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GATX Corporation Reports 2013 First Quarter Results

CHICAGO--(BUSINESS WIRE)--Apr. 25, 2013-- GATX Corporation (NYSE:GMT) reported 2013 first quarter net income of $27.1 million or $0.57 per diluted share, compared to net income of $30.3 million or $0.64 per diluted share in the first quarter of 2012. The first quarter results include the negative impact from Other Items of $1.3 million or $0.03 per diluted share in 2013 and $2.2 million or $0.05 per diluted share in 2012. Details related to the Other Items are provided in the attached Supplemental Information.

Brian A. Kenney, president and chief executive officer of GATX, said, “The North American railcar leasing market remains strong. Our fleet utilization was 97.8% at March 31, and first quarter renewal success was 80.7%, driven by high demand for tank cars. We continue to capitalize on the current market conditions by increasing lease rates and stretching lease terms. GATX's Lease Price Index (“LPI”) was positive 30.8% for the quarter and the average renewal term for cars in the LPI was 65 months. Demand for new tank cars continues at unprecedented levels, and our scheduled deliveries through 2014 have been placed with customers on long-term leases at attractive rates.”

Mr. Kenney added, “In GATX Rail International, our European tank car fleet performed well in a weaker environment and we continue to pursue attractive investment opportunities in the European tank car market.

“American Steamship's operating season began in late March. Consistent with our previous indications, record low water levels on the Great Lakes will negatively impact operating efficiency in 2013. In Portfolio Management, the Rolls-Royce joint ventures continued to perform very well while certain ocean-going marine markets showed modest improvement.

"Remarketing income, which often varies materially from quarter to quarter, was lower in the first quarter of 2013 versus the prior year period. Based on strong demand for our assets and transactions expected to close, remarketing income should increase in future quarters. First quarter investment volume totaled $149.9 million, focused primarily on North American and European rail assets."

Mr. Kenney concluded, “Based on our solid start in the first quarter, our 2013 full-year earnings estimate remains unchanged at $3.10 - $3.20 per diluted share, excluding the impact of Tax Benefits and Other Items.”

RAIL NORTH AMERICA

Rail North America segment profit was $50.3 million in the first quarter of 2013, compared to $50.7 million in the first quarter of 2012. The change in segment profit was driven by lower remarketing activity and increased maintenance expense, substantially offset by higher lease revenues. The increase in maintenance expense is consistent with the company's previously stated expectation and primarily relates to the number of railcars scheduled for regulatory compliance work in 2013.

At March 31, 2013, Rail North America's wholly-owned fleet totaled approximately 110,000 cars. Fleet utilization was 97.8%, compared to 97.9% at year end and 98.5% at March 31, 2012. During the first quarter, the change in the LPI was a positive 30.8%, which compares to a positive 32.3% in the prior quarter and a positive 19.2% in the first quarter of 2012. The average lease renewal term for cars in the LPI was 65 months, which was consistent with the 65 month term in the prior quarter and greater than the 55 months in the first quarter of 2012.

Rail North America investment volume was $85.7 million for the first quarter.

RAIL INTERNATIONAL

Rail International segment profit was $18.6 million in the first quarter of 2013, compared to $7.9 million in the first quarter of 2012. The first quarter results include the pre-tax impact from Other Items of negative $1.4 million in 2013 and $2.5 million in 2012. The increase in segment profit from the prior year was primarily due to higher lease revenue and share of affiliates' earnings.

Within Rail International, the wholly-owned tank car fleet in Europe totaled approximately 22,000 cars and utilization was 95.5%, compared to 95.1% at year end and 96.7% at March 31, 2012. Investment volume during the first quarter at Rail International was $44.3 million, primarily for new tank cars in Europe.

Additional current and historical fleet and operating data as well as macroeconomic data related to Rail North America's and Rail International's business can be found on the last page of this press release.

AMERICAN STEAMSHIP COMPANY

American Steamship Company (“ASC”) reported segment profit of $0.8 million in the first quarter of 2013 compared to $2.1 million in the first quarter 2012. ASC's operations are limited during the first quarter as the vessels are in winter lay-up from mid-January through late March.

