Good morning, everyone. Welcome to the 2023 Bank of America Healthcare Conference live from the Encore Hotel here in Las Vegas. I'm Derik De Bruin, the Senior Life Sciences and Diagnostics Tools Analyst. I cover the sector with my colleague, Mike Ryskin. Our next company up today is Stevanato Group. With us from Stevanato is Riccardo Butta, Head of Americas, and Lisa Miles, IR. I think Riccardo's gonna do a little bit of presentation, and then we'll have some Q&A. With that, Riccardo. Yeah. Thank you, Derik, for the introduction. Good morning, everyone, and welcome here at our session for this conference. We are glad to have you here and listen to the introduction of our company and potentially learn more about our growth strategy and the trajectory for the years to come. Of course, I will be making some forward-looking statements, based on our understanding of the market environment and our business and those may be subject to change over time. The safe harbor statement applies here. When you look at our company, Stevanato Group is a leading global provider of drug containment and drug delivery solutions for the pharma and biotech space. We come with a long track record of double-digit growth and delivering on commitments to our customers, thanks to the partnership with many, many mega customers around the world. We have more than 700 customers active today. More importantly, we work with 80% of the top pharma companies in the market. We are a market leader today in cartridges for all the diabetes care applications. We are number 2 in prefilled syringes, and we are number 2 in ready-to-use vials as well. Last year, we closed our year at EUR 984 million of revenue, growing 17% year-over-year compared to 2021. We delivered the 26.8% adjusted EBITDA, and we accumulated a backlog of orders for EUR 957 million going into 2023. If you go to the next one. When you look at our company, you can look at it with those two major segments. One is the BDS, Biopharma and Diagnostics segment that in 2022 accounted for 81% of our total revenue, and the other one is the engineering business for 19% of our revenue. In reality, we go to market with a unique value proposition that is centered around the integration of those two businesses to build a set of capabilities, product, processes, services that cover the entire spectrum of the life cycle of a molecule from the early stage of R&D clinical activities through to scale-up and commercial manufacturing. You see there a bit the composition of the portfolio. We are busy with cartridges, vials, syringes, as I said, but we are also bringing up platforms around the drug delivery devices. We have three proprietary platforms, pen injectors, auto-injectors, and wearables. We are leading the market on the other side with our automation solutions for glass forming, for visual inspection of filled containers, automated assembly solutions for devices and packing and serialization for the same. What is not shown there, but is extremely important, is the tech centers. We have two tech centers. One is in Boston, U.S., one is in Italy, and those are labs where we work with our customers more on the R&D side using scientific and analytical technologies and methodologies to help customers pick the right drug containment and drug delivery solution for their new molecules in the pipeline. That is important for them to make sure that they de-risk the path to market. Is extremely important for us as well because we basically get designed into the new molecules of our customers. We are into the regulatory filing in the Drug Master File. That means that we have a very long-term relationship and engagement with these customers throughout the life of the pharma product in the marketplace. Very sticky relationship, giving us a baseline of business and a lot of visibility into our growth trajectory. The company comes with 70 years of history and its history about meeting commitments to customers, delivering innovation and delivering value. We were founded in 1949, and we achieved the major milestones back in 71 when we brought to market the first instance of the glass-forming technologies and processes that are still at the core of our business today. Over the past 20 years, we worked hard to turn the company into a global leading solution provider, as I said. We are focusing in driving growth with our customers and bringing more and more innovation to the marketplace around the four pillars. One, of course, is our people, our organization that is the at the core of everything. Footprint is very important. We have been going into more and more regions and more and more countries with our solution. R&D, we continue to push the envelope from an innovation standpoint and bringing new products to market to serve the particularly the high end of the marketplace today. On top of that, we have been working quite a bit on M&A activities to add complementary capabilities to our setup around what is the core business and continue to evolve our solution, particularly around engineering, you saw the offering there, and around our delivery devices. If you go to the next one, I talk a bit about the footprint. The footprint, the global presence is extremely important to us and is extremely important to our customers. Today, we are present in nine countries with 16 