Stevanato Group S.p.A.

Good afternoon, this is the Coruscall Conference Operator. Welcome and thank you for joining the Stevanato Group Half Year 2026 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and 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 Mayor Lisa Miles, Chief Communication and IR Officer. Please go ahead, Madam.

Good morning, and thank you for joining us. With me today is Franco Stevanato, Chairman and Chief Executive Officer, and Marco Dal Lago, Chief Financial Officer. We have posted a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the Financial Results tab. I want to remind everyone that some statements being made today are forward-looking and based on current expectations. Actual results may differ materially due to risks outlined in Item 3D, Risk Factors, of our most recent annual report on Form 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 believes they may be helpful for investors in evaluating the quality of our financial results, for a reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release. And with that, I'll hand the call over to Franco Stevanato.

Thank you for joining us. Today, we review our second quarter performance, share an update on market trends in our two segments, including our investment projects, and discuss the current environment. Our second quarter financial results were largely in line with our expectations, highlighted by solid revenue growth and a better mix of high value solutions that drove expanded margins and adjusted EBITDA of 26%. Revenue grew 8% year over year, driven by a 9% revenue increase in the biopharmaceutical and diagnostics solution segment, which offset a slight decline in the engineering segment. Revenue from high-value solutions grew 16% and represented 45% of the total company revenue in the second quarter of 2026, driven by a 30% increase in revenue from biologics, the fastest growing end market. Revenue, related to GLPs, was approximately 22-23% of total company revenue. As we disclosed this morning, we completed the divestiture of our California-based subsidiary Barda Sea Brewer, which specializes in contra-manufacturing services primarily for consumables and point-of-care diagnostic applications. This initiative represents another step consistent with our long-term goal to continue optimizing our footprint and accelerating the transition towards more complex, differentiated, and integrated drug delivery systems. On behalf of management, I would like to thank the Balda team for their dedication and contribution to our group over the years. Demand for injectable biologics remains strong. with more than 9,000 injectable assets in the global drug pipeline undergoing clinical evaluation or registration. And more than 60% of those are biologics. Our strategy is firmly anchored in the higher value subsets of the market, and the business is positioned as a leader in biologic applications. The rapid growth of biologics, GLP therapies, and the increase in patient adoption of the self-administration of medicines is reshaping how pharmaceutical companies approach product development and commercialization. Drug delivery systems are playing an increasingly strategic role in the success of injectable therapies. As a result, we see strong customer demand for integrated solutions that combine device innovation, manufacturing expertise, and supply chain reliability. We believe our broad portfolio of drug delivery platforms and our end-to-end capabilities position Stevanato Group well to support this evolution. With this goal in mind, we are extremely happy that one of our pharmaceutical customers has received regulatory approval in several European countries for a liragutide-based therapy that incorporates our proprietary Lina variable dose pen platform The approval represents an important commercial milestone for our proprietary drug delivery systems and includes two Alina variants for both diabetes and weight management applications. This important customer project also embeds our world-class cartridge technology into the Alina Pen platform, harnessing the power of our integrated capabilities. Our proprietary devices are manufactured at our facility in Germany, which plays a pivotal role in serving our global pharma and biotech partners. While Alina addresses the need for a variable dose PEN platform, we also see a growing market opportunity for treatments that require strict patient adherence to dosing regimens. In response to customer feedback, we recently introduced DIORA to meet this need, Diora is a novel multi-use, fixed-dose pen injector system compatible with pre-filled cartridges delivering volume up to 3ml. This new product will take time to get to commercial stage, but we see this as a promising future opportunity. Our customer needs are clear, pointed at solutions that enhance patient usability and adherence, The Rix Supply Chain provides a better answer to new drug product requirements of modern formulation and, lastly, increase the combination product sustainability and cost efficiency profile. We believe we have the right set of expertise and competencies to support our customers with a broad and unique value proposition. Let's turn our attention to the engineering segment. We are pleased with the continued operational and financial progress in the business. Our second quarter results demonstrate that the initiatives taken under the optimization plan are yielding positive results. Overall, the operations have stabilized and we are continuing to execute our optimization plan. As we mentioned last quarter, the teams are laser focused on sales and marketing efforts to expand our opportunity set. We made good progress during the second quarter in winning new orders. We are consciously optimistic, but sales cycles are longer today than in previous years. Let's turn to updating our growth projects in the US and Italy. In the second quarter, we remain focused on scaling and executing our growth investments with a disciplined approach, strengthening our operational maturity while expanding capacity to meet customer demand. Starting from fishers, We recently completed the initial performance qualification on the first easy fill via line, and we expect to launch customer validation in the near term. The build-out for our first device program remains on track, and we continue to expect commercial production to begin later this year. As these initiatives come together in features, we are expanding our commercial capabilities and reinforcing our position for future growth. Turning to Latina, the syringe ramp-up is ongoing as we continue to validate new customers. In addition, our next generation RTU-400 cartridge line is expected to be completed and installed in the next couple of months, with commercial production expected in 2027. In summary, our second quarter results were in line with our expectations, reflecting the continuous strength of our strategy. We are positioning the business around the most attractive areas of the market, particularly biologics, GP1 therapies, and integrated drug delivery systems. The divested Rovalda C. Brewer and our continued investment in platforms such as Alina and other premium products reinforces our focus on higher value, differentiated solutions that address the evolving needs of our pharmaceutical customers. At the same time, we are making progress in improving the engineering segment and advancing our growth investments. I'll turn the call over to Marco for a review of our financial performance.

