GATX (NYSE:GATX) Q4 2025 Earnings call February 19, 2026 11:00 AM ET Speaker6Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the GATX 2025 fourth quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephon ...

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $82.2 million or $2.25 per diluted share, compared to $89 million or $2.43 per diluted share in Q3 2024, reflecting a decrease in earnings [2][3] - Year-to-date 2025 net income was $236.3 million or $6.46 per diluted share, an increase from $207.7 million or $5.68 per diluted share for the same period in 2024 [3][4] - The 2025 results included a net positive impact of $5.3 million or $0.15 per diluted share from tax adjustments, while 2024 results had a net negative impact of $9.9 million or $0.27 per diluted share from tax adjustments [3][4] Business Segment Data and Key Metrics Changes - In North America, fleet utilization remained high at 98.9% with a renewal success rate of 87.1%, and renewal lease rates increased by 22.8% for the quarter [4][6] - GATX Rail Europe's fleet utilization was 93.7%, reflecting ongoing market challenges, but lease renewals were at rates higher than expiring leases [6][7] - In India, fleet utilization was maintained at 100% with strong demand for railcars, and the company took delivery of 600 new cars during the quarter [7][8] Market Data and Key Metrics Changes - The North American secondary market showed strong demand for GATX assets, generating over $60 million in remarketing income during the quarter [5][6] - The company expects to finish the year with a strong fourth quarter, supported by a robust pipeline of assets for sale [10][11] - The company anticipates closing the acquisition of Wells Fargo's rail operating lease assets in the first quarter of 2026 or sooner [6][8] Company Strategy and Development Direction - The company continues to focus on increasing renewal lease rates and extending lease terms, with a positive outlook on the secondary market [4][10] - The acquisition of DB Cargo's railcars is viewed as a long-term investment to grow the European fleet, with expectations for future opportunities across Europe [7][24] - The company plans to adjust sales incentives in North American Rail to maximize value, especially with the anticipated expansion from the Wells Fargo transaction [77] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the North American railcar market despite macro uncertainties, with lease rates remaining healthy [28][29] - The company expects full-year earnings guidance for 2025 to be in the range of $8.50-$8.90 per diluted share, excluding impacts from tax adjustments and the Wells Fargo transaction [8] - Management noted that the supply side of the market has been rationalized, and they do not foresee a significant increase in new car builds without a spike in demand [45][46] Other Important Information - The company identified attractive opportunities to increase direct investment in aircraft spare engines, acquiring seven additional engines for $147.1 million during the quarter [7][8] - The RRPF affiliates have expanded their portfolios, with total investment exceeding $1 billion year-to-date [8][49] Q&A Session Summary Question: How does the company plan to close the gap on revenue and margin drivers for Q4? - Management indicated strong demand in the secondary market and expects solid remarketing income to be the biggest driver in Q4 [10][11] Question: Will remarketing levels remain elevated in the coming years? - Management expressed confidence that the secondary market will remain strong, supported by a balanced supply and demand dynamic [12][13] Question: Can you clarify the financial impact of the Wells Fargo deal? - Management explained that the pro forma historic financials do not account for synergies and management fees, which will be clarified post-transaction [18][20] Question: What is the outlook for the DB Cargo deal? - Management stated that it is a long-term investment and not expected to be materially accretive in the first year [24][25] Question: How are lease rates performing in the North American market? - Management noted that lease rates remain healthy, with only slight quarter-over-quarter changes, and the market is not overbuilt [28][29] Question: What is the outlook for maintenance expenses in North America? - Management indicated that maintenance expenses have increased due to volume and mix, but they are on track to control costs through in-house capabilities [35][36] Question: Is there any hesitancy from customers regarding engine leasing? - Management reported strong demand for engine leasing and no signs of hesitancy from customers [48][49]

