Stevanato Group SpA (STVN) 2021 Q4 法說會逐字稿

Hello, and welcome to today's Stevanato full year results. My name is Elliot, and I'll be coordinating your call today. (Operator Instructions)

I would now like to hand over to our host, Lisa Miles, Head of Investor Relations. Please go ahead.

Good morning, and thanks for joining us. With me today is Franco Stevanato, Executive Chairman; Franco Moro, Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer.

I'd like to remind everyone that a number of statements being made today will be forward-looking in nature. Please remember that such statements are only predictions. Actual events and results may differ materially as a result of risks we face, including those discussed in Item 3D entitled Risk Factors and the company's annual report on Form 20-F for the fiscal year ended December 31, 2021, filed with the SEC. We encourage you to review the information contained in our earnings release today in conjunction with our associated SEC filings. The company does not assume any obligation to revise or update these forward-looking statements to reflect subsequent events or circumstances, except as required by law.

Today's presentation may contain non-GAAP financial information. Management uses this information in its internal analyses of results and believes this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of the non-GAAP measures presented in this document, please see the company's most recent earnings press release.

And with that, I'll hand the call over to Franco Stevanato for opening remarks.

Thank you, Lisa. 2021 was a landmark for Stevanato Group, underscored by the power of our integrated capability and value proposition. For 2021, compared to the prior year, we delivered double-digit revenue growth, excluding COVID, expanding margin and increase the mix of high-value solutions as rising customer demand was measured with the first rate execution. With a successful IPO behind us, we met or exceeded our full year 2021 financial performance metric despite the complexity of the current global supply chain environment.

We finished 2021 with a solid backlog and new order intake as well as a robust pipeline of new opportunity. At year-end, Stevanato have more than EUR 400 million in cash, a flexible balance sheet and ample liquidity to fund future investments in growth platform. The recently announced investment from BARDA illustrate our strong reputation and further confirm our strategic approach in the U.S. to invest and broaden our offering in this strategic region.

Our 3-year track record demonstrates consistent delivery in our financial and operational objectives. Today, the fundamental of our business continues to strengthen as we steadily advance our strategic priority to capitalize on strong customer demand. Amid favorable macro trend, our integrated capability resonates with customers as we aim to drive double-digit revenue growth, increase our mix of high-value solutions, expand margins and deliver long-term shareholder value.

Thank you, Franco. Our successful financial and operational performance in 2021 sets the foundation for sustainable organic growth. For the full year 2021, revenue grew 27.5% over the last year driven by growth in both segments and an increasing mix of high-value solutions. We closed the fourth quarter of 2021 with a new order intake of approximately EUR 278.3 million and a committed backlog of approximately EUR 880 million. We view these key performance indicators as an important measure for our future growth prospects and represent ongoing favorable customer demand trends as new treatments come to market to tackle chronic diseases and advanced patient care.

Turning to Slide 6. Revenue from high-value solutions was strong in the fourth quarter, which have boosted the full year mix to 25% of the 2021 revenue compared to 22% last year. We expect that this trend to continue as customers choose a ready-to-use platform because they reduce customers' total cost of ownership, get treatment to market faster and increase quality and flexibility.

In 2021, we experienced a rising demand for syringes compared to last year. The increase was driven by our high-performance ready-to-use syringes platform where orders doubled in 2021 compared to the prior year. These proprietary platforms include our Alba and Nexa syringe products that are gaining traction. This platform ideally suited for biologic and high-sensitive drugs like monoclonal antibodies, mRNA vaccines and recombinant proteins because of their advanced technology and superior performance. We expect this trend will continue into 2022.

The evolution in our high-value solution extends beyond the primary packaging. We continue to expand our integrated capabilities in the drug delivery space of pen injectors, auto injectors and wearable pods. In January 2022, we expanded our agreement with Haselmeier for our proprietary Alina pen injector, granting us exclusivity to support a broader range of therapeutic areas beyond the diabetes. We designed and developed the Alina variable-dose and fixed-dose pen injector platform, which is compatible with established therapeutic regimens and innovative drug therapies related to diabetes. This expansion marks another important step as we continue to expand our presence and diversify the opportunities within this product family.

