EX-99.1 2 a2q17exhibit991.htm EXHIBIT 99.1 Exhibit
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Exhibit 99.1
NEWS RELEASE 
   
image0a05a02a01a11.jpg
FOR RELEASE: IMMEDIATE

GATX CORPORATION REPORTS 2017 SECOND-QUARTER RESULTS
CHICAGO, IL, July 20, 2017 - GATX Corporation (NYSE:GATX) today reported 2017 second quarter net income of $53.4 million or $1.35 per diluted share, compared to net income of $61.2 million or $1.49 per diluted share in the second quarter of 2016. Net income for the first six months of 2017 was $110.9 million or $2.79 per diluted share, compared to $130.5 million or $3.15 per diluted share in the prior year period. The 2017 second quarter and year-to-date results include net gains of approximately $1.1 million ($0.03 per diluted share) compared to 2016 second quarter and year-to date net gains of approximately $0.2 million (no effect on per share diluted income) and $1.7 million ($0.04 per diluted share) respectively, associated with the planned exit of the majority of Portfolio Management’s marine investments. Details related to the exit of Portfolio Management’s marine investments are provided in the attached Supplemental Information.
Brian A. Kenney, president and chief executive officer of GATX stated, “While North American railcar loadings and railroad velocity have trended favorably over the last few quarters, a recovery in the North American railcar leasing market continues to be hampered by a significant oversupply of existing railcars and a large railcar manufacturing backlog.”
“GATX’s fleet utilization decreased slightly to 98.8% in the quarter, although we continue to displace competitors and protect high fleet utilization. The renewal lease rate change of GATX’s Lease Price Index was a negative 21.4% in the quarter, as absolute railcar lease rates have remained flat thus far in 2017. Our commercial team has been successful in keeping existing cars on lease, as evidenced by our renewal success rate of 75.1%.”
“Rail International is performing in line with our original 2017 expectations. GATX Rail Europe’s fleet utilization increased slightly to 95.7% in the quarter. At American Steamship Company, 12 vessels are sailing under

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favorable operating conditions. The Rolls-Royce and Partners Finance affiliates continue their excellent performance, and 2017 investment volume is strong due to the solid demand for aircraft spare engines.”
Mr. Kenney concluded, “Based on year-to-date performance and our outlook for the remainder of the year, we continue to expect our 2017 full-year earnings to be in the range of $4.40 to $4.60 per diluted share.”
RAIL NORTH AMERICA
Rail North America reported segment profit of $74.9 million in the second quarter of 2017, compared to $76.8 million in the second quarter of 2016. Year-to-date, Rail North America reported segment profit of $167.9 million, compared to $185.5 million in the same period of 2016. Higher gains on asset dispositions in the second quarter of 2017 were more than offset by lower lease revenue and higher maintenance expense, resulting in slightly lower segment profit.
At June 30, 2017, Rail North America’s wholly owned fleet comprised approximately 121,000 railcars, including approximately 17,100 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.
Fleet utilization was 98.8% at the end of the second quarter, compared to 99.1% at the end of the prior quarter and 98.1% at the end of the second quarter of 2016. During the second quarter of 2017, the GATX Lease Price Index (LPI), a weighted-average lease renewal rate for a group of railcars representative of Rail North America’s fleet, decreased 21.4% over the weighted-average expiring lease rate. This compares to a 32.6% decrease in the prior quarter and a 25.4% decrease in the second quarter of 2016. The sequential improvement in LPI reflects some unique lease renewals in the quarter and is not indicative of a widespread improvement in absolute lease rates. The average lease renewal term for cars included in the LPI during the second quarter was 32 months, compared to 29 months in the prior quarter and 34 months in the second quarter of 2016. Rail North America’s investment volume during the second quarter was $127.6 million.
Additional fleet statistics, including information about 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 $16.6 million in the second quarter of 2017 compared to $13.0 million in the second quarter of 2016. Rail International reported segment profit of $30.0 million year-to-date 2017, compared

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to $25.6 million for the same period of 2016. The improvement in segment profit was primarily driven by lower maintenance expenses.
At June 30, 2017, GATX Rail Europe’s (GRE) fleet consisted of approximately 23,000 cars and utilization was 95.7%, compared to 95.0% at the end of the prior quarter and 94.8% at the end of the second quarter of 2016. Additional fleet statistics for GRE are provided on the last page of this press release.