PORTFOLIO MANAGEMENT

Portfolio Management reported segment profit of $12.5 million in the first quarter of 2013 compared to $22.0 million in the first quarter of 2012. The decline in segment profit was primarily due to the timing of asset remarketing activity, which is expected to increase in coming quarters.

The Portfolio Management segment currently consists of approximately $766.3 million of owned assets and third-party managed portfolios totaling approximately $140.7 million.

COMPANY DESCRIPTION

GATX Corporation (NYSE:GMT) strives to be recognized as the finest railcar leasing company in the world by its customers, its shareholders, its employees and the communities where it operates. Controlling one of the largest railcar fleets in the world, GATX has been providing quality railcars and services to its customers for 115 years. GATX has been headquartered in Chicago, Illinois since its founding in 1898 and has traded on the New York Stock Exchange since 1916. For more information, visit the Company's website at www.gatx.com.

TELECONFERENCE INFORMATION

GATX Corporation will host a teleconference to discuss 2013 first quarter results. Teleconference details are as follows:

Thursday, April 25th
11:00 A.M. Eastern Time
Domestic Dial-In: 1-888-487-0360
International Dial-In: 1-719-325-4856
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 5519935

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. Following the call, a replay will be available on the same site.

FORWARD-LOOKING STATEMENTS

Certain statements in this document may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor provisions of those sections and the Private Securities Litigation Reform Act of 1995. These statements refer to information that is not purely historical, such as estimates, projections and statements relating to our business plans, objectives and expected operating results, and the assumptions on which those statements are based. Some of these statements may be identified by words like “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict,” “project” or other similar words. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in GATX's Annual Report on Form 10-K/A for the year ended December 31, 2012 and other filings with the SEC, and that actual results or events may differ materially from the forward-looking statements.

Specific risks and uncertainties that might cause actual results to differ from expectations include, but are not limited to, (1) general economic, market, regulatory and political conditions affecting the rail, marine and other industries served by GATX and its customers; (2) competitive factors in GATX's primary markets, including lease pricing and asset availability; (3) lease rates, utilization levels and operating costs in GATX's primary operating segments; (4) conditions in the capital markets or changes in GATX's credit ratings and financing costs; (5) risks related to GATX's international operations and expansion into new geographic markets; (6) risks related to compliance with, or changes to, laws, rules and regulations applicable to GATX and its rail, marine and other assets; (7) operational disruption and increased costs associated with compliance maintenance programs and other maintenance initiatives; (8) operational and financial risks associated with long-term railcar purchase commitments; (9) changes in loss provision levels within GATX's portfolio; (10) conditions affecting certain assets, customers or regions where GATX has a large investment; (11) impaired asset charges that may result from changing market conditions or portfolio management decisions implemented by GATX; (12) opportunities for remarketing income; (13) labor relations with unions representing GATX employees; and (14) the outcome of pending or threatened litigation.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis, judgment, belief or expectation only as of the date hereof. GATX has based these forward-looking statements on information currently available and disclaims any intention or obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.

Investor, corporate, financial, historical financial, photographic and news release information may be found at www.gatx.com.

(4/25/2013)

—Tabular Follows—

 
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except share data)
 
Three Months Ended March 31
2013   2012
Revenues
Lease revenue $ 237.2 $ 225.5
Marine operating revenue 18.5 17.5
Other revenue 16.6   13.5  
Total Revenues 272.3 256.5
 
Expenses
Maintenance expense 66.7 60.9
Marine operating expense 16.6 13.5
Depreciation expense 57.9 55.7
Operating lease expense 32.3 31.4
Other operating expense 5.3 3.7
Selling, general and administrative expense 42.0   38.1  
Total Expenses 220.8 203.3
 
Other Income (Expense)
Net gain on asset dispositions 16.7 28.0
Interest expense, net (40.9 ) (42.6 )
Other expense (1.1 ) (0.6 )
Income before Income Taxes and Share of Affiliates’ Earnings 26.2 38.0
 
Income Taxes (7.5 ) (10.8 )
Share of Affiliates’ Earnings (net of tax) 8.4   3.1  
Net Income $ 27.1   $ 30.3  
 
