Stadler launches IPO on SIX Swiss Exchange and sets price range from 33 to 41 Swiss francs Freitag, 29. März 2019 - 15:11

Bussnang, 29 March 2019

Stadler launches IPO on SIX Swiss
Exchange and sets price range from 33 to 41 Swiss francs

Stadler Rail AG («Stadler», the «Company»), a leading global pure-play producer of rolling stock and related systems, headquartered in Bussnang, Switzerland, today announces the launch of its Initial Public Offering («IPO»). The offering memorandum will be published today and the bookbuilding process will begin on Monday, 1 April 2019.

The IPO consists of up to 40 250 000 existing shares. In the base offering, up to 35 000 000 existing shares will be offered by Peter Spuhler (directly and indirectly via PCS Holding AG). In addition, the Joint Global Coordinators have been granted an over-allotment option of up to 5 250 000 existing shares, equivalent to up to 15 per cent of the base offer size.
The price range for the offered shares has been set at 33 to 41 Swiss francs per share, implying an offer size of approximately 1155 million to 1435 million Swiss francs for the base offering and a total market capitalization of approximately 3.3 billion to 4.1 billion Swiss francs.
The free float of Stadler is expected to amount to 38.16 per cent before exercise of the over-allotment option and 43.41 per cent if the over-allotment option is exercised in full.¹
Peter Spuhler will maintain his long-term commitment to Stadler as its largest shareholder and will continue to act as Executive Chairman post IPO.
In 2018, the Company generated consolidated net revenue of two billion Swiss francs with an EBIT margin of 7.5 per cent.
Stadler continues to see strong order momentum. For 2019, the Company targets a stable level of order intake in line with the 4.4 billion Swiss francs achieved in 2018, net revenue of approximately 3.5 billion Swiss francs, of which more than 95 per cent are already secured by existing orders, and a stable EBIT margin. Furthermore, the Company expects its structurally negative net working capital to be in the range of -400 million to -550 million Swiss francs. For 2020, the Company targets net revenue of approximately four billion Swiss francs, of which approximately 80 per cent are secured by existing orders. The EBIT margin is expected to be within the Company’s 8.0 to 9.0 per cent mid-term target range. After 2020, the Company expects to consolidate the four billion Swiss francs net revenue level and continue to grow from there in the mid-single digit range on average.
As of 31 December 2018 the Company had a net cash position of 532 million Swiss francs.² Stadler targets a dividend of at least 120 million Swiss francs for the year ending 31 December 2019. In the medium term, based on its strong balance sheet and cash flow generation, the Company targets a payout ratio of approximately 60 per cent of net income and a net cash position of 1-2x EBITDA for strategic flexibility. Exceeding cash will be returned to shareholders.
The listing and first day of trading on SIX Swiss Exchange is expected to be on or around 12 April 2019.

Offering summary

The base offering of the IPO consists of up to 35 000 000 existing shares offered by Peter Spuhler directly and indirectly via PCS Holding AG (together, the «Selling Shareholders»). Furthermore, PCS Holding has granted the Joint Global Coordinators an over-allotment option of up to 5 250 000 existing shares, exercisable in whole or in part within 30 calendar days after the first day of trading on SIX Swiss Exchange.

In total, up to 40 250 000 existing shares are being offered in the IPO (including the over-allotment option).

The free float is expected to be 38.16 per cent before exercise of the over-allotment option and 43.41 per cent if the over-allotment option is exercised in full.³ After the listing and assuming the over-allotment option is exercised in full, Peter Spuhler will hold 39.70 per cent of the share capital of Stadler.

The price range for the offered shares has been set at 33 to 41 Swiss francs per share, implying an offer size of 1155 million to 1435 million Swiss francs in the base offering (1328 million to 1650 million Swiss francs assuming the over-allotment option is exercised in full) and a total market capitalization of approximately 3.3 billion to 4.1 billion Swiss francs.

Additional offering details

The offering memorandum will be published today, 29 March 2019. The bookbuilding process will begin on 1 April 2019 and is expected to end on or around 11 April 2019 (12.00 noon CEST for retail and private banking orders and 15.00 CEST for institutional orders). The final offer price is expected to be published on or around 12 April 2019 before the start of trading on SIX Swiss Exchange. The listing of the shares in accordance with the Swiss Reporting Standard of SIX Swiss Exchange and commencement of trading in the shares on SIX Swiss Exchange is expected to take place on or around 12 April 2019.

The Company, RAG-Stiftung and all members of Stadler’s Board of Directors and Group Executive Board have committed to a lock-up period of twelve months from the first day of trading. The Selling Shareholders have agreed to a lock-up period of twelve months from the first day of trading in respect of 100 per cent of the Shares they will, directly or indirectly, hold after the Offering, plus a commitment that their combined shareholdings will not fall below 30 per cent for an additional 24 months.

