Mirion Technologies Inc

NYSE:MIR

Earnings Call Transcript 2024-Q1

[Operator]

Hello, and welcome to the Mirion Technologies First Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to hand the call over to Alex Gaddy, Senior Vice President of Strategy and Investor Relations. Please go ahead.

[Alex Gaddy, executive]

Good morning, everyone, and thank you for joining Mirion's First Quarter 2024 Earnings Call. A reminder that comments made during this presentation 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 report on Form 10-K and quarterly reports on Form 10-Q that we file from time to time with the SEC under the caption Risk Factors and in Mirion's other filings with the SEC. Quarterly references within today's discussion are related to the first quarter ended March 31, 2024. 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 the call today. All earnings materials can be found on Mirion's IR website at IR [Audio Gap]. Joining me on the call today are Tom Logan, Chief Executive Officer; and Brian Schopfer, Chief Financial Officer. Now I will turn it over to our Chief Executive Officer, Tom Logan. Tom?

[Thomas Logan, executive]

Thank you, and good morning, everyone. To get us started today, I'd like to firstly thank my Mirion colleagues for delivering a very solid start to 2024. Taking a look at our Q1 results, there are a few key highlights, so I'd like to note for you. First, our end markets remain healthy across the enterprise, supported by improving fundamentals, particularly in nuclear power and cancer care. Order growth was relatively flat in Q1, but this isn't surprising given the strength we saw last year and the fact that Q1 is historically our lightest volume quarter. Overall, we continue to see excellent customer engagement, the timing dynamics impacted quarterly order growth. As an example, we received an approximately $15 million European defense order at the outset of Q2, which is not included in the results shared today. Second, I am proud to announce the commercialization of our InstadoseVUE technology, which we believe will revolutionize the occupational dosimetry space. We've commercially deployed thousands of units during a Q1 soft launch and customer interest in the product is high. We expect the adoption cycle for InstadoseVUE to be lengthy, but we are confident in the distinct differentiation that this product brings to the marketplace. Note that for competitive reasons, we will not be providing quarterly updates on badge volume going forward.Third, in terms of financial performance, we delivered total company organic revenue growth of 5.5% in the quarter, which was in line with our expectations. The technologies business led the way with 8% organic growth. Total company adjusted EBITDA grew by 8% year-over-year, reaching nearly $40 million for the quarter. We delivered 40 basis points of adjusted EBITDA margin expansion led by our technologies business, which provided 170 basis points of expansion. Finally, we have reaffirmed our 2024 financial guidance and continue to project organic revenue growth of 4% to 6% and adjusted EBITDA of $193 million to $203 million. Brian will provide more detail on our quarterly financial performance. So I'd like to use most of my time today to discuss areas of critical importance as we think about medium and longer-term growth. Note that the asset that more than 2/3 of our top line growth is driven by 2 super trends, namely nuclear power and cancer care, which we expect to be robust, global and long in the tooth. Turning first to nuclear power, which is in the midst of global resurgence. The world's demand for energy is increasing dramatically with all geographies struggling to find reliable sources of cost-efficient clean power. The emergence of AI and the attendant growth of high-energy-consuming data centers is putting increased demands on energy infrastructure. Additionally, we see continued decarbonization commitments globally and the push for energy independence driving elevated interest in nuclear power. As stated before, we believe nuclear power is a green energy source and will play a primary role in meeting increased energy demand through both utility scale reactors and small modular reactors. While the overall demand function for Mirion's nuclear business remains robust. There's an emerging body of public policy that makes us confident in the significant tailwinds support in the end market. Looking at the U.S. for a moment. The federal government has set a net 0 target for the year 2050, and it's difficult to see a path where nuclear power doesn't play a meaningful role in meeting that goal. Nuclear power plant operators are performing well financially, which is changing the calculus surrounding capacity utilization, life extension and even capacity uprates. Extraordinarily, we saw the restart announcement of the Palisades Nuclear Power Plant in Michigan in Q1, a previously doomed facility. We view this as yet another evidentiary point supporting the criticality of nuclear power in the American power market. Beyond life extensions and restarts, the EPA has recently issued sweeping new rules requiring existing coal plants to limit and capture carbon emissions and sets forth strict operating rules for future new coal plants. Additionally, an April publication from the DOE under the auspices of its cold and nuclear initiative highlights the expected economic and environmental benefits of replacing coal power plants with SMRs or utility scale reactors. With 30% of the nation's coal plants expected to retire by 2035 and over 300 existing and retired coal plants that have been deemed suitable to be replaced by nuclear plants, nuclear has a promising opportunity here. Now while the dynamics I've just touched on are U.S.-centric, they can be broadly extrapolated to global markets as well. As a reminder, nearly 40% of our total company revenue in 2023 was tied to nuclear power as we are the leading provider of safety-critical radiation detection and measurement solutions to the global nuclear fleet. Mirion's unmatched product portfolio is reactor technology agnostic and serves all 3 stages of the plant's life cycle, namely new construction, plant operations and decommissioning. We are in robust strategic engagement with the burgeoning SMR community and are committed to extending our relationships with traditional utility scale OEMs and utilities worldwide. There's a similar super trend unfolding in the area of cancer care, which represents nearly 30% of our total company revenue. This has been driven by fundamental growth in radiation therapy, which is supported by an aging population and demographic and developed markets and improving standards of care in developing markets as well as the revolution in nuclear medicine catalyzed by the emergence of therapeutic radio ligand treatments. More to come here in future calls, but the opportunity for Mirion to participate and drive future growth is clear, compelling and significant. Now turning to commercial and operating teams and focused on improving our execution in the following areas. First, I'm committed to continued improvement within our French business, which will improve our organic growth, margins and capital efficiency. Second, we are aggressively executing on self-help themes, including extending pricing heuristics, cost out and procurement programs, internally focused AI automation and capitalizing upon Mirion's inherent operating leverage. Let me reiterate here that we remain confidently committed to reaching our 5-year 30% adjusted EBITDA margin target. Third, the continued evolution and enhancement of the Mirion solution set through our investments in digital capabilities, customer-facing AI and our robust new product development pipeline. And lastly, supplementing the business through strategic and opportunistic M&A, primarily geared toward new capabilities and defending and extending our category leadership. With that, let me pass the call over to our Chief Financial Officer, Brian Schopfer. Brian?

