GATX Corporation (NYSE:GMT) today reported 2015 first-quarter net income of $62.2 million or $1.39 per diluted share, compared to net income of $42.1 million or $0.90 per diluted share in the first quarter of 2014.

Brian A. Kenney, president and chief executive officer of GATX, said, “Rail North America’s outstanding performance continued in the first quarter. The renewal rate change of GATX’s Lease Price Index (LPI) was a positive 43.2%, and the average renewal term was 59 months. Fleet utilization exceeded 99% at the end of the quarter, and our renewal success rate was nearly 85%. These favorable results were driven by continued strong demand for most railcar types in our fleet.”

Mr. Kenney added, “Consistent with our comments at the beginning of 2015, our existing fleet continues to experience high demand, but new railcar order activity has slowed as our customers assess the impact of low crude-oil prices and impending tank car regulations on their business. As these issues clarify in 2015, we can provide better insight into the medium-term effects on our business.

“Rail International’s performance was consistent with our expectations, and they continue to invest in new railcars despite the uneven European economy. American Steamship Company is experiencing another slow start to its sailing season, as Great Lakes’ ice coverage was extensive through the end of March. The Portfolio Management segment benefitted from increased asset remarketing activity during the quarter, and the Rolls-Royce and Partners Finance affiliates continued to perform well.”

Mr. Kenney concluded, “We continue to expect our 2015 full-year earnings to be in the range of $5.15 to $5.35 per diluted share. Consistent with prior guidance, we have not incorporated any costs related to pending tank car regulations into our earnings estimate.”

RAIL NORTH AMERICA

Rail North America reported segment profit of $105.8 million in the first quarter of 2015, compared to $75.0 million in the first quarter of 2014. The improvement in segment profit was driven by increased asset remarketing income, higher lease rates, and the positive contribution from the boxcar fleet that was acquired at the end of the first quarter of 2014.

At March 31, 2015, Rail North America’s wholly owned fleet comprised approximately 126,000 railcars, including nearly 19,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.

Fleet utilization was 99.3% at the end of the first quarter, compared to 99.2% at the end of the prior quarter and 98.5% at the end of the first quarter of 2014. During the first quarter of 2015, the GATX Lease Price Index (LPI), a weighted-average lease renewal rate for a group of railcars representative of Rail North America's fleet, increased 43.2% over the weighted-average expiring lease rate. This compares to a 39.2% increase in the prior quarter and a 33.9% increase in the first quarter of 2014. The average lease renewal term for cars included in the LPI during the first quarter was 59 months, compared to 67 months in the prior quarter and 62 months in the first quarter of 2014.

Rail North America’s investment volume during the first quarter was nearly $130 million. Asset remarketing income was $36.1 million, as the secondary market continues to be very active.

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 $21.8 million in the first quarter of 2015, compared to $20.7 million in the first quarter of 2014. Segment profit increased as GATX Rail Europe (GRE) had more cars on lease.

At March 31, 2015, GRE's fleet consisted of more than 22,000 cars and utilization was 95.9%, comparable to the prior quarter and 96.0% at the end of the first quarter of 2014. Additional fleet statistics for GRE are provided on the last page of this press release.

AMERICAN STEAMSHIP COMPANY

American Steamship Company (ASC) reported a segment loss of $0.4 million in the first quarter of 2015, compared to a segment loss of $1.2 million in the first quarter of 2014. ASC's operations are limited during the first quarter as the vessels are in winter lay-up from mid-January through late March. For the second consecutive year, first-quarter operations have been negatively affected by ice cover on the Great Lakes.

PORTFOLIO MANAGEMENT

Portfolio Management reported segment profit of $15.9 million in the first quarter of 2015, compared to $11.9 million in the first quarter of 2014. The increase in quarterly segment profit was primarily due to increased asset remarketing income and higher rates for the inland marine and wholly owned ocean-going vessels compared to the prior-year period.

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 115 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 2015 first-quarter results. Call details are as follows:

Thursday, April 23rd
11:00 A.M.Eastern Time
Domestic Dial-In: 1-888-504-7958
International Dial-In: 1-719-457-2089
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 3681160

