# Gatx Corp: Form 10-Q for the period ended Jun 30, 2024

- Company: [Gatx Corp](/companies/gatx.md) (CIK 40211)
- Form: 10-Q
- Filed: 2024-07-25
- Accepted by EDGAR: Jul 25, 2024, 16:16 ET
- Period: 2024-06-30
- Accession: 0000040211-24-000067
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/40211/000004021124000067/gmt-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/40211/000004021124000067/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $386.7m | us-gaap:Revenues |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $766.6m | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2024-04-01 to 2024-06-30 | $58.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-01-01 to 2024-06-30 | $114.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $82.8m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $160.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $10.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $29.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $44.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | $118.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $1.21 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | $3.25 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $1.22 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | $3.25 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 35,900,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 35,900,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | $235.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 6 months, 2024-01-01 to 2024-06-30 | $43.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2024-01-01 to 2024-06-30 | $8.9m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $823.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2024-06-30 | $12.22bn | us-gaap:Assets |
| Total liabilities | at 2024-06-30 | $9.88bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $2.34bn | us-gaap:StockholdersEquity |
| Shares outstanding | at 2024-06-30 | 35,600,000 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 61,238 characters.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report, Annual Report on Form 10-K for the year ended December 31, 2023, and in our other filings with the Securities and Exchange Commission ("SEC"). We based the discussion and analysis that follows on financial data we derived from the financial statements prepared in accordance with U.S. Generally Accepted Accounting Standards ("GAAP") and on certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP components to the most comparable GAAP components, see "Non-GAAP Financial Measures" at the end of this item. The discussion and analysis below includes forward-looking statements that are subject to risks, uncertainties and other factors described in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2023 that could cause actual results to differ materially from such forward-looking statements. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

### OVERVIEW

We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results through three primary business segments: Rail North America, Rail International, and Engine Leasing (previously named Portfolio Management). Financial results for our tank container leasing business ("Trifleet") are reported in the Other segment.

In the first quarter of 2024, we changed the name of our Portfolio Management business segment to Engine Leasing to reflect the prospective operations of this business segment. Historically, this business segment included marine operations from our liquefied gas-carrying vessels (the "Specialized Gas Vessels"). As of December 31, 2023, we had sold all of our marine assets and no longer have any marine operations. The segment is now almost entirely comprised of our engine leasing operations, which include our ownership interest in the RRPF affiliates, a group of joint ventures with Rolls-Royce plc (or affiliates thereof, collectively "Rolls-Royce") that lease aircraft spare engines, and GATX Engine Leasing ("GEL"), our business that directly owns aircraft spare engines that are leased to airline customers or employed in an engine capacity agreement.

Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results we may achieve for the entire year ending December 31, 2024. In particular, asset remarketing income does not occur evenly throughout the year. For more information, refer to the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2023.

### DISCUSSION OF OPERATING RESULTS

Net income for the six months ended June 30, 2024 was $118.7 million, or $3.25 per diluted share, compared to $140.7 million, or $3.87 per diluted share, for the same period in 2023. Results for the six months ended June 30, 2024 included a net negative impact of $7.4 million ($0.20 per diluted share) from tax adjustments and other items, compared to a net negative impact of $1.1 million ($0.03 per diluted share) from tax adjustments and other items for the six months ended June 30, 2023. See "Non-GAAP Financial Measures" at the end of this item for further details. Excluding the impact of these items, net income decreased $15.7 million compared to the prior year, largely due to lower asset disposition gains at Rail North America, the absence of the sale of natural gas holdings in the prior year, lower share of affiliates' earnings at the RRPF affiliates, and higher interest expense, partially offset by higher revenue at Rail North America and Rail International and higher non-dedicated engine revenue at Engine Leasing.

Net income for the three months ended June 30, 2024 was $44.4 million, or $1.21 per diluted share, compared to $63.3 million, or $1.74 per diluted share, for the same period in 2023. Results for the three months ended June 30, 2024 included a net negative impact of $8.0 million ($0.22 per diluted share), compared to a net positive impact of $0.2 million ($0.01 per diluted share) from tax adjustments and other items. See "Non-GAAP Financial Measures" at the end of this item for further details. Excluding the impact of these items, net income decreased $10.7 million compared to the prior year, largely due to lower asset disposition gains at Rail North America, the absence of the sale of natural gas holdings in the prior year, lower share of affiliates' earnings at the RRPF affiliates, and higher interest expense, partially offset by higher revenue at Rail North America and Rail International and higher non-dedicated engine revenue at Engine Leasing.

The following table shows a summary of our reporting segments and consolidated financial results (in millions, except per share data):

| Segment Revenues | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Rail North America | $270.4 | $240.4 | $535.4 | $479.3 |
| Rail International | 85.2 | 76.2 | 168.9 | 149.5 |
| Engine Leasing | 21.8 | 16.5 | 43.1 | 32.8 |
| Other | 9.3 | 10.1 | 19.2 | 20.5 |
|  | $386.7 | $343.2 | $766.6 | $682.1 |
| **Segment Profit (Loss)** |  |  |  |  |
| Rail North America | $78.8 | $79.3 | $169.1 | $174.5 |
| Rail International | 26.5 | 27.3 | 55.3 | 50.8 |
| Engine Leasing | 18.4 | 26.6 | 44.1 | 54.9 |
| Other | (6.2) | 6.0 | 2.0 | 13.9 |
|  | 117.5 | 139.2 | 270.5 | 294.1 |
| Less: |  |  |  |  |
| Selling, general and administrative expense | 58.6 | 52.0 | 114.5 | 102.4 |
| Income taxes (includes $4.1 and $6.3 QTR and $8.3 and $13.2 YTD related to affiliates' earnings) | 14.5 | 23.9 | 37.3 | 51.0 |
| **Net Income (GAAP)** | $44.4 | $63.3 | $118.7 | $140.7 |
| Net income, excluding tax adjustments and other items (non-GAAP) (1) | $52.4 | $63.1 | $126.1 | $141.8 |
| Diluted earnings per share (GAAP) | $1.21 | $1.74 | $3.25 | $3.87 |
| Diluted earnings per share, excluding tax adjustments and other items (non-GAAP) (1) | $1.43 | $1.73 | $3.45 | $3.90 |
| Investment Volume | $442.0 | $486.6 | $820.6 | $873.6 |

The following table shows our return on equity for the trailing 12 months ended June 30:

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Return on Equity (GAAP) | 10.5% | 10.5% |
| Return on Equity, excluding tax adjustments and other items (non-GAAP) (1) | 10.7% | 11.4% |

(1) See "Non-GAAP Financial Measures" at the end of this item for further details.

### Segment Operations

Segment profit is an internal performance measure used by the Chief Executive Officer to assess the profitability of each segment. Segment profit includes all revenues, expenses, pre-tax earnings from affiliates, and net gains on asset dispositions that are directly attributable to each segment. We allocate interest expense to the segments based on what we believe to be the appropriate risk-adjusted borrowing costs for each segment. Segment profit excludes selling, general and administrative expenses, income taxes, and certain other amounts not allocated to the segments.

