Gerresheimer AG (GXI) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the publication of Q4 and Full Year 2024 Results Conference Call. I'm Vicki, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Guido Pickert, Vice President, Corporate Investor Relations. Please go ahead, sir.

Thank you very much, Vicki. Good morning, everyone, and thank you for joining today's call. I will now hand over to our CEO, Dietmar Siemssen, to run you through the highlights of the quarter and full year, together with our CFO, Dr. Bernd Metzner. Dietmar?

Good morning. Welcome, everybody. Thank you for joining us this morning. For those who are new to the call, my name is Dietmar Siemssen, and I'm the CEO of Gerresheimer. I will start by giving you an overview of our business performance in Q4, our fiscal year 2024 in general and where we currently stand with our growth projects. And my colleague, Bernd Metzner, our CFO, will then take you into a deep dive of the numbers. As always, we will then be happy to take your questions. Yes, Q4. Q4 showed a pickup in growth we had expected earlier in 2024. We achieved an organic revenue growth of 5.4%. Adjusted EBITDA growth came in at 6.4%. Adjusted earnings per share growth at 6.7%. The growth in Q4 was mainly driven by a resurgence in vial demand and growth in systems and solutions for biologics. Once again, we grew stronger in our bottom line than in the top line. We achieved 2 important milestones towards the end of 2024. One was the tentative approval by the FDA for the SQ Innovation Lasix ONYU. Full approval was only preluded because the FDA had granted market exclusivity in the U.S. for a competing product until October 2025. The FDA's [ modicum ] undermined the market readiness of our on-body drug delivery device. It also clearly demonstrated our expertise as an innovative solution provider for our customers. The second milestone was the successful completion of the Bormioli Pharma acquisition, the largest acquisition to date for Gerresheimer. Q4, as mentioned, was actually the strongest quarter of our fiscal year 2024, but could only partially compensate for the first 3 quarters, which were significantly influenced by the destocking in the biologics business. That becomes obvious when we look at our full year results. Organic revenue for the full year came in at 2.9%, adjusted EBITDA growth at 4.1%, the adjusted earnings per share grew 1.1%. These are not results that we are satisfied or happy with. We have, no doubt, anticipated a much earlier and stronger pickup in growth in 2024. The profit warning we had to issue in September was the first since 2009. That should give you an idea how unusual the market development was that we experienced in 2024. The destocking effects are moderating now, but we are still not back to normal. On the positive side, 2024 also shows that the strategic transformation for system and solution provider that is taking effect. We managed to increase the revenue share of system and solutions for biologics from 11% in 2023 to now 15% in 2024, and we successfully ramped up new manufacturing lines for customer contracts in exactly this one. The successful acquisition of Bormioli Pharma takes us to a whole new level, significantly growing our revenues by approximately 15% to 20% and being margin accretive already in 2025, the first year after closing. After we started our journey in 2019, it took us 4 years to increase our revenues from EUR 1.4 billion to nearly EUR 2 billion and the adjusted EBITDA from a level of around EUR 300 million to about EUR 400 million. Now including Bormioli Pharma, we will even surpass the next important mark and move towards EUR 2.5 billion in revenue and towards EUR 550 million in adjusted EBITDA. We will consequently seize the opportunities which come with the extended portfolio and the new capabilities of system integration. I will come to this point back later. Looking back at the key priorities we had for 2024 we set out about a year ago, we had -- we have delivered on them and broadened the foundation for long-term profitable growth by, for example, increasing the revenue share of systems and solutions for biologics, executing on growth projects in general and by expanding our portfolio with highly innovative products. As part of our growth strategy, we systematically identified growth accelerators, markets with over-proportional growth and attractive margin profiles. The market for system and solutions for biologics is exactly such a market accelerator. It grows significantly faster than the pharma market overall. That's why we have expanded our portfolio to include specialized products, systems and solutions for large molecule biologics, most of them, in the end, high-value solutions, which help us to expand our margins and to fuel our growth. We were able to change the market perception from a commodity provider to an innovative system and solution provider. We leveraged unique business opportunities in the market, one, attractive long-term contracts, and we have been expanding our manufacturing capacities to serve exactly this market. We have, meanwhile, become a mission-critical partner, the partner of choice to the pharma and biotech industry. This is evident by the figures you see to the right. Revenues from system and solutions for biologics are up 40% in 2024 compared to 2023, a big step-up, which pushed their revenue share to 15.2% of our total revenue. The execution of our growth projects was another key topic for 2024. If you look at our CapEx of EUR 345 million in 2024, you can see that roughly 30% was dedicated to moulded glass. The investments in our moulded glass business were mainly driven by furnace overhaul projects and the upgrade to state-of-the-art furnace technology, as currently ongoing, for example, in our plant in Lohr, Germany, which will also increase production capacity. The moulded glass business requires recurring investments, but also delivers very reliable cash flows. The investment cycle for our new furnace, by the way, is 10 to 12 years. Around 70% of our investments are dedicated to our business units, Tubular Glass, Medical Systems, Primary Packaging Plastics and Advanced Technologies. As you can see, more than 80% of the CapEx for these business units is dedicated to growth projects. And the vast majority of these projects are for systems and solutions for biologics. This includes, for example, our capacity expansion for syringes in Queretaro and Skopje in the Republic of North Macedonia, the expansion of medical devices in Peachtree City, U.S. and Horsovsky Tyn in Czech Republic, or the ready-to-fill vial project in Wertheim, Germany. We ramped up new lines in 2024 with more to come online in 2025. With these investments, we are laying the foundation for future growth. The contribution of these investments for our growth and margin expansion is becoming increasingly apparent, as evidenced by the increased revenue share of systems and solutions for biologics. The third key topic for 2024 was innovation, the expansion of our portfolio with high innovative products and solutions. And also here, we delivered -- we advanced our platform technologies in manufacturing and therapy support and reached great milestone with our on-body device, which will enable the home treatment of patients. We industrialized the manufacturing process for EZ-fill Smart, the next-generation packaging platform for ready-to-fill vials, and will start commercial production this. EZ-fill Smart significantly reduced its total cost of ownership while delivering superior quality with fewer particles. It is also more sustainable as it enables hydrogen peroxide vapor sterilization instead of sterilization with ethylene oxide. In 2024, we introduced Gx Cap in the U.S. market. This is a digitally connected cap which monitors the medication intake and enables pharmacies to offer remote therapeutic monitoring for medication adherence, which is crucial for the therapy outcome. Gx Cap is also an excellent example of system integration, delivering a high-value solution. The cap goes on our prescription drug containers. We are the market leader for prescription containers for pharmacies in the U.S. With Gx Cap, we tapped into a new reoccurring revenue stream for pharmacies in the U.S. for remote therapeutic monitoring. We only started last year, but have already received a lot of interest from pharmacies because selected remote therapeutic monitoring programs can be reimbursed via Medicare and Medicaid. Another example of innovation is the SQ Innovation Lasix ONYU. The combination product consists of a novel high-concentration formulation of the diuretic furosemide and Gerresheimer's on-body drug delivery device with a patented device technology. The device is based on our proprietary Infusor platform for subcutaneous drug delivery, featuring an innovative micropump technology. Benefits include a patient-friendly design, lower cost per treatment and increased sustainability through a 2-component concept consisting of a disposal component and a reusable electronic mechanical component. The concept was developed in line with our eco-design principles, which aim to increase product life span and reduce waste. The on-body device allows for home treatment and has the potential to increase the quality of life for thousands of patients suffering from congestive heart failure. SQ Innovation received a tentative approval by the FDA last year for Lasix ONYU. You might have seen our press release. That means that the combination product has met the regulatory standards for quality, safety and efficiency required for approval in the United States. Full approval was precluded because the FDA had granted market exclusivity in the U.S. for a competing product until October 2025. The key takeaways are our on-body device is ready for market, and we have demonstrated our expertise in partnering with a pharma company from product design to regulatory submission and industrial manufacturing. First relevant revenues are expected in Q1 2026. The key topic with the biggest influence on our group in 2024 was the successful acquisition of Bormioli Pharma, highly strategic and complementary to our product portfolio. As already mentioned, this acquisition takes us to a completely new level, significantly growing our revenues by approximately 15% to 20% and being margin accretive already in 2025. Most importantly, it strengthens our market-leading position in core segments. It allows us to create a global Moulded Glass Powerhouse, a strong and independent global unit with a diversified portfolio in pharma, cosmetics and food and beverage. It opens new opportunities for system integration, border closure combinations, which creates a completely new category of high-value solutions. The acquisition strengthens our positioning as a systems and solution provider. Thank you very much for the moment. With this, I will hand over to Bernd Metzner for a deep dive into the figures in Q4 as well as the full year 2024.

