Gerresheimer AG (GXI) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the publication Q1 2025 results conference call. I am Jorge, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Guido Pickert, Vice President, Corporate Investor Relations. Please go ahead.

Thank you very much. We welcome you to our Q1 2025 results call presentation, which will be hosted by our CEO, Dietmar Siemssen; and our CFO, Dr. Bernd Metzner. For the start, I would like to hand the floor to our CEO to start the presentation. Dietmar?

Yes. Welcome, everybody. Thank you for joining us this morning. I will start by giving you an overview of our business performance and main influence of the first quarter. Then Bernd Metzner, our CFO, will take you into a deep dive into the numbers. As always, we will then be happy to take your questions. The most important impact on the Gerresheimer Group going forward is the first time consolidation of Bormioli Pharma in our group results in the first quarter. The acquisition of Bormioli Pharma, by the way, the largest acquisition to date for Gerresheimer, takes us to a completely new level in terms of revenues and adjusted EBITDA. Two success stories will have one joint future. We will take a leap forward from EUR 2 billion revenue in 2024 towards a level of around EUR 2.5 billion in 2025 with an adjusted EBITDA margin of around 22%. As pointed out in previous calls, the acquisition 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. And it opens new opportunities for system integration, [ open-closure ] combinations, which create a completely new category of high-value solutions for Gerresheimer. The acquisition significantly strengthens our position as a leading system and solution provider for the pharma and biotech industry and lays the foundation for our projected sustainable profitable growth of 8% to 10% in the midterm, strongly supporting our margin and cash flow goals. Projected organic growth of 3% to 5% in 2025 in comparison to the combined pro forma figures 2024 of Bormioli Pharma and Gerresheimer will mainly be driven by the ramp-up of new product lines, an increasing shift to high-value products and the return to normal operations in our facilities, Morganton and Lohr. Morganton, as you know, was severely impacted by the flooding caused by Hurricane Helene in late September of last year. Part of the restoration work is still ongoing. Most of the production has been restored and will be fully operational again in the next weeks. In Lohr, we are in the final stage of exchanging 1 of the 2 furnaces to a state-of-the-art hybrid furnace. Restart of production with the new furnace will be end of April. Since the beginning of our fiscal year 2025, Bormioli Pharma has been fully consolidated in our group results. That means we are now playing in a new league. We reached a whole new dimension in terms of sales and earnings. This is evidenced by a jump in reported revenues and adjusted EBITDA in the first quarter. Revenues grew by 11.6% from EUR 466 million in Q1 2024 to EUR 520 million in Q1 2025. Our adjusted EBITDA grew even stronger by 13.1% from EUR 81 million to nearly EUR 92 million. However, we had some effects which weighted on our group's organic performance in Q1. As already flagged in our Q4 and full year reporting 2024, we saw an organic decline in Q1 2025 compared to the previous year's combined pro forma figures. In organic terms, revenues were down by 6.5%, the adjusted EBITDA by 9.3%. The main reason for this is a phasing effect we see in syringe business, which has shifted revenues and adjusted EBITDA from Q1 in Q2 and Q3. We also saw softer demand in our moulded glass business, especially in the cosmetic market. We will return to organic growth on a like-for-like basis already from Q2 onwards, supporting our 2025 guidance. Order intake in Q1 was very good and added to our strong order book, which is the base for continuing our growth in absolute and in organic terms in the upcoming quarters. We introduced our key priorities for 2025 already in the last call. We will focus on the integration of Bormioli Pharma to leverage the opportunities of the combined portfolio and new capabilities from system integration. We will continue to execute our growth projects and ramp up new lines, which will start to contribute to our top and 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. Having seen our first quarter results, the most pressing question for most of you is probably why we are so confident of achieving our 2025 guidance and where the growth will come from. In summary, the key growth drivers in 2025 will be a return to normal operation, new ramp-ups and a continued shift to high-value products. The return to operation refers to our plants in Lohr, Germany and Morganton, U.S. I have already mentioned the new furnace in Lohr, Germany. Together with the Bormioli Pharma plants in Bergantino and San Vito, Lohr is 1 of our 8 moulded glass plants worldwide. In this plant, we produce a wide variety of flint and amber glass products, from syrup, dropper, tablets and infusion bottles for the pharma industry to glass containers for the food industry and bottles for the beverage industry. Furnaces in glass production have a life span between 8 to 12 years, depending on size, technology and maintenance. So we have planned and prepared this exchange for quite some time now. As the regular furnace exchange for flint glass was coming up, we decided not only to upgrade to state-of-the-art technology, but also to increase the capacity of this furnace. The new furnace in Lohr is an oxy-fuel hybrid furnace, which allows to be powered with a higher proportion of up to 50% electricity instead of natural gas, thus reducing our carbon emission per tonne by 40%. The new technology and the capacity increase led to a number of accompanying construction and infrastructure projects at the plant. These have been ongoing for the last 2 years already and include, for example, the expansion of buildings, a new extended power supply, a new eco-friendly cooling system and the