The offering consists of (i) a public offering in Switzerland and (ii) private placements in certain jurisdictions outside the United States of America and Switzerland in accordance with applicable securities laws and in reliance on Regulation S under the U.S. Securities Act of 1933, as amended, and on the basis of exemptions provided by Directive 2003/71/EC of the European Parliament and the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading, as amended, in each case in accordance with applicable securities laws, and (iii) private placements in Canada to accredited investors and permitted clients in the provinces of Alberta, British Columbia, Ontario and Quebec.

Credit Suisse and UBS are acting as Joint Global Coordinators and Joint Bookrunners for the IPO. BNP PARIBAS, Citigroup and Zürcher Kantonalbank are acting as Joint Bookrunners and UniCredit Bank AG as Co-Lead Manager, while Reichmuth & Co, St.Galler Kantonalbank AG and Thurgauer Kantonalbank are acting as Selling Agents in connection with the IPO. Alantra is acting as independent financial advisor to Stadler and Peter Spuhler. Niederer Kraft Frey AG and BianchiSchwald LLC are acting as legal advisors to Stadler and Peter Spuhler, with Lenz & Staehelin representing the bank syndicate.

Leading global pure-play producer of rolling stock and related systems

Throughout its history, Stadler has dedicated its efforts to the production of trains, metros, LRV and locomotives. In 2018, the production of rolling stock contributed 87.6 per cent of its net revenue, with the remaining 12.4 per cent coming from its Service and Components segment. Stadler believes that because of its greater emphasis on rolling stock production and related systems compared to more diversified competitors, it has been able to develop unparalleled expertise in designing, engineering and producing sophisticated trains and locomotives in an effective and efficient way. It has also been able to leverage its expertise in rolling stock to design and produce complex related systems and components, such as bogies, gear boxes, aluminium car bodies and software, and to provide a range of services that respond to its customers' ongoing maintenance needs.

As a result of its expertise as a producer of trains and locomotives, Stadler has experienced outstanding growth in recent years, and captured a significant share of the global rail market. According to data from SCI Verkehr, it has become the number two producer of electrical multiple units (EMU) and number four producer of diesel multiple units (DMU) in its strategic markets globally.⁴ Stadler has an especially strong competitive position in its strategic eleven billion Euros European rolling stock OEM market⁵ (the largest of its strategic markets), where it is the third-largest producer of rolling stock according to SCI Verkehr.⁶

Stadler offers its customers a differentiated value proposition

Stadler's success is based on the unique value proposition that it offers to its customers. The Company's engineering excellence and technological leadership results in trains that are highly reliable, efficient to run and comfortable for passengers. Stadler offers a significant degree of customization possibilities, including the capability to tailor-make vehicles in large and small batch sizes, thereby offering its customers the full range of customization that they require and granting Stadler a competitive advantage over its peers. The Company's decentralized and agile organization structure, combined with its best-in-class project management and execution capabilities, give an excellent track record in delivering its products quickly, on time and at high quality. Stadler believes that each of these factors combined contributes significantly to its strong market position.

Long-term growth in the rail industry is supported by macroeconomic trends driving increasing demand for rail transportation

Population growth and increasing urbanization trigger a growing requirement for modes of transport that can move large volumes of people in a fast, safe and reliable way. Rail also represents an attractive alternative to air and road transport from a cost and time to travel perspective. Increasing air and road congestion are expected to foster a shift towards more sustainable rail transport that is more environmentally friendly. These trends support the long-term growth of the rail industry and Stadler as a rolling stock manufacturer.

Attractive financial profile and outlook

The success of Stadler's business model is evidenced by its attractive financial profile. In 2018, Stadler generated two billion Swiss francs in net revenue, and has achieved a net revenue CAGR of approximately seven per cent between 2008 and 2018. The sustainability of its growth is underpinned by its order backlog of 13.2 billion Swiss francs as of 31 December 2018, which represents an increase of 19.3 per cent compared to 31 December 2017 and secures 85 per cent of net revenue for the next two years. Stadler’s order backlog is of a high quality, as it predominantly relates to orders from Western European customers and is well diversified.

Stadler's financial track record demonstrates that it has the ability to resiliently maintain profitability in challenging macroeconomic circumstances. Its EBIT margin, which was at 7.5 per cent in 2018, has remained above 6 per cent throughout the last 15 years, weathering the impact of various macroeconomic events. Its structurally negative net working capital in combination with its asset-light business model and an exceptionally high fixed asset turnover resulting from efficient capacity utilization have driven attractive value creation. As a result, Stadler generated a strong economic profit margin⁷ amounting to 5.7 per cent of net revenue in 2018.

