Picture supply: The Motley Idiot.
DATE
Tuesday, July 29, 2025, at 11 a.m. ET
CALL PARTICIPANTS
- President and Chief Govt Officer — Robert C. Lyons
- Govt Vice President and President, Rail North America — Paul F. Titterton
- Govt Vice President and Chief Monetary Officer — Thomas A. Ellman
- Vice President, Investor Relations — Shari Hellerman
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TAKEAWAYS
- Web revenue: $75.5 million, or $2.06 per diluted share, in comparison with $44.4 million, or $1.21 per share, for Q2 2024; the prior interval included a web destructive influence of $8 million, or $0.22 per share, from tax changes and different gadgets.
- Yr-to-date web revenue: $154.1 million, or $4.21 per diluted share, versus $118.7 million, or $3.25 per diluted share, for year-to-date 2025 and 2024, respectively (GAAP; 2024 features a web destructive influence of $7.4 million, or $0.20 per diluted share, from tax changes and different gadgets).
- Rail North America utilization: 99.2% at quarter finish, with an 84.2% lease renewal success fee.
- Lease value index renewal fee change: Constructive 24.2%, with a median renewal time period of 60 months.
- New railcars positioned underneath Trinity settlement: Over 6,500 railcars positioned for the 2022 Trinity provide settlement; earliest accessible scheduled supply strikes to Q1 2026.
- Secondary market revenue (North America): Generated over $34 million in remarketing revenue, totaling roughly $65 million year-to-date.
- Rail Worldwide utilization: Rail Europe utilization was 93.3%; Rail India utilization was 99.6% at quarter finish.
- Enterprise setting commentary: Lyons stated, “the enterprise setting in Europe is difficult and unsure relative to both North America or India,” resulting in some prospects delaying fleet planning selections.
- Engine leasing section combine: RRPF working revenue comprised about 85% of whole section revenue within the quarter and 70% year-to-date.
- Engine leasing demand: Lyons acknowledged, robust international air passenger quantity “continues to drive strong demand for plane spare engines” with wholesome secondary market dynamics.
- Funding quantity (engine leasing): No funding within the wholly owned portfolio within the first half, in comparison with about $71 million in the identical interval final yr; “rather less” than $200 million primarily based on Rolls-Royce allocations.
- RRPF funding exercise: Entered the yr anticipating $800 million in RRPF three way partnership funding, with outcomes monitoring “north of that for certain” for whole funding quantity on the RRPF three way partnership.
- Raised full-year steerage: Full-year earnings steerage elevated to $8.50 per share, excluding tax changes and impacts from the Wells Fargo transaction.
- Wells Fargo rail transaction replace: Lyons stated, “All the assumptions we had coming into the transaction on the announcement date are holding very agency,” with closing nonetheless focused for Q1 2026 or earlier, topic to ongoing regulatory critiques.
- Phase revenue (Rail Worldwide): Yr-to-date section revenue is monitoring on the decrease finish of the preliminary $5 million–$15 million enchancment vary for the primary half.
SUMMARY
GATX Corp. (GATX 0.63%) reported vital year-over-year earnings progress, with web revenue per share rising to $2.06 for the quarter and $4.21 year-to-date. Administration attributed the upgraded full-year earnings outlook — excluding tax changes and the Wells Fargo transaction — to the efficiency of the engine leasing section, citing excessive demand and remarketing exercise. A 24.2% lease value index renewal fee in North America and excessive utilization in each North America and India point out persistent core portfolio demand. Funding quantity within the engine leasing portfolio is projected to be barely under current years for wholly owned belongings, whereas RRPF three way partnership funding ranges are anticipated to exceed preliminary expectations. The corporate reported no destructive influence on the secondary railcar market from introduced rail business mergers and continues to focus on closure of the Wells Fargo rail transaction by the primary quarter of subsequent yr, with synergy particulars to be offered upon transaction finalization.
- Ellman stated, “nearly all of the rise in steerage is because of what we count on to have occur within the engine leasing enterprise.”
- Titterton acknowledged there was “no slowdown in any respect” within the secondary railcar market regardless of current business merger bulletins.
- Ellman famous, concerning Rail Worldwide profitability for the primary half, “most of that really pushed by trade fee,” with underlying section revenue for the primary half roughly even with the primary half of the prior yr after forex adjustment.