### RAIL NORTH AMERICA

### Segment Summary

Supply of existing railcars remained tight for most railcar types, and Rail North America continued to capitalize on current market conditions for both lease rates and lease terms. Utilization was 99.3% at the end of the current quarter.

The following table shows Rail North America's segment results (in millions):

| Revenues | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Lease revenue | $242.1 | $218.9 | $478.6 | $434.0 |
| Other revenue | 28.3 | 21.5 | 56.8 | 45.3 |
| **Total Revenues** | 270.4 | 240.4 | 535.4 | 479.3 |
| **Expenses** |  |  |  |  |
| Maintenance expense | 77.4 | 66.8 | 150.3 | 133.7 |
| Depreciation expense | 66.8 | 66.1 | 131.9 | 131.6 |
| Operating lease expense | 9.0 | 9.0 | 18.0 | 18.0 |
| Other operating expense | 6.4 | 6.7 | 13.1 | 13.7 |
| **Total Expenses** | 159.6 | 148.6 | 313.3 | 297.0 |
| **Other Income (Expense)** |  |  |  |  |
| Net gain on asset dispositions | 24.9 | 34.1 | 59.1 | 81.9 |
| Interest expense, net | (56.4) | (44.5) | (109.7) | (86.8) |
| Other expense | (0.3) | (2.1) | (2.4) | (2.5) |
| Share of affiliates' pre-tax losses | (0.2) | — | — | (0.4) |
| **Segment Profit** | $78.8 | $79.3 | $169.1 | $174.5 |
| **Investment Volume** | $308.1 | $161.3 | $629.8 | $457.8 |

The following table shows the components of Rail North America's lease revenue (in millions):

|  | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Railcars | $218.2 | $198.2 | $431.9 | $393.0 |
| Boxcars | 17.1 | 14.2 | 33.3 | 28.0 |
| Locomotives | 6.8 | 6.5 | 13.4 | 13.0 |
| Total | $242.1 | $218.9 | $478.6 | $434.0 |

24

### Rail North America Fleet Data

The following table shows fleet activity and statistics for Rail North America railcars, excluding boxcars, for the quarter ended:

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Beginning balance | 101,219 | 100,585 | 100,656 | 101,167 | 101,687 |
| Railcars added | 358 | 791 | 1,688 | 1,422 | 1,337 |
| Railcars scrapped | (316) | (292) | (354) | (375) | (389) |
| Railcars sold | (676) | (428) | (823) | (527) | (549) |
| Ending balance | 100,585 | 100,656 | 101,167 | 101,687 | 102,086 |
| Utilization rate at quarter end (1) | 99.3% | 99.3% | 99.3% | 99.4% | 99.3% |
| Renewal success rate (2) | 85.3% | 83.6% | 87.1% | 83.4% | 84.1% |
| Active railcars at quarter end (3) | 99,871 | 99,933 | 100,498 | 101,106 | 101,401 |
| Average active railcars (4) | 100,230 | 99,796 | 100,197 | 100,677 | 101,181 |

(1) Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.

(2) The renewal success rate represents the percentage of railcars on expiring leases that were renewed with the existing lessee. The renewal success rate is an important metric because railcars returned by our customers may remain idle or incur additional maintenance and freight costs prior to being leased to new customers.

(3) Active railcars refers to the number of railcars on lease to customers. Changes in railcars on lease compared to prior quarters are impacted by the utilization of new railcars purchased from builders or in the secondary market and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.

(4) Average active railcars for the quarter is calculated using the number of active railcars at the end of each month.

As of June 30, 2024, leases for approximately 11,700 tank and freight cars and approximately 1,400 boxcars were scheduled to expire over the remainder of 2024. These amounts exclude railcars on leases expiring in 2024 that have already been renewed or assigned to a new lessee.

In 2022, we entered into a new long-term railcar supply agreement with a subsidiary of Trinity Industries, Inc. ("Trinity") to purchase 15,000 newly built railcars through 2028, with an option to order up to an additional 500 railcars each year from 2023 to 2028. The agreement enables us to order a broad mix of tank and freight cars. Trinity will deliver 6,000 tank cars (1,200 per year) from 2024 through 2028. The remaining 9,000 railcars, which can be a mix of freight and tank cars, will be ordered at a rate of 1,500 railcars per order year from 2023 to 2028 and delivered under a schedule to be determined. At June 30, 2024, 4,319 railcars have been ordered pursuant to the terms of the agreement, of which 2,312 railcars have been delivered.

In 2018, we amended a long-term supply agreement with Trinity to extend the term to December 2023, and we agreed to purchase 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through 2023. As of June 30, 2024, all 4,800 railcars have been ordered and delivered.

In 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. ("ARI"), pursuant to which we agreed to purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-year period, beginning in April 2019 and ending in December 2023. ARI's railcar manufacturing business was acquired by a subsidiary of The Greenbrier Companies, Inc. on July 26, 2019, and such subsidiary assumed all of ARI's obligations under our long-term supply agreement. As of June 30, 2024, all 7,650 railcars have been ordered and delivered.

### Lease Price Index

Our Lease Price Index ("LPI") is an internally-generated business indicator that measures renewal activity for our North American railcar fleet, excluding boxcars. The average renewal lease rate change is reported as the percentage change between the average renewal lease rate and the average expiring lease rate. The average renewal lease term is reported in months and reflects the average renewal lease term in the LPI.

During the second quarter of 2024, the renewal rate change of the LPI was positive 29.4%, compared to positive 33.0% in the prior quarter, and positive 33.1% in the second quarter of 2023. Lease terms on renewals for railcars in the LPI averaged 61 months in the current quarter, compared to 64 months in the prior quarter, and 61 months in the second quarter of 2023.

The following table shows fleet activity and statistics for Rail North America boxcars for the quarter ended:

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Beginning balance | 8,789 | 8,959 | 9,087 | 9,311 | 9,670 |
| Boxcars added | 279 | 316 | 424 | 587 | — |
| Boxcars scrapped | (109) | (95) | (152) | (228) | (555) |
| Boxcars sold | — | (93) | (48) | — | (125) |
| Ending balance | 8,959 | 9,087 | 9,311 | 9,670 | 8,990 |
| Utilization rate at quarter end (1) | 99.8% | 99.7% | 100.0% | 99.8% | 99.8% |
| Active boxcars at quarter end (2) | 8,942 | 9,062 | 9,310 | 9,651 | 8,971 |
| Average active railcars (3) | 8,855 | 8,985 | 9,207 | 9,583 | 9,304 |

(1) Utilization is calculated as the number of boxcars on lease as a percentage of total boxcars in the fleet.

