Gatx Corporation · NYSE:GATX
Gatx — Investor Presentation (May 2011)
65 slides from Gatx's investor presentation, May 4, 2011
Slide 1: GATX Corporation Company and Industry Profile May 2011
GATX Corporation Company and Industry Profile May 2011 Unless otherwise noted, GATX is the source for data provided
Slide 2: Forward-Looking Statements
NYSE: GMT 2 Forward-Looking Statements This presentation contains statements that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those se
Slide 3: GATX Corporation
GATX Corporation 3 GATX Corporation provides leasing and related services to customers in the rail, marine and industrial equipment markets. GATX focuses on long-lived, widely used assets: Assets that GATX uniquely understands Assets requiring valuable services Locomotives Marine Vessels Industrial
Slide 4: History & Goals
GATX Corporation History & Goals 4 GATX has an impressive history Founded in 1898 as a railcar lessor Listed on NYSE in 1916 Initiated quarterly dividends in 1919 and paid without interruption ever since Railcar leasing remains the foundation of GATX GATX strives to provide: an attractive, risk-adju
Slide 5: Strategic Positioning & Performance
Strategic Positioning & Performance 5 2004 - 2008: Took a number of strategic actions during a strong market to position GATX to manage through and capitalize on a market downturn Exited volatile asset classes and businesses Strengthened balance sheet Invested with discipline Invested more than $3.0
Slide 6: Business Profile
Business Profile 6 Exited volatile asset classes and businesses Refocused in rail, marine and industrial equipment markets $7.2 billion NBV (assets of continuing operations on and off balance sheet) as of 12/31/00 $6.4 billion NBV (assets on and off balance sheet) as of 12/31/10 *American Steamship
Slide 7: Business Profile
Business Profile 7 $6.4 billion NBV (assets on and off balance sheet) as of 12/31/10 Operating Lease Assets 75% Finance Leases 6% ASC 4% Joint Ventures 8% Other 7% Other 6%
Slide 8: 2011 Environment
2011 Environment Rail market fundamentals improving GATX is focused on improving lease rates in North American Rail Investment outlook is positive 8
Slide 9: Rail Industry
Rail Industry
Slide 10: Rail Industry: Railcar Ownership
Rail Industry 10 Railcars are owned by lessors, railroads and shippers Lessors* 55% Shippers 20% Approximately 1.6 million railcars Source: Umler as of Jan-11 * Cars owned by TTX, representing about 9% of the total North American fleet, are included with Lessors
Slide 11: Rail Industry: Tank Car Ownership
Rail Industry 11 Tank cars are owned by lessors such as GATX or shippers who utilize this car type Railroads do not have an ownership presence in tank cars as these cars have more complex service requirements Railroad car ownership has been declining In 2000, 53% of railcars were owned by railroads
Slide 12: North American Tank Car Market
North American Tank Car Market 12 Approximately 310,000 tank cars in North America About 77% of tank cars are owned by lessors, the rest are owned by shippers Tank cars have complex service and regulatory requirements Source: Umler as of Jan-11
Slide 13: Rail Industry: Key Commodity Markets
Rail Industry 13 Key commodity markets for North American Class I railroads include Coal Chemicals Intermodal The chart at the left is based on Class I U.S. revenues; the same chart based on ton miles would show a much higher percentage for coal, reflecting the high- volume, long-haul nature of tran
