All right, we're going to get started again. We are really excited to have Mirion with us today. We've got the founder, chairman, and CEO of Mirion, Tom Logan, and then Brian Schopfer, who is the CFO. Thomas, I'll walk over to you. Mirion's been a public company now for about 2.5 years, and I think investors are increasingly familiar with the company. But for those who don't know the company well, could you start with an overview and really what differentiates Mirion competitively?
Sure. Where it would encapsulate our story is that we see Mirion as the global leader in ionizing detection and measurement technologies. So if you parse that up, firstly, when we think about ionizing radiation here, we are talking about radiation that can knock an electron out of its orbit. It can cause tissue damage in human beings. So we're talking about alpha, beta, gamma, X-ray, and neutron exposure in the main. And this focus, this technological focus, allows us to be a market leader today in a $4 billion currently served market within a broader total addressable market that is upwards of $18 billion overall. We are the global leader today in 15 of our 18 product categories. And importantly, we gain technological leverage.
In the learnings that we develop in big space and scientific applications, we can apply those to other commercial applications in nuclear power, in cancer care, in defense, and in other industrial applications, a nd the thing that most fundamentally sets us apart from anybody that we compete with is the fact that we are purely focused on this. So we do enjoy this leverage. Our business model is not diluted with other conglomerated assets, a nd as a consequence, that creates a cycle of virtue. It allows us to have the biggest network, the most points of presence, the most content to sell into that network. But it also allows us to be the innovation leader in our space, which is highlighted by our recent announcement in guidance a few weeks ago that this year we expect to launch more than 40 new products overall.
Those, I think, would be the key things.
That's awesome, Thomas. Following up on that, in your time as a public company, you've navigated a number of challenges: exiting Russia, post-COVID supply chain challenges, rising interest rate environment. Can you talk about how Mirion has adapted in the evolving environment and how dealing with these challenges has changed your approach to running the business?
We've learned a lot. So as a reminder to those who may be less familiar with our story, we became a public company in October of 2021 via SPAC. This was just as the SPAC market was diminishing and/or collapsing, becoming more difficult in general, and creating a bit of a tail associated with that. We also launched into a market where the industrial tech segment in general was struggling with continued supply chain hangover that began in the depths of the COVID pandemic, an unprecedented generational spike in inflation that had a profound impact not only on supply chain costs but also labor costs overall, major changes in global trade dynamics, et cetera.
But in addition, as you noted, Andy, in addition to dealing with those issues, we also simply, between loss of business associated with Russia because of the Ukraine war, and secondly, foreign exchange, we lost more than 9% of our top-line growth in 2022. So it was a difficult debut year for us, to be candid, coming out again as a SPAC and facing the macro headwinds. And as you might imagine, we learned a lot about that. We learned a lot about how to tailor our focus and essentially rejigger our priorities. And what you saw in 2023, I think, was a reflection of that, where firstly, we were very focused on deleveraging the business. The beginning of 2023, we had 4.4x leverage. At the end of 2023, we took that down to 3.0, beating our own guide of 3.1 for the year.
So an extraordinary deleveraging for the business overall, reflecting the general risk appetite for investors, particularly in small and mid-cap stocks, where leverage, obviously, has become a much more acute issue overall. Secondly, we've been very focused on augmenting the free cash flow of the business and the overall margin performance of the business and being more measured about M&A. And so if you were to look at essentially our performance last year against all of those measures, we obviously significantly improved free cash flow generation, which is a material factor in the deleveraging. From a margin standpoint, we took a number of actions that we believe will get us back onto our historical trajectory of driving systematic margin expansion in our business and achieving our target of 30-point EBITDA margins within five years.
From an M&A standpoint, even with that incredible deleveraging, we still were active in M&A and acquired a very, very strategic asset in the nuclear medicine software space called ec² that we're thrilled to have overall. I think all of those things are a reflection of how we have adapted as a relatively new public company to essentially focus on fundamentals that are far more important to the marketplace, improving our overall messaging. We expect to continue to be on that journey.
