GATX Corporation · NYSE:GATX
GATX — Debt Investor Presentation (March 2017)
37 slides from GATX's debt investor presentation, Mar 23, 2017
Slide 1: Fixed Income Presentation | March 2017
F i x e d I n c o m e P r e s e n t a t i o n | M a r c h 2 0 1 7
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements Statements in this Presentation 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
Slide 3: History and Business Overview
HISTORY AND BUSINESS OVERVIEW 118
Slide 4: GATX's 118-Year History
4 GATX’s 118-Year History 1898 Established as railcar lessor with 28 railcars 1919 Initiated quarterly dividend 1936 Began rail investment in Canada 1994 Began rail investment in Europe & Mexico 1996 Began locomotive investment 1998 Rolls-Royce Partners and Finance (RRPF) Affiliates 1973 GATX acquir
Slide 5: GATX Today – Business Segments
5 GATX Today – Business Segments AMERICAN STEAMSHIP COMPANY Largest US-flagged vessel operator on the Great Lakes Operates a fleet of efficient self-unloading ships Exceptional safety record and leader in Great Lakes environmental matters 69% 15% 8% 4% 4% PORTFOLIO MANAGEMENT RRPF affiliates
Slide 6: GATX's Strong Global Presence
6 GATX’s Strong Global Presence GATX owns or has an interest in more than 146,000 railcars, over 600 locomotives, 17 vessels on the Great Lakes, and more than 400 aircraft spare engines. (Map excludes leasing footprint for RRPF) GATX Rail Operations Footprint GATX Headquarters (Chicago, IL) Major Bu
Slide 7: Straightforward and Proven Business Model
7 Straightforward and Proven Business Model Railcar leasing is our core. BUY the railcar at an economically attractive and competitively advantaged price LEASE the railcar to a quality customer at an attractive rate for a term that reflects the business cycle SERVICE the railcar in a manner that max
Slide 8: GATX Service
8 GATX Service GATX has built a strong market position by focusing on full-service leasing in North America and Europe. MAINTENANCE Customers rely on GATX to manage the complex process of maintaining railcars Extensive maintenance network: more than 30 maintenance locations in North America and
Slide 9: GATX Rail North America Overview
9 27% 26%17% 12% 7% 11% 95% 90% 99% 96% 99% 86% 88% 90% 92% 94% 96% 98% 100% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 GATX Rail North America Overview WHOLLY OWNED FLEET COUNT 122,000+ CAR TYPE COUNT 160 AVERAGE FLEET AGE 20 Years LOCOMOTIVE COUNT 600+ NUMBER OF CUSTOMERS 900+ COUNTRIES OF
Slide 10: Managing Through Cycles
10 64 67 63 41 35 45 60 62 66 54 32 17% 14% 5% -11% -16% 7% 26% 35% 39% 32% -20% -30% -20% -10% 0% 10% 20% 30% 40% 50% 0 10 20 30 40 50 60 70 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Renewal Lease Term (left axis) Lease Price Index (right axis) Managing Through Cycles GATX quickly adap
Slide 11: GATX Rail North America - Energy Markets
11 GATX Rail North America - Energy Markets GATX purposely avoided investing heavily in the “Crude Oil Boom” – Eventual pipeline developments and market dynamics warranted a cautious approach Other lessors pursued a different approach Collapse of “Crude Oil Boom” led to logical outcome – Enorm
Slide 12: GATX Rail International Overview
12 96% 97% 95% 97% 95% 97% 96% 93% 94% 95% 96% 97% 98% 99% 100% 2006 2008 2010 2012 2014 2016 GATX Rail International Overview FLEET COUNT 23,000+ in Europe 750+ in India 150+ in Russia CAR TYPE COUNT 38+ AVERAGE FLEET AGE 18 Years NUMBER OF CUSTOMERS 220+ MAJOR COUNTRIES OF OPERATIONS Germany, Pola
Slide 13: GRE Geographies and Fleet Structure
13 42% 25% 11% 5% 4% 3% 2% 8% CAR TYPE COMMODITIES CARRIED Liquid Petroleum Products Light mineral oil (gasoline, jet fuel, diesel oils, light heating oils), Dark mineral oil (heavy heating oils, lubricating oils, coal tar, bitumen, asphalt), crude oil LPG Propane, Butane, Propylene, Butadiene, Ligh
