Gatx Corporation · NYSE:GATX
Gatx — Stifel Transportation & Logistics Conference 2024
37 slides from Gatx's conference presentation, Feb 13, 2024
Slide 1: Stifel Transportation & Logistics Conference
Stifel Transportation & Logistics Conference February 13, 2024 Last updated February 16, 2024
Slide 2: Forward-Looking Statements
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 c
Slide 3: History and Business Overview
History and Business Overview The following presentation contains unaudited financial information 3
Slide 4: GATX's History
GATX’s History Formed Rolls- Formed Began Began Exited Royce & Partners Began rail GATX Engine manufacturing listing on railcar Finance Affiliates investments Leasing railcars the NYSE manufacturing (RRPF) in India (GEL) Acquired 100% ownership in $11.3B in assets Began rail European rail joint Acqu
Slide 5: GATX Business Segments
GATX Business Segments Rail North America Rail International Portfolio Management Trifleet One of the largest railcar lessors GATX Rail Europe (GRE) is a leading Composed of our 50% ownership in One of the largest tank container with a diversified fleet of over European tank car and freight
Slide 6: Capital Allocation Framework
Capital Allocation Framework PRIORITY 1 Investment Volume* $1,665 Invest in long-lived, widely used, service- $1,256 intensive assets to $1,064 $1,132 $1,031 maximize $928 shareholder value MILLIONS $715 $723 $621 $589 $9.7 billion of investments over the past decade 2014 2015 2016 2017 2018 2019 20
Slide 7: Capital Allocation Framework
Capital Allocation Framework PRIORITY 2 Leverage & Reduction 8.0x of Secured Assets 50% Optimize the balance sheet 40% 6.0x 30% Maintain capacity 4.0x for opportunistic 20% investments 3.2x 2.0x 10% Maintain a solid 0.0x 0% investment grade 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 rati
Slide 8: Capital Allocation Framework
Capital Allocation Framework Cumulative Cash Returned PRIORITY 3 to Shareholders $1,500 Respecting Priorities 1 and 2, return excess cash to shareholders $1,000 MILLIONS $500 Over the past decade, more than $1.5 billion returned $0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 to shareholders Cu
Slide 9: GATX Financial Highlights
GATX Financial Highlights Income Per Diluted Share, excluding tax adjustments and other items (non-GAAP)* $7.07 $5.77 $6.07 $5.37 $5.06 $4.67 $4.89 $4.59 $4.48 $4.41 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Return on Equity, excluding tax adjustments and other items (non-GAAP)** Investment
Slide 10: GATX Investment Highlights
GATX Investment Highlights Disciplined Management Team Market Leadership in Essential Businesses Long-term focused and experienced in managing across business cycles across majority of the markets we operate globally Superior Asset Allocation Highly diversified portfolio of transportation Critical S
Slide 11: Proven Business Model
Proven Business Model LEASE MAXIMIZE the railcar to a the value of the quality customer at railcar by selling or an attractive rate for scrapping at the a term that reflects optimal time the business cycle BUY SERVICE the railcar at an the railcar in a economically attractive manner that and competi
Slide 12: Maximizing the Value of the Railcar
Maximizing the Value of the Railcar GATX optimizes its fleet through selling railcars in the secondary market or scrapping them at the end of their useful lives. Our fleet of cost-advantaged, well-maintained modern railcars, leased to quality customers, allows us the opportunity to realize significa
Slide 13: GATX Rail North America Overview
GATX Rail North America Overview 2023 Wholly Owned Fleet Count Car Type Count Average Fleet Age Locomotive Count Number of Customers Countries of Operation 110,400+ ~160 18 years 500+ 840+ U.S., Canada OVERVIEW & Mexico Fleet Utilization* 11% 100% 99.3% Chemicals 5% Refiners & Other 98% 30% Petroleu
