Stadler Rail AG ($SRAIL)

[Foreign Language] Ladies and gentlemen, esteemed members of the media and analysts, I warmly welcome you to today's Stadler Rail Financial Results Press Conference. On behalf of Stadler, I would like to welcome Group CEO, Markus Bernsteiner; and Group CFO, Raphael Widmer. They will both present the results for 2025 financial year and an outlook for the current year and beyond. Afterwards, the Group CEO and CFO will, of course, be available to answer individual questions. My name is Marc Meschenmoser, Head of Group Communications. I look forward to guiding you through this event. [Foreign Language] [Interpreted] I now pass the floor to Stadler Group CEO, Markus Bernsteiner.

[Interpreted] Thank you very much esteemed media representatives, analysts. I would also like to warmly welcome you to the presentation of 2025 end year results. Before I present our figures to you, I'd like to give you an overview of our past financial year. In light of the framework conditions, we are very satisfied with the development of 2025. As you will see later, the relevant key figures go in the right direction. We can confirm guidance. And furthermore, in 2026, we expect further drove major growth regarding revenue and EBIT. Over these past few years, we invested a lot in technology in our sites, which has a positive impact. With our wide product portfolio, we are excellently positioned in the market and win lots of orders, just like recently 1 month ago with a major order for the Copenhagen commuter train system. Our order backlog is growing, and we are the market leader when it comes to alternative drives like battery and hydrogen trains. This development and the future outlook show that we have taken the right measures to counter challenges. You may remember that in 2024, natural disasters hit us hard in the Canton of Valais, in Austria and particularly in Valencia. And since August 2025, the aluminum profile suppliers' plant has been producing at full capacity again. And also the commissioning center in Durnrohr in Austria operates normally again. However, we continue to feel the impact of the devastating flooding event, which literally washed away many suppliers in Valencia, 40 of them, this had a major impact on the supply chain. We had to rebuild the supply chain and adjust production processes. We are well on track. However, the impact of the flooding will presumably be felt by until 2027 and will lead to additional costs and delays in deliveries. Another burden is the economic situation in Germany. We've made progress there, and I will speak about that in a second. So you see that despite external adversaries, we've managed to further stabilize the business. The key figures go in the right direction. And with this, we have now laid the foundations for further success. I would now like to give you detailed insights into the situation in Germany. The weak economic development in Germany has a negative impact on the course of business, and we feel that in many different ways. For instance, in the supplier industry, we are directly affected by suppliers going bankrupt, had to develop new suppliers, and we noticed that several suppliers no longer managed to deliver on time. We need to compensate that. In order to secure competitiveness and the production site in Berlin, Stadler launched an extensive restructuring and efficiency program in early 2025. In the long run, we'd like to put that plant onto an economically stable foundation. And the program has shown its first impact. The production could be increased over the -- productivity could be increased over the entire value chain. We streamlined the organization and improved processes. And in April last year, Stadler, Germany was furthermore able to sign a future-oriented collective bargaining agreement for the Pankow plant. The workforce makes a contribution and now works 40 instead of 38 hours per week. And regarding orders, we also expect positive development. The Berlin transport operator has so far ordered 484 metro cars, and we expect them to [ call off ] the remaining 1,500 cars according to the framework agreement by the end of the year. Furthermore, we expect progress regarding the 350 trains awarded to us from the Berlin commuter rail system, appeals and other reasons have delayed this project several years. I will now give you an overview of the most important key figures, and Raphael Widmer will then explain them in more detail. We have reached the targets for 2025. And with this, we continue our efforts to improve our results at CHF 6.1 billion, the order intake is stable at a high level. Again, the book-to-bill ratio exceeds the strategic target of 1.0 to 1.5, which is an indicator for further solid growth, revenue increase and good capacity utilization at our plants. The high order intake is reflected in our order backlog, which is at a record high of CHF 32.3 billion. And all orders have been assigned to the individual production plants. Compared with 2024, we increased revenue by 13% or by 15% adjusted by currency effects. The EBIT margin was increased to 4.4%, which is a 1.3 percentage point increase year-on-year. So we also reached this goal. The consolidated result was almost doubled to CHF 100.7 million. I'd like to underline that we are a globally attractive employer and that we have created lots of highly qualified jobs. In 2025, we created around 2,000 jobs, meaning that at the end of last year, Stadler had over 17,100 FTEs. And