NYSE:STVN Stevanato Group Q4 2024 Earnings Report €21.46 -0.43 (-1.96%) As of 04/25/2025 03:59 PM Eastern Earnings HistoryForecast Stevanato Group EPS ResultsActual EPS€0.20Consensus EPS €0.20Beat/MissMet ExpectationsOne Year Ago EPSN/AStevanato Group Revenue ResultsActual Revenue$352.68 millionExpected Revenue$346.26 millionBeat/MissBeat by +$6.42 millionYoY Revenue GrowthN/AStevanato Group Announcement DetailsQuarterQ4 2024Date3/6/2025TimeBefore Market OpensConference Call DateThursday, March 6, 2025Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (20-F)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Stevanato Group Q4 2024 Earnings Call TranscriptProvided by QuartrMarch 6, 2025 ShareLink copied to clipboard.There are 16 speakers on the call. Operator00:00:00Good afternoon. This is the Carusco conference operator. Welcome and thank you for joining the Stephanata Group Fourth Quarter and Year End twenty twenty four Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Operator00:00:28At this time, I would like to turn the conference over to Ms. Lisa Miles, Senior Vice President, Investor Relations. Please go ahead, madam. Speaker 100:00:42Good morning, and thank you for joining us. With me today is Franco Stephanato, Chairman and Chief Executive Officer and Marco Delago, Chief Financial Officer. You can find a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the Financial Results tab. As a reminder, some statements being made today will be forward looking in nature and only predictions. Actual events and results may differ materially as a result of the risks we face, including those discussed in item three d entitled Risk Factors in the company's most recent annual report on Form 20 F filed with the SEC. Speaker 100:01:27Please read our safe harbor statement included in the front of the presentation and in today's press release. 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 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 these non GAAP measures, please see the company's most recent earnings press release. Speaker 100:02:12And with that, I will now hand the call over to Franco Stevanato. Speaker 200:02:17Thank you, Lisa, and thanks for joining us. Today, we will review our 2024 performance, address current market dynamics, discuss our fourth quarter results and provide 2025 guidance. We finished fiscal year twenty twenty four with a positive fourth quarter that was in line with our expectations. In 2024, revenue grew 2% compared to last year, driven by 6% growth in Biopharmaceutical and Diagnostic Solutions segment, which offset the expected 70% decline from the Engineering segment. BDA segment was driven primarily by the boosted market demand for high value syringes. Speaker 200:02:56This helped drive a 15% increase in high value solutions, which represented 38% of the total company revenue for fiscal twenty twenty four. We believe the success we are experiencing in high value solutions also demonstrates that we are investing in the right markets at the right time as we ramp up the syringes in Fisher and Latina to match customer demand. We expect that these investments will continue to drive near term growth and allow us to capitalize on growing patient demand for biologic treatments such as GLP1s, monoclonal antibodies and biosimilar. The increasing availability of sensitive biologic treatments and patient adoption of self administered medicines are two key areas driving growth in integrated solution and high value solutions. In 2024, revenue from Injectable Biologics increased 24% year over year and represented 34% of the BDS revenue compared to 30% of BDS revenue last year. Speaker 200:03:57Additionally, in fiscal twenty twenty four, strong revenue growth in syringes coupled with growth in other product categories helped to offset a 34% decline in revenue related to bulk and easy fill via. As you know, this temporary soft vial demand stems from the industry wide vial destocking. We saw modest improvements at the end of the year with some customers slowly returning to more normalized ordering, while other customers are still managing inventories. As a result, our thoughts remain unchanged and we still anticipate a gradual recovery in buyer demand in 2025, which we built into our guidance. We still expect that the market will continue to stabilize throughout 2025 with a faster recovery in bulk vias. Speaker 200:04:42During 2024, we also made significant progress on our growth investments and we achieved two important milestones. First, we generated our first commercial revenue in Fisher Indiana. Second, our Latina project in Italy turned profitable at a gross profit margin level in the third quarter. Please turn to Page six for a review of our expansion projects. In Latina, our teams are are focused on the ongoing ramp up of syringes capacity as part of the Phase one. Speaker 200:05:11Throughout 2025, we will continue installing, validating and launching additional manufacturing lines to help satisfy growing customer demand. We are still in the early phase of scaling up this important growth investment. As you may recall, the next phase of our expansion in Latina will be dedicated to expanding easy fill cartridges capacity. This is a part of a larger program for an anchor customer expanding into ready to use cartridges. The design and planning are completed and the core infrastructure build out is expected to continue through 2025. Speaker 200:05:43As part of this project, the engineering team will be delivering our next generation ezifil cartridges lines. We currently expect line installation to begin in early twenty twenty six. This is a market area where the demand environment has been more robust than we previously anticipated. We believe that our global leadership position and the long history, both legacy and new JL P1s, position us as a partner of choice in this growing market. Turning to Fisher, we're making great progress and activities are advancing as planned. Speaker 200:06:15Our world class facility is supporting U. S. Customers across the full value chain and our investment is strategically focused to meet the high market demand for biologics. Alongside the launch of commercial production last quarter, we are installing and validating new syringe lines throughout 2025 as we scale this multiyear approach investment. In parallel, construction is underway on the build out of our device manufacturing operation in features. Speaker 200:06:42This effort is supporting a large customer with multiple device programs across a range of biologic treatments. We will support this U. S. Global customer with a fully integrated solution with both our Nexa syringes and our device manufacturing. Commercial activities related to this new contact manufacturing work are expected to begin sometime between late twenty twenty six and early twenty twenty seven. Speaker 200:07:08Please turn to the next slide for a status update on our optimization plan for the engineering segment. The team made major strides during the quarter. We are on track to complete the previously delayed projects in 2025 with the majority expected to be completed mid year. Right now, we are squarely focused on the successful completion and installation of these manufacturing lines at our customer sites. I'm confident that we are moving in the right direction and our near term efforts are yielding results. Speaker 200:07:38The next phase of our plan has a longer horizon. This includes optimizing our operational footprint, increasing efficiency by harmonizing our industrial processes and streamlining activities into more defined structures. Our customers value our innovation, our top tier products. We continue to see a favorable demand environment for our engineering segment underpinned by the rise in biologics. Our efforts are designed to drive efficiency and productivity gains to best position the segment for long term success. Speaker 200:08:09In summary, while 2024 was challenging, it prompted us to take action to improve execution, drive operational improvements through footprint optimization, increase our efforts to streamline processes and look for further areas to gain production efficiencies. These ongoing efforts will improve our setup for long term growth. Looking ahead, we believe we are uniquely positioned with an integrated value proposition to better serve customers' wide ranging needs. Our long history of embedding science and technology to drive continuous advancements has led to a differentiated product portfolio. We operate in attractive end markets and have an increasing presence in biologics, which is the fastest growing market segment. Speaker 200:08:55We have developed next generation products such as our ALBA portfolio that are ideally suited to meet the scientific demands of highly sensitive drug products. We see a great opportunity driven by favorable macro tailwinds such as aging population, the growth in biologics and the rising patient adoption of self administered injectable drugs. We are positioning the company to take advantage of these opportunities to drive long term sustainable growth. I will hand the call over to Marco for a review of our fourth quarter results. Speaker 300:09:29Thanks, Franco. Before I begin, I want to clarify that all comparisons refer to year over year changes unless otherwise specified. Starting on page 10. For the fourth quarter of twenty twenty four, revenue grew 3% to $330,600,000 The impact of currency was neutral. Growth was driven by a 7% increase from the biopharmaceutical and diagnostic solutions segment, which offset the expected 16% decline in the engineering segment. Speaker 300:10:08Revenue from high value solutions grew 9% to a record 131,000,000 in the fourth quarter and represented approximately 40% of total revenue. This was driven by growing our premium performance syringes and, to a lesser extent, other product categories. The solid performance in the fourth quarter helped boost our full year mix of High Value Solutions to 38% of total company revenue, in line with our expectations. For the fourth quarter of fiscal twenty twenty four, a strong mix of high value year over year improvements in officials and Latina partially offset the unfavorable gross profit margin impacts from via the stocking, including lower revenue from easy fill vials underutilization of wire lines and the under absorption of costs and lower gross profit margin in the engineering segment as we continue to execute our optimization plan. As a result, gross profit margin for the fourth quarter of twenty twenty four declined by two ten basis points to 29.7%. Speaker 300:11:29Our new manufacturing plants in Fichas and Latina improved year over year, but they are still expected to be dilutive to gross profit margin in the near term. In response to industry wide soft vial demand, for the fourth quarter of twenty twenty four. As a result, net profit totaled $48,300,000 and diluted earnings per share were $0.18 On an adjusted basis, net profit was $51,500,000 and adjusted diluted EPS were $0.19 for the fourth quarter of twenty twenty four. Adjusted EBITDA increased 5% to 90,900,000.0 and adjusted EBITDA margin increased 50 basis points to 27.5%. Let's review segment results on page 11. Speaker 300:12:39Starting with the biopharmaceutical and diagnostic solutions segment. As Franco noted, we see ongoing signs of stabilization in the vial market with improvements in the second half of twenty twenty four compared with the first half, both in revenue and orders intake for bulk and diesel fuel buyers. For the fourth quarter, revenue from the BDS segment grew 78% on a constant currency basis to $279,400,000 This was driven primarily by growth in I value syringes, which offset a 14% revenue decline related to bulk and diesel vials. As expected, the drop was larger in our more accretive dizzy fill vials. Revenue from High Value Solutions grew 9% to a record of $130,600,000 in the fourth quarter, reaching 47% of BDS segment sales. Speaker 