Full Year 2022 Stevanato Group SpA Earnings Call
Speaker 1: And way that that, way that that probably I when that.
Speaker 2: For joining, Tevanato Group's third quarter and fiscal year 2022 financial results conference call. As a reminder, all participants are in this and only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing the call button.
Speaker 3: is Franco Stevinato, Executive Chairman, Franco Moro, Chief Executive Officer, and Marco Delgado, Chief Financial Officer. A presentation illustrating today's results can be found on the IR section of our website.
Speaker 3: Some statements being made today will be forward looking in nature. Substatements are only predictions. Actual events and results may differ materially as a result of risk-sweepase, including those discussed in items 3D entitled risk factors in the company's most recent annual report filed on Form 20F with the FEC.
Speaker 3: We encourage you to review the information container orings released in conjunction with our SEC filing and our latest form 20F. The company does not assume any obligation to revise or update these four-looking statements to reflect subsequent events or circumstances except as required by law.
Speaker 3: Today's presentation may contain non- GAAP financial information. Management uses its information in its internal analyses of results and the needs of information may be implemented to investors in, gazing the quality of our financial performance, identifying trends in our results, and providing meaningful period to period comparison.
Speaker 3: for a reconciliation of the nine GAAP measures , please see the company's most recent earnings press release. And with that, I'll hand the call over to Frankus Devonato for opening remarks. Thank you for joining us. As we close out, another Yara Strong financials act.
Speaker 4: The collective effort of our employees worldwide led to a standard negative function in 2022. Near-building, a track record of consistent delivery on our financial and operational objective.
Speaker 4: We are well positioned against a backdrop of favorable demand and the fundamental of our business remains stronger.
Speaker 4: As you get into 2023, you expect to benefit from the secular tailwind in high growth and market such a biological.
Speaker 4: The current is important to put it in front of us to support customer across broad range of therapeutic areas such as CAD-1, Monoclonal Triboli and mRNA application. The current is seen trained to or sustain, robust demand for high performance drug containment.
Speaker 4: And we have modified our investment plan to maximize this opportunity.
Speaker 4: Note-Even theseatched use retired objectives will provide a new position for both organizations who will not trust Brit who would not trust Brit English.
Speaker 4: We are gaining more traction in supporting customer needs in multiple product categories across both segments. Lastly, our management team and board of directors are fully aligned on capitalizing on future growth prospects.
Speaker 4: We are laser focus on fulfilling the need of our customer and cementing our leadership position as a key partner in the pharmaceutical supply chain worldwide.
Speaker 4: We are investing in the business, our people, our provost, our community and scientific innovation, which we believe in turn should deliver durable organic growth to drive long-term share of their value.
Speaker 4: We are investing in the business, our people, our provost, our community and scientific innovation, which we believe in turn should deliver durable organic roads to drive long-term, shorter value. I will now hand the call over to Franco.
Speaker 4: Thank you, Franco. Starting on July 7, our full-culture results led to a strong finish in 2022 with double-digit goals, expanding margins and the growing mix of high value solutions.
Speaker 4: We finished the year with rapid revenue from high-value solutions, which represented approximately 30% of revenue per fiscal 2022. For the first quarter, new ordering stakes totaled 237 million euros.
Speaker 4: and we ended 2022 with backlog increasing 9% to 957 million euros. As expected, growth in backlog was partially upset by a lower level of orders to support COVID-19.
Speaker 4: Excluding COVID, our backlog increased 21% compared with last year, reflecting federal demand for new customer programs.
Speaker 4: are backlog increased 21% compared with last year, reflecting favorable demand for new custom audio mascar.
Speaker 4: A first-rate execution in 2022 enabled meaningful progress against a four strategic pillars.
Speaker 4: First, you get the best of the build-out of our industrial footprint to add capacity premium product.
Speaker 4: to meet demand and drive growth. We also signed an agreement with BARDA to further expand wire capacity in fishers.
Speaker 4: Second, we continue to draw a mix of high value solutions in 2022.
Speaker 4: the shift to high performance, high value products, as we led by pharmaceutical innovation.
Speaker 4: new classes of treatments, like while specialized drug containment, to ensure the highest integrity of the treatment, and we remain ideally positioned to capitalize on this trend.
Speaker 4: of treatments, like while specialized drug containment, to ensure the highest integrity of the treatment, and we remain ideally positioned to capitalize on this trend. Have an exciting time.
