Press Release

<<  Back

GATX Corporation Reports 2021 First-Quarter Results

  • Net income for the first quarter 2021 was $36.5 million or $1.02 per diluted share
  • Rail North America’s fleet utilization was 97.8%
  • GATX's first-quarter direct investment of aircraft spare engines totals approximately $350 million
  • Company reiterates 2021 full-year earnings guidance

CHICAGO, April 20, 2021 (GLOBE NEWSWIRE) -- GATX Corporation (NYSE:GATX) today reported 2021 first-quarter results. Results for the first quarter ended March 31, 2021 are summarized below:

    Three Months Ended
March 31
   
  Per Diluted Share 2021   2020
   
  Income from Continuing Operations $ 1.02     $ 1.33    
  Income from Discontinued Operations     (0.02 )  
  Total $ 1.02     $ 1.31    

2021 first quarter net income from continuing operations was $36.5 million or $1.02 per diluted share, compared to net income from continuing operations of $47.2 million or $1.33 per diluted share in the first quarter of 2020. Net income from discontinued operations in the first quarter of 2021 was zero, compared to a net loss of $0.9 million or $(0.02) per diluted share in the same period of 2020.

“Conditions in the North American railcar leasing market are consistent with our outlook coming into the year,” said Brian A. Kenney, president and chief executive officer of GATX. “GATX’s fleet utilization decreased slightly to 97.8% and our renewal success rate was 77.7% for the quarter. While absolute lease rates for many car types modestly increased from the prior quarter, pressure on revenue remains given the continuing high number of idle cars industrywide. The first-quarter renewal lease rate change of GATX’s Lease Price Index was negative 18.1%, primarily due to energy-related car types.

“We continue to identify opportunities in the current environment to grow our asset base in North America. Our commercial team has successfully placed with customers nearly all cars expected to be delivered in 2021 under our supply agreements as well as over 1,000 additional cars outside of the supply agreements that will deliver by mid-2022.

“Rail International performed as expected. GATX Rail Europe maintained high fleet utilization of 98.2% at quarter-end and continues to experience small increases in renewal lease rates. Despite a recent resurgence of COVID-19 in Europe and India, demand for railcars remains stable as we continue to grow and diversify our fleets in both regions.

“Within Portfolio Management, the operating environment for the Rolls-Royce and Partners Finance affiliates remains challenging due to the ongoing adverse impact of COVID-19 on international air travel. We continue to execute our strategy of capitalizing on difficult market conditions to invest in attractive growth opportunities. Since commencing our program of direct investment in aircraft spare engines in January 2021, we acquired additional Rolls-Royce aircraft spare engines during the first quarter, bringing our total year-to-date investment to approximately $350 million. All of these engines are on long-term leases to a group of strong airline customers and will be managed by RRPF.”

Mr. Kenney concluded, “First quarter operating results, and the generally gradual pace of recovery in our markets, are consistent with our expectations. Therefore, our 2021 full-year earnings estimate is unchanged at $4.00 to $4.30 per diluted share.”

RAIL NORTH AMERICA
Rail North America reported segment profit of $65.7 million in the first quarter of 2021, compared to $72.0 million in the first quarter of 2020. Lower segment profit was primarily a result of lower gains on asset dispositions and lower lease revenue, partially offset by lower maintenance expense.

At March 31, 2021, Rail North America’s wholly owned fleet was comprised of approximately 116,800 cars, including approximately 13,900 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.

Fleet utilization was 97.8% at the end of the first quarter, compared to 98.1% at the end of the prior quarter and 99.0% at the end of the first quarter of 2020. During the first quarter of 2021, the GATX Lease Price Index (LPI), a weighted-average lease renewal rate for a group of railcars representative of Rail North America’s fleet, was negative 18.1%. This compares to an LPI of negative 22.6% in the prior quarter and negative 11.6% in the first quarter of 2020. The average lease renewal term for all cars included in the LPI during the first quarter was 30 months, compared to 34 months in the prior quarter and 31 months in the first quarter of 2020. Rail North America’s investment volume during the first quarter was $109.1 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 $21.8 million in the first quarter of 2021, compared to $13.9 million in the first quarter of 2020. Higher segment profit was predominately driven by more railcars on lease as well as impacts from foreign currency exchange rates.

