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GATX Corporation Reports 2021 Third-Quarter Results

  • Net income for the third quarter 2021 was $40.1 million or $1.11 per diluted share
  • Rail North America’s fleet utilization increased to 99.2%
  • Company reiterates 2021 full-year earnings guidance

GATX Corporation (NYSE:GATX) today reported 2021 third-quarter results. Results for the third quarter and nine months ended September 30, 2021 are summarized below:

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

Per Diluted Share

2021

 

2020

 

 

2021

 

2020

Income from Continuing Operations

$

1.11

 

 

$

1.36

 

 

 

$

2.28

 

 

$

3.74

 

Income from Discontinued Operations

 

 

(0.01

)

 

 

 

 

0.03

 

Total

$

1.11

 

 

$

1.35

 

 

 

$

2.28

 

 

$

3.77

 

2021 third-quarter net income from continuing operations was $40.1 million or $1.11 per diluted share, compared to net income from continuing operations of $48.2 million or $1.36 per diluted share in the third quarter of 2020. Net income from continuing operations for the first nine months of 2021 was $82.1 million or $2.28 per diluted share, compared to $132.4 million or $3.74 per diluted share in the prior year period. The 2021 year-to-date results include a net negative impact of $39.7 million or $1.10 per diluted share related to an enacted tax rate increase in the United Kingdom and a net negative impact of $3.4 million or $0.09 per diluted share attributed to debt extinguishment costs associated with an early redemption. The 2020 third-quarter and year-to-date results include a net negative impact of $12.3 million or $0.35 per diluted share related to the elimination of a previously announced tax rate reduction in the United Kingdom. Details related to these items are provided in the attached Supplemental Information under Impact of Tax Adjustments and Other Items on Net Income.

Net income from discontinued operations in the third-quarter and year-to-date periods of 2021 was zero, compared to net loss of $0.3 million or $(0.01) per diluted share in the third quarter of 2020 and net income of $1.1 million or $0.03 per diluted share for the first nine months of 2020.

"We continue to see improvement across our global railcar leasing markets," said Brian A. Kenney, president and chief executive officer of GATX. "In North America, GATX's fleet utilization increased to 99.2% at quarter end and our renewal success rate was 84%. Absolute lease rates across the majority of our fleet increased for the fifth quarter in a row, while the third-quarter renewal lease rate change of GATX’s Lease Price Index was in line with our expectations at negative 8.1%.

“Rail International continues to perform well, as demand for railcars in Europe and India remains robust. GATX Rail Europe's fleet utilization remained high at 98.1% and renewal lease rates for most car types increased versus the expiring rates. GATX Rail Europe and GATX Rail India continued to grow and diversify their fleets during the quarter. However, the pace of fleet growth in 2021 has been negatively impacted by COVID-19-related new car delivery delays in both regions. In Portfolio Management, the Rolls-Royce and Partners Finance affiliates performed as expected in a challenging operating environment for international air travel.”

Mr. Kenney concluded, “Based on year-to-date performance and our outlook for the remainder of the year, we continue to expect our 2021 full-year earnings to be in the range of $4.30 to $4.50 per diluted share. This guidance excludes any impact from Tax Adjustments and Other Items.”

RAIL NORTH AMERICA

Rail North America reported segment profit of $66.5 million in the third quarter of 2021, compared to $56.1 million in the third quarter of 2020. Year to date, Rail North America reported segment profit of $209.8 million, compared to $178.1 million in the same period of 2020. Higher third-quarter and year-to-date segment profit was predominantly driven by higher gains on asset dispositions and lower maintenance expense, partially offset by lower revenue.

At Sept. 30, 2021, Rail North America’s wholly owned fleet was comprised of approximately 114,200 cars, including over 12,800 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.

Fleet utilization was 99.2% at the end of the third quarter, compared to 98.5% at the end of the prior quarter and 98.2% at the end of the third quarter of 2020. During the third quarter, the renewal lease rate change of the GATX Lease Price Index (LPI) was negative 8.1%. This compares to negative 6.7% in the prior quarter and negative 29.4% in the third quarter of 2020. The average lease renewal term for all cars included in the LPI during the third quarter was 32 months, compared to 29 months in the prior quarter and 29 months in the third quarter of 2020. Rail North America’s investment volume during the third quarter was $178.9 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 $27.0 million in the third quarter of 2021, compared to $24.0 million in the third quarter of 2020. Rail International reported segment profit of $76.1 million year-to-date 2021, compared to $57.9 million for the same period of 2020. The increase in third-quarter and year-to-date segment profit was predominately driven by more railcars on lease.

