Gatx Corporation · NYSE:GATX
Gatx — 2016 Raymond James Annual Institutional Investors Conference
37 slides from Gatx's conference presentation, Mar 8, 2016
Slide 1: GATX Corporation 2016 Raymond James Annual Institutional Investors Conference
GATX Corporation 2016 Raymond James Annual Institutional Investors Conference Unless otherwise noted, GATX is the source for data provided
Slide 2: Forward-Looking Statements
2 NYSE: GMT Forward-Looking Statements Forward-looking statements in this presentation that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that reflect our current views with respect to, a
Slide 3: Clear vision and rich history
3 GATX Corporation Clear vision and rich history Vision We strive to be recognized as the finest railcar leasing company in the world by our customers, our shareholders, our employees and the communities where we operate. History 1898 1919 2016 Founded as a railcar lessor Initiated quarterly dividen
Slide 4: Leading Market Positions
4 Leading Market Positions Rail North America 69% Other 3% Asset Mix $7.4 billion NBV (assets on- and off-balance sheet) as of 12/31/15 Rail International 15% Portfolio Management 9% ASC(2) 4% Rail North America • One of the largest railcar lessors • 2nd largest tank car lessor • Diversified fleet a
Slide 5: Strong Global Presence
5 Owned 124,600 Affiliate 2,400 Managed 600 Total 127,600 Owned 23,000 GATX owns, manages or has an interest in more than 151,000 railcars worldwide, making it the largest global railcar lessor. Strong Global Presence Fleet data as of 12/31/15 Early stage presence in India
Slide 6: GATX Worldwide Railcar Fleet
6 GATX Worldwide Railcar Fleet Refiners & Other Petroleum 30% Chemicals & Plastics 22% Railroads & Other Transports 18% Food & Agriculture 9% Mining, Minerals & Aggregates 11% Other 10% Industries Served Based on 2015 Rail North America & Rail International revenues General- Service Tank Cars 38% Hi
Slide 7: A Leader in Tank Car Leasing
7 A Leader in Tank Car Leasing (1) UMLER as of January 2016 (2) GATX management estimate as of 12/31/15 GATX Rail Europe 26% VTG 36% Ermewa 19% Other 19% European Tank Car Leasing Market(2) Approximately 77,000 tank cars GATX 19% Union Tank Car 39% Trinity 15% ARL 8% Other 10% North American Tank Ca
Slide 8: Creating Value through Railcar Leasing
8 Creating Value through Railcar Leasing 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 economic cycle SERVICE the railcar in a manner that maximiz
Slide 9: BUY - Opportunistic Investments
9 BUY - Opportunistic Investments NEW RAILCARS Committed new railcar orders ensure a supply of new cars to meet customer needs in North America • Order for 12,500 railcars to deliver over a five-year period placed in early 2011 • Order for up to 8,950 railcars to deliver over a four-year period begi
Slide 10: LEASE - Impressive Worldwide Customer Base
10* 12/31/15 Customer families sometimes include more than one customer account, therefore the S&P or equivalent ratings noted generally reflect the credit quality of the rated parent entity. Lease obligations of subsidiaries are not necessarily guaranteed by the rated parent entity. • Approximately
Slide 11: LEASE - Managing Through Cycles
11 LEASE - Managing Through Cycles 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Approximate # of railcars(1) scheduled for renewal 20,000 20,000 17,500 15,000 17,000 21,000 20,000 21,000 20,000 17,000 15,000 LP I(2 ) d at a Rate change 16.8% 13.5% 5.2% -11.0% -15.8% 6.9% 25.6% 34.5% 38.8%
Slide 12: LEASE - Rail North America Growing Future Committed Lease Receipts
12 LEASE - Rail North America Growing Future Committed Lease Receipts 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2011 2012 2013 2014 2015 $ in b illi o n s Year 1 Years 2 & 3 Years 4 & 5 Thereafter Impact of raising lease rates and extending terms 2011-2015 is illustrated by growing future committed lease rece
Slide 13: SERVICE - Maintaining Equipment to the Highest Standards
