Gatx Corporation · NYSE:GATX
Gatx — Investor Presentation (May 2023)
66 slides from Gatx's investor presentation, May 11, 2023
Slide 1: 2023 Company Overview
GATX 3785) HPF nan0 UT at Pne mes cx se 2023 COMPANY OVERVIEW
Slide 2: Table of Contents
2 History and Business Overview Railcar Leasing Business Model Rail North America Rail International Portfolio Management Trifleet Financial Highlights Reconciliation of Non-GAAP Measures 4 16 23 39 49 54 58 63 Section Slide No. Table of Contents
Slide 3: Forward-Looking Statements
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
Slide 4: History and Business Overview
4 History and Business Overview
Slide 5: Vision Statement
5 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: History
6 As of 12/31/2022 History Established as railcar lessor with 28 railcars 1898 Exited railcar manufacturing 1984 Began rail investment in Europe & Mexico 1994 Formed Rolls- Royce & Partners Finance Affiliates (RRPF) 1998 Acquired 100% ownership in European rail joint venture & formed GATX Rail Europ
Slide 7: Celebrating Years
CELEBRATING 125 YEARS
Slide 8: Net Book Value of Assets by Segment
8 As of 12/31/2022 ~$10 Billion Net Book Value of Assets 64% 18% 11% 7% Rail North America Rail International Portfolio Management Other (Includes Trifleet) One of the largest railcar lessors with a diversified fleet of over 109,600 railcars The only diversified lessor with wholly owned, full-scale,
Slide 9: Global Presence
9 (excludes leasing footprint for RRPF and Trifleet Leasing) GATX Primary Rail Operations Footprint Major Maintenance Facilities (excludes non-major maintenance facilities, customer site locations & mobile units) Rolls-Royce & Partners Finance Headquarters (London, United Kingdom) AIRCRAFT SPARE ENG
Slide 10: Capital Allocation Framework: Investment Volume
10 *2017-2022 reflects continuing operations. The information for 2016 and prior has not been recast for discontinued operations presentation Note: Investment volume may include non-cash items $860 $1,031 $715 $621 $589 $928 $723 $1,064 $1,132 $1,256 2013 2014 2015 2016 2017* 2018* 2019* 2020* 2021*
Slide 11: Capital Allocation Framework: Leverage
11 0% 10% 20% 30% 40% 50% 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Recourse Debt*/Equity % of Assets that are Secured Leverage & Reduction of Secured Assets PRIORITY 2 Optimize the balance sheet Maintain capacity for opportunistic investments Maintain a so
Slide 12: Cash Returned to Shareholders
12 $0 $500 $1,000 $1,500 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cumulative Dividends Cumulative Share Repurchases Cash Returned to Shareholders PRIORITY 3 Respecting Priorities 1 and 2, return excess cash to shareholders Over the past decade, more than $1.5 billion returned to shareholder
Slide 13: Income per Share, ROE and Investment Volume
13 Income Per Diluted Share, excluding tax adjustments and other items (non-GAAP) *2017-2022 reflects continuing operations. The information for 2016 and prior has not been recast for discontinued operations presentation **Beginning in 2017, our equity, which is used in this calculation, increased b
Slide 14: Health and Safety, Environment, Community
Health and Safety Human Capital Management Environmental Impact Community Engagement 14 Focused on further enhancing our training and standardized work procedures to improve our Offered training across North America on the proper use of railcars and related equipment through our TankTrainer mobile c
Slide 15: Operational Excellence
15 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 majority of the markets we ope
Slide 16: Railcar Leasing Business Model
16 Railcar Leasing Business Model
Slide 17: Proven Business Model
17 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, and customer satisfactio
Slide 18: Railcar Supply: Buy
18 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 n
Slide 19: Railcar Supply Strategy
19 Railcar Supply: Benefits of Railcar Supply Strategy: Large, multi-year orders for new cars Spot orders for new cars to meet specific customer demand Fleet acquisitions of existing cars from other industry participants Access to attractively priced railcars Ability to grow our high quality fleet a
Slide 20: Business Model: Lease
