive factor to what we have talked about historically.

To harness AI for Supply Chain management, uh, for conversion activities, think of it, in terms of Master production, scheduling for distribution capabilities for product design capabilities, Etc. And, um, you know, we're in the process of of, uh, really winnowing, our hierarchy, of priorities, to make sure that we're getting after this aggressively. The second bigger bucket, is the customer facing stuff where clearly, um, you know, we see enormous opportunities to improve the utility, uh, that we are bringing to our customers through AI Solutions. And again, we're um, you know, we're taking this very seriously uh, devoting substantial resources to it. Um, and all of this at the end of the day, when you come back to the margin equation is an additive factor to what we've talked about. Historically,

Operator: Thank you. I would like to turn the floor over to Tom Logan for closing remarks.

Thank you. I would like to turn the floor over to Tom Logan for closing remarks.

Tom Logan: Well, folks, thanks again for your time and attention today. Again, we are happy about the quarter. We feel like, again, we continue to improve our financial metrics, our operating metrics. We continue to be very bullish about the order pipeline and expect to continue to extend the dynamics there in terms of what we bring down over the course of the year. We continue to enjoy the tailwinds that we see. There continues to be some noise in the market in and around tariffs, global geopolitics, and reimbursement dynamics, etc. But our view continues to be that the tailwinds beat the headwinds here. We like where we sit and feel good about how the year is unfolding. Again, we appreciate your time and attention today, and we will very much look forward to speaking with you again next quarter.

Well, folks, thanks again for your, uh, your time and attention. Uh, today. Uh, again, we're, we're happy about the quarter. Uh, we, uh, we feel like, uh, again, we continue to improve, uh, our, our financial metrics, our operating metrics. We continue to be very bullish about the, the order Pipeline and extend expect to continue to extend the uh, the Dynamics there. In terms of of what we bring down over the course of the year. Um, so we continue to enjoy the, the Tailwinds that we see we uh, their continued to continues to be some noise in the market in and around tariffs.

Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

The the Arizona folder. So again, we appreciate your time and attention today, and we'll very much look forward to speaking with you. Again, next quarter,

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