Forward-Looking Statements

Transcription

1 Cwen Glbal Transprtatin Cnference September 5, 2018

2 Frward-Lking Statements Statements in this Presentatin nt based n histrical facts are frward-lking statements within the meaning f the Private Securities Litigatin Refrm Act f 1995 and, accrdingly, invlve knwn and unknwn risks and uncertainties that are difficult t predict and culd cause ur actual results, perfrmance, r achievements t differ materially frm thse discussed. These include statements as t ur future expectatins, beliefs, plans, strategies, bjectives, events, cnditins, financial perfrmance, prspects, r future events. In sme cases, frward-lking statements can be identified by the use f wrds such as may, culd, expect, intend, plan, seek, anticipate, believe, estimate, predict, ptential, cntinue, likely, will, wuld, and similar wrds and phrases. Frward-lking statements are necessarily based n estimates and assumptins that, while cnsidered reasnable by us and ur management, are inherently uncertain. Accrdingly, yu shuld nt place undue reliance n frward-lking statements, which speak nly as f the date they are made, and are nt guarantees f future perfrmance. We d nt undertake any bligatin t publicly update r revise these frward-lking statements. The fllwing factrs, in additin t thse discussed in ur ther filings with the SEC, including ur Frm 10-K fr the year ended December 31, 2017 and subsequent reprts n Frm 10-Q, culd cause actual results t differ materially frm ur current expectatins expressed in frward-lking statements: expsure t damages, fines, criminal and civil penalties, and reputatinal harm arising frm a negative utcme in litigatin, including claims arising frm an accident invlving ur railcars inability t maintain ur assets n lease at satisfactry rates due t versupply f railcars in the market r ther changes in supply and demand a significant decline in custmer demand fr ur railcars r ther assets r services, including as a result f: weak macrecnmic cnditins weak market cnditins in ur custmers' businesses declines in harvest r prductin vlumes adverse changes in the price f, r demand fr, cmmdities reduced pprtunities t generate asset remarketing incme peratinal and financial risks related t ur affiliate investments, including the Rlls-Ryce & Partners Finance jint ventures (cllectively the "RRPF affiliates") the impact f changes t the Internal Revenue Cde as a result f the Tax Cuts and Jbs Act f 2017, and uncertainty as t hw this legislatin will be interpreted and applied. fluctuatins in freign exchange rates failure t successfully negtiate cllective bargaining agreements with the unins representing a substantial prtin f ur emplyees asset impairment charges we may be required t recgnize deteriratin f cnditins in the capital markets, reductins in ur credit ratings, r increases in ur financing csts changes in railrad peratins r efficiency cmpetitive factrs in ur primary markets, including cmpetitrs with a significantly lwer cst f capital than changes in supply chains GATX availability f pipelines, trucks, and ther alternative mdes f transprtatin risks related t internatinal peratins and expansin int new gegraphic markets ther peratinal r cmmercial needs r decisins f ur custmers changes in, r failure t cmply with, laws, rules, and regulatins higher csts assciated with increased railcar assignments fllwing nn-renewal f inability t btain cst-effective insurance leases, custmer defaults, and cmpliance maintenance prgrams r ther maintenance initiatives events having an adverse impact n assets, custmers, r regins where we have a cncentrated investment expsure financial and peratinal risks assciated with lng-term railcar purchase cmmitments, envirnmental remediatin csts inadequate allwances t cver credit lsses in ur prtfli inability t maintain and secure ur infrmatin technlgy infrastructure frm cybersecurity threats and related disruptin f ur business including increased csts due t tariffs r trade disputes 2

3 HISTORY AND BUSINESS OVERVIEW 120 YEARS OF OPERATIONAL EXPERIENCE 3

4 GATX s 120-Year Histry 1985 Began lcmtive investment *Assets n- and ff-balance sheet as f 12/31/ Initiated quarterly dividend 1936 Began rail investment in Canada 1973 Acquired American Steamship Cmpany (ASC) 1994 Began rail investment in Eurpe & Mexic 1998 Frmed Rlls-Ryce Partners and Finance (RRPF) Affiliates 1898 Established as railcar lessr with 28 railcars 2012 & 2013 Began rail investments in India and Russia 2018 $7.9 billin* in assets and mre than 144,000 whlly wned railcars wrldwide 4