- Lyons reported, “little or no left for us to do when it comes to due diligence” on the Wells Fargo transaction, with pre-announcement assumptions remaining unchanged.
INDUSTRY GLOSSARY
- Lease value index (LPI): A proprietary measure that tracks the proportion change in weighted-average lease charges for railcar lease renewals, indicating tendencies in lease pricing energy.
- Remarketing revenue: Good points realized from promoting or in any other case disposing of leased rail belongings, usually when belongings are exited from the working fleet.
- RRPF: Rolls-Royce and Companions Finance, a three way partnership in engine leasing between GATX and Rolls Royce.
- Secondary market: The marketplace for beforehand owned (used) railcars or engines, the place belongings change possession exterior of direct new sale or authentic leasing preparations.
Full Convention Name Transcript
Earlier at this time, GATX Company reported 2025 second quarter web revenue of $75.5 million or $2.06 per diluted share. This compares to 2024 second quarter web revenue of $44.4 million or $1.21 per diluted share. The 2024 second quarter outcomes embody a web destructive influence of $8 million or $0.22 per diluted share from tax changes and different gadgets. Yr-to-date 2025 web revenue was $154.1 million or $4.21 per diluted share. This compares to $118.7 million or $3.25 per diluted share for a similar interval in 2024. The 2024 year-to-date outcomes embody a web destructive influence of $7.4 million or $0.20 per diluted share from tax changes and different gadgets.
These things are detailed within the supplemental data part of the earnings launch. Now I will briefly tackle every of our enterprise segments, and after that, we’ll open the decision up for questions. For GATX Rail North America, we proceed to expertise secure demand for railcars. Our fleet utilization was 99.2% at quarter finish, and our renewal success fee was robust at 84.2%. We proceed to realize robust renewal lease fee will increase whereas efficiently extending time period. The renewal fee change of GATX Company’s lease value index was constructive 24.2% for the quarter, and the common renewal time period was 60 months. Moreover, we proceed to efficiently place new railcars from our dedicated provide settlement with a various buyer base.
We’ve positioned over 6,500 railcars for the 2022 Trinity provide settlement. Our earliest accessible scheduled supply underneath this provide settlement is within the first quarter of 2026. The secondary market in North America stays strong. We generated over $34 million in remarketing revenue through the quarter, bringing the year-to-date whole to roughly $65 million. Turning to Rail Worldwide, GATX Rail Europe utilization was 93.3% at quarter finish. As famous within the launch, the enterprise setting in Europe is difficult and unsure relative to both North America or India. Given macro headwinds and slower GDP in Germany, some prospects are delaying their fleet planning selections, which is impacting fleet utilization.
Regardless of present circumstances, we keep a constructive long-term outlook on the European railcar leasing market and can proceed to search for engaging funding alternatives there. In India, freight quantity continues to profit from the nation’s ongoing infrastructure investments. As such, we proceed to see robust demand for railcars in India. GATX Rail India fleet utilization remained excessive at 99.6% at quarter finish. Inside engine leasing, our three way partnership with Rolls-Royce and our wholly owned engine portfolio produced glorious second-quarter outcomes. A robust international air passenger quantity continues to drive strong demand for plane spare engines. We’re seeing very robust demand throughout engine sorts from international air carriers, and the secondary marketplace for engine gross sales is wholesome.
Concerning the pending Wells Fargo rail transaction introduced on the finish of Might, we’re excited concerning the alternatives it presents. However because of the customary regulatory critiques, all of that are underway, we’re restricted in what we are able to say past what we have now already disclosed. Lastly, reflecting our year-to-date efficiency and outlook for the stability of the yr, we’re rising our 2025 full-year earnings steerage to a variety of $8.50. This steerage excludes the influence of tax changes and different gadgets and excludes any impacts from the Wells Fargo transaction. And people are our ready remarks. I will hand it again to the operator so we are able to open it up for Q&A.
Operator: Your first query comes from the road of Andrzej Tomczyk with Goldman Sachs. Please go forward.
Andrzej Tomczyk: Yeah. Hello. Good morning. Thanks for taking my query. The primary one, simply given this morning’s deal announcement for a possible transcontinental merger, I used to be curious if you happen to may share any preliminary ideas on how this might influence the general leasing enterprise?
