Good morning, everybody. I'm Brian Gesuale. Welcome to Wednesday of our IIC. It's been a great week. Really happy to have Mirion here to take us through their presentation. We have the company's Chairman and Chief Executive Officer, Thomas Logan, as well as the CFO, Brian Schopfer, here to take us through the story. They're going to take us through a brief presentation, and then there'll be time for Q&A. So load your questions up and don't be shy. This is a story I got to know a couple of years ago, and it's a really exciting name for me. So I'll turn it over to you, Thomas.
Great. Thank you. Good morning, everyone. It's a delight to be here, and it's a greater pleasure to have a full room like this. So let me begin by kind of grounding you in who we are and what we do. Many of you are familiar with the name, familiar with the story, but for those who aren't, I'll spend a couple of minutes just kind of talking about how you should think about our company, and then hopefully we've got some great Q&A after that. We are the world's leading player in the detection, measurement, and analysis of ionizing radiation, which sounds stunningly technical and very dry, but it's actually an incredibly exciting field right now. And in that regard, we define ourselves as being a category of one. This is all that we do, and we're better at this than anybody else in the world.
If you look at our competitive footing today, we are the global leader in 17 of 19 product categories. We are far and away the largest player in this space by any indicia of financial performance overall. But importantly, we're also the cutting-edge firm in terms of the most demanding applications. One of the things that we're very proud of is the work that we do in the big science arena, where our instruments have discovered eight of the last elements on the periodic table. We have been involved in the majority of interplanetary space probes. Our instrumentation confirmed the presence of water on Mars, and we continue to be very active in that domain. In the last 18 months or so, we've launched on the NASA Artemis mission. We've launched on the European Space Agency Jupiter mission, or JUICE mission.
We've launched on the NASA Psyche mission, which is intercepting an asteroid called Psyche, and the work that we do there, again, is very innovative, very cutting-edge in terms of the instrumentation that we're launching. We're also deeply, deeply involved in the big kind of global physics community, in the quest in particular for the detection and measurement of dark matter, and the importance of all of this is that's cool and it's exciting, incredibly inspiring to our team internally, but the relevance here is that the work that we do in any endeavor, particularly as it relates to detector design, material science, signal chain management, everything that goes into that has coherence across the breadth of our entire business model, across our nuclear and safety segment, into our medical segment, and different vertical markets like nuclear power, defense, life sciences, cancer care, and a variety of others.
The importance of all of that is that this gives us the ability to continue to scale and grow in a very large total addressable market that's upwards of $18 billion-$20 billion without ever being in a mode of having to conglomerate. Not only are we a bit of a unicorn in terms of our pure play focus on ionizing radiation, but it gives us incredible headroom to continue to scale and grow our markets. Now, importantly, the majority of the solutions that we sell, and I say solutions because we're talking about combinations increasingly of software, capital equipment, and highly technology-enabled services overall. In general, these solutions are sold into highly regulated industries where the cost of failure is high, switching costs are high, and oftentimes they're compulsory, meaning that our customers have to buy these solutions, whether from Mirion or from one of our competitors.
And the importance of all of that is that it leads to a dynamic where our competitive mode is deep, it's broad, the competitive dynamic is highly concentrated, and this in turn leads to a situation where more than 70% of our revenue is repeat or recurring in nature. So very interesting dynamic overall. The final thing I will tell you in terms of key takeaways about our business is that we are highly levered right now to two generational trends, arguably super trends that will be long and toothed and will be very robust. One is commercial nuclear power, and I would guess that everybody in this room is fully aware of the hyperscaler activities as it relates to securing baseload carbon-free electrical generating capacity through deals with utility-scale nuclear power providers, increasingly the emerging small modular reactor players.
