v3.25.1
Fair Value Disclosure
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Fair Value
The assets and liabilities that GATX records at fair value on a recurring basis consisted entirely of derivatives at March 31, 2025 and December 31, 2024.

In addition, we review long-lived assets, such as operating assets and facilities, investments in affiliates, and goodwill, for impairment whenever circumstances indicate that the carrying amount of these assets may not be recoverable or when assets may be classified as held for sale. We determine the fair value of the respective assets using Level 3 inputs, including estimates of discounted future cash flows, independent appraisals, and market comparables, as applicable.

Derivative Instruments

Fair Value Hedges

We use interest rate swaps to manage the fixed-to-floating rate mix of our debt obligations by converting a portion of our fixed rate debt to floating rate debt. For fair value hedges, we recognize changes in fair value of both the derivative and the hedged item as interest expense. We had one instrument outstanding with an aggregate notional amount of $50.0 million as of March 31, 2025 that matures in 2027 and four instruments outstanding with an aggregate notional amount of $200.0 million as of December 31, 2024 with maturities ranging from 2025 to 2027.

Cash Flow Hedges

We use Treasury rate locks and swap rate locks to hedge our exposure to interest rate risk on anticipated transactions. We also use currency swaps, forwards, and put/call options to hedge our exposure to fluctuations in the exchange rates of foreign currencies for certain loans and operating expenses denominated in non-functional currencies. We had nine instruments outstanding with a notional amount of $21.2 million as of March 31, 2025 that mature in 2025 and zero instruments outstanding as of December 31, 2024. Within the next 12 months, we expect to reclassify $1.0 million ($0.8 million after-tax) of net losses on previously terminated derivatives from accumulated other comprehensive loss to interest expense. We reclassify these amounts when interest on the related hedged transactions affect earnings.

Non-Designated Derivatives

We do not hold derivative financial instruments for purposes other than hedging, although certain of our derivatives are not designated as accounting hedges. We recognize changes in the fair value of these derivatives in other (expense) income immediately.

Certain of our derivative instruments contain credit risk provisions that could require us to make immediate payment on net liability positions in the event that we default on certain outstanding debt obligations. The aggregate fair value of our derivative instruments with credit risk related contingent features that were in a liability position was $2.6 million as of March 31, 2025 and $4.0 million as of December 31, 2024. We are not required to post any collateral on our derivative instruments and do not expect the credit risk provisions to be triggered.

In the event that a counterparty fails to meet the terms of an interest rate swap agreement or a foreign exchange contract, our exposure is limited to the fair value of the swap, if in our favor. We manage the credit risk of counterparties by transacting with institutions that we consider financially sound and by avoiding concentrations of risk with a single counterparty. We believe that the risk of non-performance by any of our counterparties is remote.
The following table shows our derivative assets and liabilities that are measured at fair value (in millions):
Significant Observable Inputs (Level 2)
Balance Sheet LocationFair Value
March 31, 2025		Fair Value
December 31, 2024
Derivative Assets
Foreign exchange contracts (1)Other assets$0.3 $— 
Foreign exchange contracts (2)Other assets0.1 — 
Total derivative assets$0.4 $— 
Derivative Liabilities
Interest rate contracts (1)
Other liabilities
$2.6 $4.0 
Foreign exchange contracts (2)
Other liabilities
11.4 8.1 
Total derivative liabilities$14.0 $12.1 
_________
(1)    Designated as hedges.
(2)    Not designated as hedges.

We value derivatives using a pricing model with inputs (such as yield curves and foreign currency rates) that are observable in the market or that can be derived principally from observable market data. As of March 31, 2025 and December 31, 2024, all derivatives were classified as Level 2 in the fair value hierarchy. There were no derivatives classified as Level 1 or Level 3.

The following table shows the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges (in millions):
Carrying Amount of the Hedged Assets/(Liabilities)Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
Line Item in the Balance Sheet in Which the Hedged Item is IncludedMarch 31
2025		December 31
2024		March 31
2025		December 31
2024
Recourse debt$(49.5)$(198.9)$(2.6)$(4.0)

The following tables show the impacts of our derivative instruments on our statements of comprehensive income (in millions):
Amount of (Gain) Loss Recognized in Other Comprehensive Income (Loss)
Three Months Ended March 31
Derivative Designation20252024
Derivatives in cash flow hedging relationships:
Foreign exchange contracts$(0.4)$(3.4)
Total$(0.4)$(3.4)

Location of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss into EarningsAmount of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss into Earnings
Three Months Ended March 31
20252024
Interest expense$0.3 $0.4 
Other (expense) income
— (3.7)
Total$0.3 $(3.3)
The following tables show the impacts of our fair value and cash flow hedge accounting relationships, as well as the impact of our non-designated derivatives, on the statements of comprehensive income (in millions):

Amount of Gain (Loss) Recognized in Interest Expense on Fair Value and Cash Flow Hedging Relationships
Three Months Ended March 31
20252024
Total interest expense$(94.9)$(77.8)
Gain (loss) on fair value hedging relationships
Interest rate contracts:
Hedged items
(1.4)0.4 
Derivatives designated as hedging instruments
1.4 (0.4)
Gain (loss) on cash flow hedging relationships
Interest rate contracts:
Amount of loss reclassified from accumulated other comprehensive loss into earnings(0.3)(0.4)

Amount of Gain (Loss) Recognized in Other Expense on Cash Flow Hedging Relationships and Non-Designated Derivative Contracts
Three Months Ended March 31
20252024
Total other (expense) income$(2.7)$0.8 
Gain on cash flow hedging relationships
Foreign exchange contracts:
Amount of gain reclassified from accumulated other comprehensive loss into earnings (1)— 3.7 
Loss on non-designated foreign exchange derivative contracts (2)(3.3)(0.9)
_________
(1)    These amounts are substantially offset by foreign currency remeasurement adjustments on related hedged instruments, also recognized in other expense.
(2)    Foreign exchange contracts.
Other Financial Instruments

Except for derivatives, as disclosed above, GATX has no other assets and liabilities measured at fair value on a recurring basis. The carrying amounts of cash and cash equivalents, restricted cash, rent and other receivables, accounts payable, and borrowings under bank credit facilities with maturities under one year approximate fair value due to the short maturity of those instruments.

We estimate the fair values of fixed and floating rate debt using discounted cash flow analyses that are based on interest rates currently offered for loans with similar terms to borrowers of similar credit quality. The inputs we use to estimate each of these values are classified in Level 2 of the fair value hierarchy because they are directly or indirectly observable inputs.

The following table shows the carrying amounts and fair values of our other financial instruments (in millions):
March 31, 2025December 31, 2024
 
 		Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Liabilities
Recourse fixed rate debt$8,028.8 $7,717.5 $7,609.5 $7,243.9 
Recourse floating rate debt624.3 634.5 605.8 617.3 
Total$8,653.1 $8,352.0 $8,215.3 $7,861.2