upgrade of production equipment. We started the actual exchange of the flint glass furnace in January. The amber glass production continued, despite the ongoing construction work. In the picture, you see the construction shelf for the new furnace. We will restart production with the new furnace plant beginning May. In Morganton, North Carolina, U.S., restoring after the flooding of the plant in September 2024 is still ongoing. We were able to restore about half of the production capacity by the end of 2024. Our team in Morganton have been and still are working really hard to get the production fully back online. In Morganton, we produce glass vials for the pharma industry for the U.S. market. The flooding also delayed the expansion of the facility to increase our annual production capacity of vials, supported by a program of the BARDA. We now expect to restore full capacity in the next weeks. The ramp-up of new production lines for medical devices in Skopje and Peachtree will also contribute to our organic revenue growth in 2024 -- 2025, sorry. Our plant in Skopje, the Republic of North Macedonia has been a production facility for medical devices such as drug delivery systems, diagnostics and medical products made of plastic since 2019. Here, we will ramp up new lines in 2025 to serve long-term contracts for drug delivery systems as planned. You may also have seen our press release last December about the planned expansion with a new hall to produce glass syringes. This is a growth project, which will contribute to our midterm growth plans. We are currently in the qualification phase for the syringe production with one of our key customers. At our Peachtree City site close to Atlanta, we produce medical devices such as inhalers, components for infuser sets, micro injectors, test cards for microbiological tests and, very important, auto-injectors, which can be used in diabetes and obesity therapy, among other things. Peachtree is currently expanded in 2 stages: ramp-up of the production, and the new production hall right next to the existing facility has already started. The construction work for the second expansion stage, a completely new facility, roughly 2.5 kilometers or miles from the original plant, is still ongoing. We expect contributions from the first expansion stage already in 2025 and from the second expansion stage from 2026. So more to come to contribute to our midterm growth plans. The last 2 pictures on this slide are examples for the continuous shift to high-value products. Bunde, Germany is currently our main production facility for syringes. What we have seen here over the last few years is a continuous shift to high-value syringes, including ready-to-fill and customized configurations, mainly driven by the demand for solutions for large-molecule biologics. In 2025, we will further increase the share of high-value syringes from Bunde. This will contribute to our 2025 organic revenue growth and will help us to further improve our margins. Another example is the continuous shift from standard bulk vials to high-value vials, which include, for example, Elite vials and ready-to-fill configurations. We are continuously increasing our share of high-value vials, building a strong market position in bulk. Queretaro in Mexico is one of our production facilities for tubular glass products such as vials, ampoules and cartridges. Most importantly, in Queretaro, we are currently setting up the first production line for EZ-fill Smart, the next-generation packaging platform for ready-to-fill vials. Commercial production will start in the second half of the year, contributing to our growth and margin expansion in 2025. What we are currently seeing in the market is a similar shift from bulk to ready-to-fill as we saw in syringes years ago. Based on our experience, in a highly regulated market such as the pharma market, these technologies change take roughly 20 years. Of the 13 -- roughly 13 billion vials in the market for 2022, as supported by IQVIA, we estimate that only a fraction were ready-to-fill vials, primarily driven by the need for smaller lot sizes and solutions for large-molecule applications. 20 years later, we believe it will exactly be the other way around, with ready-to-fill riles dominating the market. The same, by the way, applies for the cartridge market. We currently see a highly dynamic development in the market for ready-to-fill vials and cartridges, driven by the rise of large-molecule biologics in the market. This could significantly accelerate the transition to ready-to-fill. We had a late start in the ready-to-fill market but caught up very quickly. Today, our RTF Elite vial is one of the best performing vials for the fill-and-finish process in the market, and our order intakes reflect this very well. Superior operational efficiency and derisking the fill-and-finish process are key criteria for our customers to move from standard bulk to high-quality Elite vials and ready-to-fill vials. In addition to that, we noticed that pharma companies require smaller batch sizes for personalized medicine in a highly innovative biologic drugs. EZ-fill Smart, the new platform for ready-to-fill vials, which we start to deliver from Queretaro in the second half of 2025, has all the advantages of the ready-to-fill format to address these needs of the customers and many more. For example, it significantly reduces total cost of ownership, while delivering superior quality with around 97% fewer particles. This is also more sustainable as it enables hydrogen peroxide vapor sterilization, instead of sterilization with ethylene oxide, and it reduces CO2 emissions by more than 40%. Our progress in our expanded ready-to-fill offering is a great example for the successful transformation of Gerresheimer from a commodity provider to an innovative, high-value system and solution provider and preferred partner for the pharma and biotech industry. Thank you very much for the moment. With this, I will hand over to our CFO, Bernd Metzner, for a deep dive into our financials for the first quarter.

