GATX (GATX) Q4 2025 Earnings Call Transcript

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DATE

Thursday, February 19, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Robert C. Lyons
• Executive Vice President and Chief Financial Officer — Thomas A. Ellman
• Executive Vice President and President of Rail North America — Paul F. Titterton
• Head of Investor Relations — Shari Hellerman

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TAKEAWAYS

• Q4 Net Income -- $97 million, or $2.66 per diluted share, versus $76.5 million, or $2.10 per diluted share in the same period a year ago.
• Full-Year Net Income -- $333.3 million, or $9.12 per diluted share, up from $284.2 million, or $7.78 per diluted share in the prior year.
• Tax Adjustments Impact -- Q4 2025 results include a net positive effect of $0.22 per diluted share; full-year 2025, a net positive $0.37 per share.
• Return on Equity (ROE) -- Remained above 12% for the year, in line with management’s stated approach to conservative balance sheet management.
• Leverage Ratio -- Held steady at 3.3 to 1, consistent with prior commentary on prudent capital structure.
• Capital Deployed -- $1.3 billion in new investments completed during the year across core business segments.
• Rail North America Utilization -- Maintained at 99%, while closing more than $640 million in new investments.
• Rail International Portfolio Growth -- GATX Rail India expanded to over 12,000 wagons; a nearly 6,000 railcar transaction closed with CD Cargo in Europe.
• Engine Leasing Segment -- Delivered the highest year-over-year earnings growth among business segments, with segment profit increasing nearly $50 million from 2024.
• Wells Fargo Rail Acquisition -- GATX Corporation and Brookfield formed a new joint venture acquiring 101,000 railcars; GATX Corporation owns 30%, Brookfield 70%.
• Fleet Scale -- Combined North America portfolio totals 208,000 railcars under operational control after the acquisition.
• Lease Price Index (LPI) -- 21.9% in the quarter; 2026 guidance is high teens to low 20% range for the consolidated fleet.
• Utilization Rate -- Expected to be 98%-99% by year-end 2026 for the enlarged fleet, with a renewal success rate anticipated in the high 70%-low 80% range.
• Rail North America Lease Revenue Guidance -- Projected at $1.0 billion in 2026, representing a $550 million increase attributable to the acquired fleet.
• Other Revenue Guidance -- $160 million in 2026, up $25 million from the prior year, driven primarily by repair income.
• Net Gains on Asset Dispositions -- Expected to reach $200 million in 2026, a $70 million rise over the previous year, supported by expanded secondary market opportunities, especially in freight car sales.
• Interest Expense -- Anticipated at $440 million in 2026, an increase of $180 million due to the acquisition.
• Depreciation -- Estimated at $520 million for 2026, a $230 million sequential rise.
• Maintenance Expense -- Projected at $500 million, up $150 million over 2025, with the acquisition cited as the primary driver.
• Other Operating Expense -- Forecast at $85 million in 2026, a $25 million increase.
• Segment Profit - Rail North America -- Targeted at $415 million in 2026, up $55 million to $65 million from 2025.
• Segment Profit - Rail International -- Expected to increase by $5 million to $10 million in 2026, despite continued challenging economic conditions in Europe.
• Engine Leasing Profit Guidance -- Segment profit forecasted to grow by $15 million to $20 million in 2026, after a $50 million increase from 2024 to 2025.
• SG&A Expense -- $246 million for 2025 and expected to rise to $275 million in 2026, attributed primarily to acquisition-related staffing.
• EPS Guidance for 2026 -- Management expects diluted EPS of $9.50 to $10.10, which would represent another record year.
• Dividend Increase -- Board approved an 8.2% hike in the quarterly dividend, outpacing the previous years' growth in the 5% range.
• Share Repurchase Authorization -- New $300 million approval following exhaustion of the 2019 authorization, with approximately $46.5 million repurchased in Q4 2025 at a $160 average price.
• Synergies from Wells Fargo Acquisition -- Management estimates $0.20 to $0.30 in early-stage EPS contribution from the transaction in 2026, before considering incremental future synergies.
• Management Fees Earned -- Projected annual management fees total over $50 million, with $44 million from managing the JV and $11 million from managing Brookfield's wholly owned portfolio.
• Engine Leasing Profit Composition -- For 2025, roughly two-thirds of earnings came from operating income and one-third from remarketing gains.
• Dividend and Shareholder Returns Philosophy -- Management reaffirmed capital allocation priorities: acquire hard assets, maintain balance sheet discipline, and return excess capital to shareholders through dividends and buybacks.

SUMMARY

GATX Corporation (NYSE:GATX) reported double-digit EPS growth for the year, supported by disciplined balance sheet management and accelerated integration of the Wells Fargo Rail acquisition. Management consolidated 208,000 railcars under operational control and issued 2026 guidance reflecting significant increases in lease revenue, asset disposition gains, and expenses driven by fleet expansion. The engine leasing segment maintained momentum with both base demand and supply chain constraints underpinning higher profitability. Segment profit for Rail International is projected to increase despite external macroeconomic headwinds in Europe. Early-stage acquisition synergies and management fees from the new JV will contribute to EPS accretion in 2026, with management targeting another record year of per-share earnings.

