Gatx Corp: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of the financial condition and results of operations of GATX Corporation ("GATX", the "Company," "we," "us," "our," and similar terms) should be read in conjunction with our consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report, our Annual Report on Form 10-K for the year ended December 31, 2025, 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 principles ("GAAP") and on certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP measures to the most comparable GAAP measures, 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, 2025 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. Financial results for our tank container leasing business ("Trifleet") are reported in the Other segment.

Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results we may achieve for the entire year ending December 31, 2026. 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, 2025.

On January 1, 2026, GATX acquired approximately 101,000 railcars for $4.2 billion from Wells Fargo Bank, N.A. ("Wells Fargo") through a newly formed joint venture ("GABX" or the "GABX joint venture") with Brookfield Infrastructure Partners L.P. and its institutional partners (collectively, "Brookfield"). Initially, GATX's ownership share of GABX is 30% with Brookfield's share at 70%. GATX will have the option to acquire up to 100% of GABX's equity over time. See "Note 15. Non-Controlling Interest" in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information about the options to acquire GABX's equity. The transaction was partially funded through a $2.96 billion term loan executed by GABX, which is guaranteed by GATX. As of March 31, 2026, GABX is consolidated and is reported in the Rail North America segment. GATX also directly purchased approximately 200 locomotives from Wells Fargo for approximately $30.4 million, and Brookfield directly acquired Wells Fargo’s rail finance lease portfolio, consisting of approximately 22,000 railcars and approximately 400 locomotives. GATX serves as manager of the railcars in GABX as well as the finance lease portfolio directly owned by Brookfield and earns management fees for such services. See "Note 1. Description of Business" in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

Economic Conditions

GATX, and markets more broadly, are facing heightened uncertainty related to trade policy, geopolitical tensions, and overall economic conditions. These conditions did not have a significant impact on our business and financial results during the first three months of 2026. However, recent developments, including newly announced tariffs and the ongoing conflict with Iran, have increased economic uncertainty and could have a more significant impact on GATX’s financial results in the future. For example, geopolitical tensions in the Middle East could increase energy prices, disrupt supply chains, reduce global air travel, and negatively impact our customers. A sustained economic slowdown resulting from these or other factors could impact GATX directly and indirectly, including through higher costs for new railcars or other assets or softening demand for our products and services. Management continues to monitor the macroeconomic and geopolitical environment closely to identify potential risks and to manage our business accordingly. However, we believe we are in a strong position to manage these risks due to our diverse fleet, broad global customer base, long-term lease portfolio, strong balance sheet, and access to capital.

DISCUSSION OF OPERATING RESULTS

Net income attributable to GATX for the three months ended March 31, 2026 was $85.5 million, or $2.35 per diluted share, compared to $78.6 million, or $2.15 per diluted share, for the same period in 2025. Net income attributable to GATX increased $6.9 million compared to the prior year and was impacted by the Wells Fargo rail assets acquisition. The variance was largely due to higher revenue at Rail North America and Rail International and higher net gain on asset dispositions at Rail North America, partially offset by higher maintenance expense and depreciation expense at Rail North America, higher interest expense, and lower earnings at the Rolls-Royce & Partners Finance joint ventures (collectively, the "RRPF affiliates").

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

The following table shows our return on equity for the trailing 12 months ended March 31:

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

Segment Operations

Segment profit is an internal performance measure reported to GATX's President and Chief Executive Officer for purposes of assessing performance and allocating capital and resources to 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

On January 1, 2026, GATX acquired approximately 101,000 railcars for $4.2 billion from Wells Fargo through the GABX joint venture. GABX is consolidated within the Rail North America segment. See "Note 7. Variable Interest Entities" in Part I, Item 1 of this Quarterly Report on Form 10-Q for quantification of the impacts of this acquisition. On the same date, GATX directly purchased 200 locomotives from Wells Fargo for approximately $30.4 million.

GATX serves as manager of the railcars in GABX as well as the finance lease portfolio directly owned by Brookfield and earns management fees for such services. In the three months ended March 31, 2026, GABX paid GATX $12.5 million and Brookfield paid GATX $2.8 million in management fees for these services. GABX management fees earned by GATX are eliminated in consolidation and not shown on the face of the consolidated income statement. However, the impact of fees earned are included in net income attributable to GATX. Management fees earned by GATX for managing the finance lease portfolio directly owned by Brookfield are reported in other revenue.

