GATX - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 revenue was $439.3M, up 8.4% YoY; diluted EPS was $2.25 vs $2.43 YoY; non-GAAP diluted EPS (ex Tax Adjustments and Other Items) was $2.10.
• Against Wall Street consensus, revenue modestly beat ($439.3M vs $435.8M), while EPS missed (Primary EPS consensus $2.32 vs actual diluted EPS $2.25); prior two quarters were modest beats on both revenue and EPS (S&P Global) — see tables below.
• Management reiterated full-year 2025 EPS guidance of $8.50–$8.90; the Q4 uplift is expected to be driven primarily by strong secondary-market remarketing income.
• Operational highlights: Rail North America utilization remained high at 98.9% with LPI renewal rate change +22.8%; Engine Leasing delivered strong performance (segment profit $60.4M) aided by RRPF and wholly owned portfolio investments; GRE utilization was 93.7% amid macro headwinds; Rail India at 100% utilization.

What Went Well and What Went Wrong

What Went Well

• Engine Leasing outperformed: segment profit rose to $60.4M (vs $37.5M YoY) driven by RRPF strength and seven engines acquired ($147M) for the wholly owned portfolio; RRPF investments surpassed $1B YTD.
• Commercial execution in Rail North America: renewal success rate reached 87.1%, LPI renewal rate change +22.8%, average renewal term 60 months; management emphasized healthy lease rates and a balanced supply side.
• Guidance reaffirmed: Full-year EPS guidance maintained at $8.50–$8.90 (ex Tax Adjustments and Other Items), with management citing a strong pipeline for secondary-market sales to support Q4.

What Went Wrong

• Segment profit compression in Rail North America: Q3 segment profit declined to $70.7M from $102.4M YoY due to lower gains on dispositions and higher interest and maintenance expenses despite higher revenue.
• GRE macro pressure: Rail Europe utilization fell to 93.7% (95.9% YoY), reflecting weaker GDP and cautious customer fleet planning; renewal rates increased but demand tempered for certain car types.
• Maintenance cost mix: Higher-than-expected outsourcing to third-party shops increased costs in North America as internal shop capacity was filled; management expects longer-term cost control by shifting more work in-house.

Transcript

Speaker 3

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's GATX Corporation 2025 third quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. If you'd like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Shari Hellerman, Head of Investor Relations. Shari?

Speaker 0

Thank you, Greg. Good morning, and thank you for joining GATX's 2025 third quarter earnings call. I'm joined today by Bob Lyons, President and Chief Executive Officer, Tom Ellman, Executive Vice President and Chief Financial Officer, and Paul Titterton, Executive Vice President and President of Rail North America. As a reminder, some of the information you'll hear during our discussion today will consist of forward-looking statements. Actual results or trends could differ materially from those statements or forecasts. For more information, please refer to the risk factors included in our earnings release and those discussed in GATX's Form 10-K for 2024 and our other filings with the SEC. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Earlier today, GATX reported 2025 third quarter net income of $82.2 million or $2.25 per diluted share.

This compares to 2024 third quarter net income of $89 million or $2.43 per diluted share. The 2025 third quarter results include a net positive impact of $5.3 million or $0.15 per diluted share from tax adjustments and other items. The 2024 third quarter results include a net negative impact of $2.5 million or $0.07 per diluted share from tax adjustments and other items. Year-to-date 2025 net income was $236.3 million or $6.46 per diluted share. This compares to $207.7 million or $5.68 per diluted share for the same period in 2024. The 2025 year-to-date results include a net positive impact of $5.3 million or $0.15 per diluted share from tax adjustments and other items. The 2024 year-to-date results include a net negative impact of $9.9 million or $0.27 per diluted share from tax adjustments and other items.

These items are detailed in the supplemental information section of our earnings release. I'll briefly address each of our business segments. After that, we'll open the call up for questions. In North America, demand for our existing fleet remains stable. GATX Rail North America's fleet utilization remained high at 98.9% at quarter end, and our renewal success rate reached 87.1%. Our commercial team continues to successfully increase renewal lease rates while extending lease terms. The renewal rate change of GATX's lease price index was positive 22.8% for the quarter, and the average renewal term was 60 months. While tariffs and macro uncertainties have affected customers who use the most economically sensitive car types, demand for the large majority of car types in our fleet is holding up well. An encouraging sign in the North American market is the continued strength of the secondary market.

