GATX Corporation (GMT)’s Fourth Quarter 2014 Earnings Conference Call Transcript

On other hand coal intentionally has been put out on very short terms because we’re waiting for pricing to increase different car type. Grain, we try to get some more term as those rates have come in the last few years. But there is still a lot of that fleet to roll over. Plastic pallets generally in the industry it has very long terms because a lot of those are finance [lease] because that’s not the way we play we have a lot of that portfolio to run over. So we really don’t generalize about freight cars overall. It’s really on a car type basis. And I said that there is number of those car types, plastic pallets, grain, where there is still a lot of repricing to incur and we’re especially excited about the pallet market.

Steve Barger – KeyBanc Capital Markets
Yes. Your last point is really what I was trying to get to, is that there does seem to be still significant amounts of room for the freight side of your business to both push term and raise price.

Robert C. Lyons – Executive Vice President and Chief Financial Officer
Right, for certain car types for others not so much that’s why we struggle let’s say well 40% because that’s not the way think about it.

Steve Barger – KeyBanc Capital Markets
Understood. Last question for me. You have always talked about how important it is to have high-quality customers from a credit standpoint. Are you comfortable with the customer base across the board here, or is there room to improve quality in some categories

Robert C. Lyons – Executive Vice President and Chief Financial Officer
We are absolutely comfortable with the customer base we have. It’s an outstanding — if you saw the top 50 names you probably recognize all 50 and we’ve used the strong market over the course of the last few years to continue to put our cars with some of our strongest and highest quality customers. So, the strength of our customer base is outstanding, it’s in great shape. We don’t see any need to significantly alter that going forward.

Brian Kenney – Chairman, President and Chief Executive Officer
And this is where I give kudos to our fleet and sales organizations because they’ve done an outstanding job here. And this is in an up market that’s where their job gets really tough, that’s when they have the difficult conversations with customers about extending term and not necessarily doing business with the customers that aren’t that great at credit quality but offer very high lease rates. And so they’ve done tremendous job doing what Rob suggested really locking it up with the best customers for the long term. And that’s hard to do. Those are difficult conversations to have.