GATX Corporation Reports 2012 Fourth Quarter and Full-Year Results

Before you go, we thought you'd like these...
Before you go close icon

GATX Corporation Reports 2012 Fourth Quarter and Full-Year Results

CHICAGO--(BUSINESS WIRE)-- GATX Corporation (NYS: GMT) today reported 2012 fourth quarter net income of $29.7 million or $.62 per diluted share, compared to net income of $31.6 million or $.67 per diluted share in the fourth quarter of 2011. The 2012 and 2011 fourth quarter results include benefits from Tax Adjustments and Other Items of $2.8 million or $.06 per diluted share and $1.9 million or $.05 per diluted share, respectively.

Net income for the full-year 2012 was $137.3 million or $2.88 per diluted share, compared to net income of $110.8 million or $2.35 per diluted share in the prior year. The 2012 and 2011 results include benefits from Tax Adjustments and Other Items of $3.5 million or $.07 per diluted share and $15.8 million or $.34 per diluted share, respectively.


Details related to the Tax Adjustments and Other Items are provided in the attached Supplemental Information. Quarterly segment data, presented in the new segment and income statement format, is posted in the Investor Relations section of www.gatx.com.

Brian A. Kenney, president and chief executive officer of GATX, said, "The North American rail market remains strong due to unprecedented demand for tank cars. In 2012, we capitalized on the favorable market conditions by increasing lease rates while successfully stretching lease terms. In the fourth quarter, the renewal rate change of GATX's Lease Price Index ("LPI") was a positive 32.3% and the average renewal term for cars in the LPI was 65 months. On a full-year basis, the renewal rate change of the LPI was a positive 25.6% and the average renewal term was 60 months. Additionally, fleet utilization approximated 98% and our renewal success rate averaged over 80% for the year. We also used the strong market to optimize our fleet by selling railcars, generating improved asset remarketing income in Rail North America.

"Although the European freight car market remains weak, GATX's European tank car fleet experienced higher lease rates and strong utilization throughout 2012. Tank car investment opportunities were robust, as our total European investment reached nearly $200 million, a record level for GATX in this market. We also entered the Indian railcar leasing market during the year with the purchase of railcars that began to deliver at the end of 2012."

Mr. Kenney continued, "Looking to the year ahead, we expect continued strength in the North American chemical and petroleum markets to provide a favorable operating environment for tank car leasing, while demand across certain freight car types is expected to remain weak. The number of cars scheduled for maintenance, especially tank car compliance work, will increase in 2013, and thus our maintenance costs will increase materially over 2012 levels. Internationally, demand in the European tank car market appears to be moderating, so we will focus on maintaining high utilization and upgrading our fleet while pursuing additional investment opportunities in India and other emerging rail markets.

"We anticipate that American Steamship Company's ("ASC's") 2013 tonnage will be down somewhat from the prior year, and record low water levels on the Great Lakes will hamper operating conditions. Within the Portfolio Management segment, the Rolls-Royce and Partners Finance affiliates are expected to continue their strong performance, while our ocean-going marine investments will likely have continued weak results. Based on these factors, we expect full-year 2013 EPS to be in the range of $3.10 to $3.20 per diluted share."

Mr. Kenney concluded, "Over the last few years, we believe GATX has made significant cost-advantaged investments and positioned its fleet to produce record earnings and cash flow. Reaching that goal remains our primary focus."

RAIL NORTH AMERICA

Rail North America segment profit was $59.8 million in the fourth quarter of 2012, compared to $55.4 million in the fourth quarter of 2011. The 2011 fourth quarter results include the pre-tax benefit from Other Items of $5.5 million. The improvement in segment profit was driven by higher lease rates and increased asset remarketing income; in particular an $11 million gain associated with a residual value sharing transaction. This was partially offset by increased maintenance costs, due to higher repair costs and more railroad repairs, and decreased scrapping gains due to fewer scrapped cars at lower scrap rates.

Rail North America reported segment profit of $209.3 million in 2012, compared to $172.7 million in 2011. Again, the 2011 results include the pre-tax benefit from Other Items of $5.5 million. The increase in segment profit was driven by higher lease rates, increased asset remarketing income and lower maintenance costs resulting from our high renewal success rate. The increase in segment profit was partially offset by lower scrapping gains due to fewer railcars scrapped at lower scrap rates.

At December 31, 2012, Rail North America's wholly-owned fleet totaled approximately 110,000 cars. Fleet utilization was 97.9%, compared to 98.2% at the end of the third quarter and at 2011 year end.