• Robert C. Lyons identified the enlarged proportion of freight cars from the Wells Fargo Rail portfolio as a catalyst for strong secondary market activity in 2026.
• Thomas A. Ellman clarified that only 30% of gains on JV-related asset sales accrue to GATX Corporation due to non-controlling interests.
• Paul F. Titterton emphasized that net fleet shrinkage, rather than outright equipment shortages, is supporting stable lease pricing and utilization rates.
• Management confirmed that the Wells Fargo Rail JV portfolio is intended to wind down over time, with reinvestment focused on GATX Corporation’s wholly owned assets.
• Quarterly LPI fluctuations, such as the Q4 move to 21.9%, were not interpreted by management as indicative of adverse renewal rate trends for the core fleet.

INDUSTRY GLOSSARY

• LPI (Lease Price Index): A measure of average renewal rate change on expiring railcar leases on a comparable, same-car basis.
• Segment Profit: Pre-tax profit attributed to a specific business segment, frequently used to assess operating performance before corporate overhead or other items.
• Remarketing Income: Gains generated from sales of owned railcars in the secondary market, typically arising from strong market demand for used equipment.
• Non-Controlling Interest (NCI): The portion of earnings in a consolidated subsidiary or joint venture attributable to ownership not held by the reporting company.

Full Conference Call Transcript

Operator: Thank you for standing by. My name is Jordan, and I will be your conference operator today. At this time, I would like to welcome everyone to the GATX Corporation 2025 Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Shari Hellerman, Head of Investor Relations at GATX Corporation. Please go ahead. Thanks, Jordan.

Shari Hellerman: Good morning, everyone, and thank you for joining GATX Corporation’s fourth quarter and full year 2025 earnings conference call. Joining me today are Robert C. Lyons, President and Chief Executive Officer; Thomas A. Ellman, Executive Vice President and Chief Financial Officer; and Paul F. Titterton, Executive Vice President and President of Rail North America. As a reminder, some of the information you will hear during our discussion today includes forward-looking statements. Actual results or trends may differ materially from those statements or forecasts. For more information, please refer to the risk factors in our earnings release, GATX Corporation’s 2024 Form 10-K,

Operator: and our other filings with the SEC.

Shari Hellerman: GATX Corporation assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. I will start with a brief overview of our fourth quarter and full year 2025 results, then I will turn the call over to Robert C. Lyons for additional commentary on 2025 and our outlook for 2026. After that, we will open the call up for questions. Earlier today, GATX Corporation reported fourth quarter 2025 net income of $97 million, or $2.66 per diluted share. This compares with fourth quarter 2024 net income of $76.5 million, or $2.10 per diluted share.

Results for both periods include a net positive impact from tax adjustments and other items of $0.22 per diluted share in 2025 and $0.17 per diluted share in 2024. For the full year 2025, GATX Corporation reported net income of $333.3 million, or $9.12 per diluted share. This compares with net income of $284.2 million, or $7.78 per diluted share in 2024. Full year results for both 2025 and 2024 include impact from tax adjustments and other items: a net positive impact of $0.37 per diluted share in 2025 and a net negative impact of $0.11 per diluted share in 2024. Additional details can be found in our earnings release. I will now turn the call over to Robert C.

Lyons.

Robert C. Lyons: Thank you, Shari, and thank you all for joining the call today. I will open with some brief comments on 2025 performance versus the outlook we had coming into the year, and then talk a little bit about 2026 and what we see on the horizon. For those of you that participate in our calls regularly, you know we are usually very brief at the opening. But today, I am going to take a little bit more time, as I did last year at this time, to talk through our outlook for the year ahead and recap a little bit about the past year.

First of all, I want to thank all the employees at GATX Corporation around the world for their outstanding effort and contributions this past year, especially those who were central to the Wells Fargo Rail acquisition and the integration efforts, which are ongoing. We asked a lot from people and they delivered across the board, and they did so because everyone sees the long-term benefit of this transaction. Regarding 2025 results, we came into the year expecting EPS growth in the 8% range over 2024, and as reported this morning, our EPS actually increased 11% over 2024.

Importantly, we achieved this strong EPS growth while posting another year of ROE above 12%, and I think this is important to point out because we continue to maintain a very conservatively structured balance sheet with leverage steady at 3.3 to 1. On top of the positive EPS and ROE metrics, we continue to find investment opportunities. We put $1.3 billion of capital to work in what we believe will be attractive earnings growth and return opportunities for our shareholders. Given the magnitude of the Wells Fargo Rail acquisition, it would be easy just to jump past 2025 and focus on this opportunity, which we will do.

But I do not want to lose sight of how our business delivered in 2025. Allow me a few minutes to recap some of the highlights. At Rail North America, we maintained utilization at 99%. We closed on over $640 million of new investments. We continue to invest in our own maintenance network, and we stayed focused on safety and customer service. Additionally, the secondary market was very robust and demand for GATX Corporation leased assets was strong. We capitalized on that by optimizing our portfolio and generating substantial remarketing income. Within Rail International, coming into the year, we were hopeful that the economic environment would improve as the year progressed, but it did not.

Despite these challenges, the team at GATX Rail Europe did an outstanding job by raising lease rates on many car types and holding utilization at solid levels. And on top of that, we closed a very large and important transaction requiring nearly 6,000 railcars from CD Cargo. In India, the economic environment was very strong, and our results showed it, as the GATX India team grew the portfolio to over 12,000 wagons. Demand for spare aircraft engines was very robust in 2025, and we grew our asset base and earnings at both the joint venture and wholly owned levels. In fact, the earnings growth within engine leasing was the strongest among the various GATX Corporation businesses in 2025.