Thank you, Dietmar, and welcome, everybody, also from my side. Let's dive into the analysis of the key financials for the first quarter 2025. On a pro forma basis, revenues went from EUR 553 million to EUR 520 million. This led us to an organic revenue decline by 6.5%. In our Plastics & Devices division, our medical devices business continued its growth trend of the prior quarter, but was however not able to compensate for the phasing effect in our syringes business. Business development in our Primary Packaging Glass Division was, among others, matters characterized by persistent weakness in the moulded glass cosmetics business. In tubular glass, revenues with high-value vials were strongly growing. However, the destocking effect in our bulk vials business was still visible. Adjusted EBITDA went from EUR 99 million to EUR 92 million on a pro forma basis. This led us to an organic adjusted EBITDA declined by 9.3%. Organically, adjusted EBITDA margin declined by 50 basis points to 17.6%, which is on the back of the 6.5% organic revenue decline moderate. Adjusted EPS went from EUR 0.65 to EUR 0.46. This led us to an FX-neutral adjusted EPS decline by 36.6%, which I will explain on a more granular level later. Let's move on to the divisional development in Q1 2025. Plastics & Devices pro forma revenues went from EUR 304 million to EUR 295 million. This led us to an organic revenue declined by 3.3%. While the business with medical devices driven by auto-injectors continued its strong growth of the prior quarters, it was not able to fully compensate for the phasing in the syringe business. Pro forma adjusted EBITDA declined from EUR 71 million to EUR 63 million. Organically, adjusted EBITDA declined by 11.4%, and the according margin went from 23.5% to 21.5%, driven by a less favorable product mix resulting from the phasing in the syringes business. Primary Packaging Glass pro forma revenues went from EUR 250 million to EUR 227 million. This led us to an organic revenue decline by 10.2%. Our vials business developed differently. While bulk-wise we're still impacted by the destocking trend, which is moderating, a completely different pattern was visible in our high-value vials business. As in the prior quarter, our ready-to-fill vials business grew, mostly driven by demand of new customer segments. Regarding the development in moulded glass, I will provide further information on the next slide. Pro forma adjusted EBITDA went from EUR 41 million to EUR 40 million. This led us to an organic adjusted EBITDA declined by 5.8%. Consequently, organic adjusted EBITDA margin increased from 16.8% by 19 basis points to 17.7%. Advanced Technologies. The operating performance improved slightly at Advanced Technologies, especially regarding the development of adjusted EBITDA. We are on track to start marketing of our on-body drug device in October 2025. Currently, we are conducting several evaluation studies with leading pharma companies with our own IP drug delivery devices across our entire product portfolio. Besides tests related to our Inbeneo and on-body drug devices, the tests also include our products for digital twins and traceability solutions. Let us now move on to the development of our Moulded Glass Powerhouse in the quarter in detail. Pro forma revenues went from EUR 173 million to EUR 159 million. This led us to a decline in organic revenues by 8.1%. The reason for the decline is mostly based on the following factors. Moulded glass cosmetics was impacted by significant weakening of consumer demand for cosmetic products. Besides that, our revenues were also negatively impacted by an overhaul of one of our key furnaces. Pro forma adjusted EBITDA margin went from around 18% to around 20%. The margin improvement is driven by a better product mix and a better cost position. Pro forma net CapEx almost doubled year-over-year, and the increase was mainly driven by furnace overhaul projects. As you already know, for 2025 and 2026, we will face a unique once-a-decade bundle of furnace overhauls. For 2025, it is mainly driven by furnace overall projects in Lohr and Momignies as well as investments into state-of-the-art furnace technologies. The next slide shows a reconciliation of the reported to the adjusted financials for Q1 2025. Revenues declined organically by 6.5% and adjusted EBITDA by 9.3%, as discussed in all details earlier. Let me briefly comment on our EBITDA adjustments. The clear majority of almost net EUR 10 million is due to costs related to the acquisition of Bormioli. Adjusted depreciation increased year-over-year due to the increased CapEx spend in the recent past as well as the consolidation of Bormioli. For the full year 2025, we expect the nominal growth rate to accelerate hand-in-hand with growth projects being executed in new capacities going online. We expect to end in the low-8s for depreciation as a percentage of revenues for the full year. The adjustments in the financial results are almost entirely resulting from the redemption of the Bormioli bond in the curve cost of the acquisition. Regarding income taxes, the adjusted tax rate in Q1 '25 was 22.5% compared to 28% in Q1 '24. FX-neutral adjusted net income after noncontrolling interests decreased by 36.6% compared to Q1 '24. Coming now to the cash flow development in the first quarter. As in the prior years, our Q1 is seasonally our weakest quarter with a negative free cash flow figure. Overall, the free cash flow before M&A in Q1 declined as expected from minus EUR 79 million to minus EUR 141 million. The adjusted EBITDA increased from EUR 81 million to EUR 92 million. As mentioned before, the adjustment of almost EUR 10 million is mostly due to exceptional costs related to the acquisition of Bormioli. Then looking at the net working capital development in the first quarter, our net working capital related cash out is in line with the development of the last years. For the remainder of the year, we expect also, as seen in the last years, a significant reversal of the cash out in the first quarter. Not to forget, if you compare with the last year Q1 '24, we had in Q1 '24 a customer prepayment in the amount of EUR 20 million, which did not reoccur this year. The increase in net interest paid reflects the higher net debt level. Other declined by EUR 19 million mostly due to employees -- employee and insurance-related topics, among other matters. Cash out related to net CapEx stood at EUR 113 million. Of this EUR 113 million, around 40% are allocated to moulded glass related to furnace overhaul projects. The remaining 60%, equaling around EUR 70 million, were related to Gerresheimer without moulded glass. Around 70% of this EUR 70 million went into growth CapEx, thereof around 70% into our biological expansion projects, like our GLP-1 projects. With these investments, we are laying the foundation for sustainable, profitable growth in the future. Yes, we expect a strong improvement in free cash flow in the remainder of this year. Last year, free cash flow stood at minus EUR 100 million -- EUR 105 million, and we continue to expect to end the current financial year with a free cash flow figure in the range between minus EUR 50 million and 0. Coming now to our financial position in detail. Our leverage per Q1 '25 stands at 3.97x, and we focus on deleveraging to reduce our leverage ratio to a level of mid-3s towards the end year. Our liquidity currently stands at EUR 764 million and consists of our cash position of EUR 151 million and the undrawn revolving credit facility of EUR 613 million. Our net financial debt increased from EUR 948 million to EUR 1.930 billion and was driven by the payment of the purchase price for Bormioli. Accordingly, the adjusted EBITDA leverage increased from 2.32x to 3.97x. With this, I hand back to Dietmar. Dietmar?

