Stevanato Group Spa Stock

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group Third Quarter Financial Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communications and IR Officer. Please go ahead, Madam.

Good morning, and thank you for joining us. With me today is Franco Stevanato, Chairman and Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer.

We have posted a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the financial results tab.

I want to remind everyone that 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 forward-looking statements, except as required by law.

Today's presentation may include non-GAAP financial information. Management uses these measures internally to assess performance and believes 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.

Please note that for today's call, we are introducing a new non-GAAP measure, organic revenue, for the purpose of offering a proper year-on-year comparison. Organic revenue is defined as reported revenue excluding the effects of divestments and/or acquisitions, and the impacts of foreign currency translation. For a reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release.

And with that, I will now hand the call over to Franco Stevanato.

Thank you for joining us. Today, we'll review our third quarter performance, share an update on market trends, and discuss the current market environment.

Our third quarter financial results were in line with our expectations. Reported and organic revenue grew 8%, high-value solutions represented 46% of total revenue, and adjusted EBITDA increased 150 basis points to 27.2%, compared to the third quarter of 2025.

Revenue growth was driven by an 11% increase, on an organic basis, in the Biopharmaceutical and Diagnostic Solutions Segment, which offset a 12% decline in the Engineering Segment. Revenue related to GLP-1s decreased in the third quarter and was approximately 17% to 18% of the total company revenue.

Revenue from non-GLP biologics increased over 30% in the quarter, offsetting the decline from GLP-1s. And on a year-to-date basis, revenue from non-GLP biologics was up 13%, demonstrating once again the diversity of the broader demand landscape.

In the second and third quarters of fiscal 2026, we recorded variable compensation in the BDS segment tied to lower volumes, mostly related to GLP-1 therapies.

Turning to next year, we are working through the binding forecast process with our customers. Forecasts are consistent with the trends we experienced thus far in 2026, with increasing demand across our high-value portfolio from most of our customers.

However, within our GLP portfolio, we now expect lower volumes than previously anticipated for 2027. This was not entirely unexpected, and we started taking action several months ago to offset this impact. For example, the flexibility of our global operations allowed us to move some capacity to different regions to accommodate higher demand from other customers.

More importantly, we currently expect consistent strong demand in non-GLP biologics in 2027. We are still in the process of finalizing customer production forecasts for next year, and we are confident that we have already backfilled the majority of this revenue. But we now expect this will result in a temporary moderation of growth in fiscal 2027.

Looking ahead, GLPs remain a phenomenal drug class, and we expect to continue to benefit in the long term. Currently our GLP revenue is predominantly tied to commercial products from the main originators.

However, we are actively working with over 30 global customers for multiple programs in various stages of clinical development. These new customer programs are expected to play an important role in future growth, and they utilize high-value products, including our EZ-fill platform and proprietary delivery devices.

Today, the global patient penetration is well below 10%, and the opportunity remains significant and largely untapped. The overall demand environment for injectable biologics remains structurally strong, underpinned by long-term durable tailwinds.

Scientific innovation is driving global pipelines with novel therapies expanding patients' reach. Moreover, technology advancements are providing breakthrough solutions that enhance patients' convenience and adherence. New formulation and delivery technologies allow for self-injection of highly viscous and higher volume drugs.

This is critical as treatments delivered intravenously in a hospital setting transition to a subcutaneous presentation that can be administered by patients at home. This offers clear advantages for patients and in reducing healthcare costs.

Lastly, we continue to see growing demand for high-performing containment and off-the-shelf delivery systems to support the large wave of biosimilars approaching the market in the coming years. Beyond GLPs, our customers are building a wide biosimilar pipeline including assets in immunology, oncology, endocrinology, and other therapeutic areas, that will expand patient access globally and represent a very attractive opportunity for us in the medium and long term.

In response to these market trends, we are squarely focused on meeting customer needs with new technology, innovation, and additional production capacity.

Our Alba syringe platform is a great example of this innovation. It is our highest performing syringe platform and has unique features that have led to growing market demand. In recent weeks we qualified our first high-volume Alba syringe line, in our Piombino Dese plant.

Customer demand also remains solid across other EZ-fill platforms. We continue to run production of our EZ-fill cartridges at full utilization, and we are progressively increasing production for EZ-fill vials, as demand continues to expand to a larger set of customers.

Moving to Delivery Devices, the opportunity pipeline for our proprietary platform continues to grow. Our Alina, Aidaptus and Deora platforms are in various stages of evaluation for a diverse range of biologic applications, mainly biosimilars, including GLPs and metabolic diseases, endocrinology, immunology, cardiovascular diseases, and other therapeutic areas.

Our customers' needs are clear, pointing at solutions that enhance patient usability and adherence, derisk supply chain, provide a better answer to new drug product requirements of modern formulations, and, lastly, increase the sustainability and efficiency profile of combination products.

We believe we have the right set of products, expertise, and competencies to support our customers with a broad and unique value proposition.

Let's turn to the Engineering Segment. The operations have stabilized, and efforts under our optimization plan have created operational improvements, but financial results in the third quarter were below our expectations.

We made good progress with new order intake last quarter, but we ended the third quarter below our target levels of signed new orders. This was due in part to a number of orders that have been delayed from a large customer, which put pressure on the segment in 2026.

Our guidance now reflects a slight adjustment to our full year 2026 revenue expectations for the Engineering Segment. This is expected to be fully offset by better performance in the BDS Segment and has no impact on consolidated guidance. Marco will provide more details.

Let's review the progress of our growth initiatives in U.S. and in Italy. During the third quarter, we continued to scale these investments with discipline, further enhancing operational maturity and increasing capacity to support customer demand. In Latina, commercial operations for EZ-fill syringes are running smoothly, and we continue working on customer audit and validation activities.

Looking ahead, the team is busy preparing the facility for the next phase of expansion, which is dedicated to EZ-fill ready-to-use cartridges. Demand for high-value cartridges remains strong, with the market expanding beyond the traditional cartridge players.

Our new RTU 400 cartridge lines are the first of their kind, driving significant innovation and production capacity. This includes a new aseptic crimping process to ensure sterility at the cartridge interface and maintain closure integrity in aseptic conditions.

This is one of the most distinctive features and a key enabler for protecting the final product throughout the sterile packaging flow. With new production of EZ-fill cartridges in Latina, customers now have greater supply chain security, while at the same time it gives us greater operational flexibility.

Moving to Fishers, I'm pleased to report that the site broke-even at the gross profit margin level in the third quarter, achieving another important milestone as we scale this multiyear investment. More recently, we shipped the first commercial EZ-fill vial order, while customer audit and validations continue, alongside ongoing line installations.

During the third quarter, we completed the buildout of the device manufacturing cleanroom. We remain on track to launch commercial volumes in the next couple of months. We are in the early phase of commercialization for our device programs. Over the next 18 months our facilities in Fishers and in Germany will be focused on a significant commercial scale-up for contract manufacturing and our proprietary Alina pen injector.

In summary, the overall demand environment for injectable biologics remains solid, driven by strong secular tailwinds such as aging population, scientific innovation, and the rising trend of self-administration of medicine. We have positioned the business in the most attractive areas of the market that require high-performance products.

Our broad product portfolio addresses these needs from our groundbreaking Alba syringe platform to our large-volume cartridges and our integrated drug delivery systems such as our Alina pen. Robust market demand in biologics and biosimilars gives us the confidence that we can backfill the lower GLP revenue and still grow low single digits in 2027.

I'll turn the call over to Marco for a review of our third quarter financials.

Thanks, Franco. Before I begin, I'd like to clarify that all comparisons refer to the third quarter of 2025. Let's start on Page 10.

In the third quarter of 2026, revenue grew 8% to EUR 326.1 million, both on a reported basis and organically. This was driven by 11% organic growth in the BDS Segment, which offset a 12% revenue decline in the Engineering Segment.

Revenue from high-value solutions increased 1% to EUR 149.4 million, both on a reported basis and organically, and accounted for 46% of total revenue.

In the third quarter of 2026, gross profit margin decreased 10 basis points to 29.1%, and was unfavorably impacted by increased utility costs, the expected higher depreciation, and lower gross profit in the Engineering Segment. This was partially offset by the combined improvements in Latina and Fishers, and a better mix compared to last year.

Operating profit margin increased 110 basis points to 18.5% and adjusted operating profit margin increased 90 basis points to 19.4% in the third quarter of 2026. Net profit grew 16% in the third quarter and amounted to EUR 41.8 million, and diluted earnings per share were EUR 0.15.

On an adjusted basis, net profit increased 14% to EUR 44 million and adjusted diluted EPS increased to EUR 0.16. Adjusted EBITDA grew 14% to EUR 88.8 million and adjusted EBITDA margin increased 150 basis points to 27.2% in the third quarter of 2026.

Moving to segment results on Page 11. In the third quarter of 2026, revenue from the BDS Segment was EUR 294 million, which grew 10% and increased 11% on an organic basis. Revenue from high-value solutions was EUR 149.4 million, increasing 1% both on an organic and reported basis, driven by EZ-fill syringes and cartridges and represented approximately 51% of segment revenue.

Revenue from other containment and delivery solutions was EUR 144.6 million, which grew 22% and increased 23% on an organic basis, driven by growth in standard syringes and cartridges, and included variable compensation tied to GLP therapies.

In the third quarter of 2026, gross profit increased by EUR 8.9 million, and gross profit margin grew 10 basis points to 32.1%. This was driven by higher revenue, the combined improvements in Fishers and Latina, and a better mix, which was offset by higher utilities and depreciation costs. Operating profit margin grew 90 basis points to 23%.

In the third quarter of 2026, revenue from the Engineering Segment decreased 12% to EUR 32 million, primarily due to lower sales in pharma visual inspection, and assembly and packaging, which offset growth in aftersales activities. In the third quarter of 2026, gross profit margin decreased 20 basis points to 10.2%, due to lower revenue, the timing of order intake, and project execution. Cost optimization initiatives helped to improve operating profit margin by 220 basis points to 1.1%.

Please turn to the next slide for a review of our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of EUR 114.9 million and net debt of EUR 353.7 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 financing.

For the third quarter of 2026, capital expenditures totaled EUR 44.8 million, mostly related to growth investments in the new plants, and for our device programs in Germany.

In the third quarter of 2026, net cash from operating activities totaled EUR 57.6 million. Cash used in property, plant, and equipment, and intangible assets was EUR 36.3 million. In the third quarter of 2026, the company generated free cash flow of EUR 21.7 million.

Please turn to the next page. We are reiterating our full year guidance and still expect revenue in the range of EUR 1.260 billion to EUR 1.280 billion, adjusted EBITDA between EUR 335 million and EUR 345.2 million, and adjusted diluted EPS is still expected to range between EUR 0.60 and EUR 0.62 for the fiscal year.

We are updating a couple of assumptions in our full year guidance. For fiscal 2026, we now anticipate stronger growth from the BDS Segment, now growing organically double digits at the center point of the guidance. This is expected to fully offset the slight revenue decline in the Engineering Segment compared with our prior guidance.

Revenue from the Engineering Segment is now expected to range between EUR 124 million and EUR 134 million. And finally, we now assume that CapEx will range between EUR 230 million and EUR 240 million and net of customer contribution, EUR 215 million to EUR 225 million.

I will now hand the call back to Franco for closing remarks.

In closing, in the third quarter we delivered another solid performance in line with our expectations, and we remain on track for the full year 2026 objectives. We expect that GLP will continue to be a very good tailwind for us.

In the short term, the adjustments to anticipated GLP-1 volume will temporarily moderate growth in 2027. Based on what we know today, we believe we can still grow low single digits in 2027 driven by favorable secular trends across the broader biologics area.

Without this temporary headwind in 2027, we believe that we would have grown in line with our long-range plan of high single digits to low double digits. We expect that our main KPIs will continue to move in the right direction. This includes continued growth in high-value solutions, expanding margins, and positive free cash flow for next year.

Over the medium- to long-term, GLPs will continue to drive favorable demand with new assets coming to market, the ongoing expansion of indications, and upcoming patent cliffs and new biosimilar launches. We have a long history of serving pharma and biotech customers, and this is the natural evolution of any new therapeutic class.

As we look beyond 2027, we expect to return to more normalized growth in 2028 underpinned by the strength of the broader biologics market. The demand for injectable biologics remains strong, with more than 9,000 injectable assets in the global drug pipeline.

These are in advanced stages undergoing clinical evaluation or registration. And more than 60% of those are biologics. Our strategy is firmly anchored in the higher-valued subsets of the market, and the business is positioned as a leader in biologic applications. Our strategy is unchanged, and we are progressing against our objectives.

Operator, we are ready for questions.

This is the Chorus Call operator. [Operator Instructions] First question is from David Windley, Jefferies.

I wanted to try to first clarify on the variable compensation and then ask a follow-up. So on the variable compensation, am I understanding correctly that, that's essentially a take-or-pay payment that the client is not using the committed volume and so you're getting consideration in lieu of that?

If you can quantify that, I'd love to hear the number. And then as you think about -- this is a follow-up. As you think about pursuing non-GLP-1 volumes to backfill that, are those opportunities the same formats and the same products as what you would have been producing for your GLP-1 clients?

So Marco speaking, I'll start from the variable compensation. We cannot disclose the specific clause we have with each single customer and contract. However, what I can tell you that in this case is related to lower volumes, and so the contractual protection we have in place, and basically, we are in line with what we said before.

We have several contractual protection depending customer by customer, can be take-or-pay, minimum quantities, capacity reservation, CapEx contribution or market share protection. In this case, in 2026 is related to lower volumes compared with the committed binding forecast. We cannot quantify for the reason I mentioned before. What I can tell you is that it is not relevant in the quarter in the year.

Franco speaking. Today, this reduction of this temporary demand is linked to particular to syringes, [indiscernible] syringes, we already start to backfill this temporary headwind with our strong demand that we have, in particular on the biologic and injection space.

So today, we are really starting to do a good job in order to backfill most of this temporary headwind we already started to backfill. On the top of this, what I would like to add that more on the broader aspect of the biologic market, the demand is strong.

And today, we have also a strong demand on Alba, where we are adding capacity in Italy. We have strong demand on cartridges to fill both biologic and also in the GLP-1 because we are starting to ramp up our capacity for drug delivery system. So we have done a good job in order to backfill this capacity in order to maintain a low single digit in 2027 despite this temporary headwind.

Great. If I could ask one more clarification. In the statement that the variable compensation is not material to the quarter, I think you also are highlighting that you're taking some amount in the third quarter related to the second quarter.

So I guess both of those are relatively small. Is the size of those small because the relative shortfall was small? Or is that more a result of where the protections kick in? Because it looks like your GLP-1 production in the quarter was materially below what you would have expected.

Again, I need to reiterate what I told you before. We cannot disclose the details about the clauses we have in each single contract. We have protection in place and in agreement with the customer, we started to recognize the amount in our P&L is we are growing in the BDS Segment as expected.

We are growing 12.2% organically in the 9 months. And for our long-term contract, we have protection in place that, in this case, is not significant with respect to our revenue.

Next question is from Avantika Dhabaria, Bank of America.

And then just to clarify on the GLP-1 headwind, can you give us some more color on whether it's concentrated in a single customer or more widespread? And then I have a follow-up.

Yes, I confirm that this temporary headwind in 2027, it is tied to one customer.

Got it. And then on the non-GLP-1 biologics growth in 3Q, can you give us some color on what was the primary driver for the strong -- was it strong volumes or existing programs? And how should we think about this growth going into 2027?

Yes. Thank you for the question. Today, Stevanato Group is extremely active in the biologics space. Biologics space is where there are many thousands of new molecules. We are talking about approximately 9,000 molecules that are in Phase II and Phase III in different therapeutic classes.

We're talking about monoclonal antibody, biosimilar, mRNA application, wide range of biosimilar for multiple therapeutic areas like immunology, inflammatory, rare disease, oncology. And Stevanato is actually working with several customers on a worldwide basis in order to validate our Alba technology where we are investing capacity in Italy.

We have a huge portfolio of new program on cartridges ready to fit a different format where we are heavily investing capacity in [indiscernible] and into Latina. Also we have a big program in order to ramp up capacity for our drug delivery strategy through our Alina program in Germany and with our drug deliveries that we are building up in our plant in Fishers.

Overall, with this program that we have, we are able to backfill this temporary headwind that we are facing 2027. And despite this single customer, we will be able to be low single digit in 2027. And even more, we are confident that beyond 2027, we will normalize and we go back to our normalized growth.

Next question is from Anna Snopkowski, KeyBanc.

This is Anna Snopkowski on for Paul Knight. I have 2, but maybe to start on your device portfolio. You mentioned you're going to launch commercial volumes for the Alina pen in the coming months. Do you think you could just remind us whether you support any commercial therapies today and what your pipeline looks like? And then maybe just your long-term view on the growth for delivery devices? And then I have one follow-up.

Franco speaking. Yes, I'm confirming that we have received certain number of validation and registration in the first 6 months to our Alina program, our IP product that we are going to produce in Germany, and we are ramping up capacity even more in the next years to come.

We are waiting for other registration validation in the second part of the year, and we are directly engaged with a multiple number of customers and biosimilar customers in our liraglutide program, the other biologic application.

So today is one of our strategy in Stevanato Group to not only serve our EZ platform, also provide our device program with priority #1 to our IP where we are going to produce in our plant in Germany, and this will represent an incremental revenue generation in the next years to come.

And also in parallel, we are working in a selective way to certain big international customer to work in a sort of CMO business model. We have active program that we will provide to our plant in Germany, even more in our plant in Fishers, we are ramping up a big department production for our big U.S. client.

Great. And then maybe just a follow-up. Looking at 2027 growth, could you just walk us through your assumptions for the different segments as well as GLP-1 growth? And are you assuming another year of declines on the engineering side?

Maybe I'll start with some color about 2027. It's a little bit early. We will provide full guidance in the next earnings call beginning of March. However, what I can tell you is that visibility remains strong despite the lower-than-anticipated forecast from GLP we mentioned.

We already launched action to backfill the capacity for 2027 that is mainly related to Nexa syringes. And overall, the demand across injectable biologics is strong. And today, we are confident we will be able to cover most.

As mentioned, year-to-date, we grew 13% in non-GLP-1 biologics, giving us the confidence that we can backfill the GLP-1 customer temporary weakness. In particular, we see great traction on Alba.

We recently launched the Alba industrial line following the strong demand we can see and the growth we had in third quarter. We mentioned many times that for RTU cartridges, we are fully booked for most of 2027.

For Nexa, as mentioned, we started backfilling, being able to backfill most of the capacity for 2027. And last but not least, you mentioned before that we are gaining traction with more and more visibility, our Alina pen that is growing significantly compared with the current volume. So our portfolio demonstrates that is strong, and we can leverage strong demand and visibility into the market.

If I can add a little bit more color, in particular, in the BDS Segment in this year, also last year, we were able to deliver double-digit growth because like Marco said, biologic market demand is robust, and we have a strong traction with our high-value product platform.

Also, if you can go back also to our GLP, GLP-1 is a phenomenal drug class, and this will continue to grow in the next years to come. Today, if you look a little bit at the level of penetration, we are below 10% of the full worldwide patient penetration.

And besides the 2 big originator, there is a lot of new customers coming onboard. In Stevanato Group, we are active with more than 30 customers with more than 50 programs through most of our high-value products.

So the message is that we are now facing a temporary headwind in 2027 that is going to adjust our growth based on our strategy. But if you look more the medium-term trajectory Stevanato Group, we are optimistic and confident that we are going in the good direction in improving revenue and also margin and the generation of cash.

Next question is from Chad Wiatrowski, TD Cowen.

It looks like Annex 1, the European regulation is contributing a couple of hundred basis points to the market broadly in containment and components. So curious if you're seeing that, if there's any way you could help us quantify the tailwind? Is that helping in 2027?

And then similar to that question, I guess, are you seeing the trend happen in U.S. as well? And is that a similar-sized market opportunity for you?

Yes. Today, we -- this one that we're starting to monitor carefully since 2 years, we see that it's going to give benefit to Stevanato to convince pharmaceutical customers to move into the EZ-fill direction instead to continue to use bulk technology.

I make an example on cartridges ready-to-fill, historically, the cartridges was primarily spread across very few customers only into insulin and anesthetic. Today, we see that this market demand is extended with a wide range of customers and different therapeutic classes in biologics from [indiscernible].

So we see that the adoption of EZ-fill technology, in particular for cartridges into buyer, is helping to boost our growth in this product category. Another example that we see that already some existing customers that have commercial product in bulk cartridges, they have decided to convert into ready-to-fill cartridges. So we see that this will help to boost, increase our revenue in the future around our EZ-fill product, in particular, cartridges and buyer.

And then just on that one GLP-1 customer, is this like a change in format? Is this going to 0 for them? Or is this more of like oversupply and working down inventory? Can you just give a little bit more color on kind of the dynamics there without obviously disclosing the partner?

So we cannot disclose information about our customer. What we can see that is a temporary headwind that we are facing is that we have to say that the GLP-1 is at the beginning, and it's quite common at the beginning of this launch of the product in the market that can have some temporary fluctuation. This is a traditional historical customer is a market leader. I think that we are not concerned at all. We consider more a temporary headwind in 2027, nonaffected long-term range.

Next question is from Larry Solow, CJS Securities.

Just a follow-up on that -- following up on that question. So what gives you the confidence, I know it's hard to answer, but it's a temporary headwind? I know you can't -- hard to give us any real color, but it doesn't sound like you've lost any share or anything with this customer.

It sounds like the customer -- it's customer-specific issues. What gives you that confidence that they're going to reinvigorate their demand or their growth? It feels like it's just perhaps your alignment with -- you may not be on the lead -- there are 2 horses in this race, clearly, right?

And perhaps your proportion is more on horse #2 than horse #1. I mean, that sounds like that's clearly the issue. I mean, I don't know if you can confirm that, but am I in the right direction there?

So first of all, it's difficult for us because we cannot enter in the confidentiality of the contract we have with our customers. Usually with our big international customers in general, we are protected with a long-term contract.

We are covered by different agreements that can be by quantity, CapEx contribution, take-or-pay formula, market share, or certain binding product that we agree. So the nature of the partnership that we have enhance us to have a very clear and transparent relationship that is the nature of what Stevanato is doing since more than 20 to 30 years.

So we are not concerned that is that we are losing market share at all. Even more it's the opposite. We see that Stevanato Group is playing an active role in this GLP-1 opportunity in the next years to come because we are spread into the originator.

And also we are active working in the medium-term with tens of programs like I mentioned to you, we have more than 30 active customers with more than 50 programs. And this is one of the reasons why we have really done a very good job inside the organization to backfill this temporary headwind that we are going to face only in 2027.

That's fair. So it sounds like it's -- you're not losing share, but perhaps your customer has lost share. I'll leave it at that, I guess. I guess just a follow-up, how does -- you still had a pretty good quarter this quarter, actually, your revenue was really strong. You mentioned a little lower GLP.

You're not lowering the guidance for this year. Just as you look out to next year, I know you're not ready to break out GLP versus non-GLP-1 sales, but is it -- are you seeing an acceleration on the non-GLP-1 side?

Like already Marco mentioned before, today, we're happy about this solid quarter 3 that we are delivering. We are on track to achieve our 2026 objective. And even more, if you look at the pipeline that we have in biologics and the trend that we have in biologics, we have delivered plus 30% this quarter compared to last quarter.

And on the year-to-date basis, we have plus 13%. But it's the nature of the program that we have behind. We have many programs well spread, equally spread between Alba technology, cartridges to fill, buyer to fill drug delivery system. So all this combination of elements are going directly in the direction of the investment that we are doing in Italy, in Germany, in Fishers.

We say this is why we're confident that we will be able to backfill 2027 to be -- to deliver another growth in 2027, more softer, that was our expectation. But even more what is important, the sentiment that I want to pass to all of you that our trajectory in the medium term is intact because of the quantity of the program where Stevanato is engaged in biologic and also in GLP-1.

Okay. Great. I appreciate that color. Just if I could squeeze one last one in. Great to see Fishers get to breakeven this quarter on a gross profit level. The slowdown in GLPs, at least temporarily, does that kind of slow or maybe push out a little bit the ramp partly in Fishers towards profitability?

This program of Fishers is on track. Our program is to be full up and running at the end of 2028 with our capacity expansion on syringes. We plan to add capacity for buy rate to fit because that we are starting to do the first commercial revenue in this quarter.

We will add also Alba technology even more, we are starting now to ramp up our gig department for the device that will start to generate commercial revenue in 2027. Everything is on track and the demand is robust.

Next question is from Mac Etoch, Stephens.

Maybe just a couple for me. And following up on Anna's question earlier, I'd love to just get a sense of what's going on within the underlying engineering order trends, just to kind of put a finer point on the trends that you're seeing there?

So on the engineering, like I mentioned, we -- the team is making a good operational progress, like I already mentioned in the several quarters, what we are doing in terms of supply chain, project management, and technical department, we are going to do a good job.