We saw solid lease rate increases and substantial engine sale opportunities. Overall, I was very pleased with the operating performance across our businesses last year, and we have set the stage for a very solid year in 2026, one that will have a number of new and unique elements as we integrate the Wells Fargo Rail portfolio and management activities into our daily operations. So let us talk about 2026, and I will start right there with the acquisition. There are three elements of the transaction that I would like to recap, and for some, this will be a repeat, but I think it is important because it helps set the stage for additional discussion.

First, GATX Corporation and Brookfield formed a new joint venture that acquired 101,000 railcars from Wells Fargo Rail, constituting all of their railcar operating lease assets. GATX Corporation owns 30% of the JV, Brookfield owns 70%, and we have the option to buy down Brookfield’s interest over time. Second, Brookfield acquired approximately 22,000 railcars directly from Wells Fargo, those being under finance leases. And third, GATX Corporation will manage all the railcars involved in both transactions. So I will walk through each segment and our outlook for 2026, starting with Rail North America, and some housekeeping matters to keep in mind.

As we have previously discussed, GATX Corporation will consolidate 100% of the newly formed JV into our financial statements and show Rail North America as a single segment with consolidated metrics. U.S. GAAP requires consolidation because we are the controlling partner from day one. Among other things, that means that each line item of the income statement and balance sheet will include 100% of the combined balance of the legacy GATX Corporation business and the JV, with any intercompany activity eliminated. Brookfield’s share of the JV earnings will be recognized in a single line item on the income statement, net income attributable to non-controlling interest.

That will be deducted from net income to arrive at the net income attributable to GATX Corporation. Now I know that is a mouthful and probably a little difficult to follow, but it will be much easier in Q1 and beyond when we have actual results to go along with the nomenclature. Reporting requirements aside, we have an obligation to our partner to treat all of the JV railcars exactly as we treat our legacy portfolio. In other words, we cannot and will not discriminate in any way.

The GATX Corporation portfolio of 107,000 railcars and the acquired portfolio of 101,000 is now one fleet: 208,000 railcars fully under the control of GATX Corporation, and that is how we are going to manage the business. For example, if a customer has 500 cars renewing, some are with the GATX Corporation legacy fleet and some at the JV, honestly, they are indifferent as to who the owner is. All they want is one point of commercial contact, one renewal discussion, one maintenance plan, one fleet plan, etc., and that is what we are going to deliver. At a macro level, we expect a similar operating environment in North America as we experienced in 2025.

Looking at a few of the key commercial metrics for our consolidated Rail North America fleet, this is the full 208,000 cars. For the LPI, we expect to be in the high teens to low 20% positive, following the 21.9% posted in Q4.

Operator: This reflects the continuation of a very solid existing car market.

Robert C. Lyons: The Wells Fargo fleet was running at approximately 97% utilization at closing, and factoring that starting point in, we expect utilization for the consolidated fleet to be 98% to 99% by year-end, and we expect our renewal success rate to be in the high 70% to low 80% range, again, a really, really strong outcome. With those metrics in mind, I will walk through our expectations for some key line items at Rail North America, and noting that the vast majority of the variances versus 2025 for those revenue and expense items that I am going to talk about are due to the addition of the Wells Fargo Rail fleet.

Looking first at revenue, in 2026, we expect Rail North America lease revenue to be in the range of $1.0 billion, or approximately $550 million over 2025. As indicated by the LPI, we continue to benefit from opportunities to reprice leases into a strong existing car market. We also have other revenue, which is largely related to repair revenue. We expect that to be in the range of $160 million, up $25 million versus last year. As for asset sales and scrapping, which drive our net gain on asset dispositions, the very robust secondary market we experienced in 2025 shows all signs of continuing.

In fact, given our increased scale, we are having a number of positive conversations with a range of secondary market participants about what GATX Corporation will put into the marketplace in the year ahead. So in 2026, we expect approximately $200 million of net gains on asset dispositions versus $130 million last year. That is a material increase.

Operator: But keep in mind,

Robert C. Lyons: that we now have a pool of cars to select from in terms of sale candidates that is twice the size of our historical fleet, and we are going to continue utilizing the strong demand to optimize and rebalance the entire portfolio. Of course, along with all the benefits of an increased fleet size, we have ownership costs and maintenance costs associated with the new additions. Interest expense is expected to be in the range of $440 million in 2026. That is a $180 million increase over 2025. Depreciation should be in the range of $520 million, a $230 million increase.

And regarding maintenance expense, we expect to be in the range of $500 million in 2026, a $150 million increase over 2025, and all of those increases are largely driven by the new fleet. The last item to note is other operating expense, the bulk of which relates to items like car taxes, mileage charges, freight charges, etc., as we move cars around North America. And, thankfully, we have a lot more cars to move around today. So we expect these expenses to be in the range of $85 million in the year ahead, about $25 million over last year.

Bringing all this together, we expect segment profit at Rail North America to be in the range of $415 million in 2026. That is a $55 million to $65 million increase over last year. At Rail International, in Europe, the economic environment we expect will remain challenging. However, the GATX Rail Europe team has done an excellent job investing in building the business, and we are going to see proper growth there. The same in India, although there we have the benefit of very strong economic tailwind. Taken together, we expect Rail International segment profit to increase by $5 million to $10 million in 2026. At GATX engine leasing, the market environment remains quite favorable.