Speaker 4: We continue to fuel innovation by investing in R&D, partnering with best-in-class players to quantify a market-related position. In 2022, we launch our next generation Easyfield Mod platform, and advance
Speaker 4: upon two levels of advanced literary systems.
Speaker 4: Most recently we entered into a partnership with Transcoject to expand our portfolio with the COC and COP syringes. This allowed us to offer the broader available suite of market-leading glass and plastic syringes.
Speaker 4: And lastly, we continue to build a pipeline of multi-eal opportunities in high-grow hand-markets like biologics.
Speaker 4: As we further advanced these strategic imperatives in 2023, we expect that the workforce will be able to achieve sustainable organic growth in the years to come.
Speaker 4: On page 9, we are assigned a capital standing plan to optimize our global footprint and developing demand.
Speaker 4: In the US and Europe , future demand as outpaste are expectation since RIPO.
Speaker 4: In the armontulot of plants, give us the flexibility to adjust our plants according to this.
Speaker 4: Over the last 80 months we have worked alongside customers to better address their needs.
Speaker 4: With this end of visibility, we are accelerating investments in fishers to capitalize on the elevated demand outlook, led by expected growth in biologics. Concurrently, you are tapping the brakes on the feeling of our China expansion.
Speaker 4: so that we can prioritize projects in the US and Italy. Other fine-capers planned for Fischer focuses investment in the US market, where demand has been climbing for high-performance drag containment to meet the needs of sensitive drag classes such as GLT1, monoclonal antibodies.
Speaker 4: and mRNA applications. We have updated our industrial plan to adopt to these favorable market times.
Speaker 4: First, we continue to see surge in demand for survey ranges. To capitalize on this, we are adding approximately 60% more syringe capacity in feature compared with our initial plan.
Speaker 4: This includes other cylinders which are porkers built for biologics.
Speaker 4: Turning to wires, we expect to double the capacity in the U.S. for ready-to-use wires.
Speaker 4: As we prepare the commercial loans of our next generation, it feels smart platform. Let me cross-work at the changes to our expected capital features, starting with our initial planned investment.
Speaker 4: At the time of their IPO, we assumed the context for feature of approximately 150 million euros. In March of 2022, we entered an agreement with Banda to expand the via capacity for both easy field and bulk buyers.
Speaker 4: This is estimated at approximately 100 and 75 million euros. Most recently, we decided to invest in an additional 175 million euros to further expand much needed capacity for Mexa and Albert Syranges.
Speaker 4: When you edit a lot, the total countax for feature is approximately 500 million euros. This includes the portion of the countax that is supported by Baza.
Speaker 4: We remain on track to launch validation activities in features in the fourth quarter of 2023.
Speaker 4: And as we expect that the right-of-new will begin to ramp in a meaningful way in 2024. Moving to slide 10, if you have been able to do the new business, it's complete. Polydational activities are well underway, and we started a commercial batch production.
Speaker 4: action beginning in the 4.
Speaker 4: We anticipate temporary inefficiency through the natural progression of stock-top activities as volumes are rising to grow over time. With the favorable demand in the U.S. and Europe , we are slowing down our expansion in China.
Speaker 4: China is strategic important, but our existing operations are currently sufficient. We are after your retired India, our graphics projects in the US and Europe , where our customers at the most pressing needs, and we can provide the greatest value.
Speaker 4: With that, I now land the cone over to Markle.
Speaker 4: I now land the pool over to Marco. Thanks, Franco.
Speaker 4: As night level, we end at 2022 with strong financial results. For the fourth quarter, arriving increased 26% to 292.1 million, or 23% on a cost like at the Jonah.
Speaker 4: To even by growth in both segments, they shift to high-value solutions and currency. Our top line results for the four quarter were better than expected due to the recognition of revenue that was previously forecasted in Q1 2023.
Speaker 4: This includes revenue from certain engineering projects in COVID-19. As a result, revenue from COVID-19 was higher than our forecast and represented to over five percent of total revenue.
Speaker 4: We are making relevant progress growing our mix of high-value solutions, which increase 31% to 87.2 million for the 4 quarter.
Speaker 4: For the 4-quarter gross profit margin increased by 290 basis points to 34.3%.
Speaker 4: Due to higher revenue, a favorable mix, a better leverage of fixed cost, and better quality or inflation or costs.
