Matt Elkott: Good morning. Thank you. Good to see some of the strong metrics utilization and rates and even the renewal success rate, although the renewal success rate did decline. Can you just talk a bit about this?
Tom Ellman: Yes. So, Matt, in terms of the given — a given quarter that can move around a little bit in the degree of precision that’s implied there is, it’s really more than exists a couple of transactions can move that. The important thing I’ll note is a non-renewal does not necessarily mean a non-utilized car. And as you noted, the utilization remained very, very high, which means that any car that for whatever reason is not being renewed is being quickly put back to work.
Bob Lyons: Yes. And I would add to that too. There are times, Matt, where — especially in this type of rate environment, where certain customers may say no. And given the diversity of our fleet and our commercial capabilities, we’re comfortable taking a car back and putting on lease with the next customer. So that would obviously impact your renewal success rate. But in the end, any renewal success rate up in the zip code of where we’re at today is really, really strong.
Matt Elkott: That’s very helpful. And then one more question. I believe Shari mentioned that the first available scheduled deliveries from your manufacturer suppliers is for three Q3, I believe. Last quarter you said, first quarter. Am I correct? Or just any clarification on this would be good.
Shari Hellerman: Yes. Matt. So it’s third quarter of 2024 right now and so backlog for both tank and freight cars are about a year out.
Bob Lyons: And that’s on our supply agreement, Matt.
Matt Elkott: Okay. Got it. Perfect. Thank you guys very much. Appreciate it.
Operator: Your next question comes from the line of Allison Poliniak from Wells Fargo. Your line is open.
Allison Poliniak: Hi, good morning. Just want to go back to Europe, just on sort of that intermodal pressure that you’re seeing reflected in the utilization side. Is that starting to stabilize for you or does it feel like it could take another leg down? Just trying to get a sense of where that is today.
Bob Lyons: I don’t know if it’s going to take another leg down, Allison. But it’s going to take a while to recover. We only have about 2,000 intermodal wagons in our fleet in Europe out of a fleet — total fleet of over 29,000 wagons. So it’s a small minority of our fleet. But it’s the one that’s under the most significant pressure. For example, we have roughly 1,100 idle wagons in Europe. That’s it. Over half of those are intermodal. So the market has faced a lot of pressure, as you would expect. It’s the most economically sensitive and the economic environment in Europe is spotty across regions and pretty challenged overall. I don’t see that abating here in the next three months to six months. It’s going to take a while for that market to recover.
But long term, we feel very good about the assets we own. They’re relatively new and in the push in Europe for more products from truck to rail, there will be a point where those assets are going to be fully utilized and good assets for GATX in the portfolio.
Allison Poliniak: Got it. Thank you. And then we’ve seen pretty strong diversification in terms of investment across your assets. Just any color on how you’re thinking about that going forward? Does that start to shift maybe towards one asset versus another? Just given some of the macro concerns here or just maybe kind of walk through how you’re thinking about that. Thanks.
Bob Lyons: Yes, we continue to think very economically, Allison. So we’re going to deploy capital where we have our highest return opportunities. We’re not pegging any particular percentage for Europe or any percentage for India or our engine leasing business, for example, that falls out of where we see the best return and the best opportunities. So fortunately right now we’re seeing them across the Board. As you said, it’s pretty well diversified. I don’t see that changing here in the near term.
