Loading...
Docoh

GATX (GATX)

Participants
Jennifer McManus IR
Brian Kenny President & CEO
Bob Lyons EVP & CFO
Allison Poliniak Wells Fargo
Prashant Rao Citi
Matt Elkott Cowen
Justin Long Stephens
Matt Brooklier Buckingham Research
Justin Bergner Gabelli & Company
Barry Haimes Sage Asset Management
Willard Milby Seaport Global Securities
Steve O'Hara Sidoti & Company
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Good day and welcome to the GATX Fourth Quarter Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jennifer McManus. Please go ahead.

Jennifer McManus

Good morning, everyone, and thank you for joining GATX's fourth quarter and 2017 year end earnings conference call. by Vice President President today Bob CEO; joined Executive Lyons, and am Brian and Kenny, and I CFO. consist Please information note forward-looking will you'll the statements. of hear during that our discussion some of today differ could trends or results materially statements or from forecast. Actual

commentary our the forward-looking refer Form of to XXXX. or diluted of XXXX net $X.XX million subsequent fourth and net I These million per per and The net items an diluted or estimated net enactment statements GATX Tax on tax XXXX $X.XX reported diluted $XX.XX provide of results of on to which and or no $XXX.X $X.XX included of per to For Cuts law assumes share. of Act into tax into some This signed Today discussed for XXXX. will results per update or to $X.XX XX, will for include $X.XX full to benefit factors share. brief a tax from share. other quarter fourth December XXXX fourth benefit the circumstances. the to reflect information, or full per $XXX or million what share. in income XXXX. we net compares diluted After quarter includes net diluted XXXX non-cash of net risk reported provide per overview $XX.X that adjustments year negative year and more income and income the impact Jobs million from XXXX income items or questions. diluted GATX diluted other share full one-time year This from adjustments XXXX. $X.XX compares share $XXX.X GATX Brian obligation then going please $XXX.X for GATX's XX-K revise of resulting of a open quarter any share events results million expect will per To

year of are full volume also other that solid impact a positive release. number of XXXX which which $XXX.X in was For another In investment detailed is from press and adjustments all front. results year on tax our the million included items XXXX,

In GATX over past X.X million. million $XXX years to our million. to total $XXX over brings This for XXXX activity shares approximately addition repurchase Brian. repurchased turn two overview, now quick With over call the in the approximately I'll that

Brian Kenny

Jennifer. Thanks Okay.

its oversupply. As North XXXX, business I'll our said In year minutes But give the of guidance. outlook car some North our condition. she take above American we few color the utilization next again, entered American year, outstanding of last to remained fourth and year the is entering the rail fleet XX%. you market on end At in

the placed have majority committed car of new deliveries. our We XXXX

very market. lease composition withstand weak well continued us -- and the fully our positions remaining Our term average to

Now expectations much press as all outperformed in said across in I release, pretty our the we our XXXX. original segments financial business

So let XXXX perspective. in me earnings put

of earned peak the that our year earnings above of cycle. in per third railcar still are market the these well railcar share XXXX of of tax our Jennifer in $X.XX we said in XXXX large although, end the operating with per were this impact new that's share we guidance, the as morning, the of earned of the last we earnings the $X.XX As reported downturn positive $X.XX in top upper leasing law, and we at ignoring

did our the investments, during that good market me a terms. long great making rates in high the commercial So lease team strong shows job locking for

are especially given in cycle. where in renewal financial than railcars scheduled the Now America cost of strong along business year some XX,XXX North with in XXXX We're projecting with continued we control. for less another performance

over and I'll in then segment, outlook start North business the with So rail XXXX let each America. me go by

good to to XXXX. news revenue lease ago during most expect we our increased a America, is types that But, outlook North for lease the rail, it's car absolute again compared rates XXXX. in So decline year in

as well average coming enough rate we're see is fact lease rates offset XXXX up market that today's as anticipating increasing year. to However, cars the expiring will rates the for for not still the to this moving renewal also be high through

into definitely a it's than pressure it was better rate environment So lease expect rate in But, XXXX. lease we still coming XXXX. renewal

utilization XX% to hold anticipated. some more this anticipate that We're from we few said, better I drop performance we was last As year the were We year optimistic point year. throughout utilization. able utilization still downward and on over in a -- originally pressure

slight in drop XXXX. So a we project

assumptions cars to are revenue lower lower XXXX. the fact that of much in in of less in negative for XXXX renewal the I by impact strong coming markets than mentioned than the exposure that So year the number scheduled cars average XXXX is muted the the somewhat renewing the XX,XXX were of last than that's

market the once work So in off strong commercial in good again extending is terms paying really our done the team those now. lease by

renewal with expect in side, strong revenue investment level XXXX, the a to car the cars placed of railcar $XXX the I new so are this year. And will of additions Again, contribute more. customers, positively or be already XXXX you on million and investment to slightly under these it On net majority we X% effect obviously the utilization, little revenue delivering from a fleet last American North decreasing in that rates results expect if revenue placement on existing of in new lower year. rail, combine declining cars fleet

expense. North segment obviously net rail driver Another at profit is America of maintenance

of higher car and our the with XXXX which start have in looking of that we continue and have strategy especially maintenance providers cost moving technically success from cars XXXX. qualifications due party maintenance maintenance. at due what into away cost our number our main to cars is about We But, tank driver tank certain third one drivers. is XXXX network of will was own The in the freight I with maintenance than particularly car

possible. work maintain to of even network, compliance tried discussed However, in we flow extent efficiency for in an as that purposes we the to the past our year-to-year

cars in other just for try due years. that are try reasons. later We qualifications XXXX. a cars Thus that in few we we complete network to and due forward to more anticipate hundred work actually completing the qualification So XXXX but tank in on not are pull are

expect to portion that also the that assignment boxcar income. we from which factor maintenance last some expense rail's I'll is good idle XXXX discuss net work level. is expected back cost to America fleet as The of effect X% North the put The higher for remarketing is approximately of We XXXX news. X% in to increase overall

the every to we we is So continue optimize by robust through year secondary sale of railcars that market where surprised to in as the we how we cycle. do continue are given market fleet be our but

We up. have not seen it let

economic will for realistic us our remarketing So, do. is income to really the projection up XXXX, it's in again thing be

in North from remarketing expense profit, effect of result American between income the will increased last down and summarizing investment, we American to rail, low XXXX rail ownership higher revenue maintenance new year. segment higher So expect XX% costs and net from XX% slightly North car in be

be suffered We XXXX is you Let's their getting petroleum They service. XXXX And lower we been Rail now. result That of fleet the or will offset on a last anticipate their GATX modernization it's that rates scrapping the fleet high Europe They in utilization XX% Rail the over plan their the continue that and either and talk to efficient be level fleet their and if to years. should tough the LPG customers with them they the growth first level investing net will market somewhat it in rail cars remember focus international about and currently more to by slightly several in fleet on few required the that GATX maintain we growth. fleet of have still capacity markets. in that existing be of even lease will although and that Europe. new continues see maintenance and X% in redeploying by high maintaining will XX% years, euros XXXX higher tank small set market experienced revisions ownership that on cars its fleet other cost in continue last due to and finding we over XXXX. higher than are revenue from expect between That increase, in expense the older also car serving difficult higher margins cost and modern to new in rail however, they the seen offset in we wheel and side, add Europe euros. that's are in cars utilization GATX XXXX to cars Rail are net better higher scrapping smaller investment will increase plan slightly seems revenue in

due to local So, Europe dollar flat segment much the those up dollar. in weaker on Rail basis U.S. we as expect of effect to fairly be profit a in factors currency but net XXXX the GATX

it's Rail Now, XXXX, in GATX profitability increased segment of adding India. International profit to Rail increase this in in

fleet more are We currently importantly diversification. and increased experiencing fleet growth

as Now, I'm are but Indian really profit overall million our growth we applying in a taking one market. well growing number attractive strategy to they and will prospects huge they fast GATX's And a the the profitability, do positioned rail of and perfectly economy of this in leasor contributor it do again rail fits But, business. America in generate dollars what It's North about segment not excited within our well few outlook their year. markets. and they a rail more

be European International and offset growth should in and by Indian overall X% having maintenance expectations in profit ownership segment growth our Rail, So, help expense somewhat the XXXX. increased summarizing over Europe in revenue will for and fleet stronger euro and International Rail

We than the other later they fewer but actually the delivering labor through anticipated that would realize more spot was in press were release, to and cetera. from efficiently some able more up XXXX. vessels tonnages As it due in as cost iron year. contract as as They well vessels Steamship prior to But, limestone $X million expectations we the the expected they developed the and outperformed ended over using efficiencies we carry et ore tonnage and originally efficiencies we carry return realizing in tons the plan. leased that efficiencies in our year indicated similar American to year, to

to XXXX, continued efficiencies. anticipate So, expect we Steamship gain year; tonnage of and profit looking however, increases fleet due carry we produce do last will rate freight less than will higher slightly segment to they

performance So, expect that in strong will they XXXX. our increase

profit income But, segment Royce expect Rolls by management, managed offset this portfolio. lower it affiliates excellent investment see year. in again this Now we will lower that their residual financial performance and our portfolio anticipate will in in We continue be to year.

in You might managed last gain residual the year remember for instance legacy our portfolio. from the nuclear large facility

repeat So that's not itself. going to

that management portfolio be segment that expect So, XXXX profit some the and approximately from we XX% Rolls in down we earnings XXXX. effect performance sold were in assets despite have to lower will marine also Royce's net

XXXX year. in higher items X% SG&A the in reduction modest did SG&A range some so. was that don't a expect come of originally in than in anticipate but we we reoccurring projected side, this corporate we due the unusual On or XXXX in that to

So generally operations which higher to the at foreign tax to due would change, prior be rate our to expected that the U.S. than operations. recent rate XXXXs fact XXXX lower than effective law our have we a are taxed

