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GATX (GATX)

Participants
Jennifer McManus IR
Brian Kenney President and CEO
Bob Lyons EVP and CFO
Tom Ellman EVP and President of Rail North America
Prashant Rao Citigroup
Allison Poliniak Wells Fargo
Justin Long Stephens
Bascome Majors Susquehanna
Matt Brooklier Buckingham Research
Matt Elkott Cowen
Mike Baudendistel Stifel
Justin Bergner Gabelli & Company
Willard Milby Seaport Global Securities
Brian Hogan William Blair
Call transcript
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Operator

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

Jennifer McManus

Good morning, everyone, and thank you for joining GATX’s 2018 first quarter earnings call. North Brian and and Executive CFO; and of by Executive Bob Vice today President President Vice and Rail joined Kenney, CEO; President Lyons, President I’m America. Tom Ellman, the Please note today consist forward-looking of you’ll during our will information statements. that discussion hear of some results could from differ Actual statements forecasts. or trends materially or

or XX-K or information, assumes events no GATX please risk revise For reflect XXXX. forward-looking circumstances. to more to factors discussed to update for the refer in any statements GATX’s Form obligation subsequent

get Time to our I held I'd Monroe. in Meeting the XXXX or be brief will The It numbers commentary Earlier at diluted on first per provide income to XXXX begins Trust slides XX:XX million meeting at Before The Chicago XX. posted today, of be quarter Northern quarter into at million at diluted and corner remind net This $X.XX PM will Building the of the compares $X.XX will Downtown first is be GATX $XX.X on April net LaSalle quarter, website to Central Annual like Kenney's Monday, that in from of everyone or Shareholders which www.gatx.com. $XX.X Brian presentation share. a reported share. and our per income

address at renewal segment. success was Now XX.X% I'll rate the briefly fleet quarter stable America's our and each at Rail of utilization remains North first the end XX.X%.

lease negative the price During XX.X% was changed XX an GATX’s index term the quarter, of average months. renewal of rate with of renewal

anticipate to leasing as least is a current not environment XX% release, the improvement still is the volatility sequential in the remains which the of As the We change negative result challenging. be annual XXXX earnings indicated in at LPI uncommon. quarterly

agreement. cars replace order our from successfully XXXX our with nearly to supply [XXX] railcars placed continue committed We from

deliveries customers already through have scheduled placed of end XXXX. We the of

which seeing of Within across our representing America market million majority remained expected remarketing car fleet saw $XX affiliates. quarter investment International’s the approximately for performance of in XXXX. the GRE, results but Rail good Lake. utilization management the by European remains during is We quarter with in leasing sailing vessels we anticipate service demand March the North primarily steady are Rolls-Royce $XX.X Company's secondary during activity Rail robust. were start Great Europe was off still started the was of Rail Rail the American to The the market million Steamship first America's XX solid approximately railcars in in North XXXX. volume at for vast in XX.X%. most International, increased tank a and also India. was income investment season we stable. driven Partners Finance the on GATX and Portfolio remarketing late of

mix under remains aircraft nearly shares grow. active continues was share engine our engine the the GATX for spare repurchase fleet of diversified our total and Our remarks. are $XX buying prepared million. authorization back XXX,XXX approximately Those a during strong utilization to quarter,

the So open Q&A. so can I’ll over for up it to hand now, operator, we

Operator

Please go Citigroup. with first come ahead with from The Prashant question. Instructions] [Operator your will Rao question

Prashant Rao

Thanks for the is and investors guys movement. one the I we're taking then LPI you first a for on of the guess which question. questions lot probably getting expected

be color also little I things actually you're much in but we're too? we've too indicated bit on Brian moving would to what everything that bit there seeing I helpful maybe to little you reading that maybe a And Thanks. single get direction, see right rates call starting into lease very right think low the now, last slowly just digit, the maybe more in so you would can caution know so into a market wanted maybe, us more how contrast color and

Brian Kenny

time this and start So I'll start LPI. I'll the with

in of but was single small for came low little expiring to about were market In the something number LPI the especially for maybe read we'll the a transactions much up flat always lease had this rate improvement And quarter that market lease rates a of not expiring the people rate. XX.X% into negative we But LPI X%. talk on quarter. too quarter-to-quarter LPI pretty So certain and an you're by driven is particular relatively about as rates as next transactions the caution at low. right the was relative case,

rate So a lease been smaller it new rate than prior it lease made the has to change little in old bit quarters.

