Stevanato Group S.p.A. (NYSE:STVN) Q3 2022 Earnings Conference Call November 8, 2022 8:30 AM ET
Company Participants
Lisa Miles – SVP Investor Relations
Franco Stevanato – Executive Chairman
Franco Moro – Chief Executive Officer
Marco Dal Lago – Chief Financial Officer
Conference Call Participants
Elizabeth Speyer – Citigroup Inc.
Derik De Bruin – Bank of America
Paul Knight – KeyBanc Capital Markets
David Windley – Jefferies
Madeline Mollman – William Blair
Timothy Daley – Wells Fargo
John Sourbeer – UBS
Operator
Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group Third Quarter 2022 Financial Results Conference Call. [Operator Instructions]
At this time, I would like to turn the conference over to Ms. Lisa Miles, Senior Vice President, Investor Relations. Please go ahead, madam.
Lisa Miles
Good morning, and thank you for joining us. With me today is Franco Stevanato, Executive Chairman; Franco Moro, Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer. A presentation illustrating today’s results can be found on the IR section of our website.
As a reminder, some statements being made today will be forward-looking in nature. Such statements are only predictions. Actual events and results may differ materially as a result of risks we face, including those discussed in Item 3D entitled Risk Factors in the company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2021, and filed with the Securities and Exchange Commission. We encourage you to review the information contained in our earnings release in conjunction with our SEC filings and our latest Form 20-F. 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 analysis 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 comparisons. For a reconciliation of non-GAAP financial measures, please see the company’s most recent earnings press release.
And with that, I’ll hand the call over to Franco Stevanato for opening remarks.
Franco Stevanato
Thank you, Lisa. As we come into the final month of 2022, we believe the fundamental of our business remains strong with favorable secular tailwind in growing end market. We are successfully executing against our long-term strategic and operational objective.
Industry demand trends remained healthy, and we expect this to continue as the global pipeline for new treatments in development hits record level with approximately 60% tied to injectable delivery. We believe the bias towards injectable delivery formats is boosted by favorable macro trends, such as: the growth in biologics and biosimilars; the rise of chronic diseases; pharmaceutical innovation; and self-administration of treatment.
We believe our integrated end-to-end capabilities and robust portfolio of injectable products are ideally suited to match scientific requirements of highly-sensitive treatments, such as GLP-1s. Today, we are a leader in diabetes treatment and maintain a significant presence in adoption of GLP-1s with business across both segments, demonstrating the value of our integrated offerings.
Thanks to the scientific and technological capabilities at our Technology Excellence Centers, we are supporting customers in the early-stage development of new molecules and building a robust pipeline of promising opportunities. In this way, we’re accompanying our customers alongside our pipeline with our unique and integrated value proposition.
We are leveraging our proven expertise and leadership position in Ready-To-Use vials and cartridges to forge innovative products such as our next-generation EZ-Fill Smart platform. All in all, we believe we are well positioned to capitalize on the many opportunities ahead of us as we drive durable organic growth and create long-term shareholder value.
I will now hand the call over to Franco.
Franco Moro
Thank you, Franco. On Slide 7, for the third quarter of 2022, we delivered another solid quarter of double-digit revenue growth and achieved adjusted EBITDA margin of 26.8%. Revenue from high-value solutions grew 54% to €74.4 million, representing 30% of total revenue in the third quarter of 2022. While we are pleased with our financial results and increase in inflationary costs, particularly utility and logistics costs, tempered gross profit margin in the third quarter. Since that time, utility prices have started to come down from recent highs. And like everyone else, we are proactively managing the complexities around inflation and supply chains. We implemented efforts to mitigate the effects, and we believe we are successfully navigating the current environment.
We remain optimistic on the demand landscape and our long-term growth trajectory. For the third quarter, new order intake totaled €247 million. The year-over-year decrease was due to a significant drop in COVID-19 orders. Excluding COVID, new order intake increased by approximately 6% in the third quarter of 2022 compared to last year, demonstrating that the underlying demand trends remain strong. At the end of the third quarter, our committed backlog increased 21% to just over €1 billion.
On Slide 8, we recently announced the next evolution of our ready-to-use vial platform called EZ-Fill Smart. Our R&D and continuous innovation allow us to further improve our easy-to-use platform. With our collaboration with Gerresheimer, we implemented several advancements. First, we increased the automation in the manufacturing process to drive up productivity and reduce human error.