We in are expected generate percentage pretax to XXXX. of income lower a

we Now passed, expect XX%. law that's true, still to approximate rate XXXX but with that tax new tax the now

net and consolidating So lower to range the XXXX repurchase of the total $X.XX combined results for guidance that share in than individual with income $X.XX when anticipated guidance XXXX, this but results that's all of somewhat Jennifer segment referenced. annual XXXX

economic a model on that not You know assumptions for lot build really of are variety of color variables? guidance for because into buildup. performance, input more railroad financial little of as how our What get EPS questions backdrop, using kind far economic railcar about we assumptions the performance. loadings, a we're it's our the what direct a as for So we

lease commercial we for contract in are based as renewal cars coming our lease well review are will cars be What as that think we for of the those a this As I expectations what cars and said build operational XXXX delivering. year. the up by for new on past, contract outcome

expectations in not what from supply year-over-year Also press hearing does our to as significant I the positive experiencing number of expectations well for in So and in few such I North will business as is mention market absolute North for rates, last release, on say and years. the market. as loadings over What economic a railcar metrics a been their lease America guidance over is has did demand. the move America in relevant all indicators are obviously, positive our increase railcar what customers in the based we're their a reflect those situation growth railcar our business what XXXX

catalyst, it one appear that currently demand slow is absent market is we the again, does year. the of the this leasing So unforeseen But continued recovery trend off railcar think moving bottom.

increase fleet we with they as from absolute today. not assumption, in So in rates our that significant where XXXX lease any have assumed are across the

the does So I characteristics of our is fairly financial lease I take grows in coming show the revenue. it well way may if anticipate. our say said term economy business obviously, some for Well, as of do one revenue material minor than guidance a statements. say demand time it's we up known our of is structure Much market into trends the of There performance It for year. our earnings is appear in a the catalyst to minor? some unique why much so unforeseen, upside and stronger our

we've XXXX majority example, deliveries at So for market rate. for in new XXXX, the XXXX placed our instance of coming

I on on what As happen our solid renewals I the pretty a with said, view have lease existing fleet. think, may XXXX we

if underestimated to there So XXXX more for leasing and be recovery is much of have impactful in pace we the minor the beyond. outlook it's but in going in market, XXXX, our upside some

The very don't announce way, Board a advantage example have. our will we almost shareholders their the consecutive long-term we're that. take our to our dividend. see. of streak. it our last year to of understand continue record I at decision So that dividend any can of will companies growth competitors XXXX last GATX importance next of to mark outperform I think That's all our either meets up that great year So of. before as well questions I track paying mention time. long and say week, opportunities they that dividend of The that's as our will open I thing a our is XXXth the match and is record commitment that many think proud I'll focus success Through a century we

to Let's up it open questions.

Operator

Instructions] question We'll take go from Fargo. ahead. Allison our Please [Operator first with Poliniak Wells

Allison Poliniak

Hey, guys good morning.

market being also realistic. Could from is the reform guess interest still you very are there mentioned the market obviously secondary this And maybe I more values then, to entrants active. with You absolute today? increased tax becoming new into talk

Bob Lyons

Well, different haven't on I that group. in it would tax a and for past anticipate the composition I robust; fleet GATX of good seen opportunity a At any the bidding the continue the material to to change optimize asset bidders assets for number sense piece, parties that it. of have lot that economics XXXX. that would to see and the terms types. very of to valuations Brian say do don't good mentioned, interest we across continue be our in reform of the been the add in I make as Board, good we'll us

Allison Poliniak

[indiscernible] accelerated you inflection you number we an rates, numbers see is more and too get talk sense That's of What a have great. that outside of storage are obviously improved before high. bit then, lease And do of obviously, traffic coal. do of any There's that? the think very retirements still realistically

Brian Kenny

it's two or took generally and of speak But, and XX% to But, it like reached think type by that off like saw XX But car going small as car moved a hoppers you said so a type I there's fleet off. idle. cube it's want depends; if not to the lot of cars still the in analysis, you equilibrium lease took very within year You're called covered industry last hasn't idle quarter really answer. in the market as in the quickly that industry. rates you days about, a

XX%. been I ever think is best that XX% the to that's

mean a cars lot a us I hasn't of tremendously that them, really not stop net XXX, to year the that really but traction Think it just continued XXX, XXX. it's all the has moving those to of in January scrap lease of XXXX. I by those order either did leave years. that's get in the for around right not in increase the It's rates. for enough -- last the six in here. growth need it's ended It's moving cars been market some direction. to fleet lot start think to which through rates So or a industry year not up started But, at the helped

scrap that couple the of if level So increase big or would hasn't at current last we'll rates continue the help and the other maybe help certainly way, that over a move but years. see been

Allison Poliniak

guys. Thanks Great.

Operator

Rao Prashant our Citi. take we'll from Please question go next ahead. And with

Prashant Rao

are that talked get demand expectations Good just front. I your versus said oversupply. morning. the later quarter demand has was level up how and book side words that of I kind where on to about yet. catalyst slowly seem compared bit you quarter other signal view on inflecting, are Thanks the you think and for if about order you delivery little we like kind more moving, like an you levels It little ordering a on pull we the how this Brian, bit question. don't in have for you to delivery update to warning a is for or starting taking sounds be the detail seeing wanted changed there's the to XXXX if last demand that could but one the it think manufacturing a of

Brian Kenny

be in The latest forecast think I XXXXX absolutely. XXXX. I I was saw for to like lower deliveries

know. that level some there's can some absent well. cars the have flavor that catalyst. orders this been don't market think also as I demand support of that are new It seem really the of that international I to announced doesn't

go the has cycles been to to number on like We'd really rate. get last but down reiterate in So traction I get fine to lease that has Utilization would really past what said we traction. quarter. like it

