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DATE

Thursday, Nov. 6, 2025, at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Franco Stevanato
  • Chief Financial Officer — Marco Dal Lago
  • Senior Vice President, Investor Relations — Lisa Miles

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RISKS

  • The Engineering segment reported a 19% revenue decline and an operating profit margin of negative 1.1% in the third quarter, due to lower orders, higher operational complexity, and ongoing delays in order conversion.
  • Management stated that both the Latina and Fishers facilities remain margin-dilutive, but Fishers is expected to reach a positive gross profit margin toward the end of 2025.
  • CFO Dal Lago highlighted that "Currency translation was worse than anticipated in the third quarter. We now expect the impact from currency will be approximately $15 million to $16 million, compared with our prior range of $12 million to $15 million."

TAKEAWAYS

  • BDS Segment Revenue -- Grew 14% to $260.7 million in 2025 (Q3 FY2025 period ended Sept. 30, 2025).
  • Engineering Segment Revenue -- Declined 19% to $36.4 million in 2025, reflecting lower demand for glass and assembly lines, partially offset by growth in visual inspection and aftersales services.
  • High-Value Solutions Revenue -- Increased 47% to $147.9 million in Q3 FY2025, comprising 49% of total company revenue in Q3 FY2025 and 55% of BDS segment revenue in Q3 2025.
  • Consolidated Gross Profit Margin -- driven by increased high-value solutions mix, offset in part by engineering segment weakness and currency and tariff costs.
  • BDS Segment Gross Profit Margin -- Improved 400 basis points to 32% in 2025, led by high-value product mix and site scaling at Latina and Fishers.
  • Adjusted Operating Profit Margin -- reported operating profit margin of 17.4% in Q3 FY2025.
  • Net Profit -- Net profit totaled $36.1 million in Q3 FY2025; adjusted net profit of $38.5 million in Q3 FY2025
  • Adjusted EBITDA -- with adjusted EBITDA margin up 280 basis points to 25.7% in 2025.
  • Free Cash Flow -- Positive €260,000 for the quarter and $16.9 million in free cash flow year-to-date 2025, benefiting from improved operating cash and lower capex.
  • Guidance Reiterated -- Full-year revenue is expected to be between $1.16 billion and $1.19 billion for FY2025, adjusted EBITDA in the range of $288.5 million to $301.8 million for FY2025, and adjusted diluted EPS of $0.50 to $0.54 for FY2025, despite increased currency headwinds.
  • High-Value Solutions Outlook -- Management raised FY2025 high-value solutions revenue share guidance to 43%-44% of total, up from the prior 40%-42%.
  • Capacity Investments -- Commercial production of new syringe and vial lines underway at Fisher and Latina; Fishers clean room near completion, with commercial activities expected to commence end 2026 or early 2027.
  • ESG Recognition -- Company awarded Covade Silver Medal, placing in the top 15% of all companies assessed and in the 92nd percentile of its industry.

SUMMARY

Stevanato Group S.p.A. (STVN 2.96%) reported robust top-line growth in Q3 FY2025, driven by record high-value solutions penetration, notably in Nexa syringes and ready-to-use formats. Strategic capital expenditures have accelerated production scalability, supporting surging demand from injectable biologics and biosimilars across the U.S. and Europe. Despite ongoing margin dilution at recently scaled sites and persistent challenges in the Engineering segment, consensus guidance for FY2025 remains unchanged, with management explicitly absorbing increased foreign currency headwinds through organic growth. Free cash flow turned positive in Q3 FY2025, reflecting improved capital discipline, while a major ESG milestone established strong sustainability credentials and industry distinction.

  • BDS segment topline outperformance in Q3 FY2025 included a 'pull forward,' according to Marco Dal Lago, of $10 million in high-value product shipments from Q4. Dal Lago noted this was 'predominantly in high-value solution, high-performance syringes' in the BDS segment in Q3 2025.
  • CEO Stevanato said, "we see more and more clients that are looking to totally change their supply chain, and this is going to become more new opportunity for Stefano."
  • Management clarified that no single customer accounted for the revenue pull-forward; rather, it was a "bunch of customers in the especially in high-value products that are accelerating some supply chain needs."

INDUSTRY GLOSSARY

  • BDS Segment: Business segment focused on drug containment and delivery systems, including high-value syringes and vials.
  • High-Value Solutions (HVS): Advanced containment and delivery products such as Nexa syringes and easy fill cartridges, designed for sensitive biologics and premium therapies.
  • Nexa platform: A portfolio of glass syringes engineered for biologics and automated injection devices.
  • EZFEL (Easy Fill) Cartridges: Ready-to-use cartridges optimized for pen injectors and self-administration devices.
  • Site Acceptance Test (SAT): Validation process upon delivery of an equipment line to a customer, confirming operational compliance prior to order completion.
  • RTU (Ready-To-Use): Primary packaging products supplied pre-sterilized and ready for immediate pharmaceutical filling, reducing downstream processing steps.
  • CMO (Contract Manufacturing Organization): Third-party contractor performing manufacturing functions on behalf of pharmaceutical companies.

