# Mirion Technologies, Inc.: Form 10-Q for the period ended Mar 31, 2023

- Company: [Mirion Technologies, Inc.](/companies/mir.md) (CIK 1809987)
- Form: 10-Q
- Filed: 2023-05-03
- Accepted by EDGAR: May 3, 2023, 17:27 ET
- Period: 2023-03-31
- Accession: 0001628280-23-015295
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1809987/000162828023015295/mir-20230331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1809987/000162828023015295/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $182.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-01-01 to 2023-03-31 | $103.0m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-01-01 to 2023-03-31 | $79.1m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-01-01 to 2023-03-31 | $7.6m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2023-01-01 to 2023-03-31 | $85.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-01-01 to 2023-03-31 | −$13.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | −$1.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | −$41.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | −$0.22 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | −$0.22 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 187,701,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | −$2.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $7.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-03-31 | $88.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $508.4m | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $2.73bn | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $233.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $1.15bn | us-gaap:Liabilities |
| Long-term debt | at 2023-03-31 | $679.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-03-31 | $5.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-03-31 | $1.52bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 53,170 characters.

*You should read the following discussion and analysis of Mirion’s financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes of Mirion Technologies, Inc. that are included elsewhere in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and the notes related thereto for the year ended December 31, 2022 that are included in our Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section entitled “Risk Factors” included in this Quarterly Report on Form 10-Q as well as Annual Report on Form 10-K. Unless the context otherwise requires, references in this section to “we,” “us,” “our,” “Mirion” and “the Company” refer to the business and operations of Mirion Technologies TopCo, Ltd. and its consolidated subsidiaries prior to the Business Combination and to Mirion and its consolidated subsidiaries, following the consummation of the Business Combination. Unless the context otherwise requires or unless otherwise specified, all dollar amounts in this section are in millions.*

### Overview

We are a global provider of products, services, and software that allow our customers to safely leverage the power of ionizing radiation for the greater good of humanity through critical applications in the medical, nuclear and defense markets, as well as laboratories, scientific research, analysis, and exploration.

We provide dosimetry solutions for monitoring the total amount of radiation medical staff members are exposed to over time, radiation therapy quality assurance solutions for calibrating and verifying imaging and treatment accuracy, and radionuclide therapy products for nuclear medicine applications such as shielding, product handling, medical imaging furniture, and rehabilitation products. We provide robust, field-ready personal radiation detection and identification equipment for defense applications and radiation detection and analysis tools for power plants, labs, and research applications. Nuclear power plant product offerings are used for the full nuclear power plant lifecycle including core detectors, essential measurement devices for new build, maintenance, decontamination and decommission, and equipment for monitoring and control during fuel dismantling and remote environmental monitoring.

We manage and report results of operations in two business segments: Medical and Industrial.

- Our revenues were $182.1 million for the three months ended March 31, 2023 and $163.2 million for the three months ended March 31, 2022, of which 36.5% and 36.8% were generated in the Medical segment for the three months ended March 31, 2023 and 2022, respectively, and 63.5% and 63.2% were generated in the Industrial segment for the three months ended March 31, 2023 and 2022, respectively.
- Backlog (representing committed but undelivered contracts and purchase orders, including funded and unfunded government contracts) was $740.8 million and $737.4 million as of March 31, 2023, and December 31, 2022, respectively.

On May 1, 2023, we announced that the Industrial segment has been rebranded as Mirion Technologies.

### Key Factors Affecting Our Performance

We believe that our business and results of operations and financial condition may be impacted in the future by various trends and conditions, including the following:

- **The Russia-Ukraine Conflict—**The Russia-Ukraine conflict has impacted and may continue to impact us, including through increased inflation, limited availability of certain commodities, supply chain disruption, disruptions to our global technology infrastructure, including cyberattacks, increased terrorist activities, volatility or disruption in the capital markets, and delays or cancellations of, or disputes regarding, customer projects.
- **Inflation and Interest Rates—**The Russia-Ukraine conflict and other geopolitical conflicts, as well as the related international response, have contributed to inflationary pressures which we expect to continue. We actively monitor, evaluate and respond to developments relating to operational challenges in an inflationary environment. Global supply chain disruptions and the higher inflationary environment remain unpredictable and our past results may not be indicative of future performance. In addition, the increase in interest rates, has in turn led to increases in the interest rates applicable to our indebtedness and increased our debt service costs, a trend which we expect to continue if interest rates continue to rise.
- **Other Financial Risks—**Our business and financial statements can be adversely affected by foreign currency exchange rates, changes in our tax rates (including as a result of changes in tax laws) or income tax liabilities/

assessments, changes in interest rates, recognition of impairment charges for our goodwill or other intangible assets and fluctuations in the cost and availability of commodities.