As we offer select packages for sale, we're seeing very strong demand for GATX assets from a diverse and deep buyer pool. We generated over $60 million in remarketing income during the quarter, bringing the year-to-date total to approximately $81 million, and we expect that we'll finish the year with a strong fourth quarter. Regarding the pending acquisition of Wells Fargo's rail operating lease assets, we continue to expect closing to occur in the first quarter of 2026 or sooner. Turning to Rail International, GATX Rail Europe's fleet utilization was 93.7% at the end of the quarter, reflecting ongoing market challenges in Europe. Despite these conditions, we continue to renew leases for many car types at rates higher than those of expiring leases, demonstrating the market's resilience.

In September, we announced an agreement to acquire approximately 6,000 railcars from DB Cargo, a major European rail freight operator, through a sale-leaseback transaction. Closing is expected by the end of 2025, subject to customary regulatory approvals. In India, rail freight volume remains robust, and demand for railcars is very strong despite trade uncertainties. During the quarter, GATX Rail India took delivery of 600 new cars and placed them with customers. Fleet utilization was maintained at 100% at quarter end. Engine leasing performed very well this quarter, driven by continued high demand for aircraft spare engines. This demand is manifesting itself in high utilization, attractive lease rates, and opportunities to sell engines at compelling valuations. At the same time, we identified attractive opportunities to increase our direct investment in aircraft spare engines, acquiring seven additional engines for $147.1 million during the quarter.

The RRPF affiliates also continued to expand their portfolios, with total investment already exceeding $1 billion year-to-date. Finally, as we noted in the earnings release, we continue to expect 2025 full-year earnings guidance to be in the range of $8.50 to $8.90 per diluted share. This guidance excludes any impact from tax adjustments or other items and also excludes any impact from the Wells Fargo transaction. Those are our prepared remarks. I'll hand it back to the operator so we can open it up for Q&A.

Speaker 3

Thanks, Shari. At this time, I would like to remind everyone, in order to ask a question, press star and the number one on your telephone keypad. Once again, star one. We will pause just a moment to compile the Q&A roster. It looks like our first question of the day comes from the line of Ben Moore with Citigroup. Ben, please go ahead.

Yes, hi, good morning. Thanks for taking our question. To get to your midpoint of your guide, you would need 4Q EPS at $2.39 versus consensus at $2.25. Can you discuss how you plan to close that gap on both revenue and margin drivers, please?

Speaker 5

Good morning, Ben. Thanks for your question. This is Bob. I'll take that one. As indicated, you know, the full year, just to kind of take a step back, has largely played out as we anticipated. Certainly, some puts and takes on various line items, which is not unusual, but the overall results and the overall environment are very consistent with what we thought coming into the year. We would expect that to continue into the fourth quarter. As Shari noted in her opening comments, we have a very strong pipeline of assets that we have for sale in the secondary market. We're seeing really strong demand, so we would expect really solid remarketing income in the fourth quarter. That will be largely the biggest driver in Q4 relative to Q3.

Great. I appreciate that. Maybe just as a follow-up on the remarketing you mentioned, looking into the next couple of years, longer term, would you still expect sort of elevated remarketing levels at the roughly $100 to $110 million through 2027, maybe kind of driven by inflation from the U.S. administration's policies and also more freight car mix from your Brookfield JV versus the roughly $50 million level that we saw back in pre-COVID levels?

It's a bit difficult to predict many years out into the future, but based on everything we're seeing today, there's no reason to believe or no reason for us to feel that the secondary market is going to adjust materially downward. Demand is really strong and very encouraged by just the sheer number of buyers and their appetite for the assets that GATX has on lease. We see a really positive market and environment for remarketing income in the years ahead. I think also supporting that is what we've talked about frequently over the last couple of years, the supply side thesis, that new car supply and capacity, manufacturing capacity in North America is more in line with true underlying demand for new cars.

As investors and current competitors in this market look for ways to grow and to build their fleets, the secondary market becomes a very, very good alternative, and we're seeing that.

Great. Really appreciate the time and insights. Thank you.

Thanks, Ben.

Speaker 3

Our next question comes from the line of Bascome Majors with Susquehanna. Bascome, please go ahead.

Speaker 2

Thanks for taking our questions here. To the GATX and Wells Fargo deal, you've talked about that being modestly accretive in the first full year. When we go through the pro forma historic financials you filed recently, it's indicating some modest dilution on a look-back adjusted for financing and other items. Can you help us square where we get to accretion under your ownership versus this historic look-back and where those just wouldn't add up similarly to what you're seeing on a go-forward basis? Thank you.

