Stevanato Group SpA (STVN) 2025 Q3 法說會逐字稿

Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Stevanato Group third-quarter 2025 financial results conference call.

(Operator Instructions)

At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communication Officer. Please go ahead, madam.

Good morning and thank you for joining us.

With me today, I have Franco Stevanato, Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer.

A presentation to accompany today's results is available on the Investor Relations page of our website, under the Financial Results tab.

As a reminder, some statements being made today are forward-looking and based on current expectations. Actual results may differ materially due to risks outlined in item 3D, Risk Factors, of our most recent annual report on Form 20-F, 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, identifying trends in our performance, and providing meaningful period-to-period comparisons.

For reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release.

With that, I will hand the call over to Franco Stevanato.

Thank you, Lisa. Thanks for joining us.

Today, we will review our third -quarter performance, share updates on our investment projects, and discuss the current market environment.

We deliver another solid quarter of financial results. driven by revenue growth, a record mix of high-value solutions, and continued margin expansion. Our third-quarter financial results exceeded our expectations. We benefited from favorable timing of some product shipments in the BDS segment that were previously scheduled to occur in the fourth quarter.

Relative to the same period of last year, we also faced headwinds from foreign currency at certain tariff costs that were not mitigated, which tempered margins in the third quarter. These impacts were already assumed in our guidance.

As a result, we remain on track to meet our 2025 guidance. This underscores the momentum we are experiencing from executing our strategic roadmap, as we leverage and scale up our gross investment in capacity expansion to meet the increased demand for high-value products.

Third-quarter revenue increased by 9% year over year, driven by the continuous strong performance of our BDS segment, which grew by 14%. This was primarily fueled by demand in our core Drug Containment business. As expected, revenue from Engineering segment declined as we continued implementing our business optimization plan.

Our solid performance in the third quarter was underpinned by a remarkable 47% growth in high-value solutions, driven primarily by Nexa ranges and, to a lesser extent, EZ-fill vials.

The Nexa platform is optimized for sensitive biologics. Its high mechanical resistance makes it ideal for the seamless integration of auto-injectors.

A core pillar of our long-term strategy is built around meeting the demands of high-growth markets such as injectable biologics, which require premium containment and delivery solutions. These are often sensitive drugs that require specialized glass or ready-to-use containers to maintain stability and integrity and ensure patient safety.

Our EZ-fill portfolio and our ongoing investments in growth capacity are intended to support customers' innovation programs in drug development and lifecycle management.

As the pharma industry shifts to ready-to-use platforms that deliver superior quality, simplify processes, and enhance operational flexibility, our EZ-fill cartridges are setting a new standard. Most recently, they were selected by a leading manufacturer for use with a GLP-1 biosimilar for type 2 diabetes, one of the first to receive FDA approval and launch commercially in United States.

Engineered for optimal performance in handheld injection devices, EZ-fill cartridges offer seamless compatibility with pen injector systems, helping accelerate time to market while ensuring reliability and patient convenience.

The continued growth in biologics, rising pharmaceutical innovation, and the increasing trend towards self-administration of medicine remain strong secular tailwinds for our business. Solid demand for high-value solutions and collaboration with customers on ready-to-use products illustrate why we believe we are well positioned to meet evolving industry demands and support patient-centric solutions.

Turning to the Engineering segment, the team continues to make meaningful operational progress against our business optimization plan. Over the past year, we have been squarely focused on executing effectively and meeting our customer commitments.

While the steps we are taking have yielded operational improvements, our financial performance is below our expectations. We believe that getting the segment back to historical performance levels is going to take more time, as we refresh the workload with new projects and reposition the segment for stronger profitability.

We have a healthy pipeline of new opportunities across the Engineering segment. However, converting that pipeline into new orders has been slower than we anticipated.

First, as I mentioned during last call, we are strengthening the sales organization with fresh expertise and refining our commercial processes. We expect to harvest the benefits of these initiatives in the coming quarters.

Second, several pending opportunities in our pipeline are repeat orders from existing key customers. The good news is that we have received positive feedback on the performance of recently installed manufacturing lines so we are cautiously optimistic that the current slowdown in order flow is only temporary.

We believe the long-term demand landscape for our manufacturing technologies remains strong, as the industry expands its capacity to satisfy ground demand for injectable biologics and devices.

