Stevanato Group Q1 2025 Financial Results May 8, 2025 Safe Harbor Statement Forward-Looking Statements This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of Stevanato Group S.p.A. ("we", "our", "us", "Stevanato Group" or the "Company") and which involve known and unknown risks, uncertainties and assumptions because they relate to events and depend on circumstances that will occur in the futur ...

Group 1 - The article emphasizes the importance of fundamental, income-oriented, long-term analysis conducted by buy-side hedge professionals across various sectors in developed markets globally [1] - It invites readers to engage in discussions regarding investment ideas, highlighting a collaborative approach to investment analysis [1] Group 2 - The article does not provide specific company or industry insights, focusing instead on the general practices of hedge fund professionals [2][3]

Risks and Challenges - The company faces significant risks related to product quality, which could lead to lost sales, delayed market acceptance, and increased costs[57]. - The company is highly dependent on maintaining relationships with suppliers and service providers, which impacts its financial condition and results[58]. - The company is exposed to international market risks, including geopolitical tensions, which could materially affect its liquidity and financial condition[58]. - The company may face challenges in attracting and retaining skilled employees due to intense competition in the labor market[58]. - The company’s financial performance could be adversely affected by fluctuations in currency exchange rates and interest rates[58]. - The ongoing conflict between Russia and Ukraine has caused significant fluctuations in energy prices, impacting the company's ability to source materials at reasonable terms[81]. - The company is subject to tax laws and potential audits across multiple jurisdictions, which could materially affect financial results[88]. - The company faces risks related to supplier relationships, including potential disruptions that could adversely affect financial results and operations[79]. - The ongoing military conflict in Israel and Gaza may impact the company's ability to receive materials and distribute products[156]. - The company is subject to various laws and regulations, including those related to environmental protection, which could require significant compliance costs[132]. - The company may face unexpected liabilities from acquisition agreements due to limited indemnification provisions[167]. - The company is exposed to credit risk on accounts receivable and certain prepayments made in the normal course of business[153]. - The company may face increased compliance costs due to new data protection regulations in China, which could impact operations[127]. - The company is vulnerable to data breaches and regulatory enforcement actions, which could result in significant fines and reputational damage[190]. Market and Competitive Landscape - The company must continuously develop and acquire new products and services to remain competitive in a rapidly changing technological landscape[66]. - Significant competition exists in the market, with competitors potentially having greater resources to respond to customer needs and emerging technologies[91]. - The company’s ability to innovate and respond to customer needs is crucial, as failure to do so may result in loss of market share to competitors[67]. - The company emphasizes the importance of maintaining and enhancing its brand and reputation to ensure business success, which is crucial for customer retention and acquisition[73]. - The demand for COVID-19 related products is expected to decrease as the transition from pandemic to endemic status continues[193]. - There is uncertainty regarding the long-term impact of COVID-19 on product demand, with contributions expected to decrease and potentially integrate into traditional vaccination business[194]. Financial Performance and Revenue - The company's backlog may not accurately predict future revenue, as contracts can be terminated or delayed, affecting revenue timing[70]. - The backlog as of December 31, 2024, was approximately €853 million, down from €945 million at December 31, 2023, indicating a decrease of about 9.7%[72]. - Fluctuations in backlog levels may not be