Speaker 5

Yep. Bascome, first of all, it's important to note what we issued. That 8K is looking at what happened if the transaction for income statement purposes closed on 1/1/2024, and then for balance sheet purposes closed June 30, 2025. Obviously, it didn't close on either of those dates. The other thing that it does is it takes the actual results of both companies and then kind of puts them together. Two things it does not do are it doesn't make allowances for the fact that the combined SG&A of the two companies is going to be a bigger number than what the SG&A would be for GATX on a consolidated basis. The other thing it ignores is any kind of management fee.

There are a variety of other items just because of the nature of how those statements come together that don't find their way in, but those are two big things that would take you from the dilutive numbers that you saw in those reportings versus the modestly accretive numbers that we've talked about several times. Bascome, I would just add to Tom's two key points. There's no SG&A synergy in there. That's an easy one you can pick right off the financial statement that was filed with the 8K. You can see what the SG&A is for Wells Fargo Rail and then for the combined entity, and there's no benefit given to synergies. There's no management fee. We haven't broken that out yet.

When the transaction closes and we provide guidance going forward, we'll give you some more clarity on the management fee, but that's not an immaterial number, and that's not reflected in the financial numbers. Nor is any other type of synergy that GATX may generate from the combined entity. It's really just a financial roll-up, not a snapshot of the go-forward scenario.

Speaker 2

Thank you for that. Regarding the DB Cargo deal in Europe, any thoughts on whether that will be needle-moving next year from a financial standpoint, or is that really more of a long-term investment in growing the European fleet? Thank you.

Speaker 5

Yep, it's Bob again, Bascome. It's more of a long-term, you know, like from an accretion-dilution standpoint, it's not material one way or the other in the year, the first year of ownership. It is a longer-term investment, but one that we're very excited about to be able to do a transaction like this. It starts out as a net lease, likely will convert over time to full-service leases as those initial leases roll over. Also likely to convert at some level to full-service leases versus the net, as mentioned. The DB, I think, is a very good example of what we're seeing begin to form in Europe. They have a fleet of 70,000 wagons themselves. Like other railroads in Europe, DB is looking for ways to enhance their cash flow. They don't necessarily need to own all of their rolling stock.

We think there may be opportunities elsewhere across Europe for similar type transactions. We're certainly out in the marketplace looking for those opportunities as well.

Speaker 2

Lastly, you've already commented on the secondary market in North American rail and really seeing no need or driver for that to change from the favorable situation it's been in for the last couple of years. You know, can you speak a little bit to the sequential performance in lease rates? I mean, certainly, the lease price index is still very positive. She had a slight tick down in utilization in North America. The lease price index is a little lower than it was in recent quarters. Just, I mean, is there any sequential just gradual weakening going along? You know, any thoughts on just the market here and now versus 6, 9, 12 months ago? Thank you.

Speaker 3

Sure, Bascome. This is Paul, and I'll be happy to take that one. What I would say overall, despite all the macro uncertainty, the North American railcar market is holding up pretty well. When we look across the fleet in general, lease rates remain at healthy levels, and that continues to be the case. We've seen sequentially, quarter over quarter, rates across most car types flat to perhaps down very, very slightly. In general, Bob alluded to the sort of supply-led market thesis that we've had for quite some time that has really proven itself out. I think that's where this period of macro uncertainty from a lease rate standpoint is really quite different from past periods.

If you think about, for example, the lead-up to the Great Recession or the lead-up to the COVID recession, and I'm not comparing necessarily this period to those periods, but those were periods where we started to see macro uncertainty and there was a very large negative market response from a lease rate standpoint. We really don't see that here. That's really because the market hasn't been overbuilt. Fleets remain fairly highly utilized. Again, a little bit of quarter-to-quarter deterioration, but overall across the fleet, for the most part, rates holding up well.

Speaker 5

I'll add to that, Bascome, too. I think, you know, Paul can elaborate on this, but one of the additional drivers to that we're seeing, scrap rates are holding up really well. With the market largely in balance, any temporary imbalance in a specific car type appears to be rectifying itself very quickly from a scrapping standpoint. Supply and demand are not getting out of balance for any extended period of time in any car type.

Speaker 3

Thank you all. Thank you, Bascome. Our next question comes from the line of Bascome Majors with Goldman Sachs. Bascome, please go ahead.

