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GATX Corporation Reports 2021 Third-Quarter Results

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  • Net income for the third quarter 2021 was $40.1 million or $1.11 per diluted share

  • Rail North America’s fleet utilization increased to 99.2%

  • Company reiterates 2021 full-year earnings guidance

CHICAGO, October 21, 2021--(BUSINESS WIRE)--GATX Corporation (NYSE:GATX) today reported 2021 third-quarter results. Results for the third quarter and nine months ended September 30, 2021 are summarized below:

Three Months Ended

September 30

Nine Months Ended

September 30

Per Diluted Share

2021

2020

2021

2020

Income from Continuing Operations

$

1.11

$

1.36

$

2.28

$

3.74

Income from Discontinued Operations

(0.01

)

0.03

Total

$

1.11

$

1.35

$

2.28

$

3.77

2021 third-quarter net income from continuing operations was $40.1 million or $1.11 per diluted share, compared to net income from continuing operations of $48.2 million or $1.36 per diluted share in the third quarter of 2020. Net income from continuing operations for the first nine months of 2021 was $82.1 million or $2.28 per diluted share, compared to $132.4 million or $3.74 per diluted share in the prior year period. The 2021 year-to-date results include a net negative impact of $39.7 million or $1.10 per diluted share related to an enacted tax rate increase in the United Kingdom and a net negative impact of $3.4 million or $0.09 per diluted share attributed to debt extinguishment costs associated with an early redemption. The 2020 third-quarter and year-to-date results include a net negative impact of $12.3 million or $0.35 per diluted share related to the elimination of a previously announced tax rate reduction in the United Kingdom. Details related to these items are provided in the attached Supplemental Information under Impact of Tax Adjustments and Other Items on Net Income.

Net income from discontinued operations in the third-quarter and year-to-date periods of 2021 was zero, compared to net loss of $0.3 million or $(0.01) per diluted share in the third quarter of 2020 and net income of $1.1 million or $0.03 per diluted share for the first nine months of 2020.

"We continue to see improvement across our global railcar leasing markets," said Brian A. Kenney, president and chief executive officer of GATX. "In North America, GATX's fleet utilization increased to 99.2% at quarter end and our renewal success rate was 84%. Absolute lease rates across the majority of our fleet increased for the fifth quarter in a row, while the third-quarter renewal lease rate change of GATX’s Lease Price Index was in line with our expectations at negative 8.1%.

"Rail International continues to perform well, as demand for railcars in Europe and India remains robust. GATX Rail Europe's fleet utilization remained high at 98.1% and renewal lease rates for most car types increased versus the expiring rates. GATX Rail Europe and GATX Rail India continued to grow and diversify their fleets during the quarter. However, the pace of fleet growth in 2021 has been negatively impacted by COVID-19-related new car delivery delays in both regions. In Portfolio Management, the Rolls-Royce and Partners Finance affiliates performed as expected in a challenging operating environment for international air travel."

Mr. Kenney concluded, "Based on year-to-date performance and our outlook for the remainder of the year, we continue to expect our 2021 full-year earnings to be in the range of $4.30 to $4.50 per diluted share. This guidance excludes any impact from Tax Adjustments and Other Items."

RAIL NORTH AMERICA

Rail North America reported segment profit of $66.5 million in the third quarter of 2021, compared to $56.1 million in the third quarter of 2020. Year to date, Rail North America reported segment profit of $209.8 million, compared to $178.1 million in the same period of 2020. Higher third-quarter and year-to-date segment profit was predominantly driven by higher gains on asset dispositions and lower maintenance expense, partially offset by lower revenue.

At Sept. 30, 2021, Rail North America’s wholly owned fleet was comprised of approximately 114,200 cars, including over 12,800 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.

Fleet utilization was 99.2% at the end of the third quarter, compared to 98.5% at the end of the prior quarter and 98.2% at the end of the third quarter of 2020. During the third quarter, the renewal lease rate change of the GATX Lease Price Index (LPI) was negative 8.1%. This compares to negative 6.7% in the prior quarter and negative 29.4% in the third quarter of 2020. The average lease renewal term for all cars included in the LPI during the third quarter was 32 months, compared to 29 months in the prior quarter and 29 months in the third quarter of 2020. Rail North America’s investment volume during the third quarter was $178.9 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 $27.0 million in the third quarter of 2021, compared to $24.0 million in the third quarter of 2020. Rail International reported segment profit of $76.1 million year-to-date 2021, compared to $57.9 million for the same period of 2020. The increase in third-quarter and year-to-date segment profit was predominately driven by more railcars on lease.

At Sept. 30, 2021, GATX Rail Europe’s (GRE) fleet consisted of over 26,800 cars. Utilization was 98.1%, compared to 98.4% at the end of the prior quarter and 98.2% at the end of the third quarter of 2020. Additional fleet statistics for GRE are provided on the last page of this press release.

PORTFOLIO MANAGEMENT

Portfolio Management reported segment profit of $6.2 million in the third quarter of 2021, compared to $44.3 million in the third quarter of 2020. Segment profit year-to-date 2021 was $24.5 million, compared to $83.1 million for the same period of 2020. The decline in segment profit in the comparative periods was primarily driven by lower share of affiliates’ earnings from the Rolls-Royce and Partners Finance affiliates, and in particular a large gain in the third quarter of 2020 from a transaction involving the refinancing and sale of a group of aircraft spare engines.

DISCONTINUED OPERATIONS

In the second quarter of 2020, GATX completed the sale of American Steamship Company (ASC). The ASC business segment is accounted for as discontinued operations. Results for discontinued operations are summarized below:

(Income per diluted share)

Three Months Ended

September 30

Nine Months Ended

September 30

Discontinued Operations

2021

2020

2021

2020

Operations, net of taxes

$

$

$

$

(0.06

)

Gain on sale of ASC, net of taxes

(0.01

)

0.09

Total Discontinued Operations

$

$

(0.01

)

$

$

0.03

COMPANY DESCRIPTION

GATX Corporation (NYSE: 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 120 years. GATX has been headquartered in Chicago, Illinois since its founding in 1898.

