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GATX Corporation Reports 2019 First-Quarter Results
- Net income for the first quarter 2019 was
$41.5 million or$1.12 per diluted share - Company reiterates 2019 full-year earnings guidance
Rail North America fleet utilization remains at 99.4%
“Rail International produced strong operating results, with GATX Rail Europe’s fleet utilization increasing to 98.9% at the end of the quarter. The lease rate environment in
Mr. Kenney concluded, “The current business environment and our financial performance thus far in 2019 is consistent with our original expectations. Therefore, our 2019 full-year earnings estimate is unchanged at
RAIL
At
Fleet utilization was 99.4% at the end of the first quarter, compared to 99.4% at the end of the prior quarter and 98.2% at the end of the first quarter of 2018. During the first quarter of 2019, the renewal lease rate change of the GATX Lease Price Index (“LPI”) was positive 5.2%. This compares to negative 0.9% in the prior quarter and negative 11.6% in the first quarter of 2018. The average lease renewal term for cars included in the LPI during the first quarter was 39 months, compared to 43 months in the prior quarter and 34 months in the first quarter of 2018. The first quarter renewal success rate was 83.6%. Rail North America’s investment volume during the first quarter was
Additional fleet statistics, including information about 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
At
PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of
AMERICAN STEAMSHIP COMPANY
COMPANY DESCRIPTION
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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
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FOR FURTHER INFORMATION CONTACT:
Senior Director, Investor Relations
312-621-6409
jennifer.mcmanus@gatx.com
Investor, corporate, financial, historical financial, and news release information may be found at www.gatx.com.
(4/24/2019)
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)
Three Months Ended March 31 |
|||||||
2019 | 2018 | ||||||
Revenues | |||||||
Lease revenue | $ | 274.4 | $ | 273.2 | |||
Marine operating revenue | 13.1 | 14.2 | |||||
Other revenue | 29.5 | 17.9 | |||||
Total Revenues | 317.0 | 305.3 | |||||
Expenses | |||||||
Maintenance expense | 81.2 | 81.2 | |||||
Marine operating expense | 12.1 | 12.5 | |||||
Depreciation expense | 79.9 | 77.4 | |||||
Operating lease expense | 13.7 | 13.0 | |||||
Other operating expense | 8.0 | 8.6 | |||||
Selling, general and administrative expense | 46.1 | 44.9 | |||||
Total Expenses | 241.0 | 237.6 | |||||
Other Income (Expense) | |||||||
Net gain on asset dispositions | 8.9 | 56.1 | |||||
Interest expense, net | (46.5 | ) | (39.9 | ) | |||
Other expense | (3.2 | ) | (1.3 | ) | |||
Income before Income Taxes and Share of Affiliates’ Earnings | 35.2 | 82.6 | |||||
Income taxes | (8.4 | ) | (20.6 | ) | |||
Share of affiliates’ earnings, net of taxes | 14.7 | 14.3 | |||||
Net Income | $ | 41.5 | $ | 76.3 | |||
Share Data | |||||||
Basic earnings per share | $ | 1.14 | $ | 2.02 | |||
Average number of common shares | 36.5 | 37.9 | |||||
Diluted earnings per share | $ | 1.12 | $ | 1.98 | |||
Average number of common shares and common share equivalents | 37.1 | 38.5 | |||||
Dividends declared per common share | $ | 0.46 | $ | 0.44 | |||
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
March 31 | December 31 | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Cash and Cash Equivalents | $ | 248.4 | $ | 100.2 | |||
Restricted Cash | 6.2 | 6.5 | |||||
Receivables | |||||||
Rent and other receivables | 79.9 | 87.0 | |||||
