Gatx Corporation · NYSE:GATX
Gatx — Investor Presentation (June 2010)
66 slides from Gatx's investor presentation, Jun 15, 2010
Slide 1: GATX Corporation Company and Industry Profile - 2010
Unless otherwise noted, GATX Corporation is the source for all data provided June 2010 GATX Corporation Company and Industry Profile - 2010
Slide 2: Forward-Looking Statements
Page 2 Forward-Looking Statements This presentation contains statements that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those section
Slide 3: GATX Corporation
Page 3 GATX Corporation GATX Corporation provides leasing and related services to customers in the rail, marine and industrial equipment markets GATX strives to: Provide an attractive, risk-adjusted return to shareholders Be an excellent operator focused on providing quality services to customers Pr
Slide 4: GATX Corporate History
Page 4 GATX Corporate History Founded in 1898 as a railcar lessor Listed on NYSE in 1916 Initiated quarterly dividends in 1919 Paid without interruption ever since Railcar leasing remains the foundation of GATX
Slide 5: GATX Strengths
Page 5 GATX Strengths Keys to Success GATX leases long-lived, widely-used assets Railcars - Marine Vessels Locomotives - Industrial Equipment Assets that GATX uniquely understands Assets requiring valuable services that GATX provides
Slide 6: 2004-2009 Strategic Positioning
Page 6 2004-2009 Strategic Positioning Took a number of strategic actions Exited volatile assets and businesses Exited aircraft, technology, telecom, and venture leasing Strengthened balance sheet and improved credit ratings Dramatically reduced leverage Improved ratings two notches to Baa1/BBB+ Inv
Slide 7: 2010 Market Environment
Page 7 2010 Market Environment Industry will continue to face challenges in 2010 Rail traffic levels weak, but recovering Industry has significant idle railcar inventory Idle inventory slowly declining Lease rates stabilizing, but at low levels European market also stabilizing Tank car market histor
Slide 8: Business Profile
Page 8 Business Profile Rail Specialty ASC Aircraft Tech Venture Assets 0.5 0.14 0.02 0.16 0.11 0.07 Rail Specialty ASC Other Asset Mix 0.83 0.1 0.04 0.03 Rail 83% Specialty 11% Other 2% ASC* 4% $6.2 billion NBV (assets of continuing operations on and off balance sheet) as of 12/31/09 Asset Mix *Ame
Slide 9: Business Profile
Page 9 Business Profile Operating Lease Finance Lease ASC Joint Venture Other Assets 0.77 0.05 0.04 0.07 0.07 Transportation Assets Other Industry Focus 0.95 0.05 Operating Lease Assets 77% Finance Leases 5% Other 7% ASC 4% $6.2 billion NBV (assets of continuing operations on and off balance sheet)
Slide 10: Rail Industry
Rail Industry
Slide 11: North American Railcar Market
Page 11 Rail Industry North American Railcar Market Railroads Shippers Lessors Railcars 0.25 0.2 0.55 1,699,142 railcars Lessors 1 55% Railroads 25% Shippers 20% Source: Umler as of 1/2010 1 Cars owned by TTX, which are approximately 8% of the total North American fleet, are included with Lessors.