Full Conference Call Transcript

Franco Stevanato: Thank you, Lisa, and thanks for joining us. Today, we will review our third-quarter performance, share updates on our investment projects, and discuss the current market environment. We delivered another solid quarter of financial results, driven by revenue growth, a record mix of high-value solutions, and continued margin expansion. Our third-quarter financial results exceeded our expectations. We benefited from favorable timing of some product shipments in the BDS segment that were previously scheduled to occur in the fourth quarter. Relative to the same period of last year, we also faced headwinds from foreign currency and certain tariff costs that were not mitigated, which tempered margins in the third quarter. These impacts were already assumed in our guidance.

As a result, we remain on track to meet our 2025 guidance. This underscores the momentum we are experiencing from executing our strategic roadmap. As we leverage and scale up our growth investment in capacity expansion, to meet the increased demand for high-value products. Third-quarter revenue increased by 9% year over year, driven by the continued strong performance of our BDS segment, which grew by 14%. This was primarily fueled by demand in our core drug containment business. As expected, revenue from the engineering segment declined as we continue implementing our business optimization plan.

Our solid performance in the third quarter was underpinned by remarkable 47% growth in high-value solutions, driven primarily by Nexa syringes and to a lesser extent, easy fill vials. The Nexa platform is optimized for sensitive biologics and its high mechanical resistance makes it ideal for the seamless integration of auto-injectors. A core pillar of our long-term strategy is built around meeting the demands of high-growth markets such as injectable biologics, which require premium containment and delivery solutions. These are often sensitive drugs that require specialized glass or ready-to-use containers to maintain stability and integrity and ensure patient safety. Our is field portfolio. And our ongoing investments grow capacity in drug development and lifecycle management.

As the pharma industry shifts to ready-to-use platforms, that deliver superior quality, simplify processes, and enhance operational flexibility, our easy fill cartridges are setting a new standard. Most recently, they were selected by a leading manufacturer for use with a GLP-one biosimilar for type two diabetes. One of the first to receive FDA approval and launch commercially in the United States. Engineered for optimal performance in handheld injection devices, EZFEL cartridges offer seamless compatibility with pen injector systems. Helping accelerate time to market while ensuring reliability and patient convenience. The continued growth in biologics, rising pharmaceutical innovation, and the increasing trend towards self-administration of medicine remains strong secular tailwinds for our business.

Solid demand for high-value solutions and collaboration with customers on ready-to-use products illustrate why we believe we are well-positioned to meet evolving industry demands and support patient-centric solutions. Turning to the engineering segment, the team continues to make meaningful operational progress against our business optimization plan. Over the past year, we've been squarely focused on executing effectively and meeting our customer commitments. While the steps we have taken have yielded operational improvements, our financial performance is below our expectations. We believe that getting the segment back to historical performance levels is going to take more time as we refresh the workload with new projects and reposition the segment for stronger profitability.

Across the engineering segment, we have a healthy pipeline of new opportunities. However, converting that pipeline into new orders has been slower than we anticipated. First, as I mentioned during the last call, we are strengthening the SaaS organization with fresh expertise and refining our commercial processes. Expect to harvest the benefits of these initiatives in the coming quarters. Second, several pending opportunities in our pipeline are repeat orders from existing key customers. The good news is that we have received positive feedback on the performance of recently installed manufacturing lines. So, we are cautiously optimistic that the current slowdown in order flow is only temporary. We believe that the long-term demand landscape for our manufacturing technologies remains strong.

As the industry expands, capacity to satisfy ground demand for injectable biologics and devices. Customers are investing in new capital projects as they onshore more coal operations in the United States. And upgrade their technology to meet higher quality standards and more stringent regulations. Such as our next one. Many major pharmaceutical players have announced extraordinary investments dedicated to U.S. manufacturing operations. This coupled with organic growth from on-cycle investments and growth in emerging markets provides us with added confidence in the demand outlook. Let's turn to an update on our capital investment projects in Fisher and Latina. In Fisher's, we have several syringe lines running commercial production at various stages of ramp-up.

At the same time, we will continue to install additional syringe lines and validate customers for the rest of this year and throughout 2026. Our first vial lines are being installed and qualified with customer validations expected to begin in mid-2026. We are also advancing the build-out for contract manufacturing activities in support of a couple of large device programs. The new clean room is nearly completed. The first injection molding machines are on-site and scheduled for installation in the coming months. We still expect the commercial activities to begin at the end of 2026 or early 2027. In Latina, we are scaling commercial production for Nexa syringes which will continue into 2026.