in 2026, we created another 1,000 additional jobs. In Switzerland alone, we have 6,000 full-time employees and we also further expanded our apprenticeship efforts, not only in Switzerland but worldwide. We managed to get the apprenticeship established at our U.S. site. And this brings me to the 3 reporting segments of Stadler, Rolling Stock continues to be the biggest segment. We stand for innovative and durable quality products, and we have the most extensive product range in the industry. In the Rolling Stock segment, we won orders in the amount of CHF 4.4 billion. So the order backlog increased by 7% to CHF 22.4 billion. And revenue could be increased by 10% to CHF 3 billion. The development in the Services and Components segment was also positive. Last year, Stadler won several multiyear full-service contracts, which underlines the strategic goal to expand the Services business and to strengthen the share of recurring revenue. We were thus able to increase order intake by 55% to CHF 1.6 billion. The order backlog increased by 22% to CHF 9.3 billion. And revenue increased by 19% to CHF 607.4 million. In the Signaling segment, the order intake was CHF 103.2 million, meaning that at the end of the year, we had an order backlog of CHF 549.9 million. And revenue was more than doubled to reach CHF 117.5 million. I would now like to present some highlights from our 3 reporting segments. Also in 2025, we were successful with our FLIRT. One example here is the Netherlands. For NS, we will build 36 trains. And with this, Stadler has sold more than 3,000 FLIRT running in 24 countries. In the sector of urban railways, we won an important order from the Cologne traffic operator. We will supply 132 high-floor trains with an order volume of about EUR 700 million. And regarding locomotives, I would like to underline the order for NEXRAIL, a Luxembourg-based locomotive leasing company. NEXRAIL has mandated Stadler with building 200 EURO9000 hybrid locomotives. And also when it comes to tailor-made vehicles, we were very successful. For instance, we signed a contract with TPC, Transports Publics du Chablais about 13 rack adhesion trains. And these vehicles can change seamlessly from rack to adhesion operation mode. In the segment of Services and Components, we were able to increase order intake by 55%. For instance, we received long-term full-service contracts for 27 CITYLINK trams in Frankfurt and for 7 FLIRT trains of Swedish Arlanda Express. And for Cologne, Stadler assures the supply of replacement parts and supports the operator with Service and Support. This includes preventive maintenance and technical advice. For Hungary, the Thurbo articulated trains will be refit and given second life. And this is a financially and ecologically sustainable solution and everyone benefits from that above all passengers. In the segment of Signaling, we can equip the rack railway line from Montreux to the Rochers-de-Naye with our Nova Pro train protection system. And for BLT, we will, for the first time, equip an urban system with the CBTC communication system. For Evo France, we supply the ETCS equipment for cross-border traffic. And in Bergen, Norway, we will also be able to equip the tram network with our Signaling technology. The project volume there is about EUR 50 million. Stadler was able to strengthen its leading position in the field of alternative drives. No other manufacturer sells that many vehicles with battery or hydrogen drive. Many vehicles are already running successfully. Last September, we put into operation the first hydrogen passenger train in California in North America. And ever since it has been running stably between the center of San Bernardino and Redlands. Further, in 2025, we won additional orders. And here, I'd like to underline the 19 FLIRT Akku-vehicles for Central Thuringia battery network in Germany, the battery electric vehicles can cover up to 80 kilometers without [indiscernible] compared with diesel trains, this significantly reduces CO2 emissions. And Stadler hydrogen trains will soon be running through the volcanic landscape of Mount Etna in Italy. The local operator FCE has ordered 2 tailor-made narrow-gauge trains with hydrogen drive will be built here in Bussnang, Switzerland. And the trains will presumably go into operation as from 2028. The train is the most environmentally-friendly mode of transport, which makes it part of the solution for the climate change challenges. We continue to invest in sustainable mobility solutions, and we've set ourselves ambitious sustainability targets. Compared with 2022, we've set ourselves the target of halving our CO2 emissions by 2030. The emissions created along the value chain will during the same period, be reduced by 25%. We like to achieve net zero by 2050. Many measures are being implemented. For instance, we are installing heat pumps, photovoltaic systems. And with our new heating system here at the Bussnang headquarters alone, we save 280 tonnes of CO2 per year as much as you would generate if you were going around the world 35x by car. And these measures are successful. Despite our growth, we were able to reduce our own emissions since 2022 by almost 10%, that is by 9.6%. And beyond that, we take on responsibility in all dimensions of sustainability, also we take on social responsibility. You see some examples on the slides, and you find details in our sustainability report. With this, I'd like to pass the floor to our CFO, Raphael Widmer.

