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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, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2328
gmt-20211231_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

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 $3.1 billion as of June 30, 2021.

There were 35.4 million common shares outstanding at January 31, 2022.

DOCUMENTS INCORPORATED BY REFERENCE
GATX’s definitive Proxy Statement to be filed on or about March 11, 2022PART III



GATX CORPORATION
2021 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.
Item 9C.
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. Forward-looking statements include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance, prospects, or future events. In some cases, forward-looking statements can be identified by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "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 and any mandated pandemic mitigation requirements, 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, or disruptions to, 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 our businesses
fluctuations in foreign exchange rates
inflation or deflation
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, sanctions, or trade barriers affecting our activities in the countries where we do business
changes in, or failure to comply with, laws, rules, and regulations
U.S. and global political conditions
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
changes in assumptions, increases in funding requirements or investment losses in our pension and post-retirement plans
inability to maintain effective internal control over financial reporting and disclosure controls and procedures





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. 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 25. 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"), one of the largest tank container lessors in the world. Financial results for this business is reported in the Other segment. See "Note 4. 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, 2021, we had total assets of $9.5 billion, composed largely of railcars.

OPERATIONS

GATX RAIL BUSINESS OVERVIEW

Our wholly owned fleet of approximately 147,000 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, 2021:
Tank
Railcars
Freight
Railcars
Total FleetManaged
Railcars
Total RailcarsLocomotives
Rail North America
61,540 52,976 114,516 288 114,804 568 
Rail International
22,508 9,811 32,319 32,326 — 
Total
84,048 62,787 146,835 295 147,130 568 

2


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 CarsBoxcarsFlatcars
Principal Industries ServedPetroleum/BiofuelsPetroleumChemicalPlasticsAgricultureEnergyFoodAutomotive
ChemicalChemicalPetroleumFoodEnergySteelConsumer GoodsManufactured Goods
FoodMiningIndustrialIndustrialConstructionForest ProductsConsumer Goods
AgricultureConstructionForest ProductsPackagingEnergy
ConstructionConstructionSteel
Principal CommoditiesPetroleum ProductsLiquefied Petroleum Gas ProductsSulfuric AcidPlasticsFertilizerCoalPackaged Food and BeveragesVehicles
Fertilizer ProductsPropyleneMolten SulfurFlourGrainMetals and RelatedPaper and PackagingPackaged Goods
Ethanol/BiofuelsVinyl Chloride MonomerHydrochloric AcidSugarSandAggregatesLumber and Building ProductsLumber
Edible Oils and SyrupsMiscellaneous ChemicalsCaustic SodaStarchCement, GranulesCokeMixed FreightSteel Products
ChemicalsPhosphoric AcidCarbon BlackSoda AshWasteMixed Freight

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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 22 years. Rail North America has a large and diverse customer base, serving approximately 860 customers. In 2021, no single customer accounted for more than 4% of Rail North America’s total lease revenue, and the top ten customers combined accounted for approximately 22% 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 34 months as of December 31, 2021. Rail North America’s primary competitors are Union Tank Car Company, Wells Fargo Rail, CIT Rail, and Trinity Industries Leasing Company. Rail North America competes primarily on the basis of availability of railcars, lease rate, maintenance capabilities, customer relationships, and engineering expertise.

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”) and its subsidiaries, National Steel Car Ltd., and Freightcar America. We also acquire railcars in the secondary market. In 2018, we amended a long-term supply agreement with Trinity to extend the term to December 2023, and we agreed to purchase 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through 2023. At December 31, 2021, 3,036 railcars have been ordered pursuant to the amended terms of the agreement, of which 2,280 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 agreed to purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-year period, beginning in April 2019 and ending in December 2023. ARI's railcar manufacturing business was acquired by a subsidiary of Greenbrier on July 26, 2019, and such subsidiary assumed all of ARI's obligations under our long-term supply agreement. As of December 31, 2021, 6,141 railcars have been ordered, of which 3,838 railcars have been delivered. The agreement included an option to order additional railcars subject to certain restrictions and, as of December 31, 2021, we still have the option to order 2,200 additional railcars during the remaining term of the agreement.

Rail North America also owns a fleet of locomotives, consisting of 539 four-axle and 29 six-axle locomotives as of December 31, 2021. 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, 2021, the average remaining lease term of the locomotive fleet was approximately 25 months. Rail North America's primary competitors in locomotive leasing are Wells Fargo Rail, CIT Rail, and Progress Rail Services Corporation. Competitive factors in the market include availability of locomotives, lease rates, customer service, and maintenance.

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.

In order to increase the efficiency of our maintenance network, Rail North America sold three of its customer-dedicated sites and three mobile repair units in 2021. Subsequent to year-end, Rail North America has sold one additional customer-dedicated site. Railcar maintenance demand was not sufficient to consistently achieve adequate productivity from these locations.
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At December 31, 2021, 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.
Three customer-dedicated sites operating within customer facilities that offer services tailored to the needs of our customers’ fleets.
Five locations with mobile units that travel to many track-side field locations to provide spot repairs and interior cleaning services.
    The maintenance network is supplemented by a number of preferred third-party maintenance providers and railroads. In 2021, third-party maintenance network expenses accounted for approximately 21% of Rail North America’s total maintenance network expenses, excluding repairs performed by the railroads. In 2021, wholly owned and third-party maintenance facilities performed approximately 42,700 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. We may also perform maintenance and repair activities on cars owned by third parties.

Affiliates

GATX is a co-founder of, and owns a 17% share in the RailPulse LLC ("RailPulse") joint venture. GATX’s partners include Norfolk Southern Railway Company, Genesee & Wyoming Inc., Trinity Industries, Inc., Watco Companies, LLC, and Greenbrier Leasing, LLC. The RailPulse joint venture was formed to create an industry-wide telematics platform to enable the use of telematics devices to gather data and enhance rail safety and the value proposition for rail shippers across North America. As of December 31, 2021, RailPulse is preparing to launch its first service pilot, and has publicly stated its intention to enter regular service in 2023. The financial results of RailPulse are not currently material to GATX.

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 35 to 40 years and an average age of approximately 17 years. GRE has a diverse customer base with approximately 240 customers. In 2021, one customer accounted for approximately 12% of GRE's total lease revenue and the top ten customers combined accounted for approximately 50% of GRE's total lease revenue. GRE's lease terms generally range from one to ten years and as of December 31, 2021, the average remaining lease term of the European fleet was approximately 26 months. GRE's primary competitors are VTG Aktiengesellschaft, the Ermewa Group, Wascosa AG, and Touax. GRE competes principally on the basis of availability of railcars, customer relationships, lease rate, and maintenance expertise.

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, On Rail, and Tatravagonka a.s. Additionally, GRE's Ostróda, Poland maintenance facility assembles several hundred tank cars each year. As of December 31, 2021, GRE had commitments to acquire from third parties, primarily from Gök Yapi San. Tic. a.s., Duro Dacovic, Greenbrier-Astra Rail, and Tatravagonka Poprad, approximately 1,400 newly manufactured railcars to be delivered in 2022. The majority of these railcars have committed leases in place with customers.

As of December 31, 2021, GRI owned 4,830 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, 2021, the average remaining lease term of the Indian fleet was approximately 5 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, 2021, GRI had entered into contracts to acquire 548 railcars to be delivered in 2022, the majority of which have committed leases in place with customers.

