North American North American Railcar OutlookRailcar OutlookA presentation to ACACSO by GATX

November 9, 2012

Unless otherwise noted, GATX is the source for data provided

NYSE: GMTNYSE: GMT

Forward-Looking StatementsThis 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.

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GATX CorporationGATX Corporation• Founded in 1898• Listed on NYSE in 1916• Paid quarterly dividends since 1919 without

interruption• One of the largest rail rolling stock lessors in the

world

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Today’s DiscussionToday’s Discussion

Objective•Provide useful, actionable information about the North American fleet to railcar users and other stakeholders

Agenda•Fleet composition (since Jan-’08)•Ownership trends (since Jan-’08)•Current market conditions

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North American Fleet Composition by North American Fleet Composition by Owner TypeOwner Type

5Source: UMLER as of 1/1/12

Change in Fleet CompositionChange in Fleet Composition1/1/08-1/1/121/1/08-1/1/12

Car Type Change (000)

Change (%)

Tank +4 +1%

Intermodal -1 -1%

Non-Intermodal Flat -9 -6%

Open-Top Hopper and Gondola -22 -5%

Covered Hopper -24 -5%

Box -51 -26%

6Source: UMLER as of 1/1/12

Bulk Railcar Gross Rail LoadBulk Railcar Gross Rail Load1/1/08-1/1/121/1/08-1/1/12

Railcar Type Average GRL 1/1/08

Average GRL 1/1/12

Change

Covered Hopper

273.6 276.1 +0.9%

Open-Top Hopper and Gondola

275.4 277.0 +0.6%

Tank 264.9 265.7 +0.3%

7Source: UMLER as of 1/1/12

Ownership & Trend 1/1/08-1/1/12Ownership & Trend 1/1/08-1/1/12

Owner Type Change (000) Change (%)

Lessor +25 +3%

TTX -5 -4%

Shipper -38 -11%

Railroad -85 -18%8

Fleet Makeup at 1/1/12

Source: UMLER as of 1/1/12

Total Carloads vs. Fleet SizeTotal Carloads vs. Fleet Size1/1/08-1/1/121/1/08-1/1/12

9Source: UMLER and RSI

Carloads

(MM

)

Total Rail IndustryTotal Rail IndustryRailcar Manufacturing BacklogRailcar Manufacturing Backlog

10Source: ARCI

Total Builds vs. AttritionTotal Builds vs. Attrition

11Source: UMLER, ARCI

What Are The Headlines Driving FleetWhat Are The Headlines Driving FleetPerformance?Performance?

• Goodo Fracking

• Bakken crude• NGLs• Plastics and chemicals recovery

o Auto recovery

• Bado Droughto Coal car oversupply

• Mixedo Railroad velocity

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Tank Car Fleet Size vs. Tank Car Fleet Size vs. Chemical and Petroleum CarloadsChemical and Petroleum Carloads

13Source: UMLER and AAR

A Strong Tank Car MarketA Strong Tank Car Market

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• Tank car backlogs at all builders extend into 2014

• ARCI tank car backlog at ~42,370

• FTR forecasts record or near-record production through 2014

• Crude as driver• YTD Petroleum Product carloadings are up >35% vs. similar

point in 2011

New Car Production vs. AttritionNew Car Production vs. Attrition

Sources: UMLER, ARCI, FTR, GATX business partners15

Over 6 years:•Large GS tanks will be 48% of build vs. 18-25% of fleet•Large pressure cars will be 14% of build vs. 13% of fleet•Remaining fleet will shrink by 2% due to “crowding out” by shale-related cars

North American Tank Car Fleet SizeNorth American Tank Car Fleet Size

Sources: UMLER, ARCI, FTR, GATX business partners16

Coal Cars Facing Multiple Near-TermCoal Cars Facing Multiple Near-TermHeadwindsHeadwinds

• YTD coal carloadings are down 8.6% vs. similar point in 2011, and down 17.3% compared to this point in 2008

• Railroad velocity up ~2MPH YOY• NA coal production down ~10% versus recent peak• Aggressive environmental regulation compelling plant

closures due to retrofit costs• Natural gas trading at or near historic lows• Recent moderate weather patterns have reduced burn

and increased stockpiles

Sources: Argus, EIA17

Medium-Cube Open-Top Fleet Size vs.Medium-Cube Open-Top Fleet Size vs.Coal CarloadsCoal Carloads

18Source: UMLER and AAR

Distribution of Coal FleetDistribution of Coal Fleet

Source for idle car estimate: GATX customers and business partners 19

• Lessors as Marginal Capacity• Sources of Utilization Improvement

• Attrition• Velocity• Weather• Gas Prices

Conclusions for Tank CarsConclusions for Tank Cars

• Tank car supply should remain tight for the near term, so users should value and prioritize it over other concerns

• Ethanol is the market to watch

• Regulatory developments must be monitored

• Recent spike in ownership will abate, as complexity around regulations and maintenance, plus variable demand, will push users back to leasing

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Conclusions for Freight CarsConclusions for Freight Cars

• Outside of a few markets (e.g. automotive), freight cars are either in balance or oversupplied

• Broad, near-term carload growth is unlikely, though retirements will keep most freight car markets balanced

• For now, freight car users can manage costs with less concern for availability, but improved economic conditions and/or normal weather patterns could shift the balance back to lessorso Grain – impact of robust harvest?o Coal – impact of cold winter and/or rising gas prices?

• Railroad velocity could tip the supply/demand balance

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RecapRecap

• Fleet composition (since Jan-’08)• Ownership trends (since Jan-’08)• Current market conditions

Provide useful, actionable informationabout the North American fleet to railcar users and other stakeholders

Questions?Questions?

Robert J. Gordon

Director, Fleet Administration

GATX Corporation

(312) 621-6375

robert.gordon@gatx.com