Stevanato Group S.p.A.

expanding margins, and a growing mix of high-value solutions. We finished the year with record revenue from high-value solutions, which represented approximately 30% of the revenue for fiscal 2022. For the fourth quarter, new order intake totaled 237 million euros, And we ended 2022 with backlog increasing 9% to 957 million euros. As expected, growth in backlog was partially upset by a lower level of orders to support COVID-19. Excluding COVID, our backlog increased 21% compared with the last year, reflecting favorable demand for new customer programs. Unlike APE, our first rate execution in 2022 enabled meaningful progress against our four strategic pillars. First, we advanced the build-out of our industrial footprint to add capacity in premium products to meet demand and drive growth. We also signed an agreement with BARDA to further expand prior capacity in fissures. Second, we continue to grow our mix of high-value solutions in 2022. The shift to high-performance, high-value products has been led by pharmaceutical innovation. New classes of treatments require specialized drug containment to ensure the highest integrity of the treatment, and we remain ideally positioned to capitalize on this trend. Third, we continue to fuel innovation by investing in R&D and partnering with best-in-class players to fortify our marketer-leading position. In 2022, we launched our next-generation Easy Field Map platform and advanced our portfolio of drug delivery systems. Most recently, we entered into a partnership with Transproject to expand our portfolio with the COC and COP syringes. This allows us to offer the broadest available suite of market-leading glass and plastic syringes. And lastly, we continue to build a pipeline of multi-year opportunities in high-growth hand markets like biologics. As we further advance these strategic imperatives in 2023, we expect that our efforts will yield sustainable organic growth in the years to come. On page nine, we are refining our capital spending plan to optimize our global footprint amid the rising demand. In the U.S. and Europe, future demand has outpaced our expectations since our IPO, and our modular approach gives us the flexibility to adjust our plans accordingly. Over the last 18 months, we have worked alongside customers to better address their needs. We did end visibility We are accelerating investments in fissures to capitalize on the elevated demand outlook led by expected growth in biologics. Concurrently, we are tapping the brakes on the phasing of our China expansion so that we can prioritize projects in the U.S. and Italy. Our refined capital plan for fissure focuses investment in the U.S. market where demand has been climbing for high-performance drug containment to meet the needs of sensitive drug classes, such as GLP-1s, monoclonal antibodies, and mRNA applications. We have updated our industrial plan to adapt to these favorable market trends. First, we continue to see surge in demand for syringes. To capitalize on this, we are adding approximately 60% more syringe capacity in fissures compared with our initial plan. This includes other syringes which are purpose-built for biologics. Turning to vials, we expect to double the capacity in the U.S. for ready-to-use vials as we prepare the commercial launch of our next-generation easy-fill smart platform. Let me cross-work the changes to our accepted capex for fissures, starting with our initial planned investment. At the time of the IPO, we assumed capex for fissure of approximately 150 million euros. In March of 2022, we entered into an agreement with Bandar to expand buyer capacity for both easy fill and bulk buyers. This is estimated at approximately 175 million euros. Most recently, we decided to invest an additional 175 million euros to further expand much needed capacity for Nexa and Alba syringes. When you add it all up, the total capex for Fisher is approximately 500 million euros, This includes the portion of campus that is supported by BALDA. We remain on track to launch validation activities in Fischer's in the fourth quarter of 2023. And we expect that the revenue will begin to ramp in a meaningful way in 2024. Moving to 2023. And we expect that the revenue will begin to ramp in a meaningful way in 2024. Moving to slide 10, in Piombino Desert, the new building is complete. Validation activities are well underway, and we started a commercial batch production. In Latina, we completed the largest site of the CAPEX. The site is on track for validation activities over the summer. with commercial production beginning in the fall. We anticipate temporary inefficiency through the natural progression of startup activities as volumes and revenue grow over time. With the favorable demand in the U.S. and Europe, we are slowing down our expansion in China. China is strategically important, but our existing operations are currently sufficient. We are prioritizing our CapEx projects in the U.S. and Europe, where our customers have the most pressing needs and we can provide the greatest value. With that, I now hand the call over to Marco.

