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Ann H. Heffron

Francis D'Hondt

GMT AT A GLANCE

P/E ► 7.04 AVG EV/EBITDA ► 2.07 AVG ROA ► 6.6% AVG ROE ► 15.5% AVG Debt to Equity ► 3.72 AVG Current Ratio ► 0.161 VERY LOW Interest Coverage Ratio ► 2.58 AVG

 

 

 

 

 

 

Revenue, Net Income, and Net MarginRevenue, Gross Profit, and Gross MarginOperating IncomeEbitIncome Before TaxesNet Income from Continuing OpsInterest vs Continuing IncomeInterest CoverageOperating ExpensesSG&AAmortization & Depreciation

GATX Corporation (or GATX), headquartered in Chicago, Illinois, leases rail equipment, engages in specialty finance, and owns and operates a fleet of self-loading vessels on the Great Lakes through its wholly owned subsidiary, American Steamship Company (ASC). A technology subsidiary, GATX Technology Services, was sold in 2004, and an aircraft leasing subsidiary, GATX Air, was sold in 2006, with these businesses reported as discontinued operations. GATX now operates through three primary business segments: GATX Rail, accounting for 75% of 2006 revenues Other (primarily American Steamship), posting 18% and GATX Specialty Finance, contributing 7%. GATX's long-term debt ratings are Baa3 by Moody s, BBB by S&P (recently upgraded from BBB), and BBB by Fitch.

GATX Rail primarily provides full-service leases, under which it maintains the rail equipment, to the following industries: chemical (29% of 2006 rail revenues), petroleum (27%), agricultural and food processing (15%), railroads (13%), and other (16%). With an owned and leased worldwide fleet of about 129,000 railcars at yearend 2006, the majority (roughly 85%) are in North America, with the balance in Europe (Austria, Germany, Poland, and Switzerland). In addition, the company had an ownership interest in 27,000 railcars and managed an additional 4,800 railcars for third-party owners. The average age of GATX's fleet is approximately 17 years in North America and 23 years in Europe, with railcars having useful lives of 30-38 years. GATX typically leases new railcars for five-ten years, with extensions of existing lease averaging three-seven years, and the average remaining lease term at four years. GATX purchases new railcars from a number of manufacturers, including Trinity Industries, Union Tank Car Company, Freight Car America, National Steel Car Ltd., American Railcar Industries, and The Greenbrier Companies. Principal leasing competitors in the U.S. include Union Tank Car, General Electric Railcars Services, Helm Financial Corporation, and National Railway Equipment Corporation in North America, and VTG Group, CTL Logistics Group, Ermewa, and Orlen Koltrans in Europe. GATX Rail had $4.7 billion in assets at December 31, 2006, including $1.3 billion that are off balance sheet. The company's owned fleet accounts for 21% of tank cars in North America and 3% of freight cars. Competition is based on price, service, availability, and customer relationships.

GATX Specialty Finance, with assets of $500 million at December 31, 2006, provides loans and leases, manages portfolios of assets for third parties ($470 million), and is involved in joint venture investments for various types of equipment that require a high level of expertise, including aircraft, power generation, and rail and marine equipment. GATX sold its venture portfolios in the U.K. and Canada in 2003, with the remaining book of business liquidated by yearend 2005. Competitors include commercial banks, leasing companies, lease brokers, and investment banks.

American Steamship Company (ASC), with $300 million in assets at December 31, 2006, operates a fleet of self-unloading vessels for the transportation on the Great Lakes of dry bulk commodities, including iron ore pellets (49% of 2006 revenue), coal (32%), limestone (13%), and other ( 6%). ASC typically operates under transportation agreements that range from one-fifteen years for companies within the steel production, power generation, and construction industries. ASC is a major factor in this Great Lakes freight business, accounting for 37% of total Great Lakes freight capacity. Primary competitors include Interlake Steamship Company, Great Lakes Fleet, Inc., VanEnkevort Tug and Barge, Grand River Navigation, and Wisconsin & Michigan Steamship Company. ASC principally competes based on price, customer relationships, and service.

[edit] Business Overview

[edit] Business and Financial Metrics

GATX's Revenue, Net Income, and Profit Margin for Fiscal Years 2005-2007

[edit] Business Segments

2007 Gross Revenue by Segments: Year ending Dec. 31^[1]

[edit] Rail (71% of 2007 Revenue)

[edit] ASC (17% of 2007 Revenue)

[edit] Specialty (12% of 2007 Revenue)

[edit] Key Trends and Forces

[edit] Competition

[edit] References

1. ↑ ^{1.0 1.1} GMT 2007 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition, page 19
2. ↑ Google Finance: GMT