Good day, everyone. Welcome to the GATX Third Quarter Conference Call. Today's conference is being recorded. At this time, I would like to turn things over to Ms. Jennifer Van Aken. Please go ahead.

Thank you, Sara, and good morning, everyone. Thanks for joining us for the third quarter conference call. With me on the call are Brian Kenney, President and CEO of GATX Corporation; and Bob Lyons, Executive Vice President and Chief Financial Officer. I'll give a brief overview of the results provided in our press release earlier this morning and then we'll take questions. As a reminder, any forward-looking statement made on this call represents our best judgment as to what may occur in the future. We have based these forward-looking statements on information currently available and disclaim any intention or obligation to update or revise these statements to reflect subsequent events or circumstances. The company's actual results will depend on a number of competitive and economic factors, some of which may be outside the control of the company. For more information, refer to our 2012 Form 10-K/A for a discussion of these factors. You can find this report, as well as other information about the company, on our website, www.gatx.com. Today, we reported 2013 third quarter net income of $53.8 million or $1.15 per diluted share. This includes a benefit of $2.8 million or $0.06 per diluted share from tax adjustments and other items, which are detailed on Page 11 of the press release. This compares to 2012 third quarter net income of $53.8 million or $1.13 per diluted share, which includes a benefit from tax adjustments and other items of $18.2 million or $0.38 per diluted share. Year-to-date 2013, we reported net income of $116 million or $2.45 per diluted share, including a benefit of $4.5 million or $0.09 per diluted share from tax adjustments and other items. Year-to-date 2012, we reported net income of $107.6 million or $2.26 per diluted share, including a benefit from tax adjustments and other…

[Operator Instructions] We'll hear first from Justin Long with Stephens.

Overall, would you say that things played out in line with your expectations in the third quarter or were there any areas where you saw a surprise in either direction. And also, as you look at the outlook for the fourth quarter reiterating guidance but it looks like we'll see an -- or you anticipate a sequential decline in earnings, is that mainly a function of timing with remarketing or is there something else that's driving that?

Justin, it's Bob. I'll take these questions. Really, in the third quarter, no material difference from what our expectations were. The LPI continue to perform very strong. Utilization is strong both in North America and in Europe, and generally stable performance both within Portfolio Management and American Steamship. So I'd say, little in the way of surprises here in the third quarter. Continue to be very good environment. And you hit the nail on the head with regards to the fourth quarter, with guidance where it's at, at $3.20 to $3.30 per share, that would indicate a slight decline from the third quarter income but really that's all primarily driven by remarketing.

Okay. Bob, that makes sense. And one of the things that you mentioned was demand for tank cars in North America remaining strong. I was wondering if you could provide a little more color on what trends you're seeing in terms of long-term tank car lease rates right now. And are you seeing any divergence in the lease rate trends between the crude tank car market and the non-crude tank car market?

Yes, Justin, I'll take that. It's Brian. And yes, we are. But generally, taking a step back, it's still an extremely strong tank car market. And if you look at most of our major tank car types, they're at or near full utilization and at or near record lease rates. The only exception in the quarter to your point was in crude by rail traffic, so those cars that served the crude market. And there was a development in the quarter on that and if you look at weekly petroleum carloads, they were down somewhat from the May peak. The slowing growth in demand there has been met with the accelerating new car builds that we've been talking about for quite some time. If you even look at the spreads of WTI to Brent, they've narrowed throughout the year, really starting at a very high like $18 spread in July of 2012, down to almost no spread in September of this year. And that drives a lot of that crude by rail traffic. You saw some pipeline de-bottlenecking in 2013. So there has been a lot of developments there but as far as rates that we're seeing, I think, most of the rates that have come down that people have been asking about are those short-term lease rates, the 6 months to 2-year rates that have come down substantially. But remember, we never played in that business anyway because we thought that was a little ridiculous. So we've been pushing terms long and trying to lock in those rates for long period of time. Now having said that, we saw rates for this car type come down a little bit in the third quarter, say about 10%. But to put that in perspective, rates of those cars were up about 500% in the last 3 years. So still very positive on the tank car market and rates are still at or near record high.