[Interpreted] Thank you, Markus. Ladies and gentlemen, I would also like to welcome you to this event. I will now lead you through the financial part of this presentation. And I will start with an overview. The order intake in 2025 continued its positive development. It was at CHF 6.1 billion and thus significantly exceeded our strategic target. The order backlog increased to CHF 32.3 billion compared to CHF 29.2 billion in the previous year. Revenue in 2025 was almost CHF 3.7 billion. So this was CHF 420 million more than in the previous year. The negative impact of the natural disasters in 2024 could in part be compensated. As a result, EBIT is now at CHF 161 million, which corresponds to an EBIT margin of 4.4% and the EBIT margin is thus 1.3 percentage points higher than in the previous year. The net cash situation decreased by CHF 643 million to CHF 275 million. The reason for this was the major increase in production output and work in progress and the net working capital at the same time increased by CHF 589 million to minus CHF 422 million. CapEx amounted to CHF 589 million and was thus higher than the previous year. The free cash flow was negative for the overall year, minus CHF 588 million. However, in the second half year, a positive free cash flow of CHF 155.9 million could be generated. The down payments of the past few years were used for order execution. And at the same time, we continue to invest in our plants. This brings me to the order intake. The order intake continued to show positive development at CHF 6.1 billion. This is, again, a very good value, significantly exceeding the strategic target and slightly below the previous year's level. The main driver was the Rolling Stock segment CHF 4.4 billion, and this includes Cologne, the FLIRTs for NS in the Netherlands, or CITYLINK for Frankfurt. And in addition to that, we received many well-diversified small and medium-sized orders. The order intake in the Services business amounted to CHF 1.6 billion. The order intake in the Signaling business included CHF 103 million. In the previous year's figure, the major order for MARTA in Atlanta was included with a value of $500 million. So these figures mentioned here only include third-party orders, no internal orders. Our geographically strongest markets are the German-speaking countries, Western Europe and the U.S. This brings me to the order backlog, which continues to increase and amounted to CHF 32.3 billion at the end of 2025 with a high Services and Components share of over 29%. That gives us security for planning and stability for the future. Let me now talk about revenue. Revenue for the year 2025 increased by 15% without currency effects. If you take into account the negative FX effect of 2%, revenue increased by 13% to CHF 3.7 billion. Revenue in the Rolling Stock segment increased by 10% and here, 2% was the expense of FX effects. Services revenue increased by 19%, all that despite a negative currency effect of minus 2%. In the Signaling segment, we had a 140% increase in revenue, and this increased a negative currency effect of minus 9%. And regarding revenue recognition, you also need to consider production output. Production output reflects revenue plus the gross change of work in progress. The production output in 2025 exceeded revenue by almost CHF 1.35 billion and reached over CHF 5 billion. So this accounted for an increase of over 21% compared with the previous year. Let me now show you the production output in more detail. Stadler uses the conservative revenue recognition method units of delivery, meaning that Stadler only recognizes revenue after the vehicles have been accepted. This means that revenue reported lags behind actual production output. The conservative revenue recognition method combined with the long execution cycles in our business leads to the picture that you see here. The order intake has since 2021 always been between CHF 5.6 billion and CHF 8.6 billion. They are always significantly higher than the revenue recognized in the same year. Revenue recognition follows several years later. And the production output, which you see in green on the slide, however, starts increasing much earlier, the vehicles get built and delivered to the customer after completion. The years 2024 and '25 were years with a significant increase in production output and low revenues under the units of delivery method. If we use the cost-to-cost method, revenue for the year 2025 would be at over CHF 5 billion. And because of this situation and as we are now delivering lots of vehicles, we expect major revenue increases to over CHF 5 billion in 2026 and '27. And for the revenue planned for 2026 and '27, we already have 95% in our books. And for the year 2028, we already have over 90% in our books. Now the EBIT. EBIT amounted to CHF 160.6 million, and this is CHF 60.1 million higher than the previous year. The EBIT margin was significantly improved and is in the target range of 4% to 5%. The negative effects of the flooding in 2024 could in part be compensated and the efficiency increase program in Germany is having an impact. The higher revenue also leads to better fixed cost coverage. Now some remark on the consolidated result, which amounts to CHF 100.7 million, and it follows the EBIT. The currency effects in the financial results were positive. These are mainly valuation effects of balance sheet items at the reporting date. I will now come to the cash positions. The high down payments from the past are now being used for the production output. The mix of work in progress is currently having a negative cash profile, and that has an impact on the operating cash flow on the net working capital and the net cash position. The merit image of the net cash position is the net working capital. So the net working capital was primarily influenced by the increase of work in progress. However, it remains negative, and negative net working capital is always desirable for us because that means that we have received enough cash from our customers to execute our projects. And I would now like to show you another slide regarding the net working capital. I regularly show this slide because it nicely illustrates our business in the years 2016 and '17, we received major orders with substantial down payments that was Stadler's first big growth phase. In the years '18, '19, '20, we then had a phase where we had a lot of output, so where we used the money received to build and deliver vehicles. And then in 2020, there was the COVID effect where we built vehicles, delivered vehicles or brought them to the customer sites, but we didn't get homologation, market authorization. Without market authorization, you can't hand over the vehicle, you can't get it accepted, then you can't invoice it, and you won't get money in and then the net working capital goes up. As from 2021, there was a turning point, a catch-up effect after the pandemic. And then major orders came in again with respective down payments, and we also had good orders in execution with good milestone payments. So as a result, we had a net working capital of over CHF 1 billion in the negative, which was positive. And now comes another phase where we are seeing a major increase in production output. I showed you this increase, CHF 1.3 billion, and this is not fully compensated by new down payments for new orders, which means that the net working capital shows a development in the other direction. But we do assume that it will remain negative. So we will also, in future, have enough down payments from customers to be able to use the money to execute on orders. So much on the cash position and the net working capital. Now a few final words on capital investments, the investments made in the last few years mainly affect the expansion of capacities in Spain, Hungary, the U.S. and Germany. The high order intake required additional investments in our production sites and the investments in intangible assets that you see in light blue here mainly come from development activities for locomotives, alternative drive systems and Signaling technology. And with this, I close my presentation and pass the floor back to Markus Bernsteiner. Thank you very much.

