Gerresheimer AG

Ladies and gentlemen, welcome to the publication Q4 and full year 2024 results conference call. I'm Vicky, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star, then zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Guido Pickert, Vice President, Corporate Investor Relations. Please go ahead, sir.

Thank you very much, Vicky. Good morning, everyone, and thank you for joining today's call. I will now hand over to our CEO, Dietmar Siemsson, to run you through the highlights of the quarter and full year together with our CFO, Dr. Bernd Metzner. Dietmar?

Good morning. Welcome, everybody. Thank you for joining us this morning. For those who are new to the call, my name is Dietmar Siemsson, and I'm the CEO of Verifama. I will start by giving you an overview of our business performance in Q4, our fiscal year 2024 in general, and where we currently stand with our growth projects. My colleague Dan Metzner, our CFO, will then take you into a deep dive of the numbers. As always, we will then be happy to take your questions. Yeah, Q4. Q4 showed a pickup in growth we had expected earlier in 2024. We achieved an organic revenue growth of 5.4%, Adjusted EBITDR growth came in at 6.4%. Adjusted earnings per share growth at 6.7%. The growth in Q4 was mainly driven by research and wild demand and growth in systems and solutions for biologics. Once again, we grew stronger in our bottom line than in the top line. We achieved two important milestones towards the end of 2024. One was the tentative approval by the FDA for the SQ Innovation Lasix on you. Full approval was only pre-rooted because the FDA had granted market exclusivity in the U.S. for a competing product until October 2025. The FDA's vote on the 9th the market readiness of our on-body drug delivery device. It also clearly demonstrated our expertise as an innovative solution provider for our customers. The second milestone was the successful completion of the Bomiuri Pharma acquisition, the largest acquisition to date for Kerasama. Q4, as mentioned, was actually the strongest border of our fiscal year 2024, but could only partially compensate for the first three quarters, which were significantly influenced by the destocking in the wild business. That becomes obvious when we look at our full year results. Organic revenue for the full year came in at 2.9%, adjusted EBITDA growth at 4.1%, the adjusted earnings per share grew 1.1%. These are not results we are satisfied or happy with. We have no doubt anticipated a much earlier and stronger pickup in growth in 2024. The profit warning we had to issue in September was the first since 2009. That should give you an idea how unusual the market development was that we experienced in 2024. The destocking effects are moderating now but we are still not back to normal. On the positive side, 2024 also shows that the strategic transformation to a system and solution provider is taking effect. We managed to increase the revenue share of system and solutions for biologics from 11% in 2023 to now 15% in 2024. And we successfully ramped up new manufacturing lines for customer contracts in exactly this market. The successful acquisition of Bong Yoli Pharma takes us to a whole new level, significantly growing our revenues by approximately 15% to 20% and being margin accretive already in 2025, the first year after closing. After we started our journey in 2019, it took us four years to increase our revenues from 1.4 billion to nearly 2 billion. And the adjusted EBITDA from a level of around 300 million to about 400 million euros. Now, including Bomioli Pharma, we will even surpass the next important mark, and moved towards 2.5 billion euros in revenue and towards 550 million euros in adjusted EBITDA. We consequently seized the opportunities which come with the extended portfolio and the new capabilities of system integration. I will come to this point back later. Looking back at the key priorities we have for 2024, we set out about a year ago, we have delivered on them and broadened the foundation for long-term profitable growth by, for example, increasing the revenue share of system and solutions for biologics, executing on growth projects in general, and expanding our portfolio with highly innovative products. As part of our growth strategy, we systematically identified growth accelerators, markets with overproportional growth and attractive margin profiles. The market for systems and solutions for biologics is exactly such a market accelerator. It grows significantly faster than the pharma market overall. That's why we have expanded our portfolio to include specialized products, systems, and solutions for large molecule biologics. Most of them, in the end, high-value solutions which help us to expand our margins and to fuel our growth. We were able to change the market perception from a commodity provider to an innovative solution provider. We leveraged unique business opportunities in the market, won attractive long-term contracts, and we have been expanding our manufacturing capacities to serve exactly this market. We have meanwhile become a mission-critical partner the partner of choice to the pharma and biotech industry. This is evident by the figures you see to the right. Revenues from System of Solutions for Biologics are up 40% in 2024 compared to 2023, a big step up which pushed their revenue share to 15.2% of our total revenue. The execution of our growth projects was another key topic for 2024. If you look at our CAPEX of €345 million in 2024, you can see that roughly 30% was dedicated to molded glass. The investments in our molded glass business were mainly driven by furnace overhaul projects and the upgrade to state-of-the-art furnace technology as currently ongoing, for example, in our plant in Lohr, Germany. which will also increase production capacity. The molded glass business requires recurring investments, but also delivers very reliable cash flows. The investment cycle for a new furnace, by the way, is 10 to 12 years. Around 70% of our investments are dedicated to our business units, tubular glass, medical systems, primary packaging plastics, and advanced technologies. As you can see, more than 80% of the CAPEX for these business units is dedicated to growth projects, and the vast majority of these projects are persistence and solutions for biologics. This includes, for example, our capacity expansion for syringes in Querétaro and Skopje, the Republic of North Macedonia, the expansion of medical devices in Peachtree City, U.S., and Chorsovsky-Tun, Czech Republic, all a ready-to-fill-while project in Wertham, Germany. We ramped up new lines in 2024 with more to come online in 2025. With these investments, we are laying the foundation for future growth. The contribution of these investments to our growth and margin expansion is becoming increasingly apparent as evidenced by the increased revenue share of systems and solutions for biologics. The third key topic for 2024 was innovation. The expansion of our portfolio with high innovative products and solutions. And also here we delivered. We advanced our platform technologies in manufacturing and therapy support, and reached a great milestone with our on-body device, which will enable the home treatment of patients. We industrialized the manufacturing process for Easy-Fill Smart, the next-generation packaging platform for ready-to-fill vials, and will start commercial production this year. Easy-Fill Smart significantly reduces total cost of ownership while delivering superior quality with fewer particles. It is also more sustainable as it enables hydrogen peroxide vapor sterilization instead of sterilization with ethylene oxide. In 2024, we introduced GX-CAP in the U.S. market. This is a digitally connected CAP which monitors the medication intake and enables pharmacies to offer remote therapeutic monitoring for medication adherence. which is crucial for the therapy outcome. GX-CAP is also an excellent example of system integration delivering a high-value solution. The CAP goes on our prescription drug containers. Beyond the market, leader for prescription containers for pharmacies in the US. With GX-CAP, we tap into a new reoccurring revenue stream for pharmacies in the US for remote therapeutic monitoring. We only started last year, but have already received a lot of interest from pharmacies because selected remote therapeutic monitoring programs can be reimbursed by Medicare and Medicaid. Another example for innovation is the SQ Innovation Lasage on You. The combination product consists of a novel high concentration formulation of the diuretic furosemide and Gerasimer's on-body drug delivery device with patented device technology. The device is based on our proprietary infuser platform for subcontainers drug delivery, featuring an innovative micro-pump technology. Benefits include a patient-friendly design, lower cost for treatment, and increased sustainability through a two-component concept consisting of a disposal component and a reusable electronic mechanical component. The concept was developed in line with our eco-design principles, which aim to increase product lifespan and reduce waste. The on-body device allows for home treatment and has the potential to increase the quality of life for thousands of patients suffering from congestive heart failure. SQ Innovation received tentative approval by the FDA last year for Lasix ONU. You might have seen our press release. That means that the combination product has met the regulatory standards for quality, safety, and efficiency required for approval in the United States. Full approval was precluded because The FDA had granted market exclusivity in the U.S. for a competing product until October 2025. The key takeaways are our on-body device is ready for market, and we have demonstrated our expertise in partnering with a pharma company from product design to regulatory submission and industrial manufacturing. First relevant revenues are expected in Q1 2026. The key topic with the biggest influence on our group in 2024 was the successful acquisition of Bomiuri Pharma. Higher strategic and complementary to our product portfolio. As already mentioned, this acquisition takes us to a completely new level, significantly growing our revenues by approximately 15 to 20% and being margin-creative already in 2025. Most importantly, its strength our market-leading position in core segments. It allows us to create a global molded glass powerhouse, a strong and independent global unit with a diversified portfolio in pharma, cosmetics, and food and beverage. It opens new opportunities for system integration, border closure combinations, which creates a completely new category of high-value solutions. The acquisition strengthens our positioning as a system and solution provider. Thank you very much for the moment. With this, I will hand over to Bernd Metzner for a deep dive into the figures in Q4, as well as the full year 2024.

