Q1 2025 Stevanato Group S.p.A. Earnings Call

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Operator: Good afternoon, this is the Coruscant conference operator. Welcome and thank you for joining the Stevanato Group first quarter 2025 results conference call. As a reminder, all participants are in listen-only mode.

Good afternoon disease, the chorus call conference operator, welcome and thank you for joining the Stephane at the group first quarter 'twenty 25 results conference call.

Speaker Change: As a reminder, all participants are in listen only mode.

Operator: 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 star and zero on their telephone.

After the presentation, there will be an opportunity to ask questions.

Speaker Change: Should anyone need assistance during the conference call that May signal, an operator by pricing star and zero on your telephone.

Lisa Miles: At this time, I would like to turn the conference over to Ms. Lisa Miles, Senior Vice President, Investor Relations. Please go ahead, madam.

Speaker Change: At this time I would like to turn the conference over to MS. Lisa miles Senior Vice President Investor Relations. Please go ahead Madam.

Lisa Miles: Good morning and thank you for joining us. With me today are Franco Stevanato, Chief Executive Officer, and Marco De Lago, Chief Financial Officer.

Lisa Miles: Good morning, and thank you for joining us.

Speaker Change: With me today are Franco seven auto Chief Executive Officer, and Marco to Lago Chief Financial Officer.

Lisa Miles: A presentation to accompany today's results is available on the Investor Relations page of our website under the Financial Results tab. As a reminder, some statements being made today are forward-looking and based on current expectations. Actual results may differ materially due to risks outlined in item 3D, Risk Factors, of our most recent annual report on Form 20-F filed with the SEC. Please review the Safe Harbor Statement included at the beginning of today's presentation and in our press release. The company undertakes no obligation to revise or update these four looking statements except as required by law.

Speaker Change: A presentation to accompany today's results is available on the Investor Relations page of our website under the financial results tab. As a reminder, some statements being made today are forward looking and based on current expectations actual results may differ materially due to risks outlined in item three D.

Speaker Change: <unk> risk factors of our most recent annual report on form 20-F filed with the SEC.

Speaker Change: Please review the Safe Harbor statement included at the beginning of today's presentation and in our press release.

Speaker Change: The company undertakes no obligation to revise or update these forward looking statements, except as required by law.

Lisa Miles: Today's presentation may include non-GAAP financial information. Management uses these measures internally to assess performance and believe they may be helpful for investors in evaluating the quality of our financial results, identifying trends in our performance, and providing meaningful period-to-period comparisons. For reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release.

Speaker Change: Today's presentation May include non-GAAP financial information management uses these measures internally to assess performance and believe they may be helpful for investors in evaluating the quality of our financial results identifying trends in our performance and providing meaningful period to period comparison.

Franco Savotaro: For a reconciliation of these non-GAAP measures. Please refer to the company's most recent earnings press release and with that I'll hand, the call over to Franco seven auto for his opening remarks.

Franco Stevanato: And with that, I'll hand the call over to Franco Stevanato for his opening remarks. Thank you, Lisa. And thanks for joining us. Today, we review our first quarter performance, share an update on our investment projects and discuss the current environment. We start the fiscal 2025 with strong momentum in the first quarter, highlighted by 9% revenue growth and a step up in gross profit margin compared to last year. Our first quarter financial results exceed our expectations, driven by strong operational delivery in the biopharmaceutical and diagnostic solutions. This helped offset the anticipated soft performance in the engineering sector.

Speaker Change: Thank you Lisa and thanks for joining us today wherever you our fourth quarter performance shared an update on our investment projects and discuss the current environment, though we stopped our fiscal 2025. It was strong moment during the first quarter highlighted by 9% growth and a step up in gross profit margin compared to last year.

Speaker Change: Our first quarter financial results exceeded our expectations driven by strong operational and delivering the biopharmaceutical and Daniel <unk> solutions segment. This helped offset the precipitous softer performance in the engineering segment.

Franco Stevanato: as we continue to execute our business optimization. This solid performance in the BDS segment was driven by the expected improvements at our Latina and Fisher facilities. As our capacity expansion projects started to scale volumes and revenue and a favorable mix of high value solutions, including a modest recovery in the easy field. revenue from high value solutions accounted for 43% of the total revenue in the first quarter of 2020. as we continue to expand capacity for high-value syringes to meet robust demand. We also see ongoing signs of stabilization in vial demand as the effects of the stocking gradually subside.

Franco Savotaro: We continue to execute our business optimization plan.

Franco Savotaro: The solid performance in the bps segment was driven by the strength of improvements in our Latino unofficial facilities.

Franco Savotaro: Our capacity expansion projects started to scale volumes in that Avenue, and a favorable mix of high value solutions, including a modest recovery needs if you'd via.

Franco Savotaro: Revenue from high value solutions accounted for 43% of the total revenue in the first quarter of 2025, as we continue to expand the capacity for high value selling just to meet portables them out, but we also see ongoing signs of stabilization in buyer demand of the effects of the stock and gradually subsides.

Franco Stevanato: As anticipated, the revenue and margin decline in the engineering segment were primarily related to the legacy projects in Denmark. This unfavorably impacted the portfolio mix in the first quarter. As part of our optimization plan, we prioritize the execution of these projects and have made significant operational progress. We remain on track to complete all of them in 2025, with the majority expected to be completed mid-year. While these improvements may not be fully reflected in our financial results, they led to meaningful gains across key operational performance indicators. This reinforces our confidence that we are on the right path.

Franco Savotaro: As anticipated the revenue and margin decline in the engineered segment were primarily related to the legacy projects in Denmark. This unfavorable impact the portfolio mix in the fourth quarter of.

Franco Savotaro: As part of our optimization plan, we prioritize because the bush on these projects and have made significant operational progress with.

Franco Savotaro: We remain on track to complete all of them in 2025 with the majority expected to be completed midyear.

Franco Savotaro: While these improvements may not be fully reflected in our financial results they lead to meaningful gains across key operational performance indicators. This reinforces our confidence that we're on the right path. For example in the first quarter acceptance testing rates continue to improve for both final factory acceptance and site acceptance.

Franco Stevanato: For example, in the first quarter, acceptance testing rates continue to improve for both final factor acceptance and site acceptance testing. This reflects the tangible progress we are making in bringing this project to completion and strengthening the segment's operational delivery. Looking ahead, we see strong demand for our engineering manufacturing lines, where long-term growth is underpinned by favorable secular trends. For example, rising patient adoption of drug delivery devices is fueling demand for complex device assembly and packaging lines. We are supporting a new wave of customers as they rapidly expand their device programs, helping customers deliver therapies and treatments to patients safely and efficiently.

Franco Savotaro: This reflects the tangible progress we are making in bringing these projects to completion of strengthening this segment's operational delivery looking ahead, we see strong demand for our engineering manufacturing lines, where our long term growth is underpinned by February will cycle out of plants. For example, rising patient on the option of the regularly but the devices.

Franco Savotaro: Is fueling demand for complex device Assembly and packaging lines, we are supporting a new wave of customers as they rapidly expand up device progress, helping customers deliver therapies and treatments to patients safely and efficiently.

Franco Stevanato: Let's turn to an update on our capital investment projects in T-Shirts and Latina. In the first quarter, we saw continued financial improvement in margins from our expansion projects as we begin to scale volumes, utilization, and revenue. Both facilities were ramping up syringes to satisfy strong market demands.

Franco Savotaro: Let's turn to an update on our capital investment projects in T shirts, and Latinos in the first quarter. We saw continued financial improvement in margin from our expansion projects as we begin to scale volumes utilization and revenue both facilities ramping up sort of in just to satisfy strong market demand.

Franco Stevanato: Our hub in Fishers brings together our drug containment solutions and device manufacturing capabilities to offer customers an integrated offering with localized production in the US. I recently returned from Fishers, where activities are in high gear. Today we are in the early phase of scaling commercial syringes production. In parallel, we are on track with the ongoing installation of additional manufacturing lines. We have a full schedule of customer validation and audit activities booked for the second quarter as more capacity comes online.

Franco Savotaro: Our hobby fishers brings together, our drug containment solutions and device manufacturing capabilities to offer customers, an integrated offering with localized production in the U S.

Franco Savotaro: Recently withdrawn from fee shifts where activities are in high gear. Today, we are in the early phase of scaling commercial syringe of production in parallel we are on track. We don't go installations of additional manufacturing line.

Franco Savotaro: Or schedule of customer validation and audit activities booked for the second quarter as more capacity come online.

