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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2328
gmt-20201231_g1.jpg
GATX Corporation
(Exact name of registrant as specified in its charter)
New York36-1124040
(State or Other Jurisdiction of incorporation or Organization)(I.R.S. Employer Identification No.)
233 South Wacker Drive
Chicago, IL 60606-7147
(Address of principal executive offices, including zip code)
(312) 621-6200
(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of Each Exchange on Which Registered
Common StockGATXNew York Stock Exchange
Chicago Stock Exchange
5.625% Senior Notes due 2066GMTANew York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ  No ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer  
o
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant was approximately $2.1 billion as of June 30, 2020.

There were 35.1 million common shares outstanding at January 31, 2021.

DOCUMENTS INCORPORATED BY REFERENCE
GATX’s definitive Proxy Statement to be filed on or about March 12, 2021PART III



GATX CORPORATION
2020 FORM 10-K
INDEX
Item No.Page
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.




FORWARD-LOOKING STATEMENTS

Statements in this report 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 under "Risk Factors" and elsewhere in this report and in our other filings with the U.S. Securities and Exchange Commission ("SEC"), could cause actual results to differ materially from our current expectations expressed in forward looking statements:

the duration and effects of the global COVID-19 pandemic, including adverse impacts on our business, personnel, operations, commercial activity, supply chain, the demand for our transportation assets, the value of our assets, our liquidity, and macroeconomic conditions
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 transportation assets
inability to maintain our transportation assets on lease at satisfactory rates due to oversupply of assets in the market or other changes in supply and demand
a significant decline in customer demand for our transportation assets or services, including as a result of:
weak macroeconomic conditions
weak market conditions in our customers' businesses
adverse changes in the price of, or demand for, commodities
changes in railroad operations, efficiency, pricing and service offerings, including those related to "precision scheduled railroading"
changes in supply chains
availability of pipelines, trucks, and other alternative modes of transportation
changes in conditions affecting the aviation industry, including reduced demand for air travel, geographic exposure and customer concentrations
other operational or commercial needs or decisions of our customers
customers' desire to buy, rather than lease, our transportation assets
higher costs associated with increased assignments of our transportation assets 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 purchase commitments for transportation assets
reduced opportunities to generate asset remarketing income
inability to successfully consummate and manage ongoing acquisition and divestiture activities
reliance on Rolls-Royce in connection with our aircraft spare engine leasing businesses, and the risks that certain factors that adversely affect Rolls-Royce could have an adverse effect on those businesses
fluctuations in foreign exchange rates
failure to successfully negotiate collective bargaining agreements with the unions representing a substantial portion of our employees
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
changes in banks' inter-lending rate reporting practices and the phasing out of LIBOR
competitive factors in our primary markets, including competitors with significantly lower costs of capital
risks related to our international operations and expansion into new geographic markets, including laws, regulations, tariffs, taxes, treaties or trade barriers affecting our activities in the countries where we do business
changes in, or failure to comply with, laws, rules, and regulations
inability to obtain cost-effective insurance
environmental liabilities and remediation costs
potential obsolescence of our assets
inadequate allowances to cover credit losses in our portfolio
operational, functional and regulatory risks associated with severe weather events, climate change and natural disasters
inability to maintain and secure our information technology infrastructure from cybersecurity threats and related disruption of our business




1


PART I

Item 1. Business

GENERAL

GATX Corporation ("GATX", "we," "us," "our," and similar terms), a New York corporation founded in 1898, is the leading global railcar lessor, owning fleets in North America, Europe, and Asia. In addition, jointly with Rolls-Royce plc, we own one of the largest aircraft spare engine lease portfolios in the world. 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 to Rand Logistics, Inc., subject to customary post-closing adjustments. As a result, ASC is now reported as discontinued operations, and financial data for the ASC segment has been segregated and presented as discontinued operations for all periods presented. See "Note 27. Discontinued Operations" in Part II, Item 8 of this Form 10-K for additional information. On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. ("Trifleet"), the fourth largest tank container lessor in the world. Financial results for this business will be reported in the Other segment. See "Note 5. Business Combinations" in Part II, Item 8 of this Form 10-K for additional information.
                            
The following description of our business should be read in conjunction with the information contained in our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 and the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

At December 31, 2020, we had total assets of $8.9 billion, composed largely of railcars.

OPERATIONS

GATX RAIL BUSINESS OVERVIEW

We strive 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. Our wholly owned fleet of approximately 149,000 railcars is one of the largest railcar lease fleets in the world. We currently lease tank cars, freight cars, and locomotives in North America, tank cars and freight cars in Europe and Russia, and freight cars in India. The following table sets forth our worldwide rail fleet data as of December 31, 2020:
Tank
Railcars
Freight
Railcars
Total FleetManaged
Railcars
Total RailcarsLocomotives
Rail North America
61,868 56,192 118,060 288 118,348 645 
Rail International
22,091 8,788 30,879 30,886 — 
Total
83,959 64,980 148,939 295 149,234 645 

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Our rail customers primarily operate in the petroleum, chemical, food/agriculture, and transportation industries. Our worldwide railcar fleet consists of diverse railcar types that our customers use to ship nearly 600 different commodities. The following table presents an overview of our railcar types as well as the industries of our customers and the commodities they ship.

General-Service Tank CarsHigh-Pressure Tank CarsSpecialty Tank CarsSpecialty/Pneumatic Covered HoppersGravity Covered HoppersOpen-Top CarsBoxcars
Principal Industries ServedPetroleum/BiofuelsPetroleumChemicalPlasticsAgricultureEnergyFood
ChemicalChemicalPetroleumFoodEnergySteelConsumer Goods
FoodMiningIndustrialIndustrialConstructionForest Products
AgricultureConstructionForest ProductsPackaging
ConstructionConstruction
Principal CommoditiesRefined Petroleum ProductsNatural Gas LiquidsSulfuric AcidPlasticsFertilizerCoalPackaged Food and Beverages
FertilizerPropyleneMolten SulfurFlourGrainMetals and RelatedPaper and Packaging
Ethanol/BiofuelsVinyl Chloride MonomerHydrochloric AcidSugarSandAggregatesLumber and Building Products
Edible Oils and SyrupsMiscellaneous ChemicalsCaustic SodaStarchCementCokeMixed Freight
ChemicalsPhosphoric AcidCarbon BlackSoda AshWaste



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RAIL NORTH AMERICA

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. These railcars have estimated economic useful lives of 27 to 45 years and an average age of approximately 20 years. Rail North America has a large and diverse customer base, serving approximately 850 customers. In 2020, no single customer accounted for more than 5% of Rail North America’s total lease revenue, and the top ten customers combined accounted for approximately 23% of Rail North America’s total lease revenue. Rail North America leases railcars for terms that generally range from one to ten years, which vary based on railcar types and market conditions. The average remaining lease term of the North American fleet was approximately 35 months as of December 31, 2020. Rail North America’s primary competitors are Union Tank Car Company, Wells Fargo Rail, the CIT Group, Trinity Industries Leasing Company, and SMBC Rail Services, LLC. Rail North America competes primarily on the basis of lease rate, maintenance capabilities, customer relationships, engineering expertise, and availability of railcars.

Rail North America purchases new railcars from a number of manufacturers, including Trinity Rail Group, LLC ("Trinity"), a subsidiary of Trinity Industries, The Greenbrier Companies, Inc. (“Greenbrier”), National Steel Car Ltd., and Freightcar America. We also acquire railcars in the secondary market. In 2014, we entered into a long-term supply agreement with Trinity. Under the terms of that agreement, we agreed to order 8,950 newly built railcars. As of December 31, 2020, all 8,950 railcars have been ordered and delivered. On May 24, 2018, we amended our long-term supply agreement with Trinity to extend the term to December 2023, and we agreed to purchase an additional 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through the expiration of the extended term. At December 31, 2020, 1,891 railcars have been ordered pursuant to the amended terms of the agreement, of which 1,272 railcars have been delivered.

In 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. ("ARI"), pursuant to which we will purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars that are to be delivered over a five-year period, beginning in April 2019. ARI's railcar manufacturing business was subsequently acquired by Greenbrier on July 26, 2019, and Greenbrier assumed all of ARI's obligations under our long-term supply agreement. Under this agreement, 450 railcars were to be delivered in 2019, with the remaining 7,200 to be delivered ratably over the four-year period of 2020 to 2023. As of December 31, 2020, 4,035 railcars have been ordered, of which 2,297 railcars have been delivered. The agreement also includes an option to order up to an additional 4,400 railcars subject to certain restrictions.

Additionally, we acquired a fleet of 3,098 railcars from ECN Capital Corporation, with 2,832 of the railcars acquired in 2018 and the remaining 266 railcars in early 2019.

Rail North America also owns a fleet of locomotives, consisting of 617 four-axle and 28 six-axle locomotives as of December 31, 2020. Locomotive customers are primarily regional and short-line railroads, industrial users, and Class I railroads. Lease terms vary from month-to-month to ten years. As of December 31, 2020, the average remaining lease term of the locomotive fleet was approximately 24 months. Rail North America's primary competitors in locomotive leasing are Wells Fargo Rail, CIT Group Inc., and Progress Rail Services Corporation. Competitive factors in the market include lease rates, customer service, maintenance, and availability of locomotives.

Rail North America also remarkets its rail assets, and these remarketing activities may generate gains which could contribute significantly to Rail North America’s segment profit.

Maintenance

Rail North America operates an extensive network of maintenance facilities in the United States and Canada dedicated to performing safe, timely, efficient, and high-quality railcar maintenance services for customers. Services include interior cleaning of railcars, routine maintenance and general repairs to the car body and safety appliances, regulatory compliance work, wheelset replacements, interior blast and lining, exterior blast and painting, and car stenciling. To the extent possible, railcar maintenance is scheduled in a manner that minimizes the amount of time the car is out of service. At December 31, 2020, Rail North America’s maintenance network consisted of:
Six major maintenance facilities that can complete nearly all types of maintenance services.
Two smaller maintenance facilities with more limited capabilities.
Six customer-dedicated sites operating within customer facilities that offer services tailored to the needs of our customers’ fleets.
Seven locations with mobile units that travel to many track-side field locations to provide spot repairs and interior cleaning services.
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    The maintenance network is supplemented by a number of preferred third-party maintenance providers and railroads. In 2020, third-party maintenance network expenses accounted for approximately 34% of Rail North America’s total maintenance network expenses, excluding repairs performed by the railroads. In 2020, wholly owned and third-party maintenance facilities performed approximately 48,000 service events, including multiple independent service events for the same car.
Our maintenance activities are dedicated to servicing our wholly owned railcar fleet pursuant to the provisions of our lease contracts. This may include services that are not included in the full-service lease agreement, such as repairs of railcar damage or other customer-specific requirements. Revenue earned from these types of maintenance services is recorded in other revenue.

Affiliates

We previously owned a 12.5% interest in Adler Funding LLC ("Adler"), a railcar leasing partnership that was formed in 2010 with UniCredit Bank AG, Sperber Rail Holdings Inc., and LBT Holding Corporation. Rail North America provided leasing, maintenance and asset remarketing services to Adler, for which it received a base service fee and a performance-based asset remarketing fee. All Adler railcar assets were sold in 2018. There was no operating income or loss recognized from this partnership in 2019 or 2020. During 2020, Adler was legally dissolved and final proceeds were distributed.

RAIL INTERNATIONAL

Rail International is composed of our operations in Europe ("GATX Rail Europe" or "GRE"), India ("GRI"), and Russia ("Rail Russia"). GRE primarily leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the railcars and provides value-added services according to customer requirements. These railcars have estimated useful lives of 30 to 40 years and an average age of approximately 17 years. GRE has a diverse customer base with approximately 240 customers. In 2020, one customer accounted for more than 10% of GRE's total lease revenue and the top ten customers combined accounted for approximately 53% of GRE's total lease revenue. GRE's lease terms generally range from one to ten years and as of December 31, 2020, the average remaining lease term of the European fleet was approximately 22 months. GRE's primary competitors are VTG Aktiengesellschaft, the Ermewa Group, Wascosa AG, and Touax. GRE competes principally on the basis of customer relationships, lease rate, maintenance expertise, and availability of railcars.

GRE acquires new railcars primarily from Gök Yapi San. Tic. a.s., Greenbrier-Astra Rail (Wagony Swidnica sp. z.o.o and Astra Rail Industries S.A.), Duro Dacovic, and Tatravagonka a.s. Additionally, GRE's Ostróda, Poland maintenance facility assembles several hundred tank cars each year. As of December 31, 2020, GRE had commitments to acquire from third parties, primarily from Gök Yapi San. Tic. a.s. and Greenbrier-Astra Rail, approximately 925 newly manufactured railcars to be delivered in 2021. The majority of these railcars have committed leases in place with customers.

As of December 31, 2020, GRI owned 4,156 railcars with estimated useful lives of 15 to 25 years. GRI's leases are net leases and have terms generally ranging from four to fourteen years. As of December 31, 2020, the average remaining lease term of the Indian fleet was approximately 6 years. GRI has a small customer base with twelve customers in the automotive, container, steel, cement, and bulk commodities transport sector, as well as one customer in the public sector. As of December 31, 2020, GRI had entered into contracts to acquire 414 railcars to be delivered in 2021, the majority of which have committed leases in place with customers.

As of December 31, 2020, Rail Russia owned 380 railcars with useful lives of 22 to 32 years. Rail Russia's leases are service leases and have terms generally ranging from three to seven years. As of December 31, 2020, the average remaining lease term of the Russian fleet was approximately 4 years. Rail Russia has a small customer base with three customers in the timber, food products, and chemical sectors.