Thank you, Dietmar, and welcome everybody also from my side. Let's dive into the analysis of the key financials for the fourth quarter 2024. Revenues grew from 545 million to 569 million euros. This led us to an organic revenue growth of 5.4%. The impact from FX was almost minus 6 million euros. Our plastic and devices division continued its devices-driven profitable growth in Q4 2024. Our primary packaging glass division returned to positive year-on-year growth supported by our wild business. Adjusted EBTA grew from €119 million to €127 million. This led us to an organic adjusted EBTA growth of 6.4%. Organically, adjusted EBTA margin increased by 20 basis points to 22.1%. The impact from FX was neutral. Adjusted EPS increased from 1.51 euros to 1.63 euros. This led us to an organic adjusted EPS improvement of 6.7%. Let's move on to the divisional development in Q4 2024. Plastic and Devices Revenue grew from 310 million to 321 million euros. This led us to an organic revenue growth of 4.9%. The impact from FX was minus 5 million euros. The organic growth was once again driven by strong contributions from the medical device business. Especially the business with pens and autoinjectors recorded a strong growth. The business with syringe systems was affected by phasing effects and challenging comps in prior years Q4. Adjusted EBTA declined from 90 million to 85 million euros. FX contribution was minus 1 million euros. Organically, adjusted EBTA margin declined from 29% to 26.3%, driven by a less favorable product mix. To put this into perspective, the organic adjusted EBTA margin for Q4 was with 26.3%, however, slightly better than the adjusted EBTA margin of 25.5% for the full year 2024. Let's move now to primary packaging laws. Revenues increased from 238 million to 251 million euros. This led us to an organic revenue growth by 6.1%. The impact from FX was minus 1 million euros. The temporary destocking effect at our customers' level moderated in the quarter, and for the first time since Q1 2023, to repeat, our Wiles business grew year over year again, especially driven by ready-to-fill Wiles. Besides that, molded glass grew in pharma. However, molded glass cosmetics was behind our expectations in the wake of a softening of overall consumer spending for cosmetic products. Adjusted EBTA grew from 43 million to 58 million euros. The impact from FX was 1 million euros. This led us to an organic adjusted EBTA growth of 30.6%. Organically, adjusted EBTA margin increased from 18.5 by 420 basis points to 22.7%. The improvement in margin is driven by a better product mix and utilization. Let's move to advanced technologies. The operating performance improved at advanced technologies, especially regarding the development of adjusted EBTA. However, the most important message here is that we finally reached a very important milestone towards the end of 2024, as mentioned by Dietmar before as well. The FDA granted tentative approval for SQ Innovation's on-body drug delivery device based on our technology. Due to the tentative nature of the FDA approval, our partner cannot start marketing the product before October 2025, which is later than we originally expected. This slide shows the reconciliation of the reported to the adjusted financials for Q4 2024. Revenues grew organically by 5.4% and adjusted EBTA by 6.4%, as discussed in all detail earlier. Let me briefly comment on our EBTA adjustments. The difference to prior year's level is mainly driven by 15 million euros related to the acquisition of Bomioli. Adjusted depreciation was higher compared to prior year's level due to the increased capex of the most recent past, and we expect the nominal growth rate to accelerate hand-in-hand with growth projects being executed and new capacities going online. The adjustment of 10 million euros consists of amortization of fair value adjustments. Regarding income taxes, the adjusted tax rate in Q4 2024 was 19.3% compared to 26% in Q4 2023. The lower tax rate was due to the utilization of tax losses. Adjusted net income after non-controlling interest increased organically by 8.2% compared to Q4 2023. Adjusted EPS grew from 1.51 euros to 1.63 euros. This led us to an organic adjusted EPS growth of 6.7%. Coming now to the cash flow development in Q4 2024. As always, our Q4 is our strongest cash flow quarter. Overall, the free cash flow before M&A was with 48 million euros, almost on par with the prior year with 53 million euros. The adjusted EBTA increased from 190 million to 127 million euros. As mentioned before, the adjustment of 13.9 million euros is mostly due to the exceptional costs related to the acquisition of Bomioli Pharma. The release of net working capital remained almost on prior year's level. The increase in net interest paid reflects the higher net debt level throughout the year as well as the arrangement fees for the successful refinanced RCF of 675 million euros and the promissory loan note of 600 million euros in Q4 2024. Coming now to the cash flow development in our full year 2024. In the interest of time, I will only focus on the elected line items here. Networking capital turned from a tailwind of 32 million euros to a headwind of 9 million euros. The decline in the contribution from networking capital is solely due to the customer down payments received in full year 2023, which did not reoccur in the amount of 53 million euros in full year 2024. Excluding the effect from customer down payments, our cash flow from operating activities in 2024 would be on par with the fiscal year 2023 free cash flow. The line item adjustments declined by approximately 80 million euros due to the costs related to the acquisition of Bomioli Pharma, as mentioned before. At CapEx, in 2024 was around €50 million above prior year's level as we continue to execute, and as explained by Dietmar, our investment program into highly attractive growth opportunities, just as in our siren systems operations in Peretero and Skopje, our medical device production in Priestley City, and Porosky-Tim and our high-value vials production in Wertheim. In the end, and big picture. The free cash flow 2024 was with around 100 million euros weaker than 2023. Why? Because of lower prepayments of 53 million euros and higher capex of 48 million euros in attractive projects. Just to be clear, we expect in 2025 a much better free cash flow. Net financial debt, according to credit agreement in force, stands now at 1 billion euros. This is our adjusted EBTA leverage amounts to 2.4 times. Coming now to our financial position in detail. On a pro forma basis, that means including our Bormioli bridge financing, our leverage per end of Q4 2024 would stand at 3.0 times and we focus on deleveraging to reduce our leverage ratio to a level of mid- threes towards the year end. To strengthen our financial finance position, we refinanced about €2 billion in the last year. This includes €800 million bridge financing for the acquisition of Bormudi, €600 million promissory loan notes, and the refinancing of the revolving credit facility of €675 million. Our liquidity currently stands at 861 million euros and consists of our cash position of 186 million euros and the entirely undrawn revolving credit facility of 675 million euros. As per today, the purchase price for Bomiodi has been paid by drawing the bridge loan of 774 million euros. This was the driver for the increase of our pro forma net debt to almost 1.8 billion euros and the according increase of our pro forma leverage ratio. Let me close my remarks with a word on our molded glass powerhouse. With the closing of the acquisition of Bormioli Pharma, we created, out of the combination of Gerrisheimer and Bormioli molded glass, a true powerhouse. a true global molded glass powerhouse with an attractive growth and margin profile. On a pro forma basis, our molded glass powerhouse generated around 735 million euros revenues with an adjusted EBTA margin of approximately 20% in full year 2024. As indicated last year already, the mid-term target is an adjusted EBTA margin in the mid-20s significantly above the current level, and an organic revenue growth in the mid-single digits. After the closing in December last year, we kicked off the integration of Bormioli Pharma. We can now take the according steps to A, create the new molded glass powerhouse with greater size, scale, and footprint, and B, to lift the synergies. For the avoidance of doubts, In line with what we said already last year in May, we are in the process of a strategic review to assess options with regards to the molded glass powerhouse. Speaking of disclosure, we will be starting from Q1 2025 onwards, presenting our company figures in the usual way of segmentation, but we will also present our molded glass powerhouse in a thereof format. With this, I hand back to Dietmar.