Slide 12: North American Fleet Composition
Page 12 Rail Industry North American Fleet Composition Cars are owned by railroads, shippers and lessors Tank cars are owned by lessors such as GATX or shippers who utilize this car type Railroads do not have an ownership presence in tank cars as these cars have more complex service requirements Sou
Slide 13: Rail Industry Shipment Composition
Page 13 Source: Association of American Railroads (AAR) Rail Industry Shipment Composition Coal Intermodal Chemicals Autos Farm/Agriculture Food/Kindred Other East 0.24 0.14 0.13 0.06 0.09 0.08 0.26 Key commodity markets for the North American Class I railroads include coal, intermodal, and chemical
Slide 14: Rail Industry Carloading Trends
Page 14 Rail Industry Carloading Trends 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 '10 Q1 '09 All Commodities 20293 20547 20779 20682 20634 20435 20148 20207 20904 21145 21225 20983 20347 17062 4524 4320 2004-2006 rail traffic was driven by increased demand across most
Slide 15: Railcar Manufacturing Backlog
Page 15 Rail Industry Railcar Manufacturing Backlog 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1 63453 55680 30825 19991 6443 24055 42242 59416 86857 79038 65223 26171 12990 Q2 63120 43456 28176 14452 9281 33383 51446 60544 85692 73911 61573 21558 Q3 69858 36811 26218 11888 14
Slide 16: Rail
Rail
Slide 17: Rail: GATX's largest, most valuable franchise
Page 17 Rail GATX's largest, most valuable franchise One of the largest railcar and locomotive lessors in North America A leading North American tank car lessor Strong market identity Own, manage or have interest in approximately 162,000 railcars worldwide Expanding international presence with appro
Slide 18: Worldwide Rail Fleet
Page 18 Worldwide Rail Fleet 162,000 Railcars 595 Locomotives North America Europe Railcar distribution 0.72 0.28 162,000 railcars as of 12/31/09 RAILCARS North America Europe Total Owned 111,000 20,000 131,000 Interest In 3,000 25,000 28,000 Managed 2,000 <1,000 3,000 Rail Total 116,000 46,000 162,
Slide 19: GATX Worldwide Owned Fleet
Page 19 GATX Worldwide Owned Fleet General Service Tank Cars High Pressure Tank Cars Specialty Covered Hoppers Gravity Covered Hoppers Open Top Hoppers Other GATX Worldwide Owned Fleet (excl Spf) 0.51 0.1 0.11 0.13 0.09 0.06 131,000 railcars as of 12/31/09 Tank Cars 61% (Approximately 52 different t
Slide 20: Tank Car Leasing Market North America
Page 20 Tank Car Leasing Market North America GATX Union Tank Car GE Railcar Trinity Other East 0.25 0.35 0.12 0.13 0.15 Source: Umler as of 1/2010 Tank Car Leasing North American Market Share
Slide 21: GATX's Fleet
Page 21 GATX's Fleet Major Car Types, Industries, Commodities Major Car Types, Industries, Commodities Major Car Types, Industries, Commodities Industries Served Typical Commodities
Slide 22: Rail Industries Served
Page 22 Rail Industries Served Chemical Petroleum Food & Agriculture Railroads Other Gross Revenues 0.31 0.31 0.16 0.11 0.11 Car types often serve multiple industry sectors Chemical 31% Petroleum 31% Food & Agriculture 16% Railroads 11% Other 11% Based on 2009 Rail revenues
Slide 23: Rail Worldwide Top Customers
Page 23 Top 20 Top 10 Top 5 Top 1 Worldwide 0.333 0.21 0.123 0.03 Rail has a diverse customer base with approximately 800 customers worldwide Top 20 Customer Families: Revenue Contribution as % Total Revenue as of 12/31/09 Rail Worldwide Top Customers AAA & AA A BBB BBB or < NR/Private Top 50 Custom
Slide 24: Rail North America Customer Base
Page 24 Rail North America Customer Base North America Customer Base North America Customer Base Note: Customer families sometimes include more than one customer account. Therefore, the S&P ratings noted generally reflect the credit quality of the rated parent entity. Lease obligations of subsidiari
Slide 25: Rail Customer Stability
