Financial Data of Business Segments

6 Months Ended

Jun. 30, 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 three primary business segments: Rail North America, Rail International, and Portfolio Management. Historically, we also reported financial results for American Steamship Company ("ASC") as a fourth segment. On May 14, 2020, we completed the sale of our ASC business, subject to customary post-closing adjustments. As a result, ASC is now reported as discontinued operations. Applicable amounts in the prior year have been recast to conform to this discontinued operations presentation. See "Note 16. Discontinued Operations" 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").

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			Other			GATX Consolidated
Three Months Ended June 30, 2020
Revenues
Lease revenue	$	210.0		$	59.1		$	0.2		$	—		$	269.3
Marine operating revenue	—			—			3.3			—			3.3
Other revenue	25.5			2.1			0.3			—			27.9
Total Revenues	235.5			61.2			3.8			—			300.5
Expenses
Maintenance expense	70.4			11.9			—			—			82.3
Marine operating expense	—			—			3.2			—			3.2
Depreciation expense	64.4			15.8			1.4			—			81.6
Operating lease expense	12.5			—			—			—			12.5
Other operating expense	7.6			1.5			0.1			—			9.2
Total Expenses	154.9			29.2			4.7			—			188.8
Other Income (Expense)
Net gain on asset dispositions	5.2			0.2			0.6			—			6.0
Interest (expense) income, net	(34.5		)	(11.5		)	(3.0		)	1.6			(47.4		)
Other expense	(1.3		)	(0.7		)	—			(1.0		)	(3.0		)
Share of affiliates' pre-tax income	—			—			22.6			—			22.6
Segment profit	$	50.0		$	20.0		$	19.3		$	0.6		$	89.9
Less:
Selling, general and administrative expense													43.4
Income taxes (includes $4.8 related to affiliates' earnings)													9.5
Net income from continuing operations													$	37.0

Discontinued Operations, Net of Taxes
Net loss from discontinued operations, net of taxes													$	(1.3	)
Gain on sale of discontinued operations, net of taxes													3.6
Total discontinued operations, net of taxes													$	2.3

Net income													$	39.3

Net Gain on Asset Dispositions
Asset Remarketing Income:
Net gains on disposition of owned assets	$	4.4		$	—		$	0.1		$	—		$	4.5
Residual sharing income	0.1			—			0.5			—			0.6
Non-remarketing net gains (1)	0.7			0.2			—			—			0.9
	$	5.2		$	0.2		$	0.6		$	—		$	6.0

Capital Expenditures
Portfolio investments and capital additions	$	159.6		$	49.9		$	—		$	1.0		$	210.5

Selected Balance Sheet Data at June 30, 2020
Investments in affiliated companies	$	0.2		$	—		$	551.2		$	—		$	551.4
Identifiable assets from continuing operations	$	5,758.1		$	1,573.5		$	676.3		$	504.8		$	8,512.7

__________

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



	Rail North America			Rail International			Portfolio Management			Other			GATX Consolidated
Three Months Ended June 30, 2019
Revenues
Lease revenue	$	218.8		$	53.9		$	0.2		$	—		$	272.9
Marine operating revenue	—			—			0.1			—			0.1
Other revenue	22.4			1.8			0.3			—			24.5
Total Revenues	241.2			55.7			0.6			—			297.5
Expenses
Maintenance expense	67.0			11.2			—			—			78.2
Marine operating expense	—			—			4.0			—			4.0
Depreciation expense	64.4			14.2			1.7			—			80.3
Operating lease expense	13.7			—			—			—			13.7
Other operating expense	6.4			1.3			0.1			—			7.8
Total Expenses	151.5			26.7			5.8			—			184.0
Other Income (Expense)
Net gain on asset dispositions	32.1			0.5			0.3			—			32.9
Interest (expense) income, net	(34.1		)	(10.1		)	(2.8		)	1.5			(45.5		)
Other expense (income)	(1.9		)	1.9			—			(0.4		)	(0.4		)
Share of affiliates' pre-tax income	—			—			19.6			—			19.6
Segment profit	$	85.8		$	21.3		$	11.9		$	1.1		$	120.1
Less:
Selling, general and administrative expense													43.0
Income taxes (includes $3.5 related to affiliates' earnings)													16.8
Net income from continuing operations													$	60.3

Discontinued Operations, Net of Taxes
Net income from discontinued operations, net of taxes													$	7.7
Gain on sale of discontinued operations, net of taxes													—
Total discontinued operations, net of taxes													$	7.7

Net income													$	68.0

Net Gain on Asset Dispositions
Asset Remarketing Income:
Net gains on disposition of owned assets	$	26.8		$	—		$	—		$	—		$	26.8
Residual sharing income	0.1			—			0.3			—			0.4
Non-remarketing net gains (1)	5.2			0.5			—			—			5.7
	$	32.1		$	0.5		$	0.3		$	—		$	32.9

