Good morning and welcome to the Share Series Monday Management Updates. My name is Nigel Coe. I'm a senior analyst at Wolfe Research covering the U.S. industrial sector, and it's my pleasure of speaking with the Mirion Technologies team today, Chairman and CEO Tom Logan of Mirion. Just as a reminder before we launch into the discussion with Tom, please use the button at the top of the video player to submit any questions that you have, and we'll try and get through as many questions as we can in the next 30 minutes or so. So, Tom, thanks for, thanks for the time here. To serve, maybe as an introduction, just to set the table for the folks on the in the audience here, for those that are new to the Mirion story, maybe just give us a quick walkthrough of the business and your two segments.
I'm happy to do so, and it's a pleasure to be with you today. So the best way to describe Mirion, the way that we commonly describe ourselves, is that we are the global leader in ionizing radiation detection, measurement, and analysis. And that sounds very esoteric and maybe a bit dry, but let me parse that statement. Firstly, when we talk about the market that we play in, today our currently served market is about $4 billion. Our revenue, as announced a couple of weeks ago, for 2023, just over $800 million, with about 9% quarter-over-quarter growth. That market lies within a total addressable market that in our estimation is closer to $18 billion.
When we talk specifically about ionizing radiation, we are talking about any type of radiation that can knock an electron out of orbit or cause tissue damage or DNA damage in human beings, living beings. Typically we're thinking about alpha, beta, gamma, neutron, X-ray, and various radioisotopes that are common within those families. Now, when we say we are the leader, I think we can back that up in a number of ways. Firstly, we are the global number one in 15 of our 18 product categories, spanning our two reporting divisions. Secondly, by virtue of scale, we compete against great companies. We compete against large industrial technology companies like Fortive, Thermo Fisher, and AMETEK. And on a like-for-like basis, we are many multiples larger than they are, and that generates a number of important benefits downstream.
Firstly, given the dynamics and the benefits of scale, it means that we possess the greatest network. And as with any technology business, the value of a network is a combination of points of presence and content. And given our scale, given our global reach, we have the biggest network. We have the most points of presence, overall. Secondly, from an innovation standpoint, we spend far more money on engineering than our competitors do. And given the fact that technology within our space tends to have a very high degree of fungibility across vertical market boundaries, in other words, something that we develop for a satellite application may be very germane, in a nuclear power segment or a cancer care segment.
As a consequence, this overall R&D spend tends to drive a very high cadence of innovation, and we pride ourselves on being the disruptor, on being the innovator in our space, overall. The business today is organized into two primary operating segments. The larger of the two is our technology segment, which is really dominated by commercial nuclear power. But beyond nuclear power, within the technology segment, we have a strong presence in defense, both civil defense and, in military applications. So in civil defense, we're extremely involved in homeland security applications the world over involving harmful or hazardous radiation. From a military standpoint, we are the NATO de facto standard for various types of battlefield green gear. We're also very involved in the lab space, principally through DOE sites and their analogs internationally.
And we're also very involved in big science, where we have been actively involved in many of the most important interplanetary space probes spanning the last couple of decades. Our instruments discovered water on Mars. We've launched in the last 12th months on the NASA Artemis program, the ESA Jupiter mission, most recently the NASA Psyche mission, which is basically sending some of our instruments to assess an asteroid orbiting between Mars and Jupiter. The point of all of this is that the work that we do in these cutting-edge applications, again, is relevant to every other part of the business and creates kind of a flywheel effect, as I noted. On the medical side, our business is really dominated by cancer care.
We're very involved as a global leader in quality assurance solutions in the form of capital equipment, software, and technology-enabled services to the External Beam Therapy market. We're very involved in the Nuclear Medicine market. And finally, we are a leader in the Occupational Dosimetry market. So in total, that describes the company, and happy to drill down on any of those.