Share Data
Basic earnings per share $ 0.58 $ 0.65
Average number of common shares 46.9 46.7
Diluted earnings per share $ 0.57 $ 0.64
Average number of common shares and common share equivalents 47.7 47.5
Dividends declared per common share $ 0.31 $ 0.30
   
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
 
March 31 December 31
2013 2012
Assets
Cash and Cash Equivalents $ 321.1 $ 234.2
Restricted Cash 26.9 29.7
Receivables
Rent and other receivables 66.5 88.4
Loans 34.1 27.2
Finance leases 239.5 245.7
Less: allowance for losses (4.3 ) (4.6 )
335.8 356.7
 
Operating Assets and Facilities 6,918.2 6,855.2
Less: allowance for depreciation (2,224.7 ) (2,200.8 )
4,693.5 4,654.4
 
Investments in Affiliated Companies 485.5 502.0
Goodwill 89.8 91.7
Other Assets 192.1   186.7  
Total Assets $ 6,144.7   $ 6,055.4  
Liabilities and Shareholders’ Equity
Accounts Payable and Accrued Expenses $ 151.7 $ 177.4
 
Debt
Commercial paper and borrowings under bank credit facilities 120.3 273.6
Recourse 3,483.5 3,152.4
Nonrecourse 127.9 130.6
Capital lease obligations 10.1   11.3  
3,741.8 3,567.9
 
Deferred Income Taxes 789.3 783.0
Other Liabilities 238.4   282.9  
Total Liabilities 4,921.2 4,811.2
Total Shareholders’ Equity 1,223.5   1,244.2  
Total Liabilities and Shareholders’ Equity $ 6,144.7   $ 6,055.4  
           
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2013
(In millions)
 

 

Portfolio GATX
Rail N.A.

Rail Int’l

ASC Management Other Consolidated
Revenues
Lease revenue $ 183.8 $ 43.0 $ 1.1 $ 9.3 $ $ 237.2
Marine operating revenue 12.3 6.2 18.5
Other revenue 13.8   2.2     0.6     16.6  
Total Revenues 197.6 45.2 13.4 16.1 272.3
 
Expenses
Maintenance expense 54.6 11.5 0.6 66.7
Marine operating expense 9.8 6.8 16.6
Depreciation expense 42.3 10.1 5.5 57.9
Operating lease expense 32.3 32.3
Other operating expense 4.0   0.9     0.4     5.3  
Total Expenses 133.2 22.5 10.4 12.7 178.8
 
Other Income (Expense)
Net gain on asset dispositions 10.2 1.2 5.3 16.7
Interest expense, net (25.7 ) (5.6 ) (1.6 ) (6.7 ) (1.3 ) (40.9 )
Other income (expense) (0.8 ) 0.5 (0.6 ) (0.2 ) (1.1 )
Share of affiliates’ earnings (pretax) 2.2   (0.2 )   10.5     12.5  
Segment Profit (Loss) $ 50.3 $ 18.6 $ 0.8 $ 12.5 $ (1.5 ) $ 80.7
 
Selling, general and administrative expense 42.0
Income taxes ($4.1 million related to affiliates’ earnings) 11.6  
Net Income $ 27.1  
 

Selected Data:

Investment Volume $ 85.7 $ 44.3 $ 3.2 $ 16.0 $ 0.7 $ 149.9
 
Net Gain on Asset Dispositions

Asset Remarketing Income:

Disposition gains on owned assets $ 1.6 $ $ $ 4.2 $ $ 5.8
Residual sharing income 2.8 1.1 3.9
Non-remarketing disposition gains (a) 6.5 1.4 7.9
Asset impairment (0.7 ) (0.2 )       (0.9 )
Total Net Gain on Asset Dispositions $ 10.2 $ 1.2 $ $ 5.3 $ $ 16.7
 

(a) Includes scrapping gains

           
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2012
(In millions)
 

 

Portfolio GATX
Rail N.A.