Slide 14: Industry Ownership: North America
Industry Ownership: North America Approximately 1.64 million railcars RAILROADS LESSORS SHIPPERS TTX Ownership of railcars continues Shift from railroad- and shipper- Shipper ownership share has Railroad-owned equipment pool to decline owned railcars to lessors declined slightly focused on b
Slide 15: Industry Fleet and Ownership Mix: North America
Industry Fleet and Ownership Mix: North America Tank Car Ownership Share Railcars by Type 18% (Approximately 1.64M railcars) <1% Lessor 4% Shipper/Other 7% <1% Railroad 8% Based on approximately 438K tank cars 82% 35% 19% Freight Car Ownership Share 14% 27% Lessor Railroad 18% 47% Covered Hopper Fla
Slide 16: Lessor Market Share: North America
Lessor Market Share: North America Tank Car Lessor Ownership Share 20% 18% Lessor Ownership Share GATX (Based on approximately 917K lessor-owned railcars) Union Tank Car 11% 18% Trinity 12% GATX AITX 32% Other 23% Based on approximately 358K lessor-owned tank cars 19% 15% 12% 10% GATX Freight Car Le
Slide 17: Quarterly Commodity Carload Traffic
THOUSANDS 1,000 1,500 2,000 2,500 0 500 1Q08 2Q08 3Q08 4Q08 Source: Association of American Railroads 1Q09 2Q09 3Q09 4Q09 Core Carloads 1Q10 2Q10 3Q10 4Q10 1Q11 North America 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Coal & Coke 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q1
Slide 18: Industry Backlog: North America
Industry Backlog: North America Cyclicality of the industry is illustrated by order backlogs at railcar manufacturers 160,000 Industry Backlogs 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 Nu
Slide 19: GATX Rail North America: Actively Managing Through Cycles
GATX Rail North America: Actively Managing Through Cycles GATX adjusts our offered term structure of rates based on market conditions to maximize term during strong markets and maximize future remarketing optionality during weak markets STRONG MARKET WEAK MARKET STRONG MARKET WEAK MARKET STRONG MARK
Slide 20: GATX Rail North America: Diverse Fleet
GATX Rail North America: Diverse Fleet CAR TYPE COMMODITIES CARRIED % OF FLEET % of NBV General Service Tank Cars Ethanol & methanol, food-grade oils, lubricating oils, light chemicals, light petroleum 18.6% 25.8% >25k gallon products (crude oil, fuel oils, diesels, gasoline, etc.) TA N K C A R S Ge
Slide 21: GATX Rail International Overview
GATX Rail International Overview Fleet Car Type Average Fleet Number of Primary Countries 2023 Count Count Age (GRE) Customers of Operation Germany, Poland, Austria, India, 29,200+ in Europe (GRE) Switzerland, France, OVERVIEW 8,800+ in India 50+ 17 years 275+ Hungary, Czech Republic, Romania, The N
Slide 22: Industry Snapshot: Europe
Industry Snapshot: Europe RELATIVELY LIMITED Railcar Ownership* MANUFACTURING CAPACITY (Based on approximately 680K railcars) Helps avoid creating an excess supply of industry railcars OLDER INDUSTRY FLEET 35% Key segments continue to demonstrate opportunity to replace aging, smaller, and less e
Slide 23: Industry and Fleet Ownership: Europe
Industry and Fleet Ownership: Europe Tank Car Ownership Share Railcars by Type (Approximately 680K railcars) 17% 5% Lessor Railroad & Privately Owned 9% Based on approximately 115K tank cars 33% 83% 16% Freight Car Ownership Share 18% 19% 26% Lessor Railroad & Privately Owned Open Wagons Intermodal
Slide 24: Lessor Market Share: Europe
Lessor Market Share: Europe Tank Car Lessor Ownership Share Lessor Ownership Share (Based on approximately 241K lessor-owned railcars) GRE 19% 2% 25% VTG 12% Ermewa 23% 8% 25% Wascosa GRE Touax 13% Other 33% Based on approximately 95K lessor-owned tank cars 5% 12% GRE 35% 6% Freight Car Lessor Owner
Slide 25: GATX Rail Europe (GRE): Major Rail Markets