Maintenance

As of December 31, 2020, GRE operates a maintenance facility in Ostróda, Poland. In 2020, GRE sold its railcar maintenance facility in Hanover, Germany, which had been closed and out of operation since 2018. The maintenance facility in Ostróda, Poland assembles railcars for GRE's fleet and performs significant repairs, regulatory compliance, and modernization work for our owned railcars. This service center is supplemented by a number of third-party repair facilities. The third party facilities accounted for approximately 70% of GRE's fleet repair costs in 2020.

Similar to our Rail North America segment, GRE's customers periodically require maintenance services that are not included in the full-service lease agreement. These services are generally related to the repair of railcar damage caused by customers and railways. Revenue earned from these maintenance activities is recorded in other revenue.
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In India, all railcar maintenance is performed by Indian Railways or third-parties authorized by Indian Railways, in accordance with regulatory requirements.

In Russia, all railcar maintenance is performed by third-party repair facilities either owned or authorized by Russian Railways, in accordance with regulatory requirements.

PORTFOLIO MANAGEMENT

Portfolio Management is composed primarily of our ownership in 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").

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Affiliates

The Rolls-Royce & Partners Finance joint ventures (collectively the “RRPF affiliates”) are a group of 50% owned domestic and foreign joint ventures with Rolls-Royce plc (or affiliates thereof, collectively “Rolls-Royce”), a leading manufacturer of commercial aircraft jet engines. The RRPF affiliates are primarily engaged in two business activities: leasing of aircraft spare engines to a diverse group of commercial aircraft operators worldwide and leasing of aircraft spare engines to Rolls-Royce for use in their engine maintenance programs. As of December 31, 2020, the RRPF affiliates, in aggregate, owned 445 engines, of which 215 were on lease to Rolls-Royce. Aircraft engines generally have an estimated economic useful life of 18 to 25 years when new and, depending on actual hours of usage and with proper maintenance, may achieve extended service well beyond the useful life estimates. As of December 31, 2020, the average age of these engines was approximately 12 years. Lease terms vary, but typically range from 3 to 12 years. Rolls-Royce acts as manager for each of the RRPF affiliates and also performs substantially all maintenance activities.

Owned and Managed Assets

As of December 31, 2020, Portfolio Management's owned assets consisted primarily of the Specialized Gas Vessels. The vessels are commercially managed by Anthony Veder Group B.V. ("Veder"). Veder, based in the Netherlands, owns and operates a fleet of specialized gas-carrying vessels under contracts and charters with customers in the oil and gas industry. The Specialized Gas Vessels engage in the transport of pressurized gases and chemicals, such as liquefied petroleum gas, liquefied natural gas, and ethylene for major oil and chemical customers worldwide.

Portfolio Management also manages portfolios of assets for third parties which generate fee and residual sharing income through portfolio administration and the remarketing of these assets. As of December 31, 2020, Portfolio Management's managed activities consisted primarily of managing leases of two power generating assets.

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OTHER

On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. ("Trifleet"), the fourth largest tank container lessor in the world, headquartered in Dordrecht, Netherlands. Trifleet owns and manages a fleet of over 19,000 tank containers leased to a diverse base of approximately 300 customers in the chemical, industrial gas, energy, food, cryogenic and pharmaceutical industries, as well as to tank container operators. These tank containers have estimated useful lives of 15 to 25 years and an average age of approximately 8 years for the combined owned and managed fleet. Trifleet's lease terms generally range from one to five years and as of December 31, 2020, the average remaining lease term of the combined owned and managed fleet was approximately 29 months. Trifleet manages tank containers on behalf of third-party container investors under long-term agreements. Under these agreements, Trifleet earns fees for managing these investor-owned fleets, and provides various services, including the sourcing of new containers and customers, leasing and remarketing of tank containers, arranging inspection and maintenance services. Trifleet's primary competitors are Eurotainer, Exsif, Seaco, and CS Leasing.

Trifleet acquires new tank containers primarily from China International Marine Containers (Group) Ltd. ("CIMC"), Welfit Oddy, Jingjiang Asian-Pacific Logistics Equipment Co., Ltd. ("JJAP"), and Nantong Tank Container Co., Ltd. As of December 31, 2020, Trifleet had commitments to acquire from third parties, primarily from CIMC and JJAP, 366 newly manufactured tank containers to be delivered in 2021.

TRADEMARKS AND PATENTS

Patents, trademarks, and licenses are not material to our businesses taken as a whole.

SEASONAL NATURE OF BUSINESS

GATX's business is not materially impacted by seasonality of operations.

CUSTOMER BASE

GATX, taken as a whole, is not dependent upon a single customer nor does it have any significant customer concentrations. Segment concentrations, if material, are described above.

See "Note 15. Concentrations" in Part II, Item 8 of this Form 10-K for additional information.

HUMAN CAPITAL

The strength of our workforce is the significant contributor to our success. To facilitate talent attraction and retention, we endeavor to make GATX a diverse, inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers. This is supported by fair compensation, a range of benefits and health and wellness offerings, and by programs that build connections between our employees and their communities.

Employees and Employee Relations

As of December 31, 2020, we employed 1,904 persons globally, of whom approximately 35% were union workers covered by collective bargaining agreements. The hourly employees at our US service centers are represented by the United Steelworkers. Employees at three of Rail North America's Canadian service centers are represented by Unifor, the union formerly known as the Communication, Energy and Paperworkers Union of Canada, and the Employee Shop Committee of Rivière-des-Prairies. Certain employees of GATX Rail Europe are represented by one union in Poland.

See "Note 15. Concentrations" in Part II, Item 8 of this Form 10-K for additional information about our employees and concentration of labor force.

Diversity and Inclusion

GATX recognizes that diversity, equity, and inclusion are critical to our success. We strive to cultivate a diverse and inclusive workplace, and our programs and policies are designed to provide fair treatment to all employees. In recent years, GATX has committed to strengthening its culture of diversity and inclusion by implementing key hiring and retention initiatives, including the following:

a hiring initiative which encourages diverse hires and aims to mitigate unconscious bias,
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broad candidate slates for management and management-feeder positions with the aim of building diverse talent pipelines,
interviewer slates designed to have diverse voices involved in the selection process,
a consistent methodology for evaluating candidates to maintain focus on job-related criteria,
hiring, promoting, and developing female talent in order to increase female representation in leadership positions,
conducting annual compensation analysis to ensure gender pay equity for professional, managerial, and executive level positions, and
administration of an employee engagement survey, including specific questions geared towards diversity and inclusion.

Our programs have led to developing and promoting women to leadership and officer positions, and we intend to leverage this approach to further strengthen diversity and inclusion at GATX. We welcome and celebrate our teams’ differences, experiences, and beliefs, and are investing in a more engaged, diverse, and inclusive workforce.

Talent Development, and Retention

We believe our ability to attract, retain, and develop top talent is critical to our success. We have been voted a top workplace in Chicago by our employees and have a high overall rate of retention. In addition, we conduct an annual employee engagement survey to gather valuable feedback. We are focused on creating experiences and programs that foster professional growth, performance and retention. GATX invests significant resources in the training and development of our employees with such programs as Leadership 101 for field supervisors, Business Series sessions for employees to learn about different aspects of GATX, professional development courses, e-learning, and certification programs for maintenance personnel to enable career progression through higher skilled roles. Our talent development programs are designed to provide employees with the resources they need to help achieve their career goals, build management skills and lead their organizations.

Compensation and Benefits

GATX provides comprehensive compensation and benefits programs to support our employees’ overall well-being. In addition to salaries, these programs include annual bonuses, stock awards, a matched 401(k) plan, comprehensive health insurance, prescription drug coverage, health savings accounts, and paid time-off. Our retirement program includes a defined benefit plan, health reimbursement account, and pre-65 medical plan for employees retiring from the company. Other benefits include life, disability, and accident insurance, paid parental leave, identity theft coverage, flexible time-off, adoption assistance, tuition reimbursement, and telecommuting flexibility.

Safety

GATX strives to maintain the highest levels of safety by fostering a culture that makes safety a top priority. GATX utilizes a continuous improvement methodology to identify safety risks and hazards and drive improvement initiatives. During the COVID-19 pandemic, we have taken steps to ensure that our railcar maintenance facility employees and inspectors, who are deemed “essential” to the rail industry, can safely perform their jobs every day. Our efforts include establishing consistent employee screening protocols, safe work practices and training, and robust cleaning procedures within our repair facility network in order to minimize COVID-19 risk to our employees, their families and the communities in which we operate.

GATX continues to be recognized as a Responsible Care Partner by the American Chemistry Council and the Chemical Industry Association of Canada ("CIAC"), and is an active participant in the Transportation Community Awareness and Emergency Response initiative, a national outreach effort assisting communities to prepare for and respond to possible hazardous materials transportation incidents. In 2020, GATX donated a 30,000-gallon tank car to the CIAC to provide tank car and service equipment training to emergency responders throughout Canada. Additionally, GATX offers training on the proper use of our equipment and on regulations that impact our business. We hold training events at customer locations across North America through the use of our TankTrainer™ mobile classroom. In the past three years, we have trained more than 1,600 customers and emergency responders.

Community Commitment

We believe that building connections between our employees and their communities creates a more meaningful, fulfilling and enjoyable workplace. GATX has a long history of supporting causes in communities where our employees live and work, establishing a company culture that values strong corporate citizenship. Every year, we organize and encourage employees to volunteer and give back through programs that focus on addressing the needs of underserved populations and building vibrant communities. In 2020, GATX employees donated meals to support healthcare workers on the front lines of the COVID-19 pandemic and individuals experiencing hardship and homelessness, and GATX mentored students and awarded scholarships through our partnership with Big Shoulders Fund. Further, we hold an annual employee giving campaign and fundraiser for the Make-A-Wish Foundation of Illinois and have donated nearly $4.5 million to the organization since 2008.
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ENVIRONMENTAL MATTERS

Our operations, facilities and properties are subject to extensive federal, state, local, and foreign environmental laws and regulations. These laws cover discharges to waters; air emissions; toxic substances; the generation, handling, storage, transportation, and disposal of waste and hazardous materials; and the investigation and remediation of contamination. These laws have the effect of increasing the cost and liability associated with leasing and operating assets, and violations can result in significant fines, penalties, or other liabilities. Environmental risks and compliance with applicable environmental laws and regulations are inherent in rail and marine operations, which frequently involve transporting chemicals and other hazardous materials.

We are subject to, and may from time to time continue to be subject to, environmental cleanup and enforcement actions in the United States and in the foreign countries in which we operate. In particular, the federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), also known as the Superfund law, generally imposes joint and several liability for investigation, cleanup and enforcement costs on current and former owners and operators of a site, without regard to fault or the legality of the original conduct. Accordingly, we have been and may, in the future, be named as a potentially responsible party under CERCLA and other federal, state, local, and foreign laws or regulations for all or a portion of the costs to investigate and clean up sites at which certain contaminants may have been discharged or released by us, our current lessees, former owners or lessees of properties, or other third parties. Environmental remediation and other environmental costs are accrued when considered probable and amounts can be reasonably estimated. As of December 31, 2020, environmental costs were not material to our financial position, results of operations or cash flows. For further discussion, see "Note 24. Legal Proceedings and Other Contingencies" in Part II, Item 8 of this Form 10-K.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following information regarding our executive officers is included in Part I in lieu of inclusion in our definitive Proxy Statement:
 
 
Name
 
 
Offices Held
Position Held SinceAge
Brian A. Kenney
Chairman, President and Chief Executive Officer200561
Thomas A. EllmanExecutive Vice President and Chief Financial Officer201852
James M. Conniff
Executive Vice President and Chief Human Resources Officer201863
Deborah A. Golden
Executive Vice President, General Counsel and Corporate Secretary201266
Robert C. Lyons
Executive Vice President and President, Rail North America201857
N. Gokce Tezel
Executive Vice President and President, Rail International201846
Niyi A. Adedoyin
Senior Vice President and Chief Information Officer201653
Jennifer M. McManus
Senior Vice President, Controller and Chief Accounting Officer202041
Paul F. TittertonSenior Vice President and Chief Operating Officer, Rail North America201845
Jennifer L. Van AkenSenior Vice President, Treasurer and Chief Risk Officer202046
Jeffery R. YoungSenior Vice President and Chief Tax Officer201858
Robert A. Zmudka
Senior Vice President and Chief Commercial Officer, Rail North America201853

•    Mr. Kenney has served as Chairman, President and Chief Executive Officer since 2005. Previously, Mr. Kenney served as President from 2004 to 2005, Senior Vice President, Finance and Chief Financial Officer from 2002 to 2004, Vice President, Finance and Chief Financial Officer from 1999 to 2002, Vice President, Finance from 1998 to 1999, Vice President and Treasurer from 1997 to 1998, and Treasurer from 1995 to 1996.

•    Mr. Ellman was elected Executive Vice President and Chief Financial Officer in August, 2018. Previously, Mr. Ellman served as Executive Vice President and President, Rail North America from 2013 to August 2018, Senior Vice President and Chief Commercial Officer from 2011 to 2013, and Vice President and Chief Commercial Officer from 2006 to 2011. Prior to re-joining GATX in 2006, Mr. Ellman served as Senior Vice President and Chief Risk Officer and Senior Vice President, Asset Management of GE Equipment Services, Railcar Services and held various positions at GATX in the GATX Rail Finance Group.

