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GATX Corporation Reports 2010 Third Quarter Results

October 21, 2010

CHICAGO, Oct 21, 2010 (BUSINESS WIRE) --

GATX Corporation (NYSE:GMT) today reported 2010 third quarter net income of $21.1 million or $.45 per diluted share, compared to 2009 third quarter net income of $19.6 million or $.42 per diluted share. Third quarter 2010 results include negative fair-value adjustments on interest rate swaps at GATX's European affiliate, AAE Cargo (AAE), of $2.7 million or $.06 per diluted share, and a tax benefit of $1.9 million or $.04 per diluted share from a reduction of statutory tax rates in the United Kingdom.

Net income for the first nine months of 2010 was $61.3 million or $1.31 per diluted share, compared to $59.9 million or $1.24 per diluted share in the prior year period. The 2010 year-to-date results include a net benefit of $1.7 million or $.04 per diluted share related to the aforementioned tax benefit and the favorable resolution of a litigation matter and tax accrual reversal that occurred in the second quarter, partially offset by the negative fair-value adjustments on interest rate swaps at AAE. The 2009 year-to-date results include negative fair-value adjustments of $18.5 million or $.38 per diluted share related to the AAE interest rate swaps.

"We continue to see gradual improvement in the rail market," said Brian A. Kenney, president and chief executive officer of GATX. "Our North American rail fleet's utilization in the third quarter was 96.8%, reflective of improving traffic and demand for railcars. However, the lease rate environment is still challenging given the number of idle cars remaining in the industry. Thus, lease income remains under pressure as demonstrated by the 15.7% decrease in the Lease Price Index (LPI) during the quarter.

"In Specialty, pressure on charter rates persists at the marine joint ventures, reflecting ongoing low levels of demand and increasing vessel supply. On a more positive note, American Steamship Company (ASC) had another solid quarter. Demand for iron ore is improved from the prior year period, and we expect shipping volumes on the Great Lakes to remain relatively stable through the end of the year.

"The slowly improving economy is creating more opportunities to invest. Investment volume was approximately $113 million during the third quarter, our highest quarterly volume year to date.

Mr. Kenney concluded, "We continue to expect 2010 full-year earnings to be in the range of $1.50 - $1.70 per diluted share, excluding the impact of the items noted above."

RAIL

Rail segment profit was $32.7 million in the third quarter of 2010, compared to third quarter 2009 segment profit of $47.7 million. The third quarter results for 2010 include a negative pre-tax adjustment of $3.0 million related to the change in fair-value of interest rate swaps at AAE. Rail reported segment profit of $111.4 million year-to-date 2010, compared to $135.2 million in the same period 2009. The 2010 and 2009 year-to-date results include negative pre-tax adjustments of $8.9 and $22.0 million, respectively, related to the interest rate swaps at AAE.

At September 30, 2010, Rail's North American fleet totaled approximately 109,000 cars. Fleet utilization was 96.8% compared to 96.5 % at the end of the second quarter and 95.9% at the end of third quarter 2009. Renewal lease rates in the Lease Price Index (LPI) declined 15.7% over the expiring rate, compared to an 18.6% decline in the second quarter 2010 and a decline of 8.5% in the third quarter 2009. The average renewal term in the third quarter was 36 months, consistent with the second quarter and slightly shorter than the 39 months in the third quarter of 2009. Rail's European wholly-owned tank car fleet totaled approximately 20,000 cars and utilization was 95.3% at the end of the third quarter, compared to 94.4% at the end of the second quarter and 94.7% at the end of third quarter 2009.

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

SPECIALTY

Specialty reported segment profit of $13.6 million in the third quarter of 2010 compared to $13.2 million in third quarter 2009. Year to date, Specialty reported segment profit of $40.2 million, compared to $43.5 million in the same period in 2009. The year-to-date decline in segment profit was primarily due to lower share of affiliates' earnings as the pace of recovery in the marine joint ventures remains tepid.

The Specialty portfolio currently consists of $721.7 million of owned assets (including on and off balance sheet assets) and third-party managed portfolios totaling $215.1 million.