[Interpreted] Thank you very much, Raphael, for these explanations. I would now like to give you an outlook to 2026 and beyond. In the long run, we will optimize our business in 4 action fields. Firstly, the team is the foundation for our success. We train more and more apprentices and thus counter the lack of skilled workers. We also expand internal development programs. And I'm happy that we have such a great employee loyalty. We have many long-standing employees. Their major expertise is valuable, and we'd like to preserve it. We were able to continuously lower employee turnover over the past few years. The current turnover rate is 4.3%, which is an excellent value. Secondly, we drive ahead with innovation and digitalization on vehicles in the Signaling technology and in Services. We use new technologies to become more efficient and to improve our products. This is the precondition to be successful in the market in the long run and to win orders. Thirdly, when it comes to order intake and revenue, we bank on a selective participation in tenders, meaning that we will evaluate in detail at what conditions we bid, and in which tenders we participate. And we further want to continue profitably expanding the Service and the Signaling segments. And fourthly, in the field of operations, we are focused on executing orders reliably, efficiently and on time. And here, we bank on consistent cost and milestone control. We closely accompany our suppliers in order to make sure they deliver on time. We further invest in our production technologies, and we strengthen cooperation between our sites. And this brings me to the focus points for the year 2026. This year, we will focus on 3 topics: Stadler Germany digitalization as well as process and system harmonization. I have already talked about the situation in Germany. We've reached the first goals, and we will continue to implement this efficiency increase program. When it comes to digitization, we can say that in early 2026, Stadler made a strategically important step ahead with the Stadler Digital Labs joint venture. The joint venture starts with about 100 employees. The subsidiary is focused on software engineering, safety systems, cybersecurity as well as digital solutions to support Stadler's global railway operations. The further process and system harmonization within the Stadler Group also has a major importance. Stadler is organized in a decentralized way, and this won't change, and it offers us many advantages. At the same time, this leads to challenges for efficient cooperation. So in order to assure good and efficient cooperation, we harmonize our group-wide key processes, particularly in sales and in order execution. And one precondition for that is a uniform system and application landscape. And for this, we introduce a modern PLM and ERP system for our business processes. With this, we create end-to-end processes in the entire group from sales to delivery. Both taken together increases transparency, reduces interfaces and strengthens group-wide cooperation. The system rollout has already started. Currently, the implementation is ongoing in the Swiss division. With these focus topics, we continue the pathway taken to improve our results. And this brings me to the financial outlook. We confirm the existing short and medium-term guidance. In the financial year 2026 and in the next few years, we will reach revenue of significantly over CHF 5 billion, thanks to the high order backlog, the increased production output and the efficiency program launched in Germany, we expect an EBIT margin of over 5% for 2026. In a stable environment, we furthermore expect to be able to increase the EBIT margin to 6% to 8% in the medium term. The order intake is expected to be in the range of 1 to 1.5x the annual revenue, which forms the basis for sustainable capacity utilization and further growth. Furthermore, for 2026, we expect investments of about CHF 250 million. And after 2026, the investments will still be at around CHF 200 million. The Board of Directors will propose to shareholders a dividend of CHF 50 million or CHF 0.50 per share for the year 2025. In the previous year, the payout amount was CHF 20 million or CHF 0.20. Let me summarize now. We are proud that after the external adversities of the past few years, we have stabilized our business. The key figures point in the right direction. The measures taken have an impact, and we continue to put them into practice consistently. This shows that the hard work of the past few years is now paying off. The basis for Stadler's further success has been built. We will build on that and continue to go that way to further improve our results. In addition to that, I can say that with our expansive and innovative product portfolio, we are very successful in the market. In the future-proof and growing railway market, we are excellently positioned. And I am particularly proud of our team. Every day, our employees do their very best to build the best railway vehicles and provide the best Services and Signaling solutions. We are all ready at any time to make a special effort and to find solutions for all challenges. On behalf of the Board of Directors and the entire group management, I would like to thank all Stadler employees as well as all suppliers, business partners and investors for their commitment and their trust in us. We are convinced that with our strong team, our product innovations and the pathways chosen, we are very well positioned in order to continue our success story. We will continue to do so with determination, innovation and passion. Thank you very much.

