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.

This is the Coruscant Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove your question, please press star and two. Please pick up the receiver when asking questions. Once again, that's star and one for questions. We will pause for a moment while participants join the queue. The first question is from Paul Knight of KeyBank. Please go ahead.

Hi, Franco Moro. On the growth in biologics you've mentioned, would it be the GLP-1s that stand out, or what therapeutics would you note in this increase in your capex?

Hi, Paul. Yeah, you know that we are targeting a more technological area than a single therapeutic area because our solution addresses specifically the need for biologics. But you're right. We are targeting some areas that are fast-growing and more than expected, really. One is the GLP-1, that's a strong drive for our demand. And also I want to mention mRNA application that during the pandemic proved to be a real answer for treatments, effective treatments for diseases. So this is the main area, but we have a good pipeline of opportunity also in other therapeutic areas.

And regarding fissure expansion, will that occur in terms of revenue generation over time? 2024, or will it go, take time to build that up into 25 and onward? So what would be the steps of revenue generation at Fisher? Thank you.

I can confirm, Paul, that we see the completion of the first steps for validation end of this year, and we expect to have the ramp up of revenues during 24. Obviously, we are talking about a modular investment that is a multi-year investment. It's not just for a single year. So we expect to develop our revenues not only 24, but even later as the project progresses. Thank you.

Thanks, Paul. To bring the next question, please. The next question is from Patrick Donnelly of CT. Please go ahead.

Hey, guys. Thanks for taking the questions. Maybe another one just on the capacity expansion there, just shifting the resources towards areas like fissures. Is it just that the demand is so strong here in the U.S. versus China? that you wanted to accelerate that process. Is there a way to think about revenue being committed ahead of time as you guys build this out, or is it going to be as you build it out, you'll fill it? Just trying to get a sense for the shift here. Obviously, you guys are excited about the opportunity, so I just want to feel out what that demand looks like versus the China piece.

Yes, you got it right. Our decision in terms of where we allocate capex is market-driven, is demand-driven. So we see an acceleration in demand both in U.S. and Europe. So we decide to accelerate investment there. both areas and in future, obviously, but also in our Italian side for easy-fill. And we are still investing in easy-fill platform and high-value solutions. About China, the second half of your question, we decided only to analyze, to take some time to analyze the situation and in the meantime to optimize our capital location. we remain statistically focused on the potential expansion in China. The market for the future will provide very interesting opportunities. We decided just for this year, as I put in my prepared comments, to step the brakes, and we expect now to have the foot off the brakes sometime during 2024. But the strategic meaning of the investment in China will remain the same that we mentioned at the very beginning.

Okay, that's helpful. And maybe one from Marco on the margin piece. Can you just talk about expectations for 23, how those will progress this year? And then also, as some of this capacity comes online, how we should think about the margin profile of that revenue, just kind of thinking longer term. I know as these things came online, That was always a nice margin opportunity. So maybe talk 23 and then a little longer term as things like Fisher come online. Thank you, guys.

Thanks, Patrick. So for 2023, our plan is to expand further the margin in both segments, in engineering and BDS. About BDS, we believe the main driver will be the shifting to a high-value solution. Now we are guiding between 32% to 44% of high-value solutions on total revenues. On the other side, you are right, the margin expansion in BDS will be temporarily tempered by the startup cost in Fisher and in Latina because to secure the success of the project, we need to put people and cost in place. that will be for 2023 more than proportional compared to the growth of the revenue. What we expect for the future is obviously the investing solution is to further expand as soon as the revenue generation will be normalized compared to the infrastructure and the costs.

Male Speaker 1 Okay. Thank you, guys.

Female Speaker 2 Thanks, Patrick. Sabrina, next question, please. The next question is from Derek DeBruin of Bank of America. Please go ahead.

