Good day and welcome to the GATX Fourth Quarter Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jennifer McManus. Please go ahead.

Good morning, everyone, and thank you for joining GATX's fourth quarter and 2017 year end earnings conference call. I am joined today by Brian Kenny, President and CEO; and Bob Lyons, Executive Vice President and CFO. Please note that 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 statements or forecast. For more information, please refer to the risk factors discussed in GATX's Form 10-K for 2016. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. I will provide a brief overview of our 2017 fourth quarter and full year results and then Brian will provide some commentary on what to expect going into 2018. After that we will open for questions. Today GATX reported 2017 fourth quarter net income of $342.1 million or $8.83 per diluted share. These results include an estimated one-time non-cash net tax benefit of $315.9 million or $8.15 per diluted share resulting from the enactment of the Tax Cuts and Jobs Act signed into law on December 22, 2017. This compares to 2016 fourth quarter net income of $38.9 million or $0.77 per diluted share which includes a net negative impact from tax adjustments and other items of $0.37 per diluted share. To the full year 2017 GATX reported net income of $502 million or $12.75 per diluted share. This compares to net income of $257.1 million or $6.29 per diluted share for 2016. The 2017 full year results included net benefit from tax adjustments and other items of $8.05 per diluted share. For 2016 full year results also included the positive impact from a number of tax adjustments and other items all of which are detailed in our press release. In 2017, investment volume was $603.4 million which is another solid year on that front. In addition in 2017 GATX repurchased over 1.6 million shares for approximately $100 million. This brings our total repurchase activity over the past two years to approximately $220 million. With that quick overview, I'll now turn the call over to Brian.

Okay. Thanks Jennifer. As she said I'll take the next few minutes to give you some color on our business outlook and guidance. In 2018, the North American rail car market is entering its fourth year of oversupply. But again, we entered the year in outstanding condition. At the end of last year, our North American fleet utilization remained above 98%. We have placed the majority of our 2018 committed new car deliveries. Our fully composition and our average lease term remaining -- positions us very well to withstand the continued weak market. Now as I said in the press release, we outperformed our original financial expectations pretty much across all our business segments in 2017. So let me put 2017 earnings in perspective. As we reported this morning, as Jennifer said ignoring large positive impact of the new tax law, we earned $4.70 per share in 2017 that's with the upper end of our guidance, and although, we were operating in the third year of the downturn in the railcar leasing market these earnings in 2017 of $4.70 are still well above our peak earnings of $3.49 per share that we earned at the top of the last railcar cycle. So that shows me the great job our commercial team did during the strong market making good investments, locking in high rates for a long lease terms. Now with less than 14,000 railcars scheduled for renewal in North America in 2018 along with some continued cost control. We're projecting another strong year of financial performance especially given where we are in the business cycle. So let me go over the 2018 outlook by each business segment, and then I'll start with rail in North America. So in rail, North America, we expect lease revenue to decline again in 2018.…

[Operator Instructions] We'll take our first question from Allison Poliniak with Wells Fargo. Please go ahead.

Hey, guys good morning. You mentioned obviously the secondary market still being very active. Could you talk to maybe the absolute values are becoming more realistic. And then, also with tax reform is there I guess increased interest from new entrants into this market today?

Well, I would say the tax reform piece, the parties that have been bidding on our assets in the past we haven't seen any material change in terms of the composition of that group. I don't anticipate it. I would add that it continue to be very robust; a good number of bidders a lot of interest across the Board, different asset types. At good valuations for GATX and as Brian mentioned, the economics make sense for us to continue to optimize the fleet and we'll see good opportunity to do that in 2018.

That's great. And then, obviously, the storage numbers are still very high. There's obviously talk of accelerated retirements improved traffic outside of coal. What do you think that number is [indiscernible] get too realistically before we see a bit more of an inflection and lease rates, do you have any sense of that?

