Transcript 0800 138 2636 | service@incommglobal.com www.incommglobal.com Stevanato Earnings Call Thursday, 19 August 2021 Lisa Miles Good morning and thank you for joining us. With me today, to offer prepared remarks, is

Lisa Miles Good morning and thank you for joining us. With me today, to offer prepared remarks, is Franco Stevanato, Executive

Chairman, Franco Moro, Chief Executive Officer and Chief Operating Offer, and Marco Dal Lago, Chief Financial Officer. We re also joined by Mauro Stocchi, Chief Business Officer, and Paolo Patri, Chief Technology Officer.

I d like to remind everyone that a number of statements being made today will be forward-looking in nature. Please remember that such statements are only

predictions. Actual event and results may differ materially as a result of risks we face, including those discussed in our registration statement on form F-1, which was filed with the Securities and Exchange

Commission on July 16th, 2021.

We encourage you to review the information contained in our earnings release today in conjunction with our associated SEC

filings and F-1. 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 of results 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 comparison.

For a reconciliation of the non-GAAP

measures presented in this document, please see the company s most recent quarterly earnings press release. With that, I ll hand the call over to Franco Stevanato for opening remarks.

Franco Stevanato Thank you, Lisa. Good morning and thank you for joining us. Today, I m going to kick off with some key

highlights and investment considerations for Stevanato Group. First, I m pleased with our financial result for second quarter and first half of fiscal year 2021.

Revenue for the first half of 2021 grew 33% and adjusted EBITDA increased 58% over the same period of the last year. Our operating performance reflects our

long history of more than 70 years serving the pharma, biotech and life sciences industries. The core of our DNA is science and technology.

analytical and engineering capabilities have helped us solidify our position as the market leader worldwide in pen cartridges and EZ-Fill vials. We serve the top blue chip global biopharma, pharma and

diagnostic customers. We have a strong track record for customer support and service which has translated into customer retention of data of 97%.

the last 70 years, we have grown the business through cost centre investment in technical and scientific innovation, geographic expansion to better serve our customers and solidify our position in the pharmaceutical value chain.

The proceeds from our recent IPO will be reinvested to drive sustainable long-term organic growth. Our top three investment priorities are, one, geographical

expansion, two, research and development to sustain and accelerate our high-value solutions and, three, selective M&A.

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We share the same fundamental goal of creating and driving long-term shareholder value. On behalf of the board, we are proud of the positive steps the

management has taken to advance the company position in the market and we are confident in their ability to execute against the company s long-term strategic plan.

Franco, Marco, Mauro, and Paolo bring deep expertise, decades of experience and an unparalleled commitment to achieving our growth objectives. We believe we

have the right team in place to drive vision and strategic pillars over the next ten years.

The family, the board and the management team are keenly

aligned with the goal of building long-term shareholder value. Our mission is simple, delivering patient-centric solutions to support our customers needs to meet the increasing market demand driven by a positive macro environment.

Stevanato Group remains at the heart of the pharmaceutical value chain now and for decades to come. With that, I will hand the call over to Franco Moro, Chief

Franco Moro Thanks, Franco, and good morning. For the second quarter we delivered solid year-over-year

operating and financial results highlighted by double-digit revenue growth. More importantly, the key performance indicators of future growth came in particularly strong.

We continue to make steady progress in transitioning our revenue to an increasing mix of high-value solutions, which accounted for 24% of total revenue in the

second quarter. Our high-value solutions include our higher margin products focused on pre-sterilised vials, cartridges and syringes.

The solutions offer an increasing value to our customers with four key advantages, reduced time to market, lower total cost of ownership, increased quality

and improved flexibility. Our focus and much of our future investment will be dedicated to growing the mix of high-value solutions.

was also highlighted by strong order intake. We ended the second quarter with a new order intake of 278 million and a total backlog of 739 million at June 30. We define our backlog as customer-committed orders.

The current backlog provides significant visibility into future revenues. This gives us confidence in our ability to achieve our revenue guidance for 2021. We

are pleased with the positive momentum in new order intake and backlog. These are indicative of the positive type of trends in the markets today.

trends have paved the way for our consistent double-digit growth over the last ten years and today we are focused on executing against our strategic investment plan to take advantage of the longer-term demand.

Today, I want to talk about our expansion and investment framework. This an important element to driving sustainable, accretive growth in the near-term and

the long-term. With that in mind, I will provide context around our historical investment strategy, how that translates to growth, and our plan to replicate this strategy in the years ahead.

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In 2016, we launched an expansion initiative that has been yielding double-digit growth over the last few years and continues today. We accelerated our

investment in Italy and abroad, which served as the catalyst to meet the significant increase in demand precipitated by COVID.

Yet, at the same time, we

are still able to significantly increase production in other core products outside the vaccine space, particularly in vials and cartridges. For example, our investment also allowed us to remain number one in the insulin pen cartridge market.

I will highlight key metrics and capacity increases tied to this output. First, in our EZ-Fill pre-fillable sterile syringes. When compared to our production output in 2016, we expect to double the number of syringes produced in 2021 and up to triple the syringe output in 2023.