(2) Active boxcars refers to the number boxcars on lease to customers. Changes in boxcars on lease compared to prior quarters are impacted by the utilization of new boxcars purchased from builders or in the secondary market and the disposition of boxcars that were sold or scrapped, as well as the fleet utilization rate.

(3) Average active boxcars is calculated using the number of active boxcars at the end of each month.

### Comparison of Reported Results for the First Six Months of 2024 to the First Six Months of 2023

In the six months ended June 30, 2024, segment profit of $169.1 million decreased 3.1% compared to $174.5 million for the same period in the prior year. The decrease was primarily due to lower net gain on asset dispositions and higher interest expense, largely offset by higher lease revenue. The amount and timing of disposition gains is dependent on a number of factors and may vary materially from period to period.

### Revenues

In the six months ended June 30, 2024, lease revenue increased $44.6 million, or 10.3%, driven by higher lease rates and more railcars on lease. Other revenue increased $11.5 million due to higher repair revenue.

### Expenses

In the six months ended June 30, 2024, maintenance expense increased $16.6 million, driven by higher costs of repairs, more regulatory compliance events, and more repairs performed by the railroads. Depreciation expense increased $0.3 million due to the timing of new railcar investments and dispositions, offset by a change in the useful lives of certain railcars. Other operating expense decreased $0.6 million primarily due to lower switching and freight costs.

### Other Income (Expense)

In the six months ended June 30, 2024, net gain on asset dispositions decreased $22.8 million due to fewer railcars sold, lower gains on railcars converted to finance leases, and lower net scrapping gains. The amount and timing of disposition gains is dependent on a number of factors and may vary materially from period to period. Net interest expense increased $22.9 million, driven by a higher average interest rate and a higher average debt balance.

### Investment Volume

During the six months ended June 30, 2024, investment volume was $629.8 million compared to $457.8 million in the same period in 2023. We acquired 2,200 newly built railcars and purchased 1,247 railcars in the secondary market in the six months ended June 30, 2024, compared to 1,619 newly built railcars and 1,021 railcars in the secondary market in the same period in 2023.

Our investment volume is predominantly composed of acquired railcars, but also includes certain capitalized repairs and improvements to owned railcars and our maintenance facilities. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of railcars purchased, which may include tank cars and freight cars, as well as newly manufactured railcars or those purchased in the secondary market.

### Comparison of Reported Results for the Second Quarter of 2024 to the Second Quarter of 2023

### Segment Profit

In the three months ended June 30, 2024, segment profit of $78.8 million decreased 0.6% compared to $79.3 million for the same period in the prior year. The decrease was primarily due to lower net gain on asset dispositions, higher interest expense, and higher maintenance expense, largely offset by higher lease revenue. The amount and timing of disposition gains is dependent on a number of factors and may vary materially from period to period.

### Revenues

In the three months ended June 30, 2024, lease revenue increased $23.2 million, or 10.6%, driven by higher lease rates and more railcars on lease. Other revenue increased $6.8 million due to higher repair revenue.

### Expenses

In the three months ended June 30, 2024, maintenance expense increased $10.6 million, driven by higher costs of repairs, more regulatory compliance events, and more repairs performed by the railroads. Depreciation expense increased $0.7 million due to the timing of new railcar investments and dispositions, offset by a change in the useful lives of certain railcars. Other operating expense decreased $0.3 million primarily due to lower switching and freight costs.

### Other Income (Expense)

In the three months ended June 30, 2024, net gain on asset dispositions decreased $9.2 million due primarily to lower net gains on railcars sold in the current year, partially offset by higher net scrapping gains. The amount and timing of disposition gains is dependent on a number of factors and may vary materially from period to period. Net interest expense increased $11.9 million, driven by a higher average interest rate and a higher average debt balance.

### RAIL INTERNATIONAL

### Segment Summary

Rail International, composed primarily of GATX Rail Europe ("GRE"), produced solid operating results in the six months of 2024 and continued to grow its fleet. GRE experienced renewal lease rate increases for most railcar types in the period. Utilization was 95.8% at the end of the current quarter.

Our rail business in India ("Rail India") increased its fleet size in the first six months of 2024 and continued to focus on investment opportunities, diversification of its fleet, and developing relationships with customers, suppliers and the Indian Railways. Demand for railcars in India remained robust, driven by continued growth in the economy and infrastructure development. Utilization was 100.0% at the end of the current quarter.

In the first quarter of 2023, we sold Rail Russia and recorded a gain of $0.3 million upon completion of the sale.

The following table shows Rail International's segment results (in millions):

| Revenues | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Lease revenue | $82.0 | $73.1 | $162.6 | $143.5 |
| Other revenue | 3.2 | 3.1 | 6.3 | 6.0 |
| **Total Revenues** | 85.2 | 76.2 | 168.9 | 149.5 |
| **Expenses** |  |  |  |  |
| Maintenance expense | 18.2 | 14.6 | 35.7 | 30.5 |
| Depreciation expense | 19.4 | 16.6 | 38.3 | 32.3 |
| Other operating expense | 3.6 | 2.3 | 7.1 | 4.5 |
| **Total Expenses** | 41.2 | 33.5 | 81.1 | 67.3 |
| **Other Income (Expense)** |  |  |  |  |
| Net gain on asset dispositions | 0.7 | 0.7 | 2.0 | 1.5 |
| Interest expense, net | (17.5) | (13.5) | (34.2) | (26.0) |
| Other expense | (0.7) | (2.6) | (0.3) | (6.9) |
| **Segment Profit** | $26.5 | $27.3 | $55.3 | $50.8 |
| **Investment Volume** | $59.6 | $77.3 | $109.5 | $158.4 |

29

### GRE Fleet Data

The following table shows fleet activity and statistics for GRE railcars for the quarter ended:

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Beginning balance | 28,461 | 28,759 | 29,102 | 29,216 | 29,371 |
| Railcars added | 376 | 446 | 371 | 322 | 388 |
| Railcars scrapped or sold | (78) | (103) | (257) | (167) | (110) |
| Ending balance | 28,759 | 29,102 | 29,216 | 29,371 | 29,649 |
| Utilization rate at quarter end (1) | 96.9% | 96.0% | 95.9% | 95.3% | 95.8% |
| Active railcars at quarter end (2) | 27,875 | 27,947 | 28,004 | 27,998 | 28,417 |
| Average active railcars (3) | 27,973 | 27,884 | 28,003 | 27,984 | 28,198 |

(1) Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.

(2) Active railcars refers to the number of railcars on lease to customers. Changes in railcars on lease compared to prior quarters are impacted by the utilization of newly built railcars, railcars purchased in the secondary market, and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.

(3) Average active railcars for the quarter is calculated using the number of active railcars at the end of each month.

The general decline in GRE's fleet utilization was primarily due to weakness in the intermodal market. At June 30, 2024, GRE owned 2,210 intermodal railcars.

As of June 30, 2024, leases for approximately 5,969 railcars were scheduled to expire over the remainder of 2024. This amount excludes railcars on leases expiring in 2024 that have already been renewed or assigned to a new lessee.