indicative of future direct revenue due to factors such as project size, complexity, and customer ordering patterns[72]. - 51.4% of the company's revenues derive from its top ten customers, with one individual customer representing 10.3% of revenues in 2024[98]. - The average day sales outstanding for 2024 has increased to approximately 75 days, compared to approximately 67 days for 2023[153]. - A significant majority of outstanding trade receivables are not covered by collateral or credit insurance[153]. - The company has historically paid dividends over the last three years, but future declarations are uncertain and depend on various factors including financial performance and board decisions[245]. Strategic Initiatives and Growth - The company is pursuing various strategies to maintain and improve revenue growth, although success is not guaranteed[93]. - The company plans to expand its global market position in primary drug containment systems and increase its investments in R&D to address unmet market needs[96]. - The company aims to selectively pursue acquisitions and technology collaborations to augment its product and service portfolio[96]. - The company has delayed its investment in China to focus on new manufacturing facilities in the U.S. and Italy[103]. - The establishment of new production plants for EZ-Fill® products is a priority to mitigate risks associated with current manufacturing facilities[107]. - The company is expanding its manufacturing capacity for high-value solutions primarily in North America and Europe[96]. Regulatory and Compliance Issues - The company’s operations are subject to various regulatory requirements, and failure to comply could result in significant penalties[62]. - The Golden Power Decree in Italy may restrict foreign investments and acquisitions in the healthcare sector, potentially impacting the company's strategic decisions[139]. - The evolving regulatory landscape may require additional investments in compliance programs, impacting business strategies and operational costs[187]. - Compliance with evolving data protection regulations, such as GDPR and UK GDPR, could result in fines up to €20 million or 4% of total worldwide annual turnover[180]. - Climate change legislation could lead to increased operational costs and business interruptions, affecting financial decisions and capital expenditures[191]. Intellectual Property and Legal Risks - The company relies on trade secrets and confidential know-how to protect its technology, which may be difficult to safeguard[196]. - The patent prosecution process is complex and costly, potentially hindering the ability to secure necessary patent protections[200]. - The company may face challenges in maintaining and enforcing its intellectual property rights, which could impact its competitive position[203]. - Third-party claims of patent infringement could result in substantial costs and delays in product development and commercialization[210]. - The company may need to redesign products to avoid infringement, which could lead to significant costs or delays[214]. - Public announcements related to litigation could negatively affect the company's stock price and market perception[216]. - The company may face expensive and time-consuming lawsuits to protect its intellectual property, which could adversely affect its business success[217]. - Loss of patent protection due to successful invalidity claims could allow third parties to commercialize the company's technology without compensation, impacting its competitive position[219]. Governance and Shareholder Matters - The concentrated voting control held by Stevanato Holding S.r.l. (93.11% of voting rights) may impact shareholder decisions and the company's governance[237]. - Future sales of a substantial number of shares could adversely affect the market price of the company's ordinary shares[239]. - The company may issue additional securities to raise capital for investments, which could constitute a material portion of its outstanding shares[241]. - Claims of U.S. civil liabilities may not be enforceable against the company due to its incorporation under Italian law and the location of its assets[244]. - As a foreign private issuer, the company is exempt from certain SEC rules, resulting in potentially less publicly available information compared to U.S. domestic issuers[246]. - The company follows home country practices for corporate governance, which may lead to a board composition that lacks a majority of independent directors, differing from NYSE standards[247].