- **Tariffs or Sanctions—**The United States imposes tariffs on imports from China and other countries, which has resulted in retaliatory tariffs and restrictions implemented by China and other countries. There are, at any given time, a multitude of ongoing or threatened armed conflicts around the world. As one example, sanctions by the United States, the European Union, and other countries against Russian entities or individuals related to the Russia-Ukraine conflict, along with any Russian retaliatory measures could increase our costs, adversely affect our operations, or impact our ability to meet existing contractual obligations.
- **Medical End Market Trends—**Growth and operating results in our Medical segment are impacted by:
- Changes to global regulatory standards, including new or expanded standards;
- Increased focus on healthcare safety;
- Changes to healthcare reimbursement;
- Potential budget constraints in hospitals and other healthcare providers;
- Medical/lab dosimetry growth supported by growing and aging demographics, increased number of healthcare professionals, and penetration of radiation therapy/diagnostics; and
- Medical radiation therapy quality assurance (“RT QA”) growth driven by growing and aging population demographics, low penetration of RT QA technology in emerging markets, and increased adoption of advanced software and hardware solutions for improved outcomes and administrative and labor efficiencies.
- **Strategic Transactions —**A large driver of our historical growth has been the acquisition and integration of related businesses. Our ability to integrate, restructure, and leverage synergies of these businesses will impact our operating results over time. We also divest businesses which could also impact our operating results from time to time.
- **Environmental Objectives of Governments—**Growth and operating results in our Industrial segment are impacted by environmental policy decisions made by governments in the countries where we operate. Our nuclear power customers may benefit from decarbonization efforts given the relatively low carbon footprint of nuclear power to other existing energy sources. In addition, decisions by governments to build new power plants or decommission existing plants can positively and negatively impact our customer base.
- **Government Budgets—**While we believe that we are poised for growth from governmental customers in both of our segments, our revenues and cash flows from government customers are influenced, particularly in the short-term, by budgetary cycles. This impact can be either positive or negative.
- **Nuclear New Build Projects—**A portion of our backlog is driven by contracts associated with the construction of new nuclear power plants. These contracts can be long-term in nature and provide us with a strong pipeline for the recognition of future revenues in our Industrial segment. We perform our services and provide our products at a fixed price for certain contracts. Fixed-price contracts carry inherent risks, including risks of losses from underestimating costs, operational difficulties and other changes that may occur over the contract period. If our cost estimates for a contract are inaccurate or if we do not execute the contract within our cost estimates, we may incur losses or the contract may not be as profitable as we expected. In addition, even though some of our longer-term contracts contain price escalation provisions, such provisions may not fully provide for cost increases, whether from inflation, the cost of goods and services to be delivered under such contracts or otherwise.
- **Research and Development—**A portion of our operating expenses is associated with research and development activities associated with the design of new products. Given the specific design and application of certain of these products, there is some risk that these costs will not result in successful products in the market. Further, the timing of these products can move and be challenging to predict.
- **Global Risk—**Our business depends in part on operations and sales outside the United States. Risks related to those international operations and sales include new foreign investment laws, new export/import regulations, and additional trade restrictions (such as sanctions and embargoes). New laws that favor local competitors could prevent our ability to compete outside the United States. Additional potential issues are associated with the impact of these same risks on our suppliers and customers. If our customers or suppliers are impacted by these risk factors, we may see the reduction or cancellation of customer orders, or interruptions in raw materials and components.
- **COVID-19—**The COVID-19 pandemic affected revenue growth in certain of our businesses, primarily those serving our medical end markets, and it is uncertain how COVID-19 will continue to affect our global operations generally. The impact of COVID-19 on our customers has affected our sales operations in certain ways, including increased customer disputes regarding orders, delayed customer notices to proceed with production, delayed payment from customers and, on rare occasions, customers refusing to pay for their orders entirely. Further, access

to customer sites for sales was limited in some cases. The extent and continuing duration of the impacts are dependent in part on customers returning to their offices and economic activity generally.

### Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the United States. (“GAAP”). However, management believes certain non-GAAP financial measures provide investors and other users with additional meaningful information that should be considered when assessing our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating, and planning decisions, and in evaluating our performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our GAAP results. The non-GAAP financial measures we present may differ from similarly captioned measures presented by other companies. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

We use the non-GAAP financial measures “EBITA,” “EBITDA,” and “Adjusted EBITDA." "Adjusted EBITDA" is used in the calculation of the First Lien Net Leverage Ratio in the 2021 Credit Agreement described in Note 9 *Borrowings*. See the “Quarterly Results of Operations” section below for definitions of our non-GAAP financial measures and reconciliation to their most directly comparable GAAP measures. Tax impacts for the non-GAAP financial measures are calculated based on the appropriate tax rate for each individual item presented.

The following table present a reconciliation of certain non-GAAP financial measures for the three months ended March 31, 2023 and for the three months ended March 31, 2022.

*(In millions)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Net loss** | **$(42.9)** | **$(19.0)** |
| Interest expense, net | 14.9 | 7.9 |
| Income tax (benefit) provision | (1.1) | (4.1) |
| Amortization | 33.6 | 38.8 |
| **EBITA** | **$4.5** | **$23.6** |
| Depreciation - Mirion Business Combination step-up | 1.6 | 1.6 |
| Depreciation - all other | 6.2 | 4.6 |
| **EBITDA** | **$12.3** | **$29.8** |
| Stock-based compensation expense(1)(2) | 5.6 | 7.8 |
| Increase (decrease) in fair value of warrant liabilities | 13.4 | (19.9) |
| Debt extinguishment | 2.6 | — |
| Foreign currency (gain) loss, net | (0.3) | 1.5 |
| Cost of revenues impact from inventory valuation purchase accounting | — | 6.3 |
| Non-operating expenses(3)(4) | 3.0 | 9.4 |
| **Adjusted EBITDA** | **$36.6** | **$34.9** |

(1) Stock-based compensation expense of $5.6 million for the three months ended March 31, 2023 includes $4.0 million of expense related to the issuance of Profits Interests to certain members of management and the board of directors and $1.6 million of expense related to the issuance of stock, RSU's, and PSU's to employees and directors.

(2) Stock-based compensation expense of $7.8 million for the three months ended March 31, 2022 includes $6.8 million of expense related to the issuance of Profits Interests to certain members of management and the board of directors and $1.0 million of expense related to the issuance of stock, RSU's, and PSU's to employees and directors.

(3) Pre-tax non-operating expenses of $3.0 million for the three months ended March 31, 2023 include $1.4 million of restructuring costs, $0.6 million of fees incurred in connection with a secondary offering made by affiliates of Charterhouse Capital Partners, our former majority stockholder, $0.5 million of costs to achieve information technology system integration and efficiency, $0.2 million in costs to achieve integration and operational synergies, $0.2 million related to the Business Combination and incremental one-time costs associated with becoming a public company, and $0.1 million of mergers and acquisition expenses

(4) Pre-tax non-operating expenses of $9.4 million for the three months ended March 31, 2022 include $3.6 million in costs to achieve integration and operational synergies, $2.8 million related to the Business Combination and incremental one-time costs associated with becoming public, $2.0 million of restructuring costs, and $1.0 million of costs to achieve information technology system integration and efficiency.

