GATX Corporation

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the GATX 2026 first quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Sherry Hellerman, Head of Investor Relations. Sherry, please go ahead.

Thank you, Tiffany. Good morning, and thank you for joining GATX Corporation's 2026 First Quarter Earnings Conference Call. I'm joined today by Bob Lyons, President and Chief Executive Officer. Tom Ellman, Executive Vice President and Chief Financial Officer. And Paul Hidderton, 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. For more information, please refer to the risk factors included in our earnings release and those discussed in GATX's Form 10-K for 2025 and our other filings for the SEC. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Earlier today, GATX reported 2026 first quarter diluted earnings per share of 235. This compares to 2025 first quarter diluted earnings per share of 215. I'll briefly address each of our business segments. After that, we'll open the call up for questions. Despite heightened macroeconomic uncertainty, our businesses delivered results in line with expectations in the first quarter. At Rail North America, demand for rail cars in the existing fleet remained steady. As noted in the earnings release, starting this quarter, Rail North America metrics and statistics reflect the combined legacy fleet and the Wells Fargo fleet. At the end of the first quarter, Rail North America's fleet utilization was 98.1%. This was consistent with our expectations given the inclusion of the Wells Fargo fleet, which was at 96.5% utilization entering 2026. Renewal activity remains strong. The renewal success rate was 79.1%, and we continue to achieve lease rate increases while extending terms. The renewal rate change of GATX's lease price index was 22.3%. and the average renewal term was 56 months. With a little over two-thirds of the combined fleet repriced in the current favorable lease rate environment, we see meaningful runway to enhance financial performance across the remaining fleets. We continue to successfully place new railcars from our committed supply agreement with a diverse customer base. Through the first quarter, we've placed over 8,400 railcars from our 2022 Trinity supply agreement. Our earliest available scheduled delivery under the supply agreement is in the fourth quarter of 2026. Additionally, supported by robust secondary market, we generated about $50 million in gains on asset dispositions in the quarter. At Rail International, railcar demand in Europe remains steady despite ongoing macroeconomic pressure in the region. Fleet utilization at the end of the first quarter was 94.7%, unchanged from the prior quarter. In India, policy support and economic growth continue to drive strong demand for rail cars. GATX Rail India's fleet utilization remained at 100% at quarter end. Within engine leasing, our joint venture with Rolls-Royce and our wholly owned engine portfolio produced excellent operating results in the quarter. Lower earnings at RRPS compared to the prior year quarter were driven by the timing of remarketing activity, which, as we've discussed, can be lumpy from quarter to quarter. Demand for aircraft spare engines remain strong, supported by resilient global passenger air travel. So we continue to closely monitor the evolving geopolitical environment and its potential impact on air travel trends. With that quick overview, we can open the line up for questions.

At this time, if you'd like to ask a question, press star then the number one on your telephone keypad. Your first question comes from the line of Andrzej Tomczyk with Goldman Sachs. Please go ahead.