Stevanato Group’s Earnings Call: Growth Amid Challenges

Stevanato Group Spa ((STVN)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Stevanato Group Spa painted a picture of both growth and challenges. The company reported significant advancements in high-value solutions and the Biopharmaceutical and Diagnostic Solutions segment, alongside notable improvements in free cash flow and expansion projects. However, the Engineering segment and vial revenue faced hurdles, with a marked decline in gross profit margins. Despite these challenges, the company’s strategic investments in growth areas suggest a balanced outlook for the future.

Growth in Biopharmaceutical and Diagnostic Solutions

The Biopharmaceutical and Diagnostic Solutions (BDS) segment experienced a 6% growth in 2024, fueled by strong demand for high-value syringes. Revenue from injectable biologics surged by 24% year-over-year, now comprising 34% of BDS revenue, up from 30% the previous year.

High-Value Solutions Revenue Increase

Revenue from high-value solutions reached a record €131 million in Q4 2024, marking a 9% increase and accounting for approximately 40% of total revenue. This growth was propelled by premium performance syringes and other product categories.

Progress in Expansion Projects

Stevanato Group achieved its first commercial revenue in Fishers, Indiana, and saw the Latina project in Italy turn profitable at a gross profit margin level in Q3 2024. These projects are poised to continue scaling and contribute to future growth.

Improved Free Cash Flow

The company significantly improved its free cash flow from a negative €333.9 million in 2023 to a negative €148.5 million in 2024, thanks to increased cash flow from operations and reduced capital expenditures.

Decline in Engineering Segment

The Engineering segment saw a 70% revenue decline in 2024, with a 16% drop in Q4. Declines in glass conversion and visual inspection overshadowed growth in assembly and packaging.

Vial Revenue Decline and Destocking

Revenue from bulk and EZ-fill vials fell by 34% in 2024, with a more significant drop in EZ-fill vials due to industry-wide destocking. Although there were modest improvements, the market is expected to stabilize throughout 2025.

Gross Profit Margin Decline

Gross profit margin for Q4 2024 decreased by 210 basis points to 29.7%, impacted by vial destocking, underutilization of vial lines, and challenges in the Engineering segment.

Forward-Looking Guidance

Looking ahead to 2025, Stevanato Group anticipates revenue between €1.160 billion and €1.190 billion, driven by mid to high single-digit growth in the BDS segment, particularly in high-value syringes. Adjusted EBITDA is expected to range from €293 million to €306.3 million, with an adjusted diluted EPS of €0.51 to €0.55. The company forecasts an improvement in gross profit margins by 100 to 140 basis points, supported by better performances in their Fishers and Latina facilities and a higher mix of high-value solutions. Capital expenditures are projected at €310 million to €340 million before customer contributions, with net CapEx between €250 million and €280 million. Free cash flow is expected to improve, ranging from negative €40 million to negative €60 million, with a gradual recovery in vial demand anticipated throughout the year, particularly in the second half.

In summary, Stevanato Group’s earnings call reflected a mixed sentiment, with strong growth in certain segments and challenges in others. The company’s strategic focus on high-value solutions and expansion projects, alongside its forward-looking guidance, suggests a cautiously optimistic outlook for 2025.