*(In millions)*

|  | Three Months Ended March 31, 2023 Medical | Industrial | Corporate & Other | Consolidated |
| --- | ---: | ---: | ---: | ---: |
| **Income from operations** | **$0.7** | **$5.5** | **$(19.8)** | **$(13.6)** |
| Amortization | 13.9 | 19.7 | — | 33.6 |
| Depreciation - core | 3.9 | 2.2 | 0.1 | 6.2 |
| Depreciation - Mirion Business Combination step-up | 1.2 | 0.3 | 0.1 | 1.6 |
| Stock-based compensation | 0.1 | 0.2 | 5.3 | 5.6 |
| Non-operating expenses | 0.6 | 0.6 | 1.9 | 3.1 |
| Other Income / Expense | — | — | 0.1 | 0.1 |
| **Adjusted EBITDA** | **$20.4** | **$28.5** | **$(12.3)** | **$36.6** |

*(In millions)*

|  | Three Months Ended March 31, 2022 Medical | Industrial | Corporate & Other | Consolidated |
| --- | ---: | ---: | ---: | ---: |
| **Income from operations** | **$(6.7)** | **$(2.5)** | **$(24.4)** | **$(33.6)** |
| Amortization | 17.3 | 21.5 | — | 38.8 |
| Depreciation - core | 2.6 | 1.9 | 0.1 | 4.6 |
| Depreciation - Mirion Business Combination step-up | 1.2 | 0.4 | — | 1.6 |
| Cost of revenues impact from inventory valuation purchase accounting | 0.9 | 5.4 | — | 6.3 |
| Stock based compensation | 0.1 | 0.1 | 7.6 | 7.8 |
| Non-operating expenses | 3.2 | 1.1 | 5.1 | 9.4 |
| **Adjusted EBITDA** | **$18.6** | **$27.9** | **$(11.6)** | **$34.9** |

### Our Business Segments

We manage and report our business in two business segments: Medical and Industrial.

**Medical** includes products and services for radiation therapy and personal dosimetry. This segment’s principal offerings include solutions for calibrating and/or verifying imaging, treatment machine, patient treatment plan, and patient treatment accuracy; solutions for monitoring the total amount of radiation medical staff members are exposed to over time; and products for nuclear medicine in radiation measurement, shielding, product handling, medical imaging furniture and rehabilitation.

**Industrial** includes products and services for defense, nuclear energy, laboratories and research and other industrial markets. This segment’s principal offerings are:

- ***Reactor Safety and Control Systems***, which includes radiation monitoring systems and reactor instrumentation and control systems that ensure the safe operation of nuclear reactors and other nuclear fuel cycle facilities; and
- ***Radiological Search, Measurement and Analysis Systems***, which includes solutions to locate, measure and perform in-depth scientific analysis of radioactive sources for radiation safety, security, and scientific applications

In August 2022, we completed the acquisition the Critical Infrastructure ("CI") business of Collins Aerospace (renamed as Secure Integrated Solutions "SIS") in our Industrial segment. As such, our business results for the three month period ended March 31, 2023 will differ compared to the same period ended March 31, 2022.

### Recent Developments

#### Russia and Ukraine

The United States, the European Union, the United Kingdom and other governments have implemented major trade and financial sanctions against Russia and related parties in response to Russia's invasion of Ukraine. We do business with Russian customers both within and outside of Russia and with customers who have contracts with Russian counterparties. The conflict’s impact on the Company is predominantly in our Industrial segment. As of March 31, 2023, the Company has approximately $3 million in net contract assets and accounts receivable and related reserves of approximately $1 million for Russian customers and channel partners and maintains $11.8 million in advance payment guarantees and $14.1 million in performance guarantees in support of these projects.

As of March 31, 2023, we continue to experience delays in recognizing project revenue due to the trade and financial sanctions made to date. The remaining performance obligations in our backlog for Russian related projects was $98.4 million at March 31, 2023. In April 2023, one of our Russian customers made a claim against the Company regarding liquidated damages for certain delays under the terms of an active project. Management views the claim as without merit, however uncertainty exists as to how the resolution of the claim will impact future cash flows and results of operations, including any impact from potential modifications to the underlying contract.

The Company will continue to monitor the social, political, regulatory and economic environment in Ukraine and Russia, and will consider actions as appropriate.

#### T. Rowe Price Direct Investment and Debt Repayment

T. Rowe Price funds acquired 17,142,857 registered shares of our Class A common stock at $8.75 per share, the closing price of the company’s Class A common stock on the New York Stock Exchange on February 17, 2023. The Company used $127 million of the proceeds to pay down outstanding debt and interest on its 2021 Credit Agreement. The early debt repayment resulted in a $2.6 million write-off of deferred financing costs during the three months ended March 31, 2023.

#### Supply Chain

The global supply chain continued to be stressed by increased demand, along with pandemic-related and other global events that caused increased disruptions to the Company during the three months ended March 31, 2023. The most notable impacts to the Company were delays in sourcing key devices and components needed for our products, resulting in delays in revenue recognition, and increased costs in materials and freight, most notably costs associated with certain computer chips and semiconductors used in our products. The Company mitigated a portion of these cost impacts with price increases on certain products. While we experienced some improvements in shipping delivery and associated labor availability during the three months ended March 31, 2023, the supply chain disruption continues to be a challenge and a risk of negatively impacting our future operating margins.

#### Interest Rates

In connection with the Business Combination, certain of our subsidiaries of the Company entered into the 2021 Credit Agreement to refinance and replace the credit agreement from March 2019. The 2021 Credit Agreement provides for an $830.0 million senior secured first lien term loan facility and a $90.0 million senior secured revolving facility (collectively, the “Credit Facilities”). The term loan has a seven-year term (expiring October 2028), bears interest at the greater of Adjusted London Interbank Offered Rate ("LIBOR") or 0.50%, plus 2.75% and has quarterly principal repayments of 0.25% of the original principal balance. LIBOR has been increasing during the year ended December 31, 2022 and quarter ended March 31, 2023 as central banks, specifically the Federal Reserve, have been steadily raising their interest rates to reduce inflation. As a result, the interest rate for the term loan was 7.48% and 3.25% as of March 31, 2023 and March 31, 2022, respectively. If the Federal Reserve and other central banks continue to raise the interest rates, the interest rate for the term loan will continue to increase. We will continue to monitor the interest rate, and will consider actions as appropriate.

