Stevanato Group S.p.A. (STVN) Q2 2026 Earnings Report, Transcript and Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group Half Year 2026 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communications and IR Officer. Please go ahead, madam.

Good morning, and thank you for joining us. With me today is Franco Stevanato, Chairman and Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer. We have posted a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the Financial Results tab. I want to remind everyone that some statements being made today are forward-looking and based on current expectations. Actual results may differ materially due to risks outlined in Item 3D, Risk Factors, of our most recent annual report on Form 20-F filed with the SEC. Please review the safe harbor statement included at the beginning of today's presentation and in our press release. The company undertakes no obligation to revise or update these forward-looking statements, except as required by law. Today's presentation may include non-GAAP financial information. Management uses these measures internally to assess performance and believes they may be helpful for investors in evaluating the quality of our financial results, identifying trends in our performance and providing meaningful period-to-period comparisons. For a reconciliation of these non-GAAP measures, please refer to the company's most recent earnings press release. And with that, I'll hand the call over to Franco Stevanato.

Thank you for joining us. Today, we'll review our second quarter performance, share an update on market trends in our 2 segments, including our investment projects and discuss the current environment. Our second quarter financial results were largely in line with our expectations, highlighted by solid revenue growth and a better mix of high-value solutions that drove expanded margins and adjusted EBITDA of 26%. Revenue grew 8% year-over-year, driven by a 9% revenue increase in the Biopharmaceutical and Diagnostic Solutions segment, which offset a slight decline in Engineering segment. Revenue from high-value solutions grew 16% and represented 45% of the total company revenue in the second quarter of 2026, driven by a 30% increase in revenue from biologics, the fastest-growing end market. Revenue related to GLPs was approximately 22% to 23% of total company revenue. As we disclosed this morning, we completed the divestiture of our California-based subsidiary, Balda C. Brewer, which specializes in contract manufacturing services, primarily for consumables and point-of-care diagnostic applications. This initiative represents another step consistent with our long-term goal to continue optimizing our footprint and accelerating the transition towards more complex, differentiated and integrated drug delivery systems. On behalf of management, I would like to thank the Balda team for their dedication and contribution to our group over the years. Demand for injectable biologics remains strong with more than 9,000 injectable assets in the global drug pipeline undergoing clinical evaluation or registration and more than 60% of those are biologics. Our strategy is firmly anchored in the higher-value subsets of the market and the business is positioned as a leader in biologic applications. The rapid growth of biologics, GLP therapies and increasing patient adoption of the self-administration of medicines is reshaping how pharmaceutical companies approach product development and commercialization. Drug delivery systems are playing an increasingly strategic role in the success of injectable therapies. As a result, we see strong customer demand for integrated solutions that combine device innovation, manufacturing expertise and supply chain reliability. We believe our broad portfolio of drug delivery platforms and our end-to-end capabilities positions Stevanato Group well to support this evolution. With this goal in mind, we are extremely happy that one of our pharmaceutical customers has received regulatory approval in several European countries for a liraglutide-based therapy that incorporates our proprietary Alina variable dose pen platform. The approval represents an important commercial milestone for our proprietary drug delivery systems and includes 2 Alina variants for both diabetes and weight management applications. This important customer project also embeds our world-class cartridge technology into the Alina pen platform, harnessing the power of our integrated capabilities. Our proprietary devices are manufactured in our facility in Germany, which plays a pivotal role in serving our global pharma and biotech partners. While Alina addresses the need for a variable dose pen platform, we also see a growing market opportunity for treatments that require strict patient adherence to dosing regimens. In response to customer feedback, we recently introduced Deora to meet this need. Deora is a novel multi-use fixed-dose pen injector system compatible with prefilled cartridges delivering volume up to 3 ml. This new product will take time to get to commercial stage, but we see this as a promising future opportunity. Our customer needs are clear, pointing at solutions that enhance patient usability and adherence, derisk supply chain, provide a better answer to new drug product requirements of modern formulation and lastly, increase the combination product sustainability and cost efficiency profile. We believe we have the right set of expertise and competencies to support our customers with a broad and unique value proposition. Let's turn our attention to the Engineering segment. We are pleased with the continued operational and financial progress in the business. Our second quarter results demonstrate that the initiatives taken under the optimization plan are yielding positive results. Overall, the operations have stabilized, and we are continuing to execute our optimization plan. As we mentioned last quarter, the teams are laser-focused on sales and marketing efforts to expand our opportunity set. We made good progress during the second quarter in winning new orders. We are cautiously optimistic, but sales cycles are longer today than in previous year. Let's turn to an update on our growth projects in the U.S. and Italy. In the second quarter, we remained focused on scaling and executing our growth investments with a disciplined approach, strengthening our operational maturity while expanding capacity to meet customer demand. Starting from Fishers, we recently completed the initial performance qualification on the first EZ-fill vial line, and we expect to launch customer validation in the near term. The build-out for our first device program remains on track, and we continue to expect commercial production to begin later this year. As these initiatives come together in Fishers, we are expanding our commercial capabilities and reinforcing our position for future growth. Turning to Latina, the syringe ramp-up is ongoing as we continue to validate new customers. In addition, our next-generation RTU 400 cartridge line is expected to be completed and installed in the next couple of months with commercial production expected in 2027. In summary, our second quarter results were in line with our expectations, reflecting the continued strength of our strategy. We are positioning the business around the most attractive areas of the market, particularly biologics, GLP-1 therapies and integrated drug delivery systems. The divestiture of Balda C. Brewer and our continued investment in platforms such as Alina and other premium products reinforces our focus on higher value differentiated solution that address the evolving needs of our pharmaceutical customers. At the same time, we are making progress in improving the Engineering segment and advancing our growth investments. I'll turn the call over to Marco for a review of our financial performance.