Not only is global air travel strong, but the long-term trends in this market are positive. In addition to base demand for new engines, we have the fact that the lead time to acquire a newly built engine or complete repairs on existing engines is extended. That is a continuation of global supply chain constraints, but also a reflection of the fact that there is limited capacity to build or repair these very complex assets. That means the installed base of these assets is more valuable. We see that same trait in rail. In 2025, RRPF, our 50% owned joint venture, invested over $1.4 billion, bringing its total asset base to over $5.7 billion.

GATX Corporation has grown its directly owned engine portfolio to over $1 billion. Given our outlook for the engine investments, we expect engine leasing segment profit to increase by $15 million to $20 million in 2026, and this is after increasing almost $50 million between 2024 and 2025. On SG&A, we continue to work hard to hold the line on costs, and for 2025, we came in at $246 million. We expect this to be in the range of $275 million in 2026. The majority of the increase is related to staff we have added for the acquisition.

To put this in perspective and to highlight the scalability of our business, we added over 100,000 owned railcars and 22,000 managed railcars to our franchise, more than doubling the size of our owned and managed fleet while seeing an increase in SG&A of just over 10%. And that includes the standard cost and wage inflation we would see in a normal year. Putting all these factors together, we expect EPS to be in the range of $9.50 to $10.10 per diluted share in 2026, which would mark another year of record EPS. Importantly, this is roughly a 10% increase in EPS in a year in which we will complete and integrate the largest acquisition in our history.

For those who enjoy the vagaries of lease accounting, you know that acquiring one railcar is often dilutive in the early years of ownership from a GAAP income standpoint. Adding over 100,000 cars is 100,000 times more challenging on that front. Yet, given the scalability of our platform, the management services we are providing, and the fact that we acquired the assets at an attractive valuation, we still expect to generate strong EPS growth in the year ahead. So I would like to provide a quick update on the acquisition integration because we have received a number of very good investor questions on this point.

I am pleased to report that the closing and the integration to date are progressing very well. As noted, we closed on January 1, and on that day, we did an IT cutover that entailed hundreds of thousands of data points: car files, contract records, mechanical records, customer data, and myriad other supporting documents. The cutover went very well, and I would like to take a second to thank the Wells Fargo Rail team for all of their work in assisting with that effort. From a commercial perspective, our sales team hit the ground running.

While we added some new customers through the acquisition, by and large, the biggest accounts are existing customers of GATX Corporation that we know very well. So all the customer interaction right now is under one umbrella, and with an expanded fleet, we will have more customer interaction than we have ever had before. We believe we can bring additional value to our customers. On maintenance, the historical maintenance spend on the acquired fleet was in the range of $135 million annually. As a bank, Wells Fargo was not allowed to own its own shops, and therefore, it utilized third-party shops for 100% of this spend.

As we have indicated before, given that the GATX Corporation shops are currently at full capacity, we will continue to utilize those third-party shops for maintenance of the acquired fleet. Over time, based on investments we are making in our shops and efficiency improvements, we will have an opportunity to move some of this work in-house. That does not mean that we cannot add value immediately in the maintenance process. For example, previously, there were close to 80 shops providing service on the Wells Fargo fleet. In just seven weeks of ownership, we have already pared this down materially, and we will keep doing so as we transfer work to our preferred third-party providers.

In the process, we will find cost efficiencies, just one example of how our team is integrating the fleet, applying their experience and expertise, and bringing additional value for our customers and our shareholders. So I will close with comments on the dividend and the share repurchase authorization that was announced today. Our Board has approved an increase in the quarterly dividend of 8.2%, and this follows several years of increases in the 5% range. The stepped-up percentage increase versus prior years reflects the Board’s confidence in the strength and quality of our cash flow, the increased scale and strength of our global businesses, and the positive outlook for GATX Corporation.

I appreciate the Board’s confidence, and as always, we appreciate the support of our shareholders who have been with us for years and, in several cases, decades. The Board also approved a new $300 million share repurchase authorization, as we exhausted the prior one, which was granted in 2019, in the fourth quarter. We view stock repurchase as a tool to use periodically to return capital to shareholders. Our capital allocation has been consistent and clear. We believe our first mission is to acquire hard assets at attractive valuations to grow our business. Second, we will do that while always managing our balance sheet and leverage prudently.

And third, we will return excess capital to shareholders either through the dividend or share repurchase. Again, I want to thank the Board for their support in providing the authorization. So thank you for your patience. This was a much longer preamble than normal, but I hope you found it helpful. We are trying to provide some background and foundation as we look at the year ahead. This is a very exciting time at GATX Corporation, a year of transition as we fully integrate the acquired fleet and bring all the assets fully under our commercial and operational control.

We have the foundation in place to execute on this while also pursuing and maximizing growth of return opportunities in all of our global businesses. With that, let us go to Q&A.

Operator: As a reminder, if you would like to ask a question during the question-and-answer session, simply press star followed by one on your telephone keypad. Your first question comes from Andrzej Zenon Tomczyk from Goldman Sachs. Your line is live.

Robert C. Lyons: Hey. Thanks, Bob, Tom, Paul, Shari. Good morning. Appreciate you taking my questions. Wanted to start off on the guidance for EPS. First,

Ben Moore: are you just able to kind of frame up the magnitude of gains on sales factored into the low versus the high end? And then maybe just a question on if supply-demand tightens further for railcars through 2026, given below-replacement delivery. Is that a scenario where you could see upside to your gains target through the year?