Yes. Thank you, Bernd. You'll need some of our coughing syrup. It might help you.

No doubt.

Now looking ahead of our performance in the second quarter, we see 3 key growth drivers that will support our return to profitable growth also on an organic basis. In our Plastics & Devices Division, growth in Q2 will mainly be driven by the previously described phasing effect, which has shifted syringe revenues from Q1 to Q2 and some of them also into Q3, and a solid growth in all other business units. The positive impact of the phasing effect is actually already visible in our strong March syringe numbers. Now our Primary Packaging Glass Division, our moulded glass business will be influenced by softer demand, mainly in the cosmetic market. But we expect to see growth in tubular glass, significant growth in high-value solutions, which is backed by our strong order book, as Bernd already mentioned. The strong order book, which includes increased year-on-year order intakes in Q1, firmly backs our organic revenue growth momentum in Q2 and also for the remaining year. We confirm our 2025 guidance for the new Gerresheimer Group now including Bormioli Pharma. We estimate an organic gross revenue growth of 3% to 5% in 2025 compared to the combined pro forma figures of Gerresheimer and Bormioli Pharma in 2024. We expect an improved adjusted EBITDA margin of around 22%. The adjusted earnings per share will be in the high single-digit percentage range. As pointed out earlier, in absolute terms, Bormioli Pharma will add significance to the group's revenues and adjusted EBITDA and will take us to an entirely new level. Our growth prospects remain intact. We are growing strongly in system and solutions for large-molecule biologics. With the acquisition of Bormioli Pharma, we have expanded our product portfolio and created the basis for a new integrated high-value plastic solutions. In the midterm, we plan a compound annual revenue 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 growth is forecast to reach 10% plus. The next opportunity to check in our financial performance in 2025 will be our Q2 results, which we will publish on July 10. Thank you. And now -- or we are now happy to answer your questions.

Operator, please start the question-and-answer session. .

[Operator Instructions] Our first question comes from James Vane-Tempest with Jefferies.

Two if I can, please. Firstly, just on Bormioli, even if you can't specify exactly, can you give us an indication of what profitability was in Q1? Perhaps, if it's above or below 20% EBITDA will be helpful, and how we should think about this contribution for your full year margin of around 22%. And then secondly, how should we think about potential tariffs with your global production network?

Bernd, you have to unmute first.

I could basically take the first question roughly regarding the profitability for Bormioli. Maybe just to start with, as you know, the integration process has begun post closing in December 2024. And we are on track to realizing the synergies as expected. And we consolidated now Bormioli in -- starting from December 1, 2024. And as you know, we -- in the end, we don't comment on the performance and guidance of our subsegments, given that Bormioli is now fully consolidated and actually splitted in plastic packaging and also moulded glass. But having this said, what we see actually is that our profitability was slightly increasing -- only looking at Bormioli business, was slightly increasing in Q1. And for the -- to go for the next couple of quarters, we expect also a nice contribution, especially as far as our margin accretion is concerned.

And I'll probably take the second question, which is an interesting question as the tariffs seem to come and go every other day and week. But I think in general, to the tariffs, we are in a very good position. What you very clearly see, like in the COVID time, our clear strategy to produce and source in the region, for the region clearly pays off. So the tariffs, even if they would come, in principle, are completely neutral to us, even opening opportunities for price adjustments in areas where we are not hit. That would be, in principle, the only one area where we really severely import into the U.S., and that's for Mexico. But the products that we ship from Mexico into North America actually, yes, covered by the USMCA and are not affected by the tariffs if they would come. The rest is very minor. And we don't ship products from China into the U.S., and we are well covered. So the short answer is the -- we do not ignore the tariffs, but for us they have no real -- especially no real negative impact.