Speaker 4: Operating profit margin in the quarter increased to 21.6% and included the benefit of 3.0 in other income.
Speaker 4: Excluding start-up cost on the new plant, adjusted operating profit margin was 22.2%, compared with 18.8% in the same period last year. On the bottom line, this result is even better than expected net profit of 48.3 million.
Speaker 4: or 18 cents of diluted earnings per share, adjust the net profit of 49.6 million, or adjust the diluted APS of 19 cents.
Speaker 4: and adjusted the bidet totally 81.9 million, reflecting and adjusted the bidet the marginal 28% which was up to 170 basis points over last year.
Speaker 4: and adjusted the bidet totally 81.9 million, reflecting in adjusted the bidet the marginal 28%, which was up to 170 basis points over last year. Then it is like 13.
Speaker 4: On a full year basis, revenue increased 17% to 983.7 million, due to even the growth in both segments, the mid-shift to high-value solutions and currency. On a cost-encaurrency basis, revenue grew 13% over last year.
Speaker 4: Other expected, fully arrived in Ugro, was partially upset by low arrival from COVID-19.
Speaker 4: which represented 11% of total revenue in 2022, compared to 15% in 2021.
Speaker 4: As revenue from COVID-19 rose off, we have been successfully backfilling the decrease with new projects across the broad range of therapeutic areas. But 2022, high value solution grew 41%
Speaker 4: to record 293.2 million, and represent the approximately 40% of Raleigh. I will solve growth several mid-shift in operational efficiencies that will stand in margins for the full year.
Speaker 4: As a result, Gross Profit Master for 2022 increased 110 basis points to 42.5%, despite inflation.
Speaker 4: Why do we recover nearly all of the inflationary costs to price adjustment? It takes a relatively effective growth profit margin in 2022.
Speaker 4: For the full year, the Peretti profit margin for fiscal 2022 was up 40 basis points in 19.6%
Speaker 4: Excluding start-up cost on the new plant, adjusted operating profit margin increased by 20.2% compared to 19.2% last year.
Speaker 4: This led to solid delivery on the bottleneing with net profit of 143 million or delivered with a gun in partial of 54 cents for 2022.
Speaker 4: On a major focus basis, the DUTBPS increased 17% to 56%.
Speaker 4: For 2022, adjust the DB-Danker is 21% to 263.6 million, resulted in an adjusted DB-D in the module 26.8%.
Speaker 4: Let's move to segment results on slide 14. The biopharmaceutical and diagnostic solution segment once again delivers strong results for the stroke, water and sugar here.
Speaker 4: For the fourth world, the revenue increased 25% to 241.5 million and 21% on a cost on currency basis over the prior year.
Speaker 4: Revenue growth was mainly driven by a 31% increase in five-adduced solutions and the 21% increase for another containment and delivery solutions. Thank you for your own profit margin increased to 37.3%. Give strong revenue generation.
Speaker 4: the several minks, better levels of fixed cost and the recovery of inflationary costs. Opelling profit margin for the segment was 23.7% in the quarter. For the full year, right-and-you group fit 10% to 799.7 million.
Speaker 4: and 11% on a cost-concarrency basis, compared with fiscal 2021. Revenue from high-deli solution grew 41% while other containment delivery solutions were up 4% over the prior year.
Speaker 4: For the full year, gross profit margin for the BDS segment increased 120 basis points to 34.3%. And operating profit margin improved to 22.8% despite inflationary fadlings. And operating profit margin improved to 22.8% despite inflationary fadlings.
Speaker 4: Financial results for the engineering segment were better than expected in the four quarter, a revenue increase 40% to 60.6 million, mostly due to the time in the progression of projects. For the full year, revenue increase 23% to 184 million.
Speaker 4: was 12.2%
Speaker 4: For the full year, Gross Profit margin improved 230 beds and has responded to 21.6%. Mainly driven by contribution for more creative business lines.
Speaker 4: as well as ongoing business optimization efforts. As a result, the patent profit margin improved to 13.8%
Speaker 4: ongoing business optimization effort. As a result, the patent profit margin is bought to 13.8% OsNet 15cm
Speaker 4: As of end of December 2022, we had the positive net financial position of 46 million and cash and cash equivalent of 228.7 million. For the full year, net cash generated from operating activities was 100.3 million, reflecting increased working capital to support growth.