### Rail India Fleet Data

The following table shows fleet activity and statistics for Rail India railcars for the quarter ended:

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Beginning balance | 6,351 | 6,927 | 7,884 | 8,805 | 9,501 |
| Railcars added | 576 | 957 | 921 | 696 | 408 |
| Railcars scrapped or sold | — | — | — | — | (5) |
| Ending balance | 6,927 | 7,884 | 8,805 | 9,501 | 9,904 |
| Utilization rate at quarter end (1) | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Active railcars at quarter end (2) | 6,927 | 7,884 | 8,805 | 9,501 | 9,904 |
| Average active railcars (3) | 6,584 | 7,366 | 8,321 | 9,089 | 9,711 |

(1) Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.

(2) Active railcars refers to the number of railcars on lease to customers. Changes in railcars on lease compared to prior quarters are impacted by the utilization of newly built railcars and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.

(3) Average active railcars for the quarter is calculated using the number of active railcars at the end of each month.

### Comparison of Reported Results for the First Six Months of 2024 to the First Six Months of 2023

### Foreign Currency

Rail International's reported results of operations are impacted by fluctuations in the exchange rates of the U.S. dollar against the foreign currencies in which it conducts business, primarily the euro. In the six months ended June 30, 2024, fluctuations in the value of the euro, relative to the U.S. dollar, positively impacted lease revenue by approximately $0.3 million and negatively impacted segment profit, excluding other income (expense), by approximately $1.1 million compared to the same period in 2023.

In the six months ended June 30, 2024, segment profit of $55.3 million increased 8.9% compared to $50.8 million for the same period in the prior year. Segment profit in 2023 included a $0.3 million disposition gain recorded as a result of the decision to exit the Rail Russia business. Excluding these items, results for Rail International were $4.8 million higher compared to the same period in the prior year. The increase was primarily due to more railcars on lease and higher lease rates at both GRE and Rail India, partially offset by higher maintenance expense at GRE and higher interest expense.

### Revenues

In the six months ended June 30, 2024, lease revenue increased $19.1 million, or 13.3%, due to more railcars on lease and higher lease rates at GRE and Rail India and the impact of foreign exchange rates. Other revenue increased $0.3 million, driven by higher line haul revenue, partially offset by lower repair revenue.

### Expenses

In the six months ended June 30, 2024, maintenance expense increased $5.2 million, primarily due to more repairs performed, higher costs for repairs, higher wheelset costs, and the impact of foreign exchange rates. Depreciation expense increased $6.0 million, due the impact of new railcars added to the fleet.

### Other Income (Expense)

In the six months ended June 30, 2024, net gain on asset dispositions increased $0.5 million, driven by higher net scrapping gains due to more railcars scrapped at a higher scrap price per ton. Net interest expense increased $8.2 million, due to a higher average debt balance and a higher average interest rate. Other expense was favorable by $6.6 million, driven by the positive impact of changes in foreign exchange rates, primarily euro-zloty fluctuations.

### Investment Volume

During the six months ended June 30, 2024, investment volume was $109.5 million compared to $158.4 million in the same period in 2023. In the six months ended June 30, 2024, GRE acquired 710 newly built railcars compared to 878 newly built railcars for the same period in 2023, and Rail India acquired 1,104 newly built railcars in the current year compared to 1,055 newly built railcars for the same period in 2023.

Our investment volume is predominantly composed of acquired railcars, but also includes certain capitalized repairs and improvements to owned railcars. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of the various car types acquired, as well as fluctuations in the exchange rates of the foreign currencies in which Rail International conducts business.

### Comparison of Reported Results for the Second Quarter of 2024 to the Second Quarter of 2023

### Foreign Currency

Rail International's reported results of operations are impacted by fluctuations in the exchange rates of the U.S. dollar against the foreign currencies in which it conducts business, primarily the euro. In the three months ended June 30, 2024, fluctuations in the value of the euro, relative to the U.S. dollar, negatively impacted lease revenue by approximately $0.7 million and negatively impacted segment profit, excluding other income (expense), by approximately $1.1 million compared to the same period in 2023.

In the three months ended June 30, 2024, segment profit of $26.5 million decreased 2.9% compared to $27.3 million for the same period in the prior year. The decrease was primarily due to higher maintenance expense at GRE and higher interest expense, offset by more railcars on lease and higher lease rates at both GRE and Rail India.

### Revenues

In the three months ended June 30, 2024, lease revenue increased $8.9 million, or 12.2%, due to more railcars on lease and higher lease rates at GRE and Rail India, partially offset by the impact of foreign exchange rates. Other revenue was comparable to the same period in the prior year, as higher line haul revenue was offset by lower repair revenue.

### Expenses

In the three months ended June 30, 2024, maintenance expense increased $3.6 million, primarily due to more repairs performed, higher costs for repairs, higher wheelset costs, and the impact of foreign exchange rates. Depreciation expense increased $2.8 million, due the impact of new railcars added to the fleet.

### Other Income (Expense)

In the three months ended June 30, 2024, net gain on asset dispositions was comparable to the same period in the prior year. Net interest expense increased $4.0 million, due to a higher average debt balance and a higher average interest rate. Other expense was favorable by $1.9 million, driven by the positive impact of changes in foreign exchange rates, primarily euro-zloty fluctuations.

### ENGINE LEASING

### Segment Summary

As disclosed previously, as of December 31, 2023, we have sold all of our marine assets and no longer have any marine operations. As a result, we have changed the name of this business segment from Portfolio Management to Engine Leasing to reflect the prospective operations of the segment.

Engine Leasing's segment profit is attributable primarily to income from the RRPF affiliates, a group of 50% owned domestic and foreign joint ventures with Rolls-Royce, a leading manufacturer of commercial aircraft jet engines. Segment profit included earnings from the RRPF affiliates of $40.6 million and $16.9 million for the six months and three months ended June 30, 2024, compared to $48.3 million and $20.3 million for the same periods in 2023. The operating environment for the RRPF affiliates was robust, and demand for international air passenger travel remained strong.

Engine Leasing also includes GEL, our wholly owned entity that invests directly in aircraft spare engines. In the second quarter of 2024, GEL acquired three aircraft spare engines for $71.3 million. As of June 30, 2024, GEL owned 32 aircraft spare engines, with 14 on long-term leases with airline customers and 18 that are employed in an engine capacity agreement with Rolls-Royce for use in its engine maintenance programs. All engines at GEL are managed by the RRPF affiliates, for which we paid them a fee of $1.8 million and $0.9 million for the six months and three months ended June 30, 2024 and $1.0 million and $0.5 million for the same periods in 2023.

During the second quarter of 2023, we sold our natural gas holdings and recorded a gain of $5.7 million.