And a quick follow-up, if I can. Just wondering if you can also give us a quick update on the ongoing strategic review, when we might see some progress on that. You also commented on potential speculation of private equity interest in the business. So any update on whatever process might be going on might be helpful to understand as well.

Can you repeat the first part, the strategic review?

Review.

Review. As you saw, Bernd is disclosing more and more details on the moulded. So we are with the integration of the business out of the Bormioli's, working to build up, what we call, the separate standalone powerhouse. That's what we are doing. And we are working on the strategic review as communicated over the loop of 2025. And the second question, I heard you, but you can imagine there's not much I can tell you aside the fact that no change to the appropriate information we gave to the market. There are talks ongoing.

Our next question comes from Victoria Lambert with Berenberg.

Just on the strategic review, asking about this again, but do you still plan on delaying your Capital Markets Day? Or do you think maybe you'll do a Capital Markets Day at the end of the year to present your plans around the moulded glass business? I think a lot of investors in the market would appreciate an update. And then just about organic growth phasing in Q2 to Q4. Should we expect a step-up over those quarters? Just trying to get a better idea of how you're thinking about phasing and the new capacity ramp-up. And I guess, just one last one to squeeze in is just on GLP-1 contracts. Are there any updates? Or are we working with the same assumptions that you gave in February? So EUR 300 million of GLP-1 related revenues expected this year and then a big step-up next year.

Yes. Maybe I'll take the Capital Markets Day. The whole discussion is, in principle, have no major influence on our plannings with the Capital Markets Day. We are actually with Guido Pickert in the details of planning the date for the Capital Markets Day. As we indicated in earlier was I want to have the new segmentation structure, in principle, in a shape that we really can show you something and also having the integration of the Bormioli far developed. So we are now talking about a planning that is late summer or in early fall. That's where we are planning the Capital Markets Day. But we are unchanged planning on having this. I think this is an important point for our investors. The -- to the GLP-1 contracts, there's no major update. Yes, we will -- as we indicated before, this year probably go through the EUR 200 million sales for the various GLP-1 applications that we serve, depending of whether it's plastic packaging, vials, cartridges, syringes, and medical devices. And we are working on opportunities that will actually expand the amount that we gave you to the long-term view beyond the EUR 350 million. And I see good chances to express something here in the near future.

Maybe just to step into, Victoria, your question was about the sequencing and phasing of the organic growth throughout the quarters for 2025. You will see a very strong second half of this year. And Q2 will go into this direction, will be positive growth again for our company, considering obviously the organic growth and not only the reported growth, Victoria.

Our next question comes from David Adlington with JPMorgan.

My questions have mostly been asked. Maybe I'll just press you a little bit more on that phasing. Maybe you could confirm or deny whether you expect to see double-digit growth in the second quarter, either in P&D alone or possibly for the group. And then secondly, just in terms of order intake, I just wondered if you were able to quantify the order growth in the first quarter.

Now the phasing was -- a lot of the discussion, it's real phasing. So we are really shifting the sales from the first quarter into second and third quarter, and that is something you will definitely see. We saw this in -- for the syringes, unusual, very strong March, which is also not a surprise because that's exactly what happens if you shift sales over. That's one thing. What was the other thing, Bernd?

The question was that to be more precise on the organic growth pattern for the remainder of the year. I think, honestly, we cannot say more what we just said before. So we will be in positive territory in the second quarter, that's for sure, and described by Dietmar and what are the patterns and the pillars for that. And the second half of the year will be stronger even than the second quarter.

And why is this when there clear reasons for this? We should not forget Morganton is restarting. Morganton is restarting production, yes. So it will come, especially will help in Q2, but it will primarily affect Q3, Q4. Lohr, a new furnace with capacity increase will have its impact on the second half of the year, which is very positive. The new ramp-ups of medical devices, for example, also in the U.S., will be valid from June, July. And yes, it's starting a bit earlier, but the reasonable sales, we'll only see a bit later. But these factors have an impact. That's why we -- the second half is not just hope. It's really driven by clear actions and also restarts of lines.

And just interested on the order intake. Are you able to quantify the order growth in the first quarter?

We don't guide for -- we don't disclose the details of the order intake, which we have. What we monitor is basically based on a system, 85% of all our legal entities. And based on this kind of assessment, what we are doing on a weekly basis, actually, we can firmly say that what we have seen in the last 4 months, from December to basically March, that we have a much higher order intake compared to previous year. But we don't disclose this. It's included also Bormioli, by the way. We integrated this also for our order intake, obviously, calculation.

The next question comes from Odysseas Manesiotis with BNP Paribas.

I just have one. Could you please give us a bit more color on where the order strength is coming from supporting Q2 sales? Is this what you expect on restocking for HVS? And could you be a bit more specific with modalities? And have you been seeing any pre-tariff related stocking?

I don't fully understand the question. But no doubt, the order intake is strong. The order intake is also pretty strong, especially on what Bernd already mentioned, high-value products. That's valid for both vials, cartridges, but also in other areas. [Technical Difficulty]

Mr. Manesiotis, are you still in the line?

