Stevanato Group S.p.A. (STVN) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Bank of America's Global Healthcare Conference. I'm Derik De Bruin, the Senior Life Sciences and Diagnostics Tools and biopharma services analyst. It's my pleasure to host Stevanato Group this morning. We have Marco Dal Lago, CFO; and Mauro Stocchi, Chief Business Officer, here today. Stevanato is a company with a very long history, 70-plus years in the business, but only a newly public company. And with that, I think maybe I am going to do through a couple of slides, just to give some background since it's not a name that's familiar with a lot of investors. And then I'll begin the acquisition of that sense. So gentlemen, thank you for being here, and I'll turn it over to you.

Thank you, Derik, for the introduction. Good morning, everyone. It's really a great pleasure for us to be here with you. And of course, to have the opportunity to talk about Stevanato Group business. So what we do, of course, also about the opportunity we do have in the market. Maybe a quick background. I joined Stevanato Group back in 2004. So maybe the first question, I believe it's important to answer is who is Stevanato Group. So Stevanato Group is actually a double-digit growth company. We've been growing double digit since many years, which is on track with its performances, and we'll continue also delivering double-digit growth. And I'm very glad to talk about how we can achieve this growth serving basically the biopharmaceutical and the diagnostic companies out there. So in the chart that you see here is Stevanato Group at a glance. So couple of key focus. The first focus is on our track record of growth. So we've been growing, as you see, 27.5%, 21% over 20%, and we've been also growing faster from the marginality and profitability standpoint. We have a strong visibility in the future, thanks to our backlog. And then, of course, another key aspect is for us being global, being global means to be in the market where the biggest pharmaceutical markets are in order also to streamline the supply chain that we now also recently were difficult times. And this is also, of course, supporting proximity to customers. Another focus is on being market leader. As you see here, we believe we are strongly #1 in sterile vial in the market, globally speaking. We believe we are #1 on [indiscernible] cartridges. And we are also #2 on sterile syringes, which is also particularly relevant because we were actually the last one entering in the market. And today, we have gained the second position out there. Then one focus is on being also a partner of choice to pharmaceutical companies. So basically, we deliver globally more than 70 countries, and we delivered the vast majority of the top biopharma and diagnostic companies, including also the biologics field. And we also have a great retention rate. We are almost at 100% with our customers globally speaking. So Stevanato Group as Derik was mentioned at the beginning, the Stevanato Group has a long history of success. The company was actually been able to grow along these years along this journey, you see here basically without raising any equity fund and still keeping always a very sound performance from the financial standpoint. The company was founded in 1949, and it was founded by the grandfather of our Executive Chairman. This gentleman was an inventor. And actually, in 1971, he created what still today is a very strong competitive advantage for us. It is also a very strong differentiating factor. So he was able to basically combine the process with the products, which means at the end, I mean, it's a simple strategy, but it requires a lot of science and technology behind. The logic is if you are able to own the process and to properly manage and evolve the process, you can really come out with a product, which is very differentiating from the quality standpoint and from the performance standpoint. So this is, let me say, the easy, but very important differentiating factor. We still have in our group. And which we, of course, can leverage to be our best performer in term of quality. So what did we do in the last 20 years. So in the last 20 years, we've been working hard in order to bring Stevanato Group to being a global structure company in order to accelerate our growth. And we basically focused in 4 areas. The first 1 is people. So building a very strong team globally. The second 1 is related to build a global footprint, and we did this, as you see here, in 2 directions. One is through greenfield projects. So we started from the ground, the factory we have in Mexico and China and Brazil, but we also did this through brownfield operation. And now as I said at the beginning, we are basically covering the most important pharmaceutical market in the world. Then the third thing we do, the third area is linked to integrating R&D in order to push on the expansion of our portfolio and also the repositioning of our portfolio towards high-value solutions. So products, which bring to customer additional value in comparison to other products they can find in the market. And then number four, we have been also successfully acquiring and also integrating additional competencies that are now part of our global offering, which is pretty unique in the market. We will see later which are the components of this offering. Then lastly, in 2021, as you know, we executed our IPO. Basically, we did this in order to bring Stevanato Group to the next level and be able really to drive long-term growth. The last milestone you see in the chart is the first outcome of this IPO where we are, of course, utilizing the proceeds for 2 key projects to expand our production capacity globally in high-value solutions. So we, in Stevanato Group have a very diversified operation around the world. And we are actually accelerating our growth through these 2 new plants that you see here in light blue. So the first 1 is in the United States and the second 1 is in China, and they are basically focused on the manufacturing of sterile products, the whole range, so syringes, vials and cartridges. So this global footprint, of course, help to serve our customers globally, again, with a much more effective supply chain, specifically also in the last couple of years, and of course, also help us to take advantage of the major market trends. So we are working, of course, a lot in understanding market trends and what is happening in the market since there are really a