Gatx Corporation · NYSE:GATX
Gatx — Investor Presentation (March 2015)
77 slides from Gatx's investor presentation, Mar 24, 2015
Slide 1: Company and Industry Profile March 2015
Company and Industry Profile MARCH 2015 GATX Corporation 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: GATX Corporation: 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 2015 Founded as a railcar lessor Initiated quarterly dividen
Slide 4: Leading Market Positions
4 Leading Market Positions Rail North America 66% Other 3% Asset Mix $7.6 billion NBV (assets on- and off-balance sheet) as of 12/31/14 Rail International 16% Portfolio Management 11% ASC(2) 4% Rail North America • Largest independent railcar lessor in North America • 2nd largest tank car lessor • D
Slide 5: GATX Corporation 2014 Performance
5 GATX Corporation 2014 Performance Portfolio Management • Rolls-Royce and Partners Finance affiliates had a strong year • Fleet of more than 500 inland marine barges, tugs and tows had improved performance due to the strong grain harvest • Demand for the ocean-going chemical parcel tankers and mult
Slide 6: GATX's Worldwide Railcar Fleet
6 GATX’s Worldwide Railcar Fleet
Slide 7: Strong Global Presence
7 Owned 126,000 Affiliate 3,000 Managed 2,000 Total 131,000 Owned 22,000 GATX owns, manages or has an interest in approximately 154,000 railcars worldwide, making it the largest global railcar lessor. Strong Global Presence Fleet data as of 12/31/14 Early stage presence in India
Slide 8: GATX Worldwide Railcar Fleet
8 GATX Worldwide Railcar Fleet Refiners & Other Petroleum 30% Chemicals & Plastics 28% Railroads & Other Transports 17% Food & Agriculture 9% Mining, Minerals & Aggregates 6% Other 10% Industries Served Based on 2014 Rail North America & Rail International revenues of approximately $1.1 billion Gene
Slide 9: Railcar Leasing
9 Railcar Leasing
Slide 10: Creating Value through Railcar Leasing
10 • Provide superior service with safe, reliable equipment − Maintenance − Engineering − Training − Technology − Engagement with regulators and industry associations • Top-tier customer base • Maintain high utilization − Renew or assign leases over a railcar’s life, which exceeds 30 years − Average
Slide 11: Creating Value: Buy railcars at attractive prices
11 Creating Value through Railcar Leasing Buy railcars at attractive prices
Slide 12: Opportunistic Investments
12 Opportunistic Investments NEW RAILCARS Committed new railcar orders ensure a supply of new cars to meet customer needs in North America • Order for up to 8,950 railcars to deliver over a four-year period beginning in 2016 • Order for 12,500 railcars to deliver over a five-year period placed in ea
Slide 13: Creating Value: Lease to customers
13 Creating Value through Railcar Leasing Lease to customers
Slide 14: Impressive Worldwide Customer Base
14* 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 950 Rail N
Slide 15: Managing Through Cycles
15 Managing Through Cycles 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Approximate # of railcars(1) scheduled for renewal 23,000 20,000 20,000 17,500 15,000 17,000 21,000 20,000 21,000 20,000 17,000 LP I(2 ) d at a Rate change 9.9% 16.8% 13.5% 5.2% -11.0% -15.8% 6.9% 25.6% 34.5% 38.8% mid
Slide 16: Rail North America Managing Through Cycles
16 Rail North America Managing Through Cycles • GATX used the up 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 hig
Slide 17: Rail North America Growing Future Committed Lease Receipts
17 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 $ in b illi o n s Year 1 Years 2 & 3 Years 4 & 5 Thereafter Impact of raising lease rates and extending terms 2011-2014 is illustrated by growing future committed lease receipt profile A
Slide 18: Rail International GATX Rail Europe utilization
18 Rail International GATX Rail Europe 96% 97% 95% 97% 95% 96% 80% 85% 90% 95% 100% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Utilization • Fleet utilization and renewal rates have remained relatively stable • Leases tend to have shorter terms than in North America − Average remaining lease term
Slide 19: Creating Value: Provide full-service leases
