GATX - Earnings call 3 2023 | GATX Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the GATX Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Shari Hellerman, Head of Investor Relations.

You may begin your conference.

Shari Hellerman

Rob. you, Thank thank Earnings and joining XXXX GATX's Good you Quarter Call. Third morning, for today President I'm Tom Bob by joined Lyons, Vice and Ellman, and President CFO. Executive and CEO;

during forward-looking statements. results some information of those Please materially could Actual today statements note of you'll or or that forecasts. hear consist will our differ the from trends discussion

and filings in factors earnings release our the more please GATX's XX-K assumes to For Form in no information, other circumstances. to refer any update included to subsequent in for GATX SEC. or XXXX those events or with forward-looking the discussed our reflect risk obligation and statements revise

quarter XXXX $X.XX and per a $XX.X million net Earlier reported third or today, share. $X.XX net or $X.XX million diluted per income GATX per XXXX share other include tax compares items. of results diluted $XX.X diluted third This quarter of million or third income $XX.X share. adjustments The net from of quarter XXXX impact negative to

Year-to-date the adjustments and share tax impact share information and XXXX, of $XXX.X $X.XX a per a year-to-date pages negative net $XXX.X other $X.XX $XX.X XXXX These from negative include supplemental tax per other from release. million year-to-date $X.XX items. adjustments are $X.X period or million impact diluted compares of per million The items. or results diluted in share. detailed share include results million This per our the or earnings items XXXX. diluted $X.XX diluted The to same net in XXXX net or of for income was

higher the the our and of fleet fleet North segments. business quarter. car types at to Demand our strong, rates. utilization for of Rail majority each address the briefly was remains continue renewals at XX.X% of I'll extend America, end we distinct in Now At

an renewal renewal quarter of positive of change was average XX term third XX.X%, index lease rate GATX's price with months. The

the XX% rate high and quarter. success very remained nearly renewal in Our

[ our from supply we've a all place We've agreement. new X,XXX customer to base. all continue community supply Greenbrier railcars placed X,XXX our diverse XXXX with And supply We XXXX agreement. successfully Trinity our ] agreements from from railcars placed railcars

we've railcars X,XXX XXXX over addition, from Trinity supply agreement. In placed our

is under available earliest scheduled supply delivery quarter agreements XXXX. our the of third in Our

types. America market by for utilization approximately generated third to active. railcars remained We lease secondary million The rates and fleet expiring healthy in year-to-date. $XX car continued North most Within while income International, over remains in Europe's stable of Rail remarketing experience rates, $XX Rail demand quarter the at Europe driven XX%. in increases versus renewal million for

is there European Europe. intermodal Although continuing the utilization dip Rail softness the in sector, for driver at the is which primary

nearly new During the Rail India quarter, million. was and Rail grow delivery quarter fleet. $XXX take investment cars third volume Rail continue to Europe and of Europe's the

Turning management. to portfolio

the primarily Third quarter of performance solid Partners the by driven results Rolls-Royce affiliates. & were Finance

aircraft spare also wholly passenger portfolio for contributed earnings. robust continues to Our higher demand engines air international engines owned is traffic recover. as to Global aircraft

volume opportunities attractive release, was billion over businesses environment. quarter and over our global today's the noted As investment continue million in in third identify Total investment we the $XXX in to year-to-date. across $X.X

Finally, remainder the for year. and to reflecting performance the our favorable operating of date outlook

previously adjustments remarks. share, excluding full exceed and diluted impact high per to are $X.XX prepared XXXX our the end range tax those our earnings expect And We other year of $X.XX items. modestly of guidance to any announced from

to Q&A. it back we the it for can hand I'll so open operator up

Operator

Long [Operator from your line the Stephens. of And Justin first from question Instructions] comes

Justin Long

into the And Just in on for your you third the in expectation baked a question quarter? sequential the a American with on Rail. you quarter? start then the about talk Could I'll guidance. lease on rates that fourth North you trend can absolute remarketing basis anything Maybe in share curious what's saw

Thomas Ellman

first take over then and it one Bob I'll the one. for the to turn second

So of points down covered rate. The terms that and percentage a couple about were tank car of were small the X% were were relatively XX%. up that most lease hoppers prior flat. of coal Most quarter, exception freight cube in types compared to car types to

Robert Lyons

Yes. income, timing. fourth terms activity Justin, a just I'm more little seller And on of because remarketing coming difficult predict sorry, into it's buyer to bit or the always in quarter -- of

difficult. we're a the million close it X little So the of income. year, already in to first gets $XX months Through remarketing

more quarter, the some but the see on X fourth we'll if not activity annualize So the you same magnitude in last quarters.

