“Our commercial and operations teams at Rail North America continue to execute at a high level. The renewal lease rate change of GATX’s Lease Price Index was a positive 26.6% with an average renewal term of 59 months,” continued Lyons.
In 3Q24, Chicago-based GATX reported net income of $207.7 million, or $5.68 per diluted share, compared to $193.2 million, or $5.30 per diluted share, in the prior year period. The 2024 year-to-date results include a net negative impact of $9.9 million, or $0.27 per diluted share, “from Tax Adjustments and Other Items,” GATX noted. The 2023 year-to-date results include a net negative impact of $1.1 million, or $0.03 per diluted share, “from Tax Adjustments and Other Items.”
“At Rail North America, we capitalized on an active secondary railcar market and generated third-quarter remarketing income of over $43 million, bringing year-to-date remarketing income to over $96 million,” said Lyons. “Furthermore, we identified opportunities to grow our asset base during the quarter, acquiring over 1,000 railcars in addition to those acquired under our supply agreement.
“Rail International performed well as we continue to take delivery of new railcars in Europe and India. GATX Rail Europe’s fleet utilization was 95.9% at the end of the quarter. GATX Rail India, where fleet utilization remained at 100%, continues to experience very strong demand for railcars and sees substantial opportunities for new railcar investments.
“In Engine Leasing, third-quarter results were driven by excellent performance at the Rolls-Royce and Partners Finance affiliates, as demand for aircraft spare engines remains robust. We continued to identify attractive opportunities to increase our investment in engines, both directly and through RRPF affiliates. In the third quarter, we added four engines to our wholly owned portfolio for $94.8 million,” Lyons concluded.
Rail North America
GATX’s Rail North America segment reported a profit of $102.4 million in 3Q24, compared to $66.1 million in 3Q23. Higher 3Q24 segment profit was driven by “higher gains on asset dispositions and higher lease revenue.” Year to date 2024, Rail North America reported segment profit of $271.5 million, compared to $240.6 million in the same period of 2023. Higher 2024 year-to-date segment profit was predominately driven by “higher lease revenue, partially offset by higher interest expense,” the company reported.
As of Sept. 30, 2024, Rail North America’s wholly owned fleet was composed of over 111,000 cars, including approximately 9,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet. Fleet utilization was 99.3% at the end of 3Q24, consistent with the end of the prior quarter and the end of 3Q23.
During 3Q24, the renewal lease rate change of the GATX Lease Price Index (LPI) was positive 26.6%. This compares to positive 29.4% in the prior quarter and positive 33.4% in 3Q23. The average lease renewal term for all cars included in the LPI during 3Q24 was 59 months, compared to 61 months in the prior quarter and 65 months in 3Q23. The 2024 third-quarter renewal success rate was 82.0%, compared to 84.1% in the prior quarter and 83.6% in 3Q23. Rail North America’s investment volume during 3Q24 was $325.9 million.
Rail International
GATX’s Rail International segment reported a profit of $33.9 million in 3Q24, compared to $28.2 million in 3Q23. Year to date 2024, Rail International reported segment profit of $89.2 million, compared to $79.0 million in the same period of 2023. The 2023 year-to-date results include a net positive impact of $0.3 million “from Tax Adjustments and Other Items.” Excluding the impact of these items, higher 3Q24 and year-to-date segment profit was driven by “more railcars on lease and higher lease rates,” GATX reported.
As of Sept. 30, 2024, GATX Rail Europe’s (GRE) fleet consisted of nearly 30,000 cars. 3Q24 fleet utilization was 95.9%, compared to 95.8% at the end of the prior quarter and 96.0% at the end of 3Q23.
As of Sept. 30, 2024, Rail India’s fleet consisted of over 10,300 railcars. 3Q24 fleet utilization was 100%, consistent with the end of the prior quarter and the end of 3Q23.
Engine Leasing
GATX’s Engine Leasing segment reported a profit of $37.5 million in 3Q24, compared to segment profit of $20.2 million in 3Q23. Year to date 2024, segment profit was $81.6 million, compared to segment profit of $75.1 million in the same period of 2023.
2024 and 2023 year-to-date results include a net positive impact of $0.6 million and a net negative impact of $1.4 million, respectively, “from Tax Adjustments and Other Items.”
Excluding these impacts, higher 3Q24 and year-to-date segment profit was predominately driven by “strong performance at the Rolls-Royce and Partners Finance (RRPF) affiliates,” the company reported. Earnings from GATX Engine Leasing, the company’s wholly owned portfolio, were also higher in the comparative periods “due to more engines under ownership.”
