Mirion Technologies, Inc. (MIR) Earnings Call Transcript & Summary

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 of who don't know the company well, could you start with an overview and really what differentiates Mirion competitively?

Sure. Where I would encapsulate our story is that we see Mirion as the global leader in ionizing detection and measurement technologies. And 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 this orbit. It can cause tissue damage in human being. 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 gained 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. And 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. And as a consequence, that creates a cycle of virtue 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 and guidance a few weeks ago that this year, we expect to launch more than 40 new products overall. So those, I think, would be the key things.

It is awesome time. So following up on that, your time as a public company, you've navigated a number of challenges, exiting Russia, post-COVID supply chain challenges, rising interest rate environment. So could 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. And 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 business associated with Russia because of the Ukraine war. 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 it was a reflection of that, where, firstly, we were very focused on deleveraging the business. In the beginning of 2023, we had 4.4x leverage. At the end of 2023, we took that down to 3.0x beating our own guide of 3.1x 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 on to our historical trajectory of driving systematic margin expansion in our business and achieving our target of 30-point EBITDA margins within 5 years. And 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 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, and we expect to continue to be on that journey.

Tom, maybe if you could 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 be clear, if you look at our M&A track record just over the last few 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 3 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. But again, because that is, 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 we can do both. We think we can be smart about deleveraging, while continuing to be active in M&A and we expect to continue to focus on that.

Thanks, Tom. Brian, I think there is a question for you. You've got a number of questions for Q4 earnings relative to your 4% to 6% organic growth guidance. You had mid-teens backlog growth, 30% order growth. So maybe how would you characterize visibility to your '24 organic growth guidance versus the prior years?

Look, I think the visibility continues to be good and as it's been before, right? We've -- what we've historically said is somewhere between 45% and 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 5-year kind of strategic parts order that came -- that came in as well in the third quarter. For me, it's less about '24. It'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 '23. And I think we'll continue to see and have a pretty robust '24 as well.

It's helpful, Brian. And maybe Tom, back to you like on the medical side, our medical orders are only up 5% in '23, 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 of 5% to 7%. So what would you say has gone right for you 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?

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 -- 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 delivered, over delivered 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 Tom, is it fair to say that versus when you went public a couple of years ago, 2.5% that you feel even better about that 5% to 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. World today has about half of the linac that it needs, but secondly, it's the aging population demographic in the developed West. Think of the G20 footprint. As 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 [indiscernible]. 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 2 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 [indiscernible]. 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 the 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. And our goal has been, and we've demonstrated this to really kind of build out our position in the value chain overall. So 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 2 years ago, our confidence is elevated in terms of that long-term growth trend in our medical segment.

And Tom, maybe a similar question on your nuclear power side. You had guided to, I think, 2% to 4% long-term growth in nuclear in that world. And you just did 50% year-over-year orders growth in 2030. And I know Brian talked about some of that being long lead. But maybe talk about like continued the potential for orders momentum given the market. I think you guys hinted a little bit that it wasn't just '23 that's going to be good orders, but you tell me.

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 2 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. And 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. And essentially, they called for the build-out 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 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. And 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 it's -- 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.

Tom, we're going to get spoiled with 50% year-over-year order. So we shouldn't think that's continuing, right? But generally, the order environment is 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, yes, 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 talked about.

So you talked about new products, Tom, earlier in the conversation. It's a pretty big step-up if I'm hearing this right, right? More than 40 new introductions and enhancements in '24. I think you had 10 new product launches in '23. So can you talk about what's driving that acceleration in innovation and how they can contribute to growth and margin in '24, maybe some of the more promising digital technologies that you have?

Yes. So if you look at the -- 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 put out into the marketplace overall. More than anything else, I think this reflects our commitment to innovation, where is the largest pure player in the space of radiation detection and measurement. We spend more money on engineering than the people we compete against. And what that means is that our flywheel maybe spins a little bit faster and our focus is on being the innovation leader in our space. We want to be the disruptor. We don't want to be disrupted. And 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. They 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. And 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 work or 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 on 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 digital -- 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 field. So that worker can visually see virtually picketed areas, go areas, no-go areas and the like. And that's a -- it's an example of where we can take this digital technology. There are so many different applications for it, and we are so committed to this that we created a digital organization named our inaugural Chief Digital Officer in the last few quarters. And we think there's an enormous opportunity for us to continue to drive innovation in this area.

It's very interesting, Tom. 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 is 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 guided in '24? And specifically, technologies margins have been particularly volatile. I know you said you made some organizational process changes in France. So do you feel good that the headwind from that business is beyond you?

Yes, I do. And 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. And 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 and understand that if you look at our pathway over the last 2 years, there are probably 2 major things that have candidly created some margin compression, particularly in our Technologies business overall. One was the [indiscernible] becoming a public company, which had an impact on margins of almost 2 full points. And then secondly, it was the generational spike in inflation that we experienced most acutely over the last 2 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 noninflationary 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 our 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 5 years. Brian, anything I missed?