Rail Int’l

ASC Management Other Consolidated
Revenues
Lease revenue $ 174.6 $ 40.0 $ 1.1 $ 9.8 $ $ 225.5
Marine operating revenue 10.7 6.8 17.5
Other revenue 11.8   0.9     0.8     13.5  
Total Revenues 186.4 40.9 11.8 17.4 256.5
 
Expenses
Maintenance expense 48.0 12.5 0.4 60.9
Marine operating expense 7.7 5.8 13.5
Depreciation expense 41.7 8.6 5.4 55.7
Operating lease expense 31.4 0.1 (0.1 ) 31.4
Other operating expense 4.4   1.1   (0.2 ) (1.6 )   3.7  
Total Expenses 125.5 22.2 7.9 9.7 (0.1 ) 165.2
 
Other Income (Expense)
Net gain on asset dispositions 16.0 0.9 11.1 28.0
Interest expense, net (25.8 ) (6.4 ) (1.8 ) (7.2 ) (1.4 ) (42.6 )
Other income (expense) (1.9 ) (1.8 ) 2.9 0.2 (0.6 )
Share of affiliates’ earnings (pretax) 1.5   (3.5 )   7.5     5.5  
Segment Profit (Loss) $ 50.7 $ 7.9 $ 2.1 $ 22.0 $ (1.1 ) $ 81.6
Selling, general and administrative expense 38.1
Income taxes ($2.4 million related to affiliates’ earnings) 13.2  
Net Income $ 30.3  
 

Selected Data:

Investment Volume $ 98.9 $ 44.8 $ 5.9 $ 3.1 $ 1.0 $ 153.7
 
Net Gain on Asset Dispositions

Asset Remarketing Income:

Disposition gains on owned assets $ 10.4 $ $ $ 7.8 $ $ 18.2
Residual sharing income 0.4 3.0 3.4
Non-remarketing disposition gains (a) 5.2 1.2 6.4
Asset impairment   (0.3 )   0.3      
Total Net Gain on Asset Dispositions $ 16.0 $ 0.9 $ $ 11.1 $ $ 28.0
 

(a) Includes scrapping gains

 
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except per share data)
 

Tax Adjustments and Other Items Impact on Net Income:

 
Three Months Ended
March 31
2013   2012
Tax adjustments $ $

Other Items

Interest rate swaps at AAE (a) (1.3 ) (2.2 )
Total impact on net income $ (1.3 ) $ (2.2 )
 

Tax Adjustments and Other Items Impact on Diluted Earnings Per Share:

 
Three Months Ended
March 31
2013   2012
Tax adjustments $ $

Other Items

Interest rate swaps at AAE (a) (0.03 ) (0.05 )
Total impact on diluted earnings per share $ (0.03 ) $ (0.05 )

_________

(a) Unrealized losses recognized on certain interest rate swaps at AAE Cargo AG, an affiliate of Rail International.

We highlight these items to allow for a more meaningful comparison of financial performance between years and to provide transparency into the operating results of our business.

         
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)
(Continued)
 
3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/31/2013

Assets by Segment (includes off-balance-sheet assets)

Rail North America $ 4,315.1 $ 4,361.1 $ 4,340.6 $ 4,427.1 $ 4,399.3
Rail International 955.5 935.6 984.5 1,070.1 1,076.9
ASC 274.2 324.6 312.7 305.1 291.5
Portfolio Management 808.6 802.5 812.9 789.6 763.5
Other 81.1   79.2   81.9   84.1   82.7  
Total Assets, Excluding Cash $ 6,434.5   $ 6,503.0   $ 6,532.6   $ 6,676.0   $ 6,613.9  
 

Capital Structure

Commercial paper and bank credit facilities,
Net of Unrestricted Cash $ 35.0 $ (127.2 ) $ (214.5 ) $ 39.4 $ (200.8 )
On-balance-sheet recourse debt 3,141.4 3,328.2 3,347.4 3,152.4 3,483.5
On-balance-sheet nonrecourse debt 146.3 136.5 133.3 130.6 127.9
Off-balance-sheet recourse debt 646.3 678.9 706.1 730.1 667.2
Off-balance-sheet nonrecourse debt 168.2 163.9 159.7 154.4 150.0
Capital lease obligations 13.2   12.5   11.3   11.3   10.1  
Total Borrowings, Net of Unrestricted Cash $ 4,150.4   $ 4,192.8   $ 4,143.3   $ 4,218.2   $ 4,237.9  
Total Recourse Debt (a) $ 3,835.9 $ 3,892.4 $ 3,850.3 $ 3,933.2 $ 3,960.0
Shareholders’ Equity $ 1,175.5 $ 1,170.7 $ 1,225.4 $ 1,244.2 $ 1,223.5
Recourse Leverage (b) 3.3 3.3 3.1 3.2 3.2

_________

(a)   Includes on- and off-balance-sheet recourse debt; capital lease obligations; commercial paper and bank credit facilities, net of unrestricted cash.
(b) Calculated as total recourse debt / shareholder's equity.
 