Thomas, maybe talk about the balance now, as you sit here today, between leverage and M&A. You're at 3x, as you said. You said 2.5x by the end of this year, ex M&A. So do you want to get there? How do you think about what you want to do?
Yeah. To be clear, if you look at our M&A track record just over the last two years, I think we've done 16 acquisitions since 2016. So we have been a very acquisitive company. We think it's a core strength of the company. But clearly, as a public company, since we've been public, we've done three deals. And they've all been modest in scale. And at least one of them has actually been a deleveraging transaction overall. That demonstrates, I think, more than anything else, our commitment to deleveraging the balance sheet, but also to be smart about strategic opportunities. That again, because M&A is such an important part of our history and our story is such an important key strength of the business, that we think you can do both. We think we can be smart about deleveraging while continuing to be active in M&A. We expect to continue to focus on that.
Thanks for that, Thomas. Brian, I think there's a question for you. You've got a number of questions for Q4 earnings relative to your 4%-6% organic growth guidance. You had mid-teens backlog growth, 30% order growth. So maybe how would you characterize visibility to your 2024 organic growth guidance versus the prior years?
Yeah. Look, I think the visibility continues to be good as it's been before, right? What we've historically said is somewhere between 45%-50% of the next 12 months revenue is historically in backlog. I think if you look at the strong order growth and candidly, backlog growth we saw in 2023, a couple of the things we've talked about are larger new build orders coming into the backlog, Andy, and a five-year kind of strategic parts order that came in as well in the third quarter. For me, it's less about 2024, i t's more about the ability to continuously deliver growth across multi-years. And I think that's what excites me most about the order growth we saw in 2023, a nd I think we'll continue to see and have a pretty robust 2024 as well.
It's awful, Brian. And maybe, Thomas, back to you. On the medical side, medical orders are only up 5% in 2023, but you've delivered 15% and 8% organic growth, revenue growth in medical over the last couple of years. You've got a longer-term guide at five and seven . So what would you say has gone right for you in medical, either in terms of what you've done to position the business for improved growth or market level? And then how do you think about the sustainability of that growth?
Yeah. I think firstly, if you look at the coherence of our strategy in the medical field, I think it's tight. I think we're very, very clear about where we want to play, how we want to play, and what are the key components of the value chain in cancer care, in nuclear medicine, in occupational dosimetry that we're focused on. Secondly, the team that we have is the best in the industry by far. I mean, this is a team that has overdelivered systematically day in and day out. And as you know, in any business, at the end of the day, the quality of the team matters enormously. And the caliber of our team is the best in the industry.
Thirdly, when you look at the overall product development priorities and how we've allocated capital internally, I think we have been smart about the decisions that we made, particularly from an overall product mix standpoint. But beyond pure product decisions that we made about infrastructure, building a European sales and support capability that had not previously existed, and other similar actions have had a material impact overall on our ability to drive growth, but in particular, to drive international growth in this segment.
So Thomas, is it fair to say that versus when you went public a couple of years ago, two and a half, that you feel even better about that 5%-7% sort of long-term growth in medical given all the changes you've made?
I do. And I do for a number of reasons, Andy. Firstly, it just comes down to the basic execution, which we just touched on. Secondly, when you look at the market trends, kind of undergirding this growth, clearly, when we think about the external beam therapy market, which today is about half of our medical exposure, the world is grossly underserved in terms of the number of linear accelerators, the number of clinical delivery tools that exist. The world today has about half of the linacs that it needs. But secondly, it's the aging population demographic in the developed West, t hink of the G20 footprint, a s people get older, they are more likely to get cancer. And today, a newly diagnosed cancer patient in the U.S. has about a 65% probability of being prescribed external beam therapy as a component of their treatment.
