Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
GATX CORPORATION REPORTS 2023 SECOND-QUARTER RESULTS
•Rail North America’s fleet utilization remained high at 99.3%
•Investment volume was $486.6 million in the second quarter and totaled $873.6 million year to date
•GATX's second-quarter direct investment of aircraft spare engines totaled $239 million
•Company expects to be at the upper end of or modestly exceed the previously announced 2023 full-year earnings guidance range
CHICAGO, July 25, 2023 - GATX Corporation (NYSE: GATX) today reported 2023 second-quarter net income of $63.3 million, or $1.74 per diluted share, compared to net income of $2.6 million, or $0.07 per diluted share, in the second quarter of 2022. The 2023 second-quarter results include a net positive impact of $0.2 million, or $0.01 per diluted share, from Tax Adjustments and Other Items. The 2022 second-quarter results include a net negative impact of $35.9 million, or $1.00 per diluted share, from Tax Adjustments and Other Items.
Net income for the first six months of 2023 was $140.7 million, or $3.87 per diluted share, compared to $78.4 million, or $2.18 per diluted share, in the prior year period. The 2023 year-to-date results include a net negative impact of $1.1 million, or $0.03 per diluted share, from Tax Adjustments and Other Items. The 2022 year-to-date results include a net negative impact of $44.4 million, or $1.23 per diluted share, from Tax Adjustments and Other Items. Details related to these items are provided in the attached Supplemental Information under Tax Adjustments and Other Items.
"We see continued strong demand globally for the majority of railcar types in our existing fleets," said Robert C. Lyons, president and chief executive officer of GATX. "Rail North America’s fleet utilization was 99.3% at the end of the second quarter and our renewal success rate was 85.3%. The renewal lease rate change of GATX’s Lease Price Index was positive 33.1% for the quarter, with an average renewal term of 61 months. Our commercial team remains focused on improving renewal lease rates and lengthening lease terms on many car types.
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"Rail International performed well and continued to experience higher renewal lease rates compared to expiring rates for most railcar types. For the second consecutive quarter, GATX Rail Europe and GATX Rail India expanded their fleets with a combined total of nearly 1,000 newly built railcars."
Mr. Lyons added, "In Portfolio Management, results were driven by improved performance at the Rolls-Royce and Partners Finance affiliates as international air passenger demand continues to recover. In addition, we identified attractive opportunities to increase our direct investment in aircraft spare engines, acquiring nine additional engines for $239 million during the quarter."
Mr. Lyons concluded, "Based on year-to-date performance and our outlook for the remainder of the year, we expect our 2023 full-year earnings to be at the upper end of or modestly exceed our previously announced guidance range of $6.50–$6.90 per diluted share, with variability around this guidance driven primarily by the timing of remarketing events. This guidance excludes any impact from Tax Adjustments and Other Items."
RAIL NORTH AMERICA
Rail North America reported segment profit of $79.3 million in the second quarter of 2023, compared to $53.1 million in the second quarter of 2022. Year to date 2023, Rail North America reported segment profit of $174.5 million, compared to $173.5 million in the same period of 2022. Higher 2023 second-quarter and year-to-date results were due to higher lease revenue and higher gains on asset dispositions, partially offset by higher interest and maintenance expenses.
At June 30, 2023, Rail North America’s wholly owned fleet was composed of approximately 109,500 cars, including approximately 9,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet. Fleet utilization was 99.3% at the end of the second quarter of 2023, compared to 99.3% at the end of the prior quarter and 99.4% at the end of the second quarter of 2022.
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During the second quarter of 2023, the renewal lease rate change of the LPI was positive 33.1%. This compares to positive 28.3% in the prior quarter and positive 6.1% in the second quarter of 2022. The average lease renewal term for all cars included in the LPI during the second quarter of 2023 was 61 months, compared to 55 months in the prior quarter and 51 months in the second quarter of 2022. The 2023 second-quarter renewal success rate was 85.3%, compared to 77.9% in the prior quarter and 87.7% in the second quarter of 2022. Rail North America’s investment volume during the second quarter of 2023 was $161.3 million.
Additional fleet statistics, including information on the boxcar fleet, and macroeconomic data related to Rail North America’s business are provided on the last page of this press release.
RAIL INTERNATIONAL
Rail International’s segment profit was $27.3 million in the second quarter of 2023, compared to $28.3 million in the second quarter of 2022. Year to date 2023, Rail International reported segment profit of $50.8 million, compared to $53.2 million in the same period of 2022. Results in the comparative periods were favorably impacted by more railcars on lease and negatively impacted by changes in foreign currency exchange rates.
At June 30, 2023, GATX Rail Europe’s (GRE) fleet consisted of approximately 28,800 cars. Utilization was 96.9%, compared to 98.5% at the end of the prior quarter and 99.9% at the end of the second quarter of 2022. Demand for the majority of railcar types remains solid, with the decline in utilization driven primarily by weakness in the European intermodal sector. Additional fleet statistics for GRE are provided on the last page of this press release.