Speaker 4: and higher inventory to mitigate supply chain risk. Meanwhile, issues for investing total 243 million to support our expansion plans.
Speaker 4: This is a result of the negative 3-challot of 137 million for fiscal 2022.
Speaker 4: In February 2023, we secure two lost, totally 130 million for our ongoing investment in growth platforms.
Speaker 4: The first five year loan was finance through 20 paribas for 70 million. The second loan for 60 million was finance through cash deposit and prestige.
Speaker 4: Both loans have a two-year drawdown so we can access the capital when needed. The loans show that our balance sheet can provide us with flexibility for capital deployment. Our balance sheet is healthy and we believe we have other way to liquidity to fund future growth. Turning to Capix on 916.
Speaker 4: In 2022, capital expenditure was 300.2.6 million as we continue to invest in our strategic global expansion. As Frank noted, we are focusing our force in the US and Italy to capitalize on rising demand.
Speaker 4: Consequently, we are forecasting capital expenditure of 35 to 40% of revenue in 2023, or which approximately 70 million carry-over from fiscal 2022.
Speaker 4: For 2023, approximately 90% of our expected graphics will start to grow, and there are many in bananas for all other activities including arranging.
Speaker 4: Let's review guidance on page 17. For fiscal 2023, we expect.
Speaker 4: revenue in the range of 1 billion 85 million to 1 billion 1 hundred and 15 million is implied growth between 10 and 13 percent.
Speaker 4: Excluding COVID, growth is estimated to be greater than 20%.
Speaker 4: Adjust the DTS in the range of 58 cents to 62 cents. Adjust the DBS in the range of 295 million to 300.5 million. Our 2023 guidance.
Speaker 4: assumes headwinds and tailwinds and considers the following. First, we expect that our second heart for the child will be stronger than the first heart. And growth will be linear throughout the year.
Speaker 4: Our model assumes double-digit growth in the BDS segment and high single-digit growth in engineering. Consistent with prior years, expect a spot downing revenue in the first quarter compared to Q4 2022.
Speaker 4: We have assumed that high value solution will represent a approximately 42 to 44 percent or 234 gas degree limit.
Speaker 4: Driving in from COVID-19 is expected to decrease by approximately 80 million in 2023.
Speaker 4: and estimate that it will represent about 3% of revenue. And lastly, the estimates are clear in Chicago of approximately 340 million.
Speaker 4: Thank you. I will hand the code back to Franco for closing comments. Thanks, Marco. A total financial result in 2022 demonstrated that we have the right strategy in place.
Speaker 4: We are operating in an environment of strong demand, growing end market and multi-year secular drivers. With a favorable demand landscape, a capital location priority at the time to meet current and future customer demand times.
Speaker 4: The timing of customer demand requires us to invest several years in advance of commercial production to see the opportunities in front of others.
Speaker 4: We have drawn the momentum entering in 2023. With our unique integrated capabilities and market leading portfolio, we are well positioned to drive durable, organic gold, and in turn, increase shareholder value.
Speaker 2: And with that, let's open it up for questions. This is the Coruscall Conference Operator. We will now begin the question and answer session.
Speaker 2: Anyone who wishes to ask a question may press, star, and one on their touch on telephone.
Speaker 2: To remove your question, please press star and two. Please pick up the receiver when asking questions. Once again, that's star and one for questions. We will pose for a moment what participants join the queue.
Speaker 5: The first question is from Paul Knight of Keybank. Please go ahead. I, Frank Elmoro, the growth and biologics you mentioned, would it be the GLP ones that stand out or what?
Speaker 6: because our solution addresses, particularly the needs for biologics. But we are right. We are targeting some areas that are fast-flowing and more than expected. Really, one is the GFQ-1 that has strong drive for our demand. And also, I want to mention.
Speaker 6: mRNA application that during the pandemic proved to be a real answer to for treatment, exactly three times for diseases. So disease is the main area, but we have a good pipeline of opportunity also in other therapeutic areas.
Speaker 5: In regarding Fisher expansion, will that occur in terms of revenue generation over 2024, or will it go take time to build that up into 25 and onward? So what would be the steps of revenue generation at Fisher?
Speaker 6: Thank you. I can confirm, Paul, that we see the completion of the first steps for validation end of this year, and we expect to have the ramp up of the revenue during 24. Obviously, we are talking about a modular investment that is...
