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

Greetings. Welcome to the Mirion Technologies Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Eric Linn, Treasurer and Head of Investor Relations. Thank you. Eric, you may begin.

Thank you, Liz, and good morning, everyone. Welcome to Mirion's Second Quarter 2026 Earnings Conference Call. Joining me this morning are Mirion's Founder, Chairman and CEO, Tom Logan; and Mirion's CFO and Medical Group President, Brian Schopfer. Before we begin today's prepared remarks, allow me to remind you that comments made during this call will include forward-looking statements, and actual results may differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in our annual reports on Form 10-K, quarterly reports on Form 10-Q and in Mirion's other SEC filings under the caption Risk Factors. Quarterly references within today's discussion are related to the second quarter ended June 30, 2026, unless otherwise noted. The comments made during this call will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of the presentation accompanying today's call. All earnings materials can be found in the Investor Relations section of our website at www.mirion.com. With that, let me now turn the call over to Tom, who will begin on Panel 3.

Eric, thank you, and good day to everyone joining on the call today. Yesterday, after market closed, we issued our second quarter results. Once again, we demonstrated growing orders and backlog, including key large opportunity order wins. This double-digit order growth is fueling continued backlog expansion as the nuclear power momentum continues to take hold. We also demonstrated expanding adjusted EBITDA margins from both operating segments and across the total enterprise. Better mix and pricing helped to more than offset the dilutive impacts from M&A and broader inflation headwinds. All of this is setting the stage for a strong second half 2026 acceleration. We are maintaining our 2026 full year guidance, which implies a meaningful step-up in financial performance for the remainder of the year. Brian will walk you through the details, including expectations for the third quarter and the second half. We continue to believe that the momentum in nuclear power is building. Nowhere is this more evident than right here in North America. As I've said on prior calls, the nuclear super trend continues to broaden, and this quarter's headlines highlighted on Panel 4 make that abundantly clear. Here in the U.S., regulatory and policy improvements are supporting momentum within nuclear power. The NRC has proposed updates designed to streamline the licensing process, eliminating unnecessary burdens and increasing regulatory clarity while importantly maintaining safety standards. Pair that with the Department of Energy's $17.5 billion loan program to support new reactor builds, and you can see both the financing and regulatory gateways beginning to open up simultaneously. We're also encouraged by execution, not just policy. The DOE's Reactor Pilot Program achieved criticality across 4 advanced reactor designs, outperforming its own target of 3 by the July 4 deadline. That's a tangible example that small modular reactor designs are progressing. Importantly, Mirion, Paragon and Certrec were squarely in the mix on each of these advanced reactor designs. On the demand side, new power deals continue to materialize. Constellation and Walmart announced a new nuclear power agreement, Walmart's first, and amongst the first between a large retailer and a nuclear facility in this country. Additionally, New York State and Canada are advancing their nuclear plans to add additional capacity. Moreover, just last week, the U.S. announced a deal with Saudi Arabia to supply new-new reactors and nuclear technology, creating another avenue of incremental nuclear demand. Each of these examples in just the past few months showcase the well-timed acquisitions of Paragon and Certrec to leverage their market-leading positions within North America. Looking beyond North America on Panel 5, fresh data from the World Nuclear Association reinforces what we're already seeing take hold: a generational build-out of global nuclear capacity. Today, the world operates at approximately 400 gigawatts of nuclear capacity. Latest projections forecast a tripling of total global capacity by 2050 to nearly 1.5 terawatts. This is a 45% increase compared to projections a decade ago. Even excluding growth from China and Russia, global capacity still grows at a staggering 2x. Each projection on this panel points in the same direction: increased demand for Mirion s solutions and an expanding installed base that provides recurring demand for decades to come. Recall, approximately 80% of our nuclear power-based revenue comes from today's installed base and is the source of considerable recurring and repeat revenue. Panel 6 