Stevanato Group S.p.A. Q4 FY2025 Earnings Call

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. 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 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 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 required investing in key projects in Fishers, Indiana, and Latin Italy to increase capacity for high-value syringes. In 2025, the Nexa syringe was our fastest-growing product driven primarily by growth from GLP-1s. This should come as no surprise as the syringe is by far the most prevalent format for GLP-1s in the 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 characteristics that resonate with our customers. For example, our Nexa platform features high mechanical resistance, can be produced at scale, and 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, 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 incretins 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 expectations, 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 plans 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 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 applications that were unrelated to GLP-1s. These two customer projects are expected to play an important role in 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 Fishers. 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 the 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 rightsized operations, streamlined processes, and increased standardization across delivery teams. We reinforced our project management office, driving improvements in project planning, process harmonization, contract management, and customer engagement. We also consolidated offices in Denmark, moved the visual inspection activities to Italy, and acquired a new location in Bologna to access strong technical talent. This restructuring has 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 enabled 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 tailwind, anchoring our position as a market leader in high-value products. Importantly, our best product set enables us to achieve a 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 a 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 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, representing 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 three factors: first, a favorable mix of high-value solutions; second, the year-over-year improvements in Latina 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 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 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 drove 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 2026 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 digits 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.

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 remains 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, differentiated 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. The 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 GLP-1s accounted in 2025 for approximately between 19% to 20%, and we have delivered our growth in 2025 compared to 2024 about 50%. If you do an estimation and look at our outlook for 2026, we think that there will be a growth in the range of mid-teens.

That's great to hear. Regarding the Engineering segment, it sounds like there's significant progress with the operational plan and facility optimization, which is encouraging. However, the guidance for engineering in 2026 and the mention of low order intake is disappointing. Specifically about order intake, I'd like to understand what might be causing this. Is it a market weakness, or were you so focused on operational improvements that you missed some opportunities? I'd like to know why the situation deteriorated in the second half of 2025 and how quickly you can regain commercial momentum.

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 going to move to injection, and when there is also self-administration, 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. One big KPI is the fact that there are repetitive orders with our historical bigger clients. So, what I would say is the fact that the sales cycle because of the technicality of this line is taking a little bit longer than expected, translating into maybe receiving the order, the confirmation of the order in January or February can be easily postponed a few months. This is why we took a more prudent approach. Another important element to underline in 2025 is that the focus of the engineering division is really to make strong operational progress in terms of management and execution. The good KPI that we can share with you is that the number of site acceptance tests increased more than double in 2025 compared to 2024. This is extremely important. At the end of 2025, the company focused our attention on executing and delivering on this line. Now we are entering the new ways to new orders, repetitive orders with our clients. This takes a little bit more time to meet our expectations. 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 and 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 will play a role in 2025. Practically, we run approximately full capacity intervenor. And also, this is translating to the ramping up we’re doing in Latin, particularly with good success, and the ramp-up we’re doing in Fishers. So also in 2026, we will follow this positive momentum where the demand is robust, practically in all our high-value products, but capacity has played a role in 2025. It will play a role also in 2026 for Stevanato Group.

That's helpful. And then maybe one for Marco. Just on the margin expansion here. Again, obviously, the mix helps to a 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 it was 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.

Thank you for the question. At the Stevanato Group, our guidance includes a projected revenue growth of 7.5% and 8.3% on a constant currency basis. We expect margin expansion of 0 to 30 basis points at a consolidated level. The operating profit margin is forecasted to end at 50 basis points based on our guidance, with an adjusted EBITDA margin increasing by about 150 basis points. Our gross profit margin faces both challenges and advantages. On the downside, we anticipate higher depreciation compared to 2025, with an increase of approximately 150 to 170 basis points for the industrial business. Additionally, we have currency headwinds factored into our guidance. On the positive side, our two new facilities are showing improved financial performance each quarter, both in Latina and Fishers, which supports our goal of expanding profitability. Regarding the market and revenue guidance, we expect better margins in 2026 compared to 2025, primarily due to the mix of projects. We are focusing on securing more textile contracts with customers rather than customized lines as we did previously. Furthermore, we will utilize the optimization plan we implemented in 2024 and 2025, which is reflected in our model and guidance for 2026.

Next question is from Doug Schenkel, Wolfe Research.