Yep, that's great. That's a great table set up there. So thinking about, you know, Mirion, going from Mirion as the company to Mirion as an investment, what would you say are the key highlights you'd wanna, you know, kind of explain to the audience considering Mirion as an investment? What are the key highlights? What's going to drive growth, going forward?
I think there are a number of important things, Nigel. Firstly, it's the history of the company. I'm the founding CEO of the business. I have been enrolled for 20 years, and over that period of time, we have generated above industry, above market organic growth and total growth, and have a proud history of driving margin expansion for the business. And this has been in markets that, in the main over the last 20 years have been a little bit choppy, a little bit difficult. Today we sit here, facing very favorable markets, and I think there are two important super trends for potential investors to really kind of engage with and wrap their minds around. One is the recent, very robust excitement about commercial nuclear power.
There are many, many factors supporting that, including overall energy pricing and political support, but for a variety of reasons, the world has embraced nuclear power to a degree that we haven't seen probably since the 1970s or the 1980s. And we're seeing this in the form of government subsidies, government support for various types of permitting, for new builds, for life extensions, for operating capacity. But perhaps most strikingly, at the recent UN COP28 climate conference, there was a policy statement calling for essentially a doubling of net nuclear capacity between now and 2050.
And if you really parse what that means, breaking down the current installed base of, roughly, 400 gigawatts, the decommissioning profile, and effectively what it would take to get up to 800 gigawatts of net capacity, essentially that requires building out about 1 terawatt of new nuclear power in not just a, you know, 26-year period, but really about a 20-year period from 2030 to 2050, because everything that's going to happen between now and the end of this decade is essentially cooked. It's in process. And that would imply something on the order of about 35 new utility-scale reactors per year, which is an unrealistically large target. But I think it makes the point that here you have a group of environmentalists, traditionally very progressive people, that recognize the importance of nuclear power the world over.
This is a very important theme. I think it has legs, and I think we're going to see accelerating momentum in this space, certainly over any rational planning horizon. The second important super trend is on the medical side, and that's in cancer care. Firstly, if you look at the fundamentals, the need for cancer care globally is increasing. If you look firstly at the developed West, think of the G20 footprint, you have an aging population demographic, and as people age, they're more likely to get cancer. And when they do, they're highly, highly likely to be prescribed some form of radiation treatment. And in the United States, a newly diagnosed cancer patient has about a 65% probability of being prescribed radiation therapy as a component of their overall treatment protocol.
More broadly, if you look globally and we're to apply Western standards of care to the entire globe, then what you would find is that the world today has about half of the radiation therapy clinics that it needs. And this is a very important theme, in particular driving international growth, not only for us, but for all players in this market overall, as the world seeks to equilibrate the quality of care, and we see tremendous growth in emerging markets. The other important theme in cancer care is that there's a revolution taking place in the nuclear medicine space. Historically, nuclear medicine has largely been a diagnostic space, if you will.
But with the advent of so-called theranostics, these are drugs that are targeted toward essentially delivering a nuclear or a radioactive package directly to a cancer cell, a cancer tumor structure, by using known ligands or binding agents that will essentially take that packet of radioactivity into the cancer cell, destroy the DNA, and, you know, create a tremendous new therapeutic tool in the overall toolkit for cancer care. This is a market that, again, as you look at the fundamentals that I cited previously, aging population demographic, need for broader care globally, is also going to add to the market. And it's a space that we participate in actively. So I think those are the three things that I would really think about as a potentially new investor in Mirion.
Okay, that's great. Thanks, Tom. I think it'd be good to maybe double-click a bit more onto nuclear because I've covered this space for, you know, close to 20s years, and, I've never seen so much excitement around nuclear, be it utility scale, be it SMR. We've got some power plants that have been decommissioned. So maybe just talk about how Mirion, you know, earns revenues from nuclear. Talk about how you approach the market, the customers. And maybe just talk about SMR versus utility. Do you care? I mean, are both opportunities equally good for Mirion?
Yeah, so today nuclear power represents about 37% of our total revenue. If you were to subdivide that piece of the pie into new build activity, installed base support, and decommissioning, what you'd find is that new build activity, currently represents about, 20% of our total nuclear business. The installed base represents about 75%. The balance is decommissioning. And obviously, those are dynamic numbers that move around a fair amount. But it really brings home the point that the most important, subsegment within that nuclear market for us, and candidly for anyone, is supporting the installed base. Today we have a foothold in more than 90% of the global reactor base, and there are about 450 operating commercial nuclear power reactors, across the globe today. And importantly, once we gain a position of incumbency, we are highly, highly unlikely to be displaced.
So importantly, as the health of that installed base continues to improve, as we see, again, structurally, better electrical pricing across the globe, better regulatory support, it's encouraging the operators of existing power plants to run them at a higher level of capacity utilization, effectively run them hotter, to life-extend the reactors. So in the United States, there are power stations, nuclear power stations, that are preparing for a life extension to 80 years of operation. And before all is said and done, we think there will be power plants that operate for a century. So you have that. And then finally, you have capacity uprates or augmentation overall. All of these things are favorable for the industry in general, certainly favorable for us. On the new build front, most of the activity today is focused on utility-scale nuclear power.
We are seeing an acceleration in activity here. We announced on our earnings call a couple of weeks ago that we had an extraordinary level of order intake for 2023, closed the year at more than $850 million of backlog. An important part of that was growth in the new build space. We continue to be very engaged as we work with all of the major reactor designers and reactor sponsors the world over and see this pipeline fattening and becoming more robust each and every year within our planning horizon. Finally, on decommissioning, this is an area where there are some power plants that are simply not going to be life extended. A good example would be the so-called Magnox reactors in your home country, the U.K., where that's dated technology.
They will not be life extended. So there is, we're really at kind of the leading edge of decommissioning activity, and that's another area where we participate richly, and we anticipate growth. Now, the emerging trend that people are very excited about that you noted is the small modular reactor space. And generally, we think of these as reactors that are less than 300 megawatts, you know, whereas a typical utility-scale reactor today is about 1-1.4 gigawatts in terms of total generating capacity. The small modular reactor market is intended to really complement utility-scale nuclear, not to replace it. In the main, these promoters of these projects are focused on decommissioning coal generation sites where you could not put in a utility-scale reactor because the grid infrastructure simply won't support it.
You don't have the physical landmass to support the required exclusionary zone, but you can drop in an array of small modular reactors. Beyond that, you have data center applications, co-generation applications, desalinization, and a variety of other potential applications for small modular reactors. This is a market where today there are nearly 100 different discrete initiatives underway. We think the market will concentrate over the next decade. There will be a handful of winners. But to be clear, last year we booked, we booked backlog on five different SMR projects, about $10 million, associated, in the main on first-of-kind, kind of prototype applications. But we expect this market to continue to grow.
We don't expect it to be a significant factor for another five years or so in terms of our overall revenue mix, but it definitely will add further, you know, interest and excitement to this overall nuclear power market.
That's great. Thanks, Tom. That's great color. And then how would you contrast the opportunity sets for growth in your medical segment? You obviously highlight nuclear medicine as some of the attractive drivers there. But how do you think about the way that market's evolving, and how Mirion's positioned there?
Yeah, so, in the nuclear medicine segment, just to start on that, the again, on the base, on the heels of this theranostic movement, we expect this market to grow faster than any market that we play in today. You know, of note, GE had their earnings call 2 or 3 weeks ago, and one of the things they highlighted was the acquisition of a small software company called MIM, M-I-M, in the nuclear power space. As part of their remarks, they noted that they expect the nuclear medicine market to grow by 4.5 times, so 4.5 times market growth, over the next decade. The first blockbuster drugs in this space, most notably Pluvicto, which is a Novartis PSMA drug, is over $1 billion in revenue. We see a very, very rich nuclear medicine pipeline.
