Gatx Corporation · NYSE:GATX
Gatx — Baird 2021 Global Industrial Conference
25 slides from Gatx's conference presentation, Nov 11, 2021
Slide 1: Baird 2021 Global Industrial Conference
BAIRD 2021 GLOBAL INDUSTRIAL CONFERENCE NOVEMBER 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements State ments in this presentation not based on historical facts are “forward -looking statements” within the meaning of the Private Se curities Litigation R eform Act of 1995 and, accordingly, involve known and unknown risk s and unce rtainties that are difficult to predict
Slide 3: GATX's 123-Year History
GATX’s 123-Year History $8.9B in assets Began Began Exited Formed Rolls-Royce Began rail & ~149K wholly manufacturing listing on railcar & Partners Finance investments in owned railcars railcars the NYSE manufacturing Affiliates (RRPF) India & Russia worldwide* Acquired 100% ownership in European Ac
Slide 4: GATX Today – Business Segments
GATX Today – Business Segments RAIL NORTH AMERICA 5% Premier railcar lessor 8% Diversified fleet of over 118,000 railcars Strong customer credit quality, diversification in car types and commodities carried $2.4 billion of contractual lease receipts as of 12/31/2020 21% NET BOOK VALUE OF RAI
Slide 5: GATX Rail North America Overview
GATX Rail North America Overview 2020 OVERVIEW FLEET UTILIZATION* WHOLLY OWNED FLEET COUNT 99% 118,000+ 9% 100% 6% CAR TYPE COUNT 98% 28% 96% 90% 160+ 90% 14% AVERAGE FLEET AGE INDUSTRIES SERVED 80% 20 Years LOCOMOTIVE COUNT 70% 625+ 19% 24% NUMBER OF CUSTOMERS 60% 850+ 50% COUNTRIES OF OPERATIONS C
Slide 6: Straightforward and Proven Business Model
Straightforward and Proven Business Model BUY LEASE SERVICE MAXIMIZE the railcar at an the railcar to a the railcar in a the value of the economically attractive quality customer at manner that railcar by selling or and competitively an attractive rate for maximizes safety, scrapping at the advantag
Slide 7: Industry Commodity Carloadings: North America
THOUSANDS 500 0 2,000 2,500 1,000 1,500 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 All Other 3Q09 4Q09 1Q10 As s ociation of American Railroads 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Coal & Coke 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Sand, Stone, Minerals, & Re
Slide 8: Industry Backlog: North America
Industry Backlog: North America INDUSTRY BACKLOGS 160,000 Cyclicality of the industry is 140,000 illustrated by the backlog of orders at the railcar manufacturers 120,000 The 2013 and 2014 100,000 spike in tank car backlog was primarily due to the crude boom 80,000 Backlogs have moderated 60,0
Slide 9: GATX Actively Manages Through Cycles
GATX Actively Manages Through Cycles GATX proactively manages changing market conditions by utilizing our strong customer relationships and the diversity of our fleet to adjust rate and term. RAIL NORTH AMERICA STR O NG MARKET W EAK MAR KET STR O NG MARKET W EAK MAR KET 70 67 63 66 50% 60 62 54 40%
Slide 10: GATX Rail International Overview
GATX Rail International Overview 2020 OVERVIEW GRE FLEET UTILIZATION FLEET COUNT 26,300+ in Europe (GRE) 99% 100% 97% 4,500+ in India and Russia 29% 98% 95% 96% CAR TYPE COUNT 90% 50+ INDUSTRIES 44% AVERAGE FLEET AGE (GRE) SERVED 80% 17 Years 12% 70% NUMBER OF CUSTOMERS 250+ 15% 60% COUNTRIES OF OPE
Slide 11: Industry Snapshot: Europe
Industry Snapshot: Europe Relatively limited manufacturing capacity RAILCAR OWNERSHIP* (Based on approximately 728K railcars) Helps avoid an industry oversupply of railcars Older industry fleet in need of replacement Key segments continue to demonstrate 32% need to replace aging, smaller, and le
Slide 12: GATX Rail India Overview
GATX Rail India Overview GATX obtained the first-ever wagon leasing license in 2012 and is the largest private railcar lessor in India. GATX’s GROWTH IN INDIA KEY ATTRIBUTES $160 $20 Wholly Owned Fleet of over High Growth Opportunity $140 $18 4,100 railcars $16 Actively seeks attractive Serving cust
Slide 13: Portfolio Management Overview