5 GATX Tday Business Segments RAIL NORTH AMERICA One f the largest railcar lessrs Diversified fleet f mre than 120,000 whlly wned railcars and mre than 600 lcmtives Strng custmer credit quality, diversificatin in car types and cmmdities carried Over $3.2 billin in cmmitted lease receipts NET BOOK VALUE OF ASSETS 7% 4% 4% As f 12/31/2017 RAIL INTERNATIONAL GATX Rail Eurpe (GRE) is ne f the largest Eurpean tank car lessrs with ver 23,000 railcars Strng custmer credit quality, diversificatin in car types, gegraphy and cmmdities carried Largest railcar lessr in India PORTFOLIO MANAGEMENT RRPF affiliates are the largest lessrs f Rlls-Ryce aircraft spare engines wrldwide $3.8 billin f perating assets in the RRPF affiliates Over $2.1 billin f cmmitted lease receipts at the RRPF affiliates AMERICAN STEAMSHIP COMPANY Largest US-flagged vessel peratr n the Great Lakes Operates a fleet f efficient self-unlading ships Exceptinal safety recrd and leader in Great Lakes envirnmental matters 17% $7.9 billin NBV* 68% Rail Nrth America 17% Rail Internatinal 7% Prtfli Management 4% ASC 4% Other *Assets n- and ff-balance sheet as f 12/31/ % 5

6 Straightfrward and Prven Business Mdel BUY the railcar at an ecnmically attractive and cmpetitively advantaged price LEASE the railcar t a quality custmer at an attractive rate fr a term that reflects the business cycle SERVICE the railcar in a manner that maximizes safety, in-use time and custmer satisfactin MAXIMIZE the value f the railcar by selling r scrapping at the ptimal time 6

7 GATX Rail Nrth America Overview 2017 OVERVIEW INDUSTRIES SERVED UTILIZATION * WHOLLY OWNED FLEET COUNT 120, % 100% 99% 99% CAR TYPE COUNT % 27% 98% 98% AVERAGE FLEET AGE 20 Years 12% 96% LOCOMOTIVE COUNT % 94% 96% NUMBER OF CUSTOMERS % 26% 92% COUNTRIES OF OPERATIONS US, Canada, & Mexic 27% Chemicals 26% Refiners & Other Petrleum 17% Railrads & Other Transprts 12% Fd & Agriculture 7% Mining, Minerals & Aggregates 11% Other 90% 88% 86% 90% Based n 2017 Rail Nrth America Revenue *Excludes bxcar fleet As f 12/31/2017 7

8 Railcar Leasing Market Cnditins Railcar versupply persists Apprximately 17% f industry fleet remains idle Newrailcar backlg still abve histrical averages Supply/demand imbalance exacerbated by speculative rders frm new market entrants Banks, private equity and finance cmpanies seeking yield Lack f cnnectin t ultimate car user results in pr investment decisins Railcar lease rates remain at lw levels 160, , , ,000 80,000 60,000 40,000 20,000 INDUSTRY BACKLOGS Railway Supply Institute as f January 2018 Number f Tank Number f Freight 8

9 Oversupply in the Nrth American Fleet Persists Despite negative carlad grwth, the NA fleet has grwn fr 6 cnsecutive years 1,640 Carlads vs Fleet Size 20,500 1,620 1,618 20,000 Year End NA Fleet Size (000's) 1,600 1,580 1,560 1,540 1,520 1,500 1,480 1,460 1,494 19,500 19,000 18,500 18,000 17,500 17,000 NA Annual Carlads (000's) 1,440 16,500 1, Year End NA Fleet Size (000's) NA Carlads (000's) 16,000 Surces: UMLER (as f 1/1/2018) - Year End Fleet Sizes defined as January 1 f fllwing year; AAR (Carlads) 9

10 Nrth America: Cmmdity Carlads 2,500 2,000 1,500 1, Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Quarterly Cmmdity Carlad Traffic, Nrth America (000s) All Other Cal & Cke Sand, Stne, Minerals, & Related Prducts Grain Petrleum Prducts 10

11 GATX Actively Manages Thrugh Cycles GATX practively manages changing market cnditins by utilizing ur strng custmer relatinships and diversity f ur fleet t adjust rate and term. MONTHS STRONG MARKET 67 14% 63 5% 41-11% WEAK MARKET 35-16% 45 7% % STRONG MARKET 35% 66 39% 54 32% % WEAK MARKET -28% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Renewal Lease Term (left axis) Lease Price Index (right axis) * Apprximate # f railcarsscheduled fr renewal RenewalSuccess** Rate 20,000 17,500 15,000 17,000 21,000 20,000 21,000 20,000 17,000 12,500 15,100 13,900 73% 60% 54% 62% 77% 82% 81% 86% 81% 67% 75% N/A Utilizatin** 98% 98% 96% 97% 98% 98% 99% 99% 99% 99% 98% N/A *As f 12/31/2017 **Excludes bxcar fleet LPI = Lease Price Index: The average renewal lease rate change is reprted as the percentage change between the average renewal lease rate and the average expiring lease rate, weighted by GATX s Nrth American fleet cmpsitin (excluding bxcars). Renewal Success Rate: The percentage f expiring leases that were renewed with the existing lessee. 11