Let's turn to Slide 7 of the presentation. We are excited to announce our first agreement with the U.S. government Biomedical Advanced Research and Development Authority or BARDA. Under the agreement, BARDA will invest up to approximately EUR 95 million to support an increase in manufacturing capacity in Indiana for both standard and EZ-fill vials. This will help strengthen the U.S. government's domestic capabilities for national defense readiness and preparedness programs for current and future public health emergencies. We are very pleased to be selected for this important investments from BARDA as we build and rapidly scale our capacity in Indiana to help fortify the U.S. government's pharmaceutical supply chain.

Turning to Slide 8. The BARDA investment dovetails with our plan to expand our global industrial capacity to satisfy the market demand. The build-out of our facility in Indiana remains on track. We still expect that construction will continue into 2023 followed by start-up and validation, leading to revenue generation sometime between late 2023 and early 2024. In the meantime, the pace of demand has increased over the last year, particularly for our high-value solutions.

In response, we are moving forward with an incremental investment in Italy to further shore up our capacity until the U.S. and China facilities are expected to go live. We believe that we have the necessary flexibility through our modular approach to incrementally add or modify capacity to match customer evolving needs. Our capital investments are intended to hit a sustainable organic growth as new treatments come to market that require high-quality, high-performance solutions, further up the value chain. We believe that our integrated capabilities coupled with our high-value solutions are important elements to create and drive shareholder value.

Turning to Slide 9. While the pandemic continues to present challenges to businesses around the world, we remain resolute in managing the complexity around inflation and the supply chain. We worked hard to effectively manage the impact to the business in 2021, and now we are keeping a sharp focus on inventory management, manufacturing and on-time delivery to customers.

We have been capturing cost increases and have raised the prices accordingly. We were not immune to the rapid rise of Omicron variant, and we experienced higher rate of absenteeism in January in some of our European facilities. And while production was temporarily slowed in January, we began returning to more normalized levels of staffing and productivity by mid- to late February.

We are also following the situation in the Ukraine carefully and its potential business impacts. We are closely managing inflationary cost and supply chain with a high degree of discipline and perseverance. We anticipate that these headwinds will persist throughout the year. And finally, we are executing against our strategic operational priorities to capitalize on rising demand trends and support customers across the entire drug lifecycle.

In 2022, we remain focused on adding incremental capacity in Italy in response to rising demand as customers move up the value chain; advancing our expansion plans in the U.S. and China as we diversify our industrial footprint and enhance our proximity to customers; continuing our investment in R&D to accelerate our market-leading position and increase the pipeline of our solution; building a multiyear pipeline of opportunities heavily weighted in the biologics market, where we expect to continue to see a growing demand for our high-performance products.

I now hand the call over to Marco to cover the financials in more detail.

Thanks, Franco. We are very pleased to deliver another solid quarter of financial results, which have topped our full year estimate. For the fourth quarter of 2021, revenue was better than expected and grew 12.5% to EUR 232.6 million over the prior year. This was driven by another strong quarter from our Engineering segment due in part to the ongoing capital deployment by customers to satisfy industry demand.

For the fourth quarter, COVID represented approximately 14.3% of revenue. As we mentioned on our last earnings call, the fourth quarter of 2020 included benefit of approximately EUR 15 million in our BDS segment related to the timing of revenue, which concentrate revenue recognition in the fourth quarter, but had no impact in full year 2020 revenue. For the full year, revenue increased 27.5% to EUR 843.9 million over last year driven by growth in both segments. As expected, COVID represented approximately 14.7% of revenue for fiscal year 2021. Excluding COVID, revenue grew approximately 15.2% over year 2020.

