Gatx Corporation · NYSE:GATX
Gatx — Debt Investor Presentation (April 2016)
40 slides from Gatx's debt investor presentation, Apr 6, 2016
Slide 1: GATX Corporation Fixed Income Investor Presentation April 2016
GATX CORPORATION DISCIPLINED. PROVEN. Fixed Income Investor Presentation | April 2016
Slide 2: Forward Looking Statement
2 Forward Looking Statement Forward-looking statements in this presentation that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that reflect our current views with respect to, among other
Slide 3: History & Business Overview
HISTORY & BUSINESS OVERVIEW 3
Slide 4: GATX's Year History
4 GATX’s 117 Year History 1898 Established as railcar lessor with 28 railcars 1919 Initiated quarterly dividend 1936 Rail Operations in Canada 1994 Rail Operations in Europe & Mexico 1996 Locomotive Operations 1998 Rolls-Royce Partners and Finance (RRPF) Affiliates formed 1973 GATX acquired American
Slide 5: GATX Today – Business Segments
5 GATX Today – Business Segments AMERICAN STEAMSHIP COMPANY Largest US-flagged vessel operator on the Great Lakes Operates a fleet of efficient self-unloading ships Exceptional safety record and leader in Great Lakes environmental matters 69% 15% 9% 4% 3% PORTFOLIO MANAGEMENT RRPF affiliates
Slide 6: GATX's Strong Global Presence
6 GATX’s Strong Global Presence GATX owns, manages, or has an interest in more than 151,000 railcars, over 600 locomotives, 17 vessels on the Great Lakes, and approximately 435 aircraft spare engines. (Map excludes leasing footprint for RRPF) GATX Rail Operations Footprint GATX Headquarters (Chicago
Slide 7: Straightforward and Proven Business Model
7 Straightforward and Proven Business Model Railcar leasing is our core. BUY the railcar at an economically attractive and competitively advantaged price LEASE the railcar to a quality customer at an attractive rate for a term that reflects the business cycle SERVICE the railcar in a manner that max
Slide 8: GATX Rail North America Overview
8 GATX Rail North America Overview As of 12/31/2015 INDUSTRIES SERVED 27% Chemical 26% Refiners & Other Petroleum 18% Railroads & Other Transportation 10% Food & Agriculture 8% Mining, Minerals & Aggregates 11% Other Based on 2015 Rail North America Revenue 27% 26%18% 10% 8% 11% SERVICES Customers
Slide 9: Managing Through Cycles
9 64 67 63 41 35 45 60 62 66 54 17% 14% 5% -11% -16% 7% 26% 35% 39% 32% -20% -10% 0% 10% 20% 30% 40% 50% 0 10 20 30 40 50 60 70 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Renewal Lease Term (left axis) Lease Price Index (right axis) Managing Through Cycles GATX quickly adapts to changing mark
Slide 10: Results of GATX's Disciplined Approach
10 Results of GATX’s Disciplined Approach 91% 90% 96% 99% 80.0% 82.0% 84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 96.0% 98.0% 100.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 *Utilization excludes boxcar fleet GATX RAIL NORTH AMERICA’S UTILIZATION*
Slide 11: GATX Rail North America's Limited Crude Oil and Frac Sand Exposure
11 GATX Rail North America’s Limited Crude Oil and Frac Sand Exposure 49% 51% GATX Fleet Freight Cars Tank Cars GATX Deliberately took small crude-by-rail and frac sand positions and maintained balance of tank and freight 25% 28% 44% 7% 21% 22% 68% 51% 34% North American Fleet Backlogs 2015 Deliveri
Slide 12: GATX Rail North America – Flammable Liquids Rulemaking
12 GATX Rail North America – Flammable Liquids Rulemaking Final flammable liquids rules were codified in 2015 for both US and Canada. GATX’s flammables fleet is relatively small and is well-positioned with respect to the new rules. 78% 20% 2% Fewer than 13,900 Flammable Liquid Tank Cars out of more
Slide 13: GATX's Excellent Visibility into Future Cash Flow
13 GATX’s Excellent Visibility into Future Cash Flow Raising lease rates and extending lease terms have resulted in committed lease receipts in Rail North America increasing by 17% to over $4.2 billion in 2015. Predominantly fixed leases without early termination options Committed Lease Receipts
Slide 14: GATX Rail International Overview