Robert C. Lyons: Yes. So maybe I will start on the first part and then let Paul chime in on the second. So as Bob stated, we are targeting something in the range of $200 million for gains on sales. As you know, those tend to be pretty lumpy quarter to quarter. But if you look over the past few years on how the year has actually played out compared to what our original expectations were, that gives you a pretty good guidance to what magnitude the range might be. So something on the order of $10 million, $15 million either way is something that we have seen historically. But that is no guarantee for the future.

It is really hard to say exactly how that will play out.

Paul F. Titterton: And then I will just add to that. This is Paul speaking. You know, we have talked about the benefits of the fact that new car production is down to levels we have not seen in quite some time. And what I will say is there remains a tremendous amount of capital that would like to be deployed in the railcar market, and we believe that capital, and we are seeing evidence that capital is going to flow into the secondary market as it looks for investment.

So if you are in a situation like we are where you are the largest owner of railcars in North America, that should be a very supportive environment to generate the secondary market gains.

Operator: Understood. And

Ben Moore: maybe just one follow-up there. Apart from the gains, what areas of the business could you see sort of more variability around the results in 2026 relative to the guidance you laid out between North America, International, and engine leasing? And then just maybe what is driving the variability across those segments?

Robert C. Lyons: Yeah, Andrzej. So you definitely pointed out the biggest one in the way you teed the original question, purely in terms of financial results variance and projected remarketing gains, both at Rail North America and in our engine leasing business,

Paul F. Titterton: are the biggest source of upside or downside.

Robert C. Lyons: And as I noted, that is particularly true because it can be difficult to precisely predict the timing of these asset sales. But our guidance also assumes that we are able to manage the Rail North America maintenance

Operator: spend.

Paul F. Titterton: Whether owned or third-party shops, very tightly.

Robert C. Lyons: As Bob mentioned in his opening comments, gross maintenance spend is

Thomas A. Ellman: projected to be approximately $500 million, so even a small percentage change in this line item could be impactful. We also assume no material disruption in the global economy in general, or to the global aviation market in particular. Again, we highlighted the strength that we have seen in engine leasing, but it is a market that is subject to periodic disruption.

Ben Moore: Makes sense. And just maybe following on the synergies from earlier, I was curious if you could give some more detail on synergies in total and maybe how we think about capturing the synergies through year one. And then when you said previously year two would be more than modestly accretive, are you able to put a frame around that, if it is mid-single or high-single-digit type accretion, or even double digits depending on sort of what avenues you take with the business? Any framing there would be helpful. Appreciate it.

Robert C. Lyons: Yeah, Andrzej. It is Bob. I will start out and Tom may jump in. But, you know, we gave the guidance in the press release of the $0.20 to $0.30 from the impact of the transaction. You know, that is early stage synergies and benefits. It also is reflective of the fact that, as I mentioned in my opening comments, you know, operating lease accounting is not a new acquirer’s friend. Whether it is one car or 100 cars or 100,000 cars, you know, operating lease accounting can be dilutive in the early days.

So we are overcoming that through some of the synergies we are realizing, through the management fees that we are receiving, and through some of the other benefits of the transaction. Beyond 2026, I think I would like to hold off on speculating what that may be. But as the year progresses, we will be very clear with you as to how the integration and the benefits are coming along and what those will mean longer term.

Thomas A. Ellman: So just putting a couple numbers to some of the synergies and the discussion of SG&A that we talked about. So we earn two different types of management fees. As Bob noted, we are managing the long-term lease portfolio that Brookfield wholly owns, and for that, we expect management fees of approximately $11 million a year. We also manage the JV that we are a 30% owner of, and for that, we expect management fees on the order of $44 million per year. So combined, it is a little over $50 million.

Now keep in mind, the JV portion of those is 30% owned by GATX Corporation, so you need to think of that as the 70% that we do not own. But if you compare that to the $30 million of incremental SG&A that Bob talked about, most, but not all, of which is related to the increased asset size, it gives you some idea. As far as long term, as Bob mentioned, we have historically always given one year of guidance. We are going to continue to adhere to that. Bob mentioned in his comments a couple different things related to maintenance where we could see some things.

The only other qualitative point I would make is as we introduced our cyclically aware management philosophy to the Wells Fargo portfolio, you should see some benefits there as well.

Robert C. Lyons: Yeah. I would just add to that, Andrzej. From the standpoint of the guidance we gave today, outside of the numbers Tom just hit on and the guidance we put in the press release, we are not factoring in any significant incremental synergies beyond that. Now we believe they are there long term, but we have not really factored that into the 2026 guidance because it will take some time to realize those. In 2027, we will address that as we get into that year.

Ben Moore: Understood. Appreciate all the color there. Maybe just shifting gears a little bit to engine leasing. It sounds like that has been a strong segment for you guys through the year. It sounds like Airbus just announced lower delivery expectations for the year with bottlenecks being seen around aircraft engine availability. So we are just wondering if you could talk to how this is playing out on your aircraft spare engine lease business, and maybe if you could share sort of what you expect through 2026 from affiliates. Appreciate it.

Thomas A. Ellman: Yeah. So what I will tell you is in general, the global aviation market and aircraft engine leasing in particular remains very strong. Certainly contributing to that is the supply constraints both on the engine production side and on the maintenance backlog. So all of that is quite helpful. As far as the total magnitude that we will see in engine leasing, it is exactly what Bob hit in his opening comments in terms of the total dollar amount that we will see.