Yeah, thank you, Bernd. Going back to our key priorities for 2025. Key priorities for 2025 are clearly defined. We will focus on the integration of Borneoli Pharma, as Bernd already mentioned, which is already well underway. The leverage We leverage the opportunities of the combined portfolio and new capabilities in system integration. Two success stories will have one joint future. We will definitely continue to execute our growth projects and ramp up new lines to start to contribute to our top and also bottom line. And we are committed to setting new standards for customized solutions and customer excellence as a mission-critical partner for the pharma and biotech industry. To support these key priorities and to solidify our foundation for profitable growth, we will continue to pursue our targeted investment program. The 2025 CARPEX planning reflects the increased focus on cash flow and an even stronger selection of growth projects. Our CARPEX 2025 will remain approximately at the same level as 2024. As our 2025 CAPEX includes CAPEX for BOM JOLI, it will be lower on a like-for-like base. Combined with the fact that our fiscal year 2025 will add an EBITDA contribution of well above 100 million euros, this clearly supports a stronger cash flow. Our molded glass business unit is mainly driven by furnace overhauls and upgrades to state-of-the-art furnace technology. The majority of our CARPEX for the other business units is once again dedicated to our growth projects, in particular for capacity expansion for system and solutions for biologics. You have seen the major projects already on the CARPEX overview slide for 2024. These projects continue in 2025 and will start to contribute. Bomioli Pharma adds significantly to the group's revenue and adjusted EBDR and takes us to an entirely new level and jump-off point for our future growth. Our focus in 2025 will clearly be on the integration of Bomioli Pharma, which is already well underway. A successful integration is the prerequisite for leveraging the opportunities of the combined portfolio and the new capabilities in system integration and turning them into growth. The growth rate of Bamiyoli Pharma is lower than the former Gerasimer growth rate, which will have a certain impact on the growth momentum for the new combined group as a whole. At present, We see softer demand in the food, beverage, and the cosmetic market, which affects our molded glass business. The FDA's approval of our on-body device is a great success for us. However, as SQ Innovation only received tentative approval, it means that they can market the pump only from October 2025. So we will only see revenue contributions starting from Q4 2025 onwards. we decided to take a more prudent approach to our guidance. And this all together now translates into an estimated organic group revenue growth of 3% to 5% in 2025 compared to the combined pro forma figures of Gerosama and Formioli Pharma in 2024. As mentioned before, we will see a strong EBITDA step up in 2025 and uplift in the margins. we expect an adjusted EBITDA margin of around 22%. The adjusted earnings per share will be in the high single-digit percentage range. Looking at the first quarter 2025, we will see strong growth in revenues and EBITDA on a reported basis, driven by the contributions from BOMI Old Pharma. However, Some of the effects mentioned earlier are waiting on our group's organic growth performance. Compared to the combined pro forma figures of Gerasimer and Bormione Pharma, we expect an organic decline in Q1. Besides the general topics that affect the full year 2025, Q1 is primarily affected by one key topic, a phasing topic in the syringe business which will shift revenues and adjusted EBITDA from Q1 into Q2 and Q3. We will return to organic growth on a like-for-like base from Q2 onwards, supporting our 2025 guidance. Our mid- and long-term growth prospects remain unchanged positive. We are growing strongly in systems and solutions for large molecule biologic, for which we are systematically expanding our production capacity. With the acquisition of Bomioli Pharma, we have expanded our product portfolio and created the base for new integrated high-value plastic solutions. All of this will help us to continue our profitable growth in the coming years. In the midterm, we plan a compound annual growth rate of 8% to 10% for the new combined group and a margin expansion to a level of 23% to 25%. Adjusted earnings per share is forecast to reach 10% plus. Yes, our growth momentum has been slowed down by the destocking in the market in 2024, and we expect only moderate growth in 2025. But our long-term growth prospects are completely intact. Despite the current market headwinds, the transformation of Gareth Summer is in full swing, We are building a strong and resilient company that sustainably delivers strong growth, margin, and respective cash flows. The next opportunity to check in on our financial performance in 2025 will be our Q1 results, which we will publish on April 11th. For the time being, thank you. We are now happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star then 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and 1 at this time. The first question is from Oliver Reinberg, Kepler Chevro. Please go ahead, sir.

