Enterprising Investor
6 years ago
GATX Corporation Reports 2018 Second-Quarter Results (7/19/18)
CHICAGO, July 19, 2018 (GLOBE NEWSWIRE) -- GATX Corporation (NYSE:GATX) today reported 2018 second quarter net income of $38.8 million or $1.01 per diluted share, compared to net income of $53.4 million or $1.35 per diluted share in the second quarter of 2017. Net income for the first six months of 2018 was $115.1 million or $2.99 per diluted share, compared to $110.9 million or $2.79 per diluted share in the prior year period. The 2018 second quarter and year-to-date results include a net negative impact of $5.8 million or $0.15 per diluted share, attributed to costs associated with the closure of a railcar maintenance facility in Germany. The 2017 second quarter and year-to-date results include net gains of approximately $1.1 million or $0.03 per diluted share, associated with the planned exit of the majority of Portfolio Management’s marine investments. Details related to these items are provided in the attached Supplemental Information under Tax Adjustments and Other Items.
Brian A. Kenney, president and chief executive officer of GATX stated, “Rail North America experienced a more favorable industry environment in the second quarter, as railroad car loadings increased and railroad velocity decreased relative to 2017. Although lease revenue remains under pressure due to continued railcar oversupply and a large railcar manufacturing backlog, Rail North America continues to perform extremely well. Fleet utilization was 98.9% at quarter end, the renewal success rate was 78.6% during the quarter, absolute lease rates increased across the fleet and costs remain under control. The renewal lease rate change for GATX’s Lease Price Index was negative 16.1% in the second quarter with an average renewal term of 41 months.
“Rail International is performing very well. In Europe, we are seeing gradual, broad improvement across the chemical, petroleum, and freight markets. As a result, utilization at GATX Rail Europe increased to 97.8% at quarter end. In India, customer demand for new railcar leases is gaining momentum, and total investment volume for 2018 will be strong.
“Rolls-Royce and Partners Finance affiliates’ performance continues to drive solid results within the Portfolio Management segment. American Steamship Company successfully deployed ten vessels into service and is seeing increased demand for its services.
Mr. Kenney concluded, “Given the improving business environment, we now expect our 2018 full-year earnings to be in the range of $4.90 to $5.10 per diluted share. This guidance excludes the impact of the railcar maintenance facility closure in Germany, as noted above.”
RAIL NORTH AMERICA
Rail North America reported segment profit of $64.2 million in the second quarter of 2018, compared to $74.9 million in the second quarter of 2017. Lower segment profit was a result of lower lease revenues and lower gains on asset dispositions. Year-to-date, Rail North America reported segment profit of $173.1 million, compared to $167.9 million in the same period of 2017. Lower revenues in 2018 were more than offset by higher gains on asset dispositions in 2018, resulting in slightly higher segment profit.
At June 30, 2018, Rail North America’s wholly owned fleet was comprised of approximately 119,000 railcars, including approximately 16,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.
Fleet utilization was 98.9% at the end of the second quarter, compared to 98.2% at the end of the prior quarter and 98.8% at the end of the second quarter of 2017. During the second quarter of 2018, the renewal lease rate change of the GATX Lease Price Index (LPI) was negative 16.1%. This compares to negative 11.6% in the prior quarter and negative 21.4% in the second quarter of 2017. The average lease renewal term for cars included in the LPI during the second quarter was 41 months, compared to 34 months in the prior quarter and 32 months in the second quarter of 2017. Rail North America’s investment volume during the second quarter was $149.1 million.
Additional fleet statistics, including information about 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 $12.8 million in the second quarter of 2018 compared to $16.6 million in the second quarter of 2017. Rail International reported segment profit of $31.8 million year-to-date 2018, compared to $30.0 million for the same period of 2017. The second quarter and year-to-date 2018 results include $8.6 million of expense ($5.8 million after-tax) related to the closure of GATX Rail Europe’s (GRE) railcar maintenance facility in Germany. Favorable results in the comparative periods were driven by more railcars on lease and foreign exchange impacts.
At June 30, 2018, GRE’s fleet consisted of approximately 23,100 cars and utilization was 97.8%, compared to 96.7% at the end of the prior quarter and 95.7% at the end of the second quarter of 2017. Additional fleet statistics for GRE are provided on the last page of this press release.
PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $11.4 million in the second quarter of 2018, compared to $19.8 million in the second quarter of 2017. Segment profit year-to-date 2018 was $25.3 million, compared to $34.5 million for the same period of 2017. The decline in segment profit in the second quarter and year-to-date was predominantly driven by lower residual sharing fees. Second quarter and year-to-date 2017 segment profit also includes a net pre-tax gain of approximately $1.8 million ($1.1 million after-tax) associated with the planned exit of the majority of the marine investments. Performance at the Rolls-Royce and Partners Finance affiliates (RRPF) continues to be very strong, as evidenced by the increase in Share of Affiliate’s Earnings for both the second quarter and year-to-date 2018 reported results.