Hey everybody, thanks for taking my questions. I just wanted to touch a little bit on the maintenance expense within North America. I know that jumped up a little bit sequentially, and we've been talking about increasing maintenance expenses in North America. I'm just curious, on a go-forward basis, is that sort of a good dollar level to be at in terms of North America maintenance, or should we continue to expect increases from here? Thanks.

This is Paul speaking. I'll just contextualize it before I get directly to your question. Fundamentally, as you know, over the last really five to seven years, we made tremendous investments in our own maintenance capability, and that's because we have a very substantial marginal cost advantage working cars in our own network versus in the contract network. That's been borne out over time. This year, from a mix standpoint, we do a great deal of work to try to forecast the mix of work coming into our facilities. This was a mix that really filled up our shops at a higher clip than we had forecast. As a result, we had to put more work into the contract network, which is more expensive. We're not going to guide for 2026 yet because obviously, traditionally with GATX, we don't do that until the next earnings call.

I can't really comment specifically on 2026. What I can say is over the long run, we are on track with our objective of continuing to put more work into our own shops and control our costs. We remain of the view that we can achieve that going forward.

Understood. Maybe a little bit on the combined nature of the Wells Fargo deal as we move forward, if that goes through. I know you mentioned the SG&A synergies, the management fees as well, but should we be thinking of longer-term synergies on other line items like maintenance as well?

Speaker 5

I'll take that one. Andrzej, thank you for the question. Yes, is the short answer to that question. There will be synergies in other line items as well. Maintenance is one area that we have talked about a little bit more publicly because Wells Fargo, as a bank, is not allowed to own maintenance facilities directly. They do all of their work through third-party shops. As Paul mentioned, we are at full capacity in our shops today. When this transaction closes, it's not an immediate opportunity to bring work on those cars into the GATX shops. We'll continue using the third-party network that Wells has effectively established over the years. Longer term, absolutely, we will look for opportunities to bring more of that work in-house at GATX.

Understood. Appreciate the context. Maybe just shifting a little bit to the spare engine leasing side of the business. It seemed like a good strong quarter there again. I'm just curious if you could share the breakout between the gains and the core EBIT this quarter, and maybe how you expect to trend into year-end.

Sure. For the quarter, the operating income was about 85% of the total, and the remarketing was about 15%. Year-to-date, we're at about three quarters, one quarter. Much like Paul's commentary about 2026, we usually don't try to get too specific on individual quarters because it's challenging, particularly given the lumpy nature of the way remarketing comes in, whether it's aircraft engines or railcars. The three quarters, one quarter is a little higher on the operating income side than we've historically been. If history is a guideline, you would see a little bit more on the gain side on the remarketing, but there's no guarantee of that.

Understood. Lastly for me, I did notice that the renewal success rate in North America jumped up to 87% from 84% last quarter and 82% last year. I'm just curious if that increases anything to read into relative to the certainty around tariffs. Is there any increased certainty from your customers, and is that leading to increased renewal success rates? Thanks.

Speaker 3

I would say I wouldn't so much characterize that as driven by increased certainty by our customers, but much more just as we mentioned earlier, the fleet overall remains fairly tight. Obviously, it's in our interest and the customer's interest to renew. It reduces costs for both of us to the extent that demand is still there. In a relatively tight fleet, as long as less O and less C are acting rationally and we price to the market, we should have a very high renewal success rate. I wouldn't necessarily read into that number or anything from a macro standpoint.

Appreciate it. Thanks, Az.

All right. Thank you for the questions. Our next question comes from the line of Brendan McCarthy with Susquehanna. Brendan, please go ahead.

Great. Good morning, everyone. Thanks for taking my questions here. I wanted to circle back to a point on the supply side dynamics. I think you mentioned the market remains in balance, really supported by some of the higher scrapping rates. I guess, do you see any room or capacity for new car builds just stemming from any different economic variables that may shift in the future, such as a lower interest rate environment?

Fundamentally, I would say the answer is no. We don't foresee a big uptick in builds absent some spike in demand that we can't predict. What I will say is it's not just a question of financing costs. The builders have really rationalized capacity right now. If we think back to the crude boom, which was the last big boom in railcar production, the builders were producing at an 80,000 car a year clip. They couldn't ramp up to anything close to that number right now without a Herculean effort. Fundamentally, I think the supply side has right-sized quite a bit. I think a dip in financing costs is unlikely to have a hugely material impact on new car production.

