Gatx Corporation · NYSE:GATX
Gatx — Investor Presentation (March 2009)
66 slides from Gatx's investor presentation, Mar 19, 2009
Slide 1: GATX Corporation Company and Industry Profile
GATX Corporation Company and Industry Profile
Slide 2: Forward-Looking Statements
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 sections and t
Slide 3: GATX Corporation
GATX Corporation GATX Corporation provides operating leases 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 P
Slide 4: GATX Corporate History
GATX Corporate History Founded in 1898 as a railcar lessor Listed on NYSE in 1916 Initiated quarterly dividends in 1919; paid without interruption since Railcar leasing remains the foundation of GATX
Slide 5: GATX Strengths: Keys to Success
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: 2004-2008 Strategic Positioning
2004-2008 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+ Invested w
Slide 7: Business Profile: Asset Mix
Business Profile Rail Specialty ASC Aircraft Tech Venture Assets 0.49 0.15 0.02 0.18 0.12 0.04 Rail Specialty ASC Other Asset Mix 0.83 0.1 0.04 0.03 Rail 83% Specialty 10% Other 3% ASC* 4% $6.3 billion NBV (assets of continuing operations on and off balance sheet) as of 12/31/08 Asset Mix *American
Slide 8: Business Profile: Asset Structure and Industry Focus
Business Profile Operating Lease Finance Lease ASC Joint Venture Other Assets 0.72 0.07 0.05 0.05 0.11 Transportation Assets Other Industry Focus 0.93 0.07 Operating Lease Assets 74% Finance Leases 5% Other 9% ASC 6% $6.3 billion NBV (assets of continuing operations on and off balance sheet) as of 1
Slide 9: Rail Industry
2009 = Rail Industry
Slide 10: North American Railcar Market
Rail Industry North American Railcar Market Railroads Shippers Lessors Railcars 0.26 0.2 0.54 1,745,784 railcars Lessors 54% Railroads 26% Shippers 20% Source: Umler as of 12/2008
Slide 11: North American Fleet Composition
Rail Industry North American Fleet Composition Other Intermodal Flat Cars Open Hoppers Box Cars Gondolas Tank Cars Covered Hoppers Lessor owned 1241 61911 120979 51721 94919 87489 249599 283362 Shipper owned 1453 1836 4502 59438 5760 75203 72081 125156 Railroad owned 1587 13216 30870 79722 88424 112
Slide 12: Rail Industry Shipment Composition
Source: Association of American Railroads (AAR) Rail Industry Shipment Composition Coal Intermodal Chemicals Autos Farm/Agriculture Food/Kindred Other East 0.24 0.36 0.06 0.06 0.05 0.05 0.18 Key commodity markets for the North American Class I railroads include coal, intermodal, and chemicals The ch
Slide 13: Rail Industry Carloading Trends
Rail Industry Carloading Trends 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 All Commodities 20293 20547 20779 20682 20634 20435 20148 20207 20904 21145 21225 20983 20347 2004-2006 rail traffic was driven by increased demand across most major commodity types Decline in 20072008 c
Slide 14: Railcar Manufacturing Backlog
Rail Industry Railcar Manufacturing Backlog 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Q1 63453 55680 30825 19991 6443 24055 42242 59416 86857 79038 65223 Q2 63120 43456 28176 14452 9281 33383 51446 60544 85692 73911 61573 Q3 69858 36811 26218 11888 14491 31858 61052 60986 88116 67000 52
Slide 15: Rail
2009 Ee Rail es
Slide 16: Rail: GATX's largest, most valuable franchise
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 166,000 railcars worldwide Expanding international presence with approximately
Slide 17: Worldwide Rail Fleet
Worldwide Rail Fleet 166,000 Railcars 700 Locomotives North America Europe Railcar distribution 0.74 0.26 166,000 railcars as of 12/31/08 RAILCARS North America Europe Total Owned 113,000 20,000 133,000 Interest In 6,000 24,000 30,000 Managed 3,000 <1,000 3,000 Rail Total 122,000 44,000 166,000 Own,
Slide 18: GATX Worldwide Owned Fleet
