GATX CORP (GATX)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of GATX Corporation ("GATX", the "Company," "we," "us," "our," and similar terms) should be read in conjunction with our condensed consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report, our Annual Report on Form 10-K for the year ended December 31, 2025, and in our other filings with the Securities and Exchange Commission ("SEC"). We based the discussion and analysis that follows on financial data we derived from the condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and on certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP measures to the most comparable GAAP measures, see "Non-GAAP Financial Measures" at the end of this Item. The discussion and analysis below includes forward-looking statements that are subject to risks, uncertainties and other factors described in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2025 that could cause actual results to differ materially from such forward-looking statements. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

OVERVIEW

We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results through three primary business segments: Rail North America, Rail International, and Engine Leasing. Financial results for our tank container leasing business ("Trifleet") are reported in the Other segment.

Operating results for the six months ended June 30, 2026 are not necessarily indicative of the results we may achieve for the entire year ending December 31, 2026. In particular, asset remarketing income does not occur evenly throughout the year. For more information, refer to the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2025.

On January 1, 2026, GATX acquired approximately 101,000 railcars for $4.2 billion from Wells Fargo Bank, N.A. ("Wells Fargo") through a newly formed joint venture ("GABX" or the "GABX joint venture") with Brookfield Infrastructure Partners L.P. and its institutional partners (collectively, "Brookfield"). Initially, GATX's ownership share of GABX was 30% with Brookfield's share at 70%. The acquisition from Wells Fargo was partially funded through a $2.96 billion term loan executed by GABX, which is guaranteed by GATX Corporation. As of June 30, 2026, GABX is consolidated and is reported in the Rail North America segment. GATX also directly purchased approximately 200 locomotives from Wells Fargo for approximately $30.4 million, and Brookfield directly acquired Wells Fargo’s rail finance lease portfolio, consisting of approximately 22,000 railcars and approximately 400 locomotives. 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. See "Note 1. Description of Business" in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

GATX has the option to acquire up to 100% of the ownership of GABX over time. On June 30, 2026, GATX exercised its first call option for $66.2 million, increasing its overall ownership of GABX from 30% to 33.5% and decreasing Brookfield's ownership from 70% to 66.5%. See "Note 15. Non-Controlling Interest" in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information about the options to acquire additional ownership of GABX.

Economic Conditions

GATX, and markets more broadly, are facing heightened uncertainty related to trade policy, geopolitical tensions, and overall economic conditions. These conditions did not have a significant impact on our business and financial results during the first six months of 2026. However, recent developments, including tariff announcements and the ongoing conflict with Iran, have increased economic uncertainty and could have a more significant impact on GATX’s financial results in the future. For example, geopolitical tensions in the Middle East have and could continue to increase energy prices, disrupt supply chains, reduce global air travel, and negatively impact our customers. A sustained economic slowdown resulting from these or other factors could impact GATX directly and indirectly, including through higher costs for new railcars or other assets or softening demand for our products and services. Management continues to monitor the macroeconomic and geopolitical environment closely to identify potential risks and to manage our business accordingly. However, we believe we are in a strong position to manage these risks due to our diverse fleet, broad global customer base, long-term lease portfolio, strong balance sheet, and access to capital.

DISCUSSION OF OPERATING RESULTS

Net income attributable to GATX for the six months ended June 30, 2026 was $188.9 million, or $5.19 per diluted share, compared to $154.1 million, or $4.21 per diluted share, for the same period in 2025. Net income attributable to GATX increased $34.8 million compared to the prior year and was impacted by the Wells Fargo rail assets acquisition. The variance was largely due to higher

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revenue at Rail North America and Rail International, higher net gain on asset dispositions at Rail North America, and higher earnings at the Rolls-Royce & Partners Finance joint ventures (collectively, the "RRPF affiliates"), partially offset by higher maintenance expense at Rail North America, higher depreciation expense at Rail North America and Rail International, and higher interest expense.