Hi, good morning. Thanks for taking a question. Just to expand a little bit on what Patrick just asked, specifically on the gross margin, how should we think about that going from Q1 to Q4? Just as I said, any sort of like color on just sort of like how to balance. Do you expect Q1 to be up from the prior year level? in 22 and then sort of grow off of that. Just some color on the specific pacing, just given the movement, moving parts.

Yeah, we mentioned during the commentary remarks that we plan to grow the top line quarter after quarter. And matter of fact, we expect also to expand the margin going quarter after quarter because of the better leverage of our fixed expenses and because of the greater installed capacity in easy feeding, high value solutions for Latina, for example, in the second half of the year.

Okay, great. Thank you. Just want to clarify that.

We plan to keep on expanding our margin compared to 2022. Okay.

Is that 80 million euros in COVID-19, is that a de-risk number for 2023? Basically, it's like, what's the conservatism in that? You came in a little bit stronger in the fourth quarter on COVID than we had thought. So just wanted to know if that 80 million dollar, just how to think about that.

The 2% to 3% revenue generation from COVID is what we can see today. Obviously, it's not easy to predict future revolution, but what we can see today is that level of revenue. Importantly, I think it's the excluding COVID growth that is expected to be north of 20%. Got it.

And just one final one. You mentioned the GLPs and mRNAs. Can you give us some color on how to sort of think about unit dynamics and incremental revenues from that? I mean, basically, if you're thinking about a GLP-1, what would be a average sort of like revenue contribution from a typical, you know, component that you're selling into it? I mean, how should we think about this in terms of, you know, revenue stefanato from a unit cost basis?

You know, Candace, and I cannot disclose the any specific prospect with a single customer. What I can say is that if you look at the new FDA approval in terms of potential blockbusters, and we have data about the four main blockbusters for the next year, I can confirm that we are in three of these projects among four. So we expect to have a but at the same time, the high diversification of our portfolio in terms of customer, in terms of therapeutic areas, will remain a factor to make our business resilient.

Derek, I just want to confirm and clarify your question. I think that your question was asking related to things like GLP-1, the average revenue per component. Yeah, yeah. Basically, what type of product would we be selling into those?

Okay. In this time of format, we are talking about biological molecules, synthetic molecules. The first option is to deliver by syringes, so we expect to have impact in this kind of product line. But for sure, it's linked to high-value solution syringes because we are addressing the needs of molecules that are highly sensitive. And so we have a good prospect, including our next and other syringes in that space.

Thank you.

Thank you, Eric. Sabrina, next question, please. The next question is from Tim Daly of Wells Fargo. Please go ahead.

Great, thanks. just wanted to touch on the kind of broader buyer, similar tailwinds, um, you know, as this becomes a bigger dynamic in the United States, just in thinking about the value curve here, uh, on the components that you sell, you know, how do biosimilar assets compare to the original assets? Like, um, you know, would biosimilars be using Nexa and all the syringes? Um, would there be a step down to a more commoditized type of solution? Um, when it goes biosimilar, just, Any help here would be appreciated.

The first comment is about the suitability of our product for biosimilar. We are in a very strong position because as we serve the originator, at first then biosimilar companies like to risk their business using the same solution that proved to be the right one for the originator. Second point is that also for biosimilar, the cost of the container remains a minor, very minor part compared to the total cost of treatment. So there is no expected significant impact in the competitiveness of our solution because of a different competition on the treatment side. These are the two comments that are also based on our experience along the years.

Okay, no, I appreciate that. And then secondly, thinking about raw material pricing and the security of supply on the glass front, I believe you guys in November every year start a new master supply agreement with suppliers on glass tubes. How did that go? Was there any changes on the price front, cost front, suppliers, duration, anything changing, I guess, on that side of the things as you look forward into 2023?

I just want to clarify your question, Tim. I think you're asking specifically about glass tubing as we're going into 23, if there's any changes as we see in the pricing landscape there.

Yes, like price costs in terms of your supply of glass tubing, correct?