Slide 14: Rail Industry Carloading Trends
Rail Industry Carloading Trends 14 2004-2006 rail traffic was driven by increased demand across most major commodity types Decline in 2007-2008 carloads reflect difficulties in nearly every sector; sharp decline in 4Q08 Carloadings in 2009 down 16.4% over 2008 Chemical and petroleum products carload
Slide 15: Railcar Manufacturing Backlog
15 Rail Industry Railcar Manufacturing Backlog U.S. Railcar Manufacturing Backlog* # of Cars Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 The cyclical nature of the railcar manufacturing in
Slide 16: GATX Rail
GATX Rail
Slide 17: GATX Worldwide Railcar Fleet
GATX Worldwide Railcar Fleet 17 GATX owns, manages or has an interest in approximately 167,000 railcars worldwide as of 12/31/10 RAILCARS North America Europe Total Owned 111,000 21,000 132,000 Interest In 8,000 25,000 33,000 Managed 2,000 <1,000 <3,000 Rail Total 121,000 46,000 167,000 North Americ
Slide 18: GATX Worldwide Railcar Fleet: Wholly-Owned
GATX Worldwide Railcar Fleet 18 Approximately 132,000 wholly-owned railcars as of 12/31/10 Based on 2010 Rail revenues General Service Tank Cars 50% High Pressure Tank Cars 10% Specialty Covered Hoppers 11% Open Top Hoppers & Gondolas 11% Other 14%
Slide 19: GATX Fleet Major Car Types, Industries, Commodities
GATX Fleet Major Car Types, Industries, Commodities 19 General Service Tank Cars High Pressure Tank Cars Specialty Covered Hoppers Gravity Covered Hoppers Gondolas Open Top Hoppers Chemical Chemical Plastics Agriculture Energy Energy Petroleum Petroleum Food Industrial Construction Construction Food
Slide 20: Rail Worldwide Top Customers
Rail Worldwide Top Customers 20 Rail has a diverse customer base with over 900 customers worldwide Top 20 Customer Families: Revenue Contribution as % of Total Revenue Top 50 Customer Families Customer families sometimes include more than one customer account, therefore the S&P or equivalent ratings
Slide 21: Rail North America Customer Base
Rail North America Customer Base 21 Rank S&P Credit Rating % of Revenue 1 A 3.5% 2 BBB+ 3.4% 3 A+ 2.2% 4 A- 2.2% 5 B+ 2.1% 6 B+ 2.1% 7 A 1.9% 8 A 1.9% 9 BBB 1.9% 10 NR 1.7% 11 BBB+ 1.7% 12 NR 1.5% 13 BBB- 1.3% 14 BB- 1.2% 15 BBB+ 1.2% 16 AA 1.1% 17 A 1.1% 18 NR 1.0% 19 A- 1.0% 20 AA 1.0% Top 20 Cust
Slide 22: Rail Customer Stability
Rail Customer Stability 22 Date of the first lease contract for each of GATX's top ten worldwide customers in 2010: Customer # Year Relationship Initiated 1 1960 2 1937 3 1969 4 1958 5 1971 6 1977 7 1967 8 1973 9 1958 10 1946 GATX's commitment to the industry and extensive experience has led to stab
Slide 23: Locomotive Group
Locomotive Group 23 GATX owns, manages or has an interest in approximately 660 locomotives in North America GATX focuses on high-quality, EMD four-axle and six-axle locomotives - the workhorses of the industry GATX leases locomotives to Class I, regional and short-line railroads and industrial users
Slide 24: GATX Rail Europe
GATX Rail Europe 24 Approximately 85,000 tank cars Approximately 75,000 freight cars AAE 37.5% owned freight cars Approximately 25,000 railcars GRE 100% owned tank cars Approximately 20,000 railcars * GATX management estimate About 750,000 total railcars in Europe Transwaggon & VTG 25%
Slide 25: GATX Rail Europe: Lease Terms
GATX Rail Europe 25 Length of leases tend to be shorter than in the U.S., but renewal success rate is high Average remaining lease term is approximately two years Fleet utilization remained relatively stable in 2009 and 2010.