AMERICAN STEAMSHIP COMPANY
American Steamship Company (ASC) reported segment profit of $8.0 million in the second quarter of 2018, compared to $6.5 million in the second quarter of 2017. Segment profit year-to-date 2018 was $8.8 million, compared to $6.3 million for the same period of 2017. ASC carried 9.0 million net tons of cargo through the second quarter of 2018, compared to 9.5 million during the same period in 2017. The improvement in segment profit was primarily driven by more efficient fleet performance.
COMPANY DESCRIPTION
GATX Corporation (NYSE:GATX) strives to be recognized as the finest railcar leasing company in the world by its customers, its shareholders, its employees and the communities where it operates. As the leading global railcar lessor, GATX has been providing quality railcars and services to its customers for 120 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.
[tables deleted]
https://globenewswire.com/news-release/2018/07/19/1539546/0/en/GATX-Corporation-Reports-2018-Second-Quarter-Results.html
Enterprising Investor
7 years ago
Farmers’ Grain Bounty, Crop Exports Buoy U.S. Railroads (11/15/16)
Rail traffic is still recovering from years of steep declines in coal, oil shipments
By Doug Cameron and Jesse Newman
A record fall harvest and surging crop exports are boosting U.S. railroad operators, who are still feeling pain from the collapse of coal and oil shipments.
Farmers across the Midwest -- benefiting from good weather during much of the growing season -- are expected to bring in about two billion more bushels of corn and soybeans than they did last year. Many rely on railcars to transport their crops from grain elevators to processing plants around the country, or to the coasts for export.
Shipments of grain and soybeans are up around 6.5% this year, and set a record of over 26,000 carloads a week during the peak of the harvest in October, according to the Association of American Railroads, a trade group. Leasing company GATX Corp. said every one of its grain cars was in use during the third quarter. CSX Corp., the third-largest U.S. railroad, said grain shipments shot up 27% in the third quarter compared with a year earlier, helping fuel a rally in the company’s stock.
Even so, booming grain traffic hasn’t erased years of steep declines in coal shipments, still the biggest single source of rail traffic, according to industry data. Overall, freight carloads are down 6% this year and thousands of cars designed to carry oil and industrial products are sitting idle.
Railroads are betting the grain boom will continue. Analysts say some orders for oil-tank cars are being converted into purchases of new grain cars. Through the third quarter, deliveries of covered-top railcars used most often in grain service are up 147% from the same period last year, according to the Railway Supply Institute, a trade group.
The railroad operators also have spent billions of dollars to add capacity so they can ship grain faster and with fewer traffic jams. Those improvements have helped avoid a repeat of the 2014 harvest. That year, big crop volumes and more crude-oil shipments caused snarls across the rail network, holding up trains and driving up grain prices. Grain shipments were up nearly 20% last month compared with October 2014, without major delays, rail operators say.
“More grain is moving this harvest to export channels and it’s moving faster,” said Nate Asplund, chief executive of Wahpeton, N.D.-based Red River Valley & Western Railroad Co.
BNSF Railway Co. spent $15 billion over the past three years, much of it to link crop-producing areas to ports in the Northwest and Gulf Coast, said John Miller, vice president for agricultural products. The Berkshire Hathaway Inc.-owned company, the biggest shipper of agricultural products in North America, said such shipments climbed 13% in the third quarter.
Among the improvements: Some 1,000 miles of double track, which allows trains to pass in opposite directions along the same route, and high-speed grain loaders to improve efficiency. Trains hauling 100 or more grain cars are making an average of three trips a month this year compared with 1.8 in 2014, said railroad executives.
Regional railroads like Red River have also invested in new track and facilities. Railroad operators are using new railcars that are shorter and deeper, allowing more to be hauled by a single train. Canadian Pacific Railway Ltd. has increased its grain trains to a record 124 cars, and plans to raise this to as many as 134.
Railroads of all sizes have borrowed scheduling tips from the airline industry to maximize capacity.
Just as low-cost carriers look to maximize the number of flights a day from their jets with quick airport turnarounds, railroads have found more efficient ways to load and unload railcars. New equipment has halved the time taken to fill or empty a 115-car train to as little as six hours.
“In the old days we talked about cars. Now we focus on turns per car,” said Mr. Asplund.
The rail industry also got an early jump on this year’s harvest.
Exports soared over the summer as buyers in China and Mexico purchased more soybeans and corn from U.S. farmers following a poor harvest in South America and concerns over currency swings.