### Basis of Presentation

Financial information presented was derived from our historical consolidated financial statements and accounting records, and they reflect the historical financial position, results of operations and cash flows of the business in conformity with U.S. GAAP for financial statements and pursuant to the accounting and disclosure rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned or controlled subsidiaries. For consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to noncontrolling interests is reported as “Income (Loss) attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations. All intercompany accounts and transactions have been eliminated in consolidation.

### Results of Operations

### For the Three Months Ended March 31, 2023 and the Three Months Ended March 31, 2022

The following table summarizes our results of operations for the periods presented below (in millions):

*Unaudited*

*(In millions)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Revenues | $182.1 | $163.2 |
| Cost of revenues | 103.0 | 98.8 |
| Gross profit | 79.1 | 64.4 |
| Selling, general and administrative expenses | 85.1 | 90.9 |
| Research and development | 7.6 | 7.1 |
| Loss from operations | (13.6) | (33.6) |
| Interest expense, net | 14.9 | 7.9 |
| Loss on debt extinguishment | 2.6 | — |
| Foreign currency (gain) loss, net | (0.3) | 1.5 |
| Increase (decrease) in fair value of warrant liabilities | 13.4 | (19.9) |
| Other income, net | (0.2) | — |
| Loss before benefit from income taxes | (44.0) | (23.1) |
| (Benefit from) provision for income taxes | (1.1) | (4.1) |
| Net loss | (42.9) | (19.0) |
| Loss attributable to noncontrolling interests | (1.0) | (1.3) |
| Net loss attributable to stockholders | $(41.9) | $(17.7) |

#### Overview

Revenues were $182.1 million for the three months ended March 31, 2023 and $163.2 million for the three months ended March 31, 2022. Our Medical segment contributed $66.4 million and $60.1 million of revenues for the three months ended March 31, 2023 and 2022, respectively. Our Industrial segment contributed $115.7 million and $103.1 million of revenues for the three months ended March 31, 2023 and 2022, respectively. Gross profit was $79.1 million and $64.4 million for the three months ended March 31, 2023 and 2022, respectively, resulting in a $14.7 million increase from the three months ended March 31, 2022.

Net loss was 42.9 million and $19.0 million for the three months ended March 31, 2023 and 2022, respectively. Our Medical segment contributed $0.7 million and $(6.7) million income (loss) from operations for the three months ended March 31, 2023 and 2022, respectively. Our Industrial segment was responsible for a $5.5 million and $(2.5) million income (loss) from operations for the three months ended March 31, 2023 and 2022, respectively. The overall increase in net loss is primarily driven by a $33.3 million fluctuation from the change in fair value of warrant liabilities year over year, $7.0 million higher interest expenses, and a $2.6 million loss on debt extinguishment in the current quarter. Offsetting these increases in net loss were increased segment gross profits and lower selling, general and administrative costs from both stock-based compensation expense and costs incurred in prior year with becoming a public company.

#### Revenues

Revenues were $182.1 million for the three months ended March 31, 2023 and $163.2 million for the three months ended March 31, 2022. Revenues increased $18.9 million from the three months ended March 31, 2022.

Medical segment revenues increased $6.3 million for the three months ended March 31, 2023 compared with the three months ended March 31, 2022 primarily due to price increases and organic volume growth. Offsetting the increase in

Medical segment revenues period over period was the negative impact from foreign currency exchange and unfavorable product mix.

Industrial segment revenues increased $12.6 million for the three months ended March 31, 2023 compared with the three months ended March 31, 2022 primarily due to price increases, organic volume growth, and acquisitions made in 2022 (SIS), offset by negative foreign currency impact.

#### Cost of revenues

Cost of revenues was $103.0 million for the three months ended March 31, 2023 and $98.8 million for the three months ended March 31, 2022. Cost of revenues increased $4.2 million for the three months ended March 31, 2023 as compared with the three months ended March 31, 2022.

Cost of revenues related to the Medical segment increased $1.7 million period over period due to an increase in materials in conjunction with the increase in revenues over the same period, including impacts from unfavorable product mix. Cost of revenues related to the Industrial segment increased $2.4 million period over period mainly due to the product mix impact of the SIS acquisition and increased prices for manufacturing supplies and materials, offset by the foreign currency impact.

#### Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses were $85.1 million for the three months ended March 31, 2023 and $90.9 million for the three months ended March 31, 2022, resulting in a decrease of $5.8 million.

Our Medical segment incurred lower SG&A expenses of $3.1 million for the three months ended March 31, 2023 compared with the three months ended March 31, 2022. The decrease was primarily driven by expenses incurred in 2022 related to restructuring and other cost optimization initiatives, offset by a slight increase in sales and marketing expense in the current year.

Our Industrial segment incurred higher SG&A expenses of $1.9 million for the three months ended March 31, 2023. The increase was primarily driven by the impact of the SIS acquisition and increased bad debt reserves for a Russia channel partner.

Corporate SG&A expenses were $19.2 million for the three months ended March 31, 2023 and $23.8 million for the three months ended March 31, 2022. The decrease in SG&A expenses of $4.6 million was driven by a decrease in stock-based compensation expense under the 2021 Omnibus Incentive Plan and Profit Interests (see Note 14, *Stock-Based Compensation* to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) and the decrease in public company expenses, offset by an increase in secondary offerings fees incurred on behalf of our former private equity owner Charterhouse (see Note 15, *Related Parties).*

#### Research and development

Research and development (“R&D”) expenses were $7.6 million for the three months ended March 31, 2023 and $7.1 million for the three months ended March 31, 2022, resulting in an increase of $0.5 million period over period. The increase in R&D expense was primarily a result of SIS acquisition in the Industrial segment.

