Gatx Corporation · NYSE:GATX
Gatx — Baird 2021 Global Industrial Conference
25 slides from Gatx's conference presentation, Nov 12, 2021
Slide 1: Baird 2021 Global Industrial Conference November 2021
BAIRD 2021 GLOBAL INDUSTRIAL CONFERENCE NOVEMBER 2021
Slide 2: Forward-looking statements
- Securities Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those discussed. These include statements as to our future expectati
Slide 3: Established as railcar lessor with 28 railcars: company history
Established as railcar lessor with 28 railcars 3 *As of 12/31/2020 -Year History 1898 1907 1919 1920 1936 1984 1994 1998 2003 2012/ 2013 2020 2021 Began manufacturing railcars Initiated quarterly dividend Began listing on the NYSE Began rail investment in Canada Exited railcar manufacturing Began ra
Slide 4: GATX Today: Business Segments
GATX Today Business Segments 66% 21% 8% 5% PORTFOLIO MANAGEMENT Largely comprised of our 50% ownership of Rolls-Royce and Partners Finance Affiliates (RRPF), a leading worldwide lessor of aircraft spare engines RRPF has 445 aircraft spare engines with $4.8 billion of net book value In January 2021,
Slide 5: GATX Rail North America Overview
28% 24% 19% 14% 6% 9% GATX Rail North America Overview *Excludes boxcar fleet Chemicals Refiners & Other Petroleum Railroads & Other Transports Food & Agriculture Mining, Minerals & Aggregates Other Based on 2020 Rail North America Revenue 50% 60% 70% 80% 90% 100% 2002 2004 2006 2008 2010 2012 2014
Slide 6: Straightforward and Proven Business Model
6 BUY the railcar at an economically attractive and competitively advantaged price at the right time 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 maximizes safety, in-use time, and customer satisfaction
Slide 7: Quarterly Commodity Carload Traffic
7 0 500 1,000 1,500 2,000 2,500 All Other Coal & Coke Sand, Stone, Minerals, & Related Products Grain Petroleum Products QUARTERLY COMMODITY CARLOAD TRAFFIC 7 Association of American Railroads Industry Commodity Carloadings: North America
Slide 8: Industry Backlog: North America
Number of Tank Number of Freight Cyclicality of the industry is illustrated by the backlog of orders at the railcar manufacturers The 2013 and 2014 spike in tank car backlog was primarily due to the crude boom Backlogs have moderated post-crude boom, with the recent decline attributable to Precision
Slide 9: Lease price index, renewal success and utilization
STRONG MARKETWEAK MARKET WEAK MARKET 67 63 41 35 45 60 62 66 54 32 33 38 39 31 14% 5% -11% -16% 7% 26% 35% 39% 32% -20% -28% -10% -4% -24% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 0 10 20 30 40 50 60 70 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Renewal Lease Term* (left
Slide 10: GATX Rail International Overview
95% 97% 96% 99% 98% 50% 60% 70% 80% 90% 100% 2008 2010 2012 2014 2016 2018 2020 GATX Rail International Overview FLEET COUNT 26,300+ in Europe (GRE) 4,500+ in India and Russia CAR TYPE COUNT 50+ AVERAGE FLEET AGE (GRE) 17 Years NUMBER OF CUSTOMERS 250+ COUNTRIES OF OPERATIONS Poland, Germany, Austri
Slide 11: Industry Snapshot: Europe
32% 68% (Based on approximately 728K railcars) RAILCAR OWNERSHIP* Railroads and Shippers Lessors 11 Industry Snapshot: Europe Relatively limited manufacturing capacity Helps avoid an industry oversupply of railcars Older industry fleet in need of replacement Key segments continue to demonstrate need
Slide 12: GATX Rail India Overview
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $0 $20 $40 $60 $80 $100 $120 $140 $160 NBV (left axis) Lease Income (right axis) GATX obtained the first-ever wagon leasing license in 2012 and is the largest private railcar lessor in India. KEY ATTRIBUTES Local Technical and Operational Capabilities managemen