As of December 31, 2021, Rail Russia owned 380 railcars with useful lives of 22 to 32 years. Rail Russia's leases have terms generally ranging from three to seven years. As of December 31, 2021, the average remaining lease term of the Russian fleet was approximately 3 years. Rail Russia has a small customer base with three customers in the timber, food products, and chemical sectors.

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Maintenance

As of December 31, 2021, GRE operates a maintenance facility in Ostróda, Poland. This facility assembles railcars for GRE's fleet and performs significant repairs, regulatory compliance, and modernization work for our owned railcars. This facility is supplemented by a number of third-party repair facilities. The third party facilities accounted for approximately 69% of GRE's fleet repair costs in 2021.

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.

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, directly-owned aircraft spare engines and five liquefied gas-carrying vessels (the "Specialized Gas Vessels").

Investment Portfolio
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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, 2021, the RRPF affiliates, in aggregate, owned 407 engines, of which 199 were on lease to Rolls-Royce. Aircraft engines generally have an estimated economic useful life of 20 to 25 years when new and, depending on actual usage and with proper maintenance, may achieve extended service well beyond the useful life estimates. As of December 31, 2021, 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, 2021, Portfolio Management's owned assets consisted primarily of aircraft spare engines and the Specialized Gas Vessels.

In 2021, GATX began investing directly in aircraft spare engines through its new entity, GATX Engine Leasing ("GEL"). During 2021, GEL acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million from the RRPF affiliates. GEL leases the aircraft spare engines to airline customers, and the engine lease administration is managed by the RRPF affiliates. Aircraft spare engines generally have an estimated economic useful life of 20 to 25 years when new and, depending on
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actual usage and with proper maintenance, may achieve extended service well beyond the useful life estimates. As of December 31, 2021, the average age of these engines was approximately 2 years. Lease terms vary, but typically range from 10 to 12 years.

The Specialized Gas 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, primarily on short- and medium-term contracts 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, 2021, Portfolio Management's managed activities consisted primarily of managing leases of two power generating assets.

OTHER

On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. ("Trifleet"), one of largest tank container lessors in the world, headquartered in Dordrecht, Netherlands. As of December 31, 2021, Trifleet owned and managed a fleet of approximately 20,000 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, 2021, the average remaining lease term of the combined owned and managed fleet was approximately 23 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, and 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, 2021, Trifleet had commitments to acquire from third parties, primarily from CIMC and JJAP, 678 newly manufactured tank containers to be delivered in 2022.

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

HUMAN CAPITAL

The strength of our workforce is a 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, health and wellness offerings, and by programs that build connections between our employees and their communities.

Employees and Employee Relations

As of December 31, 2021, we employed 1,863 persons globally, of whom approximately 35% were union workers covered by collective bargaining agreements. The hourly employees at our U.S. service centers are represented by the United Steelworkers.
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Employees at three of Rail North America's Canadian service centers are represented by Unifor and the Employee Shop Committee of Rivière-des-Prairies. Certain employees of GATX Rail Europe are represented by one union in Poland.

See "Note 14. 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 is committed to fostering a diverse, equitable, and inclusive environment where employees feel valued and welcomed to be their best personally and professionally. In recent years, GATX has committed to strengthening its culture of diversity and inclusion by implementing key hiring and retention initiatives, including:

a hiring initiative, which encourages diverse hires and aims to mitigate unconscious bias;
diverse candidate slates for management and management-feeder positions;
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 an annual compensation analysis to ensure gender, race, and ethnicity pay equity for professional, managerial, and executive level positions; and
administration of an employee engagement survey, including specific questions geared toward diversity and inclusion.

In 2021, GATX hired a head of Diversity, Equity, and Inclusion ("DEI") and initiated:

a Day of Understanding for employees, which included workshops, panels, and speakers on DEI topics, and
targeted DEI training for leaders and salaried employees.

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 employee engagement surveys to gather valuable feedback. We are focused on creating experiences and programs that foster professional growth, performance, and retention while meeting the evolving needs of our business. GATX invests significant resources in the training and development of our employees with programs such as Leadership 101 for eligible supervisors, Learning Paths for eligible employees, 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 broaden representation in leadership pipelines while also providing employees with the resources they need to help achieve their career goals, build management skills, and lead their organizations. GATX also has employee resource groups dedicated to enhancing our diverse and inclusive culture, including three resource groups focusing on women in leadership, BIPOC employees, and LGBTQ+ employees.

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.

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We continue to ensure that our railcar maintenance facility employees and inspectors who are essential workers in the rail industry can safely perform their jobs every day by screening, maintaining safe work practices, and executing robust cleaning practices within our repair facility network in order to minimize COVID-19 risk to our employees, their families, and the communities in which we operate. We continue to manage actual and potential exposure to COVID-19 of our employees to minimize transmission and also offered vaccine incentives and benefits.

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 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 four 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 2021, through our partnership with Big Shoulders Fund, which provides support to inner-city schools in Chicago, employees engaged students during virtual service days and volunteered on site to clean and ready schools for the new school year. Further, GATX employees have mentored Big Shoulders students since 2016 and comprise the largest single group of mentors to the organization. We also know that our employees’ philanthropic interests and passions are as unique as our employees themselves. Therefore, to further support and encourage their individual efforts, in 2021 we implemented a “Do Good Day”, a paid day off for full-time corporate employees in North America to volunteer in their communities for a cause personally meaningful to them. Finally, we held our annual employee giving campaign and fundraiser for the Make-A-Wish Foundation of Illinois, and in 2021, we celebrated 25 years of partnership with Make-A-Wish and more than $5 million in total giving to the organization to help grant wishes.

Sustainability

Consistent with our vision, we are committed to growing our business in a sustainable and socially responsible manner, and we demonstrate our commitment through our programs and initiatives. Our Environmental, Social and Governance (“ESG”) Committee, a multi-functional team, meets periodically to develop, assess, and prioritize ESG topics that are important to our business and our stakeholders and to continually improve both the measurement and transparency of our ESG disclosures and practices. The ESG Committee has primary management responsibility for our ongoing and developing ESG efforts. We maintain a Sustainability page on our website (www.gatx.com) to highlight our environmental and social responsibility accomplishments and provide key performance data to our stakeholders. In 2021, GATX issued its first Sustainability Accounting Standards Board ("SASB") report, which discloses metrics related to relevant ESG factors. Nothing on our website shall be deemed incorporated by reference into this Annual Report on Form 10-K.

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 the use of rail and other transportation assets, which can involve transporting chemicals and other hazardous materials.

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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, 2021, environmental costs were not material to our financial position, results of operations or cash flows. For further discussion, see "Note 23. Legal Proceedings and Other Contingencies" in Part II, Item 8 of this Form 10-K.

We recognize that climate change has the potential to impact our leasing business and maintenance operations. GATX continues to evaluate, quantify, and report on business, operational, and strategic risks associated with climate change. In 2021, GATX calculated and published 2019 and 2020 Scope 1 and Scope 2 greenhouse gas emissions for all our facilities globally and initiated an assessment of our full value chain impacts on the environment in an effort to identify opportunities to reduce those impacts.