Customers are investing in new capital projects, as they ensure more core operations in the United States and upgrade their technology to meet higher-quality standards and more stringent regulations, such as Annex 1.

Many major pharmaceutical players have announced extraordinary investments dedicated to US manufacturing operations. This, coupled with organic growth from on-cycle investments and growth in emerging markets, provides us with added confidence in the demand outlook.

Let's turn to an update on our capital investment projects in Fishers and Latina.

In Fishers, we have several syringe lines running commercial production at various stages of ramp-up. At the same time, we will continue to install additional syringe lines and validate customers for the rest of this year and throughout 2026. Our first vial lines are being installed and qualified. with customer validations expected to begin in mid-2026.

We are also advancing the build-out for contract manufacturing activities in support of a couple of large device programs. The new clean room is nearly completed. The first injection molding machines are on site and scheduled for installation in the coming months. We still expect commercial activities to begin at the end of 2026 or early 2027.

In Latina, we are scaling commercial production for Nexa ranges, which will continue into 2026. Preparations are underway for the next phase of EZ-fill cartridge production to meet the rising demand for ready-to-use cartridges. This next phase will be powered by our new RTU 400 EZ-fill cartridge lines. They have a fully automated, ready-to-use process, designed to ensure accepting integrity, increase production capacity, and provide superior container quality.

Our capital investments are helping us meet rising market demand for our core Drug Containment products amid the growth in biologics, which continue to become a large portion of our portfolio each year.

Before closing, I would like to thank our teams around the world on an important ESG milestone. We were recently awarded the EcoVadis Silver Medal. This puts us in the top 15% of companies assessed globally and the 92nd percentile in our industry. This recognizes our strong performance and reflects our commitment to embed sustainability into our operations and strengthens our ESG practice.

I will now turn the call over to Marco.

Thanks, Franco.

Before I begin, I want to clarify that all comparisons refer to the third quarter of 2024, unless otherwise specified.

Let's start on page 9. Revenue for the third quarter of 2025 grew 9% to EUR303.2 million, driven by a 14% increase in the BDS segment, which offset a 19% decline in the Engineering segment. As Franco mentioned, foreign currency translation was a headwind. On a constant currency basis, revenue grew 11%. Overall, financial results were better than expected in the third quarter, primarily due to a favorable timing of product shipments in the BDS segment, which were previously anticipated to occur in the fourth quarter.

Revenue from high-value solutions grew 47% and represented 49% of total company revenue. Strong performance in the BDS segment led to a 240 basis points increase in consolidated gross profit margin, reaching 29.2% in the third quarter of 2025. This was due to a favorable mix of more accretive high-value solutions; the expected financial improvements at our Latina and Fishers facilities, as we scale our multiyear investment plan.

While both sides are currently margin-dilutive, we expect to continue to gain operating leverage, as volume and revenue grow. The ongoing recovery in vial demand as the effects of [destocking abate]. These positive trends were partially offset by a lower gross profit from the Engineering segment and, to a lesser extent, the impact of currency translation and certain tariff costs that were not mitigated.

In the third quarter of 2025, operating profit margin increased to 17.4%. On an adjusted basis, operating profit margin rose 220 basis points to 18.5%. This improvement was driven predominantly by an increase in gross profit.

Net profit totaled EUR36.1 million, with diluted EPS of EUR0.13. On an adjusted basis, net profit was EUR38.5 million and adjusted diluted EPS increased 17% to EUR0.14.

In the third quarter of 2025, adjusted EBITDA increased to EUR77.8 million. The adjusted EBITDA margin improved 280 basis points to 25.7%.

Moving to segment results, starting with the BDS segment on page 10. In the third quarter of 2025, our BDS segment delivered strong results, with revenue rising 14% to EUR266.7 million. On a constant currency basis, BDS revenue grew by 17%. This segment outperformed our expectations by approximately EUR10 million in revenue, from product shipments that we previously expected to occur in the fourth quarter.

Top-line growth was driven by record-level high-value solutions, which reached EUR147.9 million and represented 55% of segment revenue for the third quarter. This was underpinned primarily by strong demand for high-value Nexa syringes, along with the continued recovery in EZ-fill vials.

Meanwhile, revenue from other Containment and Delivery Solutions decreased by 10% to EUR118.8 million due to a decline in low-value syringes and in vitro diagnostics, as we transitioned toward a larger portfolio of high-value projects. This was partially offset by growth in bulk vials and contract manufacturing activities for Drug Delivery devices.