300:13:45Revenue from other containment and delivery solutions increased 6% to $148,800,000 mostly due to higher sales tied to counter manufacturing activities. A strong fourth quarter contribution from High Value Solutions and the improvements in FISHERs and Latina as we continue to scale helped to partially offset the margin impact from vial destocking. As a result, in the fourth quarter, gross profit margin declined two fifty basis points to 31.1%. For the fourth quarter of twenty twenty four, actions we took during the year helped to moderate the decline in operating profit margin, which decreased 40 basis points to 23.3%. For the fourth quarter of twenty twenty four, revenue from the engineering segment decreased 16% to $51,200,000 Performance in the business was mixed. Speaker 300:14:49With expected revenue declines in glass conversion and visual inspection offsetting growth in assembly and packaging. As expected, gross profit margin for the fourth quarter decreased to 18.6%. Optimization and cost management initiatives helped to maintain operating profit margin consistent at 15.3% compared with the same period last year. As our results demonstrate, the steps we are taking are helping to improve the segment's operating and financial results. We believe these actions will better position the segment to capture future opportunities opportunities and improve the overall health of the business. Speaker 300:15:35Please turn to the next slide for a review of balance sheet and cash flow items. We ended the year with cash and cash equivalents of $98,300,000 and net debt of $335,000,000 With our current cash on hand, available credit lines, cash generated from operations and our ability to assess additional financing, we believe we have available liquidity to fund our strategic and operational priorities over the next twelve months. For the full year 2024, capital expenditures totaled $286,600,000 80 9 percent of CapEx was deployed for growth projects to meet rising demand for high value solutions. For the full year 2024, net cash from operating activities totaled $155,800,000 a substantial improvement from the previous periods. Cash used in the purchase of property, plant, equipment and intangible assets was $313,600,000 The combination of increased cash flow from operations and lower CapEx helped drive a significant year over year improvement in free cash flow. Speaker 300:16:58For fiscal twenty twenty four, this resulted in a negative free cash flow of $148,500,000 compared with a negative $333,900,000 in fiscal twenty twenty three. Lastly, on Slide 13, we are establishing 2025 guidance. We expect revenue in the range of $1,160,000,000 to $1,190,000,000 adjusted EBITDA in the range of $293,000,000 to $306,300,000 and adjusted diluted EPS in the range of $0.51 to $0.55 Our 2025 guidance considers headwinds and tailwinds, and we have assumed the following factors: revenue will be stronger in the second half of twenty twenty five compared with the first half We expect a step down in revenue in the first quarter of twenty twenty five compared with the fourth quarter of twenty twenty four, with revenue expected to grow sequentially throughout the year. The BDS segment is expected to grow mid to high single digits, driven principally by growth in high value syringes. For the Engineering segment, we have assumed that neutral to low single digit growth compared with 2024 As we focus efforts on execution, we expect that High Value Solutions will range between 39% to 41% of full year total revenue. Speaker 300:18:32Turning to gross profit margin. On a consolidated basis, we currently expect that gross profit margin will improve by approximately 100 to 140 basis points compared with 2024, driven by continued improvement in Latina and Fichas as our capital investment projects scale as well as increased contribution from high value solutions. We also anticipate some headwinds. While Latina and Fishers are expected to improve year over year, they will still be dilutive to margins, and we expect higher depreciation in 2025. We expect depreciation and amortization will range between 8.7% to 9% of expected sales, which reflects the range of revenue in our guidance. Speaker 300:19:23Currency is expected to be neutral compared to 2024. We are assuming a tax rate of approximately 23% and weighted average shares outstanding of 272,900,000.0. And finally, capital expenditures and free cash flow. For 2025, we have assumed CapEx in the range of $310,000,000 to $340,000,000 before customer contributions and prepayments. Our 2025 plan reflects an acceleration of CapEx related to the build out for EasyFill Cartridges at the request of a large customer. Speaker 300:20:06We had previously expected this spending to occur in future periods. Net of contributions and prepayments, CapEx is expected to range between $250,000,000 and $280,000,000 Regarding free cash flow, in 2025, we expect increased operating cash flows and higher contributions for CapEx. This will help drive continued improvement in free cash flow in 2025 with an expected range between negative $40,000,000 and negative $60,000,000 for the full year. I will hand the call back to Franco. Speaker 200:20:44Thank you, Marco. In closing, we remain focused on executing our key priorities and achieving our long term objectives. We operate in growing end markets with favorable secular tailwinds, and we have several reasons to be confident in our strategic direction. First, we continue to deliver organic growth, driven by solid demand for high value solutions, the main pillar of our long range construct. We are investing in right areas to meet the rising customer demand, and we have a growing presence in biologics. Speaker 200:21:16Second, we expect to increasingly benefit from the new capacity projects as we advance our ramp up activities and drive profitable growth. In 2025, we expect that these projects will be deleted to gross profit margin. And in 2026, we will begin to realize the benefits of scale and productivity gains as the projects mature. Third, the Bayer market continues to gradually recover and stabilize. We remain optimistic that as the Bayer demand continues to normalize, we will see a return to historical market volumes and growth rates. Speaker 200:21:51Finally, we are making meaningful progress on a clear and actionable plan to improve our operational financial performance in engineering segment. All in all, the fundamentals of our business remain stronger. We have an excellent market position and we continue to innovate each and every day. Our unique value proposition integrated offerings make us a partner of choice for customers. As CEO, I'm firmly committed to putting the business on the right path to return to double digit growth, expand margins and build shareholder value. Speaker 200:22:23We believe we have all the ingredients in place. Operator, we are ready for questions. Operator00:22:30Thank you. This is the Chorus Call conference. Operator, we will now begin the question and answer session. First question is from Michael Ryskin, Bank of America. Please go ahead. Speaker 400:23:06Great. Thanks for taking the questions and congrats on the quarter. I've got two questions. I'll go through them quickly. First on the vial recovery, it sounds like vial, especially bulk vials continues to gradually normalize. Speaker 400:23:20You've kind of talked about that trend for a number of quarters now, it's moving in the right direction. Any additional color you can provide on when you think things will be fully back to normal? Do you expect the vial environment to sort of be fully recovered in the middle of twenty twenty five? Or are you still working through it for the rest of the year? And I've got a follow-up. Speaker 500:23:43Good morning, Mike. Franco Stevonato speaking. So our main takeaway after having a very strong interaction with practically all our customer, big customer and also the regional customer, is that we are confident that 2025 to be much better than 2024, how we are going to translate this because we see sign up everywhere where we see customer, big international customer and regional customer that are starting to return to normalize ordering partner. So overall, we see that during this 2025, there will be a gradual recovery throughout all the year. Speaker 400:24:23Okay, great. And then on some of your comments on gross margins, I mean, you're pointing to pretty significant margin gains year over year, but you've had some headwinds last year, you still have some margin dilution this year. If I think about Fishers, Latina coming up to speed, maybe some of that incremental CapEx you talked about with that new customer, just talk about how those projects need to ramp and how those facilities need to ramp for them to go from being margin dilutive to margin accretive? What's the time scale on that or sort of the volumes you need to be pushing through those new that new capacity where that goes from being a headwind to a tailwind? Speaker 600:25:03Thanks for the question, Michael. First of all, as you know, Latina is a little bit higher compared with Fishers. We started generating positive gross profit in Q3 twenty twenty four in Latina, and we are keeping on improving and ramping up the revenues. We expect there by the end of the twenty twenty five to have a normal gross profit margin with respect of the high value products that we are producing there. Fishers is a little bit different because it's a larger plant. Speaker 600:25:37It's a greenfield. And basically, as you know, we have two, three quarters of delay in the program compared with Latina. We are fully in line with our plan, but it's about three quarter after. There, we are very happy with the results in Q4. We started generating a good amount of revenue in Q4, and we are keeping on improving through validations with customers. Speaker 600:26:06We expect to turn positive gross profit in T shirts in the second half of twenty twenty five. So matter of fact, 2025 will still be dilutive for our gross profit margin in the combination of the two new plants. Speaker 400:26:26Great. Thanks so much. Operator00:26:29Next question is from Maik Alaro, William Blair. Please go ahead. Speaker 700:26:37Hi. Thanks for taking the question. I want to follow-up on my first question around Vial. Obviously, last year, you guided us down 35% for the year and generally came in line with that. Is there any way you can help us with what we should expect for 2025? Speaker 700:26:56And maybe as part of that, when are you assuming a return to positive growth in vials? Do you get that in the second half of this year? Speaker 600:27:05Yes. Thanks for the question. Marco speaking. First of all, as Franco mentioned, we can see some signal of improvement in the last quarters. Both revenue and orders intake were better in the second half of twenty twenty four compared with the first half. Speaker 600:27:25You're right, we went down 34% in the year. In the last quarter, we went down 14% year over year. So we can see some signal of improvement. Going to your question, we are currently modeling a grow in bias for 2025 from mid single digit to high single digit. And as Franco mentioned, we see progresses throughout the year quarter after quarter. Speaker 600:27:54We expect a sequential improvement. Speaker 700:27:59Okay. Thank you. And then you referenced in the script the investments you're making in your device manufacturing operations and called out both Nexa and Alba. I think some heightened attention on devices and where they fit for the traditional packaging players long term. Could you just talk a little bit about your success there as well as your efforts and expectations around scale and the ability to profitably scale those programs over time? Speaker 500:28:28Correct. Practically, in our strategy for Sernato Group is really to serve an integrated solution and broader portfolio to our biologic customers. In the last year, we developed our IP out injector