sites with a diversified portfolio of capabilities. What we are really trying to do is to have the same solution in every single region, and that is where we are investing today. We are investing in expanding capacity in Italy into different locations. We are doing a greenfield in Fishers, Indiana, that will be up and running by the end of the year. Down the road, we are planning already for further expansion in China. All of this around our portion of high-value solution in our portfolio. That is where we are investing. This is important for us, of course, it's important for our customers. More and more customers want to have a regional solution and want to have redundancy in the supply chain to have a more resilient supply chain. By having multiple nodes in the market, able to deliver the same products to customer with the same technology and the same quality system is really becoming a differentiator today. On top of that, of course, being local and embedded in the supply chain of our customers allow us to have a much shorter, more efficient supply chain, but also a more sustainable one, which is now a very important consideration as we, as we look forward. When you look at our market today, we see a number of trends that are shaping the marketplace. Some of them are demographic trends and are common across all the players in the healthcare space. So you talk about aging population, prevalence of chronic diseases like diabetes, obesity, cardiovascular. There is clearly a push in several regions to bring more and more quality healthcare solutions to a larger portion of the population, that combination of those two, and combination of the increased access to vaccines and vaccination programs, is clearly driving the overall consumption of healthcare up and driving the market up. Then there are certain trends that are a bit more pharma-specific, if you like, a bit more linked to our own business. There is a major push to biologics and biosimilars. There is also a trend about moving the healthcare and the point of care from the hospital environment to the home care and self-treatment. That is where we come into play with our high-value solutions, both on the containment side as well as on the drug delivery side, because if you want to push for self-administration, you need to make sure that patients have a way to do it. Given those trends and the growth that is there, we are focusing our effort to capitalize, of course, on the growth, both from a strategic standpoint as well as with our operations. I talked a bit already about the expansion. I will not go over that again. When you look at high-value solution, sorry, we are investing a lot. We are investing a lot there to bring to market, products that can meet the most stringent requirements of the biotech companies in terms of performance, in terms of range of operations, and also in terms of quality. Those drugs are particularly critical in terms of our ability to protect them and to deliver them in a safe and effective way to patients, and they're also extremely expensive in some cases. It makes sense to do our best to deliver those solutions to our customers. When you talk about syringes, for example, we are making a major push with our Alba platform, with our Nexa platform. You talk about vials and cartridges, there is a big investment going around EZ-fill and EZ-fill Smart and so on and so forth. That is where we are putting our focus in terms of bringing up capacity and serving our customers. Of course, we continue to invest in R&D across the entire spectrum of our portfolio, both organically and through partnerships. That is a very important element of our solution. As I said earlier, we work side by side with our strategic customers as well as emerging biotech companies to be embedded early on in their pipeline, into their assets as they go to market. With that, build a pipeline that will give us the runway for the, for the years to come in terms of growth. We want the growth to be sustainable, clearly, and we want the growth to be profitable. That is why we are pushing on the high-value solution piece. Everyone is seeing the same market. The way we try to differentiate, and we so far succeeded in differentiating the marketplace, has to do with integration of the different pieces of our solution, product, processes, and the services. That is happening as we speak. If you take an auto-injector as an example, an auto-injector is a relatively complex device, with a number of components in there. You have syringes, you have motor components, you have meta components, you have subassemblies. We need to bring up a lot of automation to go to market with an injector. It's not about one or the other component. It's the system-level performance and integration of these components and managing the interfaces and making sure that you are solid on the interfaces, particularly when you scale to high volume and you want to make sure that you deliver on the performance consistently, irrespective of the variability in the process. We control the design of the syringes, we control the design of the device. We control the process to form the glass. We control the process to assemble the device. So we have all the lever to be able to do that in front of our customers. That is exactly what we did with Mersana a while