So if anything, that trend that we've long ago identified has been further kind of demonstrated. And we expect that it will be a super trend that will be long and toothed. The one area I should note, in our occupational dosimetry market, we continue to be very bullish about our Digital Technology Instadose®. But maybe the biggest change over the last two years has been in the area of nuclear medicine. GE, in their earnings call a few weeks ago, highlighted the investment in a software company focused in the nuclear medicine space called NMIS.
They highlighted their view that the nuclear medicine space will grow by about 4.5x over the next decade, really driven by the revolution that we're seeing in the so-called theranostics market, which is a creation of therapeutic nuclear medical drugs focused on cancer care, moving away from a historical footing in the nuclear medicine market focused on diagnostic applications. That is another just confirmatory point of our long-held view that nuclear medicine is going to grow dramatically in prominence in terms of the use of this modality for cancer care on a global basis. Our goal has been, and we've demonstrated this, to really kind of build out our position in the value chain overall. The short answer after that long preamble is yes.
We continue to not only have confidence, but if anything, compared to what our views were two years ago, our confidence is elevated in terms of that long-term growth trend in our medical segment.
Thomas, maybe a similar question on your nuclear power side. You had gotten to, I think, 2%-4% long-term growth in nuclear in that world. You just did 50% year-over-year orders growth in 2023. I know Brian talked about some of that being long lead. But maybe talk about continued the potential for orders momentum, given the market. I think you guys hinted a little bit that it wasn't just 2023 that's going to be good orders, but you tell me.
Okay. I think there are a few important things to look at from a macro standpoint. Firstly, just to reacquaint listeners, today, nuclear power is about 35% of our total business. It is a very important vertical market for us overall. The two things that matter most for the health of the nuclear industry are the pricing of electricity, which in the main is driven by natural gas and coal supply dynamics. But secondly, is government support. Last year, we talked about strength in both areas. What's happened over the course of the last year, perhaps the most striking example of government support, came out of the UN COP climate conference that was held a couple of months ago, where here you had a group of progressive environmentalists under the auspices of the UN focused on global environmental policy.
Essentially, they called for the buildout of a terawatt of new nuclear power, which, putting it into context, would mean something on the order of 700 new utility-scale reactors to be built between now and 2050, which is effectively a near quadrupling of the build rate that we're seeing today. Now, that's a great example. It is indicative. We don't expect that the world will build out a terawatt of new nuclear power. But directionally, again, I think it makes the case that government support is at extraordinary levels overall. This dovetails perfectly with the customer engagement that we are seeing within the nuclear industry, where we have a very long history with all of the major NSSS, or that's the term of art within the nuclear industry, the reactor designers.
The view certainly supports the fact that when we think about our future and we compare that with what we've seen over the past 20 years, we do have a constructive view. We do think that new build activity will be an important component of the organic growth in nuclear. But it's important to note that today, new build activity is 20% of our nuclear revenue. The lion's share of the revenue from the nuclear power segment is coming from the installed base. It's about 3/4 of the total revenue. So even though we get most excited about new builds, the installed base matters the most. And it is just the day in, day out trends that support that installed base that more than anything shape our views on long-term growth. But to be clear, it continues to be constructive.
We have a very positive view on the general health of the installed base and ultimately how that will drive growth in the future.
Thomas, we're going to get spoiled with 50% year-over-year orders. So we shouldn't think that that's continuing, right? But generally, the order environment's still good?
I would say that vertical market conditions are healthy. Customer engagement is very high. We have great visibility in terms of what project flow looks like. And to your point, yeah, I would never call for sustained 50% growth in orders. But we do feel good, again, about the long-term support from an order intake standpoint for the kind of growth numbers that we've talked about.
So you talked about new products, Thomas, earlier in the conversation. And it's a pretty big step up if I'm hearing this right, right? More than 40 new introductions and enhancements in 2024. I think you had 10 new product launches in 2023. So can you talk about what's driving that acceleration in innovation and how they can contribute to growth and margin in 2024? Maybe some of the more promising digital technologies that you have?