Justin Long

North business. that. I Okay. go ask decent-sized both sequential of the about expense we're ahead seems expectations Great. on North back international America maintenance secondly, step-up pretty we maintenance far in helpful. like if in the a your at a to basis. beginning expense of wanted It for to That's America, year, tracking the and And I And had

just magnitude of curious was driving about color think to and if you little going kind this of forward? I maintenance increase So the a bit what's on expense could how give more

Thomas Ellman

this International. Bob America Justin, over Tom. again take for turn to I'll the is North it then Rail once and

than facilities higher more you variance higher-than-expected was a our the caused which by recent into from few we fall As little we existing assignments volume, that owned of of more result are in coming This than we a percentage driven and costs to work have than maintenance expected bit expected. a was a maintenance stated, cars would bit a thought This the we compliance of history. on year. do we coming

to per important is However, the third-party and cost line on expectations it's in our note to attractive unit our with facilities owned alternatives. that repair very relative

of grows actually advantage relative industry limited our during capacity. times fact, In

provide the earnings do January we'll and on that. next we call XXXX As you continue our or during to commentary year, know, always

goals be our fair say that to increase of the maintenance one our of percentage will it's own However, to in facilities. performed

Robert Lyons

impacts, XXXX. Justin, -- you what expense from inflationary maintenance the not coming as sharp We overall an recall, actually Yes. anticipated. had very And during on we in the range international standpoint, the is side, it's might net of had

full So overall, had costs impact from headwinds terms there. year. well. coming coming we feel energy both in into as into material we that what deviation of expected year, in this nothing drivers of the FX would X the being labor terms But some costs XXXX, of we the and We've the knew biggest also

Operator

question TD comes line from next from Your Elkott Cowen. Matt the of

Matthew Elkott

the utilization some a see decline, did and success and talk the of the rate to strong even you this? rates rate, metrics, guys Good success renewal renewal although bit about can

Thomas Ellman

Yes.

quarter, the is can than Matt, of move of exists. can and around in a bit A there terms little given really So that. that of that's degree precision implied transactions couple the move more

car. you noted, very I'll back thing the which as work. does reason, nonrenewal that note not remained a being means being very, put to whatever important utilization a not is The renewed non-utilized quickly any high is is car necessarily that mean And for

Robert Lyons

the Yes. on say certain and too. environment, given And car no. are And to lease comfortable customers where Matt, our of capabilities, times, this a that, our would add customer. where There -- with fleet next the may especially back commercial I and of rate putting type diversity in taking we're

is renewal So that the in of your code But would rate at any obviously we're impact where ZIP renewal really success strong. really, today rate. the in up success end,

Matthew Elkott

manufacturer the this I would correct? And helpful. quarter. clarification more I Shari last XQ, you first just good. on one suppliers believe, quarter, your question. That's Or any is deliveries that from Am be then available mentioned for believe, said -- scheduled very I first

Shari Hellerman

now. XXXX third Yes, quarter Matt, of so it's right

And freight about out. so backlog year a tank for both and are cars

Robert Lyons

And agreement, that's Matt. supply yes, our on

Operator

line question next of Wells Your from from the Poliniak Fargo. comes Allison

Allison Poliniak-Cusic

does reflected today. of seeing intermodal in the leg Just I to Is is on pressure feel that it side. could just just down? you're you? to where it get sort a of want Or Europe, take that trying go to that like starting back sense for to utilization that another stabilize

Robert Lyons

fleet take a intermodal going it's in total of -- to to don't Allison, a going another if XX,XXX about take to it's in have down, recover. Europe wagons out of wagons. fleet know X,XXX We leg fleet over I while only but our

it's the So significant one small pressure. minority most fleet the but a under our that's of it's

have roughly are idle For X,XXX Europe. those Over it. wagons example, in intermodal. half we of That's

own, work. pressure, But be to and would challenged that market relatively new here has Europe to X to It's for in good It's we take I and you rail. Europe X in going a while about utilized for as a lot fully the GATX they're term, going and across for the in portfolio. the to the in pretty long environment don't expect. push most see to in faced assets There be the that assets So good point economic abating is months. we fleet sensitive from are feel very truck the where those next economically assets the regions market will of products and more overall. a

opportunities. falls return of going we're Europe leasing or have percentage where or our any deploy We're percentage pegging return India best capital out we highest to for particular best any for business, so not our example, and the that opportunity. the see for we engine where [indiscernible],

right fortunately, board. them the now, seeing So across we're

near As changing you don't well the it's said, term. I in pretty see here diversified. that

Operator

from Gabelli Funds Your Justin [ comes Instructions] ]. question [Operator from next of line the Bergner

Justin Bergner

The relate quarter? shares Did in any you would have some the repurchase first just question I to questions. cleanup

Thomas Ellman

did We not.