focuses on the near to medium term. Reactors operating today are providing foundational demand growth. At a high level, we're seeing 3 waves of installed base nuclear customer demand. The first wave is catch-up capital spending. Decades of capital rationing across the operating fleet left operators with a backlog of deferred maintenance and required replacement parts. Add in the funnel of plant restarts we've talked about, and you get an outsized near-term call on commercial-grade dedication, reverse engineering and spare parts out of our PeAks platform. The second wave is life extensions and extended power upgrades. Once an operator makes the decision to life extend, they have greater visibility to operate for another 10 to 20 years. This triggers upgrade decisions to instrumentation and controls and broader plant ecosystems. The third wave is emerging, but it's coming: digital transformation. The nuclear workforce is aging out and with it goes decades of tribal knowledge. Replacing these workers are digital natives, increasingly looking toward digital platforms to capture and scale that expertise. Additionally, digital platforms are providing the firepower to optimize outages and assist operators in improving thermal efficiency. We're already seeing these factors drive order growth as illustrated on Panel 7. Second quarter 2026 backlog totals over $1.1 billion. This is nearly 40% higher versus a year ago. Legacy backlog, excluding backlog additions from the Paragon and Certrec deals, has grown by 17%. Let's drill into this legacy backlog number a bit to illustrate my broader point about growing nuclear power demand. This subset of the backlog has seen incredible growth, up 31% versus 17% for total legacy Mirion. If you isolate the legacy Mirion installed base, it's even more impressive, up nearly 40% versus Q2 '25. Panel 8 addresses investor questions on the second half revenue visibility. We continue to have good line of sight to our full year revenue expectations. Between first half actual results and backlog expected to convert to revenue in the second half, approximately 81% of our expected full year revenue is accounted for. Importantly, this 81% shows comparable revenue coverage to prior years. This gives us the confidence to maintain full year revenue expectations. Additionally, Paragon's PeAks business adds a new revenue stream for us that does not appear in backlog. Instead, this revenue is booked in-quarter. Before I turn it over to Brian to detail the quarter, allow me to spend a minute on AI, shown on Panel 9. This is where an increasing amount of my time is spent today, thinking strategically and guiding our business to harness the incredible potential from artificial intelligence. We're investing to create early adopter advantage by embedding AI into how we develop products, how we serve customers and how we run our operations. We've organized our AI strategy across 3 distinct pillars with dedicated resources committed to accelerating adoption and deployment across the company. The first pillar is accelerating product development. AI is fundamentally changing our software development cycles and compressing time to market. Specifically, we're improving data analytics, accelerating real-time feedback loops and improving testing and compliance workflows that would have taken our engineering teams months to execute manually. The ability to move faster while maintaining and, in fact, improving the rigor of our compliance processes, is a genuine game changer. The second pillar is organization-wide efficiencies. AI is becoming an important tool in this effort, from automating back-office processes like document review to test plan development. We're still in the early innings here, but the trajectory is encouraging, and the internal adoption is gaining traction. The third pillar, the one I'm most excited about, is AI-powered solutions. We're developing new AI-centric innovations across both segments. And importantly, we are increasingly focused on connecting our hardware devices, think instruments that sit in nuclear power plants and cancer treatment centers around the world to software and data platforms that drive measurable productivity improvements for our customers. In fact, last week at the AAPM annual meeting in Vancouver, we highlighted our new Plan AI dosimetry platform, which enables dosimetrists to deliver higher-quality patient-specific plans faster. In our RTQA business, we also highlighted our new Daily QA 4 Pro, which consolidates dosimetry and imaging checks into a single indexed imageable solution. reducing room entries, minimizing setup time and standardizing execution across users. Importantly, it is integrated into our existing SunCHECK platform, so physics team can spend less time on logistics and more time on patient care. Let me turn it over now to Brian to walk through the financials. Brian?