Thank you, Dietmar, and welcome, everybody, also from my side. Let's dive into the analysis of the key financials for the fourth quarter 2024. Revenues grew from EUR 545 million to EUR 569 million. This led us to an organic revenue growth of 5.4%. The impact from FX was almost minus EUR 6 million. Our Plastics & Devices Division continued its devices-driven profitable growth in Q4 2024. Our Primary Packaging Glass Division returned to positive year-on-year growth supported by our vials business. Adjusted EBITDA grew from EUR 119 million to EUR 127 million. This led us to an organic adjusted EBITDA growth of 6.4%. Organically, adjusted EBITDA margin increased by 20 basis points to 22.1%. The impact from FX was neutral. Adjusted EPS increased from EUR 1.51 to EUR 1.63. This leds us to an organic adjusted EPS improvement of 6.7%. Let's move to the divisional development in Q4 2024. Plastics & Devices. Revenue grew from EUR 310 million to EUR 321 million. This leds us to an organic revenue growth of 4.9%. The impact from FX was minus EUR 5 million. The organic growth was once again driven by strong contributions from the medical device business. Especially, the business with pens and auto-injectors recorded a strong growth. The business with syringe systems was affected by phasing effects and challenging comps in prior year's Q4. Adjusted EBITDA declined from EUR 90 million to EUR 85 million. FX contribution was minus EUR 1 million. Organically, adjusted margin -- adjusted EBITDA margin declined from 29% to 26.3%, driven by a less favorable product mix. To put this into perspective, the organic adjusted EBITDA margin for Q4 was 26.3%. However, slightly better than the adjusted EBITDA margin of 25.5% for the full year 2024. Let us now go to Primary Packaging Glass. Revenues increased from EUR 238 million to EUR 251 million. This leds us to an organic revenue growth by 6.1%. The impact from FX was minus EUR 1 million. The temporary destocking effect at our customers' level moderated in the quarter. And for the first time since Q1 2023, to repeat, our vials business grew year-over-year, again, especially driven by ready-to-fill vials. Besides that, moulded glass grew in pharma. However, moulded glass cosmetics was behind our expectations in the wake of a softening of overall consumer spending for cosmetic products. Adjusted EBITDA grew from EUR 43 million to EUR 58 million. The impact from FX was plus EUR 1 million -- was EUR 1 million. This leds us to an organic adjusted EBITDA growth of 30.6%. Organically, adjusted EBITDA margin increased from 18.5% by 420 basis points to 22.7%. The improvement in margin is driven by a better product mix and utilization. Let's move to Advanced Technologies. The operating performance improved at Advanced Technologies, especially regarding the development of adjusted EBITDA. However, the most important message here is that we finally reached a very important milestone towards the end of 2024, as mentioned by Dietmar before as well. The FDA granted tentative approval for SQ Innovation's on-body drug delivery device based on our technology. Due to the tentative nature of the FDA approval, our partner cannot start marketing the product before October 2025, which is later than we originally expected. This slide shows the reconciliation of the reported to the adjusted financials for Q4 2024. Revenues grew organically by 5.4% and adjusted EBITDA by 6.4%, as discussed in all detail earlier. Let me briefly comment on our EBITDA adjustments. The difference to prior year's level is mainly driven by EUR 15 million related to the acquisition of Bormioli. Adjusted depreciation was higher compared to prior year's level due to the increased CapEx of the most recent past, and we expect the nominal growth rate to accelerate hand-in-hand with growth projects being executed and new capacities going online. The adjustment of EUR 10 million consists of amortization of fair value adjustments. Regarding income taxes, the adjusted tax rate in Q4 2024 was 19.3% compared to 26% in Q4 2023. The lower tax rate was due to the utilization of tax losses. Adjusted net income after noncontrolling interest increased organically by 8.2% compared to Q4 2023. Adjusted EPS grew from EUR 1.51 to EUR 1.63. This leds us to an organic adjusted EPS growth of 6.7%. Coming now to the cash flow development in Q4 2024. As always, our Q4 is our strongest cash flow quarter. Overall, the free cash flow before M&A was with EUR 48 million, almost on par with the prior year with EUR 53 million. The adjusted EBITDA increased from EUR 119 million to EUR 127 million. As mentioned before, the adjustment of EUR 13.9 million is mostly due to the exceptional cost related to the acquisition of Bormioli Pharma. The release of net working capital remained almost on prior year's level. The increase in net interest paid reflects the higher net debt level throughout the year as well as the arrangement fees for the successful refinanced RCF of EUR 675 million and the promissory loan note of EUR 600 million in Q4 2024. Coming now to the cash flow development in our full year 2024. In the interest of time, I will only focus on the elected line items here. Net working capital turned from a tailwind of EUR 32 million to a headwind of EUR 9 million. The decline in the contribution from net working capital is solely due to the customer down payments received in full year 2023, which did not reoccur in the amount of EUR 53 million in full year 2024. Excluding the effect from customer down payments, our cash flow from operating activities in 2024 would be on par with the fiscal year 2023 free cash flow. The line item adjustments declined by approximately EUR 18 million due to the costs related to the acquisition of Bormioli Pharma, as mentioned before. Net CapEx in 2024 was around EUR 50 million above prior year's level, as we continue to execute and, as explained by Dietmar, our investment program into highly attractive growth opportunities just as in our syringe systems operations in Querétaro and Skopje, our medical device production in Peachtree City and Horsovsky Tyn, and our high-value vials production in Wertheim. In the end and big picture, the free cash flow 2024 was with around EUR 100 million weaker than 2023. Why? Because of lower prepayments of EUR 53 million and higher CapEx of EUR 48 million in attractive projects. Just to be clear, we expect in 2025 a much better free cash flow. Net financial debt according to credit agreement in force stands now at EUR 1 billion. With this, our adjusted EBITDA leverage amounts to 2.4x. Coming now to our financial position in detail. On a pro forma basis, that means including our Bormioli bridge financing, our leverage per end of Q4 2024 would stand at 3x. And we focus on deleveraging to reduce our leverage ratio to a level of mid-3s towards the year-end. To strengthen our financial finance position, we refinanced about EUR 2 billion in the last year. This includes EUR 800 million bridge financing for the acquisition of Bormioli, EUR 600 million promissory loan notes and the refinancing of the revolving credit facility of EUR 675 million. Our liquidity currently stands at EUR 861 million and consists of our cash position of EUR 186 million and the entirely undrawn revolving credit facility of EUR 675 million. As per today, the purchase price for Bormioli has been paid by drawing the bridge loan of EUR 774 million. This was a driver for the increase of our pro forma net debt to almost EUR 1.8 billion and the according increase of our pro forma leverage ratio. Let me close my remarks with a word on our Moulded Glass Powerhouse. With the closing of the acquisition of Bormioli Pharma, we created out of the combination of Gerresheimer and Bormioli moulded glass a true global Moulded Glass Powerhouse with an attractive growth and margin profile. On a pro forma basis, our Moulded Glass Powerhouse generated around EUR 735 million revenues with an adjusted EBITDA margin of approximately 20% in full year 2024. As indicated last year already, the midterm target is an adjusted EBITDA margin in the mid 20s, significantly above the current level, and an organic revenue growth in the mid-single digits. After the closing in December last year, we kicked off the integration of Bormioli Pharma. We can now take the according steps to, a, create a new Moulded Glass Powerhouse with greater size, scale and footprint; and b, to lift the synergies. For the avoidance of doubts, in line with what we said already last year in May, we are in the process of a strategic review to assess options with regards to the Moulded Glass Powerhouse. Speaking of disclosure, we will be, starting from Q1 2025 onwards, presenting our company figures in the usual way of segmentation, but we will also present our Moulded Glass Powerhouse in a thereof format. With this, I hand back to Dietmar.

