GATX Q2 2025 Earnings Report

GATX EPS Results

• Actual EPS: $2.06
• Consensus EPS: $1.95
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: N/A

GATX Revenue Results

• Actual Revenue: $430.50 million
• Expected Revenue: $425.52 million
• Beat/Miss: Beat by +$4.99 million
• YoY Revenue Growth: N/A

GATX Announcement Details

• Quarter: Q2 2025
• Date: 7/29/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, July 29, 2025
• Conference Call Time: 11:00AM ET

GATX (NYSE:GATX), together its subsidiaries, operates as railcar leasing company in the United States, Canada, Mexico, Europe, and India. It operates through three segments: Rail North America, Rail International, and Portfolio Management. The company leases tank and freight railcars, and locomotives for petroleum, chemical, food/agriculture, and transportation industries. It also offers maintenance services, including the interior cleaning of railcars, routine maintenance and repair of car body and safety appliances, regulatory compliance works, wheelset replacements, interior blast and lining, exterior blast and painting, and car stenciling services. In addition, the company manufactures commercial aircraft jet engines and leases aircraft spare engines; and owns and manages tank containers that are leased to chemical, industrial gas, energy, food, cryogenic and pharmaceutical industries, and tank container operators, as well as provides tank container sourcing, remarketing, and inspection and maintenance services. As of December 31, 2023, it owned and operated a fleet of approximately 148,500 railcars; 493 four-axle and 30 six-axle locomotives; 399 aircraft spare engines; and 23,931 tank containers. GATX Corporation was founded in 1898 and is headquartered in Chicago, Illinois.

GATX Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Reported Q2 net income of $75.5 million (or $2.60 per share), up from $44.4 million ($1.21), and raised full-year EPS guidance to $8.50–$8.90.
• Positive Sentiment: Rail North America achieved 99.2% fleet utilization, saw a 24.2% increase in lease rates and generated $34 million of Q2 remarketing income.
• Negative Sentiment: GATX Rail Europe’s utilization dipped to 93.3% amid macroeconomic headwinds and delayed customer fleet planning, pressuring near-term performance.
• Positive Sentiment: Engine leasing delivered strong Q2 results thanks to robust global air travel demand and a healthy secondary market for spare engines, boosting outlook.
• Neutral Sentiment: The Wells Fargo Rail acquisition is pending regulatory approval with closing expected in Q1 2026, with accretion and synergies to be detailed at closing.

Presentation

[Operator]

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the GATX twenty twenty five Second 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.

[Operator]

I would now like to turn the call over to Sherry Hellerman, Head of Investor Relations. Please go ahead.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

Thank you, Eric. Good morning, and thank you for joining GATX's twenty twenty five second quarter earnings call. I'm joined today by Bob Lyons, President and Chief Executive Officer Tom Ellman, Executive Vice President and Chief Financial Officer and Paul Titterton, Executive Vice President and President of Rail North America. As a reminder, some of the information you'll hear during our discussion today will consist of forward looking statements. Actual results or trends could differ materially from those statements or forecasts.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

For more information, please refer to the risk factors included in our earnings release and those discussed in GATX's Form 10 ks for 2024 and our other filings with the SEC. GATX assumes no obligation to update or revise any forward looking statements to reflect subsequent events or circumstances. Earlier today, GATX reported twenty twenty five second quarter net income of $75,500,000 or $2.6 per diluted share. This compares to twenty twenty four second quarter net income of $44,400,000 or $1.21 per diluted share. The twenty twenty four second quarter results include a net negative impact of $8,000,000 or $0.22 per diluted share from tax adjustments and other items.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

Year to date 2025 net income was $154,100,000 or $4.21 per diluted share. This compares to 118,700,000.0 or $3.25 per diluted share for the same period in 2024. The 2024 to date results include a net negative impact of 7,400,000.0 or $0.20 per diluted share from tax adjustments and other items. These items are detailed in the supplemental information section of our earnings release. Now I'll briefly address each of our business segments.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