Thank you, Tom, and good morning, everyone. I'll continue the prepared remarks on Slide 10, outlining our financial performance. Second quarter total revenue was $267 million, an increase of 20% versus last year's second quarter. Organic revenue growth was 1%, in line with our expectations and aligned with what we communicated in April. Second quarter adjusted EBITDA was $65 million or 27.5% higher than last year. Margins expanded 150 basis points in the quarter, driven by favorable product mix and price across both segments. Excluding the impacts of M&A and a onetime tariff refund, margins would have expanded over 200 basis points. We've received approximately $1 million in tariff refunds to date. Based on how the stock has traded, we used approximately $25 million of our $100 million share repurchase program in the second quarter to opportunistically buy back approximately 1.4 million shares. This brings our total share buybacks for the year to approximately $40 million, with $40 million still remaining under the program. We generated $49 million of adjusted free cash flow in the quarter, reflecting higher adjusted EBITDA and a source of cash from net working capital as well as continued tailwinds from our refinancing activities last year. Lastly, as Tom outlined, orders in the second quarter were strong, up 10% versus last year's second quarter. Once again, nuclear power led the way among our end markets. Slide 11 details the continued progress against our large opportunity pipeline. In the second quarter, we won a number of opportunities, including the previously disclosed large SMR order at Paragon, the second part of another SMR order and another portion of the radioactive waste handling order within our defense and diversified end market. Although slightly later than we had expected, we've continued to see good momentum as we turn the page to July, where in the first 2 weeks, we were awarded more than $50 million of large orders, including a large European installed base order and a U.S. Department of Energy order. Separately, in July, we also unexpectedly experienced a cancellation for a Chinese new build order that was originally booked in 2019. The sites that this project are associated with have seen little progress, and these projects were stalled due to geopolitical tensions that started shortly after they were signed. Normally, with Chinese new builds, we see a much shorter order-to-build cycle. It is important to note that this project has no impact to our 2026 guidance and an immaterial impact on any of our long-range guides that we have given. In total, our July awards bring our year-to-date performance to approximately $160 million with approximately $280 million of opportunity still available to us. Slide 12 has the Q2 order book details versus Q2 of last year. Before M&A, core orders grew 10%. Total orders, including a $62 million contribution for Paragon and Certrec, grew 40% in the quarter to $291 million. Nuclear & Safety order growth was driven by the robust growth we saw in the nuclear power end market of approximately 50%, excluding M&A, with half of the dollar growth coming from the operating fleet and the remainder coming from SMRs. The growth within nuclear power was partially offset by declines in labs and research and defense and diversified. Q2 medical orders declined slightly from last year. Recall, we had a tough comp as we prioritized Asia orders to minimize tariff exposure. Dosimetry orders declined due to a tough euro-based order comp, while nuclear medicine remained flat. Slide 13 details Q2 order performance versus Q1 this year. Recall, last quarter, we guided 15% to 20% sequential order growth. If we include the 2 large orders that were awarded in early July, net of the Chinese cancellation, orders grew 14%, slightly below this range. Without the China cancellation, we would have been at the high end of the range. Before digging into the quarterly financial results, first, an update on the nuclear power end market on Slide 14. Nuclear power orders, excluding M&A, grew 50% in the second quarter, with both the operating fleet and SMRs being key drivers. We booked $49 million of SMR orders, inclusive of the 2 large opportunities previously detailed. This is up $42 million over last year, illustrating the continued momentum within the space as well as Paragon's contribution. Overall, nuclear power revenue was flat organically with increases in the installed base and SMRs offset by a decline in new build revenue. We remain confident that nuclear power will see double-digit organic revenue growth for the full year. Let's get into the quarterly financials beginning on Slide 15. Consolidated second quarter revenue grew 19.7% to $266.8 million. Approximately 18% of the 19.7% growth was attributed to acquisitions, mainly Paragon. Organic revenue growth of 1% was in line with our April guidance. Second quarter adjusted EBITDA was $65 million or 27.5% better than last year's second quarter. Adjusted EBITDA margins expanded across both segments with favorable contribution from product mix and pricing. Adjusted EPS totaled $0.12 per share in the quarter. As a reminder, in 2026, we are now including stock-based compensation in our adjusted EPS calculation. Last year's adjusted EPS would have been $0.09 per share using a similar methodology to the one put in place for 2026. We have an adjusted EPS reconciliation slide in the appendix that has the details for your modeling. Turning to the Nuclear & Safety segment on Slide 16. Second quarter revenue was $186 million, up 31%. Organic revenue was 2.3%, in line with our April guidance. We continue to be pleased with Paragon's financial performance with 15% revenue growth for the quarter and 27% growth year-to-date, highlighting the heightened demand for their products and services. Under Mirion's ownership, we have continued to see Paragon's adjusted EBITDA