Stevanato Group reiterates 2025 outlook, projects high-value solutions to reach up to 44% of revenue as biologics demand accelerates

Earnings Call Insights: Stevanato Group S.p.A. (STVN) Q3 2025

MANAGEMENT VIEW

* Franco Stevanato, CEO & Executive Chairman, reported "another solid quarter of financial results, driven by revenue growth, a record mix of high-value solutions, and continued margin expansion." He noted that third-quarter results "exceeded our expectations" due to favorable timing of product shipments in the BDS segment, previously planned for the fourth quarter. Stevanato emphasized that "we remain on track to meet our 2025 guidance," attributing this to momentum from executing the strategic roadmap and investments in capacity expansion, particularly to meet increased demand for high-value products such as Nexa syringes and EZ-fill vials.
* The CEO highlighted that high-value solutions grew 47%, primarily fueled by Nexa syringes and EZ-fill vials, with the Nexa platform "optimized for sensitive biologics" and suitable for integration into auto-injectors. He also announced that the EZ-fill portfolio was recently selected by a leading manufacturer for use with a GLP-1 biosimilar for type 2 diabetes in the United States.
* Stevanato commented on the Engineering segment, stating that while operational improvements have been made, "our financial performance is below our expectations" and "getting the segment back to historical performance levels is going to take more time." He cited a slower-than-anticipated conversion of pipeline opportunities into new orders and ongoing efforts to strengthen the sales organization and refine commercial processes.
* Updates on capital investment projects included continued ramp-up at Fishers for syringe production, with vial line installations and customer validations expected to begin in mid-2026. The new clean room for contract manufacturing is nearly completed, with commercial activities planned to begin at the end of 2026 or early 2027.
* Marco Dal Lago, Chief Financial Officer, stated, "Revenue for the third quarter of 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." Dal Lago added, "Revenue from high-value solutions grew 47% and represented 49% of total company revenue." He also noted that "strong performance in the BDS segment led to a 240 basis point increase in consolidated gross profit margin, reaching 29.2% in the third quarter of 2025."

OUTLOOK

* The company reiterated fiscal 2025 guidance, expecting 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. Dal Lago stated, "with the strength of high-value solutions, we now expect the revenue from high-value solutions will range between 43% and 44% of total revenue compared with our prior assumption of 40% to 42%." Currency translation is now expected to have an impact of approximately $15 million to $16 million, compared to the prior range of $12 million to $15 million, but this is fully offset by higher organic growth.

FINANCIAL RESULTS

* Third quarter revenue increased to $303.2 million, up 9% year-over-year. The BDS segment grew 14% to $266.7 million, while the Engineering segment declined 19% to $36.4 million.
* High-value solutions revenue reached $147.9 million, representing 55% of BDS segment revenue for the third quarter. Gross profit margin for the BDS segment increased 400 basis points to 32%, and operating profit margin rose to 22.1%.
* Net profit for the quarter was $36.1 million with diluted EPS of $0.13. Adjusted net profit was $38.5 million, and adjusted diluted EPS increased 17% to $0.14. Adjusted EBITDA reached $77.8 million, with an adjusted EBITDA margin of 25.7%.
* As of September 30, 2025, cash and cash equivalents were $113.3 million and net debt was $333 million. Capital expenditures totaled $54.9 million, and net cash from operating activities increased to $47.2 million.