fact above again flat. which relevant is negative much XX.X%, what's I much with the wouldn't that rates on into going more lease quarter-to-quarter So read barely is

Bob Lyons

I to versus quarter up to exactly the low-single digits tank right that's the in add just And and quarter. last favorable

up they’re year off but cars they're lows. last coming that by significantly year-over-year extreme Now lot a of was remember coming extreme and lows flammable off driven

that they're an produces still improving what model. investment for it's run So long slowly the think return although attractive well of below we rate our average as

still there's still existing too many delivering. many cars, new So too cars idle

that they you If are long-term to are low to exclude down going be systematic recovery obvious to and a into rate but order amount need increase an invest and term That we it we have still both low. won't to would that's that - to there's doesn't life. attractive average how means probably coal long-term. point a be tank compared rates environment there, really at do but cars let's or an over from because freight look they too XX% what Maybe investment don't its where think for by be this, mean like we

Operator

go with Wells come will from ahead. The next Poliniak Please Fargo. question Allison

Allison Poliniak

just of would XX%, high … you is or half to a think say So that's sound that that I rate historical that on normalized following that,

Brian Kenny

was long-term. in very highs we last look because and for but those much this were more too at into down they're car high, unprecedented locked read incredible for which you or can't historical yes If XX% you up-cycle in historically types most that them a know

think the to needs the Of it to be attractive investment. off for highs. again is about much the the long too what rate rate average over a worry really car life wouldn't I an run So of be we once

today’s to need I'm up level. So saying from XX% move about still that's they where

Operator

The next question Stephens. with ahead. Justin Long come will Please from go

Justin Long

about wanted of have market on markets? we've a more to cautious in drivers the drivers to of just fundamental attribute and market the train of congestion your function than versus that to ask operational wanted stabilization this I or kind network, much some about view optimism much year demand picture on seen speeds I rail big demand so, in is the that these would the the these get American of up rates. over North you to slightly the how certain end flat seen. this we last of How slower the

Bob Lyons

rule but So are of of rule rules dangerous, hour translates thumb thumb give is per train of mile X into about speeds thumb. you The for a XX,XXX I'll cars.

Now that by varies type. car

relative haven't over look moved days within improvement that you last the by in XX if explained at cars can quarter, operating the be railroad metrics. all that So decreased

it's look the Brian on at very loadings, which you few up a piece with on the operating because been low really if whether have car going been modestly is to lease past very, with is overall coal loadings doesn't not, said translate at quarters, what's earlier, going very what's moving rate. So a or of is performance that but

explained as railroad by So the metrics almost operating as metrics. used far totally cars being

Brian Kenny

they to example below rates, to two were the for they this The yes, rates is quarters. way that needed the the XX% level up discussion year investment but on an move well best attractive life, really increase. covered small over that lease over have on it can got it to in quickly. up of be happen And wrap keep just last there hoppers, were And space its

haven't demand the a or demand catalyst there catalyst, demand that a catalyst fleet. can So just We seen move once is for in widespread things hurry.

Operator

question Please ahead. Majors will next come The with Bascome from go Susquehanna.

Bascome Major

based I on you little wanted XX% have about rates buildup where down detail real know kind from be in I returns to of being broad your need very for of metric. a perspective. below more guys they micro lease commentary to this drill re-investable your

seeing equilibrium shoots what XXX-plus the Other you earlier you're your you long other types run where cars do I of and know internal mentioned think there exceptions are needs than pretty measures green to well of car types few was. be? with car as it broad base everything you fracs the very it into is or range where move really below re-investible you know some

Brian Kenney

on go Tom rates will let doesn't stop from investing, once I again necessarily me saying I'm that Before it need. its all

for We investments those those ahead, we but are worthwhile Tom. slowly over be move the investing to up to say, they car, but rates the of think will life investments go for need and

Tom Ellman

and rate hoppers the tank talking for there's improved rates and going of of So or up lot lot right hopper there. Couple car out recently you particularly are move of a as that and And time rates the spend covered tank struggling, positive still which holding as you below now. are are coil energy by them story cars, move we covered as gons levels, mill better. well varies but related ones own. every which relatively but mentioned have would performing did about move Centerbeams either talk small their steel about within in We struggling both terms situation some a are lease type and quite the have - non-energy you other of describe even a time covered core cars re-investable tank steel. now. They're already related point been I fleet variability. finished scrap steel and right cars Those are gons cube

tanker cubes little energy, basically, to so related doing notable hopper better. covered of a it's exception are And struggle in, which it's if it's to it's energy, with and the well, if related doing it if small bit not a