Thanks, Franco. Before I begin, I'd like to clarify that all comparisons refer to the second quarter of 2025, unless otherwise specified. Let's start on page 10. In the second quarter of 2026, revenue grew 8% to $302 million, both on a reported basis and at a constant currency rate. This was driven by a 9% growth in the BDS segment, which offset a 2% revenue decline in the engineering segment. Revenue from high-value solutions increased 16% in the second quarter to $135.9 million, and accounted for 45% of total revenue. In the second quarter of 2026, gross profit margin increased 60 basis points to 28.7%. This was driven by the combined improvements in Latina and Fishers, which led to an increase in high value solutions and improved marginality in engineering segment. This was partially offset by the expected increase in depreciation and more. In the second quarter of 2026, we completed the sale of our California-based subsidiary Baldassi Brewer, which specialized in contract manufacturing services for consumables and point-of-care diagnostic applications. As a result, the company recorded one-time expenses of $12.2 million in connection with the sale and related transaction costs in the second quarter of 2026. This subsidiary was expected to generate revenue of approximately $30 million in fiscal year 2026. and the transaction is expected to be accretive on the full year margins. The sale of Baldassi Brewer and to a lesser extent Haiger Startup Expenses unfavorably impacted the Group's operating profit margin in the second quarter, but on an adjusted basis, operating profit margin increased 250 basis points to 18%. As expected, The tax rate in the second quarter of 2026 was higher compared with the same period last year. As a reminder, the prior year period benefited from a tax incentive which lowered the Italian statutory corporate income tax rate in fiscal year 2025, but the incentive was not available in 2026. Additionally, there is no corresponding tax benefit on the sale of Baldassi Brewery. which contributed to the increase in the effective tax rate in the quarter. As a result of the one-time expenses related to the divestment and higher taxes, net profit totaled $23 million and diluted earnings per share were $0.08 in the second quarter 2026. On an adjusted basis, net profit increased 20% to $37.6 million. and adjusted diluted earnings per share increased to 14 cents. Adjusted EBITDA increased 21% to 78.7 million and adjusted EBITDA margin increased 280 basis points to 26% in the second quarter of 2026. Moving to segment results on page 11. In the second quarter of 2026, Revenue from the BDS segment increased 9% to $266.2 million and grew 10% on a constant currency basis. Strong growth in premium Nexus syringes and, to a lesser extent, Alba syringes and Easy-Fill vials led to a 16% increase in revenue from high-value solutions to $135.9 million. which represented approximately 51% of segment revenue. Revenue from other containment and delivery solutions increased 3% to 130.3 million, mostly driven by growth in standard syringes and bulk cartridges, as well as variable compensation tied to a customer contract. Gross profit increased by 6.6 million in the second quarter of 2026, reflecting the combined improvements in the new plans as we continue to ramp up operations, which led to an increase in high-value solutions. Dispositive trends were partially offset by the expected higher depreciation, an increase in utilities costs, and to a lesser extent, currency headwinds. As a result, gross profit margin decreased by 10 basis points to 31.1%. The operating profit margin was impacted by the sales of Balda and declined 330 basis points to 15.8%. In the second quarter of 2026, revenue from the engineering segment decreased 2% to 35.8 million due to lower sales in pharma visual inspection and glass converting, which offset growth in the assembling lines and after sales activities. In the second quarter of 2026, gross profit margin improved by 540 basis points to 12% and operating profit margin increased 370 basis points to 2.9%. Ongoing efforts under our business optimization plan led to a strong margin expansion as the segment continues to make steady operational and financial progress. Margins also benefited from improved operating results and a favorable mix in our Danish operations from newly secured projects in 2026, which is helping to refresh the project portfolio. While Margins improved in the quarter and the team is making good progress in refreshing the backlog and the pipeline, We continue to remain somewhat cautious due to the elongated sales cycle and project phasing. Please turn to the next slide for a review of our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of 78.6 million and net debt of 360.3 million. We believe we have adequate liquidity to fund our strategic priorities through a combination of cash on hand, available credit lines, cash generated from operations, and the ability to access additional financing. For the second quarter of 2026, capital expenditures totaled $52 million, mostly related to growth, investment in the new plants, and for our Alina device program in Germany and contract manufacturing activities. In the second quarter of 2026, net cash flow from operating activities totaled 31.9 million. Cash used in property, plant and equipment and intangible assets was 65.7 million. Consequently, the company reported negative free cash flow of 32 million for the second quarter of 2026. Please turn to the next slide for an update of our full year guidance. The divestiture of our California-based subsidiary has been considered in our full-year guidance, with a reduction on revenue for fiscal 2026 of approximately $15 million. This revenue reduction is partially offset by better-than-anticipated currency translation and higher organic growth in our core business. As a result, we now expect revenue in the range of 1 billion 260 million to 1 billion 280 million. The divestiture, while small, is expected to be accretive to margins at the central point of our guide, and we now expect adjusted EBITDA between 335 million to 345.2 million. We are also narrowing the range for adjusted diluted EPS, which now expect to range between 60 cents to 62 cents for the fiscal year. Our full year 2026 guidance assumes the following. The BDS segment is expected to grow on a reported basis high single digits. Engineering is expected to decline by mid single digits to low double digits. High value solutions are expected to range between 47% to 48% of total company revenue. Free cash flow is expected to range from breakeven to positive 20 million. We are updating the tax rate for 2026. and now expect a tax rate of approximately 28.2% adjusted for the divestment. The higher tax rate is expected to be offset by lower than anticipated depreciation and amortization and financial expenses. I will now hand the call back to Franco for closing remarks.