Financial Data and Key Metrics Changes - For Q2 2025, GATX reported net income of $75.5 million or $2.6 per diluted share, an increase from $44.4 million or $1.21 per diluted share in Q2 2024, which included a net negative impact of $8 million or $0.22 per diluted share from tax adjustments and other items [3][4] - Year-to-date 2025 net income was $154.1 million or $4.21 per diluted share, compared to $118.7 million or $3.25 per diluted share for the same period in 2024, which also included a net negative impact of $7.4 million or $0.20 per diluted share from tax adjustments and other items [4] Business Segment Data and Key Metrics Changes - In Rail North America, fleet utilization was 99.2% at quarter end, with a renewal success rate of 84.2% and a renewal rate change of 24.2% for the quarter [5][6] - GATX Rail Europe had a utilization rate of 93.3% at quarter end, facing challenges due to macroeconomic headwinds and slower GDP in Germany, impacting fleet utilization [7] - GATX Rail India maintained high fleet utilization at 99.6% at quarter end, benefiting from ongoing infrastructure investments [8] - The engine leasing joint venture with Rolls Royce produced strong results, driven by robust demand for aircraft spare engines [8] Market Data and Key Metrics Changes - The secondary market in North America remains robust, generating over $34 million in remarketing income during the quarter, totaling approximately $65 million year-to-date [6] - The European railcar leasing market is facing challenges, but the long-term outlook remains positive despite current conditions [7] Company Strategy and Development Direction - GATX is increasing its 2025 full-year earnings guidance to a range of $8.5 to $8.9 per diluted share, excluding the impact of tax adjustments and the Wells Fargo transaction [10] - The company is optimistic about the pending Wells Fargo Rail transaction, which is currently undergoing regulatory reviews [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the market for existing railcars remains strong, with no significant changes expected in lease rates without external catalysts [13][14] - The company does not anticipate any near-term impacts on demand from the recent merger announcement in the rail industry, as capital continues to flow into the secondary market [39][42] Other Important Information - The company expects to see healthy investment activity in the engine leasing business in the second half of the year, with total investment volume anticipated to exceed $800 million [30] - The Rail International segment's profit is tracking at the lower end of expectations, primarily due to exchange rate impacts and challenges in the intermodal market [45] Q&A Session Summary Question: Impact of potential transcontinental merger on leasing business - Management stated it is difficult to assess the immediate impact due to timing and uncertainty, but long-term efficiency improvements could benefit railcar lessors [12] Question: Future lease renewal rates - Management indicated that the market remains strong, and absent any external stimulus, lease rates are expected to remain flattish [14][16] Question: Update on engine leasing profit mix - Operating income constituted about 85% of total income for the second quarter, with expectations for strong performance in the engine leasing business [22][23] Question: Investment volume in wholly owned portfolio - Management expects to see some investment volume in the second half of the year, with a target of around $200 million for the year [29] Question: Update on Wells Fargo transaction - Management confirmed that due diligence was largely completed prior to the announcement, and they remain positive about the transaction [51][52]

Business Overview - GATX has a long history of over 125 years in the railcar leasing business [8, 9] - As of December 31, 2024, GATX's assets totaled $123 billion, including approximately 152,000 wholly-owned railcars worldwide [9] - GATX operates through four main business segments: Rail North America, Rail International, Engine Leasing, and Trifleet [11] - GATX's Rail North America manages a fleet of over 111,300 railcars [12] - GATX Rail Europe (GRE) manages over 30,000 railcars [12] - GATX Rail India manages over 10,500 railcars [12] - RRPF owns 427 aircraft spare engines [12] - GEL owns 39 aircraft spare engines [12] - Trifleet manages over 25,000 tank containers [12] Financial Highlights - Over the past decade, GATX has returned more than $14 billion to shareholders through dividends and share repurchases [23] - GATX's Income Per Diluted Share, excluding tax adjustments and other items (non-GAAP) was $789 in 2024 [25] - GATX's Return on Equity, excluding tax adjustments and other items (non-GAAP) was 12% in 2024 [27] - GATX invested $1674 million in 2024 [29]