AMERICAN STEAMSHIP COMPANY

American Steamship Company (ASC) reported segment profit of $12.5 million in the third quarter 2010 compared to $1.3 million in the third quarter 2009. Segment profit year-to-date 2010 was $22.0 million, compared to $10.1 million year-to-date 2009. The year-to-date 2009 results include income of $5.6 million from the receipt of a litigation settlement. Steel mill capacity utilization and production remain above the low levels experienced in 2009 and ASC's tonnage volumes have increased accordingly. Year-to-date 2010, ASC has carried 19.5 million net tons compared to 12.6 million net tons carried year-to-date 2009, with the most significant increase evident in iron ore shipments.

COMPANY DESCRIPTION

GATX Corporation (NYSE:GMT) provides leasing and related services to customers operating rail, marine and other targeted assets. GATX is a leader in leasing transportation assets and controls one of the largest railcar fleets in the world. Applying over a century of operating experience and strong market and asset expertise, GATX provides quality assets and services to customers worldwide. 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 2010 third quarter results. Teleconference details are as follows:

Thursday, October 21st
11:00 A.M.Eastern Time
Domestic Dial-In: 1-888-515-2235
International Dial-In: 1-719-457-2605
Replay: 1-888-203-1112 or 1-719-457-0820/ Access Code: 7516664

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

This document contains statements that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those sections and the Private Securities Litigation Reform Act of 1995. Some of these statements may be identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project" or other words and terms of similar meaning. 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 and other filings with the SEC, and that actual results or developments may differ materially from those in the forward-looking statements. Specific factors that might cause actual results to differ from expectations include, but are not limited to, general economic, market, regulatory and political conditions in the rail, marine, industrial and other industries served by GATX and its customers; lease rates, utilization levels and operating costs in GATX's primary operating segments; conditions in the capital markets; changes in GATX's credit ratings and financing costs; regulatory rulings that may impact the economic value and operating costs of assets; competitive factors in GATX's primary markets including lease pricing and asset availability; changes in loss provision levels within GATX's portfolio; impaired asset charges that may result from changing market conditions or portfolio management decisions implemented by GATX; the opportunity for remarketing income; and 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.

(10/21/10)

--Tabular Follows--

GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30 September 30
2010 2009 2010 2009
Gross Income
Lease income $ 216.1 $ 223.0 $ 651.0 $ 678.9
Marine operating revenue 64.8 36.3 125.5 75.7
Asset remarketing income 10.1 3.1 28.4 25.2
Other income 17.7 14.2 55.6 42.6
Revenues 308.7 276.6 860.5 822.4
Share of affiliates' earnings 5.7 15.6 30.6 23.0
Total Gross Income 314.4 292.2 891.1 845.4
Ownership Costs
Depreciation 54.3 55.3 161.1 161.8
Interest expense, net 41.3 40.3 125.1 125.1
Operating lease expense 35.0 34.2 104.4 101.7
Total Ownership Costs 130.6 129.8 390.6 388.6
Other Costs and Expenses
Maintenance expense 65.7 65.8 198.7 195.3
Marine operating expense 43.7 25.8 85.2 51.0
Selling, general and administrative 31.0 34.8 97.3 101.9
Other 15.1 8.8 39.5 22.2
Total Other Costs and Expenses 155.5 135.2 420.7 370.4
Income before Income Taxes 28.3 27.2 79.8 86.4
Income Tax Provision 7.2 7.6 18.5 26.5
Net Income $ 21.1 $ 19.6 $ 61.3 $ 59.9
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Data)
(Continued)
Three Months Ended Nine Months Ended
September 30 September 30
2010 2009 2010 2009
Per Share Data
Basic $ 0.45 $ 0.43 $ 1.33 $ 1.28
Average number of common shares 46.2 45.9 46.1 46.8
Diluted $ 0.45 $ 0.42 $ 1.31 $ 1.24
Average number of common shares and
common share equivalents 46.7 48.0 47.0 48.9
Dividends declared per common share $ 0.28 $ 0.28 $ 0.84 $ 0.84
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Millions)
September 30 December 31
2010 2009
Assets
Cash and Cash Equivalents $ 23.6 $ 41.7
Restricted Cash 32.0 33.2
Receivables
Rent and other receivables 69.2 68.7
Finance leases 324.3 309.7
Less: allowance for possible losses (12.9 ) (13.4 )
380.6 365.0
Operating Lease Assets, Facilities and Other
Rail 5,327.0 5,449.0
Specialty 263.1 245.4
ASC 387.6 380.2
Less: allowance for depreciation (2,037.0 ) (2,041.3 )
3,940.7 4,033.3
Investments in Affiliated Companies 462.2 452.2
Goodwill 94.0 97.5
Other Assets 200.4 183.5
Total Assets $ 5,133.5 $ 5,206.4
Liabilities and Shareholders' Equity
Accounts Payable and Accrued Expenses $ 123.9 $ 123.0
Debt
Commercial paper and borrowings under bank credit facilities 72.0 70.8
Recourse 2,534.6 2,553.0
Nonrecourse 222.7 234.2
Capital lease obligations 50.3 54.8
2,879.6 2,912.8
Deferred Income Taxes 742.2 730.6
Other Liabilities 289.2 337.4
Total Liabilities 4,034.9 4,103.8
Total Shareholders' Equity 1,098.6 1,102.6
Total Liabilities and Shareholders' Equity $ 5,133.5 $ 5,206.4
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended September 30, 2010
(In Millions)
GATX
Rail Specialty ASC Other Consolidated
Gross Income
Lease income $ 201.4 $ 13.6 $ 1.1 $ - $ 216.1
Marine operating revenue - - 64.8 - 64.8
Asset remarketing income 2.7 7.4 - - 10.1
Other income 17.5 - - 0.2 17.7
Revenues 221.6 21.0 65.9 0.2 308.7
Share of affiliates' earnings (2.1 ) 7.8 - - 5.7
Total Gross Income 219.5 28.8 65.9 0.2 314.4
Ownership Costs
Depreciation 46.1 4.6 3.6 - 54.3
Interest expense, net 32.0 7.3 2.0 - 41.3
Operating lease expense 34.7 0.3 - - 35.0
Total Ownership Costs 112.8 12.2 5.6 - 130.6
Other Costs and Expenses
Maintenance expense 61.6 - 4.1 - 65.7
Marine operating expense - - 43.7 - 43.7
Other 12.4 3.0 - (0.3 ) 15.1
Total Other Costs and Expenses 74.0 3.0 47.8 (0.3 ) 124.5
Segment Profit $ 32.7 $ 13.6 $ 12.5 $ 0.5 59.3
Selling, general and administrative 31.0
Income before Income Taxes 28.3
Income Tax Provision 7.2
Net Income $ 21.1