lot of things happening out there. And here, you can see some relevant trends, which are actually driving demand growth and specifically towards premium products, which are actually our high-value solution. So we mentioned 6, which are very important for us. The first 1 is that the topic of increasing population and aging demographic. I think this is very well known. This brings, of course, to our raise in the demand of drug containment solution, is also moving a little bit the demand toward drug delivery system. So it's really switching towards more high-value solution. This is connected to the last one, which is the topic of the self-administration, which is answering to this trend. But on the other side, it's also matching with another big trend in the market, which is actually the reduction of the health care cost. So this is requiring more and more solution where the patient can, of course, inject himself. And then to do this, our full portfolio of offerings starting from the drug containment solution going down to the drug delivery device is perfectly fitting this raising demand. Another key trend is the growth in biologics and biosimilars. I think no need to explain what it is, but here, we talk about sensitive drugs, in many cases, if not all. And these sensitive drugs require really high-performing drug containment solutions, drug delivery system. And again, this is another big trend that we follow and that is actually driving the growth of our demand globally. Another 1 is the topic of the outsourcing, and this is valid both for big pharma company, but also for small and the start-up, specifically in the biotech space. In the first case, global company are looking more and more for flexibility, and this is driving to outsource some of the capability. And this is another big trend driving the growth of our sterile solution. For what regard the small to mid-company, I mean, it's very well known. They are focused on developing the molecule. They are focused on bringing the molecule fast to the market, the patient and they don't have internal capability for packaging development, drug delivery development and so on. So they look for someone who is able to provide this competence and ideally able to provide the full package of competence because in this case, they don't need to talk with for different people, but they can make synergies and then get a faster time to market. So these trends altogether basically set the stage for our long-term organic growth because the existing portfolio we have, we can very effectively respond to this trend and drive demand growth. So quick couple of words about our priorities. So our priorities are, of course, focused on capitalizing on these big trends, as I said. And here, we mentioned 4. So 1 is global expansion. Again, we go back to the investments we are doing in U.S. and China, proximity to customers. Second 1 is the growth in high-value solutions to respond to this raising demand from customers in order to provide, of course, more value to them and to Stevanato Group as well in this case. The third 1 is to accelerate our leading position in actually premium products. So to leverage on our internal R&D and support the creation of additional IP in order to really develop and introduce in the market a high-performance product. But we are not only doing this, we are also doing this through partnership. I'm sure you're aware about the recent agreement we did with OMR. For example, we did another 1 with Haselmeier before. So we are actually complementing our offering and our effort of internal R&D also with external strategic partnership. And then last but not least, the topic of the pipeline, which is actually the visibility into the future. So we are also, in this case, focusing in building a very strong pipeline on high-value solution mainly Nexa and Alba, which are the 2 product lines that are focusing on biologics, biosimilar of timing, which is really driving our demand for the coming years. Now let's talk about Stevanato Group business segments. So here, when we talk about our business segment, we talk also about how our integrating offering supports the market trends that I just explained. So we report, as you know, 2 main segments. The first 1 is the biopharma and diagnostic solution. which was in 2021, 82% of our revenue. And then the second 1 is engineering, which was 18% of our revenue in 2021. And here, we go back to the concept I mentioned of the product and the process because we have been growing this way also with all the other competencies we have. We apply, of course, in both these areas, science and technology in order to continuously improve our process and improve our product. And through this, we achieved a pretty unique value proposition because we don't think there is actually anybody else in the market that can provide a customer this full package of competence as an integrated solution. For sure, as a single segment, we do have competitors. But as a single solution, we are really unique out in the market. And our capability is really to be able to link this end-to-end solution in front of the customer requirements. So which are the -- which is the portfolio, actually, we are delivering to customers. We are active, as you see on the system, on the full range, a very broad range of drug containment solution, we do have cartridges. We do have vial and syringes, both in bulk, but also in sterile configuration, which is actually growing very fast. We have been the first patenting solution for sterile vial back in 2008. So this is for what concerns the drug container solution. Then we have a full range of drug delivery system. In drug delivery system, we also move in two directions. We do have the full range of drug delivery system as our portfolio of IP, so we can provide off-the-shelf solution to customer, whether it is a pen-injector, an auto-injector or a wearable system. But at the same time, we also operate as a CMO/CDMO, because specifically also the big pharmaceutical company, they prefer to own their own IP on the pen side or on the auto injector side, and we can offer our capability to jointly develop or simply to CMO that kind of device. Then we are also active in the IVD. In the IVD, we both support point of lab, so the consumable for the big diagnostic system, but we are also active and we are actually growing fast on the point of care, which is actually 1 of the big trends in the market, the movement from the big lab in the hospital to