Preparations are underway for the next phase of EZ Film cartridge production. To meet the rising demand for ready-to-use cartridges. This next phase will be powered by our new RTU400 easy fill cartridge lines. They have a fully automated ready-to-use process designed to ensure aseptic integrity, increase production capacity, and provide superior container quality. Our capital investments are helping us meet rising market demand for our core drug containment products. Amid the growth in biologics which continue to become a large portion of our portfolio each year. Before closing, I would like to thank our teams around the world on our important ESG milestone. We were recently awarded the Covade Silver Medal.

This puts us in the top 15% of companies assessed globally. And the 92nd percentile in our industry. This recognizes our strong performance and reflects our commitment to embed sustainability into our operations and strengthen our ESG practice. I will now turn the call over to Marco.

Marco Dal Lago: Thanks, Franco. Before I begin, I want to clarify that all comparisons refer to 2024 unless otherwise specified. Let's start on Page nine. Revenue for 2025 grew 9% to $303.2 million driven by a 14% increase in the BDS segment which offset a 19% decline in the engineering segment. As Franco mentioned, foreign currency translation was a headwind. And on a constant currency basis, revenue grew 11%. Overall, financial results were better than expected in the third quarter. Primarily due to a favorable timing of product shipments in the BDS segment which were previously anticipated to occur in the fourth quarter. Revenue from high-value solutions grew 47% and represented 49% of total company revenue.

Strong performance in the BDS segment led to a 240 basis point increase in consolidated gross profit margin. Reaching 29.2% in 2025. This was due to a favorable mix of more accretive high-value solutions, the expected financial improvements at our Latina and Fishers facilities as we scale our multiyear investment plan. While both sites are currently margin dilutive, we expect to continue to gain operating leverage as volume and revenue grow. And the ongoing recovery in vial demand as the effects of destocking abate. These positive trends were partially offset by a lower gross profit from the Engineering segment. And to a lesser extent, the impact of currency translation and certain tariff costs that were not mitigated.

In 2025, operating profit margin increased to 17.4% and on an adjusted basis, operating profit margin rose 220 basis points to 18.5%. This improvement was driven predominantly by an increase in gross profit. Net profit totaled $36.1 million with diluted EPS of $0.13. On an adjusted basis, net profit was $38.5 million and adjusted diluted EPS increased 17% to $0.14. In 2025, adjusted EBITDA increased to $77.8 million and the adjusted EBITDA margin improved 280 basis points to 25.7%. Moving to segment results, starting with the BDS segment on Page 10. In 2025, our BDS segment delivered strong results with revenue rising 14% to $260.7 million. On a constant currency basis, BDS revenue grew by 17%.

This segment outperformed our expectations by approximately $10 million in revenue from product shipments that we previously expected to occur in the fourth quarter. Top-line growth was driven by a record level of high-value solutions which reached $147.9 million and represented 55% of segment revenue for the third quarter. This was underpinned primarily by strong demand for high-value Nexa syringes along with the continued recovery in 10% to $118.8 million due to a decline in low-value syringes and in vitro diagnostics as we transition to a larger portfolio of high-value projects. This was partially offset by growth in bulk vials and contract manufacturing activities for drug delivery devices. In 2025, gross profit margin increased 400 basis points to 32%.

Margin expansion for the BDS segment was driven by the favorable mix of high-value solutions, the financial improvements in Latina and Fishers as the site scale, and the market recovery in vial demand. These tailwinds were partially offset by the impact of foreign currency and certain tariff costs, which were not mitigated. As a result, operating profit margin for the BDS segment rose to 22.1%.

Marco Dal Lago: Up from 16.9% in the same period last year. In 2025, revenue from the Engineering segment decreased 19% to $36.4 million. This was driven by lower revenue from glass and assembly lines. This offset revenue growth in Visual Inspection and Aftersales services. As expected, the segment's gross profit margin declined year over year to 10.4%. Due to lower revenue in the current project mix. Which include a higher proportion of revenue from the complex legacy projects in Denmark and fewer new orders. In the third quarter, operating expenses were higher due to certain R&D activities. This was tied to the ongoing development and launch of our next-generation easy fill cartridge lines at our Latina plant.

As a result, segment operating profit margin was negative 1.1%. Please turn to the next slide for an overview of the balance sheet and cash flow. As of 09/30/2025, the company had cash and cash equivalents of $113.3 million and net debt of $333 million. For 2025, capital expenditures totaled $54.9 million. Net cash from operating activities increased to $47.2 million. Cash used for the purchase of property, plant, equipment, and intangible assets totaled $48.4 million for 2025. The improvement in net cash flow from operating activities and lower capital expenditures in 2025 led to a positive free cash flow of approximately €260,000 in the quarter. And $16.9 million on a year-to-date basis.