Franco Stevanato: We also started construction on our device manufacturing area to support customer device programs for biologic treatment. As a reminder, we keep a selective and strategic approach to contract manufacturing, and this project integrates our glass products and most of the time, our engineering technology for assembly. This demonstrates the value customers see in our diversified and complementary portfolio of integrated solutions. In Latina, we are scaling commercial production for high value syringes and manufacturing line installation are ongoing. Customer Validation Activities will continue into 2026 as planned.

Franco Savotaro: We also started construction on our device manufacturing area to support customer device programs for biologic treatments. As a reminder, we keep a selective and strategic approach to contract manufacturing and this project integrates our glass products and most of the time, our engineering technology for Assembly. This demonstrate the value.

Franco Savotaro: Customers see in our diversified and complementary portfolio of integrated solutions.

Franco Savotaro: Latina, we are scaling commercial production for high value ranges and manifest rely installations are ongoing.

Franco Savotaro: Customer validation activities will continue into 2026 as plan. We are also preparing for the next phase or into use cartridges production with commercial production is still expected to launch at the end of 2026.

Franco Stevanato: We are also preparing for the next phase of ready-to-use cartridges production, with commercial production still expected to launch at the end of 2026.

Franco Stevanato: Before I hand the call over to Marco, I'd like to briefly share some thoughts on global trade and tariffs. We have a task force that's practically working to mitigate the potential exposure to tariffs through a combination of actions including customer surcharges, supply chains, procurement and other initiatives. based on recent discussion with Alongside thorough analysis and a broader industry commentary, we expect that most of the tariff-related costs will be absorbed by capital.

Franco Stevanato: As a reminder, we experienced a similar situation when gas prices spiked a few years ago. Discourse in Crisis We're Passing That said, we are continuing to leverage our global manufacturing network to support localised production. As we ramp up operations in Tejas, this will further support our customers with a robust in-market supply chain. as more pharma and biotech companies increase their manufacturing footprints in the U.S. We do not expect that tariffs will affect our competitive positioning. On the contrary, we believe our ongoing investment in the US will further reinforce our position in this important market.

Marco Lago: With that, I'll turn the call over to Marco. Thanks, Franco. Before I begin, I'd like to clarify that all comparisons refer to the first quarter of 2021. unless otherwise specified.

Lisa Miles: Thanks, Franco before I begin I'd like to clarify that all comparisons refer to the first quarter of 2024, unless otherwise specified let's start on page nine.

Marco Lago: Let's start on page 9. In the first quarter of 2025, revenue increased by 9% or 8% on a cost and currency basis to $256.6 million. This was driven by 11% growth in the BDS segment, which offset the 4% revenue decline in the engineering segment. Revenue from high-value solutions grew 25% in the first quarter to $110.3 million and accounted for 43% of total revenue. This was driven by continuous strong demand in high-value syringes, increasing capacity in Latina and fishes, and a partial recovery in easy-fill vials as the stocking subsides. The strong performance in the BDS segment led to an 80 basis point increase in consolidated gross profit margin of 27.2% in the first quarter of 2025.

Lisa Miles: In the first quarter of 'twenty to 'twenty, five revenue increased by 9% or 8% on a constant currency basis to $256 6 million. This was driven by 11% growth in the Bds segment, which offset the 4% revenue <expletive>.

Lisa Miles: Klein in the engineering segment.

Lisa Miles: Revenue for our high value solutions grew 25% in the first quarter to $110 3 million and.

Lisa Miles: And accounted for 43% of total revenue. This was driven by continued strong demand in high value syringes, increasing capacity in Latina and features and the partial recovery in easily fill vials as this stocking subsides.

Lisa Miles: The strong performance in the Bds segment led to an 80 basis point increase in consolidated gross profit margin of 27, 2% in the first quarter of 'twenty 'twenty five.

Marco Lago: This was driven by the expected improvements at our Latina and Fisher's facilities as we scale our multi-year investment plan, including device counter manufacturing activities in Fisher. While the two sides remain margin dilutive, we are gaining operating leverage as we scale volumes, utilization, and revenue. Second, a niger mix of more accretive high-value solutions, including a modest improvement in EZ-Field Vial. These favorable trends were offset by the expected lower gross profit from the engineering segment. In the first quarter of 2025, operating profit margin increased 280 basis points to 13.5%. And on an adjusted basis, operating profit margin was 14.3%.

Lisa Miles: This was driven by the expected improvements at our Latino Fisher's facilities as we scale, our multiyear investment plan, including device Contra manufacturing activities and features.

Lisa Miles: While the two sides remain margin dilutive, but we are gaining operating leverage as we scale volumes utilization and revenue.

Lisa Miles: Second in light of the mix of more accretive I value solutions, including a modest improvement in music fill vials. These favorable trends were offset by the expected lower gross profit from the engineering segment.

Lisa Miles: In the first quarter of 2025 mm operating profit margin increased 280 basis points to.

Lisa Miles: To 13, 5%.

Lisa Miles: And on an adjusted basis operating profit margin was 14, 3%.

Marco Lago: This was driven by an increase in gross profit and continued benefits from the initiative launched last year to curtail costs without compromising future growth. For the first quarter of 2025, net profit totaled $26.5 million and diluted earnings per share were $0.10. On an adjusted basis, net profit was $28.1 million and adjusted diluted EPS were also $0.10. Adjusted EBITDA was $57.4 million and Adjusted EBITDA Margin increased 100 basis points to 22.4%.

Lisa Miles: This was driven by an increase in gross profit and continued benefits from the initiative launch last year to curtail costs without compromising future growth for the first quarter of 2025 net profit totaled $26 5 million and diluted earnings per share.

Shane: Thanks Shane.

Shane: On an adjusted basis net profit was $28 1 million and adjusted diluted EPS were also time sense.

Shane: Adjusted EBITDA was $57 4 million and the adjusted EBITDA margin increased 100 basis points to 22, 4% moving to segment results on page 10.

Marco Lago: Moving to segment results on page 10. In the first quarter of 2025, revenue from the BDS segment increased 11% to $220.8 million on both reported and cost and efficiency basis, driven by strong growth in high-value syringes and, to a lesser extent, other product categories. During the quarter, we also saw continued stabilization in viral demand, as the effects of this stocking began to gradually ease. High-value solutions grew 25% to $110.3 million, representing approximately 50% of segment revenue. Revenue from other containment delivery solutions totaled $110.5 million, which was consistent with the same period last year.

Shane: In the first quarter of 2025 revenue from the Bds segment increased 11% to 228 million.

Shane: On both reported and constant currency basis, driven by strong growth in high value syringes and to elect set of Spain.

Shane: Other product categories. During the quarter. We also saw continued stabilization in vial demand.

Shane: As the effects of Destocking began to gradually ease.

Shane: High value solutions grew 25% to $110 3 million, representing approximately 50% of segment revenue revenue from other containment delivery solutions total $110 5 million, which was consistent with the same period of last year in the first quarter.

Marco Lago: In the first quarter of 2025, gross profit margin increased 420 basis points to 31.3%. Margin expansion was driven by the improvements in Latina and fishes, as we scale operations. This includes activities related to our contract manufacturing projects in fishes and the higher mix of more accretive high-value solutions, including modest growth in easy-fill vials. As a result, the operating profit margin for the BDS segment rose to 18.8%, up from 14.1% in the same period last year.

Shane: 2025, gross profit margin increased 420 basis points to 31, 3% margin expansion was driven by the improvements in Latina and fishes as we scale operations. This includes activities related to our contract manufacturing projects.

Shane: In fishers, and the higher mix of more accretive high value solutions, including modest growth you need to fill vials as a result of the operating profit margin for the Bds segment rose to 18, 8%.

Shane: Up from 14, 1% in the same period last year.

Marco Lago: In the first quarter of 2025, revenue from the engineering segment decreased 4% to $35.7 million, primarily due to lower sales from pharmaceutical visual inspection and glass conversion lines. This was partially offset by growth in assembly and packaging lines, as well as after-sales activities. Gross profit margins were slightly below our expectations by approximately 50 basis points and decreased to 10.7 percent. For the first quarter, margins were unfavorably impacted by project mix as we prioritized the completion of the legacy projects in Denmark. As a result, operating profit margin declined to 4.7%.

Shane: In the first quarter of 2025 revenue from the engineering segment decreased 4% to $35 7 million deal.

Shane: Primarily due to lower sales from pharmaceutical visual inspection and glass conversion lines. This was partially offset by growth in assembly and packaging lives as well as after sales activities.

Shane: Gross profit margins were slightly below our expectations by approximately 50 basis points and decreased to 10, 7% for the first quarter margins were unfavorably impacted by project mix as we prioritize the completion of the legacy projects.

Mark: And then mark.

Mark: As a result operating profit margin declined to four 7%.