AMERICAN STEAMSHIP COMPANY
American Steamship Company (ASC) reported segment profit of $6.5 million in the second quarter of 2017, compared to $4.2 million in the second quarter of 2016. Segment profit year-to-date 2017 was $6.3 million, compared to $5.1 million year-to-date 2016. ASC carried 9.5 million net tons of cargo through the second quarter of 2017, comparable to the prior year period. The improvement in segment profit was primarily driven by more efficient fleet performance.
PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $19.8 million in the second quarter of 2017, compared to $36.5 million in the second quarter of 2016. Segment profit year-to-date 2017 was $34.5 million, compared to $55.1 million year-to-date 2016. The decline in segment profit was predominantly driven by $21.7 million of higher residual sharing fees earned in the second quarter of 2016. Second quarter 2017 segment profit includes a net pre-tax gain of approximately $1.8 million associated with the planned exit of the majority of the marine investments compared with $0.3 million in second quarter 2016.

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COMPANY DESCRIPTION
GATX Corporation (NYSE:GATX) strives to be recognized as the finest railcar leasing company in the world by its customers, its shareholders, its employees and the communities where it operates. As the largest global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 118 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 2017 second-quarter results. Call details are as follows:

Thursday, July 20th
11:00 A.M. Eastern Time
Domestic Dial-In: 1-877-681-3378
International Dial-In: 1-719-325-4761
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 8027796

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.



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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 statements 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,” “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, 2016 and subsequent reports on Form 10-Q, could cause actual results to differ materially from our current expectations expressed in forward-looking statements:
•
exposure to damages, fines, criminal and civil penalties, and reputational harm arising from a negative outcome in litigation, including claims arising from an accident involving our railcars
•
inability to maintain our assets on lease at satisfactory rates due to oversupply of railcars in the market or other changes in supply and demand
•
weak economic conditions and other factors that may decrease demand for our assets and services
•
decreased demand for portions of our railcar fleet due to adverse changes in the price of, or demand for, commodities that are shipped in our railcars
•
higher costs associated with increased railcar assignments following non-renewal of leases, customer defaults, and compliance maintenance programs or other maintenance initiatives
•
events having an adverse impact on assets, customers, or regions where we have a concentrated investment exposure
•
financial and operational risks associated with long-term railcar purchase commitments
•
reduced opportunities to generate asset remarketing income
•
operational and financial risks related to our affiliate investments, including the Rolls-Royce & Partners Finance joint ventures (collectively the “RRPF affiliates”)
•
fluctuations in foreign exchange rates
 
•
failure to successfully negotiate collective bargaining agreements with the unions representing a substantial portion of our employees
•
changes in railroad operations that could decrease demand for railcars, either due to increased railroad efficiency or decreased attractiveness of rail service relative to other modes
•
the impact of regulatory requirements applicable to tank cars carrying crude, ethanol, and other flammable liquids
•
asset impairment charges we may be required to recognize
•
deterioration of conditions in the capital markets, reductions in our credit ratings, or increases in our financing costs
•
competitive factors in our primary markets, including competitors with a significantly lower cost of capital than GATX
•
risks related to international operations and expansion into new geographic markets
•
changes in, or failure to comply with, laws, rules, and regulations
•
inability to obtain cost-effective insurance
•
environmental remediation costs
•
inadequate allowances to cover credit losses in our portfolio
•
inability to maintain and secure our information technology infrastructure from cybersecurity threats and related disruption of our business

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FOR FURTHER INFORMATION CONTACT:
GATX Corporation
Jennifer McManus
Director, Investor Relations
GATX Corporation
312-621-6409
jennifer.mcmanus@gatx.com



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


(7/20/17)

--Tabular Follows--

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GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
 
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
Lease revenue
$
274.1

 
$
281.2

 
$
546.8

 
$
565.7

Marine operating revenue
55.1

 
57.3

 
72.1

 
77.6

Other revenue
19.2

 
20.4

 
45.6

 
50.0

Total Revenues
348.4

 
358.9

 
664.5

 
693.3

Expenses
 
 
 
 
 
 
 