[Brian Schopfer, executive]

Thanks, and good morning, everyone. To kick off my commentary this morning, let's turn to Slide 4 to take a look at our first quarter results. Total company revenue was up 5.8% and adjusted EBITDA was up 7.9%. Total revenue in the quarter was $192.6 million, and organic growth was 5.5%. Adjusted EBITDA totaled $39.5 million, with margins expanding 40 basis points to 20.5%. Overall, quarterly performance was in line with our expectations, and I'm pleased with the progress shown with regard to margin expansion. Let's now dive into more detail around our segment performance during the first quarter. Let's begin with the Medical segment on Slide 5. Medical revenue grew 0.6% on both a reported and organic basis and the ECS acquisition almost fully offset the Biodex divestiture in terms of revenue contribution. As a reminder, this will be the last quarter of inorganic impact from the Biodex divestiture. Medical top line performance was negatively impacted by approximately $4 million, stemming from the implementation of a new ERP system within our nuclear medicine business. While we did expect an impact from the ERP implementation, the temporal impact was larger than originally anticipated. The implementation was completed in February. We do not expect further material ERP-related issues in Q2 or the rest of 2024. Order dynamics and backlog remains strong within nuclear medicine, exemplified by order growth of 17% and the doubling of our backlog versus the same period last year. Excluding the impact from the ERP, medical organic growth would have been approximately 7.1%. Medical adjusted EBITDA margin was 30.7% in the quarter, generally flat compared to the same period last year. And we now have an ERP blip, we would have been -- we would have seen solid margin expansion in the segment. Margin enhancement remains a key area of focus, where we expect year-over-year margin expansion in Medical for the full year. Moving on now to Slide 6 in the Technology segment. Technologies revenue grew by 8.7% and for the quarter, with organic growth of 8.4%. Top line growth was broad-based across the segment and supported by strong quarters from our Nuclear Power and labs businesses. Technologies adjusted EBITDA was $33.1 million, up 16.1% from the same period last year. Adjusted EBITDA margin expanded 170 basis points to 26.3%. As expected, Technologies margins took a step forward in Q1, supported by strong execution. Overall, I am pleased with the progress made against our improvement initiatives, particularly in France, where we are gaining momentum. We still have work to do and expect improvement in the back half of the year, but Q1 was a good first step. Turning over now to our cash flow performance for Q1. Adjusted free cash flow was negative $4.5 million and net working capital was a burn in the quarter. This was generally in line with expectations. And while negative in the quarter, performance versus the same period last year is an improvement. More specifically, inventory momentum is improving as we saw an $11 million reduction versus the same period last year. Secondarily, you will also see a larger-than-normal CapEx number, and that is reflective of us executing our InstadoseVUE Lounge plan by having product on hand. Absent the CapEx investment InstadoseVUE cash flow would have been positive in Q1. Our target for the first half continues to be cash flow positive for the enterprise. Before diving into our reaffirmed guidance for the year, I wanted to highlight the warrant redemption announcement we made a couple of weeks ago. We have opted to exercise our right under our warrant agreement to redeem all of our outstanding public warrants. Warrant holders may choose to exercise their warrants by either paying the exercise price for one full share or redeeming their warrants on a cashless basis at a ratio of 0.22 shares per warrant before May 20, 2024. This action is a meaningful step in simplifying our overall capital structure while eliminating future dilutionary effects for existing shareholders. Finally, I'd like to close out my comments by highlighting our reaffirm 2024 guidance on Slide 8. Given our solid start to 2024, we are maintaining our previously issued financial expectations with organic revenue growth of 4% to 6% for the year, supported by mid-single-digit organic growth from both segments. We are also reaffirming our adjusted EBITDA guide of $193 million to $203 million. Thinking through the cadence for the rest of the year, we are expecting Q2 margin pressure in our Technology segment, primarily related to product mix. In addition, we are making investments in supply chain and procurement with the associated costs hitting in the first half and benefits beginning to materialize in the second half and into 2025. We are very excited about this initiative, and we'll talk more later in the year about it. Despite the dynamic, visibility into our margin expansion in the second half is robust and supportive of the overall enterprise expansion target for the year. Adjusted free cash flow remains at $65 million to $85 million for the year and adjusted EPS in the range of $0.37 to $0.42. Overall, the first quarter was a good start to the year, and I am encouraged heading into the rest of 2024. With that, I'll now pass things back to Alex to open the call up for Q&A.