Marco Lago: Please turn to the next slide for a review of balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $90.7 million, a net debt of $300.2 million. We believe we have adequate liquidity to fund our strategic priorities through a combination of cash on hand, available credit lines, cash generated from operations and the ability to access additional finance.

Mark: Please turn to the next slide for a review of balance sheet and cash flow.

Mark: We ended the quarter with cash and cash equivalents of $97 million and net debt of 302 million.

Mark: We believe we have adequate liquidity to fund our strategic priorities through a combination of cash and available credit lines.

Mark: Cash generated from operations and the ability to access additional financing.

Marco Lago: For the first quarter of 2025, capital expenditures totaled $69.7 million, with more than 90% tied to gross investment to advance our ongoing capacity expansion for high-value solutions in fishers and Latina. We continue to carefully manage trade working capital to support the growth of our business. In the first quarter, we benefited from a strong collection of receivables, which drove cash generation. As expected, our inventory levels increased in the first quarter, as we replenished inventories that fell in the fourth quarter driven by strong sales. In the first quarter of 2025, net cash from operating activities increased to $99.8 million.

Mark: For the first quarter of 2025 capital expenditures totaled $69 7 million.

Mark: With more than 90% tied to growth investment to advance our ongoing capacity expansion for high value solutions and fissures in lithium we continue to carefully manage trade working capital to support the graph of our business in.

Mark: In the first quarter, we benefited from strong collection of receivables, which drove cash generation as expected our inventory levels increased in the first quarter as we replenish inventories that fell in the fourth quarter driven by strong sales.

Mark: In the first quarter of 2025.

Mark: Net cash from operating activities increased to $99 8 million cashews and the purchase of property plant and the key mental intangible assets was $71 8 million as a result, we generated free cash flow of $29 7 million in the first quarter of 2025.

Marco Lago: Cash used in the purchase of property, plant and equipment and intangible assets was $71.8 million.

Marco Lago: As a result, we generated free cash flow of $29.7 million in the first quarter of 2025.

Marco Lago: Please turn to the next slide for an update of our assessment of tariffs and our revised guidance. As Franco noted, our task force analyzes both regional sales and our network of global suppliers. These efforts are ongoing as the situation evolves, and the team is closely monitoring any further development. Our current guidance assumes a 10% tariff rate for goods shipping from the EU to the US, the absorption of price increases from suppliers, and no change in the US policy. Based on these assumptions, we estimate a tariff-related impact of approximately $4.5 million to operating profits. for approximately one cent of diluted earning per share in 2025.

Mark: Please turn to the next slide for an update of our assessment of tariffs and our revised guidance is.

Speaker Change: As Franco noted our task force analyze both the regional sales and our network of global supply ups VSAT fourth out of ongoing as the situation evolves and the team is closely monitoring any further developments our current guidance assumes that 10% tariff rate.

Speaker Change: For goods shipping from the EU to the U S. The absorption of price increases from suppliers and no change in the U S policy.

Speaker Change: Based on these assumptions, we estimate the tariff related impact of approximately $4 5 million to operating profit.

Speaker Change: For approximately one sale of diluted earnings per share in 2025.

Marco Lago: It is important to note that this is based on what we know today. We have implemented mitigation strategies in an effort to further reduce our exposure, and these efforts will continue. Discussions with customers have been constructive and are ongoing. Aside from the expected impact from tariffs, all other elements of our guidance remain fully on track with what we shared in March. As a result, we continue to expect revenue in the range of $1,160,000 to $1,190,000. And we now expect adjusted EBITDA between $288.5 million and $301.8 million, and adjusted diluted EPS between $0.50 to $0.54.

Speaker Change: It is important to note that this is based on what we know today, we have implemented mitigation strategies in an effort to further reduce our exposure and these efforts will continue discussions with customers have been constructive and that ongoing aside from the expected.

Speaker Change: Impact from tariffs all other elements of our guidance remain fully on track with what we shared in March as a result, we continue to expect revenue in the range of 1 billion 160, <unk> two $1.190 billion and we now expect adjusted EBT.

Speaker Change: Between $288 5 million and 301.8 million and the adjusted diluted EPS between 50 sensor to 54 cents.

Marco Lago: Our updated guidance assumes the following factors. Revenue will be stronger in the second half of fiscal 2025 versus the first half. The BDS segment is still expected to grow mid-single-digit to high-single-digit. And the engineering segment is expected to be neutral to low-single-digit growth. I value solutions of 39% to 41% of total revenue. On foreign currency, we now assume a modest headwind that has been fully absorbed in the model. Our hedging strategies have limited our exposure, and we assume a EURUSD average rate of 1.13 for the period from April to December. With the inclusion of tariffs, we now assume a gross profit margin improvement of approximately 100 basis points at the central point of our guidance.

Speaker Change: Our updated guidance assumes the following factors our revenue will be stronger in the second half of fiscal 2025 that should the first half.

Speaker Change: The Bds segment is still expected to grow mid single digit to high single digit in the engineering segment is expected to be neutral to low single digit growth I value solutions of 39% to 41% of total revenue and foreign currency, we now assume a modest <unk>.

Speaker Change: That has been fully absorbing them all of them, our hedging strategies as limited our exposure and we assume and eurodollar average of eight to $1 13 for the period from April to December.

Speaker Change: With the inclusion of <unk>, we now assume our gross profit margin improvement of approximately 100 basis points at the central point of our guidance and lastly, the favorable impact from tariffs of $4 5 million of operating profits or approximately one cent of diluted.

Marco Lago: And lastly, the in-February impact from tariffs of 4.5 million euro of operating profit, or approximately one cent of diluted earnings per share.

Speaker Change: The earnings per share. Thank you I will hand, the call back to Franco. Thank you Marco in closing we had a solid start to fiscal 2025 with strong momentum in the BDA segment as we advanced progress under our Latina and official sites and increase our mix of high value solutions. We are also encouraged by the continued.

Marco Lago: Thank you.

Franco Stevanato: I will end the call back to Franco. Thank you, Marco. In closing, we had a solid start to fiscal 2025, with strong momentum in the BDS segment as we advance progress at our Latina and official sites and increase our mix of high value stocks. We are also encouraged by the continued stabilization in the value market demand as the stocking phase. The team remains laser focused on executing against our key priorities and delivering our long term objectives. Ongoing capacity expansion in high value solutions is critical to meeting elevated market demand, driven primarily by the rise in biological We operate in growing markets, and our capital investments are aligned with demand-driven needs.

Speaker Change: Stabilization in the buyer market demand as the stocking phase.

Speaker Change: The team remains laser focused on executing against our key priorities in delivering our long term objectives.

Speaker Change: Ongoing capacity expansion on the high value solution is critical to meeting elevate the end market demand driven primarily by the rise in biologics.

Speaker Change: We operate in growing markets and our capital investments are aligned with demand driven needs. We continue to see a robust pipeline of long term opportunities supported by favorable secretaries from aging population with increasingly complex health needs to fund innovation and the shift towards self administration on magazines.

Franco Stevanato: We continue to see a robust pipeline of long-term opportunities supported by favorable secular tailwinds, from aging populations with increasingly complex health needs to pharma innovation and a shift towards self-administration of medicine. These strengths align closely with our core strengths. We remain committed to meeting strong customer demand for our high-value solutions. Longer term, we believe the ongoing shift towards these solutions will support a return to our target of low double-digit revenue growth and drive margin expansion.

Speaker Change: These strengths align closely with our core strengths.

Speaker Change: We remain committed to meeting strong customer demand for our high value solutions longer term, we believe the ongoing shift towards these solutions will support a return to our target of low double digit revenue growth and drive margin expansion, our strong business fundamentals and disciplined financial strategy provide us with the flexibility to fund our.

Franco Stevanato: Our strong business fundamentals and disciplined financial strategy provide us with the flexibility to fund our growth and create long-term value for shareholders.

Speaker Change: Growth and create long term value for shareholders. Operator, we are ready for questions. Thank you.

Operator: Operator, we are ready for questions. Thank you.

Speaker Change: Thank you this is the.

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Matthew Larew: The first question is from Matt Larew, William Blair, please go ahead. Hi. Thank you for taking my questions. The first one would just be a follow-up on tariffs. I just want to clarify that what is incorporated in guidance is the gross impact from tariffs and that the number of medications you're pursuing are not included in guidance and thus, in theory, are upside. And that's kind of the first part of it. The second part of the tariff question is, can you help us understand what percentage of U.S. demand is serviced by U.S.-based manufacturing today and how much of that U.S.

Speaker Change: The first question is from Matt Larew William Blair. Please go ahead.

Matt Larew: Hi, Thank you for taking my questions. The first one would just be a follow up on tariffs I just want to clarify.

Matt Larew: That what is incorporated in guidance is the gross impact from tariffs and then the number of medications you're pursuing.