and PEN. Also, we more and more, we for many customers, we are building an R and D even more some plants that are able to serve Nexa syringes, Alba syringes. Like in the case that we have in Fisher, we are building also a lot of capacity for our one of our big customer in United States. Speaker 500:29:03We are going also to serve this device with this program. So today, we have a certain number of program on through the CMO business model and also a certain number of programs to our IP pen, health ingestor that we will sell from the German plant in order to fulfill this increasing request from our biologic customers that's looking step an out of not only for glass ranges, not only for cartridges, but also like a holistic partner that can where they can buy the glass and the devices. Okay. Thank you. Operator00:29:44Next question is from Patrick Donnelly, Citi. Please go ahead. Speaker 800:29:52Hey, thanks for taking the questions guys. Marco, maybe one for you just on the pacing of the year. It sounds like just seasonally 1Q set down from 4Q on rev, no big surprise there. Can you just help frame up the quarters, the progressions we go through here, both revenue and then the margin side would be helpful as well just to think about the cadence of the year as we work our way through here? Speaker 600:30:14Sure. We expect sequential growth quarter after quarter in 2025 with a stronger second half of the year compared with the first half mainly for three reasons. First, we can see strong demand in high value syringes and these sterile cartridges. But at the same time, we are ramping up capacity. We expect to install several lines in features between May and June. Speaker 600:30:43So matter of fact, after the validation, we will have available capacity to satisfy the strong demand. So for this, there is always a stronger revenue in second half. The other reason is related to buyers. We mentioned before the fact that the expected market will be sequentially better toward the end of the year. And the third reason is related to engineering. Speaker 600:31:08We are working hard and obtaining good success in recovering the delay. We are delivering several complex projects in this period of time. And we expect to complete the recovery around the mid of the year. So we have the opportunity in the second half of the year to take more workload and increase our revenues in engineering. That's why we are confident that in the second part of the year, the revenues will be stronger. Speaker 800:31:42Okay. Okay. That's helpful. And then Franco, maybe one for you. Just as you think about the administration change here in The U. Speaker 800:31:49S, can you just talk about any impact? I mean, there's the tariff side, obviously, with things like Mexico. We'll see what happens with Europe. Just what you think there? And then on the back of that, some of these trial cancellations, HHS going after things like bird flu and maybe some of the BARDA contracts. Speaker 800:32:08I would be curious just your perspective on some of these recent changes, what your guys' exposure is, how you think about that? Thank you guys so much. Speaker 500:32:15Thank you for the question. Today, particularly what we have done in Stavantos Group since the last fifteen to twenty years, we build sophisticated supply chain where we try to be domestic in the major growing pharmaceutical area all around the world. Today, we have several plants in Europe, United States, in Asia, able to serve to our customers the same product from different regions. So on the top of this, we can add that we have a very strong partnership in a proactive way with our customers, and we are trying to monitor in the best way how eventually to review the supply chain with our customers from the different regions. So we are putting a lot of attention together with our customers how to approach if there will be some evolution. Speaker 500:33:00But the good news that we have a good footprint with the same standard of quality everywhere and the fact that we have decided to approve this bigger investment in Fisher Indiana three years ago, it will make us even more proactive to react to any type of change. Speaker 600:33:19Then, Patrick, I don't know if your question was about vaccine. Just to make sure it's a limited risk for us because we are generating about 8% of our revenue of BDS in vaccine. But the focus is predominant in Europe. We are today generating around one percent of our revenue in U. S. Speaker 600:33:44With the vaccine. So it's not a big risk for us today. Speaker 800:33:52Great. That's really helpful. Thank you, guys. Operator00:33:55Next question is from David Windley, Jefferies. Please go ahead. Speaker 900:34:01I was hoping thanks for taking my questions. Good morning. I was hoping you could comment on the utilization levels or maybe relative utilization of your lines across the different form factors, so syringe, cartridge and vial. What I'm digging for is with vials down as much as they are, I'm sure the utilization is low and how much that can recover and how we should think about that translating to margin. But then also on the other end of the spectrum, you're adding capacity for cartridge. Speaker 900:34:41And should I correctly interpret that as you're being at very high levels of utilization in your existing cartridge capacity? So just again, trying to understand your relative utilization levels of each of the different types of production. Speaker 600:34:57Thanks, Dave, for the question. Marco speaking. So first of all, we have strong demand in syringes. So we are utilizing a lot of the syringes line. And as you know, we are also ramping up capacity to match the long term demand we have with the key customers. Speaker 600:35:17We have similar situation with cartridges, but I will let later Franco to explain more the EasyFilled Cartridges project. About Vias, obviously, after going down 34% in revenue last year, we have available capacity both in bulk and in easy filler for obviously reason. So we will still have ability to grow there. We expect to grow in 2025 compared with 'twenty four, but we still have available capacity. Speaker 500:35:51David, we can say that from what is related to the high value product, our demand is driven by the capacity that we have put in place. We started two million days, years ago. Now we are heavily investing in Latina and also in Fisher. Today, we have a lot of requirements from around the next such ranges, a lot of requests about advanced ranges for particular application. There is a more and more an increase in demand for cartridges ready to fill. Speaker 500:36:18In particular, we are one big customer that really have decided to increase their capacity in the next year around this type of product. And even more, there are several tens of program around cartridges three to three. So our big focus is really to implement capacity for high value products where we see the higher demand in 2025, also the next year. Speaker 900:36:41Is that on the cartridge program for the specific customers, is that going to be dedicated capacity? Or do you expect to be able to diversify that? Speaker 500:36:52Both. We are one big Encore customer that is placing a bigger contract where we want they want to serve a bigger quantity on cartridge in two fields. But also, it's also true that we see more and more, we have several spends of mid size customer, biologic biosimilar, they are going through this type of application. It's very simple because they are putting place capacity, but they want to also source to partner like us, the washing, liquidation, sterilization. So this is why we are heavily investing. Speaker 500:37:25We have already capacity here in Termino De Geza. We are going to invest also in Latina with a lot of capacity in order to be ready to approach this nice tailwinds. Speaker 900:37:38Yes. And if I could ask one more on capacity, I think maybe I missed it, but relatively new to my eyes was the mention of devices in Fishers and adding capacity there for that. Could you help us to understand I understand the kind of strategy of being able to provide the client with both the glass as well as the device. Can you help us to understand what your longer term expectations are for the margin contribution of the devices? Or said differently, is that a positive evolution of your business mix to pursue supply of those devices? Speaker 900:38:22Or are those device margins eventually going to be lower than your glass your high value glass margins? Speaker 600:38:33Thanks, Dave, for the question. We have a different situation in device when we talk about CMO contract and proprietary solutions. We are working on both. And our strategy is obviously to become a reliable partner on both. When we talk about proprietary device, it's an I value product and the range is the normal one in I value product, so above 40%, I'm speaking. Speaker 600:39:03In CMO space, margin are lower. We are talking between 15% to 35% in line with other containment delivery solutions. Speaker 500:39:12Yes. If I can, David, give you the different angle more from business point of view, we if you look at the growth in Biologics in the next years, we would there would be a nice double digit growth on syringes like Nexai Alba. In parallel, there are the equivalent growth on pending or to ingest. So our goal is to go to our customer and to show the full value proposition no matter if it's through our IP product or through the business model of SIMO because this will help us to capture more market share and more growth. And this is why the plants that we have in Fisher have this flexibility is considered by our guest customer like UnHub where they can have the integrated solution service that is a little bit unique in this moment in United States. Speaker 500:39:59And we are taking benefit from this. Operator00:40:07Next question is from Larry Solow, CJS Securities. Please go ahead. Speaker 1000:40:17Hi, good morning. It's Pete Lucas for Larry. You covered most of my questions. Just on the engineering segment, recovery sounds like it's progressing. Can we expect Segment operating margins to return to mid teens levels over the course of the next few quarters? Speaker 1000:40:32And perhaps build on that, if you could just give us some color there? Thanks. Speaker 600:40:37Yes. You have noticed we reached mid-fifteen percent in Q4, so we are happy with the progress that we are making. We are not yet at the level we were in 2023, but we are progressing. Our goal is to complete the, let's say, delay issue by mid of next year. But the further step, as Franco was explaining, is a further optimization to further improve our profitability in the segment. Speaker 500:41:10Yes. Larry, if I can further add a more business color, the team made a big improvement during this quarter. Today, we are on track to deliver our disc compressor line to our customer. Our target is to complete this delivery at the end of the year. This will help to further improve the revenue marginality. Speaker 500:41:31In the meantime, together with the organization, we are going to review what is the cost structure. Also, we are going to review the size in our plant to make more efficiency in our operation, both in Denmark and Italy, also prepare for the future growth. Today, the product we are serving to our customer from engineering point of view are very well perceived because there is a big growth in biologics and there's a high demand for assembly technology on the industry because of this device trend. Maybe more from a regulatory point of view, there are more and more requirements from new sophisticated inspection line. It's exactly where we want to focus the division the next years. Speaker 1000:42:14Very helpful. Thank you. Speaker 500:42:16You're welcome. Operator00:42:18Next question is from Anna Snokowski, KeyBanc. Please go ahead. Speaker 1100:42:25Hi. This is Anna on for Paul Knight. Thanks for taking my questions. First, could you frame the