Yes. Thank you, Bernd. Coming back to our key priorities for 2025. Key priorities for 2025 are clearly defined. We will focus on the integration of Bormioli Pharma, as Bernd already mentioned, which is already well underway. The leverage -- we leverage the opportunities of the combined portfolio and new capabilities in system integration. Two success stories will have one joined future. We will definitely continue to execute our growth projects and ramp up new lines, which will start to contribute to our top and also bottom line. And we are committed to setting new standards for customized solutions and customer excellence as a mission-critical partner for the pharma and biotech industry. To support these key priorities and to solidify our foundation for profitable growth, we will continue to pursue our targeted investment program. The 2025 CapEx planning reflects the increased focus on cash flow and an even stronger selection of growth projects. Our CapEx 2025 will remain approximately at the same level as 2024. As our 2025 CapEx includes CapEx for Bormioli, it will be lower on a like-for-like basis. Combined with the fact that our fiscal year 2025 will add an EBITDA contribution of well above EUR 100 million, this clearly supports a stronger cash flow. The CapEx of our moulded glass business unit is mainly driven by furnace overhauls and upgrades to state-of-the-art furnace technology. The majority of our CapEx for other business units is once again dedicated to our growth projects, in particular with -- for capacity expansion for system and solutions for biologics. You have seen the major projects already on the CapEx overview slide for 2024. These projects continue in 2025 and will start to contribute. Bormioli Pharma adds significantly to the group's revenue and adjusted EBITDA and takes us to an entirely new level and jump-off point for our future growth. Our focus in 2025 will clearly be on the integration of Bormioli Pharma, which is already well underway. A successful integration is the prerequisite for leveraging the opportunities of the combined portfolio and the new capabilities in system integration and turning them into growth. The growth rate of Bormioli Pharma is lower than the former Gerresheimer growth rate, which will have a certain impact on the growth momentum for the new combined group as a whole. At present, we see softer demand in the food, beverage and the cosmetic market, which affects our moulded glass business. The FDA's approval of our on-body device is a great success for us. However, as SQ Innovation only received tentative approval, it means that they can market the pump only from October 2025, so we will only see revenue contributions starting from Q4 2025 onwards. Above all, we decided to take a more prudent approach to our guidance, and this all together now translates into an estimated organic group revenue growth of 3% to 5% in 2025 compared to the combined pro forma figures of Gerresheimer and Bormioli Pharma in 2024. As mentioned before, we will see a strong EBITDA step-up in 2025, an uplift in the margin. We expect adjusted EBITDA margin of around 22%. The adjusted earnings per share will be in the high single-digit percentage range. Looking at the first quarter 2025, we will see strong growth in revenues and EBITDA on a reported basis, driven by the contributions from Bormioli Pharma. However, some of the effects mentioned earlier are weighting on our group's organic growth performance. Compared to the combined pro forma figures of Gerresheimer and Bormioli Pharma, we expect an organic decline in Q1. Beside the general topics that affects the full year 2025, Q1 is primarily affected by one key topic, the phasing topic in the syringe business which will shift revenues and adjusted EBITDA from Q1 into Q2 and Q3. We will return to organic growth on a like-for-like basis from Q2 onwards, supporting our 2025 guidance. Our mid- and long-term growth prospects remain unchanged positive. We are growing strongly in system and solutions for large molecule biologic for which we are systematically expanding our production capacities. With the acquisition of Bormioli Pharma, we have expanded our product portfolio and created the base for new integrated high-value plastic solutions. All of this will help us to continue our profitable growth in the coming years. In the midterm, we planned a compound annual growth rate of 8% to 10% for the new combined group and a margin expansion to a level of 23% to 25%. Adjusted earnings per share is forecasted to reach 10% plus. Yes, our growth momentum has been slowed down by the destocking in the market in 2024, and we expect only moderate growth in 2025. But our long-term growth prospects are completely intact. Despite the current market headwinds, the transformation of Gerresheimer is in full swing. We are building a strong and a resilient company that sustainably delivers strong growth margin and respective cash flows. The next opportunity to check in on our financial performance in 2025 will be our Q1 results, which we will publish on April 11. For the time being, thank you. We are now happy to take your questions.