Slide 26: GATX Rail Europe Products Carried in Tank Cars
GATX Rail Europe 26 Products Carried in Tank Cars Based on 2010 revenues of wholly-owned fleet Based on # of wholly-owned tank cars at 12/31/10 * Mineral Oil refers to light and dark petroleum products. Poland 25% Austria 12% Hungary 6% Switzerland 5% Czech Republic 3% Other 10% Germany 39% Mineral
Slide 27: Full Service Leasing
Full Service Leasing 27 GATX has built and maintained a strong market position by focusing on full-service leasing GATX provides the expertise, knowledge and services essential to our customers Maintenance Engineering Training
Slide 28: Rail Maintenance Network
Rail Maintenance Network 28 Maintaining railcars and locomotives is a necessary and complicated process; customers rely on GATX to manage this maintenance process In North America, GATX owns a network of Seven (7) full-scale maintenance facilities Six (6) customer site locations Four (4) fast track
Slide 29: Rail Maintenance Services
Rail Maintenance Services 29 GATX handles every aspect of railcar maintenance, from routine service to complex railcar overhauls and retrofits GATX utilizes the latest in railcar maintenance equipment technology, including non-destructive testing inspection equipment, high-capacity overhead crane sy
Slide 30: Rail Engineering
Rail Engineering 30 GATX's rail engineering team, comprised of experienced mechanical, structural, and chemical engineers, is constantly communicating with the customer base Each customer faces a unique set of transportation challenges. Railcar needs change based on factors such as a customer's comm
Slide 31: Training
Training 31 Signing a full-service lease is the starting point for GATX's long-term relationships with its customers GATX's service offering goes beyond maintenance and engineering to include ongoing training for customers. Since customers are the operators of the railcars, they need to be well-vers
Slide 32: Capitalizing on Market Environment
Capitalizing on Market Environment 32 GATX recognized the strength of the market in prior years GATX proactively used market strength to position itself to manage through and capitalize on a downturn Extended lease terms at attractive rates Scrapped/sold certain railcar types at high scrap/asset pri
Slide 33: Experienced through Business Cycles
Experienced through Business Cycles 33 GATX used the up market (2004 - 2008) to prepare for the downturn GATX kept railcars on lease throughout the downturn GATX's fleet is positioned for market recovery GATX North American Fleet Utilization 95% 90% 99% 96% 98%
Slide 34: GATX Actively Manages Renewals
GATX Actively Manages Renewals North American Fleet 34 Extended renewal terms during the peak of the market to reduce cars exposed during the downturn Shortened renewal terms in weaker pricing environment LPI = Lease Price Index Rate change measures % change from expiring lease rate to new lease rat
Slide 35: Market Environment: Lease Price Index
Market Environment 35 The GATX Lease Price Index (LPI) is an internally generated business indicator that measures general lease rate pricing on renewals within Rail's North American railcar fleet The LPI reflects the weighted average lease rate for a select group of railcar types that GATX believes
Slide 36: 2011 Rail Market Environment
2011 Rail Market Environment 36 Expect industry will continue to improve in 2011 Rail traffic recovering Industry has significant, but declining, idle railcar inventory Nominal lease rates increasing European market strengthening Tank car market historically less volatile Freight car market recoveri
Slide 37: Specialty
Specialty
Slide 38: Specialty Owned Portfolio
Specialty 38 Owned Portfolio Specialty focuses primarily on marine and industrial equipment Seeks to invest in long-lived, widely- used assets critical to the operations of its customers Joint Ventures: Marine: co-investments with blue-water shipping pool operators Aircraft Engine Leasing: venture w
Slide 39: Specialty Marine Joint Ventures
Specialty Marine Joint Ventures 39 GATX has invested in "blue-water" (ocean-going) marine vessels for over 20 years Partners are leading ship owners and operators with extensive shipping experience, reputations for outstanding service, and shared investment philosophy Our jointly-owned vessels are a
Slide 40: Specialty Marine Joint Ventures
Specialty Marine Joint Ventures 40 JV Name Partner Partner Fleet Approximate Total Number of Vessels GATX Investment Focus Vessel Type JV Number of Vessels Clipper Third Clipper Group 200 Bulk Carriers 2 Clipper Fourth Clipper Group 200 Chemical Parcel Tankers 14 Cardinal Marine IMC Corp. 50 Chemica
Slide 41: Specialty Marine Joint Ventures
Specialty Marine Joint Ventures 41 Clipper Fourth 10,000-15,000 DWT Chemical Tankers Cardinal Marine 45,000 DWT Chemical Parcel Tankers Somargas LPG/Ethylene Carriers