Finance leases (as lessor) | 118.9 | 126.4 | |||||
Less: allowance for losses | (6.1 | ) | (6.4 | ) | |||
192.7 | 207.0 | ||||||
Operating Assets and Facilities | 9,587.9 | 9,545.9 | |||||
Less: allowance for depreciation | (3,062.0 | ) | (3,013.2 | ) | |||
6,525.9 | 6,532.7 | ||||||
Lease Assets (as lessee) | |||||||
Right of use assets, net of accumulated depreciation | 449.5 | — | |||||
Finance leases, net of accumulated depreciation | 16.7 | 16.8 | |||||
466.2 | 16.8 | ||||||
Investments in Affiliated Companies | 480.0 | 464.5 | |||||
Goodwill | 81.6 | 82.9 | |||||
Other Assets | 239.2 | 206.1 | |||||
Total Assets | $ | 8,240.2 | $ | 7,616.7 | |||
Liabilities and Shareholders’ Equity | |||||||
Accounts Payable and Accrued Expenses | $ | 155.8 | $ | 177.5 | |||
Debt | |||||||
Commercial paper and borrowings under bank credit facilities | 15.9 | 110.8 | |||||
Recourse | 4,768.1 | 4,429.7 | |||||
4,784.0 | 4,540.5 | ||||||
Lease Obligations (as lessee) | |||||||
Operating leases | 456.3 | — | |||||
Finance leases | 11.0 | 11.3 | |||||
467.3 | 11.3 | ||||||
Deferred Income Taxes | 891.7 | 877.8 | |||||
Other Liabilities | 132.2 | 221.5 | |||||
Total Liabilities | 6,431.0 | 5,828.6 | |||||
Total Shareholders’ Equity | 1,809.2 | 1,788.1 | |||||
Total Liabilities and Shareholders’ Equity | $ | 8,240.2 | $ | 7,616.7 | |||
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended
(In millions)
Rail N.A. | Rail Int’l | Portfolio Management |
ASC | Other | GATX Consolidated |
||||||||||||||||||
Revenues | |||||||||||||||||||||||
Lease revenue | $ | 220.9 | $ | 52.2 | $ | 0.3 | $ | 1.0 | $ | — | $ | 274.4 | |||||||||||
Marine operating revenue | — | — | 2.4 | 10.7 | — | 13.1 | |||||||||||||||||
Other revenue | 27.4 | 2.0 | 0.1 | — | — | 29.5 | |||||||||||||||||
Total Revenues | 248.3 | 54.2 | 2.8 | 11.7 | — | 317.0 | |||||||||||||||||
Expenses | |||||||||||||||||||||||
Maintenance expense | 68.8 | 12.1 | — | 0.3 | — | 81.2 | |||||||||||||||||
Marine operating expense | — | — | 4.6 | 7.5 | — | 12.1 | |||||||||||||||||
Depreciation expense | 64.3 | 14.0 | 1.6 | — | — | 79.9 | |||||||||||||||||
Operating lease expense | 13.7 | — | — | — | — | 13.7 | |||||||||||||||||
Other operating expense | 6.4 | 1.5 | 0.1 | — | — | 8.0 | |||||||||||||||||
Total Expenses | 153.2 | 27.6 | 6.3 | 7.8 | — | 194.9 | |||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
Net gain on asset dispositions | 8.2 | 0.4 | 0.3 | — | — | 8.9 | |||||||||||||||||
Interest (expense) income, net | (34.2 | ) | (9.9 | ) | (2.7 | ) | (1.4 | ) | 1.7 | (46.5 | ) | ||||||||||||
Other expense | (0.7 | ) | (2.3 | ) | — | — | (0.2 | ) | (3.2 | ) | |||||||||||||
Share of affiliates’ pre-tax income | — | — | 18.2 | — | — | 18.2 | |||||||||||||||||
Segment profit | $ | 68.4 | $ | 14.8 | $ | 12.3 | $ | 2.5 | $ | 1.5 | $ | 99.5 | |||||||||||
Less: | |||||||||||||||||||||||
Selling, general and administrative expense | 46.1 | ||||||||||||||||||||||
Income taxes (includes $3.5 related to affiliates’ earnings) | 11.9 | ||||||||||||||||||||||
Net income | $ | 41.5 | |||||||||||||||||||||
Selected Data: | |||||||||||||||||||||||
Investment volume | $ | 99.0 | $ | 33.1 | $ | — | $ | 14.5 | $ | 0.7 | $ | 147.3 | |||||||||||
Net Gain on Asset Dispositions | |||||||||||||||||||||||
Asset Remarketing Income: | |||||||||||||||||||||||
Net gains on disposition of owned assets | $ | 9.7 | $ | — | — | $ | — | $ | — | $ | 9.7 | ||||||||||||
Residual sharing income | 0.1 | — | 0.3 | — | — | 0.4 | |||||||||||||||||
Non-remarketing net (loss) gains (1) | (1.6 | ) | 0.4 | — | — | — | (1.2 | ) | |||||||||||||||
$ | 8.2 | $ | 0.4 | 0.3 | $ | — | $ | — | $ | 8.9 |
(1) Includes net gains (losses) from scrapping of railcars.