And after that, we'll open the call up for questions. At GATX Rail North America, we continue to experience stable demand for railcars. Our fleet utilization was 99.2% at quarter end, and our renewal success rate was strong at 84.2%. We continue to achieve strong renewal lease rate increases while successfully extending term. The renewal rate change of GATX's lease price index was positive 24.2% for the quarter, and the average renewal term was sixty months.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

Additionally, we continue to successfully place new railcars from our committed supply agreement with a diverse customer base. We have placed over 6,500 railcars from our 2022 Trinity supply agreement. Our earliest available scheduled delivery under this supply agreement is in the 2026. The secondary market in North America remains robust. We generated over $34,000,000 in remarketing income during quarter, bringing the year to date total to approximately $65,000,000 Turning to Rail International.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

GATX Rail Europe utilization was 93.3% at quarter end. As noted in the release, the business environment in Europe is challenging and uncertain relative to either North America or India. Given macro headwinds and slower GDP in Germany, some customers are delaying their fleet planning decisions, which is impacting fleet utilization. Despite current conditions, we maintain a positive long term outlook on the European railcar leasing market, and we'll continue to look for attractive investment opportunities there. In India, freight volume continues to benefit from the country's ongoing infrastructure investments.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

As such, we continue to see strong demand for railcars in India. GATX Rail India's fleet utilization remained high at 99.6% at quarter end. Within engine leasing, our joint venture with Rolls Royce and our wholly owned engine portfolio produced excellent second quarter results. A strong global air passenger volume continues to drive robust demand for aircraft spare engines. We're seeing very strong demand across engine types from global air carriers, and the secondary market for engine sales is healthy.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

Regarding the pending Wells Fargo Rail transaction announced at the May, we're excited about the opportunities it offers. But due to the customary regulatory reviews, all of which are underway, at this stage, we're limited in what we can say beyond what we've already disclosed. Finally, reflecting our year to date performance and outlook for the balance of the year, we are increasing our 2025 full year earnings guidance to a range of $8.5 to $8.9 per diluted share. This guidance excludes the impact of tax adjustments or other items and excludes any impact from the Wells Fargo transaction. And those are our prepared remarks.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

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

[Operator]

Your first question comes from the line of Andrzej Tomczuk with Goldman Sachs. Please go ahead.

[Andrzej Tomczyk, Vice President at Goldman Sachs]

Yeah. Hi. Good morning. Thanks for taking my questions. The first one, just given this morning deal announcement for potential transcontinental merger, Was curious if you could share any initial thoughts on how this could impact the overall leasing business?

[Robert Lyons, President & CEO at GATX]

Andre, this is Bob Lyons. Yeah. I mean, given the fact that the announcement was just made this morning, it's difficult to assess, particularly given the timing, uncertainty and conditions that may be put on the parties to the merger. So right now, very difficult to assess. Longer term, greater efficiency on the rails, more product moving by rail, more carload traffic, all of those are long term good things for our railcar lessors.

[Andrzej Tomczyk, Vice President at Goldman Sachs]

Understood. Appreciate the thoughts. Just switching gears a little bit. Your lease renewal rate, the change was 24% in the second quarter, which was similar to last quarter. Are you seeing any indications that we could continue to hold the high lease price renewal?

[Andrzej Tomczyk, Vice President at Goldman Sachs]

And I guess in what type of environment could we see that reaccelerate?

[Paul Titterton, Executive VP & President of Rail North America at GATX]

So this is Paul Titterson speaking, and thanks for the question. Yes, I mean, broadly speaking, what I would say is the market for existing railcars remains pretty similar to how it's been the last few quarters, which is to say that pricing remains relatively strong. And of course, we've got expirations coming off of a weaker pricing environment. And so that has continued to provide a pretty strong LPI result. At this point, I would say, in the absence of any stimulus, positive or negative, we continue to see kind of more of the same from a pricing standpoint.

[Paul Titterton, Executive VP & President of Rail North America at GATX]

Either up or down, there would have to be some external catalyst to really change that environment. And at this point, we don't really see that catalyst. So I would say the best predictor in terms of absolute lease rates is probably more of the same right now.

[Robert Lyons, President & CEO at GATX]

And I would just add, Andre, too, that many all of the elements of the supply led recovery that we've talked about now for many quarters in a row, very much remain intact.