In the meantime, we're building a strong pipeline of new program. What we are facing and we are struggling is the delay into the conversion in orders. In fact, this is the reason why in this quarter, we were lower compared with our expectation.

This was due also in part of the delay of orders from a key customer that has also lowered the volume. They also have create some pressure in the 2026 and also we do in 2027. So all overall, from operational point of view, we are fine, we are on track.

Where we are struggling today is the conversion of the pipeline into orders. This is the reason why we have decided to review together with Marco the guidance for the outlook for 2026, and we are much more compensated with the BDS Segment.

Got it. And just to clarify, it sounds like outside of that single customer, things are kind of progressing as expected, it's just more of a 2027 outlook at this point?

So we -- like I mentioned, from operational point of view, between our 2 plants in Italy, in Bado and Bologna, the plant in Danmar, we have achieved a meaningful operational improvement. The pipeline we have built with our sales organization is good.

Where we are facing some delay is conversion into orders. This is the reason why for what is related to 2027, despite also this new slowdown with one customer is that we are also optimistic that we at certain point this pipeline will translate in orders.

But from the moment that we have the okay from the customer to go with Stevanato, we see because of the technicality, we talk about particular inspection machine or assembly machine, sometimes it takes months to define the specification and to sign the order. This is where we are struggling in this moment.

Next question is from Doug Schenkel, UBS.

Just 2 cleanups. With high-value solutions growing 1% and accounting for about 46% of Q3 sales, should we still be modeling mix of 47% to 48% for the year? And if so which products or customer programs are going to drive that implied Q4 step-up?

So that's the first one. Second one is on backfilling most of the GLP-1 shortfall. If you've done that already or you're on a path to do that, why is next year's growth target still below your longer-term outlook? I'm just trying to get at how firm is the replacement revenue? And I guess by extension, how do those programs compare from a timing, visibility and profitability standpoint?

Thanks for the question, Doug. I'll start with high-value solutions. Yes, we reiterate our guidance from 47% to 48% as a percentage of revenue. It is normal for us in some quarterly fluctuations in the mix in high-value products.

You are giving me the opportunity to clarify that we refer to better mix because we are gaining a lot of traction in products like Alba and EZ-fill cartridges that are very accretive for us. So that's why we refer also in Q3 to better mix.

So we are confident and reiterating our guidance that is implying almost 50% high-value solution in Q4. And the main drivers are, again, syringes, Nexa syringes and EZ-fill vials and cartridges for that.

Today, I capture your second question, we believe we will be on the range of low single digits in 2027 because we have already backfilled most of these syringes. These are high-value product syringes, Nexa, but we are not complete to have completed this backfill because it is taking time.

So we have a strong pipeline of new customers coming, but we need also still some quarters to finalize additional validation for new programs. Just to give an order of magnitude, if we for this temporary headwind, we believe we will have grown in line with our long-range plan of high single digit to low double digit in 2027. And again, the BDS Segment is already delivering this performance is now close to 2 years.

Next question is from Curtis Moiles, BNP Paribas.

First, I just wanted to start on these other containment solutions. Maybe can you give a little bit of additional color on what drove that strong 23% growth there? It sounds like it wasn't related to the GLP-1 competition. So any additional color would be good.

And then secondly, just on the BBS gross margin. Can you maybe quantify the impact of the high utility costs that were called out? And maybe is that expected to continue into Q4? And is sort of year-over-year expansion in Q4 still a good assumption?

So thanks for the question, Curtis. We start from other containment delivery solutions. Q3 was strong, driven -- we can see strong demand in bulk cartridges. We started to gain traction with our CMO contract for drug delivery system in Fishers.

So all overall, in the quarter, other containment are growing. We also included in other containment the variable compensation because we decided to put there because we did not deliver the product and we didn't want to inflate our main KPIs like high-value solutions and GLP-1 revenue. So contributed also this. But I was saying before, for high-value solution, we can see quarterly fluctuation. And in Q4, we will talk about different mix and different figures.

The question about utility is very clear. As you know very well, in Europe, the gas price went up significantly in Q3. And with that also the energy price went up. We have long-term relationship with our customers with adjusting price mechanism in place and fair discussions ongoing, but it's taking a little bit of time to adjust the prices when the increase is so sudden, I would say.

About Q4, it's a very good question. It depends obviously also the geopolitical situation. We are cautiously assuming that it will stay slightly above Q3 prices, and it is embedded in our guidance. We had, let's say, similar experience in 2022 when the gas price went up significantly, and we are very confident we can manage the situation.

Next question is from Albert Hu, Citi.

So you called this GLP headwind a temporary moderation in 2027. So without this headwind, you also mentioned the year could be back to LRP. So does that mean the current expectation is for 2028 to be the LRP year that you're hitting as the GLP-1 moderations lapse? And if you can remind us what that LRP algo means for margins and EPS. Just want to make sure we get the timing here right.

Besides the fact that we will -- for what is related to the 2027 number, we will share on March, and what is beyond 2027, based on the pipeline that we have both in biologics, in GLP-1, in other products, we would expect to return to more normalized growth beyond 2027 in terms of revenue and to be also in the trajectory of our strategy in order to reinforce our margin and generation of cash and to expand our high-value product.

Remember, during the Capital Market Day, our goal was to be in high single digit, low double digit in terms of revenue to run on a range of 29%, 30% of EBITDA and to generate good cash flow in order to return on our investment.

Today, we are still in this trajectory, looking at the nature of the program that we have with our customers that are mostly into the high-value product range between Alba, cartridges-to-fill, Nexa syringes, and drug delivery system, and vial-to-fill. So we are confirming our strategy.

s

And as Franco mentioned, we have several tools to further improve our profitability after doing it in '25 and '26. Particularly we just reached breakeven in Fishers. Our plan is to keep on expanding profitability in Latina and Fishers, leveraging the capacity to install in high-value products. So we can play different tools in order to further expand our profitability. That is our goal for the years to come.

In fact, last point, besides this moderate growth that we face temporary in 2027 based on the strategy and also the fact that we are bringing full potential, our big investment, we continue to be in the right direction also in 2027 to reinforce our -- expand our margin and to generate also better free cash flow in 2027.

Got it. Perfect. And then maybe moving to -- on margin side. It's nice to see Fishers hitting gross margins breakeven here. Can you remind us what this now means for BDS margins?

If you can walk us through how Fishers, Latina, given the progress in 3Q, how they play part in the margin Alba this year? And then I guess, what does that set up BDS margins to be next year, maybe just on the broader level?

s

While it's too early to provide to you a full model for 2027, what I -- what we can tell you is that we have a clear plan for Fishers to fully ramp up at the end of 2028. We are installing there capacity with large majority for high-value solutions, where the gross profit margin is from 40% to 70%, depending on the type of products.

So all overall, we expect Fishers to be accretive for the segment when fully ramped up. To get there, it will be a step-by-step quarter after quarter improvement in operational KPIs and in financial consequently.

Today, as a reminder, we stall approximately 50% of the capacity in Fishers, and we are not using at full speed. So we are -- we can see month after month improvement in utilization and in further installation value products, and we believe we will be able to reach the full capacity at the end of 2028.

Same is for Latina that we are starting to produce Nexa syringes since now 2 years. We are satisfied about the marginality that we are able to deliver this high-value product in Latina. On the top of this, we are starting now to do the validation and the SAP of our RTU 400 cartridges that is a high-value product that will start to generate revenue in 2027. So this is another element that will help to continue to grow in 2027.

Next question is from Justin Bowers, Deutsche Bank.

Just wanted to clarify a couple of comments that you've made thus far. So one, if GLPs were not be selling related to this one program, you would be growing within the LRP. So it sounds like this is the primary headwind. Is there any other headwinds?

Or is this it, number one? Number two, I also want to clarify that this is isolated to the syringes and not any part of the portfolio.

So today, this temporary headwind that we are facing in 2027 is related to Nexa syringes. We don't have up to now other headwind in 2026 and 2027. And I want to say maybe it's the reverse, the demand that we have in our high-value product is quite robust.

Like I mentioned to you, we have a strong demand on cartridges-to-fill. This is why we are blocked, we are continuing to invest in capacity. The same is for the Alba technology. Also if you look also the capacity that we are building up for our drug device program, both Alina and while we work in the CMO business model, also here, the capacity that we have put in place is driven by the demand from the customers.

So to your question, it's related to one customer to the syringes is the only headwind that we are facing at this moment.

I appreciate that. And then a follow-up to that would be, it sounds like you've backfilled most of the demand. And I just want to confirm that that's just the timing of sort of the reason why it's not additive or fully replacing the growth next year is just phasing and timing and customer acceptance and validation. So that's part one.

And then part two would be, if you didn't have this headwind in GLP-1, would you have enough capacity to meet the demand for the temporary headwind in GLPs and this additional demand that you're backfilling in other parts of biologics? Or would that require you to add additional capacity?

Yes. So today, we have started to backfill most of this capacity with our syringes. And we have done a good job because we have backfilled with many customers in Nexa syringes.

It's also true that this requires some timing to fully recover all the capacity. I think we need also 2027 to backfill this. We see that it is only a temporary moment because looking ahead, the pipeline that we have in all our product portfolio in high-value products, we have robust demand that will enhance really to continue to grow in the next year on this range of high single digit to low double digit.

Like I mentioned to you today, if it were not for this temporary headwind, there was no particular issue to continue to grow high single digit, and BDS Segment most probably on double digit is also true that if we are not with this customer also Nexa syringe, we were in a situation to be close to full capacity in this moment.

But the sentiment I want to pass to you, this is a temporary in 2027 that we have mostly backfill, but because of the nature of the entity of this temporary headwind, it's going to take a little bit more quarters. Our goal is to normalize in 2028.

And we have a plan to add capacity in Fishers as part of our plan. So to your question, our plan is matching the future capacity we have in our medium-term plan.

Next question is from Anna Snopkowski, KeyBanc.

Just one follow-up for me on the engineering side. I think you kind of touched on this with Mac's question earlier, but are the delayed orders you're seeing in engineering tied to the same GLP-1 customer you mentioned? And would you consider any alternatives for engineering?

Yes. The delay that we are facing and that will generate temporary headwinds in 2027, both in the BDS Segment and Engineering are tied to the same customer, correct. In the meantime, we have, like I mentioned to you before, a strong pipeline of new orders from existing international customer, new customer, both in inspection, assembly. The only point that we are struggling, that is the conversion of this pipeline into confirmed orders.

Next question is from Matt Larew, William Blair.

What I can add you more is today, what we are going to monitor more and more is in Stevanato Group is that in the Engineering Segment, we are not where we were looking to be. We have performed some good operational progress, but we are still -- we are not in the situation where we are looking.

In fact, in Stevanato Group today, like I mentioned to you already last time, we continue to assess internally what is the best interest from strategic point of view in order to serve better our customers, even more also to grow our portfolio in high-value solution and expanding margin.

So coming back to the engineering that we have to split the discussion into 2 parts. First, for what is related to our internal competitive advantages that we launched more than 30, 40 years, that is the internal technology that we develop for the group in terms of glass converting, EZ-fill technology, needle assembly.

And this is enhanced Stevanato to take this strong position into the biologics space, look at the development that we have done for Alba, the development that we have done for our EZ-fill cartridges, product-to-fill, the other programs that we are going to develop and patent.

The second aspect of the Engineering division is the vision inspection and assembly business. That is a good business, but they remain dilutive to our corporate margin. So while this really bring this inspection and assembly good -- is dilutive, is bringing also good value for the customer, we continue to assess inside of Stevanato Group what is the best for Stevanato.

Today, at the end of the game, we want to really laser-focused to meet the need of our customers, in particular for everything that is related to injectable space and even more to reposition our product to high-value product. And we continue to assess this.

And if you look also what we have done months ago, we have announced that we have divested the California plant. Today, our goal is more and more to localize all our organization in order to be the best partner for our biologics space and even more to really reposition our product.

Operator, any last questions?

We have no more questions registered at this time. The floor is back to you for any closing remarks.

I just want to thank everyone for joining the Stevanato Group third quarter 2026 earnings call, and we look forward to future engagements. Have a good day.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Okay. Perfect. Welcome, everyone, to Day 2 of Morgan Stanley's Global Healthcare Conference. I'm Kallum Titchmarsh. I run the life sciences team here at MS. Really pleased today to be joined by the team from Stevanato. We have Marco Dal Lago, CFO; and Lisa Miles, Chief Communications and Investor Relations Officer. Thank you both for being here.

Thanks for having us.

And just before we get started, for all disclosures relating to this discussion, please see www.morganstanley.com/researchdisclosures.

So Marco and Lisa, maybe just to set the stage, can we talk about how 2026 has evolved versus your original expectations. It feels like there's been quite a lot going on in the market throughout this year, perhaps versus where we were this time last year. So maybe just talk through that evolution for us.

2026 is in line with our expectations. We are growing quite significantly our BDS segment. We are growing double digit on a constant currency rate. And so we plan to move to the end of the year with double-digit growth on a constant currency rate, 9% on a reported basis. On the Engineering side, same way, we are in line with our expectation. The expectations are to decline our overall revenue with third parties in 2026, moving from EUR 138 million to a range between EUR 130 million to EUR 140 million. Today, Engineering is representing approximately 11% to 12% of our revenue. We are doing improvements in operations and reducing the risk in that type of the business.

The core business is strong. We have a very good visibility. Again, we are growing double digit driven by demand, particularly in high-value products. We are growing significantly in high-value syringes, Nexa configuration with high mechanical resistance is very suitable for the self-administration devices. We are growing in EZ-fill cartridges. We see a good traction also in EZ-fill vials that are growing more significantly than anticipated. So all overall, the value solutions are gaining traction. We recently launched also, I mean, the validation of our pen injector proprietary product, Alina. So it's a good omen also for the future to continue with this trajectory to further expand the value products.

I didn't mention Alba, but it's very important because despite still not the most sold product, probably the best product we have in our portfolio, the most sophisticated one and we can see very good growth also in Alba syringes.

Okay. Amazing. Anything to add there, Lisa, on the first half or we covered it all?

Covered a lot.

Amazing. So yes, BDS is where at least we get most of our investor inbound. So perhaps makes sense to start there. Performed well this year, on track to deliver that low double-digit organic growth in the segment throughout '26. Could you maybe just unpack a little more of the drivers behind the strong performance here and then would love to hear a little more on the demand trends you're seeing for syringes, cartridges, vials, et cetera?

Yes. As I was saying, the main driver of growth is in high-value products that are representing today between 46% and 47% in the first half of the year of our overall revenue, above 50% within the BDS segment. In the first half of the year, the main driver has been in syringes, in Nexa syringes. We see a very good demand also in the second part of the year. I mentioned before, we can see an acceleration in EZ-fill vials, where today, the market, there is low penetration in sterile configuration. It's below 5%, but we see very good demand in EZ-fill cartridges.

We are investing accordingly to expand our capacity, anchored to a big customer that is shifting some container from bulk to sterile cartridges, but we see many, many other customers approaching us for our EZ-fill cartridges. We are fully covered for 2027, and we are investing accordingly to expand our capacity. Beginning of 2027, we will be installing our ready RTU 400 machine for the sterilization of the cartridges. So it's an opportunity for us to further expand capacity in high-value products with much higher price per unit compared with the bulk configuration.

And those high-value solutions, I think 46%, 47% of the portfolio this year revenue-wise at least. Where do you think that mix could ultimately go over the next few years? And which products do you think are likely to drive that next leg?

We expect to further increase the share of high-value products. In fact, if we look at the investment we have been doing in the after IPO -- since IPO, we are investing predominantly in high-value products in Piombino, in Latina and Fishers. We are installing a lot of capacity in pre-filled syringes, Alba syringes and now more and more in EZ-fill cartridges to expand our capacity in high-value products that is matching exactly the customers' demand and where market is going with respect to the growth in biologics. Our products are very, very suitable for the biologics needs where we can see more aggressive drugs and where we -- the need of more sophisticated products is present.

And obviously, that's an important part of the gross margin story as well, shifting out to those high-value solutions. Maybe just talk us through the premium on the margins that they have versus the lower portfolio.

This is a very important point. So besides the higher price per unit is also -- high-value solutions are also more accretive compared with other containment and delivery solutions. We disclosed the range of gross profit margin for high-value products that is between 40% to 70%, 70% is for some specific products. But overall, is we're above 40%. On the other side, in other containment and delivery solutions, typical, the bulk configuration, the gross profit margin range is between 15% to 35%. So the mix shift is helping a lot to expand profitability.

We are moving more and more the mix toward high-value products, and we are expanding the margin consistently. This year, the plan is to expand 170 basis point the adjusted EBITDA compared to 2025. In 2025, we grew significantly compared to 2024. So we are keeping on expanding profitability. And in the coming years, we can leverage together with the increase of high-value products mix, also the fact that we are ramping up Fishers and Latina that today are dilutive in terms of gross profit margin because of the ramp-up and all the costs associated with the ramp-up installing line, validation with customers and the start-up of each line is obviously slower than when fully ramped up.

Yes, we've had quite a few questions on that BDS gross margin this year being impacted by that initial ramp-up phase. How should we think about BDS margins over the next year? Can investors expect to see more significant margin expansion in 2027 as you start lapping some of those comps?

The way we see that, let's say, the medium-term scenario, we can leverage of further mix to our high-value products and the fact also leveraging the experience of Latina but also Fishers. We keep on improving the financial performance of the 2 new plants. This is one of the main driver to explain the margin expansion in '26, but if you think that in Fishers, we are still close to 0 gross profit margin compared with the target that is above 30% for those type of products and mix. You can understand the room we have to further expand profitability with the operational performances that we will take full advantage when fully ramp up. But the full ramp-up is expected to be in 2028, but we can see steady improvement toward 2028.

Yes, that makes sense. And back in June, you launched the Deora pen. Maybe just talk us through the value proposition of that product. Talk a bit about the positioning as well relative to the current portfolio and like which customers you'd be targeting with that.

Okay, sure. As we have been working on the Alina pen, which is the variable dose pen, it became clearly apparent to us that there was a vast market need for a fixed-dose pen injector. And so thus, we soft launched in June our Deora fixed-dose pen. Particularly as it relates to customers' needs, they're looking for a pen that requires strict adherence to a dosing regimen and thus the need for a fixed-dose pen such as Deora. And that's really kind of where we're going as we work in partnership with our customers through the cycle of what types of products they may need to really address some of the biggest challenges that they have. And Deora fits quite nicely into our proprietary product portfolio.

So alongside our Deora fixed-dose pen, we have the Alina variable dose which we just received regulatory approval on in several European countries for liraglutide-based biosimilar and we also have our Aidaptus auto-injector. We anticipate regulatory approval for that either later this year or early next year. And lastly, we do have an on-body delivery system called Vertiva.

Amazing. I want to spend some time on the kind of fast growth markets, GLP-1s, occupying a lot of airtime too here. Now about 22% to 23% of company revenue. How are you thinking about that market evolving over the medium term? And I guess talk to us about your competitive win rate within the GLP market as well.

Yes, we won a fair share of business in GLP-1s, leveraging our long-term relationship with the originators. We need to mention the fact that we started working GLP-1s more than 10 years ago for diabetes therapeutic needs and we keep on working on GLP-1. We -- one of the advantages that we have the capacity. We created the capacity linked to their need and also, we can offer flexibility in the type of format because we are in syringes. We are in cartridges. We can do dual chamber syringes and for the future, we have many opportunities also in drug-delivery systems for the biosimilars. So it's an important area for us. It's a phenomenal drug, in our opinion, that will represent a tailwind, a durable tailwind for Stevanato in the years to come.

About the share of revenue, we are today basically where we plan to be. We expect similar share in the future on overall revenue. It means that we expect also other therapeutic areas will grow. Going back to GLP-1s, we are very positive because we expect margin -- market expansion driven by utilization in different therapeutic areas, not only in diabetes and in obesity. We can see new assets coming into the market. And in the coming years, also biosimilar will represent an important market to leverage. So overall, we see durable growth in different type of formats. One of the questions we receive very often is about [penetration] of oral administration based on the conversations we have with our customers and also talking with peers, market experts we still have the view of a 30% penetration of oral and 70% in injectables in the years to come, and we believe we are very well positioned to serve the market. I don't know, if you...

I guess to complement what Marco said on GLP-1s, we're really in the early innings here of GLP-1s. As Marco noted, there are many drug assets that are in the pipeline and set to come to market in the next 3 to 5 years. Biosimilars will also be game changer overall. So there's been so much focus on what's happening in the U.S. market and not a lot of focus with what's happening outside the U.S., which we think has certainly meaningful tailwinds to long-term growth, especially as we think about biosimilars in APAC. And we've already been successful in winning some of those biosimilar pieces of work for EZ-fill cartridges as well as for the Alina pen injector. So we're very excited about GLP-1s and the long-term prospects of it.

When you peel back the revenue, and I think this is something we mentioned on the last earnings call, about 1% to 2% of that GLP-1 revenue is actually from outside the originators. So we are obviously working on new projects for those customers that are bringing additional assets or biosimilars to market as well. So I think that we've been very successful in winning our fair share and more.

As Marco noted, we have a very long history in GLPs. Our first project dates back to 2010. And I think that we've really become a trusted partner for blockbuster type drugs because we are a reliable supplier and have been for many, many years.

One of the things we've been toying with is it seems as though there's going to be an acceleration of growth for GLP-1s next year versus the levels this year, at least in terms of the patients that are being treated. So why wouldn't that equate to an acceleration for GLP-1 growth for the packaging providers? And I'm just trying to reconcile those 2 data points.

So there is early on. So what we did see essentially last year was inventory management, so really stocking up on their inventories as they're working through some of these products. And now we're moving into normalization, where we should see kind of those consistent products on a year in, year out with ongoing growth as they continue to grow globally.

That makes sense. And then outside of the oral debate, we've also had questions on multi-dose pens. You obviously have good visibility into that, just given how broad spread you are across the packaging types. So talk us through your assumptions there? And how do the economics change if a patient goes from single dose to multi-dose for Stevanato?

I think at the beginning, the market and administration was mainly in pen-injector with syringes, single dose. We have couple of multiyear agreements in place. We have another multiyear agreement in place for sterile cartridges. So we see the market growing significantly in different formats. So the future is -- we don't see a reduction in auto-injector and in syringes.

On the other side, we see for the future expansion, depending also on the geographical area in different formats. But the good news for us is that we are market leader in bulk cartridges. We are the first mover together with another player in sterile cartridges. So we are very well positioned to accommodate the different market needs.

As we think about the guide in the back half of the year on the GLP-1 side, maybe just talk us through how much visibility you have on those orders and the typical kind of length that customers would want to order out for? Just some context there would be really helpful.

The answer is that we have multiyear agreements in place that is, let's say, beneficial both for the pharma company and for us. On the pharma company side, obviously, they want to secure their capacity and let's say, route to market in a component that is mission-critical for them because, obviously, they need a good container to go to the market. And at the same time, they want to secure the capacity for the launch of the product in the following quarters and months.

It's a mission-critical component for them, relatively low cost compared to the overall cost of treatment. And I don't want to appear arrogant, but we are one of the best players to accommodate their needs in internal capacity and also flexibility moving to the other. If they have a problem with formulation, we can offer the dual chamber, then they can switch to normal syringes or cartridges. So we have many, many solutions to offer to these customers.

Today, we are working, as Lisa was saying, predominantly with the originators, but we see more and more drugs coming into the market plus the biosimilars is something that we expect for the future. Typically biosimilars are selecting the same containment solution than the originator to accelerate the go-to-market. So this is the way we are covering the market for the future in order to take advantage of the different opportunities.

I was going to ask on that. I'm curious, Lisa, to your comments just on new emerging GLP-1 demand pull you're seeing from biosimilars and generics. How big do you think that could be with time? Obviously, not expecting numbers here, but just a rough direction of travel versus perhaps the more established drugs that are out there.

I think, as Marco rightfully put it, but I think we view it as a sustainable durable tailwind, certainly in the midterm years to come, but probably beyond there. There's really only a small percentage of the population that is currently taking a GLP-1 today. Also as we think about the broader indications of where this is likely going to go, it really just points to the direction of really ongoing expansion in the next 5, 10, 12, 15 years.

Yes. And just outside of GLP-1s, biologics more broadly have been a really important growth driver. Q2 biologics growth accelerated to roughly 30%, I believe, now 42% of the total revenue base. Can you just talk about your biologics exposure beyond GLP-1s, like which categories you're seeing the most momentum in?

Yes. So biologics is a very important element, obviously, of the growth story. And while in the near term, the growth has really been centered around GLP-1s, which is part of the biologics bucket. One of the statistics that I find extremely interesting was in 2025, we had a 40% increase in new customer projects in biologics in just our prefillable syringes for Alba and Nexa. Those new projects, small but strategic, will serve as the seeds for future growth for us. And so that's how we kind of see it, right? So right now, we're seeing a big amount of growth coming from GLPs. The next leg of the stool we see from other future biologics coming to market.

