Gatx Corporation · NYSE:GATX
Gatx — Investor Presentation (April 2022)
68 slides from Gatx's investor presentation, Apr 8, 2022
Slide 1: 2022 Company Overview
2022 COMPANY OVERVIEW
Slide 2: Table of Contents
History and Business Overview................................................................................................... Railcar Leasing Business Model................................................................................................... Rail North America ......................
Slide 3: 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 could cause our actual resul
Slide 4: History and Business Overview
History and Business Overview
Slide 5: Vision Statement
V I S I O N S T A T E M E N T EMPOWERING OUR CUSTOMERS TO PROPEL THE WORLD FORWARD
Slide 6: Company History
Established as railcar lessor with 28 railcars 6 -Year History 1898 1907 1919 1920 1936 1984 1994 1998 2003 2012 2020 2021 Began manufacturing railcars Initiated quarterly dividend Began listing on the NYSE Began rail investment in Canada Exited railcar manufacturing Began rail investment in Europe
Slide 7: GATX Business Segments
GATX Business Segments One of the largest railcar lessors with a diversified fleet of over 114,500 railcars The only diversified lessor with wholly-owned, full-scale, network- wide repair and maintenance capability for tank and freight cars Strong customer credit quality, diversification in car type
Slide 8: Global Footprint
8 147,000 railcars, 565 locomotives, 20,000 tank containers, and an interest in more than 400 aircraft spare engines. (excludes leasing footprint for RRPF and Trifleet) GATX Primary Rail Operations Footprint GATX Headquarters Locations GATX Global Headquarters (Chicago, IL) GATX Rail Europe (Vienna,
Slide 9: Capital Allocation Framework: Invest in core assets
Capital Allocation Framework 9 PRIORITY 1 Invest in core, service-intensive assets to maximize shareholder value $8.4 billion** of investments over the past decade *2017-2021 reflects continuing operations. The information for 2016 and prior has not been recas t for discontinued operations presentat
Slide 10: Capital Allocation Framework: Optimize the balance sheet
Capital Allocation Framework 10 PRIORITY 2 Optimize the balance sheet Maintain a solid investment grade rating of at least BBB/Baa2 Maintain capacity for opportunistic investments *Total Recourse Debt = On-Balance Sheet Recourse Debt + Off -Balance Sheet Recourse Debt + Capital Lease Obligations + C
Slide 11: Capital Allocation Framework: Return excess cash
Capital Allocation Framework 11 PRIORITY 3 In lockstep with Priorities 1 and 2, return excess cash to shareholders Over the past decade, $1.5 billion returned to shareholders $0 $500 $1,000 $1,500 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Cumulative Dividends Cumulative Share Repurchase Cash
Slide 12: GATX Financial Highlights
*2017-2021 reflects continuing operations. The information for 2016 and prior has not been recas t for discontinued operations presentation. **Non-GAAP - excludes tax adjustments and other items. See Reconciliation of Non-GAAP Measures. GATX Financial Highlights $2.81 $3.50 $4.48 $5.37 $5.77 $4.41 $
Slide 13: Key ESG Initiatives & Accomplishments
Key ESG Initiatives & Accomplishments Health and Safety As a participant in an essential industry, successfully kept employees safe and facilities operating without interruption throughout COVID-19 pandemic Continuing long-term improvement of workplace safety metrics in our global rail businesses En
Slide 14: GATX Investment Highlights
GATX Investment Highlights 14 Operational Excellence Strong track record of executing our strategy effectively and delivering best-in-class services to customers Critical Service Offerings valued by customers across our business segments worldwide Market Leadership in Essential Businesses across maj
Slide 15: Railcar Leasing Business Model
Railcar Leasing Business Model
Slide 16: Proven Business Model