revenue generating capacity of the Fishers facility? Operator00:42:35I Speaker 1100:42:35know in the past you've mentioned you anticipate more meaningful revenue contribution here in, fiscal year twenty five. But what is the utilization rate you expect for 2025? And then just how is overall demand trending here versus initial expectations? Speaker 600:42:56So thanks, Anna. If I got your question, it's a matter of the speed we ramp up. So we expect to complete the full capacity ramp up in Fishers by 2028. So we are still progressing. We are pretty happy with evolution. Speaker 600:43:14We reached our milestone in Q4 twenty twenty four. We are progressing with new lines installed, but most importantly, more validations from our important North American customers. About 2025, obviously, we expect a big increase compared to 2024, but we need to underline the fact that in 2024, we generated revenue commercial revenue basically in Q4. So we expect much stronger revenue coming from features in 2025, but we still have room to install more capacity in 2026, '20 '7 and 2028. Speaker 1100:44:00Okay, perfect. And then maybe just looking at the engineering, once the operational changes are executed over the next twelve months, what do you think this business could run at in terms of adjusted EBITDA margins over the long term? Speaker 600:44:16Well, in the long term, we confirm our view. We share about the medium to long term construct. We basically want to expand our margin, increasing also after sales activities. We expect to be more accretive than we were before these problems we face in 2024, but keeping on improving also through the optimization plan, Franco mentioned in his remark. But we are confirming the trajectory we share with you during Capital Markets Day. Speaker 500:44:55Our goal for the engineering division is to keep in the next year's high single digit growth, thanks to the fact that we want to further enforce our position inspection system in assembly technology with the high speed machine most increase the percentage of their sales to our major customers. Operator00:45:19Next question is from Tayah Savan, Morgan Stanley. Please go ahead. Speaker 1200:45:25Hey, guys. Good morning and thanks for the time here. Franco, I have a question for you on high value solutions. So I think Patrick asked something along these lines earlier, but I was just curious as to in terms of your HBS revenues, what percent is sold in The U. S? Speaker 1200:45:46And what percent of that U. S. HVS revenue is manufactured locally? It's sort of related to the potential impact of tariffs that I'm trying to get at. And on a related note, is there an opportunity for you guys over the next couple of years here to leverage your global footprint and flex where you supply from depending on tariff regimes? Speaker 1200:46:09I mean, is that a competitive differentiator that is starting to resonate in RFPs just yet? Speaker 600:46:17A lot of questions together. Thanks. First of all, we are generating North America about 26 of our revenue. The concentration of iValue solution is stronger in North America, but we don't disclose the exact number. And this is exactly the reason why we are investing so heavily in efficiencies to gain customer proximity and serve them through our value products. Speaker 600:46:50And this is also why we are, as Franco mentioned before, we are confident to manage also the tariff issue because we are becoming local and domestic in many different countries. And please underline if I miss a piece of your question. Speaker 500:47:11Maybe I can reinforce from business point of view. Our strategy since a few years in particular, from the moment that we have done the IPO in New York is really to invest and to focus Severanto Group on a high value product. Today, we are heavily investing capacity nearly fully dedicated to high value product in the Immuno Days in Latina and also in Fisher for the purpose really to follow this growing demand in Biologics with our international customer that wants to supply them partner that are present in different regions. If you look at the investment that we have done here in Latina in the last year, are dedicated to Nexa's ranges that is high value product. And now we are adding capacity on cars, as you say, to feel that also is high value product. Speaker 500:47:53We are mirroring exactly the same in feature where we're building capacity first range and next configuration that we will add capacity for Bayer, rate of field for Alba technology. Our goal is to become the global partner with a global footprint that is able to have a very sophisticated, flexible supply chain with the same standard of quality, but our goal is to focus on high value products in the next years. Speaker 1200:48:19Got it. That's helpful. And then a quick follow-up on Fishers. I think you guys had an agreement with BARDA there for BARDA funding about $95,000,000 of capacity expansion for your standard and easy fill vials at the site. Is that contribution essentially derisked Or is there a possibility that that could come under sort of scrutiny under the Trump administration? Speaker 500:48:43Correct. During COVID, we signed this contract in order really to build dedicated capacity for vial in bulk, configuration dedicated for the S market. Today, we are in execution to build the capacity in alignment with the contract. Speaker 1300:48:58I just want to clarify, Tejas, that we have had no indication from the government or from BARDA that there is any risk to that existing grant from them. Speaker 500:49:08Correct. Perfect. Speaker 1200:49:10Thank you, guys. Appreciate it. Speaker 1300:49:12Thank you. Next question, please. Operator00:49:14Next question is from Doug Schenkel, Wolfe Research. Please go ahead. Speaker 1400:49:22Good morning. Good afternoon. Thank you for taking my questions. I have two. One is just given the change in administration and the current geopolitical environment, I'm wondering if through the first two months of Q1, Speaker 1500:49:38if Speaker 1400:49:38you have seen any change in customer behavior, any stalling across different geographies, different product categories? And if so, how you have factored that into your guidance, keeping in mind you did tell us to model more growth in the back half than the first half. So that's the first topic. And then the second topic is just another follow-up to a series of the Fisher questions. Speaker 600:50:07As Speaker 1400:50:07Fisher opens up, when it is fully ramped, how much of high value production in The U. S. Can be supported by that facility? Again, that Speaker 1500:50:26So Speaker 500:50:28So just to summarize today, we have a contact. We don't see any change with our customer. We are just executing all the contact we have already signed last year, two years ago with our customer today. The focus is together with them to install capacity to do the validation execute, in particular, in Europe, in particular, in The States. For what is related to Fisher, our goal is to be in full capacity at the later 2028, and we are continuing to install this capacity for high value products practically in terms of syringes, like I mentioned to you, in terms of particular configuration of syringes and also for what is related to via radio field. Speaker 500:51:13We also like we mentioned before, we have this agreement with BARDA that is referring to EZTBIA and also with BARCABIA. We also have to remember that the feature we have done with the Phase I. When we have acquired, we have decided to install capacity in feature. We built we purchased a very big land because we have decided to become domestic United States with a view of long term like we have done in Europe. So we are now want to execute until 2028 at Phase one. Speaker 500:51:42We are spacing the next year to go to Phase two. So in order to really to be flexible and proactive to approach any type of market opportunity in United States with our biologic customers. Operator00:52:00Next question is from Odysseus, Manizotov, BNP Paribas. Please go ahead. Speaker 1500:52:09Hi. Thanks for taking my questions. Here on behalf of Hugo, I've got two, please. Firstly, could you provide a clarification on vials in the 34% decline in vial sales, where it seems that ethanol was more pronounced in isifil than bulk vials? Can you share the split of declines between isifil and bulk or at least the magnitude of the difference between the two? Speaker 1500:52:35And secondly, on the CapEx guide, could you clarify how the customer contribution will be recognized? Is it fair to assume that the $250,000,000 to $280,000,000 will be the expected reported figure that we should use for free cash flow next year? Speaker 600:53:00So I'll start from the second question. We are receiving balance sheet contribution in the form of prepayment or contribution to our investment in during 2025. We expect to receive approximately million between prepayments and contribution to help us in financing the expansion on important high value product projects. So the guidance is between NOK $250,000,000 to NOK $280,000,000 net of prepayment and contribution. About the split of the bulk and sterile decline, we don't split exactly the amount. Speaker 600:53:50We reinforced the message that during 2024, the decline was stronger in Stride Buyers. But basically, it depends quarter after quarter. There could be fluctuation quarter after quarter, but we prefer to disclose consistently with previous quarters the bundle of the buyers rather than going into specific details. Understood. Thank you. Speaker 1300:54:24Operator, next question, please. Operator00:54:27There are no more questions registered at this time. Speaker 1300:54:32Okay. Thank you, operator. I think Franco Stevonato would like to make a couple of closing comments. Speaker 500:54:37Yes. I will adjust to summarize a little bit today all the questions you made to us and also to transfer what is the sentiment in Stevonato in 2025. So we are confident that 2025 will be much better than 2024. And also, the organization in 2025 is going to be extremely focused on executing our key priority at where we have put our investment in order to fulfill the demand of our customers. From market point of view, we continue to see high demand for high value products in the different primary packaging configuration. Speaker 500:55:12There is a very high demand of injectable, and more and more, we see a very high demand from customers to have integrated solution system. We see we are continuing to see positive signal was spreading on the region about the recovery of the buyer. This is also important. And also, the engineering individual have done meaningful progress in order to deliver on track this complex line. So we are happy for 2025. Speaker 500:55:35Even more, we are confident to confirm what we shared during the market Capital Market Day in New York, our ability to target 30% of EBITDA and to have to target 40% to 45% of our high value solution in the next year, 2027. So this is where the company today is fully focused to execute this year. Speaker 1300:55:57Thank you. And that concludes the Stephan Alto Group fourth quarter and year end twenty twenty four conference call. Thank you for joining us. Have a good day. Operator00:56:11Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallStevanato Group Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(20-F) Stevanato Group Earnings HeadlinesStevanato Group to Report First Quarter 2025 Financial Results on May 8, 2025April 24 at 6:14 PM | businesswire.comStevanato Group resumed with an Overweight at StephensApril 22, 2025 | markets.businessinsider.comFrom Social Security to Social Prosperity?In less than a decade, Social Security could be out of money. But a surprising plan from Trump’s inner circle may not just save the system — it could unlock a major opportunity for savvy investors. Financial insider Jim Rickards calls it “Social Prosperity,” and says those who act now could see the biggest