GATX CORP

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

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 thethree 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):

Rail North America Fleet Data

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

(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.

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.

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.

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.

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.

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

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):

GRE Fleet Data

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

(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:

(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.

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.

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.

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.

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.

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.

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

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:

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.

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.

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

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.

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.