16 Proven Business Model 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, an
Slide 17: Business Model: BUY
BEST-IN-CLASS TECHNICAL CAPABILITIES DISCIPLINED INVESTMENT APPROACH COMPETITIVE ASSET COST OPPORTUNISTIC INVESTMENT GATX places committed orders at appropriate points in the business cycle. GATX uses multiple manufacturing sources to achieve economically attractive and competitively advantaged new
Slide 18: Railcar Supply
18 Railcar Supply Benefits of Railcar Supply Strategy Large, multi-year orders for new cars from manufacturers Spot orders for new cars to meet specific customer demand Fleet acquisitions of existing cars from other lessors and customers workshop assembles new railcars Access to attractively priced
Slide 19: Business Model: LEASE
19 HIGH FLEET UTILIZATION Focus on utilization, adjusting rate and term to capture maximum value throughout cycles Maintenance service capabilities preferred by customers Utilization has remained near or above 98% for over a decade CAR AVAILABILITY Most diverse fleet in the industry can satisfy vary
Slide 20: Business Model: SERVICE
20 MAINTENANCE Customers rely on GATX to manage the complex process of maintaining railcars Premium service minimizes railcar quality issues and unexpected downtime Extensive maintenance network: nine facilities in North America and Europe In 2021, GATX performed an aggregate of approximately 65,900
Slide 21: Business Model: MAXIMIZE
REMARKETING INCOME (Income from sale of owned assets) GATX opportunistically sells cars in the secondary market to optimize a diversified, high-performing railcar fleet Over the last 10 years, GATX Rail North America generated an average of approximately $57 million of remarketing income per year SC
Slide 22: Rail North America
Rail North America
Slide 23: GATX Rail North America Overview
GATX Rail North America Overview 2 0 2 1 OVERVIEW Wholly Owned Fleet Count Car Type Count Average Fleet Age Locomotive Count Number of Customers Countries of Operation 114,500+ 160+ 22 years 565+ 850+ U.S., Canada & Mexico 28% 23%20% 14% 5% 10% Chemicals Refiners & Other Petroleum Railroads & Other
Slide 24: Industry Ownership: North America
Industry Ownership: North America Source: UMLER as of January 2022 Approximately 1.63 million railcars RAILROADS Ownership of railcars continues to decline Virtually no tank car ownership due to complexities and regulations Focuses capital investment on infrastructure 16% (2022) 57% (2022) 17% (2022
Slide 25: Industry Fleet & Ownership Mix: North America
Covered Hopper Tank Open Top Flat Boxcar Intermodal Based on approximately 438K tank cars Based on approximately 1.2M freight cars 47% 22% 17% 14% Lessor Railroad Shipper/Other TTX 35% 27% 19% 8% 7% 4% 82% <1% 18% Lessor Shipper/Other <1% Railroad Railcars by Type (Approximately 1.63M railcars) Tank
Slide 26: Lessor Market Share: North America
Based on approximately 359K lessor-owned tank cars Based on approximately 562K lessor-owned freight cars Lessor Ownership Share (Based on approximately 921K lessor-owned railcars) Tank Car Lessor Ownership Share Freight Car Lessor Ownership Share Lessor Market Share: North America Source: UMLER as o
Slide 27: Industry Shipments & Carloadings: North America
Industry Shipment Composition (Based on 2021 U.S and Canadian carloads of approximately 16.0M) 0 2 4 6 8 10 12 14 2007 2009 2011 2013 2015 2017 2019 2021 Carloads (excl. Coal) Coal-only Carloads 25% 15% 15% 6% 5% 5% 4% 3% 22% Coal & Coke Farm Products Chemicals Petroleum Products Auto Forest & Paper
Slide 28: Industry Commodity Carloadings: North America
0 500 1,000 1,500 2,000 2,500 Core Carloads Coal & Coke Sand, Stone, Minerals, & Related Products Grain Petroleum Products Quarterly Commodity Carload Traffic Industry Commodity Carloadings: North America Source: Association of American Railroads 28
Slide 29: Industry Backlog: North America