back. We worked with them within our tech center to identify the right solution, the right containment solution for them. We went out developing that one and scaling with our Nexa® platform. We deliver to the customer an automated setup for assembly of devices that will give them the right flexibility so that they could reuse the same CapEx investment over a number of different therapies and solutions. This is a bit how we create value for our customers. We differentiate in the marketplace. If you go to the next one, Lisa. The market in front of us is big in our estimates and our intelligence. When we looked at it in 2022, we are standing in front of a $15 billion market. Of course, you see there, it's a different size, different growth rate across the different pieces of our business. All in all is a very nice addressable market that we can attack, and we have the right solution to do that, particularly once again, with the high-end range of our portfolio. That high-value solution. If you go to the next one, Lisa. That high-value solution piece is creating a lot of value for our customer, and you see some of the advantages captured here. Of course, we work with customers to identify the optimal solution and therefore, make sure that we optimize the total cost of ownership, and we bring an advantage there in terms of pure economics. It's not only the cost, it's the quality of those products, the way we preserve the drug as it is delivered to patients. A lot is about de-risking. It's de-risking the time to market, it's de-risking the supply chain on an ongoing basis. The fact that this creates value for our customers is clear by the numbers, you see the trajectory there. We went from a percentage on our total revenue of 17% in 2019, 2020 to 25%, up to 30% in 2022, meaning that there is a lot of attention and interest in the marketplace for our own high-value solutions. That is good for our customers and is good for us as well, of course. You see, as we progress and we bring up the share of high-value solution in our business, the revenue goes accordingly. As I said, we grew 17% last year. We are planning to grow double digits this year as well. As I said again, it's not only about driving the top line, but it's also about margin expansion, and that is what happened 2021 to 2022 with the gross margin and the EBITDA, and we will continue to do that for the years to come. That is one growth pillar. The other one clearly is the penetration into the different geographies. As I said, we are bringing up capacity in the different regions of the world, particularly for the high-value solution piece of our business. When you look at the distribution today, there is work to do on one end, and there is an opportunity on the other end because we are definitely under-penetrated in U.S. That is why we are investing in Fishers. We are under-penetrated in China, in the whole APAC region. If you think about that, we could actually add another layer of growth simply by capturing more of the business within those markets, which we plan to do. To close, the way we look at our company is, for us, it's a growth company that brings a strong foundation to continue to deliver value to our customers and to our shareholders for the long run. We are a leading provider in our space, in our business, and we cover the entire life cycle of the product. We come with a long history, and therefore also a track record of delivering on our commitments to customers and to all the players in the ecosystem. We work with the top customers in the space, and we sit in front of a very attractive market that is growing at a nice rate. Reality is we want to overdrive that growth, and we are doing that by clearly developing our organization to be ready for that by investing in expanding the footprint and ultimately by driving the right level of innovation with our products in the marketplace. With this, I conclude my presentation. I thank everyone for the attention. Great. I think we are ready for Q&A. Q&A, yep. I look forward to the conversation. Thank you. Starting off, I mean, I think it's worth pointing out that your margin expansion between 2019 and 2022, you know, that wasn't driven by Covid, right? That was, I mean, that was all driven by the organic of the business. Also, your revenue growth projections for this year for double-digit growth include a significant headwind from Covid rolling off and going on with it. It is just overall growth, that it's not like, it's not like your business was juiced during the pandemic, and now you've got to pay for it. It is growth on it. Indeed, it is, because when you look at the Covid percentage of our business today is minor. We said it's 4% in Q1. It's going to be 2%-3% over the entire year, and yet we grow double digits. Clearly, there is an underlying strength of the business there, and there is additional capacity that we are bringing online to support that, so it's the combination of those two things. Just to add to that, you're correct. We had an EUR 80 million headwind in 2023 for COVID as it relates to last year. Secondly, the marginality in the COVID business was largely reflective from a high-value solution perspective of the corporate average, so it wasn't more heavily weighted towards a high-value solution. We did not, you know, experience the