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•    Mr. Conniff was elected Executive Vice President and Chief Human Resources Officer in August 2018. Previously, Mr. Conniff served as Senior Vice President, Human Resources from 2014 to August 2018, Vice President, Human Resources in 2014, and Senior Director, Benefits and Employee Services from 2008 to 2014. Mr. Conniff joined GATX in 1981 and has held a variety of positions in finance and human resources.

•    Ms. Golden has served as Executive Vice President, General Counsel and Corporate Secretary since June 2012. Previously, Ms. Golden served as Senior Vice President, General Counsel and Corporate Secretary from 2007 to June 2012. Ms. Golden joined GATX in 2006 as Vice President, General Counsel and Corporate Secretary. Prior to joining GATX, Ms. Golden served as Vice President and General Counsel of Midwest Generation, LLC from 2004 to 2005, Deputy General Counsel, State of Illinois, Office of the Governor from 2003 to 2004 and Assistant General Counsel with Ameritech Corporation/SBC Communications, Inc. from 1997 to 2001.

Mr. Lyons was elected Executive Vice President and President, Rail North America in August 2018. Previously, Mr. Lyons served as Executive Vice President and Chief Financial Officer from 2012 to August 2018, Senior Vice President and Chief Financial Officer from 2007 to 2012, Vice President and Chief Financial Officer from 2004 to 2007, Vice President, Investor Relations from 2000 to 2004, Project Manager, Corporate Finance from 1998 to 2000, and Director of Investor Relations from 1996 to 1998.

Mr. Tezel was elected Executive Vice President and President, Rail International in August 2018, Previously, Mr. Tezel served as Senior Vice President and President, Rail International from March 2018 to August 2018, Vice President and Senior Vice President – Business Development, Rail International from 2015 to March 2018, Vice President and Group Executive, Emerging Markets from 2012 to 2015, Vice President – International Business Development 2008 to 2012, Vice President – Strategic Growth from 2007 to 2008, Director, Marketing and Product Development from 2005 to 2007, Director, Corporate Finance from 2003 to 2005, and Associate Director, Corporate Finance from 2000 to 2003.

•    Mr. Adedoyin has served as Senior Vice President and Chief Information Officer since January 2016. Previously, Mr. Adedoyin served as Vice President and Chief Information Officer from 2013 to January 2016 and Senior Director, IT Strategy and Project Management Office from 2008 to 2013.

Ms. McManus was elected Senior Vice President, Controller and Chief Accounting Officer in January 2020. Previously Ms. McManus served as Senior Director, Investor Relations and Accounting Research, Policy & Planning since May 2017 and Director, Accounting Research, Policy & Planning from June 2015 to May 2017. Prior to joining GATX, Ms. McManus held various positions of increasing responsibility with Hyatt Hotels Corporation, Tribune Company, and in public accounting.

Mr. Titterton was elected Senior Vice President and Chief Operating Officer, Rail North America in August 2018. Previously, Mr. Titterton served as Senior Vice President and Chief Commercial Officer, Rail North America from 2015 to August 2018, Vice President and Chief Commercial Officer from 2013 to 2015, Vice President and Group Executive, Fleet Management, Marketing and Government Affairs from 2011 to 2013, Vice President and Executive Director, Fleet Management from 2008 to 2011, and in a variety of positions of increasing responsibility since joining the company in 1997.

Ms. Van Aken was elected Senior Vice President, Treasurer, and Chief Risk Officer in October, 2020. Previously Ms. Van Aken served as Vice President, Financial Planning & Analysis from 2019 to 2020, Senior Director, Financial Planning & Analysis from 2018 to 2019, Assistant Treasurer, Corporate Finance from 2016 to 2018, Director, Investment Risk Management from 2015 to 2016, Director, Investor Relations from 2010 to 2015, Director, Corporate Finance from 2009 to 2010, and Manager, Corporate Finance from 2006 to 2009. Prior to joining GATX, Ms. Van Aken held a number of positions of increasing responsibility in the financial services industry.

Mr. Young was elected Senior Vice President and Chief Tax Officer in August 2018. Previously, Mr. Young served as Vice President and Chief Tax Officer from 2015 to August 2018, Vice President of Tax from 2007 to 2015, and as Director of Tax from 2003 to 2007. Prior to joining GATX, Mr. Young spent twenty years in a variety of tax related positions of increasing responsibility in public accounting and the financial services industry.

Mr. Zmudka was elected Senior Vice President and Chief Commercial Officer, Rail North America in August 2018. Previously, Mr. Zmudka served as Vice President and Group Executive, North American Sales & Marketing from 2010 to August 2018, Vice President and Executive Director, Strategic Sales from 2007 to 2010, and Vice President, National Accounts from 2006 to 2007. Mr. Zmudka joined GATX in 1989 and worked in various sales and fleet portfolio roles before being promoted to Vice President, Regional Sales in 2001.

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AVAILABLE INFORMATION

We make available free of charge at our website, www.gatx.com, our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the U.S. Securities and Exchange Commission (“SEC”). The SEC maintains a website that contains reports, proxy, and other information that we have filed with the SEC. The SEC website may be found at http://www.sec.gov. Charters for the Audit Committee, Compensation Committee and Governance Committee of the Board of Directors, the Corporate Governance Guidelines, the Code of Business Conduct and Ethics and the Code of Ethics for Senior Company Officers are posted under Corporate Governance in the Investor Relations section of our website, and are available in print upon request by any shareholder. Within the time period prescribed by SEC and New York Stock Exchange regulations, we will post on our website any amendment to the Code of Ethics for Senior Company Officers and the Code of Business Conduct and Ethics or any waivers thereof. The information on our website is not incorporated by reference into this report.

Item 1A.  Risk Factors

Investors should consider the risk factors described below as well as other information contained in this filing or our other filings with the U.S. Securities and Exchange Commission before investing in our securities. If any of the events described in the risk factors below occur, our business, financial condition and results of operations could be materially adversely affected.

Business and Operational Risks

The global COVID-19 pandemic has had an adverse impact on our businesses and financial performance, and the duration and extent of the pandemic could prolong or increase the adverse impact. We are unable to predict the extent to which the pandemic and measures taken in response to the pandemic will adversely affect our personnel, operations, commercial activity, asset values, financial position or liquidity in the future.

We depend on continued demand from our customers to lease or use our transportation assets and services and on our customers’ ability to pay for leased assets and services. The ongoing COVID-19 pandemic has caused a slowdown of economic activity around the world (including a decrease in demand for a broad variety of goods and services), disruptions in global supply chains, a dramatic reduction in air travel, and significant volatility and disruption of financial markets, and we expect these impacts may continue for the foreseeable future. There has been reduced demand for leasing of certain railcar types and for aircraft spare engines, as well as downward pressure on lease rates and renewals, and asset disposition activity across our segments, which adversely affects our financial performance. Prolonged weakness in certain sectors of the global economy may make it difficult to lease certain types of our transportation assets that are returned either at lease end or due to customer bankruptcies or defaults. Additionally, there have been a number of requests from certain railcar- and aircraft spare engine-leasing customers for payment deferrals and rate restructurings, and we and our RRPF affiliates have made such accommodations for certain of those customers, and may continue to make such accommodations in the future. The pandemic continues to threaten the solvency of airline operators who lease aircraft spare engines and increase their risk of bankruptcy. We also face ongoing operational challenges from the need to protect employee health and safety, and have encountered and will continue to encounter ongoing workplace disruptions, temporary closures of our facilities, and reduced productivity, resulting in increased costs and adverse challenges for our rail operations. The pandemic has caused restrictions on the movement of people, raw materials and goods, including the need to limit employee travel, close facilities and offices, and implement work-from-home policies for employees. In particular, our remote work arrangements for employees, coupled with stay-at-home orders and quarantines, pose challenges for those employees and our IT systems, and extended periods of remote work arrangements could strain our business continuity plans, introduce operational risk, including cybersecurity and IT systems management risks. The situation surrounding COVID-19 is fluid, and if financial markets experience further disruption or increased volatility, we could face heightened risks related to our financing activities, including limited availability of funding or increased funding costs, which could adversely affect our business, financial position, and results of operations.

Because the duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing, and difficult to predict, the pandemic’s impact on our operations, financial performance, and liquidity, as well as its impact on our ability to successfully execute our business strategy, remains uncertain and difficult to predict. Further, the ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to: governmental, business, suppliers', and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic and actions taken in response on global and regional economies, travel, and economic activity; general economic uncertainty in the global markets we serve and volatility in financial markets; global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides. While vaccines have been approved in certain
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countries, the availability of these vaccines currently is limited, and it is unclear how quickly vaccines will be made available in all the markets in which we operate. As a result, we expect COVID-19 to continue to negatively impact our operating results in future periods, including by increasing many of the risks described below. However, we are currently unable to provide any assurance as to the magnitude and duration of any such impact.

A significant decrease in lease renewals of our transportation assets by our customers or a significant increase in the number of compliance-based maintenance events could negatively impact operations and substantially increase our costs.

Decreases in customer demand for our transportation assets could increase the number of leases that are not renewed upon expiration, resulting in the return of such assets by our customers. Returned transportation assets often must undergo maintenance and service work before being leased to new customers. A significant increase in the number of leased assets requiring maintenance may negatively affect our operations and substantially increase maintenance and other related costs.

We also perform a variety of government or industry-mandated maintenance programs on our fleet of transportation assets. These compliance programs are cyclical in nature, and as a result, we can face significant increases in the number of maintenance events in any given year. A significant increase in maintenance events or severe constraints in the repair networks may negatively impact our operations and substantially increase maintenance and other related costs. In addition, while we rely on third party maintenance providers to assist with these compliance procedures for our transportation assets, high demand faced by these providers from other asset owners may constrain our access to the providers or may substantially increase our costs.

Events that negatively affect certain assets, customers, or geographic regions could have a negative impact on our results of operations.

We generally derive our revenues from a variety of asset types, customers, industries, and geographic locations. However, from time to time we could have a large investment in a particular asset type, a large revenue stream associated with a particular customer or industry, or a large number of customers located in a particular geographic region. Decreased demand from a discrete event impacting a specific asset type, customer, industry, or region in which we have a concentrated exposure could negatively impact our results of operations.

Our long-term railcar purchase commitments could subject us to material operational and financial risks.

Unlike some of our competitors in the railcar leasing market, we do not manufacture railcars. In order to obtain committed access to a supply of newly built railcars on competitive terms, we regularly enter into long-term supply agreements with manufacturers to purchase significant numbers of newly built railcars over a multi-year period. Some of these agreements may provide for flexibility in the pricing, timing, and quantity of our purchasing commitments, while other agreements may provide no such flexibility. Therefore, if economic conditions weaken during the term of a long-term supply agreement, it is possible that we may be required to continue to accept delivery of, and pay for, new railcars at times when it may be difficult for us to lease such railcars at reasonable rates, or at all. Furthermore, we may be required to take delivery of railcars at points when our financing costs may be high. These factors could negatively affect our revenues and profitability. In addition, if tariffs, trade disputes, commodity prices, or other factors lead to higher prices for steel or other raw materials used to manufacture railcars, we may be required to pay higher prices to purchase new railcars, which could adversely affect our ability to profitably lease those railcars to customers.

Soft market conditions and declines in asset values may reduce opportunities for us to generate remarketing income.

We utilize our extensive knowledge and experience to remarket transportation assets in order to optimize the composition of our fleets, and these activities generate income that contributes significantly to segment profit. Reduced demand for our assets due to adverse market conditions could reduce opportunities for us to generate remarketing income. A significant or prolonged decline in the secondary market for our assets could adversely affect our financial performance.

We may not be able to successfully consummate and manage ongoing acquisition and divestiture activities, which could have an adverse impact on our financial statements.

From time to time, we may acquire other businesses and, based on an evaluation of our business portfolio, divest existing businesses. These acquisitions and divestitures may present financial, managerial, and operational challenges, including diversion of management attention from existing businesses, difficulty with integrating or separating personnel and financial and other systems, increased expenses and costs, assumption of liabilities and indemnities, increased compliance risks, and potential disputes with the
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buyers or sellers or third parties. In addition, we may be required to incur asset impairment charges (including charges related to goodwill and other intangible assets) in connection with acquired businesses which may reduce our profitability. If we are unable to consummate such transactions, we will not receive the expected benefits, and alternative favorable opportunities to divest may not be available to us. If we cannot successfully integrate and grow acquisitions and achieve contemplated revenue synergies and cost savings, or are unable to complete a divestiture, our financial results could be adversely affected.

We rely on Rolls-Royce in connection with our aircraft spare engine leasing businesses, and certain factors that adversely affect Rolls-Royce could have an adverse effect on those businesses.

GATX and Rolls-Royce plc. (“Rolls-Royce”) each own 50% of domestic and foreign joint venture entities (collectively, the “RRPF affiliates” or “RRPF”) that own and lease aircraft spare engines to Rolls-Royce and owners and operators of commercial aircraft. In addition, GATX directly invests in Rolls-Royce aircraft spare engines through its wholly owned subsidiary, GATX Engine Leasing Ltd., and places these engines on long-term leases with airline operators, with RRPF serving as the asset manager. Rolls-Royce is a major customer of the RRPF affiliates, as well as a critical supplier of aircraft spare engines and commercial, technical, and maintenance services to GATX and the RRPF affiliates. Rolls-Royce and RRPF are facing and may continue to face significant adverse financial and operational issues due to travel restrictions and the material decline in air travel associated with the pandemic. A deterioration in (1) the performance of services provided by Rolls-Royce or RRPF, or (2) the durability and reliability of Rolls-Royce engines, or (3) the financial condition, creditworthiness or liquidity of Rolls-Royce or RRPF could negatively impact GATX’s financial performance.