Slide 14: American Steamship Company Overview
14 American Steamship Company Overview Based on 2016 ASC volume As of 12/31/2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total Net Tons Carried by ASC (in millions) 37.2 37.3 35.7 21.2 28.0 28.4 29.7 28.8 30.5 26.5 25.4 ASC Vessels Operated 18 18 18 12 13 14 14 13 15 13 11 VESSEL COUN
Slide 15: Portfolio Management Overview
15 Portfolio Management Overview OWNED PORTFOLIO $593.5 million NBV as of 12/31/2016 SPARE ENGINE COUNT 400+ AVERAGE FLEET AGE 11 Years 2016 RRPF OVERVIEW 63% Aircraft Spare Engine Leasing Affiliates 34% Marine Equipment 3% Other 63% 34% 3% $0 $20 $40 $60 $80 $100 RRPF JV PRE-TAX INCOME (GATX’s SHAR
Slide 16: Financial Profile
FINANCIAL PROFILE 16 118
Slide 17: Financial Profile – Overview
17 Financial Profile – Overview Strong, stable and predictable cash flow – Market leadership in railcar leasing business – High level of committed revenues – Credit strength of customer base Strong balance sheet – Long-lived railcar assets – Limited secured debt Excellent liquidity through cyc
Slide 18: Financial Profile – Cash Flow
18 2006 2008 2010 2012 2014 2016 Operating Cash Flow Portfolio Proceeds $932 $781 $654 $521 $395 $768 Financial Profile – Cash Flow GATX has nearly $4.1 billion in committed future lease receipts. GATX COMMITTED FUTURE LEASE RECEIPTS As of 12/31/2016 $ M IL LIO N S $ M IL LIO N S OPERATING CASH FLOW
Slide 19: Financial Profile – Customer Base
19 Financial Profile – Customer Base 12/31/2016 Customer families sometimes include more than one customer account, therefore the S&P or equivalent ratings noted generally reflect the credit quality of the rated parent entity. Lease obligations of subsidiaries are not necessarily guaranteed by the r
Slide 20: Financial Profile – Results
20 Financial Profile – Results $2.54 $3.07 $3.49 $1.97 $1.59 $2.01 $2.81 $3.50 $4.48 $5.37 $5.77 13% 14% 15% 9% 7% 9% 11% 13% 15% 18% 18% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EPS (left axis) ROE (right a
Slide 21: Financial Profile – Balance Sheet
21 % of Assets that are Secured 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 2002 2004 2006 2008 2010 2012 2014 2016 As of 12/31/2016 Total Recourse Debt = On-Balance-Sheet Recourse Debt + Off-Balance-Sheet Recourse Debt + Capital Lease Obligations + Commercial Paper
Slide 22: Financial Profile – Diversified Access to Capital
22 Financial Profile – Diversified Access to Capital GATX will continue to utilize its traditional sources to meet its financing needs: – Commercial paper – Unsecured debt offerings – Unsecured private placements – Unsecured bank term loans – Secured rail debt
Slide 23: Financial Profile – Financings
23 Financial Profile – Financings 2016 FINANCINGS $150 million unsecured offering of 50-year retail- targeted notes $350 million unsecured offering of 10-year notes $200 million unsecured 5-year term loan 2015 FINANCINGS $650 million unsecured offering – $100 million 5-year notes (re-opening
Slide 24: Financial Profile – Summary
24 Financial Profile – Summary SOLID AND PREDICTABLE CASH FLOW Market leader in railcar leasing business Committed future lease receipts from strong and diversified customer base Operational and geographic diversification Capital spending flexibility Solid and sustained customer relationsh
Slide 25: Appendix
j | YEARS OF OPERATIONAL EXPERIENCE APPENDIX
Slide 26: North America – Industry Railcar Ownership
26 North America – Industry Railcar Ownership 52% 9% 19% 20% RAILROADS (20%) Ownership of railcars has been declining In 2000, 53% of railcars were owned by railroads Virtually no tank car ownership due to complexities and regulations Focus of capital investment on infrastructure LESSORS (52
