GATX Corp. (NYSE:GATX) Q1 2019 Earnings Conference Call Transcript

Apr 24, 2019 • 11:00 am ET

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GATX Corp. (NYSE:GATX) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day and welcome to the GATX First Quarter Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Jennifer McManus. Please go ahead.

Executive
Jennifer McManus

Good morning, everyone, and thank you for joining GATX's 2019 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.

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 forecast. For more information, please refer to the risk factors discussed in GATX's Form 10-K for 2018. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

Before I provide a brief commentary on the quarter, I'd like to remind everyone that our Annual Shareholders Meeting will be held on Monday, April 29th. It will be in Downtown Chicago at the Willis Tower and the meeting begins at 12:00 PM Central Time. Slides from Brian Kenney's presentation will be posted to our website at www.gatx.com.

Earlier today, GATX reported 2019 first quarter net income of $41.5 million or $1.12 per diluted share. This compares to 2018 first quarter net income of $76.3 million or $1.98 per diluted share. Our first quarter results are reflective of an operating environment in Rail North America, consistent with our expectations coming into the year. Rail North America's fleet utilization remained high at 99.4% at the end of the first quarter and our renewal success rate was 83.6%. During the quarter, the renewal rate change of GATX's Lease Price Index with positive 5.2% with an average renewal term of 39 months.

We continue to successfully place new railcars for our committed supply agreements with the diverse customer base. We have already placed over 8,200 railcars from our 2014 Trinity supply agreement and over 350 railcars from our 2018 Trinity supply agreement. Additionally, we've placed over 760 railcars from our 2018 ARI supply agreement. Our earliest available scheduled delivery under our supply agreements is in the first quarter of 2020. During the quarter, Rail North America's remarketing income was approximately $9.8 million. As noted in the earnings release, our 2019 full year remarketing expectations remain unchanged from prior guidance.

Within Rail International, the European railcar leasing market remained strong. GATX Rail Europe is seeing steady demand across the fleet with utilization at historic high of 98.9%. Rail International's investment volume was approximately $33 million during the first quarter. Portfolio Management's results were primarily driven by the excellent operating performance of the Rolls-Royce and Partners Finance affiliates. We are expecting 2019 to be another excellent year for investment volume.

American Steamship Company's sailing season started in late March and we are off to a good start on the Great Lakes. We anticipate 11 vessels in service in 2019. GATX investment volume in the quarter was approximately $147