Loading...
Docoh

GATX (GATX)

Participants
Brian Kenney Chairman, President and CEO
Tom Ellman EVP and CFO
Jennifer McManus Senior Director, IR
Justin Long Stephens, Inc.
Allison Poliniak-Cusic Wells Fargo Securities
Kristine Kubacki Mizuho Securities
Matthew Elkott Cowen and Company
Matthew Brooklier Buckingham Research
Bascome Majors Susquehanna
Justin Bergner Gabelli & Company
DeForest Hinman Walthausen & Company
Willard Milby Seaport Global Securities
Mario Gabelli GAMCO Investors
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 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 fourth quarter and 2018 year-end earnings conference call. Brian President and and by Ellman, and today Vice Executive CFO. joined Kenney, CEO; President Tom I’m Please note statements. that during our some of the today consist information will of forward-looking discussion you’ll hear from Actual trends results forecasts. could materially or statements differ or

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

XXX.X per share XX.X positive include $X.XX XXXX, are to share or million respectively, million associated per XXXX million and reported or net was share, release. in diluted investment of compares on per diluted $X.XX XXXX. items. In items net Page North detailed This various increased America both million net For investment income diluted These the XXXX $XX.XX tax our International. in and earnings per of $X.XX Rail GATX volume XXX adjustments of diluted Rail full income other as or XXX we of impacts or million XX with year share. and and XXXX, results XXX.X

the and to investment both in strong release, an activity acquisition end Europe year noted earnings attractive we close had and portfolio in railcar As India. made

approximately we This addition, long-term which over repurchased executed will America. In us fleet the for payments North large two grow brings years allow and repurchase In total our over supplier million. railcar our activity shares to XXX past XXX X.X in million. GATX approximately XXXX, million to diverse two

the be $X.XX approximately of lease negative new expect release, in as a of share. earnings per resulting This diluted the incorporates the share non-cash diluted currently adoption noted we XXXX range of range from to X standard. million $X.XX impact earnings $X.XX Lastly, in accounting to the per or

I quick that turn now call Brian. will with over So the to overview,

Brian Kenney

Thanks, Jennifer.

our XXXX So I to on more some helpful usually before would do I’ll than results. a take the little that it I talk give in about thought to to detail color but be you and outlook our get next guidance, few I minutes business

Rail, range our performance and Rolls-Royce valuations of in So excess in them compared XXXX produced earnings prior was joint the the XX for that $X.XX. we our of gains after laid sell to International our positive of prices ended the leased in year the American all that asset $X.XX outperformed look this in of outperformance. the 'XX, American net of so over out expectations that we effects ventures we continuing was share higher average adjusting to $X.XX forecast and year premium that that press considerably in XXXX, We tax our into per and important secondary drivers the first expectation original coming items. American earned be scrap primary to be earnings the Steamship morning market. reflective and to it’s to the was Rail, adjustments disposition And release both that Rail. expectations, than North strong were in higher sure somewhat but North in driver originally but able I And in than two higher for million of and think up at was railcars to we other

for than result. hold the values we we those a significantly we was The realize we great was prices continued was economic great so it to that expected to cars, lot but expected a achieved stronger exceeded GATX Now it the a shareholder. result if

call The second like in outperformance maintenance North expense net driver is I’d Rail. earnings to important out the for American

net year, the XXXX into we expected in cars in the qualification rail higher remember X%. coming that customers short be reluctance mostly tank by maintenance fell significantly and due as throughout And events. issues leasing year send I’d volume anticipated. if service to to their we described of maintenance, higher say was for to we But improving among our scheduled the you approximately market and Now we an caused

railroad this come XXXX. than lower maintenance with in lower net X% combined caused repairs, in So actually expense to

asset Now other I consistently strong the two disposition through weak income, market that a drivers obviously expectations our leasing for were out XXXX. reason. in variances there but from right it’s started called original these railcar On been

a to gains What and we et for sharply from experience this can declined market XXXX the down say a reasons entering low always stated secondary down market cetera, cycle. income or see interest is look to players disposition have access for all that though, rates, throughout the disposition to however, But last is even few call asset that. to financial this unlikely disappears consistently I need that the market, level to you strong. XXXX years, in new recession the usually on Now capital, remained very high be unfettered the through

relatively for market interest can have example, that capital exit hiccups and the financial of change you some XXXX, increase, economics rates For and new often can railcars the quickly. players saw in selling

it more than the XXXX an little what a maintenance uncertain I in lower unexpected anomaly. call is appears. will expense Similarly, it’s So net