Selected Data:
Investment Volume $ 93.0 $ 19.5 $ 0.3 $ 0.6 $ 113.4
Asset Remarketing Income:
Disposition Gains on Owned Assets 2.7 5.7 - - 8.4
Residual Sharing Income - 1.7 - - 1.7
Total Asset Remarketing Income $ 2.7 $ 7.4 $ - $ - $ 10.1
Scrapping Gains (a) $ 4.5 - - - $ 4.5

(a) Included in Other income

GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Nine Months Ended September 30, 2010
(In Millions)
GATX
Rail Specialty ASC Other Consolidated
Gross Income
Lease income $ 606.6 $ 41.3 $ 3.1 $ - $ 651.0
Marine operating revenue - - 125.5 - 125.5
Asset remarketing income 15.5 12.9 - - 28.4
Other income 54.0 0.5 - 1.1 55.6
Revenues 676.1 54.7 128.6 1.1 860.5
Share of affiliates' earnings 1.8 28.8 - - 30.6
Total Gross Income 677.9 83.5 128.6 1.1 891.1
Ownership Costs
Depreciation 141.2 13.0 6.9 - 161.1
Interest expense, net 95.5 21.0 6.3 2.3 125.1
Operating lease expense 103.6 1.0 - (0.2 ) 104.4
Total Ownership Costs 340.3 35.0 13.2 2.1 390.6
Other Costs and Expenses
Maintenance expense 190.5 - 8.2 - 198.7
Marine operating expense - - 85.2 - 85.2
Other 35.7 8.3 - (4.5 ) 39.5
Total Other Costs and Expenses 226.2 8.3 93.4 (4.5 ) 323.4
Segment Profit $ 111.4 $ 40.2 $ 22.0 $ 3.5 177.1
Selling, general and administrative 97.3
Income before Income Taxes 79.8
Income Tax Provision 18.5
Net Income $ 61.3

Selected Data:
Investment Volume $ 181.5 $ 52.6 $ 7.3 $ 3.1 $ 244.5
Asset Remarketing Income:
Disposition Gains on Owned Assets 15.5 6.4 - - 21.9
Residual Sharing Income - 6.5 - - 6.5
Total Asset Remarketing Income $ 15.5 $ 12.9 $ - $ - $ 28.4
Scrapping Gains (a) $ 13.2 - - - $ 13.2