Source: Railway Supply I nstitute as of January 2022 29 Industry Backlog: North America Number of Tank Number of Freight - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 Industry Backlogs The 2013 to 2015 spike in backlog was primarily due to the crude boom Backlogs have moderated post-
Slide 30: Actively Managing Through Cycles
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Approximate # of railcars scheduled for renewal* 17,500 15,000 17,000 21,000 20,000 21,000 20,000 17,000 12,500 15,100 13,900 17,800 17,800 20,000 18,500 Renewal Success Rate* 60% 54% 62% 77% 82% 81% 86% 81% 67% 75% 83% 82% 7
Slide 31: GATX Rail North America: Diverse Customer Portfolio
26% 46% 10% 18% GATX serves more than 850 individual customers Top 20 customers account for less than 35% of lease revenue Average relationship tenure of top 10 customers is 50 years Largest customer represents less than 5% of total lease revenue BB+ or lower Private / Not Rated AAA, AA, & A BBB Cre
Slide 32: Diverse Fleet by Car Type
CAR TYPE COMMODITIES CARRIED % OF FLEET % OF NBV High-Pressure Tank Cars LPG, VCM, Propylene, Carbon dioxide General Service Tank Cars: Molten sulfur, C lay slurry, Caustic soda, Corn syrup 13k-19k gallon Other Specialty Tank Cars Acids (sulfuric, hydrochloric, phosphoric, acetic, nitric, etc.), Coa
Slide 33: GATX Rail North America: Continuous Investment
$4.5 $4.6 $5.0 $5.1 $5.2 $5.4 $5.7 $5.6 $5.9 $6.1 - 20 40 60 80 100 120 140 $0 $1 $2 $3 $4 $5 $6 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Assets** Railcars Car count increased 5%* Assets increased 37%* GATX Rail North America: Continuous Investment *Over the period shown **Assets include on
Slide 34: GATX Rail North America: Maintenance Network
GATX Rail North America: Maintenance Network Extensive Maintenance Network Eight maintenance facilities Two standalone mobile repair units* One customer site location *Excludes mobile repair units ons ite at a major maintenance facility or cus tomer site location As of 3/1/2022 Customers Rely on GAT
Slide 35: GATX Rail North America: Regulatory Environment Participation
*Includes $30 million of impairment loss recorded in 2016 related to affected cars As of 12/31/21 Deep Knowledge on Industry Regulations Our employees are actively involved in numerous regulatory committees and trade and supplier associations Tank Qualification Interval Extension GATX is the only ta
Slide 36: Engineering Support Examples
Examples of engineering support include: Preventative Maintenance Inspection Plans Car Design / Specifications Chemical Engineering Customer-Specific Enhancements AUTO CARRIER CONVERSION PROJECT GATX Engineering successfully converted older flatcars to auto carriers. Some of these flatcars were orig
Slide 37: GATX Rail North America: Technology Focus
RailPulse Co-founded by GATX and four rail industry participants aimed at driving industry growth in North America Developing an information infrastructure that enables data from GPS and sensor mounted on railcars to drive improved service levels, visibility, safety, and productivity Intends to ente
Slide 38: GATX Rail North America: Locomotive Leasing
Locomotive customers include: Regional and short-line railroads Industrial users 38 $125 $0 $50 $100 $150 $200 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Locomotive Fleet NBV As of 12/31/2021 GATX owns more than 565 locomotives, 95% of which are four-axle locomotives. GATX Rail North America:
Slide 39: Rail International
Rail International
Slide 40: GATX Rail International Overview
97% 95% 97% 99% 99% 2007 2009 2011 2013 2015 2017 2019 2021 43% 15% 12% 30% GATX Rail International Overview 2 0 2 1 OVERVIEW Fleet Count Car Type Count Average Fleet Age (GRE) Number of Customers Primary Countries of Operation 27,100+ in Europe (GRE) 4,800+ in India 50+ 17 years 250+ Germany, Polan
Slide 41: Industry Snapshot: Europe
35% 65% (Based on approximately 680K railcars) Railcar Ownership* Railroads and Shippers Lessors *Based on GATX management es timates as of 2/28/2022 Industry Snapshot: Europe 41 Relatively limited manufacturing capacity Helps avoid creating an excess supply of industry railcars Older industry fleet