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 (1)
Chairman, President and Chief Executive Officer200562
Thomas A. EllmanExecutive Vice President and Chief Financial Officer201853
Deborah A. Golden
Executive Vice President, General Counsel and Corporate Secretary201267
Robert C. Lyons (2)
Executive Vice President and President, Rail North America201858
M. Kim Nero
Executive Vice President and Chief Human Resources Officer202147
N. Gokce Tezel
Executive Vice President and President, Rail International201847
Niyi A. Adedoyin
Senior Vice President and Chief Information Officer201654
Jennifer M. McManus
Senior Vice President, Controller and Chief Accounting Officer202042
Paul F. Titterton (3)Senior Vice President and Chief Operating Officer, Rail North America201846
Jennifer L. Van AkenSenior Vice President, Treasurer and Chief Risk Officer202047
Jeffery R. YoungSenior Vice President and Chief Tax Officer201859
Robert A. Zmudka
Senior Vice President and Chief Commercial Officer, Rail North America201854
_______
(1)    On December 3, 2021, Mr. Kenney notified the Board of Directors of his decision to retire as an officer of the Company effective April 22, 2022, following the Annual Meeting of Shareholders. It is expected that Mr. Kenney will continue to serve on the Company’s Board as non-executive Chairman until October 31, 2022, at which time he intends to retire from the Board.
(2)    On December 3, 2021, the Board appointed Mr. Lyons to the position of President and Chief Executive Officer, effective at the time of Mr. Kenney’s retirement on April 22, 2022. The Board intends to nominate Mr. Lyons for election as a director at the 2022 Annual Meeting of Shareholders.
(3)    On January 28, 2022, the Board appointed Mr. Titterton to the position of Executive Vice President and President, Rail North America, effective at the time of Mr. Lyons' transition to the position of President and Chief Executive Officer on April 22, 2022.

•    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
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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.

•    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.

Ms. Nero was elected Executive Vice President and Chief Human Resources Officer in May 2021. Prior to joining GATX, Ms. Nero served as Vice President, Human Resources at Ferrara Candy Company. Prior to that, she held positions in sales and then went on to lead global human resources functions in the financial, pharmaceutical, consumer packaged goods, and manufacturing industries at Discover, EVRAZ, Eli Lilly, and SC Johnson Wax.

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.
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Zmudka joined GATX in 1989 and worked in various sales and fleet portfolio roles before being promoted to Vice President, Regional Sales in 2001.

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 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 on some or all of our businesses. We are unable to predict the extent to which the pandemic and measures taken in response to the pandemic may adversely affect our personnel, operations, commercial activity, asset values, financial position or liquidity in the future.

The ongoing COVID-19 pandemic (including the emergence of new variants) has caused, to varying degrees, 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 volatility and disruption of financial markets, and we expect that some or all of these impacts may continue for the foreseeable future. Such disruptions resulted in, and may still result in, (i) reduced demand for leasing of certain railcar types and, in particular, for aircraft spare engines, which continue to be adversely impacted, (ii) downward pressure on lease rates and renewals, and in the case of our RRPF affiliates, accommodations of certain requests by customers for payment deferrals and rate restructuring, and (iii) reductions in asset disposition for certain of our segments. We also face ongoing operational challenges from the need to protect employee health and safety and may continue to encounter ongoing workplace disruptions. Our remote work arrangements for employees pose challenges for those employees and our IT systems, which could strain our business continuity plans, and introduce operational risk, including cybersecurity and IT systems management risks. The situation surrounding COVID-19 remains fluid, and financial markets could experience additional disruption or increased volatility attributable to the pandemic, including the emergence of new variants.

Jurisdictions in which we operate may adopt vaccine, testing, or other pandemic mitigation requirements and, if such requirements are imposed, they could result in labor disruptions, employee attrition, and difficulty securing future labor needs, as well as have impacts on the broader employment market and the supply chain, our suppliers, and our customers.

The duration of, and the situation surrounding, the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing, and difficult to predict, and the pandemic’s impact on our costs, 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: actions taken by other in response to the pandemic; impacts on global and regional economies, travel, and economic activity; economic uncertainty and volatility in financial markets; and global supply chain disruptions. As a result, we expect COVID-19 may 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 likelihood, magnitude, and duration of any such impact.

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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 as a result of increased volume or the need to utilize higher cost third party maintenance providers. 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. We are monitoring the potential conflict between Russia and Ukraine. The situation remains uncertain, and while we do not expect that it would be material to GATX, a conflict in Ukraine or the imposition of sanctions on Russia could result in an adverse impact on certain of our businesses, operations, and assets.

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, supply chain disruptions, 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 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
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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 COVID-19 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.

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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
Difficulties enforcing contractual rights or foreclosing to obtain the return of our assets in certain jurisdictions
Inability to access railcar or tank container 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, or retaliatory sanctions by such countries on U.S. companies
Nationalization or confiscation of assets by foreign governments, and imposition of additional or new tariffs, quotas, trade barriers, regulations, 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 in their frequency and levels of sophistication and intensity by sophisticated and organized groups and individuals with a wide range of motives and expertise. 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, and the implementation of remote work options for employees, 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. We are subject to attempted cyber intrusions, hacks and ransom attacks, and we have had and continue to experience events of this nature and expect them to continue. While we have invested in the protection of our data and IT infrastructure, 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 from our workforce working 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 or reputational damage. These disruptions could adversely affect our operations, financial position, and results of operations. While we maintain insurance to mitigate our exposure to these risks, our insurance policies carry retention and coverage limits, which may not be adequate to reimburse us for losses caused by security breaches or other cybersecurity events, and we may not be able to collect fully, if at all, under these insurance policies.

We also are subject to an evolving body of federal, state and foreign laws, regulations, guidelines and principles regarding data privacy, data protection and data security. Many states as well as foreign governments have passed or proposed laws and regulations dealing with the collection and use of personal information obtained from their data subjects, including the E.U.’s General Data Protection Regulation and the California Privacy Rights Act, and we could incur substantial penalties or litigation or reputational damage related to violations of such laws and regulations.

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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, and reputational damage.

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, fires 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 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 and other transportation assets in our fleet that are used to carry fossil fuels, such as coal and petroleum, or that directly or indirectly require fossil fuel consumption for operation of the assets could see reduced demand or be rendered obsolete 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 and value of our assets, and could have an adverse effect on our financial position, results of operations, and cash flows.
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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, or disruptions to, 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 transportation 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.

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 transportation 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, while demand for transportation assets used to transport fossil fuels or that directly or indirectly require consumption of fossil fuels for operation may be affected by government policies and mandates with respect to climate change.

The availability and relative cost of alternative modes of transportation and changes in customer transportation preferences also could reduce demand for our 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 other transportation 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 transportation 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 transportation 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
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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, disruptions to railroad operations, 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, while some of our competitors manufacture railcars for their own leasing businesses. 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.

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 certain borrowing arrangements and financing structures that are based on the London Inter-Bank Offering Rate (“LIBOR”), primarily 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 composed 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
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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 other transportation 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
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.

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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.

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 the commodities that they carry, 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, tank containers, 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.

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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, 2021, the locations of our operations were as follows:
GATX Headquarters
Chicago, Illinois
Rail North America
Business OfficesMajor Maintenance FacilitiesMobile Units
Chicago, IllinoisColton, CaliforniaFreeport, Texas
Houston, TexasHearne, TexasGalena Park, Texas
Burlington, OntarioWaycross, GeorgiaClarkson, Ontario
Calgary, AlbertaMontreal, QuebecEdmonton, Alberta
Mexico City, MexicoMoose Jaw, SaskatchewanMontreal, Quebec
 Red Deer, Alberta
 
 Maintenance Facilities
 Plantersville, Texas
Terre Haute, Indiana
Customer Site Locations
Clarkson, Ontario
Freeport, Texas
Geismar, Louisiana*
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
Shanghai, China
__________
(*) This property was sold after December 31, 2021.

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Item 3.  Legal Proceedings

Information concerning litigation and other contingencies is described in "Note 23. 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 1,448 common shareholders of record as of January 31, 2022.