You're not going to like the answer. But, it really depends; it's a car type by car type analysis, so as you said there's still a lot of idle cars in the industry. But as you saw last year like in small cube covered hoppers that market took off reached equilibrium very quickly within a quarter or two and lease rates took off. But, if you want to speak generally about, I think the 19% of the industry fleet that hasn't moved in 60 days and it's called idle. I think the best that's ever been is that 12% to 13%. So that's just us that a lot of those cars not all of them, but a lot of those cars need to either leave the market or start moving in order for lease rates to really get some traction here. It's not -- hasn't been helped tremendously by scrap rates. I mean that did increase through 2017. Think it started the year around 200, ended the year at 265, in January it's up to 295. It's moving in the right direction. But, it's really not enough to stop a net growth in the industry fleet which I think has continued for the last six years. So if scrap rates continue at the current level or increase that would certainly help and maybe we'll see that move the other way, but hasn't been a big help over the last couple of years.

Great. Thanks guys.

And we'll take our next question from Prashant Rao with Citi. Please go ahead.

Good morning. Thanks for taking the question. Brian, last quarter I think we talked a little bit about how the manufacturing side delivery expectations are starting to pull up for 2018 and you compared to where demand was inflecting, it seem to you that this could be kind of a warning signal for oversupply. It sounds like demand is slowly moving, but like you said that you don't have the catalyst yet. I just wanted to kind of get an update on how you think about the ordering levels and the delivery level we are seeing on the order book versus demand in other words one quarter later if your view has changed or if there's a little bit more detail on that front.

The latest forecast I saw was I think 45000 for deliveries in 2018. I like to be lower absolutely. I think some of the orders that have been announced are also there's some international flavor to that as well. I don't really know. It doesn't seem that the market can support this level of new cars absent that demand catalyst. So I would reiterate what we said last quarter. We'd like that number to go down like it has in the past cycles to really get traction. Utilization has been fine but to really get traction on lease rate.

Okay. Thanks. And then, just a follow up on the remarketing income question. When you look at the package for this year maybe compared to last year or prior years. Is there anything -- what has a mix of types of cars or what you're expecting to be able to remarket? Is there anything notable or any color on a shift there this year versus last year prior years in car types and maybe what that might portend for the particular end markets, anything to read there?

Sure. I'll take that one. And, first of all, there are a number of sales initiatives throughout the course of the year it's not just one. One initiative, so we're constantly in the market and testing what buyers appetites are for different assets at different valuations. I can say for 2018 where we sit today and looking at we -- what we have gone to market with in May as the year progresses there's no notable difference in the asset mix from last year to this year. So it's still a pretty broad cut across the fleet.

But what I'll add to that is the strength you've seen despite the market being weak overall I think has been exacerbated by financial players coming into the market. GATX is very focused, when we remarket railcars on our equipment. And our customer and our lease expiration schedule that's what we're trying to optimize. It seems increasingly that the people that buy railcars are focused mostly on the cash flow. So we're much more focused on the equipment and the residual than the average buyer these days. And that's been good for the market and that's why you've seen that remarketing number so high at GATX.

Okay. Thanks very much guys. I'll turn it over.

And we'll take our next question from Matt Elkott with Cowen.

Good morning. Thank you for taking my question. Ron, you mentioned how the earnings floor may be trending higher for you guys as you go through more cycles. And I wanted to ask a question about you said that there's less than 14000 railcars scheduled for renewal in 2018. If you think about that as a percentage of your active fleet and if you think back historically throughout the cycles at that percentage of the active fleet come in for renewal every year. Is that a meaningful number, is that a number that you guys look at. Is that a number that you want to make smaller so that the cyclicality is smoothed out.

Yes, absolutely. That's why you see us extend term dramatically during the upturn. And that's what we were able to do in 2012 to 2015. We had 20,000, 22,000 cars, we renewing each one of those years. We pushed the pedal on both rate, but also even more so on term and that's why you see that number relatively low during the downturn. That's the whole idea of recognizing we're in a very cyclical business. And as you just said trying to smooth out that pattern to the extent you can. Now the longer this last obviously it gets us to, but at least so far we've had lower renewals because of the extended term that we put on during the upturn. So you're right that's the objective, it depends on when things turnaround about if you're completely successful.

The other thing I'd add to is, we provide a data point with regards to the average renewal term and you can see how long it was during 2012 through really up through 2015. Also keep in mind that as new cars were coming into the fleet at that point in time, we were also very much focused on term. So the majority of those new cars that came into the fleet during that period were put on very long term lease.