I mean I'd just remind you that we also committed to doing 100 basis points of expansion in '24. And I think -- look, I think the team is very focused on this. And I think it just comes down to execution. And we'll begin improving that in the first quarter here when we release earnings in May.

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. And that is like so 30%, 5-year target, right? 100 basis points in '24 means that it's going to be more than 100 basis points on average, approximately like a little more for the next 5 years. So how do you do it? Like 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 guided 100 basis points in '24. 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.

And would you say the margin potential is 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, as 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.

The other thing, Andy, is the back end of '23, I mean, we had some onetime items in both Q3 and Q4. We had this French issue and candidly in both quarters. So I think we are -- as we begin to lap those type of things, really, we should have a tailwind behind us helpful.

Any questions from the audience? Okay. So 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, so it's a big deal. As you kind of alluded to you doing very well in Europe, so maybe talk about the runway there still. And then I think on the last earnings call, you mentioned some recovery in the U.S. So tell us what that can mean because, like, I mean, I think the forecasting mid-single-digit growth for Medical, but like it seems to me maybe get you better since U.S. has come back and Europe still has some momentum, but you guys tell me.

So firstly, as it relates to -- I won't confine International to just Europe, but I say more broadly, International. Yes, we do continue to be -- have a constructive view about the growth potential in that market. We're doing very well in Europe, and we're doing very well, I should say, in the backyard of our 2 biggest competitors in the space, both of whom are our European based entities. But 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 and other Asian markets, but we are essentially playing on the coattails of some of our major OEM partnerships, and 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. healthcare 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 somewhere in the range of 2% to 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 a material headwind that we're seeing overall in that market. And so we, overall, just trying to take a balanced view on what we think we can do in that space. And again, the aggregate picture, we think, is very constructive.

I guess I'd ask you or Brian, like what's embedded than in the mid-single-digit growth of the U.S. Is it up, down, sideways? Is it the same?

In the U.S. And one other comment real quick before I get to that is, just remember, our medical business overall in '22, we grew 15% organically. Last year, we grew kind of 8% to 9%, right? So we're doing well. It's almost double digit when you -- if you put them together and divide it by 2. 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 '24, which should help margins as well.

Tom, it's maybe wrong, but I've thought of you in terms of Asia is mostly on the nuclear power side, not really as much on the medical side. So it's interesting to may I know your comments. Like is that a growth opportunity, a new growth opportunity for you? Or am I missing that from the past?

It's both new and 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 higher 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 '24 outlook, I think you said dosimetry is got to be the slowest-growing portion of medical. So low single-digit plus growth. So given the next-generation product rollout, why shouldn't we see a little bit better growth?

The answer to that is just the nature of the occupational dosimetry market. This is a market that for decades has grown essentially a GDP growth rates. It is a market that historically has been relatively saturated. I hate to characterize it as a prisoner's dilemma market, but 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 is kind of like analog film that had to be developed in red and then replaced. Instadose is essentially a 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. We have about 1 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 on to an Instadose-type device, which is a margin accretive move for us. It's 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 technology, that there will be more of that. But the third element of 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 2 or 3 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. We're very excited to continue to tell the story.

Awesome. And then within technologies, your defense labs, research labs, and research as well as industrial businesses, I don't think they get as much focus as nuclear power. So but order growth has been very strong in those areas in '23. So could you characterize the investment outlook for those businesses?

Yes, 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. In 2022, our view was that the level of engagement that we had from both defense agencies and we equipped today a vast majority of the NATO armies. So not only that constituency, but also the civil defense constituencies that we're driving the focus on security broadly speaking, in Europe. We translated that into a likelihood an expectation that we would see that engagement convert into orders in 2022. And it didn't happen, and that was 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 that's 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. And so we continue to have a constructive view on that market. On the deal, we 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. And this is focused on environmental remediation and big government waste sites like Savannah River and Hanford and others that are probably well known to the audience and 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.

So I've got 2 more questions in 2 minutes. So I'm going to ask them at the same time. Brian, one is for you on cash flow, 40% cash conversion on EBITDA for '24 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 asked for all the companies, what are the top 2 or 3 innovations and structural changes affecting your company over the next 5 years?

So real quick, I mean, good news is '24 we're projecting to look like '23, right? We did about 40% in '23. We're projecting to do 40% in '24. As you think about 50%, we continue to aggressively attack at our working capital piece, mainly inventory. Look, in '22, inventory was a pretty big use of cash, in '23 is the exact opposite. There's more -- there's plenty of room here for us on inventory. I mean we only turn our inventory about 2.5x, right? So just getting up to 4x, which 4 years ago, wouldn't even been the kind of the average for the peer group. That's another $40 million to $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 -- our cash taxes and what we can do there.

So Andy, on the key takeaways or leave-behinds, I think there are probably 4 that I would say. 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 and 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 to 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 only -- not just in the M&A arena, but more broadly speaking across the enterprise. And 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.