U.S. soybean exports more than doubled in July from a year earlier to 98.4 million bushels, and more than tripled in August. Grain cars that usually remain parked until the fall harvest were pressed into service as early as June.
Grain elevator operators said the drop in coal and oil shipments has also reduced rail traffic, leaving more track open for agricultural products.
Roger Miller, chief executive of Premier Cooperative in Champaign, Ill., said in 2014 railroads prioritized oil cars ahead of grain hoppers. This year he said there is “a night and day difference.”
—Bob Tita contributed to this article.
http://www.wsj.com/articles/farmers-grain-bounty-crop-exports-buoy-u-s-railroads-1479729601
Enterprising Investor
7 years ago
GATX Corporation Reports 2016 Second-Quarter Results (10/20/16)
CHICAGO, July 21, 2016 (GLOBE NEWSWIRE) -- GATX Corporation (NYSE:GATX) today reported 2016 second quarter net income of $61.2 million or $1.49 per diluted share, compared to net income of $45.4 million or $1.03 per diluted share in the second quarter of 2015. Net income for the first six months of 2016 was $130.5 million or $3.15 per diluted share, compared to $107.6 million or $2.42 per diluted share in the prior year period. The 2016 results include a second quarter net gain of approximately $0.2 million, with no effect on per diluted share income, and a year-to-date net gain of approximately $1.7 million, or $0.04 per diluted share, associated with the planned exit of the majority of Portfolio Management’s marine investments.
“Despite continued deterioration of conditions in the railcar leasing market, GATX produced excellent financial results in the second quarter,” said Brian A. Kenney, president and chief executive officer at GATX. “The combination of productivity improvements in our maintenance network, tight management of SG&A, higher than anticipated railcar scrap prices, and continued low interest rates more than offset the market pressure on lease revenue during the quarter. However, revenue pressure is increasing as the year progresses due to the growing oversupply of railcars, fewer car loadings, and improved railroad velocity. Thus, the renewal lease rate change of GATX’s Lease Price Index decreased by 25.4% during the quarter, the average renewal term was 34 months, and the renewal success rate was 62.6%. While lease rate pressure is most significant in cars serving the energy markets, the majority of car types across our fleet and the industry are experiencing various levels of lease rate pressure. Fleet utilization for Rail North America was 98.1% at the end of the quarter with the quarter-over-quarter decline predominantly driven by coal cars.
“Our strategy in this environment remains unchanged: continue to compete aggressively on lease rates to protect utilization and reduce the length of lease term where possible.
“GATX Rail Europe continues to experience stable demand for existing tank cars. At American Steamship Company, 11 vessels continued to sail as favorable operating conditions helped to offset soft demand for iron ore on the Great Lakes. In the Portfolio Management segment, remarketing income during the quarter was approximately $20 million higher than originally anticipated on a pre-tax basis, or approximately $0.30 per diluted share.”
Mr. Kenney concluded, “Incorporating the higher than anticipated remarketing income in the second quarter in our Portfolio Management segment as noted above, we are increasing our 2016 full-year expectations to a range $5.55 to $5.75 per diluted share.”
RAIL NORTH AMERICA
Rail North America reported segment profit of $76.8 million in the second quarter of 2016, compared to $84.9 million in the second quarter of 2015. Year-to-date, Rail North America reported segment profit of $185.5 million, compared to $190.7 million in the same period of 2015. While railcars were on lease at higher average rates, lower gains on asset dispositions contributed to the year-over-year variance in segment profit.
At June 30, 2016, Rail North America’s wholly owned fleet comprised approximately 124,000 railcars, including approximately 18,200 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.
Fleet utilization was 98.1% at the end of the second quarter, compared to 98.9% at the end of the prior quarter and 99.3% at the end of the second quarter of 2015. During the second quarter of 2016, the GATX Lease Price Index (LPI), a weighted-average lease renewal rate for a group of railcars representative of Rail North America’s fleet, decreased 25.4% over the weighted-average expiring lease rate. This compares to a 6.4% increase in the prior quarter and a 36.3% increase in the second quarter of 2015. The average lease renewal term for cars included in the LPI during the second quarter was 34 months, compared to 34 months in the prior quarter and 54 months in the second quarter of 2015. Rail North America’s investment volume during the second quarter was $145.4 million.
Additional fleet statistics, including information about 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 $13.0 million in the second quarter of 2016, compared to $19.1 million in the second quarter of 2015. Rail International reported segment profit of $25.6 million year-to-date 2016, compared to $40.9 million for the same period of 2015. While more railcars were on lease, higher maintenance expenses and lower gains on asset dispositions negatively impacted segment profit in comparison to the prior year’s quarter and year-to-date results.