20 Most diverse fleet in the industry can satisfy varying customer demands Utilize multi-year committed orders with railcar manufacturers to maintain a steady stream of high-quality, modern, and cost-advantaged railcars Develop lease structures that fit Car Inspection Group confirms that specificati
Slide 21: Business Model: Service
21 Customers utilize GATX to manage the complex process of maintaining railcars Premium service minimizes railcar quality issues and unexpected downtime Efficient maintenance network, including eight GATX-owned facilities in North America In 2022, GATX performed an aggregate of approximately 30,900
Slide 22: Business Model: Maximize Value
22 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 $62 million of remarketing income per year
Slide 23: Rail North America
23 Rail North America
Slide 24: GATX Rail North America Overview
24 2 0 2 2 Wholly Owned Fleet Count Car Type Count Average Fleet Age Locomotive Count Number of Customers Countries of Operation 109,600+ 160+ 18 years 500+ 850+ U.S., Canada & Mexico Chemicals Refiners & Other Petroleum Railroads & Other Transports Food & Agriculture Mining, Minerals & Aggregates O
Slide 25: Industry Ownership: North America
Approximately 1.63 million railcars 25 Source: UMLER as of January 2023 RAILROADS Ownership of railcars continues to decline Virtually no tank car ownership due to complexities and regulations Focuses capital investment on infrastructure 16% (2023) 57% (2023) 17% (2023) 10% (2023) LESSORS Shift from
Slide 26: Industry Fleet and Ownership Mix: North America
26 Covered Hopper Tank Open Top Flat Boxcar Intermodal Based on approximately 439K tank cars Based on approximately 1.2M freight cars 47% 22% 17% 14% Lessor Railroad Shipper/Other TTX 34% 27% 19% 8% 7% 5% 82% <1% 18% Lessor Shipper/Other <1% Railroad Railcars by Type (Approximately 1.63M railcars) T
Slide 27: Lessor Market Share: North America
9% 21% 15% 12% 43% 27 Based on approximately 360K lessor-owned tank cars Based on approximately 560K lessor-owned freight cars Lessor Ownership Share (Based on approximately 920K lessor-owned railcars) Tank Car Lessor Ownership Share Freight Car Lessor Ownership Share Source: UMLER as of January 202
Slide 28: Industry Commodity Carloadings: North America
28 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 Source: Association of American Railroads Industry Commodity Carloadings: North America
Slide 29: Industry Backlog: North America
29 Source: Railway Supply Institute as of January 2023 Number of Tank Number of Freight - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 Industry Backlogs Cyclicality of the industry is illustrated by the backlog of orders at the railcar manufacturers Industry Backlog: North America
Slide 30: Lease Price Index, Renewals and Utilization
30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 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 18,700 Renewal Success Rate* 60% 54% 62% 77% 82% 81% 86% 81% 67
Slide 31: Diverse Customer Portfolio
31 GATX serves more than 850 individual customers Top 20 customers account for less than 35% of total lease revenue Average relationship tenure of top 10 customers is 50 years Largest customer represents less than 5% of total lease revenue 60% 8% 32% Credit Ratings of the Top 50 Customer Families In
Slide 32: Fleet by Car Type and Commodities
32 CAR TYPE COMMODITIES CARRIED % OF FLEET % OF NBV High-Pressure Tank Cars LPG, VCM, propylene, carbon dioxide General Service Tank Cars: Molten sulfur, clay slurry, caustic soda, corn syrup 13k-19k gallon Other Specialty Tank Cars Acids (sulfuric, hydrochloric, phosphoric, acetic, nitric, etc.), c
Slide 33: Maintenance Network
33 Eight maintenance facilities Two standalone mobile repair units One customer site location In 2022, GATX performed ~30,900 maintenance events in its owned and third-party maintenance network Directing an increased percentage of work to GATX- owned shops can improve safety, quality, delivery, and
Slide 34: Maintenance Network Investments
34 GATX Rail North America: Maintenance Network Investments made in recent years allowed GATX to increase the percentage of service events completed in our owned maintenance network, which we believe is the best maintenance network in the industry All while continuing to prioritize and maintain the
Slide 35: Engineering
35 including experienced mechanical, structural, and chemical engineers, communicates regularly with customers and works with them to tailor solutions to meet their needs Custom/ Optimized Design Chemical Engineering Reliability Engineering Maintenance/ Repair GATX Rail North America: Engineering