Good day, everybody, and thank you for taking the questions. I have three, 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 GLP-1s, 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 we are just executing the forecast 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 parameters that were clear to our clients. So what is beyond 2026 is a little bit too early to make any type of grand predictions because there are a lot of moving pieces in the GLP-1 space. We see the big originators that are moving between also the pen injector; they’re launching also cartridge new requirements, thanks to their fixed dose span. We also see a lot of biosimilars in the market that are very active in increasing both syringes and cartridge capacity. So the GLP-1 in the next decade will continue to be a powerful tailwind for Stevanato and for the industry, but it's a little bit too early to understand what the final configuration will be between originators, biosimilars, pen versus auto-injectors.

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.

Most of the GLP-1 products are under the syringe format Nexa, which is a high-value product, or cartridge is to feed that as well, which is also a high-value product. We have biosimilars with a lot of requirements through our Alba sy framework, a high-value product. This is practically the tendency; I would answer you that GLP-1 is going to be configured as high-value products because of the EZ-fill or through the Alina platform for the Stevanato 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-incretins? Are we kind of generally bucketing all of that together for definitional purposes?

Correct. I confirm.

As you consider the Nexus syringe as the key contributor to growth in 2025, Franco, you mentioned in response to Doug's question that the outlook for 2027 and beyond is somewhat uncertain due to the transition happening in 2026 regarding the guidance for the GLP-1 or obesity category. Is that still primarily driven by the Nexus syringe, or do you anticipate that the growth from cartridges, as you indicated in your prepared remarks about increased capacity in the next phases, might start to lead as we progress into 2026 and beyond?

In 2026, Nexa syringes will continue to play an important role in the GLP-1s, David. Beyond 2026, it’s 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 originators 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.

Could you provide an estimate of the impact of tariffs and foreign exchange on margins? It would help us understand the gross improvement resulting from the shift to HBS, balanced against these headwinds.

Yes. Sure. We mentioned the top line about EUR 20 million currency headwind, assuming our model, EUR 1.20 exchange rate. 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 the 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 EUR 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-1s for this year?

No, I think it is core because the pharmaceutical industry, in particular, all the originators, are launching the products on the market in 2025. There was massive preparation of the supply chain. Now to have 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 has to really go commercial. So this is what we see through our originators also from our biosimilar clients.

Paul, perhaps it's best to think about it as 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 products. What's driving that? Is it share gain, 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've been developing 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 is that more than 60% of biologics will be delivered through injection or 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 in Alba program. Syringes can move from 1 ml to 2.25 ml to 3 ml to 5 ml cartridges is the same format because both cartridges and syringes will be inserted onto pen auto-injector. Also, we are heavily investing in capacity for device space for our Alina clean room that we're building up in Germany, and also for other selective program in Germany. Also, we have a big contract with an American client in Fishers. So everything is going to sum up in that where there is an injection; we want to be #1 or #2 in this product. 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 biologics and biosimilars, mostly from the United States, in Europe, and also growing rapidly. This is a big long-term strategy for 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 categories are practically monoclonal antibodies. We have a wide range of biosimilars spread in different regions of the world. We are focused on monoinflammatory diseases and rare diseases, all products that are going to require an injection or a certain medication. So there's a combination for Stevanato over Nexa syringes, or our easy-fill technology will be a great value in this market. So, we anticipate good growth in this area as major clients will seek to bring their biologics to market.

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

Yes. Today, the price of Fishers plays an important role based on the decision we made in 2002, which was the intent to develop these plans. This was really the purpose to be the campus that was going to mirror exactly the capabilities we have in Europe, in particular for easy-fill technology. With a different range of syringes, varying sizes, vials, and drug delivery systems. Today, we see that many clients are addressing their supply chain in the United States, and the fact that we are present in Fishers plays a crucial role in enabling us to help accelerate additional opportunities for customers to utilize this supply chain.

Next question is from Larry Solow, CJS Securities.

Great. I guess just lots of information about 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, still be driving 10% plus growth to Stevanato on a top-line basis? What's your confidence level on that?

I believe that GLP-1 will continue to provide a positive impact in the future. The encouraging aspect of GLP-1 is that we consistently share this information with our clients. We observe that the number of patients is steadily increasing each quarter. Since the launch, we have informed our clients that they can expect more advantages than disadvantages in attracting new customers. We are noticing new opportunities for Stevanato, particularly with Nexa syringes, cartridge filling, and our device segment. I foresee this as a long-term advantage for Stevanato that will help enhance our biological revenue. However, I am uncertain if, in five years, growth will remain in the double digits, as biologics are also experiencing rapid growth in other therapies, and these products are all high-value items such as Alba and our pen injector.