The optimized platform features no glass-to-glass and no glass-to-metal contact, which improves the quality and integrity of the vial throughout the product life cycle. Second, the teams redesigned the nest and tub configuration, which significantly reduces the risk of particle contamination during the fill-and-finish process. This is a substantial step up in quality, integrity, and performance.
And third, we are introducing an alternative sterilization method that is more environmentally friendly compared to the traditional ethylene oxide sterilization. This offers a path to improve sustainability. Together, all of these improvements are projected to further lower the total cost of ownership, increase quality, and shorter lead times for customers.
Our EZ-Fill platform is a well-established standard in the industrial process for ready-to-use drug containment solutions. This standardization ensures a seamless integration with standard fill-and-finish operations and offers customers a secure and multisource supply chain.
Our efforts to drive continuous innovation are squarely aligned with our long-term strategy of providing value-added, integrated solutions to our customers as we solidify our presence as a key partner to pharma and biotech.
On Page 9, we are making good progress in our priority projects in the U.S., Italy, and China. Our global capacity expansion plans are in response to growing demand for high-performance containment products to help ensure the integrity of highly-sensitive treatment such as GLP-1s, monoclonal antibodies, and mRNA applications. We have already received a warm reception from customers who are pleased with our strategic investments in our EZ-Fill technology, the improved proximity to pharma and CDMOs, and the commonality across our technology and quality standards worldwide.
In the United States, construction on our new building in Indiana is well underway, and we still expect revenue generation to begin sometime in late 2023 to early 2024. In Italy, renovations are progressing in Latina, and a new building in Piombino Dese is nearly complete. In the meantime, adding EZ-Fill capacity in our existing operations. In China, we started preliminary work on the renovations of the facility while the design phase is still ongoing. We are focused on successfully executing on these projects and strengthening our regional organizational structures. The teams are doing an extraordinary job in supporting the evolving needs of customers amid favorable demand.
On Slide 10, I am proud to announce that Stevanato and Bexson Biomedical were awarded the 2022 Partnership Innovation Award by the Parenteral Drug Association. This award recognized an innovative pain management therapy delivered through Stevanato’s on-body delivery system. We are working with Bexson to optimize the subcutaneous delivery of nonopioid pain management treatment that is specifically designed to help prevent misuse through controlled dosing and extended delivery. It enables patients to manage their condition at home, which lowers cost and improves patient care. Our wearable device features a reusable cradle which minimizes the impact of electronic environmental waste. And while this treatment is in preclinical stages, it is strategically important as the trend towards the self-administration of medicine evolves over the next decade.
I now hand the call over to Marco.
Marco Dal Lago
Thanks, Franco. Starting on Slide 12. Revenue for the third quarter of 2022 increased 14% to €245.3 million over last year, driven by growth in the Biopharmaceutical and Diagnostic Solutions segment and favorable currency translation. On a constant currency basis, third quarter revenue grew 11%. As expected, contribution from COVID-19 accounted for approximately 13% of revenue compared to approximately 16% for the same period last year.
Gross profit margin in the third quarter of 2022 increased 210 basis points to 31.6%, principally driven by the strategic mix shift to more accretive high-value solutions, improved margin in Engineering segment, and favorable currency translation. This was partially offset by higher inflationary costs, especially utilities and logistics. We recovered the majority of this cost through price adjustment, and we expect additional recoveries in future periods. There may be a delay in the timing of price adjustment, and we estimate that this unfavorably impacted gross profit margin by 1% in the third quarter.
For the third quarter of 2022, operating profit margin was 19.4%. Excluding certain startup costs, adjusted operating profit margin improved to 20% compared to 17% for the same period last year. This was driven by higher gross profit and an increase in other income, which included the residual fees from a previously disclosed contract modification. For the third quarter of 2022, this resulted in net profit of €36.3 million, or €0.14 of diluted earnings per share; adjusted net profit of €37.7 million, or adjusted diluted EPS of €0.14; and adjusted EBITDA of €65.8 million, which reflects an adjusted EBITDA margin of 26.8%.