GATX Worldwide Owned Fleet General Service Tank Cars High Pressure Tank Cars Specialty Covered Hoppers Gravity Covered Hoppers Open Hoppers & Gondolas Other GATX Worldwide Owned Fleet (excl Spf) 0.51 0.1 0.11 0.13 0.1 0.05 133,000 railcars as of 12/31/08 Tank Cars 61% (Approximately 50 different typ
Slide 19: Tank Car Leasing Market North America
Tank Car Leasing Market North America GATX Union Tank Car GE Railcar Trinity Other East 0.26 0.35 0.12 0.13 0.14 Source: Umler as of 12/2008 Tank Car Leasing North American Market Share
Slide 20: GATX's Fleet: Car Types, Industries, Commodities
GATX's Fleet Major Car Types, Industries, Commodities General Service Tank Cars High Pressure Tank Cars Specialty Covered Hoppers Gravity Covered Hoppers Gondolas Open Hoppers Chemical Chemical Plastics Agriculture Energy Energy Petroleum Petroleum Food Industrial Construction Construction Food Indu
Slide 21: Rail Industries Served
Rail Industries Served Chemical Petroleum Food & Agriculture Railroads Other Gross Revenues 0.29 0.32 0.14 0.14 0.11 Car types often serve multiple industry sectors Chemical 29% Petroleum 32% Food & Agriculture 14% Railroads 14% Other 11% Based on 2008 Rail gross revenues
Slide 22: Rail Worldwide Customer Base
Top 20 Top 10 Top 5 Top 1 Worldwide 0.287 0.179 0.104 0.024 1-12 Months 13-24 Months 25-36 Months 37-48 Months 49-60 Months >61 Months Worldwide 0.16 0.15 0.16 0.13 0.12 0.28 Rail has over 1,000 customers worldwide The customer base is highly diversified, with no single account exceeding 2.4% of tot
Slide 23: Rail Top Customers
Rail Top Customers Rank S&P Credit Rating % of Revenue 1 D 2.4% 2 BBB 2.3% 3 A 2.0% 4 Not Rated 1.6% 5 BBB 1.3% 6 BBB 1.2% 7 BBB 1.2% 8 A- 1.1% 9 AA- 1.1% 10 A- 1.0% 11 AA+ .91% 12 A .91% 13 BBB .85% 14 BBB+ .83% 15 BB .76% 16 B+ .76% 17 AA .75% 18 CCC .66% 19 AAA .66% 20 BB+ .62% AAA & AA A BBB BBB
Slide 24: Rail Customer Stability
Rail Customer Stability Customer # Year Relationship Initiated 1 1967 2 1937 3 1960 4 1945 5 1945 6 1971 7 1958 8 1958 9 1946 10 1932 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 Custo
Slide 25: Locomotive Group
Locomotive Group 681 locomotives in North America GATX focuses on high-quality four- axle locomotives - the workhorses of the industry Medium horsepower (1,000HP- 2,000HP) Suitable for all railroad deployments Leases to Class 1, regional and short-line railroads, as well as industrial users North Am
Slide 26: Rail Europe and AAE Cargo Joint Venture
100% Owned - Tank Cars as of 12/31/08 GATX Rail Europe - Austria, Germany & Poland approx. 20,000 cars 37.5% Owned - Freight Cars AAE Cargo - Switzerland approx. 24,000 cars Expansion of EU favorable to rail transportation Strong political support for enhanced freight rail system and reduced highway
Slide 27: GATX Rail Europe
GATX Rail Europe 2004 2005 2006 2007 2008 Utilization 0.88 0.91 0.95 0.97 0.97 Utilization has steadily increased due to strong demand and aggressive scrapping Length of leases tend to be shorter than US, but renewal success is high European tank car marketplace comprised of three large participants
Slide 28: GATX Rail Europe Markets Served
GATX Rail Europe Markets Served Germany Poland Austria Hungary Switzerland Romania Benelux Slovakia Czech Republic Other Rail Europe Revenue 35.76 26.81 12.35 6.63 6.16 3.96 1.99 1.7 1.13 3.51 Source: GATX Rail Europe (Wholly-Owned Rail Fleet: Tank Cars)
Slide 29: GATX Rail Europe Products Carried in Tank Cars
GATX Rail Europe Products Carried in Tank Cars Mineral Oil* Chemical LPG Other Car Type 74 10 8 8 Source: GATX Rail Europe (Wholly-Owned Rail Fleet: Tank Cars) *Mineral Oil = light and dark petroleum products
Slide 30: Capitalizing on Market Environment