#### (Loss) income from operations

Loss from operations was $13.6 million for the three months ended March 31, 2023 compared with $33.6 million for the three months ended March 31, 2022. On a segment basis, income (loss) from operations in the Medical segment for the three months ended March 31, 2023 and 2022 was $0.7 million and $(6.7) million, respectively, representing an increase of $7.4 million period over period. Income (loss) from operations in the Industrial segment for the three months ended March 31, 2023 and three months ended March 31, 2022 was $5.5 million and $(2.5) million, respectively, representing an increase of $8.0 million period over period. Corporate expenses were $19.8 million and $24.4 million for the three months ended March 31, 2023 and 2022, respectively, representing a decrease in income from operations of $4.6 million as discussed in the "Selling, general and administrative expenses" above. See “Business segments” and “Corporate and other” below for further details.

#### Interest expense, net

Interest expense, net, was $14.9 million for the three months ended March 31, 2023 and $7.9 million for the three months ended March 31, 2022. $7.0 million is an increase in interest due to higher interest rates associated with the 2021 Credit

Agreement during the three months ended March 31, 2023 compared to the interest rates during the three months ended March 31, 2022. For more information, see Note 9, *Borrowing*s, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

#### Foreign currency (gain) loss, net

We recorded an income of $0.3 million for the three months ended March 31, 2023 and a $1.5 million loss for the three months ended March 31, 2022 from foreign currency exchange. The change in net foreign currency (gain) loss is due to appreciation in European local currencies in relation to the U.S. dollar.

#### Change in fair value of warrant liabilities

We recognized an unrealized loss of $33.3 million resulting from an increase in the fair value of the Public Warrant and Private Placement Warrant liabilities during the three months ended March 31, 2023. See Note 17, *Fair Value Measurements*, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

#### Income taxes

Our effective income tax rate was 2.5% and 17.7% for the three months ended March 31, 2023 and the three months ended March 31, 2022, respectively. The difference in effective tax rate between the periods was primarily attributable to mix of earnings and the impact of valuation allowances in the current period.

The effective income tax rate differs from the U.S. statutory rate of 21% due primarily to U.S. federal permanent differences and the impact of valuation allowances.

#### Business segments

The following provides detail for business segment results for the three months ended March 31, 2023 and 2022. Beginning January 1, 2023, the Company began measuring segment performance to include the impact of expenses identified as non-operating. Previously, these expenses would have been included with Corporate and other. Segment loss from operations for the three months ended March 31, 2022 has been recast accordingly.

For reconciliations of segment revenues and operating (loss) income to our consolidated results, see Note 16, *Segment Information*, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

#### Medical

*Unaudited*

*(In millions)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Revenues | $66.4 | $60.1 |
| Income (loss) from operations | $0.7 | $(6.7) |
| Income (loss) from operations as a % of revenues | 1.1% | (11.1)% |

Medical segment revenues were $66.4 million for the three months ended March 31, 2023 and $60.1 million for the three months ended March 31, 2022, which is an increase of $6.3 million. Revenues increased primarily due to an increased revenue of $7.3 million due to price increases and organic growth. Offsetting the increase in Medical segment revenues period over period was a negative foreign currency exchange impact by approximately $0.3 million and negative margin mix impact with $0.8 million.

Income (loss) from operations was $0.7 million and $(6.7) million for the three months ended March 31, 2023 and 2022, respectively, representing an increase in income from operations of $7.4 million. The increase in income from operations period over period was largely due to increased revenues discussed above and a $2.6 million reduction of expenses for restructuring and cost optimization initiatives incurred in 2022. Offsetting the increases was the increased sales and marketing cost of $0.7 million.

#### Industrial

*Unaudited*

*(In millions)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Revenues | $115.7 | $103.1 |
| Income (loss) from operations | $5.5 | $(2.5) |
| Income (loss) from operations as a % of revenues | 4.8% | (2.4)% |

Industrial segment revenues were $115.7 million for three months ended March 31, 2023 and $103.1 million for the three months ended March 31, 2022, representing an increase of $12.6 million. The increase is primarily driven by $3.5 million in volume increases, $2.8 million from price increases and $9.3 million from the acquisition of SIS, offset by foreign exchange rate fluctuations of $3.9 million .

Income from operations was $5.5 million for the three months ended March 31, 2023 and loss from operations was $2.5 million for the three months ended March 31, 2022. Income from operations increased $8.0 million period over period driven primarily due to increased revenues discussed above, offset by costs increases related to SIS acquisition and increased bad debt reserves of $0.5 million for a Russia channel partner.

#### Corporate and other

Corporate and other costs include costs associated with our corporate headquarters located in Georgia, as well as centralized global functions including Executive, Finance, Legal and Compliance, Human Resources, Technology, Strategy, and Marketing and other costs related to company-wide initiatives (e.g., Business Combination transaction expenses, merger and acquisition activities, restructuring and other initiatives).

Corporate and other costs were $19.8 million for the three months ended March 31, 2023 and $24.4 million for the three months ended March 31, 2022, which represents a decrease of $4.6 million. The decrease versus the comparable period was predominantly driven by a decrease in stock-based compensation expense of $2.2 million (see Note 14, *Stock-Based Compensation* to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), a $2.6 million decrease in professional services mostly due to the prior year costs associated with becoming a public company, offset by a $0.6 million increase in secondary offerings fees incurred on behalf of Charterhouse. For reconciliations of segment operating income and corporate and other costs to our consolidated results, see Note 16, *Segment Information* to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

### Quarterly Results of Operations

The following table sets forth selected unaudited quarterly financial data for the current Successor quarter, our last seven completed fiscal quarters (Predecessor) and for the transition periods from July 1, 2021 through October 19, 2021 (Predecessor Stub Period) and from October 20, 2021 through December 31, 2021 (Successor). The information for each of these periods reflects all adjustments that are of a normal, recurring nature and that we consider necessary for a fair presentation of our operating results for such periods. The results of operations presented should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing elsewhere in this document and are not necessarily indicative of our operating results for any future period. Revenues for certain quarters/periods are impacted by the capital spending patterns of government customers, which are influenced by budgetary considerations and driven by timing of fiscal year-ends. Further, as a result of the Business Combination on October 20, 2021, Mirion’s financial statement presentation distinguishes Mirion TopCo as the “Predecessor” for periods prior to the closing of the Business Combination and Mirion Technologies, Inc. as the “Successor” for periods after the closing of the Business Combination. As a result of the application of the acquisition method of accounting in the Successor Period, the financial statements for the Successor Period are presented on a full step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor Period that are not presented on the same full step-up basis due to the Business Combination.