Page 25 Rail Customer Stability Customer Stability Customer Stability GATX's commitment to the industry and extensive experience has led to stable and long-standing customer relationships that serve as the backbone of our business Customers demand that their railcar provider be committed to providin
Slide 26: Locomotive Group
Page 26 Locomotive Group 595 locomotives in North America GATX focuses on high-quality, four- axle and six-axle locomotives - the workhorses of the industry Low horsepower (1,000HP- 1,500HP) Medium horsepower (2,000HP- 3,000HP) High horsepower (3,800HP) Leases to Class I, regional and short- line ra
Slide 27: GATX Rail Europe and AAE Cargo
Page 27 100% Owned - Tank Cars as of 12/31/09 GATX Rail Europe - Austria, Germany & Poland approx. 20,000 cars 37.5% Owned - Freight Cars AAE Cargo - Switzerland approx. 25,000 cars 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 AAE 6800 8400 10000 12000 13500 14500 15500 1750
Slide 28: GATX Rail Europe
Page 28 GATX Rail Europe Length of leases tend to be shorter than U.S., but renewal success is high European tank car marketplace comprised of three large participants and many small players Source: GATX Rail Europe (Wholly-Owned Rail Fleet: Tank Cars) in millions 2006 2007 2008 2009 Lease Income $
Slide 29: GATX Rail Europe Markets Served
Page 29 GATX Rail Europe Markets Served Germany Poland Austria Hungary Switzerland Romania Benelux Slovakia Czech Republic Other Rail Europe Revenue 34 24 14 6 6 3 2 2 2 7 Source: GATX Rail Europe (Wholly-Owned Rail Fleet: Tank Cars, based on 2009 revenue) Germany 34%
Slide 30: GATX Rail Europe Products Carried in Tank Cars
Page 30 GATX Rail Europe Products Carried in Tank Cars Mineral Oil* Chemical LPG Other Car Type 74 9 10 7 Source: GATX Rail Europe (Wholly-Owned Rail Fleet: Tank Cars, based on # of cars at 12/31/09) *Mineral Oil = light and dark petroleum products Mineral Oil* 74% Chemical 9% LPG 10% Other 7%
Slide 31: Capitalizing on Market Environment
Page 31 Capitalizing on Market Environment GATX recognized the strength of the market in prior years GATX proactively used market strength to position itself to manage through and capitalize on a downturn Extended lease terms at attractive rates Scrapped/sold certain railcar types at high scrap/asse
Slide 32: GATX Knows Business Cycles
Page 32 GATX Knows Business Cycles GATX used the up market (2004-2008) to prepare for downturn Aggressively managing fleet to maintain utilization Positioning fleet for eventual recovery GATX North American Fleet Utilization
Slide 33: GATX Capitalized on Strong Market
Page 33 GATX Capitalized on Strong Market 2004 2005 2006 2007 2008 2009 2010 Exposed Cars 21000 23000 20000 20000 17500 15000 17000 Renewal Months 41 50 64 67 63 41 Actively Extended Renewal Terms to Reduce Cars Exposed Approximate Number of Exposed Cars Renewal Months North American Fleet LPI = Lea
Slide 34: Captured High Lease Rates
Page 34 Capitalized on Strong Market Captured High Lease Rates The GATX Lease Price Index (LPI) is an internally generated business indicator that measures general lease rate pricing on renewals within Rail's North American railcar fleet The LPI reflects the weighted average lease rate for a select
Slide 35: Optimized Fleet, Limited Orders
Page 35 Capitalized on Strong Market Optimized Fleet, Limited Orders Optimized Fleet, Limited Orders Optimized Fleet, Limited Orders 2010 2011 2012 Total Committed Railcar Orders (# of cars) 75 --- --- 75 Options --- --- --- --- Total 75 --- --- 75 Sold and scrapped less optimal cars at record price
Slide 36: Rail Current Focus
Page 36 Rail Current Focus Tactical Focus on utilization Control maintenance costs Constant customer dialogue Strategic - opportunities amidst challenges Fleet acquisitions New car order(s) as appropriate Asset management
Slide 37: Rail Competitive Strengths
Page 37 Rail Competitive Strengths GATX has built and maintained a strong market position by focusing on full-service leasing What do we mean by "full service"?
