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

Robert C. Lyons – Executive Vice President and Chief Financial Officer

Good morning Mike, it’s Rob Lyons. We actually expect the LPI to have another very strong year in 2015. As you know we came into 2014 expecting the LPI to be in the mid 30% range and we actually finished the year as Jennifer noted right around 39% so very strong performance.

So in 2015, we’re again expecting the LPI as we look at it today to be in that mid 30% range which is an incredibly strong number, so very positive outlook there. I would echo some of the comments that Brian made that if the energy markets remain low and we’re in an extended period of low crude prices, our customer’s behavior may change we may have to adjust our commercial strategy accordingly and as a result I think the LPI could be more volatile in 2015 on a quarter-to-quarter basis. We’ll have to see how that plays out as the year progresses.

And I add despite the potential for some volatility in the LPI. We don’t envision and I can’t envision a scenario where the LPI is not in very-very positive territory and very strong in 2015 and I think that speaks very directly to the diversity of our fleet and the renewal strategy and term strategy we’ve had over the course of the last few years. So our outlook for the LPI in 2015 is again very positive.

Mike Baudendistel – Stifel

Good. And I also wanted to ask, have you seen, as a result of the really strong production in terms of the number of tank cars, the past several quarters really being at record levels? Is that having an impact on the new lease rates? I understand you said that the lease rates are still up for most commodity types, but if you were to compare lease rates on tank cars right now versus a couple of months ago, is that sort of having a disruptive impact on the market at all?

Brian Kenney – Chairman, President and Chief Executive Officer
That’s a good question. And generally it’s tough to do quarter-to-quarter you know sequential quarter comparisons. But if I look at what tank rates did throughout 2014 and continue in the fourth quarter they are generally up low single mid digit you know base 5% to 7% from 2013 fourth quarter and that progressed fairly evenly through the year. Once again the exception being that 30,000 gallon tank car which has been under pressure due to that regulatory uncertainty for quite some time. Those rates have come down over the last year.