Call-in details, a copy of this press release and real-time audio access are available at www.gatx.com. Please access the call 15 minutes prior to the start time. Following the call, a replay will be available on the same site.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this press release that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that reflect our current views with respect to, among other things, future events, financial performance and market conditions. 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,” “continue,” “likely,” “will,” “would,” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Specific risks and uncertainties include, but are not limited to, (1) changes in regulatory requirements for tank cars carrying crude, ethanol, and other flammable liquids, (2) competitive factors in our primary markets, (3) weak economic conditions, financial market volatility, and other factors that may decrease demand for our assets and services, (4) inability to maintain our assets on lease at satisfactory rates, (5) changes to, or failure to comply with, laws, rules, and regulations applicable to our assets and operations, (6) operational disruption and increased costs associated with compliance maintenance programs and other maintenance initiatives, (7) financial and operational risks associated with long-term railcar purchase commitments, (8) deterioration of conditions in the capital markets, reductions in our credit ratings, or increases in our financing costs, (9) events having an adverse impact on assets, customers, or regions where we have a large investment, (10) decreased demand for certain railcars used in the petroleum industry due to sustained low crude-oil prices, (11) risks related to international operations and expansion into new geographic markets, (12) inadequate allowances to cover credit losses in our portfolio, (13) asset impairment charges we may be required to recognize, (14) environmental remediation costs or a negative outcome in our pending or threatened litigation, (15) inability to obtain cost-effective insurance, (16) fluctuations in foreign exchange rates, (17) operational and financial risks related to our affiliate investments, (18) reduced opportunities to generate asset remarketing income, (19) failure to successfully negotiate collective bargaining agreements with the unions representing a substantial portion of our employees, and (20) other risks discussed in our filings with the US Securities and Exchange Commission (SEC), including our form 10-K for the year ended December 31, 2014, and our subsequently filed form 10-Q reports, all of which are available on the SEC’s website (www.sec.gov).

Investors 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. The Company undertakes no obligation to publicly update or revise these forward-looking statements.

Investor, corporate, financial, historical financial, photographic and news release information may be found at www.gatx.com.

(4/23/15)

--Tabular Follows--

 
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)
 
Three Months Ended March 31
2015   2014
Revenues
Lease revenue $ 278.3 $ 250.6
Marine operating revenue 24.2 17.7
Other revenue 17.2   18.3  
Total Revenues 319.7 286.6
Expenses
Maintenance expense 78.3 73.1
Marine operating expense 18.9 15.0
Depreciation expense 68.5 58.7
Operating lease expense 20.7 26.9
Other operating expense 7.3 6.6
Selling, general and administrative expense 45.7   42.7  
Total Expenses 239.4 223.0
Other Income (Expense)
Net gain on asset dispositions 45.3 28.1
Interest expense, net (40.9 ) (42.0 )
Other expense (4.0 ) (3.4 )
Income before Income Taxes and Share of Affiliates’ Earnings 80.7 46.3
Income Taxes (27.0 ) (14.1 )
Share of Affiliates’ Earnings (net of tax) 8.5   9.9  
Net Income $ 62.2   $ 42.1  
 
Share Data
Basic earnings per share $ 1.41 $ 0.92
Average number of common shares 44.1 46.0
Diluted earnings per share $ 1.39 $ 0.90
Average number of common shares and common share equivalents 44.8 46.8
Dividends declared per common share $ 0.38 $ 0.33
   
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
 
March 31 December 31
2015 2014
Assets
Cash and Cash Equivalents $ 351.4 $ 209.9
Restricted Cash 15.6 14.5
Receivables
Rent and other receivables 64.1 86.0
Loans 13.4 97.3
Finance leases 175.4 174.7
Less: allowance for losses (5.6 ) (5.7 )
247.3 352.3
 
Operating Assets and Facilities 8,194.2 8,143.5
Less: allowance for depreciation (2,434.9 ) (2,455.5 )
5,759.3 5,688.0
 
Investments in Affiliated Companies 359.7 357.7
Goodwill 79.1 86.1
Other Assets 244.0   229.0  
Total Assets $ 7,056.4   $ 6,937.5  
Liabilities and Shareholders’ Equity
Accounts Payable and Accrued Expenses $ 163.8 $ 165.9
Debt
Commercial paper and borrowings under bank credit facilities 2.8 72.1
Recourse 4,443.8 4,179.9
Nonrecourse 13.7 15.9
Capital lease obligations 5.0   6.3  
4,465.3 4,274.2
 
Deferred Income Taxes 952.1 937.3
Other Liabilities 192.7   246.1  
Total Liabilities 5,773.9 5,623.5
Total Shareholders’ Equity 1,282.5   1,314.0  
Total Liabilities and Shareholders’ Equity $ 7,056.4   $ 6,937.5  
         
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2015
(In millions)
 