The following table shows Engine Leasing’s segment results (in millions):

| Revenues | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Lease revenue | $8.1 | $8.1 | $16.2 | $16.4 |
| Non-dedicated engine revenue | 13.7 | 6.4 | 26.9 | 10.9 |
| Marine operating revenue | — | 2.0 | — | 5.5 |
| **Total Revenues** | 21.8 | 16.5 | 43.1 | 32.8 |
| **Expenses** |  |  |  |  |
| Marine operating expense | — | 2.4 | — | 4.4 |
| Depreciation expense | 8.6 | 6.1 | 17.0 | 11.5 |
| Other operating expense | 1.9 | 1.4 | 4.4 | 2.3 |
| **Total Expenses** | 10.5 | 9.9 | 21.4 | 18.2 |
| **Other Income (Expense)** |  |  |  |  |
| Net gain on asset dispositions | — | 6.0 | 0.6 | 4.5 |
| Interest expense, net | (9.7) | (6.5) | (19.0) | (12.2) |
| Other (expense) income | (0.1) | 0.2 | 0.2 | (0.3) |
| Share of affiliates' pre-tax earnings | 16.9 | 20.3 | 40.6 | 48.3 |
| **Segment Profit** | $18.4 | $26.6 | $44.1 | $54.9 |
| **Investment Volume** | $71.3 | $239.0 | $71.3 | $239.0 |

34

The following table shows the net book values of Engine Leasing's assets (in millions):

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Investment in RRPF Affiliates | $611.3 | $626.5 | $626.8 | $647.2 | $660.6 |
| GEL owned aircraft spare engines | 702.5 | 722.4 | 714.0 | 705.6 | 768.4 |
| Specialized Gas Vessels | 8.9 | 11.4 | — | — | — |
| Other owned assets | 48.9 | 9.1 | 14.3 | 23.3 | 13.0 |
| Total assets | $1,371.6 | $1,369.4 | $1,355.1 | $1,376.1 | $1,442.0 |

### RRPF Affiliates' Portfolio Data

The following table shows portfolio activity and statistics for the RRPF affiliates' aircraft spare engines for the quarter ended:

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Beginning balance | 395 | 392 | 395 | 399 | 405 |
| Engine acquisitions | 3 | 5 | 5 | 8 | 6 |
| Engine dispositions | (6) | (2) | (1) | (2) | (3) |
| Ending balance | 392 | 395 | 399 | 405 | 408 |
| Utilization rate at quarter end (1) | 95.9% | 95.7% | 95.5% | 97.3% | 97.3% |
| Average leased engines (2) | 375 | 377 | 379 | 386 | 395 |
| Net book value of engines (in millions) | $4,106.6 | $4,100.9 | $4,067.2 | $4,157.2 | $4,170.0 |

(1) Utilization is calculated as the number of engines on lease as a percentage of total engines in the fleet.

(2) Average leased engines is calculated using the number of leased engines at the end of each month.

### GEL Portfolio Data

The following table shows portfolio activity for GEL's aircraft spare engines for the quarter ended:

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Beginning balance | 19 | 28 | 29 | 29 | 29 |
| Engines added | 9 | 1 | — | — | 3 |
| Ending balance | 28 | 29 | 29 | 29 | 32 |

### Comparison of Reported Results for the First Six Months of 2024 to the First Six Months of 2023

In the six months ended June 30, 2024, segment profit was $44.1 million, compared to segment profit of $54.9 million for the same period in the prior year. Segment profit included $0.6 million of gains in 2024 and $1.4 million of losses in 2023 associated with the Specialized Gas Vessels. Excluding the impact of these items, results for Engine Leasing were $12.8 million lower than 2023. Lower earnings at the RRPF affiliates, resulting from lower remarketing income, and the absence of the gain on the sale of natural gas holdings recorded in the prior year, were partially offset by higher earnings from GEL operations.

### Revenues

In the six months ended June 30, 2024, lease revenue was comparable to the same period in the prior year. Non-dedicated engine revenue increased $16.0 million due to aircraft spare engines acquired in 2023 and 2024 and utilized in the engine capacity agreement with Rolls-Royce. Marine operating revenue decreased $5.5 million, driven by the final sales of the Specialized Gas Vessels in 2023.

### Expenses

In the six months ended June 30, 2024, marine operating expense decreased $4.4 million, due to the sale of the Specialized Gas Vessels in 2023. Depreciation expense increased $5.5 million, due to aircraft spare engines acquired in 2023 and 2024.

### Other Income (Expense)

In the six months ended June 30, 2024, net gain on asset dispositions was unfavorable by $3.9 million, driven by the absence of gains recorded in 2023 for the sale of natural gas holdings and gains on the sales of the Specialized Gas Vessels in 2023 and related post-closing adjustments recorded in both 2023 and 2024.

In the six months ended June 30, 2024, income from our share of affiliates' earnings decreased $7.7 million, driven by lower remarketing income, partially offset by higher income from operations.

### Investment Volume

In the six months ended June 30, 2024, investment volume was $71.3 million, compared to $239.0 million in the same period in 2023. In the six months ended June 30, 2024, GEL acquired three aircraft spare engines compared to nine in the same period in 2023.

### Comparison of Reported Results for the Second Quarter of 2024 to the Second Quarter of 2023

In the three months ended June 30, 2024, segment profit was $18.4 million, compared to segment profit of $26.6 million for the same period in the prior year. Segment profit in 2023 included $0.2 million of gains associated with the Specialized Gas Vessels. Excluding the impact of these items, results for Engine Leasing were $8.0 million lower than 2023. The absence of the gain on the sale of natural gas holdings recorded in the prior year and lower earnings at the RRPF affiliates, resulting from lower remarketing income, were partially offset by higher earnings from GEL operations.

### Revenues

In the three months ended June 30, 2024, lease revenue was comparable to the same period in the prior year. Non-dedicated engine revenue increased $7.3 million due to aircraft spare engines acquired in 2023 and 2024 and utilized in the engine capacity agreement with Rolls-Royce. Marine operating revenue decreased $2.0 million, driven by the final sales of the Specialized Gas Vessels in 2023.

### Expenses

In the three months ended June 30, 2024, marine operating expense decreased $2.4 million, due to the sale of the Specialized Gas Vessels in 2023. Depreciation expense increased $2.5 million, due to aircraft spare engines acquired in 2023 and 2024.

### Other Income (Expense)

In the three months ended June 30, 2024, net gain on asset dispositions was unfavorable by $6.0 million, driven by the absence of gains recorded in 2023 for both the sale of natural gas holdings and the sale of the Specialized Gas Vessel.

In the three months ended June 30, 2024, income from our share of affiliates' earnings decreased $3.4 million, driven by lower remarketing income, partially offset by higher income from operations.

### OTHER

Other comprises our Trifleet business, as well as selling, general and administrative expenses ("SG&A"), unallocated interest expense, miscellaneous income and expense not directly associated with the reporting segments, and certain eliminations.