Yeah. So if you're to look across the breadth of these new product offerings, there's a remarkable symmetry between our technologies business and the medical business overall and a very high degree of diversification in terms of what's in the mix now. As you might expect, the majority of those new products are upgrades to existing products, which is essentially offering generational upgrades to various types of instrumentation, software solutions, tech-enabled services that we've put out into the marketplace overall. More than anything else, I think this reflects our commitment to innovation, where as the largest pure player in this space of radiation detection and measurement, we spend more money on engineering than the people we compete against. What that means is that our flywheel maybe spins a little bit faster. Our focus is on being the innovation leader in our space. We want to be the disruptor.
We don't want to be disrupted. The biggest thing driving our focus today is what you said, Andy. It's digitization. It is this movement that is reflective of the fact that the industries that we play in historically have been relatively conservative about digital solutions for a variety of good reasons. But today, as an enterprise, we have over 1 million deployed sensors in the field that almost without exception are not connected to the internet. There are not rich software tools that can be used to support the functionality of those instruments. They're essentially dumb devices providing, in many cases, analog signal output. And when you imagine what could be and what will be increasingly demanded on both operating segments, it is a digital world. It is a digital world where our instruments are connected to the internet.
We have a rich array of software tools that are increasingly using AI and driving machine learning capabilities within that space and are providing an augmented reality environment. To give you maybe a more compelling example, Apple recently came out with their new augmented reality headset. People are trying to understand, what does this mean? Where is this going to take us as a society? How does this impact consumer behavior, individual behavior? But also, how does it impact business behavior? Imagine an environment where today, in a nuclear power plant, to use one specific example, one of the key areas of focus is radiation safety. How do we make sure that the workers, the visitors, anybody present in that power plant is safe, that they're not receiving excessive exposure to hazardous radiation?
Today, the way that's done when maintenance operations and routine work is being performed is that a radiation safety officer will essentially lay out on a map to a worker, Here's where you can go. Here's where you can't go. These are areas of high dose where it could be very hazardous if you go in there. Imagine a world where that worker is equipped with an augmented reality headset like Apple or Meta or any of the other devices that are out there, where we are taking our digitized signal inputs from the broad array of instrumentation that we're providing into that power plant and feeding that into a visual representation of radiation fields so that worker can visually see, virtually picketed areas, go areas, no-go areas, and the like. And it's an example of where we can take this digital technology.
There are so many different applications for it. We are so committed to this that we created a digital organization named our inaugural Chief Digital Officer in the last few quarters. We think there's an enormous opportunity for us to continue to drive innovation in this area.
It's very interesting, Thomas. So we talked about this a little bit in the beginning as well. You've had, I would say, a little bit more of a challenging path in margins over the past couple of years. And some of this was out of your control. Maybe some of it is, like inflation, supply chain challenges. What do you see in your own operations or global supply chain that gives you confidence that you can return to margin expansion as you've got in 2024? And specifically, technologies margins have been particularly volatile. I know you said you made some organizational and process changes in France. So do you feel good that the headwind from that business is behind you?
Yeah, I do. The important thing to note is that we've got a long history. I've been running this company since it was created more than 20 years ago. Over that period of time, we're very, very proud of our track record of margin expansion, which has been systematic. It's been in the face of challenging markets that are not as robust as the markets that we are enjoying today. Understand that if you look at our pathway over the last two years, there are probably two major things that have candidly created some margin compression, particularly in our technologies business overall. One was the sheer act of becoming a public company, which had an impact on margins of almost two full points.
And then secondly, it was the generational spike in inflation that we experienced most acutely over the last two years, which had an impact on technologies margins, in large measure because that is a backlog-driven business. And while we have been assertive about pricing action in the marketplace, there's an implicit lag that follows. That has been further exacerbated by supply chain disruptions, which have caused extraordinary kind of non-inflationary spikes in the availability of certain components, et cetera. As you noted, we are taking this obviously extremely seriously. We're very, very focused on it, not only organizationally, but me personally, Brian personally, are all over this. And our view is very constructive. Our view is that we do see many opportunities for self-help.