(a) Included in Other income

GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended September 30, 2009
(In Millions)
GATX
Rail Specialty ASC Other Consolidated
Gross Income
Lease income $ 208.8 $ 13.2 $ 1.0 $ - $ 223.0
Marine operating revenue - - 36.3 - 36.3
Asset remarketing income 0.2 2.9 - - 3.1
Other income 13.7 0.3 - 0.2 14.2
Revenues 222.7 16.4 37.3 0.2 276.6
Share of affiliates' earnings 3.6 12.0 - - 15.6
Total Gross Income 226.3 28.4 37.3 0.2 292.2
Ownership Costs
Depreciation 47.4 4.7 3.2 - 55.3
Interest expense, net 30.6 6.9 2.2 0.6 40.3
Operating lease expense 34.0 0.2 - - 34.2
Total Ownership Costs 112.0 11.8 5.4 0.6 129.8
Other Costs and Expenses
Maintenance expense 61.0 - 4.8 - 65.8
Marine operating expense - - 25.8 - 25.8
Other 5.6 3.4 - (0.2 ) 8.8
Total Other Costs and Expenses 66.6 3.4 30.6 (0.2 ) 100.4
Segment Profit (Loss) $ 47.7 $ 13.2 $ 1.3 $ (0.2 ) 62.0
Selling, general and administrative 34.8
Income before Income Taxes 27.2
Income Tax Provision 7.6
Net Income $ 19.6

Selected Data:
Investment Volume $ 105.3 $ 78.3 $ 0.3 $ 2.2 $ 186.1
Asset Remarketing Income:
Disposition Gains on Owned Assets 0.2 1.8 - - 2.0
Residual Sharing Income - 1.1 - - 1.1
Total Asset Remarketing Income $ 0.2 $ 2.9 $ - $ - $ 3.1
Scrapping Gains (a) $ 2.8 - - - $ 2.8

(a) Included in Other income

GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Nine Months Ended September 30, 2009
(In Millions)
GATX
Rail Specialty ASC Other Consolidated
Gross Income
Lease income $ 634.3 $ 41.5 $ 3.1 $ - $ 678.9
Marine operating revenue - - 75.7 - 75.7
Asset remarketing income 11.4 13.8 - - 25.2
Other income 39.8 1.8 - 1.0 42.6
Revenues 685.5 57.1 78.8 1.0 822.4
Share of affiliates' earnings (8.8 ) 31.8 - - 23.0
Total Gross Income 676.7 88.9 78.8 1.0 845.4
Ownership Costs
Depreciation 141.0 14.5 6.3 - 161.8
Interest expense, net 95.7 19.6 6.8 3.0 125.1
Operating lease expense 100.9 1.0 - (0.2 ) 101.7
Total Ownership Costs 337.6 35.1 13.1 2.8 388.6
Other Costs and Expenses
Maintenance expense 185.1 - 10.2 - 195.3
Marine operating expense - - 51.0 - 51.0
Other 18.8 10.3 (5.6 ) (1.3 ) 22.2
Total Other Costs and Expenses 203.9 10.3 55.6 (1.3 ) 268.5
Segment Profit (Loss) $ 135.2 $ 43.5 $ 10.1 $ (0.5 ) 188.3
Selling, general and administrative 101.9
Income before Income Taxes 86.4
Income Tax Provision 26.5
Net Income $ 59.9

Selected Data:
Investment Volume $ 277.3 $ 85.9 $ 6.9 $ 6.4 $ 376.5
Asset Remarketing Income:
Disposition Gains on Owned Assets 7.3 3.2 - - 10.5
Residual Sharing Income 4.1 10.6 - - 14.7
Total Asset Remarketing Income $ 11.4 $ 13.8 $ - $ - $ 25.2
Scrapping Gains (a) $ 6.2 - - - $ 6.2

(a) Included in Other income

GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In Millions, Except Leverage)
9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010

Assets by Segment(includes off-balance sheet assets)