13 • GATX consistently provides safe, reliable equipment and superior service to help our customers achieve their business objectives • Tank cars are service-intensive assets − GATX is a full-service railcar lessor − Customers value the high-quality service GATX provides • Extensive maintenance netw
Slide 14: MAXIMIZE Value
14 MAXIMIZE Value GATX continually optimizes its railcar fleet • Capitalizes on market dynamics • Maintains a diversified, high-performing railcar fleet GATX typically realizes gains when railcars are scrapped at the end of their useful lives Rail North America 2006 2007 2008 2009 2010 2011 2012 201
Slide 15: Rail Market Environment
15 Rail Market Environment Rail North America • 2015 leasing environment was consistent with our outlook coming into the year −Fleet utilization remained above 99% (excluding boxcars) −LPI showed a positive 32.2% renewal change (excluding boxcars) −Investment volume was approximately $525 million
Slide 16: American Steamship Company
16 American Steamship Company Capacity of US-flagged Vessel Operators* * GATX management estimate 12/31/15 ASC 35% Interlake Steamship Company 24% Great Lakes Fleet, Inc. 20% Grand River Navigation 10% Central Marine Logistics 7% Other 4% Total annual industry capacity 104 million net tons • ASC pro
Slide 17: Portfolio Management
17 Portfolio Management Aircraft Engine Leasing Affiliates • Partner with Rolls-Royce plc • One of the largest spare aircraft engine portfolios in the industry Marine • GATX has determined the timing is right to largely exit the inland and ocean-going markets Marine Equipment 43% Aircraft Spare Engi
Slide 18: Portfolio Management: Rolls-Royce and Partners Finance affiliates
18 Portfolio Management Rolls-Royce and Partners Finance affiliates (RRPF) • GATX established its first partnership with Rolls-Royce plc in 1998 • Lease spare aircraft engines to commercial airlines and Rolls- Royce plc − The largest Rolls-Royce spare aircraft engine portfolio in the industry, with
Slide 19: Financial Results
19 $2.54 $3.07 $3.49 $1.97 $1.59 $2.01 $2.81 $3.50 $4.48 $5.37 $5.25- $5.45 13% 14% 15% 9% 7% 9% 11% 13% 15% 18% ~17% 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 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F R O E $ p er s h ar e EPS ROE Financial Results • EP
Slide 20: Summary
20 Summary • GATX has been a market force in the rail industry for more than 117 years • GATX provides premium assets and services to a high-quality customer base • GATX is making disciplined investments in North America and in International rail markets • GATX is focused on generating attractive, r
Slide 21: Appendix
21 Appendix
Slide 22: Rail North America Industry Railcar Ownership
22 Rail North America Industry Railcar Ownership Lessors 51% TTX 10% Railroads 21% Shippers 19% Railcars are owned by lessors, railroads and shippers UMLER as of January 2016 North American Railcar Market Approximately 1.6 million railcars 0 50 100 150 200 250 300 350 400 450 500 550 Intermodal Box
Slide 23: Railcar Manufacturing Backlog
23 Railcar Manufacturing Backlog Railway Supply Institute North American Railcar Manufacturing Backlog 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 • Cyclicality of the industry is illustrated by the backlog of orders at the railcar manufacturers • The recent increase in tank car ba
Slide 24: Rail North America Managing Through Cycles
24 Rail North America Managing Through Cycles • GATX used the strong market (2004 – early 2008) to prepare for the downturn • GATX maintained solid utilization throughout the downturn (late 2008 – 2010) • When the market improved, GATX increased lease rates and extended lease terms while maintaining
Slide 25: GATX's Fleet by Car Type
25 6% 15% 12% 10% 4% 5% 8% 7% 3% 15% 10% 5% Rail North America GATX’s Fleet by Car Type 1 2 3 4 5 6 7 8 9 11 General-Service Tank Cars: 13K - 19K gallon General-Service Tank Cars: 20K – 25K gallon General-Service Tank Cars: >25K gallon High-Pressure Tank Cars Other Specialty Tank Cars Gravity Covere