Maintenance expense
84.9

 
86.5

 
162.8

 
165.0

Marine operating expense
38.0

 
37.4

 
50.9

 
49.7

Depreciation expense
77.3

 
75.8

 
149.3

 
145.1

Operating lease expense
15.2

 
18.5

 
31.0

 
35.3

Other operating expense
7.8

 
14.8

 
17.4

 
23.6

Selling, general and administrative expense
43.1

 
40.9

 
86.0

 
79.7

Total Expenses
266.3

 
273.9

 
497.4

 
498.4

Other Income (Expense)
 
 
 
 
 
 
 
Net gain on asset dispositions
22.0

 
36.9

 
46.9

 
60.1

Interest expense, net
(40.0
)
 
(36.5
)
 
(79.2
)
 
(73.7
)
Other expense
(1.1
)
 
(3.9
)
 
(2.4
)
 
(7.2
)
Income before Income Taxes and Share of Affiliates’ Earnings
63.0

 
81.5

 
132.4

 
174.1

Income Taxes
(19.3
)
 
(26.7
)
 
(39.9
)
 
(57.5
)
Share of Affiliates’ Earnings (net of tax)
9.7

 
6.4

 
18.4

 
13.9

Net Income
$
53.4

 
$
61.2

 
$
110.9

 
$
130.5

 
 
 
 
 
 
 
 
Share Data
 
 
 
 
 
 
 
Basic earnings per share
$
1.37

 
$
1.51

 
$
2.83

 
$
3.18

Average number of common shares
39.0

 
40.6

 
39.2

 
41.1

Diluted earnings per share
$
1.35

 
$
1.49

 
$
2.79

 
$
3.15

Average number of common shares and common share equivalents
39.5

 
41.1

 
39.7

 
41.5

Dividends declared per common share
$
0.42

 
$
0.40

 
$
0.84

 
$
0.80





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GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
 
 
 
June 30
 
December 31
 
 
2017
 
2016
Assets
 
 
 
 
Cash and Cash Equivalents
 
$
284.3

 
$
307.5

Restricted Cash
 
3.7

 
3.6

Receivables
 
 
 
 
Rent and other receivables
 
76.4

 
85.9

Finance leases
 
141.6

 
147.7

Less: allowance for losses
 
(5.7
)
 
(6.1
)
 
 
212.3

 
227.5

 
 
 
 
 
Operating Assets and Facilities
 
8,801.4

 
8,446.4

Less: allowance for depreciation
 
(2,743.3
)
 
(2,641.7
)
 
 
6,058.1

 
5,804.7

 
 
 
 
 
Investments in Affiliated Companies
 
407.8

 
387.0

Goodwill
 
82.6

 
78.0

Other Assets
 
223.3

 
297.1

Total Assets
 
$
7,272.1

 
$
7,105.4

Liabilities and Shareholders’ Equity
 
 
 
 
Accounts Payable and Accrued Expenses
 
$
196.5

 
$
174.8

Debt
 
 
 
 
Commercial paper and borrowings under bank credit facilities
 
15.7

 
3.8

Recourse
 
4,261.2

 
4,253.2

Capital lease obligations
 
13.1

 
14.9

 
 
4,290.0

 
4,271.9

 
 
 
 
 
Deferred Income Taxes
 
1,134.1

 
1,089.4

Other Liabilities
 
208.5

 
222.1

Total Liabilities
 
5,829.1

 
5,758.2

Total Shareholders’ Equity
 
1,443.0

 
1,347.2

Total Liabilities and Shareholders’ Equity
 
$
7,272.1

 
$
7,105.4






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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2017
(In millions)
 
 
Rail N.A.
 
Rail Int’l
 
ASC
 
Portfolio
Management
 
Other
 
GATX
Consolidated
Revenues
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
$
225.7

 
$
46.2

 
$
1.0

 
$
1.2

 
$
—

 
$
274.1

Marine operating revenue
—

 
—

 
47.7

 
7.4

 
—

 
55.1

Other revenue
17.3

 
1.6

 
—

 
0.3

 
—

 
19.2

Total Revenues
243.0

 
47.8

 
48.7

 
8.9

 
—

 
348.4

Expenses
 
 
 
 
 
 
 
 
 
 
 