Many of our employees are represented by unions, and failure to successfully negotiate collective bargaining agreements may result in strikes, work stoppages, or substantially higher labor costs.

A significant portion of our employees are represented by labor unions and work under collective bargaining agreements that cover a range of workplace matters, such as wages, health and welfare benefits, and work rules. If we fail to negotiate acceptable labor agreements, our business could be disrupted by strikes or lockouts. We could also incur increased operating costs due to higher wages or benefits paid to union workers. Business disruptions or higher operating costs could both have an adverse effect on our financial position, results of operations, or cash flows.

Our transportation assets may become obsolete.

In addition to changes in laws, rules, and regulations that may make transportation assets obsolete, changes in the preferred method our customers use to ship their products, changes in demand for particular products, or a shift by customers toward purchasing assets rather than leasing them may adversely impact us. Our customers' industries are driven by dynamic market forces and trends, which are influenced by economic and political factors. Changes in our customers' markets may significantly affect demand for our transportation assets.

Risks related to our international operations and expansion into new geographic markets could adversely affect our business, financial condition, and operating results.

We generate a significant amount of our net income outside the United States. In recent years, we have increased our focus on international growth and expansion into select emerging markets as a means to grow and diversify earnings.

Our foreign operations and international expansion strategy are subject to the following risks associated with international operations:

Noncompliance with U.S. laws affecting operations outside of the United States, such as the Foreign Corrupt Practices Act
Noncompliance with a variety of foreign laws and regulations
Failure to properly implement changes in tax laws and the interpretation of those laws
Failure to develop and maintain data management practices that comply with laws related to cybersecurity, privacy, data localization, and data protection
Fluctuations in currency values
Sudden changes in foreign currency exchange controls
Discriminatory or conflicting fiscal policies
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Difficulties enforcing contractual rights or foreclosing to obtain the return of our assets in certain jurisdictions
Inability to access railcar supply
Uncollectible accounts and longer collection cycles that may be more prevalent in foreign countries
Ineffective or delayed implementation of appropriate controls, policies, and processes across our diverse operations and employee base
Imposition of sanctions against countries where we operate or specific companies or individuals with whom we do business
Nationalization or confiscation of assets by foreign governments, and imposition of additional or new tariffs, quotas, trade barriers, and similar restrictions on our operations outside the United States
Unforeseen developments and conditions, including terrorism, war, epidemics, and international tensions and conflicts.

Information Technology Risks

We rely on technology in all aspects of our business operations. If we are unable to adequately maintain and secure our information technology (“IT”) infrastructure from cybersecurity threats and related disruptions, our business could be negatively impacted.

Threats to IT systems associated with cybersecurity risks and cyber incidents or attacks have continued to increase in recent years. We rely on our IT infrastructure to process, transmit, and store electronic information that is used in all aspects of our business operations, including employee and customer information. As a result of the COVID-19 pandemic, remote access to our networks and systems has increased substantially. All IT systems are vulnerable to security threats, such as hacking, viruses, malicious software, and other unlawful attempts to disrupt or gain access to these systems. The steps we have taken to mitigate these risks may not be effective to prevent breaches of our IT infrastructure, some of which is managed by third parties, and we may be more vulnerable to a successful cyber-attack or information security incident while our workforce works remotely. Breaches of our IT infrastructure could lead to disruptions in our business, potentially including the theft, destruction, loss, misappropriation, or release of confidential employee and customer information stored on our IT systems or confidential data or other business information and subject us to potential lawsuits or other material legal liabilities. These disruptions could adversely affect our operations, financial position, and results of operations.

Legal and Regulatory Risks

We have been, and may continue to be, involved in various types of litigation, including claims for personal injury, property damage, environmental damage, and other claims arising from an accident involving our railcars or other assets.

The nature of our business and assets potentially exposes us to significant personal injury and property damage claims and litigation, environmental claims, or other types of lawsuits inside and outside the U.S. For example, some of our customers use certain types of our transportation assets to transport flammable liquids and other hazardous materials, and an accident involving such transportation assets could lead to litigation and subject us to significant liability. Similarly, if we fail to meet our obligations to maintain our assets in compliance with governmental regulations and industry rules, we could be subject to fines, penalties, and claims for such failure as well as any resulting personal injury or property damage. In some jurisdictions, an accident can give rise to both civil and criminal liabilities for us and, in some cases, our employees. In the event of an unfavorable outcome, we could be subject to substantial penalties or monetary damages, including criminal penalties and fines, and our employees who are named as criminal defendants in any such litigation may be subject to incarceration and fines. A substantial adverse judgment against us could have a material effect on our financial position, results of operations, cash flows, and reputation.

Our transportation assets and operations are subject to various laws, rules, and regulations. If these laws, rules, and regulations change or we fail to comply with them, it could have a significant negative effect on our business and profitability.

Our fleets of transportation assets and related operations are subject to various U.S. and non-U.S. laws, rules, and regulations administered by authorities in jurisdictions where we do business. Such laws, rules, and regulations could be changed in ways that would require us to modify our business models and objectives, impose requirements for additional maintenance or substantial modification or refurbishment of our assets, or otherwise affect our returns on investments by restricting existing activities and products, subjecting them to escalating costs or prohibiting them outright. Violations of these laws, rules, and regulations can result in substantial fines and penalties, including potential limitations on operations or forfeiture of assets.

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We are subject to extensive environmental regulations and the costs of remediation may be material.

We are subject to extensive federal, foreign, state, and local environmental laws and regulations concerning, among other things, the discharge of hazardous materials and remediation of contaminated sites. In addition, some of our properties, including those previously owned or leased, have been used for industrial purposes, which may have resulted in discharges onto these properties. Environmental liability can extend to previously owned or operated properties in addition to properties we currently own or use. Additionally, we could incur substantial costs, including cleanup costs, fines, and costs arising out of third-party claims for property or natural resource damage and personal injury as a result of violations of or liabilities under environmental laws and regulations in connection with our or our lessees’ current or historical operations. Under some environmental laws in the United States and certain other countries, the owner of a leased asset may be liable for environmental damage, cleanup or other costs in the event of a spill or discharge of material from such asset without regard to the owner's fault. Governments or regulators may change the legislative or regulatory frameworks within which we operate, including environmental laws and regulations, without providing us any recourse to address any adverse effects such changes may have on our business. Due to the regulatory complexities, risk of unidentified contaminants on our properties, and the potential liability for our operations as well as those of our lessees, it is possible environmental and remediation costs may be materially different from the costs we have estimated.

We may be affected by climate change or market or regulatory responses to climate change.

There is increasing global regulatory focus on climate change and greenhouse gas (“GHG”) emissions. Climate change may also pose regulatory and environmental risks that could harm our results of operations and affect the way we conduct business. Severe weather, climate change, and natural disasters, such as tornadoes, flooding and earthquakes, could cause significant business interruptions and result in increased costs and liabilities and decreased revenues. Changes in laws, rules, and regulations, or actions by authorities or other third parties under existing laws, rules, or regulations, to address GHG and climate change could negatively impact our customers and business. For example, restrictions on GHG emissions could significantly increase costs for our customers whose production processes require significant amounts of energy, which could reduce demand for the lease of our assets, while rail assets in our fleet that are used to carry fossil fuels, such as coal and petroleum, could see reduced demand if government regulations mandate a reduction in fossil fuel consumption or customer preferences change. New government regulations could also increase our operating costs and compliance with those regulations could be costly. Any of these factors, individually or in operation with one or more of the other factors, or other unforeseen impacts of climate change, could reduce the demand for our assets and could have an adverse effect on our financial position, results of operations, and cash flows.

Industry Risks

We depend on continued demand from our customers to lease or use our transportation assets and services at satisfactory rates. A significant decline in customer demand could negatively impact our business and financial performance.

Our profitability depends on our ability to lease assets at satisfactory rates and to re-lease assets upon lease expiration. Customer demand for our transportation assets and services can be adversely affected by various economic and other factors, including:
Weak macroeconomic conditions
Weak market conditions in our customers’ businesses
Adverse changes in the price of, or demand for, commodities
Changes in railroad operations, efficiency, pricing and service offerings, including those related to "precision scheduled railroading"
Changes in supply chains
Availability of pipelines, trucks, and other alternative modes of transportation
Changes in conditions affecting the aviation industry, including geographic exposure and customer concentrations
Other operational or commercial needs or decisions of our customers
World trade policies

Demand for our railcars and other assets is dependent on the strength and growth of our customers' businesses. Some of our customers operate in cyclical or fluctuating markets, such as the steel, energy, chemical, transportation, and construction industries, which are susceptible to macroeconomic downturns and may experience significant changes in demand over time. Weakness in certain sectors of the economy in the United States and other parts of the world may make it more difficult for us to lease our transportation assets or to lease them on profitable terms.

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Adverse changes in commodity prices or reduced demand for commodities could reduce customer demand for various types of assets in our fleet. A significant decrease in the price of a commodity may cause producers of that commodity to reduce their production levels. A significant increase in the price of a commodity could cause our customers to switch to less expensive transport alternatives. In either case, these changes in customer behavior can reduce demand for the portions of our fleet that are used to transport the commodity. In addition, demand for rail assets used to transport ethanol and other renewable fuels may be affected by government subsidies and mandates, which may be enacted, changed, or eliminated from time to time.
The availability and relative cost of alternative modes of transportation and changes in customer transportation preferences also could reduce demand for our rail assets. For example, technological innovations in the trucking industry and patterns in U.S. economic growth that favor truck over rail could result in a modal shift away from rail and reduce customer demand for our rail assets. Demand for our marine and aircraft spare engine assets and related services is also influenced by many of the factors discussed above. For example, aircraft spare engine leasing is influenced by airline and lessee profitability, patterns in global air travel, reliability and durability of engine types, world trade policies, technological advances, and price and other competitive factors. A significant decline in customer demand for our assets and services could adversely affect our financial performance.

In many cases, demand for our assets also depends on our customers’ desire to lease, rather than buy, the assets. Tax and accounting considerations, interest rates, and operational flexibility, among other factors, may influence a customer’s decision to lease or buy assets. We have no control over these external considerations, and changes in these factors could negatively impact demand for our assets held for lease.

A significant change in pricing and/or service offerings by North American railroads or poor operating conditions could reduce demand for our rail assets and negatively impact our financial performance.

Our North American rail asset leasing business is impacted by the operations of the railroads, particularly the eight largest rail systems known as the "Class I railroads", most of which are pursuing some form of major operational transformation under the umbrella term of "precision scheduled railroading" or "PSR". If PSR results in substantial increases in train velocity or decreases in dwell time for rail assets, the resulting excess supply of railcars and/or locomotives may adversely impact the demand for our rail assets. Alternatively, if PSR results in increased pricing and/or reduced service frequency and quality, the value proposition of rail freight for shippers relative to alternative modes of transportation could be reduced. Apart from PSR, other factors such as adverse weather conditions, railroad mergers, and increases in rail traffic could result in slower transit times making rail transportation less attractive to shippers versus other modes of transport. Each of these cases could reduce demand for our rail assets and decreased fleet utilization due to modal shift away from rail, all of which could negatively impact revenue and our results of operations.

Competition could result in decreased profitability.

We operate in a highly competitive business environment. In certain cases, our competitors are larger than we are and have greater financial resources, higher credit ratings, and a lower cost of capital. These factors may enable our competitors to offer leases or services to customers at lower rates than we can provide, thus negatively impacting our profitability, asset utilization, and investment volume.

Economic and Credit Risks

Fluctuations in foreign exchange rates and interest rates could negatively impact our results of operations.

Upon consolidation, we translate the financial results of certain subsidiaries from their local currency to the U.S. dollar, which exposes us to foreign exchange rate fluctuations. As exchange rates vary, the translated operating results of foreign subsidiaries may differ materially from period to period. We also have gains and losses on foreign currency transactions, which could vary based on fluctuations in exchange rates and the timing of the transactions and their settlement. In addition, fluctuations in foreign exchange rates can affect the demand and price for services we provide both domestically and internationally, and could negatively impact our results of operations. We also face risks associated with fluctuations in interest rates. We may seek to limit our exposure to foreign exchange rate and interest rate risk with currency or interest rate derivatives, which may or may not be effective. A material and unexpected change in interest rates or foreign exchange rates could negatively affect our financial performance.

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Deterioration of conditions in the global capital markets or negative changes in our credit ratings may limit our ability to obtain financing and may increase our borrowing costs.

We rely largely on banks and the capital markets to fund our operations and contractual commitments. Typical funding sources include commercial paper, bank term loans, public debt issuances, and a variety of other secured and unsecured financing structures. These markets can experience high levels of volatility and access to capital can be limited for an extended period of time. In addition to conditions in the capital markets, changes in our financial performance or credit ratings or ratings outlook, as determined by rating agencies such as Standard & Poor’s and Moody’s Investors Service, could cause us to incur increased borrowing costs or to have greater difficulty accessing public and private markets for secured and unsecured debt. Financial and market dynamics and volatility, including as a result of the impact of COVID-19, may heighten these risks. If we are unable to obtain financing on acceptable terms, our other sources of funds, including available cash, bank facilities, cash flow from operations, and portfolio proceeds, may not be adequate to fund our operations and contractual commitments.