[Interpreted] Thank you, Markus. We will now have a Q&A session starting here at the headquarters in Bussnang. There are 2 employees in the room with microphones. So please wait until you have the microphone. Who would like to ask the first question, the gentleman there?

[Interpreted] Thank you very much. Michael Foeth from Bank Vontobel. I've got 2 questions. The first one regarding investments, this CapEx of CHF 250 million for 2026 is higher than what you had announced last year for 2026 and 2025, it was also higher than initially planned. Can you explain where the difference comes from and where exactly you made these additional investments? And the second question is whether the FX impact on the EBIT margin can be quantified and whether other effects had a negative impact on the margin or whether you can quantify other effects on margin in 2026 and beyond.

[Interpreted] Well, thank you very much for this question. The investments, yes, they are high, and we continue to expect high investments in 2026. There are 2 effects coming into play here for 2026 -- for 2025, sorry. There was some shifting from 2024 to 2025. And another major effect came from the plant in Hungary where an outstanding payment of a double-digit number didn't come in where the Hungarian state had promised subsidies and this payment will only come in 2026, but it had been expected for 2025, and this explains the differences in CapEx. Regarding foreign currencies and the FX effect, yes, I can say that we have enormously stabilized the situation regarding currency losses. We have very well thought through hedging systems in Switzerland. This leads to slightly higher hedging costs, and this is reflected in the financial result. But on the other hand, this brings the advantage that we have reduced the volatility. So I cannot really quantify the currency losses, but I can say that they are in a range where they don't hurt us anymore. This can clearly be said. But what is decisive is that we have now found a very stable solution for Switzerland. And looking into the future, well, you need to see that all these FX effects affect the Swiss units, which account for almost 50% of our volume. And here, a major part of the incoming payments are made not only in Swiss francs, but in foreign currencies. So in the medium term, pressure might increase because we expect the Swiss franc to become probably even stronger compared with the other currencies, but this is in part compensated by the well thought through hedging concepts. This was about the EBIT, but where we are not protected is at the top line. There, the -- we will have an impact on revenue if the Swiss franc gains in strength. But for me, this is not a key question because the point that we can also always the actual increase. This year, we had a 15% increase in revenue by -- without currency effects and with currency effects by 13%. Further questions?

[Interpreted] Simon Jetzinger from Rabobank. I also have 2 questions regarding the EBIT guidance, medium term, 6% to 8%. For 2026, you announced over 5% to be achieved, thanks to efficiency increases. And I'm now asking myself regarding the medium-term guidance, what drivers or what levers do you want to work to further increase EBIT? And another question is regarding the order backlog. What's the share of alternative drivetrains in your order backlog? And how you see the future development? So what growth you're seeing.

[Interpreted] I can answer this question. I mean, since the IPO -- I'm not teaching history here. But since the IPO, there were lots of external effects, COVID and then the war in Ukraine, we took extensive measures, which have an impact. You can see that in the 2025 figures. The environmental disaster in Valencia is still having an impact, but it is in part already priced into the figures, and this will be felt until 2027. If you deduct all that, the EBIT margin would already now be at 6% to 8% as announced. And these are facts that we need to confront, and we did a good job here with our team and the key figures are going in the right direction. What are we doing? I already announced it in Berlin; we are restructuring the plant. We launched an efficiency program in 2025, and we -- this bears its fruit, and we have things well under control there. That's nice to see. And then regarding investments, we are investing in a harmonization of systems and processes. We'd like to harmonize processes for the entire group. And we're investing in our PLM and ERP systems, which we'd like to marry with each other. And on the one hand, this requires capital investments. And on the other hand, a lot of work by our employees to streamline these processes.

[Interpreted] And these are 2 points that have an impact on the EBIT. And I would like to add that our Services business is increasing in volumes and margins, and this has a major impact. In the future, if the share increases, well, but with the share, you also always need to take into account the volume of the Rolling Stock revenue in the respective year. And the other impact is the components business where we supply internally and then we have major orders like CBTC, Atlanta in the Signaling business, where we will see major revenue increases in the next 2 to 3 years, and these are business fields with above average margins. And then there was the question about alternative drives. I don't know whether you would like to answer that.

[Interpreted] Well, alternative drives. So we invested a lot in alternative drives, battery and hydrogen drives. We are the market leader in this field. No other manufacturer has delivered as many vehicles with alternative drives. So we have delivered the hydrogen train to the U.S. and have proven its worth and there we are well on track.

[Interpreted] We are not reporting these shares separately, but we had high orders from Germany. This is reflected in our order intake. We had orders from the U.S., also Austria, but we don't report that as a segment. So the figures are included in the relevant order intake.

But of course, it's a growing share.

[Interpreted] Then we've got a question here from awp, right?

[Interpreted] Johannes Brinkmann from News Agency, awp. I've got a question regarding the Minsk plant. What can you tell us about that?

[Interpreted] Well, Mr. Brinkmann, good question. So since the start of the Ukraine war, the Swiss government in coordination with the EU imposed the 18th sanction package, and we stick to this clear guidance 100%. So we have ramped everything down in Minsk to almost 0. The employees have in part found other jobs, about 600 employees of these almost 2,000 employees were integrated into other Stadler plants. And so we are at almost 0 there. And we also decoupled all these operations from Stadler. Well, there is firewall between Stadler and Minsk. So of course, Yes. The plant is still owned by Stadler, yes, that's true.

[Interpreted] Yvonne Debrunner, Finanz und Wirtschaft.

[Interpreted] You mentioned the medium-term guidance of 6% to 8% EBIT. What is medium term for you in 2 to 3 years? What do we expect?

[Interpreted] Well, for 2026, we announced an EBIT of more than 5%. And medium term for me, these are 2 to 3 years. And in the long run, that would be everything above 5 years to give you a feeling for that.

[Interpreted] Then we've got another question here in front.

[Interpreted] Alexander Michel from Sudkurier in Constance, Germany. Well, in Stadler eyes, this was probably an unpleasant decision regarding the Zurich order. Can you update us here? Do you think you will again enter into competition with Siemens there? And second question, the Chinese competitors, they are now starting using unconventional financing measures by saying order now and pay later, you don't need to pay immediately. This is the new financing mode that the Chinese are using. Is this dumping mode worrying you or not?

