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GATX Corporation Reports 2020 First-Quarter Results

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  • Net income for the first quarter 2020 was $46.3 million or $1.31 per diluted share

  • GATX suspends 2020 guidance due to uncertainties related to the COVID-19 pandemic

  • Rail North America’s fleet utilization remained strong at 99.0%

CHICAGO, May 04, 2020 (GLOBE NEWSWIRE) -- GATX Corporation (GATX) today reported 2020 first-quarter net income of $46.3 million or $1.31 per diluted share, compared to net income of $41.5 million or $1.12 per diluted share in the first quarter of 2019.

“GATX posted solid first-quarter results despite continuing weakness in the North American railcar leasing market and a deteriorating global economy,” said Brian A. Kenney, president and chief executive officer of GATX. “During this unprecedented time, our focus has been on ensuring the health and safety of our global workforce and serving our customers with minimal disruptions.

“Rail North America’s performance in the quarter was generally consistent with our expectations coming into 2020. We achieved fleet utilization of 99% at the end of the quarter and a renewal success rate of 74.6%. The renewal lease rate change of GATX’s Lease Price Index was negative 11.6% in the quarter, with an average renewal term of 31 months.

“Rail International performed as expected. Fleet utilization at GATX Rail Europe remains high at 98.5% at quarter end, and GATX Rail India grew its fleet to over 3,900 railcars while maintaining utilization at 100%. Within Portfolio Management, our Rolls-Royce and Partners Finance affiliates produced favorable results, despite an unprecedented drop in commercial air travel in the latter part of the quarter. Finally, American Steamship Company’s sailing season began at the end of March with seven of the planned 11 vessels currently deployed in anticipation of lower tonnage due to COVID-19 impacts. The sale of American Steamship Company is expected to close in the second quarter.”

Mr. Kenney added, “While the impact of the COVID-19 pandemic on our first-quarter results was limited, we expect future operating results to be negatively impacted, the magnitude of which is highly uncertain and depends on many factors that continue to evolve rapidly, including the scope and duration of the pandemic’s disruptions and the shape and timing of the eventual recovery. Accordingly, we are suspending our previously announced full-year 2020 guidance.”

Mr. Kenney concluded, “I am grateful for the dedication and resilience of our employees in the face of the current obstacles. The challenges posed by the COVID-19 pandemic are extraordinary and unparalleled. However, GATX has managed through a number of crises and economic cycles during its 120-plus-year history. We entered the current crisis with a strong balance sheet, excellent liquidity, and committed long-term leases that provide a source of stable cash flows—all of which we expect positions GATX to navigate through this difficult period and capitalize on attractive investment opportunities that may arise.”

RAIL NORTH AMERICA
Rail North America reported segment profit of $72.0 million in the first quarter of 2020, compared to $68.4 million in the first quarter of 2019. Higher segment profit was primarily a result of higher gains on asset dispositions, partially offset by lower lease revenue.

At March 31, 2020, Rail North America’s wholly owned fleet was comprised of approximately 117,600 cars, including more than 15,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.

Fleet utilization was 99.0% at the end of the first quarter, compared to 99.3% at the end of the prior quarter and 99.4% at the end of the first quarter of 2019. During the first quarter, the renewal lease rate change of the GATX Lease Price Index (LPI) was negative 11.6%. This compares to negative 9.1% in the prior quarter and positive 5.2% in the first quarter of 2019. The average lease renewal term for all cars included in the LPI during the first quarter was 31 months, compared to 37 months in the prior quarter and 39 months in the first quarter of 2019. Rail North America’s investment volume during the first quarter was $110.9 million.

Additional fleet statistics, including information on the boxcar fleet, and macroeconomic data related to Rail North America’s business are provided on the last page of this press release.

RAIL INTERNATIONAL
Rail International’s segment profit was $13.9 million in the first quarter of 2020, compared to $14.8 million in the first quarter of 2019. Higher lease revenue in 2020, due to more cars on lease, was more than offset by changes in foreign currency exchange rates, resulting in lower segment profit.

At March 31, 2020, GATX Rail Europe’s (GRE) fleet consisted of approximately 25,400 cars. Utilization was 98.5%, compared to 99.3% at the end of the prior quarter and 98.9% at the end of the first quarter of 2019. Additional fleet statistics for GRE are provided on the last page of this press release.

PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $19.5 million in the first quarter of 2020, compared to $12.3 million in the first quarter of 2019. The increase in segment profit is primarily attributable to strong performance at the Rolls-Royce and Partners Finance affiliates.