Changes in banks' inter-lending rate reporting practices or the phasing out of LIBOR may adversely affect our financial condition, cash flows, and results of operations.

We have a significant amount of borrowing arrangements and financing structures that are based on the London Inter-Bank Offering Rate ("LIBOR"), including at our RRPF affiliates. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of U.S. Dollar LIBOR (“USD LIBOR”) and other IBORs, announced that, following required consultations, (i) it intends to cease publication of 1-week and 2-month USD LIBOR at the end of 2021 and (ii) subject to compliance with applicable regulations, including as to representativeness, it does not intend to cease publication of the remaining USD LIBOR tenors until June 30, 2023. Globally, financial market participants have begun to transition away from LIBOR and other IBORs to alternative reference rates, and following the IBA’s announcement, U.S. regulators, including the Federal Reserve Board, issued statements encouraging banks to stop entering into new USD LIBOR contracts “as soon as practicable,” and by no later than December 31, 2021, as entering into new contracts after December 31, 2021, would create safety and soundness risks for banks. In addition, the Federal Reserve Board, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of a diverse set of private and public sector entities, has recommended replacing USD LIBOR with the Secured Overnight Financing Rate, a new index calculated by short-term repurchase agreements backed by U.S. Treasury securities. At this time, there continues to be uncertainty regarding the effect that these developments, any discontinuance, modification or other reforms to LIBOR or any other interest rate benchmarks, or the establishment of alternative reference rates may have on LIBOR or other interest rate benchmarks and ultimately on the amount of interest paid on, or the market value of, our current or future debt obligations. Uncertainty as to the nature of such potential changes, alternative reference rates, or other reforms may adversely affect our financial condition, cash flows, and results of operations.

Inflation or deflation could have an unanticipated adverse impact on our financial results.

The timing and duration of the effects of inflation are unpredictable and depend on market conditions and economic factors. Inflation in lease rates as well as inflation in residual values for rail and marine assets has historically benefited our financial results. However, these benefits may be offset by increases in the costs for goods and services we purchase, including salaries and wages, health care costs, supplies, utilities, maintenance and repair services, and materials, as well as increased financing costs. Significant increases in our cost of goods and services could adversely impact our financial performance. Conversely, a period of prolonged deflation could negatively impact our lease rate pricing, residual values, and asset remarketing opportunities. These negative impacts of deflation may be offset by decreases to our costs for goods and services, including those listed above.

We could be adversely affected by United States and global political conditions, including acts or threats of terrorism or war.

We may be adversely affected by national and international political developments, instability, and uncertainties, including political unrest and threats of terrorist attacks or war, which could lead to the following:

Legislation or regulatory action directed toward improving the security of transportation assets against acts of terrorism, which could affect the construction or operation of transportation assets and increase costs
A decrease in demand for transportation assets and services
Lower utilization of transportation equipment
Lower transportation asset lease and charter rates
Impairments and loss of transportation assets
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Capital market disruption, which may raise our financing costs or limit our access to capital
Liability or losses resulting from acts of terrorism involving our assets
A significant deterioration of global growth, and related decreases in confidence or investment activity in the global markets, arising from political or economic tensions, changes, and trends and/or an increase in trade conflict and protectionism.

Depending upon the severity, scope, and duration of these circumstances, the impact on our financial position, results of operations, and cash flows could be material.

Risks Related to our Common Stock

There can be no assurance that we will continue to pay dividends or repurchase shares of our common stock at current levels.

The timing, amount and payment of future dividends to shareholders and repurchases of our common stock fall within the discretion of our Board of Directors (the "Board"). The Board’s decisions regarding the payment of dividends and repurchase of shares depend on many factors such as our financial condition, earnings, capital requirements, debt service obligations, legal requirements, regulatory constraints, and other factors that our Board may deem relevant. We cannot guarantee that we will continue to pay dividends or repurchase shares in the future, and our payment of dividends and repurchase of shares could vary from historical practices and our stated expectations.

A small number of shareholders could significantly influence our business.

Six shareholders collectively control more than 60% of our outstanding common stock. Accordingly, a small number of shareholders could affect matters that require shareholder approval, such as the election of directors and the approval of significant business transactions.

General Risk Factors

Changes to assumptions used to calculate post-retirement costs, increases in funding requirements, and investment losses in pension funds could adversely affect our results of operations.

We calculate our pension and other post-retirement costs using various assumptions, such as discount rates, long-term return on plan assets, salary increases, health care cost trend rates, and other factors. Changes to any of these assumptions could adversely affect our financial position and results of operations. Periods of low interest rates reduce the discount rate we use to calculate our funding obligations, which may increase our funding requirements. Additionally, changes to laws, regulations, or rules could require us to increase funding requirements or to compensate for investment losses in pension plan assets. If we were forced to increase contributions to our pension plans, our financial position, results of operations, and cash flows could be negatively affected.

Changes in the mix of earnings in the U.S. and foreign countries and in tax rates and laws could adversely affect our financial results.

As a global company, we are subject to taxation in the U.S. and numerous other non-U.S. jurisdictions. Significant judgment is required to determine our consolidated income tax position and related liabilities. Our effective tax rate, cash flows and operating results could be affected by changes in the mix of earnings in countries with different statutory tax rates, or material audit assessments, as well as by changes in the local tax laws, regulations and treaties, or the interpretations thereof.

Our allowance for losses may be inadequate.

Our allowance for losses on reservable assets may not be adequate to cover credit losses in our portfolio if unexpected adverse changes occur in macroeconomic conditions or if discrete events adversely affect specific customers, industries, or markets. If the credit quality of our customer base materially deteriorates, it may require us to incur additional credit losses and our financial position or results of operations could be negatively impacted.

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We may incur future asset impairment charges.

We review long-lived assets and joint venture investments for impairment annually, or when circumstances indicate the carrying value of an asset or investment may not be recoverable. Among other circumstances, the following may change our estimates of the cash flows we expect our long-lived assets or joint venture investments will generate, which could require us to recognize asset impairment charges:

A weak economic environment or challenging market conditions
New laws, rules or regulations affecting our assets, or changes to existing laws, rules or regulations
Events related to particular customers or asset types
Asset or portfolio sale decisions by management.

The fair market value of our long-lived assets may differ from the value of those assets reflected in our financial statements.

Our assets primarily consist of long-lived transportation assets such as rail assets, aircraft spare engines, and marine vessels. The carrying value of these assets on our financial statements may sometimes differ from their fair market value. These valuation differences may be positive or negative and could be material based on market conditions and demand for certain assets.

We may not be able to obtain cost-effective insurance.

We manage our exposure to risk, in part, by purchasing insurance. There is no guarantee that cost-effective insurance will consistently be available. If insurance coverage becomes prohibitively expensive or unavailable, we could be forced to reduce our coverage amount and increase the amount of self-insured risk we retain, thereby increasing our exposure to uninsured adverse judgments and other losses and liabilities that could have a material effect on our financial position, results of operations, and cash flows.

Our internal control over financial accounting and reporting may not detect all errors or omissions in the financial statements.

If we fail to maintain adequate internal controls over financial accounting, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. No system of internal control provides absolute assurance that the financial statements are accurate and free of material error.

Item 1B.  Unresolved Staff Comments

None.

Item 2.  Properties

Information regarding the general character of our properties is included in Item 1, “Business” of this Form 10-K.


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As of December 31, 2020, the locations of our operations were as follows:
GATX Headquarters
Chicago, Illinois
Rail North America
Business OfficesMajor Maintenance FacilitiesMobile Units
Chicago, IllinoisColton, CaliforniaCatoosa, Oklahoma
Houston, TexasHearne, TexasDonaldsville, Louisiana
Burlington, OntarioWaycross, GeorgiaFreeport, Texas
Calgary, AlbertaMontreal, QuebecYazoo City, Mississippi
Mexico City, MexicoMoose Jaw, SaskatchewanClarkson, Ontario
 Red Deer, AlbertaEdmonton, Alberta
 Montreal, Quebec
 Maintenance Facilities
 Plantersville, Texas
Terre Haute, Indiana
Customer Site Locations
Catoosa, Oklahoma
Clarkson, Ontario
Donaldsonville, Louisiana
Freeport, Texas
Geismar, Louisiana
Yazoo City, Mississippi
Rail International
Business OfficesMajor Maintenance FacilitiesCustomer Site Locations
Amsterdam, NetherlandsOstróda, PolandPłock, Poland
Düsseldorf, Germany
Hamburg, Germany
Leipzig, Germany
Moscow, Russia
Gurgaon, India
Paris, France
Vienna, Austria
Warsaw, Poland
Portfolio Management
Chicago, Illinois
Other
Dordrecht, Netherlands
Houston, Texas
Singapore
Hamburg, Germany
Shanghai, China

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Item 3.  Legal Proceedings

Information concerning litigation and other contingencies is described in "Note 24. Legal Proceedings and Other Contingencies" in Part II, Item 8 of this Form 10-K and is incorporated herein by reference.

Item 4.  Mine Safety Disclosures

None.
PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Our common stock is listed on the New York and Chicago Stock Exchanges under ticker symbol "GATX". We had approximately 1,518 common shareholders of record as of January 31, 2021.

Issuer Purchases of Equity Securities

On January 25, 2019, our board of directors ("Board") approved a $300.0 million share repurchase program, pursuant to which we are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to Rule 10b5-1 plans. The share repurchase program does not have an expiration date, does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time. The timing of share repurchases will be dependent on market conditions and other factors.
No share repurchases were completed during 2020. As of December 31, 2020, $150.0 million remained available under the repurchase authorization.
Equity Compensation Plan Information as of December 31, 2020:
 Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and RightsWeighted-Average Exercise Price of Outstanding Options, Warrants and RightsNumber of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in Column (a))
Plan Category
(a)(b)(c)
Equity Compensation Plans Approved by Shareholders
2,013,243 (1)$67.65 (2)2,881,697
Equity Compensation Plans Not Approved by Shareholders
— — 
Total
2,013,243 2,881,697 
__________
(1) Consists of 153,366 stock appreciation rights, 1,313,577 non-qualified stock options, 179,639 performance shares, 138,556 restricted stock units and 228,105 phantom stock units.
(2) The weighted-average exercise price does not include performance shares, restricted stock or phantom stock units.

For additional information about issuable securities under our equity compensation plans and the related weighted-average exercise price, see "Note 13. Share-Based Compensation" in Part II, Item 8 of this Form 10-K.

21


Common Stock Performance Graph

The performance graph below compares the cumulative total shareholder return on our common stock for the five-year period ended December 31, 2020, with the cumulative total return of the S&P 500 Index, the S&P MidCap 400 Index, and the Russell 3000 Index. We are not aware of any peer companies whose businesses are directly comparable to ours and, therefore, the graph displays the returns of the indices noted above as those comprise companies with market capitalizations similar to ours. The graph and table assume that $100 was invested in our common stock and each of the indices on December 31, 2015, and that all dividends were reinvested.

gmt-20201231_g4.jpg


12/31/1512/31/1612/31/1712/31/1812/31/1912/31/20
GATX$100.00 $149.82 $155.48 $181.37 $217.19 $224.18 
S&P 500100.00 111.95 136.38 130.39 171.44 202.96 
S&P MidCap 400100.00 120.73 140.32 124.75 157.40 178.88 
Russell 3000100.00 112.72 136.53 129.37 169.48 204.86 

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Item 6.  Selected Financial Data

The following financial information has been derived from our audited consolidated financial statements for the years ended December 31 (in millions, except per share data, recourse leverage, and return on equity). This information should be read in conjunction with "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes thereto included elsewhere herein.
20202019201820172016
Results of Operations
Revenue
$1,209.2 $1,202.1 $1,175.1 $1,204.4 $1,418.3
Net gain on asset dispositions
41.7 51.6 72.7 56.0 98.0
Share of affiliates’ pre-tax income
95.8 94.5 61.1 55.9 53.1
Net income from continuing operations (GAAP)
150.2 180.8 190.5 467.8 n/a
Net income from discontinued operations, net of tax (GAAP)
1.1 30.4 20.8 34.2 n/a
Net income from consolidated operations, net of tax (GAAP)
151.3 211.2 211.3 502.0 257.1
Net income from continuing operations, excluding tax adjustments and other items (non-GAAP) (1)
162.5 178.0 178.8 173.5 n/a
Net income from discontinued operations, excluding tax adjustments and other items (non-GAAP) (1)
1.1 22.3 21.0 11.5 n/a
Net income from consolidated operations, excluding tax adjustments and other items (non-GAAP) (1)
163.6 200.3 199.8 185.0 235.9
Per Share Data
Basic earnings from continuing operations (GAAP)
4.30 5.07 5.07 12.07 n/a
Basic earnings from discontinued operations (GAAP)
0.03 0.85 0.55 0.88 n/a
Basic earnings from consolidated operations (GAAP)
4.33 5.92 5.62 12.95 6.35 
Diluted earnings from continuing operations (GAAP)
4.24 4.97 4.98 11.88 n/a
Diluted earnings from discontinued operations (GAAP)
0.03 0.84 0.54 0.87 n/a
Diluted earnings from consolidated operations (GAAP)
4.27 5.81 5.52 12.75 6.29 
Diluted earnings from continuing operations, excluding tax adjustments and other items (non-GAAP) (1)
4.59 4.89 4.67 4.41 n/a
Diluted earnings from discontinued operations, excluding tax adjustments and other items (non-GAAP) (1)
0.03 0.62 0.55 0.29 n/a
Diluted earnings from consolidated operations, excluding tax adjustments and other items (non-GAAP)
4.62 5.51 5.22 4.70 5.77 
Dividends declared
1.92 1.84 1.76 1.68 1.60 
Financial Condition
Operating assets and facilities, net of accumulated depreciation
$7,170.7 $6,457.3 $6,275.6 $5,940.3 $5,804.7 
Investments in affiliated companies
584.7 512.6 464.5 441.0 387.0 
Assets from discontinued operations
— 291.1 297.8 286.7 n/a
Total assets
8,937.6 8,285.1 7,616.7 7,422.4 7,105.4 
Off-balance sheet assets (1)(2)
— — 430.2 435.7 459.1 
Short-term borrowings
23.6 15.8 110.8 4.3 3.8 
Long-term debt
5,329.0 4,780.4 4,429.7 4,371.7 4,253.2 
Operating lease obligations
348.6 429.4 — — — 
Finance lease obligations
33.3 7.9 11.3 12.5 14.9 
Off-balance sheet recourse debt (1)(2)
— — 430.2 435.7 459.1 
Shareholders’ equity (3)
1,957.4 1,835.1 1,788.1 1,792.7 1,347.2 
Other Data
Average number of common shares and common share equivalents
35.4 36.4 38.3 39.4 40.9 
Net cash provided by operating activities from continuing operations
$436.8 $425.8 $485.2 $454.3 $629.4 
Portfolio proceeds from continuing operations
$131.1 $250.3 $234.4 $165.6 $223.7 
Portfolio investments and capital additions from continuing operations
$1,064.0 $722.8 $927.6 $589.4 $620.7 
Recourse leverage (4)
2.8 2.8 2.7 2.5 3.3 
Return on equity (GAAP)
8.0 %11.7 %11.8 %32.0 %19.6 %
Return on equity, excluding tax adjustments and other items (non-GAAP) (1)(5)
10.5 %13.5 %13.6 %13.1 %18.0 %
23