Overall, we are pleased with our performance in the first half of fiscal 2026, which was in line with our expectations. It further highlights the continuous strength of our core business and our ability to capitalize on the market opportunities in biologics, which remains the most attractive and fastest growing end market. This momentum reflects strong demand for premium containment and delivery solution, serving complex injectable therapies including biosimilars, monoclonal antibodies, GLP-1 therapies and other advanced treatments. With the rapid rise of patient adoption of drug delivery devices, pharmaceutical customers are increasingly seeking integrated partners that can combine device innovation, manufacturing expertise and supply chain reliability. Platforms such as Alina support this strategy by demonstrating Stevanato Group's ability to bring together drug containment and delivery device capabilities in a differentiated, commercially relevant solution. We believe we are uniquely positioned to respond to this market opportunity. Overall, we are squarely focused on growing our premium high-value solutions in both drug containment and drug delivery systems to best position the company to capture the rising opportunities in injectable therapies, particularly biologics. Our goal is to move further up the value chain and deliver sustainable profitable growth, expanded margins, and long-term shareholder value.

Thank you. This is the 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 touchstone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. We kindly ask you to limit to one question and one follow-up only. and join the queue again for any further questions. We will pause for a moment as participants are joining the queue. First question is from Michael Rishin, Bank of America.

Hi, this is Avantika An for Mike. Thank you for taking our question. You updated your BDS growth outlook from high single digits to low double digits to now high single digits. Can you walk us through what drove that change and whether it reflects only the divestiture or any other changes in the underlying business? Thank you.