Please turn to Slide 13 for segment results. The Biopharmaceutical and Diagnostic Solutions segment delivered another solid quarter of financial results. For the third quarter of 2022, revenue increased 20% to €207.1 million compared to the same period last year, driven by strong growth in our core drug containment products as new capacity comes online. On a constant currency basis, the segment grew 15%. Revenue from high-value solutions increased 54% to €74.4 million compared to last year. This represented 36% of segment revenue in the third quarter of 2022. Revenue from other containment and delivery solutions increased 7% to €132.7 million.
For the third quarter of 2022, gross profit margin increased 150 basis points to 32.7% compared to last year, driven by favorable mix shift to high-value solutions and currency effects, which have offset the inflationary costs. Operating profit margin in the third quarter of 2022 increased to 22.8% compared to 18.1% for the same period last year. This improvement was driven by higher gross profit, lower G&A, and an increase in other income.
Financial results for the Engineering segment were as expected. For the third quarter of 2022, revenue decreased 9% to €38.2 million compared to the same period last year, mostly due to timing and progression of projects in certain business lines. For the third quarter of 2022, gross profit margin increased to 21.5% compared to 15.4% last year, driven by an increase in mix of revenue for more accretive business lines and ongoing optimization effort. As a result, operating profit margin in the third quarter of 2022 increased to 14% due to improved gross profit and lower G&A expenses.
On Slide 14, our balance sheet remained strong, and we believe we have ample liquidity to fund our investments in organic growth platforms. As of September 30, we had a positive net financial position of €49.6 million and cash and cash equivalents of €259.9 million. In the third quarter, capital expenditures were €71.1 million as we continued to invest in our strategic global expansion plans.
For the third quarter, net cash used for operating activities was €3.8 million, mostly due to increasing working capital to support our strategic initiatives to drive sustainable growth and higher inventories to mitigate the supply chain risk in the current environment. One of the main reasons for negative free cash flow of €46.3 million in the third quarter was cash used for investing activities of €43.2 million.
On Page 15, we are increasing our 2022 guidance, mostly due to currency effects. Our updated guidance also considers that we are operating in a dynamic environment. We are backfilling our order book as revenue from COVID comes down. The mix shift to high-value solutions, action taken to accelerate efficiencies, and initiatives to keep a tight rein on costs are helping to offset some of the inflationary impacts. We are prudently managing the business and remain focused on our long-term growth objectives.
As a result, we now expect revenues in the range of €961 million to €961 million; adjusted diluted EPS in the range of €0.52 to €0.54; and adjusted EBITDA in the range of €254.5 million to €260 million.
I will hand over the call back to Franco for closing comments.
Franco Moro
Thanks, Marco. In closing, we are executing the 4 pillars of our strategic and operational priorities to: advance our global capacity expansion; grow the mix of high-value solutions; invest in R&D; and build a multiyear pipeline of new opportunities. We are excited about our future growth prospects and the ample opportunities in front of us. The rise in biologics and biosimilars coupled with the macro trend of the aging population, the increasing incidence of chronic disease, and the shift towards the self-administration of medicines.
Our customers are making groundbreaking strides in treatment to improve patient care. Supporting our customers in creating and delivering patient-centric solutions is central to our philosophy and vision. Our strategic priorities are designed to capitalize on these favorable trends: support customers and exploit our full potential through our unique end-to-end capabilities.
And with that, let’s open it up for questions.
Question-and-Answer Session
Operator
[Operator Instructions] The first question is from Patrick Donnelly with Citi.
Elizabeth Speyer
This is Lizzy on for Patrick. So I guess, first for COVID. That’s supposed to be around 10% of revenues for the year. Just wondering if anything has changed there. And then I have one follow-up.
Lisa Miles
Hi, Lizzy. It’s Lisa. I’m having a little bit of difficulty hearing you. I believe you asked if COVID was still expected to be 10% for the year? And then can you ask your second question again?
Elizabeth Speyer
Sure. And then for high value solutions, can you just remind us on the trajectory there? Is it still supposed to be around mid-30s few years out as well, given that was 30% of revenues for this quarter? I guess what you’re seeing there as well.
Lisa Miles
Yes. So just to round out the questions, Marco will take it to give you the confirmation of COVID revenue for 2022, and we’ll provide you the commentary on high value solutions expectations for ’22 and the long-term trajectory.