In the second quarter of 2024, GATX recorded reserves of $10.7 million for its share of anticipated environmental remediation costs arising out of prior operations and legacy businesses. The majority of the amount relates to a previously owned facility that GATX sold in 1974, while the remainder of the amount relates to a landfill that GATX entities previously utilized, which was closed in 1986.

The following table shows components of Other (in millions):

|  | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Trifleet revenue | $9.3 | $10.1 | $19.2 | $20.5 |
| Trifleet segment profit | $0.5 | $3.5 | $3.2 | $7.2 |
| Unallocated interest income | 2.9 | 2.7 | 6.4 | 5.7 |
| Other (expense) income, including eliminations | (9.6) | (0.2) | (7.6) | 1.0 |
| **Segment (Loss) Profit** | $(6.2) | $6.0 | $2.0 | $13.9 |
| Selling, general and administrative expense | $58.6 | $52.0 | $114.5 | $102.4 |
| **Investment Volume** | $3.0 | $9.0 | $10.0 | $18.4 |

### Trifleet Summary

The tank container leasing market remained soft across certain regions in the second quarter of 2024, but has shown some early signs of improvement. Utilization was 86.0% at the end of the current quarter.

### Trifleet Tank Container Data

The following table shows fleet statistics for Trifleet's tank containers for the quarter ended:

|  | June 30 2023 | September 30 2023 | December 31 2023 | March 31 2024 | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Ending balance - owned and managed | 22,870 | 23,333 | 23,931 | 24,448 | 24,663 |
| Utilization rate at quarter-end - owned and managed (1) | 91.5% | 89.6% | 87.3% | 85.5% | 86.0% |

(1) Utilization is calculated as the number of tank containers on lease as a percentage of total tank containers in the fleet.

### SG&A, Unallocated Interest and Other

SG&A increased $12.1 million for the six months ended June 30, 2024 compared to the same period in the prior year. SG&A increased $6.6 million for the three months ended June 30, 2024 compared to the same period in the prior year. Both variances were driven by higher employee-related expenses, including higher share-based compensation expense, and higher information technology expense.

Unallocated interest income (the difference between external interest expense and interest expense allocated to the reporting segments) in any year is affected by our consolidated leverage position, the timing of debt issuances and investing activities, and intercompany allocations.

Other (expense) income, including eliminations was unfavorable by $8.6 million for the six months ended June 30, 2024 compared to the same period in the prior year. Other (expense) income, including eliminations was unfavorable by $9.4 million in the three months ended June 30, 2024 compared to the same period in the prior year. Both variances were driven by environmental reserves recorded, as noted above, partially offset by the absence of pension settlement charges recorded in the prior year.

### Consolidated Income Taxes

See "Note 9. Income Taxes" in Part I, Item 1 of this Quarterly Report on Form 10-Q.

### CASH FLOW DISCUSSION

We generate a significant amount of cash from operating activities and investment portfolio proceeds. We also access domestic and international capital markets by issuing unsecured or secured debt and commercial paper. We use these resources, along with available cash balances, to fulfill our debt, lease, and dividend obligations, to support our share repurchase programs, and to fund portfolio investments and capital additions. We primarily use cash from operations to fund daily operations. The timing of asset dispositions and changes in working capital impact cash flows from portfolio proceeds and operations. As a result, these cash flow components may vary materially from quarter to quarter and year to year.

As of June 30, 2024, we had an unrestricted cash balance of $823.6 million. We also have a $600 million, 5-year unsecured revolving credit facility in the United States that matures in 2029 and a $350 million 3-year unsecured revolving credit facility in the United States that matures in 2027, both of which are fully available as of June 30, 2024.

The following table shows our cash flows from operating, investing and financing activities for the six months ended June 30 (in millions):

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $235.9 | $258.4 |
| Net cash used in investing activities | (699.0) | (544.6) |
| Net cash provided by financing activities | 839.3 | 298.9 |
| Effect of exchange rate changes on cash and cash equivalents | (3.2) | 1.0 |
| Net increase in cash, cash equivalents, and restricted cash during the period | $373.0 | $13.7 |

### Net Cash Provided by Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2024 decreased $22.5 million compared to the same period in 2023. Comparability among reporting periods is impacted by the timing of changes in working capital items. Specifically, higher payments for interest, income taxes, maintenance, and other operating expenses were partially offset by higher cash receipts from revenue.

### Net Cash Used in Investing Activities

The following table shows our principal sources and uses of cash flows from investing activities for the six months ended June 30 (in millions):

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Portfolio investments and capital additions (1) | $(820.6) | $(873.6) |
| Portfolio proceeds (2) | 105.3 | 166.5 |
| Proceeds from short-term investments (3) | — | 150.0 |
| Other investing activity | 16.3 | 12.5 |
| Net cash used in investing activities | $(699.0) | $(544.6) |

(1) Portfolio investments and capital additions primarily consist of purchases of operating assets and capitalized asset improvements. See the discussions of segment operating results sections in this Item for more detail.

(2) Portfolio proceeds primarily consist of proceeds from sales of operating assets.

(3) Short-term U.S. Treasury Obligations with an original maturity date of over 90 days.

The decrease in portfolio investments and capital additions of $53.0 million for the six months ended June 30, 2024 was primarily due to fewer aircraft spare engines acquired at GEL, fewer railcars acquired at GRE, and fewer tank containers acquired at Trifleet, partially offset by more railcars acquired at Rail North America. The timing of investments depends on purchase commitments, transaction opportunities, and market conditions.

Portfolio proceeds decreased by $61.2 million for the six months ended June 30, 2024, resulting from fewer railcars sold at Rail North America in the current year and the absence of proceeds from the sales of two Specialized Gas Vessels at Engine Leasing and the sale of Rail Russia at Rail International in the prior year.

### Net Cash Provided by Financing Activities

The following table shows our principal sources and uses of cash flows from financing activities for the six months ended June 30 (in millions):

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Net proceeds from issuance of debt (original maturities longer than 90 days) | $1,285.0 | $585.4 |
| Repayments of debt (original maturities longer than 90 days) | (413.5) | (250.0) |
| Net decrease in debt with original maturities of 90 days or less | — | (6.8) |
| Dividends | (43.0) | (40.8) |
| Stock repurchases (1) | (8.9) | — |
| Other | 19.7 | 11.1 |
| Net cash provided by financing activities | $839.3 | $298.9 |

(1) In the six months ended June 30, 2024 we repurchased 70,044 shares of common stock for $8.9 million. We did not repurchase any shares of common stock during the same period in 2023.

The following table shows the activity on our long-term debt principal in the six months ended June 30, 2024 (in millions):

|  | December 31 2023 | Issuances | Payments | Impact of Foreign Exchange Rates | June 30 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| U.S. debt | $6,450.0 | $950.0 | $(300.0) | $— | $7,100.0 |
| Europe debt (1) | 899.6 | 305.3 | (113.5) | (29.8) | 1,061.6 |
| India debt (2) | 101.0 | 36.1 | — | (0.3) | 136.8 |
| Total debt principal | $7,450.6 | $1,291.4 | $(413.5) | $(30.1) | $8,298.4 |

(1) Denominated in euros, but presented in U.S. dollars in this table.