Bob Lyons: Andrzej, that is Bob Lyons. I imply, given the truth that the announcement was simply made this morning, it is troublesome to evaluate, notably given the timing uncertainty and circumstances which may be placed on the events to the merger. So proper now, very troublesome to evaluate. You already know, long term, larger effectivity on the rails, extra product transferring by rail, extra carload visitors, all of these are long-term good issues for railcar lessors.
Andrzej Tomczyk: Understood. Respect the ideas. Simply switching gears a little bit bit. Your lease renewal fee change was 24% within the second quarter, which was much like final quarter. Are you seeing any indications that we may proceed to carry the excessive lease value renewal? And I suppose in what kind of setting may we see that reaccelerate?
Paul Titterton: So that is Paul Titterton talking, and thanks for the query. Yeah. I imply, broadly talking, what I might say is the marketplace for present railcars stays fairly much like the way it’s been the previous couple of quarters, which is to say that pricing stays comparatively robust. And, in fact, we have got expirations coming off of a weaker pricing setting. And in order that has continued to supply a fairly robust LPI consequence. You already know, at this level, I might say within the absence of any stimulus, constructive or destructive, we proceed to see form of extra of the identical from a pricing standpoint.
So, you recognize, both up or down, there must be some exterior catalyst to actually change that setting. And at this level, do not actually see that catalyst. So I might say the most effective predictor when it comes to absolute lease charges might be extra of the identical proper now.
Bob Lyons: And I might simply add, Andrzej, too, that, you recognize, many the entire parts of the supply-led restoration that we have talked about now for a lot of quarters in a row very a lot stay intact.
Andrzej Tomczyk: Acquired it. So we are able to simply assume type of usually, sequentially rising or flattish general absolute lease charges. Is that the correct approach to consider it?
Paul Titterton: Yeah. I might say flattish might be fairly cheap. That is what we have been seeing for fairly a while now.
Andrzej Tomczyk: Understood. After which lastly for me, we noticed the EU had set a provisional deadline of August twentieth to rule on the merger or the JV, sorry, with Wells Fargo and Brookfield. I am simply curious. Is there something to learn into there when it comes to approval timeline? Something monitoring sooner than anticipated, or are we nonetheless on the identical type of runway?
Bob Lyons: Effectively, nothing uncommon about that exact submitting or the response from the EU Fee. So every part is monitoring as deliberate when it comes to submitting and timeline. So actually no change in our Q1 2026 or earlier estimate from prior.
Andrzej Tomczyk: Acquired it. Thanks for the questions, and congrats on the great quarter.
Operator: Thanks. Your subsequent query comes from the road of Brendan McCarthy with Sidoti and Firm. Please go forward.
Brendan McCarthy: Nice. Good morning, everybody, and thanks for taking my questions right here. I needed to have a look at the engine leasing enterprise to start out off. It seems like outcomes from RRPF stepped down a little bit bit from final quarter. I am simply curious as to what the revenue combine has been there by means of the primary six months of the yr, whether or not or not it’s working revenue or remarketing beneficial properties. And possibly discuss your expectations for the rest of the yr.
Tom Ellman: Yeah. Thanks for the query. That is Tom. Simply to provide the numbers for the second quarter, working revenue was about 85% of the whole, and remarketing was about 15%. So year-to-date, we’re round 70/30, working revenue to remarketing exercise. As we talked about within the press launch, the important thing cause that we’re taking over steerage is the efficiency within the engine leasing enterprise. So we count on that to be robust by means of the remainder of the yr. And one of many issues that I believe you may see is over time, the remarketing aspect of that ought to most likely get to be a little bit bit greater a complete proportion.
Brendan McCarthy: That is smart. Thanks for that perception, Tom. And as you look into the again half of the yr, have you ever observed any shifts in demand or adjustments within the pattern because it pertains to remarketing revenue within the engine leasing enterprise?
Tom Ellman: Yeah. There actually is not a complete lot of trending so far as that goes. It is at all times very lumpy. And what we are able to say is that it stays very robust. There’s lots of demand for these engines within the secondary market. So lots of remarketing exercise accessible. What actually is the query is the timing. When does it happen?
