GATX Corporation (GATX) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of GATX Corporation. [Operator Instructions] It is now my pleasure to turn today's meeting over to James Ream, Board Chair of GATX Corporation. Mr. Ream, the floor is yours.

Thank you. Good morning. My name is Jim Ream, and I am the Independent Chair of the Board of Directors of GATX Corporation. Welcome to our 2025 Annual Meeting of Shareholders. We are conducting this meeting solely in a virtual format as a live webcast. Links to the proxy statement and our 2024 Annual Report to shareholders are provided under the documents and then under the Meeting Materials tab at the top of the screen. We hope that this virtual meeting will maximize the participation of our shareholders regardless of their location. Bob Lyons, our Chief Executive Officer and a member of our Board is in attendance and will make some remarks later in the meeting. In addition to Bob and myself, joining today's virtual meeting are the other independent members of our Board, Diane Algotti, Anne Arvia; Shelley Bausch, John Holmes, Adam Stanley; and Paul Yovovich. I'd like to take a moment to recognize David Sutherland, who is not standing for reelection this year in accordance with our retirement policy for directors. Dave made countless valuable contributions during his over 17-year tenure as a GATX Director, and all of us will miss his insight and counsel, and we wish him the very best. Rounding out the folks in attendance today are Brenda Fleissner, Blake Veldhuis, both representatives from our independent registered accountants, Ernst & Young, and Abby Cowart from Computershare, the inspector of election. Now I'd like to turn the meeting over to Brian Glassberg, our General Counsel and Corporate Secretary, who will discuss the conduct of the meeting today. Brian?

Thank you, Jim, and good morning. We will conduct this meeting in accordance with the bylaws of GATX Corporation and the rules of conduct posted on the meeting site today. All shareholders of record on February 28, 2025, are entitled to vote at the meeting, and I have been advised that a quorum for the conduct of business is present. Shareholders who wish to vote at this meeting may do so now or at any time until we declare the polls closed by using the Vote link on the meeting website. Any shareholder who has already voted and does not wish to change their vote, need not take any further action. Questions may be submitted now by clicking on the Q&A dialogue box at the top of the screen. If you submitted a question prior to the start of the meeting, there is no need to submit it again. Nonshareholder guests will not be permitted to submit questions. We will now proceed with the formal business of the meeting. There are 3 items of business to be considered by the shareholders. The first item of business is the election of the 8 nominees named in the proxy statement to serve on the Board of Directors until the next Annual Meeting of Shareholders or until their successors are elected and qualified. The second item is to approve the compensation of the company's named executive officers. This proposal is a nonbinding shareholder advisory vote. The third and final item is a proposal to ratify the Audit Committee's appointment of Ernst & Young LLP as the company's independent registered public accounting firm for 2025. The company recommends that shareholders vote for each of the director nominees named in the company's proxy statement and for proposals 2 and 3. Voting will now be conducted on the 3 items of business presented. If you have already voted by proxy or by Internet or telephone, you do not need to vote at this meeting unless you want to change your vote. [Voting]

I now declare the polls closed, and we'll turn the meeting to Jim.

Thank you, Brian. I would now like to turn the meeting over to Bob Lyons, who will provide an update on the company. Bob?

Thank you, Jim, and thank you all for participating today. On behalf of all of the employees at GATX, we truly appreciate your support. 2024 was a very strong year and one that exceeded our original expectations. Most encouraging, each of our business segments contributed to this performance. As shown on the table below, our EPS reached $7.89 per diluted share on a normalized basis in 2024, a 12% increase from 2023. And importantly, a 5-year compound average growth rate of over 10%. In addition to the strong earnings performance, we had solid investment in volume, putting capital to work on behalf of our shareholders totaling $1.6 billion in 2024, our second year in a row of over $1.6 billion of investment. We've done so all while keeping a close eye on generating attractive risk-adjusted return for our shareholders, as shown on the bottom left-hand side. Our return on equity has been at 12%. Turning to our business units. North American Rails performed very well in 2024 and over recent years as we are in the midst of a supply side led recovery. While industry carload growth is limited, a disciplined approach by new car builders has been keeping the supply and demand of new railcars in balance. Our focus in North American rail remains very clear: keep the fleet highly utilized, take advantage of an attractive rate market to extend term and capitalize on investment opportunities in this marketplace. Most importantly, and first and foremost, for GATX is that we continue to operate our maintenance network and the cars in our fleet in the safest manner possible. Looking at Rail International. International, our fleets in Europe and India are also highly utilized. At GATX Rail Europe, favorable long-term trends for -- there are favorable long-term trends for rail, although the near-term challenges exist due to slower economic conditions. In India, both the near and long-term prospects are quite positive as the infrastructure investment has decades of runway. In International, our focus also is clear. We'll invest prudently. We're going to continue to diversify across our customers, commodities and wagon types, and we're going to leverage the really strong teams and platforms we have in place in each of those markets. Within Engine Leasing, our investment rests both within our joint venture Rolls-Royce and Partners Finance and in a growing direct ownership of engines. Again, the long-term market trends are positive. We've seen very strong demand for engine as the outlook for new aircraft coming into service over the course of the next 10 to 15 years is positive. This supports a very similar demand outlook for spare engines. We will continue working closely and collaboratively with our partner, Rolls-Royce, we'll invest both through our joint venture and directly, and we're going to diversify the portfolio across engine types. At Trifleet, our tank container leasing business, global growth in the industry-wide fleet continues. Containers are one of the most efficient and safest ways to move various commodities around the globe, and our platform is strong, and the team there is very experienced. We'll leverage that team in order to manage through the cycle. We're going to maximize fleet utilization. And of course, we'll keep a very close watch on global trends as it relates to macroeconomic environment and tariffs and the potential demand on our assets. Our commitment to you, our shareholders, remains consistent year in and year out. So this slide remains consistent year in and year out. We are very much focused on the long term and maintaining a very disciplined approach to putting capital to work on your behalf. We're focused on earning attractive risk-adjusted returns through the cycle. And when available, will return excess capital to our shareholders, both through the dividend and select stock buyback. And as I mentioned previously, the most important thing for GATX is that we continue to operate our fleet, our cars and our maintenance facilities as safely as possible and that our thousands of employees on the shop floor can operate in the safest environment possible. Lastly, I'm proud to share our total shareholder return over the past 1-, 3-, 5- and 10-year periods where we've exceeded relevant market benchmarks. These results are a testament to the thousands of employees at GATX who work very hard every day on your behalf. We do not take our performance or the support of our shareholders for granted. With each new year, we know that we start fresh, and we must reearn your trust and support. That's what drives us and that's what we plan to do. Thank you for your time today, and I'll turn it back over to Jim.

Thank you, Bob. Brian, do you have the report of the Inspector of Election.

Thanks, Jim. Yes, the inspector has tabulated the votes and her preliminary report indicates the following: one, each of the director nominees named in the company's proxy statement has been elected. Two, the nonbinding advisory resolution approving the compensation of the company's named executive officers has been approved; and finally, three, the appointment of Ernst & Young as the company's independent registered public accounting firm for 2025 has been ratified. The final report of the inspector of election will be filed with the minutes of this meeting. I would now like to turn the meeting back over to Bob to respond to any questions we have received from shareholders. Bob?

There being no questions. Back to Jim.

Thank you, Bob. That concludes our annual meeting, ladies and gentlemen. In closing, I would like to thank our employees for their continued hard work and our shareholders for their continued support. Thank you all for participating in our virtual annual meeting and for your interest in GATX.

This concludes the meeting. You may now disconnect.