GATX (GATX) Wells Fargo 2024 Industrials Conference summary

North American railcar leasing environment

• Lease rates have improved for two years, with the Lease Price Index at +30%, near historical highs.

• Utilization remains high at 98-99%, driven by strong service and maintenance capabilities.

• Customers are holding onto existing cars due to long wait times for new cars, supporting strong lease rates.

• New car lease rates are tepid, while existing car lease rates are robust.

• Maintenance costs are expected to be flat to slightly higher, offset by more work in owned facilities.

Secondary market and fleet management

• Gains on asset sales have averaged $65 million annually, with $100 million guidance for this year.

• Asset sales are driven by fleet optimization, not market strength, and most assets are sold with leases attached.

• Fleet size is not targeted; purchases are opportunistic, with a supply agreement for 3,000 new cars annually and about 2,500 cars scrapped each year.

International operations: Europe and India

• European lease rates are stable due to balanced supply and demand and modal shift policies.

• Europe is slightly more profitable than North America due to lower volatility.

• In India, rapid growth is expected, with the fleet surpassing 10,000 cars and plans to add 1,000-2,000 cars annually.

• Absolute returns are highest in India, followed by Europe, then North America.