Bob Lyons: And, Brendan, I would just add to that too. It’s kind of amplified at RRPF inside our personal engine leasing enterprise simply given the sheer magnitude of every asset, you recognize, the web e-book worth. Whereas in rail, you recognize, we’re promoting tons of of automobiles for good beneficial properties, within the engine leasing enterprise, it is a couple of engines offered right here and there for rather more sizable beneficial properties. So the magnitude of the shift from quarter to quarter is usually a bit extra amplified.
Brendan McCarthy: Acquired it. Acquired it. That is smart. And also you take a look at funding quantity there, until I am studying into this incorrectly, it seems like there hasn’t been any funding quantity within the wholly owned portfolio by means of the primary six months of the yr, down from about $71 million similar interval final yr. However I believe at one level you talked about you goal roughly $200 million per yr. And I do know that lots of that’s dictated by what Rolls Royce decides. Simply curious as to what funding quantity would possibly appear like for the remainder of this yr within the GEL portfolio.
Tom Ellman: Yeah. So I will begin and I will let Bob add to it. Form of repeating our final reply, that aspect of the enterprise can also be fairly lumpy for a similar cause. As a result of, you recognize, every engine is such a fabric funding in of itself. We definitely count on to see some funding quantity within the second half of the yr. And coming into the yr, you recognize, we had stated we thought it could be form of in {that a} vary much like the final couple of years. However, I will let Bob add to that.
Bob Lyons: Positive. And form of take it in two components. So, you recognize, the $200 million quantity you talked about, it is definitely nonetheless inside cause. It might be rather less than that simply primarily based on, as you stated, the place Rolls Royce has its wants and the place it allocates its engine gross sales. However, you recognize, we count on a fairly wholesome funding stage exercise within the second half of the yr. I would additionally add that on the three way partnership stage at RRPF, we got here into the yr, I believe, anticipating someplace within the vary of $800 million whole funding quantity for the yr. It will likely be north of that for certain. So nonetheless seeing excellent funding exercise general within the engine portfolio.
The combo could change a little bit bit whether or not it is straight owned or at RRPF. We take part both approach. In order that’s it is all good on that entrance.
Brendan McCarthy: That is nice. Thanks, Bob. Thanks, Tom. I recognize the perception. That is all for me, and congrats once more on a superb quarter.
Operator: Your subsequent query comes from the road of Justin Bergner with Gabelli Funds. Please go forward.
Justin Bergner: Morning, Tom. Good morning, Shari.
Shari Hellerman: Morning. Morning.
Justin Bergner: Good quarter. Thanks for taking my questions. First query simply to confirm, is your complete $0.20 steerage attributable to engine leasing? And any cause why you may not have thought-about narrowing the steerage vary at this level within the yr with it being midway over? I notice you do not at all times try this, however simply questioning.
Tom Ellman: Yeah, Justin. Actually, nearly all of the rise in steerage is because of what we count on to have occur within the engine leasing enterprise. And actually form of going again to a few of Brendan’s questions, the rationale for that vary is due to the dimensions of every of these remarketing occasions, it is troublesome to actually pinpoint the timing. And the identical is true fairly actually in Rail North America. The place one of many large items of uncertainty is the timing of these varied issues that we’ll get on the remarketing of the rail automobiles. In order that’s actually why the vary is price that.
Justin Bergner: Okay. Gotcha. In the previous couple of weeks, have you ever seen any change or form of stalling within the secondary market forward of the hypothesis regarding at this time’s UMP Norfolk Southern announcement? And do you count on this era of regulatory evaluate and doubtlessly uncertainty to vary the secondary market dynamic?
Paul Titterton: Yeah. Justin, that is Paul, and I will reply that query. And the reply isn’t any. Been no slowdown in any respect. And we actually do not assume whereas clearly the introduced merger may be very vital for the rail business general, when it comes to the railcar secondary market, we do not see any influence in any respect. I imply, actually, what’s driving the railcar secondary market is there’s nonetheless lots of capital that wishes to spend money on railcars. And since new automotive quantity is down and is anticipated to remain down for a while, that capital actually needs to movement into the secondary market. So fairly actually, the secondary market is strong, and we count on it to stay strong.