have point of care solution, the pharmacy side or at the doctor side in order to be fast and more flexible in applying diagnosis. For work concern engineering, these are also complementary capabilities. We are active in the preassembly and final assembly of drug delivery systems, very flexible solution. We are, of course, active on the inspection systems since many, many years. We are active on the final packaging and sterilization and which is a little bit outside of this, let me say, market of biopharma and diagnostic. We are also active on the glass forming equipment, because through this, of course, we are able to optimize our drug containment solution, and we are also actually able to supply the market because there are very few company out there that can supply that kind of very high-tech equipment. While doing this, it's important to mention that the demand we generate and the business we generate with customers based on this offering is also pretty sticky because that at the end, if you are able to enter at the beginning of the development stage with the customer, you follow and you support the customer. At the end, you get registered in DMF or in other regulatory buffer with your drug containment solution in order to match the drug, and this will continue for the whole lifetime of the products. So I know it's a bit complicated, but I hope that this gives you a pretty, let me say, good understanding of our offering, which, again, is really pretty unique in the market. So many of this solution I mentioned, which are part of our portfolio, our high-value solutions. What does it mean high-value solution. It means that a system or a process or a service is characterized by complexity and is targeting at the end, a product which have higher performances and which is responding to very high level requirements. We do have this high-value solution basically across the whole portfolio. And as you see here in the chart, more and more business is actually transitioning in this direction. Why? Because this provides a lot of advantages to the customer that you see on the right part of the page. One relevant advantage is the reduction of total cost of ownership. And there have been also some research on the market, which actually very -- explained in a very detailed way this. I can mention routes in 2018, they prove an analysis, which is clearly explaining why. And they are also saying that the final advantage for a pharma company is around 40%, 45% in terms of reduction of TCO. So it's a very -- can be really very interesting for them. So this is a key aspect. Another part of the value provided to customers is the time to market. If they choose us, they can be very fast because we can help them to choose the right containment solution and we can slow down or reduce -- sorry, not slowdown -- reduce the regulatory path in order to get to the market and to patients faster. Then of course, there is the topic of the supply chain already mentioned through this global platform. And then last but not least, really the very high-quality performance of our product because, again, of the topic of really owning and managing the process and be able to customize based on customer requests. As you see here, we achieved the 29% of our portfolio in high-value solutions. And in this case, we are really continuously growing, and it would be this way also in the future. So to conclude quickly the topic of the portfolio and the positioning part for Stevanato Group, we do really think we have a pretty unique value proposition for our customers. And through this integrated value proposition, we will provide high value to them. And this is 1 of the main reason why, I mean, we believe we will continue growing double digit in the future. In this context, I also would like to mention, I touched it briefly before, the topic of the early development -- the early involvement in the development of the drugs. So we do have what we call tech center. One is in Boston, one is in Europe, in Italy to basically support customers during the preclinical and Phase I, II and III, when they start talking about which is the best actually primary packaging for the drug in connection to the different formulation options they have. So this is important because, of course, it's a very oriented point. But based on our portfolio, this is also very important because give us the opportunity to talk to them not only about the drug containment solution, which is what not only happens when you are developing a molecule, but also to introduce the discussion about the delivery system, about the inspection system, about the assembly system. In this way, we help them to bring forward to advance some specific activity through, for example, Benchtop Solution for inspection. We can help you to inspect your drug containment solution with the drug on the Benchtop. While we are developing we develop the receipt to do this. And then we can scale up with the future machine in order really to be faster than on the regulatory path, because they don't need to redo again what is required from the regulatory standpoint. So this is, of course, a bit technical, but gives you, I hope, a visibility about how the Stevanato Group can really advance discussion with the customer, which normally are done later and optimize the time to market for that knowing how important is also financially speaking the time to market. So where do we bring this offering? This is a high-level view of the market we are serving. We are bringing this offering to a market, which is worth EUR 13 billion. And we are, as you know, EUR 1 billion company. So within this market, which is divided in these different segment that you see here, we are also focusing and targeting specific subsegment, as I mentioned, we are targeting, for example, the biologic world because the biologic and the biosimilar world is growing at a much higher pace than the 5% to 7% that all these markets together are growing. So we are also really focusing with our R&D on this specific subsegment that can provide Stevanato Group and did provide in the past a much higher growth than the market on this 5% to 7%. And within this, we are also focusing on the high-value solution. So putting together this strategic approach to the market, we really believe that we can drive our growth through our value solution and key subsegment to a value which correspond to our target of a double-digit growth. So I would now leave Marco on some financials. Thank you.

