Gatx Corporation · NYSE:GATX
Gatx — Stifel 2018 Transportation & Logistics Conference
30 slides from Gatx's conference presentation, Feb 12, 2018
Slide 1: Stifel 2018 Transportation & Logistics Conference
Stifel 2018 Transportation & Logistics Conference | February 13, 2018
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements Statements in this Presentation not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and
Slide 3: History and Business Overview
HISTORY AND BUSINESS OVERVIEW 120 The following presentation contains unaudited financial information
Slide 4: GATX's 120-Year History
4 GATX’s 120-Year History 1898 Established as railcar lessor with 28 railcars 1919 Initiated quarterly dividend 1936 Began rail investment in Canada 1994 Began rail investment in Europe & Mexico 1996 Began locomotive investment 1998 Formed Rolls-Royce Partners and Finance (RRPF) Affiliates 1973 Acqu
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 68% 17% 7% 4% 4% PORTFOLIO MANAGEMENT RRPF affiliates
Slide 6: Straightforward and Proven Business Model
6 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 7: GATX Rail North America Overview
7 27% 26%17% 12% 7% 11% GATX Rail North America Overview WHOLLY OWNED FLEET COUNT 120,000+ CAR TYPE COUNT 160+ AVERAGE FLEET AGE 20 Years LOCOMOTIVE COUNT 600+ NUMBER OF CUSTOMERS ~900 COUNTRIES OF OPERATIONS US, Canada, & Mexico INDUSTRIES SERVED2017 OVERVIEW UTILIZATION* *Excludes boxcar fleet 27%
Slide 8: Managing Rate & Term Through Cycles
8 67 63 41 35 45 60 62 66 54 32 3314% 5% -11% -16% 7% 26% 35% 39% 32% -20% -28% -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 Renewal Lease Term (left axis) Lease Price Index (right axis) Managing Rate & Term Through Cycles G
Slide 9: North America Fleet Diversification
9 North America Fleet Diversification 31% General Service Tank 11% High Pressure 9% Other Specialty Tank 4% Other 3% Specialty Covered Hoppers 6% Pneumatic Covered Hoppers 14% Gravity Covered Hoppers 8% Open-top Cars 14% Boxcars 50% TANK 50% FREIGHT As of 12/31/2017 The diversity and balance of our
Slide 10: Railcar Leasing Market Conditions
10 Railcar Leasing Market Conditions Significant railcar oversupply Approximately 19% of industry fleet remains idle New railcar backlog still above historical averages Rail freight demand remains tepid Volume improvements not broad based Supply/demand imbalance exacerbated by speculativ
Slide 11: The Industry Continues to Add to the Fleet
11 The Industry Continues to Add to the Fleet (45) 54 9 2017 Attrition & Fleet Growth of the North American Fleet (in 000’s) Gross Attrition New Builds Net Fleet Change • AAR reports 19% of the North American Fleet idle for 60 days or longer Source: AAR & UMLER
Slide 12: GATX Strategy in this Environment
12 GATX Strategy in this Environment Outperform the competition – Maintain focus on utilization; highest reported utilization in North America – Leverage the strength of our full service offering, diversity of our fleet and depth of customer relationships – Displace competitors Continue to pract
Slide 13: GATX Rail International Overview
13 96% 97% 95% 97% 95% 97% 96% 97% 90% 91% 92% 93% 94% 95% 96% 97% 98% 99% 100% 2007 2009 2011 2013 2015 2017 GATX Rail International Overview FLEET COUNT 23,000+ in Europe 1000+ in India 150+ in Russia CAR TYPE COUNT 35+ AVERAGE FLEET AGE 18 Years NUMBER OF CUSTOMERS 225+ MAJOR COUNTRIES OF OPERATI
Slide 14: American Steamship Company Overview
14 American Steamship Company Overview Based on 2017 ASC volume As of 12/31/2017 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 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 25.4 27.8 ASC Vessels Operated 18 18 18 12 13 14 14 13 15 13 11 1
Slide 15: Rolls Royce Partners Affiliates Overview
15 Rolls Royce Partners Affiliates Overview The RRPF portfolio has committed future lease receipts of more than $2.1 billion. RRPF OVERVIEW GATX established its first partnership with Rolls-Royce plc in 1998 Total NBV of engines upon RRPF establishment was $350 million; today the NBV is approxim
Slide 16: Financial Discussion
/ YEARS OF OPERATIONAL EXPERIENCE Financial Discussion
Slide 17: GATX is Well-Positioned with Strong Cash Flows