During the quarter, GATX Rail India took delivery of over 570 newly built cars, bringing its total fleet to over 6,900 railcars at the end of the second quarter. Demand for railcars in India remains robust, driven by continued growth in the economy and infrastructure development.
PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $26.6 million in the second quarter of 2023, compared to segment loss of $15.7 million in the second quarter of 2022. Year to date 2023, segment profit was $54.9 million, compared to segment loss of $19.6 million in the same period of 2022.
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2023 and 2022 second-quarter results include a net positive impact of $0.2 million and a net negative impact of $31.5 million, respectively, from Tax Adjustments and Other Items. 2023 and 2022 year-to-date results include net negative impacts of $1.4 million and $46.8 million, respectively, from Tax Adjustments and Other Items. Additional details are provided in the attached Supplemental Information under Tax Adjustments and Other Items.
Excluding these impacts, higher 2023 second-quarter and year-to-date segment results were driven primarily by increased earnings from the Rolls-Royce and Partners Finance (RRPF) affiliates and GATX Engine Leasing, the Company’s wholly owned engine portfolio. Higher affiliate earnings from RRPF was due to improved performance across the existing engine leasing portfolio and higher remarketing income.
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COMPANY DESCRIPTION
At GATX Corporation (NYSE: GATX), we empower our customers to propel the world forward. GATX leases transportation assets including railcars, aircraft spare engines and tank containers to customers worldwide. Our mission is to provide innovative, unparalleled service that enables our customers to transport what matters safely and sustainably while championing the well-being of our employees and communities. Headquartered in Chicago, Illinois since its founding in 1898, GATX has paid a quarterly dividend, uninterrupted, since 1919.
TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss 2023 second-quarter results. Call details are as follows:
Tuesday, July 25, 2023
11 a.m. Eastern Time
Domestic Dial-In: 1-888-660-6118
International Dial-In: 1-929-203-1802
Replay: 1-800-770-2030 or 1-647-362-9199 / Access Code: 2548217
Call-in details, a copy of this press release and real-time audio access are available at www.gatx.com. Please access the call 15 minutes prior to the start time. A replay will be available on the same site starting at 2 p.m. (Eastern Time), July 25, 2023.
AVAILABILITY OF INFORMATION ON GATX'S WEBSITE
Investors and others should note that GATX routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the GATX Investor Relations website. While not all of the information that the Company posts to the GATX Investor Relations website is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media and others interested in GATX to review the information that it shares on www.gatx.com under the “Investors” tab.
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FORWARD-LOOKING STATEMENTS
Statements in this Earnings Release not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those discussed. These 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 in our other filings with the SEC, including our Form 10-K for the year ended December 31, 2022 and in any subsequent reports on Form 10-Q, could cause actual results to differ materially from our current expectations expressed in forward-looking statements:
•the impact of the ongoing military action between Russia and Ukraine, including sanctions and countermeasures, on domestic and global economic and geopolitical conditions in general, including supply chain challenges and disruptions •the duration and effects of the global COVID-19 pandemic and measures taken in response, including adverse impacts on our 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 or increased interest rates ◦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" or labor strikes or shortages ◦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 •prolonged inflation or deflation •inability to attract, retain, and motivate qualified personnel, including key management personnel •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 •competitive factors in our primary markets, including competitors with significantly lower costs of capital •risks related to our international operations and expansion into new geographic markets, including laws, regulations, tariffs, taxes, treaties or trade barriers affecting our activities in the countries where we do business •changes in, or failure to comply with, laws, rules, and regulations •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 climate change, severe weather events and natural disasters, and other environmental, social and governance matters •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 | |||||||