Prashant Rao

up Is you're last you what color has particular the income year prior then, follow -- there cars of to Is there? on expecting the to any able what to compared shift what the read years car mix or for anything anything package year on just Thanks. or be might a a markets, a anything question. end types remarketing for look there to versus notable Okay. years. And last or year at this that there portend When this prior of types year maybe in remarket? maybe and

Bob Lyons

a throughout different we're are in so initiative, initiatives one. all, Sure. market for that sales it's course in mix of I for sit and I'll XXXX say one. assets can this from have constantly And, -- not year market of we we in buyers today take the with notable May just year One at we progresses asset gone where year testing to valuations. there what as of first the looking year. are number difference the appetites the no what and last there's the different at to

the across cut broad pretty a fleet. still it's So

Brian Kenny

what And market. trying by add overall strength we're are mostly weak that schedule expiration on you've to on optimize. focused, But is GATX has being focused been flow. lease the to I cash people that's our what I'll railcars the very financial market the that increasingly remarket coming seen our our players when the railcars think into is customer and equipment. despite It we exacerbated that buy the seems

that's for you've more on residual at these focused remarketing that the GATX. we're average number that's So and seen days. so been than good equipment why and And the the much market the buyer high

Prashant Rao

it I'll guys. turn Okay. Thanks very over. much

Operator

question next Elkott with our Matt take we'll Cowen. from And

Matt Elkott

through to renewal the you Good question. XXXX. higher you railcars mentioned my said XXXXX how may go for floor that a morning. Ron, than you And question be less as trending there's scheduled you in for wanted Thank more ask I for guys cycles. you about taking earnings

that year. smaller think you that that historically that fleet your you you at think number, want that throughout of about guys make Is the cyclicality for you look renewal a back a out. number every fleet so If at. percentage that and is is smoothed to of that active a a meaningful the come cycles active Is in percentage that as if the number

Brian Kenny

what in you XXXX XXXX. in each rate, we to XX,XXX see were on the why able pushed term extend do pedal of cars, the upturn. XX,XXX, Yes, us We dramatically years. to during but absolutely. And renewing also those had both We That's we that's relatively one and whole even said during recognizing business. pattern low a And more see that why cyclical number extent you to the you very the so term out on the you that's as trying idea That's to downturn. that can. of just smooth we're

gets far it upturn. obviously at the last us lower during this of put extended had that we've longer because term on least the renewals we the but to, Now so

the objective, it that's right depends turnaround completely things you're successful. on if So about when you're

Bob Lyons

with really Also thing and it provide through other we were regards at a data to The how through on the that in also cars the average XXXX mind renewal point point to term keep much coming can is, new term. as long up I'd see in were that into focused was very add you during we XXXX. fleet time,

very of period those the came put the were term long during cars So fleet on majority new that into lease. that

Matt Elkott

given sharp Bob you in enough. beginning terms, really. in Fair average XXXX those And drop the mentioned lease

through as to is chance to lease you of are the six going dropped first happen that that to have average in you or realistic years now? it chance years swinging most could XXXX, we lease North terms Is before or So X from And where XXXX. American or What back segment? it revenue realistic with about growth had then and the five the think. it is ranging down it long I XXXX we macro profit the is continue in if XXXX

Brian Kenny

as it climbed far leases when say in hill gets the getting big it it short-term the really in to before. that's coming average again market we very I back is smaller question. and it's weak as to XXXX. But in expiring is not that climbing climbed XXXX, answer about keep a It's renew equilibrium in as it that rate the But climbs happens. market a as past in we as will climb rate, the to tough down was average XXXX, so expiring that the -- said when is question that hill that

You for in entire when fleet. XXXX, does the cubes saw small for that happen

of in it's hardest of not have I actual that on part be the said of reliable been is [indiscernible] calculation to fleets. backlog. number. I the no near math, We but the know the user an detail it's backlog. in nature sizable We really it the I the how backlog don't really still As much captive really if not by the don't it's needed I how end of may the do it not real hard How calculation. idea can the has can't part deferred term. There's The a it of is. although past, chunk demand, it's answer. technically don't describe much How the is know canceled. scrapping, of much

visibility So don't it's how hard have into without market fast great backlog will turn. that to the and we you this tell

Matt Elkott

you I if quick And it. in sorry But, in guys, enough. you did the rates do sequential the one, quarter? just one last missed mention lease fourth Fair improvement

Brian Kenny

general, rate a some In on fourth tank I fleet I'd in for rates a low say base. was said car are certain rest The pressure had that certain XX% -- quarter there the the and up lease Those more. in lease a increased flat like flammables substantially the year. pressure, side of high flammable or basis very pretty nice cars increase on although the cars off high for

really think if on to because stuff basis. In tank you a dangerous is pressure. on more. for would average at throughout in tank for which the the was at per generally look probably average it about to high have XX% fact, But -- say flat look car say. I you Average always flammables But, quarter increase increase XX%, pretty freight or I except year and XX%, type

Matt Elkott

X% it that the in it quarter? based be saw quarter, number X% increase, what third or flat you the broad slightly So the or? is Is fourth in would

Brian Kenny

I'd say it's slightly positive.

