Stevanato Group S.p.A. (STVN) Earnings

Management highlights

### Overall Financial Performance - Q2 2026 total company revenue grew 8% year-over-year to $302 million (8% growth on both reported and constant currency basis). Adjusted EBITDA increased 21% to $78.7 million, with adjusted EBITDA margin expanding 280 basis points to 26%. Gross profit margin increased 60 basis points to 28.7% overall. - The company completed the divestiture of California-based subsidiary Barda Sea Brewer, a contract manufacturing business focused on consumables and point-of-care diagnostic applications, consistent with its long-term strategy of shifting to higher-value, complex biologic-focused drug delivery solutions. One-time transaction costs of $12.2 million were recorded in Q2 2026. ### Market & Strategy Highlights - Global demand for injectable biologics remains strong, with over 9,000 injectable assets in clinical evaluation or registration, over 60% of which are biologics. GLP-1 therapies represent a strong, durable long-term tailwind, with GLP-related revenue accounting for ~22-23% of total company revenue in Q2 2026. - Management is focused on moving up the value chain to deliver integrated solutions that combine device innovation, manufacturing expertise, and supply chain reliability for pharmaceutical customers, targeting growing demand from biologics, GLP-1 therapies, and patient self-administration trends. ### Product Milestones - A customer's liraglutide-based therapy incorporating Stevanato's proprietary Alina variable dose pen platform has received regulatory approval in multiple European countries for both diabetes and weight management applications, marking a key commercial milestone for the company's proprietary drug delivery systems that combines its cartridge technology with device capabilities. - The company recently launched DIORA, a new multi-use fixed-dose pen injector system compatible with pre-filled cartridges up to 3ml, designed to meet customer demand for solutions supporting strict dose adherence for specific treatments. ### Growth Capital Projects - At the Fishers, US facility: Initial performance qualification for the first Easy Fill Vial line is complete, with customer validation expected to begin shortly. Build-out for the first device program remains on track, with commercial production expected to start in late 2026. Full ramp-up of the Fishers facility is targeted by the end of 2028. - At the Latina, Italy facility: Syringe capacity ramp-up is ongoing with ongoing customer validation. Installation of the next-generation RTU-400 cartridge line is expected to be completed in the next couple of months, with commercial production starting in 2027. ### Engineering Segment Optimization - The engineering segment's optimization plan is delivering positive results, with operations stabilized and the team focused on expanding sales and marketing to grow the opportunity set. New order wins made good progress in Q2 2026, though sales cycles remain longer than in previous years. The segment has reorganized into two centers of excellence: Italy for customized visual inspection and assembly technology, and Denmark for sophisticated high-speed assembly lines.

Guidance

- Full year 2026 total revenue guidance is set to a range of $1.26 billion to $1.28 billion, reflecting a $15 million revenue reduction from the Barda Sea Brewer divestiture that is partially offset by lower-than-expected currency headwinds and higher organic growth in the core business. - Adjusted EBITDA guidance is updated to $335 million to $345.2 million. The divestiture is expected to be accretive to full-year margins. - Adjusted diluted EPS guidance is narrowed to a range of $0.60 to $0.62. - Segment growth expectations: BDS segment is expected to deliver high single-digit reported growth, while the Engineering segment is expected to decline mid-single digits to low double digits. High-value solutions are expected to represent 47% to 48% of total full-year 2026 revenue. - Full-year 2026 free cash flow is expected to range between breakeven and positive $20 million. The adjusted full-year tax rate is updated to approximately 28.2%, with higher taxes offset by lower-than-anticipated depreciation, amortization, and financial expenses. - At the guidance midpoint, management expects full-year reported gross margin to expand ~50 basis points, adjusted operating margin to expand 110 basis points year-over-year, and adjusted EBITDA margin to reach 26.8%, an expansion of 170 basis points, driven by BDS margin improvement, engineering margin expansion, and disciplined SG&A and R&D cost management. - BDS segment gross margin is expected to meet or exceed 2025 levels, with further margin expansion expected in the second half of 2026 driven by capacity ramp at Fishers and Latina and better fixed cost leverage from stronger second half demand.