During the fourth quarter of 2012 the GATX Lease Price Index ("LPI"), a weighted average lease renewal rate for a group of railcars representative of the Rail North American fleet, increased 32.3% over the weighted average expiring lease rate. This compares to a 26.4% increase in the prior quarter and a 13.2% increase in the fourth quarter 2011. The average lease renewal term for cars included in the LPI during the fourth quarter was 65 months, up from 59 months in the third quarter and 48 months in the fourth quarter of 2011. For the full-year 2012 the LPI increased 25.6% and railcars in the LPI had an average renewal term of 60 months, compared to an increase of 6.9% and average renewal term of 45 months in 2011. Investment volume in 2012 at Rail North America totaled nearly $466 million.

RAIL INTERNATIONAL

Rail International segment profit was $10.5 million in the fourth quarter of 2012, compared to $6.7 million in the fourth quarter of 2011. The 2012 and 2011 fourth quarter results include the negative pre-tax impact from Other Items of $2.0 million and $7.5 million, respectively.

Rail International reported segment profit of $32.7 million in 2012, compared to $60.7 million in 2011. The 2012 and 2011 results include the negative pre-tax impact from Other Items of $22.9 million and the pre-tax benefit from Other Items of $3.5 million, respectively. The changes in full-year and quarterly segment profit were primarily driven by activities in Europe, including higher legal fees and increased depreciation expense associated with new investments, partially offset by more railcars on lease at higher lease rates.

Within Rail International, the wholly-owned tank car fleet in Europe totaled approximately 22,000 cars and utilization was 95.1%, compared to 96.6% at the end of the third quarter and 97.1% at 2011 year end. Investment volume in 2012 at Rail International was over $200 million, primarily for new tank cars in Europe.

Additional current and historical fleet and operating data as well as macroeconomic data related to Rail North America's and Rail International's business can be found on the last page of this press release.

AMERICAN STEAMSHIP COMPANY

American Steamship Company ("ASC") reported segment profit of $8.2 million in the fourth quarter 2012 compared to $9.4 million in the fourth quarter 2011. The decline in segment profit was due to lower volume carried as a result of low water levels on the Great Lakes.

Segment profit for 2012 was $37.5 million compared to $27.3 million in 2011. The increase in segment profit was the result of more tonnage moved at higher rates and the absence of costs associated with a work stoppage in 2011. ASC operated 14 of its 18 vessels, including the Articulated Tug Barge ("ATB"), during the sailing season and transported 29.7 million net tons of cargo compared to 28.4 million net tons carried in the prior year.

PORTFOLIO MANAGEMENT

Portfolio Management reported a segment loss of $1.4 million in the fourth quarter of 2012 compared to segment profit of $16.6 million in the prior year period. The decline in segment profit was primarily due to a $14.8 million loss recognized in the fourth quarter of 2012 associated with the disposition of GATX's interest in Enerven Compression, LLC, a joint venture that was engaged in leasing and maintaining assets in the natural gas compression market.

For full-year 2012, Portfolio Management reported segment profit of $50.2 million compared to $47.6 million in 2011. Increased asset remarketing activity contributed to the improvement in segment profit.

The Portfolio Management segment currently consists of approximately $797.4 million of owned assets and third-party managed portfolios totaling approximately $143.2 million.

COMPANY DESCRIPTION

GATX Corporation (NYS: 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. Controlling one of the largest railcar fleets in the world, GATX has been providing quality railcars and services to its customers for 115 years. GATX has been headquartered in Chicago, Illinois since its founding in 1898 and has traded on the New York Stock Exchange since 1916. For more information, visit the Company's website at www.gatx.com.

TELECONFERENCE INFORMATION

GATX Corporation will host a teleconference to discuss 2012 fourth quarter and full-year results. Teleconference details are as follows:

Thursday, January 24th
11:00 A.M.Eastern Time
Domestic Dial-In: 1-888-542-1086
International Dial-In: 1-719-325-2201
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 3377946

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

This document contains statements that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those sections and the Private Securities Litigation Reform Act of 1995. Some of these statements may be identified by words like "anticipate," "believe," "estimate," "expect," "intend," "plan," "predict," "project" or other similar words. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in GATX's Annual Report on Form 10-K for the year ended December 31, 2011 and other filings with the SEC, and that actual results or developments may differ materially from those in the forward-looking statements.

