GATX Corporation Reports 2023 Third-Quarter Results

GATX Corporation (NYSE: GATX) today reported 2023 third-quarter net income of $52.5 million, or $1.44 per diluted share, compared to net income of $29.1 million, or $0.81 per diluted share, in the third quarter of 2022. The 2022 third-quarter results include a net negative impact of $10.8 million, or $0.31 per diluted share, from Tax Adjustments and Other Items.

Net income for the first nine months of 2023 was $193.2 million, or $5.30 per diluted share, compared to $107.5 million, or $2.99 per diluted share, in the prior year period. The 2023 year-to-date results include a net negative impact of $1.1 million, or $0.03 per diluted share, from Tax Adjustments and Other Items. The 2022 year-to-date results include a net negative impact of $55.2 million, or $1.54 per diluted share, from Tax Adjustments and Other Items. Details related to these items are provided in the attached Supplemental Information under Impact of Tax Adjustments and Other Items.

"Consistent with our initial outlook, the railcar leasing environment in North America remains robust," said Robert C. Lyons, president and chief executive officer of GATX. "Rail North America’s fleet utilization was 99.3% at the end of the third quarter and our renewal success rate was 83.6%. The renewal lease rate change of GATX’s Lease Price Index was positive 33.4% for the quarter, with an average renewal term of 65 months, as we continue to lengthen lease terms on many car types, thereby locking in attractive long-term cash flow.

"Rail International produced solid operating results and added a combined total of over 1,400 newly built railcars to its fleets in Europe and India. In addition, Rail Europe continued to experience higher renewal lease rates compared to expiring rates for the majority of car types in its fleet. In Portfolio Management, results were driven by strong performance at the Rolls-Royce and Partners Finance affiliates, as demand for international air passenger travel continues to strengthen."

Mr. Lyons added, "We continued to execute our strategy of pursuing attractively priced growth opportunities across our global businesses. Investment volume was over $360 million in the quarter and over $1.2 billion year to date."

Mr. Lyons concluded, “Based on year-to-date performance and our outlook for the remainder of the year, we expect our 2023 full-year earnings to modestly exceed the high end of our previously announced guidance range of $6.50–$6.90 per diluted share. This guidance excludes any impact from Tax Adjustments and Other Items.”

RAIL NORTH AMERICA

Rail North America reported segment profit of $66.1 million in the third quarter of 2023, compared to $64.3 million in the third quarter of 2022. Year-to-date 2023, Rail North America reported segment profit of $240.6 million, compared to $237.8 million for the same period of 2022. Higher 2023 third-quarter and year-to-date results were due to higher lease revenue and higher gains on asset dispositions, partially offset by higher interest and maintenance expenses.

At Sept. 30, 2023, Rail North America’s wholly owned fleet was composed of approximately 109,700 railcars, including over 9,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet.

Fleet utilization was 99.3% at the end of the third quarter, compared to 99.3% at the end of the prior quarter and 99.6% at the end of the third quarter of 2022. During the third quarter, the renewal lease rate change of the GATX Lease Price Index (LPI) was positive 33.4%. This compares to positive 33.1% in the prior quarter and positive 18.8% in the third quarter of 2022. The average lease renewal term for all railcars included in the LPI during the third quarter was 65 months, compared to 61 months in the prior quarter and 52 months in the third quarter of 2022. The 2023 third-quarter renewal success rate was 83.6%, compared to 85.3% in the prior quarter and 87.2% in the third quarter of 2022. Rail North America’s investment volume during the third quarter was $197.0 million.

Additional fleet statistics, including information on the boxcar fleet, and macroeconomic data related to Rail North America’s business are provided in the attached Supplemental Information under Rail North America Statistics.

RAIL INTERNATIONAL

Rail International’s segment profit was $28.2 million in the third quarter of 2023, compared to $14.5 million in the third quarter of 2022. Year-to-date 2023, Rail International reported segment profit of $79.0 million, compared to $67.7 million for the same period of 2022. The third-quarter and year-to-date 2022 segment results include a net negative impact of $10.8 million from Tax Adjustments and Other Items. Additional details are provided in the attached Supplemental Information under Impact of Tax Adjustments and Other Items.

2023 third-quarter results were driven by higher lease revenue, predominately due to more cars on lease. 2023 year-to-date results were favorably impacted by more railcars on lease and negatively impacted by changes in foreign currency exchange rates.

At Sept. 30, 2023, GATX Rail Europe’s (GRE) fleet consisted of over 29,100 cars. Utilization was 96.0%, compared to 96.9% at the end of the prior quarter and 99.4% at the end of the third quarter of 2022. Additional fleet statistics for GRE and Rail India are provided in the attached Supplemental Information under Rail Europe and Rail India Statistics.

PORTFOLIO MANAGEMENT

Portfolio Management reported segment profit of $20.2 million in the third quarter of 2023, compared to $11.2 million in the third quarter of 2022. Year-to-date 2023, Portfolio Management reported segment profit of $75.1 million, compared to a segment loss of $8.4 million for the same period of 2022. 2023 and 2022 year-to-date results include net negative impacts of $1.4 million and $46.8 million, respectively, from Tax Adjustments and Other Items. Additional details are provided in the attached Supplemental Information under Impact of Tax Adjustments and Other Items.

Excluding these impacts, higher 2023 third-quarter and year-to-date results were driven by increased earnings from the Rolls-Royce and Partners Finance (RRPF) affiliates and GATX Engine Leasing, the Company’s wholly owned engine portfolio. Higher affiliate earnings from RRPF was due to improved performance across the existing engine leasing portfolio and higher remarketing income.

COMPANY DESCRIPTION

At GATX Corporation (NYSE: GATX), we empower our customers to propel the world forward. GATX leases transportation assets including railcars, aircraft spare engines and tank containers to customers worldwide. Our mission is to provide innovative, unparalleled service that enables our customers to transport what matters safely and sustainably while championing the well-being of our employees and communities. Headquartered in Chicago, Illinois since its founding in 1898, GATX has paid a quarterly dividend, uninterrupted, since 1919.

TELECONFERENCE INFORMATION

GATX Corporation will host a teleconference to discuss 2023 third-quarter results. Call details are as follows:

Tuesday, October 24, 2023
11 a.m. Eastern Time
Domestic Dial-In: 1-888-660-6118
International Dial-In: 1-929-203-1802
Replay: 1-800-770-2030 or 1-647-362-9199 / Access Code: 2548217

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), October 24, 2023.

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 “Investors” 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, 2022 and in any subsequent reports on Form 10-Q, could cause actual results to differ materially from our current expectations expressed in forward-looking statements: