Q2 2025 GATX Corp Earnings Call
Operator: Thank you for standing by.
Operator: My name is Eric and I will be your conference operator today.
Operator: At this time, I would like to welcome everyone to the GATX 2025 second quarter earnings call. All lines have been placed on mute to prevent any background noise.
Thank you for standing by. My name is Eric and I will be your conference operator today.
At this time, I would like to welcome everyone to the GATX 2025 second quarter earnings call.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone screen. If you would like to withdraw your question, press star 1 again.
Alliance have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,
Shari Hellerman: I would now like to turn the call over to Shari Hellerman, Head of Investor Relations. Please go ahead.
If you would like to withdraw your question, press star 1 again.
I would now like to turn the call over to Sherry Herman head of investor relations. Please go ahead.
Thank you, Eric.
Shari Hellerman: Good morning and thank you for joining GATX's 2025 Second Quarter Earnings Call.
Shari Hellerman: I'm joined today by Bob Lyons, President and Chief Executive Officer. Tom Ellman, Executive Vice President and Chief Financial Officer. and Paul Titterton, Executive Vice President and President of Rail North America.
Good morning, and thank you for joining gatx is 2025 second quarter earnings call.
I'm joined today by Bob Lyons president and chief executive officer.
Tom Ellman, Executive Vice President and Chief Financial Officer.
And Paul titterton, Executive Vice President and president of rail North America.
Shari Hellerman: As a reminder, some of the information you will hear during our discussion today will consist of forward-looking statements. Actual results or trends could differ materially from those statements or forecasts. For more information, please refer to the risk factors included in our earnings release and those discussed in GATX's Form 10-K for 2024 and our other filings for the SEC. GATX assumes no obligation to update or revise any forelooking statements to reflect subsequent events or circumstances.
As a reminder, some of the information you'll hear during our discussion today will consist of four looking statements.
Actual results are trends. They could differ materially from those statements or forecasts.
For more information, please refer to the risk factors included in our earnings release and those discussed in Gat access form, 10K, for 2024, and our other filings with the SEC.
Gatx assumes, no obligation to update or revise, any forward-looking statements to reflect subsequent events or circumstances.
Shari Hellerman: Earlier today, GATX reported 2025 second quarter net income of $75.5 million, or $2.06 per diluted share. This compares to 2024 second quarter net income of $44.4 million or $1.21 per diluted share. The 2024 second quarter results include a net negative impact of $8 million, or $0.22 per diluted share, from tax adjustments and other items. Year-to-date 2025 net income was $154.1 million or $4.21 per diluted share. This compares to $118.7 million, or $3.25 per dealer's share, for the same period in 2024. The 2024 year-to-date results include a net negative impact of $7.4 million, or $0.20 per dollar share, from tax adjustments and other items. These items are detailed in the supplemental information section of our earnings report.
Earlier today, GATX reported 2025 second quarter net income of $75.5 million, or $2.66 per diluted share.
This compares to 2024 second quarter net income of $44.4 million, or $1.21 for diluted share.
The 2024 second quarter results, include a net negative impact of 8 million or 22 cents per diluted, share from tax adjustments and other items.
Year to date 2025. Net income was 154.1 million or 4.21 cents per diluted share.
This compares to 118.7 million or 3.25 cents per diluted share for the same period in 2024.
The 2024 year-to-date results include a net negative impact of $7.4 million, or $0.20 per diluted share, from tax adjustments and other items.
These items are detailed and supplemental information section of earnings release.
Shari Hellerman: Now I'll briefly address each of our business segments and after that we'll open the call up for questions. At GATX Rail North America, we continue to experience stable demand for rail cars. Our fleet utilization was 99.2% at quarter end and our renewal success rate was strong at 84.2%. We continue to achieve strong renewal lease rate increases while successfully extending terms. The renewal rate change of GATX's lease price index was positive 24.2% for the quarter. and the average renewal term was 60 months. Additionally, we continue to successfully place new railcars from our committed supply agreement with a diverse customer base.