Slide 13: Portfolio Management Overview
83% 16% 1% $706.1M NBV Spare Engine Count: 445 Average Fleet Age: 12 Years 2020 RRPF OVERVIEW Aircraft Spare Engine Leasing Affiliates (RRPF) Marine Equipment Other $0 $20 $40 $60 $80 $100 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 RRPF JV PRE-TAX INCOMEASSET MIX 36% 17% 17% 9% 8% 4% 9% Based
Slide 14: Aircraft Spare Engine Leasing Industry Overview
1% 10% 40% 50% 1990 1998 2016 2019* ENGINES LEASED 14 *RRPF management estimate as of 02/24/2021 Aircraft Spare Engine Leasing Industry Overview Aircraft spare engines are attractive and reliable leasing assets Robust residual value characteristics Retain value better over the long term compared to
Slide 15: RRPF Key Attributes and Joint Venture Focus
15 RRPF Affiliates entered the COVID-19 crisis from a position of strength. Balance Sheet and Liquidity Long-dated debt maturity profile and commitment to preserving cash and maintaining strong liquidity Renewal Schedule Consistent effort to ladder lease maturities by volume and engine type Customer
Slide 16: Trifleet Overview
72% 12% 9% 6% Trifleet Overview FLEET COUNT Over 19,000* (54% owned/46% managed) AVERAGE FLEET AGE Owned: Approx. 7 Years Managed: Approx. 10 Years ESTIMATED USEFUL LIFE 15 25 Years TYPICAL LEASE TERM 1 5 Years NUMBER OF CUSTOMERS Approx. 300 MAJOR COUNTRIES OF OPERATION The Netherlands, U.S., Singa
Slide 17: GATX: Well Positioned with Strong Cash Flows
GATX has nearly $3 billion in contractual future lease receipts. 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018* 2019* 2020* Operating Cash Flow Portfolio Proceeds $942 $725 $533 $367 $199 $231 2021 2022 2023 2024 2025 Thereafter GATX CONTRACTUAL FUTURE LEASE RECEIPTS OPERATING CASH FLOW & PORTF
Slide 18: Capital Allocation Framework: Investment Priority
PRIORITY 1 Invest in core, service-intensive assets to maximize shareholder value $9.8 billion** of investments over the period shown Capital Allocation Framework $781 $480 $585 $615 $770 $860 $1,031 $715 $621 $589 $928 $723 $1,064 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018* 2019* 2020*
Slide 19: Capital Allocation Framework: Optimize the Balance Sheet
*Total Recourse Debt = On-Balance Sheet Recourse Debt + Off-Balance Sheet Recourse Debt + Capital Lease Obligations + Commercial Paper and Bank Credit Facilities, Net of Unrestricted Cash (In accordance with the new lease accounting standard, off-balance sheet assets and recourse debt are no longer
Slide 20: Capital Allocation Framework: Cash Returned to Shareholders
$0 $500 $1,000 $1,500 $2,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Cumulative Dividends Cumulative Share Repurchase CASH RETURNED TO SHAREHOLDERS Capital Allocation Framework PRIORITY 3 In lockstep with Priorities 1 and 2, return excess cash to shareholders Over the perio
Slide 21: GATX Financial Highlights
GATX Financial Highlights $1.59 $2.01 $2.81 $3.50 $4.48 $5.37 $5.77 $4.41 $4.67 $4.89 $4.59 2010 2011 2012 2013 2014 2015 2016 2017* 2018* 2019* 2020* 7% 9% 11% 13% 15% 18% 18% 13% 14% 14% 11% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $585 $615 $770 $860 $1,031 $715 $621 $589 $928 $723
Slide 22: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES
Slide 23: Reconciliation of Non-GAAP Measures: Net Income Measures
23 Reconciliation of Non-GAAP Measure Net Income Measures Net Income (in millions) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net income (GAAP) 110.8$ 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 n/a 34
Slide 24: Net Income Measures (cont.) and Earnings Per Share
24 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
Slide 25: Reconciliation of Non-GAAP Measures: Balance Sheet Measures
25 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 North Amer