At June 30, 2016, GATX Rail Europe’s (GRE) fleet consisted of approximately 23,000 cars and utilization was 94.8%, compared to 95.1% at the end of the prior quarter and 95.5% at the end of the second quarter of 2015. Additional fleet statistics for GRE are provided on the last page of this press release.
AMERICAN STEAMSHIP COMPANY
American Steamship Company (ASC) reported segment profit of $4.2 million in the second quarter of 2016, compared to a segment profit of $2.9 million in the second quarter of 2015. Segment profit year-to-date 2016 was $5.1 million, compared to $2.5 million year-to-date 2015. ASC carried 9.5 million net tons of cargo through the second quarter of 2016, compared to 9.2 million net tons in the prior year period. The improvement in segment profit was primarily driven by lower operating costs due to fewer vessels in operation.
PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $36.5 million in the second quarter of 2016, compared to $10.3 million in the second quarter of 2015. Segment profit year-to-date 2016 was $55.1 million, compared to $26.2 million year-to-date 2015. The improvement in segment profit was predominantly driven by residual sharing fees from the managed portfolio.
Second quarter 2016 segment profit includes a net pre-tax gain of approximately $0.3 million, and year-to-date net pre-tax gain of approximately $2.7 million associated with the planned exit of the majority of the marine investments.
COMPANY DESCRIPTION
GATX Corporation (NYSE:GATX) strives to be recognized as the finest railcar leasing company in the world by its customers, its shareholders, its employees and the communities where it operates. As the largest global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 117 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 2016 second-quarter results. Call details are as follows:
Thursday, July 21st
11:00 A.M. Eastern Time
Domestic Dial-In: 1-888-500-6974
International Dial-In: 1-719-325-2100
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 9450036
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.
[tables deleted]
https://globenewswire.com/news-release/2016/07/21/857913/0/en/GATX-Corporation-Reports-2016-Second-Quarter-Results.html
Enterprising Investor
8 years ago
GATX Corporation Announces Quarterly Dividend (7/29/16)
CHICAGO, July 29, 2016 (GLOBE NEWSWIRE) -- The board of directors of GATX Corporation (NYSE:GATX) declared a quarterly dividend of $0.40 per common share, payable September 30, 2016, to shareholders of record on September 15, 2016. This quarterly dividend is unchanged from the prior quarter.
COMPANY DESCRIPTION
GATX Corporation (NYSE:GATX) strives to be recognized as the finest railcar leasing company in the world by its customers, its shareholders, its employees and the communities where it operates. As the largest global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 118 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.
http://www.nasdaq.com/press-release/gatx-corporation-announces-quarterly-dividend-20160729-00595
Enterprising Investor
8 years ago
GATX Corporation Reports 2016 Second-Quarter Results (7/21/16)
CHICAGO, July 21, 2016 (GLOBE NEWSWIRE) -- GATX Corporation (NYSE:GATX) today reported 2016 second quarter net income of $61.2 million or $1.49 per diluted share, compared to net income of $45.4 million or $1.03 per diluted share in the second quarter of 2015. Net income for the first six months of 2016 was $130.5 million or $3.15 per diluted share, compared to $107.6 million or $2.42 per diluted share in the prior year period. The 2016 results include a second quarter net gain of approximately $0.2 million, with no effect on per diluted share income, and a year-to-date net gain of approximately $1.7 million, or $0.04 per diluted share, associated with the planned exit of the majority of Portfolio Management’s marine investments.
“Despite continued deterioration of conditions in the railcar leasing market, GATX produced excellent financial results in the second quarter,” said Brian A. Kenney, president and chief executive officer at GATX. “The combination of productivity improvements in our maintenance network, tight management of SG&A, higher than anticipated railcar scrap prices, and continued low interest rates more than offset the market pressure on lease revenue during the quarter. However, revenue pressure is increasing as the year progresses due to the growing oversupply of railcars, fewer car loadings, and improved railroad velocity. Thus, the renewal lease rate change of GATX’s Lease Price Index decreased by 25.4% during the quarter, the average renewal term was 34 months, and the renewal success rate was 62.6%. While lease rate pressure is most significant in cars serving the energy markets, the majority of car types across our fleet and the industry are experiencing various levels of lease rate pressure. Fleet utilization for Rail North America was 98.1% at the end of the quarter with the quarter-over-quarter decline predominantly driven by coal cars.
“Our strategy in this environment remains unchanged: continue to compete aggressively on lease rates to protect utilization and reduce the length of lease term where possible.
“GATX Rail Europe continues to experience stable demand for existing tank cars. At American Steamship Company, 11 vessels continued to sail as favorable operating conditions helped to offset soft demand for iron ore on the Great Lakes. In the Portfolio Management segment, remarketing income during the quarter was approximately $20 million higher than originally anticipated on a pre-tax basis, or approximately $0.30 per diluted share.”