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. As of December 31, 2021, $136.9 million remained available under the repurchase authorization.
The following is a summary of common stock repurchases completed by month during the fourth quarter of 2021:

Issuer Purchases of Equity Securities
 (a)(b)(c)(d)
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
October 1, 2021 - October 31, 202133,579 $95.29 33,579 $146.4 
November 1, 2021 - November 30, 202145,493 $102.23 45,493 $141.8 
December 1, 2021 - December 31, 202148,000 $102.74 48,000 $136.9 
Total127,072 $100.59 127,072 


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Equity Compensation Plan Information as of December 31, 2021:
 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
1,663,635 (1)$73.48 (2)2,490,472
Equity Compensation Plans Not Approved by Shareholders
— — 
Total
1,663,635 2,490,472 
__________
(1) Consists of 4,200 stock appreciation rights, 1,185,079 non-qualified stock options, 146,082 performance shares, 106,840 restricted stock units and 221,434 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 12. Share-Based Compensation" in Part II, Item 8 of this Form 10-K.

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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, 2021, 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, 2016, and that all dividends were reinvested.

gmt-20211231_g4.jpg


12/31/1612/31/1712/31/1812/31/1912/31/2012/31/21
GATX$100.00 $103.78 $121.06 $144.96 $149.63 $191.42 
S&P 500100.00 121.82 116.47 153.13 181.29 233.28 
S&P MidCap 400100.00 116.23 103.33 130.37 148.16 184.81 
Russell 3000100.00 121.12 114.77 150.35 181.74 228.33 

Item 6.  [Reserved]

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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.

In the first quarter of 2021, GATX began investing directly in aircraft spare engines through its new entity, GATX Engine Leasing Ltd. ("GEL"). In 2021, GEL acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million from Rolls-Royce & Partners Finance joint ventures (collectively the "RRPF affiliates" or "RRPF"). Financial results for this business are reported in the Portfolio Management segment.

On December 29, 2020, we acquired Trifleet Leasing Holding B.V. ("Trifleet"), one of the largest tank container lessors in the world. Financial results for this business are reported in the Other segment. See "Note 4. 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.

On May 14, 2020, we completed the sale of our ASC business. 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 25. Discontinued Operations" Part II, Item 8 of this Form 10-K for additional information. Unless otherwise indicated, the following information relates to continuing operations.

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")

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic and on March 13, 2020, the United States declared a national emergency related to COVID-19. Across our operating segments, we have implemented business continuity and crisis management plans. The COVID-19 pandemic continues to evolve as new variants emerge, including the scope and duration of disruptions and the pace and timing of the eventual recovery. Our top priorities continue to be ensuring the health and safety of our global workforce and serving our various stakeholders with minimal disruptions.

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 market conditions and absolute lease rates improved throughout 2021, the effects of COVID-19 will likely continue to disrupt global manufacturing, supply chains, and consumer spending, and the risk of ongoing volatility as a result of future COVID-19 disruptions persists.

Rail International

COVID-19 had a minimal impact on our operations in Europe, but it has continued to cause disruptions to railcar manufacturers in Europe and India, and the risk of ongoing volatility as a result of future COVID-19 disruptions persists.

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. As a result of the resurgence in cases from the COVID-19 variants, disruptions at our railcar repair facilities increased during the later part of 2021, and future disruptions from additional variants could occur.

26


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

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, 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 2021, 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.

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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):
202120202019
Segment Revenues
Rail North America$891.7 $934.1 $964.5 
Rail International284.3 258.1 227.7 
Portfolio Management47.7 17.0 9.9 
Other33.7 — — 
$1,257.4 $1,209.2 $1,202.1 
Segment Profit
Rail North America$285.4 $227.6 $276.2 
Rail International105.0 83.5 78.9 
Portfolio Management60.8 77.4 62.4 
Other10.2 — — 
 461.4 388.5 417.5 
Less:
Selling, general and administrative expense198.3 172.0 180.4 
Unallocated interest (income) expense0.5 (7.7)(5.8)
Other, including eliminations11.0 3.1 3.2 
Income taxes ($55.3, $33.6 and $18.0 related to affiliates' earnings)
108.5 70.9 58.9 
Net Income from Continuing Operations (GAAP)$143.1 $150.2 $180.8 
Discontinued Operations, Net of Taxes
Net (loss) income from discontinued operations, net of taxes— (2.2)30.4 
Gain on sale of discontinued operation, net of taxes— 3.3 — 
Total Discontinued Operations, Net of Taxes (GAAP)— 1.1 30.4 
Net Income (GAAP)$143.1 $151.3 $211.2 
Net income from continuing operations, excluding tax adjustments and other items (non-GAAP) (1)$182.2 $162.5 $178.0 
Net income from discontinued operations, excluding tax adjustments and other items (non-GAAP) (1)$— $1.1 $22.3 
Net income from consolidated operations, excluding tax adjustments and other items (non-GAAP) (1)$182.2 $163.6 $200.3 
Diluted earnings per share from continuing operations (GAAP)$3.98 $4.24 $4.97 
Diluted earnings per share from discontinued operations (GAAP)$— $0.03 $0.84 
Diluted earnings per share from consolidated operations (GAAP) $3.98 $4.27 $5.81 
Diluted earnings per share from continuing operations, excluding tax adjustments and other items (non-GAAP) (1)$5.06 $4.59 $4.89 
Diluted earnings per share from discontinued operations, excluding tax adjustments and other items (non-GAAP) (1)$— $0.03 $0.62 
Diluted earnings per share from consolidated operations, excluding tax adjustments and other items (non-GAAP) (1)$5.06 $4.62 $5.51 
Return on equity (GAAP)7.2 %8.0 %11.7 %
Return on equity, excluding tax adjustments and other items (non-GAAP) (1)11.0 %10.5 %13.5 %
Investment Volume$1,131.9 $1,064.0 $722.8 
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_________
(1)     See "Non-GAAP Financial Measures" at the end of this item for further details.

2021 Summary

Net income from continuing operations was $143.1 million, or $3.98 per diluted share, for 2021 compared to $150.2 million, or $4.24 per diluted share, for 2020, and $180.8 million, or $4.97 per diluted share, for 2019. Results for 2021 included a net negative impact of $39.1 million ($1.08 per diluted share) from tax adjustments and other items, compared to a net negative impact of $12.3 million ($0.35 per diluted share) from tax adjustments and other items in 2020 and a net benefit of $2.8 million ($0.08 per diluted share) in 2019 (see "Non-GAAP Financial Measures" at the end of this item for further details).
At Rail North America, segment profit in 2021 was higher than prior year. The increase was attributable to higher net gains on asset dispositions and lower maintenance expense, partially offset by lower revenue.
At Rail International, segment profit in 2021 was higher than prior year, due to higher revenue from more railcars on lease and the positive variance of foreign exchange rates, partially offset by higher maintenance expense.
At Portfolio Management, segment profit in 2021 decreased compared to prior year, primarily due to lower share of affiliates' earnings from the RRPF affiliates, partially offset by results from our new operations at GEL and higher residual sharing gains on managed portfolio sales in the current year.
Within Other, segment profit is attributable to Trifleet operations. Trifleet was acquired by GATX on December 29, 2020.
Total investment volume was $1,131.9 in 2021, compared to $1,064.0 million in 2020, and $722.8 million in 2019.
2022 Outlook
Conditions in the Rail North American leasing market gradually improved throughout 2021, and we expect this to continue in 2022. We expect continued favorable market conditions in our Rail International and Trifleet businesses. The operating environment at RRPF is expected to continue to be challenging due to the ongoing adverse impact of COVID-19 on global air travel. We have a strong balance sheet and access to capital which we believe positions us well to manage our transportation assets based on current market conditions. However, the risk of ongoing volatility as a result of future COVID-19 disruptions persists.