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FOR FURTHER INFORMATION CONTACT:
GATX Corporation
Shari Hellerman
Senior Director, Investor Relations, ESG, and External Communications
312-621-4285
shari.hellerman@gatx.com
(7/25/23)
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GATX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Lease revenue | $ | 308.6 | $ | 284.9 | $ | 610.6 | $ | 568.2 | |||||||||||||||
Marine operating revenue | 2.0 | 5.2 | 5.5 | 11.4 | |||||||||||||||||||
Other revenue | 32.6 | 22.6 | 66.0 | 49.7 | |||||||||||||||||||
Total Revenues | 343.2 | 312.7 | 682.1 | 629.3 | |||||||||||||||||||
Expenses | |||||||||||||||||||||||
Maintenance expense | 82.3 | 70.8 | 166.2 | 145.4 | |||||||||||||||||||
Marine operating expense | 2.4 | 3.9 | 4.4 | 8.1 | |||||||||||||||||||
Depreciation expense | 92.1 | 90.0 | 181.9 | 179.5 | |||||||||||||||||||
Operating lease expense | 9.0 | 9.0 | 18.0 | 18.1 | |||||||||||||||||||
Other operating expense | 11.0 | 9.3 | 22.0 | 20.0 | |||||||||||||||||||
Selling, general and administrative expense | 52.0 | 47.9 | 102.4 | 95.1 | |||||||||||||||||||
Total Expenses | 248.8 | 230.9 | 494.9 | 466.2 | |||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
Net gain (loss) on asset dispositions | 41.1 | (24.2) | 88.2 | 49.5 | |||||||||||||||||||
Interest expense, net | (63.7) | (51.9) | (122.7) | (103.1) | |||||||||||||||||||
Other expense | (4.9) | (11.3) | (8.9) | (13.3) | |||||||||||||||||||
Income before Income Taxes and Share of Affiliates’ Earnings | 66.9 | (5.6) | 143.8 | 96.2 | |||||||||||||||||||
Income taxes | (17.6) | (2.7) | (37.8) | (25.1) | |||||||||||||||||||
Share of affiliates’ earnings, net of taxes | 14.0 | 10.9 | 34.7 | 7.3 | |||||||||||||||||||
Net Income | $ | 63.3 | $ | 2.6 | $ | 140.7 | $ | 78.4 | |||||||||||||||
Share Data | |||||||||||||||||||||||
Basic earnings per share | $ | 1.74 | $ | 0.07 | $ | 3.88 | $ | 2.21 | |||||||||||||||
Average number of common shares | 35.6 | 35.5 | 35.6 | 35.5 | |||||||||||||||||||
Diluted earnings per share | $ | 1.74 | $ | 0.07 | $ | 3.87 | $ | 2.18 | |||||||||||||||
Average number of common shares and common share equivalents | 35.7 | 36.0 | 35.7 | 36.0 | |||||||||||||||||||
Dividends declared per common share | $ | 0.55 | $ | 0.52 | $ | 1.10 | $ | 1.04 | |||||||||||||||
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GATX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
| June 30 | December 31 | ||||||||||
| 2023 | 2022 | ||||||||||
Assets | |||||||||||
Cash and Cash Equivalents | $ | 317.5 | $ | 303.7 | |||||||
Restricted Cash | 0.2 | 0.3 | |||||||||
Short-Term Investments | — | 148.5 | |||||||||
Receivables | |||||||||||
Rent and other receivables | 70.0 | 71.4 | |||||||||
Finance leases (as lessor) | 127.9 | 96.5 | |||||||||
Less: allowance for losses | (5.9) | (5.9) | |||||||||
| 192.0 | 162.0 | ||||||||||
Operating Assets and Facilities | 12,392.5 | 11,675.0 | |||||||||
Less: allowance for depreciation | (3,521.8) | (3,424.7) | |||||||||
| 8,870.7 | 8,250.3 | ||||||||||
Lease Assets (as lessee) | |||||||||||
Right-of-use assets, net of accumulated depreciation | 228.4 | 243.5 | |||||||||
| 228.4 | 243.5 | ||||||||||
Investments in Affiliated Companies | 611.7 | 575.1 | |||||||||
Goodwill | 119.0 | 117.2 | |||||||||
Other Assets ($9.7 and $40.0 related to assets held for sale) | 250.6 | 271.4 | |||||||||
Total Assets | $ | 10,590.1 | $ | 10,072.0 | |||||||
Liabilities and Shareholders’ Equity | |||||||||||
Accounts Payable and Accrued Expenses | $ | 202.8 | $ | 202.2 | |||||||
Debt | |||||||||||
Commercial paper and borrowings under bank credit facilities | 10.9 | 17.3 | |||||||||
Recourse | 6,785.6 | 6,431.5 | |||||||||
| 6,796.5 | 6,448.8 | ||||||||||
Lease Obligations (as lessee) | |||||||||||
Operating leases | 241.1 | 257.9 | |||||||||
| 241.1 | 257.9 | ||||||||||
Deferred Income Taxes | 1,066.6 | 1,031.5 | |||||||||
Other Liabilities | 104.2 | 102.0 | |||||||||
Total Liabilities | 8,411.2 | 8,042.4 | |||||||||
Total Shareholders’ Equity | 2,178.9 | 2,029.6 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 10,590.1 | $ | 10,072.0 | |||||||
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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2023
(In millions)
Rail North America | Rail International | Portfolio Management | Other | GATX Consolidated | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Lease revenue | $ | 218.9 | $ | 73.1 | $ | 8.1 | $ | 8.5 | $ | 308.6 | |||||||||||||||||||
Marine operating revenue | — | — | 2.0 | — | 2.0 | ||||||||||||||||||||||||