Slide 42: Industry Fleet & Ownership Mix: Europe
Lessor Railroad & Privately Owned 25% 75% 83% 17% 34% 17%16% 15% 13% 5% Dry Bulk Wagons Tank Wagons Flat Wagons Intermodal Wagons Covered Wagons Other Lessors Railroad & Privately Owned Railcars by Type (Approximately 680K railcars) Tank Car Ownership Share Freight Car Ownership Share Industry Fleet
Slide 43: Lessor Market Share: Europe
GRE VTG Ermewa Touax Wascosa Other 4% 39% 21% 7% 5% 24% GRE VTG Ermewa Wascosa Touax Other 24% 33% 13% 8% 2% 20% 11% 36% 18% 6% 5% 24% GATX Rail Europe (GRE) VTG Ermewa Wascosa Touax Other Based on approximately 95K lessor-owned tank cars Based on approximately 143K lessor-owned freight cars Lessor
Slide 44: GATX Rail Europe: Major Rail Markets
GATX Rail Europe (GRE): Major Rail Markets 44 Austria strong rail freight transport economies. CAR TYPE COMMODITIES CARRIED Mineral Oil Light mineral oil (gasoline, jet fuel, diesel oils, light heating oils), Dark mineral oil (heavy heating oils, lubricating oils, coal tar, bitumen, asphalt), Crude
Slide 45: GATX Rail Europe: Diverse Customer Portfolio
75% 5% 20% Top 20 Customer Credit Rating GATX Rail Europe (GRE): Diverse Customer Portfolio 45As of 12/31/2021 Investment Grade Speculative (BB+ or lower) Private/Not Rated Top 20 customers based on 2021 revenue Average remaining lease term 26 months Diverse customer base with approximately 240 cust
Slide 46: GATX Rail Europe: Diverse Fleet
As of 12/31/2021 GATX Rail Europe (GRE): Diverse Fleet 46 2012 2021 GRE Car Count 21,700+ 27,100+ GRE Average Fleet Age (years) 22 17 GRE Fleet Capacity (thousand m³) 1,659 2,254 2021 Fleet Growth The focus on investments in freight and intermodal segments continued throughout 2021 Related net fleet
Slide 47: GATX Rail Europe: Modernization, Engineering and Maintenance
MODERNIZATION With an average age of 17 years, GRE has one of the youngest and most modern railcar fleets in Europe Customer-specific adaptations and additional equipment can be implemented in many railcar types SUPPORT Comprehensive customer service Deep industry-specific know-how combined with und
Slide 48: Industry Overview: India
(Based on approximately 300K railcars) Railcar Ownership As of 12/31/2021 Industry Overview: India 48 Significant Potential Large railway network, historically dominated by passenger service Commodities move long distances Economic growth drives increase in import/export Focus on developing manufact
Slide 49: GATX Rail India Overview
$0 $5 $10 $15 $20 $25 $0 $20 $40 $60 $80 $100 $120 $140 $160 NBV (left axis) Lease Income (right axis) 49As of 12/31/2021 GATX obtained the first-ever wagon leasing license in 2012 and is the largest private railcar lessor in India. GATX Rail India Overview Key Attributes Local Technical and Operati
Slide 50: Portfolio Management
Portfolio Management
Slide 51: Portfolio Management Overview
56% 32% 10% 2% $1,049M NBV Rolls-Royce & Partners Finance Affiliates (RRPF) RRPF GEL Marine Equipment Other $0 $20 $40 $60 $80 $100 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 RRPF JV Pre-Tax Income M IL LI O N S ASSET MIX 51 Portfolio Management Overview GATX Engine Leasing (GEL) In Janu
Slide 52: Aircraft Spare Engine Leasing Industry
1% 10% 40% 50% 1990 1998 2016 2021 Engines Leased* 52 Aircraft spare engines are attractive and reliable leasing assets Robust residual value characteristics Retain value better over the long term compared to aircraft Aircraft engines need regular scheduled maintenance (3-5 year intervals) which tak
Slide 53: RRPF Affiliates Overview
37% 18% 16% 8% 7% 3% 11% RRPF Affiliates Overview 2 0 2 1 OVERVIEW Spare Engine Count Average Fleet Age Estimated Useful Life Typical Lease Term Fleet Utilization 407 12 years 20-25 years 3-12 years 94.3% Based on NBV of approximately $4.4B; RRPF Engine Types 53 Trent XWB (A350) Trent 1000 (B787) Tr
Slide 54: RRPF Key Attributes