Matt Larew: Are not included in guidance.

Gary: Gary our upside and that's kind of first part of it the second part of the tariff question is can you just help us understand what percentage of U S. Demand is serviced by U S based manufacturing today and how much of that U S demand, you'll be able to satisfy from fishers practice, both by the end of this year and then over the long.

Marco Lago: demand you'll be able to satisfy from fishers perhaps both by the end of this year and then over the long term?

Matt Larew: Tim.

Marco Lago: Thanks for the question. Marco speaking. As Franco noted, we have been working on with a task for internally for a couple of months. This includes the sales people, procurement people, legal, finance and supply chain. We play different scenarios. Obviously, our our guidance is embedding. Thank you. We are planning to transfer in higher price to most of the customer, the impact. Nevertheless, we see some impact in supply chain, either in production or in procurement, in purchasing. And so this is the estimation about the 4.5 million operating profit level we mentioned in the remarks. Basically, we are playing different scenarios.

Marco: Thanks for the question Marco speaking.

Speaker Change: As Frank noted we have been working on with the task for internally or a couple of months. So this includes the phase of the bull procurement people legal finance and supply chain.

Marco: We play different scenario, obviously, our our guidance is embedding.

Speaker Change: 32.

Speaker Change: Our customers also impact on supply chain and procure mentor and these including finished product raw material and semi finished products.

Speaker Change: Uh huh.

Speaker Change: We are planning to transfer a neither applies to most of the gas them or the Baxter now.

Speaker Change: Nevertheless, we see some impact in supply chain either in production or in parochial augmenting we're chasing and so this is the estimation about the $4 5 million us operating profit demand that we mentioned in their remarks.

Speaker Change: Basically we are are we at claims different scenarios that we believe this is the car rental best estimation. We can provide the while we are working on further mitigation actions in order to minimize the day after the bulk of your request.

Marco Lago: We believe this is the current best estimation we can provide while we are working on further mitigation actions in order to minimize the impact.

Marco Lago: About your question about the U.S. footprint, we want to remind we have also a factory in California, so the combination of Ontario and Fishers are partially offsetting the impact already, and as you know, with the ramp-up of Fishers, we estimate that we will further mitigate in the future. Correct, and Fishers in 2025 is going to partially absorb this tariff impact because the focus on 2025 of Fishers is to ramp up capacity with our customers in order to execute the actual control that we have, but we are still in the phase that we are installing high-speed lines, particularly for syringes.

Speaker Change: About the U S food printer.

Speaker Change: We won't do remind we have also a factory in California, among the audio so the combination of.

Speaker Change: On Barbie and Fisher sod, partially offset D&A back already.

Speaker Change: And as you know with the ramp up of our of the share we estimate that we will further mitigate in the future.

Speaker Change: Correct.

Speaker Change: <unk> is going to be 25 is going to partially absorb this tariff impact because the focus on 2025 O feature is to ramp up capacity with our customer without in order to execute the desk will control that we have but we are feeling their fees. As we are is totally high speed line in particular.

Marco Lago: In the medium term, Fishers will be a nice tool for Stanato Group in order to compensate this tariff.

Speaker Change: Ranges in the medium term fee shares it will be a nice tool for Senator group in order to compensate these studies.

Marco Lago: Okay, very good.

Speaker Change: Okay very good and then just to follow up on vials it sounded like Destocking Theyre progressing.

Marco Lago: And then just to follow up on on vials, it sounds like the stock in there progressing, I think, as anticipated, you've given an outlook for mid to high single digit growth in vials for the year, you know, based on what you saw in the quarter, and I assume increasing visibility. Is that still kind of the outlook for the year? Correct. We continue to see positive signal in the market. Practically, all our customers, both the regional customers are spreading all the region, in particular, the global key account, they are starting to increase their order. If you compare 2024 with 2025, our order intakes grow in double digits, both for bulk vial and ready to fill vial.

Speaker Change: As anticipated given an outlook for mid to high single digit growth in vials for the year based on what you saw in the quarter and I assume increasing because ability is that still kind of the outlook for the year.

Speaker Change: Correct.

Speaker Change: We continue to see positive signal in the market practically all our customer both the regional customers, but as you know the region made particular, the global key account that we have.

Speaker Change: Starting to increase the order if you compare 'twenty 'twenty four with the 2025, our order intake is grow in double digits. Both for bulk via entity to really took this buyer and faster we are already starting to activate the law via lines practically in all our plants worldwide film.

Marco Lago: And in fact, we are starting to activate the vial lines practically in all our plants worldwide. So we are happy for this. And we are reiterating our guidance with respect to vials.

Speaker Change: From our viewpoint that this recovery is really moving in the right direction for all the 2025 in order to go to a normalization in <unk>.

Speaker Change: So we're happy for this.

Speaker Change: We are reiterating our guidance with respect of Bayelsa. So we expect the mid single digit to high single digit growth in 'twenty 'twenty cycle barefoot when it went before with sequential improvement throughout the year.

Marco Lago: So we expect a mid-single-digit to high-single-digit growth in 2025 compared to 2024, with sequential improvement throughout the year. Okay, thank you. You're welcome.

Speaker Change: Okay. Thank you.

Speaker Change: You're welcome.

Paul Knight: Next question is from Paul Knight, Key Bank, please go ahead. Congratulations on the quarter.

Speaker Change: Next question is from Paul Knight Keybanc. Please go ahead.

Paul Knight: Congratulations on the quarter.

Franco Stevanato: Ultimately, Indianapolis and Latina, what's the revenue potential going to be from those sites, whether it's five years from now, three years, I'm assuming it's just starting early days of revenue now, but what's the potential of those two sites? So, Paul, Franco speaking. Today, one of the major contributors of our growth in 2025 is thanks to the greenfield plants in Latina, and particularly also on fissures. We always share with you that in fissures, we have planned to invest half a billion euros to be fully ramped up at the end of 2028. Our goal is to generate half a billion euro revenue thanks to this investment that we are doing in fissures.

Speaker Change: The.

Speaker Change: Ultimately Indianapolis and.

Speaker Change: Latina.

Speaker Change: What is the revenue potential going to be from those sites, whether it's five years from now three years.

Speaker Change: Assuming is just starting early days of revenue now, but what's the potential of those two sites.

Speaker Change: No.

Speaker Change: Frankly speaking today.

Speaker Change: Today in them within one of the major contributor to our growth in 2025 is thanks to the Greenfield plants in Latina and particularly also on fishers, we always share with you that the efficiency, we have planned to invest the half a billion euro.

Speaker Change: Be fully ramp up at the end of 2028.

Speaker Change: All is to generate the half a billion euro revenue things with this investment that we are doing in Fisher, we always want to remind you that our ratio is the high value product one euro cost base has to correspond to one euro revenue.

Franco Stevanato: We always want to remind you that our ratio is for high value products, one euro capex has to correspond to one euro revenue.

Franco Stevanato: And are you, how do you feel about Latina? Athena is really progressing extremely well, because like I mentioned to you, last year, we already delivered in the quarter a positive gross margin. In 2025, we are continuing to increase commercial production, increasing the capacity for prefuel syringes, in particular for Nexus syringes. We're continuing to install high-speed lines. Also, we have an intense program of validation for our international customers. And on top of this, we are starting to prepare a next phase for the large capacity for cartridges ready to fill with one big customer that will be launched at the end of 2026, beginning of 2027, in commercial production.

Speaker Change: And are you how do you feel about Latina.

Speaker Change: Athena is a is really progressing extremely well because like I mentioned to you last year, we already delivered in the quarter. A positive gross margin is really identify where continued to increase the commercial production increasing the capacity for.

Speaker Change: So ranges in particular for next offering this will continue to install high speed line. It also we are intense program a validation for our international customer on the top of this we already we are starting to prepare a next phase for the large capacity for cartridges today to fill one web.

Speaker Change: <unk> customer that there will be launched at the end of <unk> beginning of 'twenty seven commercial production our revenue.

Marco Lago: And Marco, what will CapEx be in 2025? Thank you. We are not modifying our guidance. We have a net of contribution from customers from 250 to 280 million capex in 2020. mainly dedicated, as you can imagine, to the Ramp-Up in Latina and Fischer's. Thank you. You're welcome.

Speaker Change: And Margo what will our Capex beyond 2025, thank you.

Speaker Change: We are not modifying our guidance.

Speaker Change: We have a net of contributions from <unk>.

Speaker Change: Customers.

Speaker Change: From a 250 to 280 million of Capex. It. Nevertheless is 25, mainly dedicated as you can imagine to the ramp up in Latin in tissues.

Speaker Change: Thank you.