[Operator Instructions] The first question is from Oliver Reinberg, Kepler Cheuvreux.

Three, if I may. The first one was -- is to focus a bit on unpacking the kind of change in the top line guidance for 2025. So there is now obviously quite lower momentum compared to the 7% to 10% growth that you were still guiding for Gerresheimer standalone in September. So I appreciate the color on moulded glass and the delay in SQ Innovation, but is there any kind of other adjustment that you have to apply it? And can you provide more granularity what do you expect now for moulded glass? Can you provide some kind of color on this kind of syringe delay? What has caused it? And is it -- can you exclude that this is not related to the chamber? And probably any kind of color what you expect for vials and Bormioli overall? But just to understand the underlying drivers a bit better. Secondly would be on the adjusted EPS guide, which came in a bit softer than expected. It would be helpful to avoid any kind of further EPS disappointment in the future. Just can you provide some hard numbers? What do you have in mind for depreciation on a clean basis of EUR 200 million, the wide ballpark, and also in interest cost, 85%, if that's the right ballpark? And any kind of color on taxes, please? And then finally, on energy cost. I guess, you are largely hedged for this year. And luckily also the kind of gas prices came down a bit again. But can you provide any kind of sensitivity if gas prices stay where they currently are, to what extent is this still a kind of earnings headwind for 2026? And can you provide any kind of sensitivity here given that with Bormioli, obviously, the exposure to this theme has increased?

Yes. Thank you for your question. I'll take the first one, the 3 to 5. You mentioned them, in principle, the effect comes by a combination of several topics, yes. You mentioned the moulded glass softening market of the cosmetic and food beverage, that is one of the key drivers. No doubt that Bormioli growth in general is slightly lower than the old guidance that you are referring, of the old Gerresheimer and, the latter, pump. And that, in principle, are the main reason. The syringe delay that you are mentioning is actually a phasing effect that drives sales from Q1 into Q2 and Q3, and you will not see this over the look of the total year. And it's really a phasing. It's just shifting certain deliveries into the second quarter due to certain capacity, which is actually not in our production. It's actually a secondary process. It's actually the sterilization. So with the second, earnings per share, Bernd, maybe you...

Thanks, Oliver, for this question. Regarding EPS guidance, so what we baked into and what's not, actually, we -- you mentioned that for the financial result, you worked with EUR 85 million. I don't want to -- basically, it seems, from my point of view, a fair ballpark. Then the second, I think, is regarding depreciation. I would actually assume that you are in the beginning of the 8s, 8.0, 8.1, 8.2 regarding depreciation to sales. I think it's a fair assumption. And regarding the tax rate, given that we are basically -- you should not forget, we have now expanded our operation in the South Europe area, I think the 27% tax rate at this point in time is something we should consider when you're calculating your numbers. But really, quite roughly, but then, I hope you can work on this on a model basis because we don't give guidance specifically, as you know, for depreciation, not for financial results. But only that you can work on this data set. Regarding the hedge, the key question is major. The hedges, as you know, are basically running out end of this year, especially for the Gerresheimer part. We never disclosed the price -- for the hedge price. And obviously, also for Bormioli part of the business, this will be quite helpful. And then you look at the energy cost for '25, no doubt on this. Obviously, we are looking at also to hedge and decide on our hedge policy this year for the next years to come on a very opportunistic basis. So there's nothing what we can report at this stage more on this topic. I hope it helps, Oliver.

Just -- can I follow up? Can you just confirm on the 2025 guide, this does not include any kind of changes to the expectations to the old GLP-1 franchise, is that correct?

Did you get the question? Can you repeat the question, please?

So the change in the outlook for 2025 does not include any change to your early assumption for the GLP-1 franchise. Is that correct? .

That's correct.

The next question from Paul Knight, KeyBanc Capital Markets.

You had mentioned in the past the size of the GLP market was approaching triple digits. What do you think your revenue exposure or range could be in the year 2025?

We disclosed this one. Bernd?

Not precisely for the year 2025. We basically always said we have peak revenues of the magnitude of 355 systems all what we actually said, yes.

But they are steadily going up, no doubt about this.

Okay. And then the capacity expansion, you had mentioned 80% of CapEx was for growth. Is that of the total EUR 345 million?