We expect Rail North America's segment profit in 2022 to increase from 2021. Lease rates for railcars scheduled to renew in 2022 will likely be generally higher than expiring rates, due to the gradual market recovery we have recently experienced. We also anticipate high renewal success and slightly lower utilization, which will result in slightly higher revenue in 2022 compared to the prior year. Maintenance expense is expected to be similar to 2021. Finally, we expect remarketing income to be higher in 2022 as we continue to optimize our fleet.
Rail International's segment profit in 2022 is expected to increase from 2021 as the demand for railcars in Europe continues to be strong and we continue to invest in the fleet. Lease revenue is expected to be higher in 2022, resulting from more railcars on lease and higher lease rates. In India, absent any potential COVID-19 disruptions, we anticipate significant growth in our fleet, which will also contribute to an increase in segment profit.
We anticipate Portfolio Management's segment profit in 2022 to be lower than 2021. RRPF results are expected to decline as the reduction in long-haul global air travel will likely continue to impact financial and operating results. We will focus on finding attractive investment opportunities, such as our direct engine investments at GEL, as we continue to grow the business.
Trifleet's segment profit in 2022 is expected to increase from 2021. The tank container leasing market is expected to remain strong, and we anticipate additional investment in the fleet, which will also contribute to higher segment profit in 2022.
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.

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RAIL NORTH AMERICA

Segment Summary

The operating environment for Rail North America generally improved throughout 2021. Demand for many car types strengthened during the year, although pockets of weakness persisted in certain car types, and Rail North America experienced sequential increases in absolute lease rates throughout the year. Utilization remained strong at 99.2% at the end of the year.

During 2021, Rail North America recorded a $5.3 million net gain resulting from an insurance recovery for storm damage to a maintenance facility.

The following table shows Rail North America's segment results for the years ended December 31 (in millions):
202120202019
Revenues
Lease revenue$814.5 $838.3 $868.3 
Other revenue77.2 95.8 96.2 
   Total Revenues891.7 934.1 964.5 
Expenses
Maintenance expense235.4 264.7 267.9 
Depreciation expense261.1 258.6 256.9 
Operating lease expense39.2 49.3 54.4 
Other operating expense30.3 27.3 23.9 
   Total Expenses566.0 599.9 603.1 
Other Income (Expense)
Net gain on asset dispositions94.3 38.3 54.6 
Interest expense, net(136.2)(139.9)(134.5)
Other income (expense)1.6 (4.9)(5.3)
Share of affiliates' pre-tax loss— (0.1)— 
Segment Profit$285.4 $227.6 $276.2 
Investment Volume$574.4 $642.0 $502.2 

The following table shows the components of Rail North America's lease revenue for the years ended December 31 (in millions):
202120202019
Railcars$720.0 $741.9 $759.8 
Boxcars67.9 67.1 72.2 
Locomotives26.6 29.3 36.3 
Total$814.5 $838.3 $868.3 

Rail North America Fleet Data

At December 31, 2021, Rail North America's wholly owned fleet, excluding boxcars, consisted of approximately 101,600 railcars. Fleet utilization, excluding boxcars, was 99.2% at the end of 2021, compared to 98.1% at the end of 2020, and 99.3% at the end of 2019. Fleet utilization for approximately 12,900 boxcars was 99.7% at the end of 2021 compared to 95.8% at the end of 2020, and 95.0% 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 2021, an average of approximately 100,800 railcars, excluding boxcars, were on lease, compared to 101,700 in 2020, and 103,500 in 2019. Changes in railcars on lease compared to prior periods are impacted by the utilization of new railcars purchased
30


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, 2021, leases for approximately 18,500 tank and freight cars and approximately 2,000 boxcars are scheduled to expire in 2022. These amounts exclude railcars on leases expiring in 2022 that have already been renewed or assigned to a new lessee.

In 2018, we amended a long-term supply agreement with Trinity Rail Group, LLC ("Trinity"), a subsidiary of Trinity Industries to extend the term to December 2023, and we agreed to purchase 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through 2023. At December 31, 2021, 3,036 railcars have been ordered pursuant to the amended terms of the agreement, of which 2,280 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 agreed to purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-year period, beginning in April 2019 and ending in December 2023. ARI's railcar manufacturing business was acquired by a subsidiary of The Greenbrier Companies, Inc. ("Greenbrier") on July 26, 2019, and such subsidiary assumed all of ARI's obligations under our long-term supply agreement. As of December 31, 2021, 6,141 railcars have been ordered, of which 3,838 railcars have been delivered. The agreement included an option to order additional railcars subject to certain restrictions and, as of December 31, 2021, we still have the option to order 2,200 additional railcars during the remaining term of the agreement.

The following table shows fleet activity for Rail North America railcars, excluding boxcars, for the years ended December 31:
202120202019
Beginning balance103,745 102,845 105,472 
Cars added3,371 4,696 3,145 
Cars scrapped(3,076)(2,153)(2,172)
Cars sold(2,470)(1,643)(3,600)
Ending balance101,570 103,745 102,845 
Utilization rate at year end99.2 %98.1 %99.3 %
Active railcars at year end100,719 101,815 102,127 
Average (monthly) active railcars100,769 101,658 103,452 
31



gmt-20211231_g5.jpg

The following table shows fleet statistics for Rail North America boxcars for the years ended December 31:
202120202019
Ending balance12,946 14,315 15,264 
Utilization rate at year end99.7 %95.8 %95.0 %

The following table shows fleet activity for Rail North America locomotives for the years ended December 31:
202120202019
Beginning balance645 661 702 
Locomotives added, net of scrapped or sold(68)(16)(41)
Ending balance577 645 661 
Utilization rate at year end89.8 %81.1 %85.9 %
Active locomotives at year end518 523 568 
Average (monthly) active locomotives521 537 608 
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 2021, the renewal rate change of the LPI was negative 8.5%, compared to negative 23.5% in 2020 and negative 3.9% in 2019. Lease terms on renewals for cars in the LPI averaged 32 months in 2021, compared to 31 months in 2020, and 39 months in 2019. Additionally, the renewal success rate, which represents the percentage of railcars on expiring leases that were renewed with the existing lessee, was 82.7% in 2021, compared to 70.8% in 2020, and 82.2% in 2019. The renewal success rate is an important metric
32


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

gmt-20211231_g6.jpg

Comparison of Reported Results

Segment Profit

In 2021, segment profit of $285.4 million increased 25.4% compared to $227.6 million in 2020. Segment profit in 2021 includes a net gain of $5.3 million attributable to net insurance recoveries for storm damage to a maintenance facility. Excluding this gain, results for Rail North America were $52.5 million higher than 2020, resulting from higher net gains on asset dispositions and lower maintenance expense, partially offset by lower revenue. The amount and timing of disposition gains is dependent on a number of factors and will vary from year to year.

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.

Revenues

In 2021, lease revenue decreased $23.8 million, or 2.8%, a result of fewer railcars and locomotives on lease and the impact from lower lease rates we have recently experienced. Other revenue decreased $18.6 million, due to lower repair revenue, as a result of the mix of repairs.