Mr. Kenney concluded, “Incorporating the higher than anticipated remarketing income in the second quarter in our Portfolio Management segment as noted above, we are increasing our 2016 full-year expectations to a range $5.55 to $5.75 per diluted share.”
RAIL NORTH AMERICA
Rail North America reported segment profit of $76.8 million in the second quarter of 2016, compared to $84.9 million in the second quarter of 2015. Year-to-date, Rail North America reported segment profit of $185.5 million, compared to $190.7 million in the same period of 2015. While railcars were on lease at higher average rates, lower gains on asset dispositions contributed to the year-over-year variance in segment profit.
At June 30, 2016, Rail North America’s wholly owned fleet comprised approximately 124,000 railcars, including approximately 18,200 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.
Fleet utilization was 98.1% at the end of the second quarter, compared to 98.9% at the end of the prior quarter and 99.3% at the end of the second quarter of 2015. During the second quarter of 2016, the GATX Lease Price Index (LPI), a weighted-average lease renewal rate for a group of railcars representative of Rail North America’s fleet, decreased 25.4% over the weighted-average expiring lease rate. This compares to a 6.4% increase in the prior quarter and a 36.3% increase in the second quarter of 2015. The average lease renewal term for cars included in the LPI during the second quarter was 34 months, compared to 34 months in the prior quarter and 54 months in the second quarter of 2015. Rail North America’s investment volume during the second quarter was $145.4 million.
Additional fleet statistics, including information about 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 $13.0 million in the second quarter of 2016, compared to $19.1 million in the second quarter of 2015. Rail International reported segment profit of $25.6 million year-to-date 2016, compared to $40.9 million for the same period of 2015. While more railcars were on lease, higher maintenance expenses and lower gains on asset dispositions negatively impacted segment profit in comparison to the prior year’s quarter and year-to-date results.
At June 30, 2016, GATX Rail Europe’s (GRE) fleet consisted of approximately 23,000 cars and utilization was 94.8%, compared to 95.1% at the end of the prior quarter and 95.5% at the end of the second quarter of 2015. Additional fleet statistics for GRE are provided on the last page of this press release.
AMERICAN STEAMSHIP COMPANY
American Steamship Company (ASC) reported segment profit of $4.2 million in the second quarter of 2016, compared to a segment profit of $2.9 million in the second quarter of 2015. Segment profit year-to-date 2016 was $5.1 million, compared to $2.5 million year-to-date 2015. ASC carried 9.5 million net tons of cargo through the second quarter of 2016, compared to 9.2 million net tons in the prior year period. The improvement in segment profit was primarily driven by lower operating costs due to fewer vessels in operation.
PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $36.5 million in the second quarter of 2016, compared to $10.3 million in the second quarter of 2015. Segment profit year-to-date 2016 was $55.1 million, compared to $26.2 million year-to-date 2015. The improvement in segment profit was predominantly driven by residual sharing fees from the managed portfolio.
Second quarter 2016 segment profit includes a net pre-tax gain of approximately $0.3 million, and year-to-date net pre-tax gain of approximately $2.7 million associated with the planned exit of the majority of the marine investments.
COMPANY DESCRIPTION
GATX Corporation (NYSE:GATX) strives to be recognized as the finest railcar leasing company in the world by its customers, its shareholders, its employees and the communities where it operates. As the largest global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 117 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.
https://globenewswire.com/news-release/2016/07/21/857913/0/en/GATX-Corporation-Reports-2016-Second-Quarter-Results.html
Enterprising Investor
8 years ago
Citigroup, Merrill Lynch Lead $600 Million Revolver for GATX (6/02/16)
GATX Corporation entered into a Five Year Credit Agreement with Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arrangers and joint book managers, Bank of America, N.A., as syndication agent, PNC Bank, National Association, U.S. Bank, National Association and Bayerische Landesbank, acting through its New York branch, as co-documentation agents, Citibank, N.A., as administrative agent, and the lenders party thereto. The Credit Agreement replaced our prior $575 million revolving credit facility, which was terminated upon our entry into the new Credit Agreement.
The Credit Agreement provides us with $600 million in revolving credit availability for a term running through 5/26/21, with two one-year extensions that we may exercise upon approval of existing or replacement lenders holding at least fifty percent of the commitments to lend under the Credit Agreement. The term extensions only bind the lenders who vote to approve the extensions, but we have the option to add additional lenders if the facility is not fully subscribed for the extension terms. The interest rate applicable to borrowings under the Credit Agreement will vary based on prevailing market interest rates and our credit ratings and interest elections. The Credit Agreement also provides for letters of credit.