So you can see here our last 3-year track record that demonstrates consistent delivery on our financial and operational objectives. During the last 3 years, we kept on growing double digit organically. We expanded our margins, and we shift more and more of our mix to our high-value solutions. Today, the fundamental of our business continued to strengthen as we pass our strategic priorities to capitalize on our strong customer demand. Amid the favor of macro trend Mauro was mentioning, our integrated capabilities resonate with customers to keep on delivering double-digit growth and long-term shareholder value. In the second quarter, we confirm the trend basically. So we have been able to grow 15% year-over-year, 11% on a constant currency basis, and we exclude the currency effect and COVID from the equation, we would have grown about 17%. On the right, we can see we are keeping the trend also for high value solution. We grew from 24% share of high-value solution revenues on total revenues last year to 30% almost in the second quarter 2022. You can see also here a regional breakdown of our revenues. Europe, our traditional market in Europe is still very important for us, but we anticipate the fact that Asia Pacific and particularly North America, will become more and more important in the years to come with a growth driven by customer demand and the fact that we are installing capacity there in our easy field high-value problems. We can rely on a strong balance sheet. Our balance sheet give us the flexibility to invest in sustainable organic growth by expanding our capacity to meet the long-term demand dynamics in our core business. With the strong financial position we have, we believe we have ample capital to address future liquidity needs and execute our strategic priority and capital investment plan. You can see here a breakdown of our CapEx for 2022. As mentioned, the proceeds of IPO, we said our strategic capital allocation priorities. We believe our priority is to keep on growing our business, expanding our high-value solution geographically, especially in U.S. and China. And this is why this year, we are investing between EUR 330 million to EUR 380 million in CapEx with about 82% of the amount allocated to grow capacity in the greenfield we mentioned and in Italy, where we are bridging the capacity until the plants in U.S. and China will be ready. We plan to start generating revenues in U.S. with the new greenfield starting from end of '23 beginning of '24. And we expect to have a 6 months later the factory in China, ready to deliver. So the remaining part of our CapEx are dedicated 6% to R&D, beside the spending we have in [indiscernible] is about 3.5% of our revenues. R&D is the second pillar of our allocation strategy. Our efforts are concentrated in glass containment high-value product like Nexa and Alba and to the proprietary solution in drug delivery systems. The remaining part, about 12% will be dedicated to increase the efficiency in our factory maintenance, information technology and quality. We recently reviewed and increased our guidance for 2022. We are targeting our revenues between EUR 955 million to EUR 965 million for 2022 with an adjusted EBITDA between EUR 253.3 million and EUR 258.3 million. That means an adjusted EBITDA margin between 26.3% and 26.8%. We want to direct your attention more on our medium- to long-term objectives because we have clear in mind our goal to keep on growing single digit, low double-digit year-over-year for revenues organically. We want to increase the mix of high-value solutions. We have a midterm target to reach mid-30% by 2026 in a value solution as a percentage of revenues on total revenues. And our target is to further increase our EBITDA margin to position ourselves in the range of 20%. I will leave to Mauro for conclusion.