Good morning. Thanks so much for taking my questions. Free FMA. The first one is to focus a bit on unpacking the kind of change in the top-line guidance for 2025. So there's now obviously quite low momentum compared to the 7% to 10% growth that you were still guiding for for Gersona standalone in September. So I appreciate the color on molded glass and the delay in SQ innovations, but Is there any kind of other adjustment that you have to apply it? And can you provide a more granularity what you expect now for Mordeglass? Can you provide some kind of color on this kind of syringe delay? What has caused it? And can you exclude that this is not related to a chamber? And probably any kind of color, what do you expect for Wiles and Bomioli overall? But just to understand the underlying drivers a bit better. Secondly, it would be on the adjusted EPS guide, which came in a bit softer than expected. It would be helpful to avoid any kind of further EPS disappointments in the future, just to Can you provide some hard numbers? What do you have in mind for depreciations on a clean basis of $200 million, the white ballpark, and also an interest cost of $85 million, the white ballpark, and any kind of color on the tax rate, please? And then finally, on energy costs, I guess you're largely hedged for this year. And luckily, also, the kind of gas prices came down a bit again. But can you provide any kind of sensitivity if gas prices stay where they currently are? To what extent is this still the kind of earnings headwind for 2026? And can you provide any kind of sensitivity here, given that with Bomioli, obviously, the exposure to the steam has increased? Thanks very much.

Thank you for your question. I take the first one, the three to five. Man, you mentioned them. In principle, the effect comes by a combination of several topics. You mentioned the molded glass softening markets of the cosmetic and food beverage. That is one of the key drivers. No doubt the Bormuli growth in general is slightly lower than the old guidance that you are referring of the old Gerasimer. and the later pump. And that, in principle, are the main reason. The syringe delay that you are mentioning is actually a phasing effect that drives sales from Q1 into Q2 and Q3, and you will not see this over the loop of the total year. And it's really a phasing. It's just shifting certain deliveries into the second quarter due to certain capacity, which is actually not In our production, it's actually a secondary process. It's actually the sterilization.

So with second earnings per share, Bernd, maybe you... Thanks, Oliver, for this question regarding EPS guidance, what we baked into and what not. Actually, you mentioned that for the financial results, you worked with 85 million. I don't want to... Basically, it seems, from my point of view, in a fair ballpark. Then the second thing is regarding depreciation. I would actually assume that you are in the beginning of the eighth, so 8.0, 8.1, 8.2, regarding depreciation to sales. I think it's a fair assumption. And regarding the tax rate, given that we are basically, you should not forget, we have now expanded our operation in the South Europe area. I think that the 27% tax rate at this point in time is something we should consider when you're calculating your numbers, but really quite roughly. But then I hope you can work on this on a model basis because we don't give guidance specifically, as you know, for depreciation, not for financial results, but only that you can work on this data set. Regarding the hedge fund, The key question is major, the hedges, as you know, are basically running out end of this year, especially for the Gersheimer part. We never disclosed the price, for the hedge price, and obviously also for Bomioli part of the business, this would be quite helpful. When you look at the energy costs for 2025, no doubt on this. Obviously, we are looking at also to hedge and decide on our hedge policy this year for the next years to come on a very opportunistic basis. So it's nothing what we can report at this stage more on this topic. I hope it helps, Oliver.

Thanks so much. If I just can follow up, can you just confirm on the 2025 guide, this does not include any kind of changes to the expectations to the overall GP1 franchise. Is that correct? I get the question. Can you repeat the question, please? Sure. The change in the outlook for 2025 does not include any change to your early assumption for the GP1 franchise. Is that correct? That's correct. Perfect. Thanks so much indeed.

The next question from Paul Knight. Key bank capital markets, please go ahead.

Hi, you mentioned in the past the size of the GOP market was approaching triple digits. What do you think your revenue exposure or range could be in the year 2025?

Oh, let me disclose this once, Bernd.

Not precisely for the year 2025. We basically always said we have peak revenues of the magnitude of 355 systems, all what we actually said.

Yeah. But they are steadily going up, no doubt about this.

Okay. And then the capacity expansion, you had mentioned 80% of CapEx was for growth. Is that of the total 345 million capacity?