Okay. Great. That's helpful color. One last one I had, on the regulatory front, I know it's still very hard to predict what happens but what do you view as the probability that we see a required retirement of the DOT-111 flammable liquid cars. And if that's the case, would you consider making an order to replace the 7,000 cars or so you have in that category or would you hold off at this point, just given where asset prices are in the market?

Okay. Well, there's a couple of questions there. So the question about whether we anticipate retrofit or a changed new car design or phase out of DOT-111 cars. Now you sliced it, I think, the right way, but for other callers on there, you got to remember that the DOT-111, it's more of a designation that encompasses a multitude of car types that carry different kinds of commodities. And it's really applied -- that DOT-111 designation applies to almost 2/3 of the tank car fleet in North America. So the real focus of the industry and the regulators, especially in the wake of these accidents, so it's not all those DOT-111 cars but specifically large general service tank cars that transport these flammable liquids, and that's 65,000 industry-wide, and you're right about 7,000 in our fleet. Now as far as whether we anticipate a retrofit or phase out, on September 5, I don't know if you saw this, but PHMSA issued an Advance Notice of Proposed Rulemaking, and they're seeking public comment on the various petitions over the last few years and they all seek a further enhanced transportation of these hazardous materials in tank cars, specifically these DOT-111 cars. So yes, we would expect some kind of rule to enhance the safety will be enacted but as far as what it could be, as you said, it's just too early to tell and there's a lot of different possibilities. So our reaction is going to be on whatever is implemented and whether it makes sense for GATX, and we'll have to look at what the proposed or what the final rule is, if any, and determine if it's still feasible to implement for our fleet. And if it's not, we'll take that car out of service. So as far as ordering new cars, we have our existing order out there. As far as further orders, we really have to see what that final rule is before we can even react to that question. In the end, we have to make sure that these flammable commodities are transported safely and that's what we're focused on and that's what the industry is focused on. So my perspective, any rule that makes the transportation of that commodity safer in the broadest sense makes perfect sense to us. So we support any rule with a design change that makes new or existing cars safer and gives the industry a decent amount of time to implement that change. So by reasonable amount of time, I mean, long enough to not drive this flammable liquid traffic off the rails to a less safe mode of transportation like the highways but we are 100% behind making these cars safer.

Next up, we'll hear from Bascome Majors with Susquehanna.

I want to follow-up on the crude oil tank car lease rate question earlier and I was hoping you could point out if there has been any differentiation in what you're seeing in rates within the long- and short-term between the coal insulated cars and the Bakken style cars in the marketplace?

Yes, they are both down, but once again, it's in the context of we would have loved to have that rate even 6 months ago. So yes, they've come down somewhat. But really, most of the noise around dramatic decreases in lease rates have to do with those short-term leases that people were doing in the industry.

Okay. And with the backlog as big as it is today and a lot of those still going into that market, what is your sense, if you have it by base, sort of supply and demand balance today and kind of where that goes over the next 6 to 12 months?

Well, as you probably know from listening to our prior calls, we've been somewhat of a contrarian about the crude by rail market for a while over the long term. So forgetting about what happened in the quarter and whether that's really a change or temporary low, I mean, longer term, if you look at crude by rail, it's 700,000 barrels a day in the U.S. this year. And there's projections that could double by the end of 2014. But to your point, there's so many tank cars being delivered. I think, it's now 80% or more of the backlog of orders out there in the rail market are tank cars, and something close to 60,000 being delivered over the next few years with most of them earmarked for the service that we've been saying for quite some time that we think there's eventually going to be an oversupply as these cars are delivered and as these pipelines come online. Don't know exactly when that's going to be but our perspective is this market will be overserved. So that's why you've seen us take the strategy we have of maintaining a very diverse fleet using the strength in crude cars, which has caused the short supply of all tank cars to divert -- further diversify our fleet and lock in these rates for a long period of time. So the point to remember for GATX is we have less than 2,000 cars in crude service and that was an intentional move on our part. So I think we're in pretty good shape given the trend that we saw coming anyway. What I can answer is that, that has already flipped at this point in time or whether it's a temporary low but it's coming eventually.