Yes. Obviously, in the last part of the year, we are normally in the renewal process of a commercial agreement with the supplier, we see some impact of inflation, even if there is, let's say, a countdown of cost of energy that is much less than the hot period in the middle of 2022. But we look at these increasing costs, and we are back to the regular practice to recalculate the cost and pricing accordingly, including the marginality. In this case, that is something that we could not do 100% during 2022. All right, great.

Thank you for the time. Appreciate it.

Thanks, Jim. Sabrina, next question. The next question is from John Sorber from UBS. Please go ahead.

Hi. Thanks for taking the question. So, you know, the HBS growth was pretty solid in the quarter. I guess just can you talk about, you know, what products or tractions you're getting with most of the customers there? And, you know, the company is approaching that mid-30% revenue target this year. Any thoughts on just, you know, where this could go over the long term as a percent of revenues?

Yeah, we remain confident to confirm that in the next few years we will develop this share in the high range of 30%. So we are in a good trajectory. For sure we are investing to support these opportunities, but our strategy and our view of the future is not changed from what we communicated in the past. We are very confident that we can achieve it.

Got it, and then I guess just a follow-up clarification on China. Are you providing a timeline on when you expect this capacity actually to come online? Sounds like decision being made at 24, but just any additional color that you can provide around that as well.

Yes, as I told before, we are still analyzing the situation to take a decision about to restart the project. I confirm that it will be sometime in 2024, the restart of this project. In terms of revenue, we could be more precise in the following calls because now we are still in the analysis of the situation.

Got it.

Thanks for taking the question.

John, I just wanted to follow up with your first question on high-value solutions. While, yes, our target in 2026 is now high 30%, I want to be clear that that is not a cap and that we anticipate that we can go well beyond that as capacity for high-value solutions continues to come online.

I appreciate the clarification there. Thanks.

Thanks, John. Sabrina, next question, please. The next question is from Dave Windley of Jefferies. Please go ahead.

Hi, thanks for taking my questions. Good afternoon. The pull forwards of revenue into the fourth quarter, I'm wondering if you'd be willing to quantify those, and did they influence the percent of revenue from high-value solutions at all? I'm assuming certainly the engineering is not high-value solutions, I wouldn't think, and maybe the COVID is not particularly rich on high-value solutions. So I just wondered if it influenced in the amount and if it impacted the HVS percentage metrics at all.

Yeah.

Yeah, you are right, David. We had almost 37% of high-value solution on total BDS revenue. So we are pretty happy with the progress. And it's, let's say, in line with our previous guidance for 2022. 2023, we expect to further expand the share of high-value solutions from 32 to 44. And as Lisa was mentioning, we are rising a little bit our mid-term expectation, having now a high 30% by 2026. So we are happy with the speed of the shifting.

And Dave, I just want to clarify the guidance for high-value solutions is 32 to 34% for next year. and you should anticipate quarterly fluctuations here and there.

Okay, thank you. The next question is around the capacity expansion, change in plans. In the earliest iteration of that Fisher's plan, and you've confirmed this since, it was about a 150 million euro, excuse me, euro investment that was expected to produce about 150 million euros in revenue when fully ramped. Can we now expect that this Fisher's plant could ramp to 500 million euros in revenue? Is that still kind of the proportion of capacity, productivity?

Yes, I can confirm that it is a reasonable proportion. The nature of the investment is still for a high-value solution. including more syringes, but the internal rate of return and the financial success of the investment is for us very important, and at the end, yes, you're right, we expect to have the same ratio in between one euro in capital and one euro in revenue. It's obviously a time rule, but it's what we expect.

Yes, and Franco, thank you, because that segues into the follow-up question on that, which is roughly how long would you expect it to take to get to, you know, full utilization on that facility, thinking both from a revenue standpoint, but then also to the extent that your commentary today, you know, suggests that the, you know, the the build to full utilization does have some margin drag to it. How should we think about the time to get to normal margin? So kind of a two-parter on that, please.