Got it. That's helpful. Really, absent any factors driving overbuilding on the car build side, do you see any reason why lease rates can't continue to remain above the 20% threshold?

Speaker 5

Eventually, you know, you will work your way through that pool of cars that were priced at much lower rates. Over the longer term, you will get to a point where you're not, you know, you're renewing more cars, more and more cars that are put on at, you know, today's market rate. We're still a ways off from that.

That makes sense. Do you have any idea of how far along in the future that may be, whether it be two, three years, or perhaps longer?

Yeah, Tom, go ahead. As Paul mentioned earlier, we'll give more guidance next quarter, but order of magnitude, we're probably about halfway through remarketing those.

Okay. I wanted to transition to the engine leasing business. Really strong quarter there. Are you seeing any hesitancy from customers on the engine leasing side or anything within Rolls-Royce and Partners Finance affiliates, just resulting from uncertainty around tariffs or anything like that?

The short answer is no. The recovery and post-COVID in aviation has been great. We continue to see very high demand for the engines and don't expect any changes there. Of course, tariffs or general macroeconomic activity certainly will keep an eye on that for possible signs of what it might do to demand. To date, in the near term here, we expect that business to continue to be very strong. We've been encouraged by the investment volume and opportunities that we've seen, particularly within the joint venture itself, Rolls-Royce and Partners Finance, the team there. We came into the year expecting around $800 million, roughly, in total investment volume. Through the third quarter, we've already gone just north of $1 billion. They're having an outstanding year in terms of putting capital to work at really attractive returns.

Great. That's helpful. On the internal portfolio, GEL looks like, I believe I saw seven engines were purchased in the quarter. Is there anything to comment on related to the purchasing pattern there? I know there were no engines purchased in the first half of the year. Was there any outsized read-through there for this quarter?

No, nothing in particular. What I will comment on, I think it might be helpful to kind of take a look back. When we first started doing direct investments in engines, it was during the depths of the COVID downturn. At that point in time, Rolls-Royce's financial results were pretty stressed, and the capital markets in general were really in a state of flux, and there was not a lot of capital flowing into aerospace, whether it be aircraft in terms of airframes or engines. That presented GATX with a really unique opportunity to step in and buy engines directly, support Rolls-Royce in doing so, and invest in some very attractive assets for GATX for the long term. We now have over $1 billion of direct investment in engines, and they will pay dividends for years to come.

We also knew at the same time that Rolls-Royce's financial performance would strengthen, their credit profile would strengthen, and more capital would flow back into aerospace investments, as it always does. It is the epitome of capital flowing in and out depending on cycles. It certainly has flowed back in, and Rolls-Royce, we knew, would always look at their most effective way to sell engines, whether it be into the JV or GATX directly. The fact of the matter is they have a lot more options available to them today. We knew that. I think our investments going forward will be directly much more opportunistic than they are programmatic.

Understood. I appreciate the detail. That's all from me.

Yep.

Speaker 3

All right. Thank you, Brendan. Our next question comes from the line of Justin Bergner with Gabelli Funds. Justin, please go ahead.

Speaker 4

Good morning, Bob. Good morning, Tom. Good morning, Shari.

Speaker 3

Morning.

Speaker 6

Morning.

Speaker 4

A few questions here. I just wanted to make sure I heard correctly on the mix of operating and remarketing income within the Rolls-Royce and Partners Finance JV. It seems like the JV income stepped up from $33 million in Q1, then dipped to $22 million in Q2 and $53 million in Q3. I think you indicated that the share of remarketing income was less than the year-to-date.

Speaker 5

Yeah, Justin, that's correct. Part of the reason for that is one of the items that we called out was the insurance recovery. What that insurance recovery is, is back in 2022, we had an impairment at the JV for some engines that were in Russia, as you know, as the Russia-Ukrainian conflict got going. We did not anticipate being able to get those engines out, and there was some uncertainty about what would happen from an insurance standpoint. As it turned out, this year, we had a recovery of insurance proceeds, and that shows up in the operating income line. That's part of the reason for that relatively higher number in Q3.

Speaker 4

Okay, that's helpful. I see an $8.2 million adjustment net of taxes for the affiliate income. Does that correspond to the $55 million, or do I need to gross that up to be pre-tax?

Speaker 5

I'm not totally sure where you're getting the $55, but that is an after-tax number. That relates directly to the insurance proceed that Tom just mentioned. We normalized for that.