gains.April 26, 2025 | Paradigm Press (Ad)S&P 500 Futures Fall in Premarket Trading; Kimco Realty, Stevanato Group LagApril 21, 2025 | marketwatch.comWilliam Blair Remains a Buy on Stevanato Group (STVN)April 11, 2025 | markets.businessinsider.comMorgan Stanley Sticks to Their Hold Rating for Stevanato Group (STVN)April 8, 2025 | markets.businessinsider.comSee More Stevanato Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Stevanato Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Stevanato Group and other key companies, straight to your email. Email Address About Stevanato GroupStevanato Group (NYSE:STVN) engages in the design, production, and distribution of products and processes to provide integrated solutions for bio-pharma and healthcare industries in Europe, the Middle East, Africa, North America, South America, and the Asia Pacific. The company operates in two segments, Biopharmaceutical and Diagnostic Solutions; and Engineering. Its principal products include containment solutions, drug delivery systems, medical devices, diagnostic, analytical services, visual inspection machines, assembling and packaging machines, and glass forming machines. The company was founded in 1949 and is headquartered in Piombino Dese, Italy. Stevanato Group S.p.A. is a subsidiary of Stevanato Holding S.R.L.View Stevanato Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 16 speakers on the call. Operator00:00:00Good afternoon. This is the Carusco conference operator. Welcome and thank you for joining the Stephanata Group Fourth Quarter and Year End twenty twenty four Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Operator00:00:28At this time, I would like to turn the conference over to Ms. Lisa Miles, Senior Vice President, Investor Relations. Please go ahead, madam. Speaker 100:00:42Good morning, and thank you for joining us. With me today is Franco Stephanato, Chairman and Chief Executive Officer and Marco Delago, Chief Financial Officer. You can find a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the Financial Results tab. As a reminder, some statements being made today will be forward looking in nature and only predictions. Actual events and results may differ materially as a result of the risks we face, including those discussed in item three d entitled Risk Factors in the company's most recent annual report on Form 20 F filed with the SEC. Speaker 100:01:27Please read our safe harbor statement included in the front of the presentation and in today's press release. 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 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 these non GAAP measures, please see the company's most recent earnings press release. Speaker 100:02:12And with that, I will now hand the call over to Franco Stevanato. Speaker 200:02:17Thank you, Lisa, and thanks for joining us. Today, we will review our 2024 performance, address current market dynamics, discuss our fourth quarter results and provide 2025 guidance. We finished fiscal year twenty twenty four with a positive fourth quarter that was in line with our expectations. In 2024, revenue grew 2% compared to last year, driven by 6% growth in Biopharmaceutical and Diagnostic Solutions segment, which offset the expected 70% decline from the Engineering segment. BDA segment was driven primarily by the boosted market demand for high value syringes. Speaker 200:02:56This helped drive a 15% increase in high value solutions, which represented 38% of the total company revenue for fiscal twenty twenty four. We believe the success we are experiencing in high value solutions also demonstrates that we are investing in the right markets at the right time as we ramp up the syringes in Fisher and Latina to match customer demand. We expect that these investments will continue to drive near term growth and allow us to capitalize on growing patient demand for biologic treatments such as GLP1s, monoclonal antibodies and biosimilar. The increasing availability of sensitive biologic treatments and patient adoption of self administered medicines are two key areas driving growth in integrated solution and high value solutions. In 2024, revenue from Injectable Biologics increased 24% year over year and represented 34% of the BDS revenue compared to 30% of BDS revenue last year. Speaker 200:03:57Additionally, in fiscal twenty twenty four, strong revenue growth in syringes coupled with growth in other product categories helped to offset a 34% decline in revenue related to bulk and easy fill via. As you know, this temporary soft vial demand stems from the industry wide vial destocking. We saw modest improvements at the end of the year with some customers slowly returning to more normalized ordering, while other customers are still managing inventories. As a result, our thoughts remain unchanged and we still anticipate a gradual recovery in buyer demand in 2025, which we built into our guidance. We still expect that the market will continue to stabilize throughout 2025 with a faster recovery in bulk vias. Speaker 200:04:42During 2024, we also made significant progress on our growth investments and we achieved two important milestones. First, we generated our first commercial revenue in Fisher Indiana. Second, our Latina project in Italy turned profitable at a gross profit margin level in the third quarter. Please turn to Page six for a review of our expansion projects. In Latina, our teams are are focused on the ongoing ramp up of syringes capacity as part of the Phase one. Speaker 200:05:11Throughout 2025, we will continue installing, validating and launching additional manufacturing lines to help satisfy growing customer demand. We are still in the early phase of scaling up this important growth investment. As you may recall, the next phase of our expansion in Latina will be dedicated to expanding easy fill cartridges capacity. This is a part of a larger program for an anchor customer expanding into ready to use cartridges. The design and planning are completed and the core infrastructure build out is expected to continue through 2025. Speaker 200:05:43As part of this project, the engineering team will be delivering our next generation ezifil cartridges lines. We currently expect line installation to begin in early twenty twenty six. This is a market area where the demand environment has been more robust than we previously anticipated. We believe that our global leadership position and the long history, both legacy and new JL P1s, position us as a partner of choice in this growing market. Turning to Fisher, we're making great progress and activities are advancing as planned. Speaker 200:06:15Our world class facility is supporting U. S. Customers across the full value chain and our investment is strategically focused to meet the high market demand for biologics. Alongside the launch of commercial production last quarter, we are installing and validating new syringe lines throughout 2025 as we scale this multiyear approach investment. In parallel, construction is underway on the build out of our device manufacturing operation in features. Speaker 200:06:42This effort is supporting a large customer with multiple device programs across a range of biologic treatments. We will support this U. S. Global customer with a fully integrated solution with both our Nexa syringes and our device manufacturing. Commercial activities related to this new contact manufacturing work are expected to begin sometime between late twenty twenty six and early twenty twenty seven. Speaker 200:07:08Please turn to the next slide for a status update on our optimization plan for the engineering segment. The team made major strides during the quarter. We are on track to complete the previously delayed projects in 2025 with the majority expected to be completed mid year. Right now, we are squarely focused on the successful completion and installation of these manufacturing lines at our customer sites. I'm confident that we are moving in the right direction and our near term efforts are yielding results. Speaker 200:07:38The next phase of our plan has a longer horizon. This includes optimizing our operational footprint, increasing efficiency by harmonizing our industrial processes and streamlining activities into more defined structures. Our customers value our innovation, our top tier products. We continue to see a favorable demand environment for our engineering segment underpinned by the rise in biologics. Our efforts are designed to drive efficiency and productivity gains to best position the segment for long term success. Speaker 200:08:09In summary, while 2024 was challenging, it prompted us to take action to improve execution, drive operational improvements through footprint optimization, increase our efforts to streamline processes and look for further areas to gain production efficiencies. These ongoing efforts will improve our setup for long term growth. Looking ahead, we believe we are uniquely positioned with an integrated value proposition to better serve customers' wide ranging needs. Our long history of embedding science and technology to drive continuous advancements has led to a differentiated product portfolio. We operate in attractive end markets and have an increasing presence in biologics, which is the fastest growing market segment. Speaker 200:08:55We have developed next generation products such as our ALBA portfolio that are ideally suited to meet the scientific demands of highly sensitive drug products. We see a great opportunity driven by favorable macro tailwinds such as aging population, the growth in biologics and the rising patient adoption of self administered injectable drugs. We are positioning the company to take advantage of these opportunities to drive long term sustainable growth. I will hand the call over to Marco for a review of our fourth quarter results. Speaker 300:09:29Thanks, Franco. Before I begin, I want to clarify that all comparisons refer to year over year changes unless otherwise specified. Starting on page 10. For the fourth quarter of twenty twenty four, revenue grew 3% to $330,600,000 The impact of currency was neutral. Growth was driven by a 7% increase from the biopharmaceutical and diagnostic solutions segment, which offset the expected 16% decline in the engineering segment. Speaker 300:10:08Revenue from high value solutions grew 9% to a record 131,000,000 in the fourth quarter and represented approximately 40% of total revenue. This was driven by growing our premium performance syringes and, to a lesser extent, other product categories. The solid performance in the fourth quarter helped boost our full year mix of High Value Solutions to 38% of total company revenue, in line with our expectations. For the fourth quarter of fiscal twenty twenty four, a strong mix of high value year over year improvements in officials and Latina partially offset the unfavorable gross profit margin impacts from via the stocking, including lower revenue from easy fill vials underutilization of wire lines and the under absorption of costs and lower gross profit margin in the engineering segment as we continue to execute our optimization plan. As a result, gross profit margin for the fourth quarter of twenty twenty four declined by two ten basis points to 29.7%. Speaker 300:11:29Our new manufacturing plants in Fichas and Latina improved year over year, but they are still expected to be dilutive to gross profit margin in the near term. In response to industry wide soft vial demand, for the fourth quarter of twenty twenty four. As a result, net profit totaled $48,300,000 and diluted earnings per share were $0.18 On an adjusted basis, net profit was $51,500,000 and adjusted diluted EPS were $0.19 for the fourth quarter of twenty twenty four. Adjusted EBITDA increased 5% to 90,900,000.0 and adjusted EBITDA margin increased 50 basis points to 27.5%. Let's review segment results on page 11. Speaker 300:12:39Starting with the biopharmaceutical and diagnostic solutions segment. As Franco noted, we