The project is moved here, and we proceed module by module in the installation. So we expect to complete the phase of the investment, the $500 million. by the end of 26, including the last validation. And then to ramp up, to have the full ramp up, we could expect to have at least two years more to have the full utilization of the capacity because we have to spend time to validate the different products and different customers. This is the time frame for the full utilization now. But as always, our modular approach will allow us some flexibility in time of a possible acceleration or different tuning of the CAPEX.

OK. That's very helpful. Thank you.

Thanks, Dave. Sabrina, next question, please.

The next question is from Matt. Larry you have William Blair, please go ahead.

Hi, this is Madeline moment on for Matt LaRue. I just wanted to talk a little bit about pricing on the supply side. But I just wanted to see how you were thinking about pricing from your perspective in 2023. And as COVID starts to roll off, do you have opportunities to take price from maybe you are discounting bulk orders or something like that? Do you think there's room for pricing to improve in 2023?

Madeline, I apologize. We were unable to hear the beginning of your question. Can you please repeat the question and perhaps speak a little slower?

Yes, sorry about that. I was just wondering how you were thinking about pricing in 2023 as COVID begins to roll off, if there's going to be opportunities for you to replace large COVID bulk orders with maybe more attractively priced smaller orders, something like that, how you were thinking about pricing in 2023 versus 2022.

And as mentioned many times, we do expect inflation as anybody else in 2023. We are pricing accordingly, including in the margin into our pricing. So we In shifting to a high-value solution, this is the approach we are keeping with respect to pricing.

On top of that, you can also remember that COVID business was mostly related to wires, so we have a much broader range of products, and the situation about wires is only part of the true picture for us.

Great. Thank you.

Thanks, Madeline.

Sabrina, may we have the next question, please? The next question is from Drew Ranieri of Morgan Stanley. Please go ahead.

Hi. Thanks for taking the questions. Just to start to go back to I think it was David's question, but can you just talk about the pool forward in engineering revenue in the fourth quarter? Is it possible if you could quantify what the pool forward was in terms of revenue?

Yeah, we have an acceleration in our progress on projects in Q4, more than expected to accommodate some customer requests. So we are accelerating our revenues in Q4 for about $7 million to $8 million in engineering. As mentioned in my commentary, we Something similar happened to COVID, but we have been able to deliver some products expected to be delivered in Q1, again, to accommodate customers' requests.

Got it. And then just as we were thinking about guidance for the year, the commentary on a step down from fourth quarter into first quarter, understandably there's a few dynamics here one is covid uh two is the engineering pool four that we we were just discussing so can you help frame what maybe a percent decline would be sequentially from the fourth quarter to the first quarter so we're kind of all on the same page about the full year progression what we can tell you today is that we expect

stronger second half of the year and the evolution quarter after quarter will be growing in 2023, similarly to what we have done in 2022. Okay.

And then maybe just lastly on the backlog, with COVID revenue falling off, can you discuss how you're thinking about backlog for the year and potentially order intake, maybe what's embedded in in your 23 guidance in terms of book to bill or anything that we should be thinking about there. And in the past, you've quantified maybe what your backlog was for the current year and the following year. So just wondering what your current backlog implies for 23 and 24. And thank you for taking the questions.

Yeah, I thought the same. something about the meaning of the backlog for us that is obviously an important indicator of the demand, but it doesn't represent the full picture. Full picture about the demand landscape and also the demand trend is linked also different forecast that we regularly discuss with our customers to look into their future needs in the short and the long run. So now we are back to something that is more similar to what was the situation before the pandemic. During the pandemic, the pattern for orders coming from customers changed a little and became longer. Now we are back to a situation that is normalized and very similar to the year before the pandemic. In any case, the view that we have from backlog, from forecast, from any other interaction with customer support our view about the year.

Thanks, Drew. Sabrina, can we have the next question, please?

For any further questions, please press star and 1 on your telephone. Ms. Miles, gentlemen, there are no more questions at this time. This concludes our conference call. Thank you for joining. You may disconnect your telephones. Thank you.