Speaker 4

Sorry, it was $53.4. The $8.2 is apples to apples on a tax basis with the $53.4? I need to gross it up to be pre-taxed.

Speaker 5

Where specifically, Justin, are you picking up the $53.4 number? I just want to make sure we're looking also apples to apples.

Speaker 4

If I'm reading correctly, share of affiliates pre-tax earnings is $53.4 million.

Speaker 6

Yeah, Justin, that's the pre-tax number for the share of affiliates' earnings from RRPF. That includes the, sorry, that's the third quarter.

Speaker 5

Yeah, you're right.

Speaker 6

That includes the insurance proceeds that Tom was alluding to. You would need to use the pre-tax number to adjust for that $53.4 million figure.

Speaker 4

Okay, is there a pre-tax number given? I think I only see the post-tax number of $8.2.

Speaker 6

Yes, it is. It's in the engine leasing section of the earnings release. It is $10.9 million pre-tax and then $8.2 million after-tax.

Speaker 4

Thank you. Sorry about that confusion. With respect to your guidance for the year, should I maybe infer that within the unchanged guidance, your engine leasing view is somewhat stronger, your gains on dispositions may be slightly stronger, and Rail North America X gains and Rail International a touch lower?

Speaker 5

Yeah, so Justin, when we took up guidance in 2Q, we mentioned that it was primarily because of the outperformance in the engine business. If you look at where both Rail International and Rail North America are relative to the guidance we gave at the beginning of the year, they're kind of both within the range, but at the lower end of that range. That was the case when we took guidance up, and that's the case where we are right now. Really unchanged quarter to quarter.

Speaker 4

Great, thank you. One or two more, if I may. It looks like the gain per car on asset dispositions in Rail North America was a lot lower this quarter. Is that simply related to the mix of cars you sold, or should I read anything into it about the strength of pricing in the secondary market?

Speaker 5

It's really the mix of cars, Justin, which changes quarter to quarter. It's not just the cars, but the underlying lease is also a big driver of the value ascribed to any particular car in the secondary market. If you're selling cars with a Class 1 railroad with a 10-year lease stream attached to it, the secondary market's going to really value that highly. Given the volume of cars we sell in a given year, it moves all over the map.

Speaker 4

Gotcha. Lastly, to clarify, the increased maintenance expense, was that purely due to kind of volume of maintenance events and the need to outsource, or was there anything in terms of operational execution in your own facilities that may have also weighed on the margin?

Speaker 3

It's really just volume and mix. Fundamentally, we, as Bob said, you know, we have filled up our network with work, and that is, of course, on the heels of the substantial investment and increased capacity we've had over the last few years. Whatever is left over that we can't fill has to go into the contract network.

Speaker 4

Was there any kind of lumpy nature of tank car requalifications this quarter?

Speaker 3

Not noticeably so, no.

Speaker 4

Okay, thank you so much for all the questions.

Speaker 5

Thank you.

Speaker 4

Thanks, Justin.

Speaker 3

It looks like we have a follow-up question from Bascome Majors at Susquehanna. Bascome, please go ahead.

Speaker 2

Thanks, everyone. Just one more for me. As we get into next year, it sounds like you don't expect a lot of changes in the North American rail cyclical backdrop. I mean, you are taking on a lot of new cars and customers via the JV and your management of that. Is there anything to tweak on the sales incentives to really drive the outcomes you want to maximize value in the next year or two compared to this year?

Speaker 5

Yeah, that's a really good question, Bascome, because we do adjust our sales incentive plan in North American Rail every year. There are various toggles we use to kind of drive the performance and the outcomes that we want. We, of course, will be taking a very hard look at that here. We always do it in the fourth quarter as we set the plan for the year ahead. Assuming we close on the Wells Fargo transaction as expected, that'll give us a really good new footprint in which to set those goals for the sales team. There will be some adjustments made. It's a 2X size fleet, essentially, more opportunities, bigger customer opportunities. We'll drive the sales force accordingly. It's a really good question.

Speaker 2

Thank you.

Speaker 3

All right. Thanks, Bascome. It looks like there are no further questions. I will now turn the call back over to Shari Hellerman for closing remarks. Shari?

Speaker 6

I'd like to thank everyone for their participation on the call this morning. Please contact me with any follow-up questions. Have a great day. Thank you.

Speaker 3

Thanks, Shari. Ladies and gentlemen, that concludes today's call. Thank you for joining, and you may now disconnect.