Yes, thanks for the question. Antica Marco speaking. The updated guide has already reported basis. We updated to high single digit. Nevertheless, the organic growth is still double digit because We reduced by approximately 15 million related to this investor. And on the other side, we increased for approximately 8 million related to the lower currency headwind. You probably remember at the beginning of the year, we started the year with estimation of 18 million of currency headwind on the top line, all related to BDS segment. After the first half of the year with approximately 9 million currency headwinds, we can see now the second part of the year more balanced. So we have a total currency headwind in the model of approximately 10 million. So 8 million favorable in currency. 15 million headwinds related to that investor and we increased a couple of million our organic growth in our core business.

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

Yes, thank you for the question. So we all know that the GLP-1s are a phenomenal drug class that will expect to continue to represent a strong long-term durable tailwinds in next years. But where Stevanato Group is a laser focus in this moment and in next year to come is on biologic. Biologic is a phenomenal opportunity for Stevanato, just to give you some number, In the industry, there are more than 9,000 injectable assets in the global drug pipeline, and more than 60% are going to be biologic through injections and administration. So the reason why we are heavily invested through our plants in Europe and the United States, we are heavily invested in order to expand our proprietary devices in terms of drug delivery systems. is a key platform in order to try to maximize the leadership position in the next year to come in biology. In 2026, we have delivered 6% of growth in biology. Most of the reason is because we are at the early stage of more revenue that we are generating for clients that are in phase 2 and phase 3. But we have started a big strategic goal is to be five in this molecule that will represent 10 wins in the next year to come.

Great, thank you so much. Next question is from David Windley, Jefferies.

Hi, good morning, good afternoon. Thanks for taking my question. Wanted to follow up on that and your comments in the, I think in the release and your prepared remarks about a move toward premium high value solutions. So Franco, I was hoping One, you could talk about which products in your portfolio you consider to be the premium products within high value solutions and then presuming Alina is one of those. How many countries and kind of what is the size of the opportunity with this recent approval of Alina for Lyra Glutide? Thanks.

Thank you, David. First of all, let me share that we are so excited and proud because It took Stevanato eight years to develop and to launch on the market this Alina product. We started with our R&D department in 2000, eight years ago, even more. This is why in 2016 we acquired the so-called Balda Germany, and today it's going to become a sort of hub in order to produce this IP product for Stevanato. So the fact that now We were validated in Europe, in many countries for this Salina product, both for diabetes and for weight loss management treatment. It's going to recognize that Stevanato today is playing in what we so-called Champions League. because we are not serving anymore the product through the CMO business model, but we are serving our IP product and the different that have Stevanato that we don't sell only the drug delivery system. We are selling what we so-called integrated system approach where there are always our glass cartridges inside. Today, We are delivering our Alina 10, our cartridges to what's called a system integrator, our specialized partner that are going to take care of what is related to the devices, the cartridges, the filling, and the regulatory support in order to help many big international biosimilar clients, both in Europe and United States, to launch on the market this biosimilar. Today, Alina is having very strong traction for what is related to liraglutide, what is the treatment of the weight losses. But what I would like to underline, we are at a very early stage because before this validation, there were a lot of prudent approaches for many clients about the functionality of this device. Today, this official registration is opening and boosting the traction of other validations worldwide and where all this production we are going to produce through our plant in Germany. Like I already mentioned last year, we already started last year to renovate and upgrade one big area of production in order to store in heavily industrial production for Alina in the next years. In parallel also, we started to develop and launch our Deora, that is an evolution of our Alina product, that is perfectly fitting for certain treatments where patients need a stronger accuracy of the doses. And this is the reason why the fact that we are already registered on Alina is further helping to boost the dividend term in the adoption. I want to say, sorry to use my Latin approach, that this is going to be maybe one of our most big milestones in 2026.

So to follow up, I presume your enthusiasm suggests to me that Alina and I'll get the name wrong, Aura, are... are premium products. I'd love to hear what are the other ones that you consider premium within high value, and if you would, Of the 47% to 48% of revenue that is high value, what percent of that is currently premium high value? Thank you.

Alina is in the range of premium product. The revenue around Alina are already captured in our guidance 2026, and most probably in the next year to come, Alina will generate double-digit revenue growth in the Alina product. where we are also facing a strong attraction, strong success on the market is what we call our ALBA syringes because we launched these syringes many years ago for certain off-tarmic application. Today, we see more and more strong traction in customers that are going to adopt the monoclonal antibody. Also here, we are heavily investing in capacity, David, here at the plants in Pimino Deise. In the next phase, we're going also to move industrial capacity Thank you. Next question is from Paul Knight, K-Bank Capital Markets. Congratulations Franco.

