Summary of Stevanato Group Conference Call Company Overview - **Company**: Stevanato Group (NYSE: STVN) - **Industry**: Pharmaceutical packaging and automation solutions - **Core Products**: Glass primary packaging components (vials, cartridges, syringes) and modular automated production machinery [1][2] Key Growth Drivers - **Market Position**: Stevanato is well-positioned to leverage growth in biologics, with a long track record of double-digit organic growth [4][5] - **Capital Expenditure**: Significant investments in new plants, including $500 million in Fishers, Indiana, expected to ramp up by 2028, and another plant in Italy [4][5] - **Customer Base**: Serves 23 of the 25 largest pharmaceutical companies, indicating strong demand and high barriers to entry due to capital and expertise requirements [5][6] Financial Performance - **Growth Outlook**: Anticipates mid to high single-digit growth in 2025, with normalization expected in 2026 [7][11] - **High-Value Solutions**: Revenue from high-value solutions reached approximately $520 million, with a 50% growth in Q3 [14][15] - **Profit Margins**: High-value products have gross profit margins of 40%-70%, compared to 15%-35% for non-high-value products, indicating a significant opportunity for margin expansion [18][23] Market Dynamics - **Destocking Effects**: The company has moved past destocking challenges and is seeing a recovery in demand, particularly for sterile vials and high-performance syringes [7][10] - **Competitive Landscape**: Opportunities to gain market share due to disruptions among competitors and the company's innovative product offerings [12][13] Policy and Regulatory Environment - **MFN and Reshoring**: Recent policy changes, including MFN (Most Favored Nation) pricing, are seen as positive for the company, providing more certainty and potential for increased demand [24][25] - **GLP-1 Market**: The company views the growth of the GLP-1 market as a tailwind, with expectations of increased demand for biologics and related packaging solutions [39][41] Engineering Segment - **Engineering Demand**: The engineering segment is currently experiencing timing issues but is expected to recover as new orders are confirmed [50][52] - **Automation Trends**: Increased automation in manufacturing is seen as a key advantage, particularly in developed markets like the U.S. [34][35] Future Outlook - **Long-Term Growth**: The company is optimistic about future growth driven by high-value solutions, increased capacity, and favorable market conditions [23][54] - **Biosimilars and Annex One**: The push towards biosimilars and compliance with Annex One regulations in Europe are expected to further enhance market opportunities [42][49] Conclusion - Stevanato Group is strategically positioned for growth in the pharmaceutical packaging industry, with significant investments in capacity and a strong focus on high-value products. The company is navigating current market challenges while preparing for future opportunities driven by policy changes and increasing demand for biologics.

Financial Data and Key Metrics Changes - Revenue for Q3 2025 increased by 9% year over year to $303.2 million, driven by a 14% increase in the BDS segment, which offset a 19% decline in the engineering segment [12][15] - Adjusted EBITDA increased to €77.8 million, with an adjusted EBITDA margin improving by 280 basis points to 25.7% [15] - Net profit totaled $36.1 million, with diluted EPS of $0.13, while adjusted diluted EPS increased 17% to $0.14 [14][15] - Consolidated gross profit margin reached 29.2%, a 240 basis point increase, primarily due to a favorable mix of high-value solutions [13][15] Business Line Data and Key Metrics Changes - The BDS segment revenue rose 14% to €266.7 million, with high-value solutions growing by 47% and representing 55% of segment revenue [15][16] - Revenue from the engineering segment decreased by 19% to €36.4 million, driven by lower revenue from glass conversion and assembly lines [17] - Gross profit margin for the BDS segment increased by 400 basis points to 32%, while the engineering segment's gross profit margin declined to 10.4% [16][17] Market Data and Key Metrics Changes - The company noted strong demand for high-value solutions, particularly in the injectable biologics market, which is expected to continue driving growth [6][7] - The ongoing recovery in vial demand is contributing positively, with expectations of returning to pre-pandemic levels for bulk vials by 2026 [58] Company Strategy and Development Direction - The long-term strategy focuses on meeting the demands of high-growth markets such as injectable biologics, emphasizing premium containment and delivery solutions [6][7] - The company is investing in capacity expansion to support the rising demand for high-value products, with significant capital projects underway in Fishers and Latina [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting 2025 guidance despite headwinds from foreign currency and tariffs, citing