We believe we have adequate liquidity to fund our strategic priorities and satisfy our working capital needs. Through a combination of cash on hand, cash generated from operations, available credit lines, and our ability to assess additional financing. Please turn to the next slide for guidance. Despite the larger unfavorable impact from CARETS, we are reiterating our fiscal 2025 guidance and still expect revenue in the range of $1.16 billion to $1.19 billion. Adjusted EBITDA between $288.5 million and $301.8 million and adjusted diluted EPS between $0.50 and $0.54. I want to call out a few updates to our assumptions for the full-year guidance.

First, with the strength of High Value Solutions, we now expect the revenue from high-value solutions will range between 43-44% of total revenue. Compared with our prior assumption of 40% to 42%. Currency translation was worse than anticipated in the third quarter. And we now expect that the impact from current will be approximately $15 million to $16 million compared with our prior range of $12 million to $15 million. We have fully offset these with higher organic growth. Thank you. I will hand the call back to Franco.

Franco Stevanato: Thank you, Marco. In closing, our year-to-date performance demonstrates the strength of our long-term strategy and business fundamentals. We continue to deliver solid results. Driven by growth in high-value solutions, innovation in drug containment delivery, and meaningful progress across our investment projects. While challenges remain within the engineering segment, we've taken decisive steps to improve execution, reinforce our commercial teams, and unlock long-term value. Our commitment to supporting the evolving needs of our customers, especially in high-growth areas such as injectable biologics, and self-administered medicines position us well to meet the rise in demand and deliver differentiated value.

The strategic investments we have made, the innovation we have delivered, and the trust we have built with our customers, are the foundation of the strong momentum as we look towards fiscal 2026. With a healthy pipeline, strong market tailwinds, and a clear strategic focus, we are confident in our ability to drive growth, enhance patient outcomes, and deliver lasting value for our customers, employees, and shareholders. Thank you again for your time and continued support. Operator, we are ready for questions. Thank you.

Operator: Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. First question is from Larry Solow, CJS Securities.

Larry Solow: Hello. This is Charlie Strausser for Larry. Can you perhaps give us some more color on the $10 million outperformance in the quarter? And on the top line and then, you know, also talk a little bit more about the mix.

Marco Dal Lago: Yeah. Sure. Marco speaking. Thank you for the question. So the $10 million is an acceleration to accommodate customer supply chain needs. Of sales that were previously expected in Q4. So basically, based on their needs, we decided together with the customer to ship in Q3. Everything is BDS. Predominantly in high-value solution, high-performance syringes.

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

Marco Dal Lago: I will start by saying that we see strong demand in high-performance syringes, particularly Nexa, as Franco was commenting. Also, ALBA has good traction. And, also important to underline the fact that we can see some recall steroid vials following the last year, the stop in which is traction in Uzifil buyers that is improving compared to the same period last year. Those are the main drivers for 43-44% of company revenue.

Franco Stevanato: And this is if I can complement the we see that the trajectory is robust our big international clients, in particular the bio customer, also many relative biosimilar, they have a strong demand in particular, on easy field product like Nexa syringes. We see more and more interest and traction on the Alba syringes. And more and more, we see a lot of increase in demand for the cartridges ready to fill on the different format from 1 ml up to 10 ml because are perfectly fitting their self-administration for their auto-injector or wearable devices.

Larry Solow: Thank you very much.

Operator: Next question is from Matt Larew, William Blair.

Matt Larew: Hi, thanks for taking the question. On the margin improvement story here, last quarter you referenced that Latino was positive gross profit margins, but Fisher's was not yet dosing quarter on quarter improvement in both. I was wondering if you could update us as to where those stood today if fixtures had crossed over to gross profit. Or did not positive yet?

Marco Dal Lago: Well, overall, we are happy about the execution of the two plants. We keep on improving quarter after quarter. As you remember, we started the commercial production in Latina. In Q4 2023. While in Fisher, we started about three quarters later. In Latina, we keep on improving also the financial performance beside the operational KPIs. And we are getting closer to a normalized gross profit margin compared with the segment, still dilutive. About Fisher, as mentioned, is we started commercial production three quarters after Latina is a bigger plant, is a greenfield. We are keeping on improving every quarter. We are not positive yet in Fishers in Q3.

We are continuously improving all the financial performance, installing more line and leverage in our fixed expenses. We plan to go to positive gross profit margin toward the end of this year.