In the third quarter of 2025, gross profit margin increased 400 basis points to 32%. Margin expansion for the BDS segment was driven by the favorable mix of high-value solutions, the financial improvements in Latina and Fishers as the size scale, and the market recovery in viable demand. These tailwinds were partially offset by the impact of foreign currency and certain tariff costs which were not mitigated. As a result, operating profit margin for the BDS segment rose to 22.1%, up from 16.9% in the same period last year.

In the third quarter of 2025, revenue from the Engineering segment decreased 19% to EUR36.4 million. This was driven by lower revenue from glass conversion and assembly lines. This offset revenue growth in visual inspection and after-sales services.

As expected, the segment's gross profit margin declined year over year to 10.4% due to a lower revenue and the current project mix, which include a higher proportion of revenue from the complex legacy projects in Denmark and fewer new orders.

In the third quarter, operating expenses were higher due to certain R&D activities. This was tied to the ongoing development and launch of our next-generation EZ-fill cartridge lines at our Latina plant. As a result, segment operating profit margin was negative 1.1%.

Please turn to the next slide for an overview of the balance sheet and cash flow.

As of September 30, 2025, the company had cash and cash equivalents of EUR113.3 million and net debt of EUR333 million. For the third quarter of 2025, capital expenditures totaled EUR54.9 million. Net cash from operating activities increased to EUR47.2 million. Cash used for the purchase of property, plant equipment, and intangible assets totaled EUR48.4 million for the third quarter of 2025.

The improvement in net cash flow from operating activities and lower capital expenditures in 2025 led to a positive free cash flow of approximately EUR260,000 in the quarter and EUR16.9 million on a year-to-date basis.

We believe we have adequate liquidity to fund our strategic priorities and satisfy our working capital needs through a combination of cash on hand, cash generated from operations, available credit lines, and our ability to access additional financing.

Please turn to the next slide for guidance.

Despite the larger unfavorable impact from currency, we are reiterating our fiscal 2025 guidance and still expect revenue in the range of EUR1.160 billion to EUR1.190 billion; adjusted EBITDA between EUR288.5 million and EUR301.8 million; and adjusted diluted EPS between EUR0.050 and EUR0.054.

I want to call out a few updates to our assumptions for the full-year guidance.

First, with the strength of high-value solutions, We now expect the revenue from high-value solutions will range between 43% and 44% of total revenue compared with our prior assumption of 40% to 42%.

Currency translation was worse than anticipated in the third quarter. We now expect that the impact from currency will be approximately EUR15 million to EUR16 million compared with our prior range of EUR12 million to EUR15 million. We have fully offset this with higher organic growth.

Thank you. I will end the call back to Franco.

Thank you, Marco.

In closing, our year-to-date performance demonstrates the strength of our long-term strategy and business fundamentals. We continue to deliver solid results, driven by growth in high-value solutions, innovation in Drug Containment and Delivery, and meaningful progress across our investment projects.

While challenges remain within the Engineering segment, we've taken decisive steps to improve execution, reinforce our commercial teams, and unlock long-term value.

Our commitment to supporting the evolving needs of our customers, especially in high-growth areas such as injectable biologics and self-administered medicines, position us well to meet the rising demand and deliver differentiated value.

The strategic investments were made, the innovation we have delivered, and the trust we have built with our customers are the foundation of the strong momentum as we look towards fiscal 2026.

With a healthy pipeline, strong market tailwinds, and a clear strategic focus, we are confident in our ability to drive growth; enhance patient outcomes; and deliver lasting value for our customers, employees, and shareholders.

Thank you, again, for your time and continued support. Operator, we are ready for questions. Thank you.

Thank you. This is the Chirus Call conference operator. We will now begin the question-and-answer session.

(Operator Instructions)

Larry Solow, CJS Securities.

Hello. This is [Charlie Strasser], on for Larry.

Could you perhaps give us some more color on the [EUR10 million] outperformance in the quarter and on the top line. And then, also talk a little bit more about the mix.

Yes. Sure. Marco, speaking. Thank you for the question.

The EUR10 million is an acceleration to accommodate customer supply chain need of sales that were previously expected in Q4. Basically, based on their needs, we decided, together with the customer, to ship in Q3. Everything is BDS; predominantly in high-value solution, high-performance syringes.