Net income attributable to GATX for the three months ended June 30, 2026 was $103.4 million, or $2.84 per diluted share, compared to $75.5 million, or $2.06 per diluted share, for the same period in 2025. Net income attributable to GATX increased $27.9 million compared to the prior year and was impacted by the Wells Fargo rail assets acquisition. The variance was largely due to higher revenue at Rail North America and Rail International, higher net gain on asset dispositions at Rail North America, and higher earnings at the RRPF affiliates, partially offset by higher maintenance expense at Rail North America, higher depreciation expense at Rail North America and Rail International, higher interest expense, and lower earnings at the RRPF affiliates.

The following table shows a summary of our reporting segments and consolidated financial results (in millions, except per share data):

The following table shows our return on equity for the trailing 12 months ended June 30:

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(1)    See "Non-GAAP Financial Measures" at the end of this Item for further details.

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Segment Operations

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

Segment Summary

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. Also on January 1, 2026, 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 the three and six months ended June 30, 2026, GATX received $12.4 million and $24.9 million from GABX and $2.8 million and $5.6 million from Brookfield for these services. GABX management fees earned by GATX are eliminated in consolidation and not shown on the face of the condensed consolidated statements of income. 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.

Despite ongoing macroeconomic uncertainty and the impacts of the geopolitical environment in the Middle East, demand for most railcars was stable and the renewal success rate remained strong. Utilization was 98.0% at the end of the current quarter.

The following table shows Rail North America's segment results (in millions):

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of GATX Corporation ("GATX", the "Company," "we," "us," "our," and similar terms) should be read in conjunction with the audited financial statements included in "Item 8. Financial Statements and Supplementary Data" in this Form 10-K. We based the discussion and analysis that follows on financial data we derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and on certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP measures to the most comparable GAAP measures, see “Non-GAAP Financial Measures” at the end of this Item. This discussion does not include the comparison of prior year 2024 to 2023 financial results, which can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 19, 2025.

OVERVIEW

We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results through three primary business segments: Rail North America, Rail International, and Engine Leasing. Financial results for our tank container leasing business ("Trifleet") are reported in the Other segment.

On May 29, 2025, GATX entered into a definitive agreement to acquire railcars from Wells Fargo Bank, N.A. ("Wells Fargo") through a newly formed joint venture ("GABX" or the "GABX joint venture") with Brookfield Infrastructure Partners L.P. and its institutional partners (collectively, “Brookfield”). The transaction formally closed on January 1, 2026 and consisted of approximately 101,000 railcars for approximately $4.2 billion. Initially, GATX's ownership share of GABX is 30%, with Brookfield's share at 70%. GATX will have the option to acquire up to 100% of GABX's equity over time. GATX also agreed to directly purchase approximately 200 locomotives from Wells Fargo for approximately $30.4 million, and Brookfield agreed to directly acquire Wells Fargo’s rail finance lease portfolio. GATX will serve as manager of the railcars in GABX as well as the finance lease portfolio directly owned by Brookfield. In anticipation of the closing of the transaction, on December 31, 2025, GATX contributed equity of $385.3 million to GABX, Brookfield contributed equity of $899.0 million to GABX, and GABX executed a $2.96 billion term loan to fund the acquisition. GATX has guaranteed GABX's debt financing obligations. During 2025, GABX entered into deal contingent interest rate swaps in order to hedge the exposure on its anticipated debt financing. As of December 31, 2025, GABX is consolidated and is reported in the Rail North America segment, and its operations will be reflected within that segment for reporting periods after the closing of the transaction. See "Note 26. Subsequent Events" in Part II, Item 8 of this Form 10-K for further information.

In the fourth quarter of 2025, GATX Rail Europe acquired 5,882 railcars from DB Cargo AG. The acquisition was an opportunity to grow and diversify the GRE fleet by adding a mix of favorable model types.

In 2023, we sold our rail business in Russia ("Rail Russia"). Financial results were not material to our operations.

In 2023, we sold the three remaining liquefied gas-carrying vessels (the "Specialized Gas Vessels") within the Engine Leasing segment.

