and amongst the first between a large retailer and a nuclear facility in this country. Additionally, New York State and Canada are advancing their nuclear plans to add additional capacity. Moreover, just last week, the U.S. announced a deal with Saudi Arabia to supply new new reactors and nuclear technology, creating another avenue of incremental nuclear demand. Each of these examples in just the past few months showcased the well-timed acquisitions of Paragon and Surtrek to leverage their market-leading positions within North America. Looking beyond North America on panel five, fresh data from the World Nuclear Association reinforces what we're already seeing take hold, a generational build-out of global nuclear capacity. Today, the world operates at approximately 400 gigawatts of nuclear capacity. Latest projections forecast a tripling of total global capacity by 2050 to nearly 1.5 terawatts. This is a 45% increase compared to projections a decade ago. Even excluding growth from China and Russia, global capacity still grows at a staggering 2x. Each projection on this panel points in the same direction. increased demand for Merion solutions, and an expanding installed base that provides recurring demand for decades to come. Recall, approximately 80% of our nuclear power-based revenue comes from today's installed base and is the source of considerable recurring and repeat revenue. Panel 6 focuses on the near-to-medium term. Reactors operating today are providing foundational demand growth. At a high level, we're seeing three waves of installed-based nuclear customer demand. The first wave is catch-up capital spending. Decades of capital rationing across the operating fleet left operators with a backlog of deferred maintenance and required replacement parts. Add in the funnel of plant restarts we've talked about, and you get an outsized near-term call on commercial-grade dedication, reverse engineering, and spare parts out of our peaks platform. The second wave is life extensions and extended power upgrades. Once an operator makes the decision to life extend, they have greater visibility to operate for another 10 to 20 years. This triggers upgrade decisions to instrumentation and controls and broader plant ecosystems. The third wave is emerging, but it's coming, digital transformation. The nuclear workforce is aging out, and with it goes decades of tribal knowledge. Replacing these workers are digital natives increasingly looking toward digital platforms to capture and scale that expertise. Additionally, digital platforms are providing the firepower to optimize outages and assist operators in improving thermal efficiency. We're already seeing these factors drive order growth, as illustrated on panel seven. Second quarter 2026 backlog totals over 1.1 billion. This is nearly 40% higher versus a year ago. Legacy backlog, excluding backlog additions from the Paragon and Surtrek deals, has grown by 17%. Let's drill into this legacy backlog number a bit to illustrate my broader point about growing nuclear power demand. This subset of the backlog has seen incredible growth, up 31% versus 17% for total legacy Mirian. If you isolate the legacy Miran installed base, it's even more impressive, up nearly 40% versus Q2 25. Panel 8 addresses investor questions on the second half revenue visibility. We continue to have good line of sight to our full-year revenue expectations. Between first half actual results and backlog expected to convert to revenue in the second half, approximately 81% of our expected full-year revenue is accounted for. Importantly, this 81% shows comparable revenue coverage to prior years. This gives us the confidence to maintain full-year revenue expectations. Additionally, Paragon's Peaks business adds a new revenue stream for us that does not appear in backlog. Instead, this revenue is booked in quarter. Before I turn it over to Brian to detail the quarter, allow me to spend a minute on AI, shown on panel nine. This is where an increasing amount of my time is spent today thinking strategically and guiding our business to harness the incredible potential from artificial intelligence. We're investing to create early adopter advantage by embedding AI into how we develop products, how we serve customers, and how we run our operations. We've organized our AI strategy across three distinct pillars with dedicated resources committed to accelerating adoption and deployment across the company. The first pillar is accelerating product development. AI is fundamentally changing our software development cycles and compressing time to market. Specifically, we're improving data analytics, accelerating real-time feedback loops, and improving testing and compliance workflows that would have taken our engineering teams months to execute manually. The ability to move faster while maintaining and, in fact, improving the rigor of our compliance processes is a genuine game changer. The second pillar is organization-wide efficiencies. AI is becoming an important tool in this effort, from automating back-office processes like document review to test plan development. We're still in the early innings here, but the trajectory is encouraging, and the internal adoption is gaining traction. The third pillar, the one I'm most excited about, is AI-powered solutions. We're developing new AI-centric innovations across both segments, And importantly, we are increasingly focused on connecting our hardware devices, think instruments that sit in nuclear power plants and cancer treatment centers around the world, to software and data platforms that drive measurable productivity improvements for our customers. In fact, last week at the AAPM annual meeting in Vancouver, we highlighted our new Plan AI dosimetry platform, which enables dosimetrists to deliver higher quality patient-specific plans faster. In our RTQA business, we also highlighted our new daily QA4 Pro, which consolidates dosimetry and imaging checks into a single-indexed, imageable solution, reducing room entries, minimizing setup time, and standardizing execution across users. Importantly, it is integrated into our existing SunCheck platform so physics teams can spend less time on logistics and more time on patient care. Let me turn it over now to Brian to walk through the financials. Brian?