Justin Bergner

Rail year? secondly, revenue of commensurate been the it ticking international growth in then Is other what's over just business? just the could why in that And sort and last International, of the up you it's Okay. with clarify the

Thomas Ellman

Yes.

you're is guess the Portfolio actually to my segment. Management Justin, referring

Justin Bergner

that as well, but was the asking cover I international. I guess can you about

Thomas Ellman

Okay.

portfolio management, in [ driver gel the engines the So ]. key is

that Management support the business engines to pool that's accounting been pool of shows several revenue, that other because of noted those we big engines, XXXX lease airlines is up of and a to to single rather July total have this the between fourth that before segment. are Rolls-Royce we've being in quarter step-up And than fixed that used that engines as added little why their that in has rather program. are bit XX you different, that supports the to that a support revenue program. the So and engines airline that XXXX, in than Portfolio lease is see a those a on leased have care And different maintenance -- a support the

Robert Lyons

we of than revenue on customer. a primarily unlike North International a And those America, international, revenue the percentage X%. represents side, to it's that less -- that's really where it's Rail repairs line, And items. back myriad smaller of filled other the overall are the And much revenue Justin, repair in

is for be that It interest some of we damage for railcar there well. as customers, in billbacks have income damage to on -- railcars. can recovery Some

of a there's no but in in host the whole So items be should particular change nothing and really there, trend in line.

Justin Bergner

to modestly in you ahead, you come tracking what which your guidance earlier [indiscernible]? your to of handicap put had of business allow you of parts sort segments business would ahead are of If the to

Robert Lyons

additional global some out portfolio business. too. last Tom expectation want it I'll sector you the of already. pandemic year, big management, -- above pre-pandemic. driver air engine travels International was depths can fully really the weigh the pre-pandemic color, the in has in the of Yes. were coming what and we earliest travel the about and the it not been aerospace Domestic travel until first comment maybe at levels if But of XXXX. leasing for at was recover was for XX% to XX% When

recovery there has faster. the been So much

what utilization engines than been a much see debt to things has into than just able to And anticipated. originally lower above recovery the anticipated. anticipated. deploy at expense been higher capital our engines So occurred Bad in pace directly we've you'd thought. of a anyone is quicker we expect than All

as pick mentioned. So that you're portfolio our management, other Tom seeing in revenue within up

Justin Bergner

higher Great. dynamic get capital? the affect higher of The in. just cost between does higher environment, interest If one sort that I lease last how and one rates of could rate

Thomas Ellman

got think really X ways. you that So to about different in

rate fleet, really That's have a that's if interest that's the cars. and for threshold that a dynamic. of So by those car get. challenging little new any can attractive important car where it environment what environment the supply-demand car to to because of existing or type, overall higher little your kind you environment decide a the it bit rates very a the to expensive, for the the what's that actually car drives to has lease that, on the invest makes invest obviously, though and you ability On existing existing total higher investment sort of bit not rate the interest benefit note helpful dynamic type impact. alternative you It's little in get of rate. an to invest new more that makes renewing really more makes primary that investment more is unless And

Operator

Brendan of from from line McCarthy Our the next Sidoti. question comes

Brendan Michael McCarthy

balance sheet. where increase the X.X the I ] X.X quarters. it's question looks a quick [ in just of been It had small like a very have past on handful from recourse leverage to

company's aim metric of like the Or I stay think can the are comfortable under about you recall with that think to X.X. I cap the investment-grade is we debt X.X? level? But how approaching

Thomas Ellman

Yes.

certainly, very with where we're it comfortable So is.

One access always consistent is attractively capital. to of ensuring criteria our key priced

with that X.X the level So metrics. they're that be they're communication we're on for constant higher even right clear their where the something about could rating X situation in various with very to comfortable And and it's below comfortable certainly comfortable and agencies right environment. the

Brendan Michael McCarthy

helpful. one me. for then And one Got last it. That's

rates XXXX. shed since the we've early before in able lease talked you lease about think I the repriced that I'm been since been if increase on the rates metric but portfolio has wondering to can meaningfully you've of this percentage roughly higher past, light at to

Thomas Ellman

Yes.