14 96% 97% 95% 97% 95% 97% 96% 92% 94% 96% 98% 100% 2007 2009 2011 2013 2015 GATX Rail International Overview FLEET COUNT 23,000 in Europe & 750+ in India CAR TYPE COUNT 38+ AVERAGE FLEET AGE 18 Years NUMBER OF CUSTOMERS 250+ MAJOR COUNTRIES OF OPERATIONS Germany, Poland, Austria, The Netherlands, H
Slide 15: GRE's Fleet Structure
15 65% 14% 13% 8% GRE’s Fleet Structure Approximately 23,000 railcars as of 12/31/15 GRE’s newer and higher capacity fleet attracts top tier customers. FLEET STRUCTURE 65% Mineral Oil 14% LPG 13% Chemical 8% Other GRE HAS INVESTED MORE THAN $1 BILLION OVER THE LAST 10 YEARS RESULTING IN A NEWER AND
Slide 16: American Steamship Company Overview
16 BUSINESS OVERVIEW ASC provides transportation of dry bulk commodities across the Great Lakes and St. Lawrence Seaway ASC joined GATX in 1973 and has been in operation over 100 years ASC operates with significant emphasis on safety and environmental stewardship FLEET OVERVIEW Fleet of 17 s
Slide 17: Portfolio Management Overview
17 Portfolio Management Overview $6 $66 $0 $10 $20 $30 $40 $50 $60 $70 OWNED PORTFOLIO RRPF JV PRE-TAX INCOME (GATX’s SHARE) $636.5 million NBV as of 12/31/15 $ M IL LIO N S 53% Aircraft Spare Engine Leasing Affiliates 43% Marine Equipment 4% Other 53% 43% 4% RRPF OVERVIEW GATX established its fir
Slide 18: Financial Profile
FINANCIAL PROFILE 18
Slide 19: GATX Financial Profile – Overview
19 GATX Financial Profile – Overview Strong, stable and predictable cash flow – Market leadership in railcar leasing business – High level of committed revenues – Credit strength of customer base Strong balance sheet – Long-lived railcar assets – Limited secured debt Excellent liquidity throug
Slide 20: GATX Financial Profile – Cash Flow
20 2007 2009 2011 2013 2015 Operating Cash Flow Portfolio Proceeds $999 $841 $708 $591 $464 $990 GATX Financial Profile – Cash Flow GATX has nearly $4.6 billion in committed future lease receipts. GATX COMMITTED FUTURE LEASE RECEIPTS As of 12/31/15 $ M IL LIO N S OPERATING CASH FLOW & PORTFOLIO PROC
Slide 21: GATX Financial Profile – Customer Base
21 GATX Financial Profile – Customer Base 12/31/15 Customer families sometimes include more than one customer account, therefore the S&P or equivalent ratings noted generally reflect the credit quality of the rated parent entity. Lease obligations of subsidiaries are not necessarily guaranteed by th
Slide 22: GATX Financial Profile – Balance Sheet
22 GATX Financial Profile – Balance Sheet As of 12/31/15 GATX has invested in approximately $7.8 billion of hard assets since 2006, which have been primarily financed with unsecured debt. % of Assets that are Secured 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 2003 2
Slide 23: GATX Financial Profile – Financial Results
23 GATX Financial Profile – Financial Results $2.54 $3.07 $3.49 $1.97 $1.59 $2.01 $2.81 $3.50 $4.48 $5.37 13% 14% 15% 9% 7% 9% 11% 13% 15% 18% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 0.00 1.00 2.00 3.00 4.00 5.00 6.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EPS (left axis) ROE (right axis)
Slide 24: GATX Financial Profile – Future Debt Obligations
24 GATX Financial Profile – Future Debt Obligations GATX’s debt maturity schedule is well balanced. As of 12/31/15 $565 $413 $518 $550 $350 $1,810 2016 2017 2018 2019 2020 Thereafter $ M IL LIO N S FUTURE DEBT OBLIGATIONS
Slide 25: GATX Financial Profile – Diversified Access to Capital
25 GATX Financial Profile – Diversified Access to Capital GATX will continue to utilize its traditional sources to meet its financing needs: – Commercial paper – Unsecured debt offerings – Unsecured private placements – Unsecured bank term loans – Secured rail debt
Slide 26: GATX Financial Profile – Financings
26 SHORT-TERM AMOUNT Borrowings under Bank Credit Facilities (Europe) 7.4 UNSECURED 5.80% Notes due 2016 200.0 3.50% Notes due 2016 350.0 1.25% Notes due 2017 300.0 6.00% Notes due 2018 200.0 2.375% Notes due 2018 250.0 2.50% Notes due 2019 300.0 2.50% Notes due 2019 250.0 2.60% Notes due 2020 350.0
Slide 27: GATX Financial Profile – Summary