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended
(In millions)
Rail N.A. | Rail Int’l | Portfolio Management |
ASC | Other | GATX Consolidated |
||||||||||||||||||
Revenues | |||||||||||||||||||||||
Lease revenue | $ | 219.5 | $ | 52.4 | $ | 0.3 | $ | 1.0 | $ | — | $ | 273.2 | |||||||||||
Marine operating revenue | — | — | 4.4 | 9.8 | — | 14.2 | |||||||||||||||||
Other revenue | 15.8 | 2.0 | 0.1 | — | — | 17.9 | |||||||||||||||||
Total Revenues | 235.3 | 54.4 | 4.8 | 10.8 | — | 305.3 | |||||||||||||||||
Expenses | |||||||||||||||||||||||
Maintenance expense | 68.1 | 12.5 | — | 0.6 | — | 81.2 | |||||||||||||||||
Marine operating expense | — | — | 4.3 | 8.2 | — | 12.5 | |||||||||||||||||
Depreciation expense | 61.5 | 14.1 | 1.8 | — | — | 77.4 | |||||||||||||||||
Operating lease expense | 13.0 | — | — | — | — | 13.0 | |||||||||||||||||
Other operating expense | 6.9 | 1.5 | 0.2 | — | — | 8.6 | |||||||||||||||||
Total Expenses | 149.5 | 28.1 | 6.3 | 8.8 | — | 192.7 | |||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
Net gain on asset dispositions | 54.1 | 1.6 | 0.3 | 0.1 | — | 56.1 | |||||||||||||||||
Interest (expense) income, net | (30.2 | ) | (8.7 | ) | (2.3 | ) | (1.3 | ) | 2.6 | (39.9 | ) | ||||||||||||
Other expense | (0.9 | ) | (0.2 | ) | — | — | (0.2 | ) | (1.3 | ) | |||||||||||||
Share of affiliates’ pre-tax income | 0.1 | — | 17.4 | — | — | 17.5 | |||||||||||||||||
Segment profit | $ | 108.9 | $ | 19.0 | $ | 13.9 | $ | 0.8 | $ | 2.4 | $ | 145.0 | |||||||||||
Less: | |||||||||||||||||||||||
Selling, general and administrative expense | 44.9 | ||||||||||||||||||||||
Income taxes (includes $3.2 related to affiliates’ earnings) | 23.8 | ||||||||||||||||||||||
Net income | $ | 76.3 | |||||||||||||||||||||
Selected Data: | |||||||||||||||||||||||
Investment volume | $ | 136.5 | $ | 29.5 | $ | — | $ | 11.7 | $ | 0.7 | $ | 178.4 | |||||||||||
Net Gain on Asset Dispositions | |||||||||||||||||||||||
Asset Remarketing Income: | |||||||||||||||||||||||
Net gains on disposition of owned assets | $ | 49.9 | $ | — | $ | — | $ | 0.1 | $ | — | $ | 50.0 | |||||||||||
Residual sharing income | 0.1 | — | 0.3 | — | — | 0.4 | |||||||||||||||||
Non-remarketing net gains (1) | 4.1 | 1.6 | — | — | — | 5.7 | |||||||||||||||||
$ | 54.1 | $ | 1.6 | $ | 0.3 | $ | 0.1 | $ | — | $ | 56.1 |
(1) Includes net gains from scrapping of railcars.