At gatx rail. North America. We continue to experience stable demand for rail cars.
Our fleet utilization was 99.2% at quarter end, and our renewal success rate was strong at 84.2%.
We continue to achieve strong renewal lease rate increases while successfully extending terms.
The renewal rate change of GATX is lease price index with a positive 24.2% for the quarter.
And the average renewal term was 60 months.
Additionally, we continue to successfully Place, new rail cars from our committed Supply agreement with a diverse customer base.
Shari Hellerman: We have placed over 6,500 railcars from our 2022 Trinity supply agreement. Our earliest available scheduled delivery under this supply agreement is in the first quarter of 2020.
We have placed over 6,500 rail cars from our 2022. Trinity, Supply agreements.
Our earliest available scheduled delivery. Under this Supply agreement is in the first quarter of 2026.
Shari Hellerman: The secondary market in North America remains robust. We generated over $34 million in remarketing income during the quarter. bringing the year-to-date total to approximately $65 million.
The secondary Market in North America remains robust.
We generated over $34 million in remarketing income during the quarter.
Bringing the year to date total to approximately 65 million.
Shari Hellerman: Turning to Roehl International. GATX Rail Europe Utilization was 93.3% at quarter end. As noted in the release, the business environment in Europe is challenging and uncertain relative to either North America or India. Given macro headwinds and slower GDP in Germany, some customers are delaying their fleet planning decisions, which is impacting fleet utilization. Despite current conditions, we maintain a positive long-term outlook on the European railcar leasing market. And we'll continue to look for attractive investment opportunities there. In India, freight volume continues to benefit from the country's ongoing infrastructure investment. As such, we continue to see strong demand for railcars in India.
Turning to rail International.
Gatx rail Europe. Utilization was 93.3% at quarter end.
As noted in the release, the business environment in Europe is challenging and uncertain relative to either North America or India.
Given macro headwinds and slower GDP in Germany.
Some customers are delaying their Fleet planning decisions which is impacting Fleet utilization.
Despite current conditions, we maintain a positive long-term outlook on the European rail card, leasing Market.
And will continue to look for attractive investment opportunities there.
In India Freight volume continues to benefit from the country's ongoing infrastructure Investments.
Shari Hellerman: GATX Rail India's fleet utilization remained high at 99.6% at quarter end. With an engine leasing, our joint venture with Rolls-Royce and our wholly owned engine portfolio produced excellent second quarter results. A strong global air passenger volume continues to drive robust demand for aircraft spare engines. We're seeing very strong demand across engine types from global air carriers.
As such we continue to see strong demand for rail cars in India.
Gatx rail, India's Fleet, utilization remained high at 99.6%, at quarter end.
With an engine leasing our joint venture with Rolls-Royce and are wholly. Owned engine, portfolio, produced excellent second quarter results.
A strong Global air passenger volume continues to drive robust, demand for aircrafts bear engine.
Shari Hellerman: And the secondary market for engine sales is how.
We're seeing very strong demand across engine types from Global air carriers.
And the secondary market for engine sales is healthy.
Shari Hellerman: Regarding the pending Wells Fargo rail transaction announced at the end of May, we're excited about the opportunities it offers. but due to the customary regulatory reviews, all of which are underway. At this stage, we're limited in what we can say beyond what we've already disclosed.
Regarding the pending Wells, Fargo rail transaction announced at the end of May.
We're excited about the opportunities. It offers.
But due to the customary regulatory reviews, all of which are underway.
The stage we're Limited in what we can say beyond what we've already disclosed.
Shari Hellerman: Finally, reflecting our year-to-day performance and outlook for the balance of the year, We're increasing our 2025 full year earnings guidance to a range of $8.50 to $8.90 per diluted share. This guidance excludes the impact of tax adjustments or other items and excludes any impacts from the Wells Fargo transaction.
Finally reflecting our day-to-day performance and outlook for the balance of the year.
We are increasing our 2025 full year. Earnings guidance to arrange of 8.050 to $8.90 per diluted share.