Marco Dal Lago
Yes. So short answer is, yes, we still expect 10% of revenue COVID on total revenues for the year. And about high value solution, we are pretty happy with the evolution. We have a strong backlog in front of us for 2022. And we are now moving our guidance from 29% to 30% about COVID revenues. We have still a very good trajectory for the high value solutions, yes, between 29% and 30%. And we are still pretty aligned with our trajectory to reach mid-30% by 2026.
Operator
The next question is from Derik De Bruin with Bank of America.
Derik De Bruin
So there’s been a lot of confusion, and I think people questioning because of some of the results from some of the other CDMOs in the space and some of the other component suppliers. Can you just talk about the demand for the underlying non-COVID-related products? It looks like your backlog is increasing. Just some general commentary on what you’re seeing in the market with demand — continuing demand. And I’ve got a follow-up.
Franco Moro
Yes. Our view on the market is that the demand is still strong and the increase of order intake year-over-year due to the [big] business is an evidence that their growth is consistent and continues to be in the direction also to [full] the need of high-value solutions that we are putting on the market and are receiving a very warm welcome from our customers.
We can understand that there is a slowdown linked to COVID, but we believe that it is limited to that kind of business. And we are now focused on the expansion of our capacity in Europe and in the U.S. to provide what our customers are asking for, that is more high value solutions. And we see this as a consistent trend in the short term and even in the longer run.
Derik De Bruin
Great. And then just if you could offer some thoughts on what you think the COVID contribution could be to 2023 revenues? And also, your thoughts on what the overall FX impact will be on the top line for the fourth quarter, and any initial thoughts on 2022, so we can help triangulate our models.
Franco Moro
For sure, we will provide the guidance for the ’23 in the next earning call. The trend in revenue coming from COVID during the year has already started [recover] last quarter. And this quarter we still expect to be in line with our previous guidance for the year in terms of percentage. But what I want to stress that is our capacity is not limited to COVID in any way because we are flexible. Also, our investments are linked to high value solutions mostly, if not 100%. And this capacity is not dedicated to a single therapeutic area. We are providing [indiscernible] our customer needs for many therapeutic areas in a very [high-margin] business and therapeutic like mRNA application, like GLP-1s. So we are really engaged in the strong pipeline of our customer and focused on the execution of our CapEx for the next months.
Marco Dal Lago
And about the foreign exchange effect, we have in our model for 2022, about €24 million [headwind] related to foreign exchange effect. And that’s what we have in our model based on Q4 expectations.
Operator
The next question is from Paul Knight with KeyBanc.
Paul Knight
Franco, can you talk to the Gerresheimer EZ-Fill Smart collaboration? Will you both generate revenue independently? Will it be a joint venture? How should we think about the structure of that product and revenue recognition?
Franco Moro
Paul, you may recall that for the EZ-Fill, which is the current EZ-Fill, Gerresheimer was one of the partner we licensed our IP in the past, and there’s still the agreement in place. Looking at to the future, we decided to develop these technologies to transform bulk into sterile together with Gerresheimer to combine our that expertise in value for our customers. This is the reason why we developed this intellectual property under the new model EZ-Fill Smart. It is the next generation of the sterile configuration for vials and cartridges.
In terms of the revenues, we will be independent — completely independent in terms of revenue for the sales of EZ-Fill products. Obviously, in case that we will license this new technology to third parties, we will share the license fee. But in terms of the business, we will remain independent. And the reason why we strengthened this cooperation is to [pass the] adoption of the standard in the market and to give the right answer to the need of our customer, to have multiple source, and best solution in terms of quality enhancement.
Paul Knight
And Franco with 6% order growth yet 21% increase in backlog, are you having some products you’re having trouble meeting demand for? Is that what I would assume, or is it just [indiscernible] in the year? What’s the dynamic behind the significant 21% backlog growth?
Marco Dal Lago
Yes. Speaking of the question, our debt is growing. It’s about €1 billion. I can tell you, we are pretty happy with the shift into high value solution that are representing an increasing share of our backlog.
Operator
The next question is from Dave Windley with Jefferies.
David Windley
I’m curious, first, if you could talk to what specific products, if any, in your high value solutions portfolio are seeing the most uptake. And then relatedly, you’ve mentioned several times on the call, GLP-1 specifically. Can we infer from that that you’re spec’d in on GLP-1s and participating in that growth arena in those commercial products?