At March 31, 2021, GATX Rail Europe’s (GRE) fleet consisted of approximately 26,500 cars. Utilization was 98.2%, compared to 98.1% at the end of the prior quarter and 98.5% at the end of the first quarter of 2020. Additional fleet statistics for GRE are provided on the last page of this press release.

PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $6.1 million in the first quarter of 2021, compared to $19.5 million in the first quarter of 2020. Lower segment profit was primarily driven by lower lease revenue and lower remarketing income at the Rolls-Royce and Partners Finance affiliates (RRPF). Lower lease revenue in 2021 was partly due to fewer engines on lease as a result of a transaction involving the refinancing and sale of a group of aircraft spare engines in the third quarter of 2020.

DISCONTINUED OPERATIONS
In the second quarter of 2020, GATX completed the sale of American Steamship Company (ASC). The ASC business segment is accounted for as discontinued operations. Results for discontinued operations are summarized below:

  (Income per diluted share) Three Months Ended
March 31
   
  Discontinued Operations 2021   2020
   
  Operations, net of taxes $     $ (0.02 )  
  Gain on sale of ASC, net of taxes        
  Total Discontinued Operations $     $ (0.02 )  

COMPANY DESCRIPTION
GATX Corporation (NYSE: GATX) strives to be recognized as the finest railcar leasing company in the world by our customers, our shareholders, our employees and the communities where we operate. As the leading global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 120 years. GATX has been headquartered in Chicago, Illinois since its founding in 1898.

TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss 2021 first-quarter results. Call details are as follows:

Tuesday, April 20, 2021
11 a.m.  Eastern Time
Domestic Dial-In: 1-800-367-2403
International Dial-In: 1-334-777-6978
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 9126531

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), April 20, 2021.

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 “Investor Relations” tab.

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, 2020 and subsequent reports on Form 10-Q, 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, 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 our 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 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 those businesses
  • fluctuations in foreign exchange rates
  • 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 or trade barriers affecting our activities in the countries where we do business
  • changes in, or failure to comply with, laws, rules, and regulations
  • 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

FOR FURTHER INFORMATION CONTACT:
GATX Corporation
Shari Hellerman
Director, Investor Relations
312-621-4285
shari.hellerman@gatx.com


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)

  Three Months Ended
March 31
  2021   2020
Revenues      
Lease revenue $ 280.6     $ 270.7  
Marine operating revenue 3.6     3.3  
Other revenue 21.6     25.4  
Total Revenues 305.8     299.4  
Expenses      
Maintenance expense 74.3     85.8  
Marine operating expense 4.6     4.1  
Depreciation expense 88.6     80.4  
Operating lease expense 10.9     13.3  
Other operating expense 10.2     8.5  
Selling, general and administrative expense 47.1     40.4  
Total Expenses 235.7     232.5  
Other Income (Expense)      
Net gain on asset dispositions 22.5     27.4  
Interest expense, net (53.6 )   (45.5 )
Other expense (1.3 )   (8.0 )
Income before Income Taxes and Share of Affiliates’ Earnings 37.7     40.8  
Income taxes (8.4 )   (13.1 )
Share of affiliates’ earnings, net of taxes 7.2     19.5  
Net Income from Continuing Operations 36.5     47.2  
Loss from Discontinued Operations, Net of Taxes     (0.9 )
Net Income $ 36.5     $ 46.3  
       
Share Data      
Basic earnings per share from continuing operations $ 1.04     $ 1.35  
Basic earnings per share from discontinued operations     (0.02 )
Basic earnings per share from consolidated operations $ 1.04     $ 1.33  
Average number of common shares 35.2     34.9  
       
