Gerresheimer AG

Good morning ladies and gentlemen and welcome to the Gerritsheimer conference regarding the publication of the Q2 2025 results. At this time all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation. Now I hand over to Guido Pickert, VP of Investor Relations at Gerritsheimer. Mr. Pickert.

Thank you very much. Welcome everyone to our Q2 H1 2025 results earnings call. Our CEO Dietmar Siebsen will lead you through the business development and the guidance. Our CFO Dr. Bernd Metzner will lead you through the financials and to start with hand over to our CEO Dietmar Siebsen.

Thank you Guido and good morning everybody. Thank you for joining in. We had already given you a Q2 trading update on June 2, the day we issued our OTAC announcement adjusting our guidance for 2025. So, you already had a big picture about the development in the second quarter. Today, we will elaborate on the actual second quarter numbers and put some more color on the main growth drivers for the second half of the year. On a reported level, you see once again a significant increase in revenues and earnings in Q2 2025 compared to the same period last year. Thanks to the consolidation of Bomioli Pharma, the acquisition of Bomioli Pharma has taken us to a completely new level in terms of revenue and adjusted EBITDA. Reported revenues grew by 19.6% to 691 million euros, the adjusted EBITDA by 10.8% to 119 million euros. We also returned to revenue growth on an organic level in the second quarter as announced, but at a slower pace than previously expected. Revenues grew in Q2 2025 compared to the previous year pro forma figures of Gerrishammer and Formioli Pharma, and they came in at 1.9%. The lower fixed cost absorption weighted on our adjusted EBDR development, and thus our margins. The adjusted EBTR declined thus by 4.1%. In Q2, we were able to realize the shifted revenues from the syringe business. Our plastic and device division delivered a robust growth as we had expected, and the order book developed positively, supporting a stronger second half of the year. However, the weakness in the cosmetic market prevailed and affected in particular our molded glass business. This was compounded by a significant decline in demand for containment solutions for oral liquid medications affecting our results in both primary packaging plastic as well as molded glass. The first half year altogether was clearly below our expectations. The second half will be stronger. We will continue to grow profitably in the course of 2025, but less or much less dynamically than previously anticipated. The return to normal operations in Morganton following the repair of the flood damage and in Loher following the replacement of the furnace will contribute to our growth in the second half of 2025. The biggest growth drivers in the second half of the year will be the ramp up of new lines for the successful implementation of our growth projects. And I will elaborate on this in a minute. Also systems and solutions for biologics and the expanded portfolio for high value solutions will clearly contribute to our growth in the second half of the year and also the improvement of the margins. The integration of Bormioli Pharma is progressing and we are realizing the planned synergies. I can assure you that despite the unexpected market headwinds we are currently facing, acquiring Bormioli Pharma was exactly the right strategy move. It brought Gerrishammer to a different and new level. strengthened our market position and opened new strategic options. We are establishing our molded glass powerhouse and adding new integrated high-value plastic solutions to our portfolio. Our strategic review of whether, and if so when, a spin-off of the combined molded glass business might make sense is ongoing. We expect results in the second half of the year. Without the acquisition of Baumiole Pharma, we would not be talking about a strategic review. 2025 will be a consolidation and integration year for Gerritsheimer. However, we have significantly strengthened our foundation, which will enable us to return to growth that is notably stronger than that of the overall market. What did we do when we were confronted with the disappointing developments in the second quarter. Yes, we adjusted our guidance for 2025 and the annual general meeting signed off on our proposal to cut the dividend to 4 cent instead of 1 euro 25 per share. Thank you for this support here. We know that this was unexpected, but we believe that in view of the lower than expected EBITDA contribution, it was the right measure to maintain the company's financial flexibility. There are also several measures already underway to optimize processes, streamline our organization, and cut costs. Our capital structure is robust. The bridge financing of the purchase price has been already extended by a further 12 months, and we have ample headrooms with unused credit lines. Our growth strategy remains valid, and our long-term positive outlook remains unchanged. Our transformation into a system and solution provider has made us a key partner for the global pharma and biotech industry. This positioning is a key to sustainable, profitable growth. We are already today growing strongly in system and solution for large molecule biologic, including, for example, GLP-1. We have a broad portfolio of high value solutions that improve and will further improve our profitability. With the acquisition of Bormioli Pharma, we have expanded our product portfolio and created the basis for new integrated high value solutions. Given the weak first half of the year, the most pressing question, of course, is how we will achieve the necessary growth in the second half of the year to reach our guidance for 2025. We have shown you this slide already with our Q1 results. The key growth drivers in the second half of 2025 will be the return to normal operations, new ramp-ups and a continued shift to high-value products. The return to operations refers to our plants in Lower Germany after the furnace exchange and of course Morganton in the United States