Michael Ryskin: Next question is from Michael Ryskin, Bank of America. Thanks, guys. Maybe I'll tie up a couple previous ones. On the tariff front, you know, your comments in terms of the hit this year, the 4.5 million operating profit, one cent of EPS, that's for the partial year. Any early signs of how to think about that for 2026? I guess what I'm saying is you'll have a full year of impact, but you also have more revenue shifted to Fishers over time, right? So should, when should you be able to, you know, fully offset that tariff? Yeah. Yeah, you fully got the point.

Speaker Change: Welcome.

Speaker Change: Next question is from Michael Riskin Bank of America. Please go ahead.

Michael Riskin: Thanks, Hey, guys, maybe I'll tie up a couple of previous ones.

Michael Riskin: The tariffs fronts you know your comments in terms of the shift this year, the $4 5 million operating profit.

Michael Riskin: One cents of EPS, that's for the partial year.

Michael Riskin: Any early signs of how to think about that for 2026, and I guess, what I'm, saying is you'll have a full year of impact, but you also have more revenue shifted the fishers over time right. So should when should you be able to.

Michael Riskin: Fully offset the tariffs.

Michael Riskin: Yeah.

Marco Lago: Marco is speaking. First of all, we are assuming our guidance this year based on the current situation of tariffs with 10% current tariff from EU to the US. You know, there are different scenarios in front of us with respect of that. Nevertheless, the number one mitigating factor will be the ramp up in In fishes, we we are generating currently about 25% of our revenue to in the US. But we expect with fishes and Ontario to to mitigate the loss in the future.

Michael Riskin: You fully got the borrowing amount Chris speaking first of all we are assuming in our guidance is that based on the current situation of Dod is with the 10% cargo and started from <unk> to the U S.

Michael Riskin: Ah.

Michael Riskin: You know that out of different scenarios in front of us with respect of that.

Michael Riskin: Nevertheless, said the number one mitigating factor will be the ramp up phase in.

Michael Riskin: In Asia, we are generating currently about 25% of our revenue in the U S.

Michael Riskin: But.

Michael Riskin: We expect with fee shares in Ontario to mitigate and also in the future.

Marco Lago: Okay, okay, thanks. And then on the engineering segment, you called out that, you know, the gross profit margin was, was lower, and the operating profit was lower this quarter because of the unfavorable mix, you know, the legacy projects. Can you give an update on how those legacy projects are moving through? Are you, are you almost done with that? I guess just sort of asking, what should we expect gross profit margin for engineering in the second quarter? In the second half, when will it sort of bounce back to more historical levels in engineering?

Michael Riskin: Okay. Okay. Thanks, and then on the engineering segment.

Michael Riskin: Called out that the gross profit margin was.

Michael Riskin: <unk> was lower in.

Michael Riskin: Operating profit was lower this quarter because of the unfavorable mix the legacy projects.

Michael Riskin: Can you give an update on.

Michael Riskin: How those legacy projects are moving through our U R. You're almost done with that I guess, just sort of asking what should we expect gross profit margin for engineering in the second quarter and the second half when will it sort of bounce back to more historical levels.

Speaker Change: In engineering.

Franco Stevanato: I can start from business point of view at the execution point of view. So today the organization is fully focused to execute and deliver this complex program for our big customers that we are producing and delivering from the plant in Denmark. We are on track to complete it within all the 2025, but the majority of this complex program we are targeted to deliver in mid-year. This is where the organization is working hard. In parallel, we are working on what we call this operational optimization plan, where we want to balance the production in order to mitigate the risk between Denmark and Italy.

Speaker Change: I can start from business point of view of digital solution point of view. So today. The organization is fully focused to execute and deliver this Congress program for our biggest customers that we are producing and delivery from the plants in a down market. We are on track to complete that within all the 2012.

Speaker Change: Five but the majority of this Congress program than we what we our target to deliver in media is this where the organization is working hard in parallel we are working on what we call. This operational optimization plan, where we want to balance their production in order to mitigate various can between Denmark and.

Franco Stevanato: We are adding more and more capacity for assembly inspection machines from our plant in Italy in order really to make more centers of excellence. Also, this plan is on track. Today the organization, like we shared in the last quarter, is fully focused in order really to reinforce our leadership team, our project management, and to have two big hubs in Denmark and in Italy in order to be equivalent to serve this line.

Speaker Change: In Italy, we are adding more and more capacity for assembly, especially machine with from our plants in Italy, nor are they ready to make more center of excellence. They also this plan is on track to their it organization like we showed in the last quarter is fully focused in order really to reinforce our leadership team our projects many argument as well.

Speaker Change: Two big hub in down market.

Speaker Change: In Italy number to be.

Speaker Change: Equivalent to service line.

Marco Lago: Yeah, about the sequential margin. Well, first of all, the gross profit margin in Q1 was close to our expectations, because we knew we had to dedicate a big effort, a workload, to accelerate the completion of the legacy projects in Denmark. And so basically worked on less profitable projects and new ones. We expect this fact will be sequentially improved throughout the year. And as guidance, we expect sequential improvement quarter after quarter, with the overall 2025 still better than 2024 with respect to gross profit margin. It also adds another color from a customer point of view. If you look ahead, we see a strong demand today on from our engineering division because the pharmaceutical industry is heavily investing in new capacity for their bioproducts where this assembly technology in order to serve their growing demand for drug delivery system is exactly where in the direction that we are we are going with our engineering division and once this line is installed to our customers is they really is going to make the customer happy in order to reiterate our order in the future.

Speaker Change: Yeah about the sequential margin.

Speaker Change: Well first of all.

Speaker Change: The gross profit margin in Q1 was close to our expectations because we knew we had to dedicate.

Speaker Change: It'd be good for the workload the tools to accelerate the completion of the legacy projects.

Speaker Change: In the end market.

Speaker Change: And so basically war thumb less profitable pathologist then then you answer.

Speaker Change: We expect these are fast will be sequentially.

Speaker Change: Sequentially improved throughout the year and this guidance, we expect sequential improvement quarter after quarter with the overall 2025 is the best and then 2020, followed with respect of gross profit margin.

Speaker Change: So as another color from a customer point of view. If you look ahead, and we see a strong demand today and from our engineered individuals because the pharmaceutical industry is heavily investing in new capacity for that by a product where this assembly technology in order to serve their growing demand for drug delivery.

Speaker Change: Semi is exactly where in the direction that we're going with our LNG in regional one this aligner installs to our customers is they really is going to make the customer happy in order to raise the rate order in the future.

Marco Lago: Great, thank you.

Speaker Change: Great. Thank you.

David Windley: Our next question is from David Windley, Jeffreys. Hi, hopefully I don't create an echo here if I dialed in wrong, but thank you for taking my questions. I wanted to ask around the vial recovery but kind of packaged within the HVS margin drivers. So certainly you're highlighting HVS vials, easy fill vials, improving. We were under the impression that maybe standard vials were going to come back first or bulk, followed by easy fill. So am I hearing that easy fill is recovering earlier than your expectation? Part B of that would be, do you expect that to be sustainable over the balance of the year and beyond?

David Windley: Next question is from David Windley Jefferies. Please go ahead.

David Windley: Hi, hopefully I don't create an echo here I dialed in wrong, but thank you for taking my questions.

David Windley: I wanted to ask around the the vial recovery, but kind of packaged within the H B S margin driver so.

David Windley: Certainly you're highlighting H b S vials easy easy fill vials.

David Windley: Improving we were under the impression that maybe standard vials, we're going to come back first or bulk followed by easy fill so so am I hearing that easy fill is recovering earlier than your expectation.

David Windley: Part B of that would be do you expect that to be sustainable.

David Windley: Over the balance of the year and beyond so I'll stop there and then I'll follow up.

David Windley: So I'll stop there and then I'll follow up.

Marco Lago: Well, I start with the numbers, David, Marco speaking. So first of all, we are happy in Q1, we got double digit growth in orders intake compared with the same period last year, both in bulk and sterile buyers. In Q1, the revenue increase was modest. Nevertheless, we generated better profitability in Q1, mainly for two reasons. One is the good margin we generated in in easy fill. And very important also we are starting reactivating many lines around the world and is helping us with the coverage of fixed expenses also in bulk. So the combination of the two is making us more more happy obviously than one year ago.

Speaker Change: Well I'll start with the numbers, David and Biomarkers became so first of all we are.

Speaker Change: Being Q1, now we got the double digit growth in our vessels in acre compared with the same video of the last year, both in bulk and that I loved by us.

Speaker Change: In Q1.

Speaker Change: The revenue increase was modesta. Nevertheless, we generated better profitability in Q1, mainly for two reasons one is the.

Speaker Change: Good margin we generated in them.