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

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

For participants using speaker equipment, and may be necessary to pick up your handset before pressing the star keys one moment please while we pull for questions our first question is from james west from alias research please go ahead hey good morning tom and brian thank you good morning jess so curious about the you know what you guys talk about is your large opportunity pipeline um there's a significant amount of you know uh potential out there that you're that you've discussed a lot of it's still available uh as you noted in your in your slide deck and in your comments in this year um but also as we go into 27 and i wanted to just if you could characterize a bit for us you know how much of of that potential i guess is kind of yours to to lose if you will or follow-on contracts i mean how How much is that definitely coming to Miriam? How much is kind of up for grabs for others? Just kind of just curious that you have some kind of view on how much we should be thinking about that translating to Miriam.

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

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

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

Great. Thanks, Tom.

Our next question is from Joe Ritchie with Goldman Sachs. Please proceed with your question.

Good morning.

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

Yeah, I, I think you're, uh, I mean, this is why we kind of gave a pretty implicit Q3 guide and because you can, you can now squeeze it to the fourth quarter. Um, you know, I think your, your math is right. Um, you know, I think, you know, we put the visibility out there kind of for the for the rest of the year we put it in totality so 81 so we're sitting kind of exactly where uh we've sat at this point in every other quarter coming out of q2 um and a reminder when we look backwards we're talking about where we actually landed from a revenue perspective over um you know what we thought would trade you know from a backlog perspective so you know it's a pretty apples to apples comparison um so you know look we we put out the guide we we feel very good about where we are we have good visibility to the back end of the year there's clearly some some wood to chop both on the execution side and we we still have orders to win i think the orders that we want in early july also help uh help us um along the way so you know we continue to feel about where we sit, Joe, and we recognize that, you know, that's a mid-teens guy for the fourth quarter is big. But I would also tell you the comps for us more broadly in the back half of the year are smaller than what we saw kind of in the first half of the year. And I think that gives us a tailwind there too.

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

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

Yes, and thanks for the detailed explanation, Tom. Appreciate it. Our next question is from Quinn Fredrickson with Baird.

Please proceed with your question.

Hi. Good morning, guys.

Good morning.

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

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

Thanks, Tom. And then for my follow-up on nuclear medicine, can you just elaborate on what caused the reduced hardware volume and delayed demand during the quarter and then unpack what gives you confidence in the pickup in the back half that you mentioned?

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

Our next question is from Andy Kaplowitz with Citigroup.

Please proceed with your question.

Hey, good morning, everyone. Thanks for all the detail.

Good morning, Andy.

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

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

So, you know, hopefully that's a little bit more color that kind of helps give you confidence. very helpful and then tom maybe just big picture i think you know over the last couple quarters there's been a little bit more fear in the market that the proliferation of what's called short cycle power supply you know will somehow impact the nuclear cycle so maybe you know you talk to a lot of customers you know what are you hearing are customers at all disturbed about that what do you think your customers confidence level is that when they get the finish line on these you know, longer cyclonuclear projects, that there'll be enough, you know, out there for them? Just your opinion.

Yeah, I think from a contextual standpoint, Andy, I think there's a broader belief that may be a little bit erroneous that, you know, we are fundamentally locked into the data center build-out cycle. And while clearly new data centers is the biggest call on incremental energy demands, in both regulated and deregulated markets overall, we see it as being a bit more binary. And by that, what I mean is that, again, take a point historically, five years ago, more pointedly, 10 years ago, when the operators of nuclear power plants were really struggling economically, and as a result, we're in extreme capital rationing modes, really trying to ratchet down on OPEX, et cetera, today it's a vastly different picture. And even if the rate of data center builds slows dramatically, effectively they've made a binary decision that I want to extend the life of my asset base by another 20 years. And that's the big trigger for us. Once that decision is made, it drives an attendant requirement to invest in numerous systems and subsystems that in many cases have replacement cycles of a decade, in some cases even two decades overall. So firstly, you know, the generalized fear about both supply side and demand side dynamics, when you look at the nuclear base, I think have less impact on us overall, again, because the key decisions are, I want to extend the life of my power plant and in the in the wake of that, I want to upright the capacity. Remembering that 80% of our revenue comes from the global installed base, I think that's the most important foundational belief, foundational understanding that people need to have when they think about our business. At the margin, more data centers clearly means more incremental generating capacity. with probably the small modular reactor market experiencing the greatest alpha as it relates to that overall. But to us, we view that as upside. We view that as optionality and a good deal less important than the growth arc of that installed base.