[Alex Gaddy, executive]

Thank you, Brian and Tom. That concludes our formal comments for this morning. Let me pass things back over to the operator to open up the session for Q&A.

[Operator]

[Operator Instructions]. And our first question will come from Chris Moore of CJS Securities.

[Christopher Moore, analyst]

Maybe we'll just start on the nuclear. As Tom was talking about it, all you hear about these days is the need for electrification, nuclear Paramore more is, I think, viewed as part of the equation. You mentioned a new restart in Michigan. I think there was a long-awaited new reactor that came online in Georgia recently as well. I guess I'm just trying to understand within the U.S., obviously, SMRs seem like they're an easier sell. What are you hearing in terms of new utility scale build?

[Thomas Logan, executive]

Yes, Chris, I think the view on new utility scale build in the U.S. still is one of caution. I think if I were to put together the hierarchy of effects that I would expect to see in the U.S. market, it would go something like this. Firstly, if you look at plants that were deemed marginal 5 years ago or 10 years ago that are still in operations, and we're kind of easing up toward a decommissioning event. I think the majority of those, if not the entirety of that group is now viewed as candidates for life extension. And with that, typically, there is some amount of capital spending associated with doing that oftentimes additional permitting requirements, et cetera. Secondly, I would highlight the SMR initiatives, which continue to really game steam. It's funny. It's seems like maybe within the last 6 months, the world has kind of awakened to the fact that they're really catalyzed by the incredible growth of AI-related data centers, the world simply doesn't have enough electrical generating capacity. And as we look at the kind of the extrapolated requirements well into the future, have a more robust AI-driven economy, it's very, very clear that the demands for nuclear power, but nuclear both utility scale and SMRs are going to mount. And I think in this country, it's a combination of that phenomenon, coupled with the policy goals of decarbonization that ultimately are going to drive us into a period where I think growth meaningfully exceeds what people may have projected even 5 years ago in the American market.

[Christopher Moore, analyst]

Extremely helpful. That makes perfect sense with everything I'm hearing. Backlog, $841 million, down a little sequentially, up $100 million year-over-year. Maybe you could just talk a little bit about this split between the segments, how that's changed? I know it's probably more on the nuclear side, but -- and then trying to get a sense as to how much of that backlog likely recognized this year.