Stadler continues to see strong order momentum. For 2019, the Company targets a stable level of order intake in line with the 4.4 billion Swiss francs achieved in 2018, net revenue of approximately 3.5 billion Swiss francs, of which more than 95 per cent are already secured by existing orders, and a stable EBIT margin. Furthermore, the Company expects its structurally negative net working capital to be in the range of -400 million to -550 million Swiss francs. For 2020, the Company targets net revenue of approximately four billion Swiss francs, of which approximately 80 per cent are secured by existing orders. The EBIT margin is expected to be within the Company’s 8.0 to 9.0 per cent mid-term target range. After 2020, the Company expects to consolidate the four billion Swiss francs net revenue level and continue to grow from there in the mid-single digit per cent range on average. Net working capital is expected to range between -10 to -18 per cent of net revenue.

As of 31 December 2018 the Company had a net cash position of 532 million Swiss francs.⁸ Stadler targets a dividend of at least 120 million Swiss francs for the year ending 31 December 2019. In the medium term, based on its strong balance sheet and cash flow generation, the Company targets a payout ratio of approximately 60 per cent of net income and a net cash position of 1-2x EBITDA for strategic flexibility. Exceeding cash will be returned to shareholders.

Experienced management team and a deeply ingrained culture of Swiss excellence

Stadler is led by a dedicated and experienced Group Executive Board that has a demonstrated track record in delivering profitable growth. With over 100 years of experience within the Stadler family of companies, its executive leadership team brings a cumulative expertise that has been instrumental in establishing its business strategy and securing its market position. Stadler also benefits from the leadership of an experienced and entrepreneurial Board of Directors which is independent by the majority, chaired by its Executive Chairman who previously served as Group CEO for 30 years during times of substantial growth.

Stadler has instilled a culture of Swiss excellence, pragmatism and determination and a «can-do», cooperative attitude among its more than 8500 employees, which has been key in fostering its ability to deliver products and services that meet its customers' highest requirements.

Proven strategy with multiple avenues for the next level of profitable growth

Stadler has a clear and multifaceted strategy for growth beyond 2020 (when net revenue is expected to reach approximately four billion Swiss francs) that includes: 1) Further strengthening Stadler's technological and engineering expertise through ongoing product development; 2) Consolidating its presence in key European home market and targeted expansion in new regions; 3) Accelerating the growth of Stadler's services business by increasing its accessible market; and 4) Developing proprietary signalling solutions.

Key IPO data and indicative IPO timetable

Key data
Listing	SIX Swiss Exchange (Swiss Reporting Standard)
Ticker	SRAIL
Swiss security number	217.818
ISIN	CH0002178181
Nominal value	0.20 Swiss francs per share
Price range	33.00 – 41.00 Swiss francs per share
Base offer size	Up to 35 000 000 existing shares
Over-allotment option («greenshoe»)	Up to 5 250 000 existing shares (15 per cent of base offer)
Total number of shares issued (pre and post IPO)	100 000 000 registered shares

Indicative IPO schedule
Publication of offering memorandum	29 March 2019
Commencement of bookbuilding	1 April 2019
End of bookbuilding	On or around 11 April 2019, at 12.00 noon (CEST) for retail and private banking orders, and at 15.00 (CEST) for institutional orders
Publication of final offer price and final number of offered shares	On or around 12 April 2019
Listing and first day of trading	On or around 12 April 2019
Payment and settlement	On or around 16 April 2019
Last day for the exercise of the over-allotment option	On or around 10 May 2019

Contact information

Investor Relations

Raphael Widmer, Group CFO
Phone: +41 71 626 86 80
E-mail: ir@stadlerrail.com

Media

Marina Winder, Secretary General and Head of Communications & PR
Phone: +41 71 626 31 57
E-mail: media@stadlerrail.com

Follow Stadler on LinkedIn, Xing and Facebook

About Stadler

Stadler is a leading global pure-play producer of rolling stock and related systems with a strong track record of focused expansion. Founded in Switzerland in 1942, the Company has a long history of design and manufacturing excellence, offering its customers Swiss quality, precision engineering and best-in-class project management capabilities. Stadler’s origins as a local business focused on producing tailor-made trains and locomotives in small batch sizes have built the basis for its expansion into a multinational yet independent organization that prides itself on its ability to customize its rolling stock product offerings to meet the most varied and challenging customer specifications, while maintaining the ability to tailor-make trains on an individual or modular basis. Over the course of its history, the Company has produced over 8000 trains and locomotives that currently operate in 41 countries.