Slide 38: Rail Competitive Strengths
Page 38 Rail Competitive Strengths GATX provides the expertise, knowledge and services essential to our customers Maintenance Engineering Training
Slide 39: Rail Maintenance Network
Page 39 Rail Maintenance Network Maintaining railcars and locomotives is a necessary and complicated process; customers rely on GATX to manage this maintenance process In North America, GATX owns a network of Seven (7) full-scale maintenance facilities Six (6) customer site locations Six (6) fast tr
Slide 40: Rail Maintenance Services
Page 40 Rail Maintenance Services GATX handles every aspect of railcar maintenance, from routine service to complex railcar overhauls and retrofits GATX utilizes the latest in railcar maintenance equipment technology, including non-destructive testing inspection equipment, high-capacity overhead cra
Slide 41: Rail Engineering
Page 41 Rail Engineering GATX's rail engineering team, comprised of experienced mechanical, structural, and chemical engineers, is constantly communicating with the customer base Each customer faces a unique set of transportation challenges. Railcar needs change based on factors such as a customer's
Slide 42: Training
Page 42 Training Signing a full-service lease is the starting point for GATX's long-term relationships with its customers GATX's service offering goes beyond maintenance and engineering to include ongoing training for customers. Since customers are the operators of the railcars, they need to be well
Slide 43: Specialty
Specialty
Slide 44: Specialty Owned Portfolio
Page 44 Specialty Owned Portfolio Marine Industrial Equipment Aircraft Engines Other Specialty Owned Portfolio 0.49 0.21 0.131428571428571 0.22 Specialty focuses primarily on marine and industrial equipment Seeks to invest in long-lived, widely- used assets critical to the operations of its customer
Slide 45: Marine
Page 45 Marine GATX has invested in "blue water" (ocean-going) marine vessels for over 20 years GATX partners with leading ship owners and operators to invest in existing and new-build vessels
Slide 46: Marine Blue Water Joint Ventures
Page 46 Marine Blue Water Joint Ventures Partners are leading ship owners and operators with decades of shipping experience, reputations for outstanding service, and shared investment philosophy Our jointly-owned vessels are a small part of the overall pool of vessels operated by our partners Overla
Slide 47: Marine Joint Ventures Vessels
Page 47 Marine Joint Ventures Vessels Cardinal Marine 45,000 DWT Chemical Parcel Tankers Somargas LPG/Ethylene Carriers Clipper Third Handysize Dry-Bulk Carriers Clipper Fourth 10,000-15,000 DWT Chemical Tankers
Slide 48: Industrial Equipment Finance
Inland Marine Other Production Automotive Mining Transportation Energy Transaction Volume 0.52 0.03 0.03 0.04 0.06 0.32 Page 48 Industrial Equipment Finance (IEF) Provides equipment leasing solutions to meet the needs of the North American manufacturing and industrial sectors Major emphasis on equip
Slide 49: Rolls-Royce & Partners Finance Aircraft Engine Leasing
Page 49 Rolls-Royce & Partners Finance Aircraft Engine Leasing Rolls-Royce and Partners Finance Limited (RRPF) was established in 1989 as a joint venture by Rolls-Royce PLC; GATX became 50/50 partner in 1998 One of the largest spare engine portfolios in the industry Approximately 350 aircraft engine
Slide 50: Specialty Managed Portfolio
Page 50 Specialty Managed Portfolio GATX leverages its asset expertise and infrastructure by managing portfolios of assets for third-party owners Management activities include re- leasing initiatives, asset sales, advisory services, and back-office functions GATX is paid a management fee while also
Slide 51: American Steamship Company
American Steamship Company
Slide 52: American Steamship Company (ASC)