Thanks, Franco. Before I begin, I'd like to clarify that all comparisons refer to the second quarter of 2025, unless otherwise specified. Let's start on Page 10. In the second quarter of 2026, revenue grew 8% to EUR 302 million, both on a reported basis and at a constant currency rate. This was driven by a 9% growth in the BDS segment, which offset a 2% revenue decline in the Engineering segment. Revenue from high-value solutions increased 16% in the second quarter to EUR 135.9 million and accounted for 45% of total revenue. In the second quarter of 2026, gross profit margin increased 60 basis points to 28.7%. This was driven by the combined improvement in Latina and Fishers, which led to an increase in high-value solutions and improved marginality in Engineering segment. This was partially offset by the expected increase in depreciation, higher utility costs and, to a lesser extent, currency headwinds. In the second quarter of 2026, we completed the sale of our California-based subsidiary, Balda C. Brewer, which specialize in contract manufacturing services for consumables and point-of-care diagnostic application. As a result, the company recorded onetime expenses of EUR 12.2 million in connection with the sale and related transaction costs in the second quarter of 2026. The subsidiary was expected to generate revenue of approximately EUR 30 million in fiscal year 2026 and the transaction is expected to be accretive on the full year margins. The sale of Balda C. Brewer and, to a lesser extent, higher start-up expenses unfavorably impacted the group's operating profit margin in the second quarter. But on an adjusted basis, operating profit margin increased 250 basis points to 18%. As expected, the tax rate in the second quarter of 2026 was higher compared with the same period last year. As a reminder, the prior year period benefited from a tax incentive, which lowered the Italian statutory corporate income tax rate in fiscal year 2025, but the incentive was not available in 2026. Additionally, there is no corresponding tax benefit on the sale of Balda C. Brewer, which contributed to the increase in the effective tax rate in the quarter. As a result of the onetime expenses related to the divestment and higher taxes, net profit totaled EUR 23 million and diluted earnings per share were EUR 0.08 in the second quarter 2026. On an adjusted basis, net profit increased 20% to EUR 37.6 million and adjusted diluted earnings per share increased to EUR 0.14. Adjusted EBITDA increased 21% to EUR 78.7 million and adjusted EBITDA margin increased 280 basis points to 26% in the second quarter of 2026. Moving to segment results on Page 11. In the second quarter of 2026, revenue from the BDS segment increased 9% to EUR 266.2 million and grew 10% on a constant currency basis. Strong growth in premium Nexa syringes and, to a lesser extent, Alba syringes and EZ-fill vials led to a 16% increase in revenue from high-value solutions to EUR 135.9 million, which represented approximately 51% of segment revenue. Revenue from other containment and delivery solutions increased 3% to EUR 130.3 million, mostly driven by growth in standard syringes and bulk cartridges as well as variable compensation tied to a customer contract. Gross profit increased by EUR 6.6 million in the second quarter of 2026, reflecting the combined improvement in the new plants as we continue to ramp up operations, which led to an increase in high-value solutions. These positive trends were partially offset by the expected higher depreciation, an