Great. And then, high-value solutions, what drove the strong growth in the quarter? How does the trajectory look going into next year?

I will start with saying that we see strong demand in high-performance syringes, particularly Nexa, as Franco was commenting. Also, Alba has good traction.

Also, important to underline the fact that we can see some recovery in [steroid] vials. Following the last year of the stocking, we see traction in EZ-fill vials that is improving compared to the same period last year. Those are the main drivers for high-value solution growth.

This is also the main reason why we decided to update our guidance with respect to high-value products. We now expect high-value products share between 43% and 44% of company revenue.

This is -- if I can complement, Marco, we see that the trajectory is robust. Our big international clients -- in particular the bio-customers; also, many related [biosimilars] -- they have a strong demand, in particular, on EZ-fill products, like Nexa ranges.

We see more and more interest and traction on Alba ranges. More and more, we see a lot of increase in demand for the cartridges, ready-to-fill, on the different, format from 1 mL up to 10 mL, because are perfectly fitting for their self-administration for their auto-injector or wearable devices.

Thank you very much.

Matt Larew, William Blair.

Hi. Thanks for taking the question.

On the margin improvement story here, last quarter, you referenced that Latina was positive gross profit margins but Fishers was not yet. Those seen quarter-to-quarter improvement in both. I was wondering if you could update us as to where those stood today, if Fishers had crossed over to gross profit positive yet?

Well, overall, we are happy about the execution of the two plans. We keep on improving quarter after quarter.

As you remember, we started the commercial production in Latina in Q4 2023. While in Fishers, we started about three-quarters later.

In Latina, we keep on improving, also, the financial performance, beside the operational KPIs. We are getting closer to a normalized gross profit margin compared with the segments, still-dilutive.

About Fishers, as mentioned, we started commercial production three-quarters after Latina. It's a bigger plant. It's a greenfield. We are keeping on improving every quarter. We are not positive yet in Q3. We are continuously improving also the financial performance, installing more line and better leverage in our fixed expenses. We plan to go to positive gross profit margin toward the end of this year.

Okay. Thanks for that. And then, on Engineering, last quarter, you called out sort of a KPI site acceptance that had significantly increased. It seemed like maybe a positive indicator. But now, you're saying it's going to take more time to get back to historical performance.

What's the right timeline to think about a return to growth? Can that segment grow in 2026? If not, does the recovery period look like flat revenue or does it look more like the down 20%-ish that you guided to in the back half of 2025?

Yes. If I can start on the bigger picture of the Engineering, on the Q3 of last year, we shared with all of you that the Engineering was coming from a big -- record high -- in terms of orders. This has also generated an increase in complexity. So immediately, with the leadership team, we launched what we called an optimization plan.

In particular, in order to resize the two operation plans. One is related to Italy. The other one was related to Denmark because at that time, we received a lot of orders focalized in Denmark.

Today, we continue to make meaningful, positive operational progress, from an operational point of view. We further enforce the leadership. We increase the execution on supply chain afterservice; in particular, on project management.

So this was translated in Q1, Q2, and Q3 in an evident increase in the number of positive site acceptance tests that we have delivered to our customers that have outpaced the number compared to last year.

Even more, the positive signal that our customer, when they're starting to run the line, they see they give a very positive feedback to all of us.

Today, where we are, the pipeline that we have with our clients, both on historical clients and also new clients, is healthy. All the pipeline.

What we see, however, is a slow delay in the conversion into orders for, mainly, two reasons.

To our big clients, key customers, they were waiting the final positive acceptance test of the line number 1 before to place the order number 2 and number 3.

Second, also, we start to see some of our customers that are taking a little bit more time to re-evaluate in their manufacturing footprint.

So, all over all, this temporal headwind of the Engineering, we see that is month after month, progressive, even more from execution point of view. Also, looking the pipeline that we have with our customer, it's giving very positive feedback for the future.

Just to underline the last comment, the industry in this moment is very dynamic. We see more and more big customers expanding capacity. We see even more -- a lot of clients all over the world upgrading their technology because the new regulations must link to our next one. Also, we see (inaudible) want to take even more benefits so thanks to the onshore in the United States, some customers are going to add even more investments.

So this is a good environment where we continue to grow in the next (inaudible) quarters.