Fair enough. And given the sharp drop in those average lease terms, you mentioned Bob in beginning 2016 really. So you have that 2012 through 2015 where you had long average lease terms ranging from five to six years I think. And then it dropped down to about 3 years in 2016. What is the most realistic chance of swinging back to revenue and profit growth in the North American lease segment? Is it 2020, is that the first realistic chance or is it or could it happen before or if we continue going with the macro as we are now?

It's a really tough question to answer about when that happens. I will say the average expiring rate, we said in the past that it's climbing -- it climbed in 2016, it climbed in 2017, it climbs again in 2018. But that hill is getting smaller to climb as we renew leases in the weak market and keep a very short-term that average expiring rate is coming down so that hill is not as big as it was before. But as far as when the market gets back to equilibrium that's the question. You saw for small cubes in 2017, when does that happen for the entire fleet. As I said in the past, it's really hard to answer. I can describe the math, but I can't do the calculation. The hardest part of the calculation it's not demand, it's not scrapping, it's really the backlog. There's no reliable detail on the nature of the backlog. We don't know if a sizable chunk of that backlog is not needed by the actual end user in the near term. I don't really have an idea how real it is. How much has been deferred although still technically part of the number. We don't know how much of it may be canceled. How much of it is [indiscernible] captive fleets. So we don't have great visibility into the backlog and without that it's hard to tell you how fast this market will turn.

Fair enough. And just one last quick one, do you guys, sorry if I missed it. But, did you mention the sequential improvement in lease rates in the fourth quarter?

In general, I'd say for -- there are certain flammable cars and certain high pressure cars that had a nice increase in lease rates although off a very low base. Those on the tank car side like I said high pressure, some flammables increased 10% or more. The rest of the fleet was pretty flat in the fourth quarter on a lease rate basis up substantially for the year. In fact, I think tank on average which is always dangerous to say because it really -- you have to look at stuff on a car type basis. But if you look at average increase per tank throughout the year was probably about 10% or more. Average increase for freight generally 20%, 25%, I would say. But, in the quarter pretty flat except for flammables and high pressure.

So the 3% broad based increase, you saw in the third quarter, what would that number be in the fourth quarter? Is it flat or is it slightly 1% or?

I'd say it's slightly positive.

Okay, great. Thank you very much.

And we'll take our next question from Justin Long with Stephens. Please go ahead.

Thanks and good morning. So just to start, I wanted to ask about how tax reform could change your strategy on capital allocation? And I'm curious if this could drive a more aggressive approach to buybacks and/or acquisitions going forward just given the impact it could have to your leverage?

Well, the biggest component of that really is to keep in mind where we have been historically from a tax position. The Tax Reform Act has not really materially changed our overall outlook with regards to our tax position. Given the fact that there's already accelerated tax depreciation available on railcars and we've recognized that over the years. We tend to generate net operating losses not a significant cash tax payer. None of that will change on a go forward basis. So we're keeping a close eye on how this may impact some other investors in the market or from GATX's perspective not a significant -- not a sea change in the way we think about the asset class we're in and our level of investment.

Okay. That's helpful. And secondly, I wanted to follow-up on some of the commentary you made on the last call. And Brian, I think you talked about lease rates still being 30%, 40% below what you would consider are attractive levels for investment. Can you just update where we stand in terms of that number and how that number compares between tank and non-tank today?

Yes. I'd say it's -- rates got a little bit better in fourth quarter, so it's pretty much in the same place.

And going back historically what's the most you've ever seen lease rates improve over the course of a year just on an absolute basis?

I can't answer that question off the top of my head. I will say that the last two recoveries. Particularly this one in 2011 and 2012, when rates began to improve and found their footing they increased pretty dramatically. Now that -- there was a big catalyst for that which was the energy boom here in North America. But once they turned in and started to move in the right direction they moved pretty sharply and quickly.

I would agree with that. Things moved very fast once that market gets back in equilibrium.

Okay. And then, lastly, I wanted to ask about crude oil prices. We've seen a recent rally on that front. Could you talk about the potential impact that could have to your business. I'm just curious how much this matters and if you think this improvement could have a meaningful impact as it relates to absorbing the oversupply of tank cars in the market?