Other revenue | 21.5 | 3.1 | 6.4 | 1.6 | 32.6 | ||||||||||||||||||||||||
Total Revenues | 240.4 | 76.2 | 16.5 | 10.1 | 343.2 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
Maintenance expense | 66.8 | 14.6 | — | 0.9 | 82.3 | ||||||||||||||||||||||||
Marine operating expense | — | — | 2.4 | — | 2.4 | ||||||||||||||||||||||||
Depreciation expense | 66.1 | 16.6 | 6.1 | 3.3 | 92.1 | ||||||||||||||||||||||||
Operating lease expense | 9.0 | — | — | — | 9.0 | ||||||||||||||||||||||||
Other operating expense | 6.7 | 2.3 | 1.4 | 0.6 | 11.0 | ||||||||||||||||||||||||
Total Expenses | 148.6 | 33.5 | 9.9 | 4.8 | 196.8 | ||||||||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||||||
Net gain on asset dispositions | 34.1 | 0.7 | 6.0 | 0.3 | 41.1 | ||||||||||||||||||||||||
Interest (expense) income, net | (44.5) | (13.5) | (6.5) | 0.8 | (63.7) | ||||||||||||||||||||||||
Other (expense) income | (2.1) | (2.6) | 0.2 | (0.4) | (4.9) | ||||||||||||||||||||||||
Share of affiliates' pre-tax earnings | — | — | 20.3 | — | 20.3 | ||||||||||||||||||||||||
| Segment profit | $ | 79.3 | $ | 27.3 | $ | 26.6 | $ | 6.0 | $ | 139.2 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Selling, general and administrative expense | 52.0 | ||||||||||||||||||||||||||||
Income taxes (includes $6.3 related to affiliates' earnings) | 23.9 | ||||||||||||||||||||||||||||
Net income | $ | 63.3 | |||||||||||||||||||||||||||
Selected Data: | |||||||||||||||||||||||||||||
Investment volume | $ | 161.3 | $ | 77.3 | $ | 239.0 | $ | 9.0 | $ | 486.6 | |||||||||||||||||||
Net Gain on Asset Dispositions | |||||||||||||||||||||||||||||
Asset Remarketing Income: | |||||||||||||||||||||||||||||
Net gains on disposition of owned assets | $ | 30.7 | $ | 0.1 | $ | 5.9 | $ | 0.2 | $ | 36.9 | |||||||||||||||||||
Residual sharing income | 0.1 | — | 0.1 | — | 0.2 | ||||||||||||||||||||||||
Non-remarketing net gains (1) | 3.3 | 0.6 | — | 0.1 | 4.0 | ||||||||||||||||||||||||
Asset impairments | — | — | — | — | — | ||||||||||||||||||||||||
| $ | 34.1 | $ | 0.7 | $ | 6.0 | $ | 0.3 | $ | 41.1 | ||||||||||||||||||||
__________
(1) Includes net gains (losses) from scrapping of railcars.
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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2022
(In millions)
Rail North America | Rail International | Portfolio Management | Other | GATX Consolidated | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Lease revenue | $ | 203.0 | $ | 66.5 | $ | 8.2 | $ | 7.2 | $ | 284.9 | |||||||||||||||||||
Marine operating revenue | — | — | 5.2 | — | 5.2 | ||||||||||||||||||||||||
Other revenue | 18.8 | 1.9 | 0.1 | 1.8 | 22.6 | ||||||||||||||||||||||||
Total Revenues | 221.8 | 68.4 | 13.5 | 9.0 | 312.7 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
Maintenance expense | 57.8 | 12.2 | — | 0.8 | 70.8 | ||||||||||||||||||||||||
Marine operating expense | — | — | 3.9 | — | 3.9 | ||||||||||||||||||||||||
Depreciation expense | 64.9 | 17.2 | 4.9 | 3.0 | 90.0 | ||||||||||||||||||||||||
Operating lease expense | 9.0 | — | — | — | 9.0 | ||||||||||||||||||||||||
Other operating expense | 5.9 | 2.1 | 0.6 | 0.7 | 9.3 | ||||||||||||||||||||||||
Total Expenses | 137.6 | 31.5 | 9.4 | 4.5 | 183.0 | ||||||||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||||||
Net gain (loss) on asset dispositions | 5.1 | 1.4 | (30.8) | 0.1 | (24.2) | ||||||||||||||||||||||||
Interest expense, net | (34.9) | (11.1) | (4.6) | (1.3) | (51.9) | ||||||||||||||||||||||||
Other (expense) income | (1.3) | 1.1 | — | (11.1) | (11.3) | ||||||||||||||||||||||||
Share of affiliates' pre-tax earnings | — | — | 15.6 | — | 15.6 | ||||||||||||||||||||||||
Segment profit (loss) | $ | 53.1 | $ | 28.3 | $ | (15.7) | $ | (7.8) | $ | 57.9 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Selling, general and administrative expense | 47.9 | ||||||||||||||||||||||||||||
Income taxes (includes $4.7 related to affiliates' earnings) | 7.4 | ||||||||||||||||||||||||||||
Net income | $ | 2.6 | |||||||||||||||||||||||||||
Selected Data: | |||||||||||||||||||||||||||||
Investment volume | $ | 253.7 | $ | 48.8 | $ | — | $ | 11.6 | $ | 314.1 | |||||||||||||||||||
Net Gain (Loss) on Asset Dispositions | |||||||||||||||||||||||||||||
Asset Remarketing Income: | |||||||||||||||||||||||||||||
Net gains on disposition of owned assets | $ | 1.2 | $ | 0.3 | $ | — | $ | 0.1 | $ | 1.6 | |||||||||||||||||||
Residual sharing income | 0.1 | — | 0.7 | — | 0.8 | ||||||||||||||||||||||||
Non-remarketing net gains (1) | 3.8 | 1.1 | — | — | 4.9 | ||||||||||||||||||||||||
Asset impairments | — | — | (31.5) | — | (31.5) | ||||||||||||||||||||||||
| $ | 5.1 | $ | 1.4 | $ | (30.8) | $ | 0.1 | $ | (24.2) | ||||||||||||||||||||
__________
(1) Includes net gains (losses) from scrapping of railcars.
