Net income from continuing operations for the second quarter 2020 was $37.0 million or $1.05 per diluted shareRail North America’s fleet utilization remained high at 98.7%CHICAGO, July 21, 2020 (GLOBE NEWSWIRE) — GATX Corporation (NYSE: GATX) today reported 2020 second-quarter results. In the second quarter of 2020, GATX completed the sale of American Steamship Company. As a result, this segment is reported as discontinued operations and prior periods have been recast to conform to the current presentation. Results for the second quarter and six months ending June 30 are summarized below:2020 second quarter net income from continuing operations was $37.0 million or $1.05 per diluted share, compared to net income from continuing operations of $60.3 million or $1.65 per diluted share in the second quarter of 2019. Net income from continuing operations for the first six months of 2020 was $84.2 million or $2.38 per diluted share, compared to $101.5 million or $2.75 per diluted share in the prior year period. The 2019 second quarter and year-to-date results include a net deferred tax benefit of $2.8 million or $0.08 per diluted share related to an enacted foreign tax rate reduction. Details related to these items are provided in the attached Supplemental Information under Tax Adjustments and Other Items.Net income from discontinued operations in the second quarter of 2020 was $2.3 million or $0.06 per diluted share, compared to $7.7 million or $0.21 per diluted share in the same period of 2019. Year to date, net income from discontinued operations was $1.4 million or $0.04 per diluted share, compared to $8.0 million or $0.22 per diluted share in the prior year period.“In the second quarter, COVID-19 and its effect on the global economy negatively impacted all of our business segments,” said Brian A. Kenney, president and chief executive officer of GATX. “Despite the difficult business conditions, our Rail North America team continued to effectively deploy railcars on lease and displace competitors, resulting in a renewal success rate of 71.8% and fleet utilization of 98.7% at quarter-end. However, as customers right-size their fleets, railcar lessors are competing aggressively to place both new deliveries and their existing idle railcars, resulting in significant pressure on lease rates. In the second quarter, the renewal lease rate change of GATX’s Lease Price Index was negative 28% and the average renewal term was 31 months.“Rail International performed well. GATX Rail Europe continued to experience small lease renewal rate increases and fleet utilization remains strong at 98.4%. However, the pace of new railcar investments in both Europe and India was constrained due to pandemic-related shutdowns at railcar manufacturing facilities. In the Portfolio Management segment, our Rolls-Royce and Partners Finance affiliates produced solid financial results against a challenging backdrop in the global aviation industry.”Mr. Kenney added, “Investment volume was over $210 million in the quarter. With a strong balance sheet, GATX continues to have the capacity and willingness to invest at attractive valuations.”Mr. Kenney concluded, “Looking ahead, we expect pressure on lease rates, renewal activity, and asset utilization across our business segments as impacts from the COVID-19 pandemic continues. Given the highly uncertain global outlook and lack of near-term visibility, we are not reinstituting guidance for 2020 at this time.”RAIL NORTH AMERICA
Rail North America reported segment profit of $50.0 million in the second quarter of 2020, compared to $85.8 million in the second quarter of 2019. Lower segment profit was primarily a result of lower gains on asset dispositions. Year to date, Rail North America reported segment profit of $122.0 million, compared to $154.2 million in the same period of 2019. The decline in year-to-date 2020 results was predominantly driven by lower lease revenue and lower gains on asset dispositions.At June 30, 2020, Rail North America’s wholly owned fleet was comprised of approximately 117,800 cars, including approximately 15,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.Fleet utilization was 98.7% at the end of the second quarter, compared to 99.0% at the end of the prior quarter and 99.5% at the end of the second quarter of 2019. During the second quarter, the renewal lease rate change of the GATX Lease Price Index (LPI) was negative 28.0%. This compares to negative 11.6% in the prior quarter and negative 2.8% in the second quarter of 2019. The average lease renewal term for all cars included in the LPI during the second quarter was 31 months, compared to 31 months in the prior quarter and 40 months in the second quarter of 2019. Rail North America’s investment volume during the second quarter was $159.6 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 $20.0 million in the second quarter of 2020, compared to $21.3 million in the second quarter of 2019. Rail International reported segment profit of $33.9 million year-to-date 2020, compared to $36.1 million for the same period of 2019. Results in the comparative periods were favorably impacted by more railcars on lease and negatively impacted by changes in foreign currency exchange rates.At June 30, 2020, GATX Rail Europe’s (GRE) fleet consisted of approximately 25,700 cars. Utilization was 98.4%, compared to 98.5% at the end of the prior quarter and 98.9% at the end of the second quarter of 2019. Additional fleet statistics for GRE are provided on the last page of this press release.PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $19.3 million in the second quarter of 2020, compared to $11.9 million in the second quarter of 2019. Segment profit year-to-date 2020 was $38.8 million, compared to $24.2 million for the same period of 2019. The increase in second quarter and year-to-date segment profit was due to higher marine operating revenue and higher share of affiliates’ earnings from the Rolls-Royce and Partners Finance affiliates resulting from increased remarketing income.DISCONTINUED OPERATIONS
GATX completed the sale of American Steamship Company (ASC) on May 14, 2020 for a purchase price of $260 million, subject to customary closing adjustments; adjustments are not expected to be material to GATX’s overall financial position.The ASC segment is therefore accounted for as a discontinued operation. Results for discontinued operations are summarized below: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 121 years. GATX has been headquartered in Chicago, Illinois since its founding in 1898. For more information, please visit the Company’s website at www.gatx.com.TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss 2020 second-quarter results. Call details are as follows:Tuesday, July 21, 2020
11 a.m. Eastern Time
Domestic Dial-In: 1-800-458-4121
International Dial-In: 1-786-789-4772
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 7836635Call-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
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.FOR FURTHER INFORMATION CONTACT:
GATX Corporation
Shari Hellerman
Director, Investor Relations
GATX Corporation
312-621-4285
shari.hellerman@gatx.comInvestor, corporate, financial, historical financial, and news release information may be found at www.gatx.com.
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2020
(In millions)__________(1) Includes net gains from scrapping of railcars.
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2019
(In millions)__________(1) Includes net gains from scrapping of railcars.
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2020
(In millions)__________(1) Includes net gains from scrapping of railcars.
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2019
(In millions)__________(1) Includes net gains from scrapping of railcars.
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except per share data)Impact of Tax Adjustments and Other Items on Net Income*
Impact of Tax Adjustments and Other Items on Diluted Earnings per Share*(*) In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP components. Specifically, we exclude the effects of certain tax adjustments and other items for purposes of presenting net income, diluted earnings per share, and return on equity because we believe these items are not attributable to our business operations. Management utilizes net income, excluding tax adjustments and other items, when analyzing financial performance because such amounts reflect the underlying operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides investors and other users of our financial statements with meaningful supplemental information for purposes of analyzing year-to-year financial performance on a comparable basis and assessing trends.
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)__________(1) Calculated as total recourse debt / shareholder’s equity.
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)__________(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.
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