But to be clear, it goes well beyond that in terms of the dynamics supporting the global electrical energy markets and how we believe that will play out over time. Importantly here, our total revenue exposure to nuclear power is almost 40% of our total revenue. And when compared against other plays in the nuclear space and many companies that are seen almost as pure plays, that's considerably higher. And so our view, our assertion is that we are one of the better ways of playing this renaissance in nuclear power, certainly from an instrumentation standpoint that spans the entire century-long cradle-to-grave lifespan of a nuclear power plant.
The other important super trend that we're leveraged to is cancer care, cancer care in the form of both external beam therapy and also increasingly in nuclear medicine, where there is a revolution underway in the use of therapeutic radioisotopes in cancer care, oftentimes referred to as the theranostic market or the radioligand therapy market. We have a very significant position here overall in an aggregate that represents more than a quarter of our revenues. And we'll drill down into these dynamics a little bit more, I'm sure, in the Q&A, but importantly, these are the things that are really creating additional momentum in our organic growth dynamics and important things to understand as you contemplate potentially investing in our stock. We have two operating groups, and I'm going to walk you through each of those and we'll go into Q&A.
Firstly, our largest operating group is our nuclear and safety group. Here is where we compete in the nuclear power space, the laboratory and research space, and defense and diversified industrials overall. Nuclear power, far and away the biggest vertical dynamic exposure here. And importantly, if you look at some of the key metrics relating to our nuclear power business, we have a foothold in better than 95% of the roughly 450 operating commercial nuclear power reactors globally. As I noted before, we are a category leader, specifically in the nuclear power space. We're a category leader in so-called health physics applications, reactor instrumentation and control, and as I noted, increasingly a high degree of software exposure. And importantly, again, just to note again, we participate cradle to grave in the entire lifespan of nuclear power.
We would generally characterize that today, again, as being about 100 years, 10 years of construction and planning, 80 years of operation, 10 years of decommissioning on the back end. I would note that in a number of cases, that lifespan will go longer. We will see commercial nuclear power reactors built in the 1980s that will operate for 100 years, and importantly, the recurring and replacement revenue dynamics for us tend to be visible, predictable, and highly defensible overall. Secondly, in the laboratory and research space, we are the leader in advanced high-resolution spectroscopic laboratory instruments. I noted some of our key accomplishments in the big science arena, and again, importantly, how that drives technological leverage across all vertical markets for the company, remembering that what we develop anywhere in our network, broadly speaking, has relevance everywhere, and then finally, there's strong secondary exposure here to commercial nuclear power.
So we think in particular about DOE sites associated with highly enriched uranium production. There are international analogs where we have a very strong footprint, a very long-standing presence. Thirdly, we have defense and diversified. Here again, we are a leader. We provide comprehensive solutions across the defense and security ecosystem, both in terms of civil defense, think in terms of border security, shipping portals, event security, and the like, but also in terms of military applications where we are a global leader in the green gear used for the detection, measurement, and analysis of ionizing radiation. In that regard, currently, we serve as the de facto standard for 23 of the NATO militaries for this type of radiation detection green gear, have a very, very strong presence within the U.S. military, specifically in the Army and the Navy in an aggregate. This represents about 20% of segment revenues.
Finally, last panel is our medical business. Here, again, a combination of software and hardware-related solutions. The biggest segment overall is in radiation therapy. This is slightly more than half of our total medical business. And this, again, relates to external beam therapy. So today in the developed West, certainly in this country, a newly diagnosed cancer patient has better than 50% odds of being prescribed external beam therapy as a component of their overall treatment plan. These are typically delivered by machines called linear accelerators or LINACs, where the global leader is Siemens Healthineers, the number two is a firm called Elekta. But the demand drivers here are a combination of aging population demographics in the West. As populations age, as people age, they're more likely to get cancer.
Secondly, if we were to apply Western standards of care to the global market, today the world only has about half of the radiation therapy clinics that it really needs. So this drives the business overall. What we do here is that we are the leading provider of independent quality assurance solutions, a combination of capital equipment that's used to calibrate Linacs and other types of delivery mechanisms to make sure that the beam energy and the beam geometry is on spec and as prescribed in the overall patient treatment plan. We also provide software that supports workflow across the clinical scope of activities and that in combination with a very strong service business overall.