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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2023
(In millions)
Rail North America | Rail International | Portfolio Management | Other | GATX Consolidated | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Lease revenue | $ | 434.0 | $ | 143.5 | $ | 16.4 | $ | 16.7 | $ | 610.6 | |||||||||||||||||||
Marine operating revenue | — | — | 5.5 | — | 5.5 | ||||||||||||||||||||||||
Other revenue | 45.3 | 6.0 | 10.9 | 3.8 | 66.0 | ||||||||||||||||||||||||
Total Revenues | 479.3 | 149.5 | 32.8 | 20.5 | 682.1 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
Maintenance expense | 133.7 | 30.5 | — | 2.0 | 166.2 | ||||||||||||||||||||||||
Marine operating expense | — | — | 4.4 | — | 4.4 | ||||||||||||||||||||||||
Depreciation expense | 131.6 | 32.3 | 11.5 | 6.5 | 181.9 | ||||||||||||||||||||||||
Operating lease expense | 18.0 | — | — | — | 18.0 | ||||||||||||||||||||||||
Other operating expense | 13.7 | 4.5 | 2.3 | 1.5 | 22.0 | ||||||||||||||||||||||||
Total Expenses | 297.0 | 67.3 | 18.2 | 10.0 | 392.5 | ||||||||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||||||
Net gain on asset dispositions | 81.9 | 1.5 | 4.5 | 0.3 | 88.2 | ||||||||||||||||||||||||
Interest (expense) income, net | (86.8) | (26.0) | (12.2) | 2.3 | (122.7) | ||||||||||||||||||||||||
Other (expense) income | (2.5) | (6.9) | (0.3) | 0.8 | (8.9) | ||||||||||||||||||||||||
Share of affiliates' pre-tax (losses) earnings | (0.4) | — | 48.3 | — | 47.9 | ||||||||||||||||||||||||
Segment profit | $ | 174.5 | $ | 50.8 | $ | 54.9 | $ | 13.9 | $ | 294.1 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Selling, general and administrative expense | 102.4 | ||||||||||||||||||||||||||||
Income taxes (includes $13.2 related to affiliates' earnings) | 51.0 | ||||||||||||||||||||||||||||
Net income | $ | 140.7 | |||||||||||||||||||||||||||
Selected Data: | |||||||||||||||||||||||||||||
Investment volume | $ | 457.8 | $ | 158.4 | $ | 239.0 | $ | 18.4 | $ | 873.6 | |||||||||||||||||||
Net Gain on Asset Dispositions | |||||||||||||||||||||||||||||
Asset Remarketing Income: | |||||||||||||||||||||||||||||
Net gains on disposition of owned assets | $ | 75.4 | $ | 0.5 | $ | 5.5 | $ | 0.2 | $ | 81.6 | |||||||||||||||||||
Residual sharing income | 0.2 | — | 0.2 | — | 0.4 | ||||||||||||||||||||||||
Non-remarketing net gains (1) | 6.3 | 1.0 | — | 0.1 | 7.4 | ||||||||||||||||||||||||
Asset impairments | — | — | (1.2) | — | (1.2) | ||||||||||||||||||||||||
| $ | 81.9 | $ | 1.5 | $ | 4.5 | $ | 0.3 | $ | 88.2 | ||||||||||||||||||||
__________
(1) Includes net gains (losses) from scrapping of railcars.