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)
3/31/2019 | 12/31/2018 | 9/30/2018 | 6/30/2018 | 3/31/2018 | ||||||||||||||||
Assets by Segment, as adjusted (non-GAAP)* | ||||||||||||||||||||
Rail North America | $ | 5,646.7 | $ | 5,651.0 | $ | 5,418.2 | $ | 5,409.0 | $ | 5,362.2 | ||||||||||
Rail International | 1,315.6 | 1,309.7 | 1,294.5 | 1,266.6 | 1,329.0 | |||||||||||||||
Portfolio Management | 612.8 | 601.2 | 614.6 | 605.8 | 593.1 | |||||||||||||||
ASC | 311.1 | 297.7 | 303.4 | 313.6 | 298.2 | |||||||||||||||
Other | 99.4 | 80.6 | 60.7 | 61.1 | 59.8 | |||||||||||||||
Total Assets, excluding cash, as adjusted (non-GAAP) | $ | 7,985.6 | $ | 7,940.2 | $ | 7,691.4 | $ | 7,656.1 | $ | 7,642.3 | ||||||||||
Debt and Lease Obligations, Net of Unrestricted Cash* | ||||||||||||||||||||
Unrestricted cash | $ | (248.4 | ) | $ | (100.2 | ) | $ | (254.5 | ) | $ | (237.4 | ) | $ | (233.1 | ) | |||||
Commercial paper and bank credit facilities | 15.9 | 110.8 | — | 4.3 | 4.4 | |||||||||||||||
Recourse debt | 4,768.1 | 4,429.7 | 4,397.3 | 4,397.9 | 4,359.5 | |||||||||||||||
Operating lease obligations | 456.3 | — | — | — | — | |||||||||||||||
Finance lease obligations | 11.0 | 11.3 | 11.6 | 11.9 | 12.2 | |||||||||||||||
Total debt and lease obligations, net of unrestricted cash (GAAP) | 5,002.9 | 4,451.6 | 4,154.4 | 4,176.7 | 4,143.0 | |||||||||||||||
Off-balance sheet recourse debt (1) | — | 430.2 | 432.6 | 401.7 | 411.7 | |||||||||||||||
Total debt and lease obligations, net of unrestricted cash, as adjusted (non-GAAP) (2) | $ | 5,002.9 | $ | 4,881.8 | $ | 4,587.0 | $ | 4,578.4 | $ | 4,554.7 | ||||||||||
Shareholders’ Equity | $ | 1,809.2 | $ | 1,788.1 | $ | 1,838.0 | $ | 1,817.6 | $ | 1,839.7 | ||||||||||
Recourse Leverage (3) | 2.8 | 2.7 | 2.5 | 2.5 | 2.5 |
_________
(1) Under the new lease accounting standard, off-balance sheet recourse debt is no longer applicable beginning in 2019.
(2) Includes on- and off-balance sheet debt, commercial paper and bank credit facilities, and operating and finance lease obligations, net of unrestricted cash.
(3) Calculated as total recourse debt / shareholder’s equity.