Today we have a presence, if you look at the American market, in 100% of the top 100 cancer centers in this country, and we've experienced and expect to continue to experience very strong international growth. Secondly, we have nuclear medicine. I noted here that, again, there's a revolution taking place in the form of theranostics drugs. That's very early days in terms of how this is evolving. The market really has begun to gain scale and momentum within the last five years, arguably within the last three years. Today there are two blockbuster drugs in this space, PLUVICTO, which is a late-stage prostate cancer drug sold by Novartis, and PYLARIFY, which is a diagnostic prostate cancer agent sold by Lantheus overall. Today, if you look at the FDA approval pipeline for therapeutic radiopharmaceuticals, there are over 100 drugs, both therapeutic and diagnostic, in this space in the pipeline.
The general view in this space is that this is going to drive a revolution in cancer care because the essence of what's happening here is that a therapeutic, meaning a strong dose, short half-life radioisotope is being delivered intracellularly into cancer cells where it destroys the DNA of those cancer cells from within. It's an area of great promise, and here we've got a great position. We are the leading player globally in dose calibration instruments, which are critical in radiopharmacies and CDMOs and other clinical applications for radiopharmaceuticals. We provide an array of additional clinical instrumentation, including thyroid uptake systems, xenon gas-based respiratory analysis systems. We're also involved on the front end in compounding equipment, syringe shields, transport mechanisms, and the like.
Even more importantly, we have the dominant workflow software platform in the American industry where uniquely we connect the isotope producers, the drug makers, the CDMOs or contract manufacturers, the radiopharmacies, the clinicians, ultimately the patients. We control the data streams that operate within these different constituencies and see an enormous opportunity to continue to evolve and expand, augment the clinical relevance, the clinical utility of what we're offering with the ultimate goal of being able to yield a greater degree of insight from the data that flows within our network overall. Finally, we have dosimetry services. This is a smaller market business overall where we're providing a service to the employers of radiation workers. Those employers are required by law, by regulation in every civilized market in the world to track the cumulative radiation exposure incurred by their employees.
We do that for them on an outsource basis where we provide the technology platform, which is a combination of badges that can either be analog or digital in form factor with the software, the analytics that ultimately drive the overall reporting cycle here. Importantly, this is one of the few markets where we're not the market leader. We're number two to Fortive, which owns a business called Landauer. But equally importantly, given the capabilities of our development, our technological footprint, the leverage that I've now referred to several times, we have launched the leading digital platform, technology platform in this space. We are now in the third iteration of technology, the third major release of that. We're incredibly excited about what that augurs in terms of market growth overall.
So that's kind of a high-level overview as to who we are, what we do, and the space that we occupy. At this point, Brian Schopfer, our CFO, and I would love to entertain questions.
Question, just please raise your hand. Perhaps I'll start. Could you maybe talk about some of the trends you're seeing regionally in the nuclear space in terms of reactors activity, how your pipeline looks overall?
Yeah, the dynamic here is really fascinating. One of the perils, and I understand that I've been in role now. I'm the founding CEO of Mirion. This is my 23rd year running the business. And we've seen a lot over that period of time. And one of the generalized phenomena that I see is that in the American market, people tend to think the nuclear reactors are elsewhere, that there are no growth opportunities in the American market, et cetera. Generally, I will ask somebody new, if you're in the invariable cocktail party, the what do you do discussion. And if we get past my first answer, which is I work for a company that detects, measures, and analyzes ionizing radiation, if they don't turn and walk away, then we'll start talking about what that actually means.