[Brian Schopfer, executive]

Chris, thanks for the question. Look, Tom and I are not -- the sequential backlog is not something we're worried about. I think we love the dynamics as we head into Q2. We've had a bunch of cause the last couple of weeks with our team and a very positive sediment across the business. So we look less quarter-to-quarter as we think about it, is a more longer-cycle business, timing matters. We timing that is a little bit last quarter-to-quarter on when things get booked. You heard Tom talk about almost $15 million -- well, a $50 million order getting booked early in Q2. So we like it. Historically, what we've said is if you look at the next 12 months of revenue, 45% to 50% that's already in backlog. I don't think that dynamic has changed a whole lot. It's probably closer to the higher end of the range versus the lower end of the range. And we continue to like what we see in here, and we're focused on executing what's ahead of us.

[Christopher Moore, analyst]

Got it. Helpful. Maybe the last one for me. Maybe can you just provide a little more specifics on the current challenges on the French bridge business that you talked a little bit about?

[Brian Schopfer, executive]

Yes. Look, we saw meaningful full progress in the first quarter. We're all super engaged, consented to Europe next week come out of there in a couple of weeks. So we continue to kind of be very involved. We're happy with what the French team is doing in the broader European team, frankly. Part of the good news for the first quarter for us is it wasn't only the French business, that's all margin expense. We actually saw it kind of across the segment in the Technologies business. So we like our setup. We're confident in the plan, and the team is executing, takes a little bit of time, specifically in Europe to kind of see everything play out. But we feel good about where we sit today.

[Thomas Logan, executive]

Chris, I would add to that, too, noting that in France specifically, our largest and cherished customer is EDF, the operator of all the nuclear power stations in Europe. I think it's widely known that EDF had a difficult year last year because of a widespread number of outages that were related to certain component issues within their power plant infrastructure. And that had an impact overall on demand patterns in the year and kind of a knock-on effect on us, again, because this is the dominant customer we have in the region. Candidly, I think we were a little bit slow to adjust to some of that. And we're all over it. We've made some operating model changes in the arena. And it's all the self-help things that we've talked about. It's being a little bit smarter about pricing in the market. It is continuing to drive extensively our business system and the inherent focus there on all of the classical elements of big ERP, which would include procurement, production, scheduling, distribution, et cetera. It's basic blocking and tackling. The team is doing a great job. I'm actually headed over there this afternoon to catch up with them and encourage them and continue to see how we can go further faster. But we feel like we're definitely on the rail sir.

[Brian Schopfer, executive]

We had a good first quarter too with the French customer to is talking about. So I think we feel pretty good about what we said.

[Operator]

The next question comes from Vlad Bystricky of Citigroup.

[Vladimir Bystricky, analyst]

Good morning. So maybe just to start off, a follow-up on Chris' question around backlog. I guess can you just give a little more color into how you're thinking about or how we should think about orders and backlog this year? And given your expectations around potential new build nuclear work and your comments around nuclear sentiment, whether you would expect at year-end to have grown overall backlog?

[Brian Schopfer, executive]

Well, look, I think... It's a good question. I think that we need to -- we're always a bit careful, obviously, flat about talking about kind of quarter-to-quarter dynamics just because these projects -- some of the bigger projects that really move the backlog move around a bit. I think what I am willing to say is I'm encouraged about where we sit. I think we think that if things go right, we would see backlog expansion this year by the end of the year. But I think that depends on a few things we're working on in the pipeline. And I just -- some of that stuff moved. So if it doesn't happen, I don't think that's a concerning issue for us because it's probably just moved a little bit to the right as some of these things do. But the order dynamics are great. The customer engagement is great. And yes, I think we would expect to see some backlog growth by year-end. But I'm less concerned if that happens that in in the first half of next year.

[Thomas Logan, executive]

Let me tag on to Brian's comments and say a couple of additional things. Firstly, let me reiterate what Brian said, and that is that we take a very, very cautious approach to projecting backlog, particularly as it relates to nuclear new build activity simply because the timing can be very difficult to pin down. And also, we take a very conservative kind of probabilistic approach to what we think will win and what ultimately the quantum of a project order aggregation might look like. And generally, our actual performance from a bid and backlog standpoint has exceeded that point of view. But again, our goal here is to be very conservative and that's just not something we would guide. But the other thing that I think is maybe more important is to note that that given what I think all participants in the nuclear industry see as a maxed out nuclear industry where strategic partnerships and alliances are far more important. I can tell you the energy that we and I am spending focused on more strategic relationships with the most significant players in the industry. That's gone up considerably as to versus where it has been historically. And that's really where the energy is being spent. It's on how do we really forge longer-term strategic relationships that can accommodate what we all anticipate as being a period of strong growth and a rising tide that will lift all those.