Robert C. Lyons: So total segment profit kind of forecast, whether from JV or 100% owned assets, is in the $180 million range segment profit-wise, up over $165 million or so in 2025.

Ben Moore: So

Robert C. Lyons: very significant, meaningful contributor, and, again, you hit on it. You know, there are supply chain issues, whether it is on new-issue new engines or whether it is on engines that are in MRO facilities waiting on repairs. These are complex assets. Not everybody can do the work. You cannot really scale up quickly to do that kind of work, so the lead times are long. That raises the value of the existing portfolio, and it gives you more lease rate leverage as well.

Ben Moore: All the time this morning. Thank you.

Operator: Your next question comes from the line of Ben Moore from Citi. Your line is live.

Paul F. Titterton: Hi. Great. Good morning. Appreciate taking our questions. I wanted to start off by asking about whether you are seeing any potential railcar shortages in any particular car types, if you are seeing any of that in any places. In interacting with investors, there is

Ben Moore: thought that it could be starting to happen here and there due to the scrapping and age of fleet. Would be curious to hear your thoughts on what you are seeing.

Paul F. Titterton: Thanks, Ben. This is Paul. I will take that. So we continue to stand by the thesis we have been advancing for a few years now, which is that we are in a market that is what we are calling supply-led, which is to say that there are fewer new cars being produced, and thanks to supportive scrap rates, we are seeing cars leave the fleet. As a result, we are seeing net fleet shrinkage in the North American fleet. Again, that is a positive when you are the largest owner of railcars in North America because those conditions should be supportive of stable utilization and a stable pricing environment. So, certainly, those are favorable dynamics for our business.

In terms of outright shortages, I would say no. We are not seeing outright

Operator: shortages.

Paul F. Titterton: But we certainly continue to see a stable and supportive market in most of the car types in which we invest. Great. Thanks very much. My next

Ben Moore: question then is on the sort of, at least from what we view as, greater-than-expected step-down in your LPI to the 21.9%. That is kind of towards the lower end of the low-to-mid-20s expectation, a step down from your 3Q’s 22.8%. Wanted to hear your thoughts. Could that be indicative of lower renewal rate gains catching up from the show, post-COVID, to be expected over the next two years, or could it maybe just be a blip this quarter and step back up, and then kind of muddying that with your Brookfield JV. Which is what to hear kind of how you account for all of these.

Robert C. Lyons: Yeah, Ben. It is Bob. I will start. Paul may jump in, but from an LPI standpoint, I would say, actually, in 2026, something in the high teens to 20% range is very positive, especially given kind of the renewal, the trend in the number of cars renewed and the expiring rate over time. I would take 20% LPI every year to infinity if I could. That is a really, really positive outcome for us, and it is on the combined fleet. So that is a good thing and a good metric to provide.

There are some economically sensitive car types, as we referenced in the press release, where we are seeing a little bit more, you know, challenge in terms of the lease rate environment, and I will let Paul comment on that. Yes, sure. So as Bob said, there are certain segments of the

Paul F. Titterton: fleet—unfortunately for us, these are the distinct minority of our overall fleet—but certain segments of the fleet, boxcars would be a great example, where those are more sensitive to some of the macroeconomic uncertainty we are seeing. And so there, there is a little bit of downward pressure, and I think we are watching that in those and certain other car types. But having said that, the core franchise for GATX Corporation is what I call the heavy-haul bulk franchise and specifically tank cars and specialty covered hoppers. We continue to see very supportive, stable pricing and utilization. Those remain, I would say, favorable, and we expect them to continue to be favorable.

Ben Moore: Great. Thanks. And maybe kind of related to that, the step-up in your renewal success rate into the low 90s from the mid-to-high 80s, that has been kind of for some time now. That seems to be of note. Could that help offset a gradual decline in LPI, and just wanted to get your thoughts on that.

Robert C. Lyons: Yeah. I would view the low 90s as a bit of an anomaly based on certain renewals that we concluded in the fourth quarter.

Operator: That is

Robert C. Lyons: I cannot recall being north of 90% on a quarterly basis before. So being anywhere in the 80% range is commercially what we expect and consistent with, you know, history. I would say the key on that renewal success rate number is if you are in that high 70%, 80% range, etc., those are cars that are staying with existing customers. Those are cars that are not then going

Shari Hellerman: to

Robert C. Lyons: customer B and running through the shop. So there is a benefit there in terms of us not having to handle those cars upon return. So anything up in that high 70% to 80% range is really good.

Ben Moore: Great. Thanks. And I know that you have been continuing to do your railcar qualification tests, and so we have been expecting maybe a higher maintenance expense, and it seems like it stepped down quite nicely this past quarter. Is this step down more temporary, kind of a blip, and we could see it step back up, or how would you guide on kind of cadence? So you did give kind of a full year, but the cadence throughout 2026.

Paul F. Titterton: From quarter to quarter, a lot of it is, frankly, noise. So I think you really, when you think about the compliance calendar, it is really an annual calendar. 2026 will be another fairly busy compliance year for us, and we are anticipating, though, after that our compliance calendar will moderate somewhat.

Ben Moore: Great. Appreciate that. And then maybe just, if I can squeeze in one last one. Your due diligence on the Wells portfolio— is that completely done? Or, you know what, actually, now that you have already acquired it, that is a moot point. So let me just scratch that. Thank you very much. All good.