Michael Riskin, Bank of America.

Great. Thanks for taking the question.

In your prepared remarks, I think you made a call out about a biosimilar opportunity or essentially winning some biosimilar business, specifically for GLP-1s. I was wondering if you could talk a bigger picture about biosimilars and how you see that opportunity contributing to Stevanato growth in the coming years, specifically if you could talk to what part of the portfolio benefits that? Does that tend to be high value? Nexa? Or does that tend to be more bulk products or more routine products, standard products? Whether that's incremental margins or top line? Just broadly, how important are biosimilars to you today?

Thanks. Usually, when biosimilar are entering into the market, when the product is going out of patent, usually it's a benefit for companies like Stevanato because this can help to enlarge revenue in the single therapeutic drug.

On the strategy of Stevanato, always, it was extremely important to be part of the originator from the very beginning. This was valid on insulin, on (inaudible), anesthetic, (inaudible), and also even more on GLP-1s --that our big historical insulin customer engaged us many years ago and we are deeply engaged with all our product portfolio with our originator.

But also, in parallel, Stevanato is extremely active with our tech center, both here in Italy and Boston, to try to maximize the validation in all the biosimilar. In fact, today, it is exactly what is going to happen. We are deeply involved with all our EZ-fill, high-value product platform. We have a program of Nexa syringes. We have program on cartridges, ready-to-fill.

In fact, we were just sharing that we win a big program. Even more, we have on biosimilar on GLP-1. New program on pipeline for our Alina Pen.

So to your question, yes, biosimilar is helping to further increase the revenue. Usually, when the product is going out of patent, 70% will be revenue around originator; 30%, historically, revenue, that will be moving inside of biosimilar. It's exactly the strategy of Stevanato to be present in everything that is injectable, originator and biosimilar.

Okay. Okay. And then, a follow-up, if I can, on the guide for the year. As you called out, FX currency is a little bit more of a headwind by, I think, EUR2 million at the midpoint. It sounds like our assumptions for Engineering should be a little bit worse.

You talked about organic offsetting it. Just means that BDS is coming out a little bit better. You saw the pull-forward into 3Q. But am I interpreting correctly that we should expect a little bit of a better result in BDS 4Q as well, even despite the pull-forward, just to offset currency in Engineering?

Thanks. Very good points, Michael.

We are reiterating our guidance. Nevertheless, there are some moving pieces. You mentioned a couple of million more headwinds in currency effect because Q3 was, average, EUR1.17. The euro-dollar exchange rate, a little bit higher than our expectations.

We are doing better in high-value products. We expect now to have high-value products -- has a range of overall revenue between 43% and 44% so significantly higher than after second quarter.

On the other side, we are giving priority to high-value syringes, rather than accelerating the non-high-value syringes. This is also moving the mix.

As Franco mentioned, orders in taking Engineering is not at the speed that we were anticipating. So in our model, we took into account of the risk of the second quarter but we prefer to adjust our model with a couple of million less.

So, all over all, we see impact from currency, some slowdown in Engineering, and acceleration in high-value product bringing more margin to BDS segment .

Okay. Thanks so much.

Paul Knight, KeyBanc.

Hi, Franco. Could you tell us what is utilization rate in Fishers and utilization rate in Latina? Is it -- how many years to get to full capacity, if that's possible to answer?

In Latina, we are continuing -- sorry, Fishers. We are continuing to install high-speed line force ranges. Practically, we install the line. We do the internal validation. We do the customer validation. We start to ramp up. At this installation of line, we will continue throughout, also, 2026 to 2027.

On the top of this, we are starting also to add capacity for vial in both bulk and EZ-fill configuration in the next year. We are adding capacity. We will add capacity for Alba technology. Like we already mentioned to you, we are extending a big program in our building for hosting a production of auto-injector in the next year.

So in the next one to three years until end of 2028, we will continue to ramping up capacity. The goal is to be in full potential at the end of 2028.

You remember, the goal was to invest $500 million to translate the end of 2028, $500 million of revenue.

You're mentioning onshoring quite a bit. What you're hearing is that because of tariffs and pricing, et cetera, your customers are evaluating where their factories may be in the future. But it seems like it's a step higher for possible demand.