AMERICAN STEAMSHIP COMPANY
American Steamship Company (ASC) reported segment profit of $0.9 million in the first quarter of 2020, compared to $2.5 million in the first quarter of 2019. ASC’s operations are limited during the first quarter as the vessels are in winter lay-up from mid-January through late March.

On February 7, 2020, we entered into an agreement to sell ASC. The sale is subject to customary closing conditions.

COMPANY DESCRIPTION
GATX Corporation (GATX) strives 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. As the leading global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 121 years. GATX has been headquartered in Chicago, Illinois since its founding in 1898. For more information, please visit the Company’s website at www.gatx.com.

TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss 2020 first-quarter results. Call details are as follows:

Monday, May 4, 2020
11 a.m. Eastern Time
Domestic Dial-In: 1-800-263-0877
International Dial-In: 1-786-460-7199
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 9070292

Call-in details, a copy of this press release and real-time audio access are available at www.gatx.com. Please access the call 15 minutes prior to the start time. Following the call, a replay will be available on the same site.

FORWARD-LOOKING STATEMENTS
Statements in this Earnings Release 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 could cause our actual results, performance, or achievements to differ materially from those discussed. These include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance, prospects, or future events. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “outlook,” “continue,” “likely,” “will,” “would”, and similar words and phrases. Forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of the date they are made, and are not guarantees of future performance. We do not undertake any obligation to publicly update or revise these forward-looking statements.

The following factors, in addition to those discussed in our other filings with the SEC, including our Form 10-K for the year ended December 31, 2019, could cause actual results to differ materially from our current expectations expressed in forward-looking statements:

FOR FURTHER INFORMATION CONTACT:
GATX Corporation
Shari Hellerman
Director, Investor Relations
GATX Corporation
312-621-4285
shari.hellerman@gatx.com

Investor, corporate, financial, historical financial, and news release information may be found at www.gatx.com.

(5/4/2020)


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)

Three Months Ended
March 31

2020

2019

Revenues

Lease revenue

$

271.7

$

274.4

Marine operating revenue

11.8

13.1

Other revenue

25.4

29.5

Total Revenues

308.9

317.0

Expenses

Maintenance expense

86.6

81.2

Marine operating expense

10.4

12.1

Depreciation expense

80.4

79.9

Operating lease expense

13.3

13.7

Other operating expense

8.5

8.0

Selling, general and administrative expense

42.4

46.1

Total Expenses

241.6

241.0

Other Income (Expense)

Net gain on asset dispositions

27.4

8.9

Interest expense, net

(46.8

)

(46.5

)

Other expense

(8.2

)

(3.2

)

Income before Income Taxes and Share of Affiliates’ Earnings

39.7

35.2

Income taxes

(12.9

)

(8.4

)

Share of affiliates’ earnings, net of taxes

19.5

14.7

Net Income

$

46.3

$

41.5

Share Data

Basic earnings per share

$

1.33

$

1.14

Average number of common shares

34.9

36.5

Diluted earnings per share

$

1.31

$

1.12

Average number of common shares and common share equivalents

35.4

37.1

Dividends declared per common share

$

0.48

$

0.46


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)

March 31

December 31

2020

2019

Assets

Cash and Cash Equivalents

$

570.7

$

151.0

Receivables

Rent and other receivables

76.9

87.1

Finance leases (as lessor)

66.8

90.3

Less: allowance for losses

(6.2

)

(6.2

)

137.5

171.2

Operating Assets and Facilities

9,972.5

9,897.4

Less: allowance for depreciation

(3,222.1

)

(3,190.2

)

6,750.4

6,707.2

Lease Assets (as lessee)

Right of use assets, net of accumulated depreciation

402.8

413.9

Finance leases, net of accumulated depreciation

8.9

402.8

422.8

Investments in Affiliated Companies

532.4

512.6

Goodwill

80.6

81.5

Other Assets

243.5

238.8

Total Assets

$

8,717.9

$

8,285.1

Liabilities and Shareholders’ Equity

Accounts Payable and Accrued Expenses

$

120.6

$

149.1

Debt

Commercial paper and borrowings under bank credit facilities

275.5

15.8

Recourse

5,043.7

4,780.4

5,319.2

4,796.2

Lease Obligations (as lessee)

Operating leases

399.3

432.3

Finance leases

7.9

399.3

440.2

Deferred Income Taxes

930.2

924.3

Other Liabilities

117.6

140.2

Total Liabilities

6,886.9

6,450.0

Total Shareholders’ Equity

1,831.0

1,835.1

Total Liabilities and Shareholders’ Equity

$

8,717.9

$

8,285.1


GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2020
(In millions)

Rail N.A.