Speaker Change: And is it fair and very important also we are starting to reactivate the many lives around the world and this has been a house with the call of original six of this bank is also embargo. So the combination of the two is making us more moura happy obviously than one year ago.

Franco Stevanato: But we don't see any change in the trajectory throughout the year, as compared to what we said a couple of months ago. David, if you can also give us some angle from a customer point of view, bulk VIA is a market of the size of many billions of containers per year, sprayed with different therapeutic drugs, all the region and several hundred of customers. When they're starting to recover, it really is a big wave. For what is related to easy-fill VIA, we are more in the range of a few hundred million with more small, medium-sized customers, in particular customers that are launching new products on the market.

Speaker Change: But we don't see any change in their trajectory throughout the year has confirmed what we said a couple of months ago.

Speaker Change: Okay.

Speaker Change: David Fick also give us some angle from a customer point of view bulk via is a modest size.

Speaker Change: Although many billions of container 30 years.

Speaker Change: With different therapeutic drugs or the region as several hundreds of customers when they're starting to recover is really is a big waves for what is related to easy food via we're more in the range of a few hundred Nino with more small medium sized customers in particular customers that are launching new product on the market.

David Windley: So both are growing, we see positive signals, but there are two different types of lipids. Okay, um...

Speaker Change: So both are growing we see positive <unk>, but there are two different type of legal.

Speaker Change: Okay.

Marco Lago: I can't remember if you've disclosed in the past or if you'd be willing to tell us about your... The GLP-1 specific exposure in the revenue base, I think for you it would be almost exclusively BDS, but how much of your recovery here is driven by specifically GLP-1 demand? So we disclose biologics that is growing rapidly. I mean, we reached 42% as a percentage of BDS revenue compared to 34% last year. And GLP-1 is part of our biologics disclosure. It's an important leg for us, GLP-1, but it's not the only driver of growth.

Speaker Change: I can't remember, if you've disclosed in the past or if you'd be willing to tell us about.

Speaker Change: Your.

Speaker Change: So the G L P. One specific exposure.

Speaker Change: In the revenue base I think for you it would be almost exclusively bds, but but how much.

Speaker Change: Of your.

Speaker Change: You know of your recovery here is driven by specifically G. L. P. One demand.

Speaker Change: So we disclose.

Speaker Change: Biologics.

Speaker Change: That is growing rapidly I mean, we reached the 42% as a percentage of Bds revenue compared to 34% last year and <unk> is part of our biologics disclosure.

Speaker Change: It's an important leg, therefore, asa GSV wham, but is not the only driver of growth.

Franco Stevanato: But maybe Franco can give you more, more color about the market and. Correct. We already shared with you that we already signed a multi-year contract with our historical insulin customer that we already have established a very good relationship since practically 20 years ago. And this customer has engaged us a few years ago through our tech center in order to start to validate our products in the molecule. Today, the contract and where we are building capacity through our plant in Europe and the United States are for bulk cartridges, Nexus syringes, Nexus syringes double bypass, also VIA.

Speaker Change: But maybe Franco Ken can give you more color about the market in there.

Speaker Change: Got it.

Speaker Change: We already shared with you that we already signed multiyear contracts with our historical insulin customer that we already have established very good relationships since it practically 20 years ago. As these customers have engaged US few years to go through our Tech center in order to start to validate our pro.

Speaker Change: <unk>.

Speaker Change: Maluku today, the contract and where we're building capacity through our plants in Europe.

Speaker Change: This data for bulk of Carthage is neccessary, just nexus or into doubled by bus also via <unk>. So we have a program a big program forecast that is just starting to see on the top of this also.

Franco Stevanato: Also, we have a program, a big program for cartridges ready to fill. On the top of this also, we signed a big program for device. And this is why that in Fisher, we're going also to add capacity for our drug delivery system. We'll be able to serve Nexus syringes and also these devices. From an engineering point of view, our customers are engaging us on a high speed machine for assembling those inspection machines. So practically all our product portfolio is involved in this new technology.

Speaker Change: We signed a big program for their eyes, and he said as to why that is C shares. We're going also to add capacity for our drug delivery system will be able to serve Nexus arranges. It also these devices from an engineering point of view our customers are engaging us on ISP the machine for assembling you'll see special machines.

Speaker Change: So practically all of our product portfolio is involved in these in these new there Lisa.

Speaker Change: Okay.

David Windley: I'll leave it at that. Thank you.

Speaker Change: I'll leave it at that thank you.

Speaker Change: Yeah.

Doug Schenkel: Our next question is from Doug Schenkel, Wolf Research. Doug Research, Webloft, the... Line.

Speaker Change: Next question is from Doug Schenkel Wolf Research. Please go ahead.

Speaker Change: Dumped research.

Speaker Change: With loft the.

Tejas Savant: Next question is with Tejas Savant, Morgan Stanley. Please go ahead. Hey guys, good morning and appreciate the time here. Franco, or perhaps Marco, just a point of clarification to an earlier question. To what extent are you baking in mitigation benefit in that four and a half million euro impact? It sounds like there's partial credit in there for surcharges, but you hope to do more on supply chain and procurement in the back half of the year. Is that the right interpretation that there is some mitigation benefit baked into the net impact of four and a half?

Speaker Change: Line.

Speaker Change: Next question is Sweet Pasha Zavon Morgan Stanley. Please go ahead.

Speaker Change: Hey, guys. Good morning, and appreciate the dime here.

Speaker Change: Franco perhaps Marco just a point of clarification to an earlier question too.

Speaker Change: To what extent are you building in mitigation benefit in that $4 5 million Euro and back it sounds like those partial credit in there for surcharges.

Speaker Change: But you hope to do more on supply chain and procurement in the back half of the year is that the right interpretation that there is some mitigation benefit baked into the net impact of four and a half.

Marco Lago: Yes, it's a good interpretation. For example, we have a global footprint, we are producing finished products from many locations around the world. So we can have some also logistic optimization in order to minimize the tariff. But this is just an example. The task force is really active in detecting further initiative in order to minimize the impact of tariff. This is the key message behind our forecast. Got it. That's helpful.

Speaker Change: Yes, just a good interpretation for example, we have a global footprint. We are producing finished but all of those four mainly from any location around the world. So we can have some also logistic optimization in order to minimize or the indirect but this is just an example.

Speaker Change: The task bar is really active in detecting border initiative in order to minimize the lack of clarity. This is the key message behind.

Speaker Change: Our our.

Speaker Change: Okay.

Speaker Change: Got it that's helpful.

Franco Stevanato: And then my second follow-up, more of a longer-term question really, you know, look, I mean, acknowledging that pharma doesn't want to cut sort of, you know, cost as it relates to CDMO vendors, do you see an opportunity for sort of more vendor consolidation here as they try to, you know, protect their margins? And given your sort of complementary solutions, which you called out, is there an opportunity for Stevanato to gain wallet share, specifically because of what's going on with tariffs and the push for pharma for, you know, some of their U.S. reshoring efforts and so on?

Speaker Change: Then my second follow up more of a longer term question really.

Speaker Change: Acknowledging that pharma doesn't want to got sort of.

Speaker Change: As it relates to CMO vendors do you see an opportunity for sort of more vendor consolidation here as they try to protect that margin and.

Speaker Change: And given your sort of complementary solutions, which you called out is there an opportunity for <unk> to gain wallet share specifically because of what's going on with tariffs and the push for pharma for some other use reassuring efforts and so on.

Franco Stevanato: I'm sorry, Tejas, can you clarify the first portion of your question? I'm not sure we fully understood what you were getting at there. Yeah, so the question is basically around, you know, pharmaceutical companies generally don't view their CDMO vendors as a bucket where they want to squeeze out cost, because they'd rather work with, you know, better vendors, with a long track record of delivering on time and without any quality issues, right? So my question is, just given the moving parts here, with customers trying to preserve their, you know, margins as well, I mean, is there a possibility here for you to opportunistically gain share from some of the smaller vendors that perhaps your pharma customers are working with today because of the noise around tariffs and US reshoring?

Speaker Change: And I'm sorry to ask can you clarify the first portion of your question I'm not sure we fully understand what you were getting at there.

Speaker Change: Yeah. So the question is basically around you know pharmaceutical companies generally don't view their CDN vendors as a bucket, where they want to squeeze out cost because they'd rather work with better vendors with a long track record of delivering on time and without any quality issues right. So my question is.

Speaker Change: Just given the moving parts here with customers trying to preserve their margins as well I mean is there a possibility you are for you to opportunistically gain share.

Speaker Change: From some of the smaller vendors that perhaps your pharma customers are working with today because of the noise around tariffs and U S. Reassuring.