Please turn to Slide 12. As expected, contribution from high-value solutions increased approximately 62.9% to EUR 66.4 million in the fourth quarter compared to last year, representing approximately 28.5% of consolidated revenue. For the full year, high-value solutions grew approximately 42% over last year to reach EUR 207.8 million, bringing the full year mix to approximately 24.6% of consolidated revenue. And while investors should anticipate quarterly fluctuations, our long-term trajectory remains unchanged with a target mix of mid-30% by 2026, contributed to the expansion of EBITDA margin over the long term.

Moving to Slide 13. The increase in more accretive high-value solutions and ongoing operating efficiency gained from our lean manufacturing initiatives contributed to increased gross profit and operating profit margins. For the fourth quarter, gross profit margin increased by 310 basis points to 31.4%, while operating profit margin was up 40 basis points to 18.7% compared to last year. Operating profit margin reflect increased investment in R&D mostly related to the advancement in innovation in premium products, including EZ-fill platforms and BDS. This resulted in a net profit of EUR 44.6 million or EUR 0.17 of diluted earnings per share.

As expected, the higher number of shares outstanding in 2021 impacted the quarter and the full year. Adjusted net profit was EUR 33 million and adjusted diluted earnings per share grew 18.2% to EUR 0.13. For the fourth quarter, adjusted EBITDA grew 10.3% over the prior year, and adjusted EBITDA margin was 25.3%. For the full year 2021, gross profit margin increased 210 basis points to 31.4%, while operating profit margin was 19.2%. This resulted in a net profit of EUR 144.3 million or EUR 0.53 of diluted earnings per share.

Adjusted net profit for fiscal year 2021 was EUR 120.5 million, and adjusted diluted EPS grew 54.8% to EUR 0.48 compared to last year. Adjusted EBITDA increased 36.3% to EUR 218.3 million resulting in adjusted EBITDA margin of 25.9% for fiscal year 2021.

Please turn to Slide 14 for segment results. For the fourth quarter, BDS segment revenue increased 9.3% to EUR 185.9 million compared to the same period last year. For fiscal year '21, BDS segment revenue increased 22.9% to EUR 694 million. Period-to-period segment revenue increases for both the quarter and the full year were mainly driven by growth in our core products and, more importantly, due to an increasing mix of accretive high-value solutions. As expected, high-value solutions accounted for approximately 35.7% of BDS revenue in the fourth quarter and 29.9% for the fiscal year 2021. The mix shift led to expanded margin for the segment. On a full year basis, gross profit margin increased 350 basis points to 33.1%, and operating profit margin grew 330 basis points to 21.4% over the prior year.

The Engineering segment delivered another solid quarter of financial results. Revenue derived from third parties increased 27.2% to EUR 46.7 million in the fourth quarter and grew 54.3% in to EUR 149.9 million for fiscal year 2021. This segment benefited from growth in all business lines in both periods. For the full year, gross profit margin was 19.3%, and operating profit margin was 10.5%.

Let's move to Slide 15. We have a healthy balance sheet and, as of December 31, we had a positive net financial position of EUR 189.8 million, and cash and cash equivalent totaled EUR 411 million. For the full year, capital expenditures were EUR 122.1 million, induced to support our ongoing expansion plans. For 2021, net cash generated from operating activity was EUR 133.3 million, which reflects the increased working capital as we continue to build sustainable growth, and free cash flow was EUR 25.1 million.

On Slide 16, we'll drill down into the details of capital expenditures. We finished 2021 with CapEx of approximately EUR 122.1 million. This was lower than our initial expectation, mostly due to timing and the shifting of spend into 2022. We estimate that approximately EUR 90 million of CapEx spend that was previously expected to occur in 2021 is now included in our fiscal year 2022 CapEx budget. As Franco noted, we also anticipate some incremental expenditure as we have more capacity in Italy to meet rising demand. So together with the shift of approximately EUR 90 million of capital expenditure into fiscal year 2022 and incremental CapEx for Italy, we are estimating capital expenditure for 2022 will range between approximately 35% and 40% of revenue.