Of course, the CapEx we spoke about is not only the growth that we have in GLP-1, but it's also, of course, the GLP-1 investments are a key driver of this. That's Querétaro, the syringe expansion, and part of this, of course, is also for GLP-1. It's the P3 expansion, which is a lot of this is GLP-1, and also Rosovskitun, which might be GLP-1 as well. But that's not the only growth areas for the next year. There's also other areas, especially in the area of biologics.

Okay. And then last question would be, you know, your annual report mentions weakness in the cosmetics market. What's happening in that market to have a slower market dynamic?

Yeah. probably have to read some of the annual reports of some of our customers. There is a certain softness in the cosmetic market at the moment we are facing. It started actually already end of last year and it's lasting into 25. And that's what we see at the moment. And that's one of the key drivers that affects us for the total year.

Thank you.

David, Paul, just one topic regarding your GFP1 question for 2025. When I look, again, we don't guide for specific products. That's clear. But what we said was that in 2024, we will surpass 100 million. What we said, and that's a matter of fact that we did, and we said that the peak is basically so far, what we disclosed was 350. So there's also fair to say that we will basically reach the $200 million and being above in this year. Okay, very helpful.

Thank you.

The next question from Oliver Metzger. Odo, please go ahead.

Yeah, good morning. Thanks a lot for taking my questions. The first one is on the destocking bias. So you reported some green shoots, and what we've seen also in other companies, destocking cycles have shown some high volatility with some quarters even pointed to a recovery while the next quarter was weak. Are you confident that now the draft is behind you and how would you describe the recovery curve? Second question, you commented also in the past about destocking at Bomioli at the plastic site. Can you update us on that, please? And my last question is about you commented for the phasing on 25, but very weak Q1 due to the phasing in syringes. It would be great if you can elaborate a little bit more because the magnitude seems to be huge to create such high volatility. Thank you.

Yeah. And in this destocking, we can confirm what the peers also see as a moderate recovery. We are not completely over, but we also see a moderate recovery. Actually, for the Q2, we even see very strong water intakes and various errors of the bile jump. That will definitely help. The destocking in plastic is a very unusual topic because we never saw this in the old garrison. From my point of view, It was probably a little bit of beauty up of the bride that now the dealers are de-stocking, nothing that we didn't expect at all in our business model, but that's what we are facing right now. I don't think that there is a real impact of the market behavior for plastic of the new colleagues in Bormuli. And Q1, yes, the key reason is really a phasing. There is... There's some specialization topics concerning the sterilization capacity. The shifts actually started already in the fourth quarter, shifting volumes into the second and third quarter. That has quite an impact. There's a couple of other impacts you might mention. We should not forget we still have Morganton not running up after the flooding. on full power, but I didn't mention them because the key reason, the key block, the biggest block is actually from this phasing, but no doubt there are other criteria that also do slightly impact the first quarter. But the core point is that this phasing impact on the syringes is just really shifting sales and profits just forward into the year. And this actually will not impact the total ESP performance.

Just to add one topic, the molded glass, what we have seen, the softness in cosmetic, as I mentioned before, is also continuing to Q1 as an element as well for Q1.

Okay, thank you. Just a very quick follow-up. Can you give an indication where the PPG performance would have been in Q4 excluding the vials?

As you know, we don't start disclosing now all the subgroups. The cosmetic weakness started already. You have seen this. It's not a great figure. It's not a great figure, but I will basically calculate this. But the real growth in 204 came actually from tubular glass. For the glass side. For the glass side, yeah, yeah.

Okay, great. Thank you very much.

The next question from James Wayne Tempest. Jefferies, please go ahead.

Yeah, hi. Thanks for taking my questions, please. Perhaps if I can ask on the guidance, I guess there's been questions already regarding the 7% to 10% to 3% to 5%, including Bomioli. And I guess you've given some explanation in terms of some of the revenue slowdowns. But just kind of curious on the margin side, in terms of what you're guiding to is around 22%, which is quite a step up from 2024. So with the sort of slower top line, can you give us a sense of the moving pieces to get to around 22% and why there's such confidence with only moderate growth, please? My second question is just to clarify. your point on one of the questions has been, so am I right, you're saying more than 200 million for GLP-1 this year versus 100 last year. So obviously that's growing 100%. And, you know, you've mentioned 350 million in 2028. And that would be, you know, 20% compounded over three years or sort of 75. So just trying to understand the cadence of your expectation, whether that's kind of conservative or if it is very kind of front end loaded and how the revenues are going to come together. And then my final question is, I appreciate there's probably not much you can say, but given the press release that you've confirmed you're having some preliminary discussions with private equity, just wondering any background you can give us to that to help us understand potential next steps from here. Thank you.

It was very fast questions.

Maybe I'll start with the EBITDA margin of 24% to 22% actually James, the key thing is, as mentioned by Dietmar before in his speech, is definitely that Bomioli will help us. It's quite accretive for us, no doubt. But don't forget the core, core. We are now expanding really our revenues with high-value products. And this is something what you will see. You see this especially because our biologics, the dynamic in the field for our biologic products is really growing. And this is actually what's really driving the margin growth. expansion in combination with BOM UD being integrated in our company.

Yeah. I would say the BOM UD is probably have an effect of whatever percentage and all the risk actually comes. And that's not unplanned out of the, the, the higher margin profile in the mix out of the old Gary summer. And the, The 200 million GLP-1 that we are planning to go through is also nothing unplanned. It's the ramp-up of the lines, and it's the consequence of all of the investments that we did over the loop of the last years.

And if you talk about the quarterization, it's a little bit back and loaded in the sense. But again, one topic, James, what is important, we don't guide now for 200 million GLP-1 revenues We clearly said it's surpassing 200 million, and it surpassed 100 million. So we don't want to have each quarter discussion how much comes from GOP precisely. But it's fair to say that if you look at the increase during the year 2025, it's more back-end loaded.

And it will further accelerate over the loop of the next not only second half of the year, but then into 2021. Also, 26 and 27, the share will further accelerate upwards, not out of boxes. And to your third question, you are totally right. There's not much we can say, and there are no major updates, actually, to the ATOC release that we did in February 7.

Thank you very much. Just a quick follow-up, if I can. I think you mentioned Bomioli could add, you know, half a point. And I guess my understanding, looking at the performance of BOMIO through last year, the margins had kind of tweaked down below 20%. So I guess since having full ownership, are there some immediate savings you've been able to get from that to kind of get that margin so it's accretive?