Franco Moro
Yes. To answer the first part of your question, the portfolio of high value solutions is growing rapidly, but without the specific drivers because we are expanding our production in both syringes, vials, cartridges. We have become very good prospects for the future in terms of the conversion of the market of vials and cartridges. Maybe we will take a major part in the next year. But today, we are representing our portfolio with very good increase in all the business product lines.
In terms of strategic areas, I can confirm that we’ve had a very well-balanced portfolio for different customers, different therapeutic areas, and different geographies. But there are some trends that are very evident in the market today linked to some specific technologies like mRNA or therapeutic line like the [indiscernible] GLP-1s. We are engaged with the most important pharma companies, the bigger players in the market. So we are in with the multiple projects with several customers.
David Windley
Okay. Franco, on the first question, I was hoping to get at things like are you seeing Nexa and Alba uptake in terms of the hierarchy of high value solutions. Is that also something that you don’t want to talk about specifically, or would you be willing to talk about some of those products that have the more significant IP wrapped around them?
Franco Moro
Our CapEx speaks for us because we are putting all our money in high-value solutions in terms of syringes. We are investing a lot. And the new lines are almost all dedicated to Nexa or Alba configuration. We are running new lines for these kind of products. And we believe that they can become one of the standalone market in time of syringes.
In the meantime, we are also investing in EZ-Fill vial not only for the technology to transform bulk into sterile, but also because we believe that our container solution, the vials, has some features, high-quality, high mechanical resistance that successful now and can be even more successful for the future.
David Windley
Got it. In terms of the Engineering business hasn’t been touched on very much. You saw some decrease there. I’m wondering, to the extent that we’ve seen across the industry a number of manufacturers, including contract manufacturers, put a lot of capacity in place and spend a lot of CapEx themselves, was that a driver of engagement and activity for your Engineering Services business. And do we need to anticipate essentially tough comps there or a lull following a lot of pull forward of capital expansion by manufacturers?
Franco Moro
Also in this case, I have to stress that we have a variety of solutions in our portfolio. We are leader in visual inspection, but we have a very strong technology also in assembly lines. And obviously, in former life that [triggered] our know-how from the very beginning of the company. So there can be some fluctuation in each single product line. But overall, we continue to see very strong demand into innovation in this product line. We mentioned several times, artificial intelligence as a driver for our leadership position in this spectrum. It is not the only option we have.
Operator
The next question is from Matt Larew with William Blair.
Madeline Mollman
This is Madeline Mollman on for Matt Larew. Piggybacking on the high value solutions question. As COVID orders come down and they’re replaced by non-COVID high value solution orders, how do you see that impacting the margin dynamics? Is there a margin difference in terms of the products that are being ordered for COVID versus the non-COVID high value solutions? Can you speak to that a little bit and speak to how you see that impacting margins going forward?
Marco Dal Lago
We mentioned in the past the fact that in COVID business, we had about the same mix we had in other therapeutic areas. So the percentage of high value solution and COVID was similar with the overall company. And also, we haven’t experienced different margin in COVID compared to the other therapeutic areas. So in a nutshell, the short answer is no. But on the other side, the good news is that we are replacing the COVID with other therapeutic area because we don’t have any capacity constraint in doing that. We can see strong demand. And matter of fact, we are executing our plan accordingly.
Operator
The next question is from Tim Daley with Wells Fargo.
Timothy Daley
Great. So just wanted to dig a bit into the margin dynamics. So BDS did better than expected. It seems like you called out 100 basis points of price/cost timing lag by [contracts]. Engineering was better than expected. Seems like there were some low-margin deliveries being delayed. So how should we think about these normalizing into next quarter?
And then on top of those one-off factors, what was the energy impact to the margin, if you think about it on the year-over-year delta? And how are you thinking about energy impact to margin in the fourth quarter in 2023? And I think you guys detailed that you’ve taken some actions around securing your energy sourcing. If you could provide more details there, that would be really helpful.
Marco Dal Lago
Yes. So in Q3, we estimate inflationary pressure hit our gross profit for about 1%. It means that we had about €2.5 million, 2.6 million, we have been able to transfer to our customers in price increase. The main reason was the sharp increase in end of July and August and September of gas price in Europe. But excluding that, again, it would have been 1% more in gross profit margin.