Of course, the CapEx we spoke about is not only the growth that we have in GLP-1, but it's also -- of course, the GLP-1 investments are a key driver of this. That's Carretero, the syringe expansion. And part of this, of course, is also for GLP-1. It's the Peachtree expansion, which is a lot of this is GLP-1. And also Horsovsky Tyn, which might be GLP-1 as well. That's not the only growth areas for the next years. It's only GLP-1. There are also other areas, especially in the area of biologics.

Okay. And then last question would be your annual report mentions weakness in the cosmetics market. What's happening in that market to have a slower market dynamic?

Yes. You probably have to read some of the annual reports of some of our customers. There is a certain softness in the cosmetic market at the moment we are facing. It started actually already end of last year, and it's lasting into '25, and that's what we see at the moment. And that's one of the key driver that affects us for the whole year.

Maybe, Paul, just one topic regarding your GLP-1 question for 2025. When I look -- then we don't guide for specific products, that's clear. But what we said was that in 2024, we will surpass EUR 100 million. What we said that -- and that's a matter of fact that we did. And we said that the peak is basically, so far, what we disclosed was EUR 350 million. So that's also fair to say that we will basically reach the EUR 200 million and being above and...

In this year.

In this year, yes.

Our next question from Oliver Metzger, ODDO.

Yes. The first one is on the destocking vials. So you reported some green shoots. And what we've seen also that other companies destocking cycles have shown some high volatility with some quarters, even pointed to a recovery while the next quarter was weak. Are you confident that now the trough is behind you? And how would you describe the recovery curve? Second question, you commented also about -- in the past about destocking at Bormioli at the plastics side. Can you update us on that, please? And my last question is about you commented for the phasing on '25, but very weak Q1 due to the phasing in syringes. It would be great if you can elaborate a little bit more because the magnitude seems to be huge to create such high volatility.

Yes. This destocking, we can confirm what the peers also see as a moderate recovery. We are not completely over, but we also see a moderate recovery actually for the Q2. We even see a very strong order intakes in various areas of the vials. Yes, that will definitely help. The destocking in plastic is a very unusual topic because we never saw this in the old Gerresheimer. From my point of view, it was probably a little bit of duty of the bride, that now the dealers are destocking. Nothing that we didn't expect at all in our business model, but that's what we are facing right now. I don't think there is a real impact of the market behavior for plastic of the new colleagues in Bormioli. And Q1, yes, the key reason is really phasing. There is -- there are some sterilization topics concerning the sterilization capacity. That shift has actually started already in the fourth quarter, shifting volumes into the second and third quarter. That has quite an impact. There is a couple of other impacts you might mention. It's -- we should not forget we still have Morganton not running up after the flooding on full power. But I didn't mention them because the key reason -- the key block, the biggest block is actually from this phasing. But no doubt, there are other criteria that also do a slight -- slightly impact the first quarter. But the core point is that this phasing impact on the syringes is just -- is really shifting sales and profits just forward into the year and will not impact -- this actually will not impact the total year's performance.

Just to add one topic was the moulded glass, what we have seen the softness in cosmetic is as mentioned before. It's also continuing into Q1 as an element as well for Q1.

Okay. Just a very quick follow-up. Can you give us an indication where the PPG performance would have been in Q4, excluding the vials?

Moulded glass.

Moulded glass, just give a -- as you know, we don't start disclosing now all the subgroups.

As the cosmetic business start...

We have seen another great figure and another great figure. But I will basically calculate this. But the real growth in Q4 came actually from tubular glass.

For this and...

For the glass side, yes, yes.

Our next question from James Vane-Tempest, Jefferies.

Perhaps if I can ask on the guidance, I guess, there's been questions already regarding the 7% to 10% to 3% to 5%, including Bormioli. And I guess, you've given some explanation in terms on some of the revenue slowdowns. But just kind of curious on the margin side in terms of what you're guiding to is around 22%, which is quite a step-up from 2024. So with the sort of slower top line, can you give us a sense of the moving pieces to get to around 22% and why there's such confidence with only moderate growth, please? My second question is just to clarify your point on one of the questions that's been. So am I right, you're saying more than EUR 200 million for GLP-1 this year versus EUR 100 million last year? So obviously, that's growing 100%. And you mentioned EUR 350 million in 2028. That would be 20% compounded over 3 years or sort of [ 75 ]. So just trying to understand the cadence of your expectation, whether that's kind of conservative or if it is very kind of front-end loaded, and how the revenues are going to come together. And then my final question is, I appreciate there's probably not much you can say, but given the press release that you've confirmed you're having some preliminary discussions with private equity, just wondering any background that you can give us to that to help us understand potential next steps from here.

It was very fast question here. You want to start with...

Maybe I'll start with the EBITDA margin of 24% to 22%. Actually, James, the key thing is, as mentioned by Dietmar before in his speech, definitely that the Bormioli will help us. It's quite accretive for us, no doubt. But don't forget the core, we are now expanding really our revenues with high-value products. And this is something what you will see. You see this especially because of our biologics, the dynamic in the field for biologic products is really growing. And this is actually what's really driving the margin expansion in combination with Bormioli being integrated in our company.

Yes. I would say the Bormioli probably have an effect of 0.5 percentage and all the risk actually comes. And that's not unplanned out of the higher margin profile in the mix out of the old Gerresheimer. And the EUR 200 million in Q1 that we are planning to go through is also nothing unplanned. Yes, it's the ramp-up of the lines, and it's the consequence out of the investments that we did over the loop of the last years.

And if you talk about the quarterization, it's a little bit back-end loaded in the sense. But again, one topic, James, what is important, we don't guide right now for EUR 200 million GLP-1 revenues. We clearly said it's surpassing EUR 200 million. And it surpassed EUR 100 million, so we don't want to have each quarter discussion how much comes from GLP-1 precisely. But it's fair to say that the -- if you look at the increase in -- during the year 2025, it's more back-end loaded.

And it will further accelerate over the group of the next -- not only second half of the year, but then into also '26 and '27, the share will further accelerate upwards, not out of budget. And to your third question, you are totally right, there's not much we can say. And there are no major updates actually to the ad hoc release that we did on February 7.