Very helpful.

Our next question is from Chris Moore with CJS Securities. Please proceed with your question.

Hey, good morning, guys. Maybe talk a little bit about margins. So, obviously, the Paragon acquisition continues to be really attractive. Just wondering if it makes the 30% EBITDA target for 28 a little more challenging, just for context. I mean, 25 margins, 24.6. I think midpoint of this year got it as 25.6, 100 base point increase. consensus for next year is 27.1, so it's about 150 basis point increase. So either there needs to be a 300 basis point spike from 27 to 28, or the 27 estimates are too low. So I guess the question really is, am I looking at that correctly, and what are the puts and takes in terms of the EBITDA margin increase to be incrementally, you know, much more in 27 versus 26 and perhaps again in 28?

Yeah. So, Chris, just to begin at a high level and talk about the major building blocks that, you know, walk us up that essentially that four and a half points of go get if you take the midpoint of the guide on year-end 26 EBITDA margins in that 25.5 point range overall. As we've talked about extensively in the past, the biggest building block for us is operating leverage. We have a high degree of operating leverage given the fixed versus variable cost spread that we have. And what that means at the margin is that our contribution margins are higher than our gross margins. And if we can maintain discipline on our factory overhead and our SG&A growth, then we'll see a greater component of fall through. And if you sketch that forward, we would anticipate that half or more of that go-get simply comes from operating leverage as the top line continues to grow. The second major component for us is procurement. You know, we've made meaningful gains in our procurement efficiency and the associated cost dynamics over the last two years, but we still have a strong queue of, you know, kind of in-stream opportunities that really reflect kind of a multi-year prosecution of a more optimized state in our supply chain. And our view is that that's another one to two points of margin over this period of time, just based on what we have line of sight to today. And again, what is in our queue? The final piece of it really is kind of the self-help stuff beyond procurement. It is the application of our business system, which now is further enabled by what we're doing with AI for internal productivity. And here, you know, it's many, many different things. It's improving our conversion efficiency. It's improving sales and operational planning. It's continued optimization of our factory footprint, recognizing that, you know, we in general have more capacity than we need. It's improvement of all the administrative SG&A-related workflows, et cetera, et cetera. And to that end, again, if you were to look, if you had a glimpse of our hierarchy of priorities, again, we have confidence that there is a significant queue of opportunities. But a footnote to all of that is that in the quarter, we took a reserve for some organizational restructuring that is in stream right now that essentially is driven by an opportunity for us in the near term here to continue to evolve and improve the efficiency of our organization as we look at spans and layers, other dynamics that is going to, you know, add more of a near-term benefit on the margin rate as we look ahead to 27 overall. So we're still holding to a 30-point target, to be clear. That's an audacious target. It's one that we are very motivated to achieve. And notwithstanding the dilutive impacts of some of the M&A deals, that we've done, you know, we're eyes open about it.

Got it. Very helpful. Maybe just a quick follow-up on, you talked quite a bit about on the AI side. Just wondering, is there a significant amount of spend at this point in time on the AI, or is there much anticipated to get to where you need to go?

You know, for us right now, as we continue to build our AI capabilities organizationally, and here it's a combination of data infrastructure and building out the engineering capabilities, and then on top of that, you know, it's token spend overall as a company. You know, right now, our spend rate, and this is from a cash standpoint, most of this is OPEX. Some of this CAPEX is running about $5 million. And it's a number that is growing and obviously a number that we're mindful of when we think about margin dynamics overall. So it's not an outrageous number, but it is a material number.

Helpful again. I will leave it there.

Our next question is from Jeff Gramp with Northland Capital Markets. Please proceed with your question.

Good morning, guys. I was curious to touch on the 27 pipeline, large opportunity pipeline. I think you guys noted in the slides that that's building or growing. I'm just curious, you know, today versus this time last year, now that we kind of know how the 26 pipeline shook out, So, like, any observations, compare, contrasts, or themes worth noting at this point, understanding it's still a bit early to know anything too definitively?