[Interpreted] Well, regarding SBB. I mean I will not start from scratch again. I will not explain the background of the appeal. But all our employees worked hard to prepare this tender, and we were disappointed about the decision, and we wanted to understand what went not so well there on our side and there is the possibility to appeal against the decision if you don't understand the reasons. We have lodged this appeal with the Administrative Court in St. Gallen, they are now reviewing the case. And unfortunately, I can't give you an answer yet because the proceedings are ongoing. That's the one point. And the second point, and that's very important to me, in St. Margrethen, we produce double decker trains and single deckers are built here in Bussnang. And we received orders from SBB. And here, we work well in concert with SBB. And I'd like to thank SBB for that. Cooperation is working very well, very professional cooperation. Thank you. It's a joy to work with SBB. And the second question regarding China, well, we have nothing against competition. On the contrary, this inspires us, makes us innovate the engineers, they feel like attacked if there's competition and they like that. And the other point, however, is that we want to have a level playing field. It cannot be that a state subsidizes the railway industry. And we, as private operator have to pay from our own private coffers. We've got a problem with that. Competition, yes, of course, but at a level playing field.

Are there further questions?

[Interpreted] I've got 3 questions. Firstly, again, regarding the EBIT outlook and your margins, can you maybe quantify a little what the additional costs of margin are resulting from the flooding in Valencia and the impact on the supply chain? How much does it cost in 2026 and '27? The second question is about cash flow. Raphael, your comment was clear. Net working capital should remain negative as a target. But from today's perspective, with the orders that we already have, will it go towards 0 again? Or are you at a level where it should more or less stay? And my third question is regarding Signaling with the third-party orders. What does the pipeline look like? Do we stand the chance of getting in bigger orders like Atlanta, any new big orders in the next 1 to 2 years?

[Interpreted] Thank you, Patrick. So coming back to the EBIT effect of the flooding events. This primarily affects the plant in Spain, and we've heard that about 60 suppliers and sub-suppliers were literally washed away. So the entire supply chain needs to be built up again and the actual effect in figures in the year 2026 that we will have to absorb is difficult to identify. I think the plant in Spain is not back to its old levels of performance because of the situation, and I do assume that the situation will normalize again in Spain in 2027 so that they will make it back to old levels. Regarding the operating cash flow or the overall cash flow situation for 2026, I do assume we won't fare worse than in 2025, and that is clearly one of our goals to have a balanced out operating cash flow. And of course, the situation depends highly on the amount of down payments that we get from new orders that is difficult to predict, and it always depends on the individual reporting date. You can't always make projections. And then in the work in progress even if we do our work, it can happen that the customer pays 2, 3 weeks earlier or later. You always have this kind of deviation. And the third point is everything also depends on the CapEx development, whether we manage to do our investments or can we may be do that in a smarter way so that we spend less money. This all has an impact on cash. And when commenting on cash, I always need to underline our long execution cycles, and I tried to show that with the net working capital curve showing you these swings. For me, it's decisive that we continue to operate with a negative net working capital. So -- but I do assume we will remain negative regarding net working capital. And then you also asked a question about the Signaling business. You asked will similar orders like MARTA Atlanta come in? Yes. There are such orders on the horizon. And in 2025, we got orders from SOB for interlocking systems. And in the U.S., there will also be orders coming in and also in other markets.

[Interpreted] Further questions here, [indiscernible].

[Interpreted] A question about the Copenhagen project. How the project is going to be divided between Siemens and Stadler, who is going to be responsible for what and what is the financial part of the project between Stadler and Siemens.

[Interpreted] So that is a question about Copenhagen Commuter Railway, a cooperation between Siemens and Stadler. And the question is, how do you split the work and what financial impact does that have? Well, the joint venture or the cooperation there exists between Siemens and Stadler. Siemens is in the lead, and we supply bogeys and Siemens supplies the drive system. So everything that has to do with power converter and so on is Siemens' part, and we deliver the bogeys, the frame and the interior fitting. This is more or less the split. And we are now ramping up everything and refining everything. And by the way, this is a very nice order, and we are happy that we can cooperate here. So you also see we are not only competitors like at S-Bahn, Zurich, we also work professionally in partnerships that's clear to us. Well, this automation is provided by Siemens.

[Interpreted] Maybe one more remark from people here in Bussnang. [indiscernible] from UBS.

[Interpreted] I've got 3 questions, if I may. On the one hand, your order intake and the low-down payments. I do assume that this has to do with the higher Services share but were there also changes in the Rolling Stock segment that customers made fewer down payments fewer than in the previous years. And then you have CHF 300 million that need to be repaid from a bond this year. Do you want to fully or partially refinance that bond? And you now have rather low cash positions or at least compared to the previous years. I do assume that this depends on the relevant reporting date, but can you explain what more can be said there?