Diluted earnings per share from continuing operations $ 1.02     $ 1.33  
Diluted earnings per share from discontinued operations     (0.02 )
Diluted earnings per share from consolidated operations $ 1.02     $ 1.31  
Average number of common shares and common share equivalents 35.9     35.4  
       
Dividends declared per common share $ 0.50     $ 0.48  


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)

  March 31   December 31
  2021   2020
Assets      
Cash and Cash Equivalents $ 958.9     $ 292.2  
Restricted Cash 0.2     0.4  
Receivables      
Rent and other receivables 81.8     74.7  
   Finance leases (as lessor) 73.3     74.0  
Less: allowance for losses (6.4 )   (6.5 )
  148.7     142.2  
       
Operating Assets and Facilities 10,835.0     10,484.0  
Less: allowance for depreciation (3,311.8 )   (3,313.3 )
  7,523.2     7,170.7  
Lease Assets (as lessee)      
Right-of-use assets, net of accumulated depreciation 326.5     335.9  
Finance leases, net of accumulated depreciation     37.5  
  326.5     373.4  
       
Investments in Affiliated Companies 592.2     584.7  
Goodwill 139.0     143.7  
Other Assets 226.6     230.3  
Total Assets $ 9,915.3     $ 8,937.6  
       
Liabilities and Shareholders’ Equity      
Accounts Payable and Accrued Expenses $ 143.6     $ 147.3  
Debt      
Commercial paper and borrowings under bank credit facilities 19.6     23.6  
Recourse 6,374.6     5,329.0  
  6,394.2     5,352.6  
Lease Obligations (as lessee)      
Operating leases 328.0     348.6  
Finance leases     33.3  
  328.0     381.9  
       
Deferred Income Taxes 960.4     962.8  
Other Liabilities 129.1     135.6  
Total Liabilities 7,955.3     6,980.2  
Total Shareholders’ Equity 1,960.0     1,957.4  
Total Liabilities and Shareholders’ Equity $ 9,915.3     $ 8,937.6  


GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2021
(In millions)

 

Rail
North America
 

Rail
International
 

Portfolio
Management
  Other   GATX
Consolidated
Revenues                  
Lease revenue $ 206.8     $ 66.9     $ 3.3     $ 3.6     $ 280.6  
Marine operating revenue         3.6         3.6  
Other revenue 17.8     2.5     0.2     1.1     21.6  
Total Revenues 224.6     69.4     7.1     4.7     305.8  
Expenses                  
Maintenance expense 58.4     15.4         0.5     74.3  
Marine operating expense         4.6         4.6  
Depreciation expense 65.7     18.3     2.7     1.9     88.6  
Operating lease expense 10.9                 10.9  
Other operating expense 7.6     2.0     0.2     0.4     10.2  
     Total Expenses 142.6     35.7     7.5     2.8     188.6  
Other Income (Expense)                  
Net gain on asset dispositions 21.5     0.3     0.6     0.1     22.5  
Interest expense, net (37.0 )   (12.2 )   (3.1 )   (1.3 )   (53.6 )
Other expense (0.8 )           (0.5 )   (1.3 )
Share of affiliates' pre-tax income         9.0         9.0  
Segment profit $ 65.7     $ 21.8     $ 6.1     $ 0.2     $ 93.8  
Less:                  
Selling, general and administrative expense 47.1  
Income taxes (includes $1.8 related to affiliates' earnings) 10.2  
Net income from continuing operations $ 36.5  
   
Discontinued operations, net of taxes  
Net income from discontinuing operations, net of taxes $  
Loss on sale of discontinued operations, net of taxes  
Total discontinued operations, net of taxes $  
   
Net income $ 36.5  
                   
Selected Data:                  
Investment volume $ 109.1     $ 44.4     $ 352.5     $ 3.5     $ 509.5  
                   
Net Gain on Asset Dispositions                  
Asset Remarketing Income:                  
Net gains on disposition of owned assets $ 16.3     $     $     $     $ 16.3  
Residual sharing income 0.1         0.6         0.7  
Non-remarketing net gains (1) 5.1     0.3         0.1     5.5  
  $ 21.5     $ 0.3     $ 0.6     $ 0.1     $ 22.5  

(1) Includes net gains (losses) from scrapping of railcars.


GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2020 
(In millions)

 

Rail
North America
 

Rail
International
 

Portfolio
Management
  Other   GATX
Consolidated
Revenues                  
Lease revenue $ 212.1     $ 58.3     $ 0.3     $     $ 270.7  
Marine operating revenue         3.3         3.3  
Other revenue 23.6     1.8             25.4  
Total Revenues 235.7     60.1     3.6         299.4  
Expenses                  
Maintenance expense 72.9     12.9             85.8  
Marine operating expense         4.1         4.1  
Depreciation expense 63.6     15.5     1.3         80.4  
Operating lease expense 13.3                 13.3  
Other operating expense 6.6     1.8     0.1         8.5  
Total Expenses 156.4     30.2     5.5         192.1  
Other Income (Expense)                  
Net gain on asset dispositions 26.8     0.1     0.5         27.4  
Interest (expense) income, net (33.3 )   (10.6 )   (2.9 )   1.3     (45.5 )
Other expense (0.8 )   (5.5 )       (1.7 )   (8.0 )
Share of affiliates' pre-tax income         23.8         23.8  
Segment profit (loss) $ 72.0     $ 13.9     $ 19.5     $ (0.4 )   $ 105.0  
Less:                  
Selling, general and administrative expense 40.4  
Income taxes (includes $4.3 related to affiliates' earnings) 17.4  
  Net income from continuing operations $ 47.2  
   
Discontinued operations, net of taxes  
Net loss from discontinued operations, net of taxes $ (0.9 )
Gain on sale of discontinued operations, net of taxes  
  Total discontinued operations, net of taxes $ (0.9 )
   
Net income $ 46.3  
                   
Selected Data:                  
Investment volume $ 110.9     $ 69.3     $ 0.3     $ 0.5     $ 181.0  
                   
Net Gain on Asset Dispositions                  
Asset Remarketing Income:                  
Net gains on disposition of owned assets $ 26.9      $ —      $ —      $ —      $ 26.9   
Residual sharing income 0.1      —      0.5      —      0.6   
Non-remarketing net (loss) gains (1) (0.2 )   0.1      —      —      (0.1 )
  $ 26.8      $ 0.1      $ 0.5      $ —      $ 27.4   

__________
(1) Includes net gains (losses) from scrapping of railcars.


GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)

    3/31/2021   12/31/2020   9/30/2020   6/30/2020   3/31/2020
Total Assets, Excluding Cash, by Segment                    
Rail North America   $ 5,896.5      $ 5,887.5      $ 5,801.5      $ 5,700.2      $ 5,634.6   
Rail International   1,653.4      1,699.2      1,615.0      1,534.2      1,447.7   
Portfolio Management   1,057.5      700.5      707.6      675.1      656.5   
Other   348.8      357.8      106.4      110.3      107.6   
Discontinued Operations   —      —      —      —      300.8   
Total Assets, excluding cash   $ 8,956.2      $ 8,645.0      $ 8,230.5      $ 8,019.8      $ 8,147.2   
Debt and Lease Obligations, Net of Unrestricted Cash                
Unrestricted cash   $ (958.9 )   $ (292.2 )   $ (459.8 )   $ (492.9 )   $ (570.7 )
Commercial paper and bank credit facilities   19.6      23.6      13.5      5.9      275.5   
Recourse debt   6,374.6      5,329.0      5,183.0      5,047.5      5,043.7   
Operating lease obligations   328.0      348.6      368.0      372.3      399.3   
Finance lease obligations   —      33.3      —      31.8      —   
Total debt and lease obligations, net of unrestricted cash   5,763.3      5,442.3      5,104.7      4,964.6      5,147.8   
Shareholders’ Equity   $ 1,960.0      $ 1,957.4      $ 1,930.0      $ 1,875.3      $ 1,831.0   
Recourse Leverage (1)   2.9      $ 2.8      2.6      2.6      2.8   

 _________

(1) Calculated as total recourse debt / shareholders' equity.