XXXX send customers their driving an and maintenance compliance tank next increase network especially good the maintenance earnings costs, resulted to to more simply Specifically and that of a in into to was in going tank expense that our busy and higher of despite the starts for inability It presents our beyond a level increasingly in of result, years. deferred over being to challenge few in not economic XXXX. ours car forward cars operations compliance events get as work

existing it market think low few in in North did XXXX, profit maintenance. are weak the income as revenue the I as years. during and expected the American leasing it the massed have actually around asset Now they year-over-year best particularly because due those revenue increased and railcar lease And just factors last two significantly relevant discussed on I originally but the the decline example decline $XX million X.X% segment or disposition to unusually to was I the fleet

XXXX, Railcar So if produced other American We all the summarize improve. strong the original significantly across market did I businesses expectations. performance leasing outperformed we North our and

balance and Our liquidity strong. sheet are

pursuing. investment opportunities of a are lot have attractive we We

near-term given as North outperformance our factors economic and America I with combination 'XX. our general outlook to optimistic just in what in uncertainty cautiously best that’s the and describe political and see we today, However, might of I expect relative would discussed the the you

XXXX business the let’s by talk our outlook now about each segments. So of

in that calls. to changes what differently of driving – the year profit going I I really segment statement, a to little I’m just about want approach down want than to Now is each instead this in marching prior income talk business.

lower in let’s fleet. So in decrease the with million do Rail start profit existing to by to XXXX driver approximately $XX America $XX And and first million. of we that earnings North expect the a decline on be is segment

you widespread of absolute throughout increases Now we know saw as rate lease XXXX. most

However, that momentum rate recently. somewhat has positive stalled

broad-based car anticipate Although fleet we across increases select existing in don’t further do in XXXX. we the lease in types, rates forecast absolute strengthening currently

In addition, on XXXX. the expected increase expiring average in leases again to is rate

So due additions new in XXXX large that’s relatively to recent portfolio but our to acquisition. be year-over-year flat total actually is the revenue car and expected

and the and contribute on as completed to million the in segment the $XX $XX as on existing in million the decrease we sales that should fleet revenue discussed, existing So well about few going degrade profit revenue last there’s I to that’s railcar fleet continued over XXXX. as that years, pressure have to

in Looking that on XXXX get beyond. work well at XX% and are net that’s level tank maintenance increase due increasing qualifications the that expense, from XXXX the and primarily qualification in jump again XXXX trying to as to higher we of currently to a expect a completing X% due both was tank works as deferred

XXXX. lease new in again American minute through but may XXXX. market to and to Increased optimize asset Once that disposition said XX maintenance XX do, to negatively is those Jennifer in the million I North as we’ll we railcars secondary surprise secondary in realize talked railcar the is that expected robust not the we Now in I’ll years million. segment effect costs estimate suggest Currently forever. accounting to that last last and profit the last market Rail X the in million ago, rules And about segment items market of contribute income. about the fleet rates interest in continue on the also North of a it XXXX of the America are discuss weakness our million Rail effect sales by history few factor that we about made to impact despite as always to the the XX to expected drop be increased profit

but can can in a But it’s how level certainty. that current that our XXXX, we unfolds in the So we’ll have approach and little more the in year expectation to with more is we saw XXXX. before reality wait it discuss see uncertain

So with Rail let’s and I’ll GATX International start Rail Europe. at look

the increasing markets XXXX, the oil, strength it’s to throughout through these discussed showed in LPG rate starting And increases we mineral while. all we’re a chemical now see As lease newer markets year. been European and and

expected investment to and has that In growth profit segment addition, is new added to their car in accelerate XXXX. fleet

As paying materialize is freight but lot is in of you comprised fleet a opportunities know, cars XXXX. effort off, we’ll is and new find which investment investment in of majority see to historically their volume that tank their cars

XXXX. the in and as profit of Adding expect euro Rail So the India, to growth Rail in a to the should be is net International Europe year, Europe in segment segment compared good million profit effect growth GATX last rates rates news by few a utilization which dollars is see Rail and segment to story. weaker and higher a somewhat we from profit higher higher interest offset