Capitalizing on Market Environment GATX recognized the strength of the market in 2004-2008 GATX proactively used market strength to position itself to manage through and capitalize on a downturn Extend lease terms at attractive rates Scrapped/sold certain railcar types at high scrap/asset prices Lim
Slide 31: Rail Fleet Utilization - North America
Rail Fleet Utilization - North America 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Utilization 0.91 0.93 0.95 0.95 0.93 0.92 0.93 0.95 0.95 0.95 0.96 0.95 0.94 0.91 0.9 0.9 0.93 0.98 0.98 0.99 0.98 0.98 GATX's rail fleet utilization b
Slide 32: Reduced Cars Exposed to Renewal
Capitalized on Strong Market Reduced Cars Exposed to Renewal 2004 2005 2006 2007 2008 2009 Exposed Cars 21000 23000 20000 20000 17500 15000 Renewal Months 41 51 64 67 63 Actively Extended Renewal Terms to Reduce Cars Exposed Approximate Number of Exposed Cars Renewal Months North American Fleet
Slide 33: Captured High Lease Rates
Capitalized on Strong Market Captured High Lease Rates The Lease Price Index (LPI) is an internally generated business indicator that measures general lease rate pricing on renewals within the North American railcar fleet The LPI reflects the weighted average lease rate for a select group of railcar
Slide 34: Optimized Fleet, Limited Orders
Capitalized on Strong Market Optimized Fleet, Limited Orders 2004 2005 2006 2007 2008 # of Cars Scrapped 3,265 1,964 1,763 2,392 4,151 # of Cars Sold 1,400 2,040 2,212 1,660 2,860 Total 4,665 4,040 3,975 4,052 7,011 2009 2010 2011 Total Committed Railcar Orders 2,000 250 --- 2,250 Options --- 1,750
Slide 35: Rail Market Environment
Rail Market Environment Industry faces challenges in 2009 Rail traffic levels weak Industry has significant idle inventory Ethanol-capable tank cars Construction-related railcars Grain cars and coal cars Intermodal Industry-wide order backlog dropping as orders decline and manufacturers cancel produ
Slide 36: Rail Focus for 2009
Rail Focus for 2009 Utilization Control maintenance costs Selectively grow fleet Capitalize on strong competitive position GATX has consistently been a market force for 110 years Experienced in every operating cycle and market environment
Slide 37: Rail Competitive Strengths
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: Full Service
Rail Competitive Strengths GATX provides the expertise, knowledge and services essential to our customers Maintenance Engineering Training
Slide 39: Rail Maintenance Network
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 seven (7) fast track se
Slide 40: Rail Maintenance Services
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 crane syste
Slide 41: Rail Engineering
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 commodi
Slide 42: Training
Training Signing a full-service lease is a 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 versed i
Slide 43: Specialty
2009 Ee Specialty
Slide 44: Specialty Owned Portfolio
Specialty Owned Portfolio Marine Industrial Equipment Aircraft Engines Other Specialty Owned Portfolio 0.49 0.21 0.08 0.22 Specialty focuses primarily on marine and industrial equipment Seeks to invest in long-lived, widely-used assets critical to operations of customers Marine: co-investments with
Slide 45: Marine
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
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 Overlap with G
Slide 47: Marine Joint Ventures Vessels
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 (IEF)
Industrial Equipment Finance (IEF) Provides equipment leasing solutions to meet the needs of the North American manufacturing and industrial sectors Major emphasis on equipment values and GATX's expertise/experience in certain asset classes Equipment must be core to the customer and essential use En
Slide 49: Rolls-Royce & Partners Finance Aircraft Engine Leasing
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 300 aircraft engines, compr
Slide 50: Specialty Managed Portfolio