In terms of what we're seeing, obviously, a lot of approvals for mAbs, monoclonal antibodies, where we have a great solution, both in the Nexa platform that we have as well as for a higher-end platform such as Alba for those very, I would say, modern formulations that are highly aggressive and Alba platform is quite ideal. As it relates to ADCs, as an example, we have number of projects underway for specialty coated vials and we see that as an important growth driver in the future. And obviously, I would be remiss without mentioning mRNA applications as well.

Indeed, it's positive recent news...

Absolutely.

Shifting maybe on to the Engineering segment for a bit. It's been still under pressure from softness in glass conversion and pharma vision inspection. It seems as though there's still that slower conversion of new orders there. Can you just elaborate on some of that softness you're seeing? And do you think that's temporary speed bumps? Or is there perhaps something more structural at play?

Yes. In Engineering, we did good progress with respect of organization industrial footprint. We are focusing now the Danish company to assembly and packaging line for devices predominantly. While in Italy, we are working in the important part that is the, let's say, the intersegment glass forming and sterilization lines. The RTU lines for cartridge, for example, has been fully designed by our engineering department. And we are also -- we are the center of excellence for the visual inspection machines in Italy. So besides the strategic importance that we have for the glass technology, to enhance the quality of our products while reducing cost and increasing flexibility.

We see very important also the assembly and packaging where we have relevant synergies, for example, for the drug delivery system value proposition. And the same for visual inspection machines, where we can enter in intimacy with the operation of our customers in the pharma industry.

How we see the market? We see the market, we see good demand, both in assembly and packaging and visual inspection. The assembly and packaging driven by self-administration predominantly. And visual inspection driven by the fact that the inspection is becoming more and more important, obviously, to avoid contamination and detect the defect in time while avoiding false scrap and all that. So we have much appreciated technology from our customers. We see the market growing in the medium term from mid-single digit to high single digit, and we expect similar growth for our business.

We are still doing progress in improving the financial performances. Our first goal is to go back rapidly to our historical performance with 20%, 21% gross profit margin. We are still below that, but we are improving significantly compared to last year. So we anticipate this year revenue range around EUR 135 million of the center point of our guidance. So below last year, but we expect higher profitability compared to last year.

And just in the backlog that you see today, do you think that could be indicative of perhaps some revenue growth for next year for the Engineering segment? Or is it too early to call?

It's a little bit early to give you numbers about 2027. It's a project business, so you need to build the backlog for the future quarters. With respect of that, we see some good signals in terms of orders and negotiation in place and pipeline but it's a little bit early to talk about 2027.

And then maybe we can just hit on some of the margin pressures that the Engineering business has had from some of those lower legacy projects in Denmark. Maybe just talk us through the potential ramp-up back there to the kind of low 20s that I think you've spoken to.

Yes, you are right. One of the reasons why we faced the problem last year and the year before is also driven by very complex projects we took in Denmark. We are now much more focused on our technology that is holding very good in assembly and packaging for drug delivery systems. The mix of backlog is improving significantly because we completed these very complex contracts and this is now the time to restart growing and expand our profitability to get at least to our historical profitability.

We very -- I think we reduced significantly the risk here in engineering, focusing on our core technology, fixing the operation, lowering the fixed cost and the breakeven point. And also today, engineering third parties is representing approximately 11%, 12% of the overall revenue where the key focus is on the BDS segment and in expanding high-value solutions.

Yes. Maybe talk through the relationship between the engineering segment and BDS because I think that's sometimes missed when we think about the strategic value of that engineering segment.

Yes. This is a very important point. I can make many examples. If we have the ability today to be the #2 in syringes with Nexa and Alba, it's also due to the ability of our Engineering department to basically design and do the process. We have the technology within the Engineering division. And this is very important, the learning loop we have between the 2 divisions with the 2 teams working together to improve the products, enhance the quality, launch in the market new products.

Another example is Alba. Another example can be the EZ-fill vials in their configuration. I mentioned before the RTU cartridges that we manage the process [internally]. So the growth in high-value product is also driven by our ability to manage the technology and keep on improving the quality of our products. So this is the core, the key competitive advantage that is giving Engineering to Stevanato Group.

And just to complement what Marco said, I just want to underline the fact, the importance of owning and controlling the manufacturing technology that's powering the product set within the BDS segment. So our vials, cartridges and syringes. A proof point would be we have a very high amount of demand for cartridges today. And we're fully booked through 2027 on cartridge capacity. However, we were able to, based on our internal expertise, take a ready-to-use vial line that had been essentially sitting somewhat idle and transform that into a ready-to-use cartridge line in the period of roughly 12 months. So adding additional cartridge capability and capacity at a time where it's very meaningful for us and our customers. I think it really speaks to the ability and the flexibility, agility that we have by owning and controlling that technology through engineering that is really helping to drive some of that growth within the BDS segment.

And an important topic, and I'd say, theme more broadly is reshoring across the space -- across those 2 businesses, maybe just talk through how you would expect reshoring to perhaps benefit both, if that is your assumption? Because I think the question we've had is you're getting incremental volumes if you're just replacing production from one region to another. I'm curious whether you guys have a view on that.

Well, with respect of the core business in BDS, we decided to invest in U.S. in 2021. So during the IPO process, we decided to further expand our capacity in 2022, almost doubling the size of the originally planned size of Fishers. So it's something that is going to the direction more of the customer proximity and the importance of U.S. market for us in terms of biologics, sophisticated containers and so on. So there's more strategic approach on the decision to invest in the U.S.

Nevertheless, it's become even more important due to what you said, the tariffs, the reshoring, this type of trend that we can see and we can take advantage of. But the main driver for us has been the proximity to the U.S. market.

On the Engineering side, we still haven't seen a big acceleration in the investment for machines. Is probably related to the time schedule of the investment, they start from in buildings, infrastructure. We are reinforcing our presence in U.S. also from the engineering point of view, especially in the commercial department, but also in the after sales presence. We haven't experienced yet a strong acceleration in U.S. But it's something we are monitoring and we believe is coming in the coming years.

Very clear. I want to quickly just hit on the Fishers investments and Latina as well. Can you just update us on some of the manufacturing lines you've added? And then any data on like utilization relative to the longer-term goals that you have?

Okay. I start with Latina that is less complex. We are talking about a brownfield, smaller than Fishers and where in the first step, we installed basically all Nexa syringes lines. We have almost completed -- we have completed the installation and we have almost completed the ramp up. We are very happy about the speed of ramp-up in Latina. The profitability keeps on improving every quarter, and we are extremely happy about the success of the initiative.

Fishers is more comp -- sorry, the next step will be the installation of the cartridges, ready-to-fill lines where we have a long-term contract with an important customer. So we are installing the first line beginning of '27 and more lines in the coming years to satisfy the customers' demand.

About Fishers, it is a bigger plant. We started from greenfield. It's 600,000 square feet building, where we have installed already capacity for ready-to-fill syringes, similarly to Latina. We are currently starting the production for our CMO in drug delivery system, we took a CMO contract with an important customer in U.S. to leverage the integration with the syringes, but also to accelerate the learning curve in the device business. We are installing Alba technology in Fishers, and we are ready to be tested line for EZ-fill vials and we have ready-to-be tested line for EZ-fill vials.

So we are investing predominantly in high-value products, where Fishers is planned to be the hub for North America where we will have many different types of products, not only Nexa syringes but also Alba, also vials and also drug delivery system. It's a more complex project. We anticipate the full ramp-up of the plant by 2028, toward the second half of 2028. So the first year full year ramp-up will be 2029.

Amazing. Marco, Lisa thank you so much.

Thanks for having us.

Thank you.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group Half Year 2026 Financial Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communications and IR Officer. Please go ahead, madam.

Good morning, and thank you for joining us. With me today is Franco Stevanato, Chairman and Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer.

We have posted a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the Financial Results tab.

I want to remind everyone that 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 forward-looking statements, except as required by law.

Today's presentation may include non-GAAP financial information. Management uses these measures internally to assess performance and believes 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 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 Stevanato.

Thank you for joining us. Today, we'll review our second quarter performance, share an update on market trends in our 2 segments, including our investment projects and discuss the current environment.

Our second quarter financial results were largely in line with our expectations, highlighted by solid revenue growth and a better mix of high-value solutions that drove expanded margins and adjusted EBITDA of 26%. Revenue grew 8% year-over-year, driven by a 9% revenue increase in the Biopharmaceutical and Diagnostic Solutions segment, which offset a slight decline in Engineering segment.

Revenue from high-value solutions grew 16% and represented 45% of the total company revenue in the second quarter of 2026, driven by a 30% increase in revenue from biologics, the fastest-growing end market. Revenue related to GLPs was approximately 22% to 23% of total company revenue.

As we disclosed this morning, we completed the divestiture of our California-based subsidiary, Balda C. Brewer, which specializes in contract manufacturing services, primarily for consumables and point-of-care diagnostic applications. This initiative represents another step consistent with our long-term goal to continue optimizing our footprint and accelerating the transition towards more complex, differentiated and integrated drug delivery systems. On behalf of management, I would like to thank the Balda team for their dedication and contribution to our group over the years.

Demand for injectable biologics remains strong with more than 9,000 injectable assets in the global drug pipeline undergoing clinical evaluation or registration and more than 60% of those are biologics. Our strategy is firmly anchored in the higher-value subsets of the market and the business is positioned as a leader in biologic applications.

The rapid growth of biologics, GLP therapies and increasing patient adoption of the self-administration of medicines is reshaping how pharmaceutical companies approach product development and commercialization. Drug delivery systems are playing an increasingly strategic role in the success of injectable therapies.

As a result, we see strong customer demand for integrated solutions that combine device innovation, manufacturing expertise and supply chain reliability. We believe our broad portfolio of drug delivery platforms and our end-to-end capabilities positions Stevanato Group well to support this evolution.

With this goal in mind, we are extremely happy that one of our pharmaceutical customers has received regulatory approval in several European countries for a liraglutide-based therapy that incorporates our proprietary Alina variable dose pen platform. The approval represents an important commercial milestone for our proprietary drug delivery systems and includes 2 Alina variants for both diabetes and weight management applications.

This important customer project also embeds our world-class cartridge technology into the Alina pen platform, harnessing the power of our integrated capabilities. Our proprietary devices are manufactured in our facility in Germany, which plays a pivotal role in serving our global pharma and biotech partners.

While Alina addresses the need for a variable dose pen platform, we also see a growing market opportunity for treatments that require strict patient adherence to dosing regimens. In response to customer feedback, we recently introduced Deora to meet this need. Deora is a novel multi-use fixed-dose pen injector system compatible with prefilled cartridges delivering volume up to 3 ml. This new product will take time to get to commercial stage, but we see this as a promising future opportunity.

Our customer needs are clear, pointing at solutions that enhance patient usability and adherence, derisk supply chain, provide a better answer to new drug product requirements of modern formulation and lastly, increase the combination product sustainability and cost efficiency profile. We believe we have the right set of expertise and competencies to support our customers with a broad and unique value proposition.

Let's turn our attention to the Engineering segment. We are pleased with the continued operational and financial progress in the business. Our second quarter results demonstrate that the initiatives taken under the optimization plan are yielding positive results. Overall, the operations have stabilized, and we are continuing to execute our optimization plan.

As we mentioned last quarter, the teams are laser-focused on sales and marketing efforts to expand our opportunity set. We made good progress during the second quarter in winning new orders. We are cautiously optimistic, but sales cycles are longer today than in previous year.

Let's turn to an update on our growth projects in the U.S. and Italy. In the second quarter, we remained focused on scaling and executing our growth investments with a disciplined approach, strengthening our operational maturity while expanding capacity to meet customer demand.

Starting from Fishers, we recently completed the initial performance qualification on the first EZ-fill vial line, and we expect to launch customer validation in the near term. The build-out for our first device program remains on track, and we continue to expect commercial production to begin later this year. As these initiatives come together in Fishers, we are expanding our commercial capabilities and reinforcing our position for future growth.

Turning to Latina, the syringe ramp-up is ongoing as we continue to validate new customers. In addition, our next-generation RTU 400 cartridge line is expected to be completed and installed in the next couple of months with commercial production expected in 2027.

In summary, our second quarter results were in line with our expectations, reflecting the continued strength of our strategy. We are positioning the business around the most attractive areas of the market, particularly biologics, GLP-1 therapies and integrated drug delivery systems. The divestiture of Balda C. Brewer and our continued investment in platforms such as Alina and other premium products reinforces our focus on higher value differentiated solution that address the evolving needs of our pharmaceutical customers. At the same time, we are making progress in improving the Engineering segment and advancing our growth investments.

I'll turn the call over to Marco for a review of our financial performance.

Thanks, Franco. Before I begin, I'd like to clarify that all comparisons refer to the second quarter of 2025, unless otherwise specified.

Let's start on Page 10. In the second quarter of 2026, revenue grew 8% to EUR 302 million, both on a reported basis and at a constant currency rate. This was driven by a 9% growth in the BDS segment, which offset a 2% revenue decline in the Engineering segment. Revenue from high-value solutions increased 16% in the second quarter to EUR 135.9 million and accounted for 45% of total revenue.

In the second quarter of 2026, gross profit margin increased 60 basis points to 28.7%. This was driven by the combined improvement in Latina and Fishers, which led to an increase in high-value solutions and improved marginality in Engineering segment. This was partially offset by the expected increase in depreciation, higher utility costs and, to a lesser extent, currency headwinds.

In the second quarter of 2026, we completed the sale of our California-based subsidiary, Balda C. Brewer, which specialize in contract manufacturing services for consumables and point-of-care diagnostic application. As a result, the company recorded onetime expenses of EUR 12.2 million in connection with the sale and related transaction costs in the second quarter of 2026. The subsidiary was expected to generate revenue of approximately EUR 30 million in fiscal year 2026 and the transaction is expected to be accretive on the full year margins.

The sale of Balda C. Brewer and, to a lesser extent, higher start-up expenses unfavorably impacted the group's operating profit margin in the second quarter. But on an adjusted basis, operating profit margin increased 250 basis points to 18%.

As expected, the tax rate in the second quarter of 2026 was higher compared with the same period last year. As a reminder, the prior year period benefited from a tax incentive, which lowered the Italian statutory corporate income tax rate in fiscal year 2025, but the incentive was not available in 2026. Additionally, there is no corresponding tax benefit on the sale of Balda C. Brewer, which contributed to the increase in the effective tax rate in the quarter.

As a result of the onetime expenses related to the divestment and higher taxes, net profit totaled EUR 23 million and diluted earnings per share were EUR 0.08 in the second quarter 2026. On an adjusted basis, net profit increased 20% to EUR 37.6 million and adjusted diluted earnings per share increased to EUR 0.14. Adjusted EBITDA increased 21% to EUR 78.7 million and adjusted EBITDA margin increased 280 basis points to 26% in the second quarter of 2026.

Moving to segment results on Page 11. In the second quarter of 2026, revenue from the BDS segment increased 9% to EUR 266.2 million and grew 10% on a constant currency basis. Strong growth in premium Nexa syringes and, to a lesser extent, Alba syringes and EZ-fill vials led to a 16% increase in revenue from high-value solutions to EUR 135.9 million, which represented approximately 51% of segment revenue. Revenue from other containment and delivery solutions increased 3% to EUR 130.3 million, mostly driven by growth in standard syringes and bulk cartridges as well as variable compensation tied to a customer contract.

Gross profit increased by EUR 6.6 million in the second quarter of 2026, reflecting the combined improvement in the new plants as we continue to ramp up operations, which led to an increase in high-value solutions. These positive trends were partially offset by the expected higher depreciation, an increase in utilities costs and, to a lesser extent, currency headwinds. As a result, gross profit margin decreased by 10 basis points to 31.1%.

The operating profit margin was impacted by the sale of Balda and declined 330 basis points to 15.8%.

In the second quarter of 2026, revenue from the Engineering segment decreased 2% to EUR 35.8 million due to lower sales in pharma visual inspection and glass converting, which offset growth in the assembly lines and aftersales activities.

In the second quarter of 2026, gross profit margin improved by 540 basis points to 12% and operating profit margin increased 370 basis points to 2.9%. Ongoing efforts under our business optimization plan led to a strong margin expansion as the segment continues to make steady operational and financial progress.

Margins also benefited from improved operating results and the favorable mix in our Danish operations from newly secured projects in 2026, which is helping to refresh the project portfolio.

While margins improved in the quarter and the team is making good progress in refreshing the backlog and the pipeline, we continue to remain somewhat cautious due to the elongated sales cycle and project phasing.

Please turn to the next slide for a review of our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of EUR 78.6 million and net debt of EUR 360.3 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 financing.

For the second quarter of 2026, capital expenditures totaled EUR 52 million, mostly related to growth investment in the new plants and for our Alina device program in Germany and contract manufacturing activities.

In the second quarter of 2026, net cash flow from operating activities totaled EUR 31.9 million. Cash used in property, plant and equipment and intangible assets was EUR 65.7 million. Consequently, the company reported negative free cash flow of EUR 32 million for the second quarter of 2026.

Please turn to the next slide for an update of our full year guidance. The divestiture of our California-based subsidiary has been considered in our full year guidance with a reduction of revenue for fiscal 2026 of approximately EUR 15 million. This revenue reduction is partially offset by better-than-anticipated currency translation and higher organic growth in our core business.

As a result, we now expect revenue in the range of EUR 1.260 billion to EUR 1.280 billion. The divestiture, while small, is expected to be accretive to margins at the central point of our guide, and we now expect adjusted EBITDA between EUR 335 million to EUR 345.2 million. We are also narrowing the range for adjusted diluted EPS, which is now expected to range between EUR 0.60 to EUR 0.62 for the fiscal year.

Our full year 2026 guidance assumes the following. The BDS segment is expected to grow, on a reported basis, high single digits. Engineering is expected to decline by mid-single digits to low double digits. High-value solutions are expected to range between 47% to 48% of total company revenue. Free cash flow is expected to range from breakeven to positive EUR 20 million.

We are updating the tax rate for 2026 and now expect a tax rate of approximately 28.2% adjusted for the divestment. The higher tax rate is expected to be offset by lower-than-anticipated depreciation and amortization and financial expenses.

I will now hand the call back to Franco for closing remarks.

Overall, we are pleased with our performance in the first half of fiscal 2026, which was in line with our expectations. It further highlights the continued strength of our core business and our ability to capitalize on the market opportunities in biologics, which remains the most attractive and fastest-growing end market.

This momentum reflects strong demand for premium containment and delivery solutions, serving complex injectable therapies, including biosimilars, monoclonal antibodies, GLP-1 therapies and other advanced treatments.

With the rapid rise of patient adoption of drug delivery devices, pharmaceutical customers are increasingly seeking integrated partners that can combine device innovation, manufacturing expertise and supply chain reliability.

Platforms such as Alina support this strategy by demonstrating Stevanato Group's ability to bring together drug containment and delivery device capabilities in a differentiated commercially relevant solution. We believe we are uniquely positioned to respond to this market opportunity.

Overall, we are squarely focused on growing our premium high-value solutions in both drug containment and drug delivery systems to best position the company to capture the rising opportunities in injectable therapies, particularly biologics. Our goal is to move further up the value chain and deliver sustainable profitable growth, expanded margins and long-term shareholder value.

[Operator Instructions] First question is from Michael Ryskin, Bank of America.

This is Avantika on for Mike. You updated your BDS growth outlook from double -- high single digit to low double digits to now high single digits. Can you walk us through what drove that change and whether it reflects only the divestiture or any other changes in the underlying business?

Yes. Thanks for the question, Avantika. Marco speaking. The updated guidance on a reported basis, we have stated to high single digit. Nevertheless, the organic growth is still double digit because we reduced by approximately EUR 15 million related to the divestiture. And on the other side, we increased for approximately EUR 8 million related to the lower currency headwind. You probably remember, at the beginning of the year, we started the year with estimation of EUR 18 million of currency headwind on the top line, all related to BDS segment.

After the first half of the year with approximately EUR 9 million currency headwind, we can see now the year -- the second part of the year more balanced. So we have a total currency headwind in the model of approximately EUR 10 million. So EUR 8 million favorable in currency, EUR 15 million headwind related to the divestiture and we increased a couple of million our organic growth in our core business.

Great. And then as your GLP-1 exposure continues to increase, are you seeing growth broadly across the non-GLP-1 biologics as well? Or is still GLP-1 the primary growth driver for HVS?

Yes. Thank you for the question. So we all know that the GLP-1s are a phenomenal drug class that we expect to continue to represent a strong long-term durable tailwinds in the next years. But where Stevanato Group is laser focused in this moment and in the next year to come is on biologics.

Biologics is a phenomenal opportunity for Stevanato. Just to give you some number, in the industry, there are more than 9,000 injectable assets in the global drug pipeline and more than 60% are going to be with -- in biologics to injection administration. So the reason why we are heavily investing into our plants in Europe, United States, we are heavily investing in order to expand our proprietary devices in terms of drug delivery system, EZ-fill platform, in order to try to maximize our leadership position in the next year to come in biologics.

In 2026, we have delivered 6% of growth in biologics. Most of the reason is because we have, in the early stage, more revenue that we are generating for clients that are in Phase II and Phase III. But we have started a big strategic goal is to be tied in this molecule that will represent tailwinds in the next year to come.

Next question is from David Windley, Jefferies.

I wanted to follow up on that and your comments in the -- I think in the release, in your prepared remarks, about a move toward premium high-value solutions. So Franco, I was hoping, one, you could talk about which products in your portfolio you consider to be the premium products within high-value solutions. And then presuming Alina is one of those, how many countries and kind of what is the size of the opportunity with this recent approval of Alina for liraglutide?

Thank you, David. First of all, let me share that we are so excited and proud because it took Stevanato 8 years to develop and to launch in the market this Alina product. We started with our R&D department 8 years ago, even more. This is the reason why in 2016, we acquired the so-called Balda Germany, and today, it's going to become a sort of hub in order to produce this IP product for Stevanato.

So the fact that now we were validated in Europe in many countries for this Alina product, both for diabetes and for weight loss management treatment, is going to recognize that Stevanato today plays in what we so-call Champions League because we are not serving any more the product through the CMO business model, but we are serving our IP product and the difference at Stevanato is that we don't sell only the drug delivery system, we are selling what we so-call integrated system approach where there are always our glass cartridges inside.

Today, we are delivering our Alina pen, our cartridges to what's so-called a system integrator, a specialized partner that are going to take care of what is related to the devices, the cartridges and the filling and the regulatory support in order to help many big international biosimilar clients, both in Europe and United States to launch to the market this biosimilar.

Today, Alina is having very strong traction for what is related to liraglutide, what is the treatment of the weight loss, but what I like to underline, we are at a very early stage because before this validation, there were a lot of prudent approach from many clients about the functionality of this device. Today, this official registration is opening and boosting the traction of other validation worldwide and where all this production we are going to produce through our plant in Germany.

Like I already mentioned, last year -- we already started last year to renovate and upgrade one big area of production in order to start heavy industrial production for Alina in the next years. In parallel also, we started to develop and launch our Deora that is an evolution of our Alina product that is perfectly fitting for certain treatment where patients, they need a stronger accuracy of the doses, and this is the reason why this is the fact that we are already registered on Alina is further helping to boost the regulatory permit reduction.

So I want to say, sorry to use my [ long-lasting ] approach, that this is going to be maybe one of our most big milestones in 2027 -- 2026.

So to follow up, I presume your enthusiasm suggests to me that Alina and -- I'll get the name, Aeora (sic) [ Deora ] are premium products. I'd love to hear what are the other ones that you consider premium within high value? And if you would, of the 47% to 48% of revenue that is high value, what percent of that is currently premium high value?

Alina is in the range of premium product. The revenue around Alina already captured in our guidance 2026, and most probably, in the next year to come, Alina will generate double-digit revenue growth in the Alina product. Where we are also facing a strong traction, strong success in the market is what we call our Alba syringes because we launched these syringes many years ago for certain ophthalmic application, today, we see more and more strong traction from customers that are going to adopt the monoclonal antibody. Also here, we are heavily investing in capacity, David, here at the plant in Piombino Dese and the next phase we're going also to move industrial capacity into the plant in Fishers in order to serve the biologic market directly from Fishers.

Next question is from Paul Knight, KeyBanc Capital Markets.

Congratulations, Franco. The long-term potential, I think, is obviously obvious with Latina and Fishers. What capacity utilization will Fishers and Latina operate this year?

So today, the demand that we have in Fishers and Latina is quite -- in 2026 in particular for syringes, in Nexa, Alba and cartridges, bulk cartridges, ready-to-fill is quite strong and robust for both plants. The way that we plan our investments are dedicated with capacity program that we have with customers.

All the number of lines that we have installed and validated in Latina, we continue to install and do the validation throughout 2026 in Fishers with a direct program where the clients do the audit, do the validation and then we have dedicated line.

Our approach is always to maintain certain free capacity in order to enhance our plants to have the flexibility also to do the sampling and the validation for the future program that we're going to start to host in the next year to come. So overall, the message is demand is robust and strong, but also it's important to keep some space in order to perform the validation.