XXXX, As doubled last in we indicated their year. fleet size

types. starting diversification in to fleet that utilization grow I see at car We’re And other see X,XXX cars we in into customers well path investment committed to have is for next to significant XXXX. Their to car clear some XXX%. XX a the months. over

return higher a well. in in few prior metro that are million When profit rail grow GRE appropriately range. Rail so, but profit have in should we dollars by this do in we investment Europe, combine lease $X or rate a should growth factors you all International for be to attractive that XXXX the Now that’s or expect say, growth and India given and India Rail million GATX as the segment million expected I $X to segment with

favorable they realized operated a lower they just they importantly year Looking to profit tonnage efficiently increased year the segment of the beginning normal number increases. million. higher during entire because and conditions stated a them They profit than in had carry would segment smaller XXXX. show great operating with prior at their the actually rate year, we At the and that year of over $X but hence more we American they a expected contractual vessels. in more And did much freight operate than Steamship,

they the multiyear Importantly also end favorable another vessel. up bring and used to towards tonnage year lock on market

this to If XXth tonnage market to a 'XX, as strong to expected higher operating well be year. you look that as due is vessel

in other fully will utilized. fleet their be words So

So costs. higher revenue offset increase will a by you That see somewhat should be operating there.

You assume and work. costs scheduled as a have deployed well to winter a to due maintenance higher more more vessels as higher environment normal operating

portfolio in strong XXXX. year segment So as effect have operating lastly ASC have another investment be in great. in is slightly management, And been performance to Rolls-Royce the should XXXX is opportunities projected and profit up net

also management the in access. also that performance that by profit trying few we’re should is the increase effect segment marine portfolio net to in XXXX. million We expect a better investments to in see financial But remaining

to moving what’s efficiency segment business driving that’s profit SG&A, basis, On each XXXX. in unit. So consolidated gains plan we a in

certain expenses in won’t move We with reoccur. were XXXX our that have that associated headquarters

with $XX by and million. in to lower share XXXX similar tax We be $X.XX share one $X.XX net the plan XX compensation combine be have SG&A of income million pretty gets to range and 'XX repurchase; per year. our expect We And of approximately you last lower to the us that expense XX if to continued should to rate year. we project that guidance million be in the to in currently lower diluted this assuming that

I’ll can by paying XXXst So match. our consecutive that end companies marks year reminding track and a that’s XXXX you few dividend record as a of

Now example their dividend this shareholders. of of will they week, announce streak decision commitment I success the our dividend and the that GATX board is importance later of But meets century time. to the a record and our great at our understand think long

go I ahead questions. Operator, had. all open that’s let’s So to and up it

Operator

go We’ll ahead. our much. [Operator from Instructions]. Stephens. so take Long first question Thank Please Justin you with

Justin Long

in lease then made fourth provide from rate of come We’ve North update talk the the as seen about and recently. that to you’ve you morning. months. Brian, that rates the storage maybe trend seen you in up the And little anticipated on sequential Thanks PSR? couple stalling quarter? you and last America question, an railcars on start answer impact bit a positive comment here with in the momentum Could good maybe

curious you continue. that will trend think if Just

Tom Ellman

take Great. Tom. Justin. a at Hi, I’ll This of both those. is shot

bit, all were rate varies as quarter you the paying XX% were as car freight than sequential across a lease sequential roughly changes down fleet, lease gone, the So first car fleet they rates have or less – know of always by Across And it so. type. flat. car the as far

over less much you the again up varying more by as of tank course to much car than XX% significantly As mentioned up XX%, freight the as type, up year, year-over-year XX%. slightly cars

need it’s car America. railroad extent in often X it about goes, the results an all PSR can that velocity, America. that overall note To total for PSR car important less impact types of North and quoted there as impact cars increases in change in to But we demanded North thumb it’s hour velocity per will be be rule There’s of far the years XX,XXX increases cars fully As PSR. going before to won’t an efficiency mile in change in average equally. railroad gauge

lower this However, for high cars, of greatest types millage. will car impact millage fleet The and intermodal. coal majority like be GATX are in

millage boxcars to A tend would to tend PSR. that been be notable and impacted to impacted. indeed have we So by exception do less is that be higher

expect we date our strong to in because sometime. attrition and have to continue in forward However, led fleet boxcar favorable experienced supply/demand long-term utilization to the we the fleet has this balance

Justin Long

And renewal great. all provide you your then an the year LPI provide XXXX Okay, this cars could number for That’s expectation of is well? have maybe and the you on helpful. what looking for as the guidance, scheduled at update

Tom Ellman

Sure.