This guidance excludes the impact of tax adjustments and or other items and excludes any impacts from the Wells Fargo transaction.
Shari Hellerman: And those are our prepared remarks.
Operator: I'll hand it back to the operator so we can open it up for Q&A. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone key.
And those are our prepared remarks.
I'll hand it back to the operator so we can open it up for Q&A.
Andrzej Tomczyk: Your first question comes from the line of Andrzej Tomczyk with Goldman Sachs. Please go ahead. Yeah, hi, good morning. Thanks for taking my question. The first one, just given this morning's deal announcement for a potential transcontinental merger, I was curious if you could share any initial thoughts on how this could impact the overall leasing value.
At this time, I would like to remind everyone that in order to ask a question, please press star, followed by the number 1 on your telephone keypad.
Your first question comes from the line of Andres uh Tomac with Goldman Sachs.
Please go ahead.
Yeah. Hi, good morning. Um, thanks for taking my questions.
The first 1 just given the this morning deal announcement for potential, transcontinental merger was curious. If you could share any initial thoughts on how this could impact the overall leasing business.
Robert Lyons: Andrzej, this is Bob Lyons. Yeah, I mean, given the fact that the announcement was just made this morning at Difficult to assess, particularly given the timing, uncertainty, and conditions that may be put on the parties to the merger. So right now, very difficult to assess.
Andre this is uh Bob Lyons. Um yeah. I mean given the fact that the announcement was just made this morning it's
Uh, difficult to assess, um, particularly given the timing uncertainty and, um,
Robert Lyons: Longer term, greater efficiency on the rails, more product moving by rail, more carload traffic, all of those are long-term good things for a railcar lessor. I appreciate the thoughts.
you know, conditions that may be put on, uh, the parties to the merger. So, right now, very difficult to assess, you know, longer term.
Uh, greater efficiency on the rails, more product moving by rail.
Uh, more Carlo traffic, all of those are long-term good things for our rail, car, less source.
Andrzej Tomczyk: Just switching gears a little bit, your lease renewal rate, the change was 24% in the second quarter, which was similar to last quarter. Are you seeing any indications that we could continue to hold the high lease price renewal? And I guess in what type of environment could we see that reaccelerate?
Paul Titterton: So this is Paul Titterton speaking, and thanks for the question. Yeah, I mean, broadly speaking, what I would say is the market for existing rail cars remains pretty similar to how it's been the last few quarters, which is to say that pricing remains relatively strong. And, of course, we've got expirations coming off of a weaker pricing environment. And so that has continued to provide a pretty strong LPI result. You know, at this point, I would say, in the absence of any stimulus, positive or negative, we continue to see kind of more of the same from a pricing standpoint.
To hold the high lease price renewal. Um and I guess in what type of environment could we see that? Re accelerate
Paul Titterton: So, you know, either up or down, there would have to be some external catalyst to really change that environment. And at this point, we don't really see that catalyst. So I would say the best predictor in terms of absolute least rates is probably more of the same right now. Yeah, and I would just add, Andrzej, too, that, you know, many or all of the elements of the supply-led recovery that we've talked about now for many quarters in a row very much remain intact.
So this is uh, Paul titterton speaking and thanks for the question. Yeah, I mean, broadly speaking what I would say is the the market for existing rail cars, remains pretty similar to how it's been the last few quarters, which is to say that pricing remains relatively strong. And of course we've got uh expirations coming off of a weaker pricing environment and so that has continued to provide a pretty strong, uh, LPI result. Um, you know, at this point I would say in the absence of any stimulus positive or negative, we continue to see kind of more of the same, uh, from a pricing standpoint. So, you know, um uh, either up or down. There would have to be some external Catalyst to really change that environment. And and at this point, um, we don't really see that catalyst. So I would say, uh, the best predictor in terms of absolute least rates is, is probably more of the same right now.
Yeah. And I, I would just add Andre too that you know, many all of the elements of the supply lead recovery that we've talked about. Now for many quarters in a row, uh, very much remain intact.