GATX Rail Europe (GRE): Major Rail Markets 70% of GRE’s revenue is generated in Germany, Poland, and Austria – strong freight rail transport economies 3% 13% Countries Served Industries Served 4% 22% 32% Germany Hungary Mineral Oil 4% Poland France 47% LPG 6% Austria Czech Republic Chemicals 14% Fre
Slide 26: GATX Rail India Overview
GATX Rail India Overview GATX obtained the first-ever wagon leasing license in India in 2012 and is the largest private railcar lessor in India GATX’s Growth in India Key Attributes $350 $40 $35 Wholly Owned Fleet of Over $300 High Growth Opportunity 8,800 Railcars $250 $30 Actively seeks attractive
Slide 27: Portfolio Management Overview
Portfolio Management Overview 2023 Spare Engine Count Average Fleet Age Estimated Useful Life Typical Lease Term Fleet Utilization at RRPF 399 – RRPF 13 years – RRPF OVERVIEW 20-30 years 3-12 years 95.5% 29 – GEL 4 years - GEL 10% 3% 6% 6% 36% RRPF ENGINE TYPES 19% The RRPF affiliates 20% portfolio
Slide 28: Portfolio Management Overview
Portfolio Management Overview Rolls-Royce & Partners Finance GATX Engine Leasing 1% Affiliates (RRPF) (GEL) RRPF, our joint venture with Rolls-Royce plc, GATX opportunistically invests in aircraft leases aircraft spare engines to commercial spare engines through GEL, our wholly aircraft operator
Slide 29: Aircraft Spare Engine Leasing Industry
Aircraft Spare Engine Leasing Industry Aircraft spare engines are attractive and reliable leasing assets Percentage of leased vs. owned aircraft spare engines by Robust residual value characteristics airlines has increased over time Retain value better over the long term compared to air frames 2
Slide 30: Trifleet Overview
Trifleet Overview Fleet Average Estimated Typical Number of Primary Countries 2023 Count ~24,000 owned Fleet Age Useful Life Lease Term Customers of Operation Singapore, China, and managed tank 7 years 15-25 years 1-5 years ~300 OVERVIEW containers Germany, The Netherlands, France 1% 6% Key Attribut
Slide 31: Financial Highlights
es om Financial Highlights
Slide 32: Financial Highlights: High-Quality and Consistent Cash Flows
Financial Highlights: High-Quality and Consistent Cash Flows GATX Contractual Future Lease Receipts* Operating Cash Flow & Portfolio Proceeds** $1,130 $944 $482 $863 $224 $270 $273 $385 $187 $234 $264 $652 MILLIONS $250 $166 $289 MILLIONS $131 $490 $154 $84 $68 $369 $534 $520 $507 $542 $629 $411 $45
Slide 33: Financial Highlights: Focus on Balance Sheet Optimization
Financial Highlights: Focus on Balance Sheet Optimization Over the past 15 years, GATX has lowered borrowing costs while lengthening the average borrowing term Cost of Debt & Borrowing Term 7% 10 9 6% 6.1% 8 8.4 5% 7 6 4% 4.1% 5 3% 4 3.8 3 2% 2 1% 1 0% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 34
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Net Income (in millions) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net i ncome (GAAP) $ 205.0 $ 205.3 $ 257.1 $ 502.0 $ 211.3 $ 211.2 $ 151.3 $ 143.1 $ 155.9 $ 259.2 Less: Net income from di scontinued operations (GAAP) n/a n/a n/a 34.2 20.8 30.4 1.1 - - -
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Earnings per Share 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Diluted earnings per share from continuing operations (GAAP) $ 4.48 $ 4.69 $ 6.29 $ 11.88 $ 4.98 $ 4.97 $ 4.24 $ 3.98 $ 4.35 $ 7.12 Diluted earnings per share from discontinued operations (GAAP)
Slide 37: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures On- and Off-Balance Sheet Assets 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total assets (GAAP) $ 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 $ 11,326.0 Off-balance sheet assets (1): Rail North America 606.1 488.
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