margins expand. We expect this trend to continue as we identify and capture further areas of integration and synergy. As previously mentioned, nuclear power end market revenue growth was flat as growth in the installed base and SMRs was offset by less new build revenue in the period. New build revenue can be lumpy based on project timing. Adjusted EBITDA grew 35% to $51 million. Margins expanded approximately 70 basis points, reflecting the impacts of favorable product mix in Europe, good cost control across the business and a modest tariff refund here in the U.S. This was partially offset by dilution from the Paragon acquisition. On to the Medical segment on Slide 17. First quarter revenue was $81 million, down 1%. Organic revenue declined 1%, driven by the nuclear medicine and dosimetry end markets. This is below our previously disclosed April expectations of low single-digit organic growth. RTQA revenue continues to grow, driven by the OEM sector performance and our growing software business. We previously mentioned in April that in the second quarter of last year, we shipped a large quantity of products into Asia before tariffs went into effect. Excluding this tariff comp headwind, organic RTQA revenue would have grown mid-single digits. In nuclear medicine, organic revenue declined due to delayed hardware demand. We do expect to see a pickup in the back half of the year in this business. Encouragingly, our nuclear medicine software business generated a strong double-digit order growth in the first half. Lastly, the dosimetry services end market also had negative organic growth. The large hardware order from last year continues to be a difficult comp and will be in the back half of the year as well. Importantly, excluding this, our core dosimetry services organic revenue grew mid-single digits in Q2. Medical segment Q2 adjusted EBITDA was $31 million or 3% better than last year. Despite lower revenue, margins expanded in the quarter, reflecting price tailwinds, favorable product mix and software revenue. We saw limited tariff refunds in this segment. Turning to Slide 18. I want to give an update on our end market expectations within Medical while reiterating our full year segment guidance. Within RTQA, we are raising our outlook to double-digit organic growth for the year, up from our prior mid-single-digit plus guide, reflecting OEM sector dynamics and continued strong performance from our software offerings. In nuclear medicine, we are lowering our full year guide to mid-single digits, down from our prior double-digit guide, driven by the reduced hardware volume from delayed customer demand. At this point, we see this as a delay, not a decline in demand. In dosimetry, we now expect organic revenue to be negative for the year, down from our prior flat guide, driven by less hardware revenue. Note, we're also lapping the tough comp from hardware sales in 2025. We continue to expect total service revenue growth to be low single digits plus, in line with historical guidance. These puts and takes largely offset, and we are maintaining our full year Medical segment guidance. Turning to adjusted free cash flow on Slide 19. We generated $49 million of adjusted free cash flow in Q2 to end the first half of 2026 with $60 million of adjusted free cash flow. This improvement represents our best first half adjusted free cash flow since going public and is driven by good control of our net working capital with continued improving metrics, lower cash taxes and improvements to our capital structure. Turning to Slide 20. Our full year 2026 guidance is unchanged from April. Based on what we discussed earlier around our backlog coverage, Slide 21 shows that we're expecting to see an uptick in the second half of the year. On organic revenue growth, the first half came in at 2%, held back by difficult comparables from last year's tariff-related pull-forward on the medical side and a difficult Q1 '25 nuclear power comp. We expect organic revenue to step up meaningfully in the back half to between 7.5% and 11.2%, driven by the nuclear power end market within Nuclear & Safety and the RTQA end market within Medical. On margins, first half adjusted EBITDA margins came in at 22.8%, down 23 basis points year-over-year on dilutive M&A and mix impacts from Q1 '26. As is seasonally normal, we expect to see acceleration on margins in the second half of the year, with margin rates expected to be between roughly 27% and 29%, up roughly 150 basis points versus last year as operating leverage kicks in. Second half adjusted free cash flow is forecasted at $95 million to $115 million, with Q1 having been our lightest quarter and Q4 will be our largest cash generation quarter. At this point, we're trending towards the high end of the range. Altogether, accelerating organic growth and expanding margins, coupled with strong backlog are why we remain confident in our full year guidance despite a slower first half. Before we open the call to Q&A, let's spend some time discussing the third quarter guidance on Slide 22. Consolidated third quarter organic revenue growth is expected to be in the high single digits. Nuclear & Safety is expected to be mid-single digits, while we anticipate high single-digit growth in Medical. Consolidated adjusted EBITDA margins are expected to expand compared to last year. Nuclear & Safety segment adjusted EBITDA margins should contract, reflecting the impacts of the dilution from Paragon, comping a reduction in incentive compensation from 2025 and the mix shift impact of anticipated higher new build revenue in the quarter. As a reminder, new build projects typically have a slightly lower margin than the installed base. Medical segment adjusted EBITDA margins are expected to expand due to the impact of operating leverage from increasing revenue growth versus the first half of the year. With that, we're happy to take your questions.