Long-term potential, I think, is obvious with Latina and Fishers. What capacity utilization will Fishers and Latina operate this year?

So, today, the demand that we have in Fisher Latina is quite, in early 2026, In particular, for syringes, Nexa Alba and Carthagis Bulk and Carthagis Ritufil is quite strong and robust for both plants. The way that we plan our investment are dedicated with capacity and program that we have with customers. All the number of lines that we have installed and validated in Latina, we continue to install and do the validation throughout the 2026 in Fischer, are with a direct program where the clients do the audit, do the validation, and then we have dedicated lines. Our approach is always to maintain certain free capacity in order to enhance our plans, to have the flexibility also to do the sampling and the validation for the future program that we are going to start to host next year to come. So all over all, the message is demand is stronger, but also it's important to keep some space in order to perform the validation.

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

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

Sure. Today, we, regarding the engineering, we have two centers. One is in Italy, specialized in visual inspection machine for customized line for certain assembly technology. and Danmark is going to be specialized in particular for the sophisticated high-speed line for assembly. So the optimization plan initiative that we started more than one year ago, they are delivering positive results. In fact, you see, Paul, are translating also in our revenue, in our marginality, that are much better in this quarter. And this is starting to be a signal of trend for the future quarter. So, from an engineering point of view, the organization and the team are really moving in the right direction. Also, what we are starting to see is a positive signal because we are more and more having good progress in winning new orders, both with our historical clients, but also we are starting to build a rich pipeline for new clients, in particular for Vision Special. So our goal is really to have quarter by quarter some improvement in term of revenue and marginality in order to be back to original number more and more in 2027. But also here the division has started really to deliver good signal of term of revenue marginality.

Thank you.

Next question is from Larry Solo, CJS Securities.

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

Sure. So today, Franco speaking, the revenue inside of the BDS segment around biologic represents approximately 42%. So we move, where in 2022 we were approximately a little bit less than 20%, today we are more than 42%. In this moment, GLP-1 are representing a very visible revenue contribution side of biologic because it's already commercial. We are serving two big originators and we are actively moving in order to maximize our validation through all the biosimilar, both to our syringes Nexa, cartridges, also we have many programs around our drug delivery system. It's also true that we are so engaged with several hundreds of clients, both big organizations to small startups, in order to really try to maximize our penetration in all the biologic space. So today, in the biologic space, we have delivered plus 6%, like I was mentioning, because most of these programs are at the early stage, they are not representing a big revenue generation. If I can give you a sort of projection, GFP1 is a well-established opportunistic tailwind that will continue to grow in the next years. and Biologic, it will be much more spread to many clients and many therapeutic areas. And then if you're going to combine all these opportunities, it's going to be much bigger in the next year to come compared to GLP-1.

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

Absolutely. In terms of investments, in terms of revenue, revenue around Alina are already captured in 2026 in our guidance. what we can tell to you that we are heavily investing with industrial commercial capacity in our plants in Germany in the next 12, 24, 36 months in order to be able to serve this growing demand. So like I mentioned to you before, we count that Alina, he will help to generate double digit revenue around Alina product next year to come, focalizing what we call our premium high value solution product. Today we have done the first registration with a certain number of clients, first in Europe, in the second part of the year we will receive additional validation in North America. But what is more important, the fact that now we have this registration on the market is helping to boost and push and other traction from other clients, in particular in biosimilar space for what is related to weight loss management and treatment. So this is the real strategy. Our industry usually is a little bit prudent and conservative. Since there is no real product on the market, some clients, they are waiting. Now that this is proven, it's opening a big, big opportunity next year around our IP product.

Great. I appreciate that. Thank you.

Next question is from Brandon Deegan, CT. Brandon?

Can you hear me? Oh, yes. Thank you. Excellent, Brandon. Yes, we can.

Sorry about that. Don't know what happened there. I was wondering if we could start off by unpacking the engineering performance in 2Q. It's all a nice rebound up in 1Q and kind of towards the lower range of the commentary provided on the 1Q call. So I was wondering if you could unpack that a little bit, but then also kind of go into how kind of customer decision timelines have evolved throughout the quarter and what kind of the backlog looks like as we head into the second half of the year.