Sure. It's a good question. In fact that I would say our utilization out performance is 2017 to a large part. We did better in coal for instance, but the lease rates are so low. The new releases versus expiring leases it didn't matter to the bottom line. But the other source of strength in utilization was in cars and flammable service in 2017. And as you said, I believe the price of crude was 42 in June and 60 something today. So that obviously had had an impact. You're seeing more crude by rail demand especially in Mexico and Canada for different reasons. But, we are seeing and as I said that was just one source of lease rate strength in the fourth quarter was on 30s and high pressure cars and that's once again driven by some of these flammable liquid movements where there is more demand now. So, yes, it matters and hopefully it will soak up the excess capacity in the tank car market and not prompt further new car builds and tank. So that's -- that would be very helpful. But as far as what it means to our business long-term? So if you look at Mexico for instance. They've been increasingly importing refined product to meet their growing demand because Mexican production is dropping. They don't have the pipeline capacity to do it, but they're working on it. So there's a lot of demand we're starting to see. People are trying to build up their inventory to reasonable levels. And the legacy thirty's are in demand for instance in Mexico. In Canada, it's a little bit different. It's more a function of new oil sands projects coming online. Once again that production is exceeding pipeline capacity they're working on that as well. That's probably just a couple of year phenomena though it really doesn't change our long-term view of that market, which is eventually it will be served more efficiently by pipeline. But as far as soaking up excess cars in the market it can be very helpful in the near term. So yes, I would say that's an upside to the tank car market in general if those trends take off. But it's different this time. So, the oil sand projects have come online. But the Canadian rails aren't that excited about increasing their service because they too think it will be short-term in nature. So that's why you see the price differential you do between I think Western Canadian Select and WTI in the Gulf. So there is increasing demand. We don't think it's a long-term phenomenon, but it could soak up cars in the short-term, if people don't build to meet the demand.

It all makes sense. I appreciate the time today.

[Operator Instructions] We'll take our next question from Matt Brooklier with Buckingham Research. Please go ahead.

Yes, thanks. Good morning. Appreciate it. The tank car color there that was helpful. Any other car types that maybe saw a little better demand in fourth quarter or as you look out to 2018 are there any other railcar types that maybe are a little bit more bullish on that you think and potentially see, I guess a pickup outside of, I guess the tank car commentary that you gave?

It was small cube covered hoppers you know about that that was really a 2017 phenomena that continues. As far as what affects, I mean intermodal is strong. We have a very low exposure there. Probably a stronger car type and actually saw it get stronger through 2017 and we do have decent amount of exposure to the boxcar fleet. So we expect the utilization to slip there, it did. I think it was down close to 90% at the end of the second quarter, its back up to 92.6% now. As I said, we expected the utilization drop -- really boxcars had been under pressure since 2016 due to railroad velocity increasing prior to that. We had some planned releases from certain customers; obviously CSX returned theirs to us. And there was kind of mediocre car loadings forest products things like that, but it's gotten better in 2017. Now part of that has been the CSX service issues; part of that has been certain railroads emphasizing 60 foot boxcars and ours is more of a 50 foot fleet which our customers like. These have seen a velocity decrease of about 4%, I think among the class ones excluding CSX in 2017 that helps the boxcar market. So I mentioned I think in my opening that part of our maintenance increase we expect in 2018 is some boxcar cost as we put them back to work. So that market is stronger and obviously that helps us as well. Outside of that it's just been a steady slow march you saw in 2017.

Okay. Do you have the number for what your flammable services, tank car fleet looks like I guess at the end of this year? I can always get it offline and maybe…

I'm sorry Matt, are you talking about the total flammable fleet?

Yes. What is your total flammables services fleet look like right now?

Yes. It's about 13,500 cars.

Okay.

But only I believe 1600 of those are in crude and ethanol.

2,300.

2,300 in ethanol. So very low exposure to those commodities and most of ours are in other products fuel oils things like that. So that fleet actually has grown somewhat not by 500 cars in the last year and a half. But it's been pretty constant over our crude in ethanol -- the crude exposure especially has come down pretty seriously over the last couple of years.

And then, amongst the 30,000 cars, roughly how many of those cars [do you own] [ph] coiled and insulated cars i.e. cars that could be utilized in the Canadian market?

Yes, we do. I don't have that number right from me.