Thanks, Franco. On slide 12, we ended 2022 with strong financial results. For the fourth quarter, revenue increased 26% to $292.1 million, or 23% on a cost and currency basis, driven by growth in both segments, the shift to high value solutions and currency. Our top line results for the fourth quarter were better than expected due to the recognition of revenue that was previously forecasted in Q1 2023. This includes revenue from certain engineering projects and COVID-19. As a result, revenue from COVID-19 was higher than our forecast and represented 12% of total revenue. We are making relevant progress growing our mix of high-value solutions, which increased 31% to $87.2 million for the fourth quarter. For the fourth quarter, gross profit margin increased by 290 basis points to 34.3% due to higher revenue, a favorable mix, a better leverage of fixed costs, and the recovery of inflationary costs. Operating profit margin in the quarter increased to 21.6% and included the benefit of 3 million euro in other income. related to a joint development project. Excluding startup cost on the new plant, adjusted operating profit margin was 22.2%, compared with 18.8% in the same period last year. On the bottom line, this resulted in a better than expected net profit of $48.3 million, or $0.18 of diluted earnings per share, Adjusted net profit of $49.6 million, or adjusted diluted APS of $0.19, and adjusted EBITDA totally $81.9 million, reflecting an adjusted EBITDA margin of 28%, which was up 270 basis points over last year. Turning to slide 13, on a full year basis, Revenue increased 17% to $983.7 million, driven by growth in both segments, the mid-shift to high-value solutions and currency. On a cost and currency basis, revenue grew 13% over last year. As expected, full-year revenue growth was partially offset by lower revenue from COVID-19, which represented 11% of total revenue in 2022, compared to 15% in 2021. As revenue from COVID-19 rose off, we have been successfully backfilling the decrease with new projects across the broad range of therapeutic areas. For 2022, high-value solutions grew 41% to a record of 293.2 million, and represented approximately 30% of revenue. Our solid growth, several mid-shifts in operational efficiencies led to expanding margins for the full year. As a result, gross profit margin for 2022 increased 110 basis points to 32.5% despite inflation. While we recovered nearly all of the inflationary costs through price adjustment, it had a dilutive effect to gross profit margin in 2022. For the full year, operating profit margin for fiscal 2022 was up 40 basis points to 19.6%. Excluding startup costs on the new plans, adjusted operating profit margin increased to 20.2%, compared to 19.2% last year. This led to solid delivery on the bottom line, with net profit of $143 million, or diluted earnings per share of $0.54 for 2022. On an adjusted basis, diluted BPS increased 17% to $0.56. For 2022, adjusted EBITDA increased 21% to $263.6 million, resulting in an adjusted EBITDA margin of 26.8%. Let's move to segment results on slide 14. The biopharmaceutical and diagnostic solution segment once again delivers strong results for the fourth quarter and full year. For the fourth quarter, revenue increased 25% to $241.5 million, and 21% on a cost and currency basis over the prior year. Revenue growth was mainly driven by a 31% increase in high-value solutions and a 21% increase for another containment and delivery solutions. In Q4, gross profit margin increased to 37.3% due to strong revenue generation, the federal mix, better leverage of fixed costs, and the recovery of inflationary costs. Operating profit margin for the segment was 23.7% in the quarter. For the full year, revenue grew 15% to $799.7 million, and 11% on a cost and currency basis, compared with fiscal 2021. Revenue from high-value solutions grew 41% while other containment delivery solutions were up 4% over the prior year. For the full year, gross profit margin for the BDS segment increased 120 basis points to 34.3%, and operating profit margin improved to 22.8% despite inflationary headwinds. Financial results for the engineering segment were better than expected in the fourth quarter and revenue increased 30% to $60.6 million, mostly due to the timing and progression of projects. For the full year, revenue increased 23% to $184 million, driven by growth in all business lines. For the fourth quarter of 2022, gross profit margin decreased 50 basis points to 21.2%, mostly due to project mix, and operating profit margin was 12.2%. For the full year, gross profit margin improved 230 basis points to 21.6%, mainly driven by contribution for more accretive business lines. as well as ongoing business optimization effort. As a result, operating profit margin improved to 13.8%. On slide 15, as of end of December 2022, we had a positive net financial position of $46 million and cash-in-cash equivalent of $228.7 million. For the full year, net cash generated from operating activities was 103.3 million, reflecting increased working capital to support growth and higher inventory to mitigate supply chain risk. Meanwhile, cash use for investing totaled 243 million to support our expansion plans. This resulted in a negative free cash flow of $137 million for fiscal 2022. In February 2023, we secured two loans, totally $130 million for our ongoing investment in growth platforms. The first five-year loan was financed through Bente Paribas for $70 million. The second loan for $60 million was financed through Casa Deposita Prestiti. Both loans have a two-year drawdown so we can access the capital when needed. The loans shore up our balance sheet and provide us added flexibility for capital deployment. Our balance sheet is healthy, and we believe we have adequate liquidity to fund future growth. Turning to CapEx on slide 16. In 2022, capital expenditures were $302.6 million as we continue to invest in our strategic global expansion. As Franco noted, we are focusing our force in the U.S. and Italy to capitalize on rising demand. Consequently, we are forecasting capital expenditure of 35% to 40% of revenue in 2023. of which approximately 70 million carry over from fiscal 2022. For 2023, approximately 90% of our expected CAPEX is tied to growth, and the remaining balance for all other activities, including R&D. Let's review guidance on page 17. For fiscal 2023, we expect Revenue in the range of $1,085 million to $1,115 million. This implies growth between 10% and 13%. Excluding COVID, growth is estimated to be greater than 20%. Adjusted diluted EPS in the range of $0.58 to $0.62. adjusted the data in the range of 290.5 million to 302.5 million. Our 2023 guidance assumes headwinds and tailwinds and considers the following. First, we expect that our second half results will be stronger than the first half, and growth will be linear throughout the year. Our model assumes double-digit growth in the BDS segment and high single-digit growth in engineering. Consistent with prior years, we expect a step-down in revenue in the first quarter compared to Q4 2022. We have assumed that high-value solutions will represent approximately 32% to 34% of 2023 forecasted revenue. Revenue from COVID-19 is expected to decrease by approximately $80 million in 2023 versus 2022. We estimate that it will represent about 2% to 3% of revenue. And lastly, we are estimating a currency hedging of approximately $13 to $14 million. Thank you. I will hand the call back to Franco for closing comments.

Thanks, Marco. Our strong financial results in 2022 demonstrated that we have the right strategy in place. We are operating in an environment of strong demand, growing end markets, and multi-year secular drivers. With a favorable demand landscape, our capital allocation priorities are designed to meet current and future customer demand trends. The timing of customer demand requires us to invest several years in advance of commercial production to seize the opportunity in front of us. We have strong momentum entering 2023. With our unique integrated capabilities and market-leading portfolio, we are well positioned to drive durable organic growth and, in turn, increase shareholder value. And with that, Let's open it up for questions.