At Sept. 30, 2021, GATX Rail Europe’s (GRE) fleet consisted of over 26,800 cars. Utilization was 98.1%, compared to 98.4% at the end of the prior quarter and 98.2% at the end of the third 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 $6.2 million in the third quarter of 2021, compared to $44.3 million in the third quarter of 2020. Segment profit year-to-date 2021 was $24.5 million, compared to $83.1 million for the same period of 2020. The decline in segment profit in the comparative periods was primarily driven by lower share of affiliates’ earnings from the Rolls-Royce and Partners Finance affiliates, and in particular a large gain in the third quarter of 2020 from a transaction involving the refinancing and sale of a group of aircraft spare engines.

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

September 30

 

Nine Months Ended

September 30

Discontinued Operations

2021

 

2020

 

2021

 

2020

Operations, net of taxes

$

 

 

$

 

 

 

$

 

 

$

(0.06

)

 

Gain on sale of ASC, net of taxes

 

 

(0.01

)

 

 

 

 

0.09

 

 

Total Discontinued Operations

$

 

 

$

(0.01

)

 

 

$

 

 

$

0.03

 

 

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 third-quarter results. Call details are as follows:

Thursday, Oct. 21, 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: 9998699

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), Oct. 21, 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

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In millions, except per share data)

   

 

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

 

 

2021

 

2020

 

2021

 

2020

Revenues

 

 

 

 

 

 

 

 

Lease revenue

 

$

283.9

 

 

 

$

273.3

 

 

 

$

852.1

 

 

 

$

813.3

 

 

Marine operating revenue

 

5.0

 

 

 

5.0

 

 

 

13.7

 

 

 

11.6

 

 

Other revenue

 

24.6

 

 

 

26.1

 

 

 

70.6

 

 

 

79.4

 

 

Total Revenues

 

313.5

 

 

 

304.4

 

 

 

936.4

 

 

 

904.3

 

 

Expenses

 

 

 

 

 

 

 

 

Maintenance expense

 

74.2

 

 

 

76.7

 

 

 

225.1

 

 

 

244.8

 

 

Marine operating expense

 

3.7

 

 

 

3.6

 

 

 

13.8

 

 

 

10.9

 

 

Depreciation expense

 

91.1

 

 

 

83.4

 

 

 

271.2

 

 

 

245.4

 

 

Operating lease expense

 

9.0

 

 

 

12.3

 

 

 

30.1

 

 

 

38.1

 

 

Other operating expense

 

9.7

 

 

 

8.3

 

 

 

31.3

 

 

 

26.0

 

 

Selling, general and administrative expense

 

45.9

 

 

 

42.0

 

 

 

140.8

 

 

 

125.8

 

 

Total Expenses

 

233.6

 

 

 

226.3

 

 

 

712.3

 

 

 

691.0

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

Net gain on asset dispositions

 

21.9

 

 

 

8.9

 

 

 

79.1

 

 

 

42.3

 

 

Interest expense, net

 

(49.8

)

 

 

(48.6

)

 

 

(153.4

)

 

 

(141.5

)

 

Other expense

 

(0.3

)

 

 

(1.2

)

 

 

(9.7

)

 

 

(12.2

)

 

Income before Income Taxes and Share of Affiliates’ Earnings

 

51.7

 

 

 

37.2

 

 

 

140.1

 

 

 

101.9

 

 

Income taxes

 

(14.4

)

 

 

(11.8

)

 

 

(36.4

)

 

 

(29.6

)

 

Share of affiliates’ earnings, net of taxes

 

2.8

 

 

 

22.8

 

 

 

(21.6

)

 

 

60.1

 

 

Net Income from Continuing Operations

 

40.1

 

 

 

48.2

 

 

 

$

82.1

 

 

 

$

132.4

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations, Net of Taxes

 

 

 

 

 

 

 

 

Net loss from discontinued operations, net of taxes

 

$

 

 

 

$

 

 

 

$

 

 

 

$

(2.2

)

 

(Loss) gain on sale of discontinued operations, net of taxes

 

 

 

 

(0.3

)

 

 

 

 

 

3.3

 

 

Discontinued Operations, Net of Taxes

 

 

 

 

(0.3

)

 

 

$

 

 

 

$

1.1

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

40.1

 

 

 

$

47.9

 

 

 

$

82.1

 

 

 

$

133.5

 

 

 

 

 

 

 

 

 

 

 

Share Data

 

 

 

 

 

 

 

 

Basic earnings per share from continuing operations

 

$

1.13

 

 

 

$

1.38

 

 

 

$

2.32

 

 

 

$

3.79

 

 

Basic earnings per share from discontinued operations

 

 

 

 

(0.01

)

 

 

 

 

 

0.03

 

 

Basic earnings per share from consolidated operations

 

$

1.13

 

 

 

$

1.37

 

 

 

$

2.32

 

 

 

$

3.82

 

 

Average number of common shares

 

35.5

 

 

 