see ongoing signs of stabilization in the vial market with improvements in the second half of twenty twenty four compared with the first half, both in revenue and orders intake for bulk and diesel fuel buyers. For the fourth quarter, revenue from the BDS segment grew 78% on a constant currency basis to $279,400,000 This was driven primarily by growth in I value syringes, which offset a 14% revenue decline related to bulk and diesel vials. As expected, the drop was larger in our more accretive dizzy fill vials. Revenue from High Value Solutions grew 9% to a record of $130,600,000 in the fourth quarter, reaching 47% of BDS segment sales. Speaker 300:13:45Revenue from other containment and delivery solutions increased 6% to $148,800,000 mostly due to higher sales tied to counter manufacturing activities. A strong fourth quarter contribution from High Value Solutions and the improvements in FISHERs and Latina as we continue to scale helped to partially offset the margin impact from vial destocking. As a result, in the fourth quarter, gross profit margin declined two fifty basis points to 31.1%. For the fourth quarter of twenty twenty four, actions we took during the year helped to moderate the decline in operating profit margin, which decreased 40 basis points to 23.3%. For the fourth quarter of twenty twenty four, revenue from the engineering segment decreased 16% to $51,200,000 Performance in the business was mixed. Speaker 300:14:49With expected revenue declines in glass conversion and visual inspection offsetting growth in assembly and packaging. As expected, gross profit margin for the fourth quarter decreased to 18.6%. Optimization and cost management initiatives helped to maintain operating profit margin consistent at 15.3% compared with the same period last year. As our results demonstrate, the steps we are taking are helping to improve the segment's operating and financial results. We believe these actions will better position the segment to capture future opportunities opportunities and improve the overall health of the business. Speaker 300:15:35Please turn to the next slide for a review of balance sheet and cash flow items. We ended the year with cash and cash equivalents of $98,300,000 and net debt of $335,000,000 With our current cash on hand, available credit lines, cash generated from operations and our ability to assess additional financing, we believe we have available liquidity to fund our strategic and operational priorities over the next twelve months. For the full year 2024, capital expenditures totaled $286,600,000 80 9 percent of CapEx was deployed for growth projects to meet rising demand for high value solutions. For the full year 2024, net cash from operating activities totaled $155,800,000 a substantial improvement from the previous periods. Cash used in the purchase of property, plant, equipment and intangible assets was $313,600,000 The combination of increased cash flow from operations and lower CapEx helped drive a significant year over year improvement in free cash flow. Speaker 300:16:58For fiscal twenty twenty four, this resulted in a negative free cash flow of $148,500,000 compared with a negative $333,900,000 in fiscal twenty twenty three. Lastly, on Slide 13, we are establishing 2025 guidance. We expect revenue in the range of $1,160,000,000 to $1,190,000,000 adjusted EBITDA in the range of $293,000,000 to $306,300,000 and adjusted diluted EPS in the range of $0.51 to $0.55 Our 2025 guidance considers headwinds and tailwinds, and we have assumed the following factors: revenue will be stronger in the second half of twenty twenty five compared with the first half We expect a step down in revenue in the first quarter of twenty twenty five compared with the fourth quarter of twenty twenty four, with revenue expected to grow sequentially throughout the year. The BDS segment is expected to grow mid to high single digits, driven principally by growth in high value syringes. For the Engineering segment, we have assumed that neutral to low single digit growth compared with 2024 As we focus efforts on execution, we expect that High Value Solutions will range between 39% to 41% of full year total revenue. Speaker 300:18:32Turning to gross profit margin. On a consolidated basis, we currently expect that gross profit margin will improve by approximately 100 to 140 basis points compared with 2024, driven by continued improvement in Latina and Fichas as our capital investment projects scale as well as increased contribution from high value solutions. We also anticipate some headwinds. While Latina and Fishers are expected to improve year over year, they will still be dilutive to margins, and we expect higher depreciation in 2025. We expect depreciation and amortization will range between 8.7% to 9% of expected sales, which reflects the range of revenue in our guidance. Speaker 300:19:23Currency is expected to be neutral compared to 2024. We are assuming a tax rate of approximately 23% and weighted average shares outstanding of 272,900,000.0. And finally, capital expenditures and free cash flow. For 2025, we have assumed CapEx in the range of $310,000,000 to $340,000,000 before customer contributions and prepayments. Our 2025 plan reflects an acceleration of CapEx related to the build out for EasyFill Cartridges at the request of a large customer. Speaker 300:20:06We had previously expected this spending to occur in future periods. Net of contributions and prepayments, CapEx is expected to range between $250,000,000 and $280,000,000 Regarding free cash flow, in 2025, we expect increased operating cash flows and higher contributions for CapEx. This will help drive continued improvement in free cash flow in 2025 with an expected range between negative $40,000,000 and negative $60,000,000 for the full year. I will hand the call back to Franco. Speaker 200:20:44Thank you, Marco. In closing, we remain focused on executing our key priorities and achieving our long term objectives. We operate in growing end markets with favorable secular tailwinds, and we have several reasons to be confident in our strategic direction. First, we continue to deliver organic growth, driven by solid demand for high value solutions, the main pillar of our long range construct. We are investing in right areas to meet the rising customer demand, and we have a growing presence in biologics. Speaker 200:21:16Second, we expect to increasingly benefit from the new capacity projects as we advance our ramp up activities and drive profitable growth. In 2025, we expect that these projects will be deleted to gross profit margin. And in 2026, we will begin to realize the benefits of scale and productivity gains as the projects mature. Third, the Bayer market continues to gradually recover and stabilize. We remain optimistic that as the Bayer demand continues to normalize, we will see a return to historical market volumes and growth rates. Speaker 200:21:51Finally, we are making meaningful progress on a clear and actionable plan to improve our operational financial performance in engineering segment. All in all, the fundamentals of our business remain stronger. We have an excellent market position and we continue to innovate each and every day. Our unique value proposition integrated offerings make us a partner of choice for customers. As CEO, I'm firmly committed to putting the business on the right path to return to double digit growth, expand margins and build shareholder value. Speaker 200:22:23We believe we have all the ingredients in place. Operator, we are ready for questions. Operator00:22:30Thank you. This is the Chorus Call conference. Operator, we will now begin the question and answer session. First question is from Michael Ryskin, Bank of America. Please go ahead. Speaker 400:23:06Great. Thanks for taking the questions and congrats on the quarter. I've got two questions. I'll go through them quickly. First on the vial recovery, it sounds like vial, especially bulk vials continues to gradually normalize. Speaker 400:23:20You've kind of talked about that trend for a number of quarters now, it's moving in the right direction. Any additional color you can provide on when you think things will be fully back to normal? Do you expect the vial environment to sort of be fully recovered in the middle of twenty twenty five? Or are you still working through it for the rest of the year? And I've got a follow-up. Speaker 500:23:43Good morning, Mike. Franco Stevonato speaking. So our main takeaway after having a very strong interaction with practically all our customer, big customer and also the regional customer, is that we are confident that 2025 to be much better than 2024, how we are going to translate this because we see sign up everywhere where we see customer, big international customer and regional customer that are starting to return to normalize ordering partner. So overall, we see that during this 2025, there will be a gradual recovery throughout all the year. Speaker 400:24:23Okay, great. And then on some of your comments on gross margins, I mean, you're pointing to pretty significant margin gains year over year, but you've had some headwinds last year, you still have some margin dilution this year. If I think about Fishers, Latina coming up to speed, maybe some of that incremental CapEx you talked about with that new customer, just talk about how those projects need to ramp and how those facilities need to ramp for them to go from being margin dilutive to margin accretive? What's the time scale on that or sort of the volumes you need to be pushing through those new that new capacity where that goes from being a headwind to a tailwind? Speaker 600:25:03Thanks for the question, Michael. First of all, as you know, Latina is a little bit higher compared with Fishers. We started generating positive gross profit in Q3 twenty twenty four in Latina, and we are keeping on improving and ramping up the revenues. We expect there by the end of the twenty twenty five to have a normal gross profit margin with respect of the high value products that we are producing there. Fishers is a little bit different because it's a larger plant. Speaker 600:25:37It's a greenfield. And basically, as you know, we have two, three quarters of delay in the program compared with Latina. We are fully in line with our plan, but it's about three quarter after. There, we are very happy with the results in Q4. We started generating a good amount of revenue in Q4, and we are keeping on improving through validations with customers. Speaker 600:26:06We expect to turn positive gross profit in T shirts in the second half of twenty twenty five. So matter of fact, 2025 will still be dilutive for our gross profit margin in the combination of the two new plants. Speaker 400:26:26Great. Thanks so much. Operator00:26:29Next question is from Maik Alaro, William Blair. Please go ahead. Speaker 700:26:37Hi. Thanks for taking the question. I want to follow-up on my first question around Vial. Obviously, last year, you guided us down 35% for the year and generally came in line with that. Is there any way you can help us with what we should expect for 2025? Speaker 700:26:56And maybe as part of that, when are you assuming a return to positive growth in vials? Do you get that in the second half of this year? Speaker 600:27:05Yes. Thanks for the question. Marco speaking. First of all, as Franco mentioned, we can see some signal of improvement in the last quarters. Both revenue and orders intake were better in the second half of twenty twenty four compared with the first half. Speaker 600:27:25You're right, we went down 34% in the year. In the last quarter, we went down 14% year over year. So we can see some signal of improvement. Going to your question, we are currently modeling a grow in bias for 2025 from mid single digit to high single digit. And as Franco mentioned, we see progresses throughout the year quarter after quarter. Speaker 600:27:54We expect a sequential improvement. Speaker 700:27:59Okay. Thank