19 Creating Value through Railcar Leasing Provide full-service leases
Slide 20: Premium Customer Service
20 Premium Customer Service • GATX has built and maintained a strong market position by focusing on full-service leasing • GATX consistently provides safe, reliable equipment and superior service to help our customers achieve their business objectives − Maintenance − Engineering − Training − Technol
Slide 21: Extensive Maintenance Network
21 • Maintaining railcars and locomotives is a complex, continuous process − Customers rely on GATX to manage the maintenance process • Extensive maintenance network in North America − Six major service centers − Five field repair centers − Twenty mobile units − Six customer site locations − Third p
Slide 22: Comprehensive Maintenance Services
22 Comprehensive Maintenance Services • We are known for integrity, the safety and quality of our operations and superior execution • Using continuous improvement, we constantly identify and evaluate opportunities to increase efficiency to minimize the time our customers are without their railcars •
Slide 23: Engineering Expertise
23 Engineering Expertise • GATX’s engineering team communicates regularly with customers − Includes experienced mechanical, structural and chemical engineers • GATX’s engineers tailor solutions to meet customer needs − Customers have unique transportation challenges − Factors such as customers’ comm
Slide 24: Training
24 Training • GATX provides important training − Customers need to be well-versed in the equipment and related regulations − First responders learn the proper handling and important features of railcars • GATX offers training at its headquarters and through its TankTrainerTM mobile classroom − This
Slide 25: Fleet Management Technology
25 Fleet Management Technology MyGATXRail.com provides real-time maintenance data and fleet management capability to our customers
Slide 26: Active Participant in the Regulatory Landscape
26 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 27: Regulatory Agencies & Industry Groups
27 Regulatory Agencies & Industry Groups GATX actively participates in or interacts with several committees within various industry groups in the United States • GATX employees have roles on boards and committees within the AAR: − Associates Advisory Board − Advanced Safety & Efficiency Committee −
Slide 28: Creating Value: Scrap or sell
28 Creating Value through Railcar Leasing Scrap or sell
Slide 29: Maximizing Value
29 Maximizing Value GATX continually rebalances and optimizes its railcar fleet • Capitalizes on market dynamics • Maintains a well-balanced railcar portfolio • Optimizes the performance of the railcar fleet GATX typically realizes gains when railcars are scrapped at the end of their useful lives Ra
Slide 30: Rail North America
Rail North America GAIK | »
Slide 31: Rail North America Industry Railcar Ownership
31 Rail North America Industry Railcar Ownership Lessors 50% TTX 10% Railroads 22% Shippers 18% Railcars are owned by lessors, railroads and shippers UMLER as of January 2015 North American Railcar Market Approximately 1.5 million railcars • Car ownership by railroads has been declining − In 2000, 5
Slide 32: North American Fleet Composition
32 Rail North America Industry Railcar Ownership 0 50 100 150 200 250 300 350 400 450 500 Intermodal Box Cars Flat Cars Tank Cars Open-Top Cars Covered Hoppers Lessor-owned TTX Railroad-owned Shipper-owned 000s of railcars • Tank cars are owned either by lessors or shippers who use this car type • R
Slide 33: Rail North America Industry Shipments
33 Rail North America Industry Shipments Coal 20% Chemicals 14% Intermodal 13% Food/ Kindred 8% Farm Products 7% Auto 8% Metals 4% All Other 26% • Key commodity markets for North American Class I railroads include − Coal − Chemicals − Intermodal • The chart at the left is based on Class I US revenue
Slide 34: Rail North America Industry Carloading Trends
34 Rail North America Industry Carloading Trends 15,000 16,000 17,000 18,000 19,000 20,000 21,000 22,000 2 00 0 2 00 1 2 00 2 2 00 3 2 00 4 2 00 5 2 00 6 2 00 7 2 00 8 2 00 9 2 01 0 2 01 1 2 01 2 2 01 3 2 01 4 17,061 • 2004-2006 rail traffic was driven by increased demand across most major commodity