Bascome Major

early sense candid for place. as when quickly a to couple you've where the that see cycle And cycle, last multi-year order car the over we can about, positions I how that have it the broadly? change. list point it When detail. make starts new But of been pretty appreciate in you yourselves, in were in talked not from forward, more we do sort speculative you operating look - investment the we get necessarily of hours to And

Tom Ellman

struggling point across, do like get because mean recovery. we invest, are I'm rates it you think this doesn't with It's very to underway slow a don't

of deal usually car preclude terms to we market is when more about on you it the can a depressed from it today. manufacturer when focus necessarily margin. We So investing. like best that's invest cost doesn't And get and done is in the from when

Operator

Matt come will from Brooklier question Please with ahead. go Research. next Buckingham The

Matt Brooklier

the are be did within more, a with there to sales but, you big think asset business further So just that, the could through implied I on, question American what number quarter, and you quarter. the dispositions in again the year North respect a in then your expectations first

like. looks year a So just get maybe the feel rest the to what trying for of

Bob Lyons

So the of ended into the we and that quarter. be maybe a North $XX this transactions a That's for remarketing carryover combination American had in plus we of the during up in that obviously out XXXX January north year would where million for came little sales income. back year. that quarter the package we some of said we closed range That's

So the planned year, but we'll and we anticipate continue some for in could there don't the point sales be while nothing opportunities market significant the this to of activity major at during time. gauge any balance

return We adhere to around maximum and is long-term have our a built generating shareholders. for that we process fleet which the optimization

majority that want continue to in fleet vast, to vast of own because we we of our the cars and own will that have long-term. So

planned candidates abundance of point. year plays to and for we'll verse balance of an the cars market lying our the have how don't sale. out and valuations just check That at the know but continue we'll said, around value hold see we test this major you nothing So

Matt Brooklier

would just certain activity then color of that quarter. you overweight That if first car any sold type helpful? terms are of in the And a on in cars types you the be

Bob Lyons

a into That's usually not what and lot of tipping with have market. cars historically get detail something types don't not selling. our we’re of really with, we're the We about hand

our course over but fleet of quarter, half certainly to given the say the freight later. may was detail keep the in around half case know get what not that thought tank side you too would something we're come mind the of occur is and the going that and Typically and out freight. getting equation into specifics, first sales just I is optimization fleet to in it’s So into much

Matt Brooklier

time? the is This

Bob Lyons

Yes.

Operator

Instructions] from come Matt ahead. Please Elkott Cowen. with [Operator next The will question go

Matt Elkott

question This maybe Bob. for

sort see decline in going revenue what expenses bit some the but So you year? expected, you a of think of can outlook the for had margin you was that well. quarter, operating as a which caused increased give where the Bob, color forward I and remainder us on the

Bob Lyons

think perspective know Well really terms first of all a from of don't here. margin in you we

with not line margin with revenue a about not the QX use we perspective, it a quarter-over-quarter lease versus concept the we metric likely that's that would regards yeah to was a that down internally. operating QX in American what So XXXX revenue an right said XXXX, we for From X.X% be year. here - that's North

full be X% down the would to range. we'd basis, thought it For X% that year we in

item? in play color far as did more bit if that quarter. me you on So out first could a And as which bit operating give the line expenses more little

Matt Elkott

maintenance. on and but that would was up was think maintenance was you I noticed I maybe of XQ say up I I year-over-year understand the basis working things depreciation was a that's XXXX, that from would one that

Bob Lyons

than maintenance versus obviously the depreciation bit year a million value larger a North American fleet's little standpoint from actually today bigger a less a XXXX. than And item Yes. QX, $X items, The up line the was ago. XXXX only was QX, it line the netbook rail

depreciation run exactly your number International for America So almost last higher, Rail we're bit. as that's, same total Rail this income up the bit if is year we that's at the they were North look going off a statement a expenses little really, actually little were numbers year. to

line driver that the was anything on expense more correct. of Some else than that

Matt Elkott

when And and share how question, quarter? just cars leased guys with one off be quick renewed came able you in to the many were us, you to