Matt Larew: Okay. Thanks for that. And then on engineering, last quarter, you called out sort of a KPI site acceptance test had significantly increased. It seemed like maybe a positive indicator. Like, now you're saying it's gonna take more time to get back to historical performance. What's the right timeline to think about a return to growth? Can that segment grow in 2026? And if not, does the recovery period look like flat revenue or does it look more like, you know, the down 20% ish that you know, guided to in the back half of 2026? About 2025?

Franco Stevanato: Yes. If I can start from the on the bigger picture, of the engineering. On the Q3 of last year, we shared with all of you that the engineering was coming from a big record high in terms of orders. This has also generated also an increase in our complexity. So immediately with the leadership team, we launch a sort of what we call optimization plan in particular in order to resize the two operation plans. One is related to Italy, other one was related to Denmark because at that time, we received a lot of orders localized in Denmark. So today we continue to make meaningful positive operational progress from an operational point of view.

We further enforce the leadership. We increased the execution on supply chain service, so in particular on project management. So this was translated in Q1, Q2, and Q3 in an evident increase of number of positive site acceptance tests we have delivered to our customer, that have outpaced the number compared to last year. Even more, the positive signal that our cash customer, once they're starting to run the line, they see they give a very positive feedback to all of us. Today where we are. The pipeline that we have with our clients both on the historical clients and also new clients is healthy, all the pipeline.

What we see, however, that is a slow delay in the conversion into orders for mainly two reasons. To our big clients, key customer, they were waiting for the final positive acceptance test of the line number one before placing the order number two and number three. Second, also, we start to see some of our customers that are taking a little bit more time to reevaluate in their manufacturing footprint. So all overall, this temporary headwind over the engineering, we see that is month after month progressive even more from execution point of view, also looking the pipeline that we have with our customer is giving very positive feedback for the future.

Just to underline the last comment the industry in this moment is very dynamic. We see more and more big customers expanding capacity. We see even more a lot of clients all over the world upgrading their technology because the new regular mentation mostly linked to our next one. And also we see this we want to take even more benefits on thanks to the Onshore in United States, some customers are going to add even more investments. So this is a good environment where we continue to grow in the next quarters.

Matt Larew: Thank you.

Operator: Next question is from Michael Ryskin, Bank of America.

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

Franco Stevanato: Yes. So usually, when biosimilars are entry into the market, when the product is going out of patent, usually, it's a benefit for a company like Stevanato because this can help to enlarge revenue in the single therapeutic drug. On the strategy of Stevanato always was extremely important to be part of the originator from the very beginning. This was valid on the insulin on heparin, anesthetic, mAbs and also even more on GLP-1s. That our big historical insulin customer engaged us many years ago and we are deeply engaged with all our product portfolio with our originator.

Also in parallel, Stefano is extremely active with all the with our tech center both here in Italy, Boston, to try to maximize the validation in all the biosimilar. In fact, today is exactly what is going to happen. Are deeply involved with all our easy fill, high-value product platform. We have a program of Nexa. Syringes have program on cartridges ready to fill, in fact, we were just sharing that we win a big program. Even more we have on biosimilar on JP1 new program on pipeline for our 70%, it will be revenue around originator, 30% historically, the revenue that we're moving inside of biosimilar.

Is exactly the strategy of step and have to be present everything that is injectable, originator and biosimilars.

Michael Ryskin: Okay. And then a follow-up if I can on the on the guide for the year that you called out a affects currency is a little bit more of a headwind by, I think, $2 million at the midpoint. It sounds like assumptions for engineering should be a little bit worse, and you can talk about organic offsetting it. So just kinda means the BDS is coming on a little better, you saw the pull forward into 3Q but am I interpreting correctly that we should expect a little bit of a better pull forward and better result. In BDS 4Q as well. Even despite the pull forward just to offset currency? To offset currency in engineering?

Marco Dal Lago: Very good points, Michael. We are reiterating our guidance. Nevertheless, there are some moving pieces. You mentioned a couple of million more headwinds in currency effect. Because Q3 was average €1.17 the euro dollar exchange rate a little bit higher than our expectations. We are doing better in High Value products. We expect now have high-value products as a range of overall revenue between 43-44%. So significantly higher than after the second quarter. On the other side, we are giving priority to high-value syringes rather than accelerating the non-high-value syringes. And this is also moving the mix. As Franco mentioned, orders intake in engineering is not at the speed that we were anticipating.

So in our model, we took into account of the risk also after the second quarter. But we prefer to adjust our model with a couple of million less. So all overall, we see impact from currency some slowdown in engineering, and acceleration in high-value products bringing more margin to BDS segment.

Michael Ryskin: Okay. Thanks so much.

Operator: The next question is from Paul Knight, KeyBanc.