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

Yeah, so just as you can unpack the engineering performance in 2Q.

See, today we have a healthy pipeline. that is going to be step by step translated in order. So if you combine from the beginning of the year to the second part of the year, we are starting really to more and more move this pipeline into order. In fact, we have a very strong progress in winning new orders, in particular for what is related to vision inspection machine, in particular in Europe, in Asia, and technology for assembly for drug delivery system in Europe and United States. So we see quarter after quarter a progression in order to enlarge the confirmed orders compared to what was the order intake. So the trend is starting to become better and better quarter after quarter.

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

Yes, thanks for the question. About our guidance, I'm staying at the center point of our guidance. Our plan is to expand reported gross profit by 50 basis points approximately. If we exclude the one-timer event in second quarter, our plan is to increase our adjusted operating profit of 110 basis points compared with last year. And as mentioned in our press release, adjusted bid-to-margin at the center point of the guide as expected to be at 26.8%, expanding 170 basis points compared with last year. This is driven by slightly improved margin in our BDS segment, improved gross profit margin in our engineering segment, and disciplining cost management in SG&A and R&B expenses.

Great, thank you.

Next question is from Marc Airtok, Stephans Inc. Hey, good morning and thank you for taking my questions.

Maybe just to follow up on the previous answer, I think you touched on it a little bit, but the variable compensation that you highlighted within the presentation deck, how much was that and how much of a benefit was that to QQ margins?

Thanks for the question. Marco is speaking. So the variable compensation is tied to one specific contract with the long lasting customer. It provides a fair compensation for a reduction in volumes compared with the committed volumes from the customer. and as a reminder under the contract testing condition we have protection in place for changes in forecast. So variable consideration compensate us for the cost we had in the quarter, in the first half of the year in term of capacity reservation, workers, labor, depreciation and so on so far. plus a fair compensation of the missing margin.

Thanks for that, Marco. Maybe just to bear down a little bit more on that, is it possible to quantify how much of a benefit it was to the quarter?

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

Got it. Okay, I appreciate that. Thank you.

Next question is from Cal Tim Rush, Morgan Stanley.

Hi, this is Jason for Calum. Thank you for taking our questions. Some recent question on the Bada Brewer divestiture. Could you just walk us through the strategic rationale for divesting the business and the business profile What was the growth profile of that business, and what was the HVS, non-HVS mix for that business? And appreciate the comments that the spinoff was margin-incretive, but was wondering if you could quantify that margin uplift. Thank you.

Thank you. So, when in 2016 we decided to enter in the device space, we acted for two decisions. First, to acquire Balda, where the big target was the industrial hub in Germany. And when we acquired this company, we discovered there was also a smaller operation in California, in south of Los Angeles, so we called Baldassi Brewer, specialized more in contract manufacturing of standard consumable product. So when we are starting to develop our R&D center in Milano, more and more our attention focus was to move the standard diagnostic in order to better serve molecular diagnostics. Now the real goal is really to build a value proposition for our biologic clients in injection in order to deliver not only the glasses, but also together with the drug delivery system. Now we are in 2026, where most of our investments are in order to build capacity for the drug delivery system. These plants are not anymore strategic for Stevanato because they don't have any particular strategy to serve this biologic market. So we have decided to pass to this program of divestiture in order really to remove some industrial setup not strategic for our biologic clients.

and about the model, we had previously in our model approximately 30 million revenue for the year and slightly positive a bit. So that's why we are, let's say, our margin is more accretive with this investor.

This initiative is really representing another step in order really to move The value chain and the product portfolio of Stevanato have our industry set up more versus some creative high-value solution product in order to better serve the biologic market. This is one another step, like what we have already done last year, we started to slow down a little bit our attention in Europe for the standard impulse.

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

So today we serve the GLP-1 market To our originator, to our biosimilar, we serve the syringes Nexa, we serve the cartridges, but mostly cartridges A2 field, and also we are starting to maximize with all the biosimilar that are entering the market. Today we see that all the biosimilar, they are practically using the same type of subministration term injection. Stevanato is acting to serve to this biosimilar that are still at the early phases through syringes Nexa, cartridges Etofilma. Even more, we have started really to deliver what we call the fully integrated system. We're going to add also our proprietary device like Kalina. So this is valid for practically all the region. Like I was mentioning before, we are starting to serve some European market Now the next phase is to be North America, Latin America, exactly for this type of configuration, where there will be either our syringes or there will be our cartridges plus the arena product.