Portfolio GATX
Rail N.A. Rail Int’l ASC Management Other Consolidated
Revenues
Lease revenue $ 228.5 $ 42.1 $ 1.0 $ 6.7 $ $ 278.3
Marine operating revenue 7.0 17.2 24.2
Other revenue 14.7   1.9     0.6     17.2  
Total Revenues 243.2 44.0 8.0 24.5 319.7
Expenses
Maintenance expense 69.2 8.9 0.2 78.3
Marine operating expense 6.9 12.0 18.9
Depreciation expense 52.3 10.7 5.5 68.5
Operating lease expense 20.7 20.7
Other operating expense 5.5   0.9     0.9     7.3  
Total Expenses 147.7 20.5 7.1 18.4 193.7
Other Income (Expense)
Net gain on asset dispositions 36.8 4.9 3.6 45.3
Interest expense, net (24.5 ) (6.5 ) (1.3 ) (5.2 ) (3.4 ) (40.9 )
Other expense (2.2 ) (1.8 ) (4.0 )
Share of affiliates’ earnings (pretax) 0.2   (0.1 )   11.4     11.5  
Segment Profit (Loss) $ 105.8 $ 21.8 $ (0.4 ) $ 15.9 $ (5.2 ) $ 137.9
Selling, general and administrative expense 45.7
Income taxes (includes $3.0 related to affiliates’ earnings) 30.0  
Net Income $ 62.2  

Selected Data:

Investment Volume $ 129.8 $ 41.4 $ 9.3 $ $ 0.4 $ 180.9
Net Gain on Asset Dispositions

Asset Remarketing Income:

Disposition gains on owned assets $ 35.9 $ $ $ 2.0 $ $ 37.9
Residual sharing income 0.2 1.6 1.8
Non-remarketing disposition gains (1) 0.7 5.0 5.7
Asset impairment   (0.1 )       (0.1 )
Total Net Gain on Asset Dispositions $ 36.8 $ 4.9 $ $ 3.6 $ $ 45.3

(1) Includes scrapping gains.

         
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2014
(In millions)
 
Portfolio GATX
Rail N.A. Rail Int’l ASC Management Other Consolidated
Revenues
Lease revenue $ 194.9 $ 47.2 $ 1.1 $ 7.4 $ $ 250.6
Marine operating revenue 3.1 14.6 17.7
Other revenue 14.6   2.0     1.7     18.3  
Total Revenues 209.5 49.2 4.2 23.7 286.6
Expenses
Maintenance expense 61.4 11.5 0.2 73.1
Marine operating expense 3.4 11.6 15.0
Depreciation expense 41.5 11.7 5.5 58.7
Operating lease expense 26.9 26.9
Other operating expense 4.8   1.4     0.4     6.6  
Total Expenses 134.6 24.6 3.6 17.5 180.3
Other Income (Expense)
Net gain (loss) on asset dispositions 24.8 2.4 (0.4 ) 1.3 28.1
Interest expense, net (24.6 ) (6.2 ) (1.4 ) (6.8 ) (3.0 ) (42.0 )
Other (expense) income (3.4 ) 0.3 (0.3 ) (3.4 )
Share of affiliates’ earnings (pretax) 3.3   (0.1 )   10.9     14.1  
Segment Profit (Loss) $ 75.0 $ 20.7 $ (1.2 ) $ 11.9 $ (3.3 ) $ 103.1
Selling, general and administrative expense 42.7
Income taxes (includes $4.2 related to affiliates’ earnings) 18.3  
Net Income $ 42.1  

Selected Data:

Investment Volume $ 396.0 $ 39.3 $ 8.3 $ $ 1.9 $ 445.5
Net Gain on Asset Dispositions

Asset Remarketing Income:

Disposition gains on owned assets $ 21.6 $ $ $ $ $ 21.6
Residual sharing income 0.6 1.2 1.8
Non-remarketing disposition gains (1) 2.6 2.4 5.0
Asset impairment     (0.4 ) 0.1     (0.3 )
Total Net Gain on Asset Dispositions $ 24.8 $ 2.4 $ (0.4 ) $ 1.3 $ $ 28.1

(1) Includes scrapping gains.