Maintenance expense
68.5

 
9.7

 
6.7

 
—

 
—

 
84.9

Marine operating expense
—

 
—

 
30.6

 
7.4

 
—

 
38.0

Depreciation expense
59.7

 
11.8

 
4.0

 
1.8

 
—

 
77.3

Operating lease expense
14.8

 
—

 
0.4

 
—

 
—

 
15.2

Other operating expense
6.3

 
1.2

 
—

 
0.3

 
—

 
7.8

Total Expenses
149.3

 
22.7

 
41.7

 
9.5

 
—

 
223.2

Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
Net gain on asset dispositions
10.7

 
0.8

 
—

 
10.5

 
—

 
22.0

Interest (expense) income, net
(28.5
)
 
(8.1
)
 
(1.3
)
 
(2.4
)
 
0.3

 
(40.0
)
Other (expense) income
(1.2
)
 
(1.1
)
 
0.8

 
—

 
0.4

 
(1.1
)
Share of affiliates’ pretax income (loss)
0.2

 
(0.1
)
 
—

 
12.3

 
—

 
12.4

Segment Profit
$
74.9

 
$
16.6

 
$
6.5

 
$
19.8

 
$
0.7

 
$
118.5

Selling, general and administrative expense
43.1

Income taxes (includes $2.7 related to affiliates’ earnings)
22.0

Net Income
$
53.4

Selected Data:
 
 
 
 
 
 
 
 
 
 
 
Investment Volume
$
127.6

 
$
33.1

 
$
5.5

 
$
—

 
$
0.1

 
$
166.3

Net Gain on Asset Dispositions
 
 
 
 
 
 
 
 
 
 
 
Asset Remarketing Income:
 
 
 
 
 
 
 
 
 
 
 
Disposition gains on owned assets
$
10.9

 
$
—

 
$
—

 
$
1.8

 
$
—

 
$
12.7

Residual sharing income
0.2

 
—

 
—

 
8.7

 
—

 
8.9

Non-remarketing disposition gains (1)
1.5

 
0.8

 
—

 
—

 
—

 
2.3

Asset impairments
(1.9
)
 
—

 
—

 
—

 
—

 
(1.9
)
Total Net Gain on Asset Dispositions
$
10.7

 
$
0.8

 
$
—

 
$
10.5

 
$
—

 
$
22.0

 
(1) Includes scrapping gains.
 



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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2016
(In millions)
 
 
 
Rail N.A.
 
Rail Int’l
 
ASC
 
Portfolio
Management
 
Other
 
GATX
Consolidated
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
 
$
233.4

 
$
45.3

 
$
1.1

 
$
1.4

 
$
—

 
$
281.2

Marine operating revenue
 
—

 
—

 
46.4

 
10.9

 
—

 
57.3

Other revenue
 
18.4

 
1.6

 
—

 
0.4

 
—

 
20.4

Total Revenues
 
251.8

 
46.9

 
47.5

 
12.7

 
—

 
358.9

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Maintenance expense
 
67.6

 
12.9

 
6.0

 
—

 
—

 
86.5

Marine operating expense
 
—

 
—

 
29.6

 
7.8

 
—

 
37.4

Depreciation expense
 
58.1

 
11.5

 
4.4

 
1.8

 
—

 
75.8

Operating lease expense
 
16.6

 
—

 
2.0

 
—

 
(0.1
)
 
18.5

Other operating expense
 
9.5

 
1.2

 
—

 
4.1

 
—

 
14.8

Total Expenses
 
151.8

 
25.6

 
42.0

 
13.7

 
(0.1
)
 
233.0

Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
 
Net gain on asset dispositions
 
4.7

 
0.3

 
—

 
31.9

 
—

 
36.9

Interest (expense) income, net
 
(26.9
)
 
(7.3
)
 
(1.1
)
 
(2.1
)
 
0.9

 
(36.5
)
Other expense
 
(1.1
)
 
(1.3
)
 
(0.2
)
 
—

 
(1.3
)
 
(3.9
)
Share of affiliates’ pretax income
 
0.1

 
—

 
—

 
7.7

 
—

 
7.8

Segment Profit (Loss)
 
$
76.8

 
$
13.0

 
$
4.2

 
$
36.5

 
$
(0.3
)
 
$
130.2

Selling, general and administrative expense
40.9

Income taxes (includes $1.4 related to affiliates’ earnings)
28.1

Net Income
$
61.2

Selected Data:
 