We know we can continue to drive improvements in supply chain management, procurement in particular, but not just procurement, production scheduling, distributions, the entirety of what we classically think of as operational activities. And secondly, the biggest lever that we've enjoyed historically is simply operating leverage. We are a high-margin business. And by maintaining discipline around SG&A and factory overhead, essentially, margin expansion happens naturally. This will be further augmented by the fact that our medical business, which has higher gross margins, higher EBITDA margins, is growing at a faster rate than our industrial business overall. And all of these things give us confidence in our ability to meet our targeted EBITDA margins of 30 points within the next five years. Brian, anything I missed?
No, I mean, I'd just remind you that we also committed to doing 100 basis points of expansion in 2024. And look, I think the team is very focused on this. And I think it just comes down to execution. And we'll begin proving that in the first quarter here when we release earnings in May.
Yeah, no, that's helpful, guys. I'm going to open it up to the audience in a second for questions. But let me follow up on the margin question for one minute. That is, so 30%, five year target, right? 100 basis points in 2024 means that it's going to be more than 100 basis points on average, approximately, like a little more for the next five years. So how do you do it? You talked about all these things. Is there anything structurally that you're going to do different? Or is it more blocking and tackling, would you say?
It's all blocking and tackling and execution. And yes, we've got 100 basis points in 2024. We hope we can do better than that. But again, as far as I'm concerned, 30 point EBITDA margins is a stake in the ground. And we're extremely committed to getting there.
Would you say the margin potential's stronger in medical or technologies?
I think in terms of the augmentation of margins, it's higher in technologies. The margins today in medical are very high. And we hope that, in particular, through the changes that will derive from the ec² acquisition on our nuclear medicine business, we think that that probably represents some upside margin opportunity, as does the Instadose ® platform and the SunCHECK platform and RTQA. But fundamentally, when we look at technologies and we look at the ability to just improve operational quality, there we see the biggest opportunity from an enterprise standpoint.
Yeah. The other thing, Andy, is the back end of 2023, I mean, we had some one-time items in both Q3 and Q4. We had this French issue, candidly, in both quarters. So I think as we begin to lap those type of things, really, we should have a tailwind behind us.
Helpful. Any questions from the audience? OK, let me dig into the segments a little bit more. We talked a little bit about radiation therapy quality assurance, right? You said it's half your medical sales. It's a big deal. As you kind of alluded to, you're doing very well in Europe. Maybe talk about the runway there still. Then I think on the last earnings call, you mentioned some recovery in the U.S. Tell us what that can mean because, I mean, I think you're forecasting mid-single-digit growth for medical but u t seemed to me maybe you could do better since U.S. has come back and Europe still has some momentum? You guys tell me.
Firstly, as it relates to I won't confine international to just Europe, but say more broadly, international, yeah, we do continue to have a constructive view about the growth potential in that market. We're doing very well in Europe, and w e're doing very well, I should say, in the backyard of our two biggest competitors in the space, both of whom are European-based entities. More broadly speaking, when we look at international, again, reflecting the fact that in this segment in particular, the world today is grossly underserved in terms of the need for more radiation therapy clinics. Most of that growth today is happening in China, in other Asian markets. But we are essentially playing on the coattails of some of our major OEM partnerships. We expect that to continue for a time.
Now, as it relates to the domestic U.S. market, there have been headwinds that are really a continuation of COVID disruptions, COVID-related disruptions on the U.S. health care system, where a majority of American hospitals were losing money, had negative operating margins until the last couple of quarters, where we've begun to see a recovery, which is a positive phenomenon. A countervailing trend, though, is that the reimbursement rates for radiation therapy will have a negative impact on American providers of somewhere in the range of 2%-3% this year. So that's something that we need to overcome. And we anticipate that, for a variety of reasons, we'll be able to do that. But it's important to note that that is maybe a relatively minor but not immaterial headwind that we're seeing overall in that market.