*(In millions)*

|  | Successor March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | From October 20, 2021 through December 31, 2021 | Predecessor October 19, 2021 | September 30, 2021 | June 30, 2021 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Net loss** | **$(42.9)** | **$(159.7)** | **$(50.4)** | **$(59.3)** | **$(19.0)** | **$(23.0)** | **$(105.7)** | **$(46.7)** | **$(54.0)** |
| EBITA(1)(2) | $4.5 | $(114.6) | $(7.1) | $(20.8) | $23.6 | $8.4 | $(38.8) | $8.5 | $22.7 |
| EBITDA(1)(2) | $12.3 | $106.8 | $0.3 | $(13.5) | $29.8 | $13.7 | $(32.6) | $13.6 | $29.5 |
| Adjusted EBITDA(1)(2) | $36.6 | $56.4 | $30.8 | $42.6 | $34.9 | $44.5 | $31.2 | $30.9 | $49.9 |

(1) EBITA is a non-GAAP measure defined as U.S. GAAP net income (loss) before net interest expenses (including loss on debt extinguishment), income tax (benefit) provision, and amortization. EBITDA is a non-GAAP measure defined as U.S. GAAP net income (loss) before net interest expense (including loss on debt extinguishment), income tax (benefit) provision, and depreciation (including finance lease amortization) and amortization. EBITA and EBITDA are not terms defined under U.S. GAAP and do not purport to be alternatives to net income as measures of operating performance or to cash flows from operating activities as measures of liquidity. Additionally, EBITA and EBITDA are not intended to be measures of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements.

Adjusted EBITDA is a non-GAAP measure defined as EBITDA excluding the items described our non-GAAP table above. Adjusted EBITDA is used by management as a measure of operating performance. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about our results of operations that management utilizes on an ongoing basis to assess our core operating performance.

EBITA, EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. You should not consider our EBITA, EBITDA and Adjusted EBITDA as alternatives to operating income (loss) or net income (loss), determined in accordance with U.S. GAAP.

(2) The following table reconciles EBITA, EBITDA and Adjusted EBITDA to the most directly comparable U.S. GAAP financial performance measure, which is net loss:

*(In millions)*

|  | Successor March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | From October 20, 2021 through December 31, 2021 | Predecessor From July 1, 2021 through October 19, 2021 | September 30, 2021 | June 30, 2021 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Net loss** | **$(42.9)** | **$(159.7)** | **$(50.4)** | **$(59.3)** | **$(19.0)** | **$(23.0)** | **$(105.7)** | **$(46.7)** | **$(54.0)** |
| Interest expense, net | 14.9 | 12.5 | 13.1 | 8.4 | 7.9 | 6.2 | 52.8 | 43.8 | 43.7 |
| Income tax (benefit) provision | (1.1) | (1.7) | (5.0) | (7.4) | (4.1) | (6.8) | (5.6) | (4.7) | 14.4 |
| Amortization | 33.6 | 34.3 | 35.2 | 37.5 | 38.8 | 32.0 | 19.7 | 16.1 | 18.5 |
| **EBITA** | **$4.5** | **$(114.6)** | **$(7.1)** | **$(20.8)** | **$23.6** | **$8.4** | **$(38.8)** | **$8.5** | **$22.6** |
| Depreciation | 7.8 | 7.8 | 7.4 | 7.3 | 6.2 | 5.3 | 6.2 | 5.1 | 6.9 |
| **EBITDA** | **$12.3** | **$(106.8)** | **$0.3** | **$(13.5)** | **$29.8** | **$13.7** | **$(32.6)** | **$13.6** | **$29.5** |
| Stock/share-based compensation expense | 5.6 | 7.0 | 8.5 | 8.5 | 7.8 | 5.3 | 9.3 | — | — |
| Increase (decrease) in fair value of warrant liabilities | 13.4 | (10.1) | 12.0 | (19.6) | (19.9) | (1.2) | — | — | — |
| Goodwill impairment | — | 156.6 | — | 55.2 | — | — | — | — | — |
| Other impairments | — | 4.5 | — | — | — | — | — | — | — |
| Debt extinguishment | 2.6 | — | — | — | — | — | 15.9 | — | — |
| Foreign currency loss (gain), net | (0.3) | (3.0) | 3.1 | 3.3 | 1.5 | 1.6 | (0.6) | (1.4) | 1.1 |
| Revenue reduction from purchase accounting | — | — | — | — | — | 2.3 | 4.5 | 3.7 | 3.7 |
| Cost of revenues impact from inventory valuation purchase accounting | — | — | — | — | 6.3 | 15.8 | — | — | — |
| Non-operating expenses | 3.0 | 8.2 | 6.9 | 8.7 | 9.4 | 7.0 | 34.7 | 15.0 | 15.6 |
| **Adjusted EBITDA** | **$36.6** | **$56.4** | **$30.8** | **$42.6** | **$34.9** | **$44.5** | **$31.2** | **$30.9** | **$49.9** |

### Liquidity and Capital Resources

#### Overview of Liquidity

Our primary future cash needs relate to working capital, operating activities, capital spending, strategic investments, and debt service.

Mirion management believes that net cash provided by operating activities, augmented by long-term debt arrangements, will provide adequate liquidity for the next 12 months of independent operations, as well as the resources necessary to invest for growth in existing businesses and manage its capital structure on a short- and long-term basis. Access to capital and availability of financing on acceptable terms in the future will be affected by many factors, including our credit rating, economic conditions, and the overall liquidity of capital markets. There can be no assurance of continued access to financing from the capital markets on acceptable terms or at all.