[Vladimir Bystricky, analyst]

Got it. That's helpful color, guys. Appreciate it. And then maybe just as I'm thinking about the year, if you can give us any more color into how you're thinking about seasonality or the cadence. I know 2Q is usually stronger than 1Q. So do you see sort of normal seasonality there this year and then mixed in with that $4 million of nuclear-related revenue, should we expect that sort of flowing through ratably? Or is there some larger catch up here in 2Q? Just how should we think about that $4 million coming back?

[Brian Schopfer, executive]

Yes. I don't think the seasonality changes by time. I mean I did say in my comments, I expect a little bit of margin pressure in the second quarter, mainly on the technology side and then in some of the investments we're making on the supply chain, which by the way, we're super excited about. We think this has a very nice impact to us in the back half of the year, but probably more in the 25% as we think about that, but we'll take some of that cost here in the second quarter. But then I think the back half of the year from a margin standpoint looks very good, and the cadence isn't any different really than last year. But the business from a growth perspective is much more even, right? We saw 5.5% in the first quarter. I think we like that type of range kind of each quarter with a little bit of margin pressure in the second quarter, but the back end is definitely set up to be a margin expansion in a pretty robust way.

[Operator]

[Operator Instructions]. Our next question will come from Andy Kaplowitz of Citigroup.

[Andrew Kaplowitz, analyst]

Brian, I wanted to ask you about free cash flow. You did have better, I guess, lower cash burn than last year's first quarter, but it kind of seems like 2 steps forward, one step back in terms of cash generation. So what happened in the quarter? And what is your conviction that you can get to the target that you have for the year? And I did notice the first half, you expect positive free cash flow. So it seems like you get a lot of that back in Q2.

[Brian Schopfer, executive]

Yes. I mean, look, we held our guidance that our conviction is clearly strong that we'll be within that range. Look, I actually think the first quarter was a good step forward for us. As I talked about, in my comments, we made a strategic investment on the inside side and the CapEx number. So that's an elevated CapEx number for the quarter for us, specifically in the first quarter. I think absent that, you would have saw a positive cash flow number versus the negative one you saw. So we feel good. And like I said, I mean, we think first half cash flow positive for us, which is different than it was last year. And we're set up well.I would reiterate that we are spending -- we continue to spend a ton of time with the team on this. This continues to be a very high priority for us in the company. There is still a lot of room here for us to continue to improve. I mentioned the $11 million in inventory reduction year-over-year. So that's beginning to take fold as well, maybe a little bit slower than we'd like, but we feel very good about where we're sitting. But we like our free cash flow guide for the year right now.

[Andrew Kaplowitz, analyst]

That's helpful, Brian. And then I'm sorry if I missed this detail. But the European integration, I just want to sort of ask you, it happens a lot for industrial companies in general. So we understand that at the same time, it always is a little surprising when you have it. Like are there anything out -- is there anything else to focus on? Any other ERP integrations that we need to sort of care about is this really more of a one-off? And then your commentary around getting the $4 million back, does it really come sooner versus later, given the strong orders in nuclear medicine.

[Brian Schopfer, executive]

Yes. Look, we -- this is a play. I mean we didn't -- we had some typical challenges for a couple of weeks as we put it in. March was strong. April was good and on track. So we feel good about our progress and that kind of coming back. Look, I think we'll -- we're evaluating, do we do one more this year, which is pretty -- it's a smaller business or smaller than the nuclear medicine business even. I think we learned a lot from this. So there's a double-down effort on this. It is -- would not be going into one of the bigger businesses, so we're clear. So yes, I think we'll see one more later in the year, again, smaller. I think as you think about the cadence sort of coming back, I expect half of it to come back in the second quarter and the rest probably in the third quarter. And that's more just a capacity and kind of process bag more than anything else. The orders are robust, continue to be robust, and we feel really good about where that business sits.

