Financial Data of Business Segments

3 Months Ended

Mar. 31, 2020

The financial data presented below depicts the profitability, financial position, and capital expenditures of each of our business segments.

We lease, operate, manage, and remarket long-lived, widely-used assets, primarily in the rail market. We report our financial results through four primary business segments: Rail North America, Rail International, Portfolio Management, and American Steamship Company ("ASC"). On February 7, 2020, we entered into an agreement to sell ASC. The sale is subject to customary closing conditions. See "Note 25. Subsequent Events" in Part II, Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2019 and "Note 16. Subsequent Events" of this Form 10-Q for additional information.

Rail North America is composed of our operations in the United States, Canada, and Mexico. Rail North America primarily provides railcars pursuant to full-service leases under which it maintains the railcars, pays ad valorem taxes and insurance, and provides other ancillary services.

Rail International is composed of our operations in Europe ("GATX Rail Europe" or "GRE"), India ("GRI"), and Russia ("Rail Russia"). GRE leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the railcars and provides value-adding services according to customer requirements.

Portfolio Management is composed primarily of our ownership in the RRPF affiliates, a group of joint ventures with Rolls-Royce plc that lease aircraft spare engines, as well as five liquefied gas carrying vessels (the "Specialized Gas Vessels") and assorted other marine assets.

ASC operates the largest fleet of US-flagged vessels on the Great Lakes, providing waterborne transportation of dry bulk commodities such as iron ore, coal, limestone aggregates, and metallurgical limestone.

Segment profit is an internal performance measure used by the Chief Executive Officer to assess the profitability of each segment. Segment profit includes all revenues, expenses, pre-tax earnings from affiliates, and net gains on asset dispositions that are directly attributable to each segment. We allocate interest expense to the segments based on what we believe to be the appropriate risk-adjusted borrowing costs for each segment. Segment profit excludes selling, general and administrative expenses, income taxes, and certain other amounts not allocated to the segments. These amounts are included in Other.

The following tables show certain segment data for each of our business segments (in millions):



	Rail North America			Rail International			Portfolio Management			ASC			Other			GATX Consolidated
Three Months Ended March 31, 2020
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

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 net (losses) gains (1)	(0.2		)	0.1			—			—			—			(0.1		)
	$	26.8		$	0.1		$	0.5		$	—		$	—		$	27.4

Capital Expenditures
Portfolio investments and capital additions	$	110.9		$	69.3		$	0.3		$	13.7		$	0.5		$	194.7

Selected Balance Sheet Data at March 31, 2020
Investments in affiliated companies	$	0.2		$	—		$	532.2		$	—		$	—		$	532.4
Identifiable assets	$	5,679.0		$	1,497.4		$	657.3		$	300.9		$	583.3		$	8,717.9

__________

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



	Rail North America			Rail International			Portfolio Management			ASC			Other			GATX Consolidated
Three Months Ended March 31, 2019
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

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 net (losses) gains (1)	(1.6		)	0.4			—			—			—			(1.2		)
	$	8.2		$	0.4		$	0.3		$	—		$	—		$	8.9

Capital Expenditures
Portfolio investments and capital additions	$	99.0		$	33.1		$	—		$	14.5		$	0.7		$	147.3

Selected Balance Sheet Data at December 31, 2019
Investments in affiliated companies	$	0.2		$	—		$	512.4		$	—		$	—		$	512.6
Identifiable assets	$	5,646.7		$	1,486.7		$	653.7		$	291.1		$	206.9		$	8,285.1

__________

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