_________
Note: The information above for 2016 has not been recast for discontinued operations presentation.
(1)    See "Non-GAAP Financial Measures" included in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for an explanation of tax adjustments and other items, as well as a reconciliation to the most directly comparable GAAP measures.
(2)    Off-balance sheet assets and off-balance sheet recourse debt, which relate to operating leases, are applicable for 2015 through 2018. In accordance with the new lease accounting standard, off-balance sheet assets and recourse debt are no longer applicable beginning in 2019.
(3)    Balances for 2020, 2019, 2018 and 2017 reflect increases in shareholders' equity resulting from the impact of the Tax Cuts and Jobs Act of 2017 ("Tax Act").
(4)    The reduction in recourse leverage beginning with 2017 is due to the increase in shareholders' equity resulting from the impact of the Tax Act.
(5)    Shareholder's equity used in this calculation for 2020, 2019, 2018 and 2017 excludes the impact of the Tax Act.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

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, and financial data for the ASC segment has been segregated and presented as discontinued operations for all periods presented. See "Note 27. Discontinued Operations" Part II, Item 8 of this Form 10-K for additional information. Unless otherwise indicated, the following information relates to continuing operations.

On December 29, 2020, we acquired Trifleet Leasing Holding B.V. ("Trifleet), the fourth largest tank container lessor in the world. Financial results for this business will be reported in the Other segment. See "Note 5. Business Combinations" in Part II, Item 8 of this Form 10-K for additional information. A more complete description of our business is included in “Item 1. Business," in Part I of this Form 10-K.

The following discussion and analysis should be read in conjunction with the audited financial statements included in "Item 8. Financial Statements and Supplementary Data" in this Form 10-K. We based the discussion and analysis that follows on financial data we derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and on certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP measures to the most comparable GAAP measures, see “Non-GAAP Financial Measures” at the end of this item.

Coronavirus Disease 2019 ("COVID-19")

COVID-19 negatively impacted operating conditions for all of our business segments in 2020. We expect COVID-19 will continue to have negative impacts on our operating results in future periods, the magnitude and duration of which are still uncertain. To limit the spread of COVID-19, governments have taken various actions, including travel bans and restrictions, the issuance of stay-at-home orders, and social distancing guidelines. These actions caused many businesses to reduce or suspend operations, negatively impacting economic conditions and many of the markets we serve. While certain of these restrictions were temporarily eased, some have been subsequently reinstated, and the economy continues to be adversely impacted by the effects of COVID-19. Our top priorities continue to be ensuring the health and safety of our global workforce and serving our various stakeholders with minimal disruptions.

Across our operating segments, we have implemented business continuity and crisis management plans. We have a strong liquidity position, solid balance sheet, and access to capital which we expect will enable GATX to effectively manage through the COVID-19 pandemic. The COVID-19 pandemic continues to evolve rapidly, including the scope and duration of disruptions and the pace and timing of the eventual recovery.

Rail North America

The initial impact of COVID-19 resulted in a decline in industry railcar loadings, had a negative impact on lease rates, and led to a reduction in the purchase and sale of railcars in the secondary market. Although industry railcar loadings and absolute lease rates improved modestly by the end of year, the effects of COVID-19 will likely continue to disrupt global manufacturing, supply chains, and consumer spending. We expect the reduction in economic activity to continue to impact our customers, which we expect, in turn, to negatively impact the demand for our railcar fleet.

Rail International

The initial impact of COVID-19 resulted in delayed investment at both GRE and GRI due to shutdowns and delays at the railcar manufacturers. Although railcar manufacturers have since re-opened, future disruptions may occur which could impact our ability to invest in our international railcar fleets.

Rail North America & Rail International Maintenance Operations

Rail freight transportation and railcar repair have been deemed essential businesses globally. Our rail operations teams have implemented COVID-19 preparation and response programs to ensure the health and safety of our employees while continuing to provide critical railcar maintenance services. While our railcar repair facilities continue to operate, some have periodically reduced operating levels or closed on a temporary basis, and future disruptions may occur as the impacts of COVID-19 continue.
25



Rolls-Royce & Partners Finance Joint Ventures ("RRPF affiliates")

Global air travel continues to be significantly impacted by COVID-19. In response to the drastic decline in demand, airlines have reduced system-wide capacity and grounded large portions or all of their fleets. Although some flight operations have resumed in a limited capacity, air travel remains significantly below pre-COVID-19 levels. Many airlines are currently focused on managing their near-term liquidity positions, restructuring operations, and obtaining government financial support. The major reduction in global air travel and the disruption across the aviation industry did impact the profitability of our aircraft spare engine leasing business and operating results in 2020, and we expect that it will continue to have a negative impact on our near-term future operating results, the magnitude and duration of which are still uncertain.

26


DISCUSSION OF OPERATING RESULTS

The following table shows a summary of our reporting segments and consolidated financial results relating to continuing operations and discontinued operations for years ended December 31 (dollars in millions, except per share data):
202020192018
Segment Revenues
Rail North America$934.1 $964.5 $941.5 
Rail International258.1 227.7 217.5 
Portfolio Management17.0 9.9 16.1 
$1,209.2 $1,202.1 $1,175.1 
Segment Profit
Rail North America$227.6 $276.2 $307.9 
Rail International83.5 78.9 68.6 
Portfolio Management77.4 62.4 38.7 
 388.5 417.5 415.2 
Less:
Selling, general and administrative expense172.0 180.4 182.5 
Unallocated interest (income) expense(7.7)(5.8)(8.6)
Other, including eliminations3.1 3.2 9.5 
Income taxes ($33.6, $18.0 and $10.8 related to affiliates' earnings)
70.9 58.9 41.3 
Net Income from Continuing Operations (GAAP)$150.2 $180.8 $190.5 
Discontinued Operations, Net of Taxes
Net (loss) income from discontinued operations, net of taxes(2.2)30.4 20.8 
Gain on sale of discontinued operation, net of taxes3.3 — — 
Total Discontinued Operations, Net of Taxes (GAAP)1.1 30.4 $20.8 
Net Income (GAAP)$151.3 $211.2 $211.3 
Net income from continuing operations, excluding tax adjustments and other items (non-GAAP) (1)$162.5 $178.0 $178.8 
Net income from discontinued operations, excluding tax adjustments and other items (non-GAAP) (1)$1.1 $22.3 $21.0 
Net income from consolidated operations, excluding tax adjustments and other items (non-GAAP) (1)$163.6 $200.3 $199.8 
Diluted earnings per share from continuing operations (GAAP)$4.24 $4.97 $4.98 
Diluted earnings per share from discontinued operations (GAAP)$0.03 $0.84 $0.54 
Diluted earnings per share from consolidated operations (GAAP) $4.27 $5.81 $5.52 
Diluted earnings per share from continuing operations, excluding tax adjustments and other items (non-GAAP) (1)$4.59 $4.89 $4.67 
Diluted earnings per share from discontinued operations, excluding tax adjustments and other items (non-GAAP) (1)$0.03 $0.62 $0.55 
Diluted earnings per share from consolidated operations, excluding tax adjustments and other items (non-GAAP) (1)$4.62 $5.51 $5.22 
Return on equity (GAAP)8.0 %11.7 %11.8 %
Return on equity, excluding tax adjustments and other items (non-GAAP) (1)10.5 %13.5 %13.6 %
Investment Volume$1,064.0 $722.8 $927.6 
_________
(1)     See "Non-GAAP Financial Measures" at the end of this item for further details.

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2020 Summary

Net income from continuing operations was $150.2 million, or $4.24 per diluted share, for 2020 compared to $180.8 million, or $4.97 per diluted share, for 2019, and $190.5 million, or $4.98 per diluted share, for 2018. Results for 2020 included a net negative impact of $12.3 million from tax adjustments and other items, compared to a net benefit of $2.8 million from tax adjustments and other items in 2019 and a net benefit of $11.7 million in 2018 (see "Non-GAAP Financial Measures" at the end of this item for further details).
At Rail North America, segment profit in 2020 was lower than prior year. The decrease was attributable to lower lease revenue and lower net gains on asset dispositions, partially offset by lower maintenance expense.
At Rail International, segment profit in 2020 was higher than prior year, due to higher revenue from more railcars on lease, partially offset by higher maintenance expense and depreciation expense, as well as the negative impact of changes in foreign exchange rates on non-functional currency items.
At Portfolio Management, segment profit in 2020 increased compared to prior year, primarily due to higher marine operating revenue. A large gain at the Rolls-Royce & Partners Finance joint ventures (collectively the "RRPF affiliates") from a transaction involving the refinancing and sale of a group of aircraft spare engines in 2020 also contributed to higher segment profit.
Total investment volume was $1,064.0 in 2020, compared to $722.8 million in 2019, and $927.6 million in 2018.
2021 Outlook
The outlook for 2021 continues to be challenging. While we anticipate gradual easing of COVID-19 impacts as we move through 2021, the possibility of COVID-19 related volatility on our business segments remains high. Despite these adverse conditions, we have a strong balance sheet and access to capital which we believe positions us well to execute our strategy of investing in a weak market at attractive prices.

Rail North America's segment profit in 2021 is expected to be essentially flat compared to 2020. Lease rates for railcars scheduled to renew in 2021 will likely be lower than expiring lease rates, and we anticipate a small decrease in fleet utilization due to a continued oversupply of railcars in the market. As a result, we project revenue in 2021 to decline compared to the prior year. We expect 2021 maintenance expense to be similar to 2020, exclusive of any unplanned and/or major potential COVID-19 related disruptions. Finally, we expect remarketing income to be higher than 2020.
We anticipate Rail International's segment profit in 2021 to increase from 2020 as the demand for railcars in Europe continues to be strong. Lease revenue is expected to be higher in 2021, resulting from higher lease rates and more railcars on lease. In addition, we expect continued investment in our railcar fleet in India this year, which will contribute to additional revenue in 2021.
Portfolio Management's segment profit in 2021 is expected to be lower than 2020. RRPF results are expected to decline due to the significant reduction in global air travel. We expect lower segment profit at RRPF to be partially offset by our direct investment in aircraft spare engines in 2021 and improved contribution from our marine operations.
At the end of 2020, we acquired Trifleet, the fourth largest tank container lessor in the world. Financial results will be reported in the Other segment. We expect that the timing of recognition of certain acquisition-related expenses will have a dilutive impact on results in 2021.
Segment Operations

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.

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RAIL NORTH AMERICA

Segment Summary

The operating environment for Rail North America continued to be challenging in 2020. Persistent industry-wide railcar overcapacity combined with the economic impacts of COVID-19 put significant pressure on lease rates. However, renewal lease rates for most car types stabilized or modestly improved in the second half of the year. During the year, the North American railcar leasing market experienced decreased railcar loadings across commodity types in response to the dramatic reduction in overall economic activity. Railcar lessors competed aggressively to place new and existing railcars, resulting in significant pressure on lease rates. Despite this, our commercial team continued to deploy railcars and displace competitors, resulting in fleet utilization of 98.1% at the end of the year.

The economic environment presented unique challenges resulting from COVID-19, which negatively impacted Rail North America's financial results. Rail North America did receive lease restructuring requests earlier in the year as some customers sought to lower costs and, in certain cases, reduce the size of their fleets. However, such requests dissipated in the second half of the year. To date, restructuring requests that have been approved did not have a significant impact on Rail North America's financial results. Railcar repair facilities continued to operate throughout the year, but some facilities experienced periodic operating disruptions resulting from employee absences due to COVID-19 issues. The frequency of these disruptions increased in the fourth quarter. As a result of the aforementioned factors, Rail North America expects ongoing pressure on future railcar utilization, lease rates, and other key performance metrics, the magnitude and duration of which are still uncertain.

