GATX Corporation Annual Report 2020

GATX Corporation Annual Report 2020 Form 10-K (NYSE:GATX) Published: February 19th, 2020 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-2328 GATX Corporation (Exact name of registrant as specified in its charter) New York 36-1124040 (State or Other Jurisdiction of incorporation or Organization) (I.R.S. Employer Identification No.) 233 South Wacker Drive Chicago, IL 60606-7147 (Address of principal executive offices, including zip code) (312) 621-6200 (Registrant's telephone number, including area code) Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of Each Exchange on Which Registered Common Stock GATX New York Stock Exchange Chicago Stock Exchange 5.625% Senior Notes due 2066 GMTA New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant was approximately $2.8 billion as of June 30, 2019. There were 34.9 million common shares outstanding at January 31, 2020. DOCUMENTS INCORPORATED BY REFERENCE GATX’s definitive Proxy Statement to be filed on or about March 13, 2020 PART III GATX CORPORATION 2019 FORM 10-K INDEX Item No. Page Forward-Looking Statements 1 Part I Item 1. Business 2 Item 1A. Risk Factors 11 Item 1B. Unresolved Staff Comments 18 Item 2. Properties 19 Item 3. Legal Proceedings 20 Item 4. Mine Safety Disclosures 20 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. Selected Financial Data 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Discussion of Operating Results 24 Balance Sheet Discussion 41 Cash Flow Discussion 43 Liquidity and Capital Resources 46 Critical Accounting Policies and Estimates 49 New Accounting Pronouncements 51 Non-GAAP Financial Measures 51 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 55 Item 8. Financial Statements and Supplementary Data 56 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 106 Item 9A. Controls and Procedures 106 Item 9B. Other Information 109 Part III Item 10. Directors, Executive Officers and Corporate Governance 109 Item 11. Executive Compensation 109 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 109 Item 13. Certain Relationships and Related Transactions, and Director Independence 109 Item 14. Principal Accounting Fees and Services 109 Part IV Item 15. Exhibits, Financial Statement Schedules 110 Item 16. Form 10-K Summary 112 Signatures 113 FORWARD-LOOKING STATEMENTS Statements in this report 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 under “Risk Factors” and elsewhere in this report and in our other filings with the U.S. Securities and Exchange Commission (“SEC”), could cause actual results to differ materially from our current expectations expressed in forward-looking statements: • exposure to damages, fines, criminal and civil penalties, and reputational • financial and operational risks associated with long-term railcar purchase harm arising from a negative outcome in litigation, including claims arising commitments, including increased costs due to tariffs or trade disputes from an accident involving our railcars and other transportation assets • reduced opportunities to generate asset remarketing income • inability to maintain our transportation assets on lease at satisfactory • inability to successfully consummate and manage ongoing acquisition and rates due to oversupply of assets in the market or other changes in supply divestiture activities and demand • operational and financial risks related to our affiliate investments, including • a significant decline in customer demand for our assets or services, the Rolls-Royce & Partners Finance joint ventures, and the durability and including as a result of: reliability of aircraft engines ◦ weak macroeconomic conditions • fluctuations in foreign exchange rates ◦ weak market conditions in our customers' businesses • failure to successfully negotiate collective bargaining agreements with the ◦ declines in harvest or production volumes unions representing a substantial portion of our employees ◦ adverse changes in the price of, or demand for, commodities • asset impairment charges we may be required to recognize ◦ changes in railroad operations or efficiency • deterioration of conditions in the capital markets, reductions in our credit ◦ changes in railroad pricing and service offerings, including those ratings, or increases in our financing costs related to "precision scheduled railroading" • uncertainty relating to the LIBOR calculation process and potential phasing ◦ changes in supply chains out of LIBOR after 2021 ◦ availability of pipelines, trucks, and other alternative modes of • competitive factors in our primary markets, including competitors with a transportation significantly lower cost of capital than GATX ◦ changes in conditions affecting the aviation industry, including • risks related to our international operations and expansion into new geographic exposure and customer concentrations geographic markets, including the inability to access railcar supply and the ◦ other operational or commercial needs or decisions of our imposition of new or additional tariffs, quotas, or trade barriers customers • changes in, or failure to comply with, laws, rules, and regulations ◦ customers' desire to buy, rather than lease, our transportation • inability to obtain cost-effective insurance assets • environmental remediation costs • higher costs associated with increased assignments of our transportation • potential obsolescence of our assets assets following non-renewal of leases, customer defaults, and compliance • inadequate allowances to cover credit losses in our portfolio maintenance programs or other maintenance initiatives • operational, functional and regulatory risks associated with severe weather • events having an adverse impact on assets, customers, or regions where events, climate change and natural disasters we have a concentrated investment exposure • inability to maintain and secure

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