Yes. We start to see -- starting from after the (inaudible) this year, it was end of March of 2025, many clients that are coming to raise the interest to our US facility with two types of interest or because they were re-evaluating their footprint because maybe the region they were looking to produce is in a different region of the world and now, they are thinking to put capacity in the United States. There are even more interest to boost and speed up the validation of our plants.

This is, let's say, what was already inside of our guidance. The good news is that we see more and more clients that are looking to totally change their supply chain. This is going to become a more new opportunity for Stevanato because we are already in a very advanced stage of ramping up capacity in Fishers and they like the idea to speed up the validation of our plans in Fisher, in particular, for our (inaudible) product.

Mac Etoch, Stephens.

Good morning. Thank you for taking my questions.

Maybe just to follow up on the order pull-through, can you confirm if that's a single customer that's pushing forward [10 million] in orders?

Secondly, as you look towards 4Q, do you expect those volumes to continue from there? Or is that more of a one-time item?

Now we are not confirming that. We are not so concentrated as a customer revenue. It's a bunch of customers, especially in high-value products, that are accelerating some supply chain needs. But it's not a single customer.

I'm sorry, Mike. I missed the second part of your question.

I was just curious if those orders are going to repeat in 4Q, just given the pull-forward.

Oh, I see. No, that's not expected. It's a pull-forward from Q4 into Q3 on that batch of orders from those customers.

I appreciate the context. Thank you.

And then, secondly, on Engineering, you mentioned the United States manufacturing announcements. I'd just like to get a sense of what you're hearing within your Engineering segment and the customer conversations you have there and when that might translate to more meaningful order growth for engineering and maybe also the BDS segment, as well?

Obviously, these are longer-dated opportunities but I just want to get a sense of what you're hearing.

On Engineering segment, what we see -- that there are -- again, very similar to the question that Paul asked to us. Certain clients, they are re-evaluating their footprint. Maybe, originally, they were looking to invest capacity in Europe or through certain [CMO]. Now, they are seriously re-evaluating or they have already approved to extend their capacity to United States. This is also one of the reasons why we are taking a little bit more time to confirm the order and the specifications.

Other customers, they are also changing their type of supply chain. Maybe they are starting to further increase the outsourcing through US CMO or to use to further increase the capacity of their existing plants.

So, all over all, we see a positive trend in the United States, where customers are starting to more and more increase their platform for filling at estates. Automatically, once they will build the factory, there will be even more opportunity for our Fishers plants because, automatically, we will have more opportunity for syringes Nexa, syringes Alab, by the way, to fill all devices.

I appreciate the context. I'll leave it there.

David Windley, Jefferies.

Hi. Can you hear me okay?

Yes.

Hi, Dave.

All right. Hi. Good afternoon. Thank you. I wanted to follow up on Paul's question on capacity. Put a maybe slightly different spin on it.

On the HVS guidance for the year, the previous guidance for the year, I believe you said 40% to 42%. 1Q started off pretty favorable to that. I think, at the time, the commentary was that your ability to see HVS continue to rise as a percentage from that first quarter-favorable level was somewhat gated by capacity and when lines were coming on.

This quarter, obviously, you were able to pull that 10 million forward. The trends have been pretty favorable. I'm coming back again to Paul's question about capacity and utilization. Are lines in place to continue to support HVS outperformance but for the pull-forward in the near term? Or are you in a position where you have to wait for additional lines to be validated before you can see HVS continue to move higher?

Today -- David, in the last years, most of our investments were just fully dedicated to build capacity in high-value products, both in Italy and the two plants in the United States. Today, it is true. The demand is really driven by the capacity that we have put in place in all the locations. Most probably, we will continue in this way.

What is important to know is that there is an intense program that continues to install capacity in all the formats. Just to translate in facts:

In Latina, we continue to install capacity for syringes Nexa In Latina, we will install capacity for syringes with double chamber. We have this huge program to install several hundred million for capacity for cartridges, ready-to-fill.

In Fisher is the same. We continue to add capacity for Nexa ranges. We will add capacity for Alba. We will add the capacity for also by (inaudible). This is only for EZ-fills.

On the top of this, in Germany, we are launching the new big-size cleaning room that is going to host and produce Alina Pen. Also, we have space to further duplicate in the future in the United States.

We are so focused to intensively execute all our investment. We will add EUR700 million of additional capacity in a high-value product until 2028 in order to really met all the program and execute the contract that we have with our customers.