after the flooding in fall 2024. The ramp up of new production lines for medical devices refers to Skopje, North Macedonia and Peachtree, Georgia, United States. The last two pictures you see on this slide are examples for the continuous shift to high value products. Our plant in Bünde as an example for high value syringes, mainly driven by the demand for solutions for large molecule biologics. And of course our plant in Querétaro, Mexico as an example for ready to fill vials and cartridges. All of these growth drivers on this slide will contribute to our revenues and earnings in the second half of 2025 and beyond. We picked three examples, Loa, Peachtree and Carretero to make this a bit more tangible. So Loa, we gave you a status update on the project and our plant in Loa when we presented our Q1 figures. We were able to successfully complete the furnace exchange in May 2025 and have restarted the flint glass production contributing to our growth in the second half of the year. The new furnace, this by the way the world's first oxy-hybrid furnace in this size, has a higher capacity and can be operated with up to 50% electricity. This will enable us to reduce our carbon emissions by up to 40% compared to a furnace with conventional technology. The project also included infrastructure measures for the power supply, the expansion of production buildings, new production facilities, and a new environmental-friendly cooling system. With a total investment volume of around 100 million euros, the project in Loa is one of the Gerritsheimer's largest investments in molded glass in recent years, if not ever. Investments in the latest technology are extremely important to future-proof our production and ensuring our long-term competitiveness. Instead of just going for the bare minimum of maintenance, Carpex and Loa, we consciously invested in top-notch energy-efficient technology, including new lines to support our high-quality standards, as well as customized solutions for our customers. Peachtree, the second example of a significant growth driver for the second half of 2025 and, of course, the following years, is the ramp-up of our new production lines in our plant in Peachtree, Georgia. At our Peachtree City site, we produce medical devices such as inhalers, components for infusion sets, microinjectors, test cards for microbiologic tests, and also autoinjectors, which can be used in diabetes and obesity therapy, among other things. The growth project in Peachtree has been a two-stage expansion. For the first expansion stage, we have built new facilities literally right next to the existing plant. The smaller buildings on the left of the upper picture are the original Peachtree One, you can call it, Peachtree One plant. The large holes to the right are the first expansion stage. Construction is finished and the ramp up of the production in the new hall has already started in Q2 and will be a strong contributor to our growth in the second half of 2025. The second expansion stage, Peachtree 2, is a completely new facility, roughly two and a half kilometers or miles from the original plant. The qualification of the new lines in Peachtree 2 will start in Q3, late Q3, First contributions from commercial productions are expected in fourth quarter 2025, more to come in 2026 and beyond. We have built the PhD I and II expansions based on long-term customer contracts. That means that the cap expense on the expansion was not based on hope. that we would be able to utilize production capacity at some point in the future, but on actual contractual order intake. Considering the current development and tariff discussions in the United States, our principle to produce in the region for the region pays off once more, although the decision was made before and independently of these discussions. In Mexico is one of our production facilities for tubular glass products, such as vials, ampoules, cartridges, and we have recently expanded the facility to become our hub in the Americas for our syringe production. In Querétaro, we are currently setting up the first production line for Easy-Fill Smart, the next generation packaging platform for ready-to-fill vials. Easy-Fill Smart is an advanced version of the platform solution for ready-to-fill vials. that offers several advantages, including environmental friendly sterilization, the vaporized hydrogen peroxide. Until now, ethylene oxide has mostly been used for sterilization. When used with our Gerrishammer Elite vials, Easy-Fill Smart significantly reduces the total cost of ownership and the risk involved in the fill and finish processes. which is a significant, important aspect, especially for expensive, innovative biologics for our customers. Commercial production will start in the second half of the year, contributing to our growth and margin expansion in 2025. We are continuously increasing our share of high-value vials, including ready-to-fill elite vials, building on a strong market position in bulk. Revenues from ready-to-fill vials have now been growing several quarters in a row. Easy-fill smart has the potential to accelerate the market's transition to ready-to-fill vials. At the end of 2023, ground was broken for the planned expansion in Querétaro, Mexico. Now the first new syringe forming lines are being ramped up as part of our preparation for the qualification process. In the mid-term, we will increase our production capacity for ready-to-fill syringes in the North American market by several hundred million syringes annually. The pre-fillable glass syringe manufactured here are suitable for injectable biologics among other things. These include GLP-1-based drugs for the treatment, for example, of obesity. In total, we have invested around $100 million in the expansion of the plant and the respective equipment for long-term customer orders. And it will start to pay off already in Q4 2025. Thank you for attending at the moment. Thank you very much. And with this, I will hand over to our CFO, Bernd Metzner, for a deep dive into our financials of the second quarter. Bernd, it's on you.