[Andrzej Tomczyk, Vice President at Goldman Sachs]

Got it. So we can just assume sort of normally sequentially increasing or flattish, overall absolute lease rates. Is that the right way to think about it?

[Paul Titterton, Executive VP & President of Rail North America at GATX]

Yes. I would say, flattish is probably pretty reasonable. That's what we've been seeing for quite some time now.

[Andrzej Tomczyk, Vice President at Goldman Sachs]

Understood. And then lastly for me, we saw, intra quarter, the EU had set a provisional deadline of August 20 to rule on the your merger, or the JV, sorry, with Wells Fargo and and, Brookfield. I'm just curious. Is there anything to read into there in terms of approval timeline? Anything tracking earlier than expected, or are we still still on the same sort of, runway?

[Robert Lyons, President & CEO at GATX]

Well, nothing unusual about that particular filing or the response from the EU Commission. So everything is is tracking as planned in terms of filing and timeline. So real no change in our Q1 twenty twenty six or earlier estimate from prior.

[Andrzej Tomczyk, Vice President at Goldman Sachs]

Got it. Thanks for the questions and congrats on a nice quarter.

[Operator]

Thank you. Your next question comes from the line of Brendan McCarthy with Sidoti and Company. Please go ahead.

[Brendan McCarthy, Equity Research Analyst at Sidoti & Company]

Great. Good morning, everyone. Thanks for taking my questions here. Wanted to look at the engine leasing business to start off. It looks like results from RRPF stepped down a little bit from last quarter.

[Brendan McCarthy, Equity Research Analyst at Sidoti & Company]

Just curious as to what the profit mix has been there through the first six months of the year, whether it be operating income or remarketing gains? And maybe talk about your expectations for the remainder of the year.

[Thomas Ellman, EVP & CFO at GATX]

Yes. Thank you for the question. This is Tom. Just for the to give you the numbers for the second quarter, operating income was about 85% of the total and remarketing was about 15%. So year to date, we're around seventy-thirty operating income to remarketing activity.

[Thomas Ellman, EVP & CFO at GATX]

As we mentioned in the press release, the key reason that we're taking up guidance is the performance at in the engine leasing business. So we expect that to be strong through the rest of the year. And one of the things that I think you'll see is over time the remarketing side of that should probably get to be a little bit higher of total percentage.

[Brendan McCarthy, Equity Research Analyst at Sidoti & Company]

Great. That makes sense. Thanks for that insight, Tom. And as you look into the back half of the year, are there any have you noticed any shifts in demand or changes in the trend as it relates to remarketing income in the engine leasing business?

[Thomas Ellman, EVP & CFO at GATX]

Yes. There really isn't a whole lot of trending as far as that goes. It's always very lumpy. And what we can say is that it remains very strong. There's a lot of demand for those engines in the secondary market.

[Thomas Ellman, EVP & CFO at GATX]

So a lot of remarketing activity available. What really is the question is the timing. When does it occur?

[Robert Lyons, President & CEO at GATX]

And Brandon, I'd just add to that too. It's a bit amplified at RRPF or within our own engine leasing business just given the sheer magnitude of each asset, the net book value. Whereas in Rail, we're selling hundreds of cars for nice gains. In the engine leasing business, it's a few engines sold here and there for much more sizable gains. So kind of they're they the magnitude of the shift from quarter to quarter can be a bit more amplified.

[Brendan McCarthy, Equity Research Analyst at Sidoti & Company]

Got it. Got it. That makes sense. And when you look at investment volume there, unless I'm reading into this incorrectly, looks like there hasn't been any investment volume in in the wholly owned portfolio through the first six months of the year, down from about 71,000,000 same period last year. But I think at one point, mentioned you target roughly 200,000,000 per year.

[Brendan McCarthy, Equity Research Analyst at Sidoti & Company]

And I know that a lot of that is dictated by what Rolls Royce decides. Just curious as to what investment volume might look like for the rest of this year in the GEL portfolio?