Great, appreciate the call, thank you.

Next question is from Chad Witaworski, TD Cohen.

Hey everyone. Beyond the Balded Divestment, are there other segments or SKUs that you view as non-core and could potentially be under strategic review currently?

At the moment, we don't have it. and many other relevant initiatives under the radar. It's also true that if you look from the day of the IPO to today, we invested more than 1.3 billion, mostly around high-value products. It's also true that if you look at the strategy of organizations starting from sales, R&D, product management and operations and supply chain, The goal is to build a leadership position in biologic. So indirectly, there are step by step a little bit less attention in what we call non-high value product of certain bulk activity. Make an example, ampoules that we sell from Europe, from Brazil, some other standard plastic component for the agnostic, where step by step we would like really to reconvert and to use this space in order to better serve our easy fit platform, our drug delivery solution. For sure, this is something that we do step by step, gradually, because we want really to evolve our value proposition in the next one, two, three, four years. But today, no other relevant initiative.

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

Thanks for the questions. Today, all over all, there is a trend of the pharma industry to outsource as much as they can the supply chain. They can use specialized CMOs, they can use companies like Stevanato that will sell the integrated offerings. So today, there is more and more a visible trend where pharma customers, they try to outsource a big portion of the supply chain. The advantage of this system integrated provider, they are very proactive that they don't perform only the filling, they are helping this biosimilar, international biosimilar company really to take all the type of activity in order really to collect the devices, the cartridges to the filling, regulatory support in order to enhance this biosimilar to focalize in the go-to-market. More and more we see this trend in the industry today and Stevanato proactively what we do. We use our tech center, we use our specialized hub in Italy, United States in order to try to capture as much as we can big pieces of this supply chain and increase our value proposition.

Next question is from Curtis Miles, BNP Paribas.

Hey, thank you for taking my questions. So first, just on GLP-1s, I mean, obviously that stepped up again as a percentage of revenue compared to 1Q26. So maybe you can talk about how you're seeing that progress through the year and whether your sort of mid-teens growth guidance remains intact there.

Okay, starting from the guidance, we can see a double-digit growth compared to last year, so still a significant growth. about the overall market situation, I will hand over to Franco.

Correct. Today, in the industry, what we see that the GMP1 is who really are what we call at the beginning of this journey. Because if you look at all the potential opportunities that we have to our originator clients, even more with the biosimilars that are very active in any region of the world, I think that we are really at the tip of the iceberg. So today there are less than 10% of patient penetration in a total potential addressable patient that is 1.5 billion. So, we expect that this will continue to represent a strong long-term durable tailwind for all the industry, including Stevanato. The strategy of Stevanato is really to maximize our penetration through the originator, like we have done in the past with Insuli, and in parallel try to maximize our presence, our validation in all the biosimilar, not only to our easy feed platform, also with our drug delivery system. because I think in the next five to ten years there will be a lot of opportunities to stay in double digits only through GLP-1 in the next year. What is important, again, to underline for the second time, that the GMP1, we want to have a very strong opportunistic approach, but it's limited to one therapeutic class. The real goal of Stevanato, and the reason why we have done the APO in 2021 in order to finance and build this huge hub in the United States and increase the capacity in Europe, is because all the biologic market is growing, spread to several tens of hundreds of clients, and several other technical areas. This is where we want really to play a visible role with all our integrated value propositions, starting from easy-fit products, syringes, cartridges and via, and move up the value chain to our drug delivery system and to certain clients through our tech center. We are starting to perform also fill and finish for non-human users. This is where we really want to focalize SG the next five to eight years.

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

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

Thank you.

Next question is from Matt Laro, William Blair.

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

So practically, Matt, with this approval in Europe, and there will be an additional approval in the second part of the United States, we are going to start to deliver to a certain number of clients, a big number of clients, we are going to start to deliver our Alina pen for this liraglutide product together with our cartridges. So translated in number, we are starting to generate revenue with May I ask Miles, gentlemen, there are no more questions registered at this time.

Thank you very much everyone for joining us for Stevanato Group's second quarter 2026 earnings call. We look forward to speaking with you in the future and enjoy the rest of your summer.

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