Matt Elkott

much. you Thank great. very Okay,

Operator

our we'll Stephens. take Justin ahead. question next Long go And with Please from

Justin Long

Thanks and good morning.

allocation? on to if forward change could drive aggressive ask it could your to capital your could given how wanted So the I acquisitions just tax and/or just strategy reform to going curious impact have leverage? And approach start, I'm about a to buybacks this more

Bob Lyons

mind our keep the have tax really a from Well, is Tax to our that not overall changed position. The has to really biggest we position. where tax outlook Reform in Act component with been regards materially of historically

accelerated net tax recognized over the the generate go tax already Given operating fact and basis. that that a depreciation tend payer. years. losses cash to change that not forward of on railcars None on available We significant there's a we've will

some -- not So close a significant change keeping and market we're in our investors not this in we how eye level GATX's perspective investment. or may a sea on impact in class way the from think asset other the we're a of the about

Justin Long

we about the investment. for compares Okay. number I still XX%, you lease some of that between being update in levels non-tank number attractive and wanted Can That's on talked you are to you the made And XX% helpful. consider And of where secondly, follow-up how commentary on would last call. today? Brian, stand just that terms rates you what and think below tank I

Brian Kenny

much Yes. rates little pretty in got a place. in so I'd quarter, the it's better bit fourth say same -- it's

Justin Long

rates on just the back an going over basis? ever most a absolute you've year improve lease what's of the historically seen And course

Bob Lyons

to I top can't Particularly dramatically. answer and and two improve that one of say began pretty this increased in footing last XXXX their rates when recoveries. found the question head. they XXXX, off that my will the I

in started But Now sharply they that turned right move the America. energy boom the direction North was and that they once in moved big and pretty was for catalyst to in here -- there which a quickly.

Brian Kenny

in market equilibrium. I gets back would once fast agree that. very with moved that Things

Justin Long

recent Could to We've rally potential then, a prices. ask lastly, could And I wanted that seen you crude impact Okay. the your that talk to oil about about front. on have meaningful much it matters business. have you oversupply of if the improvement as relates in a cars think the impact tank absorbing curious this market? I'm just this to and how could

Brian Kenny

good Sure. a It's question.

releases In are lease part. fact The We but out performance versus coal expiring matter did to that I would new for is in a it say our so rates instance, better the didn't leases XXXX utilization large the in XX XX was of flammable to in you line. XXXX. in and of believe and said, cars was the But today. source June crude bottom low. utilization in And service price the as something strength other I

So impact. that obviously had an had

of strength for driven more You're in where reasons. and now. said we demand cars demand and that's there high one seeing Mexico lease is these of quarter rail by I in and seeing source again pressure the XXs that just by are and some as crude movements But, more once was was on fourth rate flammable Canada different especially liquid

So, car yes, it prompt up it excess hopefully the tank. soak and builds not will tank in the and car market matters new further capacity and

So would it They But at demand been dropping. as you but Mexican that's it. increasingly product what refined the they're Mexico pipeline it, don't to for as working because So growing if be our look their They've very meet business importing -- that far production have to capacity do to on long-term? helpful. instance. means is

probably the coming So be helpful function that again really as a up far little is eventually are pipeline. to there's in will by it market People working bit And term. just reasonable In they're different. in of pipeline demand to sands That's trying served the long-term year market, excess demand in new Canada, a thirty's instance that inventory be It's of change near well. as can of build more to on very more are Mexico. it levels. online. soaking starting legacy view in it as Once a projects lot though couple which of But up production is see. capacity that exceeding the oil their a efficiently cars for our phenomena doesn't it's we're

an would tank take time. upside if But to market it's I yes, in that's this general say So different those off. car trends the

sand oil But projects the in online. So, Canadian nature. think aren't because increasing about rails have they that come will be the excited short-term service too it their

So Canadian do I in that's Gulf. why the price the WTI see Select you and think you Western between differential

but to don't build demand. it So there in We people short-term, the if phenomenon, up don't the could it's think is meet demand. cars soak increasing a long-term

Justin Long

sense. It time all the makes appreciate I today.

Operator

Please Research. ahead. go Matt our from take Brooklier We'll [Operator question Instructions] Buckingham with next

Matt Brooklier

of, fourth little tank helpful. look other that are as Yes, car XXXX types it. there thanks. better Appreciate there a out Any potentially tank morning. I maybe railcar guess maybe to you demand pickup that Good that and outside are a on other more you bit guess a bullish commentary saw or I car any color see, that The little you car gave? the think types that was quarter in

Brian Kenny

cube small hoppers phenomena that you XXXX that was a really covered continues. that was know about It

strong. I what As is far mean as affects, intermodal

and Probably stronger We saw have car a type we to through get it have low stronger decent and of very boxcar the XXXX do exposure there. a amount fleet. exposure actually

to utilization it the there, slip expect we So did.