Revenue Performance - FY 2024 revenue grew by 2% year-over-year, driven by a 6% increase in the BDS Segment, which offset a decline in the Engineering Segment[12]. - HVS revenue increased by 15%, representing 38% of total revenue for FY 2024, with a 24% increase in revenue from biologics[12]. - Total revenue for FY 2024 was €1.104 billion, with a reported revenue of €330.6 million for Q4 2024, reflecting a 3.0% increase from Q4 2023[47]. - In Q4 2024, revenue increased by 3% to €201 million, with a 7% growth in the BDS Segment offsetting a 16% decline in the Engineering Segment[28]. - The Biopharmaceutical and Diagnostic Solutions segment reported organic revenue of €937.5 million for FY 2024, while the Engineering segment reported €170.4 million[47]. Profitability Metrics - Net profit for Q4 2024 was €48.3 million, or €0.18 of diluted EPS, with adjusted net profit of €51.5 million, or €0.19 of adjusted diluted EPS[29]. - Net profit for Q4 2024 was €48.3 million, a 6.8% increase compared to €45.2 million in Q4 2023, while FY 2024 net profit decreased by 19.2% to €117.8 million from €145.7 million in FY 2023[49]. - The company reported a net profit guidance for 2025 ranging from €138.3 million to €148.5 million, indicating potential growth in profitability[65]. EBITDA and Margins - Adjusted EBITDA for Q4 2024 increased by 5% to €90.9 million, with an adjusted EBITDA margin of 27.5%[29]. - Adjusted EBITDA for FY 2025 is projected to be between €293.0 million and €306.3 million, with an expected gross profit margin expansion of 100 to 140 basis points[37][39]. - Adjusted EBITDA for 2025 is expected to be between €293.0 million and €306.3 million, suggesting a focus on operational efficiency[65]. - Gross profit margin decreased by 210 basis points to 29.7% due to vial destocking and lower margins in the Engineering Segment[29]. Future Outlook - Continued market stabilization is expected in FY 2025, with a gradual recovery in vial demand anticipated[12]. - The company expects FY 2025 revenue guidance between €1.160 billion and €1.190 billion, implying a growth rate of 5% to 8%[37]. - The company aims to return to double-digit growth and expand margins through strategic investments in high-value solutions (HVS) and operational improvements in the Engineering segment[42]. Capital Expenditures and Cash Flow - The company plans to increase capital expenditures to between €310 million and €340 million for FY 2025, net of customer contributions[39]. - Free cash flow for FY 2025 is anticipated to be negative, ranging from €40 million to €60 million[39]. - Free cash flow for the year ended December 31, 2024, was negative €148.5 million, compared to negative €333.9 million in 2023, showing an improvement of 55.6%[64]. - Total CAPEX for the year 2024 was €286.6 million, down from €453.3 million in 2023, a decrease of 36.7%[60]. Asset and Debt Management - Capital employed increased to €1,739.4 million as of December 31, 2024, up from €1,457.1 million in 2023, representing a growth of 19.4%[58]. - Net debt increased slightly to €335.0 million as of December 31, 2024, compared to €324.4 million in 2023, reflecting a change of 2.0%[62]. - Trade working capital improved to €401.6 million as of December 31, 2024, compared to €367.2 million in 2023, an increase of 9.4%[58]. - Non-current assets excluding the fair value of derivative financial instruments rose to €1,448.7 million as of December 31, 2024, from €1,209.2 million in 2023, a growth of 19.7%[58]. Operational Developments - The Latina project in Italy turned profitable at the gross profit margin level in Q3 2024, with ongoing capacity expansion for PFS and EZ-fill cartridges[12]. - Commercial production in Fishers, Indiana, began in Q3 2024, supporting U.S. customers in the biologics market[12]. - The Engineering Optimization Plan aims to improve performance and is on track to complete previously delayed projects in 2025[18]. - The company recorded start-up costs of €3.8 million for new plants in Q4 2024, totaling €13.0 million for FY 2024[54]. Taxation - The tax rate for FY 2025 is estimated to be approximately 23%[39].