Yeah, Jeff, I think the biggest delta just thematically between today and a year ago is the SMR opportunity set, which, again, you know, as I noted, we are seeing a lot of tangible engagement here. and the opportunities set related to new build activity in the SMR arena continues to build. But on top of that, we do see meaningful gigawatt scale opportunities and then an assortment of other opportunities relating to federal government work and global analogs for that that is broadly in line with what we saw a year ago. So the biggest delta would be on the new build front and most pointedly in the in the SMR arena.

I worship those details. And my follow up more near term on the Q3 commentary you guys had. So nuclear and safety, I think you were looking mid single digit growth and then within that power specifically double digits. So I guess implying some of the other contributing factors are a bit slower or lower. Is that isolated to Q3, or can you just touch on those dynamics a bit for the other kind of revenue buildups within the nuclear safety segment? Thanks.

Yeah, I think you, I mean, I think you have the math right. I think the, we haven't changed a lot of our full-year guides on the nuclear and safety side from an end market standpoint, so we continue to think, you know, labs and research, or we continue to model at least and we'll see how it plays out. Labs and research will be, you know, flat for the year. The diversified business will kind of be mid-single digits-ish. And then the nuclear power business, you know, as we commented is double digits. Obviously, you know, the math stated earlier in the Q&A about the fourth quarter kind of teens number, you know, implies that the nuclear safety business is a big piece of that. You know, I don't really have anything other to add than that at this time.

Okay. First of all, guys.

Our next question is from Tomo Sano with J.P. Morgan. Please proceed with your question.

Hi. Good morning, everyone. Hi, Tomo.

Hi, Tomo.

Thank you for taking my question. So on July, net bookings were $37 million. Could you give us more color, major contributors? And should we think about this as rent rate or timing related? If you could share more color into a second and a half, I appreciate it.

Yeah, just to clarify, the $37 million net is just the two large orders we won in the first two weeks of July and the Chinese cancellation that we've already talked about. That doesn't include anything broader from a, you know, sub 10 million order scale or kind of the book to build business.

Okay.

So, Brian, if you could talk about some opportunities and momentums into a second and a half for a large opportunity pipeline, I appreciate it.

Yeah, I mean, you can see it on the right side of that slide. You know, we still largely have about 12 opportunities in Q. ADAR, we would classify in the new build, so that's both utility scale and SMR. So you can see noted, we haven't done this before, but that represents about 15 reactors in there. So it's obviously not one-to-one. So, again, as Todd mentioned, we like our right to win on every one of those. The timing dynamic between Q3 and Q4, look, I got burned on that in the second quarter. so I'm not going to try to pin it again in the third quarter. But we continue to believe each and every one of these opportunities should and could trade this year, and we'll see how that plays out. Obviously, we continue to see a couple of things in the install base of size. I would tell you there's less kind of 10 million-plus projects in the install base on a size basis. And then the DOE, I would say, represents kind of that last bucket. And we continue to see very good activity on the pipeline side out of the DOE. And that's something we're watching on whether that kind of hits us here in 26 or maybe 27. Obviously, we're watching the government shutdown dynamics closely, too, in Washington. So, you know, a lot happening. But we continue to believe, you know, there's a lot out there for us kind of on the larger scale stuff and that, you know, that flow business continues to have good momentum.

Thank you. And just one quick follow up on the capital allocations as you generate stronger free cash flow and target lower leverage. How are you thinking about the medium-term capital allocations? I think it's, Tom, you mentioned about the AI investment and some of the opportunity, M&A, and then Brian, you talked about buybacks. Any update? I appreciate it.

Yeah, Tomo, if we did know M&A for the balance of the year, looking at our operating plans and our capital spending plans, we'd end the year at about two and a half times leverage, somewhere in that range. you know, again, we've got a decent pipeline within that, you know, these are tend to be smaller size deals. So, you know, our first priority, you know, strategically, as we think about capital allocation generally, is M&A, but there will invariably be, you know, net reduction and leverage over the course of the year and the degree to which that's impacted by M&A's TBD.

Thank you. I appreciate it. That's all.

We have reached the end of the question and answer session. I would like to turn the floor back over to Tom Logan for closing remarks.

Well, ladies and gentlemen, I appreciate your time and attention today. Again, we're happy to report the second quarter performance. Obviously excited about the support that we have for Q3 and Q4 and look forward to reconnecting in three months to update our outlook at that point in time. Appreciate your time.

Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.