For the future, what we can see now is that the gas price in Europe went down in October and beginning of November. The tool we have in front of us in order to manage this is basically recalculating frequently our cost/price [coordinate] with our customers. And on top of it, obviously, we have many tools in place to minimize the impact through automation and cost efficiency. This is how we are managing the situation since some months ago, and this is how we will keep on going.
Timothy Daley
All right. No, appreciate that detail. And then my second question, thinking about the capacity expansion plans specific to the Indiana facility. So seeing a lot of slacking in the construction markets in the U.S. So that would suggest that there’s potential acceleration of timelines in terms of the doors opening, ribbon-cutting, revenues getting recognized there faster than expected. So if you are able to achieve better construction timelines, would there be any reason that you wouldn’t — would be not able to, I guess, achieve revenue recognition earlier there just from a — whether it’s licensing or anything like that?
Marco Dal Lago
Yes. Here I have to confirm that we are on track with our plans. The construction of the facility is an important piece, but also the delivery on the lines is on track. That is very important, and we are well-satisfied. But the action taken to prepare the crew, to prepare the staff that is already in Italy for training. And in the meantime, we have also prepared the Italian staff to join the American one for the startup of the facility. So I can confirm that we are in line with our plans, and we don’t have any evidence of a possible impact in the near term.
Operator
The next question comes from the line of John Sourbeer with UBS.
John Sourbeer
First one here, just on pricing, given some of the inflationary costs. Are you receiving any pushback from customers on pushing in price increases? And do you expect some of this pricing to flow through and to continue to get price increases in 2023?
Franco Moro
Yes, good option to discuss our approach to price increase because we passed on during this year cost to our customer. But looking at the overall [indiscernible] of our relationship with customers, we decided to have the approach for the long run and not for the immediate advantage. So this approach made some dilutive effect in terms of marginality because we passed cost without adding marginality on that.
What I anticipate that looking into the future that we will be back to the normal practice to recalculate cost and having the normal marginality on that. But it’s something that is linked to our very intimate relationship with the customer, and we are progressing in that direction.
John Sourbeer
Got it. And then I’m sorry if I missed in your prepared remarks, but I don’t think I heard an update on when the China expansion is expected to come online. Any change in the timelines there?
Franco Moro
As I anticipated in my comments — said in my comments, we started some work in the facility for the rejuvenation of the facility. You know that it is brownfield. It is not a greenfield. In the meantime, we are progressing with our design activities. We have — we several times see that we are — we have a modular approach to these investments, so we are ready to adjust the [rhythm] of our investment to the actual need, actual demand. That is something that we look at carefully everywhere, every time, for each single project. And at the end, you may recall that we have expectation to start our revenue generation in the second half of ’24. It remains unchanged.
Operator
The next question is from Drew Ranieri with Morgan Stanley.
Unidentified Analyst
Franco and Marco, this is [Jacob] on for Drew. I’ll ask my 2 questions upfront. I know you mentioned, you won’t be able to provide too much color. But thinking ahead to 23%, given the current environment, are you comfortable with consensus revenue slightly over €1 billion and EPS of €0.54? And then my second question, how are you thinking about the evolution of CapEx spend over full year 2022 and into the next couple years ahead?
Marco Dal Lago
So today, the color we can provide is about our existing backlog. We are happy with the backlog we are building for 2022, first of all, but also for 2023. We have almost €600 million for 2023. And also we are building the backlog for 2024. So we are not providing guidance today about 2023, but also only talking about our [backlog]. And I don’t recall the second part of your question.
Unidentified Analyst
Trend of CapEx.
Marco Dal Lago
Okay. Trend of CapEx is — let’s say, we spent about €202 million in the first 3 quarters. We now expect to have between €300 million and €330 million this year in 2022. And as anticipated, we expect to be an important year for CapEx also of 2023 as we complete the buildout of the 3 facilities. And then we expect to enter into a more normalized phase starting from 2024. But this is exactly what we expected before the IPO and the use of primary proceeds.
Operator
[Operator Instructions] Ms. Miles, gentlemen, there are no more questions registered at this time.
Lisa Miles
Thank you, Eugene. I just want to say thank you to everyone for joining us today for the Stevanato Group Third Quarter 2022 Earnings Call, and we look forward to speaking with you in the future. Thank you very much.
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