Reconciliation of Total Assets, excluding cash (GAAP) to Total Assets, excluding cash, as adjusted (non-GAAP)* | ||||||||||||||||||||
Total Assets | $ | 8,240.2 | $ | 7,616.7 | $ | 7,517.4 | $ | 7,495.5 | $ | 7,468.0 | ||||||||||
Less: cash | (254.6 | ) | (106.7 | ) | (258.6 | ) | (241.1 | ) | (237.4 | ) | ||||||||||
Total Assets, excluding cash (GAAP) | 7,985.6 | 7,510.0 | 7,258.8 | 7,254.4 | 7,230.6 | |||||||||||||||
Add off-balance sheet assets: | ||||||||||||||||||||
Rail North America | — | 430.2 | 432.6 | 401.7 | 411.7 | |||||||||||||||
Total Assets, excluding cash, as adjusted (non-GAAP) | $ | 7,985.6 | $ | 7,940.2 | $ | 7,691.4 | $ | 7,656.1 | $ | 7,642.3 |
(*) A portion of our North American railcar fleet is financed through sale-leasebacks that are accounted for as operating leases. Prior to 2019, these railcar assets were not recorded on the balance sheet. Under the new lease accounting standard adopted on
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)
3/31/2019 | 12/31/2018 | 9/30/2018 | 6/30/2018 | 3/31/2018 | ||||||||||
Rail North America Statistics | ||||||||||||||
Lease Price Index (LPI) (1) | ||||||||||||||
Average renewal lease rate change | 5.2 | % | (0.9 | )% | (11.5 | )% | (16.1 | )% | (11.6 | )% | ||||
Average renewal term (months) | 39 | 43 | 33 | 41 | 34 | |||||||||
Fleet Rollforward (2) | ||||||||||||||
Beginning balance | 105,472 | 103,420 | 102,890 | 102,597 | 103,730 | |||||||||
Cars added | 617 | 3,120 | 1,381 | 1,231 | 1,226 | |||||||||
Cars scrapped | (662 | ) | (387 | ) | (431 | ) | (720 | ) | (673 | ) | ||||
Cars sold | (597 | ) | (681 | ) | (420 | ) | (218 | ) | (1,686 | ) | ||||
Ending balance | 104,830 | 105,472 | 103,420 | 102,890 | 102,597 | |||||||||
Utilization | 99.4 | % | 99.4 | % | 99.2 | % | 98.9 | % | 98.2 | % | ||||
Average active railcars | 104,613 | 103,387 | 102,056 | 101,330 | 101,208 | |||||||||
Boxcar Fleet | ||||||||||||||
Ending balance | 16,006 | 16,220 | 15,859 | 16,007 | 16,227 | |||||||||
Utilization | 95.2 | % | 94.2 | % | 94.7 | % | 92.8 | % | 93.5 | % | ||||
Rail Europe Statistics | ||||||||||||||
Fleet Rollforward | ||||||||||||||
Beginning balance | 23,412 | 23,234 | 23,124 | 23,004 | 23,166 | |||||||||
Cars added | 185 | 281 | 258 | 245 | 63 | |||||||||
Cars scrapped/sold | (66 | ) | (103 | ) | (148 | ) | (125 | ) | (225 | ) | ||||
Ending balance | 23,531 | 23,412 | 23,234 | 23,124 | 23,004 | |||||||||
Utilization | 98.9 | % | 98.8 | % | 98.4 | % | 97.8 | % | 96.7 | % | ||||
Average active railcars | 23,105 | 22,949 | 22,759 | 22,407 | 22,327 | |||||||||
Rail North America Industry Statistics | ||||||||||||||
Manufacturing Capacity Utilization Index (3) | 78.8 | % | 79.5 | % | 78.4 | % | 77.8 | % | 77.5 | % | ||||
Year-over-year Change in U.S. Carloadings (excl. intermodal) (4) | (3.1 | )% | 1.8 | % | 2.0 | % | 1.3 | % | (0.3 | )% | ||||
Year-over-year Change in U.S. Carloadings (chemical) (4) | (1.0 | )% | 3.8 | % | 4.5 | % | 3.8 | % | 3.1 | % | ||||
Year-over-year Change in U.S. Carloadings (petroleum) (4) | 22.0 | % | 18.2 | % | 14.7 | % | 6.8 | % | 3.3 | % | ||||
Production Backlog at Railcar Manufacturers (5) | n/a (6) | 80,223 | 73,812 | 65,161 | 55,216 | |||||||||
American Steamship Company Statistics | ||||||||||||||
Total Net Tons Carried (millions) | 1.2 | 8.5 | 8.7 | 8.1 | 0.9 |
_________
(1) GATX’s 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. The index is calculated using the weighted average lease rate for a group of railcar types that
(2) Excludes boxcar fleet.
(3) As reported and revised by the Federal Reserve.
(4) As reported by the
(5) As reported by the
(6) Not available, not published as of the date of this release.