[Andrew Kaplowitz, analyst]

That's helpful. And then maybe just one for Tom. There's been sort of an increasing crescendo around SMRs. They still have time to sort of make their way into the market, obviously. But like how does that impact sort of the order profile? Could we start to see more along that maybe even as early as '25 or '26. I know you've had some already. But like is it meaningful to the order profile over the next couple of years, Tom?

[Thomas Logan, executive]

I would say, Andy, that it will be material but not significant. So I think last year, we booked about $10 million in SMR orders I don't know that we've disclosed what we anticipate this year. But as we look at the activity and look at the nature of the discussions that we're engaged in, my expectation continues to get kind of moved up in terms of how solid the demand is likely to be here and the viability in particular, of some of the top players in the space overall.So my view is that, yes, over our planning horizon, we will see within the nuclear vertical, we will see a material growth in SMR orders. But again, I wouldn't characterize it as necessarily being significant.

[Operator]

The next question comes from Yuan Zhi of B. Riley Securities.

[Yuan Zhi, analyst]

Brian, I'm just curious about what factors contributed to the order growth for the nuclear medicine in this quarter, the order growth 17% quarter-over-quarter and the backlog doubled year-over-year. Should we anticipate similar growth trends throughout the year?

[Brian Schopfer, executive]

Well, the -- I would say that when we look at the nuclear medicine space, as you know, this space above all others, I think, is likely to grow at the fastest rate. There is a revolution taking place in radioligand therapy that will have a massive impact on cancer treatment modalities throughout the world. And we believe we're well positioned to participate in this. Through a combination of our legacy position as market leader and dose calibration instruments and a variety of compounding and transport and clinical assessment instrumentation in the nuclear medicine space. Secondly, through the acquisition of the ECS software platform, which is the leading data management and workflow software platform in the nuclear medicine space in North America. And then thirdly, through the ability for us to leverage the first 2 items to really bring to the market a much broader solution set that encompasses much of our legacy instrumentation that historically has been deployed exclusively on the technology side. So when you look at the combination of a market that I think axiomatically is going to increase at a very strong rate, coupled with the strengthening position that we have in that space. Our view is that the growth prospects here will be positive. And I wouldn't necessarily be specific about the first part of your question, but I would tell you that we're very bullish about the long-term prospects in this space.

[Yuan Zhi, analyst]

Got it. That's very helpful. And another question we have is, recently, you mentioned that about 60%, 60% of your Life Sciences lab related activity is DOE-funded and focusing on the environmental remediation and government waste side. Do you see this continuing to be the main driver of that category? Or how should we look at this going forward?

[Thomas Logan, executive]

We see that as a very solid foundation and for many decades that has been the case, and we don't see that base, that foundation, that historical presence, not only in the American DOE space, but globally in many of the comp analogs. We see that continuing. But when we look at what is beyond that in the life sciences space where kind of the core of what we do there is to develop and field very, very accurate spectroscopic instruments that are -- that have a very high degree of resolution and are incredibly important for understanding the composition of unknown samples. But we see the ability to extend that further. And a good example would be nuclear medicine, whereas we are seeing an evolution in therapeutic strategies, in particular, a shift toward an acutely elevated focus on alpha emitters, where there is a tremendous opportunity, I think, to bring our unparalleled gamma spectroscopy capabilities to bear in a way that would actually improve clinical efficiency and safety. So our view is that over time, that we see many opportunities to really kind of build beyond that base that historical DOE-related base in this space overall.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Tom Logan for any closing remarks.

[Thomas Logan, executive]

Ladies and gentlemen, thank you for participating today. Let me just wrap up with a few closing comments. Firstly, we continue to see very strong demand and engagement across our end markets. We're well positioned to take advantage of these positive macro trends driving growth, and we're committed to superior execution. Our financial performance for Q1 was in line with our expectations, and I'm proud of the execution within our Technologies business and the resulting adjusted EBITDA margin expansion we reported today. We remain focused on improving our free cash flow dynamics heading into the rest of '24 and beyond. We continue to expect to be cash flow positive in the first half of the year and have reiterated our cash flow guide for the full year. Overall, I'm proud of our first quarter results and believe the business is solidly on track to deliver the year. We look forward to updating you with our second quarter results in a few months. So again, thank you for participating today. And operator, that will conclude the call.

[Operator]

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.