increase in utilities costs and, to a lesser extent, currency headwinds. As a result, gross profit margin decreased by 10 basis points to 31.1%. The operating profit margin was impacted by the sale of Balda and declined 330 basis points to 15.8%. In the second quarter of 2026, revenue from the Engineering segment decreased 2% to EUR 35.8 million due to lower sales in pharma visual inspection and glass converting, which offset growth in the assembly lines and aftersales activities. In the second quarter of 2026, gross profit margin improved by 540 basis points to 12% and operating profit margin increased 370 basis points to 2.9%. Ongoing efforts under our business optimization plan led to a strong margin expansion as the segment continues to make steady operational and financial progress. Margins also benefited from improved operating results and the favorable mix in our Danish operations from newly secured projects in 2026, which is helping to refresh the project portfolio. While margins improved in the quarter and the team is making good progress in refreshing the backlog and the pipeline, we continue to remain somewhat cautious due to the elongated sales cycle and project phasing. Please turn to the next slide for a review of our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of EUR 78.6 million and net debt of EUR 360.3 million. We believe we have adequate liquidity to fund our strategic priorities through a combination of cash on hand, available credit lines, cash generated from operations and the ability to access additional financing. For the second quarter of 2026, capital expenditures totaled EUR 52 million, mostly related to growth investment in the new plants and for our Alina device program in Germany and contract manufacturing activities. In the second quarter of 2026, net cash flow from operating activities totaled EUR 31.9 million. Cash used in property, plant and equipment and intangible assets was EUR 65.7 million. Consequently, the company reported negative free cash flow of EUR 32 million for the second quarter of 2026. Please turn to the next slide for an update of our full year guidance. The divestiture of our California-based subsidiary has been considered in our full year guidance with a reduction of revenue for fiscal 2026 of approximately EUR 15 million. This revenue reduction is partially offset by better-than-anticipated currency translation and higher organic growth in our core business. As a result, we now expect revenue in the range of EUR 1.260 billion to EUR 1.280 billion. The divestiture, while small, is expected to be accretive to margins at the central point of our guide, and we now expect adjusted EBITDA between EUR 335 million to EUR 345.2 million. We are also narrowing the range for adjusted diluted EPS, which is now expected to range between EUR 0.60 to EUR 0.62 for the fiscal year. Our full year 2026 guidance assumes the following. The BDS segment is expected to grow, on a reported basis, high single digits. Engineering is expected to decline by mid-single digits to low double digits. High-value solutions are expected to range between 47% to 48% of total company revenue. Free cash flow is expected to range from breakeven to positive EUR 20 million. We are updating the tax rate for 2026 and now expect a tax rate of approximately 28.2% adjusted for the divestment. The higher tax rate is expected to be offset by lower-than-anticipated depreciation and amortization and financial expenses. I will now hand the call back to Franco for closing remarks.