Franco Stevanato: Practically, if I fully understand your question, today, tariff is going to give to Stevanato a small pain in 2025 that we already captured with this 4.5 million of macro share. It's also true that the fact that we have already proactively decided to invest in 2021 with this big campus in the United States that will be able to serve the US market for syringes, for Nexa syringes, for ALBA, for Bypass, Vial, Vire to Philae, today also with a big program on device, is have further rise interest for our American customer that Stevanato is the right global partner, in particular because of these US plants, that the scope of these US plants is only to serve the full US biotech market, all the international customers.

Speaker Change: But I think really if I.

Speaker Change: I fully understand your question today.

Speaker Change: The tariff is going to give to stay went out though as more pain in 2025, but as we already captured with this $4 5 million of macro sure.

Speaker Change: It's also true that the fact that we are already proactively decided to invest in 2021 with this big campus in United States that will be able to serve the U S market for syringes for Nexus the ranges for Alba for bypass via via to file today also with a big program device is.

Speaker Change: Further rise interest for our American customer that they went out to if the right global partner in particular because of these U S plant.

Speaker Change: The scope of this plant is already to sell the full U S. Biotech market all the international customer. So at the end of the game shot paint on the longer term, we see much more benefit there.

Franco Stevanato: So at the end of the game, short pain, in the long term, we see much more benefit.

Tejas Savant: Okay, I'll leave it there. Thanks, guys.

Speaker Change: Okay I'll leave it there thanks guys.

Mark Ettock: Next question is from Mark Ettock, Stevens Inc. Please go ahead. Good morning. Thank you for taking my questions.

Speaker Change: Next question is from Mark talk.

Speaker Change: Stephens Inc. Please go ahead.

Speaker Change: Good morning. Thank you for taking my questions, maybe just to quickly touch on the performance within the media segment as during.

Mark Ettock: Maybe just to quickly touch on the performance within the BDS segment, during the quarter, did you see any shift in customer ordering patterns or timing there or behavior within the companies as they prepared for the impacts of terrorism. Franco speaking, the way that our customers are passing the forecast to Stevanato group is in line with the past, but usually our customer, okay, we have the long-term contract, then they move with a 12-month forecast, and then have the one or two-quarter confirm order, usually depending if it's bulk product or easy-fill product, where with easy-fill, the order intake is a little bit longer.

Speaker Change: During the quarter did you see any shift in customer ordering patterns or timing, there or behavior with them.

Speaker Change: These are they prepared to the impacts of tariffs.

Speaker Change: The frankly speaking the way that our customer is passing the Florida coast to seven of the group is in line with the past is usually our cost them. Okay. We have the long term contract then they move with a 12 month forecast and then have the one or two quarter confirm order usually dependent as bulk products.

Speaker Change: Or is it product where it is.

Speaker Change: The order intake that we compete with a longer so we don't see any different answer from the way that they're placing order for what do we see on via we like I mentioned, we already started to see Q3 Q4 last year, an increase in their forecast that increase in order intake, but this will only.

Franco Stevanato: So we don't see any difference from the way that they're placing order. For what we see on Viad, we, like I mentioned, we already started to see Q3, Q4 last year, an increase in their forecast, and they are increasing the order intake, but this is only due to the stocking effect in the past. Mateo in line with the bus. Thanks for that.

Speaker Change: Due to the stocking effect in the past.

Speaker Change: But they are in line with the past.

Speaker Change: Thanks again.

Franco Stevanato: And can you break out just about how much of an improvement you saw from each of the respective buckets for margin impacts that you saw for EZ-FIL and also the ramp in the new facilities, as in, you know, what percentage of the year-over-year improvement relates to the improvements in the Bile docket? We are very happy about the progress in Latina and also Fishers is starting generating better results than last year, generating more revenues and gross margin. The margin is still dilutive compared to the overall segment. But we expect sequential improvement, as we mentioned last March.

Speaker Change: Can you break out just about how much of improvement you saw from each of the respective buckets.

Speaker Change: Margin margin impacts that you saw for easy so and also the regulatory authorities.

Speaker Change: What percentage of the year over year improvement relates to the.

Speaker Change: Improvements in the bile duct.

Speaker Change: So I can tell you that the number one improvement is related to Athena b shares.

Speaker Change: We mentioned many times last year that obviously with the ramp up we generated more cost.

Speaker Change: Revenue due to validate shows training and all the ramp up activities.

Speaker Change: We are we are very happy about the progress is in Latina and also fee chassis, starting generating better result than last year.

Speaker Change: Generated more revenues and gross margin that the margin is still dilutive or compared to the overall segment.

Speaker Change: But we expect a sequential improvement as we mentioned last March.

Franco Stevanato: Thank you for taking the questions. Yeah, and then obviously, the number two factor as underlined in the remark is the fact that we 43% high value solution on total revenue, obviously makes this favorable and better than last year. Appreciate the call.

Speaker Change: Thank you for taking my questions.

Speaker Change: And then obviously the number two factor is underlining the remark is the fact that with 43%.

Speaker Change: I value solutions on on total revenue, obviously, the mix is favorable and better than last year.

Speaker Change: I appreciate the color.

Patrick Donnelly: Next question is from Patrick Donnelly, City. Please go ahead. Hey guys, thanks for answering the questions.

Patrick Donnelly: Next question is from Patrick Donnelly Citi. Please go ahead.

Patrick Donnelly: Hey, guys. Thanks for taking the questions.

Marco Lago: Marco, maybe one for you. I know you talked about the second half being stronger than the first half. Can you help us think about just the progression throughout the year, particularly 2Q, just a little context around both reds and then margins, how we would think about 2Q and then flowing into the second half of the Yes, we still expect, like two months ago, sequential growth throughout the year. We expect overall 44% of revenues generated in first half of the year and the remaining 56% in the second half with sequential improvement throughout the year. As last time we mentioned, we also expect margin improvement throughout the year.

Patrick Donnelly: Mark maybe one for you I know you talked about the second half being stronger than the first half can you just help us think about just the progression throughout the year, particularly <unk> just a little context around growth rather than margin. How we should think about the <unk> and then flowing into the second half would be helpful.

Patrick Donnelly: Yes, we still expect like a two months ago sequential growth throughout the year.

Patrick Donnelly: We expect overall, a 44% of revenues generated in first half of the year and the remaining 50 seats in the second alpha with sequential improvement throughout the year.

Patrick Donnelly: As last time, we May show, we also expect the.

Patrick Donnelly: Margin improvement throughout the year.

Marco Lago: with Latina and Fishers ramping up. With engineering improving in the second half of the year, and also on VIAS the stock, we expect sequential improvement quarter after quarter. So our assumption has not changed with some confirmation, as mentioned, for VIAS and the ramp-up, that is, the second one is under our control. Matter of fact, we are reiterating our guidance.

Patrick Donnelly: With the Latina fishes are ramping up.

Patrick Donnelly: With engineering, improving in the second half of the year.

Patrick Donnelly: And also homebuyers Destocking, we expect sequential improvement quarter after quarter.

Patrick Donnelly: I want a farm show has not changed we have sunk goldfield may show mismanaged shortfall by us and the ramp up but that is the second one is under our control.

Patrick Donnelly: A matter of fact, we are reiterating our guidance.

Marco Lago: Beside obviously the impact of tariffs, that is a net impact of Okay, that's helpful.

Patrick Donnelly: Besides obviously they've okay. That's helpful.

Patrick Donnelly: So that is a net deemed viable.

Speaker Change: Okay. That's helpful and then Frank maybe one for you just in terms of the facility.

Franco Stevanato: And then Franco, maybe one for you just in terms of the facilities on the China piece, has the current situation, whether it's tariffs, the overall tensions, has that changed the way you're thinking about, you know, expanding into China? I know you guys push the facility out a bit, but we're still committed. How are you thinking about your presence in China as we move forward? Today, we serve this market from the existing plant that we have in Shanghai, and also for what is related to easy-fill products we produce in Europe and we ship to China. Today, it is true that in 2025, also in 2026, our big focus is in ramping up Latina, even more fishers, because if you remember, originally, in 2021, there was also the program to build production for easy-fill products, high-value products in China, but then some of our big customers have decided to put in standby, and they asked us, Stevanato, to increase their capacity from Europe and the United States to sell from these two locations.

Patrick Donnelly: On the China piece.

Patrick Donnelly: The current situation, whether it's tariffs the overall pension has that changed the way you're thinking about.

Patrick Donnelly: Banding into China, I know you guys personal facility out a bit but we're still committed how are you thinking about your presence in China as we move forward here.

Patrick Donnelly: But today the this model we serve this market from the existing plans that we have in Shanghai also for what is related to easy feel product that we produce in Europe, and we ship it to China today. It is true that the <unk> 25, or so in 2026 out of our big focus is in the ramping up of Latina.