Slide 35: Railcar Manufacturing Backlog
35 Rail North America 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 incr
Slide 36: Tank Car Market
36 Rail North America Tank Car Market • Approximately 360,000 tank cars in North America • About 80% of tank cars are owned by lessors, with the balance owned by shippers GATX 21% Union Tank Car 32% GE Railcar 9% Trinity 13% CIT 8% ARL 8% Other 9% Tank Car Leasing North American Market Share UMLER a
Slide 37: GATX's Fleet by Car Type
37 2% 15% 12% 10% 8% 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 38: GATX's Car Types & Typical Commodities
38 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 39: Rulemaking Status: Tank Cars in Flammable Liquid Service
39 Rulemaking Status Tank Cars in Flammable Liquid Service United States • NPRM released in July 2014 − Introduction of “High-Hazard Flammable Train” (HHFT) concept − Three options for new tank car standards used in HHFT − Aggressive timeline to retrofit or remove existing cars from HHFT service − S
Slide 40: Energy-related Railcar Demand
40 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 143,000 railcars(1), including approximately − 40,000 small cube covered hoppers − 58,000 tank
Slide 41: Prudent Approach to Serving Energy Customers
41 GATX’s Prudent Approach to serving customers in the energy industry Limited exposure • Approximately 3,100 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 Focus
Slide 42: Rail North America Locomotive Leasing
42 Rail North America Locomotive Leasing GATX owns, manages or has an interest in approximately 600 locomotives − Mostly high-quality, four-axle locomotives leased to: − Class I railroads − regional and short-line railroads − industrial users $34 $36 $34 $32 $35 0 10 20 30 40 2010 2011 2012 2013 2
Slide 43: Rail North America Performance
43 Rail North America Performance 111,389 109,070 109,551 107,004 107,343 97.4% 98.2% 97.9% 98.5% 99.2% 1,944 1,866 1,725 2,109 19,021 $120 $167 $209 $232 $321 0 50 100 150 200 250 300 350 2010 2011 2012 2013 2014 $ in milli o n s Adjusted Segment Profit Wholly owned term lease fleet* Utilization* *
Slide 44: Rail International
Rail International GAIX | «
Slide 45: European Railcar Fleet
45 Rail International European Railcar Fleet Dry Bulk Wagons 31% Flat Wagons 29% Tank Wagons 16% Covered Wagons 15% Other 9% Car Types Approximately 705,000 railcars in standard-gauge countries Leasing Companies ~30% Others ~70% Railcar Ownership GATX management estimate
Slide 46: European Tank Car Market
46 Rail International European Tank Car Market • The structure of the tank car leasing market in Europe is similar to the tank car leasing market in North America − Lessors own the majority of the tank cars in Europe – approximately 68% − A few large leasing companies lead the market GATX Rail Europ
Slide 47: GATX Rail Europe (GRE)
47 Rail International GATX Rail Europe (GRE) Petroleum Wagons 66% LPG Wagons 13% Chemical Wagons 13% Bulk Wagons 8% Fleet Structure Approximately 22,000 railcars as of 12/31/14 Germany 47% Poland 22% Austria 11% Hungary 3% Czech Republic 3% Slovakia 2% Other 8% Geographies Served Based on 2014 GRE r
Slide 48: GRE Car Types & Typical Commodities
48 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 49: GATX India Private Ltd (GIPL)
49 Rail International GATX India Private Ltd (GIPL) The Market • World’s 4th largest rail network • Government initiative to invite private participation in rail sector generating further investment opportunities • Continued construction of Dedicated Freight Corridors to further expand rail network
Slide 50: Rail International Performance
50 Rail International Performance 20,432 20,927 21,794 21,836 22,451 95.7% 97.1% 95.1% 96.6% 95.9% $41 $57 $56 $80 $79 0 10 20 30 40 50 60 70 80 90 2010 2011 2012 2013 2014 $ in milli o n s Adjusted Segment Profit # of GRE railcars GRE’s Utilization
Slide 51: American Steamship Company
51 American Steamship Company
Slide 52: Great Lakes Shipping Industry Overview