Overall, we are pleased with our performance in the first half of fiscal 2026, which was in line with our expectations. It further highlights the continued strength of our core business and our ability to capitalize on the market opportunities in biologics, which remains the most attractive and fastest-growing end market. This momentum reflects strong demand for premium containment and delivery solutions, serving complex injectable therapies, including biosimilars, monoclonal antibodies, GLP-1 therapies and other advanced treatments. With the rapid rise of patient adoption of drug delivery devices, pharmaceutical customers are increasingly seeking integrated partners that can combine device innovation, manufacturing expertise and supply chain reliability. Platforms such as Alina support this strategy by demonstrating Stevanato Group's ability to bring together drug containment and delivery device capabilities in a differentiated commercially relevant solution. We believe we are uniquely positioned to respond to this market opportunity. Overall, we are squarely focused on growing our premium high-value solutions in both drug containment and drug delivery systems to best position the company to capture the rising opportunities in injectable therapies, particularly biologics. Our goal is to move further up the value chain and deliver sustainable profitable growth, expanded margins and long-term shareholder value.

[Operator Instructions] First question is from Michael Ryskin, Bank of America.

This is Avantika on for Mike. You updated your BDS growth outlook from double -- high single digit to low double digits to now high single digits. Can you walk us through what drove that change and whether it reflects only the divestiture or any other changes in the underlying business?

Yes. Thanks for the question, Avantika. Marco speaking. The updated guidance on a reported basis, we have stated to high single digit. Nevertheless, the organic growth is still double digit because we reduced by approximately EUR 15 million related to the divestiture. And on the other side, we increased for approximately EUR 8 million related to the lower currency headwind. You probably remember, at the beginning of the year, we started the year with estimation of EUR 18 million of currency headwind on the top line, all related to BDS segment. After the first half of the year with approximately EUR 9 million currency headwind, we can see now the year -- the second part of the year more balanced. So we have a total currency headwind in the model of approximately EUR 10 million. So EUR 8 million favorable in currency, EUR 15 million headwind related to the divestiture and we increased a couple of million our organic growth in our core business.

Great. And then as your GLP-1 exposure continues to increase, are you seeing growth broadly across the non-GLP-1 biologics as well? Or is still GLP-1 the primary growth driver for HVS?

Yes. Thank you for the question. So we all know that the GLP-1s are a phenomenal drug class that we expect to continue to represent a strong long-term durable tailwinds in the next years. But where Stevanato Group is laser focused in this moment and in the next year to come is on biologics. Biologics is a phenomenal opportunity for Stevanato. Just to give you some number, in the industry, there are more than 9,000 injectable assets in the global drug pipeline and more than 60% are going to be with -- in biologics to injection administration. So the reason why we are heavily investing into our plants in Europe, United States, we are heavily investing in order to expand our proprietary devices in terms of drug delivery system, EZ-fill platform, in order to try to maximize our leadership position in the next year to come in biologics. In 2026, we have delivered 6% of growth in biologics. Most of the reason is because we have, in the early stage, more revenue that we are generating for clients that are in Phase II and Phase III. But we have started a big strategic goal is to be tied in this molecule that will represent tailwinds in the next year to come.

Next question is from David Windley, Jefferies.

I wanted to follow up on that and your comments in the -- I think in the release, in your prepared remarks, about a move toward premium high-value solutions. So Franco, I was hoping, one, you could talk about which products in your portfolio you consider to be the premium products within high-value solutions. And then presuming Alina is one of those, how many countries and kind of what is the size of the opportunity with this recent approval of Alina for liraglutide?

Thank you, David. First of all, let me share that we are so excited and proud because it took Stevanato 8 years to develop and to launch in the market this Alina product. We started with our R&D department 8 years ago, even more. This is the reason why in 2016, we acquired the so-called Balda Germany, and today, it's going to become a sort of hub in order to produce this IP product for Stevanato. So the fact that now we were validated in Europe in many countries for this Alina product, both for diabetes and for weight loss management treatment, is going to recognize that Stevanato today plays in what we so-call Champions League because we are not serving any more the product through the CMO business model, but we are serving our IP product and the difference at Stevanato is that we don't sell only the drug delivery system, we are selling what we so-call integrated system approach where there are always our glass cartridges inside. Today, we are delivering our Alina pen, our cartridges to what's so-called a system integrator, a specialized partner that are going to take care of what is related to the devices, the cartridges and the filling and the regulatory support in order to help many big international biosimilar clients, both in Europe and United States to launch to the market this biosimilar. Today, Alina is having very strong traction for what is related to liraglutide, what is the treatment of the weight loss, but what I like to underline, we are at a very early stage because before this validation, there were a lot of prudent approach from many clients about the functionality of this device. Today, this official registration is opening and boosting the traction of other validation worldwide and where all this production we are going to produce through our plant in Germany. Like I already mentioned, last year -- we already started last year to renovate and upgrade one big area of production in order to start heavy industrial production for Alina in the next years. In parallel also, we started to develop and launch our Deora that is an evolution of our Alina product that is perfectly fitting for certain treatment where patients, they need a stronger accuracy of the doses, and this is the reason why this is the fact that we are already registered on Alina is further helping to boost the regulatory permit reduction. So I want to say, sorry to use my [ long-lasting ] approach, that this is going to be maybe one of our most big milestones in 2027 -- 2026.