[Operator Instructions] Our first question is from James West from Melius Research.

So curious about what you guys talked about as your large opportunity pipeline. There's a significant amount of potential out there that you've discussed. A lot of it is still available, as you noted in your slide deck and in your comments in this year, but also as we go into '27. And I wonder just if you could characterize a bit for us how much of that potential, I guess, is kind of yours to lose, if you will, or follow-on contracts. I mean how much is that definitely coming to Mirion? How much is kind of up for grabs for others? Just kind of -- just curious, if you have some kind of view on how much we should be thinking about that translating to Mirion.

Yes, James, I'll start and then Brian can add additional color. But the way we look at it is that we've got a right to win on all of this stuff. So the screening methodology that we use here, just again, to provide this color, this broader visibility is that these are opportunities that are greater than $10 million in scope where we think, again, our probability of winning is likely to be greater than 50%, meaning that, again, we feel like we've got a right to win. I think if we look at the opportunities that actually traded in the last quarter, I believe we won all of them. I don't think we lost anything that actually transacted over that period of time. And so we remain optimistic about our ability to continue that track record. In our view, the -- in general, the biggest risk is timing risk, where, depending on the nature of the project, the sector that it's in, et cetera, they can have a tendency to move to the right. But I'd also note that this is a replenishing opportunity set that continues to build overall. So we feel very good about it in aggregate.

Right. Okay. That makes perfect sense. And then maybe just a little bit unrelated follow-up though. When I was with you earlier, when we were traveling earlier this year, we talked about the kind of the M&A outlook, and you were very clear that you had a pipeline, and it was strong. And I wonder -- just curious if that has any change there? Or should we be expecting announcements? What's happening with the kind of the target list?

Yes. I would characterize our M&A pipeline as one of continued strength. There are a lot of really interesting assets in the market that we view as being highly complementary strategically to our business model. And this -- M&A, to be clear, has always been an important part of our strategy. We've done roughly 20 deals over the last decade. And our expectation is that we're going to continue to be active in this realm.

Our next question is from Joe Ritchie with Goldman Sachs.