Segment performance

1. Biopharmaceutical and Diagnostics Solutions (BDS) Segment: Q2 2026 revenue increased 9% year-over-year to $266.2 million (10% growth at constant currency). High-value solutions within BDS grew 16% to $135.9 million, representing 51% of total BDS segment revenue. Gross profit increased by $6.6 million, but gross profit margin decreased 10 basis points to 31.1% due to higher expected depreciation, increased utilities costs, and currency headwinds, partially offset by operational improvements at new facilities. Operating profit margin declined 330 basis points to 15.8% due to the impact of the Barda Sea Brewer divestiture. 2. Engineering Segment: Q2 2026 revenue decreased 2% year-over-year to $35.8 million, as lower sales in pharma visual inspection and glass converting offset growth in assembling lines and after-sales activities. Gross profit margin improved 540 basis points to 12%, and operating profit margin increased 370 basis points to 2.9%, driven by ongoing optimization initiatives, improved operating performance and a favorable project mix at Danish operations. The segment continues to make steady progress refreshing its project backlog and pipeline, though management remains cautious due to elongated sales cycles.

Risks & headwinds

- Elongated sales cycles in the Engineering segment create uncertainty for order intake and revenue growth, even as the pipeline improves. - Currency headwinds impact BDS segment revenue, though the magnitude of headwinds has decreased from initial 2026 projections. - Ongoing capacity ramp at new facilities (Fishers and Latina) requires ongoing validation and investment, with full ramp-up not expected until 2028, leading to near-term depreciation costs that pressure near-term margins. - Actual results may differ materially from forward-looking statements due to risk factors previously disclosed in the company's most recent Form 20-F annual report filed with the SEC.

Analyst Q&A

• Q: The BDS growth outlook was revised from low double digits to high single digits – is this only from divestiture or are there other underlying business changes? Also, is GLP-1 the sole growth driver for high-value solutions (HVS), or is non-GLP-1 biologics also growing? /

  A: The high single-digit BDS growth guidance is on a reported basis; organic core growth remains double-digit. The 15 million revenue reduction from divestiture is partially offset by an 8 million favorable impact from lower currency headwinds, plus a small organic growth upgrade to the core business. GLP-1 is a strong long-term tailwind, but the company's primary strategic focus is the broader biologics market, which has over 9,000 injectable assets in the pipeline (60% biologics). 2026 biologics growth is 6%, with most revenue still from early-stage phase 2/3 programs that will drive larger growth in future years.

• Q: What products are classified as premium within HVS, and what opportunity does the recent European Alina approval create? /

  A: Alina and DIORA are core premium proprietary products, and ALBA syringes, which have strong traction for monoclonal antibody applications, are also premium HVS. Alina took 8 years of development, and the European approval for liraglutide (diabetes/weight management) confirms Stevanato can compete in the highest tier of integrated drug delivery, combining both glass cartridges and proprietary devices. The approval opens new traction for additional customer validations globally, with Alina already on track to generate double-digit revenue growth next year. Capacity expansion for Alina at the German facility is already underway.

• Q: What is the strategic rationale for the Barda Sea Brewer divestiture, and will there be additional non-core asset divestitures? /

  A: Barda Sea Brewer was a small non-strategic contract manufacturing operation for standard diagnostic consumables that came with the 2016 Balda Germany acquisition, which was targeted at building the company's device manufacturing hub. It did not align with the current strategy of focusing capacity and investment on high-value solutions for the biologics market, so divesting it simplifies the business and is margin accretive. There are no other large divestiture initiatives planned currently, though the company is gradually reallocating capacity from non-core products like standard ampoules to higher-value HVS product lines over time.

• Q: What is the opportunity from upcoming generic GLP-1 launches, and do generics use the same high-value solutions as branded GLP-1s? /

  A: Generic GLP-1s, like branded products, use the same type of injectable delivery configurations. Stevanato already serves originator GLP-1 clients and is actively winning validation for biosimilar/generic GLP-1 programs across regions, supplying high-value Nexus syringes, RTU cartridges, and increasingly its integrated Alina device platform for these customers. Generic GLP-1 launches expand the overall market opportunity for Stevanato's HVS portfolio, alongside continued growth in the branded segment.