Robert C. Lyons: No. That is fine, Ben. Thank you. And just to add on to that question, I would say that based on the amount of due diligence we were able to do pre-close,

Ben Moore: there were very few, if any, surprises at closing.

Robert C. Lyons: You know, by and large, the fleet we expected to acquire, we acquired, with the underlying car types, customer base, etc. So no issues there.

Ben Moore: I appreciate that. Thank you so much.

Operator: Your next question comes from the line of Brendan Michael McCarthy from Sidoti. Your line is live.

Thomas A. Ellman: Great. Good morning, everybody. Appreciate you taking my questions here. Just wanted to circle back to that CapEx question. Can you provide a further breakdown there? Are you looking 2026 just among railcar assets in the engine leasing business? Yes. So, thank you for that follow-up. So the $1 billion, I would say about three quarters of that is expected to be at Rail North America and about a quarter of it expected to be in Rail International. But in addition to that, we anticipate doing significant investment via the JV. So GATX Corporation does not typically have to make, nor do we anticipate making, any capital contribution. But in 2025, the JV invested about $1.4 billion.

So our percentage share of that investment would have been another $700 million. And in 2026, we anticipate the JV will do another $1 billion of investment or more. So that would translate our share to being another $500 million. But, again, the engine leasing, the JV is self-funded, so GATX Corporation does not typically make a capital contribution.

Operator: Great. I appreciate that. That is helpful. And just

Brendan Michael McCarthy: on the engine leasing segment, just really strong results there in 2025. I have it, you know, driving pretty much all of the year-over-year gain in segment profit. Can you provide a breakdown there of that year-over-year gain between what you saw from remarketing income and then what you saw from operating

Operator: income.

Thomas A. Ellman: Yep. So, again, as a reminder for that, the quarter-to-quarter variability can be pretty lumpy just because of the way the gains come in. But for the full year, about two thirds of that was operating income and about one third of it remarketing gains.

Brendan Michael McCarthy: Got it. As you look into 2026, I think you mentioned $15 million to $20 million uplift in segment profit for engine leasing. Should that breakdown, you know, maybe stay right around the same for 2026?

Thomas A. Ellman: Yeah. You answered your own question. That is a very good assumption to make going in, but, again, with the caveat that there is a certain degree of lumpiness on the remarketing side. But assuming that it would be similar to this year is a reasonable assumption.

Brendan Michael McCarthy: Got it. Got it. Last question for me just on the outlook for $200 million in railcar remarketing income for 2026. How do you kind of expect the Wells Fargo fleet to play into that? Maybe you can talk about the average, you know, age of the Wells Fargo fleet, any certain railcar types that you feel you are, you know, maybe oversupplied in at the moment. Do you think that the, I guess, overall, do you think the quarterly cadence might be similar to the past, or do you think there might be some front-end, you know, impact there just as you kind of gauge the Wells Fargo fleet?

Robert C. Lyons: Yeah. It will take a little bit of time to fully assess, you know, the Wells portfolio in terms of what we want to go to market with. But let us just start with the $200 million to begin with. The GATX Corporation legacy fleet: 2025, we generated $130 million. We would expect about the same, roughly, in 2026. So the incremental amount, that $70 million incremental amount, is really from the Wells side of the ledger. But, again, we are managing the whole portfolio as one.

Ben Moore: From a

Robert C. Lyons: standpoint of what we are going to be in the market with. You know, the very good news is, as I mentioned in my opening comment, we have 2x the portfolio now to work with, and there is a lot of demand in the secondary market. So it is really going to be a decision we make from a fleet management perspective on whether it is credits or car types that we may want to

Paul F. Titterton: Yeah. I will just say one of the nice things about the Wells Fargo business—you know, we said when we announced the deal that it has been a well-managed business. You know, we are not buying a distressed, problematic asset. We are buying a portfolio that has been managed effectively. And so what that means is there are actually quite a few quality, saleable deals within that portfolio that we think the secondary markets will want. And so as Bob said, we are still determining what parts of that portfolio we want

Ben Moore: dispose of. You know, we think about things like concentrations in

Paul F. Titterton: credit or commodity or car type or tenor of exposure. We are really trying to do a portfolio balancing exercise as we sell down. But ultimately, the good news is really however we decide we want to rebalance the portfolio, there are quite a few saleable transactions in both legacy GATX Corporation and the Wells Fargo portfolio.

Robert C. Lyons: Yeah. And I would just add to that the most liquid car types in the secondary market is freight cars versus tank. Tank, it is not that you cannot sell cars in the secondary market, but there is a limited buyer universe, and it is a more specialized asset. So the most active market by far is for freight cars, and the Wells Fargo fleet was 95% freight cars. So we have a lot to work with.

Brendan Michael McCarthy: That makes sense. And just as a follow-up, just curious as to, you know, the Wells Fargo fleet doubled the fleet size, and you just mentioned, you know, a much higher proportion of freight cars, but then you kind of mentioned in 2026 the breakdown might be like a $130 million in remarketing income from the GATX Corporation legacy fleet plus the $70 million from the Wells Fargo fleet. I guess, why would the breakdown look like that, you know, just considering the Wells Fargo fleet was a higher proportion of freight?

Robert C. Lyons: Well, there is really no reason in particular. We continue to see very good demand on the legacy side of the business.