margin cliff, as a result of that. Great. You know, there was some. You had your earnings call last week, and I think there was some people worried coming out of it just because the second quarter guide was a little bit below on it, and that where people were thinking. It seems like your biggest, not to say roadblock, but your biggest bottleneck right now is just how fast you can bring on capacity. Is that basically the way to say it? I mean, you've been able to backfill what it is, and so your confidence in the back half of the year accelerating is because you've got new capacity coming online? Yes. In reality, you can see the capacity coming online as we speak. We opened our new building in Piombino Dese, our headquarter a few weeks ago. So we are ramping production as we speak. We are going into qualification with our customers in Q3 in the other site in Latina near Rome. That will be operational in Q4. By now that piece of the scale-up is totally de-risked. We are ramping. That should accelerate our growth in the second half of the year. As we go into 2024, we have Fishers coming online, it will continue like that. I guess Is all the capacity that you're bringing online now already spoken for, or is there some flexibility to go up if you need it? I guess in Fishers, if you look at the rationale for the investment there, it wasn't driven by one or the other customer, by one or the other molecule or therapy. We saw the market, we saw this wave of demand coming across the biologics and biosimilars, we decided to invest there. The reason I say so is because when you look at the total capacity that we are going to have installed in Fishers, some of it is already allocated, if you like, and some of it is available. Our approach is to go modular, meaning the building will be there, we'll go adding one line after the next as we see the market growing. We should be in good shape there. Your model is a little bit cleaner than some of the other companies that sort of serve the space. I mean, for basically for every EUR you spend on CapEx, it's roughly a EUR return in revenue, correct? That begs the question of like, how many EUR are you spending on CapEx right now? Well, as you know, in Fishers, it's about $500 million. There's a portion of that that is tied to the BARDA investment as well. Yes, you're right, in Fishers, which is a multi-year project, last lines of the current phase likely to go in in 2026, so full production by 2028. You're looking at about, you know, $500 million of CapEx there. Yes, it's roughly correct, dollar for dollar. Great. The cash flows have been, obviously you've been spending a lot of money doing this. I'm like, at what point does the cash flows start to normalize and you break even? It should be normalized, meaning close to break even next year, and then go back up positive in 2025. Great. I mean, a lot of the people in the audience are familiar with West, just 'cause they've been public a lot longer. Where are your penetrations in, you know, prefilled syringes and in the glass vial business when we sort of look at the high-value solutions? It's like, where are we in sort of the ramps of those products? Of course, you look at the average, right? The numbers we showed today, what we refer to as high-value solution is in the 30-plus%. It varies a lot between syringes and cartridges and vials. Syringes is the majority of it already today is a high-value solution, meaning it's prefilled syringes, sterilized, ready-to-use components. You go on the opposite extreme, vials is probably 5% of the market. It's very little compared to the capacity. By the way, we are bringing up capacity to support what we think will be the market growth there. Cartridges, we just started now with a couple of applications, so I think there is a big difference between the two. Your average out is 30%, but there is a big range. Got it. Even though you're penetrated, even though it's like 90-ish% penetration in the prefilled syringes, that's a market which clearly is accelerating because of just volumes of units that are being... Yeah. Let me be clear. It's 90% of what we produce. Gotcha. The market there is huge, right? We have a lot of ground to cover in terms of picking up share from what is the existing distribution. We are second in the marketplace today, but there is a lot that we can do to take a bigger share of the pie. The trends that I talked about and customers wanting to have dual sources and de-risk their supply chain is playing into our favor because we are the up and coming. We are not the established player there. Got it. Any questions from the audience? Continuing, you know, I think what's been interesting, I've dug a little bit deeper into the business, is that. You know, you're all over the place. You collaborate all over the place. I mean, you've got relationships with Gerresheimer, you've got relationships with West and Corning as we're doing this. How did all those relationships work together? I guess I, in the sense of, you know, what is the potential, what are the potential growth driver? How can that contribute to your growth, all these different collaborations? Again, what we do is putting the customer at the center and really trying to understand what is that they need. For example, in the case of Gerresheimer, the collaboration stems