Thank you, Marco. So just to maybe conclude a little bit this high-level presentation of Stevanato Group. We just would like to mention a couple of things. The first 1 is that we believe we are in an ideal position to continue delivering shareholder results, of course, shareholder value, and which are actually the highlights of Stevanato Group. The first 1 is that we have a real unique end-to-end integrated value proposition that is capable to address the most important trends in the market, respond to customer evolving demand, of course, driven by science and technology. We serve the top blue chip high-growth biopharmaceutical and diagnostic companies out there with a very, very high external, I would say, retention rate. We operate in high-growth markets and within the high growth markets, we focus and we target markets that are actually asking more and more high-value solutions that we are focusing on. And then last but not least, we are also a very highly motivated team -- global team, which are united working for these targets. So we are -- basically, we believe in an ideal position, and we really have strong fundamentals in order to provide a long-term sustainable growth. And with this, I would like to thank, of course, Bank of America and give back the word to great Derik. Thank you very much.

So a couple of questions on this. I have to ask you the inevitable COVID ramp-down question. So as that continues to ramp up. I mean, you lowered your expectations this last quarter. I guess, your initial thoughts on how that impacts you going forward and so like what would be the residual on COVID for next year? And basically, it's like when you think about the -- your double digits as your double-digit growth is should we think about 2023 as double digits on a net basis, excluding the COVID headwind on the top line for your core business continue to grow because you mentioned it grew 17%?

Yes. So this year, we started the year with more aggressive guidance about COVID, we reduced to 10%. The good news for me is that we have been able to replace quickly with other therapeutic areas and without losing our gross profit margins, keeping or growing in spite of the fact that COVID portion is going down. So for us COVID is important, but we are not so worried about COVID because we can replace quickly with other therapeutic without investing differently than what we are doing. So we are very flexible in switching from and not have to be other.

How much of your -- how much of a price differential is there between standard and high-value solutions. I mean, of your growth algorithm, what comes from the mix shift versus just volume growth?

Well, there is a relevant price difference to make you an example in vials where the penetration is very small today, it's in the range of 5% in sterile. The same product in the vial and sterile configuration with price on average 10x more than the sterile configuration.

10x more. And the customers are willing to pay that premium, I guess, what's -- is it -- I mean pharma moves at a very glacial pace? So I mean -- so and you're 5% penetrated. So where should we think about that going ahead?

Maybe to answer this, we can make a parallel with the syringes. Syringes nowadays are more or less 95% in sterile configuration, but if we look back beginning of year 2000, well less than 5%. So is a long way to go because this will require, of course, validation. But the advantages we showed before for the pharma company are really high. So what we are doing, we are trying to estimate the switching time that they have, but this will be -- we see this as a very solid and strong trend for the future.

Got it. What -- have you started -- how much of an impact has switching to lower dose formats. Have you started to see people doing more prefilled syringes. I mean COVID is 1 avenue of this, but are people moving more?

Yes, I would say this is not only in the COVID environment, but this is also reflecting some of the trends like going, for example, moving from hospital to home. I mean all this trends are actually creating the bureaucracy to move a lot of demand from multi-format vial to single dose, whether it is a syringes or cartridges. This is an ongoing trend that we see will continue in the future, independently from COVID.

A lot of questions on inflationary costs. Obviously, FX is not a huge problem for you on that, but energy as well and supply chain concerns. Can you just sort of talk about margin pressures from those?

Yes, for sure. 2022, we see a lot of pressure about inflation. Gas is also part of our process to form the glass. What is important to underline that before the increase utilities represent much less than 5% of our cost of sales. So it was a minor part of our cost. Obviously now is more and more important. How we manage? We simply recalculate particularly our standard cost. And we price accordingly, most of the time, we able to not to close to adjust the price to our customers. When we don't have them, especially in this period, we sit down with our customer, which we have a very long-term relationship talking in a transparent way and most of the time, but they are available to recognize a price increase. So for the year, we anticipate we will be able to offset the higher cost with higher price. It could be a little bit dilutive with respect to gross profit margin, because we are not capable in this situation to move the margin on the cost increase for utilities, but -- and we can have some quarterly delay. But overall, our plan is to offset the cost increase with price increase for the year.

And also on the margin, I mean, as you bring this additional capacity online, one would think there would be a little bit of a dipped before things pick up together? Or do you think you can get steady margin progression even through bringing on the 23 and 24 capacity?