Portfolio Management Overview 1% 2020 RRPF OVERVIEW 9% Spare Engine Count: 445 16% 4% Average Fleet Age: 12 Years 8% 36% RRPF ASSET RRPF JV PRE-TAX INCOME 9% ENGINE MIX (GATX’s SHARE) TYPES $100 17% 83% $80 17% $ MILLIONS $60 Aircraft Spare Engine Trent XWB (A350) V2500 (A320) Leasing Affiliates (RR
Slide 14: Aircraft Spare Engine Leasing Industry Overview
Aircraft Spare Engine Leasing Industry Overview Aircraft spare engines are Percentage of leased vs. owned attractive and reliable leasing aircraft spare engines by airlines assets has increased over time Robust residual value characteristics Retain value better over the long term compared to air
Slide 15: RRPF & GATX's Direct Investment of Engines
RRPF & GATX’s Direct Investment of Engines RRPF Affiliates entered the COVID-19 crisis from a position of strength. RRPF KEY ATTRIBUTES RRPF Joint Venture Balance Sheet and Liquidity Operating Flexibility Focus on maintaining a strong balance sheet and liquidity position Long-dated debt maturity p
Slide 16: Trifleet Overview
Trifleet Overview Trifleet is one of the largest global tank container lessors with a young and diversified fleet. 2020 OVERVIEW 1% FLEET COUNT 6% Why Tank Containers Over 19,000* (54% owned/46% managed) 9% Consistent growth AVERAGE FLEET AGE Long-lived, widely used – similar to GATX’s other Own
Slide 17: GATX: Well Positioned with Strong Cash Flows
GATX: Well Positioned with Strong Cash Flows GATX has nearly $3 billion in Our strong operating cash flow provides contractual future lease receipts. tremendous capital allocation flexibility. GATX CONTRACTUAL FUTURE LEASE RECEIPTS OPERATING CASH FLOW & PORTFOLIO PROCEEDS $942 $725 $482 $224 $533 $
Slide 18: Capital Allocation Framework
Capital Allocation Framework PRIORITY 1 Invest in core, service-intensive assets to maximize shareholder value $9.8 billion** of investments over the period shown INVESTMENT VOLUME $1,064 $1,031 $928 $860 $781 $770 $ MILLIONS $715 $723 $615 $621 $585 $589 $480 2008 2009 2010 2011 2012 2013 2014
Slide 19: Capital Allocation Framework
Capital Allocation Framework PRIORITY 2 Optimize the balance sheet Maintain a solid investment grade rating of BBB/Baa2 Maintain capacity for opportunistic investments LEVERAGE & REDUCTION OF SECURED ASSETS 5.0x 50% 4.0x 40% 2.8x 3.0x 30% 2.0x 20% 1.0x 10% 0.0x 0% 2003 2004 2005 2006 2007 2008
Slide 20: Capital Allocation Framework
Capital Allocation Framework PRIORITY 3 In lockstep with Priorities 1 and 2, return excess cash to shareholders Over the period shown below, $1.7 billion returned to shareholders CASH RETURNED TO SHAREHOLDERS $2,000 $1,500 $ MILLIONS $1,000 $500 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 21: GATX Financial Highlights
GATX Financial Highlights Income Per Diluted Share, Adjusted** $5.77 $5.37 $4.67 $4.89 $4.48 $4.41 $4.59 $3.50 $2.81 $2.01 $1.59 2010 2011 2012 2013 2014 2015 2016 2017* 2018* 2019* 2020* Return on Equity, Adjusted** Investment Volume 18% 18% $1,031 $1,064 15% $928 14% 14% $860 13% 13% $770 $715 $72
Slide 22: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES
Slide 23: Reconciliation of Non-GAAP Measure
Reconciliation of Non-GAAP Measure Net Income Measures Net Income (in millions) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net income (GAAP) $ 110.8 $ 137.3 $ 169.3 $ 205.0 $ 205.3 $ 257.1 $ 502.0 $ 211.3 $ 211.2 $ 151.3 Less: Net income from discontinued operations (GAAP) n/a n/a n/a n/a n/a
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Net Income Measures (cont.) and Earnings Per Share Net Income (in millions) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Adjustments attributable to discontinuing operations, net of taxes: Net casualty gain at ASC n/a n/a n/a n/a n/a n/a - - (8.1) - Impact of
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Balance Sheet Measures On- and Off-Balance Sheet Assets 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total assets (GAAP) $ 5,846.0 $ 6,044.7 $ 6,535.5 $ 6,919.9 $ 6,894.2 $ 7,105.4 $ 7,422.4 $ 7,616.7 $ 8,285.1 $ 8,937.6 Off-balance sheet assets (1): Rail Nor