Paul Titterton: got it. So we can just assume sort of normally sequentially increasing or flattish overall, absolutely. Is that the right way to think about it? Yeah, I would say flat issues is probably pretty reasonable. That's what we've been seeing for quite some time now.
Got it. So we can just assume sort of normally sequentially, increasing or, or flat-ish? Um, overall absolute lease rates is that the right way to think about it.
Andrzej Tomczyk: And lastly, for me, we saw InterCorps, the EU, had set a provisional deadline of August 20th to rule on the year merger, or the JV, sorry, with Wells Fargo.
Yeah, I I would say, uh, flat-ish is is probably pretty reasonable. That's what we've been seeing for for quite some time now.
Andrzej Tomczyk: Brookfield. I'm just curious, is there anything to read into there in terms of approval timeline? Anything tracking earlier than expected, or are we still on the same sort of runway?
Paul Titterton: Now, nothing unusual about that particular filing or the response from the EU Commission. So everything is tracking as planned in terms of filing and timeline.
Understood. Um, and then lastly, for me, we saw, um, entry quarter of the EU had set up provisional deadline of August 20th to rule on the year merger. Um, or the Jay-Z. Sorry with Wells Fargo and and um Brookfield. I'm just curious. Is there anything to read into there in terms of approval timelines? Um, anything tracking earlier than expected? Or are we still still on the same sort of, uh, Runway
Andrzej Tomczyk: So no change in our Q1 2026 or earlier estimate from prior. Thanks for the questions and congrats on the next quarter.
No, nothing unusual about that particular filing or the response from the EU Commission. So, everything is tracking as planned in terms of filing and timelines.
So, real. Uh, no, no change in our Q1 2026 or earlier estimate from prior.
got it. Thanks for the questions and congrats on the next quarter.
Thank you.
Brendan Mccarthy: Your next question comes from the line of Brendan McCarthy with Sidoti and Company. Please go ahead. Great. Good morning, everyone. Thanks for taking my questions here.
Your next question comes from the line of Brendan McCarthy with Saudi and Company.
Please go ahead.
Brendan Mccarthy: I wanted to look at the engine leasing business to start off. It looks like results from our PF stepped down a little bit from last quarter. I'm just curious as to what the profit mix has been there through the first six months of the year, whether it be operating income or remarketing gains, and maybe talk about your expectations for the remainder of the year.
Great. Good morning everyone. And thanks for taking my questions here. Uh, I wanted to look at the engine leasing business to start off. It looks like uh, results from our PF step down a little bit from last quarter.
Thomas Ellman: Yeah, thank you for the question. This is Tom. Just to give you the numbers for the second quarter, operating income was about 85% of the total, and remarketing was about 15. So year-to-date, we're around 70-30 operating income to remarketing activity. As we mentioned in the press release, the key reason that we're taking up guidance is the performance in the engine leasing business. So we expect that to be strong through the rest of the year. And one of the things that I think you'll see is over time, the remarketing side of that should probably get to be a little bit higher of a total.
Uh, just curious as to what the profit mix has been there, uh, through the first six months of the year, uh, whether it be operating income or remarketing gains. Um, and maybe talk about your expectations for the remainder of the year.
Uh yeah, thank you for the question. This is Tom. I just for the to give you the numbers for the second quarter. Operating income was about 85% of the total and remarketing was about 15. So, year to date, we're around 7030. Operating income to a remarketing activity.
As we mentioned in the press release, uh, the key reason that we're taking up guidance is the performance at in the engine leasing business. So we expect that to be, uh, strong through the rest of the year and 1 of the things that I think you'll see is over time the, uh, the remarketing side of that should probably get to be a little bit higher of a total percentage.
Brendan Mccarthy: Great, that makes sense. Thanks.
Brendan Mccarthy: Thanks for that insight, Tom. And as you look into the back half of the year, are there any, have you noticed any, you know, shifts in demand or changes in the trend as it relates to remarketing income in the angel leasing business? Yeah, there really isn't a whole lot of trending as far as that goes, it's always very lumpy. And what we can say is that it remains very strong. There's a lot of demand for those engines in the secondary market, so a lot of remarketing activity available. What really is the question is the timing, when does it occur?
