GATX Corporation

Good day, ladies and gentlemen, and welcome to the GATX 2022 First Quarter Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Sherry Hellerman, Director of Investor Relations. Please go ahead.

Thank you, Keith. Good morning, everyone, and thank you for joining GATX's 2022 First Quarter Earnings Call. I'm joined today by Brian Kenney, President and CEO, Tom Ellman, Executive Vice President and CFO, and Bob Lyons, Executive Vice President and President of Rail North America. We'll begin our call this morning with an overview of our first quarter results, followed by prepared remarks by Brian and Bob. Afterwards, we'll open the call up for questions. Before we begin, please note that 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 For more information, please refer to the risk factors included in our earnings release and those discussed in GATX's Form 10-K for 2021 and in our other filings with the SEC. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Today, GATX reported 2022 first quarter net income of $75.8 million. or $2.10 per diluted share. This compares to 2021 first quarter net income of $36.5 million, or $1.02 per diluted share. 2022 first quarter results include a net negative impact of $11.5 million, or $0.32 per diluted share, which represents GATX's share of a net impairment charge at the Rolls-Royce and Partners Finance Affiliates. associated with aircraft barringens in Russia. Also included in the quarter was a net positive impact of $3 million, or $0.08 per dilute share, related to an enacted tax rate reduction in Austria. These items are detailed on page 10 of our earnings release. Our first quarter results reflect strong demand for rail cars across our global rail businesses. At Rail North America, Fleet utilization remained high at 99.3%, and the renewal success rate was 80%. We have now seen seven consecutive quarters of sequential increases in absolute lease rates. Furthermore, the pace of lease rate increases accelerated this quarter. The renewal rate change of GATX's lease price index was positive 9.3%, with an average renewal term of 30 months. We continue to successfully place new railcars from our committed supply agreements with a diverse customer base. We have placed nearly 3,600 railcars from our 2018 Trinity Supply Agreement. Additionally, we've placed virtually all 7,650 railcars from our 2018 Greenbrier Supply Agreement. Our earliest available scheduled delivery under our Trinity Supply Agreement is essentially in the first quarter of 2023. The secondary market for rail cars remains very strong. Rail North America's remarketing income was approximately 66.4 million during the quarter. This represents the vast majority of our expected remarketing activity for 2022. Rail International performed well, with high fleet utilization of 99% or above, and continues to experience increases in renewal lease rates versus the expiring rate. Turning to portfolio management, first quarter performance was in line with expectations. Our Rolls-Royce and Partners finance affiliates continue to operate in a very challenging and uncertain environment for global passenger air travel. Finally, GATX's total investment volume in the first quarter was over $370 million, with a focus on our rail car assets globally. Before I turn the microphone over to Brian, I'd like to remind everyone that our annual shareholders meeting is scheduled on Friday, April 22nd at 9 a.m. Central Time and will be held in a virtual-only meeting format. With that, I would now like to turn the call over to Brian.

Thanks, Sheri. As a lot of you know, last December I announced my retirement as the CEO of GHX after 17 years. And that's effective at our 2022 annual shareholders meeting. And as Sherry said, that's in two days. So that makes this my 91st and last earnings call. And I do want to say it's been interesting and challenging. And honestly, it's been fun to work with all of GHX's shareholders and analysts over the years. And I do hope you feel as though I was honest and transparent in my communications with you. It's been even more of a pleasure to work with the extraordinary employees of GHX over the last 26 years. They are, without a doubt, the best team in the industry. And I want to say they're led by an equally strong senior leadership team in Tom Ellman, Deb Golden, Kim Nero, Gautier Tizel, and Paul Titterton. And at the head of that team, the new CEO of GHX, Bob Lyons. Bob and I have worked together at GHX for over 25 years, and I can tell you he's more than ready for this job. So without further delay, let me hand it over to the incoming CEO.