Demand for most railcars was stable, despite ongoing macroeconomic uncertainty and the impacts of the geopolitical environment in the Middle East, and the renewal success rate remained strong. Utilization was 98.1% at the end of the current quarter.

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

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

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Rail North America Fleet Data

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

(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 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.

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

As of March 31, 2026, leases for 29,052 tank and freight cars and 1,289 boxcars are scheduled to expire over the remainder of 2026. These amounts exclude railcars on leases expiring in 2026 that have already been renewed or assigned to a new lessee.

In 2022, we entered into a 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, are expected to 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 March 31, 2026, 8,437 railcars have been ordered pursuant to the terms of the agreement, of which 6,745 railcars have been 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 LPI calculation includes all renewal activity based on a 12-month trailing average, and the renewals are weighted by the count of all renewals over the 12-month period. 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 first quarter of 2026, the renewal rate change of the LPI was positive 22.3%, compared to positive 21.9% in the prior quarter, and positive 24.5% in the first quarter of 2025. Lease terms on renewals for railcars in the LPI averaged 56 months in the current quarter, compared to 58 months in the prior quarter, and 61 months in the first quarter of 2025.

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

(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 of 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 for the quarter is calculated using the number of active boxcars at the end of each month.

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

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

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

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

Comparison of Reported Results for the First Quarter of 2026 to the First Quarter of 2025

Segment Profit

In the three months ended March 31, 2026, segment profit of $103.9 million increased 17.0% compared to $88.8 million for the same period in the prior year. Segment profit in 2026 was impacted by the acquisition of railcars from Wells Fargo. Aside from the impact of the acquisition, segment profit increased $22.1 million, driven by higher net gains on asset dispositions and higher revenue from the legacy fleet, partially offset by higher maintenance and interest expense.

Revenues

In the three months ended March 31, 2026, lease revenue increased $140.7 million, or 54.1%. The acquisition of railcars from Wells Fargo led to an increase in lease revenue of $132.8 million. In addition to the impact of the acquisition, lease revenue increased $7.9 million, primarily driven by more railcars on lease and higher lease rates. Other revenue increased $2.7 million, driven by management fee revenue from the finance lease portfolio owned by Brookfield and managed by GATX.

Expenses

In the three months ended March 31, 2026, maintenance expense increased $36.9 million. The acquisition of railcars from Wells Fargo led to an increase of $26.5 million. In addition to this impact, maintenance expense increased $10.4 million, driven by more repairs performed by the railroads, more repair events and a mix of repairs that resulted in higher costs per repair. Depreciation expense increased $56.3 million, primarily due to the impact of the railcars acquired from Wells Fargo.

Other Income (Expense)

In the three months ended March 31, 2026, net gain on asset dispositions increased $17.7 million, driven by higher net gains on asset dispositions and railcars converted to finance leases and 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 $49.3 million, due to a higher average debt balance, resulting from debt incurred for the acquisition of railcars from Wells Fargo, and a higher average interest rate.

Investment Volume

During the three months ended March 31, 2026, investment volume was $4,464.2 million (including approximately $4.2 billion for the acquisition of railcars and locomotives from Wells Fargo) compared to $227.7 million in the same period in 2025. We acquired 1,064 newly built railcars, 100,920 railcars in the secondary market (including 100,870 railcars acquired at GABX from Wells Fargo) and 200 locomotives from Wells Fargo in the three months ended March 31, 2026, compared to 642 newly built railcars, 627 railcars in the secondary market, and zero locomotives in the same period in 2025.

Our investment volume is predominantly composed of acquired railcars, but also includes the acquisition of locomotives and 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.

RAIL INTERNATIONAL

Segment Summary

Rail International, composed primarily of GATX Rail Europe ("GRE"), experienced a challenging railcar leasing market as GRE faced ongoing macroeconomic headwinds, including weak GDP results, and uncertainty due to the geopolitical environment in the Middle East and Ukraine, which weighed on customers' fleet planning activities. Despite pressure on utilization, GRE experienced renewal lease rate increases for the majority of railcar types in the period. Utilization was 94.7% at the end of the current quarter.

The fleet size of our rail business in India ("Rail India") continued to grow during the current quarter, as Rail India 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 strong, driven by continued growth in the economy and infrastructure development. Utilization was 100.0% at the end of the current quarter.

