GATX Announces Year-End and Fourth Quarter Results
--Exceptional Results at GATX Capital
--Record Fleet Size at General American
--Record Cash Flow and Portfolio Proceeds
--Market Weakness Continues to Impact GATX Terminals
CHICAGO, Jan. 28 /PRNewswire/ -- GATX Corporation (NYSE: GMT) today announced record net income of $102.7 million or $4.37 per common share for 1996. This compares to 1995 net income of $100.8 million or $4.30 per common share. On a fully diluted basis, EPS for the year were $4.19 per share compared to $4.13 for 1995.
For the fourth quarter of 1996, GATX reported earnings of $18.9 million or $.76 per common share compared to net income of $18.7 million or $.75 per common share reported for the fourth quarter of 1995. On a fully diluted basis, EPS were $.76 for the fourth quarter of 1996 compared to $.75 per share for the fourth quarter of 1995.
Ronald H. Zech, chairman and CEO, stated, "This was our third consecutive year of record earnings. However, because of the downturn at GATX Terminals, GATX did not achieve as great a growth rate as we would have liked. The strategies and trends that set the stage for this year's performance are continuing into 1997, and we expect to again report improved net earnings for the year.
"We are particularly pleased with the exceptional performance reported by GATX Capital this year. GATX Capital's net income grew by more than 40 percent, reflecting strong rail, air, and technology markets. In addition, asset re-marketing fees generated from the sale of owned and managed assets grew to record levels.
"General American Transportation also reported a record year. General American added a high number of new railcars, and completed the acquisition of CGTX, a Canadian railcar leasing company in which GATX previously held a 45 percent interest. Monthly rate increases in our railcar fleet and lower maintenance expenses as a percent of revenues also contributed to improved earnings," Zech explained.
"We are obviously disappointed with the impact on GATX Terminals of the major changes underway in the petroleum industry. We have responded very aggressively to those conditions, but it will take time for the marketplace to settle down and for the benefits of our actions to flow through to the bottom line," Zech concluded.
CASH FLOW REMAINS STRONG
Cash flow from operations and portfolio proceeds increased to $653 million for 1996 compared to $487 million in 1995 illustrating the consistently high level of cash generated by the company's long-term assets on long-term leases. The significant increase in cash flow reflects a 45 percent increase in cash from operations and a 26 percent increase in portfolio proceeds generated at GATX Capital.
GENERAL AMERICAN REPORTS RECORD YEAR
General American Transportation Corporation, GATX's railcar leasing and management subsidiary, reported record earnings of $67.7 million for 1996 compared to $62.9 million for 1995, reflecting new car additions, contribution from full ownership of CGTX since July 1996, and fleet acquisitions. For the fourth quarter of 1996, General American recorded net income of $17.0 million compared to net income of $16.4 million for the fourth quarter of 1995.
General American Transportation has 73,000 railcars on lease, an increase of approximately 11,000 railcars over 1995, including 8,700 railcars at CGTX. Utilization for the fleet ended the year at 95 percent, up from 1995 year-end utilization of 94 percent.
Fleet repair costs were slightly less than 23 percent of revenue for 1996, down from approximately 24 percent at the end of 1995.
GATX CAPITAL REPORTS RECORD YEAR EARNINGS
GATX Capital, GATX's financial services and asset management subsidiary, reported record net income of $45.9 million for 1996 compared to earnings of $32.6 million for 1995. For the fourth quarter of 1996, GATX Capital reported earnings of $6.8 million compared to $3.4 million in the prior-year period.
Lease income grew to $196 million in 1996 compared to $140 million in 1995 due to the full year effect of the October 1995 acquisition of Sun Financial and new volume. Joint venture income increased due to the formation of Locomotive Leasing Partners with GM/EMD.
Gains from the sale of assets for the quarter were $9.7 million compared to $3.9 million last year. For all of 1996, gains from the sale of assets were $35.5 million compared to $33.1 million last year.
Capital had a particularly strong year for fee income, generating $31.8 million for the full year of 1996 compared to $19.0 million for 1995. For the fourth quarter of 1996, Capital reported fee income of $10.5 million compared to $4.5 million for the fourth quarter of 1995. These gains and fees were generated primarily from air, rail and manufacturing assets and do not fall evenly period to period.
GATX Capital's full year portfolio volume of $659 million was the highest investment level ever, and increased 70 percent over 1995. The investments included $116 million in partnerships and joint ventures involving rail, air, technology, and marine assets.
Significant achievements at GATX Capital during 1996 included the acquisition of the remaining portion of Centron DPL and the establishment of several joint ventures -- GATX 737-800 Partners (Boeing 737's); EMD/General Motors (locomotives); and Southern Capital LLC (rail equipment). At the end of 1996, GATX Capital had approximately $9 billion original cost of equipment under management for itself and its partners.