52 • Shipping industry on the Great Lakes is mature • The fresh-water vessels are long-lived − ASC operates the youngest US-flagged fleet • High barriers to entry − New-build vessel costs have risen sharply in recent years • Sailing season generally runs from late March through the end of December G
Slide 53: Industry Cargo Carriage and Capacity
53 American Steamship Company Industry Cargo Carriage and Capacity 0 20 40 60 80 100 120 US-flagged Net Tons Carried ASC Net Tons Carried US-flagged Dry Bulk Cargo Carriage (1) Capacity of US-flagged Vessel Operators(2) • Weather conditions impact operating efficiencies, especially in the early spri
Slide 54: American Steamship Company
54 American Steamship Company • ASC provides transportation of dry bulk commodities on the Great Lakes − ASC has been operating for more than 100 years, joining GATX in 1973 − ASC operates with an emphasis on safety and environmental stewardship • Fleet of 17 self-unloading vessels − No shore-side a
Slide 55: Commodities Carried & Industries Served
55 American Steamship Company Commodities Carried & Industries Served • Steel mills are the largest consumers of cargos carried by US-flagged Great Lakes vessels • Coal is transported to power generating facilities along the Lakes • Limestone is used by the steel and construction industries Iron Ore
Slide 56: American Steamship Company Performance
56 American Steamship Company Performance 13 14 14 13 15 28.0 28.4 29.7 28.8 30.5 $29 $27 $38 $29 $27 0 5 10 15 20 25 30 35 40 2010 2011 2012 2013 2014 $ in milli o n s Segment Profit # vessels operated Net tons Carried (millions)
Slide 57: Portfolio Management
Portfolio Management GAIX | »
Slide 58: Portfolio Management Affiliates
58 Portfolio Management Affiliates • Spare aircraft engine leasing − Partner with Rolls-Royce plc − One of the largest spare aircraft engine portfolios in the industry • Marine − Partner with IMC Group − Five ocean-going, chemical parcel tankers Wholly owned marine assets • 500+ barges, tugs and tow
Slide 59: Rolls-Royce and Partners Finance affiliates (RRPF)
59 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 − One of the largest spare aircraft engine portfolios in the industry, with more
Slide 60: RRPF affiliates Performance
60 RRPF affiliates Performance $253 $267 $302 $2,671 $2,771 $3,134 $37 $42 $0 $10 $20 $30 $40 $50 2012 2013 2014 GATX's share of after-tax income Lease Revenues* Total Assets* • Spare aircraft engines have characteristics similar to railcars: − Long-lived − Widely used − Service component − Unique a
Slide 61: Portfolio Management Performance
61 Portfolio Management Performance $744 $847 $797 $857 $813 $242 $167 $143 $125 $64 $49 $48 $50 $74 $68 0 10 20 30 40 50 60 70 80 2010 2011 2012 2013 2014 $ in milli o n s Segment Profit NBV wholly owned assets NBV managed assets In millions
Slide 62: Financial Highlights
62 Financial Highlights
Slide 63: Financial Profile
63 Financial Profile • Strong cash flow and revenue under long-term contracts • Targeted and effective asset remarketing • Solid and well-diversified access to capital • Strategic investment philosophy • Track record of returning capital to shareholders • Improving EPS and ROE with a resilient asset
Slide 64: Cash Flow Strength
64 Cash Flow Strength Nearly $4.2 billion in committed future lease and loan receipts $1,036 $770 $610 $492 $382 $866 0 200 400 600 800 1,000 1,200 2015 2016 2017 2018 2019 Thereafter $ in m ill io n s As of 12/31/14
Slide 65: Operating Cash Flow and Portfolio Proceeds
65 Operating Cash Flow and Portfolio Proceeds Strong Operating Cash Flow and Portfolio Proceeds $293 $340 $364 $267 $244 $307 $370 $401 $449 $123 $247 $156 $68 $84 $154 $289 $385 $264 0 100 200 300 400 500 600 700 800 900 2006 2007 2008 2009 2010 2011 2012 2013 2014 $ in milli o n s Operating Cash F
Slide 66: Committed Receipts vs. Payments
66 Committed Receipts vs. Payments $1,036 $770 $610 $492 $382 $866 $679 $548 $427 $408 $483 $329 0 200 400 600 800 1,000 1,200 2015 2016 2017 2018 2019 Thereafter $ in mi lli o n s Committed receipts Committed Capex & Op Lease Payments $4.2 billion in committed future lease and loan receipts vs. $2.