as is material really this transactions quarter wouldn’t mentioned as as being LPI X.X%, view far So us we’ve of at And certainly to we what the challenging move a for the number the that the forecast. in given And I market. small a one a change in as quarter can relatively a LPI. previously, saw

As broadly you in if and the sequential I stated, a lease rates flat little car look bit. freight at fact down just tank

to turn we to do XXXX, end through that we rate year the we environment lease saw of expect XXXX. the at continue As largely the

comparison we year-over-year difficult the of LPI of types, car course look freight at of to And So for you renewal values these predict but slightly if provide year. it happened for and most throughout that the always And the the will to LPI. X%. somewhere modest reasons sense impact tank be also more expect The And negative activity car makes to currently we range change. the increase rates will because strong to the think what it between to all a XXXX more in positive. causes rate is because be going again, be the competitor positive XX%

be XXXX, than XX,XXX a As see order of maybe XX,XXX it the far in of cars. higher this should year on to expirations number as that we to expect and little bit the

Justin Long

last very maybe give of in that. And maintenance that? all how North to And year to us is what low-single catching this on back commentary expense? to look you from kind there to lastly we the and think gave digits? view you a do X% normalized as XX% then year? rate beyond, about grow up as much to for can commentary American maintenance XXXX maintenance great. it essentially expense, Brian, you digits, mid-single run some of a helpful Okay, then there any around increase way Is Does of Is go

Tom Ellman

Yes.

year picture of it. with of with don’t amount again, part full present important going TQs the as I’ll a total maintenance, we on So Justin, they’re in but mentioned The start what’s very that. of the

we what you million car magnitude have normal. before. So million difficult that is than level because that of somewhere that more more as in And already doing to range curve extra And about gave. about X,XXX doubling to that we as And twice the exact for far of as TQ important you bring the certainly typical. $X would deferred, to expect But to the at baked is and be the cars are the that up of total catch into the to that 'XX we between ahead when try that, more into and dollar see deferred did XXXX. of we an the we perform many X,XXX Probably look done the expect Between TQ. up XXXX, over one TQs much in of do fact this a TQ to order deferring number year. key find by In going in cars TQs. the is as year came get TQs of we’re it’s guidance in costs of them else we we picking on from amount early, maintenance TQs versus $XX we probably with got while we did put the

have the challenge range of that it We a number that part Brian at But and past. TQs it’s the will be for of the the reason described in beginning.

Brian Kenney

what’s Justin, beyond. cars up as changes XXXX once as does far pull to forward, start scheduled it it due, in and starts but ramp you again as

even So you’ll maintenance of think elevated we the out to were see that even couple workflow expense over if next I years.

Justin Long

appreciate I the helpful really all That’s detail. time. Okay.

Operator

question our of And we’ll next Allison move to Fargo. that Poliniak with Wells and is

Allison Poliniak-Cusic

Hi, guys. Good morning.

that we’re pushing mean any on maintenance balanced some I Is waiting half I keep 'XX. be throughout year? stronger we the should into specific the expense, be of know to it first could there fairly or is like Just where aware

Brian Kenney

it regulations of customers by expectation more early work, in see But be the make of is would timing the really the the the So when to way car available. dictated the year of because will people something the catch deferral. try when that over, as we dependent lot customers those make have control to it’s up on But so available. cars a not from it be our

Allison Poliniak-Cusic

Got North step read blip then into I like in America? term that we that is it. And in quarter, just to anything a up that this saw mean QX, in

Brian Kenney

Yes.

So we that always caution over the improve. broader of XXXX market a course a But continued with grain to people message to quarter the salt. take given the of

to term. trying been lengthen have we So lease

sign at look that the improving lengthening So as an you course of XXXX. of over should general market a

Allison Poliniak-Cusic

you we should in – that secondary should that? asset what 'XX, gains 'XX is we how guidance think Great. what you be And that assuming, on said approaching is did the implied then approaching lastly market, about in just the

Tom Ellman

couple said years. the Well, to of little is it than I uncertain a as what more appears last be we over do it’s

in is So range guidance. that and we then range put a reflected our

Allison Poliniak-Cusic

Thank Perfect. you.