Just a quick follow-up, if I can. I think you mentioned Bormioli could add 0.5 point. And I guess, my understanding, looking at the performance of Bormioli last year, the margins have kind of tweaked down below 20%. So I guess, since having full ownership, are there some immediate savings you've been able to get from that to kind of get that margin, so it's accretive?

Yes, absolutely. And there are no doubt, we also enjoy certain synergies that were also planned from the very beginning, and we are now step-by-step materializing these synergies, which is also helpful. But one more time, you should not only see Bormioli as we buy more business of the same. This is a transformational acquisition that really gives access to this high-value segment in plastics. We will not see all this in '25. But relatively soon also, and then into the next years, you will see further margin increases coming with the high-value segment in plastic, which is a great thing.

The next question from Victoria Lambert, Berenberg.

The first one is just about -- could you provide any time lines around moulded glass review, when we should expect some update on this process? Are you still planning a Capital Markets Day over the summer? And what sort of topics are going to be discussed at the event? That would be helpful. Then just on the Plastics & Devices and PPG business, just to get a sense of the phasing throughout the year. Maybe it's more of a clarification question. So Q1 is expected to be weaker for both divisions. We expect a pickup in growth throughout the year. And maybe just some insight in margins because Plastics & Devices was a little bit weak in Q4 versus the previous year. Yes, that would be helpful.

Yes, I'll probably take the last question first, Bernd. There are 2 aspects you are referring to in the -- which affects Q1. The phasing, it's really a phasing and it started already in Q4. That's why you probably also see a slightly softer EBITDA in Q4 in Plastic & Devices because we also here already shifted and delayed some of the deliveries that we now shifted to Q2, and that is also affecting Q1. The other aspect in Q1 are -- and it's clear, we are still not fully operating again in Morganton in the facility. Here, we believe that we will be fully operational by end of March, which means we -- in April, they will be able to contribute to the sales and profits in the full way again.

Taking the question of the Capital Markets Day, and then I'm sure that Dietmar will elaborate on the moulded glass strategic review. Regarding the Capital Markets Day, as you can imagine, now, we are really focusing on the integration of Bormioli, which, as you know, is really the largest acquisition the company has ever made. And this is one topic. The other thing is, obviously, we need also to see this element in the -- with respect to the ad hoc we have published. So you really will appreciate and understand that we focus on this topic as well and on our fiduciary duties in this context. So all in all, we will come back to you with an update on that, what the group will look like once we have clarity on this issue as mentioned above.

Yes. To the moulded glass, these things are fully ongoing. As you can imagine, we reported that we are fully integrating the Bormioli business. You saw the first information from Bernd, this joint powerhouse disclosure of the first information that will -- you saw now the first time when we will proceed like this in the next quarterly report. That shows very clearly we are moving on by not only setting up this powerhouse, but also setting up as a separate segment. And this is what you see. And so things are ongoing. There is no change in the plan. We are actually executing. I hope this covers your question.

The next question from Falko Friedrichs, Deutsche Bank.

I have 3 questions, please. Firstly, when we look at the P&D segment, excluding your GLP-1 sales, do you expect this business to grow in 2025? And then also the glass segment, do you expect that to at least grow in 2025? And then on the GLP-1 revenue specifically, one of your competitors announced the signing of additional contracts here in the fourth quarter. Were you also able to secure additional contracts? Or is that something that might be possible rather down the road? And then last but not least, could you give us a flavor for the share of high-value solution products in your company, including Bormioli?

Can you -- I give you some time to work on the first 2 questions, then I maybe answer the questions 3 and 4. Then you can prepare yourself a bit better. The contracts with GLP-1, yes, there is quite some tenders in the market at the moment, which we are quoting for. We're also expecting positive news here with over the new book the next months, yes, in various areas, honestly speaking. It's a very dynamic market with great opportunities. Also share of high-value products, do you have an update on this?

Should I step into -- yes. Yes, there are the 2 topics. One is we talked about the segmentation. In the segments, you asked how was Plastic & Devices and PPG will perform throughout the year, and whether we will see some growth there in the various segments. And the answer is clearly yes. But we don't start now -- and you will understand, Falko, that we don't start not to say what would have been if I have not GLP-1 included and so on and so forth. The message from our side is, yes, we will grow in both segments.

Then on GLP-1, no doubt it's a strong driver, especially in Plastic & Devices. That's it.

And then the other question is regarding the high-value products ultimately. What we can tell you as of -- starting from -- basically, we are adjusting now, given that we have also now the company, including Bormioli, we'll start now really to present going forward our high-value products in a different way, including also our high-value products plastics. But I think one good approximate for our high-value products in this area of glass is definitely -- is -- in medical devices is definitely the biologics. And also in 2025, we expect that our biologics is really increasing. The share of biologics for the whole company will increase from last year of, it was around, if I'm not wrong, what we presented, was around 15% will also grow in 2025 by a substantial percentage points to sales, including Bormioli. I hope this helps.

You probably will not see too much of it in '25. But we have to clearly see that with the integration of the plastic business in Bormioli, there will be a clear increase of high-value products in plastic. What I always say, it is a very transformative acquisition that is not just adding more business of the same. This bottle closure combinations will open a great opportunity for high-value products in plastic, a field that we never were bad at, but now will further increase our margins and our market excellence also in the -- over the group of the next months and especially years.

Okay. If I can squeeze in one quick follow-up. Bernd, you mentioned the free cash flow should be much better in '25. Do you think it could turn positive again this year or should it still be rather slightly negative?

It should be rather slightly negative. In the beginning of the year, it's difficult to quantify, but we should be around 0 and minus 50. This would be basically today our expectation. But we should not forget where we are coming from in 2024, where we were minus 100. So you see really a significant step-up. And this step-up is also due to the contributions of Bormioli, we should not forget this. And this is a quite good one also to deleverage and having this good cash conversion. So this will be basically the ballpark.

And you probably saw in my speech, yes, you probably saw in my speech, we have further increase with the CapEx, our focus on cash flow and become even more selective. That -- and generally, not only '25, especially also next years, we'll further increase the free cash flow. That's what I'm saying. We are -- even this year '25, we will not increase in dollar and euro our CapEx, in spite of the fact that we are now a new company with Bormioli. And yes, at the moment, we are looking at are you only growing 3% to 5%, whatever. Yet, you should not forget the step-up in both sales and also in EBITDA of the total new company is actually significant. If you keep the CapEx flat, but you do a step-up in EBITDA by well above EUR 100 million, it's clearly that has a positive impact on the cash flow.