35.0

 

 

 

35.4

 

 

 

34.9

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

1.11

 

 

 

$

1.36

 

 

 

$

2.28

 

 

 

$

3.74

 

 

Diluted earnings per share from discontinued operations

 

 

 

 

(0.01

)

 

 

 

 

 

0.03

 

 

Diluted earnings per share from consolidated operations

 

$

1.11

 

 

 

$

1.35

 

 

 

$

2.28

 

 

 

$

3.77

 

 

Average number of common shares and common share equivalents

 

36.0

 

 

 

35.4

 

 

 

36.0

 

 

 

35.4

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.50

$

0.48

 

$

1.50

$

1.44

 

 

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions)

   

 

 

September 30

 

December 31

 

 

2021

 

2020

Assets

 

 

 

 

Cash and Cash Equivalents

 

$

566.0

 

 

 

$

292.2

 

 

Restricted Cash

 

0.2

 

 

 

0.4

 

 

Receivables

 

 

 

 

Rent and other receivables

 

75.2

 

 

 

74.7

 

 

Finance leases (as lessor)

 

71.5

 

 

 

74.0

 

 

Less: allowance for losses

 

(6.4

)

 

 

(6.5

)

 

 

 

140.3

 

 

 

142.2

 

 

 

 

 

 

 

Operating Assets and Facilities

 

11,025.8

 

 

 

10,484.0

 

 

Less: allowance for depreciation

 

(3,352.3

)

 

 

(3,313.3

)

 

 

 

7,673.5

 

 

 

7,170.7

 

 

Lease Assets (as lessee)

 

 

 

 

Right-of-use assets, net of accumulated depreciation

 

279.2

 

 

 

335.9

 

 

Finance leases, net of accumulated depreciation

 

 

 

 

37.5

 

 

 

 

279.2

 

 

 

373.4

 

 

 

 

 

 

 

Investments in Affiliated Companies

 

564.4

 

 

 

584.7

 

 

Goodwill

 

138.7

 

 

 

143.7

 

 

Other Assets

 

224.0

 

 

 

230.3

 

 

Total Assets

 

$

9,586.3

 

 

 

$

8,937.6

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

Accounts Payable and Accrued Expenses

 

$

164.1

 

 

 

$

147.3

 

 

Debt

 

 

 

 

Commercial paper and borrowings under bank credit facilities

 

20.7

 

 

 

23.6

 

 

Recourse

 

6,029.8

 

 

 

5,329.0

 

 

 

 

6,050.5

 

 

 

5,352.6

 

 

Lease Obligations (as lessee)

 

 

 

 

Operating leases

 

292.1

 

 

 

348.6

 

 

Finance leases

 

 

 

 

33.3

 

 

 

 

292.1

 

 

 

381.9

 

 

 

 

 

 

 

Deferred Income Taxes

 

977.7

 

 

 

962.8

 

 

Other Liabilities

 

125.0

 

 

 

135.6

 

 

Total Liabilities

 

7,609.4

 

 

 

6,980.2

 

 

Total Shareholders’ Equity

 

1,976.9

 

 

 

1,957.4

 

 

Total Liabilities and Shareholders’ Equity

 

$

9,586.3

 

 

 

$

8,937.6

 

 

GATX CORPORATION AND SUBSIDIARIES

SEGMENT DATA (UNAUDITED)

Three Months Ended September 30, 2021

(In millions)

   

 

 

Rail

North America

 

Rail

International

 

Portfolio

Management

 

Other

 

GATX

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

Lease revenue

 

$

200.4

 

 

 

$

68.8

 

 

 

$

8.2

 

 

 

$

6.5

 

 

 

$

283.9

 

 

Marine operating revenue

 

 

 

 

 

 

 

5.0

 

 

 

 

 

 

5.0

 

 

Other revenue

 

19.4

 

 

 

2.7

 

 

 

0.1

 

 

 

2.4

 

 

 

24.6

 

 

Total Revenues

 

219.8

 

 

 

71.5

 

 

 

13.3

 

 

 

8.9

 

 

 

313.5

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Maintenance expense

 

58.9

 

 

 

14.0

 

 

 

 

 

 

1.3

 

 

 

74.2

 

 

Marine operating expense

 

 

 

 

 

 

 

3.7

 

 

 

 

 

 

3.7

 

 

Depreciation expense

 

64.8

 

 

 

18.5

 

 

 

4.9

 

 

 

2.9

 

 

 

91.1

 

 

Operating lease expense

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

9.0

 

 

Other operating expense

 

6.6

 

 

 

1.8

 

 

 

0.6

 

 

 

0.7

 

 

 

9.7

 

 

Total Expenses

 

139.3

 

 

 

34.3

 

 

 

9.2

 

 

 

4.9

 

 

 

