Stevanato Group S.p.A. — 2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. The filing also presents unaudited fourth-quarter results and audited full-year financial statements for 2022, 2021 and 2020. Financial statements are prepared under IFRS as issued by the IASB; amounts below are euros unless stated otherwise.
Business context and reporting period
Stevanato supplies drug-containment, drug-delivery, diagnostic and engineering solutions to pharmaceutical, biotechnology and life-sciences customers. Its two segments are Biopharmaceutical and Diagnostic Solutions and Engineering. In 2022, they represented 81% and 19% of sales, respectively. High-value solutions reached 30% of total revenue. The company reported serving more than 700 customers; its ten largest accounted for 44.26% of revenue, and no individual customer exceeded 10%.
Financial performance and position
| Metric | FY 2022 | FY 2021 | Change |
|---|---|---|---|
| Revenue | €983.7m | €843.9m | +16.6%; +13.4% at constant currency |
| Gross profit / margin | €319.8m / 32.5% | €265.4m / 31.4% | Profit +20.5%; margin +1.1 percentage points |
| Operating profit / margin | €192.4m / 19.6% | €162.2m / 19.2% | Profit +18.6% |
| Profit before tax | €187.6m | €165.7m | +13.3% |
| Net profit | €143.0m | €134.3m | +6.5% |
| Diluted EPS | €0.54 | €0.53 | +1.5% |
| Adjusted EBITDA (non-IFRS) | €263.6m; 26.8% margin | €218.3m; 25.9% margin | +20.8%; margin +0.9 percentage points |
Fourth quarter: Revenue was €292.1m, up 25.6% year over year (22.5% at constant currency). Gross profit was €100.2m, with a 34.3% margin; operating profit was €63.1m, with a 21.6% margin; and net profit was €48.3m. Fourth-quarter diluted EPS was €0.18.
Revenue mix and drivers: Full-year Biopharmaceutical and Diagnostic Solutions revenue was €799.7m (+15.2%); high-value solutions were €293.2m (+41.1%), while other containment and delivery solutions were €506.4m (+4.2%). Engineering revenue was €184.0m (+22.8%). Revenue growth reflected higher volumes, a shift toward high-value products, favorable currency translation and growth in Engineering. EMEA generated 61.0% of revenue and North America 25.5%; APAC revenue fell 14.8%.
Cash flow, investment and liquidity: Operating cash flow was €103.3m, down from €133.3m. Management attributed the decline principally to €117.7m of working-capital absorption, including inventory built to protect supply. Investing cash outflow was €243.0m; cash purchases of property, plant and equipment were €235.0m. Reported CAPEX additions were €302.6m. Non-IFRS free cash flow was negative €137.0m, versus positive €25.1m in 2021. Cash and cash equivalents were €228.7m, compared with €411.0m; current assets were €845.8m and current liabilities €462.5m.
Financial liabilities totaled €219.2m, including €148.4m non-current and €70.8m current liabilities. Management’s non-IFRS net cash measure was €46.0m, down from €189.8m. Equity was €995.9m. The company paid €13.5m in dividends during 2022. Its reported available short-term facilities were €69.0m, of which only €13,200 had been drawn at year-end. Two loans totaling €130m were arranged in January and February 2023 for capacity investment; both have five-year terms and ESG-linked pricing provisions.
Material changes versus the prior comparable period
- Revenue growth slowed to 16.6% from 2021’s 27.5% growth over 2020; constant-currency growth in 2022 was 13.4%.
- High-value solutions expanded substantially and supported the gross-margin increase. Engineering operating margin also improved for the full year, from 10.5% to 13.8%.
- COVID-19-related revenue declined to an estimated 11.2% of 2022 revenue from 14.7% in 2021, or approximately €110.5m versus €123.7m.
- Operating cash flow fell by €30.0m, while investing outflows increased by €146.6m. Cash declined by €182.3m year over year, primarily amid elevated investment and working-capital needs.
- Finance expense rose to €29.8m from €18.8m; 2021 had benefited from a €12.3m gain on the sale of an associate. The 2022 effective tax rate was 23.78%, versus 18.96%, with 2021 benefiting from a retroactive Patent Box tax saving.
Outlook, commentary, risks and unusual items
The filing provides no specific numerical revenue or earnings guidance. Management expected COVID-related revenue to continue declining in 2023, with some demand potentially transitioning into the traditional vaccination business over time. It described liquidity, together with expected operating cash generation and available facilities, as sufficient for investment and working-capital needs over the next 12 months.
Expansion is focused on high-value ready-to-use products and capacity in the United States and Italy, while the China buildout was slowed to prioritize those markets. The Indiana facility was expected to begin validation in the second half of 2023 and commercial operations in early 2024; Latina was expected to start commercial production in late 2023. Management reported approximately €270m of committed orders for ongoing investments, net of the expected BARDA contribution. BARDA agreed to contribute up to approximately US$95m for U.S. vial capacity; advances from BARDA and the City of Fishers totaled approximately €16.2m at year-end.
- Inflation, energy prices, labor, materials and logistics pressured costs. Utilities expense doubled in 2022, partly offset by pricing and €6.5m of Italian and Slovak government energy subsidies. The filing said the subsidies were in effect through Q1 2023, with continuation subject to government review.
- Russia’s invasion of Ukraine and related sanctions increased energy-price and supply uncertainty. The company reported no material difficulty obtaining natural gas through the filing date.
- COVID-19 vaccine and diagnostic demand may continue to normalize; customers may delay orders, and backlog is not a reliable guarantee of future revenue. Backlog was €957.0m at year-end, up from €880.0m; excluding COVID-19, it increased 21%.
- Other key risks include product quality or recall events, reliance on suppliers (including limited or single sources), manufacturing interruptions, customer concentration and purchasing discretion, regulatory changes (including possible restrictions on ethylene oxide sterilization), foreign-exchange movements, cybersecurity, and execution risk on expansion and new products.
- Full-year results included €6.3m of non-recurring items used in adjusted EBITDA, principally new-plant start-up costs. Other operating income included €7.6m related to contract modifications and a €3.0m strategic-partner contribution for joint product development. The filing also describes a continuing criminal proceeding involving the CEO in his employer-safety capacity; management said current legal proceedings were not expected to have a material effect, while noting outcomes are uncertain.
The auditor issued an unqualified opinion that the IFRS financial statements fairly present the company’s financial position, results and cash flows. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022. The company, an emerging growth company, did not obtain an auditor attestation on internal controls.
Most important facts for investors to verify
- Whether growth and margins persist as COVID-related demand declines, and whether high-value products continue gaining share.
- Cash conversion, inventory and receivables trends, and the funding and expected returns of the elevated capacity-investment program.
- Actual launch, validation, customer qualification and utilization timelines for Indiana and Latina, and the terms and milestones associated with BARDA support.
- Energy-cost exposure after subsidies, the ability to pass inflation through to customers, and any resulting margin pressure.
- Debt covenant headroom, use of the €130m 2023 loans, and liquidity after committed capital spending.
- Backlog conversion and cancellations, customer order patterns, and the timing of Engineering projects.
- The status and potential consequences of the disclosed legal proceeding and other contingencies.