At March 31, 2023 and December 31, 2022 we had $88.3 million and $73.5 million, respectively, in cash and cash equivalents, which include amounts held by entities outside of the United States of approximately $48.8 million and $66.4 million, respectively, primarily in Europe and Canada. Non-U.S. cash is generally available for repatriation without legal restrictions, subject to certain taxes, mainly withholding taxes. We are asserting indefinite reinvestment of cash for certain non-U.S. subsidiaries. The Company has alternative repatriation options other than dividends should the need arise. The 2021 Credit Agreement provides for up to $90.0 million of revolving borrowings.

There is a discussion in Note 9, *Borrowings*, of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q of the long-term debt arrangements issued by Mirion. For more information on our lease commitments, See Note 10, *Leased Assets*, of the condensed consolidated financial statements and for other commitments and contingencies, see Note 11, *Commitments and Contingencies* of the condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q.

### Debt Profile

#### 2021 Credit Agreement

On the Closing Date, certain subsidiaries of the Company entered into a credit agreement (the “2021 Credit Agreement”) among Mirion Technologies (HoldingSub2), Ltd., a limited liability company incorporated in England and Wales, as Holdings, Mirion Technologies (US Holdings), Inc., as the Parent Borrower, Mirion Technologies (US), Inc., as the Subsidiary Borrower, the lending institutions party thereto, Citibank, N.A., as the Administrative Agent and Collateral Agent and Goldman Sachs Lending Partners, Citigroup Global Markets Inc., Jefferies Finance LLC and JPMorgan Chase Bank, N.A., as the Joint Lead Arrangers and Bookrunners. The 2021 Credit Agreement refinanced and replaced an earlier credit facility (the "2019 Credit Facility").

The 2021 Credit Agreement provides for an $830.0 million senior secured first lien term loan facility and a $90.0 million senior secured revolving facility (collectively, the “Credit Facilities”). Funds from the Credit Facilities are permitted to be used in connection with the Business Combination and related transactions, to refinance the 2019 Credit Facility referred to above and for general corporate purposes. The term loan facility is scheduled to mature on October 20, 2028 and the revolving facility is scheduled to expire and mature on October 20, 2026. The agreement requires the payment of a commitment fee of 0.50% per annum for unused revolving commitments, subject to stepdowns to 0.375% per annum and 0.25% per annum upon the achievement of specified leverage ratios. Any outstanding letters of credit issued under the 2021 Credit Agreement reduce the availability under the revolving line of credit.

The 2021 Credit Agreement is secured by a first priority lien on the equity interests of the Parent Borrower owned by Holdings and substantially all of the assets (subject to customary exceptions) of the borrowers and the other guarantors thereunder. Interest with respect to the facilities is based on, at the option of the borrowers, (i) a customary base rate formula for borrowings in U.S. dollars or (ii) a floating rate formula based on LIBOR (with customary fallback provisions described below) for borrowings in U.S. dollars, a floating rate formula based on EURIBOR for borrowings in Euro or a floating rate formula based on SONIA for borrowings in Pounds Sterling, each as described in the 2021 Credit Agreement with respect to the applicable type of borrowing. The 2021 Credit Agreement includes fallback language that seeks to either facilitate an agreement with our lenders on a replacement rate for LIBOR in the event of its discontinuance or that automatically replaces LIBOR with benchmark rates based on the Secured Overnight Financing Rate ("SOFR") or other benchmark replacement rates upon triggering events. The interest rate for the term loan under the 2021 Credit Agreement was 7.48% and 3.25% as of March 31, 2023 and March 31, 2022, respectively

The 2021 Credit Agreement contains customary representations and warranties as well as customary affirmative and negative covenants and events of default. The negative covenants include, among others and in each case subject to certain thresholds and exceptions, limitations on incurrence of liens, limitations on incurrence of indebtedness, limitations on making dividends and other distributions, limitations on engaging in asset sales, limitations on making investments, and a financial covenant that the “First Lien Net Leverage Ratio” (as defined in the 2021 Credit Agreement) as of the end of any fiscal quarter is not greater than 7.00 to 1.00 if on the last day of such fiscal quarter certain borrowings outstanding under the revolving credit facility exceed 40% of the total revolving credit commitments at such time. The covenants also contain limitations on the activities of Mirion Technologies (HoldingSub2), Ltd. as the “passive” holding company. If any of the events of default occur and are not cured or waived, any unpaid amounts under the 2021 Credit Agreement may be declared immediately due and payable, the revolving credit commitments may be terminated and remedies against the collateral may be exercised.

### Cash flows

Three months ended March 31, 2023 compared to three months ended March 31, 2022

*Unaudited*

*(In millions)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Net cash (used in) provided by operating activities | $(2.7) | $11.4 |
| Net cash used in investing activities | $(7.5) | $(7.9) |
| Net cash provided by (used in) financing activities | $24.6 | $(0.6) |

#### Net Cash (Used in) Provided by Operating Activities

Net cash used in operating activities was $2.7 million for the three months ended March 31, 2023, and net cash provided by operating activities was $11.4 million for the three months ended March 31, 2022, representing a decrease of $14.1 million.

The decrease is partially due to our net loss, adjusted for non-cash items, declining by $10.7 million. Net loss decreased by $23.8 million. Non-cash add-backs to net income included a decrease in deferred income taxes by $3.3 million, and a decline in the fair value of warrant liabilities by $33.3 million, partially offset by an increase in depreciation and amortization by $3.6 million. Cash from working capital decreased by $24.7 million period over period. Within working capital, changes in inventories increased by $13.0 million as the Company prepares for our 2023 planned increased volume, changes in accrued expenses and other current liabilities decreased by $7.6 million primarily due to the payment of our 2022 bonus plan compensation, and changes in costs in excess of billings increased by $3.4 million due to timing of project milestones, primarily in Europe.