One of the questions I'll commonly ask people is there are about 450 nuclear reactors in the world today. How many of those do you think are in the U.S.? And generally, the answer that I will receive, and these are from the bi-coastal cognitive elite, is something in the range of 30 to 40. And the answer is that at its peak, there were over 100 today. They're in the low 90s, 93 operating nuclear reactors in the U.S. So in the first instance, people don't realize how prevalent nuclear power is, the fact that it today provides about 20% of American power generation. But secondly, they also take the view that, well, we're not building nuclear power plants here anymore, so the growth internationally must be pretty tepid. And the reality is today there are more than 50 reactors under construction globally.
New build activity is picking up both in terms of utility scale and small modular reactors, and today the focal point of that activity is in Asia, where China is the most active market, but activity in Korea, activity in India, a lot of activity in Europe, both Western and Central Europe, increasing activity in terms of new build activity in North Africa and other markets, but what's of critical importance to us is the fact that if you look at where our revenue comes from in the nuclear power space, about 80% of it comes from the installed base, meaning that the installed base is the most important dynamic for nuclear power, and again, footprint in 95% or more of the roughly 450 reactors globally.
And what that means is that it gives us visibility into the revenue cycles, the replacement cycles, the upgrade cycles for all of the instrumentation that we provide. When spread against such a large base, a large pool of client power stations, again, it creates a very robust kind of all-weather dynamic in that. And this is what's allowed us to grow systematically throughout our history at a time when the nuclear industry was considerably weaker than it is today. But what's interesting is that given the fact that today almost every operator of a nuclear power plant globally is making money and making very good money in contrast with a decade ago when almost no one was, what that means is that firstly, there's a bit of a catch-up dynamic as it relates to capital spending.
Secondly, everybody is focused on maximizing capacity utilization, or the term of art in the industry is capacity factors. Thirdly, people are looking at life extension. Fourthly, they're looking at uprating activity. And this is the most fundamental driver of the spirited growth that we've begun to see and we've guided to continue. We've guided upper single-digit growth in this segment. It really is driven more than anything by that installed base. Now, on top of that, when you add an acceleration of new build activity and you then add in this entire new category of small modular reactors, which is additive too, it is not going to cannibalize utility-scale nuclear, this is what makes us really excited about kind of this long-term generational trend in nuclear power.
Thank you. When I talk to industry insiders within the utility industry, they always talk about the NRC and how the compliance burden makes operating the plants very burdensome, and I'm just curious how you see yourselves perhaps assisting or accelerating or perhaps lessening that burden in some way on either the small nuclear reactor projects or on the larger scale products as well. Can you be part of the way that it can lessen the regulatory burden and shorten the lead times before these plants become operational?
We think there may be a role to play for us. They're noting that we're very, very good at navigating regulatory burdens, whether they accrue from the NRC or any of the international analogs overall. The compliance activity, all of the certification, the documentation, the qualification that comes with the majority of what we are selling into the nuclear space is a core competence of the business overall. There's been a clear signal within Washington, and again, I think this is broadly true internationally, that the NRC really has been a barrier to American innovation in nuclear power. It's kind of the way that salespeople will refer to the legal team as the sales prevention department. It's kind of that activity overall.
But where we can bring some help to this in support of, again, what's been, I think, pretty clear direction coming from Chris Wright, the new Secretary of Energy, who until very recently sat on the board of Oklo, which is Sam Altman's small modular reactor place. So obviously a very knowledgeable individual about the nuclear power markets, very knowledgeable about the SMR space, very, very knowledgeable about that hurdle associated with regulatory compliance. And he's been very clear that we need to do better. We need to streamline the regulatory flow. We need to create a situation where the American nuclear industry is, again, leading the world. Trump has issued supportive statements about this as well. So we think there is really a focused and earnest intent to improve that.
Where we can help from a compliance standpoint is through our capabilities where based not only upon our history of, again, core competence, strength in this area of navigating regulatory burdens and having a point of view, but increasingly this is an area where AI is extremely relevant. When you think about the analytics necessary to prove out a safety case, to really have better situational awareness of operational dynamics, et cetera, this is an area where AI, I think, is increasingly going to play a role in a scenario where we're focused internally. But the bottom line is, A, we expect the regulatory burden, at least the movement vector to improve. But B, we think there are some things that we can do to kind of help with that streamline.