Our capital investments are vital to growing revenue, increasing our mix of high-value solutions and expanding margins, all of which we believe will create and drive long-term shareholder value. Therefore, our overall capital allocation plans remain unchanged. First, our #1 priority is investing in and executing against our ongoing capacity expansion plans that are aimed to satisfy market demand and drive organic growth; second, research and development to maintain our competitive advantages and drive innovation; and third, we may consider opportunistic M&A to broaden our offering, technical know-how and international footprint, but for now, we are squarely focused on organic growth.

In a nutshell, our balance sheet gives us the flexibility to invest in sustainable organic growth by expanding our capacity to meet the long-term demand dynamics in our core business. With a strong financial position, we believe we have ample capital to address future liquidity needs and execute our strategic and capital investment plans.

Moving to Slide 17, guidance. The company is establishing 2022 guidance that is framed by the strength and visibility of our backlog. For the full year 2022, we now expect revenue in the range between EUR 935 million and EUR 945 million, adjusted diluted EPS in the range of EUR 0.49 to EUR 0.51, adjusted EBITDA in the range of EUR 248 million to EUR 253 million. Using the midpoint of revenue guidance, we estimate that we have approximately 75% of our forecasted revenue in the form of committed backlog.

Our guidance also assumes continued durability from COVID, with expected revenue contribution in the mid-teens as a percentage of total revenue. Our guidance also considers the temporary headwind related to inflation and supply chain. We currently expect that revenue will be higher in the second half of fiscal year 2022 compared to the first half of the year. This aligns to our industrial plans as we continue to bring more capacity online during the course of fiscal year 2022.

Thank you. I will pass the call back to Franco Moro for closing comments.

Thanks, Marco. Our 2022 guidance reinforces our belief that we can continue to deliver on our long-term objectives. We have earned a reputation as a leader in premium drug packaging and engineering, serving as a vital link to the safety and effective administration of our customers' injectable treatments, diagnostic tests and therapies. We have a relentless focus on driving constant innovation in R&D, delivering high-quality products, offering scientific and technical support and meeting market demands.

We serve some of the fastest-growing market segments, and we are integrated into the drug production, delivery supply chain with favorable multiyear secular tailwinds including pharmaceutical innovation, aging population with chronic conditions, growth in biologics and biosimilars, acceleration expansion of vaccination programs, self-administration of medicine and increasing quality standards and regulations.

Above all, we believe that our strong reputation coupled with these favorable macro trends and our high-quality suite of products position us well to benefit from continued demand and, in turn, deliver double-digit revenue growth, margin expansion and long-term shareholder value.

Operator, let's open up the line for questions.

(Operator Instructions) Our first question today comes from David Windley from Jefferies.

I want to start with just a couple of kind of housekeeping type questions. Marco, I was hoping you could tell us what the dollar value or the percentage of revenue from your EZ-fill products that you're not including in high-value solutions?

Yes. We are going after actively in EZ-fill. As our practice, we provide data about segments in high-value solution. Anyhow, I can tell you that high-value solution went up 42% in the year and EZ-fill sales will end up more or less in the same range year-over-year.

Okay. Then secondly, do you have -- you mentioned the inflation factors and the pricing that you're taking watching supply chain, things of that sort. Can you quantify any kind of unexpected negative impact that the fourth quarter P&L absorbed? Maybe talk about the timing of the pricing. Is there any lag between the pickup on pricing versus the costs that you're incurring?

Yes. As anybody else in the industry, we are facing inflation pressure like any other industry. We have experienced, we mentioned in Q3, some logistical cost increase. We are putting in our model some other cost increase in our total manufacturing cost. And as Franco was saying, we are recalculating pricing frequently and rising price accordingly. All overall, we expect also taking out the inflation from our model and organic double-digit growth for 2022 compared to 2021.