187.7

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

Net gain on asset dispositions

 

20.2

 

 

 

0.9

 

 

 

0.6

 

 

 

0.2

 

 

 

21.9

 

 

Interest expense, net

 

(32.9

)

 

 

(10.9

)

 

 

(4.5

)

 

 

(1.5

)

 

 

(49.8

)

 

Other (expense) income

 

(1.1

)

 

 

(0.2

)

 

 

2.0

 

 

 

(1.0

)

 

 

(0.3

)

 

Share of affiliates' pre-tax (loss) income

 

(0.2

)

 

 

 

 

 

4.0

 

 

 

 

 

 

3.8

 

 

Segment profit

 

$

66.5

 

 

 

$

27.0

 

 

 

$

6.2

 

 

 

$

1.7

 

 

 

$

101.4

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

45.9

 

 

Income taxes (includes $1.0 related to affiliates' earnings)

15.4

 

 

Net income from continuing operations

$

40.1

 

 

 

 

Discontinued operations, net of taxes

 

Net income from discontinued operations, net of taxes

$

 

 

Gain on sale of discontinued operations, net of taxes

 

 

Total discontinued operations, net of taxes

$

 

 

 

 

Net income

$

40.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Data:

 

 

 

 

 

 

 

 

 

 

Investment volume

 

$

178.9

 

 

 

$

40.9

 

 

 

$

 

 

 

$

10.0

 

 

 

$

229.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Gain on Asset Dispositions

 

 

 

 

 

 

 

 

 

 

Asset Remarketing Income:

 

 

 

 

 

 

 

 

 

 

Net gains on disposition of owned assets

 

$

14.4

 

 

 

$

0.3

 

 

 

$

 

 

 

$

0.2

 

 

 

$

14.9

 

 

Residual sharing income

 

0.2

 

 

 

 

 

 

0.6

 

 

 

 

 

 

0.8

 

 

Non-remarketing net gains (1)

 

5.6

 

 

 

0.6

 

 

 

 

 

 

 

 

 

6.2

 

 

 

 

$

20.2

 

 

 

$

0.9

 

 

 

$

0.6

 

 

 

$

0.2

 

 

 

$

21.9

 

 

__________

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

GATX CORPORATION AND SUBSIDIARIES

SEGMENT DATA (UNAUDITED)

Three Months Ended September 30, 2020

(In millions)

   

 

 

 

Rail

North America

 

Rail

International

 

Portfolio

Management

 

Other

 

GATX

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

Lease revenue

 

$

208.7

 

 

 

$

64.5

 

 

 

$

0.1

 

 

 

$

 

 

 

$

273.3

 

 

Marine operating revenue

 

 

 

 

 

 

 

5.0

 

 

 

 

 

 

5.0

 

 

Other revenue

 

23.4

 

 

 

2.6

 

 

 

0.1

 

 

 

 

 

 

26.1

 

 

Total Revenues

 

232.1

 

 

 

67.1

 

 

 

5.2

 

 

 

 

 

 

304.4

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Maintenance expense

 

63.2

 

 

 

13.5

 

 

 

 

 

 

 

 

 

76.7

 

 

Marine operating expense

 

 

 

 

 

 

 

3.6

 

 

 

 

 

 

3.6

 

 

Depreciation expense

 

65.0

 

 

 

17.1

 

 

 

1.3

 

 

 

 

 

 

83.4

 

 

Operating lease expense

 

12.3

 

 

 

 

 

 

 

 

 

 

 

 

12.3

 

 

Other operating expense

 

6.6

 

 

 

1.6

 

 

 

0.1

 

 

 

 

 

 

8.3

 

 

Total Expenses

 

147.1

 

 

 

32.2

 

 

 

5.0

 

 

 

 

 

 

184.3

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

Net gain on asset dispositions

 

7.9

 

 

 

0.5

 

 

 

0.5

 

 

 

 

 

 

8.9

 

 

Interest (expense) income, net

 

(35.7

)

 

 

(11.9

)

 

 

(3.2

)

 

 

2.2

 

 

 

(48.6

)

 

Other (expense) income

 

(1.1

)

 

 

0.5

 

 

 

 

 

 

(0.6

)

 

 

(1.2

)

 

Share of affiliates' pre-tax income

 

 

 

 

 

 

 

46.8

 

 

 

 

 

 

46.8

 

 

Segment profit

 

$

56.1

 

 

 

$

24.0

 

 

 

$

44.3

 

 

 

$

1.6

 

 

 

$

126.0

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

42.0

 

 

Income taxes (includes $24.0 related to affiliates' earnings)

35.8

 

 

Net income from continuing operations

$

48.2

 

 

 

 

Discontinued operations, net of taxes

 

Net income from discontinued operations, net of taxes

$

 

 