So, we overall just try and take a balanced view on what we think we can do in that space. Again, the aggregate picture, we think, is very constructive.
I guess I'd ask you or Brian, what's embedded then in the mid-single-digit growth for the U.S.? Is it up, down, sideways? Is it the same?
In the U.S.?
Yeah.
Well, and one other comment real quick before I get to that is just remember, our medical business overall, in 2022, we grew 15% organically. Last year, we grew kind of 8%-9%, right? So we're.
You're doing well.
It's almost double-digit if you put them together and divide by two. As we think about the U.S., I think there's definitely some growth in the U.S. It's not a big number. I think more importantly, it's on the software side, actually. That's what is baked in. So if we see incremental hardware growth in the U.S., that would be upside to the business. Most of our guide has software growth leading the way for us in 2024, which should help margins as well.
Thomas, this may be wrong, but I've thought of you in terms of Asia as mostly on the nuclear power side, not really as much on the medical side. So it's interesting to hear your comments. Is that a growth opportunity, a new growth opportunity for you? Or am I missing that from the past?
It's both new. It's a sustaining opportunity for us overall. As an example, the Japanese market in Asia historically has been an extremely important market for us, particularly in RTQA. But China clearly has been growing at a high rate for the reasons I articulated previously.
Got it. And then you mentioned Instadose ® . So let me ask you about that. I think you've been in the process of commercializing Instadose ® , the next generation, for a little while here. And in your 2024 outlook, I think you said the dosimetry is expected to be the slowest growing portion of medical, so low single-digit+ growth. So given the next-generation product rollout, why shouldn't we see a little bit better growth?
Yeah, the answer to that is just the nature of the occupational dosimetry market. This is a market that for decades has grown essentially at GDP growth rates. It is a market that historically has been relatively saturated. I hate to characterize it as a prisoner's dilemma market. It's not far from that overall. The difference about Instadose ® , as we've noted before, and for those of you who are not familiar with the technology, essentially, this is a technology that digitizes what is today a very analog process that requires the swapping of badges. It's kind of like analog film that had to be developed and read and then replaced. Instadose ® is essentially technology that allows the customer to not have to exchange badges, provide a more accurate, more immediate dose readout capability, which ultimately improves user behavior.
The opportunities for us with the Instadose ® Technology are not only to continue to grow our overall market share in the business but also to replace what is today a majority of our users today. And we have about a million people that we actively monitor for radiation exposure. Majority of those people today are on an analog device. And we have the opportunity at our discretion to transfer them onto an Instadose-type device, which is a margin accretive move for us, is simply kind of a CapEx versus margin trade-off. And it's a fairly favorable equation. So we expect over a long period of time, as we ramp up the supply chain for this third generation of technology, that there will be more of that.
But the third element to the strategy is that we think the technology platform that we've developed here is so compelling that we should make it available to the world. We should make it available to everybody that today is a competing service provider. And we think it is a superior platform. And that is central to our thinking overall. But we've been very clear that this is a market that moves slowly. We don't expect this to happen in two or three years. We expect it to be a campaign that will span a decade. But we're very, very focused on it. We feel good about where we are in the commercialization and formal release of Instadose ® 3. We feel very, very good about the customer beta testing feedback that we've received on it. And we're very excited to continue to tell this story.
Awesome. And then within technologies, your defense labs and research, as well as industrial businesses, I don't think they get as much focus as nuclear power. But order growth has been very strong in those areas in 2023. So could you characterize the investment outlook for those businesses?