And as a reminder, Paul, Marco speaking, we plan to fully ramp up Fishers by the end of 2028. So we still have ways to go there and improving our production and financial performance throughout our next quarters.

And then could you, Franco, give us an update on -- you were creating centers of excellence within engineering? Or where are you in that program?

Sure. Today, we -- regarding the engineering, we have 2 centers. One is in Italy, specialized in visual inspection machine for customized line for certain assembly technology and Denmark is going to be specializing in particular for the sophisticated high-speed line for assembly. So the optimization plan initiative that we started more than 1 year ago, they are delivering positive results that, in fact, you see, Paul, are translated also in our revenue and our margin, I think, that are much better in this quarter, and this is starting to be a signal of trending for the future quarter.

So from an engineering point of view, the organization and the team are really moving in the right direction. Also what we are starting to see is positive signal because we are more and more having a good progress in winning new orders, both with our historical clients and also we are starting to build a rich pipeline for new clients, in particular for vision inspection.

So our goal is really to have, quarter-by-quarter, some improvement in terms of revenue and marginality in order to be back to original number more and more in 2027. But also here, the division has started really to deliver a good signal in terms of revenue and marginality.

Next question is from Larry Solow, CJS Securities.

Just a couple of questions. Can you give us just a little flavor maybe just on -- you said -- you mentioned GLP is 22%, 23% of revenue. Can you just speak GLPs versus non-GLPs in the high-value products or biologics growth, give us an idea of what that was? It sounds like GLPs grew faster than overall growth. So can you give us any idea of that?

So today, frankly speaking, the revenue inside of the BDS segment around biologics represents approximately 42%. So we moved, where in 2022, we were approximately a little bit less than 20%, today, we are more than 42%. In this moment, GLP-1s are representing a very visible revenue contribution side of biologics because it's already commercial. We are serving 2 big originators and we are actively moving in order to maximize our validation through all the biosimilars, both to our syringes, Nexa, cartridges, [indiscernible] we have many programs around our drug delivery system.

It's also true that we are so engaged with several hundred of clients, both big organization to small start-up, in order to really try to maximize our penetration in all the biologics space. So today, in the biologics space, we have delivered plus 6%, like I was mentioning before, because most of these programs are at early stage. They are not representing a big revenue generation.

If I can give you a sort of projection, GLP-1 is a well-established opportunistic tailwind that will continue to grow in the next years. And biologic, it will be much more spread to many clients and many therapeutic areas. And then if you go to combine all these, opportunity is going to be much bigger in the next year to come compared to GLP-1.

Okay. Great. And then a follow-up just on the Alina, if I could just ask a clarification. So it sounds like this approval culminates several years of work and its validation, it feels like you're not building in a lot of revenue specifically to this approval this year, but this validation opens the door for a lot -- for several other approvals. And I imagine this is multiyear stuff, so you must have other customers in the queue. Is that fair to say?

Yes, absolutely. In terms of investments, in terms of revenue, revenue around the Alina are already captured in 2026 in our guidance. What we can tell to you is that we are heavily investing with industrial commercial capacity in our plants in Germany in the next 12 to 24, 36 months in order to be able to serve this growing demand.

So like I mentioned to you before, we count that Alina, it will help to generate double-digit revenue around Alina products in next year to come, focalizing what we call our premium high-value solution product. Today, we have done the first registration with a certain number of clients first in Europe. In the second part of the year, we will receive additional validation in North America.

But what is more important, the fact that now we have this registration on the market is helping to boost and push other traction from other clients, in particular, in biosimilar space for what is related to the weight loss management treatment. So this is the real strategy.

Our industry usually is a little bit prudent and conservative. Since there is no real product in the market, some clients, they are waiting. Now that this product is opening a big, big opportunity next year around our IP product.

Next question is from Brendan Digan, Citi.

I was wondering if we could start off by unpacking the engineering performance in 2Q. I saw a nice rebound up from 1Q and kind of towards the lower range of the commentary provided on the 1Q call. So I was wondering if you could unpack that a little bit, but then also kind of go into how kind of customer decision time lines have evolved throughout the quarter and what kind of the backlog looks like as we head into the second half of the year.

If I understood the question -- sorry, because there was a lot of noise in the microphone, you asked how is the situation of the backlog compared to the first part of the year to the second part of the year?

Yes. So just if you can unpack the engineering performance in 2Q.

Today, we have a healthy pipeline that is going to be, step-by-step, translated in orders. So if you combine from the beginning of the year to the second part of the year, we are starting really to more and more move this pipeline into orders, but we have a very strong progress in winning new orders, in particular for what is related to visual inspection machine, in particular in Europe, in Asia, and technology for assembly for drug delivery system in Europe and United States.

So we see, quarter after quarter, a progression in order to enlarge the confirmed orders compared to what was the order intake. So the trend is starting to become better and better quarter after quarter.

Got it. And then I wonder if you could touch on the gross and operating margin assumptions for the full year. I believe, given the divestiture, I was wondering if you could just touch on those. I believe the last guide had around 0 to 30 bps for gross margin and around 50 bps for operating. So how does that change with the divestiture? Congrats on the quarter.

Yes. Thanks for the question. About our guidance, I'm saying, at the center point of our guidance, our plan is to expand the reported gross profit by 50 basis points approximately. If we exclude the onetime event in second quarter, our plan is to increase our adjusted operating profit of 110 basis points compared with last year. And as mentioned in our press release, adjusted EBITDA margin at the center point of the guidance is expected to be at 26.8%, expanding 170 basis points compared with last year.

This is driven by slightly improved margin in our BDS segment, improved gross profit margin in our Engineering segment and discipline in cost management in SG&A and R&D expenses.

Next question is from Mac Etoch, Stephens Inc.

Maybe just a follow-up on the previous answer. I think you touched on it a little bit. But the variable compensation that you highlighted within the presentation deck, how much was that? And how much of a benefit was that to 2Q margins?

Thanks for the question, Marco speaking. So the variable compensation is tied to one specific contract with a long-lasting customer. It provides a fair compensation for a reduction in volumes compared with the committed volumes from the customer. And as a reminder, under the contract clause and condition, we have protection in place for changes in forecast.

So variable consideration compensate us for the cost we had in the quarter in the first half of the year in terms of capacity reservation, workers, labor, depreciation plus fair compensation of the missing margin.

Maybe just to bear down a little bit more on that. Is it possible to quantify how much of a benefit it was to the quarter?

No, it's not impacting in a significant way the quarter. It's a fair compensation of the missing margin and cost that we had.

Next question is from Kallum Titchmarsh, Morgan Stanley.

This is Jason on for Kallum. So maybe just a question on the Balda Brewer divestiture. Could you just walk us through the strategic rationale for divesting the business and the business profile? What was the growth profile of that business? And what was the HVS, non-HVS mix for that business? And I appreciate the comments that the spin-off was margin accretive, but I was wondering if you could quantify that margin uplift.

Thank you. So when, in 2016, we decided to enter in the device space, we asked for 2 decisions. First to acquire Balda, where the big target was the industrial hub in Germany. And when we acquired this company, we discovered there was a smaller operation in California in south of Los Angeles, so we call Balda C. Brewer, specialized more in contract manufacturing of standard consumable products.

So when we are starting to develop our R&D center in Milano, more and more our attention focus was to move to standard diagnostic in order to better serve molecular diagnostic. Now the real goal is really to build a value proposition for our biologic clients in injection in order to deliver not only the glass [ package ], also together with the drug delivery systems.

Now we are in 2026 where most of our investments are in order really to build capacity for drug delivery systems. This plant is not any more strategic for Stevanato because it don't have any particular strategy to serve this biologic market. So we have decided to pass to this program of divestiture in order really to remove some industrial setup not strategic for our biologic clients.

And about the model, we had previously, in our model, approximately EUR 30 million revenue for the year and slightly positive EBITDA. So that's why we are -- let's say, our margin is more accretive with divestiture.

This initiative really represent another step in order really to move the value chain and the product portfolio of Stevanato's industrial setup more versus some accretive high-value solution product to better serve the biologic market. This is one another step like what we have already done last year, we started to slow down a little bit our attention in Europe for the standard [indiscernible].

Great. I guess maybe just a question on like kind of generic GLPs. We've seen patents for semaglutide expire in 2026 in Canada, India, Brazil and some early generic GLP launches. I'm wondering, will generic GLPs largely use high-value solutions as the current branded GLP-1 drugs? And could you just talk about the opportunity from the generics?

So today, we serve the GLP-1 market to our originator to our biosimilar, we serve the syringe Nexa, we serve the cartridges, but mostly cartridges ready-to-fill. Also, we are starting to maximize with all the biosimilars that are entering the market. Today, we see that all the biosimilars, they are practically using the same type of administration of injection. Stevanato is acting to serve to these biosimilars that still are at early phases through syringes Nexa, cartridges ready-to-fill, even more, we have started really to deliver what we call the fully integrated system where we're going to add also our proprietary device like Alina.

So this is valid for practically all the regions. Like I was mentioning before, we have started to serve some European market. Now the next phase to be North America, Latin America, exactly for this type of configuration where there will be either our syringes or there will be our cartridges plus the Alina product.

Next question is from Chad Wiatrowski, TD Cowen.

Beyond the Balda divestment, are there other segments or SKUs that you view as noncore and could potentially be under strategic review currently?

At the moment, we don't have a relevant initiative under the radar. It's also true that if you look at from the day of the IPO to today, we invested more than EUR 1.3 billion, mostly around high-value products. It's also true that if you look at the strategy of our organization starting from sales, R&D, product management and operation and supply chain, the goal is to build a leadership position in biologics.

So indirectly, step-by-step, a little bit less attention in what we call non-high-value products or certain bulk activity, make the example, and of course, that we sell from Europe, from Brazil, some other standard plastic component for diagnostics where, step-by-step, we would like really to reconvert to use this space in order to better serve our EZ-fill platform, our drug delivery solution.

For sure, this is something that we do step-by-step gradually because we want really to evolve our value proposition in the next 1, 2, 3, 4 years, but today, no other relevant initiative.

Got it. That's helpful. And then yes, it was encouraging to see the Alina approvals. Is there an incentive for pharma customers to order from providers who offer both the glass combined with the proprietary device? And are these approvals symbolic of maybe a broader shift over time where companies who offer more integrated solutions are positioned stronger in a market that's historically been pretty fragmented?

Today, overall, there is a trend of the pharma industry to outsource, as much as they can, the supply chain. It can be -- they can use specialized CMO, they can use a company like Stevanato that we sell the integrated offering. So basically, today, there is more and more a visible trend where pharma customers, they try to outsource a big portion of supply chain.

The advantage of this system integrated provider, yes, very proactive but they don't perform only the filling, helping this biosimilar -- international biosimilar company really to take all the type of activity in order really to collect the devices, the cartridges, to the filling, regulatory support in order to enhance these biosimilars to focalize in the go-to-market.

More and more, we see this trend in the industry today. And Stevanato proactively what we do, we use our tech center. We use our specialized hub in Italy and United States in order to try to capture as much as we can big pieces of this supply chain and increase our value proposition.

Next question is from Curtis Moiles, BNP Paribas.

So first, just on GLP-1s. I mean, obviously, that stepped up again as a percentage of revenue compared to 1Q '26. So maybe you can talk about how you're seeing that progress through the year and whether your sort of mid-teens growth guidance remains intact there?

Okay. Starting from the guidance, we can see a double-digit growth compared to last year. So still a significant growth. About the overall market situation, I will hand over to Franco to elaborate more.

Correct. Today, in the industry, what we see that GLP-1 is really -- we are really at what we call at the beginning of this journey because we are -- if you look at all the potential opportunity that we have to our originator clients, even more with the biosimilars that are very active in any region of the world, I think that we are really at the tip of the iceberg.

So today, there are less than 10% of patient penetration in total potential addressable patient that is 1.5 billion. So we expect that this will continue to represent a strong long-term durable tailwinds for all the industry, including Stevanato.

The strategy of Stevanato is really to maximize our penetration through the originator like we have done in the past with insulin and in parallel, try to maximize our validation in all the biosimilar not only to our EZ-fill platform, also with our drug delivery system because I think the next 5 to 10 years, there will be a lot of opportunity to stay in double digit only to GLP-1 in next year.

What is important again to underline for the second time that the GLP-1, we want to have a very strong opportunistic approach, but it is limited to one therapeutic class. The real goal of Stevanato and the reason why we have done the IPO in 2021 in order to finance and build this huge hub in the United States and increase the capacity in Europe is because all the biologic market is growing, spread to several tens of hundreds of clients and several therapeutic areas.

It is where we want really to play a visible role with all our integrated value proposition starting from EZ-fill product, syringes, cartridges and vials and move up the value chain to our drug delivery system to certain clients. Through our tech center, we've started to perform also fill-and-finish for non-human user. This is where we really want to focalize SG in the next 5 to 8 years.

Okay. And then moving to the BDS gross margin. I'm just wondering, is this sort of Q2 level a good jumping off point for the remainder of the year? And should we see it ramp a little bit from here? Or could it maybe come off a bit?

Yes, we expect for BDS to match or overtake the gross profit margin we had in 2025. So we expect in Q3 and Q4 further margin expansion in our BDS segment driven by the growth in Fishers and Latina and driven by the fact that we expect a stronger second half of the year, so a better leverage on our fixed expenses, again mainly driven by Fishers and Latina.

Next question is from Matt Larew, William Blair.

Obviously, a lot has been covered. Just one for me. I know you had a press release a few days ago on the Alina approvals. You mentioned it a couple of times today. I know that these were already approved. So I'm curious if these are new or different configurations and thus perhaps new share opportunities for Stevanato. And again, you've covered it a little bit, but just what these approvals mean for you in terms of long-term aspirations in the device space?

So practically, Matt, with this approval in Europe, there will be additional approval in the second part in the United States. We are going to start to deliver to certain number of clients. We have a big number of clients. We are going to start to deliver our Alina pen for this liraglutide product together with our cartridges. So translating in number, we are starting to generate revenue through selling Alina in 2026, even more there will be a progression because these clients are launching the product on the market. The configuration to be Alina product in different format and with our cartridges.

Ms. Miles, gentlemen, there are no more questions registered at this time.

Thank you very much, everyone, for joining us for Stevanato Group's Second Quarter 2026 Earnings Call. We look forward to speaking with you in the future, and enjoy the rest of your summer.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

[Audio Gap] Bank of America Healthcare Conference in Las Vegas 2026 edition. Thanks, everyone, for being here. Hope this will be a great conference. For the first session of the conference, [indiscernible] Stevanato. We're joined by Marco Dal Lago, CFO; Giacomo Guiducci, [indiscernible] IR. The format will be, we will have a couple of slides to kick it off

[Audio Gap]

Marco?

Thank you.

[Audio Gap]

Okay. Moving to the second slide. We have a long track record of double-digit organic growth. We have more than 70 years of history. And we are well positioned to be a global leader in the industry. We saw in the previous slide our unique value propositions that is a key competitive advantage for us to serve the industry with high flexibility and different type of formats and solutions.

We can leverage on secular tailwinds. We see the growth of biologics, where our high-value solutions are particularly suitable for due to low silicon content, high mechanical resistance. We see the growth of GLP-1s, where we won a good share of the market in glass containment solutions. Thanks to the capacity and the flexibility we can provide to our customers in switching from different formats, from Nexa syringes to sterile cartridges to dual chamber syringes. So we won a fair share of wallet.

Other secular tailwind, we can see is the self-administration of the drug. I mentioned before the drug delivery system development we did in recent years. And what we can see besides biologics, GLP-1s self-administration, we see the trend in pharma industry to focus more and more on the core business, on drug development rather than in production. So this is positioning us as an ideal partner to serve the overall pharmaceutical industry.

Following our IPO, we decided to deploy our capital predominantly in increasing our capacity in high-value solutions. We invested significantly to gain customer proximity both in Europe and North America with our plant in Fishers, Indiana and Latina close to Rome, where we are installing more and more capacity validating new lines with customers, and we are increasing rapidly in those two new plants.

We entered in 2026 with a strong momentum. We have been able to grow double digit on a constant currency rate also in Q1 2026 compared with the same period last year, mainly driven by the main segment, the BDS segment. We grew 16% on a constant currency rate in BDS segment, mainly driven by our high-value solutions that grew 17% compared with last year. They are representing today approximately 47% of our overall revenue. And we see strong momentum, strong growth in high-value solutions driven by biologics and GLP-1s. The main driver of growth has been predominantly in our Nexa syringes that are very suitable for self-administration due to mechanical resistance.

GLP-1 is an important tailwind for us. We see it as a durable trend and tailwind. Today, the revenues in GLP-1s are representing between 21% and 22% of our overall revenue. We are serving the market predominantly with high-value solutions. I mentioned Nexa syringes, but we can see starting traction also in sterile cartridges. 21% to 22% compared to last year's same period, we grew more than 20% in GLP-1s.

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GLP-1s. GLP-1s, we went up more than 20%. So the big driver in terms of product has been again Nexa syringes, but we are happy about the visibility we can see in the overall high-value products like Alba syringes. Sterile cartridges are exceeding our Capital Market Day expectations. The conversion from bulk to sterile is gaining traction. This is the main reason why we decided approximately 10 month ago to convert to 1 EZ-Fill vials line into EZ-Fill cartridges to accommodate high demand. So good visibility and good growth.

Engineering went down 31%. It was expected from our side due to the current moment in the visibility we have about the current backlog, the backlog we had at the end of Q4. So it's largely anticipated. We see margin expansion there following the difficult period we had in '23, in particular -- in '24 and particularly in '25 with respect of margin. We are exiting from the legacy not profitable projects in Denmark for highly complex machining assembly and packaging, and we are managing the situation as anticipated.

Okay. That's great. There's a lot of that I want to follow up on. Maybe first on the Biologics and GLP-1 demand specifically. You called out more than 20% growth. It's in the low 21%, 22% of revenues now. That's obviously been a big driver for you the last couple of years. Have you noticed any change in customer demand in the last 3 or 6 months as oral GLPs hit the market? I imagine that you have very close relationships with the major GLP-1 vendors. You know as much about their demand patterns as anybody will outside of themselves. Sort of what's been the latest communication and messaging from them? And how does that play out over the next couple of years in your road map?

Yes. So our strategy, first of all, is to cover the market. We are clearly working now predominantly with the big originators. Nevertheless, we are covering the market and monitoring the evolving growing situation, both in biosimilars and also other biotech that are -- they are in Phase II, Phase III, ready to issue new assets in the market. We are working with most of them, and we want to play a key role in the GLP-1 space as we are currently doing. This is driven by our ability to provide flexible solutions to our customers. So we can accommodate the pen injector route administration through our cartridges. We can do the same with the Nexa syringes for auto-injectors.

We have proprietary device like Alina Pen for biosimilars that are gaining traction. So we have multiple solutions to serve the market. We see a growing market for the coming years. We are, let's say, secured by long-term contracts with our key customers, the originators. So we have very good visibility for the next 3, 4 years. But in the meantime, we are covering the market.

To your question, based on discussions we have with customers, the expert reports and all the data points, we have the fact that, for example, Lilly is investing heavily in injectables. We see the injectable will still play a key role in the future. The bigger share of market, we expect to be in injectable. And we expect, as anybody else that the market is keeping on growing in the coming years. We know we are talking about approximate 10% of the overall population affected by obesity, diabetes or overweight. So it's an important market. It's a phenomenal drug, and we want to play an important role on that for the years to come.

Our focus is not only in GLP-1s. We are growing significantly in biologics. We see the wave coming driven basically by the big pipeline in the biologics space. And our high-value products are, let's say, perfectly suitable for managing the complexity of the drug in biologics due to the low silicon content, the interaction between our containers and the biologics drugs.

Okay. And within GLPs, what about some of the changes in formulation? If you talk about syringes versus cartridges versus vials, are you seeing any of that transition? And can you talk about how you're exposed across the portfolio?

Well, we have good visibility, a multiyear contract with the syringes on one side, but also [indiscernible] cartridges on the other side. We are installing capacity in our plant in Latina for the first high-speed ready-to-use line that will start generating revenue beginning of 2027. And we have a plan to install more lines in cartridges. So we have very good visibility for syringes, but we see cartridges gaining traction. There can be some different route of administration depending on -- also on the geographical area. Europe are more used to use multi-dose pen injectors. We see a lot of traction in U.S. in pen injectors, but -- in auto-injectors, sorry, but pen injectors are starting gaining traction. About formulation, for example, we have flexibility also here. We are providing dual chamber syringes. We can switch easily from producing dual chamber to Nexa syringes due to our engineering flexibility. So we have many solutions to offer to the market. And again, we see our pen injector gaining traction with the biosimilars.

Okay. And something you called out in the quarter was that you did take that one line where you switched from ready-to-use vial to ready-to-use cartridges where you've converted an existing line that was underutilized capacity. Could you talk about that a little bit more detail sort of the buildup to that? Have you done moves like that in the past and sort of the opportunity to do that to flex the manufacturing base and your existing CapEx to meet evolving customer needs?

Yes. Again, the peak for vial has been during the pandemic. So in '22, '23, we saw the destocking in '24. We have sufficient installed capacity to serve the market today. The market in vial, we see it growing mid-single digit on average with more traction in sterile configuration than in bulk configuration. So looking at the demand, we saw approximately 1 year ago, the demand growing in cartridges and having us not enough capacity to serve the market, waiting for the installation -- 400 [indiscernible] is producing commercial revenue in 2027. So we decided with our engineering department to switch the technology from vials to sterile cartridges. And this is another tool of flexibility we have to adapt demand without installing new machines, but leveraging our ability to have flexibility, speed to market and lower CapEx with that.

And how long did that process take to convert that...

Well, from the decision to start of the commercial production approximately 9 to 10 months.

Okay. All right. Let's talk -- I mean, let's talk about other capacity you're talking about Fishers, Latina. You called that out in some of your prepared remarks. You've been talking about those facilities for a number of years, a lot of CapEx dedicated to that. You're sort of right on the cusp of start -- reaping the gains from those facilities. Can you talk about the road map from here over the next couple of years as they come online, what we should expect from both of those sites?

Yes. The good news is that most of the CapEx has been already deployed. So we spent the money to create the infrastructure to develop and buy the machines. And so most of the money went already out. We expect now to grow significantly our revenue driven by the capacity we installed. The good news is that the capacity is matching market demand. We have very good visibility. We installed so far most of our capacity for Nexa syringes, for high-value syringes. We have almost completed the phase related to syringes in Latina, where we are growing significantly in terms of installation, validation and commercial revenue. In Q1 2026, Latina plant is not any more dilutive compared with the average of the segment. So we are very happy also about the financial performances. We still see room to increase in Latina because there is a high concentration of high-value products there.

About Fishers, it's a bigger plant. It's a greenfield. We are in line with our plan at least to reach the full capacity, the full ramp-up by second half of 2028. So we are sort of in the middle of the journey. We see improvements every quarter. So far, we installed, validated and generated commercial production for Nexa syringes, too, also in Fishers. We will be starting the production of drug delivery system in the second half of this year. And for 2027, we plan the installation of Alba syringes. And we have already installed also a sterile vials line that will be validated in the coming quarters.

Okay. So -- and when you talk about full capacity by second half 2028, that's when you'll see sort of full margins as well?

Absolutely. In the meantime, you know it's a continuous improvement. Same way we saw in Latina quarter after quarter is getting better, same in Fishers. And it's important to underline the fact that the ramp-up of the two sites represented in 2024 and 2025 a pain for the P&L, obviously, because you need to set up the organization, train the people, validate the lines. And in the meantime, you are not generating revenue in each single line you are validating. So now the situation is much better. Also in Fisher, we validated almost all the lines with very important customers in U.S. So we are now ready to take advantage of the growth of the revenue and the higher profitability.

I didn't mention probably enough the plan we have for expanding Latina for EZ-fill cartridges. We have an important anchor customer here with many years of visibility about the production of sterile cartridges. And it's very important for us because being the market leader in bulk cartridges, we believe it's very important for us that the market is switching to sterile solutions. Today is a very low penetrated market with lower than 5% penetration in sterile, but we see more and more traction not only from the big customers but also from the overall market in biosimilar and biotech.

Okay. Just real quick. In terms of the sort of peak contribution we can expect from Fishers and Latina, the old paradigm of $1 or EUR 1 of CapEx is EUR 1 of revenues, does that hold? And is that the right ballpark of what we should be thinking about in 2028, '29 and sort of like the incremental contribution from these? And you're seeing some of it already?

Yes. Yes. It's -- the rule of thumb is when we talk about high-value solutions, we can estimate EUR 1 CapEx, EUR 1 revenue when fully ramped up. This is the case for the high-value solutions that is giving us confidence to have, as I was saying before, a big room for expansion in the coming years in revenue and profitability.