So to follow up, I presume your enthusiasm suggests to me that Alina and -- I'll get the name, Aeora (sic) [ Deora ] are premium products. I'd love to hear what are the other ones that you consider premium within high value? And if you would, of the 47% to 48% of revenue that is high value, what percent of that is currently premium high value?

Alina is in the range of premium product. The revenue around Alina already captured in our guidance 2026, and most probably, in the next year to come, Alina will generate double-digit revenue growth in the Alina product. Where we are also facing a strong traction, strong success in the market is what we call our Alba syringes because we launched these syringes many years ago for certain ophthalmic application, today, we see more and more strong traction from customers that are going to adopt the monoclonal antibody. Also here, we are heavily investing in capacity, David, here at the plant in Piombino Dese and the next phase we're going also to move industrial capacity into the plant in Fishers in order to serve the biologic market directly from Fishers.

Next question is from Paul Knight, KeyBanc Capital Markets.

Congratulations, Franco. The long-term potential, I think, is obviously obvious with Latina and Fishers. What capacity utilization will Fishers and Latina operate this year?

So today, the demand that we have in Fishers and Latina is quite -- in 2026 in particular for syringes, in Nexa, Alba and cartridges, bulk cartridges, ready-to-fill is quite strong and robust for both plants. The way that we plan our investments are dedicated with capacity program that we have with customers. All the number of lines that we have installed and validated in Latina, we continue to install and do the validation throughout 2026 in Fishers with a direct program where the clients do the audit, do the validation and then we have dedicated line. Our approach is always to maintain certain free capacity in order to enhance our plants to have the flexibility also to do the sampling and the validation for the future program that we're going to start to host in the next year to come. So overall, the message is demand is robust and strong, but also it's important to keep some space in order to perform the validation.

And as a reminder, Paul, Marco speaking, we plan to fully ramp up Fishers by the end of 2028. So we still have ways to go there and improving our production and financial performance throughout our next quarters.

And then could you, Franco, give us an update on -- you were creating centers of excellence within engineering? Or where are you in that program?

Sure. Today, we -- regarding the engineering, we have 2 centers. One is in Italy, specialized in visual inspection machine for customized line for certain assembly technology and Denmark is going to be specializing in particular for the sophisticated high-speed line for assembly. So the optimization plan initiative that we started more than 1 year ago, they are delivering positive results that, in fact, you see, Paul, are translated also in our revenue and our margin, I think, that are much better in this quarter, and this is starting to be a signal of trending for the future quarter. So from an engineering point of view, the organization and the team are really moving in the right direction. Also what we are starting to see is positive signal because we are more and more having a good progress in winning new orders, both with our historical clients and also we are starting to build a rich pipeline for new clients, in particular for vision inspection. So our goal is really to have, quarter-by-quarter, some improvement in terms of revenue and marginality in order to be back to original number more and more in 2027. But also here, the division has started really to deliver a good signal in terms of revenue and marginality.

Next question is from Larry Solow, CJS Securities.

Just a couple of questions. Can you give us just a little flavor maybe just on -- you said -- you mentioned GLP is 22%, 23% of revenue. Can you just speak GLPs versus non-GLPs in the high-value products or biologics growth, give us an idea of what that was? It sounds like GLPs grew faster than overall growth. So can you give us any idea of that?

So today, frankly speaking, the revenue inside of the BDS segment around biologics represents approximately 42%. So we moved, where in 2022, we were approximately a little bit less than 20%, today, we are more than 42%. In this moment, GLP-1s are representing a very visible revenue contribution side of biologics because it's already commercial. We are serving 2 big originators and we are actively moving in order to maximize our validation through all the biosimilars, both to our syringes, Nexa, cartridges, [indiscernible] we have many programs around our drug delivery system. It's also true that we are so engaged with several hundred of clients, both big organization to small start-up, in order to really try to maximize our penetration in all the biologics space. So today, in the biologics space, we have delivered plus 6%, like I was mentioning before, because most of these programs are at early stage. They are not representing a big revenue generation. If I can give you a sort of projection, GLP-1 is a well-established opportunistic tailwind that will continue to grow in the next years. And biologic, it will be much more spread to many clients and many therapeutic areas. And then if you go to combine all these, opportunity is going to be much bigger in the next year to come compared to GLP-1.