Gain on sale of discontinued operations, net of taxes

(0.3

)

 

Total discontinued operations, net of taxes

$

(0.3

)

 

 

 

Net income

$

47.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Data:

 

 

 

 

 

 

 

 

 

 

Investment volume

 

$

204.1

 

 

 

$

45.3

 

 

 

$

 

 

 

$

0.5

 

 

 

$

249.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Gain on Asset Dispositions

 

 

 

 

 

 

 

 

 

 

Asset Remarketing Income:

 

 

 

 

 

 

 

 

 

 

Net gains on disposition of owned assets

 

$

7.8

 

 

 

$

0.2

 

 

 

$

 

 

 

$

 

 

 

$

8.0

 

 

Residual sharing income

 

0.1

 

 

 

 

 

 

0.5

 

 

 

 

 

 

0.6

 

 

Non-remarketing net gains (1)

 

 

 

 

0.3

 

 

 

 

 

 

 

 

 

0.3

 

 

 

 

$

7.9

 

 

 

$

0.5

 

 

 

$

0.5

 

 

 

$

 

 

 

$

8.9

 

 

__________

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

GATX CORPORATION AND SUBSIDIARIES

SEGMENT DATA (UNAUDITED)

Nine Months Ended September 30, 2021

(In millions)

   

 

 

 

Rail

North America

 

Rail

International

 

Portfolio

Management

 

Other

 

GATX

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

Lease revenue

 

$

611.4

 

 

 

$

204.7

 

 

 

$

19.8

 

 

 

$

16.2

 

 

 

$

852.1

 

 

Marine operating revenue

 

 

 

 

 

 

 

13.7

 

 

 

 

 

 

13.7

 

 

Other revenue

 

56.4

 

 

 

7.9

 

 

 

0.5

 

 

 

5.8

 

 

 

70.6

 

 

Total Revenues

 

667.8

 

 

 

212.6

 

 

 

34.0

 

 

 

22.0

 

 

 

936.4

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Maintenance expense

 

178.8

 

 

 

43.6

 

 

 

 

 

 

2.7

 

 

 

225.1

 

 

Marine operating expense

 

 

 

 

 

 

 

13.8

 

 

 

 

 

 

13.8

 

 

Depreciation expense

 

195.7

 

 

 

55.2

 

 

 

12.6

 

 

 

7.7

 

 

 

271.2

 

 

Operating lease expense

 

30.1

 

 

 

 

 

 

 

 

 

 

 

 

30.1

 

 

Other operating expense

 

22.6

 

 

 

5.5

 

 

 

1.2

 

 

 

2.0

 

 

 

31.3

 

 

Total Expenses

 

427.2

 

 

 

104.3

 

 

 

27.6

 

 

 

12.4

 

 

 

571.5

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

Net gain on asset dispositions

 

74.8

 

 

 

2.0

 

 

 

1.7

 

 

 

0.6

 

 

 

79.1

 

 

Interest expense, net

 

(102.5

)

 

 

(34.2

)

 

 

(12.0

)

 

 

(4.7

)

 

 

(153.4

)

 

Other (expense) income

 

(2.9

)

 

 

 

 

 

2.0

 

 

 

(8.8

)

 

 

(9.7

)

 

Share of affiliates' pre-tax (loss) income

 

(0.2

)

 

 

 

 

 

26.4

 

 

 

 

 

 

26.2

 

 

Segment profit (loss)

 

$

209.8

 

 

 

$

76.1

 

 

 

$

24.5

 

 

 

$

(3.3

)

 

 

$

307.1

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

140.8

 

 

Income taxes (includes $47.8 related to affiliates' earnings)

84.2

 

 

Net income from continuing operations

$

82.1

 

 

 

 

Discontinued operations, net of taxes

 

Net income from discontinued operations, net of taxes

$

 

 

Gain on sale of discontinued operations, net of taxes

 

 

Total discontinued operations, net of taxes

$

 

 

 

 

Net income

$

82.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Data:

 

 

 

 

 

 

 

 

 

 

Investment volume

 

$

394.4

 

 

 

$

126.1

 

 

 

$

353.0

 

 

 

$

19.7

 

 

 

$

893.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Gain on Asset Dispositions

 

 

 

 

 

 

 

 

 

 

Asset Remarketing Income:

 

 

 

 

 

 

 

 

 

 

Net gains on disposition of owned assets

 

$

62.2

 

 

 

$

0.7

 

 

 

$

 

 

 

$

0.5

 

 

 

$

63.4

 

 

Residual sharing income

 

0.8

 

 

 

 

 

 

1.7

 

 

 

 

 

 

2.5

 

 

Non-remarketing net gains (1)

 

11.8

 

 

 

1.3

 

 

 

 

 

 

0.1

 

 

 

13.2

 

 

 