Financial Data and Key Metrics Changes - In 2024, revenue grew 2% year-over-year, driven by a 6% increase in the Biopharmaceutical and Diagnostic Solutions segment, offsetting a 70% decline in the Engineering segment [8] - For Q4 2024, revenue increased 3% to €330.6 million, with a 7% increase from the Biopharmaceutical and Diagnostic Solutions segment, countering a 16% decline in the Engineering segment [26] - Net profit for Q4 totaled €48.3 million, with diluted earnings per share at $0.18, and adjusted diluted EPS at $0.19 [29] Business Line Data and Key Metrics Changes - Revenue from high value solutions grew 9% to a record €131 million in Q4, representing approximately 40% of total revenue [27] - The Biopharmaceutical and Diagnostic Solutions segment saw a 7% revenue increase to €279.4 million, primarily driven by high value syringes, despite a 14% decline in bulk and EZ-fill vials [30] - The Engineering segment's revenue decreased 16% to €51.2 million, with mixed performance across different areas [32] Market Data and Key Metrics Changes - Revenue from injectable biologics increased 24% year-over-year, representing 34% of the Biopharmaceutical and Diagnostic Solutions revenue [10] - The company anticipates a gradual recovery in vial demand throughout 2025, with expected growth in vials from mid to high single digits [60] Company Strategy and Development Direction - The company is focused on expanding high value solutions and has made significant investments in manufacturing capacity in Fisher, Indiana, and Latina, Italy [9][12] - The strategic direction includes optimizing operational efficiency and increasing production capabilities to meet growing demand for biologics [23][24] - The company aims to return to double-digit growth and expand margins by leveraging its integrated value proposition [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that 2025 will be significantly better than 2024, with ongoing high demand for high value products and a gradual recovery in the vial market [45][129] - The company is optimistic about the operational improvements in the Engineering segment and expects to capture future opportunities [22][46] Other Important Information - The company ended 2024 with cash and cash equivalents of €98.3 million and net debt of €335 million, indicating sufficient liquidity for strategic priorities [35] - Capital expenditures for 2024 totaled €286.6 million, with 89% allocated for growth projects [36] Q&A Session Summary Question: Vial Recovery Timeline - Management is confident that 2025 will see a gradual recovery in vial demand, with normalization expected throughout the year [51] Question: Gross Margin Dynamics - Latina is expected to achieve normal gross profit margins by the end of 2025, while Fishers is anticipated to turn positive in the second half of 2025 [54][56] Question: 2025 Vial Growth Expectations - The company models growth in vials for 2025 from mid single digits to high single digits, with sequential improvement expected [60] Question: Device Manufacturing Operations - The company is focused on providing integrated solutions, with significant investments in device manufacturing to meet customer demand [62] Question: Engineering Segment Recovery - The Engineering segment is expected to return to mid-teens operating margins as optimization efforts progress [93] Question: Fishers Facility Revenue Contribution - The Fishers facility is expected to significantly increase revenue contribution in 2025, with full capacity ramp-up projected by 2028 [99] Question: Impact of Administration Changes - The company has a robust supply chain and is well-positioned to adapt to any changes in the geopolitical environment [71][72] Question: Vial Sales Decline Details - The decline in vial sales was more pronounced in EZ-fill vials compared to bulk vials, with specific figures not disclosed [126]

Company Performance - Stevanato Group reported quarterly earnings of $0.20 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.19 per share a year ago [1] - The company posted revenues of $352.68 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 1.85%, and up from $345.22 million year-over-year [2] - Over the last four quarters, Stevanato has not surpassed consensus EPS estimates, but has topped consensus revenue estimates three times [2] Stock Outlook - Stevanato shares have declined approximately 12.5% since the beginning of the year, contrasting with the S&P 500's decline of 0.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.12 on revenues of $260.58 million, and for the current fiscal year, it is $0.58 on revenues of $1.25 billion [7] Industry Context - The Medical - Drugs industry, to which Stevanato belongs, is currently ranked in the bottom 46% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5] - Another company in the same industry, Durect, is expected to report a quarterly loss of $0.02 per share, with revenues projected to be $6.91 million, reflecting a significant year-over-year increase [9]

Core Viewpoint - The analysis reinstates a buy rating on Stevanato Group, highlighting its position as a leading player in drug containment and delivery for life sciences and biopharmaceutical sectors [1]. Company Overview - Stevanato Group operates in the drug containment and delivery market, serving life sciences and biopharmaceutical companies [1]. Investment Analysis - The decision to reinstate the buy rating follows a stock derating, indicating a potential opportunity for investors [1].