Operator

of Kristine Our next Securities. from Kubacki question Mizuho comes

Kristine Kubacki

macro to know is visibility you is some kind a seen European morning. reconcile a Can the of there. just talk of what little is doing but in indictors over and the little obviously bit like portfolio talk PMIs you it the well. was lease your there seen? a about macro Good it little the Hi. if disconnected could seems that I kind the shorter bit are about market. trying durations And bit from we’ve quite I really choppiness we’ve

Brian Kenney

mineral kind It’s Brian. year we is. and really actually types; coming petroleum, a fleet little improved. bit of chemical, oil, Those disconnected. saw We is than North LPG it the of It our that’s better It’s so Yes, in America. the expected all reverse across environments utilization freight. all

the helping If but some is stated, economy you as petroleum the you that perhaps choppier look at little are a other the market, factors there’s market. yes,

difficult in So petroleum first of continues gasoline, continued years. there’s XXXX. market high and consumption all, prior of and fuel the diesel into XXXX even That through

to change construction track of in They transport There’s shortages. locomotive European Poland. have Some demand. transportation meet struggling in the are railways routes. driver There’s

barge the So there. factors some those continues Rhine water transportation. are there’s low some customers levels customers other and rivers are and that then are other on And and – abandoning

in lot things a out combined that sold most part of where there’s what XXXX. finally shortage there’s situation manufacturing is for cars. And in we’re with the Europe So of everybody seeing the a

turning So that while. success, rates up. hence high Hence the XXXX a over in we XX% renewal in haven’t I renewal seen think and quite

that’s Now utilized you quarter. That anywhere, would the I think in be I fleet, chemical probably ahead well exposed in XXXX the softened bit racing market. actually said but the economy probably in Having mentioned say most a our in choppiness the that if probably over was it little fourth as that we’re XX%.

bit economy generally So looks right it in is pretty break Europe little what’s now. a of it happening in the from but good a

Kristine Kubacki

as question at Thank I but can helpful. to bit it’s get really you. you larger then little market the that forecast from there? opportunities I this And there and softens are ECN perspective? it expect also more did, even That’s might about the market you the pipeline a deal opportunities look be guess do on a secondary picture buy talk Obviously, the that what’s that the more maybe another harder side maybe what you like as that time,

Brian Kenney

eventually obvious market. oversupply you in of an this very There’s first see something passive that players funding seek a as again a involved, going but the ones investment both then really excess are needed that knew spurred the bring in you’re platforms people element at general built is five the to of actually over look the feel. one opinion don’t think industry. financial I we’ll a low I In the talk know. two honestly if that’s if don’t a from the have sign what have a who but it, Whether to I think think bank deal there’s the fleets funding that the that and know types even of with have beyond but statement that’s Well, run last and long years. cost these perspective; I to and is players opportunities, situation, is railcars But beginning my the underwater. shippers guess from I of I cost are economically more don’t asking is categories about industry our players I financial couldn’t by low our investment once I financial and And pullback exiting in

Kristine Kubacki

very appreciate you Okay. the Thank I much. color.

Operator

Cowen. Next of we’ll from hear Matt Elkott

Matthew Elkott

cancelation question you. tell to renewals this fees? pay Thank any or get for to are are is and read Is is there the than us on to it out behind or of of number morning. customers renewal typical Good year? into willing random can higher it you anything that My there what is XXXX. trying leases Tom,

Tom Ellman

Yes.

over Challenges have the also to and as back addition, commercial get velocity great XXXX. into our they function last, where in great by far one, renewal success job a cars so And talked as historical and a really work the been success we market it’s of our tend a challenges about forward is to customers railroad And team of we in previously. percentage and need with the because the level percentage, continues trucking that helped going then course the of we alternative to continue the as high team. truck. by customers the maintain year going cars. expect low, strengthening to As that the the that again relationships with on that But renewal be

And little some and success to talked different contributed getting challenges in. stronger all renewal in to of about things context TQs related that that we’ve have a those a is we our But percentage. the

As we’ve as leases any out or happen rare in far of be but occasionally, does in talked any wouldn’t and highlight earlier It that, that’s market. a to I kind about customers phenomenon of get that looking specific pretty instances occasionally as trend. interested

Matthew Elkott

I the you the last to think you guys have, planning helpful. couple think those, very that time of materially had DOT-XXX asked you quarter this of add fleet I third year? this in are the about thousand And fleet I you to Okay, a

Brian Kenney

Yes, about so talked we the as not we’ve many cars. as in the cars, far liquids past, flammable as to times do legacy any plan retrofit

I our in So area for to a side. relative car car the going in Like we’re any other new so. that any outsized and with on been types. investment has market, look growth participate we measured do and wouldn’t way do to we have participated we’ll to continue