you. And then you referenced in the script the investments you're making in your device manufacturing operations and called out both Nexa and Alba. I think some heightened attention on devices and where they fit for the traditional packaging players long term. Could you just talk a little bit about your success there as well as your efforts and expectations around scale and the ability to profitably scale those programs over time? Speaker 500:28:28Correct. Practically, in our strategy for Sernato Group is really to serve an integrated solution and broader portfolio to our biologic customers. In the last year, we developed our IP out injector and PEN. Also, we more and more, we for many customers, we are building an R and D even more some plants that are able to serve Nexa syringes, Alba syringes. Like in the case that we have in Fisher, we are building also a lot of capacity for our one of our big customer in United States. Speaker 500:29:03We are going also to serve this device with this program. So today, we have a certain number of program on through the CMO business model and also a certain number of programs to our IP pen, health ingestor that we will sell from the German plant in order to fulfill this increasing request from our biologic customers that's looking step an out of not only for glass ranges, not only for cartridges, but also like a holistic partner that can where they can buy the glass and the devices. Okay. Thank you. Operator00:29:44Next question is from Patrick Donnelly, Citi. Please go ahead. Speaker 800:29:52Hey, thanks for taking the questions guys. Marco, maybe one for you just on the pacing of the year. It sounds like just seasonally 1Q set down from 4Q on rev, no big surprise there. Can you just help frame up the quarters, the progressions we go through here, both revenue and then the margin side would be helpful as well just to think about the cadence of the year as we work our way through here? Speaker 600:30:14Sure. We expect sequential growth quarter after quarter in 2025 with a stronger second half of the year compared with the first half mainly for three reasons. First, we can see strong demand in high value syringes and these sterile cartridges. But at the same time, we are ramping up capacity. We expect to install several lines in features between May and June. Speaker 600:30:43So matter of fact, after the validation, we will have available capacity to satisfy the strong demand. So for this, there is always a stronger revenue in second half. The other reason is related to buyers. We mentioned before the fact that the expected market will be sequentially better toward the end of the year. And the third reason is related to engineering. Speaker 600:31:08We are working hard and obtaining good success in recovering the delay. We are delivering several complex projects in this period of time. And we expect to complete the recovery around the mid of the year. So we have the opportunity in the second half of the year to take more workload and increase our revenues in engineering. That's why we are confident that in the second part of the year, the revenues will be stronger. Speaker 800:31:42Okay. Okay. That's helpful. And then Franco, maybe one for you. Just as you think about the administration change here in The U. Speaker 800:31:49S, can you just talk about any impact? I mean, there's the tariff side, obviously, with things like Mexico. We'll see what happens with Europe. Just what you think there? And then on the back of that, some of these trial cancellations, HHS going after things like bird flu and maybe some of the BARDA contracts. Speaker 800:32:08I would be curious just your perspective on some of these recent changes, what your guys' exposure is, how you think about that? Thank you guys so much. Speaker 500:32:15Thank you for the question. Today, particularly what we have done in Stavantos Group since the last fifteen to twenty years, we build sophisticated supply chain where we try to be domestic in the major growing pharmaceutical area all around the world. Today, we have several plants in Europe, United States, in Asia, able to serve to our customers the same product from different regions. So on the top of this, we can add that we have a very strong partnership in a proactive way with our customers, and we are trying to monitor in the best way how eventually to review the supply chain with our customers from the different regions. So we are putting a lot of attention together with our customers how to approach if there will be some evolution. Speaker 500:33:00But the good news that we have a good footprint with the same standard of quality everywhere and the fact that we have decided to approve this bigger investment in Fisher Indiana three years ago, it will make us even more proactive to react to any type of change. Speaker 600:33:19Then, Patrick, I don't know if your question was about vaccine. Just to make sure it's a limited risk for us because we are generating about 8% of our revenue of BDS in vaccine. But the focus is predominant in Europe. We are today generating around one percent of our revenue in U. S. Speaker 600:33:44With the vaccine. So it's not a big risk for us today. Speaker 800:33:52Great. That's really helpful. Thank you, guys. Operator00:33:55Next question is from David Windley, Jefferies. Please go ahead. Speaker 900:34:01I was hoping thanks for taking my questions. Good morning. I was hoping you could comment on the utilization levels or maybe relative utilization of your lines across the different form factors, so syringe, cartridge and vial. What I'm digging for is with vials down as much as they are, I'm sure the utilization is low and how much that can recover and how we should think about that translating to margin. But then also on the other end of the spectrum, you're adding capacity for cartridge. Speaker 900:34:41And should I correctly interpret that as you're being at very high levels of utilization in your existing cartridge capacity? So just again, trying to understand your relative utilization levels of each of the different types of production. Speaker 600:34:57Thanks, Dave, for the question. Marco speaking. So first of all, we have strong demand in syringes. So we are utilizing a lot of the syringes line. And as you know, we are also ramping up capacity to match the long term demand we have with the key customers. Speaker 600:35:17We have similar situation with cartridges, but I will let later Franco to explain more the EasyFilled Cartridges project. About Vias, obviously, after going down 34% in revenue last year, we have available capacity both in bulk and in easy filler for obviously reason. So we will still have ability to grow there. We expect to grow in 2025 compared with 'twenty four, but we still have available capacity. Speaker 500:35:51David, we can say that from what is related to the high value product, our demand is driven by the capacity that we have put in place. We started two million days, years ago. Now we are heavily investing in Latina and also in Fisher. Today, we have a lot of requirements from around the next such ranges, a lot of requests about advanced ranges for particular application. There is a more and more an increase in demand for cartridges ready to fill. Speaker 500:36:18In particular, we are one big customer that really have decided to increase their capacity in the next year around this type of product. And even more, there are several tens of program around cartridges three to three. So our big focus is really to implement capacity for high value products where we see the higher demand in 2025, also the next year. Speaker 900:36:41Is that on the cartridge program for the specific customers, is that going to be dedicated capacity? Or do you expect to be able to diversify that? Speaker 500:36:52Both. We are one big Encore customer that is placing a bigger contract where we want they want to serve a bigger quantity on cartridge in two fields. But also, it's also true that we see more and more, we have several spends of mid size customer, biologic biosimilar, they are going through this type of application. It's very simple because they are putting place capacity, but they want to also source to partner like us, the washing, liquidation, sterilization. So this is why we are heavily investing. Speaker 500:37:25We have already capacity here in Termino De Geza. We are going to invest also in Latina with a lot of capacity in order to be ready to approach this nice tailwinds. Speaker 900:37:38Yes. And if I could ask one more on capacity, I think maybe I missed it, but relatively new to my eyes was the mention of devices in Fishers and adding capacity there for that. Could you help us to understand I understand the kind of strategy of being able to provide the client with both the glass as well as the device. Can you help us to understand what your longer term expectations are for the margin contribution of the devices? Or said differently, is that a positive evolution of your business mix to pursue supply of those devices? Speaker 900:38:22Or are those device margins eventually going to be lower than your glass your high value glass margins? Speaker 600:38:33Thanks, Dave, for the question. We have a different situation in device when we talk about CMO contract and proprietary solutions. We are working on both. And our strategy is obviously to become a reliable partner on both. When we talk about proprietary device, it's an I value product and the range is the normal one in I value product, so above 40%, I'm speaking. Speaker 600:39:03In CMO space, margin are lower. We are talking between 15% to 35% in line with other containment delivery solutions. Speaker 500:39:12Yes. If I can, David, give you the different angle more from business point of view, we if you look at the growth in Biologics in the next years, we would there would be a nice double digit growth on syringes like Nexai Alba. In parallel, there are the equivalent growth on pending or to ingest. So our goal is to go to our customer and to show the full value proposition no matter if it's through our IP product or through the business model of SIMO because this will help us to capture more market share and more growth. And this is why the plants that we have in Fisher have this flexibility is considered by our guest customer like UnHub where they can have the integrated solution service that is a little bit unique in this moment in United States. Speaker 500:39:59And we are taking benefit from this. Operator00:40:07Next question is from Larry Solow, CJS Securities. Please go ahead. Speaker 1000:40:17Hi, good morning. It's Pete Lucas for Larry. You covered most of my questions. Just on the engineering segment, recovery sounds like it's progressing. Can we expect Segment operating margins to return to mid teens levels over the course of the next few quarters? Speaker 1000:40:32And perhaps build on that, if you could just give us some color there? Thanks. Speaker 600:40:37Yes. You have noticed we reached mid-fifteen percent in Q4, so we are happy with the progress that we are making. We are not yet at the level we were in 2023, but we are progressing. Our goal is to complete the, let's say, delay issue by mid of next year. But the further step, as Franco was explaining, is a further optimization to further improve our profitability in the segment. Speaker 500:41:10Yes. Larry, if I can further add a more business color, the team made a big improvement during this quarter. Today, we are on track to deliver our disc compressor line to our customer. Our target is to complete this delivery at the end of the year. This will help to further improve the revenue marginality. Speaker 500:41:31In the meantime, together with the organization, we are going to review what is the cost structure. Also, we are going to review the size in our plant to make more efficiency in our operation, both in Denmark and Italy, also prepare for the future growth. Today, the product we are serving to our customer