Important, we are matching customers' demand. Well, it's not only the CapEx, it's the fact that in investing in syringes, for example, we match the needs of our customers. We are doing the same for cartridges with multiyear visibility. So in high-value solution, we believe, yes, we did very big CapEx in the past, but we believe it has been the best way to deploy our capital after IPO.

Yes. Let's pivot to engineering and talk through that. You've been facing headwinds in that segment for a number of quarters now. You're working through it sort of it's a lot of blocking and tackling and identifying the issues and working through them. Can you give us an update on sort of the road map from here? You mentioned 31% decline in 1Q as expected. How does that progress through the year? When does engineering sort of get back on track and is no longer a headwind?

The visibility we have today is similar to the one we had last year to deliver our guidance. So we are confident about our guidance. Our guidance today stays between EUR 130 million to EUR 140 million of third-party revenue driven by the backlog we have and the opportunities we are discussing with our key customers. The good news is that our key customers are still there. They appreciate a lot of our technology.

Medium term, we see strong demand, both for visual inspection machines and assembly and packaging lines mainly related to the self-administration. So the technology is there. Customers -- good customers are there. And the market demand is we can see it positively for the medium term. We are in this situation where we saw some slowdown in the decision-making of CapEx projects, probably driven by -- also by tariffs and some geopolitical tension. Talking with the peers is a quite common situation in this period of time.

Nevertheless, we did, we believe, a good job in making the segment more efficient with a more efficient footprint with more technology concentrated in Italy for visual inspection, glass forming and the second step of the process of the ready-to-use. In Denmark, we are keeping the assembly and packaging lines for drug delivery system and devices in general. We have been able to reduce cost, improve our processes and we can see the first signal in our profitability expansions. Very important also, we have been able to deliver all the complex machines that were in delay, in the past. And so we regained credibility with customers, and we are well positioned to restart our journey of growth.

Okay. And you talked about sort of rebuilding some of that funnel, some of the order and commercial execution. I imagine you have a very long lead time in this business. Are you starting to get visibility on 2027, trends you talked about this year, kind of thinking through of when will engineering go back to historical trends or sort of LRP. Is it too early to project that? Or do you think you're on your way there?

It's a little bit early to project 2027 because it's a project business. So we have backlog for 2027, but we still have to fulfill the backlog. We are -- it's important to underline, we are recognizing our revenue on the percent of completion basis. So part of the orders we are winning will be converting to [ in ] '26 and part in '27. So we are starting gaining more visibility on 2027, but it's a little bit early to talk about numbers. What I can tell you is that we see strong interest and good pipeline in visual inspection machines and assembly and packaging lines.

And just in the last couple of minutes we have left. You touched on margin expansion and sort of the road map there a number of times, both from BDS and HVS, underlying demand and volumes, mix shift and Latina, Fishers coming online and then also getting past the engineering headwinds. Can you talk about margin trajectory this year? And then longer term, what that algorithm what that formula looks like?

No. Our journey we explained during Capital Markets Day remains intact. We see -- we have been able to increase adjusted EBITDA margin by 160 basis points last year, and our guidance for this year is a further expansion of 150 basis points. But this is the trajectory, I mean, when you put together the fact that biologics are gaining traction, GLP-1s is a durable tailwind. This is driving the increase of the share of our high-value products. I mentioned before Fishers and Latina, were dragging. They are still dilutive in the combination of the two. And on the opposite, we plan that when fully ramp up will be significantly accretive for the mix of the segment.

So if you put this together with the fact that we need to slightly improve our engineering business, we are confident to do that. Our trajectory of growth and margin expansion remain intact. Our goal is to reach 30% of adjusted EBITDA at some point in 2027. So the trajectory is there. There can be some quarterly anticipation of delay in getting there, but we are very committed and confident to get there.

Any questions from the audience? I'll throw in one last one. We're almost out of time. You talked about CapEx and free cash flow and the requirements in Latina. The heavy lifting has been done yet, but this typically is still a very CapEx-intensive industry and market. So what's your -- what are your plans for cash use going forward and so it's in those -- lines?

Following the IPO, the peak was in 2023 with more than EUR 430 million of CapEx. We went down in '24 and '25. We see '26 between EUR 240 million to EUR 260 million of net CapEx. This is related to the execution in Fishers and Latina, but level of CapEx is going down in 2027. And our goal is to go back to our 10% CapEx on revenue to keep on growing high single-digit, low double digit. So the cash flow is coming. 2026, we are still between -- neutral to EUR 20 million positive after EUR 18 million positive free cash flow in 2025. We see significant improvement in cash flow by 2027 and beyond.

All right. Well, thank you so much. That's -- we're out of time. Thanks, everyone. Thank you, Marco.

Thank you very much. Thank you.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group First Quarter 2026 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communications Officer. Please go ahead, madam.`

Good morning, and thank you for joining us. Today, we have a change to how we normally manage our earnings call. Franco Stevanato, our Chief Executive Officer, is recovering from an unexpected appendectomy, and he is unable to join the call today. He is doing well, and we wish him all the best for a speedy recovery.

For today's call, Marco Dal Lago, our Chief Financial Officer, and I will deliver the prepared remarks and then open the call up for questions. I want to remind everyone that a presentation to accompany today's results is available on the Investor Relations page of our website under the Financial Results tab.

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 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 forward-looking statements, except as required by law.

Today's presentation may include non-GAAP financial information. Management uses these measures internally to assess performance and believes 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 a reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release.

So let's get started. Today, we'll review our first quarter performance, share an update on our investment projects and discuss the current environment. We started fiscal 2026 with strong momentum in the first quarter, highlighted by 10% revenue growth on a constant currency basis.

Our first quarter financial results were largely in line with our expectations, driven by solid revenue growth in the Biopharmaceutical and Diagnostic Solutions segment. This was driven by ongoing demand for our pre-fillable syringes, as we continue to bring new capacity into service in our plants in Latina and Fishers. While syringes were the largest driver of the growth in the quarter, increasing over 20% year-over-year, other product categories like cartridges and vials also contributed to the company's growth in the quarter.

Revenue from high-value solutions accounted for 47% of total company revenue in the first quarter of 2026, driven by biologics. In the first quarter of fiscal 2026, GLP1s accounted for approximately 21% to 22% of total company revenue. This drove a 15% increase in revenue from biologics, the fastest-growing end market. The market for GLPs and incretin therapies is expected to continue to grow and evolve over the next decade with novel indications beyond diabetes and obesity, new originators in clinical phases and biosimilars gaining traction as drugs reach their patent cliffs. As we previously mentioned, this is one of the key drivers behind the strong demand trends that we see in the market today for ready-to-use and bulk cartridges.

Beyond GLPs, we are seeing growing demand for cartridges for use with other biologics like monoclonal antibodies. Historically, cartridge volumes were primarily spread across a handful of large players. But today, market demand is extending into many other traditional large pharma and emerging biotech players driven by biologics. The demand is wide ranging from traditional 1.5 ml and 3 ml cartridges to large volumes of up to 20 ml. For example, the emerging trend towards large volume biologics has led pharma companies to consider cartridges as the preferred solution. Underpinning this trend is the shift to home-based solutions from intravenous to subcutaneous injections and the higher potency of some drugs.

As we mentioned last quarter, recent demand trends in cartridges have outpaced our expectations. To satisfy this market need, we identified specific actions to convert an underutilized ready-to-use vial line to a ready-to-use cartridge line at our headquarters in Piombino Dese. This allows us to optimize our capital investments, while at the same time supporting our customers' needs. We believe this will help bridge the gap between demand and capacity while we prepare for the next phase in Latina that is dedicated to expanding ready-to-use cartridge capacity.

This is a great example of maximizing our engineering know-how to enable growth in our core drug containment business in the BDS Segment. This conversion underscores our ability to reconfigure assets efficiently in response to shifts in customer demand, when time to market is crucial for our pharma and biotech customers. The converted RTU cartridge line is expected to come into commercial production in the coming weeks.

Let's turn our attention to the Engineering Segment. While revenue declined as anticipated, we saw an initial improvement in margins as we begin to gain traction from the actions taken under our business optimization plan. The anticipated revenue decline was primarily due to the low backlog and the slow pace of new order intake.

The team is squarely focused on 2 main priorities. First, we continue executing the optimization plan, and much work has been done to improve operational efficiency over the last 18 months. As we right-sized operations and streamlined processes, along with the better mix resulting from the delivery of legacy projects in Denmark, we are starting to harvest the benefits with initial profitability improvements in the segment.

Second, we are laser focused on our sales and marketing efforts, which are essential to driving growth in the second half of the year. We continue to strengthen our commercial organization with new talent in the U.S. and Europe, and we increased business development activities which are expected to expand our opportunity set, but customer orders are materializing slower than expected. While the financial performance of the segment is not where we want it to be, the team is prioritizing execution, new business development, and returning the segment to its historical performance levels.

Let's turn to an update on our growth projects in the U.S. and Italy. In the first quarter, we remained focused on scaling and executing our growth investments with a disciplined, demand-driven approach, strengthening operational maturity, while expanding capacity to meet customer demand.

Starting with Fishers, customer validations and audits will continue as planned throughout 2026. At the same time, we are expanding the U.S. team as we continue to build our U.S. presence as a strategic hub for the delivery of domestic supply. We are making great progress with the contract manufacturing buildout. The device assembly area is really taking shape, with the first automation assets being delivered and installed. The overall project remains on schedule, and we expect commercial production to begin at the end of 2026 or early 2027.

Turning to Latina, the current ramp-up remains centered on bringing high-value syringe capacity into service and advancing customer validations. At the same time, we are preparing for the next phase of expansion for EZ-fill cartridges, bringing much needed capacity to meet rising global demand. The expansion will be powered by our next generation RTU 400 EZ-fill cartridge lines. These high-speed lines have significantly higher production output and are designed to drive best in class operational efficiency. Commercial production of the RTU cartridges on the new line is set to launch in early 2027.

In summary, we started 2026 with solid momentum, delivering results in line with our expectations, and demonstrating the resilience of our business model. Performance in the BDS segment remained strong, supported by continued demand for high-value solutions and the progressive ramp-up of capacity in Latina and Fishers. Our first quarter results in the Engineering segment reflect disciplined operational delivery, and a clear focus on aligning execution with our strategic priorities as we move through the year.

We are making operational progress against our main KPIs, and the results of our optimization plan are gaining traction. However, we still have work to do to secure new orders and rebuild the backlog to drive sustainable improvements in the segment's financial performance. All in all, we are off to a good start in the first quarter.

And with that, I'll turn the call over to Marco.

Thanks, Lisa. Before I begin, I'd like to clarify that all comparisons refer to the first quarter of 2025, unless otherwise specified.

Let's start on Page 10. In the first quarter of 2026, revenue grew 10% at constant currency rates, and 7% on a reported basis to EUR 273.6 million. This was driven by 13% growth in the BDS Segment, which offset a 31% revenue decline in the Engineering segment. Revenue from high-value solutions increased 17% in the first quarter to EUR 128.6 million and accounted for 47% of total revenue. This was driven predominantly by growth in high-value syringes, and to a lesser extent EZ-fill vials.

In the first quarter of 2026, gross profit margin increased 30 basis points to 27.5%. This was driven by the ongoing improvements in our facilities in Latina and Fishers, an increase in high-value solutions, and improved marginality in the Engineering segment. As expected, higher depreciation and the effect of foreign currency partially offset these favorable trends.

In the first quarter of 2026, operating profit margin increased 70 basis points to 14.2%, and on an adjusted basis, operating profit margin rose 60 basis points to 14.9%. As expected, the tax rate in the first quarter of 2026 was 28.6% compared with 24.5% for the same period last year. In 2025, we benefitted from a 400-basis point reduction in the Italian statutory corporate income tax under the IRES Premiale, which was implemented to encourage corporate investments in Italy. This incentive was discontinued in 2026.

For the first quarter of 2026, net profit totaled EUR 28 million, and diluted earnings per share were EUR 0.10. On an adjusted basis, net profit increased 5% to EUR 29.6 million, and adjusted diluted EPS grew 10% to EUR 0.11. Adjusted EBITDA increased 14% to EUR 65.5 million and adjusted EBITDA margin increased 150 basis points to 23.9% in the first quarter of 2026.

Moving to segment results on Page 11. In the first quarter of 2026, revenue from the BDS Segment increased 16% at constant currency rate and 13% on a reported basis to EUR 249 million. This was driven by strong growth in high-value syringes and, to a lesser extent, other product categories, in both high-value and standard configurations. High-value solutions grew 17% to EUR 128.6 million, representing approximately 52% of segment revenue. Revenue from other containment and delivery solutions increased 9% to EUR 120.3 million, driven mostly by standard syringes and cartridges, which offset the decline in the IVD business.

Gross profit increased by EUR 1.2 million in the first quarter of 2026, reflecting improvements in Fishers and Latina, and the favorable mix shift in high value solutions. These positive trends were offset by several factors. As expected, the biggest factor was higher depreciation related to the ramp-up in Fishers and Latina as we bring more manufacturing capacity into commercial service.

Second, the headwind from foreign currency. Third, in the first quarter of last year, the segment benefited from an accretive pilot project out of our Technology Excellence Center in Italy. The project was for an industry leading customer for large batch, Not for Human Use fill and finish services. The success of the 2025 project led us to recently launch this as a new service offering to meet market needs.

And last, the impact of tariffs, some of which are expected to be recover in future periods. As a result, gross profit margin decreased by 300 basis points to 28.3%. For the first quarter of 2026, operating profit increased 6% to EUR 44.1 million and operating profit margin was 17.7%.

In the first quarter of 2026, revenue from the Engineering segment decreased 31% to EUR 24.6 million, due to lower sales from assembly and glass conversion, which offset growth in pharmaceutical visual inspection. Gross profit margin improved 460 basis points to 15.3%, as we start to realize some of the benefits from the actions taken under our optimization plan. In particular, right-sizing our operations and a better labor cost structure led to improved financial performance in our Denmark operations.

For the first quarter of 2026, operating profit margin increased 190 basis points to 6.6%. While the margins improved in the Engineering segment due to efficiencies we are beginning to gain from the execution of our business optimization plan, we remain somewhat cautious due to the low backlog and the time required to get new orders over the finish line.

Please turn to the next slide for a review of our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of EUR 111.7 million and net debt of EUR 337.7 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 financing.

For the first quarter of 2026, capital expenditures totaled EUR 67.6 million, with more than 90% related to growth investments for high-value solutions in Fishers and Latina. In the first quarter of 2026, net cash from operating activities totaled EUR 75.5 million. Cash used in property, plant, and equipment, and intangible assets was EUR 70.7 million. As a result, we generated free cash flow of EUR 5.5 million, in the first quarter of 2026.

Please turn to the next slide. With a solid start to the first quarter, we are maintaining our 2026 guidance and continue to expect revenue in the range of EUR 1.260 billion to EUR 1.290 billion, adjusted EBITDA between EUR 331.8 million and EUR 346.9 million and adjusted diluted EPS between EUR 0.59 and EUR 0.63. For modeling purposes, the assumptions we provided in March remain the same.

In closing, we had a great start to fiscal 2026, with strong momentum in the BDS segment as we progress at our Latina and Fishers sites and increase our mix of high-value solutions. We are also encouraged by margin improvement in the Engineering segment, while remaining cautious given the slow pace in converting new orders. We operate in some of the fastest growing end markets, underpinned by strong secular tailwinds. We successfully won our fair share of business in the GLP arena, and we are confident that we will continue benefiting in the future as more originators and biosimilars enter the market.

Our capital investments are aligned with market demand, and we are maximizing our operational flexibility through ongoing initiatives to optimize our global footprint to meet customer needs. We will continue to leverage our strong competitive position as we strive to be #1 or #2 in our core product categories within the injectables market. We are progressively de-emphasizing non-core products in favor of more accretive solutions that also move us up the value chain, such as the large batch Not for Human Use fill and finish services that I mentioned earlier.

Looking ahead, we expect to see a strong growth trajectory for the injectable biologics market over the coming years, driven by biosimilars, monoclonal antibodies, and other advanced therapies. This trend continues to support demand for reliable, scalable, high-value solutions. With our high-quality products, global footprint, and our ability to deliver at scale, we believe that we are well positioned to support our customers and to continue capitalizing on the rising growth in biologics and injectable therapies.

Operator, we are ready for questions. Thank you.

[Operator Instructions] The first question is from Michael Ryskin, Bank of America.

This is Alexa Chan on for Mike. First, we hope Franco has been well and wishing him a speedy recovery. Maybe just to start with my first question on GLP1. With the GLP1s now 21% to 22% of revenue, how are you thinking about volume visibility and durability? And how should investors frame the risk from orals over time? And then I have a follow-up.

Thanks for the question. We believe the GLP market will continue to grow over the next several years. While the vast majority of our GLP revenue came from players with commercial assets, it also includes revenue from customers with assets in clinical phase. So we see a long tailwind as the market continue to evolve. So we are pretty positive about the GLP1 outlook. We reiterate our guidance for the year with a growth of mid-teens compared with 2025. They are predictable volumes for us in 2026 because we are largely covered by contractual commitments from our customers. They are keeping on updating us on the evolution of their forecast.

Overall, we see some customer growing their demand, some other customer managing the inventories. But overall, for us, it's a growing trend with predictable volumes, and we expect it to stay for many years for Stevanato.

And as it relates to your question on orals, it's obvious that GLPs represent a phenomenal drug class and we expect this will continue to represent a durable tailwind for us. We do expect that the market will continue to evolve, but we still see 70% of the market opportunity is in injectables and orals at 30%. And this is consistent with what we hear out of many industry experts, peers as well as our customers.

I think with the recent data behind us on some of the new orals that have been out, the commentary has lent itself much more to market expansion rather than cannibalization of the injectable market. So those early signs, certainly, the very vast majority of those oral patients are being -- are new starts. So moreover, the opportunity will continue to grow driven by new indications beyond both obesity and diabetes. There's a strong pipeline of new assets that will be coming to market in the coming years and the future wave of biosimilars expanding access.

In the third quarter of last year, we discussed a biosimilar win for GLP1s for EZ-fill cartridges. And so we are beginning to see real traction in biosimilars. I think as you think about the overall market opportunity, in the U.S. only, over 150 million potential patients between both obesity and diabetes. But when you kind of look out globally, we're talking about 1.5 million patients between both obesity and diabetes. So at the end of the day, we've won our fair share and more in GLP1s. Primarily, we are the global leader in cartridges, both bulk and EZ-fill. But at the end of the day, we anticipate that this will remain a long-term tailwind for us.

Okay. Great. That's super helpful. And then maybe just as a follow-up on Annex 1. Can you provide an update on the program and help us quantify the tailwind from that?

Yes. Sure. So from a tailwind perspective, Annex 1 for Stevanato Group, we consider this as a much longer term accelerator to RTU adoption over time. Obviously, the ready-to-use configuration can simplify and reduce the regulatory burden for customers. Annex 1, as you know, specifies much higher standards for contamination control as well as quality risk management. The regulations are getting stricter.

In this context, the pre-sterilized ready-to-use configurations can help ease the compliance burden for these new standards for our pharma customers. So net-net, we do see it as a tailwind. There are a number of factors that our clients do indicate to us for their transition from bulk to ready-to-use. Oftentimes, it's a handful of factors and not driven by one single individual case.

The next question is from Larry Solow of CJS Securities.

It's actually Charlie for Larry. Please send our best wishes to Franco and for a speedy recovery. Can you talk about the moving parts in the BDS segment margins in the first quarter and perhaps provide color on GPM for the BDS segment for the year?

Yes. I'll start from the year. Thank you for the question. We reiterate our guidance where we see BDS gross profit margin in line or slightly better than last year with many moving pieces. On the positive side, we have a slightly better mix compared to 2025. On the other side, we mentioned 2 months ago during our guidance in the Q4 earnings call, we anticipate more pressure from that depreciations and we are also estimating for the year currency headwinds for approximately EUR 18 million in the top line that is impacting also the gross profit margin. So, overall we are positive. We see growth in BDS, a significant growth in the margins, gross profit margins, consistent or slightly better than 2025.

About first quarter is the combination of many factors. I start with depreciations, it's consistent with what we guided for the year. We had an impact from the depreciation, approximately EUR 4 million compared with the same period last year. That is impacting more I think Q1 than in the coming quarters because revenues are expected to grow quarter-after-quarter, so the impact of depreciation is stronger in Q1.

Second very important element, last year Q1, euro/dollar exchange rate was about 1.05. It has been 1.17 in the first quarter of 2026. So the EUR 8 million impact we had in the top line was partially reflected in gross profit margin too. This is the second element.

I also mentioned in the commentary remarks the tariffs. Tariffs, we had an impact in Middle East, temporary for us because the plan is to recover the temporary shifting from cost to revenue in the coming quarters. But it is faster than Q1 2026 and obviously not for Q1 2025. And finally, we mentioned a very good service we provided last year for last batch for an important customer in fill and finish services, Not for Human Use. That is slowing down in Q1 2026. Nevertheless, we have been able to add this service for our customers. We believe it will be an important task as we head into 2026.

Great. Just following up on that, on the fill and finish services, Not for Human Use. Is that considered a high-value solution? And how do the margins compare to your 40% to 7% gross profit margin range for HVS?

So yes, we are talking about high-value solutions here. The margin is very accretive in the range of high-value solution, in very good profitability. Overall, let me say that we are exactly where we expected to be. I mean we expanded overall gross profit margin by 30 basis points compared to the same period last year, and 150 basis points our adjusted EBITDA margin, that is in line with the expansion we plan for the entire year that is embedded in our guidance. [indiscernible]

The next question is from Patrick Donnelly, Citi.

Maybe one on the Engineering segment. It sounds like orders may be materializing a little slower than you guys anticipated. Again, the assembly glass conversion seems like it's a little slower. Can you just talk about, I guess, what you're seeing in that segment and the visibility into the recovery, what the initiatives are to kind of turn things around there? Just wanted to get a bit more color on that piece.

So first of all, we are doing good progresses in our operational improvement with respect of on-time delivery, cost structure and manufacturing footprint and this is delivering margin expansion for us. But we have a larger focus today is winning new contracts. We are winning contracts as we speak, so we are progressing with the orders intake. We are planning for the coming quarters. We expect the second part of the year stronger than the first part of the year. Everything is embedded in our guidance.

What I can tell you is that we can see strong demand in visual inspection machines and also assembly and packaging for self-administration for any check ground project. The speed between the awards of the contract and the starting sometimes is taking longer than anticipated, but we have a good visibility to deliver what we put in our guidance, if in any case, as mentioned 2 months ago, a reduction compared with 2025 between mid single digits to low double digits. So no surprises compared to 2 months ago, we are reiterating our focus in improving operational efficiency and increasing our orders intake to get back as soon as possible to our historical financial performances.

And then Marco, maybe just on 2Q, if you could help us think about the setup there on the revenue margins, earnings side and just the margin progression through the year would be helpful.

Thanks, Patrick, for the question. In second quarter, we reiterate basically what we said 2 months ago. We expect the first half of the year will represent approximately 45% of our earlier revenue. We anticipate growth in the second quarter high single digit, low double digit in the BDS segment. We anticipate approximately 10% decline in Engineering compared with the same period last year.

So all overall, we are confirming what we were seeing a couple of months ago. As mentioned in our guidance, we expect second half of the year stronger compared with the first half of the year. We reiterate our guidance of a high-value solutions that are expected to represent between 47% to 48% for the year. And so basically, our guidance are confirmed, including the currency headwinds that we anticipated.

The next question is from Paul Knight of KeyBanc.

Our regards to Franco as well. The biologics business is growing 15%. And yet market -- kind of the data says the market is at 10%. Why are you achieving this premium growth rate?

Thanks for the question, Paul. So I think as we highlighted in our prepared remarks, GLPs are a significant driver behind our current biologics growth. But nevertheless, revenues in biologics relates to wide-ranging different areas, including mAbs, biosimilars, mRNA applications and other therapeutic areas like immunology, inflammatory and rare disease.

So I think in terms of product categories, today, our demand is highly concentrated in pre-fillable syringes. But we're also seeing increasing prospects and leads in cartridges as a container format, as we addressed in our prepared remarks. So I think also the combination of GLPs, the ramp-up of our additional capacity in Fishers, all of those are leading to mid-teens growth for that biologics category for us.

And then the question on Engineering is, assembly -- I think, from your statements and doc handouts, assembly Denmark is complete, meaning the long-tail problem projects seem to be over. Is that correct? And should we assume, therefore, that this new level of higher gross margin should continue?

Thanks for the comment, Paul. Good comment because one of the main factors to improve profitability in Q1 compared to the same period last year is also the project mix. We have been able to deliver the most complex and customized projects that last year pushed the gross profit margin down. The guidance for the year between EUR 130 million to EUR 140 million third-party revenue in Engineering is reflecting also a more selective approach from our side about this large, complex, customized and non-repetitive project in the assembly packaging machines. So we are confident about the margin expansion compared to 2025, and this is exactly the direction we are taking in order to go back as soon as possible to our historical financial performances in Engineering.

The next question is from Matt Larew, William Blair.