Okay. And then just the last question I have is around your capacity. You mentioned the shift in some of your CapEx spend. And I guess, first of all, I want to just confirm that that's not impacting the timing of capacity that you're bringing on. And then kind of maybe flipping the coin and asking the question in the opposite way, does the BARDA investment give you any ability to accelerate the pace of buildout and validation of your Indiana greenfield?

Starting from the first part of your question about the capacity. Since we have our original plan for capacity expansion, the demand grew more than expected. So we took the decision to boost the capacity in Italy, that is the way we can bridge waiting for the availability of a new capacity in U.S. and China. And our modular approach to investment make -- have the possibility to be reactive or responsive to match the upside in demand. Back to the second part of your question about BARDA. BARDA agreement involved a multiyear plan to expand the capacity. For sure, it is a sort of acceleration on part of our initial plan, but it is not for the short time.

Our next question comes from Paul Knight from KeyBanc.

Could you update us on the planning on the China expansion as well?

Yes, our plan has not changed at all. We are proceeding. As we mentioned, we spent some time to improve, to optimize the capital allocation also to work on having the right appropriate financial incentives. But we are in line both with starting -- designing and starting construction and hiring people, training people to get ready for the date we already mentioned that is having the first activities in the first -- and first revenues in first half and second half of the '24.

And then it looks like COVID and non-COVID grew a little better than expected. Is the industry moving to lower doses per vial with COVID at this point, do you think?

But there is the continuation of this trend to move from multi-dose to single dose that impacts the volume needed for the market both in syringe and vial. We see opportunities in both areas because you are well aware that we produce both the syringe and vial. Our syringes proved to be the right solution also for -- in terms of suitability with cold chain distribution. So we monitor these trends, and there is no impact in our planning about the capacity expansion.

Our next question comes from Derik De Bruin from Bank of America.

One housekeeping question. What's embedded in your guidance for FX in the top line?

Derik, let me just clarify. You're wondering what the currency translation rates are that are embedded in our guidance?

Yes, what's the head -- yes, what should we model for currency headwinds? I'm trying to -- the question about what's the organic revenue growth guide for the total business.

Yes. Thank you for the question, Derik. We don't expect material changes compared to 2021 in our model.

Great. When you look at your business, I mean, the COVID expectations you had -- you're guiding to are basically in line with where we are. I guess the question I have is like if you didn't have -- if you weren't doing COVID work, is there -- would your core business -- your non-core business is even higher. That is, are you turning away business or delaying business due to COVID? Do you have any COVID work? Is it basically trying to get to sort of like what's the underlying core demand?

As we so many times mentioned, our business is not COVID dependent. And the visibility we have because of the backlog, interaction with customers make us in good position to look at the order intake and we have good visibility in COVID revenue that we think and we believe we remain consistent also in the near term. It's harder to speculate about the future of the COVID, but we feel reasonably confident that we can match any possible free capacity with fresh order because the demand is very strong in different therapeutic areas.

Just to complement, you mentioned the fact we have visibility in our revenue in form of backlog of 75% of 2022 midpoint guidance. So again, we have clear visibility also about COVID for 2022. And as Franco was saying, it's obviously more difficult to speculate for 2023 and beyond.

Great. And then just one final question. High-value solutions at 25% exiting kind of fiscal '21, mid-30s by '26. How should we think about that number for '22? Another increment -- basically, I know it's not going to be linear, but should we think about another 2 to 3 percentage point increase on average per year?

So thank you for the question. As you noted, we were in 17% range in '19, 22% in '20, and we are close to 25% in 2021. We see the trajectory going on. We have a robust backlog and visibility, and we see high 20% range for 2022, consistent with our trajectory and expectation to meet with 30% by 2026.

Our next question comes from Lizzie Speyer from Citi.

I'm on for Patrick. So I think backlog, as you touched on earlier ramped to EUR 880 million this year. Can you just talk more about how that 75% for 2022 that's covered compared to prior years?