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

Franco Stevanato: We put in a Latina, we are continuing sorry, Fishers we are continuing to install high-speed line for syringes. Practically, we install the line, we do the internal validation, we do the cast validation. We start to ramp up. At this installation of line, we will continue throughout all the 2026 to 2027. On top of this, we are starting also to add capacity for Bahia in both bulk easy configuration in next year. We are adding capacity. We will add capacity for ALBA technology. And like we already mentioned to you, are extending a big program in our building for hosting a production of our injector in the next year.

So in the next one to three years until 2028, we will continue to ramp enough capacity. The goal is to be in the full potential at the 2028. Remember, we the goal was to invest half a billion dollars to translate 2028, dollars $500 million of revenue.

Paul Knight: And the you were mentioning onshoring quite a bit. I guess what you're hearing is that because of tariffs and pricing etcetera, your customers are evaluating where their factories may be in the future, but it seems like it's a step higher, I guess, were possible to.

Franco Stevanato: Yes. We start to see starting from after the decaf this year in was March. Of 2025. Many clients that are came in to raise interest to our, US facility. With two types of interest. All because they were evaluating their footprint because maybe the region they were looking to produce in a different region of the world and now be they are thinking to put capacity in United States. They are even more interest to boost and speed up the validation of our plans. And this is, let's say, is already inside of our guidance.

The good news is that we see more and more clients that are looking to totally change their supply chain, and this is going to become more new opportunity for Stefano. Because we are already in a very advanced stage of ramping up capacity. In future. And they like the idea to speed up the validation. Of our plans in Fisher, in particular for our existing product.

Paul Knight: Thank you.

Operator: Next question is from Mark Etok, Stephens Inc.

Mark Etok: Good morning. Thank you for taking my questions. Maybe just to follow-up on the order pull through. Can you confirm if that's a single customer that's pushing forward $10 million in orders? And secondly, as you look towards 4Q, do you expect those volumes to continue from there? Or is that more of a one-time item?

Marco Dal Lago: No. We are not confirming that. You know, we are not so concentrated as a cash revenue. It's a bunch of customers in the especially in high-value products that are accelerating some supply chain needs, but it's not a single customer.

Lisa Miles: Sorry, Mike. I missed the second part of your question.

Mark Etok: I was just curious if those orders are going to repeat in 4Q just given the pull forward?

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

Mark Etok: Appreciate the context. Thank you. And then secondly, on engineering, you mentioned the United States manufacturing announcements. I'd just like to get a sense of what you're hearing within your engineering segment. And the customer conversations you have there. And when that might translate to more meaningful order growth for engineering and maybe also the BDS segment as well. Obviously, these are longer-dated opportunities, but I just wanna get a sense of what you're hearing.

Franco Stevanato: So on the engineering segment, what do we see that certain there are again, very similar to the question Paul asked to us. Clients, are reevaluating their footprint. Maybe originally, they were looking to invest capacity in Europe or through certain CMO. And now they are seriously evaluating or they have already approved to extend their capacity in United States. This is why also one of the reasons why we are taking a little bit more time to confirm the order and specifications. Other customers, they are also changing their type of supply chain. Maybe they are starting to further increase the outsourcing through U.S. CMO or to use to further increase the capacity of their existing plants.

So all overall, we see a positive trend in United States where customers are starting to more and more increase their platform for filling at The States. Automatically, once they will build the factory, there would be even more opportunity for our future plans because automatically we will have more opportunity for syringes Nexa syringes Alba, Violet to fill all devices.

Mark Etok: Appreciate the context. I'll leave it there.

Operator: Next question is from David Windley, Jefferies.

David Windley: Hi. Can you hear me okay?

Operator: Yes. Hi, Dave.

David Windley: Alright. Hi. Good afternoon. Thank you. I wanted to follow-up on Paul's question on capacity. Put a maybe slightly different spin on it. On the HVS guidance for the year, the previous guidance for the year, at I believe you said 40 to 42. And one q started off pretty favorable to that. And I think at the time, the commentary was that your ability to see HVS continue to rise as a percentage from that first quarter you know, favorable level was somewhat gated by capacity. And wind lines were coming on. So this quarter, obviously, you were able to pull that $10 million forward. The trends have been pretty favorable.

Guess I'm coming back again to Paul's question about capacity and utilization. Our lines in place to continue to support HVS outperformance know, but for the pull forward, I guess, in the near term, or are you kind of in a position where you have to wait for additional lines to be validated before you can see HBS continue to move higher?

Franco Stevanato: But today, David, the demand in part let's say, in the last two years, most of our investment were just fully dedicated to build capacity. In high-value product both in Italy in the two plants in United States. Today, is it true We the demand is really driven by the capacity that we have put in place in all the location. Most probably, we will continue in this way. Is important to know that there is an intense program to continue to install capacity in order format just to translate in facts. Latina, we continue to install capacity for syringes Nexa. In Latina, we will store capacity for syringes with double chamber.