Stadler operates in two reporting segments: The Rolling Stock segment focuses on the design, engineering and production of high-speed, intercity and regional passenger trains and coaches, as well as locomotives, metros and light rail vehicles («LRV»), thereby addressing all relevant segments of the rail market. The Service & Components segment offers customers a range of services, from the supply of single spare parts, vehicle repairs, modernization and overhauls to entire full service offerings, ensuring that after delivery, Stadler’s vehicles continue to meet customers' most stringent demands in terms of reliability and availability during their entire life cycle of, on average, 30 years.

As of today Stadler is majority-owned by Peter Spuhler, who directly and indirectly holds 79.95 per cent of the share capital of the Company. The remainder is held by RAG Stiftung (10.00 per cent), management shareholders (6.89 per cent)⁹ and other shareholders (3.16 per cent).

9 Includes 17 members of the Board of Directors or the Group Executive Board, each owning less than three per cent (excluding, for the avoidance of doubt, the direct or indirect shareholdings of Peter Spuhler).

Disclaimer

This document is not an offer to sell or a solicitation of offers to purchase or subscribe for shares. This document is not a prospectus within the meaning of Article 652a of the Swiss Code of Obligations, nor is it a listing prospectus as defined in articles 27 et seqq. of the listing rules of the SIX Swiss Exchange AG or of any other stock exchange or regulated trading venue in Switzerland or a prospectus under any other applicable laws. Copies of this document may not be sent to jurisdictions, or distributed in or sent from jurisdictions, in which this is barred or prohibited by law. The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, in any jurisdiction in which such offer or solicitation would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction. A decision to invest in securities of Stadler Rail AG should be based exclusively on the offering memorandum published by Stadler Rail AG for such purpose. Copies of the offering memorandum, the pricing supplement and any other supplements to the offering memorandum can be obtained free of charge in Switzerland from Credit Suisse AG, Zurich, Switzerland (e-mail: equity.prospectus@credit-suisse.com), UBS AG, Swiss Prospectus Switzerland, P.O. Box, 8098 Zurich, Switzerland (voicemail: +41 44 239 47 03; fax number: +41 44 239 69 14; e-mail: swiss-prospectus@ubs.com) and Stadler Rail AG, Investor Relations, Ernst-Stadler-Strasse 1, 9565 Bussnang, Switzerland (tel: +41 71 626 86 80; e-mail: ir@stadlerrail.com).

This document is not for publication or distribution in the United States of America (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan or any other jurisdiction into which the same would be unlawful. This document does not constitute an offer or invitation to subscribe for or purchase any securities in such countries or in any other jurisdiction into which the same would be unlawful. In particular, the document and the information contained herein should not be distributed or otherwise transmitted into the United States of America or to publications with a general circulation in the United States of America. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the «Securities Act»), or the laws of any state, and may not be offered or sold in the United States of America absent registration under or an exemption from registration under the Securities Act. There will be no public offering of the securities in the United States of America.

The information contained herein does not constitute an offer of securities to the public in the United Kingdom. No prospectus offering securities to the public will be published in the United Kingdom. This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the «FSMA Order») or (iii) persons falling within Articles 49(2)(a) to (d), «high net worth companies, unincorporated associations, etc.» of the FSMA Order, and (iv) persons to whom an invitation or inducement to engage in investment activity within the meaning of Section 21 of the Financial Services and Markets Act 2000 may otherwise be lawfully communicated or caused to be communicated (all such persons together being referred to as «relevant persons»). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Any offer of securities to the public that may be deemed to be made pursuant to this communication in any member state of the European Economic Area (each an «EEA Member State») that has implemented Directive 2003/71/EC (as amended, including by Directive 2010/73/EU, and together with any applicable implementing measures in any EEA Member State, the «Prospectus Directive») is only addressed to qualified investors in that EEA Member State within the meaning of the Prospectus Directive.

This publication may contain specific forward-looking statements, e.g. statements including terms like «believe», «assume», «expect», «forecast», «project», «may», «could», «might», «will» or similar expressions. In addition, this publication includes certain financial targets. These forward-looking statements are not guarantees of future financial performance and the actual results of Stadler Rail AG could differ materially from those expressed or implied by these forward-looking statements as a result of many factors. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of Stadler Rail AG and those explicitly or implicitly presumed in these statements. Against the background of these uncertainties, readers should not rely on forward-looking statements. Stadler Rail AG assumes no responsibility to up-date forward-looking statements or to adapt them to future events or developments. Except as required by applicable law, Stadler Rail AG has no intention or obligation to update, keep updated or revise this publication or any parts thereof following the date hereof. Investors are strongly urged not to place undue reliance on any forward looking statements.