And so this market is real. It's going to grow at an incredible rate. And, you know, our focus is on how do we continue to broaden our footing in the overall value chain here and make sure that our boat floats with the tide overall. But beyond that, if you look at the, you know, the remainder of our medical business, again, about half of it is External Beam Therapy driven. And, this is a market that has consistently grown, for us at a double-digit rate, again, on the heels of aging population demographics, development of emerging market applications for radiation therapy clinics, but also candidly by technological evolution.
And our focus here has been on really broadening our position in the form of workflow software where we are a market leader in applications that support that and really improving our overall ecosystem of software and capital solutions. The final piece of the puzzle is about a quarter of our business is tied to something called Occupational Dosimetry, which is a fancy word for simply measuring cumulative radiation incurred by radiation workers. And we do this as a service for their employers. This is a business that, much like analog film, today for most of the world is analog in nature. People wear passive badges for a period of time that will absorb radiation and can be algorithmically interpreted. At the end of that wear period, they'll send them back and receive a replacement device. We are the disruptor in this market.
About a decade ago, or more than a decade ago, we launched the first digital, passive dosimetry or occupational dosimeter. We are this year coming out with our third generation of the technology, and it's phenomenal technology overall. So this is a market where, it's a slow grower in general, but we're getting ahead of it by being the technological disruptor, by being the leader in digitizing this market overall.
Okay, that's great. So maybe just shifting gears here and thinking about, you've talked about the importance of digitization, and you know, maybe just talk about you know, your digital strategy, you know, how that's sort of evolving your business model, you know, which areas of your business are most advanced and you know, where is there more work to be done?
I'll start with the medical segment where we're the most advanced. Here again, we are the market leader in terms of workflow software in our radiation therapy space. In the nuclear medicine space, we recently acquired the leading workflow software provider within that space overall that basically supports value chain participants from isotope production through patient administration. And then finally, I noted what we're doing in terms of digitizing the occupational dosimetry market. So our positioning from a digital evolution standpoint on the medical side I think is very clear. What is less clear, I think, to many market participants is what we're doing on the technology side. And here the fundamental premise is that we literally have over 1 million deployed sensors across the customer constituencies that we support in nuclear power, in defense, in life sciences, in other industrial applications.
There's a massive opportunity for us to internet-enable those sensors, to create supporting software that allows us to essentially not only provide value-added tools, but to virtualize the application of those tools. And a good example would be in a nuclear power plant where we have dozens of different types of sensors deployed throughout a nuclear power plant, measuring gas, liquids, particulate matter, air on personnel, static monitors, et cetera. Again, hundreds. I said dozens. I should say hundreds of discrete measurement points within a nuclear power plant. There is a clear and compelling opportunity for us to again internet-enable those using technology that we've launched. We've also launched a very innovative positional tool that even in a highly attenuated, highly signal-attenuated environment like a nuclear power plant allows us to provide positional information and instrumentation telemetry from various types of instruments.
And you can imagine, you know, maybe at its simplest, maybe at its grandest, taking some of the new VR headsets, the new Apple headset, the new Meta headset, and incorporating into those a data feed that would give an operator who today has to look at maps, has to physically, you know, pick at no-go areas within a power plant. There's a great deal of uncertainty and planning, and it's a fairly laborious effort overall. You can imagine a world where very quickly we can integrate data feeds into visual representations of kind of an augmented reality map of the radiation dose environment, virtually picketed areas, et cetera, within a power plant. There's so many places we can go here. It's an area where we're spending a huge amount of time, as you might imagine.
But there's a very rich opportunity to both add to our growth and candidly to change the nature of our business model, to evolve toward more, you know, subscription-based recurring revenue, as many have done in industrial tech in general.
Right. Okay, let's switch to cap allocation. And I think since you came to the market, you've done a tremendous job of lowering balance sheet leverage. I think you're now close to just at three times or maybe a bit below three times net debt EBITDA. Maybe just talk about, you know, how your cap allocation priorities are evolving as leverage comes down. Maybe talk about some of the recent acquisitions, the opportunities you see for acquisitions, and perhaps more importantly, how you're balancing future cap allocation versus future debt reduction going forward.