XX.X% I close XX% think the it was down its to of the end to back now. up second quarter, at

like things drop since forest loadings CSX XXXX said, of railroad velocity XXXX. had releases gotten we the better to -- to us. products mediocre pressure utilization planned in theirs some kind there I to due customers; boxcars expected increasing obviously was but under prior car been As returned really that, from had it's We And certain that.

of about boxcars CSX has our These issues; velocity boxcar ones helps of railroads is market. which and among that been the service think part class a fleet customers been more XX in emphasizing a Now decrease excluding foot that have certain CSX XXXX like. part of X%, seen the I XX ours that has the foot of

I our in work. boxcar of them opening expect part increase I cost we to as some we mentioned that my XXXX put is back maintenance in think So

that Outside as well. market us in been and is march a that just stronger saw you So slow that it's helps XXXX. steady obviously of

Matt Brooklier

for fleet guess looks and always get can maybe… at it what you the I like this car number flammable Okay. I end have tank services, offline of your Do year? the

Bob Lyons

total are talking fleet? sorry the about Matt, flammable you I'm

Matt Brooklier

look Yes. your flammables like now? services What fleet right total is

Brian Kenny

Yes. It's about XX,XXX cars.

Matt Brooklier

Okay.

Brian Kenny

But believe and of in only XXXX I those are ethanol. crude

Jennifer McManus

X,XXX.

Brian Kenny

X,XXX in ethanol.

very other ours things fuel most in oils of So those and exposure like low products to commodities are that.

in actually cars pretty of ethanol it's fleet year especially our come crude last crude the somewhat pretty grown been So years. that a by exposure not and the XXX has last -- down couple has the over constant seriously half. in over But

Matt Brooklier

could the [ph] those cars in insulated cars the you many that market? how i.e. coiled XX,XXX amongst roughly cars, cars then, And Canadian be of and utilized [do own]

Brian Kenny

right have I do. number from don't we Yes, me. that

Matt Brooklier

North tank that moving of fleet cars directionally the up Do we're from i.e., the color change. the a side on of service will potentially on tranche you think what's first the you on demand. the cold using What know then, And car tank car through some slightly here? Okay. to contributing maybe older and being working to American plant [carbon] about also gave regulation I contributing side? rates [ph] supply tighter market

Brian Kenny

I'm side. car tank the on sorry. mean You

Matt Brooklier

Yes.

market cars now I'm just supply is So cars no regulation out a if [DoD] tighter in can't I less getting believe I like on starting in services The flammable available of allowing to weren't curious, side [valid] is longer the [ph] those use cars little side because the anymore. XXXX. market XXXX, just cars [ph] pull maybe of and things. there's the --

Brian Kenny

No, I don't.

retrofit them. I'm our number retrofits industry. done it legacy have retrofit have others by legacy seen make more done them. But believe so trying have haven't to had XXXX might widespread remember others a been customers the thirty's from We younger retrofit. our That's for requests scrapping. I in zero sense the fleets, no very about expensive We've on

think yet. XX% legacy probably cars that widespread XXs. tank of need seen retrofitting of I scrapping haven't I market you

for haven't from We customers requests had legacy XX our retrofit.

the increases regulations fleet it's to point. that and that hopefully we'll as see don't So these scrap this the start But if out in. I holds, transition moved tremendously market know rate to come

Matt Brooklier

time. the Appreciate helpful. That's Okay.

Operator

from And & Bergner we'll Gabelli Company. take our next with question Justin

Justin Bergner

my taking questions. Thank for everyone. Hi, you

Bob Lyons

Morning.

Justin Bergner

Morning.

rates guide, sequential fourth in your question XXXX rates quarter? are sequentially lease from just First XXXX flat you relates assuming to are lease

Brian Kenny

There wouldn't XXXX. certain are XXXX. assumed we are broad in better today's a there lot broadly our no increases assuming from fleet I increase be rate in we're across going But, that fleet. car not assume widespread it's I in rates say the are would to say lease types of

Justin Bergner

Okay.

to that the phenomenon unabated. in be slow you interest increase factors signs who down of to respect seen there starting there slow any which interest out Are are I to or some buyers seems railcars are that or to are interest with the that of down? continuing hearing relatively guess the Secondly, some other buying financial starting rates is

Bob Lyons

any impact on up or terms the number of of -- the interest they're valuations impact assets. rates buyers tick from the the the in seen putting in haven't We

continue Now, thought move away we to yet. if would from these at that investors of not there my some yes, begin certainly and But be look trend continues up, be interest some some my expectation that seen may have of to rail. rates that and other that alternatives

Brian Kenny

Yes.

that rates asset commodities reflects to helpful inflation our other has in our interest extraordinarily especially the historically is higher been the and The and thing of prices higher value business fleet.

So been our inflation friend. generally has

So could higher be interest rates that good.