Reconciliation of Total Assets to Total Assets (Including Off-Balance-Sheet Assets), Excluding Cash:
Total Assets   $ 5,792.9   $ 5,917.9   $ 6,125.1   $ 6,055.4   $ 6,144.7
Less: cash (172.9 ) (257.7 ) (458.3 ) (263.9 ) (348.0 )
Add off-balance-sheet assets:
Rail North America 813.7 819.5 843.6 863.5 797.3
ASC 23.3 22.2 21.0 19.9
Portfolio Management 0.8          
Total Assets, Excluding Cash $ 6,434.5   $ 6,503.0   $ 6,532.6   $ 6,676.0   $ 6,613.9  
         
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)

(Continued)

 
3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/31/2013

Rail North America Statistics (wholly-owned fleet)

Lease Price Index (LPI) (a)
Average renewal lease rate change 19.2 % 23.9 % 26.4 % 32.3 % 30.8 %
Average renewal term (months) 55 59 59 65 65
Fleet Rollforward
Beginning balance 109,070 109,116 109,187 109,162 109,551
Cars added 1,223 1,385 858 1,106 988
Cars scrapped (544 ) (591 ) (544 ) (366 ) (810 )
Cars sold (633 ) (723 ) (339 ) (351 ) (92 )
Ending balance 109,116 109,187 109,162 109,551 109,637
Utilization 98.5 % 98.3 % 98.2 % 97.9 % 97.8 %
Average active railcars 107,328 107,452 107,224 107,062 106,964
 

Rail International Statistics (wholly-owned fleet)

Fleet Rollforward
Beginning balance 20,927 21,064 21,209 21,314 21,840
Cars added 304 273 355 650 361
Cars scrapped/sold (167 ) (128 ) (250 ) (124 ) (305 )
Ending balance 21,064 21,209 21,314 21,840 21,896
Utilization 96.7 % 96.3 % 96.6 % 95.1 % 95.5 %
Average active railcars 20,356 20,386 20,490 20,635 20,817
 

Rail Industry Statistics

Manufacturing Capacity Utilization Index (b) 77.3 % 78.8 % 78.4 % 77.7 % 78.5 %
Year-over-year Change in U.S. Carloadings (excl. intermodal) (c) (2.5 )% (2.9 )% (2.5 )% (3.1 )% (3.0 )%
Year-over-year Change in U.S. Carloadings (chemical) (c) (1.3 )% (1.2 )% (1.1 )% (0.8 )% (1.5 )%
Year-over-year Change in U.S. Carloadings (petroleum) (c) 28.4 % 38.2 % 42.6 % 46.3 % 57.2 %
Production Backlog at Railcar Manufacturers (d) 60,191 58,674 61,400 60,244 71,704
 

American Steamship Company Statistics

Total Net Tons Carried (millions) 1.3 9.2 10.4 8.8 1.5

_________

(a)   Our Lease Price Index ("LPI") is an internally-generated business indicator that measures general lease rate pricing on renewals within our North American railcar fleet. 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. In addition to our LPI, we use this representative group of North American railcars to calculate an average renewal lease rate change and an average renewal term. The average renewal lease rate change is the percentage change between the weighted average renewal lease rate and the weighted average expiring lease rate. The average renewal lease term index is reported in months. It reflects the average renewal lease term of railcar types in the LPI weighted by fleet composition.
(b) As reported and revised by the Federal Reserve.
(c) As reported by the Association of American Railroads (AAR).
(d) As reported by the Railway Supply Institute (RSI).

Source: GATX Corporation

GATX Corporation
Irma Dominguez
Investor Relations Coordinator
312-621-8799
ir@gatx.com