Great that makes sense. Thanks, thanks for that Insight Tom and as you look into the back, half of the year, are there any have you noticed any, you know, shifts in demand or or changes in in the trend as it relates to remarketing income in the engine leasing business?
Yeah. There, you know, there really isn't a whole lot of trending as far as that goes. Uh, it's always very lumpy. Uh, you and, and we what we can say is that it remains very strong. Uh, there's a lot of demand for those, those engines in the secondary market. So a lot of lot of remarketing activity available.
Paul Titterton: And Brendan, I just add to that too, it's a bit amplified at our RPF or within our own engine leasing business, just given the sheer magnitude of each asset, you know, the net book value, whereas in rail, you know, we're selling hundreds of cars for nice gains. In the engine leasing business, it's a few engines sold here and there for much more sizable gains. So kind of The magnitude of the shift from quarter to quarter can be a bit more amplified.
Um, what what really is, the question is the timing. When does it occur?
And Brandon, I just want to add to that too. It's a bit amplified at RPF or within our own engine leasing business, just given the sheer magnitude of each asset, you know, the net book value. Whereas in rail, you know, we're selling hundreds of cars for nice gains.
Uh, and the engine leasing business. It's a few engines sold here and there for much more sizable gains, so kind of...
There they they the magnitude of the shift from quarter to quarter. It can be a bit more Amplified.
Brendan Mccarthy: Got it. That makes sense.
Brendan Mccarthy: And when you look at investment volume there, unless I'm reading into this incorrectly, it looks like there hasn't been any investment volume in the wholly owned portfolio through the first six months of the year, down from about 71 million, same period last year.
Um, unless I'm reading into this incorrectly, it looks like there hasn't been any investment volume in in the wholly owned portfolio, uh, through the first 6 months of the year.
Thomas Ellman: But I think at one point you mentioned you target roughly 200 million per year. And I know that a lot of that is dictated by what Rolls-Royce decides. Just curious as to what investment volume might look like for the rest of this year in the GEL portfolio.
Um, down from about 71 million, uh, the same period last year. But I think at one point you mentioned your target, roughly $200 million per year. Um, and I know that a lot of that is dictated by what Rolls-Royce decides. Um, just curious as to...
Thomas Ellman: Yeah, so I'll start and then I'll let Bob add to it. Kind of repeating our last answer, that side of the business is also pretty lumpy for the same reason, because each engine is such a material investment in and of itself. We certainly expect to see some investment volume in the second half of the year. And coming into the year, we had said we thought it would be kind of in that range similar to the last couple years, but I'll let Bob add to that.
What investment volume might look like for the rest of this year in the, in the G portfolio.
Robert Lyons: Sure, and kind of take it in two parts. So you know, the $200 million number you mentioned, certainly still within reason, it may be a little less than that, just based on, as you said, where Rolls-Royce has its needs and where it allocates its engine sales. But you know, we expect a pretty healthy investment level activity in the second half of the year. I'd also add that at the joint venture level at RRPF, we came into the year, I think, expecting somewhere in the range of $800 million total investment volume for the year. It will be north of that for sure.
Yeah, so I'll start and then I'll let uh, Bob add to it. Uh, kind of repeating our last answer that that side of the business is also pretty lumpy uh, for the same reason because you know, each engine is such a material investment in of itself. We certainly expect to see some, uh, investment volume in the second half of the year and, and coming into the year, you know, we we had said, we thought it would be kind of in that uh, a range similar to the last couple years. But uh, I'll let Bob head to that, sure. And um, kind of take it in 2 parts. So you know, the 200 million dollar number, you mentioned, uh certainly still within reason, it may be a little less than that. Just based on as you said, where Rolls-Royce has its needs and where it allocates its engine sales.
Um, but you know, we expect a pretty healthy level of investment activity in the second half of the year. I'd also add that it's at the joint venture level at our RPF.