Moving on, we'll hear from Art Hatfield with Raymond James. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: I want to ask a question with regards to your lease book. It seems to me, and help me if I'm off base here, but as I think about your lease book and what's gone on with your renewal terms over the last couple of years, it seems to me that best rates you have are locked up long-term and the worst rates you have are locked up short-term. So if I think about GATX's lease portfolio, regardless of what goes on over the next year or 2 in the tank car market, particularly related to crude by rail, you theoretically have a very strong setup for good pricing growth over the next couple of years, particularly on your renewal side, am I thinking about that right?

Yes, you're thinking about that right. I mean, there's always the risk that if there's a rapid decline in the market, there's more of a utilization risk, right? Because we do have cars coming up for renewal every year, it's not likely we've locked up the entire fleet. But we've locked up a significant portion of it, especially on the tank cars side, at very high rates, almost record rates, for very long periods of time. So yes, directionally, you're right but there's always that utilization risk. And nothing is perfect but we certainly work towards that goal. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: You've seen a...

The point I'd add on that, just to follow-up on Brian, if you think about the fleet rollover over the course of the last few years and you assume that 2014, as we do, will still be positive, very positive rate environment, we will have rolled close to 80% of our lease portfolio at a very attractive rate except for those cars we've targeted for the shorter-term, like coal or certain cars that remain challenged, we're keeping those short and we'll get another shot at those in a better environment. So we have locked down a significant amount of cash flow.

And to even get more specific, if you look at the tank cars side, because there's been a lot of questions that you've already heard about rates and have they peaked or are they coming down. Even if rates don't move up from here and actually come down from here, we're still going to see revenue increases because that expiring rate is still pretty low and doesn't really change much next year. So we're going to have revenue increases even if rates have peaked at this point in time. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: Right. And that's my point. So if you start to -- excluding the risk with regards to utilization, if you start to see improvement in the freight car side of things, we could see very strong LPI for the foreseeable future?

And absolutely, and that's when people ask me, has the rail car market peaked? Is it -- do you think it's very strong? It's really -- it's such a car type by car type answer. And on the freight side, with a little help from the economy, you could really see, I could actually say our entire fleet is performing very well.

If you think about the LPI numbers that we posted last year, this year, and the renewal terms we're getting, we're really getting those despite the fact that on the freight car side of the business, it's been pretty fair market relative to tank which has been spectacular. We don't feel like we've gotten a lot of help or economic lift on the freight car side. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: Okay. Just moving over to Europe. Now that you've sold AAE, can you talk a little bit about what your growth strategy over there is, how we may think about kind of how the international side of the business may perform going forward?

Sure. Well, on the tank cars side, we think we've been in a growth mode for well over 1.5 years now with our multiyear order program over there and we will continue to have, I think, a high level of new tank car orders in Europe for the near future. On the freight car side, yes, we sold AAE now, but we're going to continue to look at opportunities through ordering of new cars and through potential fleet acquisitions on the freight car side. So we do -- in the kind of market Europe is right now, which is obviously relatively weak, as you know, GATX's strategy generally is to place orders and to try to grow in those kind of markets anyway because you get more attractive prices. So that is the objective over there. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: Can you refresh my memory, how big is the European market from a unit standpoint?

In terms of the leased market, I think, it's about 75,000 to 85,000 cars each of both tank and freight. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: Okay. So 150,000 to 160,000 total?

Right.

One of the things occurring in the European market that is of significant interest to us, and we think is an opportunity, is that there is, much like in North America, there's increased regulatory scrutiny and focus in the European market and so we're seeing a number of smaller lessors not really reinvest capital back into their business. And so we were displacing some of those cars and we think there may be some opportunities there. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: Is there an opportunity for ownership to transition from owned to leased?

Not a significant shift. We don't see a significant shift there.

Next up, we have Steve O'Hara with Sidoti & Company. Stephen O'Hara - Sidoti & Company, LLC: I was just curious, I mean, in terms of the new railcar order, when does that go through? I think, it's 2014. And kind of what are the plans beyond that? I mean, with tank car prices where they are, would you lean more towards -- I guess, how do you think about your capital, your CapEx decisions at that time?