Yes. Sorry, I got cut for a second. I wanted you to be a bit more specific on the modalities that drove the HVS order book growth, if that's okay. Sorry if you'd touched on it already. I got cut for the last 10 seconds there.

Ladies and gentlemen, please hold your line.

Can you hear us here?

Ladies and gentlemen, the connection is back with the speakers.

Can you hear us here?

Yes, we can hear you. We can hear you.

Now we're back on.

We are back on. Ladies and gentlemen, thank you for your patience.

Yes. They can hear me and not the music. That's good. I don't know what you heard. We spoke about the order book, yes.

Yes, you talked about it.

Yes. We spoke about the order book. The order book actually looks pretty good for various product fields, but it looks also especially good in high-value products such as vials, ready-to-fill vials, Elite vials, cartridges, which is also driven not only by classic customers, but also by more and more filled order book of new customers that are joining the portfolio of our customers. I hope that helps you.

And the next question comes from Olivier Calvet with UBS.

Hope you can hear me. Firstly, I just wanted to come back on the second half 2025. It's helpful to have the second quarter message. I just wanted to get your thoughts on PPG and particularly moulded glass in the second half. So given pharma is likely more stable, I assume in moulded glass, your cosmetics business right now is down in maybe the mid-teens. How much of that is the -- related to the furnace refurbishment in F&B? And how much is the cosmetic weakness? And also I'm just wondering if you assume a similar level of sales in moulded glass for the remainder of the year or if you expect the recovery in the second half. That would be the first question. Second question would be the share of biologics in revenue. You've given that at full year results. It'd be very helpful to have that transparency at a quarterly level. Or another way to ask is, looking at last year's level of 15.2%, if I apply this to sales, given your non-pharma business is slightly weaker, I would assume you're at least at EUR 79 million, EUR 80 million. Is that fair? Then in -- third question would be just on the high-value switch in containment. So I understand from your comments that the format that is driving your growth there is rather in vials, given what you've just said. Just wanted to confirm that. And then two more, just one on the timing of the Mexico plant additional line to start. Is that in line with what you've said on the medical devices start in the second half? And final one on free cash flow, just looking at the negative EUR 140 million for Q1. Can you just help us reconcile that with the indications you've given at full year of 0 to negative EUR 50 million free cash for the year?

That was a lot of questions. I'll try to cover them. And if I miss something, Olivier, will you just repeat them. I'll start with the first part here with moulded glass. The pharma is pretty stable, there's no doubt. If you don't have your biggest furnace in Lohr running for months, this -- we planned with the renewal of the furnace, this is not helpful with the figures. The cosmetic is not influenced by this because cosmetic is not a product that we produce in this facility. The market for cosmetic is soft at the moment. So if you look at the -- into the outlook for the second Q, very clearly, Lohr back on track will clearly add to the party. And the order intake also here after the switch looks promising. For cosmetic market, it's very difficult to predict for me at the moment. I would like to stay prudent in this regard for cosmetic. But for the pharma, it's pretty stable. The bio products -- biological products in the first quarter, no doubt, the shift of biologic syringes from first quarter into second and third, maybe for a single quarter, influence the figures. But in general, our biologic products are moving upwards as planned. We are beyond the 15% now in this year. I think the story, Bernd, please.

Maybe just to step and recap because we're always -- as you rightly said, we're disclosing biologics starting from last quarter. So actually, we have seen also moderate growth, despite that we had overall a decline. Last Q1 '24, we had around EUR 62 million in revenues. And now we have in Q1 '25 EUR 66 million, I see here. And therefore, you also see a slight growth. And nonetheless, despite of the fact that, overall, we were basically declining, so I just reiterate actually what Dietmar said before that the structural growth and especially in this area is very well intact.

And which is also not a surprise because the vast majority of all of our growth actually takes place within the area of large molecule applications, means biologics. Then there was a question on the line ramp-up or the projects for growth in Queretaro. This is all in plan and unchanged to any plannings, yes.

Maybe regarding the free cash flow, thanks for this question, Olivier. Ultimately, if you look at the remainder of the month -- of the year, 9 months to go, obviously, what is really driving our cash flow is the really strong growth in -- for EBITDA for the next 9 months. And then that's a key driver. Then what I said also in the speech part of the CFO, we will also see a release over the next 9 months, especially in Q3 and Q4, regarding our working capital. This will be very helpful. And one of the key drivers is always our CapEx. We expected, as you know, a cash out for CapEx. We expect that we will be spending less CapEx than previous year for the remainder of year. In previous year, we spent EUR 238 million as a reference point, and we will be lower than that. This is actually really driving the free cash flow into a territory where, ultimately, we will be plus 0 to minus EUR 50 million in this kind of ballpark.

And I saw -- I missed the question of high-value solutions. Thank you for the reminder, Olivier. Without the adding of the lines from mid of the year, EZ-fill Smart in Queretaro will support the vial. But the growth is not only coming from vials. The growth in high-value solutions comes really by vials, cartridges and also syringes and multiple products, yes.

Our next question comes from Ed Hall in Stifel.