 

$

74.8

 

 

 

$

2.0

 

 

 

$

1.7

 

 

 

$

0.6

 

 

 

$

79.1

 

 

__________

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

GATX CORPORATION AND SUBSIDIARIES

SEGMENT DATA (UNAUDITED)

Nine Months Ended September 30, 2020

(In millions)

   

 

 

 

Rail

North America

 

Rail

International

 

Portfolio

Management

 

Other

 

GATX

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

Lease revenue

 

$

630.8

 

 

 

$

181.9

 

 

 

$

0.6

 

 

 

$

 

 

 

$

813.3

 

 

Marine operating revenue

 

 

 

 

 

 

 

11.6

 

 

 

 

 

 

11.6

 

 

Other revenue

 

72.5

 

 

 

6.5

 

 

 

0.4

 

 

 

 

 

 

79.4

 

 

Total Revenues

 

703.3

 

 

 

188.4

 

 

 

12.6

 

 

 

 

 

 

904.3

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Maintenance expense

 

206.5

 

 

 

38.3

 

 

 

 

 

 

 

 

 

244.8

 

 

Marine operating expense

 

 

 

 

 

 

 

10.9

 

 

 

 

 

 

10.9

 

 

Depreciation expense

 

193.0

 

 

 

48.4

 

 

 

4.0

 

 

 

 

 

 

245.4

 

 

Operating lease expense

 

38.1

 

 

 

 

 

 

 

 

 

 

 

 

38.1

 

 

Other operating expense

 

20.8

 

 

 

4.9

 

 

 

0.3

 

 

 

 

 

 

26.0

 

 

Total Expenses

 

458.4

 

 

 

91.6

 

 

 

15.2

 

 

 

 

 

 

565.2

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

Net gain on asset dispositions

 

39.9

 

 

 

0.8

 

 

 

1.6

 

 

 

 

 

 

42.3

 

 

Interest (expense) income, net

 

(103.5

)

 

 

(34.0

)

 

 

(9.1

)

 

 

5.1

 

 

 

(141.5

)

 

Other expense

 

(3.2

)

 

 

(5.7

)

 

 

 

 

 

(3.3

)

 

 

(12.2

)

 

Share of affiliates' pre-tax income

 

 

 

 

 

 

 

93.2

 

 

 

 

 

 

93.2

 

 

Segment profit

 

$

178.1

 

 

 

$

57.9

 

 

 

$

83.1

 

 

 

$

1.8

 

 

 

$

320.9

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

125.8

 

 

Income taxes (includes $33.1 related to affiliates' earnings)

62.7

 

 

Net income from continuing operations

$

132.4

 

 

 

 

Discontinued operations, net of taxes

 

Net loss from discontinued operations, net of taxes

$

(2.2

)

 

Gain on sale of discontinued operations, net of taxes

3.3

 

 

Total discontinued operations, net of taxes

$

1.1

 

 

 

 

Net income

$

133.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Data:

 

 

 

 

 

 

 

 

 

 

Investment volume

 

$

474.6

 

 

 

$

164.5

 

 

 

$

0.3

 

 

 

$

2.0

 

 

 

$

641.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Gain on Asset Dispositions

 

 

 

 

 

 

 

 

 

 

Asset Remarketing Income:

 

 

 

 

 

 

 

 

 

 

Net gains on disposition of owned assets

 

$

39.1

 

 

 

$

0.2

 

 

 

$

0.1

 

 

 

$

 

 

 

$

39.4

 

 

Residual sharing income

 

0.3

 

 

 

 

 

 

1.5

 

 

 

 

 

 

1.8

 

 

Non-remarketing net gains (1)

 

0.5

 

 

 

0.6

 

 

 

 

 

 

 

 

 

1.1

 

 

 

 

$

39.9

 

 

 

$

0.8

 

 

 

$

1.6

 

 

 

$

 

 

 

$

42.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________

(1) Includes net gains (losses) 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(1)

     

 

   

Three Months Ended

September 30

 

Nine Months Ended

September 30

 

   

2021

 

2020

 

 

2021

 

 

2020

Net income (GAAP)

   

$

40.1

 

 

$

47.9

 

 

 

$

82.1

 

 

 

$

133.5

 

Less: Net (loss) income from discontinued operations (GAAP)

   

 

 

(0.3

)

 

 

 

 

 

1.1

 

Net income from continuing operations (GAAP)

   

$

40.1

 

 

$

48.2

 

 

 

$

82.1

 

 

 

$

132.4

 

Adjustments attributable to pre-tax income from continuing operations:

   

 

 

 

 

 

 

 

Debt extinguishment costs (2)

   

 

 

 

 

 

4.5

 

 

 

 

Total adjustments attributable to pre-tax income from continuing operations

   

$

 

 

$

 