Well, yes, the term of the order was a 5-year ordered that was placed in March 2011, started delivering in the summer of 2011, so that really ends up '16. And as far as how we're doing there, obviously, that's great. We placed all the cars in 2011, '12, '13, '14, and we're halfway through '15 right now. As far as what happens beyond that, we definitely always want to have a supply of tank cars coming so we can fill our best customers' needs but in terms of strategically what we're going to do there yet, I don't really have anything to announce yet. I really want to see how it plays out in terms of supply and demand in the tank car market, especially given what we've talked about in the call, and the overbill that I think is out there. Stephen O'Hara - Sidoti & Company, LLC: Okay. And then, I mean, in terms of the -- on freight side, what are the -- I mean, it sounded like I think, grain and coal doing a little bit better. I mean, are there any other areas that are very weak or getting better?

Well, as you said, coal has improved somewhat but let's not get excited about that. I mean, there's still, what is it, 170 trains that fight on the industry, so that's down a little bit. And we played some this year but all on very short-term lease, and all at relatively low rates. So I'd say it's less worse but it's certainly, I wouldn't call it improving dramatically. Grain, there's some, if you look at the railroads, they're seeing some improve traffic there. But I think, from a lease perspective, with the good harvest this year, you'll really see that start to get better next year. The good news is there's some strengthening in other car types, small cube covered hoppers, which had some weakness, especially last year, with some over-ordering. We've seen a nice uptick this year, both from fracs and service, as well as renewed cement demand. The medium Q markets getting a little better. I think, fertilizer is helping there. Autos have been strong throughout this period. So there's pockets of strength and things aren't quite as it has been but I'd say it's far away from being a strong or even strengthening market overall in the freight car side.

And Steve, just if you hear a reference or comment about coal being better than anticipated, I just want to be clear that we have been able to keep more cars at work than we anticipated coming into the year, but rates are still very low, hence, the reason we're just staying very short term.

Next up, we'll hear from Matt Brooklier with Longbow Research.

Just a follow-up question on tank car pricing. I think you did indicate you saw some sequential moderation, the number being roughly 10% in terms of leased rates. Was that just specific to longer-term crude cars or was that for, I guess, all tank cars including general purpose?

No, it's just for the cars that served -- the general purpose cars that were serving a crude market. And we did see this around that kind of reduction in the quarter. As far as the rest of the tank car types, we did not see reductions in lease rate. Now starting in the second quarter, actually, those rates have -- those rate increases have moderated. We're not -- definitely not seeing the increases we saw in prior year 2 years but as far as lease rates coming down, that really refers to the cars that are serving the crude market.

Okay. And I got on the call a little bit late but, I guess, if you could provide kind of a current update on the overall tank car market potentially, I guess, rates for crude cars could have gotten a little bit healthier in October with the spread widening but just curious to hear your thoughts on that?

No, it doesn't happen in that kind of realtime pattern but I'm glad you said that because a big appeal of crude by rail has been the flexibility it offers refiners and marketers to put their product where they get the best price. So it does depend on that factor you said, which is that WTI to Brent differential, which was huge. In the middle of 2012, I think, $18. It came all the way down to 0 or $1 in September of 2013, and has widened out to about $10. So as far as seeing any effect of that immediately, no, we haven't seen it yet. But that's one of the reasons I'm not willing to say that our prediction, long-term prediction of oversupply and a reduction in the crude by rail market, I don't know if it's actually here yet, but our long-term view hasn't changed, which is eventually, it will be oversupplied.

Okay. And then, outside of tank cars and given -- we're seeing the overall railcar cycle maybe broaden from an equipment, a different -- a varying equipment perspective specifically on the freight side, is it -- I guess, is it the right time now to start thinking about potentially putting in incremental orders for those car types. I guess, my question really boils down to your level of conviction in terms of freight car overall market improvement to continue and maybe build in 2014?

Yes, we're seeing some indication of higher freight car backlog in 2014, and actually a little bit puzzled by that because -- and my answer is probably not going to be a satisfying one because I'm not going to say freight cars in general, there might be certain freight car types we'd be interested in placing an order for as things improve here but as far as the blanket freight car or coal cars, you're not going to see us order new coal cars anytime soon. So I can't be that broad when I talk about freight cars but on a specific type of commodity for specific customers, sure, we always entertain adding cars.

Do you guys have a sense for the overall coal car markets, still feels like we're in an oversupply and likely we're going to have to go through a longer-term phase out of coal cars. I'm just trying to get a sense for how much more supply do we have to go here before maybe we see some lease rate normalization in terms of, I guess, the number of coal cars that maybe you have to attrition out of the current population, and what's the potential, I guess, timing for that supply-side correction?