Financial Performance - Revenue for Q3 2024 was €277.87 million, a 2% increase from €271.42 million in Q3 2023[13]. - Gross profit decreased to €74.44 million in Q3 2024, down 10% from €82.89 million in Q3 2023[13]. - Operating profit for the nine months ended September 30, 2024, was €94.29 million, a decline of 31% compared to €136.67 million for the same period in 2023[13]. - Net profit for Q3 2024 was €30.02 million, a decrease of 21% from €37.89 million in Q3 2023[13]. - Basic earnings per share for Q3 2024 was €0.11, down from €0.14 in Q3 2023[13]. - Total comprehensive income for Q3 2024 was a loss of €2.58 million, compared to a gain of €42.80 million in Q3 2023[15]. - For the nine months ended September 30, 2024, total revenue reached EUR 773,441 thousand, a 1.5% increase from EUR 764,715 thousand in the same period of 2023[53]. - Gross profit for the nine months ended September 30, 2024, was EUR 204,165 thousand, down from EUR 238,058 thousand in 2023, reflecting a decrease of 14.2%[53]. - Operating profit for the nine months ended September 30, 2024, decreased to EUR 94,285 thousand, compared to EUR 136,673 thousand in 2023, a decline of 30.9%[56]. - The net profit attributable to equity holders for Q3 2024 was EUR 30.0 million, a decline of 20.8% from EUR 37.9 million in Q3 2023[176]. Assets and Liabilities - Total assets increased to EUR 2,213,843 thousand as of September 30, 2024, up from EUR 2,071,577 thousand at December 31, 2023, representing a growth of approximately 6.85%[16]. - Total liabilities decreased to EUR 891,547 thousand at September 30, 2024, compared to EUR 938,931 thousand at December 31, 2023, a reduction of about 5.0%[16]. - Total assets as of September 30, 2024, were €2,386 billion, compared to €2,213 billion as of December 31, 2023, indicating an increase of approximately 7.8%[52]. - Total liabilities as of September 30, 2024, were €1.078 billion, compared to €891.547 million as of December 31, 2023, reflecting an increase of about 21.0%[52]. - Current financial liabilities decreased significantly to EUR 75,614 thousand as of September 30, 2024, down from EUR 143,277 thousand at December 31, 2023, a reduction of about 47.3%[16]. - Total financial liabilities decreased to EUR 364,986 thousand at September 30, 2024, from EUR 398,916 thousand at December 31, 2023[125]. Cash Flow and Investments - Net cash flows from operating activities increased to EUR 112,141 thousand, up 18.0% from EUR 95,019 thousand in the same period last year[20]. - Cash flows used in investing activities decreased to EUR (219,179) thousand, a reduction of 33.5% compared to EUR (328,937) thousand in 2023[20]. - Cash and cash equivalents increased to EUR 77,996 thousand at September 30, 2024, compared to EUR 69,602 thousand at December 31, 2023, representing a growth of approximately 12.1%[16]. - Cash and cash equivalents increased to EUR 77,996 thousand as of September 30, 2024, up from EUR 69,602 thousand at December 31, 2023, representing an increase of 12.93%[131]. - Capital expenditures related to ongoing infrastructure investments were approximately EUR 92.2 million, net of expected contributions from BARDA for the new U.S. facility[92]. Research and Development - Research and development expenses for the nine months ended September 30, 2024, were €26.10 million, slightly up from €25.61 million in the same period of 2023[13]. - Research and development expenses for the nine months ended September 30, 2024, totaled EUR 26,103 thousand, compared to EUR 25,605 thousand in 2023, indicating a slight increase of 1.9%[53]. - The company has secured a leadership position in drug development and delivery through significant investment in research and development[167]. Market and Production - The Group initiated commercial production at its new EZ-fill® manufacturing hub in Fishers, Indiana, in Q3 2024, with customer validations expected to continue into 2026[22]. - The Group has ten production plants globally, with new facilities in Piombino Dese and Latina starting commercial production in 2023[22]. - The Group is focused on expanding its global capacity for high-value solutions products[22]. - Approximately 85% of total revenue for the first nine months of 2024 came from the Biopharmaceutical and Diagnostic Solutions segment[184]. - The company operates ten production plants globally, with expansions in the U.S. and Italy to increase capacity for premium EZ-Fill® products[174]. Financial Risks - The Group is exposed to financial risks including foreign currency exchange rates, liquidity risk, credit risk, and commodity price fluctuations, which could significantly impact its financial position and cash flows[46]. - The average foreign exchange rate for the US dollar was 1.0871 for the nine months ended September 30, 2024, compared to 1.0833 for the same period in 2023, showing a slight increase[49]. Employee and Shareholder Information - The company has a Long Term Incentive Plan running from January 1, 2023, to December 31, 2027, which includes two sub-plans with performance criteria based on revenue growth and ROIC[139]. - The company granted 145,670 Performance Share Units (PSUs) and 145,670 Restricted Share Units (RSUs) in 2023, with 1,390 forfeited by year-end[147]. - At September 30, 2024, the outstanding number of PSUs was 187,909 and RSUs was 173,458[147].