Bob Lyons

cars ratable scheduled quarter. the There's during renewal. occurs year about course over no Well to really the evenly seasonality for the that. I with It we be XX,XXX into came would pretty of that,

divide to and that it get little for a you quarter can real of where north and renewal rate was So number quarter four the by for close solid XX%. were we success just the in sure,

commercial execution team. very and again strong Tom So his by

Matt Elkott

why we're just at year talking little very improving rate. general modest to the question, has for over markets this I somewhat Service recovery very for higher a had Freight quick a been in increases about it's suffering one becoming lease hard And so maybe Rail understand, It's larger robust. rates picture in sequential far. see backlog we've mean has are macro not at rates. rail is and have more a quarters. of I on solid, couple pronounced that I still been have that as environment to basis we’d to last theory strong. still The why that the guys very improvement a solid. least is hasn't But Any that build would lease happened understand you thought sequential spot that yet? now.

Brian Kenney

comes low. which many we What is Actually that is all to availability of cars. lease for is sources what rates theory. idle most can alternatives go two and there's The how of – important are it shippers availability beyond there keeping competitor down for

GATX are cars in comes At So for up, than has are our our virtually available that somebody the cars cars utilization, opportunity other but there market. every available. deployed,

unplaced. long car new backlog exist. largely continues Secondly, be to alternatives The and

in car short new get period can a someone a time. Additionally, of

majority vast of is car types, XXXX. still available in delivery the For

alternatives the to it car, rate renewing is lease down. keeps there available the when So

the note, the Now, fortunately of you some measures have customers of cars who need because that them.

to as can long price the placed. keep as we car So we market,

renewal So it’s you we utilized. the a see keep and percentages can car good

see keeps utilization, that market You you lease the down. which stumblingly to rates good price have but to

Tom Ellman

market. down is lessors trying on when of by even saying the pile on lease I'd that's manufacturers are the the detriment Obviously, captive the sell fleet. a cars to to often manufacturers behavior that case railcar aggressively have And but and

that's for understand. hard to So us

today. manufacturers the base to is it behavior the railcars, ironically in think holds are of and rates trying It present lease sell. depresses further market So down that the I the

is with in being values their see the industry And of industry. aftermarket lease this perhaps see So same what the you assets aircraft discipline railcar you like that's or cognizant rates. the industries manufacturers certain in of manufacturing construction don't other

Matt Elkott

is airline You may and of one think three. industry, mentioned of a mean lack two round consolidation be the that another airline function manufacturers you or airline of there or I

the manufacturers round seven We railcar is I of helpful? North there America. be could railcar industry, guess consolidation in another have

Brian Kenney

calls to so I get and… encourage those on you

Matt Elkott

make manufacturer on comment to I'll try the that of...

Brian Kenney

you think dialed wrong into may the I call. have

Operator

will The Please with next Stifel. go from Baudendistel question Mike come ahead.

Mike Baudendistel

segment, investible cars sounds ask where will it market see to and an into fleet? on lease about you maybe you from mean leasing be segment International like wanted is I levels that’s in just you talk I or adding there area the the opportunity from that the rail above there either rates can the rising

Brian Kenney

because and for for hasn’t you been Sure asked that years well very really very really the I'm market GATX performed good. last had - the glad XX

petroleum car called sector As they fleet and biggest about fleet. tank the there our mineral over with you know all XX% an as of is or us, it’s

of level inquiries, to And requests quarter. went started gasoline to So went that markets customers. have of through reasonable there cars. third in but last customer industry when but European the down although this, price cars projects, refiner halfway increase. year a in idle the to and down, price more oil further see ours continued gone of rates we changed all has more our diesel oil remember a in all consumption more the through with Lease a there’s main the in lot for about additional XXXX Obviously to more struggle the not

placed doing a Eastern GRE in very and the in very I fleet So quarter has very to They think. a their well They have of new that petroleum presence. renewal had the all strong been in in where high many success market either scrapped that returned XX% Europe cars deliveries, market. we rate were