12 GATX Strategy in this Envirnment Outperfrm the cmpetitin Maintain fcus n utilizatin; highest reprted utilizatin in Nrth America Leverage the strength f ur full service ffering, diversity f ur fleet and depth f custmer relatinships Displace cmpetitrs Cntinue t practice a disciplined capital allcatin strategy Execute cyclically aware management f lease terms and assets Pursue investment pprtunities as market slwly recvers New railcar rders Struggling fleets 12

13 GATX Rail Internatinal Overview 2017 OVERVIEW INDUSTRIES SERVED BY GRE GRE FLEET UTILIZATION FLEET COUNT 23,000+ in Eurpe (GRE) in India and Russia CAR TYPE COUNT 35+ AVERAGE FLEET AGE 18 Years NUMBER OF CUSTOMERS 225+ MAJOR COUNTRIES OF OPERATIONS Germany, Pland, Austria, The Netherlands, Hungary, Czech Republic, Switzerland 25% 13% 6% 56% Refiners & Other Petrleum 25% Mining, Minerals & Aggregates, Chemistry Based n 2017 GRE Revenue 56% 13% Railrads & Other Transprts 6% Other 100% 99% 98% 97% 96% 95% 94% 93% 92% 91% 90% 96% 97% 95% 97% 95% 97% 96% 97% As f 12/31/2017 As f 12/31/

14 Prtfli Management Overview 23% OWNED PORTFOLIO 3% 2017 RRPF OVERVIEW SPARE ENGINE COUNT 430+ AVERAGE FLEET AGE 11 Years RRPF ENGINE TYPES 9% 5% 29% 6% RRPF JV PRE-TAX INCOME (GATX s SHARE) 13% 74% $100 $80 13% 25% 74% Aircraft Spare Engine Leasing Affiliates (RRPF) 23% Marine Equipment 3% Other $ MILLIONS $60 $40 $20 29% Trent XWB (A350) 25% Trent 700 (A330) 13% V2500 (A320) 13% Trent 900 (A380) 6% Trent 800 (B777) 5% Trent 1000 (B787) 9% Other $582.8 millin NBV as f 12/31/2017 $0 Based n NBV f apprximately $3.8 billin; 100% f RRPF s prtfli as f 12/31/17 14

15 American Steamship Cmpany Overview Ttal Net Tns Carried by ASC (in millins) ASC Vessels Operated OVERVIEW FLEET SIZE 12 AVERAGE FLEET AGE ASC COMMODITIES CARRIED 20% 1% 40 Years CUSTOMER BASE 20+ MAJOR COMMODITIES CARRIED Irn Ore, Cal and Limestne 27% 52% 52% Irn Ore 27% Cal 20% Limestne 1% Other As f 12/31/2017 Based n 2017 ASC vlume 15

16 Capital Allcatin Framewrk PRIORITY 1 Invest in value-creating assets whereby GATX can leverage strengths t maximize sharehlder value $8.5 billin* f investments ver the perid shwn INVESTMENT VOLUME $1,031 $ MILLIONS $763 $634 $781 $480 $585 $615 $770 $860 $715 $621 $ *Investment Vlume and Nn-cash Items As f 12/31/

17 Capital Allcatin Framewrk PRIORITY 2 Manage the balance sheet Maintain a slid investment grade rating f BBB/Baa2 Maintain capacity fr pprtunistic investments 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x LEVERAGE & REDUCTION OF SECURED ASSETS % 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Recurse Debt/Equity % f Assets that are Secured *Ttal Recurse Debt = On-Balance Sheet Recurse Debt + Off-Balance Sheet Recurse Debt + Capital Lease Obligatins + Cmmercial Paper and Bank Credit Facilities, Net f Unrestricted Cash As f 12/31/

18 Capital Allcatin Framewrk PRIORITY 3 In lckstep with Pririties 1 and 2, return cash t sharehlders Over the perid shwn belw, $1.7 billin returned t sharehlders $ MILLIONS $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 CASH RETURNED TO SHAREHOLDERS Cumulative Dividends Cumulative Share Repurchase As f 12/31/