Okay. Great. And then a follow-up just on the Alina, if I could just ask a clarification. So it sounds like this approval culminates several years of work and its validation, it feels like you're not building in a lot of revenue specifically to this approval this year, but this validation opens the door for a lot -- for several other approvals. And I imagine this is multiyear stuff, so you must have other customers in the queue. Is that fair to say?

Yes, absolutely. In terms of investments, in terms of revenue, revenue around the Alina are already captured in 2026 in our guidance. What we can tell to you is that we are heavily investing with industrial commercial capacity in our plants in Germany in the next 12 to 24, 36 months in order to be able to serve this growing demand. So like I mentioned to you before, we count that Alina, it will help to generate double-digit revenue around Alina products in next year to come, focalizing what we call our premium high-value solution product. Today, we have done the first registration with a certain number of clients first in Europe. In the second part of the year, we will receive additional validation in North America. But what is more important, the fact that now we have this registration on the market is helping to boost and push other traction from other clients, in particular, in biosimilar space for what is related to the weight loss management treatment. So this is the real strategy. Our industry usually is a little bit prudent and conservative. Since there is no real product in the market, some clients, they are waiting. Now that this product is opening a big, big opportunity next year around our IP product.

Next question is from Brendan Digan, Citi.

I was wondering if we could start off by unpacking the engineering performance in 2Q. I saw a nice rebound up from 1Q and kind of towards the lower range of the commentary provided on the 1Q call. So I was wondering if you could unpack that a little bit, but then also kind of go into how kind of customer decision time lines have evolved throughout the quarter and what kind of the backlog looks like as we head into the second half of the year.

If I understood the question -- sorry, because there was a lot of noise in the microphone, you asked how is the situation of the backlog compared to the first part of the year to the second part of the year?

Yes. So just if you can unpack the engineering performance in 2Q.

Today, we have a healthy pipeline that is going to be, step-by-step, translated in orders. So if you combine from the beginning of the year to the second part of the year, we are starting really to more and more move this pipeline into orders, but we have a very strong progress in winning new orders, in particular for what is related to visual inspection machine, in particular in Europe, in Asia, and technology for assembly for drug delivery system in Europe and United States. So we see, quarter after quarter, a progression in order to enlarge the confirmed orders compared to what was the order intake. So the trend is starting to become better and better quarter after quarter.

Got it. And then I wonder if you could touch on the gross and operating margin assumptions for the full year. I believe, given the divestiture, I was wondering if you could just touch on those. I believe the last guide had around 0 to 30 bps for gross margin and around 50 bps for operating. So how does that change with the divestiture? Congrats on the quarter.

Yes. Thanks for the question. About our guidance, I'm saying, at the center point of our guidance, our plan is to expand the reported gross profit by 50 basis points approximately. If we exclude the onetime event in second quarter, our plan is to increase our adjusted operating profit of 110 basis points compared with last year. And as mentioned in our press release, adjusted EBITDA margin at the center point of the guidance is expected to be at 26.8%, expanding 170 basis points compared with last year. This is driven by slightly improved margin in our BDS segment, improved gross profit margin in our Engineering segment and discipline in cost management in SG&A and R&D expenses.

Next question is from Mac Etoch, Stephens Inc.

Maybe just a follow-up on the previous answer. I think you touched on it a little bit. But the variable compensation that you highlighted within the presentation deck, how much was that? And how much of a benefit was that to 2Q margins?

Thanks for the question, Marco speaking. So the variable compensation is tied to one specific contract with a long-lasting customer. It provides a fair compensation for a reduction in volumes compared with the committed volumes from the customer. And as a reminder, under the contract clause and condition, we have protection in place for changes in forecast. So variable consideration compensate us for the cost we had in the quarter in the first half of the year in terms of capacity reservation, workers, labor, depreciation plus fair compensation of the missing margin.