So you guys provided a bunch of good color on like the confidence you have in the guide, going into the rest of the year. I guess maybe just -- if you're just thinking about the Nuclear & Safety segment, I think the implied guidance implies at least like mid-teens type organic growth in the fourth quarter. I just want to just get a sense for how much of that is already in backlog? And then maybe just provide a little bit more color on that ramp between now and the end of the year.

Yes. I think you're -- I mean, this is why we kind of gave a pretty implicit Q3 guide and because you can now squeeze it to the fourth quarter. I think your math is right. I think we put the visibility out there kind of for the rest of the year, we put it in totality. So 81%. So we're sitting kind of exactly where we sat at this point in every other quarter coming out of Q2. And a reminder, when we look backwards, we're talking about where we actually landed from a revenue perspective over what we thought would trade from a backlog perspective. So it's a pretty apples-to-apples comparison. So look, we put out the guide. We feel very good about where we are. We have good visibility to the back end of the year. There's clearly some wood to chop both on the execution side, and we still have orders to win. I think the orders that we won in early July also help us along the way. So we continue to feel good about where we sit, Joe. And we recognize that that's -- a mid-teens guide for the fourth quarter is big. But I would also tell you the comps for us more broadly in the back half of the year are smaller than what we saw kind of in the first half of the year, and I think that gives us a tailwind there, too.

Yes. That's helpful, Brian. Maybe just a broader question for Tom. Just talking about that China debooking, I know it was only $18 million, but it was for contracts that went all the way back to 2019. Can you just kind of maybe just talk about like how you guys think about the backlog that you have today like whether there's any potential risk from like some of these legacy contracts, why now to debook that specific contract this quarter?

Yes. Joe, we continuously scrutinize our backlog and as you're aware, the history of debooking events for us is exceedingly rare. These are very unusual events and typically tied to some broader issue. Shortly after we went public, we had debooking of a Finnish order that was tied to the Ukraine conflict. We had a debooking in Turkey a couple of years later that was related to, what I would call -- characterize as a localized contractual dispute. And then this one came candidly a bit out of the blue. To be clear, when you look at the contractual provisions, there is not an exit provision and obviously we will have extensive discussions and negotiations in and around this. But having said all of that, this was a contract that essentially was undergirded by a project that was making very little progress. It is a contract that was booked many years ago and has candidly been impacted by some of the changed trading dynamics specifically between the U.S. and China. So looking beyond that, when we look at our backlog quality, our view is it continues to be very high. We don't see any level of elevated risk. We don't see this as being some kind of trigger event that where there are others that fall behind us and again remain confident in the dry powder that we have there overall. The other thing I would note, you didn't ask this, Joe, but just to note it. When we look at the Chinese market overall, recognize that today if you look at our position in the installed base, we have a meaningful position in 50 out of 60 operating Chinese reactors. And this is an experiential track record that candidly even predates Mirion. It goes back about 30 years. We've been a long-standing fixture in this market. But we've also been very clear that over time over those decades, we have seen a declining wallet share overall in the Chinese market driven by factors that are familiar in every industry. But importantly, where we stand today, we continue to see a -- what I would characterize as a robust and predictable spare parts market there, again recognizing that position in 50 reactors in China. But if you look back over the last 5 years, it's been averaging about $8 million a year and we have confidence that that will continue. Moreover, when we look at new build dynamics, there are 2 primary streams and I'd argue a third stream of lesser importance in Chinese new build activity. The primary focus now is on an indigenous reactor type called the Hualong reactor where essentially we are locked out. We have no content in that. The planned feature of the Hualong is that it is a 100% indigenous locally produced Chinese reactor. But to be clear, there continue to be export opportunities in China through derivatives of the Westinghouse AP1000 technology, the Framatome EPR technology and the Rosatom VVER opportunity. And we expect that we're going to continue to have [ BATs ] there and that will continue over our planning horizon. Final thing I'd say about China too is that right now we are very active in 3 advanced reactor applications in China. China is very active in the SMR market overall and doing some really interesting things with advanced reactor technology and that continues to be an opportunity for us overall. So this debooking was disappointing. There'll be more to the story that will play out over the next few months. But we don't view it as auguring some broader set of issues for us.