Just maybe sticking with Engineering. I think for -- to hit kind of the guidance range, clearly, you need a pretty healthy ramp throughout the year, and you're saying today you have visibility to that. I think the message before was about sales cycle extension, customers taking longer to make decisions. You mentioned today the need to add sales and marketing and BD resources. So I guess I just want to confirm that you still view kind of the current lag as one related to sales extension and not losing share or just see more competition? So I guess just confirming those are discrete decisions rather than related ones?

Yes. So Matt, as it relates to our prepared comments, we have been adding talent in Engineering, both in Europe and the United States. This has been actually an ongoing process as we build the team stronger, particularly here in the United States as Fishers has become much more of a strategic hub for the delivery of our domestic supply and support for our U.S. customers. So that has been ongoing.

In terms of the sales cycle, I don't think the message has changed. The sales cycle overall has lengthened. And perhaps it's really the decision cycle. So what we're seeing are slower decisions out of our customers that we have seen, let's say, 5 years back before the pandemic. I would say more disciplined procurement on their side, higher hurdles with decisions going through CapEx committees today, them focusing on their capital investments and the timing of those investments. I don't think that we're unique, while we have been at several events this year and in talking to many of our peers, they are seeing the very similar effects on the client side in terms of those lengthening of decisions.

Okay. And then just on cartridge demand, you referenced the conversion of the ready-to-fill Bio line and additional capacity coming on in Piombino Dese. I guess what -- as a percentage of the existing cartridge capacity today, how much are you in process of adding? And how you can quantify kind of what is that gap between supply and demand right now? It feels like cartridges are an area that are really accelerating.

Yes, Matthew. As you know, we are still in a low penetrated market with respect of the sterile cartridges. So we are the first mover and the market leader. Percentage wise it is a significant step up in the increase of capacity, the conversion from vials to sterile cartridges. So we are accelerating because we see a lot of demand.

On top of it, as mentioned many times, we are investing in Latina for the new RTU technology that will be ready for commercial production by the beginning of 2027. We are serving 2 different types of customers here. We have much more flexibility in Piombino with the new converted line. In Latina instead, we are installing capacity for large volumes and competitive contracts. So all overall, we are pretty happy about what we see in the market for the conversion from bulk to sterile we expect on the format of cartridges.

And just to complement what Marco said, I think it's important to recognize that we saw this demand shift coming. And so about 1 year ago, the decision was made to convert that ready-to-use vial line into a ready-to-use cartridge line, which clearly demonstrates our agility and flexibility with our capital investments to optimize those and then deploy them to meet customer demand. I think that's an important point.

Secondly, at the moment, we're fully booked on cartridges in 2026, and we see this demand being very widespread beyond just the traditional handful of players that we have normally seen. It's extending into other large pharma, biotech customers for really new treatment areas, including mAbs.

A lot of the cartridge evolution, I would say, in the medium to longer term is really shifting towards large volume, as we mentioned in our prepared remarks. This is really driven by innovation by our pharma customers who -- new treatments that are coming to market, if you think about mAbs, are more challenging and more sensitive. They may have a higher viscosity or higher payloads, which simply lends itself to much higher volume drug containment. So overall, as the global leader in pen cartridges, we feel extremely well positioned to capture this ongoing future demand.

The next question is from Doug Schenkel of Wolfe Research.

Our best to Franco. Three topics. One, would you be willing to disaggregate GLP1 versus non-GLP1 growth within Q1 HVS? Second, inflationary pressures have intensified, including input and freight costs. I'm just wondering if that impacted Q1 at all and how this is contemplated in guidance?

And then third, I'm curious on the topic of margins, which has come up a couple of times, if there's anything that was surprising regarding your model? You were a little bit light of what we expected. And I'm just wondering if, again, some of that's tied to inflationary pressures, maybe there's something one-timer-ish when it comes to the facilities ramping? Again, maybe there's nothing there, but I'm just curious if there was something different relative to plan because it did look different relative to trend?

Thanks for the 3 questions. So first of all, GLP1 is representing in Q1 between 21% and 22% of our revenue. It means that we grew compared with the same period last year, slightly more than 20%. The non-GLP1 biologics went up mid-single digits, 6% to be more precise. So it's growing. Obviously, here, capacity is also playing a role in addressing our capacity for high-value syringes and other format to serve our customers. So both are growing.

About inflationary pressure, yes, like anybody else, we can see gas price going up, that is part of our manufacturing process in the glass forming. Energy is going up. Logistic is, transportation is more expensive. And we can see also some -- pressure from some suppliers that are using obviously energy and gas for manufacturing. Obviously, the reaction has been immediately talking with our customers in order to, let's say, transfer the pressure in price increase. We are still monitoring and working with our suppliers and our customers. It's not easy to understand if it will be a temporary effect or not as anybody else.

Nevertheless, we already took actions to mitigate and avoid any impact to our P&L. This is something similar what happened you probably remember in 2022 when the gas price went up to more than EUR 300 per megawatt hour. Also in that case, we have been able to mitigate the effect in talking with our customers with which we have a very long-term relationship. And every time there is an external factor not depending on our side, they are fair in sitting down and calculating the impact and adjust price accordingly.

About your third question, no surprises from our side. Numbers in Q1 are in line with our expectations. We had some effect of -- temporary effect of tariffs, approximately EUR 1.7 million if we need to quantify that. The rest from depreciation to exchange rate is exactly in line with our expectation and is embedded in our model also for future period.

The next question is from Mac Etoch, Stephens. Mr. Etoch, we cannot hear you with the lines on mute. Please check your microphone, please. We cannot hear you.

The next question is from Kallum Titchmarsh, Morgan Stanley.

This is Jason on for Kallum. So maybe just a question on the mid-teens GLP growth assumption embedded in the 2026 guidance. Can you just unpack that assumption just between price, volume and product mix between syringes and cartridges? How do you see those variables comparing relative to 2025? Just want to understand that dynamic better.

So 2025 was largely about high-value syringes. 2026 the growth is driven again by syringes. We can see, as mentioned before, also cartridges growing in both sterile configuration and bar configurations. Overall in 2026, syringes are still playing the main role. Obviously, as you know, we plan well in advance with our customers, taking care of their needs. Made -- We made many times the example of sterile cartridges to pass it to we are installing in Latina. But this is a plan we have together with our customers for the next 10 years is not for 2026.

Got it.

And then maybe just as a follow-up. I know in the past, you've talked about like double-digit growth in Site Acceptance Test, that's an important leading KPI for the Engineering business recovering. I think you made those comments even like during first quarter, second quarter of 2025. So it seems like we haven't seen those sites translate to revenue. Just wondering what is the typical lag that we should expect from the Site Acceptance Test to translate into orders and then... [Technical Difficulty]

So I apologize you were cutting in and out, but I think the spirit of your question relates to Engineering in terms of Site Acceptance Test statistics that we provided last year and then following the SATs how that translates into revenue. I'll hand the call over to Marco, but it's important to remember that the revenue recognition on these particular projects is POC and that has an impact on how the revenue flows through.

Yes. Yes, the SAT is very important, obviously, the event to conclude the contract basically with our customers, with the final test within the customer factory. So it's an important event to monitor our ability to execution. So with the acceptance of the customer, we can say that the project is finished.

On the revenue side, yes, as Lisa said, we are recognizing revenue upon the time, so with the percentage of completion method with a cost-to-cost basis. So we are progressing, from the beginning, recognizing revenue in line with the accounting policies that we have in place.

The next question is from Curtis Moiles, BNP Paribas Exane.

My best to Franco. So I just wanted to start off on the EZ-fill vials. I know you mentioned a contribution to the high-value solutions in the quarter and then also a conversion of one of those lines to cartridges. So can you share a little bit more about the dynamics you're seeing overall there? And are you seeing some still elevated under-utilization after that conversion?

So we are happy about the progresses we have been doing with vials, particularly in EZ-fill configuration. Easy-fill vials grew significantly in Q1 compared with the same period last year. By the way, overall vials grew mid-single digit. What we can see today is that the acceleration in cartridges configuration.

We see growing EZ-fill vials too, but we have much more capacity installed there following the pandemic. So the flexibility of our Engineering team is helping us to address the capacity where the demand is and is expected to be in the coming years. So we are not concerned in both cases, we are growing in EZ-fill vials. We are growing more rapidly in sterile cartridges where we have less capacity. So that's why we decided to switch the line from vials to cartridges.

And in terms of your question regarding under-utilizations, when we look across the industrial footprint that we have, we see some underutilization in certain regional pockets, while in other areas we're running at full capacity in vials. So it's a bit of a mix. But overall, as Marco mentioned, vials were up mid-single digits.

Great. That's helpful. And then you also mentioned earlier that you're fully booked on cartridges through this year. And I know you have some more lines coming on in Latina next year. But do you think at this point, there could be a need to further invest above and beyond that?

I mean at the moment, the new converted line is set for SAT to begin at the end of this week. And so we anticipate bringing that line into service by the end of this quarter, so by the end of June. So we have taken the flexibility and agility to translate an under-utilized asset into an optimization of an asset where we see clear customer demand. But at the moment, we are working on completing the RTU 400 lines, and those will be going into installation in Latina. But right now, that is our current plan for the expansion of capacity for those cartridges.

[Operator Instructions] Ms. Miles, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Thank you. We appreciate everyone joining our call today, and we look forward to additional follow-ups. As a reminder, we will be at the Bank of America Conference next week, and then we will be at the William Blair Conference and Jefferies Conference the first week of June. Have a great day.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group Fourth Quarter and Full Year 2025 Financial Results Conference Call.

[Operator Instructions]

At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communications Officer. Please go ahead, madam.

Good morning, and thank you for joining us. With me today is Franco Stevanato, Chairman and Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer. You can find a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the Financial Results tab. As a reminder, some statements being made today will be forward-looking in nature and are only predictions. Actual events and results may differ materially as a result of the risks we face, including those discussed in Item 3D entitled Risk Factors in the company's most recent annual report on Form 20-F filed with the Securities and Exchange Commission.

Please read our safe harbor statement included in the front of the presentation and in today's press release. The company does not assume any obligation to revise or update these forward-looking statements to reflect subsequent events or circumstances, except as required by law. Today's presentation may contain non-GAAP financial information. Management uses this information in its internal analyses and believes this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of these non-GAAP measures please see the company's most recent earnings press release. And with that, I will now hand the call over to Franco Stevanato.

Thank you, Lisa, and thanks for joining us. Today, we will review our 2025 performance, address current market dynamics, discuss our fourth quarter results and provide 2026 guidance. We finished fiscal 2025 with another solid quarter that led to positive full year performance and positive momentum as we start 2026. For the fiscal 2025, total company revenue increased by 9% at constant currency rates and 7% on a reported basis compared with 2024. This growth was consistent with our expectations and reflects the execution of our strategic priorities throughout 2025. The biopharmaceutical and Diagnostic Solutions segment delivered another solid year with double-digit top line growth for fiscal 2025. This offset the expected revenue decline from the Engineering segment.

Revenue growth in the BDS segment was driven primarily by strong market demand for high-value solutions, which increased 29% in fiscal 2025, and represented 46% of the total company revenue for the year. The strong performance in High Value Solutions was also the main driver for margin expansion in the year with gross profit margin rising by 160 basis points compared to 2024. These results demonstrate the company's ability to execute against our strategic priorities and to grow our innovative premium offerings positioning the business for sustained success in the evolving market environment. At the same time, as we continue to move up the value chain, we are pivoting away from certain non-high-value product categories that we consider not aligned with our strategy, and we may consider additional action in the future.

Since our IPO in 2021, we remain committed to meeting customer demand for high-value solutions, which meant investing in key projects in Fishers, Indiana and Latin Italy to spend capacity for high-value syringes. In 2025, the Nexa syringe was our fastest-growing product driven primarily by growth from GLP1s. This should come as no surprise as the syringe is by far the most prevalent format for GLP-1s in United States today. There's no doubt that we've been successful in winning our fair share of the GLP-1 market. This success is rooted in our long history of being a trusted partner to customers. Our global footprint, which provides supply chain security and the quality of our products, which have a characteristic that resonate with our customers. For example, our Nexa platform feature high mechanical resistance. It can be produced at scale, and it is ideally suited for an auto-injector. In fiscal 2025, our revenue from GLP-1s accounted for approximately 19% to 20% of total company revenue. growing more than 50% compared with 2024.

We currently expect that the GLP-1s will serve as a meaningful tailwind as special demand continues to grow in the years to come. With the launch of the Wegovy pill, patients now have more options for GLP treatments. The general consensus among industry experts and our customers is that injectables are expected to be the preferred format for treatment lost while our GLPs will enable market expansion and support patients with specific needs. We also anticipate the market for GLP-1 will continue to evolve over the next decade, primarily driven by the different commercial and supply chain strategies among the originators, biosimilar launches, the expected expansion of treatment indications and next-generation [ incretin ] still in clinical phases. We are already seeing some of these dynamics play out in the market today. As we noted on prior calls, recent demand for cartridges has outpaced our prior expectation, and we are expanding our capacity to satisfy demand. We see this trend aligned with the introduction of new pen injector formats with various treatment plants as well as the expected growth of biosimilars, especially in APAC.

We currently expect that we will continue to benefit from GLPs in the future. We also believe that the market will continue to evolve and mature. We see a pipeline of opportunities where we are well positioned with a deep expertise, a global footprint and a comprehensive portfolio of products from primary packaging to our platform drug delivery devices. While GLPs represented the largest top line growth contributor in 2025, we continue to increase our participation in other injectable biologics with our premium best-in-class high-value product portfolio. In fiscal 2025, we realized a 40% increase in the number of customers ordering premium ranges, both Alba and Nexa platforms for biologic application that were unrelated to GLP-1s. These 2 customer projects are expected to play an important role in the future growth. We continue to expand our participation in the broader set of biological applications with new customer programs, unlocking incremental value and setting the path for sustainable growth in the coming decade.

As a result, in fiscal 2025, Biologics represented 41% BDS revenues, up from 34% in 2024. Third, to the next slide for an update on our strategic growth investments. In Latina, the past year was dedicated to the installation and production of syringe capacity and customer validations all of which will continue in 2026. The next phase in Latina is devoted to increasing capacity for EZ-fill cartridges to meet rising global demand. Turning to Fishers throughout 2025, the teams were focused on core activities, including the ongoing line installations. In parallel, customer validations and audits continue and in 2025 we doubled the number of customers that are now validated in features. Looking ahead, line installations and customer validation activities are expected to continue all year. We continue to advance the build-out for contract manufacturing activities in support of a couple of large device programs for a key U.S. customer the build-out is going well. Nearly all of the injection molding machines are installed, and we started producing components for qualification activities. The first phase of new clean room is completed. We still expect the commercial activities to begin at the end of 2026 or early 2027 for the first device program.

Please turn to the next slide for a status update on the Engineering segment. Over the past 12 months, we've made meaningful progress advancing our optimization efforts and improving execution. In 2025, we rightsize operations streamline processes and increase standardization across delivery teams. We reinforce our project management office, driving improvements in project planning, process harmonization, contract management and customer engagement. We also consolidated offices in Denmark, move the visual inspection activities to Italy and acquired a new location in Bologna to access strong technical talent. This section have contributed to double-digit growth in site acceptance rates, an important KPI. Nevertheless, our 2026 guidance assumes a revenue decrease from the Engineering segment due to lower order intake in the prior months.

While our efforts in 2025 were focused on execution we recently stepped up our sales and marketing efforts, which has led to a more robust opportunity pipeline. Converting opportunities into new firm orders has been slower than we anticipated. But our pipeline is especially strong in pharmaceutical visual inspection, underpinned by innovation and superior technology. All in all, getting the business back to historical performance is taking longer than we expected and we're working to best position the segment for long-term success. In summary, 2025 was a successful year, characterized by robust top line growth, a favorable mix and ongoing margin expansion. Double-digit growth in our BDA segment more than offset the expected revenue reduction in engineering and enable us to navigate the favorable effects from foreign currency.

High-value solutions were the primary driver of revenue growth and margin expansion, reflecting our ability to scale our main investments and perform in full alignment with the strategic direction set at the time of our IPO. We expect that GLPs will remain an important tailwinds, having anchor our position as a market leader in high-value products. Importantly, our best product set enable us to achieve strategic position beyond GLPs, allowing us to participate in the broader global market for injectable biologics and biosimilars.

Looking ahead, we will continue to execute our strategic priorities, including aligning growth investments with customer demand trends. I will hand the call over to Marco

Thanks, Franco. Before I begin, I want to clarify that all comparisons refer to year-over-year changes unless otherwise specified. Starting on Page 10. We ended fiscal 2025 with positive financial results for the fourth quarter. Total company revenue grew 7% at constant currency and 5% on a reported basis to $346.5 million for the fourth quarter of 2025. Foreign currency translation was a headwind throughout fiscal 2025 with an higher impact in the second half of 2025 due to a weaker U.S. dollar.

Our BDS segment delivered another solid fourth quarter with revenue increasing 13% at the constant currency and 10% on a reported basis. This offset the expected 23% revenue decline in the Engineering segment. For the fourth quarter of 2025, revenue from high-value solutions grew 31% to EUR 171 million, represented approximately 49% of total company revenue in the quarter. The strong performance was driven by continued growth in our premium performance Nexa syringes and, to a lesser extent, EZ-fill cartridges. For the fourth quarter of 2025, gross profit margin increased 120 basis points to 30.9%. This was mostly driven by 3 factors: first, a favorable mix of high-value solutions. Second, the year-over-year improvements in Latin and Fishers as we scale production in our new facilities. But together, they remain dilutive to the corporate margin. And third, the improved market landscape for vials which led to higher vial production and better utilization. This was partially offset by tariffs and unfavorable effects of foreign currency.

For the fourth quarter of 2025, operating profit margin was 20.2%. As a result, net profit totaled EUR 47.6 million and diluted earnings per share were EUR 0.17. On an adjusted basis, net profit was EUR 49.8 million and adjusted diluted EPS were EUR 0.18 for the fourth quarter of 2025. Adjusted EBITDA increased 7% to EUR 97.7 million, and adjusted EBITDA margin increased 70 basis points to 28.2%. Let's review segment results on Page 11. The BDS segment finished strong with double-digit growth in the fourth quarter. Revenue grew 13% at the constant currency and 10% on a reported basis to EUR 307.1 million. Segment growth was led by a 31% revenue increase from high-value solutions to EUR 171 million, which accounted for 56% of segment revenue. This offset the 9% revenue reduction in other containment and delivery solutions as we prioritize the production of premium products. For the fourth quarter of 2025, gross profit margin for the BDS segment improved 50 basis points to 31.6% led by a favorable mix, operational gains in our new facilities as we scale commercial production and an improved vial market.

These positive trends were offset by the unfavorable impact of tariffs and foreign currency translation. This resulted in an operating profit margin of 23.8% which improved 50 basis points in the fourth quarter of 2025. The BDS segment continues to perform well, reflecting the successful execution of our strategic priorities and a strong position to capitalize on future opportunities. For the fourth quarter of 2025, revenue from the Engineering segment decreased 23% to EUR 39.4 million due to lower revenue in glass conversion and assembly, offsetting growth in pharmaceutical visual inspection. For the fourth quarter of 2025, segment gross profit margin decreased to 15.8%. And as a result, operating profit margin was 9.1%. Ongoing efforts under our business optimization plan have yielded the improvements in execution and meaningful operational progress. However, the unfavorable portfolio mix coupled with low order intake continues to put pressure on margins.

The team has been very focused on securing new orders which will help refresh and reposition the portfolio for long-term success. Please turn to the next slide for a review of balance sheet and cash flow items. We ended the year with cash and cash equivalents of EUR 130.6 million and net debt of EUR 337.7 million. With our current cash on hand, cash generated from operations, available credit lines and our ability to access additional financing we believe, we have available liquidity to fund our strategic and operational priorities over the next 12 months. For the full year 2025, capital expenditures totaled EUR 294.9 million, of which approximately 89% were deployed for growth projects to support customer demand. These investments are related to capacity expansion for high-value solutions and supporting future DDS commercial activities. For the full year 2025, cash from operating activities totaled EUR 286.1 million. Cash used in the purchase of property, plant, equipment and intangible assets was EUR 275.1 million.

The combination of increased cash flow from operations and lower CapEx and drive a significant year-over-year improvement in free cash flow, and we exited fiscal 2025 with positive free cash flow of EUR 18.4 million for the full year. Lastly, turn to the next slide, we are establishing 2026 guidance. We expect revenue in the range of EUR 1.260 billion to EUR 1.290 billion. On a constant currency basis, revenue will range between EUR 1.278 and EUR 1.308 billion. Adjusted EBITDA in the range of EUR 331.8 million to EUR 346.9 million, and adjusted diluted EPS in the range of EUR 0.59 to EUR 0.63. Our 2026 guidance considers headwinds and tailwinds, and we have assumed the following factors: revenue will be stronger in the second half of 2022 and compared with the first half. The effects from foreign currency translation are expected to be a headwind of approximately EUR 18 million for fiscal 2026 with an impact of approximately EUR 10 million in Q1.

As a result, in the first quarter, we expect mid-single-digit revenue growth on a reported basis compared to last year based on the midpoint of our guide. For the full year, the BDS segment is expected to grow on a reported basis, high single to low double digits and double digits on a constant currency rate. Engineering is expected to decline by mid-single digit to low double digits. For fiscal 2026 High-value solutions are expected to range between 47% to 48% of total company revenue. And in 2026, we are assuming a tax rate of approximately 26.8%.

And finally, capital expenditures and free cash flow. We have assumed CapEx in the range of EUR 270 million to EUR 290 million before customer contributions and prepayments. Net of contributions and payments is expected to range between EUR 240 million and EUR 260 million. Regarding free cash flow in 2026 we are modeling breakeven to positive free cash flow of approximately EUR 20 million. I will hand the call back to Franco.

Thank you, Marco. In closing, we remain focused on executing our key priorities supported by strong business fundamentals. We operate in attractive growing end markets. with favorable secular tailwinds, innovation across the industry continues to advance patient care, and we remain mission-critical to the delivery of biologics supporting new therapeutic areas, expanding global access to treatments and improving standards of care. Demand for innovative drug products remain strong. There are more than 9,000 injectable assets in the global drug pipeline undergoing clinical evaluation or being registered and more than 60% are biologics. We believe we are well positioned to serve this demand through our integrated value proposition, differentiate the portfolio and long-standing commitment to science and technology-driven innovation.

Biologics, our fast and growing segment is expected to remain a key driver of top line growth and margin expansion as we continue to move up the value chain. At the same time, we're making meaningful operational progress, and we expect to increasingly benefit from new capacity coming online, productivity gains and improvements within our Engineering segment. Together, we expect that these efforts position us to deliver long-term sustainable growth and shareholder value. Operator, we are ready for questions.

Thank you. This is the Chorus Call conference operator.

[Operator Instructions]

First question is from Michael Ryskin, Bank of America.

Great. Congrats on the strong end of the year. I want to start on sort of parsing out your guide for 2026. I appreciate you provided a lot of color in the deck and in your prepared remarks. I'm curious if you would comment on your expectations for GLP-1s in 2026. I think you said for 2025, it was up to 19% to 20% of revenues and grew 50% year-over-year. So at the midpoint of your guide for 2026, what is your assumption for GLP-1 growth next year? And I have a follow-up.

Thank you, Franco speaking. Revenue from the GLP1s accounted in 2025, approximately between 19% to 20% and we have delivered our growth in 2020 compared to the '24 about 50%. If you do an estimation and look at our outlook of 2026, we think that will be a growth in the range of mid-teens.

Mid-teens. Okay. That's great. And then a follow-up on the Engineering segment. I mean, on the one hand, encouraging, it sounds like you're making a lot of progress in terms of the operational plan, the optimization moving to the facilities around rightsizing operations. All of that is encouraging, but then the guide for engineering for 2026 and the color on low order intake that's a disappointing update. So on the order intake side, we just love to -- this is engineering specific, I would just love to get a better sense of what you think is behind that. Is that some weakness in the market? Is it as simple as you guys were so focused on getting the operational things right, that you missed a few opportunities? Just get a sense of why that suddenly turned bad in the second half of 2025 and how quickly can you regain the momentum on the commercial side of things?

So first of all, the pharmaceutical market, in particular, biologics, is also robust in terms of demand for new machines that need for spectrum machine, assembly technology is very robust today. Most of the biologic market is it will move to injection and when there is also self administration and it's going to require a new special machine. So today, the order intake and the pipeline that we have in the engineering is healthy, is [indiscernible] what is the big -- nice KPI is the fact that there are repetitive orders with our historical bigger clients. So what was the same point is the fact that the sales cycle because of technicality of this line is taking a little bit longer than was expected, translating water instead to maybe receive the order, the confirmation of the order in January, February can be easily postponed a few months. This is going to -- there is why we took some more prudent approach.