Rail Int’l

Portfolio
Management

ASC

Other

GATX
Consolidated

Revenues

Lease revenue

$

212.1

$

58.3

$

0.3

$

1.0

$

$

271.7

Marine operating revenue

3.3

8.5

11.8

Other revenue

23.6

1.8

25.4

Total Revenues

235.7

60.1

3.6

9.5

308.9

Expenses

Maintenance expense

72.9

12.9

0.8

86.6

Marine operating expense

4.1

6.3

10.4

Depreciation expense

63.6

15.5

1.3

80.4

Operating lease expense

13.3

13.3

Other operating expense

6.6

1.8

0.1

8.5

Total Expenses

156.4

30.2

5.5

7.1

199.2

Other Income (Expense)

Net gain on asset dispositions

26.8

0.1

0.5

27.4

Interest (expense) income, net

(33.3

)

(10.6

)

(2.9

)

(1.3

)

1.3

(46.8

)

Other expense

(0.8

)

(5.5

)

(0.2

)

(1.7

)

(8.2

)

Share of affiliates’ pre-tax income

23.8

23.8

Segment profit (loss)

$

72.0

$

13.9

$

19.5

$

0.9

$

(0.4

)

$

105.9

Less:

Selling, general and administrative expense

42.4

Income taxes (includes $4.3 related to affiliates’ earnings)

17.2

Net income

$

46.3

Selected Data:

Investment volume

$

110.9

$

69.3

$

0.3

$

13.7

$

0.5

$

194.7

Net Gain on Asset Dispositions

Asset Remarketing Income:

Net gains on disposition of owned assets

$

26.9

$

$

$

$

$

26.9

Residual sharing income

0.1

0.5

0.6

Non-remarketing disposition (losses) gains (1)

(0.2

)

0.1

(0.1

)

$

26.8

$

0.1

$

0.5

$

$

$

27.4

__________
(1) Includes net gains (losses) from scrapping of railcars.


GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2019
(In millions)

Rail N.A.

Rail Int’l

Portfolio
Management

ASC

Other

GATX
Consolidated

Revenues

Lease revenue

$

220.9

$

52.2

$

0.3

$

1.0

$

$

274.4

Marine operating revenue

2.4

10.7

13.1

Other revenue

27.4

2.0

0.1

29.5

Total Revenues

248.3

54.2

2.8

11.7

317.0

Expenses

Maintenance expense

68.8

12.1

0.3

81.2

Marine operating expense

4.6

7.5

12.1

Depreciation expense

64.3

14.0

1.6

79.9

Operating lease expense

13.7

13.7

Other operating expense

6.4

1.5

0.1

8.0

Total Expenses

153.2

27.6

6.3

7.8

194.9

Other Income (Expense)

Net gain on asset dispositions

8.2

0.4

0.3

8.9

Interest (expense) income, net

(34.2

)

(9.9

)

(2.7

)

(1.4

)

1.7

(46.5

)

Other expense

(0.7

)

(2.3

)

(0.2

)

(3.2

)

Share of affiliates’ pre-tax income

18.2

18.2

Segment profit

$

68.4

$

14.8

$

12.3

$

2.5

$

1.5

$

99.5

Less:

Selling, general and administrative expense

46.1

Income taxes (includes $3.5 related to affiliates’ earnings)

11.9

Net income

$

41.5

Selected Data:

Investment volume

$

99.0

$

33.1

$

$

14.5

$

0.7

$

147.3

Net Gain on Asset Dispositions

Asset Remarketing Income:

Net gains on disposition of owned assets

$

9.7

$

$

$

$

$

9.7

Residual sharing income

0.1

0.3

0.4

Non-remarketing disposition (losses) gains (1)

(1.6

)

0.4

(1.2

)

$

8.2

$

0.4

$

0.3

$

$

$

8.9

__________

(1) Includes net gains (losses) from scrapping of railcars.


GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Total Assets, Excluding Cash, by Segment

Rail North America

$

5,634.6

$

5,632.4

$

5,611.9

$

5,607.7

$

5,646.7

Rail International

1,447.7

1,462.8

1,368.4

1,404.1

1,315.6

Portfolio Management

656.5

637.0

637.5

626.6

612.8

ASC

300.8

291.1

319.0

331.2

311.1

Other

107.6

110.8

105.5

96.6

99.4

Total Assets, excluding cash

$

8,147.2

$

8,134.1

$

8,042.3

$

8,066.2

$

7,985.6

Debt and Lease Obligations, Net of Unrestricted Cash

Unrestricted cash

$

(570.7

)

$

(151.0

)

$

(48.6

)

$

(286.6

)

$

(248.4

)

Commercial paper and bank credit facilities

275.5

15.8

112.0

26.0

15.9

Recourse debt

5,043.7

4,780.4

4,580.2

4,832.5

4,768.1

Operating lease obligations

399.3

432.3

440.3

454.5

456.3

Finance lease obligations

7.9

10.6

11.0

Total debt and lease obligations, net of unrestricted cash

5,147.8

5,085.4

5,083.9

5,037.0

5,002.9

Shareholders’ Equity

$

1,831.0

$

1,835.1

$

1,786.5

$

1,834.8

$

1,809.2

Recourse Leverage (1)

2.8

2.8

2.8

2.7

2.8

_________

(1) Calculated as total recourse debt / shareholder’s equity.

Reconciliation of Total Assets to Total Assets, Excluding Cash

Total Assets

$

8,717.9

$

8,285.1

$

8,090.9

$

8,353.1

$

8,240.2

Less: cash

(570.7

)

(151.0

)

(48.6

)

(286.9

)

(254.6

)

Total Assets, excluding cash

$

8,147.2

$

8,134.1

$

8,042.3

$

8,066.2

$

7,985.6


GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Rail North America Statistics

Lease Price Index (LPI) (1)

Average renewal lease rate change

(11.6

)%

(9.1

)%

(7.7

)%

(2.8

)%

5.2

%

Average renewal term (months)

31

37

40

40

39

Fleet Rollforward (2)

Beginning balance

102,845

103,255

103,554

104,830

105,472

Cars added

883

965

902

661

617

Cars scrapped

(389

)

(620

)

(513

)

(377

)

(662

)

Cars sold

(781

)

(755

)

(688

)

(1,560

)

(597

)

Ending balance

102,558

102,845

103,255

103,554

104,830

Utilization

99.0

%

99.3

%

99.2

%

99.5

%

99.4

%

Average active railcars

101,668

102,309

102,653

104,089

104,613

Boxcar Fleet

Ending balance

15,026

15,264

15,803

15,921

16,006

Utilization

94.6

%

95.0

%

93.5

%

94.1

%

95.2

%

Rail Europe Statistics

Fleet Rollforward

Beginning balance

24,561

24,211

23,967

23,531

23,412

Cars added

871

416

325

491

185

Cars scrapped/sold

(80

)

(66

)

(81

)

(55

)

(66

)

Ending balance

25,352

24,561

24,211

23,967

23,531

Utilization

98.5

%

99.3

%

99.4

%

98.9

%

98.9

%

Average active railcars

24,622

24,216

23,877

23,480

23,105

Rail North America Industry Statistics

Manufacturing Capacity Utilization Index (3)

72.7

%

77.1

%

77.4

%

77.7

%

78.4

%

Year-over-year Change in U.S. Carloadings (excl. intermodal) (4)

(6.3

)%

(4.9

)%

(3.8

)%

(2.9

)%

(3.1

)%

Year-over-year Change in U.S. Carloadings (chemical) (4)

3.1

%

(0.6

)%

(0.2

)%

(0.1

)%

(1.0

)%

Year-over-year Change in U.S. Carloadings (petroleum) (4)

3.6

%

12.2

%

16.6

%

23.2

%

22.0

%

Production Backlog at Railcar Manufacturers (5)

46,330

51,295

58,127

69,227

73,076

American Steamship Company Statistics

Total Net Tons Carried (millions)

1.0

7.5

9.6

8.7

1.2

_________

(1) GATX’s Lease Price Index (LPI) is an internally-generated business indicator that measures lease rate pricing on renewals for our North American railcar fleet, excluding boxcars. GATX calculates the index using the weighted-average lease rate for a group of railcar types that GATX believes best represents its overall North American fleet, excluding boxcars. The average renewal lease rate change is reported as the percentage change between the average renewal lease rate and the average expiring lease rate, weighted by fleet composition. The average renewal lease term is reported in months and reflects the average renewal lease term of railcar types in the LPI, weighted by fleet composition.
(2) Excludes boxcar fleet.
(3) As reported and revised by the Federal Reserve.
(4) As reported by the Association of American Railroads (AAR).
(5) As reported by the Railway Supply Institute (RSI).