Bob Lyons

on And standpoint impact big GATX. even from a a funding not

that net-net scenario I to continue gradually would take up. rates So move where

Justin Bergner

function question, Okay. of where we a from type in operating as sort joint And XX high more relatively management about -- of sort just Should for higher the guess then one the profit Rolls business And forward years Royce in joint remarketing million a the the Rolls came of I the think income flat was Royce profit more on range the in prior is sort million occurred that XXs then, range figure venture? the of years. segment high affiliate prior the or sort XX plus versus the venture. XXXX XXs range. step XXXX in high million portfolio down of in the income XX go range that

Bob Lyons

the Actually Rolls XXs. high Royce came in

affiliate the of about $XX is Royce. look Rolls of at And you portfolio line income. that almost if all management Justin, million

an So of over around happens within million, our $XXX that sales. very Royce. volume and asset bit will a year. move at north while was had Rolls income we for Royce, from term, XXs little to that the Yes, GATX rising remarketing the with of million $XX number business mid that this mid year what XXs we excellent returns add to share investment continue on depending time. Rolls expect Longer of generate and to attractive I'd about also

did affiliate which investment million in level. was volume Royce Rolls Our a close $XXX to record

saw funding that's to the outstanding and facilities opportunity grow all we off cash investment so and it nicely. flow of continues obviously the self there quite business So credit

Justin Bergner

there book guess tax Reform finally, rate the helpful. on been share versus rates come have on wrong Okay. by the points. the years? hundred somewhat book few wouldn't I smaller a comments. your basis benefit line of than suggests an I on there I'm earnings any of book That's out point sort why a $X.XX for Tax it, view, with more from I that more basis down be then a is of surprised apologize Act, only sort helpful. clarification Is And per benefit Any reason tax not coming seeing rate looking of must which P&L will there guess my XXXX a you're the down the that

Bob Lyons

in years definitely it's cycle. a in than XXXX that benefit Yes, the we given smaller the out where are fact the

where U.S. rail and only, in keep For will benefit. that mind that domestic U.S. see we

taxed foreign have operations large is and Rolls already obviously very We in rates. almost entirely Europe Mexico, at Canada, Royce

cycle. a rail in to income U.S. at time be the enacted So when this a point low point at is contribution in the happens

impact improves it greater as we and go be So recovery the will and grow continue, hopefully gradual as will out. the

Justin Bergner

questions. for Thanks my taking Great.

Operator

question from Management. Haimes Asset take ahead. with Please go our next Barry we'll And Sage

Barry Haimes

just you earlier. Thanks excess the could very sort on wonder which cars follow much. of And of I very took below car range are you types car types Thanks just much. average? you give or meaningfully had by XX% mentioned a if I question the feel some up sort if us XX% above that that for

Brian Kenny

that We [AR] XX%, data that don't have in haven't cars That we? days. moved [ph] or last do or XX it's the

Bob Lyons

point Yes. industry a specific That's data point. not an data GATX

parse limited. to that ability data is our So

Barry Haimes

Okay.

or don't you So terms below any have for above directionally of feel in that even that.

Bob Lyons

on has freight? market challenging been all Tanker car category? car By equally types. This

Barry Haimes

Got.

Appreciate you. it. Okay. Thank

Operator

And Securities. our Seaport with Milby we'll next take Global from Willard question

Willard Milby

Hey, to focus wanted good morning I on Rail everybody. International.

curious, revenue could Looking maybe XXXX in car type. some into with comps into the a some per sustainable or you single-digit car? the move first of you've lease revenue couple as was if that two per growth quarters, in easier lease thought had that last good of in coming you double-digit growth was kind see we I quarters

Brian Kenny

over been it the has positive more years. in than the Europe is But, lot No. I last say don't that. few generally I know will a about market

the dropping and dropping of oil customer as the see with market which requesting started we to But quarter petroleum of more a is and more projects in I portion the the XX%. I in refiners that's haven't it half new know the been fleet said under mean customer actually their while. or customers. in is mineral inquiries is So we of U.S. which margins as their earlier is we in seen the cars XXXX, last fourth crude price pressure biggest additional

them lot sure about quite market are a requesting of there. for of terms Now a so lease not the sustainability recovery very short they're

-- this less GRE I on if has for high But, deliveries in and market very it scrap than XXXX. placed So did down upturn either said Europe. in They instance successfully -- I as virtually on they release XXXX said all that when well success legs very mineral to Eastern or all rate. down remarket for I we'll rates say as new the that see many renewal had past recent a Europe renewal. lease in cars were in the returned fleet in And X% it's are their

year the than in a positive oil, America. about And both it especially ago. which and the fleet is in mineral is North a XX% was LPG much in chemicals outlook is than it's much So Europe of business less it volatile more

Chemistry data. For we rate chemical up, that consumption types data hard volatile up very variety wide Generally there's Utilization chemical our output, more pricing to was generalize show up. was the in it's and last Industry strength had our very really renewal lower and in fleet. of And market European it's been a quarter. and recently on The to Council, instance solid exports. chemical utilization. prices, in started they the see on that there's commodities some fleet chemical good on side, been car had But

XXXX recent years. So across has lot it look Rail that coming than into things in the markets Europe better a

first which recovery some that just we've seen in legs. hopefully will So the have quarter

Willard Milby

sounds like of over a in a any like we've there's kind Okay. strong coming risk soon North America? online think to supply you it And anytime with demand. seen Do

Brian Kenny

it's think in when one market I said I Europe. a that's volatile less

point. on right is question your think I

that's in the sources couple supply With years the the cars I the And more it's been a U.S. that of It's competitive of you've seen been lower been have oversupply a been I the oil. think manufacturing situation, are market there insane one over mineral market. last in hasn't of the that it But the excess mean rational volatility. there especially very

So hopefully that continues.