Yes, absolutely. And there are no doubt we also enjoy certain synergies that were also planned from the very beginning, and we are now step-by-step materializing these synergies, which is also helpful. But one more time, you should not only see BOMIO as we buy more business of the same. This is a transformational acquisition that really gives access to this high-value segment in plastics. We will not see all of this in 2025, but relatively soon, also into the next years, you will see further margin increases coming with the high-value segment in plastic, which is a great thing.

Thank you very much.

The next question from Victoria Lambert, Barenburg. Please go ahead, madam.

Thanks for taking my questions. The first one is just about, could you provide any timelines around the molded glass review, like when we should expect some update on this process? Are you still planning capital markets day over the summer? and what sort of topics are going to be discussed at the event, that would be helpful. And then just on the plastics and devices and PPG business, just to get a sense of phasing throughout the year, maybe it's more of a clarification question, So Q1 is expected to be weaker for both divisions, and then we expect to pick up and grow throughout the year. And maybe just some insight in margins, because plastics and devices was a little bit weaker in Q4 versus the previous year. Yeah, that would be helpful. Thank you.

I'll probably take the last question first, Bernd. There are two aspects you are referring to which affects Q1. The phasing, it's really a phasing, and it started already in Q4. That's why you probably also see a slightly softer EVDR in Q4 in plastic and devices because we also here already shifted and delayed some of the deliveries that will now shift into Q2, and that is also affecting Q1. The The other aspects in Q1 are, and it's clear, we are still not fully operating again in Malden 10 in the facility. Here we believe that we will be fully operational by end of March, which means in April they will be able to contribute to the sales and profits in the full way again.

Just taking the question of the capital markets day, and then I'm sure that – Deepa will elaborate on the molded glass strategic review. Regarding the capital market stay, I mean, as you can imagine, now we are really focusing on the integration of Baum Joly, which, as you know, is really the largest acquisition the company has ever made. And this is one topic. The other thing is, obviously, you need also to see this element in the – with respect to the talk we have published – So you really will appreciate and understand that we focus on this topic as well and on our fiduciary duties in this context. So all in all, we will come back to you with an update on what the group will look like once we have clarity on these issues mentioned above.

Yeah, to the model class, I would say these things are fully ongoing. As you can imagine, we reported that we are fully integrating the BOMI-only business. You saw the first information from Berndt. This joint powerhouse disclosure of the first information that you saw now the first time, and we will proceed like this in the next quarter reports that shows very clearly we are moving on by not only setting up this powerhouse, but also setting up as a separate segment. And this is what you see. And so things are ongoing. There's no change in the plannings we are actually executing. I hope this covers your question.

Great. Yes, thanks. Thank you. The next question from Falco Friedrichs, Deutsche Bank. Please go ahead.

Thank you. I have three questions, please. Firstly, when we look at the P&D segment excluding your GLP-1 sales, do you expect this business to grow in 2025? And then also the glass segment, do you expect that to at least grow in 2025? And then on the GLP-1 revenue specifically, one of your competitors announced the signing of additional contracts here in the fourth quarter. Were you also able to secure additional contracts, or is that something that might be possible rather down the road? And then last but not least... Could you give us a flavor for the share of high-value solution products in your new company, including Bormioli? Thank you.

I'll give you some time to work on the first two questions, and then maybe answer the question three and four, then you can prepare yourself for the next answer. The new contract here, P1, yes, there's quite some tenders in the market at the moment, which we are voting for. We're also expecting positive news here over the next months and various areas, honestly spoken. It's a very dynamic market with great opportunities. Also a share of high value for expectation.

Do you have an update on this? Should I step into? Yeah, there are the two topics. One is we talked about the segmentation. In the segments, you ask how is plastic and devices and PPG will perform throughout the year and whether we will see some growth there in the various segments. And the answer is clearly yes. But we don't start now at the beginning. You will understand if I quite, we don't start not to say what would have been if I have not, that GFP1 and so on and so forth. So the message from our side is, yes, we will grow in both segments. But GFP1, no doubt, will be a strong driver, especially in plastic and devices. That's it. And then the other question is regarding the high-value products, ultimately. What we can tell you – starting from, basically, we are adjusting now, given that we have also now the company, including Bonivoli, we start now really to present, going forward, our high-value products in a different way, including also our high-value products, plastics. But I think one good approximate for our high-value products in this area of glass is definitely, and medical devices, is definitely the biologics. And also in 2025, we expect that our Biologic is really increasing. The share of biologics for the whole company will increase from last year. It was around, if I'm not wrong, what we presented was around 15%. It will also grow in 2025 by a substantial percentage. We have percentage points to sales, including warm yoli. I hope this helps.

You probably will not see too much of it in 2025, right? But we have to clearly see that with the integration of the plastic business in Bamiyoli, there will be a clear increase of high-value products in plastic. That's what I always say. It is a very transformative acquisition that is not just adding more business of the same. These bottle closure combinations will open a great opportunity for high-value products in plastic, a field that we have never were bad at, but now we further increase our margins and market excellence also over the loop of the next months and especially years.

Okay, thank you. If I can squeeze in one quick follow-up, Bernd, you mentioned the free cash flow should be much better in 2025. Do you think it could turn positive again this year or should it still be rather slightly negative?

It could be rather slightly negative. From the beginning of the year, it's difficult to quantify, but we should be around zero and minus 50. This would be basically today our expectation, but we should not forget where we are coming from in 2024, where we were minus 100. So you see really a significant step up. And this step up is also due to the contributions of Bomioli. We should not forget this. And this is a quite good one also to the leverage and having this good cash conversion. So this will be basically the ballpark.

And you probably saw in my speech, we have further increased with the CapEx our focus on cash flow and become even more selective. And generally, not only 25, but especially also in the next years, will further increase the free cash flow. That's what I try to say. Even this year, 25, we will not increase in dollar and euro our capex, in spite of the fact that we are now a new company with Formuli. And at the moment, we are looking at, are you only growing 3% to 5%, whatever, but we should not forget the step up in both sales and also in EBITDA of the total new company is actually significant. If you keep the CapEx flat, but you do a step up in EBITDA by well above $100 million, it's clear that that has a positive impact on the cash flow.