from engineering point of view are very well perceived because there is a big growth in biologics and there's a high demand for assembly technology on the industry because of this device trend. Maybe more from a regulatory point of view, there are more and more requirements from new sophisticated inspection line. It's exactly where we want to focus the division the next years. Speaker 1000:42:14Very helpful. Thank you. Speaker 500:42:16You're welcome. Operator00:42:18Next question is from Anna Snokowski, KeyBanc. Please go ahead. Speaker 1100:42:25Hi. This is Anna on for Paul Knight. Thanks for taking my questions. First, could you frame the revenue generating capacity of the Fishers facility? Operator00:42:35I Speaker 1100:42:35know in the past you've mentioned you anticipate more meaningful revenue contribution here in, fiscal year twenty five. But what is the utilization rate you expect for 2025? And then just how is overall demand trending here versus initial expectations? Speaker 600:42:56So thanks, Anna. If I got your question, it's a matter of the speed we ramp up. So we expect to complete the full capacity ramp up in Fishers by 2028. So we are still progressing. We are pretty happy with evolution. Speaker 600:43:14We reached our milestone in Q4 twenty twenty four. We are progressing with new lines installed, but most importantly, more validations from our important North American customers. About 2025, obviously, we expect a big increase compared to 2024, but we need to underline the fact that in 2024, we generated revenue commercial revenue basically in Q4. So we expect much stronger revenue coming from features in 2025, but we still have room to install more capacity in 2026, '20 '7 and 2028. Speaker 1100:44:00Okay, perfect. And then maybe just looking at the engineering, once the operational changes are executed over the next twelve months, what do you think this business could run at in terms of adjusted EBITDA margins over the long term? Speaker 600:44:16Well, in the long term, we confirm our view. We share about the medium to long term construct. We basically want to expand our margin, increasing also after sales activities. We expect to be more accretive than we were before these problems we face in 2024, but keeping on improving also through the optimization plan, Franco mentioned in his remark. But we are confirming the trajectory we share with you during Capital Markets Day. Speaker 500:44:55Our goal for the engineering division is to keep in the next year's high single digit growth, thanks to the fact that we want to further enforce our position inspection system in assembly technology with the high speed machine most increase the percentage of their sales to our major customers. Operator00:45:19Next question is from Tayah Savan, Morgan Stanley. Please go ahead. Speaker 1200:45:25Hey, guys. Good morning and thanks for the time here. Franco, I have a question for you on high value solutions. So I think Patrick asked something along these lines earlier, but I was just curious as to in terms of your HBS revenues, what percent is sold in The U. S? Speaker 1200:45:46And what percent of that U. S. HVS revenue is manufactured locally? It's sort of related to the potential impact of tariffs that I'm trying to get at. And on a related note, is there an opportunity for you guys over the next couple of years here to leverage your global footprint and flex where you supply from depending on tariff regimes? Speaker 1200:46:09I mean, is that a competitive differentiator that is starting to resonate in RFPs just yet? Speaker 600:46:17A lot of questions together. Thanks. First of all, we are generating North America about 26 of our revenue. The concentration of iValue solution is stronger in North America, but we don't disclose the exact number. And this is exactly the reason why we are investing so heavily in efficiencies to gain customer proximity and serve them through our value products. Speaker 600:46:50And this is also why we are, as Franco mentioned before, we are confident to manage also the tariff issue because we are becoming local and domestic in many different countries. And please underline if I miss a piece of your question. Speaker 500:47:11Maybe I can reinforce from business point of view. Our strategy since a few years in particular, from the moment that we have done the IPO in New York is really to invest and to focus Severanto Group on a high value product. Today, we are heavily investing capacity nearly fully dedicated to high value product in the Immuno Days in Latina and also in Fisher for the purpose really to follow this growing demand in Biologics with our international customer that wants to supply them partner that are present in different regions. If you look at the investment that we have done here in Latina in the last year, are dedicated to Nexa's ranges that is high value product. And now we are adding capacity on cars, as you say, to feel that also is high value product. Speaker 500:47:53We are mirroring exactly the same in feature where we're building capacity first range and next configuration that we will add capacity for Bayer, rate of field for Alba technology. Our goal is to become the global partner with a global footprint that is able to have a very sophisticated, flexible supply chain with the same standard of quality, but our goal is to focus on high value products in the next years. Speaker 1200:48:19Got it. That's helpful. And then a quick follow-up on Fishers. I think you guys had an agreement with BARDA there for BARDA funding about $95,000,000 of capacity expansion for your standard and easy fill vials at the site. Is that contribution essentially derisked Or is there a possibility that that could come under sort of scrutiny under the Trump administration? Speaker 500:48:43Correct. During COVID, we signed this contract in order really to build dedicated capacity for vial in bulk, configuration dedicated for the S market. Today, we are in execution to build the capacity in alignment with the contract. Speaker 1300:48:58I just want to clarify, Tejas, that we have had no indication from the government or from BARDA that there is any risk to that existing grant from them. Speaker 500:49:08Correct. Perfect. Speaker 1200:49:10Thank you, guys. Appreciate it. Speaker 1300:49:12Thank you. Next question, please. Operator00:49:14Next question is from Doug Schenkel, Wolfe Research. Please go ahead. Speaker 1400:49:22Good morning. Good afternoon. Thank you for taking my questions. I have two. One is just given the change in administration and the current geopolitical environment, I'm wondering if through the first two months of Q1, Speaker 1500:49:38if Speaker 1400:49:38you have seen any change in customer behavior, any stalling across different geographies, different product categories? And if so, how you have factored that into your guidance, keeping in mind you did tell us to model more growth in the back half than the first half. So that's the first topic. And then the second topic is just another follow-up to a series of the Fisher questions. Speaker 600:50:07As Speaker 1400:50:07Fisher opens up, when it is fully ramped, how much of high value production in The U. S. Can be supported by that facility? Again, that Speaker 1500:50:26So Speaker 500:50:28So just to summarize today, we have a contact. We don't see any change with our customer. We are just executing all the contact we have already signed last year, two years ago with our customer today. The focus is together with them to install capacity to do the validation execute, in particular, in Europe, in particular, in The States. For what is related to Fisher, our goal is to be in full capacity at the later 2028, and we are continuing to install this capacity for high value products practically in terms of syringes, like I mentioned to you, in terms of particular configuration of syringes and also for what is related to via radio field. Speaker 500:51:13We also like we mentioned before, we have this agreement with BARDA that is referring to EZTBIA and also with BARCABIA. We also have to remember that the feature we have done with the Phase I. When we have acquired, we have decided to install capacity in feature. We built we purchased a very big land because we have decided to become domestic United States with a view of long term like we have done in Europe. So we are now want to execute until 2028 at Phase one. Speaker 500:51:42We are spacing the next year to go to Phase two. So in order to really to be flexible and proactive to approach any type of market opportunity in United States with our biologic customers. Operator00:52:00Next question is from Odysseus, Manizotov, BNP Paribas. Please go ahead. Speaker 1500:52:09Hi. Thanks for taking my questions. Here on behalf of Hugo, I've got two, please. Firstly, could you provide a clarification on vials in the 34% decline in vial sales, where it seems that ethanol was more pronounced in isifil than bulk vials? Can you share the split of declines between isifil and bulk or at least the magnitude of the difference between the two? Speaker 1500:52:35And secondly, on the CapEx guide, could you clarify how the customer contribution will be recognized? Is it fair to assume that the $250,000,000 to $280,000,000 will be the expected reported figure that we should use for free cash flow next year? Speaker 600:53:00So I'll start from the second question. We are receiving balance sheet contribution in the form of prepayment or contribution to our investment in during 2025. We expect to receive approximately million between prepayments and contribution to help us in financing the expansion on important high value product projects. So the guidance is between NOK $250,000,000 to NOK $280,000,000 net of prepayment and contribution. About the split of the bulk and sterile decline, we don't split exactly the amount. Speaker 600:53:50We reinforced the message that during 2024, the decline was stronger in Stride Buyers. But basically, it depends quarter after quarter. There could be fluctuation quarter after quarter, but we prefer to disclose consistently with previous quarters the bundle of the buyers rather than going into specific details. Understood. Thank you. Speaker 1300:54:24Operator, next question, please. Operator00:54:27There are no more questions registered at this time. Speaker 1300:54:32Okay. Thank you, operator. I think Franco Stevonato would like to make a couple of closing comments. Speaker 500:54:37Yes. I will adjust to summarize a little bit today all the questions you made to us and also to transfer what is the sentiment in Stevonato in 2025. So we are confident that 2025 will be much better than 2024. And also, the organization in 2025 is going to be extremely focused on executing our key priority at where we have put our investment in order to fulfill the demand of our customers. From market point of view, we continue to see high demand for high value products in the different primary packaging configuration. Speaker 500:55:12There is a very high demand of injectable, and more and more, we see a very high demand from customers to have integrated solution system. We see we are continuing to see positive signal was spreading on the region about the recovery of the buyer. This is also important. And also, the engineering individual have done meaningful progress in order to deliver on track this complex line. So we are happy for 2025. Speaker 500:55:35Even more, we are confident to confirm what we shared during the market Capital Market Day in New York, our ability to target 30% of EBITDA and to have to target 40% to 45% of our high value solution in the next year, 2027. So this is where the company today is fully focused to execute this year. Speaker 1300:55:57Thank you. And that concludes the Stephan Alto Group fourth quarter and year end twenty twenty four conference call. Thank you for joining us. Have a good day. Operator00:56:11Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.Read morePowered by