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 typicall
Slide 51: American Steamship Company
2009 American Steamship Company
Slide 52: American Steamship Company (ASC)
American Steamship Company (ASC) ASC provides transportation of dry-bulk commodities on the Great Lakes Fleet of 18 self-unloading vessels Range in length from 635 feet to 1,000 feet Single trip vessel carrying capacity ranges from 24,000 to 70,000 net tons Unloading speeds range from 7,000 to 10,00
Slide 53: ASC Market
ASC Market 2002 2003 2004 2005 2006 2007 2008 U.S.-Flag Cargo Carriage - Net Tons 101.5 94.7 111.3 107.7 109.7 104 100.9 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 steelmaking capac
Slide 54: ASC Market: Commodities and Industries Served
ASC Market 2006 Iron Ore Coal Limestone Aggregates Other ASC Commodities Carried - Net Tons 0.52 0.35 0.11 0.02 2008 Steel Electric Utility Construction Other ASC Commodities Carried - Net Tons 0.5 0.37 0.09 0.04 ASC Commodities Carried 2008 Iron Ore 52% Coal 35% Limestone Aggregates 11% Other 2% 36
Slide 55: ASC Industry Overview
ASC Industry Overview Industry environment is mature Customer base is highly concentrated 24 customers in 2008 Top 5 customers = 72% total ASC revenue Market is primarily driven by integrated steel producers Sailing season generally runs from April 1 to December 31
Slide 56: ASC Great Lakes Trade Patterns
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
M/V American Spirit 1004' 62,400 M/V Burns Harbor 1000' 80,900 M/V Indiana Harbor 1000' 80,900 M/V Walter J. McCarthy, Jr. 1000' 80,900 M/V American Century 1000' 78,850 M/V American Integrity 1000' 78,850 M/V St. Clair 770' 44,800 M/V American Mariner 730' 37,300 M/V H. Lee White 704' 35,400 M/V Jo
Slide 58: Financial Highlights
2009 Fe Financial Highlights
Slide 59: Financial Profile Overview
Financial Profile Overview Stable cash flow and contracted revenue Market leadership in the railcar leasing business Credit strength of underlying customer base Liquidity is excellent Access to capital is well diversified Financial ratios are strong Minimum future capital expenditure commitments Foc
Slide 60: Strengthened Balance Sheet, Improved Ratings
Strengthened Balance Sheet Improved Ratings 2002 2003 2004 2005 2006 2007 2008 Recourse Leverage 5.1 4.4 3.5 3.7 2.6 2.7 2.9 Note: Total Recourse Debt = On Balance Sheet Recourse Debt + Off Balance Sheet Recourse Debt + Capital Lease Obligations + Commercial Paper and Bank Credit Facilities, Net of
Slide 61: Disciplined Investment
Disciplined Investment 2006 2007 2008 2009 Committed 2010 Committed Rail 534 487 587 301 28 Specialty 94 141 163 55 6 ASC 128 4 8 Other 7 2 23 $ millions $763 $634 $781 $356 $34 Continuing Operations
Slide 62: Strong Operating Cash Flow and Portfolio Proceeds
Financial Profile Strong Operating Cash Flow And Portfolio Proceeds 2004 2005 2006 2007 2008 Operating Cash Flow 210 197 293 340 364 Portfolio Proceeds 308 167 123 247 156 $ millions Continuing Operations
Slide 63: Strong Committed Cash Flows
Financial Profile Strong Committed Cash Flows 2009 2010 2011 2012 2013 Thereafter East 845.1 669.3 511 364.9 255.2 813.3 as of 12/31/08 $3.5 billion in minimum future cash lease receipts $ millions
Slide 64: Future Debt Obligations
Financial Profile Future Debt Obligations 2009 2010 2011 2012 2013 Thereafter Debt 446 284 306 434 369 778 $ millions GATX's debt maturity schedule is level and moderate
Slide 65: Summary: GATX Knows Business Cycles
Summary GATX Knows Business Cycles Strategic actions in recent years have positioned the company well for any environment Credit profile is attractive Focused on strengthening market leadership in the railcar leasing business during downturn Investment opportunities will continue to be pursued in a
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