Maybe just to bear down a little bit more on that. Is it possible to quantify how much of a benefit it was to the quarter?

No, it's not impacting in a significant way the quarter. It's a fair compensation of the missing margin and cost that we had.

Next question is from Kallum Titchmarsh, Morgan Stanley.

This is Jason on for Kallum. So maybe just a question on the Balda Brewer divestiture. Could you just walk us through the strategic rationale for divesting the business and the business profile? What was the growth profile of that business? And what was the HVS, non-HVS mix for that business? And I appreciate the comments that the spin-off was margin accretive, but I was wondering if you could quantify that margin uplift.

Thank you. So when, in 2016, we decided to enter in the device space, we asked for 2 decisions. First to acquire Balda, where the big target was the industrial hub in Germany. And when we acquired this company, we discovered there was a smaller operation in California in south of Los Angeles, so we call Balda C. Brewer, specialized more in contract manufacturing of standard consumable products. So when we are starting to develop our R&D center in Milano, more and more our attention focus was to move to standard diagnostic in order to better serve molecular diagnostic. Now the real goal is really to build a value proposition for our biologic clients in injection in order to deliver not only the glass [ package ], also together with the drug delivery systems. Now we are in 2026 where most of our investments are in order really to build capacity for drug delivery systems. This plant is not any more strategic for Stevanato because it don't have any particular strategy to serve this biologic market. So we have decided to pass to this program of divestiture in order really to remove some industrial setup not strategic for our biologic clients.

And about the model, we had previously, in our model, approximately EUR 30 million revenue for the year and slightly positive EBITDA. So that's why we are -- let's say, our margin is more accretive with divestiture.

This initiative really represent another step in order really to move the value chain and the product portfolio of Stevanato's industrial setup more versus some accretive high-value solution product to better serve the biologic market. This is one another step like what we have already done last year, we started to slow down a little bit our attention in Europe for the standard [indiscernible].

Great. I guess maybe just a question on like kind of generic GLPs. We've seen patents for semaglutide expire in 2026 in Canada, India, Brazil and some early generic GLP launches. I'm wondering, will generic GLPs largely use high-value solutions as the current branded GLP-1 drugs? And could you just talk about the opportunity from the generics?

So today, we serve the GLP-1 market to our originator to our biosimilar, we serve the syringe Nexa, we serve the cartridges, but mostly cartridges ready-to-fill. Also, we are starting to maximize with all the biosimilars that are entering the market. Today, we see that all the biosimilars, they are practically using the same type of administration of injection. Stevanato is acting to serve to these biosimilars that still are at early phases through syringes Nexa, cartridges ready-to-fill, even more, we have started really to deliver what we call the fully integrated system where we're going to add also our proprietary device like Alina. So this is valid for practically all the regions. Like I was mentioning before, we have started to serve some European market. Now the next phase to be North America, Latin America, exactly for this type of configuration where there will be either our syringes or there will be our cartridges plus the Alina product.

Next question is from Chad Wiatrowski, TD Cowen.

Beyond the Balda divestment, are there other segments or SKUs that you view as noncore and could potentially be under strategic review currently?

At the moment, we don't have a relevant initiative under the radar. It's also true that if you look at from the day of the IPO to today, we invested more than EUR 1.3 billion, mostly around high-value products. It's also true that if you look at the strategy of our organization starting from sales, R&D, product management and operation and supply chain, the goal is to build a leadership position in biologics. So indirectly, step-by-step, a little bit less attention in what we call non-high-value products or certain bulk activity, make the example, and of course, that we sell from Europe, from Brazil, some other standard plastic component for diagnostics where, step-by-step, we would like really to reconvert to use this space in order to better serve our EZ-fill platform, our drug delivery solution. For sure, this is something that we do step-by-step gradually because we want really to evolve our value proposition in the next 1, 2, 3, 4 years, but today, no other relevant initiative.

Got it. That's helpful. And then yes, it was encouraging to see the Alina approvals. Is there an incentive for pharma customers to order from providers who offer both the glass combined with the proprietary device? And are these approvals symbolic of maybe a broader shift over time where companies who offer more integrated solutions are positioned stronger in a market that's historically been pretty fragmented?