Slide 27: North America – Industry Shipments & Carloadings
27 North America – Industry Shipments & Carloadings 20.9 21.2 17.1 16.9 16 17 18 19 20 21 22 2004 2006 2008 2010 2012 2014 2016 19.4 Demand increased across most major commodity types. Demand declined due to difficulties in nearly every sector. Demand increased as a result of nearly all sectors. Dem
Slide 28: North America – Industry Backlogs
28 North America – Industry Backlogs Cyclicality of the industry is illustrated by the backlog of orders at the railcar manufacturers The 2014 and 2015 spike in tank car backlog was primarily due to energy markets Deep backlogs are generally positive for existing lessors’ fleets – Customers’ a
Slide 29: North America – Lessor Market Share
29 North America – Lessor Market Share LESSOR TANK CARS Approximately 407,000 tank cars in North America – About 80% of tank cars are owned by lessors, with the balance owned by shippers GATX is the second largest tank car lessor UMLER as of January 2017; SMBC counts are post-ARL purchase LESSOR
Slide 30: GATX Rail North America's Fleet Breakdown
30 CAR TYPE COMMODITIES CARRIED % OF GATX’S FLEET TA N K C A R S (49. 9 % o f Fl ee t) FR EIGH T CA R S (50. 1 % o f Fl ee t) GATX Rail North America’s Fleet Breakdown General Service Tank Cars: 20k-25k gallon General Service Tank Cars: >25k gallon High-Pressure Tank Cars General Service Tank Cars:
Slide 31: International – European Industry Snapshot
31 30% 70% International – European Industry Snapshot Approximately 705,000 railcars in standard-gauge countries RAILCAR OWNERSHIP Eastern European fleets include many older, smaller tank cars Increasingly difficult for smaller lessors to obtain financing and meet required regulatory standards i
Slide 32: International – European Industry Snapshot
32 26% 36% 19% 19% THE STRUCTURE OF THE TANK CAR LEASING MARKET IN EUROPE IS SIMILAR TO NORTH AMERICA’S Lessors own the majority of the tank cars in Europe – approximately 68% A few large leasing companies lead the market International – European Industry Snapshot GATX management estimates as of
Slide 33: Great Lakes Industry Overview
33 SAILING SEASON GENERALLY RUNS FROM LATE MARCH THROUGH THE END OF DECEMBER Weather conditions and water levels impact operating efficiencies, especially early spring and early winter SHIPPING INDUSTRY ON THE GREAT LAKES IS MATURE WITH HIGH BARRIERS TO ENTRY US new-build vessel costs have risen
Slide 34: RRPF Affiliates Overview
34 RRPF Affiliates Overview The RRPF portfolio has committed future lease receipts of more than $1.9 billion. 72% 84% 39% 73% 45% 100% 100% 24% 11% 34% 27% 21% Trent 500 Trent 700 Trent 800 Trent 900 V2500 XWB Trent 1000 RRPF MARKET POSITION (% OF SPARE ENGINES ON OPERATING LEASE) RRPF 2nd Largest S
Slide 35: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES 35
Slide 36: Reconciliation of Non-GAAP Measures – Net Income Measures
36 Reconciliation of Non-GAAP Measures – Net Income Measures Net Income 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (in millions) Net income (GAAP) 183.8$ 194.8$ 81.4$ 80.8$ 110.8$ 137.3$ 169.3$ 205.0$ 205.3$ 257.1$ Adjustments attributable to consolidated income, pretax: Railcar impairment at
Slide 37: Reconciliation of Non-GAAP Measures – Balance Sheet Measures
37 Reconciliation of Non-GAAP Measures – Balance Sheet Measures On- and Off-Balance Sheet Assets 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total assets (GAAP) 4,723.2$ 5,190.5$ 5,206.4$ 5,442.4$ 5,846.0$ 6,044.7$ 6,535.5$ 6,919.9$ 6,894.2$ 7,105.4$ Off-balance sheet assets: Rail North Americ