going difficult home up in a over of So the if And base. you now it's situation occurring, look has up indicate long-term while how started time average, but somewhere years fleet of pretty get was from precisely precisely on mentioned or lease attractive for lease a environment. frame. predict, sequential to when a into that X repriced but We're rates it low -- to much very rates that for predict quarter-over-quarter. that were at that We've was the XXXX like not more

the at environment. start increased, back have a to say might lease of good you slightly you fleet from X/X when you'd say, higher it to is about So rates if and perspective, wanted lower percentage. lease we looking have that go in you might about an to extending wanted percentage a repriced attractive did when But if the term, we feeling

So you there. it's hard really to an give absolute number

Robert Lyons

being just positive lot we cars at high-quality I X- in in have embedding the add of [indiscernible] And positive a into of we for differentials, these to, rates and terms of to X-year lot a we the Yes. have would differential, at for are runway flow runway cash terms portfolio.

Operator

the of from comes line Susquehanna. Bascome next question from Majors Your

Bascome Majors

Bob, to North of change understanding expiring rate X, X, may years, shape that what go American question, portfolio hold? as follow of forward up this on and last your the we is X the that that, won't portfolio

Thomas Ellman

Yes.

going information know, as So January give guidance every exploration the at forward. earnings we you we'll about provide the some call year, profile and

of see years, long railcars looked lower XX,XXX you'd If it's over XX,XXX period at time, us you a expiring. to of that some in the

of the years, over little it's Some higher a XX,XXX.

you So you guidance we'll give but January, more of exact kind in of some it's gives where -- range it. expect might that

Bascome Majors

a does But in portfolio? year the American expiring rate go next from perspective, North up rate the down similar

Robert Lyons

and out into -- previously, said lay January. a there's we for It's Yes. you. of there. lot runway get that will I of my in as Bascome that terms level differential in will confidence positive But

Bascome Majors

economics Is as [ International to silica North ] And anything just about book. down similar think much fairly there of the the just talked pro tops concept directional we in there? we talk don't on America? unique view Should we that rata about kind

Robert Lyons

terms decades. in lease That's the needle to North in typically than much a case really much from term. hard been America. are It's actual move on Europe standpoint just the commercial shorter, Yes, for the are they

in to now, magnitude a you is because that example, range up North see in for good in if see But that. it much America. lease America, certainly tends the in in America. in in nothing in to you right swings or greater do plus points Yes, But rates a of pushing North over types the is percentage-wise. off. XX%. favor rate environment like of is our bad a also, environment, X% day lower don't a fleet an Europe and each variability to would So on plus do the certain the is LPI Good see year environment, car Europe a in the renewal really percentage couple be XX% We're North rate you of the historically, than rolling Europe. That higher you bad single-digit percentage down

Bascome Majors

clarification. for you Thank that

lot pretty constructively in your quarter. Just momentum one businesses, and one. this a talked your about last both quarter you've -- The last of

keeps necessarily quantitative look potential. you're What deliver night? the into here? over at into guidance, up next watch year results continuing downside of curious from should we are to you last As you we sharpen where in what pencils the the without getting we've risks on but kind couple years of seen Just our and

Robert Lyons

side. that to of back a year Well, has the X up Sure. encouraging go from question previously the International, I'll it's on Management been Europe, in India. to behind that, whether what area is this engine Rail -- the call a regards Portfolio you, But outperformance really with Trifleet, have Rail came me to what's

continued foundation have managing seeing future investment year, for certainly, here, and We work for the existing we're lot to GATX in it's long last year whether the lease we're a really returns for for the and of solid really build to capital putting portfolio a term. this shareholders attractive that our through volume the

So feel I in. about been really the where we're is today, feel that. how business managed very I about and positioned good good it's

war GATX's awake me years, keeps the night whether thrown seen unpredictable through business strong And night. the things really, those night outside our way. that in of now for to are sleep that But respond we stable, the go the in what bigger allows we've keep a it's years. we been are is factors whatever can really at at and awake guess we've right is those are a macro back in foundation last what What of I couple control. the of XXX me to challenges of number accordingly, have And macro Ukraine, macro me pandemic, at kind the

Thomas Ellman

talked the own you to that when then strong you answered segments. say, reminded we've degree, been that volume your would all each across those about I investment Bascome, has segment and been question, talking constructively about some Bob And

of some the of all segments. sources reason resiliency those X So there's is really and for optimism that strength across

Operator

our the remarks. back we call session. the some over reached Shari turn of Ms. end you question-and-answer And closing Hellerman, I have to for final

Shari Hellerman

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

Operator

for This concludes call. you conference participation. your today's Thank

disconnect. may now You

GATX (GATX) 24 Oct 232023 Q3 Earnings call transcript