The next question from Olivier Calvet, UBS.

Just a follow-up on the free cash flow guidance. The CapEx guidance you're implying, these 2 lines, the cash effective CapEx of EUR 370 million and the cash from investing of around EUR 345 million after divestments in government, just to clarify, you referred to that EUR 345 million or to the EUR 370 million? That would be the first one. Second one on the syringe business phasing. Could you give me maybe a bit more details on that contract, which geography or end market that is? And what do you mean with the sterilization capacity being a bottleneck? And then just on overall visibility on the business. You had said you would disclose the new segment structure at the Bormioli acquisition, if I'm not mistaken. So I understand this is not coming, but maybe you could just shed a little bit of light on the contract manufacturing business. First of all, could you quantify your GLP-1 exposure there and your exposure also to continuous glucose monitors that were in the news recently. And then on the GAT segment, could you just give us a sense of how much of an uplift you expect from the pump business pickup in 2027? Because, obviously, there's already a product on the market and your expectation would be on EBITDA breakeven in that segment. That would be my few questions here.

Yes. The first question in regards of the surge, I will not be able to disclose customer and other topics, but it's a European topic. And one more time, it's a phasing topic that just shifts certain deliveries of already produced components into the next quarters. To -- I'm not sure whether I fully understood, the contract manufacturing business, our exposure when we are a key player, world market leader in inhalers and pens in the contract manufacturing. So it's one of the core areas of our business in the medical devices today. We are now strongly growing in the auto-injectors as well. The expertise of Gerresheimer is clearly in the capability to industrialize products, and that's also why we have -- why we are very successful in getting GLP-1 contracts because we are, obviously, a player that has the highest likelihood that you can ramp up high volumes in high accuracy, and that's what happens. And as such, we have, of course, an increased market also in the GLP-1 devices, independent whether it's pens or auto-injectors for the devices. And the pump, 2026, we believe, the pump of the customer, we are delivering the pump. But they deliver, of course, the drug. We believe that this solution is very cost-competitive solution that has a strong market. And we hope that ramp-up that's now a bit delayed from October on is really contributing to sales and profits also in '26 and especially '27 onwards.

And then tackling your question regarding the CapEx, indeed, the -- we talk about the same year -- basically, the CapEx cash-out of 2025, same with 2024. It's a magnitude of EUR 350 million CapEx cash-out for 2025.

The next question from David Adlington, JPMorgan.

Maybe just to circle back on Plastics & Devices. Obviously, a bit of a step-down in growth in the fourth quarter. I just wondered if you could maybe give us your high-level thoughts in terms of how we should be modeling growth for the year in 2025 in P&D. And then secondly, just also to clarify your comments on the Capital Markets Day. I wasn't able to interpret your comments just in terms of should we expect a Capital Markets Day this year. Or is that something that you've delayed indefinitely?

Maybe I'll take the Capital Markets Day question first. In the end, what we actually said is that now the focus on integration of Bormioli, then we manage -- need to manage the -- all the things around the ad hoc release. And after this, basically, we will give an update once we have clarity on this, especially on this ad hoc topic. Then we give clarity on when and -- when we want to do -- will do the Capital Markets Day. That's the idea.

Yes. To the Plastic & Device step-down growth in fourth quarter, over time, I would not overestimate this. There are certain phasing topics in the Plastics & Devices will deliver a solid growth pattern in the whole year 2025.

And then maybe one follow-up, just in terms -- you mentioned that you are looking at potentially new GLP-1 contracts. Would those pressure your CapEx plans this year? Or is it already incorporated in your CapEx guidance?

Yes. Basically, all what -- we don't disclose all the details of the plan. But you can be assured that we have -- we are prudently managing our CapEx. And there are also some ideas which kind of projects we can win and we have to accommodate in our CapEx budget for this project.

It's both. Some are -- we are very, very confident we will win these platforms. They have been included. And others, we have to see. We have not included yet.

The next question from Edward Hall, Stifel.

Perfect. I guess, my first question would just be on Bormioli. I think when the acquisition was announced, you mentioned the synergies in the region of 3% to 5% in the first 2 years. So could you quantify the synergies you see for Bormioli today? And is it baked into the guide? And then a question more on sort of the actual individual facilities. Are there any facilities in your organization where moulded glass and tubular are produced in the same building? That would be my sort of first question. And then second question, again, on GLP-1. Could you provide a rough percentage split of how much is earned in glass and how this is expected to change as we approach the EUR 350 million target that you've set?

Did you understand? It was a bit hard to understand. I understood there was a question whether there are opportunities that are mixed with moulded glass and others. This is not the case. This moulded glass is very specific in the production process. So they are moulded glass facilities. Our moulded glass facilities that is valid for both old Gerresheimer but, of course, also for the new facilities coming in with Bormioli.

Maybe just to tackle the question of the synergies for Bormioli part. To rightly remind us, we basically said 3% to 5% of the revenues of Bormioli in the near term. So -- and we have this clear on -- in mind. And a significant portion of this should be -- we should also realize already in 2025 in the magnitude maybe of EUR 5 million to EUR 10 million.

And the other question, I think I understood how can we reach or will -- do you believe on this EUR 350 million GLP-1 sales, I -- we don't have doubts in the achievement of this EUR 350 million. The question is how much will be, over the loop of the next year, be able to overachieve this.

Okay. Perfect. And just wanted to double check. The synergies that you just described there, is this baked into your guide that you have today for 2025?

Yes. It's included in our guidance, indeed.

The next question from Delphine Le Louet, Bernstein.

Just to be back into this CapEx allocation and trying to extract from '25 having a big -- a longer view than the short-term one. I think it's a lot of importance when considering the investment to be made. So can you tell us on how you think the evolution, let's say, in the 3 years, ex moulded glass, for your envelope? So how should we think about this EUR 300 million going forward, absolute and relative to sales? Is it the time to go now in terms of relative to sales for the CapEx, the way to look at that or not? Second question, obviously linked with the operating cash flow and so the free cash flow. So you give us all of the response. Just willing to go back effectively into this 3% to 5% synergy on the revenue, but we all know that there is also a lot of synergy to expect from the mortgaging and selling, for instance, on the OpEx side. So can you let us know if you have a plan for that? When will you activate that? And thirdly, I was also willing to know what is going to be your major, let's say, innovation milestone to come in '25 and '26?