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

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GRE Fleet Data

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

(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.

As of March 31, 2026, leases for 8,502 railcars are scheduled to expire over the remainder of 2026. This amount excludes railcars on leases expiring in 2026 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:

(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 Quarter of 2026 to the First Quarter of 2025

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 March 31, 2026, fluctuations in the value of the euro, relative to the U.S. dollar, positively impacted lease revenue by approximately $8.6 million and positively impacted segment profit, excluding other income (expense), by approximately $4.4 million compared to the same period in 2025.

Segment Profit

In the three months ended March 31, 2026, segment profit of $31.6 million increased 23.0% compared to $25.7 million for the same period in the prior year. The increase was primarily due to higher lease revenue and changes in foreign currency exchange rates, partially offset by higher depreciation and interest expense.

Revenues

In the three months ended March 31, 2026, lease revenue increased $16.8 million, or 20.1%, driven by more railcars on lease at GRE and Rail India, as well as the impact of foreign exchange rates.

Expenses

In the three months ended March 31, 2026, maintenance expense increased $0.6 million, primarily due to the impact of foreign exchange rates, partially offset by fewer repair events, the mix of repairs performed, and fewer regulatory compliance events. Depreciation expense increased $7.7 million, due to the impact of new railcars added to the fleet, including the railcars acquired from DB Cargo AG primarily in 2025.

Other Income (Expense)

In the three months ended March 31, 2026, net interest expense increased $5.9 million, due to a higher average debt balance and a higher average interest rate. Other income (expense) was favorable by $4.3 million, driven by the positive impact of changes in foreign exchange rates, primarily euro-zloty fluctuations, and lower litigation costs.

Investment Volume

During the three months ended March 31, 2026, investment volume was $47.4 million compared to $62.7 million in the same period in 2025. In the three months ended March 31, 2026, GRE acquired 355 newly built railcars compared to 446 newly built railcars for the same period in 2025, and Rail India acquired 343 newly built railcars compared to 312 newly built railcars for the same period in 2025.

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 railcar types acquired, as well as fluctuations in the exchange rates of the foreign currencies in which Rail International conducts business.

ENGINE LEASING

Segment Summary

Engine Leasing includes the RRPF affiliates, a group of 50% owned domestic and foreign joint ventures with Rolls-Royce plc (or affiliates thereof, collectively "Rolls-Royce"), a leading manufacturer of commercial aircraft jet engines. Segment profit included earnings from the RRPF affiliates of $27.6 million for the three months ended March 31, 2026, compared to $33.4 million for the same period in 2025. The change was driven by the timing of remarketing income.

Engine Leasing also includes GATX Engine Leasing ("GEL"), our wholly owned business that invests directly in aircraft spare engines. As of March 31, 2026, GEL owned 46 aircraft spare engines, with 21 on long-term leases with airline customers and 25 that are employed in an engine capacity agreement with Rolls-Royce for use in its engine maintenance programs. All engines owned by GEL are managed by the RRPF affiliates, for which we paid them a fee of $1.5 million for the three months ended March 31, 2026 and $1.4 million for the same period in 2025.

The operating environment for the RRPF affiliates and GEL continued to be favorable in the first quarter of 2026 as robust global passenger air travel continued to drive strong demand for aircraft spare engines. However, uncertainty exists due to the geopolitical environment in the Middle East.

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

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

RRPF Affiliates' Portfolio Data

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

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

(2) Average leased engines for the quarter 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:

Comparison of Reported Results for the First Quarter of 2026 to the First Quarter of 2025

Segment Profit

In the three months ended March 31, 2026, segment profit of $35.3 million decreased $3.3 million compared to segment profit of $38.6 million for the same period in the prior year. The decrease was driven by lower earnings at the RRPF affiliates, primarily due to the timing of remarketing events, partially offset by higher earnings at GEL.

Revenues

In the three months ended March 31, 2026, lease revenue increased $1.4 million, driven by aircraft spare engines acquired and placed on leases directly with airline customers. Non-dedicated engine revenue increased $0.6 million, due to higher annuity receipts resulting from higher average engine flying hours for aircraft spare engines utilized in the engine capacity agreement with Rolls-Royce.

Expenses

In the three months ended March 31, 2026, depreciation expense increased $1.2 million, due to aircraft spare engines acquired in 2025.