Speaker 6: multi-year investment is not just for a single year. So we have expected to develop our revenue not only 24 but even later as a discharge at the progress. Thank you. Thank you. Well, to bring the next question please. The next question is from Patrick Donnelly of CT please go ahead. Hey guys, thanks.
Speaker 7: taking the questions. Maybe another one just on the capacity expansions there, just shifting the resources towards areas like fishers. Is it just that the demand is so strong here in the US versus China that you wanted to accelerate that process? Is there a way to think about revenue being committed ahead of time as you guys build this out or is it going to be as you build it out? You'll fill it, just trying to get a sense for.
Speaker 6: The shift here obviously you guys are excited about the opportunities. You just want to feel out what that demand looks like versus the China piece. Yes, you go through the right. The decision time of where we are located, Capix is market driven, is demand driven. So we see an acceleration in demand both in US and Europe . So we decide to accelerate investment both areas and in future obviously but also in our Italian side.
Speaker 6: as I took in my...
prepare the comments to tap the brakes and we expect now to have the foot of the brakes sometime during 24. But the strategic meaning of the investment in China will remain the scheme that we mentioned at the very beginning.
Okay, that's helpful. Maybe one from Marco on the margin piece. Can you just talk about expectations for 23, how those will progress this year, and then also as some of this capacity comes online, how should think about the margin profile of that revenue just kind of thinking longer term. I know as these things came online, that was always a nice margin opportunity. So maybe talk 23 and then a little longer term.
things like Fisher come on mine. Thank you guys. Thanks Patrick. So for 2023 our plan is to expand farther the margin in both segments in engineering and BDS. About BDS we believe the main driver will be the shifting to our high-value solution. Now we are guiding between 32 to 44 percent of high-value solutions on total revenues. On the other side you are right the margin expansion in BDS will be temporary the 10th of May the start-up cost in Fisher in Linden, China.
because to secure the success of the project, we need to put people in cost in place that will be for 2023 more than proportional compared to the revenue. What we expect for the future is obviously the investing high resolution is to further expand as soon as the revenue generation will be normalized compared to the infrastructure and the cost. Okay, thank you guys. Thanks for that. The next question is from Derek De Bruin of Bank of America. Please go ahead. Hi, good morning. Thanks for taking a question. Just to explain.
quarter after quarter because of the better levels of our fixed expenses and because of the greater install capacity in easy feeding and I value solutions for Latina, for example, in second half of the year. Okay, great.
in that. You came in a little bit stronger in the fourth quarter on COVID than we have sought. So just want to know if that's a, that 80 number, did a million dollars just provide how to, how to think about that. The two to three percent arriving in generation from COVID is what we can see today. Obviously this is not easy to predict future revolution but what we can see today is.
can you give us some color on, you know, what, how to sort of think about unit dynamics and, you know, incremental revenue from that? I mean, basically if you're thinking about it.
a GLP one, what would be an average revenue contribution from a typical component that you're selling into it? How does it be think about this in terms of revenue, stuff, and not all from unit cost You can't understand, I cannot disclose a specific prospect with a single customer. What I can say is that if you look at the new FDA approval in terms of potential blockbuster, we have data about the four main blockbuster.
For the next year, I can confirm that we are at a three of these projects among four. So we expected to have a certain reconstruction, but at the same time, the high diversification of our portfolio in time of customer, in time of therapeutic areas, we are remain an effector to make our business a resilient. Derek, I just want to confirm and clarify your question. I think that your question was asking, related to things like GLP1, the average revenue per component. What type of product would you be selling into those? That's great.
In this time in terms of the format, we are talking about biological molecules. The first option is to deliver by syringes. So we expect to have impact in these kinds of prototypes. But for sure, it's linked to high-value solution syringes because we are addressing the needs of molecules that are highly sensitive. And so we have a good prospector.
including our next and our sub-arrangeting in that space. Thank you. Thank you, Eric. To bring the next question, please. The next question is from Team Daily of Wells Fargo. Please go ahead. Great. Thanks. So just wanted to touch on the kind of broader buyer-similar tailwinds, and this becomes a bigger dynamic in the United States.
Just think about the value curve here on the component that you sell. How do biosimilar assets compare to the original assets? Would biosimilars be using Nexon all the syringes? Would there be a step down to a more commoditized type of solution when it goes biosimilar? Just any help here would be appreciated.