Maybe I take the CapEx synergies. You can add, Bernd. But generally, if you look at the CapEx -- if you -- for moulded glass, yes, you have a situation where the base CapEx in moulded is, of course, much higher than in the other areas of the business. So if you look at the moulded glass topic separately and point to the other business separately, you would see a lower base CapEx. And then no doubt, any further CapEx is significantly stronger supporting and funding the growth. That is something that you would see if you separate the moulded picture and the other picture, yes.

Maybe just to -- Delphine, to add what Dietmar just said. If you look at our CapEx program, as mentioned by Dietmar also in his presentation, the major -- a significant chunk, more than EUR 100 million goes into moulded glass. So if you really -- EUR 120 million or something like this in the ballpark of this EUR 350 million. If you really zoom into the part which is not moulded glass related, what is very important, and it was also worked out by Dietmar in his presentation, is that the base CapEx needs for the part of Gerresheimer without moulded glass is lower, much lower than what you see for moulded glass. I think it's a very important feature. And therefore, you need to focus on the growth CapEx in this area. And the growth CapEx for this area is actually high single digit in 2025. And here comes into play the CapEx growth rule what we have. Today, for CapEx -- growth CapEx, what we have, EUR 1, you actually can translate this into EUR 1 additional sales, rule of thumb. And that's the logic how you need to approach our CapEx out of moulded glass. And what we always said, we want to improve this ratio going forward. But that's where we stand today based on CapEx rule.

Yes. There's not much -- what I tried to say in my presentation, you have to see that the key also with moulded, the CapEx is relatively flat for the time being, but we are actually adding big chunks of additional EBITDA that comes in, in '25, but also in the years out. And that, for sure, is changing the cash flow profile.

We'll take the last question from Alexander Galitsa, HAIB.

A couple of questions and some maybe follow-ups on what you already discussed. Just wondering if you're willing to share more ideas, particularly around SQ Innovation. So the product will be launched in 2026. Is there a sense how -- is that the monopoly market currently? And what's kind of the current size of the market you ultimately will be addressing?

That goes deep in the details of our customers, actually. The market is an attractive market, and we are talking about furosemide where, today, the patient goes to the hospital actually and get infusion for 10 days. The competitor gets you protected is not strong in the market yet because the technology has just rolled out. So it's still possible to really grab a major part of the market that is in its strongly growing. So that's the strategy of the customer. And with this, we can also clearly see the potential. Beside this project, one aspect is very relevant. It's the first time where we have come together with the customer through the FDA, and the response is significant. It was not that our own IT device business, the former acquisition of Sensile. It was driven by only success stories of the group after last year,with new orders and so on. But what we clearly see now with the pump -- first pump through the FDA, we have significantly more discussions with further application for the customers because they see we are on a technology level where you can successfully get one of these pumps through the FDA. That is very, very good for further growth, even beyond -- very clearly beyond this individual project.

Understood. But it sounds like it's somewhat a differentiated product. I wonder if you can share sort of what's the revenue behind that. So maybe we can derive some kind of numbers on that in terms of what's, I don't know what this way to think about it, ultimately, the product generates EUR 6 million, what's the -- Gerresheimer's share.

Maybe I just get some basic data from our marketing that pulled out some data for you, but they will not help you much. There are 7 million patients suffering from this congestive heart failure in the United States. And this leads to actually 1.2 million hospital admissions annually, and this actually is permanently growing over the group of the next years. And that shows you the potential of this market. We are actually pretty conservative, our plannings at the moment, based on the experience we made over the group of the last years. But no doubt, we also clearly see a potential into the mid -- whatever, you can say much we want to disclose here.

No. We don't disclose specific customer projects because, also for competitive reasons, especially in this market. And therefore, we are a little bit shy on this topic. And I think this, by the way, a very good case for systems actually, Dietmar, because, ultimately, we are not getting only royalty streams from a concept, but we are actually also selling the pump separately. And therefore, you need to see the whole package in the end of the day.

But that's the important point of their own IP devices, yes. The own IP device, of course, in the margin profile have a significant different return than the classic. You mentioned it earlier or one of your peers mentioned earlier, the classic contract manufacturing. And that is -- as we delay into the October, we will not see much of it in '25. But they will steadily contribute in the outer years, '26, '27 to both bottom and top, but especially also bottom line.

And my last question is one on biologics share. So you mentioned 15%, which amounts to roughly EUR 300 million. Thereof, EUR 100 million is GLPs. Just wondering if you could remind us. So this EUR 100 million GLP revenue, is that all CMO for auto-injectors? Or is there something else? And also, if you could give some kind of idea, the remainder EUR 200 million, what is the composition of that? That's the first question. And then the very last one is I noticed that the exceptional items shot up again. There is some -- there are some items on reorganization front, EUR 3 million. Just wondering whether it has to do somewhat with the Bormioli integration or a potential spin-off already and whether we need to expect something on that front in 2025 as well.

Maybe a little bit to our portfolio on GLP-1. You have to see that we are really serving GLP-1 in various applications with the broad portfolio. You have vials and cartridges. You have syringes. You have Primary Plastic Packaging for the oral solutions. And you have both auto-injectors and pens. They together make these figures that we are disclosing, no doubt. Key drivers are auto-injectors and pens, followed by the syringes.

Maybe just to step into this exceptional question. Ultimately, indeed, our exceptional were high in 2024, but the end due to the Bormioli acquisition, ultimately, I think it was a ballpark of EUR 50 million. Then you -- there's something what still you need also to expect in 2025, a double-digit million euro amount linked to the Bormioli acquisitions still also in 2025. It could be my judgment from today's perspective, there's no doubt on this. Because, ultimately, we want to also materialize the synergies, which we talked about it before.

As there are no further persons with questions in the queue at this time, we will, therefore, now conclude today's call. We are happy to organize follow-up calls should you still have questions, and we are looking forward to seeing many of you soon. Bye-bye.

Thank you.

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