 

 

$

4.5

 

 

 

$

 

Income taxes thereon, based on applicable effective tax rate

   

$

 

 

$

 

 

 

$

(1.1

)

 

 

$

 

Adjustments attributable to affiliates' earnings, net of taxes:

   

 

 

 

 

 

 

 

Income tax rate changes (3)

   

 

 

12.3

 

 

 

39.7

 

 

 

12.3

 

Total adjustments attributable to affiliates' earnings, net of taxes

   

$

 

 

$

12.3

 

 

 

$

39.7

 

 

 

$

12.3

 

Net income from continuing operations, excluding tax adjustments and other items (non-GAAP)

   

$

40.1

 

 

$

60.5

 

 

 

$

125.2

 

 

 

$

144.7

 

Net (loss) income from discontinued operations, excluding tax adjustments and other items (non-GAAP)

   

 

 

(0.3

)

 

 

 

 

 

1.1

 

Net income from consolidated operations, excluding tax adjustments and other items (non-GAAP)

   

$

40.1

 

 

$

60.2

 

 

 

$

125.2

 

 

 

$

145.8

 

Impact of Tax Adjustments and Other Items on Diluted Earnings per Share(1)

 

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

 

2021

 

2020

 

 

2021

 

2020

Diluted earnings per share from continuing operations (GAAP)

$

1.11

 

 

$

1.36

 

 

 

$

2.28

 

 

$

3.74

 

Diluted earnings per share from discontinued operations (GAAP)

 

 

(0.01

)

 

 

 

 

0.03

 

Diluted earnings per share from consolidated operations (GAAP)

$

1.11

 

 

$

1.35

 

 

 

$

2.28

 

 

$

3.77

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations, excluding tax adjustments and other items (non-GAAP)

$

1.11

 

 

$

1.71

 

 

 

$

3.48

 

 

$

4.09

 

Diluted earnings per share from discontinued operations, excluding tax adjustments and other items (non-GAAP)

 

 

(0.01

)

 

 

 

 

0.03

 

Diluted earnings per share from consolidated operations, excluding tax adjustments and other items (non-GAAP)

$

1.11

 

$

1.70

 

$

3.48

$

4.12

  

(1)

 

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.

(2)

 

Write-off of unamortized deferred financing costs associated with the early redemption of our $150 million 5.625% Senior Notes due 2066.

(3)

 

Deferred income tax adjustments due to an enacted corporate income tax rate increase in the United Kingdom in 2021 and the elimination of a previously announced corporate income tax rate reduction in the United Kingdom in 2020.

GATX CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION (UNAUDITED)

(In millions, except leverage)

 

 

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

Total Assets, Excluding Cash, by Segment

 

 

 

 

 

 

 

 

 

 

Rail North America

 

$

5,976.8

 

 

 

$

5,916.3

 

 

 

$

5,896.5

 

 

 

$

5,887.5

 

 

 

$

5,801.5

 

 

Rail International

 

1,672.2

 

 

 

1,695.8

 

 

 

1,653.4

 

 

 

1,699.2

 

 

 

1,615.0

 

 

Portfolio Management

 

1,019.6

 

 

 

1,023.2

 

 

 

1,057.5

 

 

 

700.5

 

 

 

707.6

 

 

Other

 

351.5

 

 

 

347.1

 

 

 

348.8

 

 

 

357.8

 

 

 

106.4

 

 

Total Assets, excluding cash

 

$

9,020.1

 

 

 

$

8,982.4

 

 

 

$

8,956.2

 

 

 

$

8,645.0

 

 

 

$

8,230.5

 

 

Debt and Lease Obligations, Net of Unrestricted Cash

 

 

 

 

 

 

 

 

Unrestricted cash

 

$

(566.0

)

 

 

$

(417.9

)

 

 

$

(958.9

)

 

 

$

(292.2

)

 

 

$

(459.8

)

 

Commercial paper and bank credit facilities

 

20.7

 

 

 

17.9

 

 

 

19.6

 

 

 

23.6

 

 

 

13.5

 

 

Recourse debt

 

6,029.8

 

 

 

5,803.1

 

 

 

6,374.6

 

 

 

5,329.0

 

 

 

5,183.0

 

 

Operating lease obligations

 

292.1

 

 

 

298.7

 

 

 

328.0

 

 

 

348.6

 

 

 

368.0

 

 

Finance lease obligations

 

 

 

 

43.6

 

 

 

 

 

 

33.3

 

 

 

 

 

Total debt and lease obligations, net of unrestricted cash

 

$

5,776.6

 

 

 

$

5,745.4

 

 

 

$

5,763.3

 

 

 

$

5,442.3

 

 

 

$

5,104.7

 

 

Shareholders’ Equity

 

$

1,976.9

 

 

 