The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including a financial covenant related to our fixed charge coverage ratio. As is customary in such financings, the lenders may terminate their commitments, accelerate the repayment of amounts outstanding and exercise other remedies upon the occurrence of an event of default, subject to the expiration of any applicable cure period.
The administrative agent, co-syndication agents and certain other lenders under the Credit Agreement and their respective affiliates have performed or may in the future perform various commercial banking, lending, investment banking, financial advisory, trustee, hedging or other services for us and our affiliates, for which they have received or will receive fees and reimbursement of expenses.
http://www.sec.gov/Archives/edgar/data/40211/000004021116000096/gmt-201606028xkcreditagree.htm
Enterprising Investor
8 years ago
Letter From the Chairman
The employees of GATX produced another year of outstanding financial results in 2015. Our net income and earnings per share were at record levels. We also earned an excellent return on equity while maintaining a healthy balance sheet and access to attractively priced capital
We generated nearly $1.02 billion of cash from operations and portfolio proceeds, paid more than $68 million in quarterly dividends to our shareholders, and repurchased more than $125 million of common stock. Rail North America’s committed lease receipts increased by 17% to over $4.2 billion. Reflecting confidence in our future financial position, in January, 2016, our Board of Directors increased our quarterly dividend 5.3% to $0.40 per share and granted a new stock repurchase authorization of $300 million.
Our record financial performance and focused fleet management over the past few years have put us in an excellent position to perform well through, and capitalize on, a downturn in the North American railcar market. We have cautioned our investors about an impending downturn since late 2014. While there are a number of metrics that we monitor to understand rail market health, I will address the two that directly guided our thinking: railcar manufacturing backlog and railcar loadings.
Historically, railcar manufacturing backlog tends to reach peak levels due to rising trends in the production of specific commodities that travel heavily by rail. For example, the peak in railcar manufacturing backlog in the mid-2000s was caused by rapidly increasing production of ethanol, which drove record orders for large general-service tank cars to carry this commodity. In recent years, the “boom” in crude oil drilling and production in the United States and Canada triggered huge orders for tank cars and covered hoppers. As the accompanying chart shows, railcar manufacturing peaked at a record 142,800 units in the fourth quarter of 2014, an incredible 62% above the prior peak in 2006.
More important, a majority of this backlog was for tank cars ordered to transport crude oil and small cube covered hoppers earmarked for frac sand service. This was troubling to GATX. Although lease rates on those car types at that time were at record levels, we believed that demand for these cars was unsustainable and that a significant oversupply was rapidly developing.
Turning to North American railcar loadings, the data shown in the chart on the following page also suggested that this increasing oversupply of cars could deliver into a weaker market than anticipated. As the chart demonstrates, not only did railcar loadings over the last few years not reach the level of the prior peak in 2006, they started to trend down in 2015 as the bulk of these railcar orders began to deliver. We realized that a market imbalance was developing that called for us to accelerate our peak market tactics. At GATX, we call this strategy being “cyclically aware.” We responded in a number of ways.
First, and most important, GATX did not chase the crude oil boom and continued to maintain a diverse fleet. Out of our 125,000 railcar fleet in North America, only 2,500 cars carry crude and 2,800 cars carry frac sand. We placed these cars at attractive rates on very long lease terms with financially strong customers who have a propensity to renew our leases. In addition, we managed our near-term renewal exposure by selling cars and renewing leases early. Finally, we redeployed many of these cars into other types of service.
Despite these actions, a sustained downturn will eventually catch up to GATX and negatively impact our business. Thus, we took steps to further improve our cost structure by increasing the efficiency of our maintenance operations, controlling our SG&A and lowering our financing costs.
We have used continuous improvement techniques to advance our strategy of doing more of our railcar maintenance at GATX-owned service centers – rather than using less efficient third-party providers that historically perform almost half of our maintenance.
In 2016, we project that almost 75% of our tank car and specialty freight maintenance will be performed in our owned network – where we believe the safety, quality, delivery and cost metrics are superior. In a declining railcar market where more of our railcars will enter the maintenance network in preparation for leases to different customers, controlling a larger and more efficient network is a key competitive advantage.
Compared to 2008, the year of GATX’s peak financial performance in the last cycle, our SG&A costs have increased at less than the rate of inflation. More important, our SG&A growth has not occurred in our staff areas, but in our Quality and International Rail groups, in line with our strategies to continually improve our maintenance operations and diversify our geographic earnings base.
Lastly, our average financing costs have decreased significantly as we capitalized on low interest rates and the attractive financing markets of the last few years. Today, our average debt cost is 3.8% with an average maturity of 7.2 years, compared to 6.1% and 3.8 years at our last peak in 2008. As a result, our interest expense has been flat over that period despite growing our asset base by nearly 20%.