Page 52 American Steamship Company (ASC) ASC provides transportation of dry-bulk commodities on the Great Lakes including iron ore, coal, and limestone aggregates ASC has been operating on the Great Lakes for more than 100 years, joining GATX in 1973 Fleet of 18 self-unloading vessels Range in lengt
Slide 53: ASC Market
Page 53 ASC Market 2002 2003 2004 2005 2006 2007 2008 2009 U.S.-Flag Cargo Carriage - Net Tons 101.5 94.7 111.3 107.7 109.7 104 100.9 66 The largest consumers of the cargos carried by U.S.-Flag Great Lakes vessels are the steel mills The Great Lakes states account for more than 70% of the nation's s
Slide 54: ASC Market: Commodities and Industries Served
Page 54 ASC Market 2006 Iron Ore Coal Limestone Aggregates Other ASC Commodities Carried - Net Tons 0.39 0.48 0.1 0.03 2008 Steel Electric Utility Construction Other ASC Commodities Carried - Net Tons 0.38 0.47 0.08 0.07 ASC Commodities Carried 2009 Iron Ore 39% Coal 48% Limestone Aggregates 10% Oth
Slide 55: ASC Industry Overview
Page 55 ASC Industry Overview Industry environment is mature Long-lived assets; 2 non-ASC vessels operating since 1929 High barriers to entry; estimated cost for new 1000' vessel is $100 million Customer base is highly concentrated Top 5 customers = 73% total ASC revenue Market is primarily driven b
Slide 56: ASC Great Lakes Trade Patterns
Page 56 ASC Great Lakes Trade Patterns Great Lakes Trade Patterns Great Lakes Trade Patterns Great Lakes Trade Patterns Great Lakes Trade Patterns Great Lakes Trade Patterns Great Lakes Trade Patterns Great Lakes Trade Patterns Great Lakes Trade Patterns
Slide 57: ASC Fleet
Page 57 ASC Fleet With the most versatile fleet operating on the Great Lakes, ASC is well positioned to manage its fleet to meet changing demand levels in 2010
Slide 58: Financial Highlights
Financial Highlights
Slide 59: Financial Profile Overview
Page 59 Financial Profile Overview Stable cash flow and contracted revenue Market leader in the railcar leasing business Credit strength of underlying customer base Access to capital is solid and well diversified Financial ratios are strong Limited capital expenditure commitments Investments will be
Slide 60: Strengthened Balance Sheet
Page 60 Strengthened Balance Sheet Improved Ratings 2002 2003 2004 2005 2006 2007 2008 2009 Recourse Leverage 5.4 4.6 3.6 3.6 2.6 2.8 2.9 3.1 Note: Total Recourse Debt = On Balance Sheet Recourse Debt + Off Balance Sheet Recourse Debt + Capital Lease Obligations + Commercial Paper and Bank Credit Fa
Slide 61: Disciplined Investment
Page 61 Disciplined Investment 2006 2007 2008 2009 Rail 534 487 587 345 Specialty 94 141 163 120 ASC 128 4 8 7 Other 7 2 23 8 $ millions $763 $634 $781 $480 Continuing Operations
Slide 62: Strong Operating Cash Flow and Portfolio Proceeds
Page 62 Financial Profile Strong Operating Cash Flow And Portfolio Proceeds 2004 2005 2006 2007 2008 2009 Operating Cash Flow 210 197 293 340 364 265 Portfolio Proceeds 308 167 123 247 156 68 $ millions Continuing Operations
Slide 63: Strong Committed Cash Flows
Page 63 Financial Profile Strong Committed Cash Flows 2010 2011 2012 2013 2014 Thereafter East 792.3 614.9 452.1 330.1 244.4 734.9 as of 12/31/09 $3.2 billion in minimum future lease receipts $ millions
Slide 64: Future Debt Obligations
Page 64 Financial Profile Future Debt Obligations Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2104 Thereafter Debt 243.124 5.73 44.144 26.731 193.642 53.409 26.693 255.648 70.713 10.051 395.178 54.
Slide 65: Summary
Page 65 Summary GATX has consistently been a market force for 112 years Experienced in every operating cycle and market environment Credit profile is attractive Strategic actions taken throughout business cycles stabilized fleet performance and reduced volatility Actively pursuing investment opportu
Slide 66: GATX Financial Review
GATX Financial Review For detailed financial information, please see the Supplemental Financial Information contained in the Investor Relations section of www.gatx.com