Yes, the backlog is much stronger this year compared to 12 months ago, where we had approximately EUR 600 million of backlog. So we have much more visibility this year compared to 12 months ago. We see robust backlog in both segments. The percentage is more or less the same in the 2 segments. So we have clear visibility and ability to plan in advance.

Great. That's helpful. And then, I guess, just broadly, can you talk about how you guys performed in the 3 regions within Europe, the U.S. and APAC? And what your outlook is for these regions going into 2022?

Yes, about regions, we are -- we have grown in Asia Pacific, particularly, as you have seen in 2021. We expect robust growth both in Asia Pacific and North America regions for 2022. Europe is still there, a very important market for us, but we see growing more in those regions than Europe.

Our next question comes from Tim Daley from Wells Fargo.

So my first question is digging a bit more into the booking trends and the backlog, how should we be thinking about this, I guess, the lead times and the percent of revenues that were captured in backlog heading into the year as we go forward. Are you expecting some sort of normalization lead times? Any sort of detail you could provide around what happens when, I guess, things start normalizing a bit more. And how should we think about the trajectory of backlog and book-to-bills and everything throughout 2022?

Yes. Great question. I mean we experienced, as mentioned a couple of times, our customers booking in advance capacity to secure their supply chain. And this is one of the reasons why we have been able to grow the backlog so significantly besides growing over Stevanato Group business. It's not easy to speculate what will go in -- to happen in the future. But we see, as Franco was saying, very robust demand in the market. So we are not worried about filling our capacity for the future.

Okay. And in a similar vein there, just -- I know you noted that 75% of the sales for 2022 are captured in backlog. For the around EUR 140 million or so of COVID works expected per your guidance here, how much of that is captured in the backlog? Or are there any assumptions baked into that EUR 140 million number?

Yes, more or less the same percentage. I mean the 75% of COVID.

Okay. No, that's helpful. And then my final one is on margins. So obviously, lots of noise going on the macro front, especially in Europe around energy prices. What are the assumptions baked into the EBITDA guidance for, I guess, energy prices? How much of your expenses this year were spent on energy? And do you have any hedging mechanisms in place to account for the macro volatility going around right now?

Yes, those are the costs we are talking about when we say we are frequently calculating our total manufacturing cost. Again, this is a situation everybody are facing in any industry. Our customers understand it. Obviously, we try to minimize the cost increase, but we are increasing our price accordingly.

And then, Tim, just to follow up on that, as Marco mentioned previously, if you exclude the cost increases year-to-year, we still anticipate double-digit organic growth.

All right. And are there any hedging mechanisms in place for energy costs?

There is no mechanism. It's [not in the clauses] that are embedded generally in our agreement with the customer. But the relationship with the customer was also to share the situation, and we think they can really understand what is going on in market.

And you probably know, an important part of our production is in Italy, where we have some protection due to the long-term agreement we have with utilities here in Italy.

Our next question comes from Andrew Ranieri from Morgan Stanley.

Just on guidance for a moment. You grew 15% ex COVID in 2021. 2022 looks like it's taking a little stepdown. Is this just modeling conservatism into your guidance? Or just as you're kind of looking at the business, can you talk about maybe areas of the business where you are starting to see any type of slower growth rate relative to 2021? And then just on your commentary about phasing between the back half and first half of the year, can you give us a little bit more detail there on how the businesses should ramp over the year?

Thank you for the question. So for 2022, as mentioned, we expect strong sales in second half of the year compared to the first part of the year because of the capital deployment we are doing, increasing capacity mainly in EZ-fill high-value solutions. We can tell you also that we expect double-digit growth in our BDS segment, boosted by high-value solutions. In January, we are initially modeling a high single-digit growth compared to 2021 when we went up almost 55%.

Okay. And then just on the inflationary environment. You touched on this a little bit, but should we think gross margins are -- will be able to actually expand in 2022? Or should we kind of think about it more consistent with your 2021 levels? Or will high-value solutions really drive the mix shifts and you'll see some pricing benefit? Just trying to get a better sense of gross margin expansion here.