$0 $100 $200 $300 $400 $500 $0 $1 $2 $3 $4 $5 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 NBV Revenue Strong Growth in NBV and Revenue Rolls-Royce in 1998 54As of 12/31/2021 RRPF Key Attributes Balance Sheet and Liquidity Long-dated debt maturity profile and commitment to preserving
Slide 55: Trifleet
Trifleet
Slide 56: Trifleet Overview
71% 12% 10% 6% Trifleet Overview 2 0 2 1 OVERVIEW Fleet Count Average Fleet Age Estimated Useful Life Typical Lease Term Primary Countries of Operation ~20,000 owned and managed tank containers 8 years 15-25 years 1-5 years China, Singapore, U.S., The Netherlands, Germany Tank Types 56 Number of Cus
Slide 57: Tank Container Industry Snapshot
0 200,000 400,000 600,000 800,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Tank containers transport a variety of liquids and gases and can be transported and stored as standard dry box containers for all ship, rail, and road journeys Tank container fleet growth has increased steadily along
Slide 58: Industry Ownership & Market Share
Industry Ownership (Based on global tank container fleet of approximately 737K) 44% 56% Lessors1 Top Lessors Ownership Share1 (Based on approximately 323K tank containers in leasing company fleets) 6% 22% 22% 13% 7% 5% 4% 3% 17% Trifleet Eurotainer2 EXSIF Worldwide Seaco Global CS Leasing Peacock Co
Slide 59: Main Commodities by Tank Type
59 Main Commodities by Tank Type STANDARD Capacity: 14.5K to 26K liters SEMI-STANDARD (Swap Bodies, Heated & Cooled, Baffled) GAS Capacity: 20K to 24.5K liters SPECIALITY (Coated, U-Stamp, Multi- compartment, Dedicated use) CRYOGENIC Capacity: ~22K liters for 20ft containers ~46K liters for 40ft con
Slide 60: Financial Highlights
Financial Highlights
Slide 61: Financial Profile Summary
FUNDING AND LIQUIDITY Strong, stable, and predictable cash flow Contractual future lease receipts from strong and diversified customer base Consistent access to capital markets through cycles Robust contingent funding plan with diverse sources Capital spending flexibility 61 ASSET QUALITY Market lea
Slide 62: Financial Highlights: High-Quality and Consistent Cash Flows
$ 1 5 4 Operating Cash Flow Portfolio Proceeds $1,005 $769 $563 $343 $208 $343 2022 2023 2024 2025 2026 Thereafter GATX Contractual Future Lease Receipts** Operating Cash Flow & Portfolio Proceeds 62 Financial Highlights: High-Quality and Consistent Cash Flows *2017-2021 reflects continuing operatio
Slide 63: Financial Highlights: Strong Balance Sheet
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 % of Assets that are Secured Sold aircraft leasing business; reduced leverage and % of secured assets Recourse Debt*/Equity $364 $500 $533 $527 $461 $3,544 2022 2023 2024 2025 20
Slide 64: Financial Highlights: Focus on Funding Optimization
6.1% 3.8% 3.8 9.0 0 1 2 3 4 5 6 7 8 9 10 0% 1% 2% 3% 4% 5% 6% 7% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Effective Cost of Debt (left axis) Average Life in Years (right axis) Cost of Debt & Borrowing Term 64 Financial Highlights: Focus on Funding Optimization As of 12/3
Slide 65: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures
Slide 66: Reconciliation of Non-GAAP Measures
66 Reconciliation of Non-GAAP Measures Note: The information for 2012-2016 in the tables above has not been recas t for discontinued operations presentation.
Slide 67: Net Income and Earnings per Share Reconciliation
67 Net Income (in millions) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Adjustments attributable to discontinued operations, net of taxes: Net casualty gain at ASC n/a n/a n/a n/a n/a - - (8.1) - - Impact of the Tax Cuts and Jobs Act of 2017 n/a n/a n/a n/a n/a (22.7) 0.2 - - - Total adjustmen
Slide 68: On- and Off-Balance Sheet Assets Reconciliation
68 On- and Off-Balance Sheet Assets 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total assets (GAAP) 6,044.7$ 6,535.5$ 6,919.9$ 6,894.2$ 7,105.4$ 7,422.4$ 7,616.7$ 8,285.1$ 8,937.6$ 9,541.7$ Off-balance sheet assets (1): Rail North America 863.5 887.9 606.1 488.7 456.5 435.7 430.2 - - - Discont