Stevanato Group S.p.A.

Good afternoon, this is the Coruscall conference operator. Welcome and thank you for joining the Stevanato Group first quarter 2025 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Lisa Miles, Senior Vice President, Investor Relations. Please go ahead, Madam.

Good morning, and thank you for joining us. With me today are Franco Stevanato, Chief Executive Officer, and Marco De 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 20F 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 believe they may be helpful for investors in evaluating the quality of our financial results, identifying trends in our performance, and providing meaningful period-to-period comparisons. For reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release. And with that, I'll hand the call over to Franco Stevinato for his opening remarks.

Thank you, Lisa, and thanks for joining us. Today, we review our first quarter performance, share an update on our investment projects, and discuss the current environment. We started fiscal 2025 with strong momentum in the first quarter, highlighted by 9% revenue growth and a step up in gross profit margin compared to last year. Our first quarter financial results exceeded our expectations, driven by strong operational delivery in the biopharmaceutical and diagnostic solutions segment. This helped offset the anticipated soft performance in the engineering segment, as we continue to execute our business optimization plan. This solid performance in the BDS segment was driven by the expected improvements at our Latina and Fisher facilities, as our capacity expansion projects started to scale volumes and revenue, and a favorable mix of high-value solutions, including a modest recovery in the easy-fill bias. Revenue from high-value solutions accounted for 43% of the total revenue in the first quarter of 2025. as we continue to expand capacity for high-value syringes to meet robust demand. We also see ongoing signs of stabilization in vial demand as the effects of the stocking gradually subside. As anticipated, the revenue and margin decline in the engineering segment were primarily related to the legacy projects in Denmark. This unfavorably impacted the portfolio mix in the first quarter. As part of our optimization plan, we prioritized the execution of these projects and have made significant operational progress. We remain on track to complete all of them in 2025, with the majority expected to be completed mid-year. While these improvements may not be fully reflected in our financial results, they led to meaningful gains across key operational performance indicators. This reinforces our confidence that we are on the right path. For example, in the first quarter, acceptance testing rates continued to improve for both final factor acceptance and site acceptance testings. This reflects the tangible progress we are making in bringing these projects to completion and strengthening the segment's operational delivery. Looking ahead, we see strong demand for our engineering manufacturing lines, where long-term growth is underpinned by favorable secular trends. For example, rising patient adoption of drug delivery devices is fueling demand for complex device assembly and packaging lines. We are supporting a new wave of customers as they rapidly expand their device programs, helping customers deliver therapies and treatments to patients safely and efficiently. Let's turn to an update on our capital investment projects in Fishers and Latina. In the first quarter, we saw continued financial improvement in margins from our expansion projects as we begin to scale volumes, utilization, and revenue. Both facilities were ramping up ranges to satisfy strong market demand. Our hub in Fishers brings together our drug containment solutions and device manufacturing capabilities to offer customers an integrated offering with localized production in the US. I recently returned from Fishers, where activities are in high gear. Today, we are in the early phase of scaling commercial syringe production. In parallel, we are on track with ongoing installations of additional manufacturing line. We have a full schedule of customer validation and audit activities booked for the second quarter as more capacity come online. We also started construction on our device manufacturing area to support customer device programs for biologic treatments. As a reminder, we keep a selective and strategic approach to contract manufacturing, and these projects integrate our glass products and most of the time our engineering technology for assembly. This demonstrates the value customers see in our diversified and complementary portfolio of integrated solutions. In Latina, we are scaling commercial production for high-value syringes and manufacturing line installations are ongoing. Customer validation activities will continue into 2026 as planned. We are also preparing for the next phase of ready-to-use cartridges production with commercial production still expected to launch at the end of 2026. Before I hand the call over to Marco, I'd like to briefly share some thoughts on global trade and tariffs. We have a task force that's practically working to mitigate the potential exposure to tariffs through a combination of actions, including customer surcharges, supply chains, procurement and other initiatives. Based on recent discussions with customers, alongside thorough analysis and a broader industry commentary, We expect that most of the tariff-related costs will be absorbed by customers. As a reminder, we experienced a similar situation when gas prices spiked a few years ago. These cost increases were passed through. That said, we are continuing to leverage our global manufacturing network to support localised production. As we ramp up operations in fishers, this will further support our customers with a robust in-market supply chain. as more pharma and biotech companies increase their manufacturing footprints in the US. We do not expect that tariffs will affect our competitive positioning. On the contrary, we believe our ongoing investment in the US will further reinforce our position in this important market. With that, I'll turn the call over to Marco. Thanks, Franco.