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.