Capital Expenditures
Portfolio investments and capital additions	$	105.3		$	73.7		$	—		$	1.2		$	180.2

Selected Balance Sheet Data at December 31, 2019
Investments in affiliated companies	$	0.2		$	—		$	512.4		$	—		$	512.6
Identifiable assets from continuing operations	$	5,646.7		$	1,486.7		$	653.7		$	206.9		$	7,994.0
Identifiable assets from discontinued operations	$	—		$	—		$	—		$	—		$	291.1

__________

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



	Rail North America			Rail International			Portfolio Management			Other			GATX Consolidated
Six Months Ended June 30, 2020
Revenues
Lease revenue	$	422.1		$	117.4		$	0.5		$	—		$	540.0
Marine operating revenue	—			—			6.6			—			6.6
Other revenue	49.1			3.9			0.3			—			53.3
Total Revenues	471.2			121.3			7.4			—			599.9
Expenses
Maintenance expense	143.3			24.8			—			—			168.1
Marine operating expense	—			—			7.3			—			7.3
Depreciation expense	128.0			31.3			2.7			—			162.0
Operating lease expense	25.8			—			—			—			25.8
Other operating expense	14.2			3.3			0.2			—			17.7
Total Expenses	311.3			59.4			10.2			—			380.9
Other Income (Expense)
Net gain on asset dispositions	32.0			0.3			1.1			—			33.4
Interest (expense) income, net	(67.8		)	(22.1		)	(5.9		)	2.9			(92.9		)
Other expense	(2.1		)	(6.2		)	—			(2.7		)	(11.0		)
Share of affiliates' pre-tax income	—			—			46.4			—			46.4
Segment profit	$	122.0		$	33.9		$	38.8		$	0.2		$	194.9
Less:
Selling, general and administrative expense													83.8
Income taxes (includes $9.1 related to affiliates' earnings)													26.9
Net income from continuing operations													$	84.2

Discontinued operations, net of taxes
Net loss from discontinued operations, net of taxes													$	(2.2	)
Gain on sale of discontinued operations, net of taxes													3.6
Total discontinued operations, net of taxes													$	1.4

Net income													$	85.6

Net Gain on Asset Dispositions
Asset Remarketing Income:
Net gains on disposition of owned assets	$	31.3		$	—		$	0.1		$	—		$	31.4
Residual sharing income	0.2			—			1.0			—			1.2
Non-remarketing net gains (1)	0.5			0.3			—			—			0.8
	$	32.0		$	0.3		$	1.1		$	—		$	33.4

Capital Expenditures
Portfolio investments and capital additions	$	270.5		$	119.2		$	0.3		$	1.5		$	391.5

__________

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



	Rail North America			Rail International			Portfolio Management			Other			GATX Consolidated
Six Months Ended June 30, 2019
Revenues
Lease revenue	$	439.7		$	106.1		$	0.5		$	—		$	546.3
Marine operating revenue	—			—			2.5			—			2.5
Other revenue	49.8			3.8			0.4			—			54.0
Total Revenues	489.5			109.9			3.4			—			602.8
Expenses
Maintenance expense	135.8			23.3			—			—			159.1
Marine operating expense	—			—			8.6			—			8.6
Depreciation expense	128.7			28.2			3.3			—			160.2
Operating lease expense	27.4			—			—			—			27.4
Other operating expense	12.8			2.8			0.2			—			15.8
Total Expenses	304.7			54.3			12.1			—			371.1
Other Income (Expense)
Net gain on asset dispositions	40.3			0.9			0.6			—			41.8
Interest (expense) income, net	(68.3		)	(20.0		)	(5.5		)	3.2			(90.6		)
Other expense	(2.6		)	(0.4		)	—			(0.6		)	(3.6		)
Share of affiliates' pre-tax income	—			—			37.8			—			37.8
Segment profit	$	154.2		$	36.1		$	24.2		$	2.6		$	217.1
Less:
Selling, general and administrative expense													87.0
Income taxes (includes $7.0 related to affiliates' earnings)													28.6
Net income from continuing operations													$	101.5

Discontinued operations, net of taxes
Net income from discontinued operations, net of taxes													$	8.0
Gain on sale of discontinued operations, net of taxes													—
Total discontinued operations, net of taxes													$	8.0

Net income													$	109.5

Net Gain on Asset Dispositions
Asset Remarketing Income:
Net gains on disposition of owned assets	$	36.5		$	—		$	—		$	—		$	36.5
Residual sharing income	0.2			—			0.6			—			0.8
Non-remarketing net gains (1)	3.6			0.9			—			—			4.5
	$	40.3		$	0.9		$	0.6		$	—		$	41.8

Capital Expenditures
Portfolio investments and capital additions	$	204.3		$	106.8		$	—		$	1.9		$	313.0

__________

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