Other Income (Expense)

In the three months ended March 31, 2026, income from our share of affiliates' earnings decreased $5.8 million, driven by the timing of remarketing income. Higher income from operations was primarily due to more aircraft spare engines in the fleet, partially offset by higher interest expense. The amount and timing of remarketing income is dependent on a number of factors and may vary materially from period to period.

Investment Volume

In the three months ended March 31, 2026, investment volume was $0.2 million, compared to zero in the same period in 2025. Investment volume in 2026 consisted of the purchase of engine stands.

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.

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

Trifleet Summary

The tank container leasing market remained challenging in the first quarter of 2026 due to macro-economic headwinds and the impact of the current geopolitical environment in the Middle East. Utilization was 85.2% at the end of the current quarter.

Trifleet Tank Container Data

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

(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 $14.7 million in the three months ended March 31, 2026 compared to the same period in the prior year. The variance was primarily due to higher employee-related expenses, including the impact of higher headcount resulting from the Wells Fargo rail assets acquisition, and higher information technology expenses.

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.

Consolidated Income Taxes

See "Note 11. 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 debt. 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 March 31, 2026, we had an unrestricted cash balance of $740.9 million. We also have a $632 million, 5-year unsecured revolving credit facility in the United States that matures in 2030 and a $368 million, 3-year unsecured revolving credit facility in the United States that matures in 2028, both of which were fully available as of March 31, 2026. In addition, we have a €250 million, 3-year unsecured revolving credit facility in Europe that matures in 2027, of which €210 million was available as of March 31, 2026. At GABX, we have a $250 million 5-year unsecured revolving credit facility in the United States that matures in 2030, all of which was fully available as of March 31, 2026.

The following table shows our cash flows from operating, investing, and financing activities for the three months ended March 31 (in millions):

Net Cash Provided by Operating Activities

Net cash provided by operating activities for the three months ended March 31, 2026 increased $74.9 million compared to the same period in 2025. Comparability among reporting periods is impacted by the timing of changes in working capital items. Specifically, higher cash receipts from revenue and lower payments for operating leases were partially offset by higher payments for interest, income taxes, maintenance, and other operating expenses.

Net Cash Used in Investing Activities

The following table shows our principal sources and uses of cash flows from investing activities for the three months ended March 31 (in millions):

(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) In 2026, we purchased 187 railcars that were previously on operating leases, compared to 802 railcars in 2025.

(4) Proceeds from sales of other assets were primarily related to railcar scrapping.

The increase in portfolio investments and capital additions of $4,223.7 million for the three months ended March 31, 2026 was primarily due to the acquisition of railcars and locomotives from Wells Fargo and the cost of other railcars acquired at Rail North America, partially offset by fewer railcars acquired at GRE. The timing of investments depends on purchase commitments, transaction opportunities, and market conditions.

Portfolio proceeds increased by $84.1 million for the three months ended March 31, 2026, primarily due to more railcars sold at Rail North America.

Net Cash Provided by Financing Activities

The following table shows our principal sources and uses of cash flows provided by financing activities for the three months ended March 31 (in millions):

(1) In the three months ended March 31, 2026, we repurchased 21,587 shares of common stock for $3.8 million. In the three months ended March 31, 2025, we repurchased 12,046 shares of common stock for $1.9 million. See Part II, Item 2 of this Quarterly Report on Form 10-Q for more information on share repurchases.

The following table shows the activity on our long-term debt principal in the three months ended March 31, 2026 (in millions):

(1) Issuances include $1,000.0 million at GABX. The cash proceeds were used for partial prepayment of the outstanding GABX term loan.

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

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

The following provides detail of the long-term debt issued in the three months ended March 31, 2026:

U.S. debt

• $500.0 million of 5-year unsecured 4.63% fixed rate debt at GABX, which is guaranteed by GATX.
• $500.0 million of 10-year unsecured 5.30% fixed rate debt at GABX, which is guaranteed by GATX.

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, distributions from affiliates, issuances of debt, commercial paper issuances, and committed revolving credit facilities. 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 March 31, 2026 (in millions):

(1) For the remainder of the year.

(2) Includes GABX obligations of $1,966.9 million in 2030, $500.0 million in 2031, and $500.0 million in 2036 that are guaranteed by GATX.