Reconciliation of Total Assets to Total Assets, Excluding Cash
Total Assets   $ 9,915.3     $ 8,937.6     $ 8,690.3     $ 8,512.7     $ 8,717.9  
Less: cash   (959.1 )   (292.6 )   (459.8 )   (492.9 )   (570.7 )
Total Assets, excluding cash   $ 8,956.2     $ 8,645.0     $ 8,230.5     $ 8,019.8     $ 8,147.2  


GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)

  3/31/2021   12/31/2020   9/30/2020   6/30/2020   3/31/2020
Rail North America Statistics                  
Lease Price Index (LPI) (1)                  
Average renewal lease rate change (18.1 ) %   (22.6 ) %   (29.4 ) %   (28.0 ) %   (11.6 ) %
Average renewal term (months) 30       34       29       31       31    
Fleet Rollforward (2)                  
Beginning balance 103,745       103,363       102,891       102,558       102,845    
   Cars added 977       1,015       1,578       1,220       883    
   Cars scrapped (1,002 )     (571 )     (623 )     (570 )     (389 )  
   Cars sold (817 )     (62 )     (483 )     (317 )     (781 )  
Ending balance 102,903       103,745       103,363       102,891       102,558    
Utilization 97.8   %   98.1   %   98.2   %   98.7   %   99.0   %
Average active railcars 101,099       101,723       101,552       101,600       101,668    
Boxcar Fleet                  
Ending balance 13,880       14,315       14,753       14,936       15,026    
Utilization 97.1   %   95.8   %   94.5   %   94.6   %   94.6   %
Rail Europe Statistics                  
Fleet Rollforward                  
Beginning balance 26,343       25,956       25,705       25,352       24,561    
   Cars added 226       446       331       423       871    
   Cars scrapped/sold (71 )     (59 )     (80 )     (70 )     (80 )  
Ending balance 26,498       26,343       25,956       25,705       25,352    
Utilization 98.2   %   98.1   %   98.2   %   98.4   %   98.5   %
Average active railcars 25,917       25,669       25,369       25,100       24,622    
Rail North America Industry Statistics                  
Manufacturing Capacity Utilization Index (3) 74.4   %   74.7   %   72.3   %   68.7   %   73.5   %
Year-over-year Change in U.S. Carloadings (excl. intermodal) (4) (2.6 ) %   (12.9 ) %   (15.3 ) %   (15.9 ) %   (6.3 ) %
Year-over-year Change in U.S. Carloadings (chemical) (4) (3.8 ) %   (3.4 ) %   (5.1 ) %   (5.0 ) %   3.1   %
Year-over-year Change in U.S. Carloadings (petroleum) (4) (14.4 ) %   (14.0 ) %   (12.5 ) %   (11.1 ) %   3.6   %
Production Backlog at Railcar Manufacturers (5) n/a (6)     34,598       37,417       39,612       46,330    
American Steamship Company Statistics                  
Total Net Tons Carried (millions) (7)                   2.7       1.0    

 _________

(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. GATX calculates the index using the weighted-average lease rate for a group of railcar types that GATX believes best represents its 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.
(2) Excludes boxcar fleet.
(3) As reported and revised by the Federal Reserve.
(4) As reported by the Association of American Railroads (AAR).
(5) As reported by the Railway Supply Institute (RSI).
(6) Not available, not published as of the date of this release.
(7) Total net tons carried for the second quarter of 2020 reflects volume through May 14, 2020, the date of the sale.


Primary Logo

Source: GATX Corporation