I think most of them have been answered already, but just 2 quick ones. One on cartridges. I'm just curious in your offering there. Is there any numbers you can give on the number of pieces produced annually or the proportion of revenues in RTF versus bulk? That would be quite helpful. And then I appreciate there's a very sizable tender that's been floated in the market. Any confirmation in your participation in this regard? And any sort of timing in terms of incremental revenues would be great.

First question was around cartridges. We do cartridges. The truth is also that we do today primarily bulk cartridges and only a small share of ready-to-fill cartridges.

The second question was difficult to hear. The second question was difficult to hear for us. Maybe you can repeat.

Sure, sure. Yes. There's been obviously news floating around of a very sizable tender in the market for syringes. Can you confirm any participation? And when can we expect any incremental revenues? I know you already alluded to additional GLP-1 revenues. But yes, anything here would be great.

Yes. There are various actually pretty large tenders at the table at the moment in the market for vials, for syringes, for devices. And yes, definitely, we are participating. And we have to see when the final decision for these tenders are. We hope to take place, whatever, Q2, Q3, that ballpark. It's up to the tender, and some will only be decided by end of the year.

So just to confirm, you said the final decision will be Q2 or Q3.

There are so many tenders. It's hard to say. But there are various tenders at the table at the moment. We have to see when the decision is made. That's not in our hand. It comes from the customer.

The next question comes from Delphine Le Louet with Bernstein.

Just to be back on the order intake and the seasonality or the way we should think about the development of the order intake over the coming and the rest of the year. I know you don't want to go too much into detail, but it might be definitely useful to compare that to the historical level of order impact. So can you give us a sort of a magnitude of the improvement and also the evolution within that part of the HVS in order for us to better understand? So that would be the first question. The second question deals with the Bormioli integration. And I was wondering, what are currently the 3 element to focus on year 1 when it comes to operating efficiency? And what is the rough and envelope to book in terms of cost for this year? The third question is probably broader, and just wondering because we are hearing some comments into the market right now regarding the tariffs. And I was wondering if you have any change on your pharma discussion when it comes to their ordering pattern for the containment. So are you seeing any visible side of patience, wait-and-see position? Any comments would be interesting. And finally, regarding your deleveraging, we hear about the EBITDA growth back-end loaded. And so a question about the target of 3x net debt to EBITDA. Obviously, you made a comment regarding the CapEx. But can you explore probably more in detail your working cap just for us to get a better understanding of how you can get there?

The first thing -- we didn't understand very well, but I think the first thing was around the Bormioli integration, these -- the core elements of the integration. No doubt, the integration is fully ongoing and in various aspects also far developed. One thing was very clear. Integrating the business of the plastic into our plastic world, which is strongly ongoing. We are really forming the opportunity for more high-value products in plastic, building a big group of 400 million to 600 million of plastic solutions with strong margins, very good cash generation, low CapEx. So it's a very good field, and we are working on this. Of course, the full effect on new products and product development is ongoing, and this will come over the group over the next years. So that was the first point. The second point is that building of the integration of the moulded glass business into the moulded glass world, which creates -- which is what we elaborated on, building the strong powerhouse. Also here we are far developed the integrations. It's very well ongoing. What you can clearly see the cultures of these companies. They talk the same language, maybe not Italian and German, but they speak the same language in terms of process, products, customers, which is very helpful. Also this is ongoing. And the third aspects are certain elements of synergies -- cost synergies in certain headquarter functions, also here, we are pretty progressed and well underway. So the next question was around the tariffs. So do you want to comment on Bormioli?

No, nothing. No, no.

It was -- the tariffs is -- as I indicated before, the total effect of the tariffs is, with our very strong in the region, for the region footprint, pretty neutral to us and is, in principle, opening also opportunities, for example, of customers that are looking for business served out of the regions and with our footprint because we are very well positioned to support our customers and serve them from our sites here.

And maybe to tackle the question of the deleveraging, actually, indeed, if you look at it, what are the drivers? Ultimately, you will see a nice margin growth in the upcoming quarters. Especially in the second half of the year, you will see a nice margin expansion. And this is actually really driving the thing regarding the leverage. And another element is obviously our cash in, what we are generating for the remainder of this year, especially also here in the second half of the year. And again, what is really driving ultimately our cash flow, apart from our of EBITDA growth is, in the end, the change of net working capital, as usual, because you have, especially in Q3 and Q4, the release for our net working capital. And the other thing is that we also look obviously at CapEx, especially the cash out for that. And again, we will be lower than previous year. And that's basically really the key drivers ultimately for a nice cash flow showing for the -- and the significant improvement, let's say, compared to the previous year. In the previous year, as you know, we had around EUR 100 million. And now we want to go from between 0 and minus EUR 50 million That's our plan. Then comes the question about -- regarding the order intake. We are a little bit cautious to really start now to digging into all the details of the order intakes apart from what we have said. Why? Because, ultimately, this is one of the key lead indicators for our business to steer it, indeed. But it's not so precise because we just have 85% coverage of the whole company. But what we can say is that, definitely, the order intake was very strong in the first -- in the last 4 months, so again December to March. And this is a good indicator. And another good indicator for Q2 is especially when you look at the order intakes, which are already in committed and which are due to be delivered in the second quarter. And this gives us also a very confident view also looking at our actual March that you will see a growth again in the second quarter.