Another important element that we'll have to underline in 2025, the big focus of the engineering division is really to make a strong operational progress in terms of management and execution and the good KPI that we can translate to share with you is the number of site accepted tests that increased more than double in 2025 compared to 2024. This is extremely important. At the end of again, the company '25 focus our attention to execute and deliver this line. Now we are entering the new ways to new orders, repetitive orders with our clients. This take a little bit more muted what are our expectation. But the outlook in the medium term is strong growth in the engineering division.

Next question is from Patrick Donnelly, Citi.

Maybe one on the high-value solutions side, it seems like you guys are guiding 47%, 48% of revenue for that segment. Can you just talk about where we are on kind of the utilization capacity side? I know you guys are ramping Fishers you're renting Latina in terms of utilization. Are you still capacity constrained with the high value side? Just wondering where we are on the capacity side versus the demand? Are there areas where demand is outpacing capacity would be helpful just to talk through that piece?

So capacity in Stevanato Group in particular for prefilled syringes through the format of Nexa syringes, Alba syringes and cartridges to play a role in 2025, practically, we run approximately full capacity intervenor. And also this is translating the ramping up that we're doing in Latin in particular with good success, the ramp-up that we are doing in Fisher. So also in 2026, we will follow this nice positive momentum where the demand is robust, practically in all our high-value product, but the capacity have played a role '25. It will play a role also in 2026 for Stevanato Group.

That's helpful. And then maybe one for Mark. Just on the margin expansion here. Again, obviously, the mix helps to degree within the high-value stuff that is helpful here with GLP growth. Can you just talk about the moving pieces on the margins the right way to think about the path forward here as high value becomes a bigger and bigger piece of the pie? And then I guess, flowing that into just the cash flow piece, how you continue to drive an inflection there? It seems like a little bit positive this year.

Patrick, just to clarify, I think you're asking about '26 or are you asking about '25?

Yes. '26 margin expansion and just the drivers of cash flow into '26 as well.

Yes. Thanks for the question. So overall, Stevanato Group level, we are assuming in our guidance as mentioned, the center point of the guidance, 7.5% revenue growth and 8.3% on a constant currency basis. About margin, we see margin expansion from 0 to 30 basis points on a consolidated level. Operating profit margin ended 50 basis points at the center point of our guidance and adjusted EBITDA margin expanding for approximately 150 basis points. Gross profit margin, we can put together some headwinds and tailwinds.

On the headwind side, for sure, we can mention higher depreciation were compared with 2025, we expect approximately 150, 170 basis both more in depreciation on industrial business. We have currency headwind embedded in our guidance. And on the positive side, instead, we have on top of the 2 new facilities where we can see quarter after quarter, the financial performance is improving, both in Latina and Fishers. So we are on the right track there to keep on expanding profitability -- and that's briefly also engineering. Frank already mentioned the market and revenue guidance. What I can tell is that we anticipate better margin in 2026 compared to 2025, mainly driven by the project mix. We are targeting more textile contracts with respective customers. So not really customized mines as we did in the past. And also, we will leverage the optimization plan we executed in 2024 and 2025. So we have -- this is embedded in our model and in our guidance for 2026.

Next question is from Doug Schenkel, Wolfe Research.

Good day, everybody, and thank you for taking the questions. I have 3, I'll just throw them out there and then listen to your answers. So one, is there any change in how you're thinking about the long-term growth outlook for GLP-1s for your business? Two, more near term, how strong is your visibility on demand pursuant to the assumption you embedded into guidance for GLPs, which I think is high teens growth in 2026. And then third, thinking about Lilly's multi-dose quick pen format, how do the economics differ between formats for Stevanato and really getting at vials versus cartridges?

What is related to the GLP-1 in 2026, practically were just executing the foreign cast that we share with our clients today and have already everything is embedded in our guidance that we are sharing with you today. We have already all the problem that was clear our clients. So what is beyond the 2026 it's a little bit too early to make any type of grand because there are a lot of moving pieces in the GLP-1. We see the big originator that are moving between, also the pen injector, they're launching also cartage new requirement, thanks to their fixed dose span. -- also, we see a lot of biosimilar in the market that continues to be very, very active to put capacity both for syringes, for cartridges, also from the devices.

So the GLP-1 in the next decade, it will continue to be a powerful tailwinds for Stevanato, for all the industry but it's a little bit too early to understand what to be the final configuration between originator, biosimilar pen versus out injector.

I think that answer covers all of your questions, just to confirm.

Yes. I think the only thing, Lisa, was just the economics of the different formats.

In terms of syringes, cartridges vials, so on and so forth.

Also here, sorry.

Most of the GLP-1 products are under syringe Nexa that's a high-value product or cartridge is to feed that is also a high-value product. We have biosimilar a lot of requirement through our Alina's a high-value product this is practically the tendency is to answer to you that GLP-1 is going to be in a configuration of high-value products because of the EZ-fill or through Alina for Stavanato Group.

Next question is from David Windley.

I just wanted to clarify definitionally, when you are talking about GLP-1s, are you including the full gamut of mechanisms that are kind of pursuing obesity. So GLP-1 glucagon non-incretinglucagon. Are we kind of generally bucketing all of that together for definitional purposes?

Correct. I confirm.

And then as you think about -- I think you talked about Nexus syringe being the strongest driver of growth in '25. Franco, you just commented to Doug's question about the kind of '27 and beyond outlook being a little less clear because of the transition, I guess in '26 on that guidance that you're giving for this GLP-1 or obesity category, is that still driven by Nexa syringe or do you see that start -- you mentioned in the prepared remarks some uptake in capacity in cartridge in your next phases of capacity, is cartridge kind of overtaking the growth lead as we move into '26 and beyond?

In 2026, Nexa syringes, it will continue to play an important role in the GLP-1s, David. Beyond the 2026 is also true that we are building a lot of capacity on the cartridges to fill, still minor compared to syringe Nexa but we are starting also to see that the customer originator and also biosimilars, they're starting to put new capacity not only on syringes but for cartridges in the next year to come beyond '26.

And if I could just sneak in a follow-up on the margin question. Would you be able to size -- maybe this is a Marco question, but size the tariff and FX headwinds to margin so we kind of understand what the gross improvement was from the mix shift to HBS, but offset by tariffs and FX, please?

Yes. Sure. We mentioned the top line about EUR 20 million currency headwind, assuming our model, EUR 1.20 exchange rate that you know in the last days there was volatility, but this is what we have in our model. You can assume about 30% of that is impact in margins for 2026. About tariffs, we have been able to have a good dialogue with our customers, mainly predominantly transferring the effect of tariffs to customers in 2025, we had about 4 million headwinds, but it was mainly related to supply chain and the time to transfer the different scenario. So we are assuming limited impact from tariffs in 2026.

Next question is from Paul Knight, KeyBanc.

Franco, after the 50% growth in GLP-1 last year, your mid-upper teens guide on '26 seems a bit conservative. Is it because Fishers is just ramping or what's behind this guide on GLP ones for this year?

No, I think it's core because the pharmaceutical industry, in particular, all the originators, the launch the product on the market in 2025. There was a massive preparation of the supply chain. Now to have a mid-teens growth in this in this category of drugs is still very important. I think it is a realistic number, Paul. When there is a takeoff of the product, when starting the product as to really go commercial. So this is what we see through our originator also to our biosimilar clients.

Paul, perhaps it's best to think about it of an initial surge, followed by a period of normalization where growth slows a bit.

Yes. And then you had mentioned earlier a 45% increase in customers using high-value product. What's driving that? Is it share gain is [ NX1 ] regulations? Is it recent approvals that have been the right ones for you? What's behind that 45% customer gain?

On the non-biologic, you mean? Yes, this is our most important KPI in Stevanato Group. So the strategy that we're building since the day of the IPO of Stevanato Group is to become the partner of the pharmaceutical industry and everything that is around biologic where the good news that more than 60% of biologic, it will be through injection through a certain indication for devices. This has to become our big #1 strategy. And this is exactly what we are executing.

Today, we are deeply engaged on Nexa syringes program. We are deeply engaged on Alba program. Syringes can move from 1 ml to 2.25 ml to 3 ml to 5 ml cartridge is the same format because both cartridges and syringes are going to be inserted on pen on auto-injector. Also, we are heavily investing in capacity for device space to our Alina clean room that we are building up in Germany and also for other selective program of [indiscernible] in Germany.

Also, we have a big contract with American client in Fisher. So everything is going to summarize that where there is an injection want to be in. The real future in the next 1, 2, 3, 4, 5 years are the incremental value that we'll be able to generate spread through several tens of hundreds of programs worldwide through biologic and biosimilar, mostly United States, in Europe and also is growing rapidly. This is a big long-term strategy of Stevanato.

Next question is from Calum Times, Morgan Stanley

Beyond GLP-1s, I'd love to get a better sense of what you're seeing across the biologic category today. I realize there's a lot of GLP focus just given the relative growth profile. But curious how other biologic categories have been performing, how customer discussions have been trending? Any positives? Any pressure points? And then what's just being assumed from these categories in the guide for.

So the category are practically monoclonal antibody. We have a wide range of biosimilar spread in a different region of the world. We are focused on mono infirmatory rare disease, all products that are going to require an injection or a certain medication. So there's a combination for Stevanato over Nexa syringes, [indiscernible] fill with at or injectors will be great to a little later thought as well on U.S. onshoring.

Obviously, Fishers should be well positioned for that. Any early discussions or insights you could share with us to just better understand the time lines for benefits here and when we could expect something to appear in the P&L. Do you want to say sure you mean?

Yes. Today, the price of Fishers play an important role when we decide in 2002, and we started to develop these plans -- this was really the purpose to be the campus that was going to mirror exactly the same capability that we have in Europe in particular for easy-fitchnology. -- with a different range of syringes, vary to files for devices. Today, what we see that many clients that are addressing their supply chain in United States and the fact that we are present in future with this why the capability is play all translating water, we can really accelerate additional opportunity for customers on to utilize the supply chain.

Next question is from Larry Solow, CJS Securities.

Great. I guess just lots of information GLPs and all that. I really appreciate it. I guess from your seat today, and I won't hold you to this, but as we look out over the next 5 years, do you think the GLPs in summary, will, in aggregate, will still be driving 10% plus growth to Stevanato on a top line basis? What's your confidence level on that?

So we -- I think it will be -- continue to benefit on the GLP-1 in the future like a tailwinds. So the good news of the GLP-1 is this is information that we share constantly with our clients. We see quarters after quarters that the number of patients are going to increase and the large. So this is the good news. So from the moment that they launched, we also all our clients that they see more upside downside a number of the new customers. More and more, what we see that there are new opportunities for Stevanato on Nexa syringes, the opportunity for cartridges to fill and also for our device space. So

I can see that it will be a long always for Stevanato that we help to further boost our biological revenue I don't know if after 5 years, it will continue to be in double digit because in [indiscernible] is also rapidly growing in other therapy that is so-called biologic. And this is are all high-value product like albacore our pen Liana or high format on cartridges.

That's all fair. What about just the RTU vials you mentioned 2025, obviously, had a nice rebound 24 down years. What can you give us a little more granularity on sort of how the year finished up and your outlook for '26 in that market?

Yes, Marco speaking. As forecast, let's say, we went up about 6% in 2025, predominantly, we grew in asteric ratio. And this is where we see more traction also for 2026 where we expect a mid- to high single-digit growth, predominantly driven by the configuration. Another other point, orders intake in '25 was double digit higher than 2024. So we see the to is not a sharp increase, but we see increasing [indiscernible] demand.

Got you. And then if I could just squeeze one more in. Just Latina Fishers the trajectory of profitability. Where do we kind of stand? And I know Latin is a little bit ahead and Fishers is larger. But where do we stand and when do we kind of hit full run rate profitability? When do you think we can start closing in on that?

We are going to the right direction. We see quarter-after-quarter better financial performances, the side operational performance, and we are growing quantities and that leverage our fixed expenses. We are very well positioned in Latina, where we are getting close to our average gross profit margin. Fishers, we are a little bit behind, but we see steady improvement of Fishers. That's difference as mentioned many times between the 2 plants. Latina is a smaller plant is about field, and we ramp up more rapidly than in Fishers. Fishers is a more complex plan with different type of products, syringes, vials, [indiscernible] , the drug delivery system. So we are progressing. We are improving going to the right direction, but it will take longer compared with Latina. Today, the gross profit margin is positive on the combination plants still dilutive compared to the average of the company and the average of this segment.

If I can give a sort of business angle. In Latin, we have continued the installation of the line for high-speed line for syringe. We are continuing to orient our regional customers to national customers. And this year, we're going to install the first high-speed line forecast is way to fill, but the goal is to do the validation is yet to start to do commercial revenue in the beginning of 2027 and in Fisher continues to perform audit to our big international clients in order to become particular domestic United States. In fact we have doubled the number of audit validation in 2025. Important milestone that we are advancing with the build-out of this bigger apartment production that is still expected to produce out in get for one big U.S. client at the end of this year.

Next question is from Matt Larew, William Blair.

The first is starting on GLPs, maybe the question on historically

I'm sorry. We cannot hear you at all. Can you speak up a little bit?

Sure. Can you hear me now?

A little bit better.

Okay. So you've historically said that you expect orals to be about 30% or 1/3 of the market. And I would say, investor expectations on that metric have moved quite a bit since the oral [indiscernible] launch. So you've addressed GLP growth for next year and reference for the next couple of years, but how do you feel about that metric? And I guess, in discussions with your customers, how are they viewing that metric?

Yes. So for sure, this is -- we are putting a lot of attention on this evolution of the pie, and we have a lot of point of contact with our clients, both the originator and the biosimilar. We look at what are the key opinion leaders are sharing. Our peers are customers also, I know that all the banks are very well prepared on this. [indiscernible] we are going to confirm that the share between injection spread between cartridges or syringes, which we represented the majority in the range of 70% and oral to be the minority in the range of 30%. Now what also we see, like I also mentioned to all of you before, we see this is information that we receive from the market the number of total patients worldwide, it will continue to increase month after month.

And we don't see cannibalization between injection to the order because they are targeting to different type of patients today. So this is our internal estimation. From a supply chain point of view, what do we do because this is another important [indiscernible] if you look at the number of lines that the pharmaceutical industry is installing for syringes, for cartridges, and the number of lines for assembly technology for pen injector both into the originator into the biosimilar and to the CMO is still high. There's a big program of massive investment for injection in the next year to come on a worldwide basis.

Okay. And on non-GLP biologics, sort of backing into maybe that being up mid-teens. Does that sound right? And then you referenced in the deck large global pipeline, I think, 60% of the 9,000 molecules. So what's your expectation for non-GLP biologics going forward. And I think that's generally speaking, all high-value demand. I guess if you could confirm that as well.

Usually, this non biologic product are a very rich that are maybe not in big size, it's difficult that to go in the range of hundreds of millions, in the range of tens of millions. They're looking -- because of the specific of this large molecule, they're looking for particular drugs, particular primary packaging with particular coating, particularly, for example, we are engaged with our Alba syringe because they have a special plasma coating. We are engaged with particular [indiscernible] silicon syringes with particular Nexa syringes and also different format. We see more and more moving to 3 mls to 5 today. That's something that is a little bit new on the market, usually the autoinjector pen used to stop at 3ml.

So all overall, we see several hundred of programs spread to many customers meet the top 25 customer and some hundred of biosimilars that are extremely active to build capacity in this way. So what we are doing in Stevanato Group, we are building a supply chain through our engineering division, with particularly line dedicated to be able to be fast and flexible to serve these customers. So we want to keep a few [indiscernible] Latina in particular United States to be able to serve this wide range of products that are moving from syringes to [indiscernible] fee through our device colleagues. We are ready with our out injector, in particular also with our pen Alina or in a selective way when we already serve the syringes of the cartridges, we afflict CMO. So I want to reiterate our real strategy in Stevanato is really to say where there is an injection, self-administration, we want to be always on the #1 on the #2 for this product.

Okay. And just one follow-up. You referenced the contract manufacturing opportunities and maybe that will be ramping end of this year into next year. How do you expect the economics of that business to look for you relative to the BDS business and your engineering segment?

So we are not classifying the CMO as IPO. Nevertheless, we see the specific projects in a high range of normal value solutions. And as mentioned many times, we are taking here a selective approach with customers, leveraging this particular case, the integration between syringes and injectors, all the capabilities we have tool with very important customers. So we are using this strategy, taking a selective approach, especially where we can leverage integration.

Last question is from Curtis Moiles BNP Paribas Exane.

Great. I think you've already given a lot of color here. But on the High Value Solutions guidance for 47% to 48% of revenue, I just wanted to clarify, are you thinking that will be primarily driven by GLP-1s? Or maybe can you separate the contribution from syringes versus kind of files and cartridges?

It's a level of detail we don't provide. What I can tell you is that we are increasing our high-value solution next year double digit -- low teens if we consider constant currency rate. So we are growing both and other biologics next year.

And then also just I think earlier in the call, you mentioned that you could consider some additional actions around permitting away from the non-HPS categories. Can you maybe give a little color about what you're thinking about there?

I'm sorry, Curtis. We missed a portion of your question as you were dropping out. Can you please repeat?

Sorry, Yes, of course, I think in the beginning of the call, you mentioned that you could consider actions around pivoting away from non-high-value solutions categories in the future. I was just wondering if you can comment on what you're thinking about there.

Yes. Thank you for clarifying that.

Yes. Today, the focus in Stevanato Group also the investment or the attention of all our colleagues is on building capacity and to become the partner of this biologic market for high-value product and this is a while, for example, what you had to do to select, we are going maybe to the privatized the [indiscernible] for example, this historical product is good to produce in certain regions of the market, but in particular, in your United States, the goal is to focus to become the #1, #2 in the new product. Or for example, another example, in Germany, we have built this new big [indiscernible] room in order to host the production for line originally in this screen room we used to produce a standard in [indiscernible] forecast. We have decided to use this space, important space this now how to start to ramp up in the next years Salina the type of the prioritization that we are looking in the next year's focus on biologic high-value products. And when there is no strategic customer behind the strategic market, we try really to do some [indiscernible]

Ms Miles, gentlemen, there are no more questions registered at this time.

Thank you, everyone. That concludes today's call, and we'll be seeing you shortly. Have a good day.

Ladies and gentlement, thank you for joining. The conference is now over. You may disconnect your telephones.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group Third Quarter 2025 Financial Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communication Officer. Please go ahead, madam.

Good morning, and thank you for joining us. With me today, I have Franco Stevanato, Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer. 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 forward-looking statements, except as required by law.

Today's presentation may include non-GAAP financial information. Management uses these measures internally to assess performance and believes 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 a reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release.

And with that, I will hand the call over to Franco Stevanato.

Thank you, Lisa, and thanks for joining us. Today, we will review our third-quarter performance, share updates on our investment projects, and discuss the current market environment. We delivered another solid quarter of financial results, driven by revenue growth, a record mix of high-value solutions, and continued margin expansion. Our third-quarter financial results exceeded our expectations. We benefited from favorable timing of some product shipments in the BDS segment that were previously scheduled to occur in the fourth quarter.

Relative to the same period last year, we also faced headwinds from foreign currency and certain tariff costs that were not mitigated, which tempered margins in the third quarter. These impacts were already assumed in our guidance. As a result, we remain on track to meet our 2025 guidance. This underscores the momentum we are experiencing from executing our strategic road map as we leverage and scale up our growth investment in capacity expansion to meet the increased demand for high-value products. Third quarter revenue increased by 9% year-over-year, driven by the continued strong performance of our BDS segment, which grew by 14%. This was primarily fueled by demand in our core drug containment business.

As expected, revenue from Engineering segment declined as we continue implementing our business optimization plan. Our solid performance in the third quarter was underpinned by a remarkable 47% growth in high-value solutions, driven primarily by Nexa syringes and to a lesser extent, EZ-fill vials. The Nexa platform is optimized for sensitive biologics, and its high mechanical resistance makes it ideal for the seamless integration of auto-injectors. Our core pillar of our long-term strategy is built around meeting the demands of a high-growth market, such as injectable biologics, which require premium containment and delivery solutions. These are often sensitive drugs that require specialized glass or ready-to-use containers to maintain stability, and integrity, and ensure patient safety. Our EZ-fill portfolio and our ongoing investments in growth capacity are intended to support customers' innovation programs in drug development and life cycle management.

As the pharma industry shifts to ready-to-use platforms that deliver superior quality, simplify processes and enhance operational flexibility, our EZ-fill cartridges are setting a new standard. Most recently, they were selected by a leading manufacturer for use with a GLP-1 biosimilar for type 2 diabetes, one of the first to receive FDA approval and launch commercially in United States. Engineered for optimal performance in handheld injection devices, EZ-fill cartridges offer seamless compatibility with pen injector systems, helping accelerate time to market while ensuring reliability and patient convenience. The continued growth in biologics, rising pharmaceutical innovation, and the increasing trend towards self-administration of medicine remain strong secular tailwinds for our business. Solid demand for high-value solutions and collaboration with customers on ready-to-use products illustrate why we believe we are well-positioned to meet evolving industry demands and support patient-centric solutions.

Turning to the Engineering segment. The team continues to make meaningful operational progress against our business optimization plan. Over the past year, we have been squarely focused on executing effectively and meeting our customer commitments. While the steps we have taken have yielded operational improvements, our financial performance is below our expectations. We believe that getting the segment back to historical performance levels is going to take more time as we refresh the workload with new projects and reposition the segment for stronger profitability. We have a healthy pipeline of new opportunities across the Engineering segment.

However, converting that pipeline into new orders has been slower than we anticipated. First, as I mentioned during the last call, we are strengthening the sales organization with fresh expertise and refining our commercial processes. We expect to harvest the benefits of these initiatives in the coming quarters. Second, several pending opportunities in our pipeline are repeat orders from existing key customers. The good news is that we have received positive feedback on the performance of recently installed manufacturing lines. So we are cautiously optimistic that the current slowdown in order flow is only temporary. We believe the long-term demand landscape for our manufacturing technologies remains strong as the industry expands its capacity to satisfy growing demand for injectable biologics and devices.

Customers are investing in new capital projects as they onshore more core operations in the United States and upgrade their technology to meet higher quality standards and more stringent regulations, such as Annex 1. Many major pharmaceutical players have announced extraordinary investments dedicated to the U.S. manufacturing operations. This, coupled with organic growth from on-cycle investments and growth in emerging markets, provides us with added confidence in the demand outlook.

Let's turn to an update on our capital investment projects in Fisher and Latina. In Fishers, we have several syringe lines running commercial production at various stages of ramp-up. At the same time, we will continue to install additional syringe lines and validate customers for the rest of this year and throughout 2026. Our first vial lines are being installed and qualified, with customer validations expected to begin in mid-2026. We are also advancing the build-out for contract manufacturing activities in support of a couple of large device programs. The new clean room is nearly completed. The first injection molding machines are on site and scheduled for installation in the coming months. We still expect commercial activities to begin at the end of 2026 or early 2027.

In Latina, we are scaling commercial production for Nexa Syringes, which will continue into 2026. Preparations are underway for the next phase of EZ-fill cartridge production to meet the rising demand for ready-to-use cartridges. This next phase will be powered by our new R400 EZ-fill cartridge lines. They have a fully automated, ready-to-use process designed to ensure aseptic integrity, increase production capacity, and provide superior container quality. Our capital investments are helping us meet the rising market demand for our core drug containment products amid the growth in biologics, which continue to become a large portion of our portfolio each year.

Before closing, I would like to thank our teams around the world on our important ESG milestone. We were recently awarded the EcoVadis silver medal. This puts us in the top 15% of companies assessed globally and the 92nd percentile in our industry. This recognizes our strong performance and reflects our commitment to embedding sustainability into our operations and strengthen our ESG practice.

I will now turn the call over to Marco.

Thanks, Franco. Before I begin, I want to clarify that all comparisons refer to the third quarter of 2024, unless otherwise specified. Let's start on Page 9. Revenue for the third quarter of 2025 grew 9% to $303.2 million, driven by a 14% increase in the BDS segment, which offset a 19% decline in the Engineering segment. As Franco mentioned, foreign currency translation was a headwind, and on a constant currency basis, revenue grew 11%. Overall, financial results were better than expected in the third quarter, primarily due to a favorable timing of product shipments in the BDS segment, which were previously anticipated to occur in the fourth quarter. Revenue from high-value solutions grew 47% and represented 49% of total company revenue.

Strong performance in the BDS segment led to a 240 basis point increase in consolidated gross profit margin, reaching 29.2% in the third quarter of 2025. This was due to a favorable mix of more accretive high-value solutions, the expected financial improvements at our Latin and Fishers facilities as we scale our multiyear investment plan. While both sites are currently margin dilutive, we expect to continue to gain operating leverage as volume and revenue growth, and the ongoing recovery in vial demand as the effects of destocking abate. These positive trends were partially offset by a lower gross profit from the Engineering segment and to a lesser extent, the impact of currency translation and certain tariff costs that were not mitigated. In the third quarter of 2025, operating profit margin increased to 17.4%. And on an adjusted basis, operating profit margin rose 220 basis points to 18.5%. This improvement was driven predominantly by an increase in gross profit. Net profit totaled $36.1 million with diluted EPS of $0.13. On an adjusted basis, net profit was $38.5 million and adjusted diluted EPS increased 17% to $0.14.