The first comment is about the suitability of our target for biosimilar. We are in a very strong position because as we serve the originator at first then a biosimilar company like to the risk of their business using the same solution that proves to be the right one for the originator. The second point is that also for biosimilar the cost of the container remains a minor, very minor part compared to the total cost of the treatment.
in the competitiveness of our solution because of a different competition on the treatment side. This is the two comments that also based on our experience along the years. OK, I know I appreciate that. And secondly, thinking about raw material pricing and the security of supply on the glass front, I believe you guys in November every year started a new master supply agreement with suppliers on glass tubes. How did that go? Was there any changes on the price front, cost front, suppliers, duration, anything? Anything changing I get from that on that side of the things as you look forward into 23?
I just want to clarify your question, Cam. I think you're asking specifically about glass tubing and as we're going into 23, if there's any changes as we see in the pricing landscape there. Yes, like price costs in terms of your supply of glass tubing. Correct. Yes, the last part of the year, we are normally in the renewal process of commercial agreement with supplier. We see some impact of inflation, even if there is a kind of cost of energy that is much less than the hot period in the need of a lot of 22.
But we look at this increasing cost and we are back to the regular planters to recalculate the cost and price in order to include in the marginality in this case, the three sums that we can't do 100% of the year in 22. Great. Thank you for the time. Appreciate it.
We look at this increasing cost and we are back to the regular practice to recalculate the cost and apply a score, and apply a single quartering, including the marginality. In this case, the T-SUN is at the wake-up. Could you not do 100% of your income? All right, great. Thank you for the time. Appreciate it. Thanks, Dan Sabrina, next question.
The next question is from John Sorber from UBS. Please go ahead. Thanks for taking the question. So, you know, the HVS growth was pretty solid in the quarter. I guess, can you talk about what products attraction you're getting with most customers there? And, you know, the company is approaching that mid 30% revenue target this year. Any thoughts on just, you know, where this could go over the long term as a percent of revenues? Yeah, we are remain confident that they to confirm that in the next years, we will develop these shares in the high range of 30%. So, we are in the good trajectory. For sure, we are investing to support these opportunities. But our strategy and our view of the future is not for change that formal water we come in the past. We are very confident that we can achieve it.
I want to be clear that that is not a cap, and that means it's a bit of that we keep. Well, be on that app, the capacity of the high value division continues to come online. I appreciate the clarification there. Thanks.
Thanks, John . We bring our next question please. The next question is from Dave Windley of Jeffries. Please go ahead. Hi. Thanks for taking my questions. Good afternoon. The poll forwards of revenue into the fourth quarter. I'm wondering if you'd be willing to quantify those. And did they influence? Yes.
The percent of revenue from high value solutions at all, I'm assuming in a certainly the engineering is not high value solutions I wouldn't think and and maybe the COVID is not particularly rich on high value solutions So just wondered if it if it in the amount and if it impacted the HVS percentage metrics at all
of revenue from high-value solutions at all. I'm assuming, in a certain way, the engineering is not high-value solutions I wouldn't think, and maybe the COVID is not particularly rich on high-value solutions. So, just wondered if it impacted the HVS percentage metrics at all.
Yeah, you arrived, David, we had almost 37% of identity solution on total BDS revenue. So we are pretty happy with the progress. And it's the same line with our previous guidance for 2022. 2023, respectively, Father expanded the share of identity solution from 32 to 44. And as Lisa was mentioning, we are rising a little bit toward midterm expectation, having now a high 30% by 2026. So we are happy with the speed of the shifting. I just want to clarify the guidance for high value solutions is 32 to 34% for next year. And you shouldn't hesitate quarterly fluctuations here and there. Okay. Thank you. The next question. The next question is around the capacity expansion, change in plans. In the earliest iteration of that, that Fisher's plan and you, you confirmed this sense. It was about 150 million euro.
excuse me, Euro investment that was expected to produce about 150 million euros in revenue when fully ramped. Can we now expect that this Fisher's plant could ramp the 500 million euros as the in revenue? Is that still kind of the proportion of capacity productivity? Yes, I can confirm that the EUC is a reasonable proportion. The nature of the investments is still for high value solutions, including more, it is still by us, including more syringes, other syringes. But the internal rate of return and the financial success of the investment is very important. At the end, yes, you are right, we expect to have the same ratio in between one euro and capital, one euro in revenue. It is obviously time-the-rule, but what we expect. Yes, and Frank, thank you because that segues into the following question on that, which is roughly how long would you expect it to take to...