Our 117 years of success in the railcar leasing business have been the result of matching the extremely long lives of our assets with an extremely long view of our business and strategy. We will continue to avoid short- term “booms” and instead invest with a long-term view. We will continue to enter developing international rail markets with the understanding that it takes years for these investments to earn a sustainable, attractive return. We will continue to return capital to our shareholders through share repurchase and a dividend that has been paid for 96 consecutive years. And we will continue our long-term focus on our vision 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.
Brian A. Kenney
Chairman, President and Chief Executive Officer
GATX Corporation
Enterprising Investor
8 years ago
GATX Corporation Reports 2015 Fourth-Quarter and Full-Year Results (1/21/16)
CHICAGO--(BUSINESS WIRE)--Jan. 21, 2016-- GATX Corporation (NYSE:GMT) today reported 2015 fourth quarter net income of $58.2 million or $1.37 per diluted share, compared to net income of $58.5 million or $1.30 per diluted share in the fourth quarter of 2014. Net income for the full-year 2015 was $205.3 million or $4.69 per diluted share, compared to $205.0 million or $4.48 per diluted share in the prior year. The 2015 results include net negative impacts from the exit of Portfolio Management’s marine investments and other items of $3.0 million, or $0.07 per diluted share for the fourth quarter and $29.6 million, or $0.68 per diluted share for the full year. Details related to the exit of Portfolio Management’s marine investments and other items are provided in the attached Supplemental Information.
Full year highlights for 2015 include:
• Fleet utilization remained above 99% for Rail North America (excluding the boxcar fleet) and above 95.5% for GATX Rail Europe (“GRE”).
• GATX’s Lease Price Index (“LPI”) showed a positive 32.2% renewal rate change with an average renewal term of 54 months, which was in line with our expectations.
• GATX Rail North America’s renewal success rate was 81.4%.
• Investment volume was approximately $525 million for Rail North America and approximately $136 million for GRE.
• Historically high Rail North America remarketing income of approximately $67 million resulted from the Company’s strategy to optimize its fleet by capitalizing on very attractive asset values.
• Rail North America’s committed lease revenue grew more than $600 million from the prior year to approximately $4.2 billion.
• In Portfolio Management, our engine leasing joint ventures with Rolls-Royce (“RRPF affiliates”) had a record earnings year.
• GATX acquired $125 million of its own stock during the year.
“GATX achieved excellent financial results in the fourth quarter, resulting in another record earnings year,” said Brian A. Kenney, president and chief executive officer. “In addition to producing outstanding financial results in 2015, our disciplined strategy has positioned GATX well for the long term. Over the last few years, we dramatically extended lease renewal terms at very attractive rates and optimized our fleet by selling select railcars into a robust secondary market. Additionally, we utilized our supply agreement to purchase new railcars at an attractive cost, limiting our spot market orders in a high-cost manufacturing environment.
“Rail North America performed exceptionally well in 2015. Our diverse and balanced fleet limited our exposure to any one particular commodity or car type. As a result, GATX’s LPI experienced a positive 32.2% renewal rate change in 2015 and we ended the year with fleet utilization of 99.1% (excluding the boxcar fleet) - all despite the industry’s growing over-supply of energy-related railcars. This over-supply did impact our fourth quarter LPI, which showed a positive 20.5% renewal rate change and an average renewal term of 43 months, both of which are down from the prior quarter.
“GRE achieved solid operating results and stable utilization ending the year at 95.8%. Throughout 2015, we invested in our European fleet to replace our customers’ older, less efficient fleets with newer, higher capacity railcars.
“Throughout the year, American Steamship Company (“ASC”) dealt with lower demand for iron ore shipments as steel production in the region declined. However, improved weather and higher water levels resulting in more efficient operations, and spot cargos helped to partially offset the impact of reduced iron ore volumes.
“In Portfolio Management, the RRPF affiliates had another year of outstanding financial results. Also, in the second-half of 2015, we announced our plan to exit the majority of our non-core, marine investments within our Portfolio Management segment. This process has progressed well, with most of the planned sales completed by year end and the balance largely expected to be completed by the end of the first quarter 2016. The planned exit of these assets will not affect ASC.
“Against a backdrop of increasing global economic uncertainty and a pronounced slowdown in the U.S. energy markets, GATX will continue to benefit from our fleet actions over the past few years. By extending average lease terms and optimizing our fleet, we reduced the number of leases scheduled for expiration in 2016 relative to the prior few years. For car types serving weak market segments, GATX will focus on maintaining utilization and shortening lease terms. In 2016, we will continue to use our supply agreement to pursue new car placements with our best customers. Our strong balance sheet also offers us flexibility to pursue attractive secondary market acquisition opportunities.