$

1,971.4

 

 

 

$

1,960.0

 

 

 

$

1,957.4

 

 

 

$

1,930.0

 

 

Recourse Leverage (1)

 

2.9

 

 

 

2.9

 

 

 

2.9

 

 

 

2.8

 

 

 

2.6

 

 

_________

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

Reconciliation of Total Assets to Total Assets, Excluding Cash

Total Assets

 

$

9,586.3

 

 

 

$

9,400.5

 

 

 

$

9,915.3

 

 

 

$

8,937.6

 

 

 

$

8,690.3

 

 

Less: cash

 

(566.2

)

 

 

(418.1

)

 

 

(959.1

)

 

 

(292.6

)

 

 

(459.8

)

 

Total Assets, excluding cash

 

$

9,020.1

 

 

 

$

8,982.4

 

 

 

$

8,956.2

 

 

 

$

8,645.0

 

 

 

$

8,230.5

 

 

GATX CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION (UNAUDITED)

(Continued)

   

 

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

Rail North America Statistics

 

 

 

 

 

 

 

 

 

 

Lease Price Index (LPI) (1)

 

 

 

 

 

 

 

 

 

 

Average renewal lease rate change

 

(8.1

)

%

 

(6.7

)

%

 

(18.1

)

%

 

(22.6

)

%

 

(29.4

)

%

Average renewal term (months)

 

32

 

 

 

29

 

 

 

30

 

 

 

34

 

 

 

29

 

 

Fleet Rollforward (2)

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

102,144

 

 

 

102,903

 

 

 

103,745

 

 

 

103,363

 

 

 

102,891

 

 

Cars added

 

742

 

 

 

693

 

 

 

977

 

 

 

1,015

 

 

 

1,578

 

 

Cars scrapped

 

(947

)

 

 

(770

)

 

 

(1,002

)

 

 

(571

)

 

 

(623

)

 

Cars sold

 

(598

)

 

 

(682

)

 

 

(817

)

 

 

(62

)

 

 

(483

)

 

Ending balance

 

101,341

 

 

 

102,144

 

 

 

102,903

 

 

 

103,745

 

 

 

103,363

 

 

Utilization

 

99.2

 

%

 

98.5

 

%

 

97.8

 

%

 

98.1

 

%

 

98.2

 

%

Average active railcars

 

100,467

 

 

 

100,722

 

 

 

101,099

 

 

 

101,723

 

 

 

101,552

 

 

Boxcar Fleet

 

 

 

 

 

 

 

 

 

 

Ending balance

 

12,809

 

 

 

12,659

 

 

 

13,880

 

 

 

14,315

 

 

 

14,753

 

 

Utilization

 

98.4

 

%

 

97.1

 

%

 

97.1

 

%

 

95.8

 

%

 

94.5

 

%

Rail Europe Statistics

 

 

 

 

 

 

 

 

 

 

Fleet Rollforward

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

26,727

 

 

 

26,498

 

 

 

26,343

 

 

 

25,956

 

 

 

25,705

 

 

Cars added

 

213

 

 

 

359

 

 

 

226

 

 

 

446

 

 

 

331

 

 

Cars scrapped/sold

 

(100

)

 

 

(130

)

 

 

(71

)

 

 

(59

)

 

 

(80

)

 

Ending balance

 

26,840

 

 

 

26,727

 

 

 

26,498

 

 

 

26,343

 

 

 

25,956

 

 

Utilization

 

98.1

 

%

 

98.4

 

%

 

98.2

 

%

 

98.1

 

%

 

98.2

 

%

Average active railcars

 

26,310

 

 

 

26,156

 

 

 

25,917

 

 

 

25,669

 

 

 

25,369

 

 

Rail North America Industry Statistics

 

 

 

 

 

 

 

 

 

 

Manufacturing Capacity Utilization Index (3)

 

75.2

 

%

 

75.6

 

%

 

74.6

 

%

 

74.7

 

%

 

72.3

 

%

Year-over-year Change in U.S. Carloadings (excl. intermodal) (4)

 

7.9

 

%

 

9.4

 

%

 

(2.6

)

%

 

(12.9

)

%

 

(15.3

)

%

Year-over-year Change in U.S. Carloadings (chemical) (4)

 

5.6

 

%

 

5.9

 

%

 

(3.8

)

%

 

(3.4

)

%

 

(5.1

)

%

Year-over-year Change in U.S. Carloadings (petroleum) (4)

 

(3.6

)

%

 

(4.3

)

%

 

(14.4

)

%

 

(14.0

)

%

 

(12.5

)

%

Production Backlog at Railcar Manufacturers (5)

 

n/a (6)

 

37,470

 

 

 

34,829

 

 

 

34,598

 

 

 

37,417

 

 

_________

(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.

 

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