Slide 36: Training and Regulatory Participation
3636 GATX Rail North America: Training and Regulatory Participation As of 12/31/22 Training and Safety With our one-of-a-kind TankTrainer provided training on tank car operations and safety since 1993. Continued partnerships with American Chemistry Council and Responsible Care. Our employees are act
Slide 37: Technology Focus: RailPulse
RailPulse -thinking railcar owners who have joined together to facilitate and accelerate the adoption of GPS and other telematics technology across the North American railcar network. RailPulse technology platform that will transform rail shipping and enhance the customer experience. 37 GOAL OF THE
Slide 38: Locomotive Leasing
38 GATX owns more than 500 locomotives, over 90% of which are four-axle locomotives Key Attributes Four-Axle Locomotives Lower horsepower Typically travel shorter distances Predominately used by industrial users, and regional and short-line railroads As of 12/31/2022 Six-AxleFour-Axle 92% 8% GATX Lo
Slide 39: Rail International
39 Rail International
Slide 40: GATX Rail International Overview
40 Fleet Count Car Type Count Average Fleet Age (GRE) Number of Customers Primary Countries of Operation 28,000+ in Europe (GRE) 5,800+ in India 50+ 17 years 260+ Germany, Poland, Austria, India, Switzerland, Hungary, France, Czech Republic 2 0 2 2 OVERVIEW 41% 14% 11% 34% Based on 2022 Rail Interna
Slide 41: Industry Snapshot: Europe
41 35% 65% Railcar Ownership* Railroads and Shippers Lessors RELATIVELY LIMITED MANUFACTURING CAPACITY Helps avoid creating an excess supply of industry railcars OLDER INDUSTRY FLEET Key segments continue to demonstrate opportunity to replace aging, smaller, and less efficient railcars GREEN INITIAT
Slide 42: Industry and Fleet Ownership: Europe
42 Lessor Railroad & Privately Owned 25% 75% 83% 17% 33% 19% 18% 16% 9% 5% Open Wagons Flat Wagons Tank Wagons Intermodal Wagons Covered Wagons Other Lessors Railroad & Privately Owned Railcars by Type (Approximately 680K railcars) Tank Car Ownership Share Freight Car Ownership Share Based on approx
Slide 43: Lessor Market Share: Europe
4% 39% 21% 7% 5% 24% 24% 33% 13% 8% 2% 20% 43 GRE VTG Ermewa Touax Wascosa Other GRE VTG Ermewa Wascosa Touax Other 12% 35% 18% 6% 3% 26% GATX Rail Europe (GRE) VTG Ermewa Wascosa Touax Other Based on approximately 96K lessor-owned tank cars Based on approximately 145K lessor-owned freight cars Less
Slide 44: Fleet by Car Type and Commodities: Europe
44 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 oil, bio diesel, styrene, acetone, methanol, ethanol Liquefied Petroleum Gas (LPG) Propane,
Slide 45: GATX Rail Europe: Diverse Customer Portfolio
45 higher capacity railcar fleet attracts top-tier customers 65% 5% 30% Credit Ratings of Top 20 Customer Families Investment Grade BB+ or lower Private/Not Rated Top 20 customers based on 2022 revenue Average remaining lease term 24 months Diverse customer base with approximately 260 customers Rene
Slide 46: GRE Maintenance, Engineering, Assembly and Support
46 MAINTENANCE railcar availability for its customers Proven track record of extremely high safety standards and technical expertise Owned workshop in Poland and certified contract partners GRE arranges for the cleaning of tanks and freight cars combined with scheduled repairs to minimize downtime E
Slide 47: Industry Snapshot: India
47 (Based on approximately 310K railcars) Railcar Ownership 10% 90% Privately OwnedIndian Railways SIGNIFICANT POTENTIAL Large railway network, historically dominated by passenger service Commodities move long distances Economic growth drives increase in import/export Focus on developing manufacturi
Slide 48: GATX Rail India Overview
48 $0 $5 $10 $15 $20 $25 $30 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 NBV (left axis) Lease Income (right axis) Key Attributes Local Technical and Operational Capabilities management expertise to generate competitive advantages and premium customer services Wholly Owned Fleet of Over 5,
Slide 49: Portfolio Management
49 Portfolio Management
Slide 50: Portfolio Management: RRPF and GEL
50 52%43% 2% $1,107M NBV Rolls-Royce & Partners Finance Affiliates (RRPF) RRPF* GEL Marine Equipment Other $0 $20 $40 $60 $80 $100 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 RRPF Pre-Tax Income, Adjusted** ASSET M I X In January 2021, GATX commenced a direct investment program to opportu