TELECONFERENCE INFORMATION

GATX Corporation will host a teleconference to discuss 2021 third-quarter results. Call details are as follows:

Thursday, Oct. 21, 2021
11 a.m. Eastern Time
Domestic Dial-In: 1-800-367-2403
International Dial-In: 1-334-777-6978
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 9998699

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. A replay will be available on the same site starting at 2 p.m. (Eastern Time), Oct. 21, 2021.

AVAILABILITY OF INFORMATION ON GATX'S WEBSITE

Investors and others should note that GATX routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the GATX Investor Relations website. While not all of the information that the Company posts to the GATX Investor Relations website is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media and others interested in GATX to review the information that it shares on www.gatx.com under the "Investor Relations" tab.

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, 2020 and subsequent reports on Form 10-Q, could cause actual results to differ materially from our current expectations expressed in forward-looking statements:

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In millions, except per share data)

Three Months Ended

September 30

Nine Months Ended

September 30

2021

2020

2021

2020

Revenues

Lease revenue

$

283.9

$

273.3

$

852.1

$

813.3

Marine operating revenue

5.0

5.0

13.7

11.6

Other revenue

24.6

26.1

70.6

79.4

Total Revenues

313.5

304.4

936.4

904.3

Expenses

Maintenance expense

74.2

76.7

225.1

244.8

Marine operating expense

3.7

3.6

13.8

10.9

Depreciation expense

91.1

83.4

271.2

245.4

Operating lease expense

9.0

12.3

30.1

38.1

Other operating expense

9.7

8.3

31.3

26.0

Selling, general and administrative expense

45.9

42.0

140.8

125.8

Total Expenses

233.6

226.3

712.3

691.0

Other Income (Expense)

Net gain on asset dispositions

21.9

8.9

79.1

42.3

Interest expense, net

(49.8

)

(48.6

)

(153.4

)

(141.5

)

Other expense

(0.3

)

(1.2

)

(9.7

)

(12.2

)

Income before Income Taxes and Share of Affiliates’ Earnings

51.7

37.2

140.1

101.9

Income taxes

(14.4

)

(11.8

)

(36.4

)

(29.6

)

Share of affiliates’ earnings, net of taxes

2.8

22.8

(21.6

)

60.1

Net Income from Continuing Operations

40.1

48.2

$

82.1

$

132.4

Discontinued Operations, Net of Taxes

Net loss from discontinued operations, net of taxes

$

$

$

$

(2.2

)

(Loss) gain on sale of discontinued operations, net of taxes

(0.3

)

3.3

Discontinued Operations, Net of Taxes

(0.3

)

$

$

1.1

Net Income

$

40.1

$

47.9

$

82.1

$

133.5

Share Data

Basic earnings per share from continuing operations

$

1.13

$

1.38

$

2.32

$

3.79

Basic earnings per share from discontinued operations

(0.01

)

0.03

Basic earnings per share from consolidated operations

$

1.13

$

1.37

$

2.32

$

3.82

Average number of common shares

35.5

35.0

35.4

34.9

Diluted earnings per share from continuing operations

$

1.11

$

1.36

$

2.28

$

3.74

Diluted earnings per share from discontinued operations

(0.01

)

0.03

Diluted earnings per share from consolidated operations

$

1.11

$

1.35

$

2.28

$

3.77

Average number of common shares and common share equivalents

36.0

35.4

36.0

35.4

Dividends declared per common share

$

0.50

$

0.48

$

1.50

$

1.44

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions)

September 30

December 31

2021

2020

Assets

Cash and Cash Equivalents

$

566.0

$

292.2

Restricted Cash

0.2

0.4

Receivables

Rent and other receivables

75.2

74.7

Finance leases (as lessor)

71.5

74.0

Less: allowance for losses

(6.4

)

(6.5

)

140.3

142.2

Operating Assets and Facilities

11,025.8

10,484.0

Less: allowance for depreciation

(3,352.3

)

(3,313.3

)

7,673.5

7,170.7

Lease Assets (as lessee)

Right-of-use assets, net of accumulated depreciation

279.2

335.9

Finance leases, net of accumulated depreciation

37.5

279.2

373.4

Investments in Affiliated Companies

564.4

584.7

Goodwill

138.7

143.7

Other Assets

224.0

230.3

Total Assets

$

9,586.3

$

8,937.6

Liabilities and Shareholders’ Equity

Accounts Payable and Accrued Expenses

$

164.1

$

147.3

Debt

Commercial paper and borrowings under bank credit facilities

20.7

23.6

Recourse

6,029.8

5,329.0

6,050.5

5,352.6

Lease Obligations (as lessee)

Operating leases

292.1

348.6

Finance leases

33.3

292.1

381.9

Deferred Income Taxes

977.7

962.8

Other Liabilities

125.0

135.6

Total Liabilities

7,609.4

6,980.2

Total Shareholders’ Equity

1,976.9

1,957.4

Total Liabilities and Shareholders’ Equity

$

9,586.3

$

8,937.6

GATX CORPORATION AND SUBSIDIARIES

SEGMENT DATA (UNAUDITED)

Three Months Ended September 30, 2021

(In millions)

Rail

North America

Rail
International

Portfolio
Management

Other

GATX
Consolidated

Revenues

Lease revenue

$

200.4

$

68.8

$

8.2

$

6.5

$

283.9

Marine operating revenue

5.0

5.0

Other revenue

19.4

...