[Interpreted] Well, regarding order intake and down payment behavior, we see no change in the down payment behavior of our customers. And this holds true both for new orders and for Rolling Stock and for Signaling. So what is the size of the mix of orders in execution at the individual reporting date. And here, I'd like to repeat myself. These are extremely long cycles, high payments, difficult to predict. There can be shifting of dates, and then this can easily have an impact of CHF 100 million to CHF 200 million. So no change there. Regarding the bond, yes, that is right. In November, we have the bond repayment date, and we're currently evaluating how to deal with that. And what to do. So currently, it is not clear yet. And I think the entire cash situation for me didn't come as a surprise. So it is our purpose to build railway vehicles and to execute orders. And if I have CHF 1 billion or more in down payments, we need to use them. If we still had the cash available, we'd have another problem because that would mean we hadn't executed our orders. So this is all part of our business. And I tried to show you these enormous swings, these curves, and they are not worrying me.

[Interpreted] Thank you very much. Now the questions from the telephone stream. We will start with the German questions, who would like to have the floor? We currently have no questions from the German channel. We will take a question from the English channel, Akash Gupta from JPMorgan.

I have 3 questions, and I'll ask one at a time. The first one is on impact of war in the Middle East. I think you had around 2.5 weeks to digest what is going on. So maybe if you can talk about how do you see the impact -- potential impact on your cost base and supply chain, particularly those industries which are more energy intensive. So that's the first one to start with.

[Interpreted] Well, that was a question regarding the situation in the Middle East and the impact on the cost side and the supply chain.

[Interpreted] We are closely observing the situation. At the moment, we see no negative impact, but I mean, it's as every war at some point, they will have an impact. But for the time being, we don't see anything. Also regarding the supply chains, no impact for the time being.

[Interpreted] Your second question, go ahead, please.

Yes. The second one is on operating leverage. So in second half of 2025, you delivered CHF 2.2 billion sales and had 5.4% margin. When we look at for 2026, you are guiding more than CHF 5 billion in revenues. which is more than double of second half revenues last year. But when we look at your guidance, your guidance is kind of implying no operating leverage. I know there can be several moving parts, but wondering if you can provide what is stopping operating leverage in 2026 compared to second half of 2025.

[Interpreted] Well, if you compare the revenue figures of the second half year 2025 and compare that with the guidance for 2026, will we be able to meet the guidance? That's the question.

[Interpreted] The situation is as follows. I go in English. I mean the question you had is actually the second half of the year, you said the operating leverage was not visible. And why is that? So is that your point?

My point is when we look at your '26 guidance with '25 and especially second half of '25 and given that your revenues are more than doubling compared to second half of '25, but margins are more or less similar, given you delivered 5.4% and now you're guiding more than 5%. So I'm like -- it doesn't sound like we have operating leverage in the business. So is there anything on the mix side or any other thing, maybe on currency that might be a headwind why margins are not going meaningfully above 5.4% you delivered in second half of 2025?

They are still -- I mean, still the situation in Spain, actually, where we still have to have these negative impacts and also in Germany. That basically also had an influence in 2025 and we have one in 2026. And the operating leverage, you actually see only or predominantly on the SG&A level.

And my last one is on Rolling Stock backlog margin. I mean you have seen increase in your Rolling Stock backlog from CHF 22.4 billion from CHF 20.9 billion a year ago. Can you give us some color on how backlog margins are changing? And when we look at your margins in new projects, how does those compare with your margins in your backlog?

So the question is how about the Rolling Stock margin regarding the order backlog or comparing new with old orders?

[Interpreted] We do not separately report these margins. But what can be said is that we tend to generate better margins on new orders than in the past. In our order backlog, we continue to have some orders from the past where the margins are not so great and you should not underestimate the situation in Spain, where some projects suffered because of the natural disaster, and we saw similar effects in Germany. And once these orders have been delivered, we will definitely also see an improvement of margins.

[Interpreted] Are there further questions from the phone?

We've got another question from the English channel, Vivek Midha from Citi.

My first question is a follow-up regarding the margins. Do you have any updated view on when you might be able to get to that midterm margin target? In particular, you commented that you think that Spain should be back to normal by 2027. Should we take that as meaning that we should be back into that 6% to 8% margin band by next year?

[Interpreted] So the question is, can you give us an update on the margin, the medium-term outlook? And if you say that the negative effect of Spain would be -- in Spain would be over in 2027, whether you can then expect medium-term margin improvement.

[Interpreted] Well, the Spain effect, we do assume it will continue until 2027. And how quickly everything will then be balanced out can only be seen in the course of the year. And this is why we said in the medium run, 6% to 8%. So I cannot guarantee that we can get on track that quickly, but we do assume there will be margin improvement.

[Interpreted] Your second question please?

My next question is just following up on the order intake. You've given us the book-to-bill range for 2026. Based on your pipeline, the delays in order intake from 2025, where would you say your central case is around where you land in that book-to-bill range?

[Interpreted] So I think that it's a question regarding the order intake 2025 and the book-to-bill ratio, right?

I'm not sure I got the question correctly. Is it with regards to the volumes?

Yes.

Okay. No, I mean...

Yes, essentially, where do we land within the 1 to 1.5x most likely in '26.