(3) For floating rate debt, future interest payments are based on the applicable interest rate as of March 31, 2026.

(4) 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 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.

We have a $632 million 5-year unsecured revolving credit facility in the United States that matures in May 2030. This facility contains a one-year extension option. As of March 31, 2026, the full $632 million was available under this facility. Additionally, we have a $368 million 3-year unsecured revolving credit facility in the United States that matures in May 2028. This facility contains a one-year extension option. As of March 31, 2026, the full $368 million was available under this facility.

GABX has a $250 million 5-year unsecured revolving credit facility in the United States that matures in 2030. As of March 31, 2026, the full $250 million was available under this facility.

In Europe, we have a €250 million, 3-year unsecured revolving credit facility that matures in December 2027. As of March 31, 2026, €210 million was available under this credit facility. In addition, our European subsidiaries have smaller unsecured credit facilities with an aggregate limit of €25.0 million. As of March 31, 2026, €22.0 million was available under these credit facilities, as €3.0 million ($3.5 million) was drawn. The weighted average interest rate of these outstanding borrowings during the three months ended March 31, 2026 was 3.0%.

Delayed Draw Term Loans

As of March 31, 2026, we had INR 2.0 billion ($21.1 million) available under an outstanding delayed draw term loan in India.

Restrictive Covenants

Our $632 million and $368 million revolving credit facilities in the United States, and our €250 million revolving credit facility in Europe, 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. Certain exceptions to the covenants permit us to incur an unlimited amount of purchase money and nonrecourse indebtedness.

The GABX term loan and $250 million revolving credit facility contain various restrictive covenants, including a requirement to maintain an asset coverage ratio.

At March 31, 2026, our European rail subsidiaries had outstanding term loans, public debt, and private placement debt balances totaling €1,065.0 million, and Trifleet had an outstanding term loan of €113.0 million. The loans are guaranteed by GATX Corporation and are subject to similar restrictive covenants as the GATX and GRE revolving credit facilities noted above. In addition, Rail India had outstanding term loans of INR 12.4 billion ($130.8 million) that are subject to certain restrictive covenants.

At March 31, 2026, we were in compliance with all covenants and conditions of all of our credit agreements, indentures, and loans. 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 March 31, 2026:

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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):

(1) Includes recourse debt, borrowings under bank credit facilities, and operating lease obligations, net of unrestricted cash.

(2) Calculated as total recourse debt / total equity.

GATX Common Stock Repurchases

On January 25, 2019, our Board of Directors approved a $300.0 million share repurchase program (the "Prior Repurchase Program"), pursuant to which we were 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. On February 18, 2026, the Board terminated the Prior Repurchase Program and approved a new $300.0 million share repurchase program (the "New 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 New Repurchase Program 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 share repurchases will be dependent on market conditions and other factors.

During the three months ended March 31, 2026, we repurchased 21,587 shares of common stock for $3.8 million, excluding commissions, under the New Repurchase Program compared to 12,046 shares of common stock for $1.9 million during the same period in 2025 under the Prior Repurchase Program. As of March 31, 2026, $296.2 million remained available under the New Repurchase Program authorization.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes to our critical accounting policies during the three months ended March 31, 2026. Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 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 measures to the most directly comparable GAAP measures.

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 attributable to GATX, diluted earnings per share, and return on equity attributable to GATX because we believe these items are not attributable to our business operations. Management utilizes net income attributable to GATX, 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.

There were no tax adjustments and other items impacting net income or diluted earnings per share for either the first quarter of 2026 or 2025. However, we did have tax adjustments and other items impacting net income in other periods used in the calculation of the applicable measures for the trailing 12 months ended March 31, 2026 and 2025.

The following tables show our net income and return on equity, excluding tax adjustments and other items, for the trailing 12 months ended March 31 (in millions):

(1) Expenses associated with the acquisition of Wells Fargo's rail assets.

(2) Expenses recorded for the settlements of litigation claims arising out of legacy business operations.

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

(4) Deferred income tax adjustment attributable to an enacted corporate income tax rate reduction in Germany in 2025 and deferred income tax adjustments attributable to state tax rate reductions in 2024.

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

(6) Insurance recoveries related to aircraft spare engines at RRPF for which it had previously recorded impairment losses.

Since December 31, 2025, 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, 2025.

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 March 31, 2026, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes in our risk factors since December 31, 2025. 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, 2025.