The following table shows Rail North America's segment results for the years ended December 31 (in millions):
202020192018
Revenues
Lease revenue$838.3 $868.3 $873.4 
Other revenue95.8 96.2 68.1 
   Total Revenues934.1 964.5 941.5 
Expenses
Maintenance expense264.7 267.9 254.7 
Depreciation expense258.6 256.9 248.5 
Operating lease expense49.3 54.4 49.6 
Other operating expense27.3 23.9 27.3 
   Total Expenses599.9 603.1 580.1 
Other Income (Expense)
Net gain on asset dispositions38.3 54.6 76.3 
Interest expense, net(139.9)(134.5)(125.2)
Other expense(4.9)(5.3)(5.2)
Share of affiliates' pre-tax (loss) income (0.1)— 0.6 
Segment Profit
$227.6 $276.2 $307.9 
Investment Volume$642.0 $502.2 $737.4 

The following table shows the components of Rail North America's lease revenue for the years ended December 31 (in millions):
202020192018
Railcars$741.9 $759.8 $757.8 
Boxcars67.1 72.2 76.8 
Locomotives29.3 36.3 38.8 
Total$838.3 $868.3 $873.4 

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Rail North America Fleet Data

At December 31, 2020, Rail North America's wholly owned fleet, excluding boxcars, consisted of approximately 103,700 cars. Fleet utilization, excluding boxcars, was 98.1% at the end of 2020, compared to 99.3% at the end of 2019, and 99.4% at the end of 2018. Fleet utilization for approximately 14,300 boxcars was 95.8% at the end of 2020 compared to 95.0% at the end of 2019, and 94.2% at the end of 2018. Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.

During 2020, an average of approximately 101,700 railcars, excluding boxcars, were on lease, compared to 103,500 in 2019, and 102,100 in 2018. Changes in railcars on lease compared to prior periods are impacted by the utilization of new railcars purchased under our supply agreements or in the secondary market and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.

As of December 31, 2020, leases for approximately 20,000 tank cars and freight cars and approximately 2,300 boxcars are scheduled to expire in 2021. These amounts exclude railcars on leases expiring in 2021 that have already been renewed or assigned to a new lessee.

In 2014, we entered into a long-term supply agreement with Trinity Rail Group, LLC ("Trinity"), a subsidiary of Trinity Industries. Under the terms of that agreement, we agreed to order 8,950 newly built railcars. As of December 31, 2020, all 8,950 railcars have been ordered and delivered. On May 24, 2018, we amended our long-term supply agreement with Trinity to extend the term to December 2023, and we agreed to purchase an additional 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through the expiration of the extended term. At December 31, 2020, 1,891 railcars have been ordered pursuant to the amended terms of the agreement, of which 1,272 railcars have been delivered.

In 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. ("ARI"), pursuant to which we will purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars that are to be delivered over a five-year period, beginning in April 2019. ARI's railcar manufacturing business was subsequently acquired by The Greenbrier Companies, Inc. ("Greenbrier") on July 26, 2019, and Greenbrier assumed all of ARI's obligations under our long-term supply agreement. Under this agreement, 450 railcars were to be delivered in 2019, with the remaining 7,200 to be delivered ratably over the four-year period of 2020 to 2023. As of December 31, 2020, 4,035 railcars have been ordered, of which 2,297 railcars have been delivered. The agreement also includes an option to order up to an additional 4,400 railcars subject to certain restrictions.

Additionally, we acquired a fleet of 3,098 railcars from ECN Capital Corporation, with 2,832 of the railcars acquired in 2018 and the remaining 266 railcars in early 2019.
The following table shows fleet activity for Rail North America railcars, excluding boxcars, for the years ended December 31:
202020192018
Beginning balance102,845 105,472 103,730 
Cars added4,696 3,145 6,958 
Cars scrapped(2,153)(2,172)(2,211)
Cars sold(1,643)(3,600)(3,005)
Ending balance103,745 102,845 105,472 
Utilization rate at year end98.1 %99.3 %99.4 %
Active railcars at year end101,815 102,127 104,864 
Average (monthly) active railcars101,658 103,452 102,061 
30



gmt-20201231_g5.jpg

The following table shows fleet statistics for Rail North America boxcars for the years ended December 31:
202020192018
Ending balance14,315 15,264 16,220 
Utilization rate at year end95.8 %95.0 %94.2 %

The following table shows fleet activity for Rail North America locomotives for the years ended December 31:
202020192018
Beginning balance661 702 693 
Locomotives added, net of scrapped or sold(16)(41)
Ending balance645 661 702 
Utilization rate at year end81.1 %85.9 %88.6 %
Active locomotives at year end523 568 622 
Average (monthly) active locomotives537 608 622 
Lease Price Index

Our 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. We calculate the index using the weighted-average lease rate for a group of railcar types that we believe best represents our 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.

During 2020, the renewal rate change of the LPI was negative 23.5%, compared to negative 3.9% in 2019 and negative 9.8% in 2018. Lease terms on renewals for cars in the LPI averaged 31 months in 2020, compared to 39 months in 2019, and 38 months in 2018. Additionally, the renewal success rate, which represents the percentage of railcars on expiring leases that were renewed with the existing lessee, was 70.8% in 2020, compared to 82.2% in 2019, and 82.9% in 2018. The renewal success rate is an important metric
31


because railcars returned by our customers may remain idle or incur additional maintenance and freight costs prior to being leased to new customers.

gmt-20201231_g6.jpg

Comparison of Reported Results

Segment Profit

In 2020, segment profit of $227.6 million decreased 17.6% compared to $276.2 million in 2019. The decrease was primarily driven by lower lease revenue and lower net gains on asset dispositions in the current year, partially offset by lower maintenance expense. The amount and timing of disposition gains is dependent on a number of factors and will vary from year to year.

In 2019, segment profit of $276.2 million decreased 10.3% compared to $307.9 million in 2018. The decrease was driven by lower net gains on asset dispositions, higher maintenance expense, and lower lease revenue, partially offset by higher other revenue.

Revenues

In 2020, lease revenue decreased $30.0 million, or 3.5%, a result of fewer railcars and locomotives on lease, lower lease rates, and lower boxcar revenue. Other revenue decreased $0.4 million, due to lower lease termination fees, offset by higher repair revenue.

In 2019, lease revenue decreased $5.1 million, or 0.6%. The decrease was due to lower lease rates, higher rental abatement attributable to more railcars in the maintenance network, and fewer locomotives on lease in 2019, partially offset by more railcars on lease. Other revenue increased $28.1 million, due to higher repair revenue and higher lease termination fees in 2019.

Expenses

In 2020, maintenance expense decreased $3.2 million. The decrease resulted primarily from fewer repairs performed by the railroads on GATX-owned railcars and lower volumes of repairs on boxcars at third-party shops. Depreciation expense increased $1.7 million due to the timing of new railcar investments and dispositions. Operating lease expense decreased $5.1 million, resulting from the purchase of railcars previously on operating leases. Other operating expense increased $3.4 million, due to higher switching, freight, and storage costs.

32


In 2019, maintenance expense increased $13.2 million, driven by more tank qualifications in 2019, as expected, as well as more repairs performed by the railroads on GATX-owned railcars. Depreciation expense increased $8.4 million due to new railcar investments, including the railcars acquired from ECN Capital Corporation in 2018. Operating lease expense increased $4.8 million, primarily a result of the elimination of deferred gain amortization for sale-leaseback transactions in accordance with the new lease accounting standard adopted in 2019. Other operating expense decreased $3.4 million, primarily due to lower switching, storage, and freight costs.

Other Income (Expense)

In 2020, net gain on asset dispositions decreased $16.3 million, due to fewer railcars sold, partially offset by lower net scrapping losses. The amount and timing of disposition gains is dependent on a number of factors and will vary from year to year. Net interest expense increased $5.4 million, primarily driven by a higher average debt balance and a higher average interest rate.

In 2019, net gain on asset dispositions decreased $21.7 million, resulting from lower asset remarketing gains and lower net scrapping gains. Net scrapping gains were lower in 2019 due to certain railcars and locomotives scrapped at a loss, as well as lower scrap prices per ton. See "Note 25. Financial Data of Business Segments" in Part II, Item 8 of this Form 10-K, for further details of the components of net gain on asset dispositions. Net interest expense increased $9.3 million, driven by a higher average debt balance and a higher average interest rate.

Investment Volume

During 2020, investment volume was $642.0 million compared to $502.2 million in 2019, and $737.4 million in 2018. We acquired 5,103 railcars in 2020, compared to 3,225 railcars in 2019, and 7,489 railcars, including 2,832 railcars purchased as part of the ECN Capital Corporation transaction, in 2018.

Our investment volume is predominantly composed of acquired railcars, but also includes certain capitalized repairs and improvements to owned railcars and our maintenance facilities. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of railcars purchased, which may include tank cars and freight cars, as well as newly manufactured railcars or those purchased in the secondary market.

RAIL INTERNATIONAL

Segment Summary
                
Rail International, composed primarily of GATX Rail Europe ("GRE"), produced strong operating results in 2020. Demand for railcars in Europe remained relatively stable during the year, and renewal rates for most car types increased slightly. COVID-19 did not have a material impact on GRE's financial results in 2020. However, GRE experienced delays in new railcar investments throughout the year due to COVID-19 related interruptions at railcar manufacturing facilities. Although GRE received lease restructuring requests from certain customers during the year, requests dissipated in the second half of the year, and requests that were approved did not have a significant impact on GRE's financial results. GRE expects ongoing pressure on future railcar utilization and lease rates, the magnitude and duration of which are still uncertain.

In 2018, GRE recorded $9.5 million of expenses attributable to the closure of a railcar maintenance facility in Germany.

Our rail operations in India ("GRI") continued to focus on investment opportunities, diversification of its fleet, and developing relationships with customers, suppliers and the Indian Railways. While COVID-19 did not have a material impact on GRI's financial results in 2020, GRI did experience delays in new railcar investments due to COVID-19 related interruptions at railcar manufacturing facilities. GRI expects continued fleet growth and diversification in 2021.

During 2020, our rail operations in Russia ("Rail Russia") focused on managing its existing fleet, which consisted of 380 railcars, and maintaining strong relationships with its customer base.

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The following table shows Rail International's segment results for the years ended December 31 (in millions):
202020192018
Revenues
Lease revenue$248.4 $219.2 $209.3 
Other revenue9.7 8.5 8.2 
   Total Revenues258.1 227.7 217.5 
Expenses
Maintenance expense50.8 46.5 44.5 
Depreciation expense66.6 57.8 55.5 
Other operating expense7.5 6.8 5.8 
   Total Expenses124.9 111.1 105.8 
Other Income (Expense)
Net gain (loss) on asset dispositions1.2 1.7 (0.2)
Interest expense, net(45.9)(40.6)(35.9)
Other (expense) income(5.0)1.2 (7.0)
Segment Profit
$83.5 $78.9 $68.6 
Investment Volume$216.0 $215.7 $152.7 

GRE Fleet Data

At December 31, 2020, GRE's wholly owned fleet consisted of approximately 26,300 cars. Fleet utilization was 98.1% at the end of 2020, compared to 99.3% at the end of 2019 and 98.8% at the end of 2018. Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.

During 2020, an average of approximately 25,200 railcars were on lease, compared to 23,700 in 2019 and 22,600 in 2018. Changes in railcars on lease compared to prior periods are impacted by the number of new railcars purchased or acquired in the secondary market and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.

The following table shows fleet activity for GRE railcars for the years ended December 31:
202020192018
Beginning balance24,561 23,412 23,166 
Cars added2,071 1,417 847 
Cars scrapped or sold(289)(268)(601)
Ending balance26,343 24,561 23,412 
Utilization rate at year end98.1 %99.3 %98.8 %
Active railcars at year end25,831 24,392 23,124 
Average (monthly) active railcars25,174 23,665 22,619 

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gmt-20201231_g7.jpg\

GRI Fleet Data

The following table shows fleet activity for GRI railcars for the years ended December 31:
202020192018
Beginning balance3,679 2,053 1,052 
Cars added477 1,626 1,001 
Ending balance4,156 3,679 2,053 
Utilization rate at year end99.0 %100.0 %100.0 %

Comparison of Reported Results

Foreign Currency

Rail International's reported results of operations are impacted by fluctuations in the exchange rates of the U.S. dollar versus the foreign currencies in which it conducts business, primarily the euro. In 2020, fluctuations in the value of the euro, relative to the U.S. dollar, positively impacted lease revenue by approximately $4.1 million and segment profit, excluding other income (expense), by approximately $3.4 million compared to 2019. In 2019, fluctuations in the value of the euro, relative to the U.S. dollar, negatively impacted lease revenue by approximately $10.6 million and segment profit, excluding other income (expense), by approximately $5.0 million compared to 2018.

Segment Profit

In 2020, segment profit of $83.5 million increased 5.8% compared to $78.9 million in 2019. The increase was primarily due to higher revenue from more railcars on lease, partially offset by higher maintenance expense and depreciation expense, as well as the negative impact of changes in foreign exchange rates on non-functional currency items.

In 2019, segment profit of $78.9 million increased 15.0% compared to $68.6 million in 2018. Segment profit in 2018 included expenses of approximately $9.5 million attributable to the closure of a railcar maintenance facility in Germany. Excluding these costs, results for Rail International were $0.8 million higher than 2018, primarily due to higher revenue from more railcars on lease, partially offset by higher maintenance expense and the negative impact of foreign exchange rates.
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Revenues

In 2020, lease revenue increased $29.2 million, or 13.3%, due to more railcars on lease at GRE and GRI, as well as the impact of foreign exchange rates. Other revenue increased $1.2 million, driven by higher repair revenue.