Robert Lyons: So still seeing very good investment activity overall in the engine portfolio. The mix may change a little bit, whether it's directly owned or at RRPF. We participate either way, so it's all good on that front.
Uh, we came into the year, I think, expecting somewhere in the range of $800 million total investment volume for the year. It will be north of that, for sure. Uh, so still seeing very good investment activity. Overall, in the engine portfolio, the mix may change a little bit whether it's directly owned or at our PPF; we participate either way. Uh, so that's all good on that front.
Brendan Mccarthy: That's great. Thanks, Bob. Thanks, Tom. I appreciate the insight.
Brendan Mccarthy: That's all from me and congrats again on a good quarter. Thank you.
That's great. Thanks, Bob. Thanks, Tom. I appreciate the insight. That's all from me, and congrats again on a good quarter.
Thank you.
Justin Bergner: Your next question comes from the line of Justin Bergner with Gabelli Funds. Please go ahead. Good morning, Shari. Morning. uh...
Your next question comes from the line of Justin bergner with gabelli funds.
Please go ahead.
Morning, Tom. Good morning, Sherry.
Good morning. Morning morning.
Justin Bergner: good quarter thanks for taking my questions first question just to verify is the entire twenty cent guidance increase attributable to engine leasing Any reason why you might not have... Narrowing the guidance Halfway over, I realized... Yeah, Justin, certainly the majority of the increase in guidance is due to what we expect to have happen in the engine leasing business. And really, kind of going back to some of Brendan's questions, the reason for that range is because of the scale of each of those remarketing events, it's difficult to really pinpoint the timing. And the same is true, quite honestly, in rail North America, where one of the big pieces of uncertainty is the timing of those various gains that we'll get on the remarketing of the rail cars.
Um, good quarter. Thanks for taking my questions. First question, just to verify is the entire 20 cent guidance. Increase attributable to engine Leasing
and,
Any reason why you might not have considered narrowing, the guidance range at this point in the year with it being halfway over. I realize you don't always do that, but just wondering,
Justin Bergner: So that's really why the range is. Okay, gotcha.
Yeah, Justin. Certainly the, uh, the, the majority of the increase in guidance is due to, uh, uh, what we expect to have happen in the engine leasing business and, and really kind of going back to some of Brendan's questions. The reason for that range is is because of the scale of each of those uh, remarketing events. It's difficult to really, really pinpoint the timing. And uh, and the same is true. Quite honestly in rail, North America, where 1 of the big pieces of of uncertainty is the timing of those various, uh, gains that we'll get on the, the remarketing of the rail cars. So, that's, that's really why the the range is where it's at
Justin Bergner: In the last few weeks, have you seen any change or kind of stalling in the secondary market ahead of, you know, the speculation relating to today's UMP Norfolk Southern announcement? And do you expect, you know, this period of regulatory review and potentially uncertainty to change?
Okay, gotcha.
In the last few weeks, have you seen any change or kind of stalling in the secondary market ahead of, you know, the speculation relating to today's?
ump Norfolk Southern announcement and do you expect, uh, you know, this
Paul Titterton: Yeah, Justin, this is Paul. And I'll answer that question. And the answer is no, there's been no slowdown at all. And we really don't think, while obviously, the announced merger is very significant for the rail industry overall, in terms of the rail car secondary market, we don't see any impact at all. I mean, really, what's driving the rail car secondary market is there's still a lot of capital that wants to invest in rail cars. And because new car volume is down, and is expected to stay down for some time, that capital really wants to flow into the secondary market.
Period of regulatory review and potential uncertainty to change the secondary market dynamic.
Paul Titterton: So quite honestly, the secondary market is robust, and we expect it to remain robust.
Justin Bergner: Okay, so even though some of the efficiency... Perhaps targeted in today's announcement might mean a slightly smaller need for railcars if the line can move more productively.