19 GATX Financial Highlights EPS* $4.48 $5.37 $5.77 $4.70 $1.59 $2.01 $2.81 $ ROE INVESTMENT VOLUME 7% 9% 11% 13% 15% 18% 18% 13% $ MILLIONS $585 $615 $770 $860 $1,031 $715 $621 $ *Graph displays Diluted EPS Diluted EPS & ROE exclude Tax Adjustments and Other Items. See the Appendix fr a recnciliatin f these nn-gaap measures. 19

20 RECONCILIATION OF NON-GAAP MEASURES 120 YEARS OF OPERATIONAL EXPERIENCE 20

21 Recnciliatin f Nn-GAAP Measures Net Incme Measures Net Incme (in millins) Net incme (GAAP) $ $ $ 81.4 $ 80.8 $ $ $ $ $ $ $ Adjustments attributable t cnslidated pre-tax incme: Railcar impairment at Rail Nrth America Net lss (gain) n whlly wned Prtfli Management marine investments (1.8) Residual sharing settlement at Prtfli Management (49.1) - Early retirement prgram Litigatin recveries (6.5) (3.2) Leveraged lease adjustment (5.5) Gain n sale f ffice building - (12.0) Envirnmental reserve reversal - (8.2) Ttal adjustments attributable t cnslidated pre-tax incme $ - $ (20.2) $ - $ (6.5) $ (8.7) $ - $ - $ - $ 18.2 $ (16.8) $ (1.8) Incme taxes theren, based n applicable effective tax rate $ - $ 3.8 $ - $ 2.4 $ 2.0 $ - $ - $ - $ (6.9) $ 7.2 $ 0.7 Other incme tax adjustments attributable t cnslidated incme: Incme tax rate changes (17.1) GATX incme taxes n sale f AAE Impact f the Tax Cuts and Jbs Act f (315.9) Freign tax credit utilizatin - - (7.4) - - (4.6) (3.9) - - (7.1) - Tax benefits upn clse f tax audits (9.5) (4.8) (15.5) Deferred tax benefit frm the expiratin f the statute f limitatins n a tax psitin taken - (6.8) Ttal ther incme tax adjustments attributable t cnslidated incme $ (17.1) $ (6.8) $ (7.4) $ (9.5) $ (4.8) $ (19.4) $ 19.3 $ - $ 14.1 $ (7.1) $ (315.9) Adjustments attributable t affiliates' earnings, net f taxes: Net lss (gain) n Prtfli Management affiliate (0.6) - Incme tax rate changes (3.0) - - (1.9) (4.1) (4.6) (7.6) - (7.7) (3.9) - Pre-tax gain n sale f AAE (9.3) Interest rate swaps at AAE (0.2) 20.5 (6.9) Ttal adjustments attributable t affiliates' earnings, net f taxes $ (3.0) $ 3.3 $ 20.7 $ 7.4 $ (4.3) $ 15.9 $ (23.8) $ - $ 4.2 $ (4.5) $ - Net Incme, excluding tax adjustments and ther items (nn-gaap) $ $ $ 94.7 $ 74.6 $ 95.0 $ $ $ $ $ $ Earnings per Share Diluted earnings per share (GAAP) $ 3.43 $ 3.88 $ 1.70 $ 1.72 $ 2.35 $ 2.88 $ 3.59 $ 4.48 $ 4.69 $ 6.29 $ Diluted earnings per share, excluding tax adjustments and ther items (nn-gaap) $ 3.07 $ 3.49 $ 1.97 $ 1.59 $ 2.01 $ 2.81 $ 3.50 $ 4.48 $ 5.37 $ 5.77 $

22 Recnciliatin f Nn-GAAP Measures Balance Sheet Measures On- and Off-Balance Sheet Assets Ttal assets (GAAP) $ 4,723.2 $ 5,190.5 $ 5,206.4 $ 5,442.4 $ 5,846.0 $ 6,044.7 $ 6,535.5 $ 6,919.9 $ 6,894.2 $ 7,105.4 $ 7,422.4 Off-balance sheet assets: Rail Nrth America 1, , , ASC Prtfli Management Ttal ff-balance sheet assets $ 1,235.9 $ 1,061.2 $ 1,016.1 $ $ $ $ $ $ $ $ Ttal assets, as adjusted (nn-gaap) $ 5,959.1 $ 6,251.7 $ 6,222.5 $ 6,413.9 $ 6,733.1 $ 6,929.2 $ 7,439.9 $ 7,537.7 $ 7,389.7 $ 7,564.5 $ 7,