GATX reported Q2/18 net income of $38.8 million compared to net income of $53.4 million in Q2/17. Net income for the first six months of 2018 was $115.1 million compared to $110.9 million in the prior year period. Q2/18 and year-to-date results include a net negative impact of $5.8 million attributed to costs associated with the closure of a railcar maintenance facility in Germany. Q2/17 and year-to-date results include net gains of approximately $1.1 million associated with the planned exit of the majority of Portfolio Management’s marine investments.

Brian A. Kenney, president and CEO of GATX, said, “Rail North America experienced a more favorable industry environment in the second quarter, as railroad car loadings increased and railroad velocity decreased relative to 2017. Although lease revenue remains under pressure due to continued railcar oversupply and a large railcar manufacturing backlog, Rail North America continues to perform extremely well. Fleet utilization was 98.9% at quarter end, the renewal success rate was 78.6% during the quarter, absolute lease rates increased across the fleet and costs remain under control. The renewal lease rate change for GATX’s Lease Price Index was negative 16.1% in the second quarter with an average renewal term of 41 months.

“Rail International is performing very well. In Europe we are seeing gradual, broad improvement across the chemical, petroleum and freight markets. As a result, utilization at GATX Rail Europe increased to 97.8% at quarter end. In India customer demand for new railcar leases is gaining momentum, and total investment volume for 2018 will be strong.

“Rolls-Royce and Partners Finance affiliates’ performance continues to drive solid results within the Portfolio Management segment. American Steamship Company successfully deployed 10 vessels into service and is seeing increased demand for its services.

“Given the improving business environment, we now expect our 2018 full-year earnings to be in the range of $4.90 to $5.10 per diluted share. This guidance excludes the impact of the railcar maintenance facility closure in Germany.”

Rail North America reported segment profit of $64.2 million in Q2/18, compared to $74.9 million in Q2/17. Lower segment profit was a result of lower lease revenues and lower gains on asset dispositions. Year-to-date, Rail North America reported segment profit of $173.1 million, compared to $167.9 million in the same period of 2017. Lower revenues in 2018 were more than offset by higher gains on asset dispositions in 2018, resulting in slightly higher segment profit.

At June 30, 2018, Rail North America’s wholly owned fleet was comprised of approximately 119,000 railcars, including approximately 16,000 boxcars.

The following fleet statistics and performance discussion exclude the boxcar fleet:

Fleet utilization was 98.9% at the end of the second quarter, compared to 98.2% at the end of the prior quarter and 98.8% at the end of Q2/17. During Q2/18 the renewal lease rate change of the GATX Lease Price Index (LPI) was negative 16.1%. This compares to negative 11.6% in the prior quarter and negative 21.4% in the second quarter of 2017. The average lease renewal term for cars included in the LPI during the second quarter was 41 months, compared to 34 months in the prior quarter and 32 months in Q2/17. Rail North America’s investment volume during the second quarter was $149.1 million.

Rail International’s segment profit was $12.8 million in Q2/18 compared to $16.6 million in the Q2/17. Rail International reported segment profit of $31.8 million year-to-date 2018, compared to $30.0 million for the same period of 2017. The second quarter and year-to-date 2018 results include $8.6 million of expense ($5.8 million after-tax) related to the closure of GATX Rail Europe’s (GRE) railcar maintenance facility in Germany. Favorable results in the comparative periods were driven by more railcars on lease and foreign exchange impacts.

At June 30, 2018, GRE’s fleet consisted of approximately 23,100 cars and utilization was 97.8%, compared to 96.7% at the end of the prior quarter and 95.7% at the end of Q2/17.

Portfolio Management reported segment profit of $11.4 million in Q2/18, compared to $19.8 million in Q2/17. Segment profit year-to-date 2018 was $25.3 million, compared to $34.5 million for the same period of 2017. The decline in segment profit in the second quarter and year-to-date was predominantly driven by lower residual sharing fees. Second quarter and year-to-date 2017 segment profit also includes a net pre-tax gain of approximately $1.8 million ($1.1 million after-tax) associated with the planned exit of the majority of the marine investments. Performance at the Rolls-Royce and Partners Finance affiliates (RRPF) continues to be very strong, as evidenced by the increase in Share of Affiliate’s Earnings for both the second quarter and year-to-date 2018 reported results.

American Steamship Company (ASC) reported segment profit of $8.0 million in Q2/18, compared to $6.5 million in Q2/17. Segment profit year-to-date 2018 was $8.8 million, compared to $6.3 million for the same period of 2017. ASC carried 9.0 million net tons of cargo through Q2/18, compared to 9.5 million during the same period in 2017. The improvement in segment profit was primarily driven by more efficient fleet performance.