from the fact that if you want to make the EZ-fill vials the standard in the market, you cannot pretend to do it yourself. Customers want to have redundant solution. They want to have dual sources. So we are trying as much as possible to make it a standard so that everyone can get access to it. Plus, they brought to the table a lot of knowledge around secondary packaging, and that allowed us to have a more sustainable solution, higher quality, lower particle count. But that is what the customer and the market are asking for, right? You look, the collaboration we signed with Owen Mumford. We think there is a need there for an auto-injector that is flexible in terms of the possible applications, and that goes competing against a couple of established players. There is space, and the customers are asking for someone else to come in with a solution like that. That is why we signed the agreement with Owen Mumford. Transcoject the same. I think we are trying to read. We have very strong relationship with customers. We talk to them every day at strategic level. We understand what they need, and then we go out and work with partners to do it. Along those lines, some of the other companies that sort of in the bioprocessing supply chain have been stuck with inventory issues, and, you know, supplying a channel that they can't account for. We have not seen that with Stevanato. We haven't seen it with West. What's different about these businesses? I mean, there have been some issues in the past where you've seen some inventory stocking, but why hasn't that sort of, like, come back and been a problem with you, given we're coming off of a pandemic? Well, because we are differentiated. You look at our portfolio is quite broad, and I think the overstocking that happened during COVID mainly had to do with bulk buyers, which is a fraction of what we do. Of course, we saw that specifically with certain customers on that product. As a share of our business is small and is not really impacting us. Maybe other people are more concentrated on a certain product and see that bigger. I'd be remiss and get yelled at if I didn't ask the obligatory GLP-1 question. you know, I think there's a lot of interest just given what's going on in that market. but I think it's an interesting. When you look at this, it's like you've been. I mean, these have been out for over a decade. You've been involved with it. How does sort of this play into your growth algorithm and look, outlook for it? Because it's not like Covid, where suddenly this is just a new class of things that just pop up. It's been planned for a while. What's it? I guess, how do we sort of think about the opportunity for you from tailwinds from those? Of course, it's potentially a big opportunity. The market is still developing, people are trying to figure out the overall size. Is one of the vectors in our growth strategy. We are partnering with many customers to bring solutions to the market. In reality, as you said, we have been busy with GLP-1 since 10 years ago. Clearly, it was more around diabetes. Now is about obesity. Everyone with the obesity indication want to go over to ready-to-use solutions, which is great for us. Ultimately, what I'm trying to say is it's going to be a very important element of our growth. Is not the only one. When you look at our investment in those sites that we discussed, we did that for biologics, but there is more than a GLP-1. There is a lot of mRNA, mAbs, other applications. We see a bit of uptick as well with ophthalmic, ophthalmology applications. That is also go ing toward the high value with Alba. It's one of the legs. It's a very important one. We are still trying to understand ourself. May I add some more color on that? Yeah. As you mentioned, we've been in this space since 2010. We have built a leading diabetes franchise, which has anchored us as a good position for additional indications of GLP-1s. Today, we're serving the market with bulk cartridges, high-value solutions cartridges, and syringes. On the engineering side as well, we are also supplying visual inspection equipment lines as well as assembly and packaging lines. When we look out at the space today, we're in commercialized products as well as products in development, and as well as the biosimilars down the road. Got it. We're running out of time, and I'll ask you my standard closing question. What's what's misunderstood about Stevanato? What's underappreciated? That is for Lisa. I think that, first of all, you know, we were largely considered a Covid story, given the timing of the IPO, and that was just merely a tailwind. We have a highly diversified product set, not relying on any single treatment area or customer. I do think that, one of the things that I would say is some of the competitive advantages that we have, are largely misunderstood. I would also say the competitive moat that we have as it relates to, you know, it's a fairly walled garden. It's high CapEx. You need to have long experience within the industry. The regulatory hurdles are high. Lastly, I would just say the differentiated product set that we have as well. Having the value proposition of both across our BDS and engineering segment is really important to customers. With that, we're out of time. Thank you. Thank you very much. Thank you. Thanks, everybody.