 
 
 
 
 
 
 
 
 
 
 
Investment Volume
 
$
145.4

 
$
30.4

 
$
4.4

 
$
—

 
$
1.8

 
$
182.0

Net Gain on Asset Dispositions
 
 
 
 
 
 
 
 
Asset Remarketing Income:
 
 
 
 
 
 
 
 
 
 
 
 
Disposition gains on owned assets
 
$
3.0

 
$
—

 
$
—

 
$
2.1

 
$
—

 
$
5.1

Residual sharing income
 
0.1

 
—

 
—

 
31.6

 
—

 
31.7

Non-remarketing disposition gains (1)
 
1.6

 
0.3

 
—

 
—

 
—

 
1.9

Asset impairments
 
—

 
—

 
—

 
(1.8
)
 
—

 
(1.8
)
Total Net Gain on Asset Dispositions
 
$
4.7

 
$
0.3

 
$
—

 
$
31.9

 
$
—

 
$
36.9

 
(1) Includes scrapping gains.



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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2017
(In millions)
 
 
 
Rail N.A.
 
Rail Int’l
 
ASC
 
Portfolio
Management
 
Other
 
GATX
Consolidated
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
 
$
452.9

 
$
89.5

 
$
2.0

 
$
2.4

 
$
—

 
$
546.8

Marine operating revenue
 
—

 
—

 
54.1

 
18.0

 
—

 
72.1

Other revenue
 
42.1

 
2.7

 
—

 
0.8

 
—

 
45.6

Total Revenues
 
495.0

 
92.2

 
56.1

 
21.2

 
—

 
664.5

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Maintenance expense
 
136.2

 
19.7

 
6.9

 
—

 
—

 
162.8

Marine operating expense
 
—

 
—

 
35.9

 
15.0

 
—

 
50.9

Depreciation expense
 
118.7

 
23.0

 
4.1

 
3.5

 
—

 
149.3

Operating lease expense
 
29.8

 
—

 
1.2

 
—

 
—

 
31.0

Other operating expense
 
14.4

 
2.4

 
—

 
0.6

 
—

 
17.4

Total Expenses
 
299.1

 
45.1

 
48.1

 
19.1

 
—

 
411.4

Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
 
Net gain on asset dispositions
 
34.5

 
1.6

 
—

 
10.8

 
—

 
46.9

Interest (expense) income, net
 
(59.6
)
 
(16.0
)
 
(2.5
)
 
(4.6
)
 
3.5

 
(79.2
)
Other expense (income)
 
(3.2
)
 
(2.6
)
 
0.8

 
2.3

 
0.3

 
(2.4
)
Share of affiliates’ pretax income (loss)
 
0.3

 
(0.1
)
 
—

 
23.9

 
—

 
24.1

Segment Profit
 
$
167.9

 
$
30.0

 
$
6.3

 
$
34.5

 
$
3.8

 
$
242.5

Selling, general and administrative expense
86.0

Income taxes (includes $5.7 related to affiliates’ earnings)
45.6

Net Income
$
110.9

Selected Data:
 
 
 
 
 
 
 
 
 
 
 
 
Investment Volume
 
$
230.4

 
$
51.8

 
$
12.8

 
$
—

 
$
0.3

 
$
295.3

Net Gain on Asset Dispositions
 
 
 
 
 
 
 
 
Asset Remarketing Income:
 
 
 
 
 
 
 
 
 
 
 
 
Disposition gains on owned assets
 
$
32.0

 
$
—

 
$
—

 
$
1.8

 
$
—

 
$
33.8

Residual sharing income
 
0.3

 
—

 
—

 
9.0

 
—

 
9.3

Non-remarketing disposition gains (1)
 
4.1

 
1.6

 
—

 
—

 
—

 
5.7

Asset impairments
 
(1.9
)
 
—

 
—

 
—

 
—

 
(1.9
)
Total Net Gain on Asset Dispositions
 
$
34.5

 
$
1.6

 
$
—

 
$
10.8

 
$
—

 
$
46.9

 
(1) Includes scrapping gains.



Page 12



GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2016
(In millions)
 
 
 
Rail N.A.
 