27 GATX Financial Profile – Summary SOLID AND PREDICTABLE CASH FLOW Market leader in railcar leasing business Committed future lease receipts from strong and diversified customer base Operational and geographic diversification Capital spending flexibility Solid and sustained customer relat
Slide 28: Appendix
APPENDIX 28
Slide 29: North America – Industry Railcar Ownership
29 North America – Industry Railcar Ownership 51% 9% 19% 21% RAILROADS (21%) Ownership of railcars has been declining In 2000, 53% of railcars were owned by railroads Virtually no tank car ownership due to complexities and regulations Focus of capital investment on infrastructure LESSORS (51
Slide 30: North America – Industry Shipments & Carloadings
30 North America – Industry Shipments & Carloadings 20.9 21.2 17.1 18.2 16 17 18 19 20 21 22 2005 2007 2009 2011 2013 2015 Demand increased across most major commodity types. Demand declined due to difficulties in nearly every sector. Demand increased in 2010 due to nearly every sector. Demand decli
Slide 31: North America – Industry Backlogs
31 North America – Industry Backlogs Cyclicality of the industry is illustrated by the backlog of orders at the railcar manufacturers The recent trends in tank car backlog are primarily due to energy markets Deep backlogs are generally positive for existing lessors’ fleets – Customers’ alterna
Slide 32: North America – Lessor Market Share
32 North America – Lessor Market Share LESSOR TANK CARS Approximately 396,000 tank cars in North America – About 80% of tank cars are owned by lessors, with the balance owned by shippers GATX is the second largest tank car lessor UMLER as of January 2016 LESSOR FREIGHT CARS Approximately 1.2 m
Slide 33: GATX Rail North America's Fleet Breakdown
33 CAR TYPE COMMODITIES CARRIED % OF GATX’S FLEET 15% 12% 10% 6% 4% 15% 10% 8% 7% 5% 3% 5% TANK CA R S (49% o f Fl ee t) FR EIGH T CA R S (51% o f Fl ee t) GATX Rail North America’s Fleet Breakdown General Service Tank Cars: 20k-25k gallon General Service Tank Cars: >25k gallon High-Pressure Tank Ca
Slide 34: International – European Industry Snapshot
34 International – European Industry Snapshot Approximately 705,000 railcars in standard-gauge countries RAILCAR OWNERSHIP Eastern European fleets include many older, smaller tank cars Increasingly difficult for smaller lessors to obtain financing and meet required regulatory standards in a cost
Slide 35: Great Lakes Industry Overview
35 SAILING SEASON GENERALLY RUNS FROM LATE MARCH THROUGH THE END OF DECEMBER Weather conditions and water levels impact operating efficiencies, especially early spring and early winter SHIPPING INDUSTRY ON THE GREAT LAKES IS MATURE WITH HIGH BARRIERS TO ENTRY U.S. new-build vessel costs have ris
Slide 36: American Steamship Company Overview
36 American Steamship Company Overview Based on 2015 ASC volume of 26.5 million net tons As of 12/31/2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Net Tons Carried by ASC (in millions) 37.2 37.3 35.7 21.2 28.0 28.4 29.7 28.8 30.5 26.5 ASC Vessels Operated 18 18 18 12 13 14 14 13 15 13
Slide 37: RRPF Affiliates Market Leadership
37 RRPF Affiliates Market Leadership RRPF enjoys leading market position in each targeted asset type. 50% 79% 91% 100% 45% 38% 16% 9% 0% 28% Trent 500 Trent 700 Trent 800 Trent 900 V2500 RRPF MARKET POSITION (% OF SPARE ENGINES ON OPERATING LEASE) RRPF 2nd Largest Spare Engine Lessor of the Asset Ty
Slide 38: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES 38
Slide 39: Reconciliation of Non-GAAP Measures – Net Income Measures
39 Reconciliation of Non-GAAP Measures – Net Income Measures Net Income 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (in millions) Net Income (GAAP) 147.3$ 183.8$ 194.8$ 81.4$ 80.8$ 110.8$ 137.3$ 169.3$ 205.0$ 205.3$ Adjustments attributable to consolidated income: Net loss on wholly owned Port
Slide 40: Reconciliation of Non-GAAP Measures – Balance Sheet Measures
40 Reconciliation of Non-GAAP Measures – Balance Sheet Measures On- and Off-Balance Sheet Assets 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Consolidated on-balance-sheet assets 4,646.6$ 4,723.2$ 5,190.5$ 5,206.4$ 5,442.4$ 5,846.0$ 6,044.7$ 6,535.5$ 6,919.9$ 6,894.2$ Less: Assets of discontinu