Our next question is from Quinn Fredrickson with Baird.

Just building on that last question on SMRs. You clearly have some momentum here based on these large orders and then expecting to move from 2% of revenue to 3% through this year. I think 2030 has been speculated as the time frame when SMRs become more commercially deployed. But just based on that order momentum and the visibility you have today, should we think about the portion of your revenue from SMRs scaling further in '27?

What I would say, Quinn, is that the continuing theme here is that while historically, we have been very cautious about expressing confidence in the SMR timeline overall, the reality continues to move to the left. We are seeing a stronger and stronger opportunity flow in this sector. Our positioning here is somewhat unique when you look at the breadth of our capabilities that are relevant to these players overall. And so our view is that the growth dynamic, without putting specifics on guidance here, but our view is that the growth opportunity here is considerable and the momentum is continuing to build. So we are increasingly bullish on the sector. We are increasingly bullish on our positioning, our right to win, if you will. And while I'm not necessarily going to call them all now, I do expect this is going to continue to grow at a rate faster than our overall organic growth rate for the rational planning horizon.

And then for my follow-up on Nuclear Medicine. Can you just elaborate on what caused the reduced hardware volume and delayed demand during the quarter and then unpack what gives you confidence in the pickup in the back half that you mentioned?

Yes. I think we've just seen a bit of a pause I think in the first half. I think we're waiting to see some more momentum in the drug pipeline. The team continues to be very bullish about the second half just on what we saw kind of coming out of June. Our Nuclear Medicine software business saw very strong order growth in the first half of the year. I think I talked about double digits and it was strong double digits for what it's worth. We've spent a lot of time in that factory. If you remember, we did an ERP implementation there. We've consolidated some factories there. That factory is absolutely working better today than it has been so lead times have come down dramatically. So our ability to kind of book and ship in that business in a quarter -- in 2 quarters has dramatically increased. So I think all those dynamics are at play here. And so this is one we continue to watch, this is one we continue to be optimistic about as we come through the back end of the year into '27.

Our next question is from Andy Kaplowitz with Citigroup.

Tom, I just wanted to sort of ask Joe's question in a slightly different way. Nuclear power order growth of 47% ex M&A. But as you know, nuclear power revenue is still -- was still flattish in Q2. So why has the disconnect between the 2 lasted so long here? And if I think about what's ramping up in Q3, I know you said you're starting to lap much easier comparisons in new nuclear. So is it that simple or is there maybe a higher degree of SMR as well as installed base projects that's ramping up too and have you seen any inflection so far here in July?

Yes. So I mean, look, in order to hit the back end numbers, I mean, I think we're expecting a step-up kind of in all 3 pieces of the nuclear power business; SMR, new build and MPP. And just as a reminder, I mean MPP is 80% of our nuclear power revenue. Obviously to hit the back end of the numbers, we need to see that business work. And I think I put some comments in my script, Andy, that the nuclear power growth was very good and it was half on a dollars basis out of the installed base and half out of the SMR space, which you can see much of the SMR stuff came via the large orders. So I think that continues to give us confidence that that business is poised to be able to deliver in the back half of the year. And again, like Joe asked specifically about Q4, but more broadly, we're sitting at a coverage base that at the midpoint of our guide is the same as where we sat every year basically for the last couple of years. I would tell you if you added the peak's revenue, that gives you another incremental percentage point of coverage for what it's worth on the back end plus the wins we saw in early July although it won't be a lot of revenue that kind of comes through the P&L, that continues to bolster our coverage dynamics. So hopefully, that's a little bit more color that kind of helps give you confidence.