Okay. And then, you gave color on what's potentially contributing to [carbon] [ph] on the tank car side i.e., demand. What about on the supply side? I know we're working through the first tranche of regulation change. Do you think some of the older cars being cold from the North American plant will service tank car fleet using that also contributing to maybe a slightly tighter market and rates directionally moving up here?

You mean on the tank car side. I'm sorry.

Yes. So I just -- I believe in 2018, [DoD] [ph] weren't allowing cars on the flammable services side no longer [valid] [ph] can't use those cars anymore. I'm just curious, if regulation is starting to pull cars out of the market and maybe like the supply side of things. The market is getting a little tighter because there's less available cars now in 2018.

No, I don't. We haven't seen widespread scrapping. I'm trying to remember the retrofit number I believe about 7500 retrofits have been done in the industry. We've had zero retrofit requests from our customers on our legacy thirty's by no others have done them. That's a very expensive retrofit. But others have younger legacy fleets, so it might make more sense for them. I think you need tank cars probably 60% of that market of retrofitting legacy 30s. I haven't seen widespread scrapping yet. We haven't had requests from our customers for legacy 30 retrofit. So hopefully as the scrap rate increases and holds, we'll start to see that fleet transition out if these regulations come in. But I don't know that it's moved the market tremendously to this point.

Okay. That's helpful. Appreciate the time.

And we'll take our next question from Justin Bergner with Gabelli & Company.

Thank you for taking my questions. Hi, everyone.

Morning.

Morning. First question just relates to sequential lease rates in your 2018 guide, are you assuming lease rates are sequentially flat from 2017 fourth quarter?

I would say there are no broad widespread increases assumed in our fleet. There are certain car types we assume are going to be better in 2018. But, I wouldn't say it's broadly across the fleet that we're not assuming a lot of lease rate increase from today's rates in 2018.

Okay. Secondly, with respect to the financial buyers who are out there buying railcars which I guess the phenomenon seems to be continuing relatively unabated. Are you hearing or seen any signs that the increase in interest rates is starting to slow some of that interest down or are there other factors are starting to slow some of that interest down?

We haven't seen the impact -- any impact from the up tick in interest rates in terms of the number of buyers or the valuations they're putting on the assets. Now, if that trend continues and interest rates continue to move up, yes, my expectation and my thought would be that there may be some of some other alternatives that some of these investors begin to look at away from rail. But we certainly have not seen that yet.

Yes. The other thing is the higher interest rates historically especially in commodities and asset prices that reflects higher inflation has been extraordinarily helpful to our business and the value of our fleet. So inflation has generally been our friend. So higher interest rates that could be good.

And even from a funding standpoint not a big impact on GATX. So net-net I would take that scenario where rates gradually continue to move up.

Okay. And then, one more question, on the portfolio management business in the Rolls Royce joint venture. I guess the segment operating profit or the affiliate income came in relatively flat for 2017 versus 2016 sort of in the high 40s -- high 40 million range. And then that was sort of a step down from sort of the 60 million range that occurred in the prior years. Should we think about sort of high 40s range as the go forward range where the prior years 60 million plus type profit figure is more a function of just higher remarketing income in the Rolls Royce joint venture?

Actually Rolls Royce came in the high 50s. Justin, if you look at the portfolio management line about $58 million of affiliate income. And almost all of that is Rolls Royce. So our share of that was about $57 million, an excellent year for Rolls Royce. Yes, that number will move around a little bit from the mid 50s to the mid 60s depending on what happens with remarketing and asset sales. Longer term, we expect that business to continue to generate very attractive returns and rising income over time. I'd also add within Rolls Royce, while we had north of $600 million of investment volume at GATX this year. Our Rolls Royce affiliate did close to $400 million in investment volume which was a record level. So we saw outstanding investment opportunity there and that's all self funding obviously off the credit facilities and cash flow of the business so it continues to grow quite nicely.

Okay. I apologize for it, must have been looking the wrong line on the P&L there with my comments. That's helpful. And then finally, on the Tax Reform Act, I guess I'm somewhat surprised that from a book tax rate point of view, you're not seeing more of an earnings benefit than the $0.20 per share which I guess only suggests that your tax rates on a book basis is coming down a few hundred basis points. Is there any sort of reason why the book rate wouldn't come down by more 2018 sort of a smaller benefit versus out years? Any clarification there will be helpful.