(2) Denominated in Indian rupees, but presented in U.S. dollars in this table.

The following provides detail of the long-term debt issued during the six months ended June 30, 2024:

### U.S. debt

- $350.0 million of 3-year unsecured fixed rate debt at a 5.430% yield
- $200.0 million of 10-year unsecured fixed rate debt at a 5.700% yield
- $400.0 million of 30-year unsecured fixed rate debt at a 6.053% yield

### Europe debt

- €121.0 million ($132.0 million) of 2-year unsecured floating rate debt at Trifleet, currently 5.437%\*
- €50.0 million ($54.4 million) of 7-year unsecured floating rate debt at GRE, currently 5.642%\*
- €75.0 million ($81.1 million) of 5-year unsecured floating rate debt at GRE, currently 5.359%\*
- €35.0 million ($37.8 million) of 3-year unsecured fixed rate debt at GRE at a 4.371% yield

### India debt

- INR 2.0 billion ($24.1 million) in two tranches from a 5-year delayed draw term loan at fixed rates of 8.43% and 8.55%
- INR 1.0 billion ($12.0 million) from a separate 5-year delayed draw term loan at a fixed rate of 8.88%

(\*) Floating rates are based on the applicable interest rate as of June 30, 2024

### LIQUIDITY AND CAPITAL RESOURCES

### General

We fund our investments and meet our debt, lease, and dividend obligations using our available cash balances, as well as cash generated from operating activities, sales of assets, commercial paper issuances, committed revolving credit facilities, distributions from affiliates, and issuances of secured and unsecured debt. We primarily use cash from operations to fund daily operations. We use both domestic and international capital markets and banks to meet our debt financing needs.

### Material Cash Obligations

The following table shows our material cash obligations, including debt principal and related interest payments, lease payments, and purchase commitments at June 30, 2024 (in millions):

|  | Material Cash Obligations by Period Total | 2024 (1) | 2025 | 2026 | 2027 | 2028 | Thereafter |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Recourse debt | $8,298.4 | $107.1 | $655.9 | $607.5 | $842.2 | $733.3 | $5,352.4 |
| Interest on recourse debt (2) | 3,541.5 | 182.0 | 360.3 | 339.9 | 311.8 | 272.9 | 2,074.6 |
| Commercial paper and credit facilities | 10.7 | 10.7 | — | — | — | — | — |
| Operating lease obligations | 237.0 | 17.5 | 37.0 | 45.4 | 38.8 | 25.4 | 72.9 |
| Purchase commitments (3) | 2,402.9 | 517.0 | 583.5 | 527.5 | 396.2 | 378.7 | — |
| Total | $14,490.5 | $834.3 | $1,636.7 | $1,520.3 | $1,589.0 | $1,410.3 | $7,499.9 |

(1) For the remainder of the year.

(2) For floating rate debt, future interest payments are based on the applicable interest rate as of June 30, 2024.

(3) Primarily railcar purchase commitments. The amounts shown for all years are based on management's estimates of the timing, anticipated railcar types, and related costs of railcars to be purchased under its agreements. For additional details on our purchase agreements, refer to the discussion of Rail North America operating results within this item.

### Short-Term Borrowings and Credit Lines and Facilities

We primarily use short-term borrowings as a source of working capital and to temporarily fund differences between our operating cash flows and portfolio proceeds, and our capital investments and debt maturities. We do not maintain or target any particular level of short-term borrowings on a permanent basis. Rather, we will temporarily utilize short-term borrowings at levels we deem appropriate until we decide to pay down these balances.

During the second quarter of 2024, we entered into a new $600 million, 5-year unsecured revolving credit facility in the United States, expiring in May 2029. The new credit facility contains two one-year extension options. This replaced our prior $600 million, 5-year unsecured revolving credit facility, which was terminated upon our entry into the new credit facility. As of June 30, 2024, the full $600 million was available under this facility. We also entered into a new $350 million, 3-year unsecured revolving credit facility in the United States, expiring in May 2027. This facility also has two one-year extension options. This replaced our prior $250 million 3-year unsecured revolving credit facility, which was terminated upon entry into the new credit facility. As of June 30, 2024, the full $350 million was available under this facility.

Our European subsidiaries have unsecured credit facilities with an aggregate limit of €35.0 million. As of June 30, 2024, €25.0 million was available under these credit facilities. At June 30, 2024, we had $10.7 million of outstanding short-term borrowings under bank credit facilities at our European subsidiaries. The weighted average interest rate of these outstanding borrowings during the six months ended June 30, 2024 was 4.5%.

### Delayed Draw Term Loans

As of June 30, 2024, we had INR 3.0 billion ($36.0 million) available under an outstanding delayed draw term loan in India.

### Restrictive Covenants

Our $600 million and $350 million revolving credit facilities contain various restrictive covenants, including requirements to maintain a fixed charge coverage ratio and an asset coverage test. Some of our bank term loans and other loan agreements have the same financial covenants as these facilities.

The indentures for our public debt also contain various restrictive covenants, including limitations on liens provisions that restrict the amount of additional secured indebtedness that we may incur. Additionally, certain exceptions to the covenants permit us to incur an unlimited amount of purchase money and nonrecourse indebtedness.

At June 30, 2024, our European rail subsidiaries had outstanding term loans, public debt, and private placement debt balances totaling €870.0 million. The loans are guaranteed by GATX Corporation and are subject to similar restrictive covenants as the revolving credit facility noted above.

At June 30, 2024, we were in compliance with all covenants and conditions of all of our credit agreements. We do not anticipate any covenant violations nor do we expect that any of these covenants will restrict our operations or our ability to obtain additional financing.

### Credit Ratings

The global capital market environment and outlook may affect our funding options and our financial performance. Our access to capital markets at competitive rates depends on our credit rating and rating outlook, as determined by rating agencies.