that. in lease XX% tighter again hasn't LPG is other really talking and XXX GRE, so the that and a to segments, But cars, that market, It are and always reasons cars had and European a petroleum both digits. been single as and is which new additional roll rates renewals, been did car, as a been relatively it new there was the biggest for absolute in almost a But see tougher LPG over resulted Rail that's received. story. And rates starting start of actually there to we're XX% And Utilization fleet finally very the about in fleet our and chemical market have chemistry been somewhat introduced quarter is prices favorable creep growth I've XX%, idle absolute LPG, the is with get that’s lightest a it. about, meter on through up same LPG, LBG, The renewal great better changed renewal low That's They but cubic of more year seen for side fleet their Tom in are reception fleet. that's well market the in in the in same the rates the petroleum competitors quarter the their has just great in than well. increase rates but utilization fleet. surprise them, the sources. utilization XXXX the largest has it shown recently for industry flat. some Once lower were highest Europe. up rates GATX us. So in They as course well. to that’s car fleet last their petroleum were

was. as will car to back probably as see two from million seeing But we far increased Europe, X,XXX GATX what in over the you So range. dialed and we're better at had side, Europe investment in in XXXX plus investment Rail €XXX last a the that market it definitely years

Bob Lyons

this said, €XXX we expectation. XXXX, to point, about of Europe million that to year, as in Brian at volume €XX investment of just Rail GATX north the last add that is million And and on Mike, did

nice the Brian of up made. So there all a and comments reflective

Operator

ahead. Justin go The next Gabelli question come from Bergner & will with Company. Please

Justin Bergner

that not the And highlight there we as I progressing year be, progressing expected that as would guess would question in comment you the first or negative? positive expected, anything guidance on saying is that's is

Brian Kenney

wanted. I really

the there collectively sat we played up all and and through were around and they I work quarter out numbers no think real or quarter for in where there down. surprises the the what

Tom Ellman

through steel we course value is XXXX, around quarter, generally impact didn't first of thing which Yes, hard the of pounds tell. fleet. the the the to billion steel anticipate But that are our that's on have business obviously we rolling tariffs in prices of a and good have that few and steel for is higher might

So we'll out. how see it rolls

Justin Bergner

question was of actually on not think prices mentioned My steel prices second steel yet? scrappage of to where encouraging the you point it bring sort fleet these more market we of by or value help higher excess could the there at rationality a you steel of your some and are cars rail of

Brian Kenney

trend the short not yet. answer So direction. the there we're The is is right in

shop what into decision up. You is cash the scrap the if the flows know flows - it. what each you what steel And run you as if cash comes car is do are versus a to made you are continue

and So the as scale supply balance demand help the margin, but and you'd occur steel into would helps see any have prices to get to on back scrapping large steel higher longer. for need in that to increase

Justin Bergner

you a there Is scrap a as threshold? price think sort of of like that

Brian Kenney

highest there got The it helpful. XXX so really. mid-threes, think somewhere I in would between I mean more be was the Not ever

Tom Ellman

one been point. low-twos at in had we the And

set time helpful. up as direction it's in So any

Justin Bergner

question performance that quarter mainly to due mean or I was remarketing within last good non-remarketing the Was the on the And it there's JV. income it was Rolls-Royce JV drivers? was another

Brian Kenney

was It both, Justin. actually

evenly to say it some was split. QX XXXX would activity, split increase some lease evenly operationally QX continued nice the uptick rates, in remarketing too I high with also in of improvement about but utilization, and year-over-year the better between So portfolio XXXX a overall performance just is So increased

Operator

from Securities. go come ahead. Global will with Willard Milby Please question Seaport next The

Willard Milby

top know short the stay was Obviously, or some I will kind business for since it's I or engine a any JV impact this on didn't ordering that the utilization. Southwest type I real not you inspections the off been positively your that know, Actually, that and on of to notice occurred. engine if whether of had But, type on negatively. the just FDA could exposure have the think you if head you fleet, there. comments might that has your and all

Tom Ellman

we Well, to engine any have that type. don't exposure

no type swap that we our from the So determine portfolio the uptick portfolio. don't there what to an Southwest on real for obviously, of portfolio Again, risk a all given to in. very early situation, there. demand engines operates, stages at fleet but see tragic And and in to our no impact happened

Willard Milby

fundamental market could I increased on if step the front, boxcar really seeing utilization obviously that of are the of to market congestion railcars, to think out I or switch car, come XX%, lot up drivers that driving was a get months Do the and driven car. could And XX% that sequentially. back utilization in usage of you usage you back on that your that stores it there. fundamental so of more last Is – short-term. on up of cars curious couple those the in thought here your