Okay, thank you. Thank you, Paco.

The next question from Olivier Calvet, UBS. Please go ahead.

Yeah, morning. Thanks for taking my questions. Just to follow up on the free cash flow guidance, the capex guidance you're implying, these two lines, the cash effective capex of $370 million and the cash from investing of around $345 million after Investments in government grants, just to clarify, you refer to that 345 or to the 370? That would be the first one. Second one on the syringe business phasing, could you give me maybe a bit more details on that contract, which geography or end market that is, and what do you mean with the sterilization capacity being a bottleneck? And then just on overall visibility on the business, you had said you would disclose a new segment structure at the Bormioni acquisition, if I'm not mistaken. So I understand this is not coming, but maybe you could just shed a little bit of light on the contract manufacturing business, first of all. Could you quantify your GLP-1 exposure there and your exposure also to continuous glucose monitors that were in the news recently? Um, and then on the GAT segment, um, could you just give us a sense of how much of an uplift to expect from, from, um, the, the pump business, you know, pick up in 2026, 27, um, because obviously there's already a product on the market and, and what your expectation would be on APWC even in that, uh, segment, uh, that would be, uh, my, my few questions here.

And the first question to, uh, In regards of the search, I will not be able to disclose customer and other topics, but it's a European topic. And one more time, it's a phasing topic that just shifts certain deliveries of already produced components into the next course. I'm not sure whether I fully understood the contract manufacturing business, our exposure. We are a key player here. world market leader in nailers and pens in the contract manufacturing. So it's one of the core areas of our business in the medical devices today. We are now strongly growing in the auto-injectors as well. The expertise of a Gerasimer is clearly in the capability to industrialize the products, and that's also why we have Now, we are very successful in getting GLP-1 contracts because we are obviously a player that has the highest likelihood that you can ramp up high volumes in high accuracy, and that's what happens. And as such, we have, of course, an increased market also on devices, independent whether it's pens or auto-injectors for the devices. And the pump, 2026, we believe, and that's a pump of the customer. We are delivering the pump, but they deliver, of course, the drug. We believe that this solution is a very cost-competitive solution that has a strong market, and we hope that the ramp-up, and that's now a bit delayed from October on, is really contributing to sales and profits also in 2026 and especially in 2027 and onwards, onwards.

And then tackling your question regarding the CapEx, indeed, when we talk about the same year, also basically CapEx cash out of 2025, same as 2024, it's a magnitude of 350 million CapEx cash out for 2025.

Okay, thank you.

The next question from David Ellington, JP Morgan. Please go ahead.

Hey, guys. Thanks for the questions. Most have been asked, but maybe just circle back on plastics and devices. Obviously, a bit of a step down in growth in the fourth quarter. Just wondered if you could maybe give us your high-level thoughts in terms of how we should be modelling growth for the year in 2025 in P&D. Then, secondly, just also to clarify your comments on the capital markets there. I wasn't able to interpret your comments in terms of Should we expect a capital market stay this year, or is that something that you've delayed indefinitely?

Maybe I take the capital market stay question first. In the end, what we actually said is we have now the focus on the integration of BOM Yoli. Then we need to manage all the things around the ad hoc release. And after this, basically, we will give an update. Once we have clarity on this, especially on this ad hoc topic, Then we give clarity on when and when we want to do and will do the capital market stage. That's the idea.

Yeah, to the plastic device step-down growth in fourth quarter, I would not overestimate this. There are certain phasing topics in. The plastic device will deliver a solid growth pattern in the whole year 2025.

And then maybe one follow-up, just in terms you mentioned that you are looking at potentially new GLP-1 contracts. Would those pressure your CAPEX plans this year, or is it already incorporated in your CAPEX guidance?

Basically, we don't disclose all the details of the plan, but you can be assured that we are prudently managing our CAPEX, and there are also some ideas which kind of projects we might win, and we have accommodated

in our capex budget for this project it's both some are we are very very confident that we will win these platforms they have been included and others we have to see we have not included thanks the next question from edward hall stefa please go ahead

Perfect. Thanks, guys. I guess my first question would just be on Bormioli. I think when the acquisition was announced, you mentioned synergies in the region of 3% to 5% in the first two years. So could you quantify the synergies you see for Bormioli today, and is this baked into the guide? And then a question more on sort of the actual individual facilities. Are there any facilities in your organization where molded glass and tubular revenues are produced in the same building? That would be my sort of first question. And then second question again on GLP-1. Could you provide a rough percentage split of how much is earned in glass and how this is expected to change as we approach the 350 million target that you've said? Thank you.

I don't understand. And it was a bit hard for me to understand. I understood there was a question whether there are possibilities that are mixed with molded glass and others. This is not the case. Molded glass is very specific in the production process.

process so their motor class facilities are motor class facilities that is valid for both old charisma but of course also for the new facilities coming in with bombioli maybe just to to tackle the question of the synergies for bombioli part as you rightly remind us we basically said three to five percent of the revenues of bombioli and the near term so um and then we have this clear on in mind um And a significant portion of this we should also realize already in 2025 in the magnitude maybe of 5 to 10 million.

And the other question, I think I understood how can we reach or will you believe in these 350 million GLP-1 sales? We don't have doubts in the achieving of this 350 million. The question is how much will be over the loop of the next year be able to overachieve this.

Okay, perfect. And just wanted to double check, the synergies that you just described there, is this baked into your guide that you have today for 2025?

Yeah, it's included in our guide.

Okay, perfect. Thank you very much, guys.

The next question from Delphine Lelouet Bernstein. Please go ahead.

Yes, hello. Hi. Morning, everybody. Just to be back into this CapEx allocation and trying to extract from 25, having a longer view than the short-term one, I think it's a lot of importance when considering the investment you have to be made. So can you tell us how you think the evolution, let's say, in the three years, X multi-class for your envelopes? So how should we think about this $300 million going forward, absolute and relative to sales? Is it the time to go now in terms of relative to sales for the capex, the way to look at that, or not? Second question, obviously linked with the operating cash flow and so the free cash flow, so you gave us part of the response. Just willing to go back effectively into this 3% to 5% synergy on the revenue, but we all know that there is also a lot of synergy to expect from the marketing and selling, for instance, on the OPEC side. So can you let us know if you have a plan for that? When will you activate that? And thirdly, I was also willing to know, what is going to be your major, let's say, innovation milestone to come in 2025 and 2026?