The amount of power generated, or is it more similar to a large-scale reactor?
The way that we look at it, understanding that when we talk about SMRs, we're talking about many, many different classes and types of reactors, some of which are simply kind of descaled variants of third-generation utility-scale technology, which is fairly conventional, well understood, but many of which are advanced fourth-generation reactor types using sodium and gas-cooled and moderated strategies overall, and so the instrumentation, the solution set that we can bring to bear varies depending on the type of that reactor technology. This is a question we get a lot, though, so we gave it a deep think and really tried to think about it in terms of a standardized approach, and the metric that we use is that the revenue opportunity per megawatt of generating capacity is about 60% greater with a small modular reactor than it is for a utility-scale reactor.
So this is an exciting new market. Again, we see it as an additive market. We don't see it as cannibalizing utility-scale nuclear per se. We see SMRs being used in the main to replace coal-fired power plants to power data centers, cogeneration facilities, and the like. We're very excited about the development of this market.
Great, thank you. Maybe I'll sneak in a financial question. Can you maybe talk about your outlook for free cash flow and maybe your opportunities for capital deployment and how you prioritize that?
Yeah, no, thanks, Brian. I think first off, we've made some, I would say, bold commitments around improvements around free cash flow over the next couple of years. We've committed to get to 60% free cash flow as a percentage of EBITDA. By 2028, we'd like to see 50% by 2026. Additionally, we've committed in 2025 to see a 50% increase in our free cash flow as a percent of EBITDA versus 2024, so I think it's clear that this is a place that we have work to do. We have a clear path to do that, and most importantly, we are committing to it and putting our money where our mouth is. One of the things we've done internally is changed all of our compensation schemes, right, to be cash first, margin expansion second, growth third.
We believe that from a valuation standpoint, those are the three things that move the needle the most. So our short-term schemes are that way. But more importantly, our longer-term kind of LTIP PSU schemes are that way. And we've moved most of the management team to a 60/40 construct on performance shares versus restricted shares. So really putting at risk a lot more comp across the team. And I think this year, Tom and I both actually have 100% of our schemes are performance-based shares. So I think that's important. I think as you think about where is that, it's really across the working capital scheme, but inventory continues to be the biggest lever. We still only do about three turns, less than three turns a year, actually. That number needs to get to four, and then we can work on getting to six.
We got work to do in AR and AP, lesser numbers, but still optimization around. And then some of the contractual schemes on some of the larger projects we sign up to. Everybody loves a large order. It's fantastic. It builds backlog. But making sure we are margin positive from a cash standpoint as we go is super important. Now, real quick, just to touch on capital, where are we going to use the cash? For the last three years, well, first off, if you step back, if you look at the history of the company, it was built on a lot of M&A. I think we've done 16 deals over the last 10 years, but we've only done three since we've gone public, and we did none in 2024, which is the first time, I think, since 2017 that we haven't done a deal.
That's important because it shows the discipline we have. It also shows how focused we were on execution in 2024. We believe we've set the foundation for that execution that we can now grow inorganically and organically on top of. So I think you'll increasingly see us look to deploy capital on the M&A side. Historically, those 16 deals we've bought kind of in a 12x pre-synergy multiple. More importantly, we've been able to see a post-synergy multiple of about 7x. So there's a ton of value creation in this lever for us. It's something we're good at. We have a team that this is what they do. And I think this gives us kind of an added growth vector as we think about 2025 and beyond.
Great. Sounds like a really interesting compounding story. We're going to end it here for the formal part, but please join Tom and Brian in the breakout session downstairs. Thank you so much for joining us.
Thank you.
Thank you for your attention.
Thanks for coming on Wednesday.