Yeah, Justin. This is Paul and I'll answer that question. And the answer is no, there's been no slowdown at all, and we really don't think while obviously, the the announced merger is very significant for the rail industry. Overall, in terms of the rail car secondary Market, we don't see any impact at all. I mean, really, what's driving? The rail car secondary Market is, there's still a lot of capital that wants to invest in rail cars and because new car volume is down. And and, and is expected to stay down for some time that Capital really wants to flow into the secondary market. So so quite honestly, uh, secondary Market is robust and we expect it to remain robust.
Robert Lyons: You just think that that's Yeah, and historically, and looking forward, Justin, it's Bob, you know, rail cars through cycles through time over decades have proven to be tremendous stores of value. And capital, you know, flows into the market accordingly. And it's always been an asset class that people have been interested in investing in and continuing to grow their portfolios. We don't see any change in that.
Okay. So even though some of the efficiencies, perhaps targeted in today's announcement, might mean a slightly smaller need for rail cars if the line can move more productively, you just...
Think that that's trumped by the demand for Capital flowing into this space.
Time over decades have proven to be be tremendous stores of value.
Capital.
Robert Lyons: The other thing I would mention, too, is I don't know the stated or unstated period for regulatory approval for that transaction announced this morning, but it's likely to be protracted. So, and then you add integration on top of that, you know, it's a pretty extended period. So we're not, we're not anticipating any near-term impact. on Demands and Our Portfolio, or the second.
Uh, and asset class that people have been interested in investing in and continuing to grow, uh, their portfolios. We don't see any change in that. The other thing I would mention too is I, I don't know. The
Stated or unstated, uh, period for regulatory approval for that, uh, transaction announced this morning, but it's likely to be protracted. So,
Um, and then you add integration on top of that. Um, you know, it's a pretty extended period, so we're not anticipating any near-term impacts.
On demands in our portfolio or the secondary market.
Justin Bergner: Okay, thank you.
Justin Bergner: And then lastly, strong international performance from a profit.
Thomas Ellman: Any way you can help me decompose that a little bit. I noticed the other revenue kind of ticked up, but just, you know, a strong segment profit there. You've got to look a little deeper at some of those Roehl International numbers. So when we came into the year, Bob indicated that the Roehl International business would be up between about $5 and $15 million from a segment profit. And for the first half of the year, we're kind of tracking with that. We're at the lower end of the range. But some of that is most of that actually is driven by exchange.
Okay, thank you. And then lastly, strong International performance from a profitability point of view. Um, any way you can help me decompose that a little bit further, Beyond, I guess, what was called out in the press release. I noticed the other Revenue kind of ticked up, but just, you know, strong segment profit there or sequentially in year 1 year.
Thomas Ellman: If you correct for that, the segment profit is roughly equal to what we had for the first six months of last year, which is a little bit below expected. And the reason for that is some of the challenges that we've seen in the intermodal market in Europe have expanded a little bit to a couple other car types. You probably saw the utilization drop a little bit in the rail international segment. We're still tracking, like I said, similar to last year, but that'll be a little bit down absent FX from what we expected coming.
Yeah, you gotta look a little little deeper at some of those rail International numbers. So, when we came into the year Bob indicated, that the rail international business would be up between about 5 and 15 million from a segment profit standpoint. And, for the first half of the Year, we're, we're kind of tracking with that. We're at at the lower end of the range, but but some of that, uh, is most of that actually is driven by exchange rates if you correct for that. The, the segment profit is roughly equal to what we had for the first 6 months of last year, which is a little bit below expectations.
And the reason for that is some of the challenges that we've seen in the inner Moto Market in uh, in Europe, have expanded a little bit to a couple of other car types. You probably saw the utilization. Drop a little bit in the rail International segment. We're still tracking. Like I said similar to last year, but that'll be, uh, a little bit down absent, uh, FX from what we expected coming into the year.
Justin Bergner: Great, thanks for taking all my questions. Thank you.
Great. Thanks for taking all my questions.
Bascome Majors: Your next question comes from the line of Bascome Majors with Susquehanna. Please go ahead. Good morning. It's been two months since you announced the rails. Sorry, the wells deal.