That's very helpful. Thank you. Follow-up question around vials.

You'd highlighted that the particular pressure on vials, I believe, if we go back to '24, was acute on your margin. Post the pandemic and post the decline in vaccine-related activity, you're seeing recovery in that.

I'm wondering what the drivers are of recovery in vials? Is it the recovery of orders from your traditional clients? Or are you seeing new products, perhaps participation in GLP-1s or something like that, that are driving an uptick in buyer orders? Thank you.

Yes. David, let's make a parallelism.

Bulk buyer, you have to consider like a big ocean. with several hundred customers that, in the last two years, started to normalize their inventory. Today, since the last four quarters, we continue to see positive signal to go back on the normalization. In fact, I think throughout 2026, most probably, we can say that we'll be back to pre-pandemic period for bulk buyer.

EZ-fill vial is more a niche. It's more -- let's say, we have some big commercial customer but it's where we see new molecule launching on the ready-to-fill buyer. So we also have seen a positive traction with particular -- also, increase of orders with new customer on EZ-fill vial.

Because remember, we said that the customer were looking to clean the inventory of bulk vial -- and then, because they have the EZ-fill flexible line for filling EZ-fill vial, they are starting to place new order.

So, all over all, bulk, we are moving to a normalization. On EZ-fill, we see also new molecule that are going to use this type of primary configuration, EZ-fill.

Okay. Thank you.

Doug Schenkel, Wolfe Research.

You had a really strong high-value solutions quarter that was partially offset by standard bulk coming in a bit light of our model. I'm just wondering, based on your commentary, it seems like this is just timing. Is that right? Is there some other more durable shift in mix and demand that we should be contemplating as we update our models?

Besides what Franco just said about the long-term view and the adoption of the sterile configuration, for the year, there are a couple of factors to be mentioned.

First of all, we mentioned the acceleration in the BDS or volumes previously expected in Q4. This is mainly in high-value products so it's a pull-forward from Q4 to Q3.

Then, in Q3, we mentioned also the fact that other Containment Delivery solutions are going down compared to the same period last year. This is mainly driven by in vitro diagnostic and non-high-value syringes.

More specifically, on syringes, we have some flexible lines. So our priority is to switch the production and the revenue to a high-value Nexa syringes, rather than staying in the low-value syringes.

So we have this type of acceleration in Q3 with the Nexa syringes and EZ-fill vials recovery compared with the same period last year.

If I can add a little bit more in a broader picture, the goal of Stevanato in the next 5, 10 years is to become a full (inaudible) solution provider for our customer where we want really to sell the fully integrated system.

This is the reason why, for example, the plant official is a campus that is going to provide multi-capability only, all in high-value product. Also, this is in combination with the fact that in the last year, most of our investments are fully dedicated to high-value products.

So you can see some fluctuation quarter by quarter but the clear goal of Stevanato in the next few years is really to be laser-focused on serving the full system on high-value product to our clients.

Okay. Super helpful. I was trying to parse out trend versus transitory so that's great.

An unrelated follow-up. There have been a number of recent headlines around large pharmaceutical companies essentially making deals with the US government around drug pricing. Recently, it's been speculated that Lilly and Novo may announce a deal, as soon as today.

Is it logical to assume a significant price drop and, thus, some elastic response in terms of market expansion via Medicare and Medicaid? Could be an absolute good (inaudible) for packaging suppliers. I'm just wondering, as you think about these settlements potentially leading to an increase in volume, wouldn't that, by extension, be good for Stevanato?

We saw this announcement. I think also today -- later today, there will be a further announcement. What we can say is very similar to the question that we received before about the biosimilar.

Every time the biosimilar is coming on board, this can help to further enlarge revenue for all the industry. Usually, what we say, just to put us in a standard position, with our clients, we have a long-term contract in place. The cost of primary packaging, also EZ-fil product, auto-injector, is really minor compared to the overall cost of goods of the drugs.

Usually, this, we see more like a net-positive effect for companies like Stevanato because they will translate in more orders for our product.

Patrick Donnelly, Citi.

Hey, guys. Thank you for taking the questions.

Franco, maybe to follow up on Dave's question there on the vials, can you just talk about where we are on the inventory side? It feels like destocking, far less of an impact. Are we fully past that? What's the latest you're hearing from customers on that front and confidence on the go-forward there?