We expect 1 to 1.5 as guidance for orders received, 1 to 1.5x revenues.

Okay. So any view on where most likely you land on that? Is it the high end more likely than the low end? How are you thinking about that?

It's really -- let's say. You also know how bulky our orders are. So that's why I would stick with the 1 to 1.5x.

Okay. That's clear. My final question is just regarding your comments on restructuring in Berlin. I understand, of course, a lot of this is actually around processes and so on. But just to check, have you embedded any cost for restructuring and severance within that guidance on the EBIT margin?

It's not a restructuring. It's an efficiency program. So then those answers and the question, there's no, how to say, provision and so on for whatever severances and so on included. It's an efficiency program.

[Interpreted] Okay. Are there further questions from the telephone channel? Otherwise, we can come to the written questions.

[Interpreted] Yes, there's another question on the English channel. William Mackie from Kepler Cheuvreux.

My first is a couple of details on orders. Very impressive booking with NEXRAIL for locomotives. But how much of the 200 framework that you talk about was booked within the '25 account? And when will that subsequent order drop through? And again, specifically on Berlin, you called out potential for 1,500 railcar order coming through to follow on around the framework you have there. Just an idea of the sort of quantum of that order. So that's the first question. The second was on your Slide 20 relating to production output, 21% in 2025. Can you give us -- I know you've given a lot with regard to guidance, but can you give us a sense of where you see production output developing in '26 in comparison to revenues? Are we going to see another delta where gross work in progress expands and we see higher production output compared to the revenue guide that you're talking about for 2026? And the last question is going back to the commentary around net working capital and to ask the question perhaps again. But when you think about your central case scenario around the framework for '26, to what extent will net working capital be a drag or negative within the commentary that you're giving around cash flow?

[Interpreted] So I will quickly summarize your 3 questions. First question was about the NEXRAIL order from Luxembourg, these 200 locomotives. How much of that is already priced in? Then second question, Berlin, the expected order of 1,500 cars, how realistic is that?

[Interpreted] Let's maybe the first question. Well, these 200 locomotives, that's a framework agreement. And I must admit, I don't know exactly how much has already been booked for 2026. So there's always a framework agreement with the first fixed call up and the rest will then come later. Do you know it? I don't know what the exact number is.

[Interpreted] We won the framework agreement. Currently, none of these 200 vehicles is currently in the order book. And the second question, BVG in Berlin order and the scope of a framework agreement, these 1,500, 484 are currently in production. And for the rest, we're still waiting. So nothing is currently in our capacity planning for that. So maybe this is important to understand. If we win a framework agreement, we nevertheless only book this order into our books once we have signed the actual agreement for the call of the framework agreement. That's only the framework. And if they then need a certain number of vehicles, then they make a call off and this needs to be signed in the scope of the contract and we communicate that. So this is only for your understanding.

[Interpreted] And the second question regarding the production output, what development do you expect in 2026? And what will be the impact on the profit?

[Interpreted] Well, regarding production output, we do assume that it will increase again after 2025. And -- I mean, revenue will continue to increase, will significantly exceed CHF 5 billion. And this to happen is a precondition to go up to new dimensions. And this then will have an impact on net working capital and cash because building these vehicles ties up capital. And I don't know this answers your question, whether you got it. I mean we're building up production output again in 2026 compared to 2025. And this again has then an impact also on the net working capital. And all -- I mean the second question or the third you had was about net working capital and development, what would be my mid-expected range. I would say with all what I have said now, I would expect like a stable outlook for the net working capital, the remaining negative.

Okay. One last question regarding the guidance to revenue. At the CMD, you talked about a midterm revenue potential of CHF 5.5 billion. With these results today, you talk about above CHF 5 billion. So can you frame why there was a change in the terminology? And do you still see the potential to exceed CHF 5.5 billion of revenue from the execution of the current order backlog?

We expect CHF 5.5 billion. That's also the guidance. We had CHF 5.5 billion in the midterm.

[Interpreted] Before we come to further telephone questions, I'd like to ask [ Miriam Koch ] what written questions have come in.

Well, we have one more question by Lucas [indiscernible]. He asks to what extent did you price in the price increases for steel and electronics and other matters.

[Interpreted] Well, all price increases that we know about so far are included in this 5% in this guidance.

[Interpreted] Then that's from the written questions. And of course, you will still have the opportunity to ask individual questions in interviews. We will right now start a guided tour through the Stadler plant here in Bussnang. If you'd like to participate, it takes about half an hour. So if you'd like to go on the guided tour, follow [indiscernible] and Heinz Hofer. So you will be split into 2 groups. But what is important, please stay within your group and keep away from electronic parts or parts with edges. You can take pictures at 4 photo spots and there you can take photographs, make videos. For all journalists who would like to have an individual interview, please report to us. You can then after the interview also still get a guided tour. And as from 12:00, we will all invite you to lunch. Raphael Widmer and Markus Bernsteiner will also be at lunch with you. I'd like to thank you for your interest in Stadler. If you would like to get even more background information, this is the latest annual report printed last night, and you get it at the exit. Thank you very much for your interest, and goodbye. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]