Page 13
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2022
(In millions)
Rail North America | Rail International | Portfolio Management | Other | GATX Consolidated | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Lease revenue | $ | 403.7 | $ | 134.1 | $ | 16.5 | $ | 13.9 | $ | 568.2 | |||||||||||||||||||
Marine operating revenue | — | — | 11.4 | — | 11.4 | ||||||||||||||||||||||||
Other revenue | 41.8 | 4.2 | 0.1 | 3.6 | 49.7 | ||||||||||||||||||||||||
Total Revenues | 445.5 | 138.3 | 28.0 | 17.5 | 629.3 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
Maintenance expense | 117.7 | 26.2 | — | 1.5 | 145.4 | ||||||||||||||||||||||||
Marine operating expense | — | — | 8.1 | — | 8.1 | ||||||||||||||||||||||||
Depreciation expense | 128.4 | 35.2 | 9.9 | 6.0 | 179.5 | ||||||||||||||||||||||||
Operating lease expense | 18.1 | — | — | — | 18.1 | ||||||||||||||||||||||||
Other operating expense | 13.2 | 4.5 | 1.1 | 1.2 | 20.0 | ||||||||||||||||||||||||
Total Expenses | 277.4 | 65.9 | 19.1 | 8.7 | 371.1 | ||||||||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||||||
Net gain (loss) on asset dispositions | 76.7 | 2.4 | (29.9) | 0.3 | 49.5 | ||||||||||||||||||||||||
Interest expense, net | (69.3) | (22.3) | (9.3) | (2.2) | (103.1) | ||||||||||||||||||||||||
Other (expense) income | (2.0) | 0.7 | (0.1) | (11.9) | (13.3) | ||||||||||||||||||||||||
Share of affiliates' pre-tax earnings | — | — | 10.8 | — | 10.8 | ||||||||||||||||||||||||
Segment profit (loss) | $ | 173.5 | $ | 53.2 | $ | (19.6) | $ | (5.0) | $ | 202.1 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Selling, general and administrative expense | 95.1 | ||||||||||||||||||||||||||||
Income taxes (includes $3.5 related to affiliates' earnings) | 28.6 | ||||||||||||||||||||||||||||
Net income | $ | 78.4 | |||||||||||||||||||||||||||
Selected Data: | |||||||||||||||||||||||||||||
Investment volume | $ | 534.1 | $ | 127.7 | $ | — | $ | 22.7 | $ | 684.5 | |||||||||||||||||||
Net Gain (Loss) on Asset Dispositions | |||||||||||||||||||||||||||||
Asset Remarketing Income: | |||||||||||||||||||||||||||||
Net gains on disposition of owned assets | $ | 65.6 | $ | 0.7 | $ | — | $ | 0.2 | $ | 66.5 | |||||||||||||||||||
Residual sharing income | 2.1 | — | 1.6 | — | 3.7 | ||||||||||||||||||||||||
Non-remarketing net gains (1) | 9.0 | 1.7 | — | 0.1 | 10.8 | ||||||||||||||||||||||||
Asset impairments | — | — | (31.5) | — | (31.5) | ||||||||||||||||||||||||
| $ | 76.7 | $ | 2.4 | $ | (29.9) | $ | 0.3 | $ | 49.5 | ||||||||||||||||||||
__________
(1) Includes net gains (losses) from scrapping of railcars.
Page 14
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except per share data)
Impact of Tax Adjustments and Other Items on Net Income (1)
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net income (GAAP) | $ | 63.3 | $ | 2.6 | $ | 140.7 | $ | 78.4 | |||||||||||||||
| Adjustments attributable to consolidated pre-tax income: | |||||||||||||||||||||||
| (Gain) Loss on Specialized Gas Vessels at Portfolio Management (2) | $ | (0.2) | $ | 31.5 | $ | 1.4 | $ | 31.5 | |||||||||||||||
| Gain on sale of Rail Russia at Rail International (3) | — | — | (0.3) | — | |||||||||||||||||||
| Environmental remediation costs (4) | — | 5.9 | — | 5.9 | |||||||||||||||||||
| Total adjustments attributable to consolidated pre-tax income | $ | (0.2) | $ | 37.4 | $ | 1.1 | $ | 37.4 | |||||||||||||||
| Income taxes thereon, based on applicable effective tax rate | $ | — | $ | (1.5) | $ | — | $ | (1.5) | |||||||||||||||
| Other income tax adjustments attributable to consolidated income: | |||||||||||||||||||||||
| Income tax rate change (5) | — | — | — | (3.0) | |||||||||||||||||||
| Total other income tax adjustments attributable to consolidated income | $ | — | $ | — | $ | — | $ | (3.0) | |||||||||||||||
| Adjustments attributable to affiliates' earnings, net of taxes: | |||||||||||||||||||||||
| Aircraft spare engine impairment at RRPF (6) | — | — | — | 11.5 | |||||||||||||||||||
| Total adjustments attributable to affiliates' earnings, net of taxes | $ | — | $ | — | $ | — | $ | 11.5 | |||||||||||||||
| Net income, excluding tax adjustments and other items (non-GAAP) | $ | 63.1 | $ | 38.5 | $ | 141.8 | $ | 122.8 | |||||||||||||||
Impact of Tax Adjustments and Other Items on Diluted Earnings per Share (1)
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Diluted earnings per share (GAAP) | $ | 1.74 | $ | 0.07 | $ | 3.87 | $ | 2.18 | |||||||||||||||
| Diluted earnings per share, excluding tax adjustments and other items (non-GAAP) | $ | 1.73 | $ | 1.07 | $ | 3.90 | $ | 3.41 | |||||||||||||||
_________
(1) In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP components. Specifically, we exclude the effects of certain tax adjustments and other items for purposes of presenting net income and diluted earnings per share because we believe these items are not attributable to our business operations. Management utilizes net income, excluding tax adjustments and other items, when analyzing financial performance because such amounts reflect the underlying operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides investors and other users of our financial statements with meaningful supplemental information for purposes of analyzing year-to-year financial performance on a comparable basis and assessing trends.