Well, there's 170 train sets [indiscernible] on the industry. That's down a lot from earlier this year. It's down a lot from March 2012, when I think it was over 300 train sets. So it has gotten "better" but when there's 170 train sets [indiscernible] on the industry, you're not going to see prices or lease rates increase. As far as what it takes, there's a lot of factors, one is economic activity, which hasn't been a help. It's -- high natural gas prices would help, that hasn't occurred just yet. More normal weather patterns would help, that hasn't occurred yet just. And lastly, the fleet attrition is what you have to depend on until all those other factors come around, and that actually is moving kind of slow. And if we're just depending on that alone, it would still be a couple of years, I think, before that market got it back into balance.

Matt, that's consistent too when we talk about the lease terms on the coal cars. That's 1 to 2-year type range that we're talking about. Keeping those short. So we're not anticipating a huge turnaround in some of the factors that Brian just mentioned.

Next up, we'll hear from Steve Barger with KeyBanc Capital Markets.

This is actually Tejas filling in for Steve. Seems like a lot of my questions are taken but I just have the last one. You did surprise a little bit relative to our model on the number of cars you sold out of your American fleet. What did you exactly sell? I mean, were these coal, grain cars, were these cars that are hot where you're not really seeing demand?

Well, I'd say, first of all, we did come into the second half of the year anticipating a very strong remarketing. Level of remarketing activity, we indicated that at the end of the second quarter. That much of the remarketing income for the year would come in the back half of the year. So we've had packages out for sale. I'd say, in general, they've been fairly diversified across car types. This is not a market where anybody would be selling a significant amount of coal cars, for example. But we're -- the package, I think, is generally reflective of the fact that we have a highly diversified fleet. And we continue to seek opportunity to put some of those cars out in the marketplace. They're all attached to leases, all very good equipment, and seeing a lot of interests across the board.

Got it. And then, just one other quick one, if I could. It seems like for Europe, your rates are higher but the margins are too, can you just kind of walk through that?

Well, the -- there's a couple of things going on in Europe. One, we're bringing a number of new cars into the fleet. And we are more aggressively scrapping older cars out. That's a good thing for income this year. But keep in mind that, that is your potential lost revenue and income in future years. But we're replacing some of our older cars with new equipment. That has an impact on that revenue line. The other thing that's happened this year in Europe is that as we're scrapping those older cars, there's no maintenance required on those as they're coming out of the fleet, so our maintenance numbers have actually gone down in Europe, which has benefited their segment profit.

[Operator Instructions] We'll hear next from Mike Baudendistel with Stifel. Michael J. Baudendistel - Stifel, Nicolaus & Co., Inc., Research Division: I had a question on the safety discussion earlier, if there are additional requirements in Europe, cars in flammable service that causes you to spend extra capital to retrofit some of those cars with additional safety features. Is there any mechanism for cars that are already on lease to recapture some of the economics from your customers or do you have to wait for those leases to expire and start new leases in order to pass any of those costs along to customers.

It's Brian. It's a great question. And yes, we do have provisions in our standard lease contract that allow us to pass along mandatory modifications. I don't want to give too much details because this is a competitive term but directionally, the longer the remaining lease term, the higher the percentage of the cost you're going to be able to pass on to your customer. And as you know, we focus intently on increasing our lease term over last few years, so we're probably better-positioned to pass that cost along than we have been in the past. But I think, your point that we have to wait till the car comes off lease, no, actually, that's what you don't want to happen because then you're just subject to market forces and whatever the market bears at the time. So it's better if the car is on lease for a long period as for as your success at passing along any of that cost. Michael J. Baudendistel - Stifel, Nicolaus & Co., Inc., Research Division: Great. That's very helpful. And then, the other question is, I think, you said earlier that -- are the only cars that you're taking delivery of are the ones that are in the Trinity contract of new cars?

During the course of the year and last year, we've hit some very small incremental orders for no equipment on top of that but nothing very material.

We have no further questions from our audience.

Okay. I just like to thank everyone for your participation on the call this morning. I will be around all afternoon in case you have any follow-up questions. Thanks.

Ladies and gentlemen, that does conclude today's conference. Again, we do thank you all for joining.