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.
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Expenses

In 2021, maintenance expense decreased $29.3 million. The decrease resulted primarily from fewer regulatory compliance events, fewer repairs performed by the railroads, and a higher share of repairs being performed by GATX's owned shops versus contract shops. Depreciation expense increased $2.5 million due to the timing of new railcar investments and dispositions. Operating lease expense decreased $10.1 million, resulting from the purchase of railcars previously on operating leases. Other operating expense increased $3.0 million, due to higher insurance expense and higher switching, storage, and freight costs.

In 2020, maintenance expense decreased $3.2 million. The decrease resulted primarily from fewer repairs performed by the railroads 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.

Other Income (Expense)

In 2021, net gain on asset dispositions increased $56.0 million, due to higher asset remarketing gains, higher net scrapping gains, and a net gain on insurance recoveries as noted above. The amount and timing of disposition gains is dependent on a number of factors and will vary from year to year. Higher net scrapping gains were primarily a result of a higher scrap price per ton in 2021. Net interest expense decreased $3.7 million, primarily driven by a lower average interest rate, partially offset by a higher average debt balance.

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.

Investment Volume

During 2021, investment volume was $574.4 million compared to $642.0 million in 2020, and $502.2 million in 2019. We acquired 3,947 railcars in 2021, compared to 5,103 railcars in 2020, and 3,225 railcars in 2019.

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 significantly higher operating results in 2021. Demand for railcars in Europe remained strong, and renewal lease rates for most car types continued to increase modestly. GRE continued to grow and diversify its fleet during the year. However, the pace of fleet growth in 2021 was negatively impacted by new car delivery delays.

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. The pace of fleet growth in 2021 was negatively impacted by railcar manufacturing and supply disruptions as a result of COVID-19.

During 2021, 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):
202120202019
Revenues
Lease revenue$272.9 $248.4 $219.2 
Other revenue11.4 9.7 8.5 
   Total Revenues284.3 258.1 227.7 
Expenses
Maintenance expense57.6 50.8 46.5 
Depreciation expense73.6 66.6 57.8 
Other operating expense9.0 7.5 6.8 
   Total Expenses140.2 124.9 111.1 
Other Income (Expense)
Net gain on asset dispositions2.7 1.2 1.7 
Interest expense, net(45.2)(45.9)(40.6)
Other income (expense)3.4 (5.0)1.2 
Segment Profit$105.0 $83.5 $78.9 
Investment Volume$173.3 $216.0 $215.7 

GRE Fleet Data

At December 31, 2021, GRE's wholly owned fleet consisted of approximately 27,100 railcars. Fleet utilization was 98.7% at the end of 2021, compared to 98.1% at the end of 2020 and 99.3% at the end of 2019. Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.

During 2021, an average of approximately 26,200 railcars were on lease, compared to 25,200 in 2020 and 23,700 in 2019. 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:
202120202019
Beginning balance26,343 24,561 23,412 
Cars added1,131 2,071 1,417 
Cars scrapped or sold(365)(289)(268)
Ending balance27,109 26,343 24,561 
Utilization rate at year end98.7 %98.1 %99.3 %
Active railcars at year end26,754 25,831 24,392 
Average (monthly) active railcars26,240 25,174 23,665 

35


gmt-20211231_g7.jpg\

GRI Fleet Data

The following table shows fleet activity for GRI railcars for the years ended December 31:
202120202019
Beginning balance4,156 3,679 2,053 
Cars added715 477 1,626 
Cars scrapped or sold(41)— — 
Ending balance4,830 4,156 3,679 
Utilization rate at year end100.0 %99.0 %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 2021, fluctuations in the value of the euro, relative to the U.S. dollar, positively impacted lease revenue by approximately $7.6 million and segment profit, excluding other income (expense), by approximately $4.5 million compared to 2020. 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.

Segment Profit

In 2021, segment profit of $105.0 million increased 25.7% compared to $83.5 million in 2020. The increase was primarily due to higher revenue from more railcars on lease, as well as the positive variance of foreign exchange rates.

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.

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Revenues

In 2021, lease revenue increased $24.5 million, or 9.9%, due to more railcars on lease at GRE and GRI and the impact of foreign exchange rates. Other revenue increased $1.7 million, driven by higher repair revenue.

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

Expenses

In 2021, maintenance expense increased $6.8 million, primarily due to higher wheelset costs and higher costs for other repairs, as well as the impact of foreign exchange rates. Depreciation expense increased $7.0 million, resulting from the impact of new railcars added to the fleet.
    
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.

Other Income (Expense)

In 2021, net gain on asset dispositions increased $1.5 million, attributable to higher asset remarketing gains and higher net scrapping gains. Higher net scrapping gains were positively impacted by a higher scrap price per ton in 2021. Net interest expense decreased $0.7 million, due to a lower average interest rate, partially offset by a higher average debt balance. Other income (expense) increased $8.4 million, driven by the positive impact of changes in foreign exchange rates on non-functional currency items and lower net litigation costs related to the Viareggio matter. See "Note 23. Legal Proceedings and Other Contingencies" in Part II, Item 8 of this Form 10-K for further details about the Viareggio matter.

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 income (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.

Investment Volume

Investment volume was $173.3 million in 2021, $216.0 million in 2020, and $215.7 million in 2019. During 2021, GRE acquired 1,131 railcars (including 335 assembled at the GRE Ostróda, Poland facility), GRI acquired 715 railcars, and Rail Russia did not acquire any railcars, compared to 2,071 railcars at GRE (including 374 assembled at the GRE Ostróda, Poland facility), 477 railcars at GRI, and no railcars at Rail Russia in 2020, and 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.

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 $56.5 million for 2021, $95.5 million for 2020, and $94.5 million for 2019. Financial results for 2020 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. GATX's 50% share of the resulting pre-tax net gains was $35.3 million. Portfolio Management did not make any
37


additional investment in the RRPF affiliates in 2021, 2020, or 2019. There were no dividend distributions from the RRPF affiliates in 2021 or 2020, compared to $27.5 million in 2019.

The operating environment for RRPF continued to be challenging in 2021 due to the ongoing adverse impact of COVID-19 on air travel. RRPF continues to face pressure on both utilization and lease rates as a result of rent deferral requests that have been granted in the past, and the impact from a number of its customers having declared bankruptcy or undertaken restructuring processes. RRPF remains focused on preserving a strong liquidity position in the current environment. The risk of ongoing volatility as a result of future COVID-19 disruptions persists.

In the first quarter of 2021, GATX began investing directly in aircraft spare engines through its new entity, GEL. During the first quarter of 2021, GEL acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million from the RRPF affiliates. All engines are on long-term leases with airline customers and are managed by the RRPF affiliates. Despite the ongoing adverse impact of COVID-19 on air travel, GEL was able to maintain all of its engines on lease with customers during the year.

Portfolio Management also owns marine assets, consisting of five liquefied gas-carrying vessels (the "Specialized Gas Vessels"). The Specialized Gas Vessels are utilized to transport pressurized gases and chemicals, such as liquefied petroleum gas, liquefied natural gas, and ethylene, primarily on short- and medium-term spot contracts for major oil and chemical customers worldwide. The gas shipping market continued to experience modest improvement in 2021.

In addition, Portfolio Management manages leases for third parties for which it receives management fee income and earns residual sharing income from the sale of managed assets. During 2021, Portfolio Management recorded $5.6 million of residual sharing gains on managed portfolio sales.

Portfolio Management's total asset base was $1,048.7 million at December 31, 2021, compared to $706.1 million at December 31, 2020, and $653.7 million at December 31, 2019.

