What does the quarter’s cash conversion and free cash flow look like after the increased revenue and margins?
Answer
The press release you quoted tells us that Stevanato Group’s second‑quarter 2025 (Q2‑25) results featured:
- Revenue: €280.0 million, up 8 % versus the prior‑year quarter.
- High‑value solutions: 42 % of total revenue.
- Gross‑profit margin: Up 210 basis points (2.1 percentage‑points) versus the prior‑year quarter.
These are the only quantitative performance figures that the release actually provides. The release does not disclose the company’s cash‑conversion ratio (CCR) or free‑cash‑flow (FCF) for the quarter, so we cannot give you the exact numbers for those metrics.
Below is a concise, step‑by‑step explanation of what the cash‑conversion ratio and free cash flow represent, how they are normally calculated, and what the likely direction of those metrics is given the information we do have.
1. What the cash‑conversion ratio (CCR) measures
| Definition | Formula |
|---|---|
| CCR shows how efficiently a company turns its earnings (or net income) into cash generated from operations. A higher ratio (closer to 1) means earnings are being backed by strong cash generation, while a lower ratio indicates earnings are more “paper‑based” (e.g., due to large non‑cash items, working‑capital timing, or aggressive accruals). | CCR = Operating Cash Flow (OCF) ÷ Net Income (or sometimes OCF ÷ EBITDA, depending on the analyst’s preference). |
Why the CCR matters for Stevanato
* An 8 % revenue lift and a 210‑bp improvement in gross margin suggest that the company’s profitability per euro of sales has risen.
* If the cost‑structure (SG&A, R&D, CAPEX) has not expanded at a faster pace than revenue, the incremental profit is likely to be reflected in higher operating cash flow.
* Consequently, the CCR should improve (i.e., move upward) versus the prior‑year quarter, assuming the cash‑generation side of the business kept pace with the stronger earnings.
2. What free cash flow (FCF) measures
| Definition | Formula |
|---|---|
| FCF is the cash that remains after a company has covered its operating cash needs and its capital‑expenditure (CAPEX) requirements. It is the cash that can be used for debt repayment, dividends, share repurchases, or strategic investments. | FCF = Operating Cash Flow (OCF) – Capital Expenditures (CAPEX). |
Why FCF matters for Stevanato
* The 8 % top‑line growth and higher gross margin should boost OCF, all else equal.
* The press release does not mention any change in CAPEX, but historically Stevanrow’s “high‑value solutions” segment is capital‑intensive (e.g., equipment for drug containment and delivery). If CAPEX stayed flat or grew only modestly, the FCF would likely rise relative to the prior‑year quarter.
* Conversely, if the company launched a major new production line or made a sizable acquisition in Q2‑25, CAPEX could offset some of the OCF gains, dampening the FCF increase. The release gives no clue about such spending, so the net effect is uncertain.
3. Expected direction of CCR and FCF given the disclosed performance
| Metric | Expected change (vs. Q2‑24) | Rationale |
|---|---|---|
| Cash‑conversion ratio | Upward (improved) | Higher gross margin (+210 bp) means more profit per euro of sales. If operating cash flow grew in line with profit, the ratio of cash to earnings will rise. |
| Free cash flow | Higher (or at least not lower) | OCF should be stronger thanks to higher revenue and margins. Unless CAPEX surged dramatically, the net cash left after capex will be larger than in the prior‑year quarter. |
4. How to obtain the precise figures
Because the press release does not publish the CCR or FCF numbers, the only way to retrieve the exact values is to look at the full earnings release (often posted on the company’s investor‑relations website) or the Form 10‑Q that the company files with the U.S. SEC for the quarter. Those documents typically include:
- Statement of cash flows – showing operating cash flow, investing cash flow, financing cash flow, and the net change in cash.
- Notes on capital expenditures – detailing the amount spent on plant, equipment, and other investments.
- Management discussion – where the CFO may comment on cash‑conversion performance and free‑cash‑flow trends.
If you need those exact numbers, you can:
- Visit Stevanato Group’s investor‑relations portal (e.g.,
investor.stevanato.com). - Download the Q2‑2025 earnings presentation and the accompanying SEC filing (Form 10‑Q).
- Locate the cash‑flow statement and compute:
- CCR = Operating cash flow ÷ Net income (or EBITDA).
- FCF = Operating cash flow – CAPEX.
- CCR = Operating cash flow ÷ Net income (or EBITDA).
5. Bottom line for the original question
“What does the quarter’s cash conversion and free cash flow look like after the increased revenue and margins?”
Based solely on the information in the news release:
- Exact cash‑conversion and free‑cash‑flow figures are not disclosed.
- Qualitatively, both metrics are expected to have improved because the company posted higher revenue (+8 %) and a stronger gross‑profit margin (+210 bp).
- To know the precise numbers, you’ll need to consult the full earnings release or the SEC filing for Q2‑2025.
If you retrieve those documents and share the cash‑flow statement with us, we can walk through the calculations step‑by‑step. Until then, the best we can say is that the cash‑conversion ratio and free cash flow are likely upward‑trending relative to the prior‑year quarter, reflecting the positive impact of the higher top‑line and better profitability.