We have this huge program to install several 100,000,000 for capacities capacity for cartridges ready to fill. In Fisher is the same. We continue to add capacity for next syringes. We will add capacity for ALBA. And we will add the capacity for also via radio feed. This is only for easy feed. On the top of this in Germany, we are launching the new big size clean room that is going to host the produce Alina pen. And, also, we have space to further duplicate in the future in a test States. So we are so focused to intensively execute all our We will add €700,000,000 of additional capacity in the high-value product until 2028.

In order to really matter all the program and execute to the contract that we have with our customers.

David Windley: That's very helpful. Thank you. Follow-up question around vials. So you'd highlighted that the particular pressure on vials I believe, if we go back to '24, was acute on your margin and, you know, kind of post the pandemic and post the decline in vaccine-related activity, you're seeing recovery in that. I'm wondering what the drivers are of recovery in vials. Is it reorg you know, kind of the recovery of orders from your traditional clients or are you seeing new products perhaps you know, participation in GLP ones or something like that are driving an uptick in vial orders? Thank you.

Franco Stevanato: Yes. David, let's make a parallel list. Bulk via, you have to consider like a big ocean. With several 100 customers that is in the last two years, they start to normalize their inventory. And today, since the last four quarters, we continue to see positive signals to be go back on the normalization. In fact, think throughout 2020, '26, most probably we can say that we'll be back to pre-pandemic period for bulk buyer. Easy fill buyer is more an issue. It's more, let's say, we have some big commercial customers, but it's where we see new molecule launching on the ready to ready to fill buyer.

So we also have seen a positive traction with particular also increase of orders with new easy fill buyer because remember, we shared that the customer were looking to clean the inventory of bulk Avaya. And then because they have the easy, feel, flexible line, Philly, easy fill buy. Yeah. They are starting to place new order. So all overall, bulk, we are moving to a normalization. On easy field, we see also new molecule that are going to use this type of primary configuration is filler.

David Windley: Okay. Thank you.

Franco Stevanato: You're welcome.

Operator: Next question is from Doug Schenkel, Wolfe Research.

Doug Schenkel: Thank you for taking my questions. So you had a really strong high-value solutions quarter that was partially offset by standard bulk coming in a bit light of our model. I'm just wondering based on your commentary you're it seems like this is just timing. Is that right or is there some other more durable shift in mix and demands that we should be contemplating as we update our models?

Marco Dal Lago: Beside what Franco just said about the long-term view and the adoption of the sterile configuration, for the year, there are a couple of factors to be mentioned. First of all, we mentioned the acceleration in the BDS on volumes previously expected in Q4. This is mainly in high-value products. So it's a pull forward from Q4 to Q3. Then in Q3, we mentioned also the fact that other containment delivery solutions are going down compared to the same period last year. This is mainly driven by in vitro diagnostic and non-high-value syringes. More specifically on syringes, we have some flexible lines.

So our priority is to switch the product the revenue to a high-value NexSys ranges rather than staying in the low-value syringes. So we have this type of acceleration in Q3 with the next synergies and easy fill variance recovery compared with the same period last year.

Franco Stevanato: If I can add a little bit more in a broader picture, the goal of Stevanato in the next five, ten years is to become a fully solution provider for our customer where we want really to sell the fully integrated system. This is why, for example, the plant official is a campus that is going to provide multi-capability only all in high-value product. And also, this is in combination with the fact that in the last year, most of our are fully dedicated to high-value products.

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

Doug Schenkel: Okay. Super helpful. I was trying to parse out trend versus transitory, so that's great. An unrelated follow-up. There have been a number of recent headlines around large pharmaceutical companies you know, essentially making deals with the US government around drug pricing. And recently, it's been speculated that Lilly and Novo may announce a deal as soon as today. Is it logical to assume that a significant price drop and thus some elastic response in terms of market expansion via Medicare and Medicaid. Could be an absolute good guy for packaging suppliers. You know, I'm just wondering as you think about these settlements potentially leading to an increase in volume, wouldn't that by extension be good for Stevanato? Thank you.

Franco Stevanato: Yes. We saw this announcement, I think, also today. We let it today. There will be a further announcement. What we can say is very similar to the question that we received before about biosimilar. Every time the biosimilar is coming on board, this can help to further enlarge revenue for all the industry. Usually, what we say, just to put us in the standard position, with our clients, we have a long-term contract in place. The cost of primary packaging also easy for product auto inject is really minor compared to the overall cost of good of the drugs.