Slide 26: GATX's Car Types & Typical Commodities
26 Rail North America GATX’s Car Types & Typical Commodities General-Service 13K-19K gallon 20K–25K gallon >25K gallon High-Pressure Other Specialty Covered Hoppers Gravity >4K cf Specialty Boxcars <4K cf Pneumatic OtherOpen-Top Cars sand cement roofing granules fly ash dry chemicals grain sugar fer
Slide 27: Active Participant in the Regulatory Landscape
27 Active Participant in the Regulatory Landscape ECONOMICS STB Surface Transportation Board SAFETY NTSB National Transportation Safety Board REGULATE/ ENFORCE DOT Dept of Transportation SECURITY DHS Department of Homeland Security TSA Transportation Security Administration AAR Association of Americ
Slide 28: Energy-related Railcar Demand
28 Energy-related Railcar Demand Railcars • We are monitoring demand for small cube covered hoppers to transport frac sand and large tank cars to transport crude oil − Total manufacturing backlog of about 111,000 railcars(1), including approximately − 23,600 small cube covered hoppers − 30,800 tank
Slide 29: GATX's Prudent Approach to serving customers in the energy industry
29 GATX’s Prudent Approach to serving customers in the energy industry Limited exposure • Approximately 2,800 cars in frac sand service* • Approximately 2,500 cars in crude service* • GATX’s railcars serving these markets are: − Leased to customers with high credit ratings − On long-term leases Focu
Slide 30: Modification deadlines
30 Modification deadlines Tank cars in flammable liquid service Earliest deadlines for modification of existing cars • Approximately 13,700 GATX tank cars may be affected* • Modification deadline for approximately 90% of GATX’s potentially affected cars in 2023 or later* • Will not modify Legacy car
Slide 31: Rail International: GATX Rail Europe
31 Rail International GATX Rail Europe (GRE) Petroleum Wagons 65% LPG Wagons 14% Chemical Wagons 13% Bulk Wagons 8% Fleet Structure Approximately 23,000 railcars as of 12/31/15 Germany 40% Poland 26% Austria 12% Hungary 4% Czech Republic 3% Slovakia 3% Other 8% Geographies Served Based on 2015 GRE r
Slide 32: Rail International GRE Car Types & Typical Commodities
32 Rail International GRE Car Types & Typical Commodities Tank Wagons Chemical WagonsLPG Wagons Bulk Wagons Petroleum Wagons light mineral oil products - gasoline - jet fuel - diesel oils - light heating oils dark mineral oil products - heavy heating oils - lubricating oils - coal tar - bitumen - as
Slide 33: Operating Cash Flow and Portfolio Proceeds
33 Operating Cash Flow and Portfolio Proceeds Strong Operating Cash Flow and Portfolio Proceeds $293 $340 $364 $267 $244 $307 $370 $401 $449 $534 $123 $247 $156 $68 $84 $154 $289 $385 $264 $482 0 200 400 600 800 1,000 1,200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ in milli o n s Operating
Slide 34: Strong Balance Sheet
34 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 6.0x 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 BBB-/Baa3 BBB/Baa2 Total Recourse Debt = On-Balance-Sheet Recourse Debt + Off-Balance-Sheet Recourse Debt + Capital Lease Obligat
Slide 35: Reconciliation of non-GAAP measures
35 Reconciliation of non-GAAP measures
Slide 36: Reconciliation of Non-GAAP Measures: Net Income Measures
36 Reconciliation of Non-GAAP Measures Net Income Measures Net Income 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (in millions) Net Income (GAAP) 147.3$ 183.8$ 194.8$ 81.4$ 80.8$ 110.8$ 137.3$ 169.3$ 205.0$ 205.3$ Tax Adjustments (5.9) (20.1) (6.8) (7.4) (11.4) (8.9) (24.0) 11.7 6.4 Other Item
Slide 37: Reconciliation of Non-GAAP Measures: Balance Sheet Measures
37 Reconciliation of Non-GAAP Measures Balance Sheet Measures On- and Off-Balance Sheet Assets 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Consolidated on-balance-sheet assets 4,646.6$ 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$ Less: Assets of discontinued
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