Stevanato Group S.p.A. (NYSE:STVN) Q3 2023 Earnings Call Transcript

Larry Solow: Great. Good morning or good afternoon. Thanks for taking the questions. Just first question. You guys mentioned a nice improvement or you’re seeing a good increase in demand in the vision inspection and assembly lines. And just talking through and coming out of the Capital Markets Day, your ability to leverage this engineering segment. Are a lot of these customers who — where you’ve seen that demand for the machinery, are they customers as well on the BDS segment? Can you kind of just talk about that dynamic?

Franco Moro: Yes, you’re right. There are many customers that use our visual inspection system, our assembly line that are also our customer for containment solution, and mostly high-value containment solution. So the share of customer that we serve more than with a single product line is increasing and is in line with our strategy to be a solution provider because we believe that the integrated offering leveraging on the engineering, provide benefit to customer in time of shorter time to market, more simple supply chain for them, better management of project, and at the end, reduction of their total cost of ownership. And the increased number of customers that use more than one single product [indiscernible] is increasing.

Larry Solow: Got it. And just to clarify, you guys — I know you don’t guide to the quarter and you certainly don’t guide particularly to the quarter for the segment. So just a follow-up to a couple of questions asked earlier, I think by Derik on the — just on the BDS segment. So it sounds like that — those numbers were essentially in line with your expectations, the EUR5 million or so shortfall at least relative to the street and your — internally was all on the engineering piece, correct?

Marco Dal Lago: Yes, that’s correct. We are on our side reiterating the double-digit organic growth in BDS segment. And this is how we can see the picture for the entire fiscal year with a strong growth in high value solution that are expected to represent between 32% to 34% on total revenue. So we are reiterating this. And as you said, we generally don’t provide quarter-after-quarter guidance, quarterly guidance, and that is, our picture is still the same.

Larry Solow: Got you. And that guidance obviously implies a pretty nice pickup in Q4. And I guess seasonally, the BDS segment normally does pick up significantly in Q4 and I assume that dynamic comes into play this year as well. But — or does that supply chain, that supply and you are ramping capacity, I guess that’s helping that trend even more. Any thoughts there?

Franco Moro: But you already covered your question with the appropriate answer yourself. Because yes, it’s a combination of new capacity coming online, specifically for high-value solution that is more effective in term of revenues. At the same time, there is some repetitive pattern in term of ordering by customer that is driving this distribution of revenues along the year. But the increasing capacity is the most important driver, because we are having more capacity in high-value solution.

Larry Solow: Right. And then just last question, just on price, any color there? I imagine you’ve been getting a little bit more price this year, you probably increasingly over the last couple of years as inflation has obviously gotten significantly more material. Your expectation as we go forward, do you continue to expect to get price and more in line with, I guess what the inflationary pressures are?

Franco Moro: Our approach about pricing is basically depending on value, with respect of the high value solution is not just based on cost first of all. About inflationary pressure, you mentioned last year, we discussed many times the sudden increase in cost of utilities and other specific items. But the approach generally-speaking is the same, we are frequently recalculating our cost basis including inflation and price accordingly.

Larry Solow: Great. Thank you. Appreciate the color.

Franco Moro: Thank you.

Lisa Miles: Thanks, Sabrina. Next question, please.

Operator: The next question is from Jacob Johnson of Stephens. Please go ahead.