That's all fair. What about the RTU vials you mentioned 2025, obviously, had a nice rebound after 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 our steric ratio. And this is where we see more traction also for 2026, where we expect mid- to high single-digit growth, predominantly driven by the configuration. Another point, orders intake in '25 was double digits higher than 2024, so we see there is not a sharp increase, but we see increasing 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 Latina is a little 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 in the right direction. We see quarter-after-quarter better financial performance, the site operational performance, and we are growing quantities 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 in Fishers. There’s a difference, as mentioned many times, between the two plants. Latina is a smaller plant that has been ramping up more rapidly than Fishers, which is a more complex plan with different types of products, syringes, vials, drug delivery systems. So we are progressing; we are improving; we are going in the right direction, but it will take longer compared to 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 Latina, we have continued the installation of high-speed lines for syringes. We are continuing to orient our regional customers to national customers. And this year, we're going to install the first high-speed line for filling, but the goal is to do the validation and start generating commercial revenue in the beginning of 2027. Fishers continues to perform audits for our big international clients to become particularly relevant in the United States. In fact, we have doubled the number of audit validations in 2025. This is an important milestone that we are advancing with the build-out of this bigger apartment production that is still expected to produce out 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 one-third of the market. And I would say, investor expectations on that metric have moved quite a bit since the oral 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, we are focusing a lot on the changes in the market. We have many interactions with our clients, including both originators and biosimilars. We pay attention to the insights shared by key opinion leaders and are aware that our peers and customers, including banks, are well-prepared for this. We plan to confirm that the division between injections and orals remains consistent, with injections accounting for about 70% and orals around 30%. Additionally, we anticipate that the number of patients worldwide will keep growing monthly. We do not see any cannibalization between injections and orals since they cater to different patient groups. From a supply chain perspective, the pharmaceutical industry continues to invest heavily in production lines for syringes, cartridges, and pen injectors, both among originators and biosimilars. There is a significant investment program for injection technologies planned for the upcoming year globally.

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, these non-biologic products are very rich, but may not be in big sizes; it's difficult to go in the range of hundreds of millions, more likely in the range of tens of millions. They are looking for the specifics of this large molecule, looking for particular drugs, particular primary packaging with particular coating, for example, we are engaged with our Alba syringes because they have a special plasma coating. We are engaged with particular silicon syringes with particular Nexa syringes and also different formats. We see more and more moving to 3 mls to 5 ml today. That's something that is a little bit new on the market. Usually, the auto-injector pens used to stop at 3 ml. So overall, we see numerous programs spreading across many customers; with the top 25 customers and some hundred of biosimilars that are extremely active to build capacity in this way. So what we are doing at Stevanato Group is building a supply chain through our engineering division, with particular lines dedicated to be able to be fast and flexible to serve these customers. We want to keep a few strategically positioned plants to be able to serve this wide range of products that are moving from syringes to filling through our device capabilities. We are ready with our auto-injectors, in particular also with our pen Alina or in a selective way when we already serve the syringes and the cartridges, we are afflicting CMO. So I want to reiterate our real strategy in Stevanato is to say that where there is an injection, self-administration; we want to be always the #1 or #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 a selective approach with customers, leveraging this particular case, the integration between syringes and injectors; all the capabilities we have to talk 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 vials and cartridges?

It's a level of detail we don't provide. However, I can share that we expect to see a double-digit increase in our high-value solutions next year, in the low teens when considering constant currency rates. We are experiencing growth in both this area and other biologics for the upcoming year.

And then also just I think earlier in the call, you mentioned that you could consider some additional actions around pivoting away from the non-high-value solutions 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 includes the investment or the attention of all our colleagues on building capacity and becoming the partner of this biologic market for high-value products, and this as a whole, for example, what you had to do to select, we may pivot away to privatize certain historical products that are good to produce in specific regions of the market, but particularly in the United States, the goal is to focus on becoming #1 or #2 in new products. For example, in Germany, we have built this new big clean room in order to host the production for lines originally noted in this clean room; we used to produce standard products, but we have decided to use this space; this important space will pivot to ramping up our priority towards biologic high-value products. And when there’s no strategic customer behind the market, we try really to do some reallocation.

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