Yes, it's definitely a smaller benefit in 2018 than the out years given the fact that where we are in the cycle. For rail U.S. and keep in mind that domestic U.S. only, where we will see that benefit. We have obviously very large operations in Canada, Mexico, Europe and Rolls Royce is almost entirely already taxed at foreign rates. So this happens to be enacted at a point in time when the rail U.S. income contribution is at a low point in the cycle. So as it improves and grow and hopefully the gradual recovery will continue, the impact will be greater as we go out.

Great. Thanks for taking my questions.

And we'll take our next question from Barry Haimes with Sage Asset Management. Please go ahead.

Thanks very much. I had just a follow up question on the 19% excess cars that you mentioned earlier. And I wonder if you just took sort of the range by car types if you could give us some feel for which car types are meaningfully above or below that sort of 19% average? Thanks very much.

We don't have that data or do we? That 19%, or it's [AR] [ph] cars that haven't moved in the last 60 days.

Yes. That's an industry data point not a GATX specific data point. So our ability to parse that data is limited.

Okay. So even directionally in terms of above or below that you don't have any feel for that.

By car category? Tanker freight? This market has been equally challenging on all car types.

Got. Okay. Thank you. Appreciate it.

And we'll take our next question from Willard Milby with Seaport Global Securities.

Hey, good morning everybody. I wanted to focus on Rail International. Looking into the last couple of quarters you've had a good single-digit growth in lease revenue per car type. I was kind of curious, if you thought that was sustainable as we move into 2018 or maybe with some easier comps coming in the first two quarters, you could see some double-digit growth in that lease revenue per car?

No. I don't know about that. But, I will say the market is generally a lot more positive in Europe than it has been over the last few years. So as I said earlier the mineral oil or petroleum market as we know it in the U.S. is the biggest portion of their fleet is 60%. I mean that's been under pressure with the price of crude dropping and refiners margins dropping which is their customers. But in the last half in the fourth quarter of 2017, we started to see more customer inquiries more new projects and customer is actually requesting additional cars which we haven't seen in a while. Now a lot of them are requesting for very short lease terms so they're not quite sure about the sustainability of a market recovery there. So we'll see if this recent upturn has legs and 2018. But, GRE did very well in that market in 2017 as I said they placed all -- virtually all their new deliveries -- cars that were returned to release for either scrap or remarket it successfully many in Eastern Europe. They had a very high success rate. And when I say lease rates on renewal are down in Europe as I said in the past for instance the mineral fleet it's less than 1% down on renewal. So it's a much less volatile business than it is in North America. And the outlook both in mineral oil, LPG and especially chemicals which is about 13% of the fleet in Europe is much more positive than it was a year ago. For instance on the chemical side, it's hard to generalize on that market there's a very wide variety of car types and commodities in our chemical fleet. Generally it's been more volatile and had lower utilization. But recently there's been some really good data. The European Chemistry Industry Council, they had very solid data on chemical output, chemical prices, consumption and exports. And we started to see that strength show up in our fleet in the last quarter. Utilization was up, renewal rate pricing was up. So across the markets that Rail Europe things look a lot better coming into 2018 than it has in recent years. So hopefully that recovery which we've just seen in the first quarter will have some legs.

Okay. And it sounds like with a strong demand. Do you think there's a risk to any kind of over supply coming online anytime soon like we've seen in North America?

I think that's one when I said it's a less volatile market in Europe. I think your question is right on point. With the manufacturing the supply situation, I mean there are excess cars that there have been it's been a very competitive market over the last couple of years especially in mineral oil. But it hasn't been the insane oversupply that you've seen in the U.S. And I think that's one of the sources of the lower volatility. It's been a more rational market. So hopefully that continues.

All right. Thanks. And just one housekeeping follow up. Did you say what your share repurchases were during the quarter and what you forecasted from a dollar point of view in 2018?

Yes. We had $25 million of repurchase in the fourth quarter. For the full year was $100 million. And what we've assumed in 2018 is that we continue in that range for the year ahead.

All right. Perfect. Thanks very much.