Rail Int’l
 
ASC
 
Portfolio
Management
 
Other
 
GATX
Consolidated
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
 
$
470.0

 
$
90.2

 
$
2.1

 
$
3.4

 
$
—

 
$
565.7

Marine operating revenue
 
—

 
—

 
50.5

 
27.1

 
—

 
77.6

Other revenue
 
46.2

 
3.2

 
—

 
0.6

 
—

 
50.0

Total Revenues
 
516.2

 
93.4

 
52.6

 
31.1

 
—

 
693.3

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Maintenance expense
 
133.4

 
25.4

 
6.2

 
—

 
—

 
165.0

Marine operating expense
 
—

 
—

 
32.5

 
17.2

 
—

 
49.7

Depreciation expense
 
114.6

 
22.6

 
4.4

 
3.5

 
—

 
145.1

Operating lease expense
 
33.4

 
—

 
2.0

 
—

 
(0.1
)
 
35.3

Other operating expense
 
16.4

 
2.6

 
—

 
4.6

 
—

 
23.6

Total Expenses
 
297.8

 
50.6

 
45.1

 
25.3

 
(0.1
)
 
418.7

Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
 
Net gain on asset dispositions
 
23.3

 
1.0

 
—

 
35.8

 
—

 
60.1

Interest (expense) income, net
 
(54.1
)
 
(14.6
)
 
(2.2
)
 
(4.3
)
 
1.5

 
(73.7
)
Other expense
 
(2.4
)
 
(3.5
)
 
(0.2
)
 
—

 
(1.1
)
 
(7.2
)
Share of affiliates’ pretax income (loss)
 
0.3

 
(0.1
)
 
—

 
17.8

 
—

 
18.0

Segment Profit
 
$
185.5

 
$
25.6

 
$
5.1

 
$
55.1

 
$
0.5

 
$
271.8

Selling, general and administrative expense
79.7

Income taxes (includes $4.1 related to affiliates’ earnings)
61.6

Net Income
$
130.5

Selected Data:
 
 
 
 
 
 
 
 
 
 
 
 
Investment Volume
 
$
258.3

 
$
52.4

 
$
9.1

 
$
—

 
$
2.4

 
$
322.2

Net Gain on Asset Dispositions
 
 
 
 
 
 
 
 
Asset Remarketing Income:
 
 
 
 
 
 
 
 
 
 
 
 
Disposition gains on owned assets
 
$
20.6

 
$
—

 
$
—

 
$
4.5

 
$
—

 
$
25.1

Residual sharing income
 
0.4

 
—

 
—

 
33.1

 
—

 
33.5

Non-remarketing disposition gains (1)
 
2.3

 
1.0

 
—

 
—

 
—

 
3.3

Asset impairments
 
—

 
—

 
—

 
(1.8
)
 
—

 
(1.8
)
Total Net Gain on Asset Dispositions
 
$
23.3

 
$
1.0

 
$
—

 
$
35.8

 
$
—

 
$
60.1

 
(1) Includes scrapping gains.



Page 13



GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except per share data)

Impact of Tax Adjustments and Other Items on Net Income*
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
2017
 
2016
 
2017
 
2016
Net income (GAAP)
$
53.4

 
$
61.2

 
$
110.9

 
$
130.5

 
 
 
 
 
 
 
 
Adjustments attributable to consolidated income, pretax:
 
 
 
 
 
 
 
Net gain on wholly owned Portfolio Management marine investments
(1.8
)
 
(0.3
)
 
(1.8
)
 
(2.7
)
Total adjustments attributable to consolidated income, pretax
$
(1.8
)
 
$
(0.3
)
 
$
(1.8
)
 
$
(2.7
)
Income taxes thereon, based on applicable effective tax rate
$
0.7

 
$
0.1

 
$
0.7

 
$
1.0

 
 
 
 
 
 
 
 
Net income, excluding tax adjustments and other items (non-GAAP)
$
52.3

 
$
61.0

 
$
109.8

 
$
128.8


Impact of Tax Adjustments and Other Items on Diluted Earnings per Share*
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
2017
 
2016
 
2017
 
2016
Diluted earnings per share (GAAP)
$
1.35

 
$
1.49

 
$
2.79

 
$
3.15

Diluted earnings per share, excluding tax adjustments and other items (non-GAAP)
$
1.32

 
$
1.49

 
$
2.76

 
$
3.11


(*) In addition to financial results reported in accordance with GAAP, we provide certain non-GAAP financial information. Specifically, we exclude the effects of certain tax adjustments and other items for purposes of presenting net income and diluted earnings per share because we believe these items are not attributable to our business operations. Management utilizes this information when analyzing financial performance because such amounts reflect the underlying operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides investors and other users of our financial statements with meaningful supplemental information for purposes of analyzing year-to-year financial performance on a comparable basis and assessing trends.