get to full utilization on that facility, thinking both from a revenue standpoint, but then also to the extent that your commentary today suggests that the build to full utilization does have some margin drag to it. How should we think about the time to get the normal margin? So kind of a two-parter on that, please. The poll that is started is moved here and we proceed the module by module in the installation. So we expected to complete this phase of the investment, the 500 million by the end of 26, including the last validation. And then to run proper to have the full ramp up, we could have expected to have at least two years more to have the full utilization of the capacity because we have to spend time to validate the different products and the customer. So this is the time frame for the full utilization now, but as a, as a, as always, our modular approach will allow us to have some flexibility in time of possible acceleration or a different attuning of the products. Okay, that's very helpful. Thank you.
Thanks, Dave. Sabrina, next question, please. The next question is from Matt Leru of William Blair. Please go ahead. Hi, this is Madeline Mollman on for Matt Leru. I just wanted to, we talked a little bit about pricing on the supply side, but I just wanted to see how you were thinking about pricing from your perspective in 2023. And as COVID starts to roll off, do you have opportunities to take price from maybe you are discounting bulk orders or something like that? Do you think there's room for pricing to improve in 2023? Matt Leru, I apologize. We were unable to hear the beginning of your question. Can you please repeat the question and perhaps speak a little further? Yes, sorry about that.
I was just wondering how you were thinking about pricing in 2023 as COVID begins to roll off if there's going to be opportunities for you to replace large COVID bulk orders with maybe more attractively priced smaller orders, something like that, how you were thinking about pricing in 2023 versus 2022.
As you guys mentioned many times, we do expect inflation as anybody else in 2023. We are pricing accordingly, including the margin into our pricing. So, in shifting to a revenue solution, this is the approach we are keeping with respect to pricing.
On top of that, you can also remember that COVID business was mostly related to wires. So we have a much broader range of products and the situation about wires is only part of the two pictures for us. Great. Thank you. Thank you.
Thanks, Adeline. Sabrina, may we have the next question, ladies? The next question is from Drew Ranieri of Morgan Stanley . Please go ahead. Hi, next question. Just to start to go back to, I think it was David's question. But can you just talk about the tool forward in engineering revenue in the fourth quarter? I did.
Is it possible if you could quantify what the pool floor was in terms of revenue? We are then acceleration in our progress system project. Thank you for more than than expected to accommodate some customer request.
As a reality, I was revenues in Q4 for about a seven to eight million soon engineered. As mentioned in my commentary, we, something similar happened to COVID, but we have been able to deliver some products expected to be delivered in Q1, again to accommodate customers requests. And then just as we were thinking about guidance for the year, the commentary on a step down.
from fourth quarter and the first quarter. Understandably, there's a few dynamics here. One is COVID, two is the engineering pool floor that we were just discussing. So can you help frame what maybe 8% decline would be sequentially from the fourth quarter to the first quarter. So we're kind of all on the same page about the full year progression.
What we can tell you today is that we expect a stronger second half of the year and the evolution of quarter-factor will be growing in 2022, similarly to what we have done in 2022. And then maybe just lastly on the backlog.
What COVID revenue falling off, can you discuss how you're thinking about backlog before the year and potentially order and take? Maybe what's embedded in your 23 guidance in terms of book to bill or anything that we should be thinking about there? And in the past you've quantified maybe what your backlog was for the current year.
the following years, they're just wondering what your current backlog implies for 23 and Thank you for taking the questions. I have started saying something about the meaning of the backlog for us that is obviously an important indicator of the demand, but he doesn't represent the full picture. The demand landscape, I also did the demand trend.
The link also defined for a cast that we regularly discuss with our customers to look into their future needs in the short and the long run. So now we are back to something that is more similar to what was the situation before the pandemic. During the pandemic, the pattern of all those coming from customers changes a little and it became longer. Now we are back to it.
situation that is normalized and very similar to the year before the pandemic. So in any case, the view that we have from backlog, from a forecast, from any other interaction with customer support, how about you about the year? Thanks, Drew. Sabrina, can we have the next question please? For any further questions, please press star and one on your telephone.
Miss miles. Gentlemen, there are no questions at this time. This conclude our conference call.
Miss Miles, gentlemen, there are no more questions. At this time, this concludes our conference call. Thank you for joining.
You may disconnect your telephone. Thank you. You