Maybe I take the CapEx, then you can add that. Generally, if you look at the CapEx, it's just for molded glass. You have where the base CAPEX and MODE is, of course, much higher than in the other areas of the business. So if you look at the MODE class CAPEX separately and point to the other business separately, you would see a lower base CAPEX and then, no doubt, any further CAPEX is significantly stronger, supporting and funding the growth. that is something that you would see if you separate the co-holded picture and the other picture.

Maybe just to add to what Dietmar just said, if you look at our CAPEX program, as mentioned by Dietmar also in his presentation, I mean, the major significant chunk, more than 100, goes into molded glass. So if you really, 120, something like this in the ballpark of this 350, if you really zoom into the part which is not molded glass related, what is very important, and it was also worked out by Dietmann in his presentation, is that the base capex needs for the part of Gerritsheimer without molded glass is huge. lower, much lower than what you see for molded glass. I think it's a very important feature. And therefore, you need to focus on the growth capex in this area. And the growth capex for this area is actually rising a digit in 2025. And here comes into play the capex growth rule that we have. Today, for each capex, growth capex, what we have, €1, you actually can translate this into one euro additional sales, rule of thumb. And that's the logic, how you need to approach our CapEx out of molded glass. And what we always said, we want to improve this ratio even going forward. But that's where we stand today based on our CapEx rule.

Yeah, there's not much to say. What I tried to say in my presentation is, You have to see that we keep, also with molded, the complex relatively flat for the time being, but we are actually adding big chunks of additional EBITDA that comes in, in 25, but also in the years out, and that for sure is changing the cash flow profile.

Yeah, understood.

We'll take the last question from Alexander Galitsa, HAID. Please go ahead.

Yes, thank you. A couple of questions and some maybe follow-ups on what you already discussed. Just wondering if you're willing to share more ideas, particularly around SQ innovations. The product will be launched in 2026. Is there a sense how, like, is that the monopoly market currently, and what's kind of the current size of the market you ultimately will be addressing?

That goes deep in the details of our customer, actually. Market is an attractive market. And we are talking about a fluorescent light where today the patient goes to the hospital actually, and gets an infusion for 10 days. The competitive is here protected is not strongly the market yet because the technology is just rolled out. So it's still possible to really grab a major part of the market that is in itself strongly growing. So that's the strategy of the customer. And with this, we also clearly see the potential. Beside this project, one aspect is very relevant. It's the first time where we have a pump together with a customer through the FDA, and the response is significant. It was not that our own IT device business, the former acquisition of Sensa, was driven by only success stories over the group of the last year with new orders and so on. But what we clearly see now with the first pump through the FDA, we have significantly more discussion with further application for the customers because they see we are on a technology level where you can successfully get one of these trumps through the FDA. That is very, very good for further growth even beyond, very clearly, beyond this individual project.

You said that sounds like it's somewhat differentiated product. I wonder if you can share sort of what's the revenue model behind that? So maybe we can derive some kind of numbers for that in terms of what's, I don't know what the best way to think about it. Ultimately, if the product generates X million, what's the Gersheimer's share?

Maybe I just get you. some basic data from our marketing that pulled out some data for you, but it will not help you much. There are 6.7 million patients suffering from this congestive heart failure in the United States. And this leads actually to 1.2 million hospital admissions annually. And this actually is permanently growing over the loop of the next years. And that shows you the potential of this market. We are actually pretty conservative, our plannings at the moment, based on the experience we made over the loop of the last years, but no doubt, we also clearly see a potential into the mid, whatever you can say, much we want to disclose.

Normally, we don't disclose specific customer projects because also for competitive reasons, especially in this market, and therefore we are a little bit shy on this topic. And I think this is, by the way, a very good case for systems, actually, because ultimately we are not getting all the royalty streams from a concept, but we are actually also selling the pump separately, and therefore you need to see the whole package in the end of the day.

But that's the important point of their own IP devices. The owner of the device, of course, in the margin profile have significant difference a return than the classic, you mentioned it earlier, or one of your peers mentioned it earlier, classic contract manufacturing. And that is, as with the delay into the October, we will not see much of it in 2025, but they will steadily contribute in the outer years, 2026 and 2027, to both bottom and top, but especially also bottom line.

And my last two questions is one on biologics shares. So you mentioned 15%, which amounts to roughly 300 million. Thereof, 100 million is GLPs. Just wondering if you could remind us, so this 100 million GLP revenue, is that all CMO for autoinjectors, or is there something else? And also, if you could give some kind of an idea, the remainder 200 million, what is the composition of that? That's the first question. And then the very last one is I noticed that the exceptional items shot up again. There are some items on reorganization front, $3 million. Just wondering whether it has to do somewhat with the Borneoli integration or potential spinoff already and whether we need to expect something on that front in 2025 as well. Thank you.

Maybe a little bit to our portfolio on GLP-1. You have to see that we are really serving GLP-1 in various applications with the broad portfolio. You have wires and cartridges. You have syringes. You have primary plastic packaging for the oral solutions, and you have both autoinjectors and pens. They together make these figures that we are disclosing. No doubt, key drivers are autoinjectors and pens, followed by the syringes.

Maybe just to step into this exceptional question, ultimately, indeed, our exceptional were high in 2024, but in the end, due to the Bomioli acquisition, ultimately, I think it was a ballpark of 50 million. A ballpark of 50 million. There's something still you need also to expect in 2025, a double-digit million acquisition. Euro amount linked to the Bomioli acquisition still also in 2025. This would be my judgment from today's perspective. There's no doubt on this because ultimately we want to also materialize the synergies which we talked about it before.

Thank you. As there are no further persons with questions in the queue at this time, we will therefore now conclude today's call. We are happy to organize follow-up calls should you still have questions, and we're looking forward to seeing many of you soon. Bye-bye.

Thank you.