#### Net Cash Used in Investing Activities 7

Net cash used in investing activities was $7.5 million for the three months ended March 31, 2023 and $7.9 million for the three months ended March 31, 2022. The difference is driven primarily by a $1.2 million decrease in purchases of property, plant, equipment and badges during the three months ended March 31, 2023. Additionally, cash provided from the sale of property, plant and equipment decreased $0.8 million for the three months ended March 31, 2023.

#### Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities was $24.6 million during the three months ended March 31, 2023, and net cash used in financing activities was $0.6 million during the three months ended March 31, 2023. The increase of $25.2 million primarily relates to an $150.0 million cash increase from the proceeds from the issuance of common stock in the T. Rowe Price direct equity investment, a $125.0 million decrease from a term loan repayment and $0.2 million of costs associated with the issuance of common stock.

### Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. Such estimates are based on historical experience and on various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.

During the three months ended March 31, 2023, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K.

### Recent Accounting Pronouncements

See Note 1, *Nature of Business and Summary of Significant Accounting Policies* to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

## Market risk

As filed, 222 characters.

### Quantitative and Qualitative Disclosures about Market Risk

We have no material changes to the disclosures on this matter made in our Annual Report on Form 10-K for the periods ended March 31, 2023 and December 31, 2022.

## Controls and procedures

As filed, 5,283 characters.

### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that material information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2023, because of material weaknesses in internal control over financial reporting described below.

Notwithstanding the identified material weaknesses, management has concluded that the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company's financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. generally accepted accounting principles (U.S. GAAP)

### Previously Reported Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, we identified a material weakness due to the aggregation of deficiencies in certain general information technology controls (GITCs), at our division in France, related to program change-management and user access in information technology (IT) systems that support the Company’s financial reporting processes. Some of our business process controls (automated and manual) are dependent on the information and data produced by the systems affected by the deficiencies in GITCs and these business process controls were deemed ineffective because they could have been adversely impacted. We believe that these control deficiencies were the result of a lack of training for our IT personnel on the importance of GITCs, and in particular the importance of controls over program change-management and user access.

The material weakness did not result in any identified misstatements to the financial statements as of and for the quarter ended March 31, 2023. However, the material weakness created a reasonable possibility that a material misstatement to our consolidated financial statements will not be prevented or detected on a timely basis and, therefore, we

concluded that the deficiency represents a material weakness in our internal control over financial reporting.

### Remediation Plan

Management is implementing a number of actions, as described below, to remediate the material weakness described in this Item 4. Company management is committed to ensuring that our internal controls over financial reporting are designed and operating effectively. We are making progress on remediation actions, focused on our division in France, including:

- Educating IT control owners concerning the importance of GITCs, with a focus on those related to program change management and user access,
- Developing enhanced controls and reviews related to program changes in IT systems and access to IT systems,
- Adding additional manual business process controls to monitor information and data produced by the system to help mitigate the risks associated with ineffective GITCs.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgement in evaluating the cost-benefit relationship of possible controls and procedures.

### Changes in Internal Control Over Financial Reporting

We have undertaken strategic remediation actions, as discussed above, to address the material weaknesses in our internal controls over financial reporting. These remediation actions continued throughout the quarter ended March 31, 2023 but have not materially affected our internal control over financial reporting

There were no other changes to our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 4,486 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, as further updated and supplemented below, which could materially affect our business, results of operations, and financial condition. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, could also materially adversely affect our business, financial condition or future results.

***The military conflict between Russia and Ukraine and the sanctions imposed as a result have adversely affected and may further adversely affect our business, results of operations, and financial condition***

We do business with Russian customers both within and outside of Russia and with customers who have contracts with Russian counterparties. Russia’s invasion of Ukraine, the ensuing build-up of Russian sanctions and other impacts on this region have impacted the global economic environment and currencies resulting in fluctuating demand for our products and services, delays or cancellations of customer projects and difficulties in supplying and sourcing products from this and other geographic regions. In addition, it has become more difficult for certain of our customers and business partners to satisfy their obligations to us as a result of the conflict and we may experience further impacts as the conflict continues. In May 2022, one of the Company's customers announced that it had terminated a contract with a Russian state-owned entity to build a nuclear power plant in Finland, which termination had an impact on our goodwill and our backlog. The same entity attempted unsuccessfully to call on a demand guarantee securing an advance payment for another contract in March 2023, and subsequently demanded the return of advance payments and claimed approximately $18 million for penalties for project delays in April 2023 (see Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Russia and Ukraine ). While we view the claim as without merit, the contract is governed by Russian law and there is uncertainty as to how its resolution will impact our business, results of operations and financial condition. In addition, we have experienced and may continue to experience delays in revenue recognition, order booking and contract payments due to export controls and other sanctions instituted to date. In addition, while no return of advanced payment refunds have been made, other customers could seek to recover previous payments made to us depending on future developments. The Russian-Ukraine conflict may also escalate or expand in scope, thereby exacerbating its impact. A number of nuclear power plants are being constructed, and/or are being operated, by or with the participation of Russian state-owned enterprises. As the situation evolves, there is a risk that those Russian state-owned enterprises could be sanctioned by the United States Government and/or the European Union. The broader consequences of this conflict cannot be predicted, nor can we predict the conflict's ultimate impact on the global economy or our business, results of operations, and financial condition. We also are continuing to sell medical equipment and related products into Russia in compliance with applicable export control regulations, for medical/humanitarian applications, however we may be subject to criticism for continuing to sell products to Russia which may damage our reputation, the consequences of which are difficult to predict. In addition, we could be prevented from selling our products or required to cease work on certain customer projects if additional sanctions related to the Russia-Ukraine conflict are imposed or due to changes in applicable export control regulations. The Russia-Ukraine conflict has heightened other risks disclosed herein, including through increased inflation, limited availability of certain commodities, supply chain disruption, disruptions to our global technology infrastructure, including cyber-attacks, increased terrorist activities, volatility or disruption in the capital markets, and delays or cancellations of customer projects, each of which could materially adversely affect our business, results of operations, and financial condition.

Filed May 3, 2023.
Source: SEC EDGAR, the filing index for accession 0001628280-23-015295. Last ingested by Listed: Oct 27, 2026, 16:16 ET. No prices; not investment advice.