The following table shows Portfolio Management’s segment results for the years ended December 31 (in millions):
202120202019
Revenues
Lease revenue$28.1 $0.8 $1.0 
Marine operating revenue19.1 15.6 8.2 
Other revenue0.5 0.6 0.7 
   Total Revenues47.7 17.0 9.9 
Expenses
Marine operating expense17.5 19.7 18.9 
Depreciation expense17.6 5.3 6.6 
Other operating expense1.7 0.5 0.6 
   Total Expenses36.8 25.5 26.1 
Other Income (Expense)
Net gain (loss) on asset dispositions8.0 2.2 (4.7)
Interest expense, net(16.6)(12.2)(11.2)
Other income2.0 — — 
Share of affiliates' pre-tax income56.5 95.9 94.5 
Segment Profit$60.8 $77.4 $62.4 
Investment Volume$353.0 $0.5 $— 

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The following table shows the net book value of Portfolio Management’s assets as of December 31 (in millions):
202120202019
Investment in RRPF Affiliates$588.1 $584.7 $512.4 
GEL owned aircraft spare engines340.4 — — 
Marine equipment103.6 111.1 119.9 
Other assets16.6 10.3 21.4 
Managed assets (1)9.8 17.3 24.8 
________
(1) Amounts shown represent the estimated net book value of assets managed for third parties and are not included in our consolidated balance sheets.

RRPF Affiliates Engine Portfolio Data

As of December 31, 2021, the RRPF affiliates' fleet consisted of 407 aircraft spare engines with a net book value of $4,399.9 million, compared to 445 aircraft spare engines with a net book value of $4,784.1 million at the end of 2020 and 478 aircraft spare engines with a net book value of $5,036.4 million at the end of 2019.

Engine utilization for the RRPF affiliates was 94.3% at December 31, 2021, compared to 92.8% at the end of 2020 and 96.9% at the end of 2019. Utilization is calculated as the number of engines on lease as a percentage of total engines in the fleet.

The following table shows portfolio activity for the RRPF affiliates' aircraft spare engines for the years ended December 31:
202120202019
Beginning balance445 478 452 
Engine acquisitions20 46 
Engine dispositions(43)(53)(20)
Ending balance407 445 478 
Utilization rate at year end94.3 %92.8 %96.9 %





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gmt-20211231_g8.jpg

Comparison of Reported Results

Segment Profit

In 2021, segment profit was $60.8 million compared to $77.4 million in 2020. The decrease is primarily due to lower share of affiliates' earnings at the RRPF affiliates, partially offset by higher results from our new operations at GEL and higher residual sharing gains on managed portfolio sales in the current year.

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.

Revenues

In 2021, lease revenue was $28.1 million compared to $0.8 million in 2020, due to the addition of our GEL operations in the current year. Marine operating revenue increased $3.5 million, driven by higher utilization and charter rates from the Specialized Gas Vessels.

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.

Expenses
    
In 2021, marine operating expense decreased $2.2 million, due to lower bunker fuel expense, offset by higher repairs and maintenance costs. Depreciation expense increased $12.3 million, due to the investment in new aircraft spare engines in the current year at GEL.

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.

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Other Income (Expense)

In 2021, net gain (loss) on asset dispositions was favorable by $5.8 million, largely due to higher residual sharing gains on managed portfolio sales in the current year.

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 2021, income from our share of affiliates' earnings decreased $39.4 million, driven by lower asset remarketing income, including $35.3 million of gains in 2020 from a transaction at RRPF involving the refinancing and sale of a group of aircraft spare engines.

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 in 2020, due to the significant reduction in global air travel resulting from COVID-19.

Investment Volume

Investment volume was $353.0 million in 2021, compared to $0.5 million in 2020 and no investment in 2019. During 2021, GEL acquired 14 aircraft spare engines.
OTHER
Other is composed of Trifleet operations, as well as selling, general and administrative expenses ("SG&A"), unallocated interest expense, miscellaneous income and expense not directly associated with the reporting segments, and certain eliminations.

On December 29, 2020, GATX acquired Trifleet, one of the largest tank container lessors in the world. See "Note 4. 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):
202120202019
Other segment profit$10.2 $— $— 
Selling, general and administrative expense198.3 172.0 180.4 
Unallocated interest expense ( income)0.5 (7.7)(5.8)
Other expense (income), including eliminations11.0 3.1 3.2 

Trifleet Summary

The worldwide tank container leasing market improved throughout 2021, as demand for tank containers was strong. As a result, Trifleet experienced higher utilization of its tank containers and higher lease rates during the year. In addition, Trifleet continued to invest in new tank containers throughout the year.

Trifleet Tank Container Data

At December 31, 2021, Trifleet's owned and managed fleet consisted of approximately 20,000 tank containers compared to 19,000 at the end of the prior year. Fleet utilization was 89.2% at December 31, 2021 compared to 80.2% at the end of the prior year. Utilization is calculated as the number of tank containers on lease as a percentage of total tank containers in the fleet.

The following table shows fleet statistics for Trifleet's tank containers for the years ended December 31:
20212020
Ending balance - owned and managed19,996 19,031 
Utilization rate at year-end - owned and managed89.2 %80.2 %
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SG&A, Unallocated Interest and Other

In 2021, SG&A of $198.3 million increased $26.3 million from 2020. The increase was primarily attributable to higher employee compensation expenses, largely due to higher share-based compensation expenses, and the inclusion of Trifleet SG&A expenses in the current year.

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.

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 2021, other expense (income), including eliminations, of $11.0 million increased $7.9 million from 2020, driven by the write-off of unamortized deferred financing costs associated with the early redemption of debt and higher non-service pension expense, resulting from a settlement expense, both recorded in the current year.

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

Consolidated Income Taxes

See "Note 13. 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. 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 25. Discontinued Operations" in Part II, Item 8 of this Form 10-K for additional information. The ASC business represents 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):
202120202019
Discontinued operations, net of taxes
Net (loss) income from discontinued operations, net of taxes$— $(2.2)$30.4 
Gain on sale of discontinued operations, net of taxes— 3.3 — 
Total Discontinued operations, net of taxes$— $1.1 $30.4 

Comparison of Reported Results

As a result of the completion of the sale in 2020, there were no operating results in 2021.

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.

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BALANCE SHEET DISCUSSION

Assets

Total assets were $9.5 billion at December 31, 2021, compared to $8.9 billion at December 31, 2020. The increase in total assets was primarily driven by the acquisition of aircraft spare engines at GEL and an increase in operating assets at Rail North America.

The following table shows total balance sheet assets by segment as of December 31 (in millions):
20212020
Rail North America$6,141.7 $5,944.4 
Rail International1,729.9 1,745.8 
Portfolio Management1,048.7 706.1 
Other621.4 541.3 
Total$9,541.7 $8,937.6 

Gross Receivables

Receivables of $170.0 million at December 31, 2021 decreased $21.3 million from December 31, 2020, primarily due to the timing of payments by customers.

Allowance for Losses
As of December 31, 2021, allowance for losses totaled $6.2 million, or 9.0% of rent and other receivables, compared to $6.5 million, or 8.7%, at December 31, 2020. Both balances related entirely to general allowances.

See "Note 18. Allowance for Losses" in Part II, Item 8 of this Form 10-K.

Operating Assets and Facilities

Net operating assets and facilities increased $614.1 million from 2020. The increase was primarily due to investments of $1,115.2 million, including the operating assets acquired at GEL, and $86.8 million for the purchase of assets previously leased, partially offset by depreciation of $371.6 million, asset dispositions of $145.2 million, and negative foreign exchange rate effects of $117.4 million.