         
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In millions, except leverage)
(Continued)
 
3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015

Assets by Segment (includes off-balance-sheet assets)

Rail North America $ 4,842.9 $ 4,929.8 $ 4,902.2 $ 4,939.9 $ 5,057.6
Rail International 1,269.5 1,289.3 1,220.1 1,193.0 1,029.1
ASC 282.2 314.5 304.2 298.3 283.8
Portfolio Management 837.1 842.7 814.2 811.4 792.1
Other 121.6   118.8   118.1   88.3   103.4  
Total Assets, excluding cash $ 7,353.3   $ 7,495.1   $ 7,358.8   $ 7,330.9   $ 7,266.0  

Capital Structure

Commercial paper and bank credit facilities,
net of unrestricted cash $ (408.8 ) $ 30.3 $ (0.2 ) $ (137.8 ) $ (348.6 )
On-balance-sheet recourse debt 4,310.0 4,033.9 4,081.8 4,179.9 4,443.8
On-balance-sheet nonrecourse debt 70.1 20.5 18.1 15.9 13.7
Off-balance-sheet recourse debt 639.6 642.6 562.9 566.7 527.4
Off-balance-sheet nonrecourse debt 56.5 54.7 52.9 51.1 49.2
Capital lease obligations 7.6   7.6   6.3   6.3   5.0  
Total Borrowings, net of unrestricted cash $ 4,675.0   $ 4,789.6   $ 4,721.8   $ 4,682.1   $ 4,690.5  
Total Recourse Debt (1) $ 4,548.4 $ 4,714.4 $ 4,650.8 $ 4,615.1 $ 4,627.6
Shareholders’ Equity $ 1,423.2 $ 1,374.4 $ 1,331.2 $ 1,314.0 $ 1,282.5
Recourse Leverage (2) 3.2 3.4 3.5 3.5 3.6
_________
(1)   Includes on- and off-balance-sheet recourse debt; capital lease obligations; commercial paper and bank credit facilities, net of unrestricted cash.
(2) Calculated as total recourse debt / shareholder's equity.
 

Reconciliation of Total Assets to Total Assets (Including Off-Balance-Sheet Assets), Excluding Cash:

Total Assets   $ 7,119.0   $ 6,921.1   $ 6,816.3   $ 6,937.5   $ 7,056.4
Less: cash (461.8 ) (123.3 ) (73.3 ) (224.4 ) (367.0 )
Add off-balance-sheet assets:
Rail North America 680.8 683.2 602.9 606.1 566.1
ASC 15.3   14.1   12.9   11.7   10.5  
Total Assets, excluding cash $ 7,353.3   $ 7,495.1   $ 7,358.8   $ 7,330.9   $ 7,266.0  
         
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(Continued)
 
3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015

Rail North America Statistics

Lease Price Index (LPI) (1)
Average renewal lease rate change 33.9 % 36.0 % 46.9 % 39.2 % 43.2 %
Average renewal term (months) 62 67 68 67 59
Fleet Rollforward (2)
Beginning balance 107,004 106,804 106,894 107,387 107,343
Cars added 486 1,174 958 835 1,013
Cars scrapped (368 ) (387 ) (440 ) (202 ) (261 )
Cars sold (318 ) (697 ) (25 ) (677 ) (1,146 )
Ending balance 106,804 106,894 107,387 107,343 106,949
Utilization 98.5 % 98.6 % 98.8 % 99.2 % 99.3 %
Average active railcars 105,287 105,366 105,755 106,569 106,541
Boxcar Fleet
Ending balance 19,630 19,254 19,146 19,021 18,912
Utilization 80.7 % 90.7 % 91.3 % 92.7 % 92.8 %

Rail Europe Statistics

Fleet Rollforward
Beginning balance 21,836 21,591 21,684 21,960 22,451
Cars added 125 409 481 657 249
Cars scrapped/sold (370 ) (316 ) (205 ) (166 ) (203 )
Ending balance 21,591 21,684 21,960 22,451 22,497
Utilization 96.0 % 95.6 % 95.1 % 95.9 % 95.9 %
Average active railcars 20,913 20,706 20,833 21,111 21,479

Rail North America Industry Statistics

Manufacturing Capacity Utilization Index (3) 79.1 % 79.1 % 79.5 % 79.5 % 78.4 %
Year-over-year Change in U.S. Carloadings (excl. intermodal) (4) 0.9 % 3.2 % 3.6 % 3.9 % 0.3 %
Year-over-year Change in U.S. Carloadings (chemical) (4) 0.7 % 1.4 % 1.5 % 1.2 % 1.8 %
Year-over-year Change in U.S. Carloadings (petroleum) (4) 7.1 % 7.0 % 12.8 % 12.7 % 0.4 %
Production Backlog at Railcar Manufacturers (5) 81,927 99,782 124,437 142,837 138,856

American Steamship Company Statistics

Total Net Tons Carried (millions) 0.4 7.9 11.3 10.9 0.8
_________
(1)   GATX's Lease Price Index (LPI) is an internally-generated business indicator that measures lease rate pricing on renewals within our North American railcar fleet, excluding the boxcar fleet. The index is calculated 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).