Financial Data and Key Metrics Changes - For Q3 2024, revenue grew 2% to €277.9 million, with a 3% increase on a constant currency basis, driven by a 6% growth in the Biopharmaceutical and Diagnostic Solutions Segment [21] - Gross profit margin decreased to 26.8% due to temporary impacts from vial destocking and higher costs associated with ramp-up activities [22] - Net profit totaled €30 million, with diluted earnings per share at €0.11, and adjusted EBITDA was €63.7 million, resulting in an adjusted EBITDA margin of 22.9% [24] Business Line Data and Key Metrics Changes - The Biopharmaceutical and Diagnostic Solutions (BDS) segment revenue grew 6% to €233 million, driven by high-value syringes, while the Engineering segment revenue decreased 15% to €44.8 million [28][30] - Revenue from high-value solutions increased 17% to €100.4 million, representing approximately 36% of total revenue, up from 32% last year [22][28] Market Data and Key Metrics Changes - Vial revenue declined approximately 38%, with a more pronounced drop in EZ-fill vials, impacting overall margins [28][30] - The company expects vial orders to begin picking up at the end of 2024, with a gradual recovery anticipated in 2025 [12][20] Company Strategy and Development Direction - The company is implementing a business optimization plan to address current challenges and improve operational structure, aiming for long-term profitable growth [10][11] - The demand landscape for the Engineering Segment remains favorable, driven by trends such as the rise in biologics and the adoption of drug delivery devices [11][54] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the recovery of vial demand, emphasizing that the destocking is a temporary inventory normalization effect [70][71] - The company remains focused on execution and achieving long-term objectives, with expectations for improved financial performance in Fishers and Latina as capacity ramps up [39][40] Other Important Information - The company is maintaining its revenue guidance for 2024 but has lowered its outlook for adjusted EBITDA and adjusted diluted EPS due to increased costs from the optimization plan [35][36] - Capital expenditures for Q3 2024 totaled €58.8 million, reflecting ongoing investments in capacity expansion [34] Q&A Session Summary Question: Guidance for 2025 and growth expectations - Management indicated that the uncertainty in 2025 growth is related to the pace of recovery in EZ-fill and bulk vials, but they see favorable tailwinds in high-performance syringes and other product categories [42][44] Question: Visibility on destocking easing - Management characterized the market as normalizing, with gradual improvements in vial orders expected in the second half of 2024, but the timing of recovery remains uncertain [47][49] Question: Engineering segment challenges - Management acknowledged challenges in the Engineering segment but noted that they are seeing initial benefits from optimization actions and expect to return to profitability by mid-2025 [52][73] Question: Vial demand recovery - Management expressed confidence that vial demand will return to pre-pandemic levels, emphasizing that the current decline is due to inventory normalization [70][104] Question: Costs related to validation and optimization - Management clarified that additional costs are associated with validation activities in Fishers and the execution of the optimization plan in Engineering, which are expected to yield long-term benefits [88][90]

Stevanato Group Q3 2024 Financial Results November 5, 2024 Safe Harbor Statement 2 Forward-Looking Statements This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of Stevanato Group S.p.A. ("we", "our", "us", "Stevanato Group" or the "Company") and which involve known and unknown risks, uncertainties and assumptions because they relate to events and depend on circumstances that will occur in th ...