What we see is that, all over all, they are starting to normalize their inventory. In fact, this is translating more normal forecasts from our customer. Usually, with our customer, we work with what we call three-to-five years agreement, then we have the 12-month forecast. Three-month confirmed order, if more bulk-related. Six-month confirmed order, if it's more EZ-fill related.

Today, all over all, we see that clients are starting to normalize. One KPI that I can share with you, if you really compare last year with this year the revenue around vial, if you can take a blend between bulk and EZ-fill, we increased 12% compared to last year.

So we see continue, month after month, positive scene, practically everywhere. We are talking about Europe, United States, Latin America, and Asia. We have a portfolio of 700 customers. But, all over all, the macro trend is moving slowly in the good normalization direction.

Okay. That's helpful. And then, looking at next year, I know you guys (inaudible) is out there, that low-double-digit range. It sounds like, throughout this call, it's been a lot of positives between some of the regulatory stuff. Obviously, the stocking behind you guys; the new facilities ramping.

Any reason why next year wouldn't be in that low-double-digit range? I think the Street's around 10% next year. I just wanted to take your temperature on that. Thank you guys so much.

As you know, we will be providing our detailed guidance for 2026 in next quarter.

Nevertheless, what we can tell you is that we see, today, positive trends for high-value solution adoption. We see Fishers and Latina ramping up in the right way, in line with our plan. We are executing our plan in engineering so we have a positive approach toward 2026. We need, obviously, to finalize our internal budget and objectives.

But this is what we can tell you today.

Understood. Thank you guys so much.

Curtis Moiles, BNP Paribas Exane.

Cool. Thanks for taking my questions.

First, I wanted to just maybe get a little deeper into the high-value solutions guidance for the year. On my rough math, I think it implies, for Q4, a range of 39% to 42% of revenue versus 45% year to date or so.

So could you maybe just give a little more color around the assumptions you have there? Is that based on customer orders or anything else to be aware of?

Yes. Correct. Our guidance are implying 40% to 41% in Q4. This is driven by the backlog we have in our hands and by the fact that, again, we have been able to accelerate some revenue in Q3 that were previously expected in Q4.

So as Franco was saying, there can be some quarterly fluctuation or acceleration, depending on the mix of orders we have in that specific quarter. Nevertheless, in the medium term -- but, in the past, we saw a steady growth of the share of our high-value products and we expect to keep on installing capacity and keep on growing in the share of our (inaudible) products.

If I can also maybe add a little bit more color from product and customer and therapeutic area point of view, we see that we are growing in biologics a lot. Inside the biologic, we see traction on Nexa syringes, where clients are using some auto-injectors We see more and more increased demand from product in (inaudible) and (inaudible) but also commercial on Alba.

We are extremely excited because they have superior performance in the result of reduction of releases of visible particles. Cartridges, ready-to-fill, on different formats, from 1 mL up to 10 mL, are good because it's very easy to be inserted in this complex device, the cartridges. Also, our Alina Pen is starting to fill good pipeline, new prospect on particular biosimilar.

So what I would like to share with you: The pipeline is spread with a very nice number of clients and therapeutic drugs in all our product portfolio. We are not just focalized in one product or one customer.

Got it. Very helpful. And then, quickly, on contract manufacturing. I know the press release called out strong growth in Q3 and then, you mentioned Fishers should start commercial activities for contract manufacturing, I think, end of '26, early '27.

Can you maybe just give some high-level thoughts about how we should think about this, going forward? Is that going to become a more meaningful growth driver for the business?

We are building in Fishers this production department dedicated for one high-runner for auto-injector for one of our big customers that already buy from us these Nexa ranges.

Today, our strategy, our approach, on Drug Delivery Systems is our main goal is to deliver our IP product to our Alina, Aidaptus, and Vertiva product. This is why we're building this big clean room in Germany that we have already. We have to execute the pipeline with our customer.

It's also true that we have already contracted in a selective way that we can provide these self-injectors or some pen to some customers that they own the (inaudible). When we are already the supplier with our Alba syringes or cartridges, ready-to-fill, or syringe Nexa, practically in order to have a bigger contract, we also serve this product in the form of CMO business model.

Great. Thank you.

Operator, are there any other questions?

There are no more questions registered at this time. Thank you.

That concludes our call for the day. Thank you for joining us.

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