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DISCUSSION OF OPERATING RESULTS

The following table shows a summary of our reporting segments and consolidated financial results for the years ended December 31 (dollars in millions, except per share data):

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(1) See "Non-GAAP Financial Measures" at the end of this Item for further details.

2025 Summary

Net income attributable to GATX was $333.3 million, or $9.12 per diluted share, for 2025 compared to $284.2 million, or $7.78 per diluted share, for 2024, and $259.2 million, or $7.12 per diluted share, for 2023. Results for 2025 included a net positive impact of $13.5 million ($0.37 per diluted share) from tax adjustments and other items, compared to a net negative impact of $3.9 million ($0.11 per diluted share) from tax adjustments and other items in 2024 and a net positive impact of $1.6 million ($0.05 per diluted share) from tax adjustments and other items in 2023 (see "Non-GAAP Financial Measures" at the end of this Item for further details).

•At Rail North America, segment profit in 2025 was lower than prior year. The decrease was primarily attributable to higher maintenance and interest expenses, partially offset by higher lease revenue and higher repair revenue.

•At Rail International, segment profit in 2025 was higher than prior year, primarily due to higher lease revenue and changes in foreign currency exchange rates, partially offset by higher interest expense.

•At Engine Leasing, segment profit in 2025 increased compared to prior year, a result of higher earnings at the RRPF affiliates and GEL.

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•Within Other, Trifleet's segment profit decreased, largely due to changes in foreign exchange rates, lower lease revenue, resulting from lower utilization, and higher interest expense, partially offset by lower bad debt expense resulting from the absence of a settlement and restructuring agreement with a customer recorded in the prior year.

Total investment volume was $1,316.7 million in 2025, compared to $1,674.4 million in 2024, and $1,665.0 million in 2023.

2026 Outlook

Conditions in the North American railcar leasing market were stable in 2025, and we expect generally similar conditions in 2026. At Rail International, we expect stable demand for most railcar types in Europe, although economic headwinds will present challenges in certain car types. We expect economic growth in India will support growing demand for railcars. The operating environment for our engine leasing businesses at RRPF and GEL is strong, as global air travel trends are positive, and long lead times for delivery of new engines and repair services are driving solid demand for existing assets. We have a strong balance sheet and adequate access to capital, which we believe positions us well to manage our transportation assets based on current market conditions.

•We expect Rail North America's segment profit in 2026 to increase from 2025. Generally, lease rates for railcars scheduled to renew in 2026 will likely be higher than expiring rates for most car types as the lease rate environment for existing railcars is expected to remain stable. Our fleet is highly diversified across car types, customers, and commodities, and broadly we see stable demand for railcars in 2026. For certain of our most economically sensitive car types, we are anticipating a more challenging commercial environment. Across the entire fleet, we expect that increasing lease rates, along with new railcar additions and the impact of the Wells Fargo rail acquisition, will generate higher lease revenue in 2026. We anticipate that remarketing income, driven by strong secondary market conditions and increased asset sales activity given our larger North American fleet, will be higher in 2026. Ownership costs, comprised of interest and depreciation, and maintenance expense will be higher in 2026, primarily due to the impact of the Wells Fargo rail acquisition.

•Rail International's segment profit in 2026 is expected to increase from 2025, driven by continued growth of the fleet sizes in Europe and India, as well as favorable foreign currency impacts compared to 2025. Demand for most railcar types in Europe should remain stable, and we plan to continue to invest in the fleet. In India, we anticipate significant growth again in our fleet this coming year, which will also contribute to an increase in segment profit.

•We anticipate Engine Leasing's segment profit in 2026 to be higher than 2025. RRPF's results are expected to be higher as a result of continued growth in global air travel. Additionally, long lead times for delivery of new engines and repair services are driving strong demand for existing assets. GEL results are expected to benefit from these same factors.

Segment Operations

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.

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RAIL NORTH AMERICA

Segment Summary

Demand for most railcars was stable during the year, despite ongoing macroeconomic uncertainty, and the renewal success rate remained strong. Utilization of our non-boxcar fleet was 99.0% at the end of the year.

The following table shows Rail North America's segment results for the years ended December 31 (in millions):

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