17 2007 2009 2011 2013 2015 2017 Operating Cash Flow Portfolio Proceeds $969 $777 $619 $440 $328 $553 GATX is Well-Positioned with Strong Cash Flows GATX has nearly $3.7 billion in committed future lease receipts Our strong operating cash flow provides tremendous capital allocation flexibility G
Slide 18: Capital Allocation Framework
18 PRIORITY 2 Manage the balance sheet Maintain a solid investment grade rating of BBB/Baa2 Maintain capacity for opportunistic investments Capital Allocation Framework $763 $634 $781 $480 $585 $615 $770 $860 $1,031 $715 $621$603 2007 2009 2011 2013 2015 2017 $0 $200 $400 $600 $800 $1,000 $1,2
Slide 19: Financial Results
19 Financial Results $2.54 $3.07 $3.49 $1.97 $1.59 $2.01 $2.81 $3.50 $4.48 $5.37 $5.77 $4.70 13% 14% 15% 9% 7% 9% 11% 13% 15% 18% 18% 13% 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 7.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EPS (left axis) ROE (ri
Slide 20: Appendix
/ YEARS OF OPERATIONAL EXPERIENCE Appendix
Slide 21: Business Model: Buy
21 Business Model: BUY EXPERIENCED INTERNAL CAPABILITIES DISCIPLINED INVESTMENT APPROACH COMPETITIVE ASSET COST OPPORTUNISTIC INVESTMENT GATX ADVANTAGE GATX achieves lower new car cost by placing large orders at appropriate points in the business cycle GATX focuses on achieving economically attracti
Slide 22: Business Model: Lease
22 Business Model: LEASE GATX’s premium service to top-tier customers results in high fleet utilization, strong lease renewal success and customer satisfaction across the globe. CUSTOMER VALUE DELIVERY Develop lease structures that fit customers’ needs New Car Inspection Group ensures railcars m
Slide 23: Business Model: Service
23 Business Model: SERVICE GATX has built a strong market position by focusing on full-service leasing in North America and Europe. MAINTENANCE Customers rely on GATX to manage the complex process of maintaining railcars Extensive maintenance network: more than 30 maintenance locations in North
Slide 24: Business Model: Maximize Value
24 REMARKETING INCOME (Income from sale of owned assets) Capitalize on market peaks Helps to maintain a diversified, high-performing railcar fleet Over the last 10 years, GATX Rail North America generated an average of approximately $40 million of remarketing income per year SCRAPPING GAINS
Slide 25: North America – Industry Railcar Ownership
25 North America – Industry Railcar Ownership RAILROADS (19%) Ownership of railcars has been declining Virtually no tank car ownership due to complexities and regulations Focus of capital investment on infrastructure LESSORS (53%) Shift from railroad- and shipper- owned railcars to lessor ma
Slide 26: North America – Lessor Market Share
26 North America – Lessor Market Share LESSOR TANK CARS Approximately 408,000 tank cars in North America – 80% of tank cars are owned by lessors, with the balance owned by shippers GATX is the second largest tank car lessor UMLER as of January 2018 LESSOR FREIGHT CARS Approximately 1.2 million
Slide 27: GATX Rail Europe
27 42% 25% 8% 4% 3% 3% 3% 12% CAR TYPE COMMODITIES CARRIED Liquid Petroleum Products Light mineral oil (gasoline, jet fuel, diesel oils, light heating oils), Dark mineral oil (heavy heating oils, lubricating oils, coal tar, bitumen, asphalt), crude oil LPG Propane, Butane, Propylene, Butadiene, Ligh
Slide 28: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES 28
Slide 29: Reconciliation of Non-GAAP Measures – Net Income Measures
29 Reconciliation of Non-GAAP Measures – Net Income Measures Net Income 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (in millions) Net income (GAAP) 183.8$ 194.8$ 81.4$ 80.8$ 110.8$ 137.3$ 169.3$ 205.0$ 205.3$ 257.1$ 502.0$ Adjustments attributable to consolidated pre-tax income: Railcar i
Slide 30: Reconciliation of Non-GAAP Measures – Balance Sheet Measures
30 Reconciliation of Non-GAAP Measures – Balance Sheet Measures On- and Off-Balance Sheet Assets 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total assets (GAAP) 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$ 7,105.4$ 7,422.4$ Off-balance sheet assets: Rai
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