Patrick Donnelly: Even more features because if you remember.

Patrick Donnelly: Regionally where in 2021 there was also the program to build production for the ECP products of high value products those in China, but some of our big customers have decided to put has been by and they ask us to seven outdoor to increase their capacity from Europe and in United States to sell from this to locate.

Franco Stevanato: So, in order to summarize, Asia will remain strategic for Stevanato, because also there is a big growth in biosimilars, but today, the big focus is to execute these two huge greenfield plants in order to execute all the contracts that we have with our customers. One example is the big program from Carthage Essay to Fill. This is a huge program. We need to be laser-focused to execute with big success, because there is a big contract behind it.

Patrick Donnelly: So.

Patrick Donnelly: In order to summarize Asia easily remains strategic first of an outdoor because also there is a big growth on biosimilars, but today the big focus was to exit due to these two huge greenfield plants in order to execute on the contracts that we have with our customers. One example is the big problem were going out for Mcarthur just safety.

Patrick Donnelly: This is a huge program.

Patrick Donnelly: Laser focused to execute with big success, because there is a big contract behind it.

Patrick Donnelly: Okay.

Doug Schenkel: Next question is from Doug.

Speaker Change: Next question is from Doug <unk>.

Doug Schenkel: Schenkel, Wolf Research, please go ahead. Hey, thank you for taking my questions and sorry for the technical challenges before. So two topics. First on guidance. It seems like your updated full year guidance reflects first quarter upside, both at the revenue line and the margin line. But you're not really changing the outlook for the balance of the year beyond that, other than to reflect the tariff impact that you've discussed. Do I have that right? And if so, keeping in mind that orders remain strong, you don't feel like there was any pull forward of revenue or abnormal behavior in the midst of the current policy uncertainty.

Patrick Donnelly: <unk> Wolfe research. Please go ahead.

Patrick Donnelly: Hey, Thank you for taking my questions and sorry for the technical challenges before so two topics first on guidance. It seems like your updated full year guidance reflects first quarter upside both at the revenue line and the margin line.

Patrick Donnelly: But you are not really changed in the outlook for the balance of the year beyond that other than to reflect the tariff impact that you discussed.

Patrick Donnelly: Do I have that right and if so can you.

Patrick Donnelly: <unk> in mind that orders remained strong.

Patrick Donnelly: You don't feel like there was any pull forward of revenue or abnormal behavior in the midst of the current policy uncertainty and again margins are ahead of plan is this just prudent conservatism as a philosophy given the current environment.

Marco Lago: And again, margins are ahead of plan. Is this just prudent conservatism as a philosophy given the current environment?

Marco Lago: Marco speaking. First of all, we are reiterating our revenue guidance. We see there two opposite effects. On one side, we see some headwinds related to the exchange rate. You know, euro went stronger compared to a couple of months ago. And this is an headwind. On the other side, one of the mitigation effect tool we have for tariff is increasing price or transfer some extra cost to our customer. And this is basically offsetting the currency headwinds in the top line. The guidance obviously we are providing is obviously the best estimation we have today. And this is reflecting the trajectory we designed two months ago.

Patrick Donnelly: Margaret speaking first of all we are reiterating our revenue guidance.

Patrick Donnelly: We see that two opposite effects.

Patrick Donnelly: On one side, though we see some headwinds related to the exchange of data.

Patrick Donnelly: When stronger compares to a couple of months ago and this is a.

Patrick Donnelly: This is an add Linda on the other side the one of the myths deviation effect.

Patrick Donnelly: The tool we add before the body is increasing for ISO fast for some extra cost to our customers and this is basically offsetting the currency headwinds in the top line.

Patrick Donnelly: Did the guidance obviously, we are to provide this is obviously the best destination. We have today and this is reflecting the trajectory we designed two months ago.

Marco Lago: And from market point of view, the demand from our customers is robust, well spread practically in all the products. So to be considered that we are in the middle of the construction ramping up this huge greenfield plant where the demand is driven by the capacity that we are putting in place. So there are some technical timing that we are going to install this high speed line, we are doing the validation, we have the green light from the customer and then we're going to deliver it. So it's difficult to further accelerate this ramp up because the quality is the priority number one for our international customers.

Patrick Donnelly: And from marketing point of view the demand from our customers is there a boost of where spread practically in all the products.

Patrick Donnelly: So to be considered that we are in the middle of the construction of ramping up these huge greenfield plants, where the demand is driven by the capacity that we have put in place. So there are some technical time and Thats what were going to install these high speed line, while doing the validation we have the green light from the customer and then we're going to deliver.

Patrick Donnelly: So it's difficult to further accelerate that this ramp up because of the quality is the priority number one Robert this international customers.

Marco Lago: Okay, understood. Thank you for that.

Patrick Donnelly: Okay understood. Thank you for that and then for my second question.

Marco Lago: And then for my second question, just high level on free cash flow. This was a really strong quarter. You know, I presume some of that is timing of projects, but also the benefit of mix. Um, could you just comment on that a little bit more? And maybe more importantly, how should we think about durability from here in terms of free cash flow improvement over the coming quarters? Sure. So first of all, we still expect 40 to 60 million negative free cash flow for the year. We are happy about the performance in Q1, driven by strong collection from customers after the revenues we generated in Q4 last year.

Patrick Donnelly: The high level on free cash flow. This was a really strong quarter.

Patrick Donnelly: I presume some of that is timing of projects, but also the benefit of mix.

Patrick Donnelly:

Patrick Donnelly: Could you just comment on that a little bit more and maybe more importantly, how should we think about durability from here in terms of free cash flow improvement over the coming quarters.

Patrick Donnelly: Sure.

Patrick Donnelly: So first of all we still expect the.

Patrick Donnelly: $40 million to $60 million negative free cash flow for the year. We are happy about the performance in Q1, driven by strong collection from customers after.

Patrick Donnelly: The revenues, we generated in Q4 last year.

Marco Lago: Nevertheless, it's it's we will see some fluctuation quarter after quarter depending on topics. but also the fact that we are, for example, paying taxes in the second half of the year. So we are very focused on keeping under control the free cash flow, but we are reiterating our guidance of 40 to 60 million negative free cash flow in the year. Okay, thank you again.

Patrick Donnelly: Nevertheless.

Patrick Donnelly: It's a.

Patrick Donnelly: We will see some fluctuation quarter after quarter, depending on Capex.

Patrick Donnelly: But also the fact that we are for example, paying taxes in the second half of the year. So we.

Patrick Donnelly: We are very focused on keeping under control the free cash flow, but we are reiterating our guidance of 40 to 60 million negative free cash flow in the year.

Patrick Donnelly: Okay. Thank you again.

Operator: For any further questions, please press star and one on your telephone.

Patrick Donnelly: Are any further questions. Please press star one on your telephone.

Franco Stevanato: Mrs. Miles, gentlemen, there are no more questions registered at this time. Maybe if I can just summarize the sentiment that we have in Stevanato Group. We have a solid start in 2025. We have a robust demand for all the 2025, practically in all our product category. We see a strong momentum in the BDS segment. And we see a high interest in our high-value product because the biologic demand of this product from our customer is very strong. With our greenfield plant, we are on track, both with the installation of line and the validation with our customers.

Speaker Change: Smile gentlemen, there are no more questions registered at this time.

Speaker Change: Maybe if I can just summarize the sentiment that we obviously have another group of we have a solid start in 2025, we are going to boost the demand for 20 below the 2025, we practically in all our product categories. We see a strong momentum in the Bts segment, and we have we see a high in.

Speaker Change: Rests on our high value product because the biological demands of these products from our customer is very strong with our greenfield plants that we are on track both with installation of line and validation with our customers. We see visible improvement from an engineering point of view. It also we are happy that finally on buyer Louisiana.

Franco Stevanato: We see visible improvement from an engineering point of view. And also, we are happy that finally, on Vial, we see a recovery. So we are fully committed to deliver the result.

Speaker Change: Recovery. So we are fully committed to deliver the result, I'm also even more we are confident in our long term trajectory of double digit growth target of 30% of EBITDA is to move to 40% to 45% of high value problems. The novel products. So thank you very much. Thank you everyone for joining us today, and we look forward speaking organic.

Franco Stevanato: And also, even more, we are confident in our long-term trajectory of double-digit growth, target of 30% of EBITDA, and to move to 40% to 45% of high-value product in our product. So thank you very much. Thank you, everyone, for joining us today. And we look forward to speaking with you in the future.

Speaker Change: Uhm.

Operator: Ladies and gentlemen, thank you for joining.

Speaker Change: Ladies and gentlemen, thank you for joining the conference is now all of that you may disconnect your telephones.

Operator: The conference is now over. You may disconnect your telephone.

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