Slide 51: Aircraft Spare Engine Leasing Industry
51 Aircraft spare engines are attractive and reliable leasing assets Robust residual value characteristics Retain value better over the long term compared to air frames Aircraft engines need regular scheduled maintenance (3-5 year intervals) which takes between 90 and 120 days Correct level of spare
Slide 52: RRPF Affiliates Overview
52 Spare Engine Count Average Fleet Age Estimated Useful Life Typical Lease Term Fleet Utilization 398 12 years 20-25 years 3-12 years 94.2% 2 0 2 2 OVERVIEW 37% 18% 17% 8% 6% 3% 11% Based on NBV of approximately $4.2B; 100% RRPF ENGINE TYPES Trent XWB (A350) Trent 1000 (B787) Trent 700 / 7000 (A330
Slide 53: RRPF Key Attributes
53 $0 $100 $200 $300 $400 $500 $0 $1 $2 $3 $4 $5 NBV Revenue Strong Growth in NBV and Revenue First Partnership with Rolls-Royce in 1998 Balance Sheet and Liquidity Long-dated debt maturity profile and commitment to preserving cash and maintaining strong liquidity Renewal Schedule Consistent effort
Slide 54: Trifleet
TCUU 222708 [3] 22K; Trifleet
Slide 55: Trifleet Overview
55 71% 12% 10% 6% Fleet Count Average Fleet Age Estimated Useful Life Typical Lease Term Primary Countries of Operation ~22,000 owned and managed tank containers 7 years 15-25 years 1-5 years TANK TYPES Number of Customers ~300 Standard Semi-Standard Specialty Gas Cryogenic 1% Experienced, highly re
Slide 56: Tank Container Industry Snapshot
56 Tank Container Industry Snapshot 0 200,000 400,000 600,000 800,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 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 The tank container i
Slide 57: Industry Ownership and Market Share
57 Industry Ownership and Market Share Industry Ownership (Based on global tank container fleet of approximately 802K) 45% 55% Lessors1 Top Lessors Ownership Share1 (Based on approximately 361K tank containers in leasing company fleets) 6% 24% 19% 12% 8% 6% 3% 3% 19% Trifleet Eurotainer2 EXSIF World
Slide 58: Financial Highlights
58 Financial Highlights
Slide 59: Financial Profile Summary
59 Strong, stable, and predictable cash flow Contractual future lease receipts from high-quality and diversified customer base Consistent access to capital markets through cycles Robust contingent funding plan with diverse sources Capital spending flexibility Market leader in railcar leasing busines
Slide 60: High-Quality and Consistent Cash Flows
60 $1,011 $766 $530 $359 $221 $573 2023 2024 2025 2026 2027 Thereafter GATX Contractual Future Lease Receipts** *2017-2022 reflects continuing operations. Information for 2016 and prior has not been recast for discontinued operations presentation As of 12/31/2022 Operating Cash Flow Portfolio Procee
Slide 61: Strong Balance Sheet
61 $500 $520 $514 $455 $418 $4,086 2023 2024 2025 2026 2027 Thereafter Future Debt Obligations 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 % of Assets that are SecuredRecourse Debt*/Equity Leverage & Reduction of Secured A
Slide 62: Focus on Funding Optimization
62 6.1% 3.7% 3.8 8.6 0 1 2 3 4 5 6 7 8 9 10 0% 1% 2% 3% 4% 5% 6% 7% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Effective Cost of Debt (left axis) Average Life in Years (right axis) Cost of Debt & Borrowing Term Over the past 15 years, GATX has lowered borrowing costs
Slide 63: Reconciliation of Non-GAAP Measures
63 Reconciliation of Non-GAAP Measures
Slide 64: Reconciliation of Non-GAAP Measures: Net Income
64 Net Income (in millions) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net income (GAAP) 169.3$ 205.0$ 205.3$ 257.1$ 502.0$ 211.3$ 211.2$ 151.3$ 143.1$ 155.9$ Less: Net income from discontinued operations (GAAP) n/a n/a n/a n/a 34.2 20.8 30.4 1.1 - - Net income from continuing operations (GAA
Slide 65: Reconciliation of Non-GAAP Measures
65 Reconciliation of Non-GAAP Measures Note: The information for 2012-2016 in the tables above has not been recast for discontinued operations presentation.
Slide 66: On- and Off-Balance Sheet Assets
66 On- and Off-Balance Sheet Assets 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total assets (GAAP) 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$ 10,072.0$ Off-balance sheet assets (1): Rail North America 887.9 606.1 488.7 456.5 435.7 430.2 - - - - Discontinu