Tom Ellman

on Demand operating of but driven railroad majority kind of put So much operating more issues. the is it congestion side. it by would of there, more has I much the in and held

story to but, important too utilization XXXX, more So if are could half up leases them continue the other but utilization are you expect exactly significant been for there. it's we've of least at earn running of hard about note cars at being to hard the an It's had on fleet really previously. yes, levels a but that least half they basis, seen. business say we've is so to And every boxcars, that there be part to that would in of for per than on money the on reason, car thing able the type, fixed to we at improvement of tells earn our from out part only seen tick for like as And they’re diem used. often firm say

Operator

[Operator from Rao Please with Instructions] a ahead. go follow Prashant have Citigroup. We up question

Prashant Rao

congestion hearing to the wanted side non-pipe shale we've the there's your of for there's some demand out the bottleneck and of more side, We Canadian about transportation on Permian flammable being in been sense a transportation patch of for on the car Sort heavies. used. rail energy need - get know

more like drivers rail incremental traffic the for So demand it seems side. petroleum there's on

the Just now? an read too about or you're rate that on and pickup level lease right curious is inquiry if flammable maybe were that on is you it helping cars through even the early seeing incrementally talking

Brian Kenney

great individual we demand what's available of example the in about general talked of earlier a versus terms the that topic in That's market. underlying

absolutely be Nobody that of how they activity. You're last. there might railroad correct, Canada hearing rail And two railroad also, a is additional problem two, there's moving difficult there shippers And want particularly length are knows meet all to then to already. the Canada One, we're there There demand. moved more time problems. CN contract that will to CP the long where move cars of idle there's congestion between some and need of having have. available up challenges the in the kind is in the cars is been there and the the on and what

that. – term desire on bit to of the is So side, there get out of a little railroad a

infrastructure in creates struggle. meet to to the railroad is we’re a some, and there there that meet it. there's a so Permian, demand, – comes there not that is, lot seen back to we've is able immediately it cars And In area. the some of But inquiries

case, do going think either a translate material to in into the unfortunately I activity you're lease move on rates. So see

Prashant Rao

affiliates I how impressed has well. get income of income, expectations very of might have income just there to line caution in a on sense maybe that increased that total rate our this mismodeling that, been would side know flip of you reading then a But And wanted on the follow-up be some the just you outperformed or and I drivers or strengths granted some in by and how run that as strong unrelated to quick it anything us affiliates some got could upside what be item? is,

Bob Lyons

that by affiliate the Rolls-Royce, it’s entirely share line. again of - almost And that's driven

than really guidance our million XXXX, share $XX So in into is from previously our doesn't back deviated as first I same evenly in be so as return bit income have we pretax income range very think strong and I haven't still range we a that, total and each were coming that still the that wouldn't again think little I this be that some in had and had but good, activity that higher of quarter, we very But felt quarter we of affiliate number same we in will a a mentioned that, from now We in of this performance. throughout that year. year that we go of were would good a QX. good with. year of last to the a which on remarketing share and if that's in did rate occur basis run Rolls-Royce

Operator

question follow from Justin next up is The Please Stephens. go Long ahead. with a

Justin Long

rates I from taking the think the expiring outlook Thanks that ask the longer the positively for we assume that chance in the Do about baked we rates for there's LPI follow-up. term inflects North wanted comp XXXX? and lease you year a next what's if hit to LPI year. American the for about this into think guidance the

Brian Kenney

expiring And to other XXXX about in a maybe little rate to bit. the begins down it XXXX little XXXX up haven't is XXXX previously where indicating we after Well bit. average was that similar a after than come it then gradually commented

we clear. early environment think Tom lease it's comment rate to bit the has will XXXX LPI easier challenge pretty but gets where want or a still be out don't on I as So little indicated. XXXX to hurdle for there too a

front. of gradual So that despite terms the we challenges will certainly continue the rate improvement see this lease in

Justin Long

similar I'm have you're pricing the seeing pricing today, to seeing been manufacturers, And curious flat what car new you're of that? lease new market more just the then follow-up car terms pricing on the of rates been some earlier the on to competitive to has railcar kind what maybe trends railcar than new or in on the in up on of environment slightly commentary

Brian Kenney

long-term that taking cars of we're supply agreements. majority the So part of are

in negotiated wouldn't agreements the environment. ours And across terms that have terms since different enough to coming comment through supply a of general so we I were on with market say detail is most that