Secondly, in our EZ-Fill sterile vials and cartridges, the numbers are even more impressive. In 2021, we expect to

produce up to 11 times more sterile vials and cartridges compared to 2016 and in 2023, we expect to product up to 19 times more sterile vials and cartridges compared to 2016.

Our investment initiatives are targeted to the production and delivery of more accretive high value solutions. Equally important, this is being done in

response to customer demands. The approximate capex on the EZ-Fill expansion between 2015 and 2021 was roughly 220 million and we will continue investing.

The recent acceleration of organic growth demonstrates our proven track record in optimising our capital investments. At this stage of our life cycle, we see

unprecedented demand. In the near-term, we have made timely investments in our capacity to enable us to stay ahead of our customers rising demand for our high-value solutions and we expect to invest in a similar manner in the future.

We are supplementing our ongoing expansion with new EZ-Fill lines and converting space to dedicate to our high-value

solutions. An important element to our investment strategy is anticipating customer demand to make the right investment at the right time. This has been our approach in the past and it continues today.

Based on current trends, we believe now is the time for investing in expanded capacity globally for our EZ-Fill

solutions. Our current expansion plans in the US and China are proactively addressing where we believe we will continue to experience high levels of customer demand.

Our future investment in the fastest growing markets of the US and China advance our position with customers across the pharmaceutical, biotech and life

sciences industries. From a capex perspective, we currently plan to spend approximately 300 million for our plants in the US and China.

will expand our existing footprint in these geographies and enhance our proximity to customers in attractive end markets. As many of you already know, the US market is highly sophisticated and the pace of growth in biologics is at record speed. We

believe that we are well-positioned to become a larger player in the market.

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From a timing perspective, we expect to break ground in Indiana in the fall of 2021. We anticipate construction will take approximately 18 months, followed by start-up and customer validation in 2023. At this pace, we are currently targeting revenue generation to begin around the end of 2023 or early 2024.

In China, the backdrop is very different. There is a predominance in biosimilar and the biologics market is just emerging. Our goal is to take advantage of

market timing to be among the first movers. We estimate that construction will begin in early 2022, which puts our estimated revenue generation in the second half of 2024.

We are approaching these new investments with the ambition to replicate the same strategy, discipline and execution as with past investments. Our overall

approach of increasing capacity, embedding scientific and technological advancement in our portfolio and broadening our servicing and geographic reach is the cornerstone of delivering value to our customers.

We are also boosting our efforts in research and development with a significant emphasis on service capabilities. These investments are evident in our

technology centres in Boston and Italy. The scientific and analytical services developed in our technology centres are helping us gain an early entry point with our customers. We expect this will help expand our presence in the pipeline for new

In parallel, these efforts are aimed and expanding our own portfolio of proprietary solutions across all product lines. Above all, we

believe that the current underlying trends in the macro environment set the stage for favourable tailwinds for decades to come.

confluence of events coming together with and urgent need to tackle the challenge of aging populations, the increasing complexity in health conditions and comorbidity rates and a significant shift in patients seeking to manage their conditions and

access care closer to their home environment.

We believe we are well-positioned to capitalise on these trends. Our priority is to support our customers

in creating and delivering patient-centric solutions, which is central to our philosophy and vision. I will hand the call over to Marco to cover the financials in more detail.

Marco Dal Lago Thanks, Franco. For the second quarter, total company revenue grew 26% to 204 million and 28.5% on a

constant currency basis compared to the same period last year. Top line increases were driven by growth in both segments in all geographies.

noted, our focus remains on expanding the sales mix of high-value solutions in the portfolio. For the second quarter, high-value solutions accounted for approximately 24% of total company revenue. We currently expect a full year contribution from

high-value solutions to range between 25-26%.

The COVID-19 pandemic

continues to be a tailwind and it has increased demand for our drug containment solutions. We are playing a meaningful role in the fight against the pandemic and our products are supporting the vaccination rollout around the world.

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In the second quarter, we estimate that approximately 15% of gross revenue was linked to the pandemic. The key takeaway is that, excluding COVID, we still

achieved robust double-digit growth in the second quarter compared to last year. This is a result of solid demand for our core products and the shift to high-value solutions.

For the rest of the year, we expect contribution from the pandemic to remain consistent. We currently estimate that gross revenue attributable to COVID will

range between approximately 13% and 17% for 2021.

For the second quarter, total company gross margin improved 100 basis points over the last year to

31.2%, mainly thanks to our focus on high-value solutions. Also, in the second quarter adjusted operating profit margin improved 240 basis points to 19.1% and adjusted EBITDA grew by 90 basis points to 25.7%.

This was due to gross margin expansion and efficient cost management in certain overhead expenses. In parallel, we continue to increase investment in R&D

activities compared to the same period last year as we aim to sustain and accelerate the pipeline of high-value solutions.

47.6 million and EBITDA of 61 million include a one-time benefit of 8.6 million gross profit, which is 4.4 of net profit or 0.02 of diluted earnings per share. The

majority of this related to the termination of a stock incentive plan. As a result, second quarter diluted earnings per share were 0.14 and adjusted diluted earnings per share were 0.12.