Matthew Elkott

one impact the said And would the know out what on that Okay. it will years take follow I find PSR to last up guys front, just then you be.

fully previous may examples three implementing detected recently, hard from and it have PSR. any know of of to implementation have impact even I quantify, your much those we CN most CSX on So and business CP pretty type then railroads? be of PSR but And PSR trends first or you historically from did with the

Brian Kenney

Yes.

commentary the of back the of made car about I So some it kind to types. goes

boxcars. talked that quite because about because fleet in the nothing beyond really boxcars our pinpoint remarketing in could market successfully getting but specifically going We’ve some there the cars. the what’s of still calls on in and back market, was them, those them the nature previous of we some needed nature So remarketing and

and other and implementations as we to them. minimal. pretty compete cars continue thing the far against having The is as to fleet, be getting people prior with PSR concerned big about on So impact our us back

Matthew Elkott

Okay, great. much. Thank you very

Operator

from we’ll Matt And Brooklier. hear Buckingham Research from

Matthew Brooklier

and Thanks good Hi. morning.

locomotives. you you So PSR conversation railcars, on things? obviously of the another around question have most Do but a the of think been for have you. leasing smaller guys has I PSR any business exposure locomotive side

if had or hear either on side any of you locomotive the to curious things? exposure Just UP to NS

Brian Kenney

we granular to want over don’t our fleet it the general customer so in exposure. get But that tends industrials, more moving specific direction. short to lines too more of time and with be and with in Yes, nature we’re

is implemented to the we Xs it locomotives. direct not being the impactful nearly So would of if is impact as different a by had class PSR be due mix it’s

Ours lower horsepower that we are customer with locomotives and base the X-axile, have.

Matthew Brooklier

That’s you. Got helpful.

pretty But of maintenance So should the good – maintenance a a 'XX. your shop the costs that car from another pretty able expectations to maintenance you in deferred it. the your right, amount – being pushed and to up previous maintenance fair some is getting you for question, costs dependent that’s back the you, be amount. that comments to are of costs some on getting customer deferred 'XX maintenance then There’s said

how been the the it that bit maybe have this year arguably freight curious if than where year with you is this as maintenance just I’m So expected for 'XX? little where to where an better maintenance we market expense? where comes car in below stronger there’s potentially volatility would tank much situation a Could been costs area market the a guys it’s and be there in is doing car

Brian Kenney

we way, the in. as could And that not the hitting there’s The question phasing to could your that timing on 'XX the be not Yes, some same be have or be But variability. what if a timeframe, of expect. long variability the discussed. might another far Likewise, event, head more at could maintenance this thing cars variability would nail saw of right originally And to 'XX? we negative our as recession happen the much as Over the end and costs. other year, we you’re opposite it the that come at operating absolutely the a up some environment, In there would the customers was happen. it on cars. give happened of end enough willing

variability there built So in timing there. is

Matthew Brooklier

Got you.

you the Thank Okay. time. for

Operator

Majors. From from Susquehanna, hear we’ll Bascome

Bascome Majors

how else Thank Is on how in maximize and what’s into nuance something you’re your you’re the there, it entirely compensation term, performance-related that’s we’re there maximize you I it XXXX, force and for trying the again XXXX? is wanted plans that that Now to enter sales to incentivize? rate, than different really with the what’s there trying behaviors to the lease incentivize you. focus And is ask XXXX? just

Brian Kenney

Yes.

we that So with they this to every at things more being into term. do depth tend were optimization tweak And XXXX, I to plan and market little we that more coming things are we better utilization, rate of of side than emphasis before. the you how and on those whereas think but It’s But placed. individual into year to getting tradeoff look of might something we to and the get bit year little between for on and into try question put every a the asked the maximize rate have year that year that’s the emphasis every it the this the year. look tweak cars something we much, come specifics in a term optimize Can’t as optimize. exactly and

Tom Ellman

year. pushing fleet. trying this market we and we’re trying XXXX some us the rate varied and fleet that across fleet. rate complicated the below, for are saw it’s same trying at In across others to of In the and to up are some 'XX it’s be say I just term. as rate you think tactics. and the as to a long-term close almost In extending direction and as in cars rolling inflexion to utilization far some can cases staying way and to hard extend more you’ll down where always the our market and some would push lock you’re term as model Because point are everybody’s and you’re the I 'XX, short Yes, pushing

emphasis much It car there’s a on year. board more the basis. be will across So think I this don’t type any

Bascome Majors

it So bottoming or like that sounds in cyclical is mix peaking extremes of market? the somewhere you the at would see incentives between

Tom Ellman

that’s I fair assessment, think a yes.