And we'll take our next question from Steve O'Hara with Sidoti & Company. Please go ahead. Steve, hi, it's open. You can unmute yourself.

Yes. Can you hear me now?

Yes.

All right. Thank you. Just on the guidance you provided for Rail North America and can you just talk, I don't think you mentioned it maybe I missed it, but the total gain on -- net gain on asset disposition you're expecting for 2018. I would assume you're talking flat up maybe, but can you talk about that a little bit?

Sure. The disposition gains on the owned assets in Rail North America. Just for reference was $46 million in 2016, $44 million last year, we expect to be in the range of $50 million maybe slightly above that this year.

Okay. And then, the total amount I mean it was -- in 2016, I think it was about 84, last year 54. I mean looking back it looks like maybe the normal levels higher I mean how do you expect that to be in 2018 overall?

Well, the biggest driver is going to be the number I just gave you. We don't anticipate for -- obviously for GATX overall brand reference. We had about $10 million residual sharing fee at portfolio management on a new facility that will not reoccur in 2018. So really the main driver, or the primary driver of the remarketing activity in 2018 will be North American rail.

Okay. Okay. And then just on the SG&A, you'd mentioned that you thought that there was some onetime items. I think it was in the fourth quarter was a pretty big jump there. I mean overall you expect SG&A to be kind of flattish. Is that -- does that make sense?

Yes. Down a little bit in 2018. From where we finished the year at 181 in change. So hopefully coming in maybe a little less than the 180 number. I'd also point out that this past year was our fifth straight year of when you kind of normalize for pension items and others that we've called out before being in that 175, 180 range. So I think we've held the line pretty well on SG&A, despite the fact obviously we've continued to invest heavily grow the business. We have a bigger balance sheet today and a much bigger European presence today entering in -- emerging market presence today than we had five years ago. But SG&A is pretty much in the same range.

To give you some data there about how I look at that in 2008 and that was our last peak earnings year. SG&A was about $168 million. We had assets just over $5 billion. So if we can get to that $175 million level in 2018 with our assets will be more in the $8 billion range that's 50% growth and SG& will increase less than 5%. So we're really focused on leveraging our current infrastructure and trying to stay where we are.

Okay. All right. Thank you very much.

And we'll take our next question from Justin Long with Stephens.

Thanks for the follow up. Just had a quick question, I wanted to fit in on LPI. Do you have an expectation for where that shakes out in 2018 and when you [Technical Difficulty]

Justin you were -- you were breaking up there a little bit. We did catch the first part of the question which was kind of 2018 and the LPI. So we'll go and answer that one. But we missed the back half of your question.

Yes. So in 2017, I believe we said 30% plus decline in the LPI, we ended up just under 30. If I have to put a range on 2018, it's going to be in the 25% plus range down on LPI.

That's helpful. And if you can hear me a little bit better now. Then the second part of that question was on the car type of renewals. I think you mentioned around 14,000 cars renewing. So I know that's a consideration when thinking about that LPI numbers. So, just curious if those renewals will be more weighted towards a particular car type.

No. Actually with the LPI as a constant weighting of our current fleet. So it is influenced by activity, but not by the amount of activity. As far as I did say utilization might slip a little bit. We have a much better expectation there than we did coming into 2017 although we outperformed. We do have with the 2500 coal renewals and 2018 to less but there's still enough that it's a tough market you could see a little bit of slippage there.

Okay. That's helpful. Thanks again for the time.

And we'll take our last question from Willard Milby with Seaport Global. Please go ahead.

Hey thanks for the follow up. On the North American gains on dispositions, are you aware of any quarterly lumpiness at this point. Anything we should be aware of?

Yes. It's actually a good question. Probably should have pointed that out when we were talking about an earlier. Yes, where we sit today, quarterly it's a little hard to lay out exactly, but certainly I think we'll see more of that probably materially more of that in the early part of the year. Call first half of the year just based on the level of activity we have underway currently.

All right. Thanks very much.

And that does conclude our question-and-answer session. I'd like to turn the conference back over to Jennifer for any additional or closing remarks.

I'd like to thank everyone for their participation on the call this morning. So please contact me with any follow-up questions. Thanks.

And once again, that concludes today's presentation. We thank you all for your participation and you may now disconnect.