Specific factors that might cause actual results to differ from expectations include, but are not limited to, (1) general economic, market, regulatory and political conditions affecting the rail, marine and other industries served by GATX and its customers; (2) competitive factors in GATX's primary markets, including lease pricing and asset availability; (3) lease rates, utilization levels and operating costs in GATX's primary operating segments; (4) conditions in the capital markets or changes in GATX's credit ratings and financing costs; (5) risks related to compliance with, or changes to, laws, rules and regulations applicable to GATX and its rail, marine and other assets; (6) costs associated with maintenance initiatives; (7) operational and financial risks associated with long-term railcar purchase commitments; (8) changes in loss provision levels within GATX's portfolio; (9) conditions affecting certain assets, customers or regions where GATX has a large investment; (10) impaired asset charges that may result from changing market conditions or portfolio management decisions implemented by GATX; (11) opportunities for remarketing income; (12) labor relations with unions representing GATX employees; and (13) the outcome of pending or threatened litigation.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis, judgment, belief or expectation only as of the date hereof. GATX has based these forward-looking statements on information currently available and disclaims any intention or obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.

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

(1/24/13)

--Tabular Follows—

 
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions)
 
 Three Months Ended Twelve Months Ended
December 31December 31
2012 20112012 2011
Revenues
Lease revenue$234.4$230.3$917.0$900.1
Marine operating revenue79.481.9265.5230.0
Other revenue 17.9  17.8  60.7  61.3 
Total Revenues331.7330.01,243.21,191.4
 
Expenses
Maintenance expense72.268.0269.7277.6
Marine operating expense57.259.6182.4165.6
Depreciation61.559.2237.4226.5
Operating lease expense33.632.4130.2132.0
Other operating expense7.66.024.227.8
Selling, general and administrative 44.6  43.0  160.2  155.3 
Total Expenses276.7268.21,004.1984.8
 
Other Income (Expense)
Net gain on asset dispositions21.914.679.565.8
Interest expense, net(39.5)(42.0)(166.6)(168.9)
Other (4.2) 1.9  (8.2) 4.1 
Total Other Income (Expense)(21.8)(25.5)(95.3)(99.0)
 
Income before Income Taxes and

Share of Affiliates' Earnings

33.236.3143.8107.6
Income Tax (Provision) Benefit(3.8)(7.2)(26.1)(29.2)
Share of Affiliates' Earnings (net of tax) 0.3  2.5  19.6  32.4 
Net Income$29.7 $31.6 $137.3 $110.8 
 
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Data)
 
 Three Months Ended Twelve Months Ended
December 31December 31
2012 20112012 2011
Per Share Data
 
Basic$0.63$0.68$2.93$2.39
 
Average number of common shares46.946.546.846.4
 
 
Diluted$0.62$0.67$2.88$2.35
 
Average number of common shares and
common share equivalents47.747.447.647.2
 
Dividends declared per common share$0.30$0.29$1.20$1.16
 
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Millions)
 
  December 31 December 31
20122011
 
Assets
 
Cash and Cash Equivalents$234.2$248.4
Restricted Cash29.735.2
 
Receivables
Rent and other receivables88.476.7
Loans27.230.4
Finance leases245.7334.9
Less: allowance for losses (4.6) (11.8)
356.7430.2
 
Operating Assets and Facilities6,855.26,416.0
Less: allowance for depreciation (2,200.8) (2,056.7)
4,654.44,359.3
 
Investments in Affiliated Companies502.0513.8
Goodwill91.790.5
Other Assets 186.7  180.1 
Total Assets$6,055.4 $5,857.5 
 
Liabilities and Shareholders' Equity
 
Accounts Payable and Accrued Expenses$177.4$135.6
 
Debt
Commercial paper and borrowings under bank credit facilities273.628.6
Recourse3,152.43,354.8
Nonrecourse130.6149.4
Capital lease obligations 11.3  14.3 
3,567.93,547.1
 
Deferred Income Taxes783.0765.9
Other Liabilities 282.9  281.6 
Total Liabilities4,811.24,730.2
Total Shareholders' Equity 1,244.2  1,127.3 
Total Liabilities and Shareholders' Equity$6,055.4 $5,857.5 
 
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended December 31, 2012
(In Millions)
 
    Portfolio  GATX
Rail N.A.Rail Int'lASCManagementOtherConsolidated
Revenues
Lease revenue$182.0$42.1$1.1$9.2$-$234.4
Marine operating revenue--73.16.3- Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Gift Finder Promo
More to Explore
Sun, Dec 04
Set Your Location
City, State, or Zip