Investments in Affiliated Companies

Investments in affiliated companies increased $3.7 million in 2021. The increase was primarily driven by our share of earnings from the RRPF affiliates.

The following table shows our investments in affiliated companies by segment as of December 31 (in millions):
20212020
Rail North America$0.3 $— 
Portfolio Management588.1 584.7 
Total$588.4 $584.7 

See "Note 7. Investments in Affiliated Companies" in Part II, Item 8 of this Form 10-K.

Goodwill

Goodwill decreased $20.7 million from the prior year. The decrease was primarily driven by the final adjustments recorded as part of the purchase price allocation related to the Trifleet acquisition. See "Note 4. Business Combinations" in Part II, Item 8 of this Form 10-K for additional information. The remaining changes in goodwill resulted from fluctuations in foreign currency exchange rates. We tested our goodwill for impairment in the fourth quarter of 2021, and no impairment was indicated.

See "Note 17. Goodwill" in Part II, Item 8 of this Form 10-K.
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Debt

Total debt increased $553.0 million from the prior year. Issuances of long-term debt of $1,507.4 million were offset by maturities and principal payments of $884.0 million and the effects of foreign exchange rates on foreign debt balances.

The following table shows the details of our long-term debt issuances in 2021 ($ in millions):
Type of DebtTermInterest RatePrincipal Amount
Recourse Unsecured30 years3.1% Fixed$550.0
Recourse Unsecured10 years1.9% Fixed400.0
Recourse Unsecured (1)10 years1.6% Fixed86.7
Recourse Unsecured (1)7 years1.2% Fixed60.1 
Recourse Unsecured (1)5 years0.9% Fixed26.6 
Recourse Unsecured (2)3 years1.0% Floating (3)384.0 
$1,507.4 
________
(1)     Denominated in euros, but presented in U.S. dollars in this table.
(2)    In 2021, we drew $384 million on a delayed draw term loan agreement and subsequently repaid $134 million. At December 31, 2021, $250 million was outstanding.
(3)    Floating interest rate at December 31, 2021.

As of December 31, 2021, our outstanding debt had a weighted-average remaining term of 9.0 years and a weighted-average interest rate of 3.79%, compared to 8.1 years and 4.04% at December 31, 2020.

The following table shows the carrying value of our debt and lease obligations by major component as of December 31 (in millions):
20212020
SecuredUnsecuredTotalTotal
Commercial paper and borrowings under bank credit facilities$— $18.1 $18.1 $23.6 
Recourse debt— 5,887.5 5,887.5 5,329.0 
Operating lease obligations286.2 — 286.2 348.6 
Finance lease obligations1.5 — 1.5 33.3 
Total$287.7 $5,905.6 $6,193.3 $5,734.5 

See "Note 8. Debt" in Part II, Item 8 of this Form 10-K.

Equity

Total equity increased $61.8 million in 2021, primarily due to net income of $143.1 million, $28.7 million from the effects of share-based compensation, $26.7 million from the effects of post-retirement benefit plan adjustments, and $1.9 million of net unrealized gains on derivatives. These increases were offset by dividends of $73.7 million, $51.7 million of foreign currency translation adjustments due to the balance sheet effects of a stronger U.S. dollar relative to the foreign currencies in which our subsidiaries conduct business, primarily the euro, Canadian dollar, and Polish zloty, and $13.2 million of stock repurchases.

See "Note 20. Shareholders’ Equity" in Part II, Item 8 of this Form 10-K.

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CASH FLOW DISCUSSION

We generate a significant amount of cash from operating activities and investment portfolio proceeds. We also access domestic and international capital markets by issuing unsecured or secured debt and commercial paper. We use these resources, along with available cash balances, to fulfill our debt, lease, and dividend obligations, to support our share repurchase programs, and to fund portfolio investments and capital additions. We primarily use cash from operations to fund daily operations. The timing of asset dispositions and changes in working capital impact cash flows from portfolio proceeds and operations. As a result, these cash flow components may vary materially from year to year.

As of December 31, 2021, we had an unrestricted cash balance of $344.3 million. We also have a $250 million 3-year unsecured revolving credit facility in the U.S. that matures in 2024 and a $600 million, 5-year unsecured revolving credit facility in the U.S. that matures in 2026, both of which were fully available as of December 31, 2021.

The following table shows our principal sources and uses of cash from continuing operations for the years ended December 31 (in millions):
202120202019
Principal sources of cash
Net cash provided by operating activities
$507.2 $436.8 $425.8 
Portfolio proceeds
187.1 131.1 250.3 
Other asset sales
54.7 26.0 23.0 
Proceeds from issuance of debt, commercial paper, and credit facilities
1,487.8 1,592.9 743.0 
Total
$2,236.8 $2,186.8 $1,442.1 
Principal uses of cash
Portfolio investments and capital additions
$(1,131.9)$(1,064.0)$(722.8)
Repayments of debt, commercial paper, and credit facilities
(884.0)(1,100.0)(504.6)
Purchases of assets previously leased - investing activities
— — (1.0)
Purchases of assets previously leased - financing activities
(77.2)(40.0)(11.3)
Stock repurchases
(13.1)— (150.0)
Dividends
(74.3)(71.0)(69.3)
Total
$(2,180.5)$(2,275.0)$(1,459.0)

Additionally, net cash from discontinued operations, including proceeds from the sale of ASC, was $1.1 million, $254.2 million, and $(0.1) million for the years ended December 31, 2021, 2020, and 2019.

Net Cash Provided by Operating Activities

Net cash provided by operating activities of $507.2 million increased $70.4 million compared to 2020. Comparability among reporting periods is impacted by the timing of changes in working capital items. Specifically, lower cash payments for operating leases and income taxes were partially offset by higher payments for other operating expenses.

Portfolio Investments and Capital Additions

Portfolio investments and capital additions primarily consist of purchases of operating assets, investments in affiliates, and capitalized asset improvements. Portfolio investments and capital additions of $1,131.9 million increased $67.9 million compared to 2020, primarily due to the acquisition of 14 aircraft spare engines at GEL and tank containers at Trifleet, partially offset by the acquisition of Trifleet in 2020 and fewer railcars acquired at Rail North America and Rail International. The timing of investments depends on purchase commitments, transaction opportunities, and market conditions.

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The following table shows portfolio investments and capital additions by segment for the years ended December 31 (in millions):
202120202019
Rail North America$574.4 $642.0 $502.2 
Rail International173.3 216.0 215.7 
Portfolio Management353.0 0.5 — 
Other31.2 205.5 4.9 
Total$1,131.9 $1,064.0 $722.8 

Additionally, portfolio investments and capital additions for discontinued operations were $0.0 million, $18.2 million, and $18.9 million for the years ended December 31, 2021, 2020 and 2019.

Portfolio Proceeds

Portfolio proceeds primarily consist of proceeds from sales of operating assets and finance lease receipts, as well as capital distributions from affiliates. Portfolio proceeds of $187.1 million for the year ended December 31, 2021 increased $56.0 million compared to the year ended December 31, 2020, primarily due to higher proceeds from railcar and locomotive sales at Rail North America.
    
The following table shows portfolio proceeds for the years ended December 31 (in millions):
202120202019
Proceeds from sales of operating assets
$181.1 $123.6 $239.6 
Finance lease rents received, net of earned income
6.0 7.0 8.4 
Capital distributions and proceeds related to affiliates