Our first -- our next question comes from Alexander Galitsa with HAIB.

I have just two. First one is I'd like to maybe better understand what's the sort of baseline growth you've seen in your syringe business, absent of the phasing effects, and whether you're able to at least roughly quantify the shift in revenues that is happening. And I apologize if you have already done that. That's number one. Number two is just talking about this revenue block evolution that comes from Bormioli. Is that fair to roughly assume that the non-moulded glass revenue is roughly compensating for the weakness you've seen in moulded glass? So that on the full year basis, Bormioli will come out roughly stable. Is that a fair assumption?

Take the question, the first one.

Basically, the base growth of syringes and the phasing effect, actually.

The phasing effect is really a phasing effect. You will see this with more or less double growth in -- or more than double growth in the next quarters, driven by the fact that these volumes just go out later. It has an impact. That's why -- and you see this very clearly. It's in principle the whole deviation you see in Plastics & Devices -- or the major part of the division, Plastics & Devices. There's still ongoing growth in the syringes. It's not unplanned. And -- but the biggest effect, of course, will come with the launch of the new lines, and that will only be in '26. But we will say we have a very solid growth in syringes this year, which is also not unplanned.

Maybe just to tackle the question -- your question regarding Bormioli. As mentioned at the beginning, it was one of the first question, we don't -- really, we don't plan and we don't intend to comment on performance and guidance of our subsegment. And this is also valid for Bormioli now being fully consolidated, especially if you dig deeper into Bormioli plastics and Bormioli moulded glass. Having this said, it's clear that I just mentioned that in the first quarter, we have seen a margin improvement in business of Bormioli. EBITDA was compared to the -- that was compared to the previous year, almost flattish. We had a certain decline for revenues. But if you look at the full year, we really see a very nice showing for the reasons just mentioned by Dietmar as far as the bottom line is concerned. And here, we see clearly that our cost position in various areas. As we have mentioned this, apart from the growth, we see also that the cost positions are really improving and also the synergies kick in. And therefore, we expect a nice EBITDA contribution from Bormioli.

Our last question is a follow-up from David Adlington in JPMorgan.

Yes. We've seen some news this week of some pharma companies increasing their capacity in the U.S., and I expect we're going to see some more announcements in coming months given the concern around tariffs. I just wondered if on the back of that you'd see an increased need to expand your own capacity in the U.S. as a result and whether that's in your CapEx plans.

Thank you for the question, David. No doubt, the footprint -- the global footprint of Gerresheimer is clearly an advantage at the moment and gives us a competitive advantage. So if there is a demand of higher share coming from North America, with our footprint, we are able to increase capacity, even breathe, and also increase capacity further in existing sites, and that is something we would definitely do. And it's too early. I think we have not -- we have the first questions of these customers. But also for the -- these customers, they have to see what really happens midterm. But if there is a shift of production into the U.S., I think that would be very beneficial for us.

We have another follow-up question from Mr. Calvet with UBS.

Just for the avoidance of doubt on the tariff piece. You've talked about no China imports into the U.S. You've talked about Mexico being covered by the USMCA. Can you just confirm how we should think about Europe imports into the U.S.?

We have actually very -- it's almost [indiscernible], very minor imports from Europe into the U.S. And here for short term, you can always -- you could, if the tariffs are coming, shift this to the customer. But we can also shift production into the U.S.

Would you quantify perhaps? I don't know if that's possible.

Maybe just give me -- just give us a second. I mean, just give us a second. We had made an analysis yesterday to give you a certain ballpark. Just give us a quick -- maybe we have another question.

Maybe in the meantime, yes, just to confirm, you were saying there's a new syringe line launching in 2026. Is that Queretaro? Or...

Gerresheimer. Of course, it's Gerresheimer.

No. Is it at Queretaro? Is it in Mexico?

That's in Queretaro, that's right. But also here in Queretaro, we will not be affected by the tariffs because we are protected by the USMCA.

But the syringe contract that you have for -- there's some syringe business in Queretaro, is that just starting from 2026?

It's starting from 2026, that's correct. There's some qualification runs in '25, but the real sales starts in '26. Yes, the figures from Europe, actually, what we have is it's project-related. This means this is actually machines that we are shifting over into our facility in Peachtree, ramping up the facility. But these machines actually will now not be affected that these machines are moving over into the U.S. over the loop of the next 3 months. I was very surprised that my people here showed me that we have some sales from Europe into the U.S. But if it's machines, that's understood, yes.

Ladies and gentlemen, this was our last question. I hand back over to the management for any closing remarks.

Well, thank you very much for participating and all your questions. We are happy to do follow-ups, as always, as you know. And we will also be out in the market. Again, thank you. Have a good day. Talk to you next.

Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Have a great weekend. Goodbye.