strong momentum from high-value solutions [4][19] - The company remains optimistic about the long-term demand landscape for manufacturing technologies, particularly as customers invest in U.S. manufacturing operations [9][19] Other Important Information - The company received the COVADIS Silver Medal, placing it in the top 15% of companies assessed globally, reflecting its commitment to sustainability and ESG practices [11] Q&A Session Summary Question: Can you provide more details on the $10 million outperformance in the quarter? - The $10 million outperformance was due to an acceleration of product shipments in the BDS segment, accommodating customer supply chain needs [23] Question: What drove the strong growth in the quarter, and how does the trajectory look going into next year? - Strong demand for high-performance syringes, particularly Nexa, and recovery in Easyfill vials contributed to growth, with expectations for continued robust demand [24][25] Question: Can you update on the margin improvement in Fishers and Latina? - Latina is approaching normalized gross profit margins, while Fishers is still improving but has not yet reached positive margins [27][28] Question: What is the timeline for the engineering segment to return to growth? - The engineering segment is experiencing delays in order conversion, but there is a healthy pipeline and positive feedback from customers, indicating potential for future growth [29][30] Question: How significant are biosimilars to the company's growth strategy? - Biosimilars are expected to contribute to revenue growth, with the company actively engaged in developing products for this market [34][36] Question: What is the outlook for high-value solutions in Q4? - Guidance for Q4 implies a range of 40-41% for high-value solutions, driven by backlog and recent order acceleration [72]

Financial Data and Key Metrics Changes - The company reported a 9% revenue growth in Q1 2025, reaching €256.6 million, with an 8% increase on a constant currency basis [17] - Gross profit margin improved by 80 basis points to 27.2%, driven by strong performance in the BDS segment [17][18] - Net profit totaled €26.5 million, with diluted earnings per share at €0.10, and adjusted EBITDA increased to €57.4 million, with an adjusted EBITDA margin of 22.4% [19][24] Business Line Data and Key Metrics Changes - Revenue from the BDS segment increased by 11% to €220.8 million, driven by strong growth in high-value syringes [20] - High-value solutions revenue grew by 25% to €110.3 million, accounting for 43% of total revenue [17][21] - The engineering segment saw a 4% revenue decline to €35.7 million, primarily due to lower sales from legacy projects [22] Market Data and Key Metrics Changes - The company observed a stabilization in vial demand as destocking effects began to ease, with expectations of mid to high single-digit growth in vials for the year [39][41] - The demand for drug delivery devices is increasing, supporting long-term growth in engineering manufacturing lines [9][30] Company Strategy and Development Direction - The company is focused on ongoing capacity expansion for high-value solutions to meet elevated market demand, particularly in biologics [30] - Investments in U.S. manufacturing are expected to reinforce the company's competitive position amid tariff challenges [14][30] - The company aims for a return to low double-digit revenue growth and margin expansion in the long term [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for high-value solutions and the ongoing recovery in vial demand [29][30] - The company is committed to executing its key priorities and long-term objectives, with a robust pipeline of opportunities supported by favorable industry trends [30] Other Important Information - The company expects a tariff-related impact of approximately €4.5 million on operating profit for 2025, with mitigation strategies in place [26] - Capital expenditures for Q1 2025 totaled €69.7 million, with over 90% allocated to growth investments [24] Q&A Session Summary Question: Clarification on tariff impact and U.S. demand - Management confirmed that the guidance incorporates the gross impact of tariffs and that ongoing discussions with customers are constructive [33][35] Question: Outlook for vial demand recovery - Management reiterated expectations for mid to high single-digit growth in vials for 2025, supported by increasing order intake [39][41] Question: Revenue potential from new facilities - The company aims to generate €500 million in revenue from the Fisher facility by 2028, with Latina also progressing well [44][46] Question: Engineering segment performance and legacy projects - Management indicated that legacy projects are on track for completion in 2025, with expectations for sequential margin improvement [56][58] Question: Free cash flow outlook - The company expects negative free cash flow of €40 million to €60 million for the year, with fluctuations based on CapEx and tax payments [100]