Bascome Majors

you. Thank

Operator

Bergner. Company, With Gabelli from we’ll hear & Justin

Justin Bergner

Good and questions. you taking thank my Hello. for morning

First with off, I just start wanted PSR. to

leasing referred You you you extend being competitors. that? car just or that on increase you had that mentioned just elaborate referred guess the Could of sort I car beyond your risk to? risk cars risk previously some the types types to returned in of Does the that primary is the to

Brian Kenney

manage get and would more customers to wouldn’t talked about we’re very cars Yes, than gets previously the I cars types expirations where different be you that a of anything lot event, a referred about have It’s mix have any have when try you then else I once, of PSR the What thoughtful to. that the we an challenge. come question say really we car with that of what somebody And we else or cars If against back, exposure. a various earlier. back it’s at to But compete if always lease. those. we profiles term really the off

Justin Bergner

going Okay, that’s that say to discuss factors demand from sequential outlook you what and due of of due sort forward these step in to leasing related I or it flattish back also you prior highlighted guess mainly was great. a is down, storage? deceleration to is cars some going which economic the call, a and And into considerations PSR would velocity as the

Brian Kenney

the impacted the PSR, Yes. of a is not types as that’s some which relatively we base the of with If car that which won’t off exception other continuation seen. levels Again, for are of as boxcars, car types impactful as quarter our our assumption less are have fleet. be fleet the in it by velocity

Justin Bergner

it various as Should out year? then like about taking that an earlier And were the at in you. the up points the fourth in you out increased in fact we repurchase of blacked at just you’re going activity earlier to a finally forward terms Obviously fourth the Thank or of weak in the more run advantage share blacked activity quarter you million. the XXX repurchases, year. quarter stepped year think price the just the end seems rate

Tom Ellman

Yes.

last the had we the year to call on of back as So level. range something pace XXX mentioned for to the the that certainly million targeted in try to increasing were we we and

be move we board GATX targeting subject amount we higher our forward, will approval, a XXXX. to in As

million have approximately authorization. current remaining $XXX on our We

Justin Bergner

you. Thank

Operator

from Hinman. we’ll DeForest & Company, Walthausen hear From

DeForest Hinman

questions. for my Thanks taking Hi.

some Just clarity on the tax rate.

I said have significantly believe. I tax It prepared XX%. forecasted in beginning think last remarks of year on tax lower the to third And quarter XXXX came than 'XX around the the similar we rate at that. rate call call

the should in So thinking XXXX rate about correctly? low tax teens that if I’m a in we reading be

Tom Ellman

Yes.

normalized guidance basis. the we all So we’re on provide a talking

XX% the we On XX% range the that discussed. looking various the that a range to going expect similar Act. forward. without Tax to normalized in at And would you’re basis So something a is impacts referring of that’s closer the we much

DeForest Hinman

XX%. Around

Tom Ellman

you for saying is which XX% is number adjustments the normalized No. normalized impacts the number, Tax when around the I’m of the make What Act.

DeForest Hinman

the bit get Okay. And color you Rolls-Royce But strong JV? bit We’ll us the more little area the very growth an you or saying give of Obviously there then can you’re very, a side revenue can that’s on for help when the out. expectation color K comes from understand a another either it’s basis? more years? strong year. little runway what a profitability on been us number side the Clearly an is

Tom Ellman

Yes.

XXXX. JV an the Rolls-Royce for basis the with operating gains tend variability remarketing of be usually for do to On So outperformed timing has which to lumpy. very the

similar the in to overall XXXX similar performance expect We – to 'XX. compared be roughly when

good and expectation. XX some be depending at were range perhaps million million might be base remarketing we Putting there million. can a about XX somewhere on level a those 'XX gains, in XX But So variability. between

Brian Kenney

is other We there huge Rolls-Royce XXXX. close a investment $X joint The billion venture there in at I’d year thing Rolls-Royce. invested the was to add in

DeForest Hinman

to million. XXXX, the a reflective share repurchase management see from capital around an of And XXX the to on amount it’s Okay. perspective outlook side, similar encouraging

We to million repurchase soon it we authorization. From get on remaining need perspective, board have a authorization? not does discussed XXX how share whether the that increase or

Brian Kenney

and our We Friday meeting share repurchase and shortly. discussed, be both board dividend have so the this will

DeForest Hinman

for Thank is helpful. taking you That Okay. the questions.