Rail $ 5,118.0 $ 5,110.4 $ 4,998.1 $ 4,899.7 $ 4,978.0
Specialty 676.8 676.0 693.8 691.5 713.8
ASC 262.1 269.0 260.3 285.5 274.3
Other 88.5 92.2 90.3 89.5 94.7
Total Assets, Excluding Cash $ 6,145.4 $ 6,147.6 $ 6,042.5 $ 5,966.2 $ 6,060.8
Non-performing Investments $ 18.4 $ 18.2 $ 17.8 $ 17.4 $ 17.1

Capital Structure
Commercial Paper and Bank Credit Facilities,
Net of Unrestricted Cash $ 0.3 $ 29.1 $ (132.4 ) $ 72.0 $ 48.4
On Balance Sheet Recourse Debt 2,627.7 2,553.0 2,764.1 2,515.3 2,534.6
On Balance Sheet Nonrecourse Debt 236.9 234.2 226.9 225.2 222.7
Off Balance Sheet Recourse Debt 801.7 813.0 742.6 746.3 787.4
Off Balance Sheet Nonrecourse Debt 206.7 203.1 200.3 197.8 195.5
Capital Lease Obligations 56.1 54.8 53.4 52.0 50.3
Total Borrowings, Net of Unrestricted Cash $ 3,929.4 $ 3,887.2 $ 3,854.9 $ 3,808.6 $ 3,838.9
Total Recourse Debt (a) $ 3,485.8 $ 3,449.9 $ 3,427.7 $ 3,385.6 $ 3,420.7
Shareholders' Equity $ 1,112.2 $ 1,102.6 $ 1,096.2 $ 1,044.9 $ 1,098.6
Recourse Leverage 3.1 3.1 3.1 3.2 3.1

______________________

(a) Total Recourse Debt = On Balance Sheet Recourse + Off Balance Sheet Recourse
+ Capital Lease Obligations + Commercial Paper and Bank Credit Facilities, Net of Unrestricted Cash

(b) Recourse Leverage = Total Recourse Debt / Shareholders' Equity

GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)
9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010

North American Rail Statistics (wholly-owned fleet)

Lease Price Index (LPI) (a)
Average Renewal Lease Rate Change -8.5 % -18.7 % -15.2 % -18.6 % -15.7 %
Average Renewal Term (months) 39 43 31 36 36
Fleet Rollforward
Beginning Balance 111,154 111,206 110,870 108,918 108,626
Cars Added 1,478 774 346 434 1,189
Cars Scrapped (1,302 ) (1,108 ) (1,026 ) (726 ) (917 )
Cars Sold (124 ) (2 ) (1,272 ) - (98 )
Ending Balance 111,206 110,870 108,918 108,626 108,800
Utilization 95.9 % 95.9 % 96.0 % 96.5 % 96.8 %

GATX Rail Europe Statistics(wholly-owned fleet)

Fleet Rollforward
Beginning Balance 20,000 20,005 20,033 20,321 20,302
Cars Added 91 100 288 15 61
Cars Scrapped/Sold (86 ) (72 ) - (34 ) (137 )
Ending Balance 20,005 20,033 20,321 20,302 20,226
Utilization 94.7 % 94.7 % 94.4 % 94.4 % 95.3 %

Rail Industry Statistics
Manufacturing Capacity Utilization Index (b) 70.5 % 71.6 % 72.8 % 74.2 % 74.7 %
Year-over-year Change in U.S. Carloadings (total, excl. intermodal) (c) -18.1 % -16.1 % 2.2 % 7.8 % 7.2 %
Year-over-year Change in U.S. Carloadings (chemical) (c) -14.0 % -9.6 % 13.5 % 12.8 % 10.2 %
Year-over-year Change in U.S. Carloadings (petroleum products) (c) -13.4 % -11.1 % 2.0 % 4.9 % 4.9 %
Production Backlog at Railcar Manufacturers (d) 19,343 10,462 12,990 14,930 19,267

American Steamship Company (ASC) Statistics
Total Net Tons Carried (millions) 6.1 8.6 1.3 8.3 9.9

______________________

(a) LPI is an internally generated business indicator that measures general lease rate pricing on renewals within GATX's North American rail fleet. The index reflects the weighted average lease rate for a select group of railcar types that GATX believes to be representative of its overall North American fleet. The LPI measures the percentage change between the weighted average renewal lease rate and the weighted average expiring lease rate. Average renewal term reflects the weighted average renewal lease term in months.

(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
Jennifer Van Aken
312-621-6689
jennifer.vanaken@gatx.com
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