Today, overall, there is a trend of the pharma industry to outsource, as much as they can, the supply chain. It can be -- they can use specialized CMO, they can use a company like Stevanato that we sell the integrated offering. So basically, today, there is more and more a visible trend where pharma customers, they try to outsource a big portion of supply chain. The advantage of this system integrated provider, yes, very proactive but they don't perform only the filling, helping this biosimilar -- international biosimilar company really to take all the type of activity in order really to collect the devices, the cartridges, to the filling, regulatory support in order to enhance these biosimilars to focalize in the go-to-market. More and more, we see this trend in the industry today. And Stevanato proactively what we do, we use our tech center. We use our specialized hub in Italy and United States in order to try to capture as much as we can big pieces of this supply chain and increase our value proposition.

Next question is from Curtis Moiles, BNP Paribas.

So first, just on GLP-1s. I mean, obviously, that stepped up again as a percentage of revenue compared to 1Q '26. So maybe you can talk about how you're seeing that progress through the year and whether your sort of mid-teens growth guidance remains intact there?

Okay. Starting from the guidance, we can see a double-digit growth compared to last year. So still a significant growth. About the overall market situation, I will hand over to Franco to elaborate more.

Correct. Today, in the industry, what we see that GLP-1 is really -- we are really at what we call at the beginning of this journey because we are -- if you look at all the potential opportunity that we have to our originator clients, even more with the biosimilars that are very active in any region of the world, I think that we are really at the tip of the iceberg. So today, there are less than 10% of patient penetration in total potential addressable patient that is 1.5 billion. So we expect that this will continue to represent a strong long-term durable tailwinds for all the industry, including Stevanato. The strategy of Stevanato is really to maximize our penetration through the originator like we have done in the past with insulin and in parallel, try to maximize our validation in all the biosimilar not only to our EZ-fill platform, also with our drug delivery system because I think the next 5 to 10 years, there will be a lot of opportunity to stay in double digit only to GLP-1 in next year. What is important again to underline for the second time that the GLP-1, we want to have a very strong opportunistic approach, but it is limited to one therapeutic class. The real goal of Stevanato and the reason why we have done the IPO in 2021 in order to finance and build this huge hub in the United States and increase the capacity in Europe is because all the biologic market is growing, spread to several tens of hundreds of clients and several therapeutic areas. It is where we want really to play a visible role with all our integrated value proposition starting from EZ-fill product, syringes, cartridges and vials and move up the value chain to our drug delivery system to certain clients. Through our tech center, we've started to perform also fill-and-finish for non-human user. This is where we really want to focalize SG in the next 5 to 8 years.

Okay. And then moving to the BDS gross margin. I'm just wondering, is this sort of Q2 level a good jumping off point for the remainder of the year? And should we see it ramp a little bit from here? Or could it maybe come off a bit?

Yes, we expect for BDS to match or overtake the gross profit margin we had in 2025. So we expect in Q3 and Q4 further margin expansion in our BDS segment driven by the growth in Fishers and Latina and driven by the fact that we expect a stronger second half of the year, so a better leverage on our fixed expenses, again mainly driven by Fishers and Latina.

Next question is from Matt Larew, William Blair.

Obviously, a lot has been covered. Just one for me. I know you had a press release a few days ago on the Alina approvals. You mentioned it a couple of times today. I know that these were already approved. So I'm curious if these are new or different configurations and thus perhaps new share opportunities for Stevanato. And again, you've covered it a little bit, but just what these approvals mean for you in terms of long-term aspirations in the device space?

So practically, Matt, with this approval in Europe, there will be additional approval in the second part in the United States. We are going to start to deliver to certain number of clients. We have a big number of clients. We are going to start to deliver our Alina pen for this liraglutide product together with our cartridges. So translating in number, we are starting to generate revenue through selling Alina in 2026, even more there will be a progression because these clients are launching the product on the market. The configuration to be Alina product in different format and with our cartridges.

Ms. Miles, gentlemen, there are no more questions registered at this time.

Thank you very much, everyone, for joining us for Stevanato Group's Second Quarter 2026 Earnings Call. We look forward to speaking with you in the future, and enjoy the rest of your summer.

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