Willard Milby

say follow of the what from XXXX? All what right. point Thanks. repurchases And you view in forecasted just Did were housekeeping during dollar up. share your one and a quarter you

Bob Lyons

in repurchase the of fourth million $XX had We Yes. quarter.

For for the assumed full year the that is what we've range in year ahead. $XXX continue was XXXX million. we that And in

Willard Milby

All right. Perfect. Thanks very much.

Operator

go And we'll Steve ahead. Please take open. Company. & Sidoti with our O'Hara next question hi, Steve, from it's

You yourself. can unmute

Steve O'Hara

you Can hear Yes. me now?

Bob Lyons

Yes.

Steve O'Hara

right. All Thank you.

guidance up provided net disposition but can on XXXX. America on gain for the you're you on missed you little maybe, a you're flat but it bit? maybe think you talking for about expecting talk Just you Rail I would it, asset I that total I North don't and gain -- assume mentioned the can talk, just

Bob Lyons

Sure. The North owned Rail assets disposition the America. in on gains

this last we XXXX, to $XX for was that million Just in reference $XX year. year, range million be above expect slightly maybe million of the in $XX

Steve O'Hara

be in I the levels maybe I you normal it -- mean it mean was then, to think about higher total do I overall? was it in mean I last And looking looks the expect back XX, Okay. like amount XX. XXXX, year how that XXXX

Bob Lyons

management We going will residual that overall reoccur in portfolio don't new GATX biggest I you. facility reference. on sharing at driver the Well, for to brand We about a for obviously be not just had fee -- gave the XXXX. is anticipate $XX number million

primary or rail. driver, the in main of the XXXX remarketing activity really will North driver So American the be

Steve O'Hara

Okay.

just Okay. you you'd SG&A, the that some onetime then items. on was mentioned thought that there And

does overall jump it make big -- was fourth flattish. you was sense? to a Is that quarter of mean the pretty be kind think I in there. SG&A I expect that

Bob Lyons

year From Yes. Down in little the bit change. in where finished at XXX we XXXX. a

before also you past pension when straight I'd little XXX out that less being items in was others called that coming of for and our XXX, out hopefully number. a year maybe than year we've fifth the that range. normalize point XXX So this kind in of

pretty the held we've obviously on think heavily the SG&A, business. to we've despite invest well the I grow continued So line fact

balance and We today years have -- emerging a bigger ago. market than range. sheet much in same But a SG&A today we presence the entering European five pretty today had in bigger much is presence

Brian Kenny

about assets We in you had that give some peak data billion. To was look SG&A last year. and there $XXX I just at our over about how XXXX earnings $X million. that was

will in So $XXX that's million assets if XXXX the in level increase to and SG& range our growth more less than we that be can $X will XX% billion X%. with get

leveraging on infrastructure to and current stay focused are. really we're where So trying our we

Steve O'Hara

much. All Okay. you very right. Thank

Operator

And from Long we'll take next Stephens. Justin with question our

Justin Long

for up. the follow Thanks

you have a had out for to XXXX when an I that and Just on fit expectation quick shakes where [Technical you question, wanted Do LPI. in Difficulty] in

Bob Lyons

LPI. first breaking the -- you the and there were little you catch up of Justin were bit. part a kind We question did of XXXX which was the

and that So missed half we'll of we question. go back But your answer the one.

Brian Kenny

Yes.

to in XX% So in ended XXXX, LPI, down put be XXXX, on I decline the it's under range If just in to plus I the plus believe going up we have LPI. a we on XX% range said XX.

Justin Long

renewals. better type a Then That's that hear now. part bit of second the helpful. on me you was if of little car question And can the

XX,XXX mentioned you think I around renewing. cars

a that that's about when LPI consideration know thinking numbers. I So

particular car towards those more a if So, be type. just curious weighted renewals will

Brian Kenny

weighting with fleet. current Actually constant of as a our No. the LPI

So of the it but is amount influenced activity. by activity, by not

might say little did a As far as bit. utilization slip I

a XXXX the enough have a but XXXX little although less you than We outperformed. slippage have it's to we we better there. there's bit XXXX of coal still with We market coming see renewals expectation a did do tough could much there into and that

Justin Long

That's again for Okay. Thanks time. helpful. the

Operator

go And Willard question Global. ahead. from Seaport last Milby with we'll take our Please

Willard Milby

Hey thanks up. for follow the

North dispositions, aware any we on be American are point. you of? quarterly gains this Anything On aware of the lumpiness should at

Bob Lyons

talking of good Yes, Probably that but to where a hard question. out about certainly quarterly pointed earlier. when out an today, it's have should a exactly, I we actually It's Yes. of level we of currently. year. were the little have materially sit first lay underway the early activity of that part the the in more year half think of based more we just we'll Call see on that probably

Willard Milby

All very right. Thanks much.

Operator

conference And that for to our to additional remarks. does the like over back Jennifer conclude any question-and-answer I'd closing or turn session.

Jennifer McManus

this on the like participation I'd to everyone call for their thank morning.

with Thanks. me any contact questions. please So follow-up

Operator

that you all may you again, concludes once now participation thank And for and presentation. today's your disconnect. We