Brendan Michael McCarthy: You know,

Robert C. Lyons: while it is half of what we do on the legacy portfolio, freight cars, that is still over 50,000 cars you are talking about. So it is a very big universe of cars. And, you know, we will continue to balance what makes sense to be in the market with, whether it is car type or credit. And, again, we will be working with our partner on what is the most logical thing to be putting in the marketplace from the JV side. We think that is a good mix going in. It could shift, could very well shift as the year progresses, but in total, that is a very reasonable number, that $200 million, to work

Ben Moore: I will just add too. Over the last several years of supportive railcar markets, we have

Paul F. Titterton: put on a lot of very good leasing business in the legacy fleet. In terms of deals that we have on our balance sheet, legacy balance sheet, that are attractive to sell, we have done a good job restocking the shelves there.

Brendan Michael McCarthy: Got it. I appreciate. Just curious there. But thanks for all the detail.

Operator: That is all for me.

Ben Moore: Thank you.

Operator: Next question comes from the line of Justin Laurence Bergner from Gabelli Funds. Your line is live.

Justin Laurence Bergner: Good morning, Bob, Tom, Paul, Shari. Morning. Morning.

Robert C. Lyons: Thanks for letting me jump in. Congratulations on closing the deal for Wells Fargo. First question would be, any contours around the specifics of the repurchase, or is it just pretty open-ended?

Ben Moore: Time-wise and pace-wise?

Justin Laurence Bergner: It is very open-ended.

Robert C. Lyons: As I mentioned, the authorization that we just exhausted in the fourth quarter was granted in 2019. And so, you know, we look first to invest, second, manage the balance sheet, and third, as we said, kind of what is the increment or the extra leftover for dividends and share repurchase. So we do not have a targeted amount in any given year. It is just what makes sense in the overall capital allocation framework. Okay. Did you actually repurchase some vast amount of shares in fourth quarter? Said it was exhausted or just exhausted time-wise?

Thomas A. Ellman: Yeah. So, again, as Bob mentioned, the initial authorization was 2019. In the fourth quarter, we purchased approximately $46.5 million of stock at an average price of $160 a share.

Justin Laurence Bergner: Okay.

Thomas A. Ellman: Thank you.

Robert C. Lyons: Any comments on sequential lease rates— usually asked earlier in the call, but since it has not come up, figured I would. Yeah. Justin, this is Paul speaking. And broadly speaking, across most car types,

Paul F. Titterton: we are seeing sequential lease rates roughly flattish. Bob mentioned a handful of what we call economically sensitive car types where there are a few headwinds, but across the broad bulk of the fleet, flattish.

Justin Laurence Bergner: Okay. I think when you spoke about the Wells Fargo transaction,

Robert C. Lyons: you announced it and had the call. You spoke about modest accretion in 2026. I forget, were you including gains from sale on the Wells Fargo side at that point in time, or has the mix become a little bit more gains— Nope. That was all in, Justin. Kind of a

Justin Laurence Bergner: yeah.

Robert C. Lyons: And then just lastly, the Wells Fargo fleet is going to continue to kind of operate in runoff mode, right? There is going to be minimal investment. That $70 million in gains would just, you know, shrink it by however many cars are sold as part of that roughly $70 million of gains. Yeah. The joint venture itself is structured to run down over time. It is not set up to reinvest. All of that activity will be taking place on the GATX Corporation side of the ledger. So to the extent there are replacement opportunities and reinvestment opportunities that come out of the fact that portfolio will burn down over time, they will be on GATX Corporation’s side.

But, again, you know, we are looking at a few thousand— three or 4,000 car sale package roughly, spread out over 2026 to generate those gains. So you would have a very long tail of selling cars at that rate before you put serious reduction into that portfolio. Got it. That is helpful. So three to 4,000 cars sold, that would be the Wells Fargo side of the ledger. Yeah. We will be in that ballpark. Yes. Okay. Thank you for taking all my questions, and good luck.

Ben Moore: Thank you. Thank you.

Operator: Final question comes from the line of Ben Moore from Citi. Your line is live.

Ben Moore: Great. Thanks for bringing me back from the queue. Just one clarification question on your very strong guide of the $200 million in remarketing for 2026. If we take your midpoint of your EPS guide range and we less out that $200 million and try to compare apples to apples versus 2025, it looks like

Justin Laurence Bergner: the

Ben Moore: net income less the remarketing appears to be kind of a down 20% or so for 2026 year over year. Are we missing anything? Is that because you only have 30% impact of that? Or how should we think about the net income less remarketing for 2026?

Thomas A. Ellman: Yeah. Ben, I think you found your way to it near the end of that question. It is all tied up in the fact that the asset sales that we do from the JV are subject to the NCI, the non-controlling interest piece of it.

Ben Moore: So GATX Corporation

Thomas A. Ellman: will economically enjoy 30% of those gains as opposed to the wholly owned portfolio.

Justin Laurence Bergner: Terrific.

Ben Moore: Thank you for answering. Appreciate it.

Operator: There are no further questions. I would now like to turn the call back over to the CEO of GATX Corporation for closing remarks.

Robert C. Lyons: I do not have any closing remarks, but Shari probably does.

Shari Hellerman: I would like to thank everyone for their participation on the call this morning. Please contact me with any follow-up questions. Have a great day. Thank you.

Operator: That concludes today’s meeting. You may now disconnect.

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