In the third quarter of 2025, adjusted EBITDA increased to $77.8 million, and the adjusted EBITDA margin improved 280 basis points to 25.7%.

Moving to segment results, starting with the BDS segment on Page 10. In the third quarter of 2025, our BDS segment delivered strong results with revenue rising 14% to $266.7 million. On a constant currency basis, BDS revenue grew by 17%. The segment outperformed our expectations by approximately $10 million in revenue from product shipments that we previously expected to occur in the fourth quarter. Top-line growth was driven by a record level of high-value solutions, which reached $147.9 million and represented 55% of segment revenue for the third quarter. This was underpinned primarily by strong demand for high-value Nexa Syringes, along with the continued recovery in EZ-fill vials.

Meanwhile, revenue from other containment delivery solutions decreased by 10% to $118.8 million due to a decline in low-value syringes and in vitro diagnostics as we transition to a larger portfolio of high-value projects. This was partially offset by growth in bulk vials and contract manufacturing activities for drug delivery devices. In the third quarter of 2025, gross profit margin increased 400 basis points to 32%. Margin expansion for the BDS segment was driven by the favorable mix of high-value solutions, the financial improvements in Latin and Fishers as the site scale, and the market recovery in vial demand. These tailwinds were partially offset by the impact of foreign currency and certain tariff costs, which were not mitigated.

As a result, operating profit margin for the BDS segment rose to 22.1%, up from 16.9% in the same period last year. In the third quarter of 2025, revenue from the Engineering segment decreased 19% to $36.4 million. This was driven by lower revenue from glass conversion and assembly lines. This offset revenue growth in visual inspection and after-sales services. As expected, the segment's gross profit margin declined year-over-year to 10.4% due to a lower revenue and the current project mix, which included a higher proportion of revenue from the complex legacy projects in Denmark and fewer new orders.

In the third quarter, operating expenses were higher due to certain R&D activities. This was tied to the ongoing development and launch of our next-generation EZ-fill cartridge lines at our Latina plant. As a result, segment operating profit margin was negative 1.1%. Please turn to the next slide for an overview of the balance sheet and cash flow.

As of September 30, 2025, the company had cash and cash equivalents of $113.3 million and net debt of $333 million. For the third quarter of 2025, capital expenditures totaled $54.9 million. Net cash from operating activities increased to $47.2 million. Cash used for the purchase of property, plant, equipment, and intangible assets totaled $48.4 million for the third quarter of 2025. The improvement in net cash flow from operating activities and lower capital expenditures in 2025 led to a positive free cash flow of approximately EUR 260,000 in the quarter and EUR 16.9 million on a year-to-date basis.

We believe we have adequate liquidity to fund our strategic priorities and satisfy our working capital needs through a combination of cash on hand, cash generated from operations, available credit lines, and our ability to assess additional financing. Please turn to the next slide for guidance.

Despite the larger unfavorable impact from currency, we are reiterating our fiscal 2025 guidance and still expect revenue in the range of $1.16 billion to $1.19 billion, adjusted EBITDA between $288.5 million and $301.8 million, and adjusted diluted EPS between $0.50 and $0.54. I want to call out a few updates to our assumptions for the full year guidance. First, with the strength of high-value solutions, we now expect the revenue from high-value solutions will range between 43% and 44% of total revenue compared with our prior assumption of 40% to 42%. Currency translation was worse than anticipated in the third quarter, and we now expect that the impact from currency will be approximately $15 million to $16 million compared with our prior range of $12 million to $15 million. We have fully offset this with higher organic growth. Thank you.

I will hand the call back to Franco.

Thank you, Marco.

In closing, our year-to-date performance demonstrates the strength of our long-term strategy and business fundamentals. We continue to deliver solid results, driven by growth in high-value solutions, innovation in drug containment delivery, and meaningful progress across our investment projects. While challenges remain within the Engineering segment, we've taken decisive steps to improve execution, reinforce our commercial teams, and unlock long-term value. Our commitment to supporting the evolving needs of our customers, especially in high-growth areas such as injectable biologics and [indiscernible] medicines, positions us well to meet the rising demand and deliver differentiated value. The strategic investments we have made, the innovation we have delivered, and the trust we have built with our customers are the foundation of the strong momentum as we look towards fiscal 2026.

With a healthy pipeline, strong market tailwinds, and our clear strategic focus, we are confident in our ability to drive growth, enhance patient outcomes, and deliver lasting value for our customers, employees, and shareholders. Thank you again for your time and continued support. Operator, we are ready for questions. Thank you.

[Operator Instructions] First question is from Larry Solow, CJS Securities.

This is Charlie Strauser for Larry. Could you perhaps give us some more color on the $10 million outperformance in the quarter and on the top line, and then also talk a little bit more about the mix?

Yes, sure. Marco speaking. Thank you for the question. So the $10 million is an acceleration to accommodate customer supply chain needs of sales that were previously expected in Q4. So basically, based on the needs, we decided together with the customer to ship in Q3. Everything is BDS, predominantly in high-value solution, high-performance syringes.

And then high-value solutions. What drove the strong growth in the quarter? And how does the trajectory look going into next year?

I will start with saying that we see strong demand in high-performance syringes, particularly Nexa, as Franco was commenting. Also Alba has good traction, and also important to underline the fact that we can see some recovery in sterile vials following the last year destocking. We see traction in physical vials that is improving compared to the same period last year. Those are the main drivers for high-value solution growth. And this is also the main reason why we decided to update our guidance with respect of high-value products. We now expect high-value products share between 43% and 44% of company revenue.

This is -- if I can complement, Marco, we see that the trajectory is robust. Our big international clients, in particular, the bio customer, also many relative biosimilars. They have a strong demand, in particular, on EZ-fill products like Nexa syringes. We see more and more interest and traction on Alba syringes. And more and more, we see a lot of increase in demand for the cartridges ready to fill on the different format from 1 ml up to 10 ml because they are perfectly fitting for their self-administration for their auto-injector or wearable devices.

Next question is from Matt of William Blair.

On the margin improvement story here, last quarter, you referenced that Latina was positive gross profit margins, but Fishers was not yet those seeing quarter-on-quarter improvement in both. I was wondering if you could update us as to where those stood today, if Fishers had crossed over to gross profit margin positive yet.

Well, overall, we are happy about the execution of the 2 plants. We keep on improving quarter after quarter. As you remember, we started commercial production in Latina in Q4 2023. While in Fisher, we started about 3 quarters later. In Latina, we keep on improving also the financial performance beside the operational KPIs, and we are getting closer to a normalized gross profit margin compared with the segment, still dilutive. About Fisher, as mentioned, is we started commercial production 3 quarters after Latina is a bigger plant, is a greenfield. We are keeping on improving every quarter. We are not positive yet in Fishers in Q3. We are continuously improving also the financial performance, installing more line and better leveraging our fixed expenses. And we plan to go to positive gross profit margin towards the end of this year.

And then on engineering, last quarter, you called out sort of a KPI site acceptance has significantly increased. It seems like maybe a positive indicator. I think now you're saying it's going to take more time to get back to historical performance. What's the right timeline to think about a return to growth? Can that segment grow in 2026? And if not, does the recovery period look like flat revenue? Or does it look more like the down 20%-ish that you guided to in the back half of 2026 -- 2025?

Yes. If I can start from -- on the bigger picture of the engineering on the Q3 of last year, we shared with all of you that the engineering was coming from a big record high in terms of orders. This has also generated also an increase in complexity. So immediately with the leadership team, we launched a sort of what we call optimization plan, in particular, in order to resize the 2 operation plants. One is related to Italy, other one was related to Denmark because at that time, we received a lot of orders for Cal in Denmark. So today, we continue to make meaningful positive operational progress from operational point of view. We further enforced the leadership. We increased the execution on supply chain after service, in particular on project management. So this was translated in Q1, Q2, and Q3 in evidence increase of number of positive site acceptance tests that we have delivered to our customers that have outpaced the number compared to last year.

Even more the positive signal that our customer, once they're starting to run the line, they see -- they give a very positive feedback to all of us today, where we are. The pipeline that we have with our clients, both on historical clients and also new clients is healthy, all the pipeline. What we see, however, that is a slow delay in the conversion into orders for mainly 2 reasons. To our big clients, key customers, they were waiting the final positive acceptance test of the line #1 before to place the order #2 and #3. Second, also, we start to see some of our customers that are taking a little bit more time to reevaluating their manufacturing footprint.

So all overall, this temporary headwind of the engineering, we see that is month after month progressing even more from execution point of view, also looking the pipeline that we have with our customers is giving very positive feedback for the future. Just to underline the last comment, the industry in this moment is very dynamic. We see more and more big customers expanding capacity. We see even more -- a lot of clients all over the world upgrading their technology because the new reglementation mostly linked to our next one. And also, we see this we want to take even more benefits.

So thanks to the onshoring in United States, some customers are going to add even more investment. So this is a good environment where we continue to grow in the next quarters.

Next question is from Michael Ryskin, Bank of America.

In your prepared remarks, I think you made a callout about a biosimilar opportunity or essentially winning some biosimilar business, specifically for GLP-1s. I was wondering if you can talk bigger picture about biosimilars and how you see that opportunity contributing to Stevanato's growth in the coming years. Specifically, if you could talk to what part of the portfolio benefits that? Does that tend to be high-value Nexa? Or does that tend to be more bulk products or more routine products, standard products, whether that's incremental margins or top line? And just broadly, how important are biosimilars to you today?

Yes. So usually, when biosimilars are entering into the market when the product is going out of patent, usually is a benefit for a company like Stevanato because this can help to enlarge revenue in the single therapeutic drugs. So on the strategy of Stevanato always was extremely important to be part of the originator from the very beginning. This was valid on insulin, on heparin, anesthetic, mass, and also even more on GLP-1s that our big historical insulin customer engaged us many years ago, and we are deeply engaged with all our product portfolio with our originator. But also in parallel, Stevanato is extremely active with all the -- with our tech center, both here in Italy and Boston to try to maximize the validation in all the biosimilars. In fact, today is exactly what is going to happen.

We are deeply involved with all our EZ-fill high-value product platform. We have a program of Nexa syringes. We have a program on cartridges ready to fill. In fact we were just sharing that we win a big program. Even more, we have on biosimilar on JP-1, new program on pipeline for our Alina Pen. So to your question is, yes, biosimilar helping to further increase the revenue. Usually, when the product is going out of patent, 70%, it will be revenue around originator, 30% historically revenue that will move inside of the biosimilar is exactly the strategy of Stevanato to be present in everything that is injectable, originator, and biosimilars.

And then a follow-up, if I can, on the guide for the year, and you called out FX currency is a little bit more of a headwind by, I think, EUR 2 million at the midpoint. It sounds like our assumptions for engineering should be a little bit worse, and you talk about organic offsetting it. So just kind of means that BDS is coming out a little bit better. You saw the pull forward into 3Q, but am I interpreting correctly that we should expect a little bit of a better pull forward and better result in BDS 4Q as well, even despite the pull forward just to offset currency in engineering?

Very good points, Michael. We are reiterating our guidance. Nevertheless, there are some moving pieces. You mentioned a couple of million more headwinds in currency effect because Q3 was average EUR 1.17, the euro-dollar exchange rate, a little bit higher than our expectations. We are doing better in high-value products. We expect now to have high-value products as a range of overall revenue between 43% and 44%, so significantly higher than after second quarter. On the other side, we are giving priority to high-value syringes rather than accelerating the non-value syringes. And this is also moving the mix.

As Franco mentioned, orders intake in Engineering is not at the speed that we were anticipating. So in our model, we took into account of the risk of softer second quarter, but we prefer to adjust our model with a couple of million less. So all overall, we see impact from currency, some slowdown in engineering, and acceleration in high-value products, bringing more margin to BTS segment.

The next question is from Paul Knight, KeyBanc.

Could you tell us what is utilization rate in Fishers and utilization rate in Latina? And with it how many years to get to full capacity, if that's possible to answer?

In Latina, we are continuing -- sorry, in Fishers, we are continuing to install high-speed line for syringes. Practically, we install the line. We do the internal validation. We do the customer validation, we start to ramp up. And this installation of the line, we will continue throughout also 2026 to '27. On the top of this, we are starting also to add capacity for Via in both bulk EZ-fill configuration and next year, we are adding capacity. We will add capacity for Alba technology. And like we already mentioned to you, we are extending a big program in our building for hosting a production of auto-injector in the next year. So in the next 1 to 3 years until end of 2028, we will continue to ramping up capacity. The goal is to be in the full potential at the end of 2028. You remember, we -- the goal was to invest $0.5 billion to translate end of 2028, $0.5 billion of revenue.

And the -- you're mentioning onshoring quite a bit. I guess what you're hearing is that because of tariffs and pricing, et cetera, your customers are evaluating where their factories may be in the future, but it seems like it's a step higher, I guess, possible demand?

Yes. We start to see starting from -- after this year was end of March of 2025, many clients that came in to raise interest to our U.S. facility with 2 type of interest, or because they were reevaluating their footprint, because maybe the region they were looking to produce in a different region of the world. And now they are thinking to put capacity in the United States, they are even more interest to boost and speed up the validation of our plants. And this is, let's say, what was already inside of our guidance. The good news is that we see more and more clients that are looking to totally change their supply chain, and this is going to become more new opportunity for Stevanato because we are already in a very advanced stage of ramping up capacity in Fisher, and they like the idea to speed up the validation of our plans in Fisher in particular for our EZ-fill product.

Next question is from Mac Etock, Stephens Inc.

Maybe just a follow-up on the order pull-through. Can you confirm if that's a single customer that's pushing forward $10 million in orders? And secondly, as you look towards 4Q, do you expect those volumes to continue from there? Or is that more of a onetime item?

No, we are not confirming that. We are not so concentrated as a customer revenue. It's a bunch of customers in the -- especially in high-value products that are accelerating some supply chain needs, but it's not a single customer.

I'm sorry, Mac, I missed the second part of your question.

I was just curious if those orders are going to repeat in 4Q, just given the pull forward.

I see. No, that's not expected. It's a pull forward from Q4 into Q3 on that batch of orders from those customers.

And then secondly, on engineering. You mentioned the United States manufacturing announcements. I'd just like to get a sense of what you're hearing within your Engineering segment and the customer conversations you have there, and when that might translate to more meaningful order growth for engineering and maybe also the BDS segment as well. Obviously, these are longer-dated opportunities, but I just want to get a sense of what you're hearing.

On Engineering segment, what we see that certain -- there are, again, very similar to the question that Paul asked to us. Certain clients, they are reevaluating their footprint. Maybe originally, we were looking to invest capacity in Europe or through certain CMO, and now they are seriously reevaluating or they have already approved to extend their capacity in the United States. And this is why also one of the reasons why we are taking a little bit more time to confirm the order and the specifications. Other customers, they are also changing their type of supply chain. Maybe they are starting to further increase the outsourcing through U.S. CMO, or to use to further increase the capacity of their existing plants. So all overall, we see a positive trend in the United States where customers are starting to more and more increase their platform for fill in United States.

Automatically, once they will build the factory, there will be even more opportunity for our Fisher plants because automatically, we will have more opportunity for syringes Nexa, syringes Alba via EZ-fill devices.

Next question is from David Windley, Jefferies.

I wanted to follow up on Paul's question on capacity, put maybe a slightly different spin on it. On the HBS guidance for the year, the previous guidance for the year at, I believe you said 40% to 42% and 1Q started off pretty favorable to that. And I think at the time, the commentary was that your ability to see HBS continue to rise as a percentage from that first quarter favorable level was somewhat gated by capacity and when lines were coming on. So this quarter, obviously, you were able to pull that $10 million forward. The trends have been pretty favorable. I guess I'm coming back again to Paul's question about capacity and utilization. Are lines in place to continue to support HBS outperformance, but for the pull forward, I guess, in the near term? Or are you kind of in a position where you have to wait for additional lines to be validated before you can see HBS continue to move higher?

Today, David, the demand -- let's say, in the last years, most of our investments were just fully dedicated to build capacity in high-value product, both in Italy in the 2 plants in the United States. Today, is it true? We -- the demand is really driven by the capacity that we have put in place in all the locations. And most probably, we will continue in this way. What is important to know that there is an intense program continues to install capacity in all the format just to translate in fact. In Latina, we continue to install capacity for syringes Nexa. In Latina, we will install capacity for syringe with double chamber. We have this huge program to install several hundred million for capacity for cartridges ready-to-fill. In Fisher, it is the same. We continue to add capacity for Nexa syringes. We will add capacity for Alba, and we will adding capacity also via Ready-to-Fill. This is only for EZ-fill.

On the top of this, in Germany, we are launching a new big-sized clean room that is going to host produce Alina Pen. And also, we have space to further duplicate in the future in the United States. So we are so focused to intensively execute all our investment. We will add several hundred million of additional capacity in the high-value product until 2028 in order to really meet all the program and execute the contract that we have with our customers.

Follow-up question around vials. So you had highlighted that the particular pressure on vials, I believe, if we go back to '24 was acute on your margin and kind of post the pandemic and post the decline in vaccine-related activity. You're seeing recovery in that. I'm wondering what the drivers are of recovery in vials. Is it kind of the recovery of orders from your traditional clients? Or are you seeing new products, perhaps participation in GLP-1s or something like that, that are driving an uptick in vial orders?

Yes. David, let's make a parallel. Bulk via, you have to consider like a big ocean with several hundred customers that in the last 2 years, they started to normalize their inventory. And today, since the last 4 quarters, we continue to see positive signal to go back on the normalization. And in fact, I think throughout 2026, most probably we can say that we'll be back to pre-pandemic period for Bulk via. EZ-fill via is more a niche. It's more, let's say, we have some big commercial customer, but it's where we see new molecule launching on the ready-to-fill vial. So we also have seen a positive traction with particular also increase of orders with new customers on EZ-fill via because remember, we shared that the customers were looking to clean the inventory of bulk via, and then because they have the EZ-fill flexible line for filling EZ-fill vial, they are starting to place new orders.

So all overall, bulk, we are moving to a normalization. On EZ-fill, we see also a new molecule that are going to use this type of primary configuration, EZ-fill.

Next question is from Doug Schenkel, Wolfe Research.

So you had a really strong high-value solutions quarter that was partially offset by standard bulk coming in a bit light of our model. I'm just wondering, based on your commentary, it seems like this is just timing. Is that right? Or is there some other more durable shift in mix and demand that we should be contemplating as we update our models?

Besides what Franco just said about the long-term view and the adoption of the sterile configuration for the year, there are a couple of factors to be mentioned. First of all, we mentioned the acceleration in the BDS volumes previously expected in Q4. This is mainly in high-value products. So it's a pull forward from Q4 to Q3. Then in Q3, we mentioned also the fact that other containment delivery solutions are going down compared to the same period last year. And this is mainly driven by in vitro diagnostic and non-value syringes. More specifically, on syringes, we have some flexible lines. So our priority is to switch the production and the revenue to high-value syringes rather than staying in the low-value syringes. So we have this type of acceleration in Q3 with the Nexa syringes and EZ-fill vials recovery compared with the same period last year.

If I can add a little bit more in a broader picture, the goal of Stevanato in the next 5, 10 years is to become a fully solution provider to our customer, where we want really to sell the fully integrated system. This is the reason why, for example, the Planto Fisher is a campus that is going to provide multi-capability all in high-value product. Also, this is in combination with the fact that in the last year, most of our investments are fully dedicated to high-value products. So you can see some fluctuation quarter-by-quarter, but the clear goal of Stevanato in the next years is really to be laser focused on serving the full system on high-value products to our clients.

I was trying to parse out trend versus transitory. So that's great. An unrelated follow-up. There have been a number of recent headlines around large pharmaceutical companies essentially making deals with the U.S. government around drug pricing. And recently, it's been speculated that Lilly and Novo may announce a deal as soon as today. Is it logical to assume that a significant price drop and thus some elastic response in terms of market expansion via Medicare and Medicaid could be an absolute good guy for packaging suppliers? I'm just wondering, as you think about these settlements potentially leading to an increase in volume, wouldn't that, by extension, be good for Stevanato?

Yes. We saw this announcement also today, we letter today, there will be further announcement. What we can say is very similar to the question that we received before about the biosimilar. Every time that biosimilar is coming on board, this can help to further enlarge revenue for all the industry. Usually, what we say, just to put in the Stato position, with our clients, we have a long-term contract in place. The cost of primary packaging also is product or auto-injector is really minor compared to the overall cost of good of the drugs. So usually, this we see more like a net positive effect for company like Stemato because it will translate in more orders for our products.

Next question is from Patrick Donelly, Citi.

Franco, maybe to follow up on Dave's question on the vials. Can you just talk about where we are on the inventory side? I mean it feels like destocking far less of an impact. Are we fully past that? What's the latest you're hearing from customers on that front, and confidence on the go forward there?

What we see that all overall, they are starting to normalize their inventory. In fact, this will translate in more normal forecast to -- from our customers. Usually, with our customers, we work with what we call 3 to 5 years agreement. Then we have 12 months forecast, 3 months confirm order if more bulk-related, 6 months confirm order if it's more EZ-fill related. So today, all overall, we see that clients are starting to normalize. One KPI that I can share with you, if you really compare last year with this year, the revenue around vial, if you can take a blend between bulk and EZ-fill, we increased 12% compared to last year. So we see continued month after month positive signal practically everywhere. We are talking about Europe, United States, Latin America, and Asia. We have a portfolio of 700 customers, but all overall, the macro trend is moving slowly in a good normalization direction.

And then I guess looking at next year, I know you guys LRP is out there at kind of that low double-digit range. It sounds like throughout this call, it's been a lot of positives between some of the regulatory stuff, obviously, destocking behind you guys. The new facilities ramping. Any reason why next year wouldn't be in that low double-digit range? I think the Street is around 10% next year. I just wanted to take your temperature on that.

As you know, we will be providing our detailed guidance for 2026 next quarter. Nevertheless, what we can tell you is that we see today positive trends for high-value solution adoption. We see Fishers and Latina ramping up in the right way, in line with our plan. We are executing our plan in engineering. So we have a positive approach towards 2026. We need, obviously, to finalize our internal budget and objectives, but this is what we can tell you today.

The last question is from Curtis Moiles, BNP Paribas Exane.

So first, I wanted to just maybe get a little deeper into the High Value Solutions guidance for the year. On my kind of rough math, I think it implies for Q4 a range of 39% to 42% of revenue versus 45% year-to-date or so. So could you maybe just give a little more color around the assumptions you have there? And is that kind of based on customer orders or anything else to be aware of?

Yes, correct. Our guidance are implying 40% to 41% in Q4, and this is driven by the backlog we have in our hands, and by the fact that, again, we have been able to accelerate some revenue in Q3 that were previously expected in Q4. So as Franco was saying, there can be some quarterly fluctuation or acceleration depending on the mix of orders we have in that specific quarter. Nevertheless, in the medium term, both in the in the past, we saw a steady growth of the share of our high-value products, and we expect to keep on installing capacity and keep on growing in the share of high-value products.

If I can also maybe add a little bit more color from product customer, and therapeutic area point of view, we see that we are growing in biologics a lot. And inside the biologics, we see traction on Nexa syringes where clients is using some autoinjectors. We see more and more increased demand from product in Phase II and Phase III, but also commercial on Alba. This is where we are extremely excited because they have a superior performance in the result of reduction of release of visible particles, Cartridges to fill on different formats from 1 ml up to 10 ml are good because it's very easy to be insert in the complex device cartridges. Also our Alina Pen is starting to feel good pipeline, new prospect on particular on biosimilars.

So what I would like to share with you that the pipeline is spread with a very nice number of clients and therapeutic drugs in all our product portfolio. We are not just localized in one product or one customer.

And then quickly on contract manufacturing. I know the press release called out strong growth in Q3. And then you mentioned Fishers should start commercial activities for contract manufacturing, I think, end of '26, early '27. So can you maybe just give some high-level thoughts about how we should think about this going forward? Is that going to become a more meaningful growth driver for the business?

So we are building in Fisher this production department dedicated for one high runner for auto-injector for one of our big customers that already buy from us the Nexa syringes. Today, our strategy, our approach on drug delivery system is our main goal is to deliver our IP product to our Alina, Aidaptus, and Vertiva products. This is why we're building this big clean room in Germany that we have already -- we have to execute the pipeline with our customer. It's also true that we have going to -- we have already contracted in a selective way that we can provide the auto-injectors or some pen to some customers that they own the AP and when we are already the supplier with our Alba syringes of cartridges to fill off syringe Nexa, practically in order to have more bigger contract, we are also serve this product in a form of CMO business model.

There are no more questions registered at this time. Thank you.

And that concludes our call for the day. So thank you for joining us, and we appreciate the support. Have a great day.

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