Tom Ellman

Yes, so for data the through if the XXX not I good But then not increase go of in it's in cars we the be year. we're think seeing in quarter, we I'd Europe set. price less Europe, steel, a instance with took an than as surprised

Operator

Brian [Operator question go from ahead. will come Instructions] William Please Hogan Blair. next with The

Brian Hogan

and questions, a Just in India but. one, still your there, I update, efforts us give few know you Russia, early can little

Brian Kenney

India orders, of going towards a fleet there in is business path in very the happy cars existing fleet the are the X,XXX XXXX that's clear actually of over XXX% performance things fleets XXXX. The that utilized. what that is size with the in and well. Really doubling and customer now So are

is try the large. committed Importantly the they they they steel delivery to continue and container taking from customers is fleet. and auto And diversified and Railways carriers their car, of to as carriers not relationship have just rigs to I great their pipeline obviously fleet XXXX diversify Indian in very a away continue said, with auto They important. their

it'll fleet we're So think in even XXXX. real finally in seeing, that seeing XXXX, in more I be growth

So better it's after much period of India really in years. a looking

Brian Hogan

U.S.? returns say the compare or to are the Europe how And

Brian Kenney

market. So great in question. are rate that's Obviously, our higher emerging higher a lease dramatically investment and way is for rate factors hurdle

more it much necessarily basis, much So car you it on and going I other risk per on I in require we're say But to mean, a return you're looks wouldn't profitable words invest if basis. a that high should there it's adjusted better. getting

Brian Hogan

And Right. update any Russia, then there?

Tom Ellman

if business Basically proceed XXX it's than it Russia what with in was very to market. going was lot out fleet, going $X end all to careful We the we're for we the going I'll but in to XXXX, that make you're in at year Russian can't of news be delivery it. the slated difficult obviously - do of there, if be you say have can't is how and out with less of very Russia, do in be very a small more Russia customers, business cars to about in you a a million.

going there So obviously we're open. our in eyes with

Brian Hogan

can American Steamship, you to I seeing the Steamship, there? opportunity environment the competitively you into and share. describe longer that American I'm taking term getting guess market what there [indiscernible] are

Tom Ellman

market, best be XX lot now into just the few. sailing to going I we've lot that right idle capacity, the lower We Traditionally say a vessels. Great year was But of of we’ve is we about getting but sold XXXX, it's was, XX% should Lakes. scrapped on said is of assuming I those, the of about the a anticipate the which going It’s there was but season market, footers market. vessels, had have of have idle, of importantly tonnage X,XXX capacity the that vessel a We underway. that now, like of competitive a XX% we're market, that in lot XX%

nine have coming But we coming limestone. there earlier was obviously we things perhaps into be a effect I eventually vessels in said will that the anticipate Like of the I XX tariffs ore will lower on one little deployed. prices. and year steel tonnage into be out We as iron the and steel said, the didn't year expect

spot the ASC year opportunities Every of could steel don't tonnage of goes last over largely tonnage we One the anticipate, the that spot we up. primarily seem ways couple arise price at through at that GATX’s opportunities start of may benefit to years Great if in of But that see significantly the could U.S. that's further the benefit of the Lakes in volume a for more, through then steel up sea producing way. of goes tonnage. ASC manufacturers price the they been terms then get export

Brian Hogan

line return say, and term was in on of And longer it just kind you is with your then will. believe XX% ROE to equity your if question, target I tangible last teens your was in last XX% year, in low XXXX

guess average there? is down the are talking your you're to of But strategically maybe long term the over with I you kind teens range the time, to of obviously get what to assets. I about up the life around Your long and this lease and guidance XX% doing ROE, back how low rates guess, XX-ish%. being year get below capital midpoint your

Brian Kenney

question, I on. time mean it's a and obviously spent great of one, lot we it's a

lease talking time, to our do be we’re think about, over I where So rates are need and long-term. they where

But we very demand didn't never to we didn't see XX they'll fashion we there, going it’s We we big a unless off know As years get price just in catalyst we foresee. that of taking catalysts. demand said, oil think the the foresee ethanol we currently slow going there ago. see there's don't to that a $XXX, get

we equilibrium. we oversupplied market in it's years. an investment agree if that don't view with for realize what's won't to are So exited, already surprising the investment not fleets market people see poorly attract anymore. turn be we've demand that of they it'll financing is the Yes we'll But the last they comes that get seen always to of they couple into anymore, a that's catalyst, don't our but out back, lot won't we that those think once and historically, attract likely happened back