Sure. Yeah, so we became a public company via the SPAC route. And as a, you know, kind of a tail effect of that, came out with a higher level of leverage than we expected to. So we became public in October of 2021. We came out at about 4.5x leverage. We began 2023 at about 4.4x leverage. And as you noted, we ended the year at 3.0x. So we reduced leverage by 1.4 turns, something that we're extremely proud of. And, you know, it reflects strong cash flow generation and I think smart, balance sheet management, on behalf of the company.
This is particularly important now when, if you look at the Russell 2000 stocks in particular, which tend to carry a higher degree of leverage than the S&P 500, the larger cap stocks overall, you know, the Russell is underperformed largely because of concerns about leverage and variable rate debt, et cetera. This is why it's been so important for us to de-leverage. We noted in our earnings call, 2 weeks ago that, absent any M&A activity this year, we would expect to de-leverage below 2.5x by the end of this year. So, you know, it's, firstly, it's important to note the company recognizes that, you know, while we're in an environment of higher interest rates and a bit of a risk-off perspective as it relates to small and mid-cap investments, again, it's critically important that we manage leverage judiciously.
It's also important to note that historically, we've been a very acquisitive company. We've done 16 acquisitions since 2016. We think we're a very good acquirer. We have a very robust pipeline. We've done a deal in each year since we've been a public company in 2021, 2022, 2023, all of which goes to show that we can continue to be active in M&A in a very measured fashion, a very highly selective fashion, while we de-leverage the balance sheet. And this will continue to be our focus as just being, again, good stewards of capital, but not abandoning our M&A pipeline, you know, while we're de-leveraging the business overall.
From my experience, you know, a two-handle on leverage is important. So, I think that's the right strategy. So, Tom, again, to the close to the bottom of the hour here. So, perhaps, I don't think there's any questions from the audience here. I think I guess they must be pretty happy with my questions. But to maybe close it out, I think a good place to finish off here would be, you know, what is your, you know, as the founding CEO of Mirion, what is your future? What is your perspective? What is your vision for Mirion in the future? And you know, again, maybe just recap on some of the key themes and focus areas that, you know, investors should be excited about.
Sure. So, you know, starting again with the markets, we do expect to benefit tremendously from the two supertrends that I noted. Again, the accelerating growth of nuclear power and the revolution in cancer care, most pointedly, in nuclear medicine. We will continue to evolve our capabilities, clearly, driving toward a higher degree of digitization and value-added solutions for our customers that will help us, I think, grow at a rate that historically has been better than the market, in our view, would be that as we continue to evolve our capabilities so we can sustain that over time. Importantly, we expect to do this by continuing our journey of margin expansion and being a strong cash flow generator.
From a margin expansion standpoint, you know, note that, prior to becoming public, over the course of our history, we drove more than a 1,200 basis point expansion of EBITDA margins. And as a public company, taking on public company costs and also because of the there's a bit of a lag between price action and price realization because of the significance of our backlog. And so we've seen a bit of a margin compression. We demonstrated expanding margins in Q4. We've clearly guided in 2024 that we're going to see meaningful margin expansion in our business. But it's important to note that I also have been very, very clear that our goal is to drive toward 30-point EBITDA margins over the next five years. And that's something that we consider to be very achievable, something within our grasps.
And so the bottom line is that with growing markets, with a commanding share position, across those markets, as the innovation leader, we expect that we will participate richly from a top-line growth standpoint and that we will continue our history of being good operators and driving margin expansion overall. And I think that tells you everything you need to know about our story and what the potential is here.
Right. Well, Tom, that was a great discussion. Thank you very much. Once again, Tom Logan, Chairman and CEO of Mirion Technologies. For those in the audience, thanks again for watching the share series. Next up at 10:00 A.M. is Rubicon. Thank you very much.