But I think that it is worth to go back to the driver of our growth that is the market. The market demand is growing very fast, and the demand for our high-value solution is very strong, particularly in syringes with our Alba and Nexa products. EZ-fill vials also enjoy very robust demand. So this is the main driver, and we are growing because we are putting our investment in that direction, deploying the capital step-by-step to increase the share of our high-value solutions in our portfolio. So the marginality as an average is the result of this effort coming from the demand on the market.

Got it. And then just -- lastly, just on COVID-related revenue. Is there any way to put out a 2023 number of kind of what you're thinking about for potential COVID contribution?

There are many variables playing in the [forming] for 2023. We mentioned that the shifting from multidose to single dose that can happen, that could be from neutral to favorable from the economic point of view. We cannot speculate on the presence of new variants and there are many, many factors to be understood before providing any numbers on 2023.

Our next question comes from John Sourbeer from UBS.

I guess any update around new customers in the quarter with HVS growing pretty solid 63% roughly year-over-year. I guess, specifically, what percentage of that HVS growth was from new customers?

No, we will not disclose these figures. But what I can say is that there is a very good demand for high-value solutions linked to new therapeutic and new drugs, specifically in biotech space. So this is one of the main drivers of our emerging business in that space.

And John, just as a reminder, many of our contracts with our customers are under nondisclosure agreements. And so therefore, that would be the type of information that we won't be able to provide on a regular basis.

Got it. And then I guess just as a follow-up, the comment in 1Q with the increased absenteeism in January in Europe due to the Omnicom spike. Any way to quantify the impact there? Or just how we should see on the cadence on 1Q for the guidance.

Yes. When Omicron variant hit Europe, also we had to face increased rate of absenteeism in our facility in Europe. And we took a countermeasure in terms of having more shift from people that were happy, and we've been incentive to have people at work. We are not going to quantify the impact. But what I can say is that mid- to late February, we came back to the normalized condition in terms of staffing, in terms of productivity, and we expect it to continue in this direction.

Our guidance includes this headwind.

Our final question comes from John Kreger from William Blair.

Maybe just one more to try to clarify on the first quarter outlook. Do you expect revenue growth to be positive in the first quarter compared to last year? Should we assume down a bit given the Omicron surge?

I will expect significant growth compared to previous year in the range of double-digit growth.

Marco, just -- is that in the first quarter? Or is that for the full year?

First quarter, we expect lower revenues than in Q4 in both segments. But nevertheless, we expect an organic growth, double digit, year-over-year.

Great. Another question. It sounds like you've had strong orders. Are you capacity constrained at all? In other words, what -- how does your time to complete orders now compare to where it was, let's say, a year ago?

First of all, the demand for our high-value solutions has remained very, very strong. So our plan to expand the capacity in that space is obviously something that is vital. We recognize that the execution is a vital factor to match the customer expectation. And we will continue to put our best effort to match their needs in the short-term time possible.

Okay. And then one last one. You noted CapEx is supposed to be much higher in '22. I understand part of that is a push from '21. Can you remind us what you think your longer-term CapEx spending ratio should be relative to revenues?

Yes. 2022 is expected to be the peak year for CapEx because of the initiative we launched. We expect also high CapEx in '23 as we complete the buildings and the machinery for U.S., Europe and China. As normalized CapEx we see for the future something in the range of 9% of revenue to keep on growing double digit. We can expect some years where we are installing more capacity followed by years when we leverage the existing capacity and just concentrate on driving execution. But this is what we have in mind in the medium term as normalized level of CapEx.

We've come to the end of our Q&A. I will now hand back to the Stevanato management team for closing remarks.

We want to thank everyone for joining us today for the Stevanato Group Fourth Quarter and Full Year 2021 Earnings Call. We appreciate your time and have a good day. Bye.

This concludes today's call. We thank you for joining. You may now disconnect your lines.