(2) In the second quarter of 2022, we made the decision to sell the Specialized Gas Vessels. As a result, we recorded losses in 2022 associated with the impairments of these assets. In 2023, we recorded gains and losses associated with the impairments and subsequent sales of these assets.
(3) In the third quarter of 2022, we made the decision to exit our rail business in Russia ("Rail Russia") and recorded losses in 2022 associated with the impairment of the net assets. In the first quarter of 2023, we sold Rail Russia and recorded a gain on the final sale of this business.
(4) Reserve recorded as part of an executed agreement for anticipated remediation costs at a previously owned property, sold in 1974.
(5) Deferred income tax adjustment due to an enacted corporate income tax rate reduction in Austria in 2022.
(6) Impairment losses related to aircraft spare engines in Russia that RRPF does not expect to recover.
Page 15
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)
| 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | ||||||||||||||||||||||||||||
| Total Assets, Excluding Cash and Short-Term Investments, by Segment | ||||||||||||||||||||||||||||||||
| Rail North America | $ | 6,671.3 | $ | 6,610.8 | $ | 6,439.1 | $ | 6,405.4 | $ | 6,347.2 | ||||||||||||||||||||||
| Rail International | 1,902.3 | 1,801.2 | 1,731.3 | 1,554.3 | 1,634.5 | |||||||||||||||||||||||||||
| Portfolio Management | 1,328.6 | 1,089.6 | 1,084.8 | 970.9 | 1,010.3 | |||||||||||||||||||||||||||
| Other | 370.2 | 368.9 | 364.3 | 348.2 | 351.7 | |||||||||||||||||||||||||||
| Total Assets, excluding cash and short-term investments | $ | 10,272.4 | $ | 9,870.5 | $ | 9,619.5 | $ | 9,278.8 | $ | 9,343.7 | ||||||||||||||||||||||
| Debt and Lease Obligations, Net of Unrestricted Cash and Short-Term Investments | ||||||||||||||||||||||||||||||||
| Unrestricted cash and short-term investments | $ | (317.5) | $ | (177.4) | $ | (452.2) | $ | (596.3) | $ | (180.3) | ||||||||||||||||||||||
| Commercial paper and bank credit facilities | 10.9 | 20.3 | 17.3 | 16.3 | 20.0 | |||||||||||||||||||||||||||
| Recourse debt | 6,785.6 | 6,360.9 | 6,431.5 | 6,353.1 | 5,964.4 | |||||||||||||||||||||||||||
| Operating lease obligations | 241.1 | 246.2 | 257.9 | 259.0 | 266.7 | |||||||||||||||||||||||||||
| Total debt and lease obligations, net of unrestricted cash and short-term investments | $ | 6,720.1 | $ | 6,450.0 | $ | 6,254.5 | $ | 6,032.1 | $ | 6,070.8 | ||||||||||||||||||||||
| Total recourse debt (1) | $ | 6,720.1 | $ | 6,450.0 | $ | 6,254.5 | $ | 6,032.1 | $ | 6,070.8 | ||||||||||||||||||||||
| Shareholders’ Equity | $ | 2,178.9 | $ | 2,101.5 | $ | 2,029.6 | $ | 1,940.5 | $ | 1,981.5 | ||||||||||||||||||||||
| Recourse Leverage (2) | 3.1 | 3.1 | 3.1 | 3.1 | 3.1 | |||||||||||||||||||||||||||
_________
(1) Includes recourse debt, commercial paper and bank credit facilities, and operating and finance lease obligations, net of unrestricted cash and short-term investments.
(2) Calculated as total recourse debt / shareholder's equity.