Slide 67: Strong Balance Sheet
67 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 BBB-/Baa3 BBB/Baa2 Total Recourse Debt = On-Balance-Sheet Recourse Debt + Off-Balance-Sheet Recourse Debt + Capital Lease Obligations
Slide 68: Future Debt Obligations
68 Future Debt Obligations GATX’s debt maturity schedule is well balanced $529 $639 $455 $508 $592 $1,480 0 200 400 600 800 1,000 1,200 1,400 1,600 2015 2016 2017 2018 2019 Thereafter $ in milli o n s As of 12/31/14
Slide 69: GATX's Declining Cost of Debt
69 GATX’s Declining Cost of Debt GATX issued $1.1 billion of public unsecured debt in 2014 3-year (March) 5.5-year (March) 30-year (March) 5.5-year (October) Size $300 million $250 million $300 million $250 million Reoffer spread T+60 bps T+105 bps T+160 bps T+120 bps Coupon 1.25% 2.50% 5.20% 2.60%
Slide 70: Capital Deployment: Strong Investment Volume
70 • $6.5 billion invested in hard assets that will earn an attractive return for shareholders over time Capital Deployment Strong Investment Volume $763 $634 $781 $480 $585 $615 $770 $860 $1,032 $5.7 $6.0 $6.3 $6.2 $6.4 $6.7 $6.9 $7.5 $7.6 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 0 200 400 600 800 1,000
Slide 71: Capital Deployment: Track Record of Shareholder Return
71 Capital Deployment Track Record of Shareholder Return $43 $391 $519 $628 $682 $738 $796 $926 $1,112 0 200 400 600 800 1,000 1,200 2006 2007 2008 2009 2010 2011 2012 2013 2014 $ in milli o n s Cumulative Dividends Cumulative Share Repurchase Consistent dividends • 2.8% average yield • $487 million
Slide 72: Financial Results: EPS and ROE
72 $2.54 $3.07 $3.49 $1.97 $1.59 $2.01 $2.81 $3.50 $4.48 $5.15 – $5.35 13% 14% 15% 9% 7% 9% 11% 13% 15% ~17% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 0.00 1.00 2.00 3.00 4.00 5.00 6.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F R O E $ p er s h ar e EPS ROE Financial Results • EPS and ROE exclude
Slide 73: Summary and Opportunity
73 Summary and Opportunity • GATX has been a market force in the rail industry for more than 115 years • GATX provides premium assets and services to a high-quality customer base • GATX is benefitting from strength in the tank and freight car markets • GATX is making disciplined investments in North
Slide 74: Appendix
74 Appendix
Slide 75: Reconciliation of Non-GAAP Measures: Net Income
75 Reconciliation of Non-GAAP Measures Net Income Measures Net Income (millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014 (in millions) Net income (GAAP) $147.3 $183.8 $194.8 $81.4 $80.8 $110.8 $137.3 $169.3 $205.0 Tax Adjustments (5.9) (20.1) (6.8) (7.4) (11.4) (8.9) (24.0) 11.7 Other Items: Re
Slide 76: Reconciliation of Non-GAAP Measures: Balance Sheet
76 Reconciliation of Non-GAAP Measures Balance Sheet MeasuresOn- and off-balance-sheet assets 2006 2007 2008 2009 2010 2011 2012 2013 2014 (in millions) Consolidated on-balance-sheet assets $4,414.4 $4,723.2 $5,190.5 $5,206.4 $5,442.4 $5,857.5 $6,055.4 $6,549.6 $6,937.5 Off-balance-sheet assets 1,32
Slide 77: GATX Corporation
For additional financial information, please see the SUPPLEMENTAL FINANCIAL DATA part of the Investor Relations Section of www.gatx.com GATX Corporation