GATX Corporation (GMT)’s Fourth Quarter 2014 Earnings Conference Call Transcript

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Robert C. Lyons – Executive Vice President and Chief Financial Officer

We still have a freight car side of the business.

Steve Barger – KeyBanc Capital Markets


Yes freight

Robert C. Lyons – Executive Vice President and Chief Financial Officer

A very big, not 20% or probably be the reverse of that maybe 70%, 80% because the freight car rates really do not start to improve materially across the broad spectrum of freight cars until last year.

Steve Barger – KeyBanc Capital Markets
Right. And I know there will be timing associated with this, but when you look at the average freight car lease rate that you see right now versus the average market rate, how big is that differential?

Robert C. Lyons – Executive Vice President and Chief Financial Officer

I don’t want to get into too much detail on that, because you really have to start to going car type by car type by car type but it’s material, significant number.

Steve Barger – KeyBanc Capital Markets


I mean material like they are 50% below market rates or just any way to frame that?

Robert C. Lyons – Executive Vice President and Chief Financial Officer

No, I wouldn’t go all the way to 50. Again it’s a pretty difficult number to frame up just given the diversity of that fleet, but in that 20% to 25% type range or greater in certain car types.

Steve Barger – KeyBanc Capital Markets
Got it. And the press release talked about the $3.6 billion of embedded cash flow and that was up $400 million from 2013. Do you happen to know what that change was in 2013 from 2012?

Robert C. Lyons – Executive Vice President and Chief Financial Officer

I don’t have the each of the annual numbers with me, I can tell you the kind of in modern history, if you look back to 2010 coming out of the down cycle that number was 2.3 billion, and today it’s 3.6 billion. So we have added another 1.3 billion of high quality very long-term cash flow, and we have embedded that into the business and it will go up again in 2015.

Steve Barger – KeyBanc Capital Markets
I guess, if this is the right term, the duration of that cash flow? Does it mirror your lease renewal term? Is that how you think about it? Six years or

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