| Reconciliation of Total Assets to Total Assets, Excluding Cash and Short-Term Investments | ||||||||||||||||||||||||||||||||
| Total Assets | $ | 10,590.1 | $ | 10,048.1 | $ | 10,072.0 | $ | 9,875.4 | $ | 9,524.2 | ||||||||||||||||||||||
| Less: cash and short-term investments | (317.7) | (177.6) | (452.5) | (596.6) | (180.5) | |||||||||||||||||||||||||||
| Total Assets, excluding cash and short-term investments | $ | 10,272.4 | $ | 9,870.5 | $ | 9,619.5 | $ | 9,278.8 | $ | 9,343.7 | ||||||||||||||||||||||
Page 16
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)
| 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | |||||||||||||||||||||||||
| Rail North America Statistics | |||||||||||||||||||||||||||||
| Lease Price Index (LPI) (1) | |||||||||||||||||||||||||||||
| Average renewal lease rate change | 33.1 | % | 28.3 | % | 24.4 | % | 18.8 | % | 6.1 | % | |||||||||||||||||||
| Average renewal term (months) | 61 | 55 | 52 | 52 | 51 | ||||||||||||||||||||||||
| Renewal Success Rate (2) | 85.3 | % | 77.9 | % | 85.7 | % | 87.2 | % | 87.7 | % | |||||||||||||||||||
| Fleet Rollforward (3) | |||||||||||||||||||||||||||||
| Beginning balance | 101,219 | 100,954 | 101,289 | 101,272 | 100,452 | ||||||||||||||||||||||||
| Cars added | 358 | 1,816 | 583 | 772 | 1,414 | ||||||||||||||||||||||||
| Cars scrapped | (316) | (324) | (486) | (506) | (594) | ||||||||||||||||||||||||
| Cars sold | (676) | (1,227) | (432) | (249) | — | ||||||||||||||||||||||||
| Ending balance | 100,585 | 101,219 | 100,954 | 101,289 | 101,272 | ||||||||||||||||||||||||
| Utilization | 99.3 | % | 99.3 | % | 99.5 | % | 99.6 | % | 99.4 | % | |||||||||||||||||||
| Average active railcars | 100,230 | 100,552 | 100,618 | 100,783 | 100,079 | ||||||||||||||||||||||||
| Boxcar Fleet Rollforward | |||||||||||||||||||||||||||||
| Beginning balance | 8,789 | 8,663 | 10,224 | 10,315 | 10,283 | ||||||||||||||||||||||||
| Cars added | 279 | 229 | 106 | — | 85 | ||||||||||||||||||||||||
| Cars scrapped | (109) | (103) | (94) | (91) | 64 | ||||||||||||||||||||||||
| Cars sold | — | — | (1,573) | — | (117) | ||||||||||||||||||||||||
| Ending balance | 8,959 | 8,789 | 8,663 | 10,224 | 10,315 | ||||||||||||||||||||||||
| Utilization | 99.8 | % | 100.0 | % | 99.9 | % | 100.0 | % | 99.9 | % | |||||||||||||||||||
| Average active railcars | 8,855 | 8,720 | 9,032 | 10,267 | 10,239 | ||||||||||||||||||||||||
| Rail North America Industry Statistics | |||||||||||||||||||||||||||||
| Manufacturing Capacity Utilization Index (4) | 78.9 | % | 79.5 | % | 78.9 | % | 80.1 | % | 79.8 | % | |||||||||||||||||||
| Year-over-year Change in U.S. Carloadings (excl. intermodal) (5) | 0.6 | % | (0.3) | % | (0.3) | % | 0.1 | % | (0.1) | % | |||||||||||||||||||
| Year-over-year Change in U.S. Carloadings (chemical) (5) | (4.5) | % | (6.8) | % | — | % | 3.1 | % | 4.9 | % | |||||||||||||||||||
| Year-over-year Change in U.S. Carloadings (petroleum) (5) | 9.6 | % | 12.3 | % | (7.6) | % | (10.4) | % | (13.1) | % | |||||||||||||||||||
| Production Backlog at Railcar Manufacturers (6) | n/a (7) | 56,062 | 59,698 | 61,415 | 47,461 | ||||||||||||||||||||||||
_________
(1) GATX's Lease Price Index (LPI) is an internally-generated business indicator that measures renewal activity for our North American railcar 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. The average renewal lease term is reported in months and reflects the average renewal lease term in the LPI.
In the second quarter of 2023, we modified the methodology of the LPI calculation to more consistently reflect actual trends in renewal lease rates and renewal lease terms across the North American non-boxcar fleet. We believe this modification will provide investors and other constituents with a more complete representation of lease rate and term performance. The prior period LPI metrics presented above have been updated to reflect the change in calculation. For further details, please see the GATX press release dated July 6, 2023.
(2) The renewal success rate represents the percentage of railcars on expiring leases that were renewed with the existing lessee. The renewal success rate is an important metric because railcars returned by our customers may remain idle or incur additional maintenance and freight costs prior to being leased to new customers.
(3) Excludes boxcar fleet.
(4) As reported and revised by the Federal Reserve.
(5) As reported by the Association of American Railroads (AAR).
(6) As reported by the Railway Supply Institute (RSI).
(7) Not available, not published as of the date of this release.
Page 17
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)
| 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | |||||||||||||||||||||||||
| Rail Europe Statistics | |||||||||||||||||||||||||||||
| Fleet Rollforward | |||||||||||||||||||||||||||||
| Beginning balance | 28,461 | 28,005 | 27,701 | 27,470 | 27,192 | ||||||||||||||||||||||||
| Cars added | 376 | 502 | 362 | 277 | 347 | ||||||||||||||||||||||||
| Cars scrapped/sold | (78) | (46) | (58) | (46) | (69) | ||||||||||||||||||||||||
| Ending balance | 28,759 | 28,461 | 28,005 | 27,701 | 27,470 | ||||||||||||||||||||||||
| Utilization | 96.9 | % | 98.5 | % | 99.3 | % | 99.4 | % | 99.9 | % | |||||||||||||||||||
| Average active railcars | 27,973 | 27,931 | 27,658 | 27,489 | 27,158 | ||||||||||||||||||||||||