Q&A

* Lawrence Solow, CJS Securities, asked about the $10 million outperformance and mix. CFO Dal Lago explained this was "an acceleration to accommodate customer supply chain needs of sales that were previously expected in Q4," primarily in high-value syringes.
* Solow also asked what drove high-value solutions growth and the outlook. Dal Lago cited "strong demand in high-performance syringes, particularly Nexa," and recovery in sterile vials. Stevanato added the trajectory is robust, with "strong demand, in particular, on EZ-fill products like Nexa syringes."
* Matthew Larew, William Blair, inquired about margin improvements at Latina and Fishers. Stevanato said Latina is "getting closer to a normalized gross profit margin," while Fishers "is not positive yet in Q3" but is "continuously improving."
* Larew also questioned the Engineering segment’s recovery timeline. Dal Lago described operational progress but noted a slow order conversion, with "a healthy pipeline" but delays due to customer decision-making.
* Michael Ryskin, BofA Securities, asked about biosimilars and their impact. Stevanato responded, "biosimilar helping to further increase the revenue" and confirmed company strategy to be present in both originator and biosimilar injectables.
* Ryskin sought clarification on the BDS segment outlook amid FX headwinds. Dal Lago confirmed guidance reiteration with "acceleration in high-value products, bringing more margin to BTS segment."
* Paul Knight, KeyBanc, asked about utilization rates and the timeline for full capacity at Fishers and Latina. Stevanato stated full potential is targeted for "the end of 2028."
* Steven Etoch, Stephens Inc., questioned order pull-through and Engineering segment order growth. Dal Lago clarified the $10 million was not from a single customer and order pull-forward is not expected to repeat in Q4. Stevanato sees positive trends in U.S. manufacturing investments translating to future growth opportunities.
* David Windley, Jefferies, focused on high-value solution capacity and vial market recovery. Stevanato described ongoing capacity installations and a positive normalization trend in vials.
* Douglas Schenkel, Wolfe Research, probed mix shifts and the impact of U.S. drug pricing. Dal Lago cited a shift to high-value syringes, while Stevanato said increased biosimilar presence is positive for packaging suppliers.
* Patrick Donnelly, Citi, asked about vial inventory normalization and confidence in double-digit growth for next year. Stevanato reported clients are "starting to normalize their inventory" and Dal Lago expressed a "positive approach towards 2026."
* Curtis Moiles, BNP Paribas, sought more on high-value solutions Q4 mix and contract manufacturing. Dal Lago explained Q4 guidance is based on backlog, with a medium-term trend of steady high-value share growth. Stevanato detailed expansion in contract manufacturing, particularly for auto-injectors.

SENTIMENT ANALYSIS

* Analysts’ questions focused on sustainability of high-value growth, Engineering segment recovery, capacity ramp timelines, and the impact of FX and tariffs, indicating a neutral to slightly positive but scrutinizing tone.
* Management maintained a confident tone in prepared remarks, frequently stating "we are confident" and "we see strong demand," but was more measured in Q&A, especially when addressing Engineering segment challenges, saying "we believe that getting the segment back to historical performance levels is going to take more time."
* Compared to the previous quarter, management’s sentiment remained confident about high-value product growth and capacity expansion but acknowledged persistent delays and slower recovery in Engineering. Analysts’ tone shifted slightly more positive regarding high-value solutions but remained cautious about Engineering segment outlook and macro risks.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for revenue, EBITDA, and EPS remains unchanged, but the expected mix of high-value solutions was raised from 40-42% to 43-44% of total revenue.
* Management continues to emphasize strong momentum in BDS and high-value solutions, but the Engineering segment recovery is now expected to take longer than previously indicated.
* Analysts in both quarters focused on margin trends, capacity expansion, and Engineering segment recovery, but the latest call reflected more scrutiny about timing and durability of high-value mix gains.
* Financial performance improved quarter-over-quarter, with higher revenue, stronger margins, and increased cash flow. Currency headwinds intensified, but were offset by stronger organic growth.
* Management confidence in growth initiatives is steady, though more candid about lingering operational challenges in Engineering.

RISKS AND CONCERNS

* Management highlighted slower-than-expected order conversion in the Engineering segment and ongoing margin dilution at new sites, particularly Fishers.
* Currency translation and unmitigated tariff costs remain key headwinds, though management stated these are incorporated in guidance.
* Analysts repeatedly questioned the durability of high-value mix gains, timeline to full capacity, and the pace of Engineering segment recovery.
* Mitigation strategies include strengthening the sales organization, refining commercial processes, ongoing investment in capacity, and leveraging customer feedback.

FINAL TAKEAWAY

Stevanato Group’s third quarter 2025 results underscore strong execution in high-value solutions and BDS, supported by ongoing investment in capacity expansion and innovation for biologics and self-administered medicines. While the company reiterated its 2025 outlook and increased the projected share of high-value solutions, challenges persist in the Engineering segment and from currency headwinds. Management remains confident in the long-term demand outlook, driven by secular industry trends, a robust product pipeline, and operational progress at key sites, positioning the company for continued growth and improved profitability as it heads towards 2026.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/stvn/earnings/transcripts]

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