It time us. improving and we we'll a know very will enough bottoming do a would it an boxcar couple the in example the return not asset say the think we low very sure of So was we market that opportunities you going thing at America, mean sense I with in we're utilization, made doesn't North today correct North to Great and to was investment that but saw out to as risk and depressed manner we and ago, that where America which was disciplined North in a continue get invest has. that years type do in America. just in other invest are makes

in your America do creative the last in your continue what invest adjusted opportunities. that's risk you meantime, investment have we'll we'll lease have in as you to North we In disciplined So rates to recover. to years as investment, and the in few to get better be continue have

about couple I So starting allocation ROE strategy the we to like examples. we in talked to And return great Europe, getting about and will it up, Bob end, if our think that get we take a it capital always doesn't and better, have Rolls-Royce, of have. invest talked Rail will that India back shareholders off. don't Rail opportunity to those are we

Bob Lyons

keeping just doing the that to addition our we’ve end And also while in net over of North book basically as sheet $X American investment of stock in $X shares, I markets our quarter would shape at XX markets. since in rail XXXX million repurchased this of roughly balance value Rail really Rail, good our billion the billion point European of primary note growing that and our a own in

Operator

with from question a next Securities. Global The Willard Seaport Please follow-up Milby is ahead. go

Willard Milby

XXXX the volatility? on the cars for had that number these of on be may the two. these rates we'll the be late XXXX, these for you we booked I metric rates look or with that to maybe next with and one just should call expect we touch guess, wanted kind next we was as or that me it year terms back in early two? LPI already early XXXX. lease time. the just combined of the from out increased are increase maybe that's shorter year XXXX I more thoughts coming getting I kind of Should to high Seems lease curious in this LPI your that low off in early volatility

Brian Kenney

the We earlier, market on evasive. lease now what's rate will scheduled come know, and Bob that the this to that. it to expiring year. expiring short-term XXXX. be not be we when But think still condition we rate When of a we mentioned don't he's we honestly is XX% lot issue know the in down Well, range trying changing so is the off do leases, month-by-month for in the is know we're

So we're the of be what we end visibility like. it don't until the almost year have of good will at

necessarily better positive a expiring gets leases but want fashion a we the new statistic isn't it we great very right, rate if down is, the thing and and of very either. point were not it's me, almost indicator bring low invest to rate doing counterintuitive, a So year, short-term great in because next that all that's and where if to if or necessarily business is excuse that's, be other I renewing that out, I'm

just going like originally I and lead can you saw, too where we've the just the intended they LPI, to the So isn't and when indication of it it stock market But volatile forward. think market which that's much quarters where in the market's of in was is put going. is risk the it's indicative as general, is depressed probably is an

So increases and over demand gets continue that years. be a I could think and volatile see year it or normalized, volatility. two yes, next long more you'll answer we solidifies too, And until the to think

Tom Ellman

how given be taken we just don't add, of try isolation in in that look or many a call, are over gets people just as too into mix probably is any the should focus the bigger received folks to I or quarter. LPI. know left that's would the too really on LPI I point, than much the it data metrics about out think in the course we still And the none stress business I provide but on And how Brian's when the nominal trend simply we quarter-to-quarter, output. is have impact improvement point rates year, - next an of we the on think to the

Willard Milby

look see quarter-over-quarter, maybe the short to is on exactly when lines based really negative could that out thinking term the this that whole maybe positive I on what the or overreaction quarter XX, negative renewing business? metric be was but next or assessing when of along either under just quarter just an throwing one depending people numbers, side, shouldn't XX

Brian Kenney

and the they And about long business for quarterly you XX% questions on in sure start below more did need a where than rates a of to get I’d get still statement market, think are term. as be basis lot kind I this away by assessing from a in whole the of talking us LPI the meaningful quarterly That's LPI.

Operator

Jennifer are call at back closing time. to for this over you. I'll Thank questions turn further There remarks. no the McManus

Jennifer McManus

this for everyone any call the you. with questions. follow-up Please Thank me on morning. you your participation contact Thank

Operator

This and today's event. ladies you, concludes Thank gentlemen.

great may your day. a lines. disconnect Have now You