GATX TERMINALS REPORTS LOWER QUARTER
GATX Terminals, GATX's bulk-liquid storage, distribution, and pipeline operation, reported earnings of $12.6 million for 1996 compared to earnings of $31.0 million for 1995. For the fourth quarter, net earnings were $1.4 million compared to $6.1 million a year ago. Fourth quarter earnings include costs related to employee terminations and costs to transform the company's competitive position.
GATX Terminals' initiatives continue to address ongoing cost reduction efforts and productivity enhancements. GATX Terminals is assessing market trends, customer requirements and its business processes in order to improve profitability throughout its organization. A total of $4 million after-tax of related rationalization costs were expensed in 1996.
Terminals' revenues decreased 4 percent from 1995 levels. Virtually all of this decline was in the petroleum sector, where revenues were down 11 percent from a year ago. The chemical and pipeline sectors benefitted from increased chemical business and growing demand for clean products in the Las Vegas and Orlando markets.
Year-end capacity utilization of 89 percent at Terminals' wholly owned facilities improved from last quarter's 84 percent and the 85 percent achieved last year. The increase is principally attributable to seasonal spot storage at New York harbor, New Orleans and in England.
Despite the decline in petroleum storage markets, demand for petroleum continues to increase and was reflected in the amount of product going through Terminals' facilities. Throughput for the year was 705 million barrels, up 8 percent over last year.
COMPETITIVE PRESSURES CONTINUE AT GATX LOGISTICS
GATX Logistics reported earnings of $.9 million for the full year 1996 compared to earnings of $.5 million for 1995. For the fourth quarter of 1996, GATX Logistics reported earnings of $.3 million, comparable to the fourth quarter 1995 earnings of $.4 million. GATX Logistics continues to implement its strategy of providing integrated logistics solutions to an expanding customer base and steadily reducing its role in the lower margin, public warehousing business. The improvement from 1995 is in part due to better pricing and stronger volumes with existing customers. Earnings continue to be constrained by higher empty space costs due to lower than anticipated new customer sales, the impact of lost business that was not replaced, and increased information systems costs.
SOLID YEAR AT AMERICAN STEAMSHIP
American Steamship Company, GATX's Great Lakes shipping subsidiary, earned $6.8 million for 1996 compared to earnings of $7.0 million for 1995. For the fourth quarter of 1996, American Steamship reported earnings of $2.7 million compared to earnings of $1.5 million for the year ago period, primarily as a result of improved weather.
Demand remained strong throughout 1996 due to both the favorable economy and the slow start experienced at the onset of the shipping season. Iron ore tonnage shipments, the primary commodity transported on the Great Lakes, improved over 1995 levels as raw steel production continued at a high level. Limestone aggregate shipments, another important commodity transported, also improved while coal shipments decreased slightly. American Steamship's fleet of ten self-unloading vessels transported 24.6 million tons of product in 1996 versus 25.5 million tons in 1995.
GATX Corporation provides approximately $6 billion of service-enhanced assets primarily used to help its customers transport, store or distribute their products. GATX's assets include railcars and locomotives, bulk liquid terminals and pipelines, ships, warehouses, commercial aircraft, technology equipment and other capital assets and related services worldwide. GATX also offers a variety of financial services focusing on owning or managing transportation and distribution assets.
GATX CORPORATION (In Millions, Except Per Share Data) Net Income --------------------------------- Three Months Twelve Months Ended Ended December 31 December 31 ---------------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Railcar Leasing and $17.0 $16.4 $67.7 $62.9
Terminals and Pipelines 1.4 6.1 12.6 31.0 Financial Services 6.8 3.4 45.9 32.6 Great Lakes Shipping 2.7 1.5 6.8 7.0 Logistics and 0.3 0.4 0.9 0.5
Corporate and Other (9.3) (9.1) (31.2) (33.2) ----------------------------------- Net Income $18.9 $18.7 $102.7 $100.8 =================================== Net Income Per Common $0.76 $0.75 $4.37 $4.30 Share =================================== Three Months Twelve Months Ended Ended December 31 December 31 ----------------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Gross Income $405.2 $323.0 $1,414.4 $1,246.4 Net Income 18.9 18.7 102.7 100.8 Net Income Per Share 0.76 0.75 4.37 4.30
Fully Diluted Net
Income Per Share 0.76 (a) 0.75(a) 4.19 4.13
Average Number of
Common Shares and
(in thousands) 20,576 20,491 20,483 20,359
(a) Conversion of preferred stock excluded from computation of
fully diluted earnings because of antidilutive effect.
SOURCE GATX Corporation
/CONTACT: George S. Lowman of GATX, 312-621-6599/
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CO: GATX Corporation ST: Illinois IN: TRN SU: ERN
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