[Thomas Ellman, EVP & CFO at GATX]

Yes. So I'll start and then I'll let Bob add to it. Kind of repeating our last answer, that side of the business is also pretty lumpy for the same reason because each engine is such a material investment in of itself. We certainly expect to see some investment volume in the second half of the year. And coming into the year, we had said we thought it would be kind of in that a range similar to the last couple of years, but I'll let Bob add to that.

[Robert Lyons, President & CEO at GATX]

Sure. And kind of take it in two parts. So the $200,000,000 number you mentioned, certainly still within reason. It may be a little less than that just based on, as you said, where Rolls Royce has its needs and where it allocates its engine sales. But we expect a pretty healthy investment level activity in the second half of the year.

[Robert Lyons, President & CEO at GATX]

I'd also add that at the joint venture level at our RRPF, we came into the year, I think, expecting somewhere in the range of $800,000,000 total investment volume for the year. It will be north of that for sure. So still seeing very good investment activity overall in the engine portfolio. The mix may change a little bit, whether it's directly owned or at RRPF. We participate either way. So that's it's all good on that front.

[Brendan McCarthy, Equity Research Analyst at Sidoti & Company]

That's great. Thanks Bob. Thanks Tom. I appreciate the insight. That's all from me and congrats again on a good quarter.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

Thank you.

[Operator]

Your next question comes from the line of Justin Bergner with Gabelli Funds. Please go ahead.

[Justin Bergner, Portfolio Manager, Research Analyst at Gabelli Funds]

Good morning, Tom. Good morning, Sherry.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

Good morning. Good

[Justin Bergner, Portfolio Manager, Research Analyst at Gabelli Funds]

Good quarter. Thanks for taking my questions. First question, just to verify, is the entire $0.20 guidance increase attributable to engine leasing? And any reason why you might not have considered narrowing the guidance range at this point in the year with it being halfway over? I realize you don't always do that, but just wondering.

[Thomas Ellman, EVP & CFO at GATX]

Yes, Justin. Certainly, majority of the increase in guidance is due to what we expect to have happen in the engine leasing business. And really kind of going back to some of Brendan's questions, the reason for that range is because of the scale of each of those remarketing events. It's difficult to really pinpoint the timing. And the same is true quite honestly in Rail North America where one of the big pieces of uncertainty is the timing of those various gains that we'll get on the remarketing of the railcars.

[Thomas Ellman, EVP & CFO at GATX]

So that's really why the range is where it's at.

[Justin Bergner, Portfolio Manager, Research Analyst at Gabelli Funds]

Okay. Got you. In the last few weeks, have you seen any change or kind of stalling in the secondary market ahead of the speculation relating to today's UMP Norfolk Southern announcement? And do you expect, you know, this period of regulatory review and potentially uncertainty to to change the secondary market dynamic?

[Paul Titterton, Executive VP & President of Rail North America at GATX]

Yes. Justin, this is Paul, and I'll answer that question. And the answer is no. There's been no slowdown at all. And we really don't think while obviously the announced merger is very significant for the rail industry overall, in terms of the railcar secondary market, we don't see any impact at all.

[Paul Titterton, Executive VP & President of Rail North America at GATX]

I mean, really what's driving the railcar secondary market is there's still a lot of capital that wants to invest in railcars. And because new car volume is down and is expected to stay down for some time, that capital really wants to flow into the secondary market. So quite honestly, secondary market is robust and we expect it to remain robust.

[Justin Bergner, Portfolio Manager, Research Analyst at Gabelli Funds]

Okay. So even though some of the efficiencies perhaps targeted in today's announcement might mean a slightly smaller need for railcars if the line can move more productively. You just think that that's trumped by the demand for capital flowing into this space.

[Robert Lyons, President & CEO at GATX]

Yeah. And historically, and looking forward, Justin, it's Bob. Railcars through cycles, through time, over decades have proven to be tremendous stores of value. And capital flows into the market accordingly, and it's always been an asset class that people have been interested in investing and continuing to grow their portfolios. We don't see any change in that.

[Robert Lyons, President & CEO at GATX]

The other thing I would mention too is I don't know the stated or unstated period for regulatory approval for that transaction announced this morning, but it's likely to be protracted. So and then you add integration on top of that. It's a pretty extended period. So we're not anticipating any near term impacts on demands in our portfolio or the secondary market.