Page 14



GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)
(Continued)
 
 
6/30/2016
 
9/30/2016
 
12/31/2016
 
3/31/2017
 
6/30/2017
Assets by Segment, as adjusted (non-GAAP)*
 
 
 
 
 
 
 
 
Rail North America
 
$
5,235.7

 
$
5,243.0

 
$
5,216.5

 
$
5,269.4

 
$
5,304.3

Rail International
 
1,127.2

 
1,153.0

 
1,084.8

 
1,116.0

 
1,209.3

ASC
 
301.9

 
289.6

 
281.3

 
307.5

 
322.0

Portfolio Management
 
608.3

 
595.0

 
589.9

 
597.4

 
573.2

Other
 
77.0

 
75.9

 
80.9

 
72.2

 
63.9

Total Assets, excluding cash, as adjusted (non-GAAP)
 
$
7,350.1

 
$
7,356.5

 
$
7,253.4

 
$
7,362.5

 
$
7,472.7

Debt, Net of Unrestricted Cash*
 
 
 
 
 
 
 
 
 
 
Unrestricted cash
 
$
(177.6
)
 
$
(211.5
)
 
$
(307.5
)
 
$
(155.2
)
 
$
(284.3
)
Commercial paper and bank credit facilities
 
28.5

 
5.1

 
3.8

 
3.0

 
15.7

Recourse debt
 
4,298.8

 
4,204.4

 
4,253.2

 
4,250.9

 
4,261.2

Non-recourse debt
 
2.3

 
—

 
—

 
—

 
—

Capital lease obligations
 
16.6

 
15.1

 
14.9

 
13.5

 
13.1

Total debt, net of unrestricted cash (GAAP)
 
4,168.6

 
4,013.1

 
3,964.4

 
4,112.2

 
4,005.7

Off-balance sheet recourse debt
 
449.0

 
483.1

 
459.1

 
424.6

 
488.6

Total debt, net of unrestricted cash, as adjusted (non-GAAP)
 
$
4,617.6

 
$
4,496.2

 
$
4,423.5

 
$
4,536.8

 
$
4,494.3

Total Recourse Debt (1)
 
$
4,615.3

 
$
4,496.2

 
$
4,423.5

 
$
4,536.8

 
$
4,494.3

Shareholders’ Equity
 
$
1,308.5

 
$
1,371.5

 
$
1,347.2

 
$
1,385.2

 
$
1,443.0

Recourse Leverage (2)
 
3.5

 
3.3

 
3.3

 
3.3

 
3.1

 _________
(1)
Includes on- and off-balance sheet recourse debt; capital lease obligations; commercial paper and bank credit facilities, net of unrestricted cash.
(2)
Calculated as total recourse debt / shareholder's equity.
Reconciliation of Total Assets, excluding cash (GAAP) to Total Assets, excluding cash, as adjusted (non-GAAP)
Total Assets
 
$
7,090.6

 
$
7,089.3

 
$
7,105.4

 
$
7,096.9

 
$
7,272.1

Less: cash
 
(189.5
)
 
(215.9
)
 
(311.1
)
 
(159.0
)
 
(288.0
)
Total Assets, excluding cash (GAAP)
 
6,901.1

 
6,873.4

 
6,794.3

 
6,937.9

 
6,984.1

Add off-balance sheet assets:
 
 
 
 
 
 
 
 
 
 
Rail North America
 
443.3

 
478.9

 
456.5

 
423.9

 
488.1

ASC
 
5.7

 
4.2

 
2.6

 
0.7

 
0.5

Total off-balance sheet assets
 
449.0

 
483.1

 
459.1

 
424.6

 
488.6

Total Assets, excluding cash, as adjusted (non-GAAP)
 