So usually this we see more like a net positive effect for company like Stemenato because we translate in more orders for our products.

Operator: Next question is from Patrick Donnelly, Citi.

Patrick Donnelly: Guys. Thank you for taking the questions. Franco, maybe to follow-up on Dave's question there on the vials. Can you just talk about where we are on the inventory side? I mean, it feels like destocking far less of an impact. Are we fully past that? What's the latest you're hearing from customers on that front and confidence on the go forward there?

Franco Stevanato: What do we see? That all overall, they are starting to normalize their inventory. In fact, this will translate in more normal forecast to from our customer. Usually, with our customer, we work with what we call three to five years agreement. Then we have the twelve months forecast. Three months confirm order, even more bulk related. Six months config model if it's more easy fee related. So today, all overall, we see that clients are starting to normalize. One KPI that I can share with you, if you really compare last year with this year, their revenue around Vial, if you can take a blend between bulk and easy we increased 12% compared to last year.

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

Patrick Donnelly: Okay. That's helpful. And then I guess, looking at next year, I know you guys LRP is out there. Kind of that low double-digit range. It sounds like, you know, through this throughout this call, it's been a lot of positive between some of the regulatory stuff, obviously destocking behind you guys, you know, the new facilities ramping, any reason why, you know, next year wouldn't be in that low double-digit range? I mean, the street's around 10%. I next year. Just wanted to take your temperature on that. Thank you guys so much.

Marco Dal Lago: As you know, we will be providing our detailed guidance for 2026 and next quarter. Nevertheless, what we can tell you is that we see today positive trends for high-value solution adoption. We see Fishers and Latina ramping up at the right in the right way in line with our plan. We are executing our plan in engineering, so we have a positive approach toward 2026. We need, obviously, to finalize our internal budget and objectives but this is what we can tell you today.

Patrick Donnelly: Understood. Thank you guys so much.

Operator: The last question is from Curtis Moiles, BNP Paribas, Exane.

Curtis Moiles: Thanks for taking my questions. First, I wanted to just maybe a little deeper into the High Value Solutions guidance for the year. On my kind of rough math, think it implies for Q4 a range of 39% to 42% of revenue versus 45% year to date or so. So maybe just give a little more color around the assumptions you have there? And is that kind of based on customer orders or anything else to be aware of?

Marco Dal Lago: Yes, correct. Our guidance are implying 40% to 41% in Q4. And this is driven by the backlog we have in our hands and by the fact that, again, we have been able to accelerate some revenue in Q3 that were previously expected in Q4. So as Franco was saying, there can be some quarterly fluctuation or acceleration depending on the mix of orders we have in that specific quarter. Nevertheless, in the medium term, both in the past. In the past, we saw a steady growth of the share of our high-value products and we expect to keep on installing capacity and keep on growing in the share of innovative products.

Franco Stevanato: If I can also maybe add a little bit more color from product and therapeutic area point of view. See that we are growing in biologics a lot. And inside the biologics, we see traction on Nexa syringes where clients are using some auto-injectors. We see more and more increased demand from product in Phase II and Phase III, but also commercial on ARBA. This is where extremely excited because they have a superior performance in the result of reduction of releases of the busy football cartridges ready to fill on different format from 1 ml up to 10 ml, are good because it's very easy to be set in this complex device, the cartridges.

Also, our Alina pen is starting to feel good pipeline, new prospects on particular biosimilar. So I would like to share with you that the pipeline is spread with a very nice number of localized in one clients and therapeutic drugs in all our product portfolio. We are not just product or one customer.

Curtis Moiles: Got it. Very helpful. And then quickly on, contract manufacturing, I know the press release called out strong growth in Q3. And then you mentioned the Fisher's should start commercial activities for contract manufacturing, I think, end 2026, early 2027. So can you maybe just give some high-level thoughts about we should think about this going forward? Is that gonna become a more meaningful growth driver for the business?

Franco Stevanato: So we are building in a in a in Fischer this production department dedicated for one higher banner for auto-injector. For one of our big customers that already buy from us this Nexa syringes. Today, strategy, our approach on drug delivery system is our main goal is to deliver our IP product to our Alina adapters and Nextiva product. That is why we're building this big clean room in Germany that we have already we have to execute the pipeline with our customer. It's also true that we have going to we already contract in a selective way that we can provide the SALT injectors or some pen to some customer that they own the AP.

And when we are already the supplier with our Albus ranges, of cartridges, say, to fill or syringendexa practically in order to have more bigger contract. We are also serve this product in a form of CMO business model.

Curtis Moiles: Great. Thank you.

Lisa Miles: Operator, are there any other questions?

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

Lisa Miles: And that concludes our call for the day. So thank you for joining us and we appreciate the support. Have a great day.

Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.