Operator

is Global And next. Willard Milby with Seaport

Willard Milby

everybody. morning, Good Hi.

does the North coming guess was it ask I income, fleet America about Just similar wanted I on cars remarketing number assume a the year? that X,XXX this of think of to out Rail

Brian Kenney

Yes.

So variety optimize portfolio exposure, customer profile. of metrics type each year do including the the what exposure, expiration we is across a car

the cars, plays the subject we kinds but it expect to it market in depending So I we will base be at same variability the year. be we how of a say what look things the out wouldn’t lot of why same saw which this of necessarily is case would number

Willard Milby

North fleet, the Okay. the purchases guess and up know American continuation I with far of American from Trinity. of I And the new deal as Railcar car the long-term as picking the overall you’re beginning

XXXX, that ended kind slight As a increase? of kind think flat of maybe does of railcars, where of look the we overall here from portfolio year we the

Brian Kenney

Yes.

about new get was the one transitional is year ramp the year. a And as ones Trinity are far old agreements they work, combination two as we at of per X,XXX two X,XXX the the The cars when year. ARI. itself cars So up way a going XXXX as supply

over So agreement we’ve as slight far going supply as forward would seen historically. the you increase a see what

Willard Milby

I Okay. all And other my asked. the questions been Thanks. have time. appreciate

Operator

GAMCO Investors, from Mario we’ll hear And from Gabelli.

Mario Gabelli

Hi. Thank you.

– or your Is rate, rate, Just cash of your nits. is cash your book XX it of tax it’s a that couple rate book correct? tax not your tax

Tom Ellman

Yes, that’s -- Cash tax is book. correct,

Mario Gabelli

fine. All right, that’s

$X XXXX? cash net think XXXX? XXXX? billion cash or in or you out in mentioned you the How that is question the out in What Second much in into out do much did you pull JV. How cash in is

Brian Kenney

here, million million. XX that Typically, of investment on get I depends XX investment Mario. opportunities. an don’t It dividends big expect we to

Mario Gabelli

So had but get you cash you out. that didn’t

You had in then cash XXXX? in

Brian Kenney

Correct.

Mario Gabelli

right. All

that’s Now be going a important to materially swing.

about that what I the Now the your know the I K you cash earnings. as Q have don’t monetizing mean asset. and opposed – to in guys talked – have I don’t

You considered your in up and non-rail and taking them some past to businesses them in the the off packaging form. shareholders spinning

what’s want your basis So ask, JV? in I to the Rolls-Royce tax just

Brian Kenney

rate. about the sure tax not I’m Actually,

Mario Gabelli

We’ll get that another problem. time. offline No at

that to fleet share you you purchases? how the Obviously, with in the care I NDAs you but it you you to talked call investors You I indicate earlier or didn’t outstanding don’t about whether Okay, anything. way. are about to your that. that about to many fleet on your Would philosophy you’re bidding ready element share regards do – is with have NDAs. want don’t care

You had to try.

Brian Kenney

Mario. nice try, But

Mario Gabelli

the was the about owns you fleets Have Berkshire. I fleet agree. past? do. philosophy years aggressive else Listen, paid for does more of and a we the NetJets the like your U.S. where that’s about you any all have what to you at of of Independent much XX I in ago than get changed it, asset-light somebody manage pace managing in that, thinking had

Brian Kenney

interested percentage the structures business per We I’m car of we terms that’s of not the fee Mario, tend a in us. $X the and real month, do But other not industry. do some Generally, per per exciting is propose people for car in per competitors those in $X managing get fleets, types to interest. month, of so getting and which lose just occasionally upside a then of

Mario Gabelli

There’s very to on XXX% who would and write-off, for the by their day. and a lot call clients take fleets are piece firms that work your then And take care. of I’ve Have take then great the stock out upside. – you much. is Congratulations. have that lot manage like a to bought Thanks a individuals just this figure of why a book. got brokerage already

Operator

to or And for there like I’d to appears further at our additional conference closing any back questions time. It remarks. turn this are presenters the no

Jennifer McManus

to like Thanks. follow-up me call I’d the any questions. contact this morning. their thank for Please with participation everyone on

Operator

you Thank participation. conference. today’s for your concludes This

may You now disconnect.