$
7,350.1

 
$
7,356.5

 
$
7,253.4

 
$
7,362.5

 
$
7,472.7


(*) We disclose total on- and off-balance sheet assets because certain operating assets are accounted for as operating leases and are not recorded on the balance sheet. We include these leased-in assets in our calculation of total assets (as adjusted) because we believe it gives investors a more comprehensive representation of the magnitude of the assets we operate and that drive our financial performance. In addition, this calculation of total assets (as adjusted) provides consistency with other non-financial information we disclose. We also provide information regarding our leverage ratios, which are expressed as a ratio of debt (including off-balance sheet debt) to equity. The off-balance sheet debt amount in this calculation is the equivalent of the off-balance sheet asset amount. We believe reporting this corresponding off-balance sheet debt amount provides investors and other users of our financial statements with a more comprehensive representation of our debt obligations, leverage, and capital structure.


Page 15




 GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)
 
6/30/2016
 
9/30/2016
 
12/31/2016
 
3/31/2017
 
6/30/2017
Rail North America Statistics
 
 
 
 
 
 
 
 
 
Lease Price Index (LPI) (1)
 
 
 
 
 
 
 
 
 
Average renewal lease rate change
(25.4
)%
 
(21.4
)%
 
(36.2
)%
 
(32.6
)%
 
(21.4
)%
Average renewal term (months)
34

 
29

 
29

 
29

 
32

Fleet Rollforward (2)
 
 
 
 
 
 
 
 
 
Beginning balance
105,422

 
105,368

 
104,874

 
104,522

 
103,672

Cars added
857

 
764

 
1,087

 
795

 
1,224

Cars scrapped
(567
)
 
(590
)
 
(579
)
 
(806
)
 
(640
)
Cars sold
(344
)
 
(668
)
 
(860
)
 
(839
)
 
(249
)
Ending balance
105,368

 
104,874

 
104,522

 
103,672

 
104,007

Utilization
98.1
 %
 
99.0
 %
 
98.9
 %
 
99.1
 %
 
98.8
 %
Average active railcars
103,824

 
103,479

 
103,702

 
102,976

 
102,760

Boxcar Fleet
 
 
 
 
 
 
 
 
 
Ending balance
18,209

 
18,089

 
17,706

 
17,415

 
17,138

Utilization
97.1
 %
 
94.7
 %
 
93.8
 %
 
92.9
 %
 
90.2
 %
Rail Europe Statistics
 
 
 
 
 
 
 
 
 
Fleet Rollforward
 
 
 
 
 
 
 
 
 
Beginning balance
22,859

 
23,088

 
22,966

 
23,122

 
23,131

Cars added
323

 
78

 
287

 
207

 
288

Cars scrapped/sold
(94
)
 
(200
)
 
(131
)
 
(198
)
 
(239
)
Ending balance
23,088

 
22,966

 
23,122

 
23,131

 
23,180

Utilization
94.8
 %
 
95.0
 %
 
95.6
 %
 
95.0
 %
 
95.7
 %
Average active railcars
21,747

 
21,830

 
22,002

 
22,012

 
22,024

Rail North America Industry Statistics
 
 
 
 
 
 
 
 
 
Manufacturing Capacity Utilization Index (3)
75.4
 %
 
75.3
 %
 
76.0
 %
 
75.8
 %
 
76.6
 %
Year-over-year Change in U.S. Carloadings (excl. intermodal) (4)
(12.3
)%
 
(10.5
)%
 
(8.2
)%
 
5.7
 %
 
6.4
 %
Year-over-year Change in U.S. Carloadings (chemical) (4)
2.4
 %
 
1.7
 %
 
1.5
 %
 
(1.2
)%
 
0.1
 %
Year-over-year Change in U.S. Carloadings (petroleum) (4)
(21.7
)%
 
(22.2
)%
 
(21.4
)%
 
(13.2
)%
 
(14.1
)%
Production Backlog at Railcar Manufacturers (5)
89,155

 
77,640

 
66,681

 
60,471

 
n/a (6)

American Steamship Company Statistics
 
 
 
 
 
 
 
 
 
Total Net Tons Carried (millions)
8.9

 
8.7

 
7.2

 
1.0

 
8.5

 _________
(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. The index is calculated 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).
(6) Not available, not published as of the date of this release.
-30-