GATX Corporation

Hello, everyone. Thank you for joining us and welcome to the GATX 2026 second quarter earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference call over to Shari Hellerman, head of investor relations. Shari, please go ahead.

Thank you, Jillian. Good morning, and thank you for joining GATX Corporation's 2026 Second 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 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 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 2025 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 2026 second quarter diluted earnings per share of $2.84. This compares to 2025 second quarter diluted earnings per share of $2.06. Year to date 2026 GATX delivered diluted earnings per share of $5.19 compared to $4.21 for the same period in 2025. I'll briefly touch on each of our business segments, and then we'll open the line for questions. In Rail North America, market conditions remain constructive. Fleet utilization remained high at 98%, and our renewal success rate was strong at 82.6%. The renewal rate change of GATX's lease price index was 16.8%, with an average renewal term of 54 months. Leasing fundamentals driven by favorable supply-demand dynamics continue to support attractive renewal economics across most car types. We also continue to realize benefits from the Wells Fargo rail acquisition as innovation efforts progressed and the combined fleet continued to perform well. Additionally, we continue to successfully place new rail cars from our committed supply agreement with a diverse customer base. We've placed about 9,500 rail cars from our 2022 Trinity Supply Agreement. Our earliest available scheduled delivery under this supply agreement is in the first quarter of 2027. We capitalized on strong demand for rail cars in the secondary market during the quarter, resulting in meaningful asset remarketing activity. Our gains on asset dispositions was $67.7 million in the quarter, and totaled $117.5 million year to date. Outside North America, GATX Rail Europe delivered a solid performance, achieving 95.3% fleet utilization at quarter end despite challenging economic conditions. At GATX Rail India, demand for rail cars remained robust and the fleet was fully utilized. REL International's investment volume was approximately $46 million during the quarter, reflecting continued fleet growth as we took delivery of new cars in Europe and India to meet customer needs. Turning to engine leasing, the segment delivered excellent results in the second quarter, supported by favorable market fundamentals and continued air travel trends. which drove strong demand for aircraft spare engines. We also identified attractive investment opportunities through our 50-50 joint venture with Rolls-Royce. Finally, as we noted in the earnings release, we are raising our 2026 earnings guidance to a range of $9.90 to $10.30, reflecting our strong year-to-date performance Healthy Leasing Fundamentals in the North American Rail and Engine Leasing Market, the Benefits from the Wells Fargo Rail Acquisition, and the Positive Outlook for our Businesses. And with that overview, Gillian, let's open the line for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ben Moore with Citigroup. Ben, your line is open. Please go ahead.