GATX Corp. (NYSE:GATX) Q4 2014 Earnings Conference Call - Final Transcript

Jan 22, 2015 • 11:00 am ET


GATX Corp. (NYSE:GATX) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, and welcome to the GATX Fourth Quarter Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jennifer Van Aken. Please go ahead, ma'am.

Jennifer Van Aken

Thank you, Michelle, and good morning, everyone. Thanks for joining us for the fourth quarter and 2014 year end conference call. With me today are Brian Kenney, President and CEO of GATX Corporation and Bob Lyons, Executive Vice President and Chief Financial Officer.

(Forward-Looking Cautionary Statement)

I will give an overview of the results provided in our press release earlier this morning, provide some brief comments regarding our expectations for 2015, and then Brian will provide his insight on some key areas for GATX in the year ahead. After that, we'll open it up to questions.

Today, we reported 2014 fourth quarter net income of $58.5 million, or $1.30 per diluted share. This compares to 2013 fourth quarter net income of $53.3 million, or $1.14 per diluted share. For full year 2014, net income was $205 million or $4.48 per diluted share. By comparison, 2013 net income was a $169.3 million, $3.59 per diluted share, including a benefit of $4.5 million or $0.09 per diluted share from tax adjustments and other items. Details related to these tax adjustments and other items can be found on page 12 of this morning's press release.

The fourth quarter and full year 2014 results are reflective of the continued strong demand for tank cars and improved demand for freight cars in North America. The following fleet performance discussion excludes GATX's boxcar fleet.

At the end of the fourth quarter, GATX's North American fleet utilization was 99.2%. In the fourth quarter, the renewal rate change of GATX's lease price index was 39.2%, resulting in the full year renewal rate change of the LPI of 38.8%. We continue to optimize our

Jennifer Van Aken

fleet through railcar sales, generating more than $50 million in asset remarketing income. We also capitalized on opportunities to grow the railcar fleet as investment volume exceeded $800 million.

Within Rail International, the economic environment was challenging for GATX Rail Europe and in certain instances it took longer to place cars on lease. Utilization was affected throughout the year but improved 95.9% at the end of the fourth quarter. 2014 was another sizeable investment year for GATX Rail Europe with investment volume of more than 150 million as we continue to investment in new tank cars.

American Steamship Company operated 15 vessels and carried 30.5 million net tons of cargo in 2014 compared with 13 vessels that carried 28.8 million net tons in 2013. Higher water levels on the Great Lakes contributed to the increased volume of cargo ships. Segment profit in 2014 was lower than in 2013, however, as harsh weather conditions and ice cover on the Great Lakes caused extreme delays in operating inefficiencies earlier in the navigation season.

Within the Portfolio Management segment, the Rolls-Royce and Partners Finance affiliates continued to post very strong results. And the performance