Justin Bergner: Okay. So despite the fact that among the efficiencies maybe focused in at this time’s announcement would possibly imply a barely smaller want for railcars if the road can transfer extra productively. You simply assume that is trumped by the demand for capital flowing into this area.
Bob Lyons: Yeah. And traditionally, and searching ahead, Justin, it is Bob. Railcars by means of cycles, by means of time, over many years, have confirmed to be large shops of worth. And capital flows into the market accordingly, and it is at all times been an asset class that folks have been concerned about investing in and persevering with to develop their portfolios. We do not see any change in that. The opposite factor I might point out too is, like, I do not know the acknowledged or unspoken interval for regulatory approval for that transaction introduced this morning, however it’s more likely to be protracted. So and you then add integration on prime of that, you recognize, it is a fairly prolonged interval.
So we’re not anticipating any near-term impacts on calls for in our portfolio or the secondary market.
Justin Bergner: Okay. Thanks. After which lastly, robust worldwide efficiency from a profitability perspective. Any approach you may assist me decompose that a little bit bit additional past, I suppose, what was referred to as out within the press launch? I observed the opposite income form of ticked up, however simply, you recognize, robust section revenue there sequentially and yr on yr.
Tom Ellman: Yeah. You gotta look a little bit deeper into a few of these rail worldwide numbers. So once we got here into the yr, Bob indicated that the rail worldwide enterprise can be up between about $5 and $15 million from a section revenue standpoint. And for the primary half of the yr, we’re form of monitoring with that. We’re on the decrease finish of the vary. However a few of that’s most of that really pushed by trade fee. If you happen to right for that, the section revenue is roughly equal to what we had for the primary six months of final yr. Which is a little bit bit under expectations.
And the rationale for that’s among the challenges that we have seen within the intermodal market in Europe have expanded a little bit bit to some different automotive sorts. You most likely noticed the utilization drop a little bit bit within the rail worldwide section. We’re nonetheless monitoring, like I stated, much like final yr. However that’ll be a little bit bit down absent, FX. From what we anticipated coming into the yr.
Justin Bergner: Nice. Thanks for taking all my questions.
Operator: Thanks. Your subsequent query comes from the road of Bascome Majors with Susquehanna. Please go forward.
Bascome Majors: Good morning. It has been two months because you introduced the Wells deal. I do not know what you have been in a position to accomplish in due diligence that possibly wasn’t allowed through the are you able to give us an replace on what you have been in a position to dig into incrementally? And if the synergy expectations for what this may imply on be it upkeep or different gadgets are coming into higher focus. Thanks.
Bob Lyons: Positive, Bascome. After which I will simply return to a remark I consider I made on the convention name a few months in the past, on the finish of Might once we introduced the transaction. That given the size of time, we have been structuring the transaction and in dialogue with Wells Fargo and going by means of the due diligence. By the point we introduced the transaction on the finish of Might, there was little or no left for us to do when it comes to due diligence. The heavy lifting had been performed. And Wells Fargo had been very forthcoming in constructing out an exhaustive information room that had just about every part, you recognize, by and enormous we would wish to finish due diligence.
So we did not anticipate discovering any surprises post-announcement, and we’ve not. I will not remark rather more past that on condition that we’re nonetheless not the rightful proprietor of the portfolio. We sit up for closing on it. All the assumptions we had coming into the transaction on the announcement date are holding very agency, and we really feel actually very, very constructive concerning the transaction.
Bascome Majors: What assumption did you make on synergies once you introduced the transaction, and when would possibly you replace us on what that would appear like long term?
Bob Lyons: Yeah. We did not actually get into a lot element on the time of the announcement. We stated it could be accretive. However we hadn’t offered a lot element on that and will not till we get to closing of the transaction, which we count on Q1 2026 or sooner. Once we get to that time, and we’re on the closing, we may be rather more forthcoming with these synergies and the outlook for the portfolio and for the combination with our enterprise.
Bascome Majors: Thanks.
Operator: Thanks. There aren’t any additional questions at the moment. I would now like to show the decision again over to Shari Hellerman for closing remarks. Please go forward.
Shari Hellerman: I would prefer to thank everybody for his or her participation on the decision this morning. Please contact me with any follow-up questions. Have an awesome day. Thanks.
Operator: Girls and gents, this concludes at this time’s name. Thanks all for becoming a member of, and you could now disconnect.