Slide 42: Rolls-Royce and Partners Finance (RRPF)
Specialty Rolls-Royce and Partners Finance (RRPF) 42 RRPF was established in 1989 as a joint venture by Rolls-Royce plc; GATX became 50/50 partner in 1998 RRPF leases spare aircraft engines to commercial airlines One of the largest spare aircraft engine portfolios in the industry, with approximately
Slide 43: Specialty Industrial Equipment Finance
Specialty Industrial Equipment Finance 43 Industrial Equipment Portfolio by Industry $313 million NBV as of 12/31/10 Equipment must be core to the customer and essential use Major emphasis on equipment values and GATX's expertise in certain asset classes Typical transactions: Targeted industries are
Slide 44: Specialty Managed Portfolio
Specialty Managed Portfolio 44 GATX leverages its asset expertise and infrastructure by managing portfolios of assets for third-party owners Management activities include re- leasing initiatives, asset sales, advisory services, and back-office functions GATX is paid a management fee while also typic
Slide 45: American Steamship Company
American Steamship Company
Slide 46: American Steamship Company (ASC)
American Steamship Company (ASC) 46 ASC provides transportation of dry-bulk commodities on the Great Lakes including iron ore, coal, and limestone aggregates ASC has been operating on the Great Lakes for more than 100 years, joining GATX in 1973 Fleet of 18 self-unloading vessels 15 vessels are whol
Slide 47: ASC Market
ASC Market 47 Net Tons (millions) U.S.-Flag Dry-Bulk Cargo Carriage Capacity of U.S.-Flag Vessel Operators Industry Total Annual Capacity 104 Million Net Tons The largest consumers of the cargos carried by U.S.-Flag Great Lakes vessels are the steel mills The Great Lakes states account for more than
Slide 48: ASC Cargo and Customer Mix
ASC 48 Based on 2010 volume 28.0 million net tons Based on 2010 revenue Iron Ore 52% Coal 37% Limestone Aggregates 9% Other 2% Steel 53% Electric Utility 37% Construction 6% Other 4%
Slide 49: ASC Industry Overview
ASC Industry Overview 49 Industry is mature The assets are long-lived 2 non-ASC vessels in operation since 1929 High barriers to entry Estimated cost for a new 1000' vessel is $100 million Customer base is highly concentrated Top 5 customers comprise 76% of ASC's total revenue Market is primarily dr
Slide 50: ASC Great Lakes Trade Patterns
ASC Great Lakes Trade Patterns 50
Slide 51: ASC Fleet
ASC Fleet 51 With the most versatile fleet operating on the Great Lakes, ASC is well positioned to manage its fleet to meet changing demand levels * ASC's lease on the American Republic expires in 2011. *
Slide 52: Financial Highlights
Financial Highlights
Slide 53: Financial Profile Overview
Financial Profile Overview 53 Stable cash flow and contracted revenue Access to capital is solid and well-diversified Focused on disciplined investment, effective asset remarketing and growing the asset base
Slide 54: Cash Flow Strength
Cash Flow Strength 54 Nearly $3 billion in minimum future lease receipts as of 12/31/10
Slide 55: Operating Cash Flow and Portfolio Proceeds
Operating Cash Flow and Portfolio Proceeds 55 Strong Operating Cash Flow and Portfolio Proceeds Continuing operations
Slide 56: Financial Profile Future Debt Obligations
Financial Profile Future Debt Obligations 56 GATX's debt maturity schedule is moderate and manageable as of 12/31/10
Slide 57: Disciplined Investment
Disciplined Investment 57 $763 $634 $781 $480 $585
Slide 58: Strong Balance Sheet
Strong Balance Sheet 58 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 BBB-/Baa3 BBB/Baa1
Slide 59: Financial Performance
Financial Performance 59 Normalized amounts exclude certain tax benefits and other items
Slide 60: Long-term Outlook
Long-term Outlook Very optimistic... GATX acquired an interest in over 18,000 railcars during market downturn at attractive valuations GATX strengthened its competitive position during downturn GATX recently placed the largest railcar order on record GATX has excellent access to attractively priced
Slide 61: Summary & Opportunity
Summary & Opportunity GATX has consistently been a market force for 113 years GATX prepared for and capitalized on the market downturn GATX is well positioned to benefit from a market recovery GATX has the capacity and desire to invest in quality, long- lived assets GATX is focused on generating att
Slide 62: Appendix: Reconciliation of non-GAAP measures
Appendix Reconciliation of non-GAAP measures
Slide 63: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures 63
Slide 64: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures 64
Slide 65: GATX Corporation Financial Review
GATX Corporation Financial Review For detailed financial information, please see the Supplemental Financial Information contained in the Investor Relations section of www.gatx.com.