GATX Corporation

Please stand by. We're about to begin. Good morning, ladies and gentlemen, and welcome to the GATX 2023 first quarter earnings call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. And if you would like to withdraw your question, simply press the pound key. And now at this time, I'll turn things over to Ms. Sherry Hellerman, Head of Investor Relations. Sherry, please go ahead.

Thank you, Beau. Good morning, everyone. And thank you for joining GATX's 2023 First Quarter Earnings Call. I'm joined today by Bob Lyons, President and CEO, and Tom Ellman, Executive Vice President and CFO. Please note that some of the information you'll hear during our discussion today will consist of four 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 2022. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Before I provide a quick recap of our first quarter results, I'd like to remind everyone Their annual shareholders meeting is scheduled on Friday, April 28th at 9 a.m. Central Time and will be held in a virtual-only meeting format. Earlier today, GATX reported 2023 first quarter net income of $77.4 million, or $2.16 per doula share. This compares to 2022 first quarter net income of $75.8 million, or $2.10 per diluted share. 2023 and 2022 first quarter results included net negative impacts of $0.04 per diluted share and $0.24 per diluted share, respectively, from tax adjustments and other items. These items are detailed on page 11 of our earnings release. Now I'll briefly address each segment. At Real North America, Fleet utilization remained high at 99.3%, and the renewal success rate was 77.9%, reflecting continued strong demand for rail cars currently in our fleet. The lease rate environment for existing rail cars remains favorable, as evidenced by the renewal rate change of GATX's lease price index of positive 34.3% for the quarter. We remain focused on our objective of lengthening lease terms and locking in attractive rates. Additionally, we continue to successfully place new railcars from our committed supply agreements with a diverse customer base. We've placed over 4,600 railcars from our 2018 Trinity Supply Agreement. And we've placed all 7,650 railcars from our 2018 Greenbrier Supply Agreement. In addition, we've placed nearly 1,500 railcars from our 2022 Trinity Supply Agreement. Our earliest available scheduled delivery under our supply agreement is in November 2023. In our North American Maintenance Network, we continue to operate safely while achieving high levels of productivity across the shops in our network. We'll continue to direct the vast majority of work on our specialty freight and tank cars to our own network, where we believe our experienced workforce gives us superior safety, quality, and cost metrics. The secondary market for rail cars remains robust. Rail North America generated a remarketing income of approximately $45 million for the quarter. As mentioned in earnings release, we also identified attractive investment opportunities in the quarter and acquired over 1,000 cars in the secondary market. These cars are on long-term leases. with attractive rates. At Roehl International, demand for Roehl cars remains very strong, and we continue to experience success in pushing up renewal lease rates for most car types. Roehl International's first quarter investment volume was over $81 million as we took deliveries of nearly 1,000 new cars in the quarter. Turning to portfolio management, First quarter performance was driven by higher share of affiliates earnings from RRPF, our aircraft's Beringian joint venture with Rolls-Royce. Consistent with our expectations, the operating environment for RRPF is steadily improving, reflecting the ongoing recovery in international passenger air travel. With the first quarter environment very much in line with our expectations coming into the year, we continue to expect full year earnings to be in the range of $6.50 to $6.90 per diluted share, excluding any impact from tax adjustments and other items. And that concludes our prepared remarks. I'll hand it back to Beau so we can open it up for questions.

Thank you very much, Ms. Elliman. Ladies and gentlemen, at this time, if you have any questions or comments, simply press star 1. And again, just a reminder, if you would like to remove yourself from the queue, you can press the pound key. We'll take our first question this morning from Justin Long of Stevens.