“In 2016, we expect Rail North America segment profit to decrease from 2015’s record levels primarily due to lower expected railcar remarketing activity in a softer market. We anticipate Rail International will achieve segment profit similar to the prior year, as lease rate improvements are offset by higher maintenance and currency impacts. ASC’s segment profit is expected to increase in 2016 due to improved fleet efficiency, although uncertainty in the steel industry will continue to be a factor for this business segment. In Portfolio Management, 2016 segment profit is expected to be in line with 2015 levels as performance at the RRPF affiliates will continue to drive segment results.”
“GATX is positioned to perform well in this difficult environment. We currently expect EPS in 2016 to be in the range of $5.25-$5.45 per diluted share,” concluded Mr. Kenney.
RAIL NORTH AMERICA
Rail North America reported segment profit of $98.8 million in the fourth quarter of 2015, compared to $83.7 million in the fourth quarter of 2014. The increase in quarterly segment profit was primarily attributable to higher lease rates, increased boxcar utilization revenue, and lower net maintenance expenses across the fleet.
Full-year, Rail North America reported segment profit of $379.5 million, compared to $321.0 million in the same period of 2014. Several items contributed to this increase in segment profit, including higher lease rates, a full-year contribution of the boxcar fleet acquired in March 2014, lower net maintenance expenses, and higher remarketing gains.
At December 31, 2015, Rail North America’s wholly owned fleet was approximately 124,500 cars, including more than 18,400 boxcars. The following fleet statistics exclude the boxcar fleet.
Fleet utilization was 99.1% at the end of the fourth quarter, compared to 99.2% at the end of the prior quarter and 99.2% at 2014 year end. During the fourth quarter, the GATX Lease Price Index (“LPI”), a weighted average lease renewal rate for a group of railcars representative of Rail North America's fleet, showed a positive 20.5% renewal rate change. This compares to a positive 25.6% in the prior quarter and a positive 39.2% in the fourth quarter of 2014. The average lease renewal term for all cars included in the LPI during the fourth quarter was 43 months, compared to 60 months in the prior quarter and 67 months in the fourth quarter of 2014. For full-year 2015, the LPI was a positive 32.2% and the average renewal term was 54 months, compared to a positive 38.8% and 66 months in 2014. The LPI and average renewal term impact quarter-over-quarter and year-over-year were negatively impacted by coal cars and high-capacity tank cars serving the energy sector. Asset remarketing income for the year was $67.4 million, and total investment volume was $524.5 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 $13.7 million in the fourth quarter of 2015, compared to $18.9 million in the fourth quarter of 2014. While more railcars were on lease at GRE, the weaker Euro/U.S. Dollar exchange rate negatively affected reported lease revenues.
Rail International reported full-year segment profit of $70.1 million in 2015, compared to $78.7 million in 2014. GRE lease revenue increased throughout 2015, and a more modern fleet driven by recent new car purchases has resulted in lower maintenance activity, offset by the impact of a weaker Euro.
At the end of 2015, GRE's fleet consisted of approximately 22,900 cars and utilization was 95.8%, compared to 95.7% at the end of the third quarter and 95.9% at 2014 year end.
Additional fleet statistics for GATX Rail Europe are provided on the last page of this press release.
AMERICAN STEAMSHIP COMPANY
American Steamship Company (“ASC”) reported a segment profit of $1.7 million in the fourth quarter of 2015 compared to segment profit of $10.2 million in the fourth quarter of 2014. Segment profit for full-year 2015 was $15.1 million, compared to $27.3 million in 2014. ASC operated 13 vessels during the year and carried approximately 26.5 million net tons of cargo, compared to 15 vessels which carried 30.5 million net tons in 2014. The decrease in tonnage and segment profit was driven by reduced iron ore demand.
PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $40.9 million in the fourth quarter of 2015 compared to $28.1 million in the fourth quarter of 2014. 2015 fourth quarter results include a net gain of $14.4 million associated with the planned exit of the majority of Portfolio Management’s marine investments. Higher income from the RRPF affiliates also contributed to the increase.
For full-year 2015, Portfolio Management reported segment profit of $49.8 million compared to $68.2 million in 2014. The 2015 full-year results include a net loss of $28.2 million associated with the planned exit of the majority of Portfolio Management’s marine investments.
COMPANY DESCRIPTION
GATX Corporation (NYSE:GMT) strives to be recognized as the finest railcar leasing company in the world by its customers, its shareholders, its employees and the communities where it operates. As the largest global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 117 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.
http://ir.gatx.com/phoenix.zhtml?c=70051&p=irol-newsArticle&ID=2131087
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