[Justin Bergner, Portfolio Manager, Research Analyst at Gabelli Funds]

Okay. Thank you. And then lastly, strong international performance from a profitability point of view. Any way you can help me decompose that a little bit further beyond, I guess, what was called out in the press release? I noticed the other revenue kind of ticked up, but just a strong segment profit there sequentially in year on year.

[Thomas Ellman, EVP & CFO at GATX]

You got to look a little deeper at some of those Rail International numbers. So when we came into the year, Bob indicated that the Rail International business would be up between about 5,000,000 and $15,000,000 from a segment profit standpoint. And for the first half of the year, we're kind of tracking with that. We're at the lower end of the range. But some of that is most of that actually is driven by exchange rates.

[Thomas Ellman, EVP & CFO at GATX]

If you correct for that, the segment profit is roughly equal to what we had for the first six months of last year, which is a little bit below expectations. And the reason for that is some of the challenges that we've seen in the intermodal market in Europe have expanded a little bit to a couple other car types. You probably saw the utilization drop a little bit in the Rail International segment. We're still tracking, like I said, similar to last year, but that will be a little bit down absent FX from what we expected coming into the year.

[Justin Bergner, Portfolio Manager, Research Analyst at Gabelli Funds]

Great. Thanks for taking all my questions.

[Robert Lyons, President & CEO at GATX]

Thank you.

[Operator]

Your next question comes from the line of Bascome Majors with Susquehanna. Please go ahead.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

Good morning. It's been two months since you announced the rails, sorry, the Wells deal. I don't know what you've been able to accomplish in due diligence that maybe wasn't allowed during the negotiation process. Could you give us an update on on what you've been able to dig into incrementally? And if, you know, the synergy expectations for what this can mean on, be it maintenance or other items are coming into better focus? Thank you.

[Robert Lyons, President & CEO at GATX]

Sure, Bascome. And I'll just go back to a comment I believe I made on the conference call a couple of months ago at the May when we announced the transaction that given the length of time we structuring the transaction and in dialogue with Wells Fargo and going through the due diligence, By the time we announced the transaction at the May, there was very little left for us to do in terms of due diligence. The heavy lifting had been done, and Wells Fargo had been very forthcoming in building exhaustive data room that had virtually everything, by and large, we would need to complete due diligence. So we didn't anticipate finding any surprises post announcement, and we haven't. I won't comment much more beyond that given that we're still not the rightful owner of the portfolio.

[Robert Lyons, President & CEO at GATX]

We look forward to closing on it. All of the assumptions we had coming into the transaction on the announcement are holding very firm, and we feel really very, very positive about the transaction.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

What assumption did you make on synergies when you announced the transaction? And when might you update us on what that could look like longer term?

[Robert Lyons, President & CEO at GATX]

Yeah. We didn't really get into much detail at at the time of the announcement. We said it would be accretive, but we hadn't provided much detail on that and won't until we get to closing of the transaction, which we expect Q1 twenty twenty six or sooner. When we get to that point and we're at the closing, we can be much more forthcoming with those synergies and the outlook for the portfolio and for the integration with our business.

[Bascome Majors, Senior Equity Research Analyst at Susquehanna]

Thank you.

[Robert Lyons, President & CEO at GATX]

Thank you.

[Operator]

There are no further questions at this time. I'd now like to turn the call back over to Sherri Hellerman for closing remarks. Please go ahead.

[Shari Hellerman, Senior Director - IR & Corporate Communications at GATX]

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

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.

Participants

Executives

• Shari Hellerman, Senior Director - IR & Corporate Communications
• Robert Lyons, President & CEO
• Paul Titterton, Executive VP & President of Rail North America
• Thomas Ellman, EVP & CFO

Analysts

• Andrzej Tomczyk, Vice President at Goldman Sachs
• Brendan McCarthy, Equity Research Analyst at Sidoti & Company
• Justin Bergner, Portfolio Manager, Research Analyst at Gabelli Funds
• Bascome Majors, Senior Equity Research Analyst at Susquehanna