In 2019, lease revenue increased $9.9 million, or 4.7%, primarily due to more railcars on lease, partially offset by the impact of foreign exchange rates. Other revenue increased $0.3 million, driven by higher repair revenue.

Expenses

In 2020, maintenance expense increased $4.3 million, primarily due to higher wheelset costs, partially offset by lower costs for other repairs. Depreciation expense increased $8.8 million, resulting from the impact of new railcars added to the fleet.

In 2019, maintenance expense increased $2.0 million, primarily due to higher wheelset costs and other repairs. These negative drivers were partially offset by lower workshop costs, due in part to the elimination of expenses associated with a maintenance facility in Germany that was closed in 2018, as well as the impact of foreign exchange rates. Depreciation expense increased $2.3 million, primarily due to new railcars added to the fleet.

Other Income (Expense)

In 2020, net gain on asset dispositions decreased $0.5 million, attributable to lower net scrapping gains. Net interest expense increased $5.3 million, due to a higher average debt balance, partially offset by a lower average interest rate. Other expense increased $6.2 million, driven by the negative impact of changes in foreign exchange rates on non-functional currency items and higher net litigation costs related to the Viareggio matter, which reflected the absence of insurance proceeds received in the prior year. See "Note 24. Legal Proceedings and Other Contingencies" in Part II, Item 8 of this Form 10-K for further details about the Viareggio matter.

In 2019, net gain on asset dispositions increased $1.9 million, attributable to the absence of the impairment for the maintenance facility in Germany recorded in the prior year, partially offset by lower railcar scrapping gains, as a result of fewer railcars scrapped in 2019. Net interest expense increased $4.7 million, due to a higher average interest rate and a higher average debt balance. Other expense decreased $8.2 million, driven by the absence of the railcar maintenance facility closure costs recorded in 2018 and lower net litigation costs related to the Viareggio matter, which reflected insurance proceeds received in 2019. See "Note 22. Legal Proceedings and Other Contingencies" in Part II, Item 8 of this Form 10-K for further details about the Viareggio matter. This was partially offset by the negative impact of changes in foreign exchange rates on non-functional currency items.

Investment Volume

Investment volume was $216.0 million in 2020, $215.7 million in 2019, and $152.7 million in 2018. During 2020, GRE acquired 2,071 railcars (including 374 assembled at the GRE Ostróda, Poland facility), GRI acquired 477 rail cars, and Rail Russia did not acquire any railcars, compared to 1,417 railcars at GRE (including 384 assembled at the GRE Ostróda, Poland facility), 1,626 railcars at GRI, and 26 railcars at Rail Russia in 2019, and 847 railcars at GRE (including 316 assembled at the GRE Ostróda, Poland facility), 1,001 railcars at GRI, and 184 railcars at Rail Russia in 2018.

Our investment volume is predominantly composed of acquired railcars, but may also include certain capitalized repairs and improvements to owned railcars. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of the various car types acquired, as well as fluctuations in the exchange rates of the foreign currencies in which Rail International conducts business.

PORTFOLIO MANAGEMENT

Segment Summary

Portfolio Management's segment profit is attributable primarily to income from the RRPF affiliates, a group of 50% owned domestic and foreign joint ventures with Rolls-Royce plc (or affiliates thereof, collectively “Rolls-Royce”), a leading manufacturer of commercial aircraft jet engines. Segment profit included earnings from the RRPF affiliates of $95.5 million for 2020, $94.5 million for 2019, and $60.5 million for 2018. Financial results for the current year included a transaction involving the refinancing and sale of a group of aircraft spare engines at the RRPF affiliates. In this transaction, the RRPF affiliates sold 21 aircraft spare engines for total proceeds of $233.0 million in 2020. GATX's 50% share of the resulting pre-tax net gains was $35.3 million. Portfolio Management
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did not make any additional investment in the RRPF affiliates in 2020 and 2019, compared to $14.1 million in 2018. There were no dividend distributions from the RRPF affiliates in 2020, compared to $27.5 million in 2019 and $35.2 million in 2018.

COVID-19 severely impacted global air travel during 2020. As a result, RRPF has granted significant rent deferrals and a number of its customers have declared bankruptcy or undertaken restructuring processes. Despite this, RRPF maintained strong utilization, with 92.8% of its engines on lease at the end of the year, and is focused on preserving a strong liquidity position in the current environment. RRPF continues to expect pressure on both engine utilization and lease rates, which will impact future operating results, the magnitude and duration of which are still uncertain.

Portfolio Management also owns marine assets, consisting of five liquefied gas-carrying vessels (the "Specialized Gas Vessels"). During 2019, the prior commercial management agreement with Norgas Carriers Private Limited, and related pooling arrangement, was terminated, and we entered into a new agreement with Anthony Veder Group B.V. to commercially manage these vessels.

While COVID-19 had a significant impact on the gas shipping market in 2020, there were signs of improvement in the second half of the year, as charter rates and utilization increased modestly. We expect COVID-19 will likely continue to have a negative impact on future results, the magnitude and duration of which are still uncertain.

Portfolio Management's total asset base was $706.1 million at December 31, 2020, compared to $653.7 million at December 31, 2019, and $606.8 million at December 31, 2018.

The following table shows Portfolio Management’s segment results for the years ended December 31 (in millions):
202020192018
Revenues
Lease revenue$0.8 $1.0 $1.0 
Marine operating revenue15.6 8.2 14.3 
Other revenue0.6 0.7 0.8 
   Total Revenues17.0 9.9 16.1 
Expenses
Marine operating expense19.7 18.9 16.8 
Depreciation expense5.3 6.6 7.3 
Other operating expense0.5 0.6 — 
   Total Expenses25.5 26.1 24.1 
Other Income (Expense)
Net gain (loss) on asset dispositions2.2 (4.7)(3.4)
Interest expense, net(12.2)(11.2)(10.4)
Share of affiliates' pre-tax income95.9 94.5 60.5 
Segment Profit
$77.4 $62.4 $38.7 
Investment Volume
$0.5 $— $14.1 


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The following table sets forth the approximate net book value of Portfolio Management’s assets as of December 31 (in millions):

202020192018
Investment in RRPF Affiliates$584.7 $512.4 $464.3 
Owned assets121.4 141.3 142.5 
Managed assets (1)17.3 24.8 32.3 
________
(1)     Amounts shown represent the estimated net book value of assets managed for third parties and are not included in our consolidated balance sheets.

gmt-20201231_g8.jpg

RRPF Affiliates Engine Portfolio Data
At December 31, 2020, the RRPF affiliates owned 445 aircraft spare engines with a net book value of $4,784.1 million, compared to 478 aircraft spare engines with a net book value of $5,036.4 million at the end of 2019 and 452 aircraft spare engines with a net book value of $4,435.6 million at the end of 2018.
The following table shows portfolio activity for the RRPF affiliates' aircraft spare engines for the years ended December 31:
202020192018
Beginning balance478 452 432 
Engine acquisitions20 46 48 
Engine dispositions(53)(20)(28)
Ending balance445 478 452 
Utilization rate at year end92.8 %96.9 %96.9 %




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gmt-20201231_g9.jpg

Comparison of Reported Results

Segment Profit

In 2020, segment profit was $77.4 million compared to $62.4 million in 2019. The increase is primarily due to higher marine operating revenue and the absence of impairment losses recognized in the prior year.

In 2019, segment profit was $62.4 million compared to $38.7 million in 2018. The increase reflects stronger results at the RRPF affiliates, partially offset by a lower contribution from the Specialized Gas Vessels.

Revenues

In 2020, lease revenue was comparable to the same period in 2019. Marine operating revenue increased $7.4 million, driven by higher charter rates and utilization from the Specialized Gas Vessels, as well as the transition to the new commercial manager in the prior year.

In 2019, lease revenue was comparable to the same period in 2018. Marine operating revenue decreased $6.1 million, due to lower revenue from the Specialized Gas Vessels. In 2019, utilization of the vessels was lower due to idle time associated with the transition to a new commercial manager, as discussed previously.

Expenses
    
In 2020, marine operating expense increased $0.8 million, due to higher bunker fuel expense, offset by lower other operating expenses and management fees for the Specialized Gas Vessels.

In 2019, marine operating expense increased $2.1 million. This increase was driven by the write-off of residual net assets as part of the wind-up of activities under the prior commercial management pooling agreement, partially offset by lower expenses from the Specialized Gas Vessels.

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Other Income (Expense)

In 2020, net gain (loss) on asset dispositions was favorable by $6.9 million, largely due to the absence of impairment losses recorded in the prior year for certain offshore supply vessels, as well as higher residual sharing fees from the managed portfolio.

In 2019, net loss on asset dispositions increased $1.3 million, largely due to higher impairment losses for certain offshore supply vessels, partially offset by higher residual sharing fees from the managed portfolio.

In 2020, income from our share of affiliates' earnings increased $1.4 million, driven by higher net disposition gains, including $35.3 million of gains from a transaction involving the refinancing and sale of a group of aircraft spare engines. Apart from this, financial results were lower, due to the significant reduction in global air travel resulting from COVID-19.

In 2019, income from our share of affiliates' earnings increased $34.0 million. The increase was due to more engines on lease and increased residual realization at the RRPF affiliates.

Investment Volume

Investment volume was $0.5 million in 2020, compared to no investment in 2019 and $14.1 million in 2018. Portfolio Management's investment volume in 2018 consisted primarily of equity investments in the RRPF affiliates.
OTHER
Other comprises selling, general and administrative expenses (“SG&A”), unallocated interest expense, and miscellaneous income and expense not directly associated with the reporting segments and eliminations. On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. ("Trifleet"), the fourth largest tank container lessor in the world, for approximately €165 million ($203.2 million) in cash. Financial results for this business will be reported in the Other segment in our financial statements. See "Note 5. Business Combinations" in Part II, Item 8 of this Form 10-K for additional information.

The following table shows components of Other for the years ended December 31 (in millions):
202020192018
Selling, general and administrative expense$172.0 $180.4 $182.5 
Unallocated interest (expense) income(7.7)(5.8)(8.6)
Other expense (income), including eliminations3.1 3.2 9.5 

SG&A, Unallocated Interest and Other

In 2020, SG&A of $172.0 million decreased $8.4 million from 2019. The decrease was largely due to lower employee compensation and discretionary expenses, partially offset by transaction costs associated with the Trifleet acquisition.

In 2019, SG&A of $180.4 million decreased $2.1 million from 2018. The decrease was primarily due to the absence of accelerated depreciation recorded in 2018 related to the early termination of the corporate headquarters office lease, partially offset by higher compensation and other employee benefits costs.

Unallocated interest (expense) income (the difference between external interest expense and interest expense allocated to the reporting segments) in any year is affected by our consolidated leverage position, the timing of debt issuances and investing activities, and intercompany allocations.

In 2020, other expense (income), including eliminations, was comparable to the prior year.

In 2019, other expense (income), including eliminations, decreased $6.3 million, driven by lower non-service pension expense. Specifically, certain lump sum distributions paid to retirees in 2018 triggered a non-recurring adjustment to pension expense for $2.1 million. In addition, lower provisions recorded for litigation and environmental accruals contributed to the decrease.

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Consolidated Income Taxes

In 2017, the Tax Cuts and Jobs Act (the “Tax Act”) made broad and complex changes to the U.S. federal income tax laws. Additional guidance was issued by the Internal Revenue Service, the U.S. Department of the Treasury, and state taxing authorities during 2018 and, as a result, we recorded an adjustment to our provisional estimates. Specifically, in the fourth quarter of 2018, we recorded an additional net tax benefit of $16.5 million based on this clarifying guidance, the filing of our 2017 income tax returns, and the final determination of our foreign undistributed earnings and associated tax attributes. We do not expect to record any future material adjustments associated with the Tax Act. See "Note 14. Income Taxes" in Part II, Item 8 of this Form 10-K for additional information on income taxes.

DISCONTINUED OPERATIONS

Segment Summary

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, and financial data for the ASC segment has been segregated and presented as discontinued operations for all periods presented. See "Note 27. Discontinued Operations" in Part II, Item 8 of this Form 10-K for additional information. The ASC business comprises the entirety of GATX's discontinued operations.

We recognized a gain of $3.3 million, net of taxes, in 2020 in connection with this sale.

In 2019, one of ASC's vessels was heavily damaged by fire during winter maintenance. As a result, the vessel was removed from service and written off. Upon final assessment of the damage, the vessel was deemed a total loss, and insurance proceeds of $27.0 million were received, resulting in a net casualty gain of $10.5 million ($8.1 million net of taxes).

The following table shows the income from discontinued operations, net of taxes (in millions):
202020192018
Discontinued operations, net of taxes
Net (loss) income from discontinued operations, net of taxes$(2.2)$30.4 $20.8 
Gain on sale of discontinued operations, net of taxes3.3 — — 
Total Discontinued operations, net of taxes$1.1 $30.4 $20.8 

Comparison of Reported Results

In 2020, net loss from discontinued operations, net of taxes, was $2.2 million, compared to net income of $30.4 million in 2019. The variance was driven by the timing of the sale of the ASC business in the second quarter of 2020. The net casualty gain recorded in 2019, noted above, also contributed to the variance.

In 2019, net income from discontinued operations, net of taxes, was $30.4 million, compared to net inco