Yeah, I think it's constructive. So firstly, on the defense side, this is an area where, candidly, we talked about 2022 and lessons learned. This is an area where, candidly, we got burned. We are a leader in certain types of militarized or battlefield-type radiation detectors and sensors that are used to really kind of safeguard the troops, the war fighters that are out there. We're also a leader in civil defense applications overall. And in 2022, our view was that the level of engagement that we had from both defense agencies, and we equip today a vast majority of the NATO armies, so not only that constituency but also the civil defense constituencies that were driving the focus on security, broadly speaking, in Europe, we translated that into a likelihood and expectation that we would see that engagement convert into orders in 2022. And it didn't happen.
That led to, again, some of the issues that we had in 2022. What we saw last year, though, and I think we noted this in our earnings release, is that in addition to kind of normal NATO-related and U.S. Department of Defense-related activity, we saw what we would characterize as nontraditional orders in military and in civil defense of more than $20 million in the European region. That is generally reflective of a view that we continue to hold, that the focus on civil defense is not diminishing. The focus on military spending is not diminishing. In fact, when we look at defense trends in Europe, the opposite is happening. The NATO member states are definitely stepping up their game. We are seeing fatter budgetary allocations to military spending overall, some of which ultimately will find its way to us.
So we continue to have a constructive view on that market. On the DOE, or think more broadly, the laboratory space, and firstly, I would note that about 60% of our life sciences-related activity or lab-related activity is DOE-funded. This is focused on environmental remediation in big government waste sites like Savannah River and Hanford and others that are probably well known to the audience. This, again, is an area where we have seen significant government support, bipartisan support for continued budgetary support in this arena, all of which gives us a constructive view on this segment as well.
Got it. So I've got two more questions in two minutes. I'm going to ask them at the same time. Brian, one is for you on cash flow.
Sure.
40% cash conversion on EBITDA for 2024 is the guide. I think 50% is the ultimate goal. Sort of how do you get there? You've mentioned inventory. Is that the biggest sort of change that you can make? And how do you sort of assess the probability of good progress as you go over the next couple of years? And then the question for you is around, it's a question we ask for all the companies. What are the top two or three innovations and structural changes affecting your company over the next five years?
So real quick, I mean, good news is 2024, we're projecting to look like 2023, right? We did about 40% in 2023. We're projecting to do 40% in 2024. As you take about 50%, we continue to aggressively attack the working capital piece, mainly inventory. Look, in 2022, inventory was a pretty big use of cash. In 2023, it was the exact opposite. There's more, plenty of room here for us on inventory. I mean, we only turn our inventory about 2.5x , right? So just getting up to four, which four years ago wouldn't even have been kind of the average for the peer group, that's another $40-$50 million of cash we can release off the balance sheet. That plus scale, right, just moving into some of our interest payments, et cetera, will help.
I think the other thing we talked about on the earnings call that we're starting to look at is our cash taxes and what we can do there.
So Andy, on the key takeaways or leave-behinds, I think there are probably four that I would cite. One is the super trends that are impacting our markets, firstly, in the extraordinary dynamics in nuclear power. Secondly, the similar dynamics in cancer care through both external beam therapy and this revolution in theranostics that's driving the nuclear medicine space. Secondly, I would tell you, it's digitization, the fact that, again, we have such a vast opportunity through our deployed sensor base to improve the tools, the value-added solutions that we're offering to our vast clientele base. Thirdly, it's responsible capital allocation. We're very, very proud of the fact that we reduced leverage in 2023 from 4.4x- 3.0x over the course of the year. And we did that while continuing to be active in M&A with the ec² deal.
We expect to continue to be good stewards of capital, not just in the M&A arena but more broadly speaking, across the enterprise. Then finally, it's the opportunity for continued self-help, that we are good operators. That is our history. We see significant opportunities, as we've noted, to continue to improve the caliber, the quality of our operations, to drive improved margins, better free cash flow, et cetera. That's what I'd say.
Awesome. Well, Tom, Brian, thank you very much for joining us.
Andy, thank you.