The following table shows our credit rating and rating outlook as of June 30, 2024:

|  | Rating Agency |  |  |
| --- | --- | --- | --- |
|  | **Standard & Poor's** | **Moody's Investor Service** | **Fitch Ratings, Inc** |
| Long-term unsecured debt | BBB | Baa2 | BBB+ |
| Short-term unsecured debt | A-2 | P-2 | F2 |
| Rating outlook | Stable | Positive | Stable |

43

### Leverage

Leverage is expressed as a ratio of debt (including debt and lease obligations, net of unrestricted cash) to equity. The following table shows the components of recourse leverage (in millions, except recourse leverage ratio):

| Debt and lease obligations, net of unrestricted cash: | June 30 2024 | March 31 2024 | December 31 2023 | September 30 2023 | June 30 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Unrestricted cash | $(823.6) | $(479.1) | $(450.7) | $(203.1) | $(317.5) |
| Commercial paper and bank credit facilities | 10.7 | 10.8 | 11.0 | 12.3 | 10.9 |
| Recourse debt | 8,235.7 | 7,624.5 | 7,388.1 | 6,835.6 | 6,785.6 |
| Operating lease obligations | 209.3 | 215.2 | 226.8 | 233.2 | 241.1 |
| Total debt and lease obligations, net of unrestricted cash | $7,632.1 | $7,371.4 | $7,175.2 | $6,878.0 | $6,720.1 |
| Total recourse debt (1) | $7,632.1 | $7,371.4 | $7,175.2 | $6,878.0 | $6,720.1 |
| Shareholders' Equity | $2,343.4 | $2,324.3 | $2,273.0 | $2,174.5 | $2,178.9 |
| Recourse Leverage (2) | 3.3 | 3.2 | 3.2 | 3.2 | 3.1 |

(1) Includes recourse debt, commercial paper and bank credit facilities, and operating and finance lease obligations, net of unrestricted cash.

(2) Calculated as total recourse debt / shareholder's equity.

### GATX Common Stock Repurchases

On January 25, 2019, our board of directors approved a $300.0 million share repurchase program, pursuant to which we are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to Rule 10b5-1 plans. The share repurchase authorization does not have an expiration date, does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time. The timing of repurchases will be dependent on market conditions and other factors. During the six months ended June 30, 2024, we repurchased 70,044 shares of common stock for $8.9 million, excluding commissions. No share repurchases were completed during the same period in 2023. As of June 30, 2024, $78.2 million remained available under the repurchase authorization.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes to our critical accounting policies during the six months ended June 30, 2024. Refer to our Annual Report on Form 10-K for the year ended December 31, 2023, for a summary of our policies.

### NON-GAAP FINANCIAL MEASURES

In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP components, as defined by the SEC. These measures are not in accordance with, or a substitute for, GAAP, and our financial measures may be different from non-GAAP financial measures used by other companies. We have provided a reconciliation of our non-GAAP components to the most directly comparable GAAP components.

### Reconciliation of Non-GAAP Components Used in the Computation of Certain Financial Measures

We exclude the effects of certain tax adjustments and other items for purposes of presenting net income, diluted earnings per share, and return on equity because we believe these items are not attributable to our business operations. Management utilizes net income, excluding tax adjustments and other items, when analyzing financial performance because such amounts reflect the underlying operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides investors and other users of our financial statements with meaningful supplemental information for purposes of analyzing year-to-year financial performance on a comparable basis and assessing trends.

The following tables show our net income and diluted earnings per share, excluding tax adjustments and other items (in millions, except per share data):

| Impact of Tax Adjustments and Other Items on Net Income: | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net income (GAAP) | $44.4 | $63.3 | $118.7 | $140.7 |
| Adjustments attributable to consolidated pre-tax income: |  |  |  |  |
| Environmental reserves (1) | $10.7 | $— | $10.7 | $— |
| Net (gain) loss on Specialized Gas Vessels at Engine Leasing (2) | — | (0.2) | (0.6) | 1.4 |
| Net gain on Rail Russia at Rail International (3) | — | — | — | (0.3) |
| Total adjustments attributable to consolidated pre-tax income | $10.7 | $(0.2) | $10.1 | $1.1 |
| Income taxes thereon, based on applicable effective tax rate | $(2.7) | $— | $(2.7) | $— |
| Net income, excluding tax adjustments and other items (non-GAAP) | $52.4 | $63.1 | $126.1 | $141.8 |

| Impact of Tax Adjustments and Other Items on Diluted Earnings per Share: | Three Months Ended June 30 2024 | 2023 | Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Diluted earnings per share (GAAP) | $1.21 | $1.74 | $3.25 | $3.87 |
| Adjustments attributable to consolidated income, net of taxes: |  |  |  |  |
| Environmental reserves (1) | 0.22 | — | 0.22 | — |
| Net (gain) loss on Specialized Gas Vessels at Engine Leasing (2) | — | (0.01) | (0.02) | 0.04 |
| Net gain on Rail Russia at Rail International (3) | — | — | — | (0.01) |
| Diluted earnings per share, excluding tax adjustments and other items (non-GAAP) | $1.43 | $1.73 | $3.45 | $3.90 |

45

The following tables show our net income and return on equity, excluding tax adjustments and other items, for the trailing 12 months ended June 30 (in millions):

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Net income (GAAP) | $237.2 | $218.2 |
| Adjustments attributable to consolidated pre-tax income: |  |  |
| Environmental reserves (1) | $10.7 | $— |
| Net loss on Specialized Gas Vessels at Engine Leasing (2) | 2.0 | 4.2 |
| Net loss on Rail Russia at Rail International (3) | — | 14.3 |
| Total adjustments attributable to consolidated pre-tax income | $12.7 | $18.5 |
| Income taxes thereon, based on applicable effective tax rate | $(2.7) | $— |
| Other income tax adjustments attributable to consolidated income: |  |  |
| Income tax rate change (4) | $(3.0) | $— |
| Net operating loss valuation allowance adjustment (5) | (2.3) | — |
| Total other income tax adjustments attributable to consolidated income | $(5.3) | $— |
| Net income, excluding tax adjustments and other items (non-GAAP) | $241.9 | $236.7 |

(1) Reserves recorded for our share of anticipated environmental remediation costs arising out of prior operations and legacy businesses.

(2) In 2022, we made the decision to sell the Specialized Gas Vessels. We have recorded gains and losses associated with the subsequent impairments and sales of these assets. As of December 31, 2023, all vessels had been sold.

(3) In 2022, we made the decision to exit Rail Russia and recorded losses in 2022 associated with the impairment of the net assets. In the first quarter of 2023, we sold Rail Russia and recorded a gain on the final sale of this business.

(4) Deferred income tax adjustment attributable to state tax rate reductions in 2023.

(5) Valuation allowance adjustment associated with the realizability of state net operating losses in future tax years.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Return on Equity (GAAP) | 10.5% | 10.5% |
| Return on Equity, excluding tax adjustments and other items (non-GAAP) | 10.7% | 11.4% |

## Market risk

As filed, 377 characters.

Since December 31, 2023, there have been no material changes in our interest rate and foreign currency exposures or types of derivative instruments used to hedge these exposures. For a discussion of our exposure to market risk, refer to "Item 7A. Quantitative and Qualitative Disclosure about Market Risk" of our Annual Report on Form 10-K for the year ended December 31, 2023.

## Controls and procedures

As filed, 892 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective.

### Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended June 30, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 223 characters.

There have been no material changes in our risk factors since December 31, 2023. For a discussion of our risk factors, refer to "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2023.

Filed Jul 25, 2024.
Source: SEC EDGAR, the filing index for accession 0000040211-24-000067. Last ingested by Listed: Nov 3, 2026, 21:59 ET. No prices; not investment advice.