So we are confident with the shift in to value solution to keep on growing our margin. We could have some temporary effect related to depreciation utilization, but it's something that really is more an accounting effect rather than.

Got it. There's -- I think there's some concern in the industry that some of your customers may have stockpiled because of concerns of supply chain issues. I mean, is there a lot of inventory in the channel?

This topic is, I believe, very common all around the world. I mean we have also been acting on our stock in order to manage a tough situation. But I would say that this is a phenomenon that we saw also in the past. So as long as the market will return back to normal, this will also other weight some of the stocks. So it's -- I would say it's a standard effect in the market, which will not have any effect on the -- I mean, on the plan we have.

Because today, we can rely on a backlog that is EUR 1 billion that is the largest ever. So we can plan and adjust also some modification of the craft.

Yes. And also the pipeline is, of course, working in this direction. I mean, yes.

So 1 of the questions we've gotten from investors is that people would like to own more of your stock, but the float is not particularly high. What are you doing to think about in terms of increasing the float.

This is all related to business basically. So we have this clear plan to expand our capacity. The main focus is not about M&A. So it's more about the capital we need -- we plan to keep on growing leverage, for example, for the future, the shifting from vial to sterile buyers, and it will force us to invest more CapEx. So in a nutshell, we will be considering a secondary offering for the future. We -- the intention of the main shareholders is not to stay with a free float of 1% or less. So it will happen. We don't have -- we are not in a hurry and we don't have a short-term plan for that.

And as we're sort of coming up on the end, what do you think is misunderstood or underappreciated about Stevanato?

Maybe I can comment this starting from the integrated offering in the sense that this is really -- we see this from the customer. I'll just make an example. If a company wants to bring a biosimilar to the market, they focus on the molecule development and they need primary packaging. They need a pen, they need to assemble, they need to inspect, they need to package and they need to set a value. So all these capabilities under 1 roof is something that is really picking up fast in the market, but there is still not there the full understanding or the full knowledge about this business model because it's new, because it's pretty unique. So this is something that we believe will give us a lot of satisfaction in the future.

Maybe at the beginning or maybe not now the dependency on COVID. We are on the market for 70 years. We kept on growing double digit, at least in the last 12 years. So -- and we are demonstrating now that in spite of the decline of COVID, we are keeping on performing. At a certain point in time, we were associated to the COVID company.

We're in the vaccine space since decades.

Yes. Here is a question from the audience. Just 1 real quick -- you talked about all the capacity you're bringing online in North America and in China, high-growth markets and you focus on high-value solutions. Once that capacity goes online in late 2023, 2024, what's going to be the impact of the financial model? Is there an opportunity for that to accelerate the growth rate even further?

Sure there's an opportunity. We didn't mention the fact that high value solution, we have a gross profit margin between 40% to 70%. So much higher than the average of 31% to 32% you've seen before. So for us is for sure an opportunity shift in our revenues to our value solution, not by starting capacity close to our customers. So this is simple, but we believe the best way to invest our bank.

And we're also doing this in a modular way so that we are responding to the demand, but we are flexible since we produce our own machine internally to respond specific additional demand that may come in the market. So there might be opportunity for sense.

Is there already like a backlog or an order book for those facilities? Are you having conversations with customers sort of how do you know where you need the capacity?

Absolutely because you need to qualify and validate the plan. So we already started with many customers to launch activity in this direction in order to come when the factory will be ready to ramp up already with customers on board. Yes, absolutely. And they look for this very favorably because they will be -- we will be closer also to their plant at the end, to streamline the supply chain.

So just quickly, what's the limiting factor on the percentage of revenues that you can get from high-value solutions as your long-term target is 30. Why 30s? Why not 50 or higher?

This is linked maybe to the regulatory path we mentioned before. So switching to high-value solution for a pharmaceutical company requires several activities in terms of maybe adapting their internal process, revalidating the primary packaging, make stability on the drug. So this is, I would say, straightforward for the new products that are coming in the market because they can start directly with the high-value solution. For the existing product in the market, there's a cycle time mainly due to regulatory you have to go through, which is actually what happened on the syringes.

The only thing I would add on that is those financial targets were laid out during the IPO were meant to be roughly 5-year targets. So that's a horizon, call it 2026.

And with that, I think we're out of time. Thank you, gentlemen. Thank you very much for attending.

Thank you very much.