Thank you.
Your next question comes from the line of Bascom Majors with CES Guana.
Please go ahead.
Bascome Majors: I don't know what you've been able to accomplish in due diligence that maybe wasn't allowed during the negotiation process, but can you give us an update on what you've been able to dig into incrementally and if, you know, the synergy expectations for what this can mean on, be it maintenance or other items are coming into better focus. Thank you.
Good morning, it it's been 2 months since you announced the rails uh sorry, the wells deal. Uh,
Robert Lyons: Sure, Bascome, and I'll just go back to a comment I believe I made on the conference call a couple of months ago at the NMA when we announced the transaction. Given the length of time we were structuring the transaction and in dialogue with Wells Fargo and going through the due diligence, by the time we announced the transaction at the end of May, there was very little left for us to do in terms of due diligence. The heavy lifting had been done, and Wells Fargo had been very forthcoming in building out an exhaustive data room that had virtually everything, you know, by and large, we would need to complete due diligence, so we didn't anticipate finding any surprises post-announcement, and we haven't.
I don't know what you've been able to accomplish and due diligence that maybe wasn't allowed during the negotiation process. But can you give us an update on what you've been able to dig into incrementally? And if you know the synergy expectations for what this can mean, be it maintenance or other items, are coming into better focus. Thank you.
Sure bets come, and I'll just, uh, go back to a comment I believe I made on the, uh, conference call a couple of months ago, uh, the NMA, when we announced the transaction.
um, that
Given the the length of time. Uh, we were, we were, uh, structuring the transaction and in dialogue uh, with Wells Fargo and going through the due diligence.
By the time we announced the transaction at the end of May, there was very little left for us to do in terms of due diligence.
Uh the the heavy lifting had been done. Um and Wells Fargo had been very forthcoming and building out an exhaustive data room that had virtually everything, you know by and large. We would need to complete due diligence so we didn't anticipate finding any surprises post announcement and we haven't
Robert Lyons: I won't comment much more beyond that, given that we're still not the rightful owner of the portfolio. We look forward to closing on it. All of the assumptions we had coming into the transaction on the announcement date are holding very firm, and we feel really very, very positive about the transaction.
um,
I won't, uh,
Comment much more beyond that given that we're we're still not the rightful owner of the portfolio. Uh we look forward to closing on it. All of the assumptions we had coming into the transaction on the announcement today date.
Uh, we are holding very firm, and we feel really, uh, very, very positive about the transaction.
Bascome Majors: What assumption did you make on synergies when you announced the transaction and when might you update us on what that could look like longer term? Yeah, we didn't really get into much detail. At the time of the announcement, we said it would be accretive. But we hadn't provided much detail on that and won't until we get to closing of the transaction, which we expect Q1 2026 or sooner. When we get to that point, and we're at the closing, we can be much more forthcoming with you know, those synergies and the the outlook for the portfolio and for the integration with our business.
What assumption did you make on synergies when you announced the transaction? And when might you update us on what that could look like longer term?
yeah, we didn't really get into much detail um at at the time of the announcement um
we said it would be uh, a creative
Um, but we hadn't, uh, provided much detail on that and won't until we get to closing of the transaction, which we expect in Q1 2026 or sooner.
and we're at the closing. Uh, we can be much more forthcoming with, um, you know, those synergies and the
The outlook for the portfolio and for the integration with our business.
Shari Hellerman: Thank you. There are no further questions at this time.
Thank you.
Thank you.
Shari Hellerman: I'd now like to turn the call back over to Shari Hellerman for closing remarks. Please go ahead. I'd like to thank everyone for their participation on the call this morning.
There are no further questions at this time. I would now like to turn the call back over to Sherry Herman for closing remarks. Please go ahead.
Shari Hellerman: Please contact me with any follow-up questions. Have a great day. Thank you.
I would like to thank everyone for their participation on the call this morning. Please contact me with any follow-up questions. Have a great day. Thank you.
Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining and you may now disconnect.
Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.