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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
FORM 10-Q
__________________________________________

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023
or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-2328
GATX Corporation
(Exact name of registrant as specified in its charter)

New York | 36-1124040
(State of incorporation) | (I.R.S. Employer Identification No.)

233 South Wacker Drive
Chicago, Illinois 60606-7147
(Address of principal executive offices, including zip code)
(312) 621-6200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of Each Exchange on Which Registered
Common Stock | GATX | New York Stock Exchange
| GATX | Chicago Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

| ☒ | Large accelerated filer |  | ☐ | Smaller reporting company
| ☐ | Non-accelerated filer |  | ☐ | Emerging growth company
| ☐ | Accelerated filer |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 35.4 million common shares outstanding at June 30, 2023.

GATX CORPORATION
FORM 10-Q
QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2023
INDEX

Item No. |  | Page No.
| Forward-Looking Statements | 1
Part I - FINANCIAL INFORMATION
Item 1 | Financial Statements |
| Condensed Consolidated Balance Sheets (Unaudited) | 2
| Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | 3
| Condensed Consolidated Statements of Cash Flows (Unaudited) | 4
| Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) | 5
| Notes to Condensed Consolidated Financial Statements (Unaudited) |
| Note 1. Description of Business | 6
| Note 2. Basis of Presentation | 6
| Note 3. Revenue | 7
| Note 4. Leases | 7
| Note 5. Fair Value | 8
| Note 6. Asset Impairments and Assets Held for Sale | 11
| Note 7. Pension and Other Post-Retirement Benefits | 13
| Note 8. Share-Based Compensation | 14
| Note 9. Income Taxes | 14
| Note 10. Commercial Commitments | 14
| Note 11. Earnings per Share | 15
| Note 12. Accumulated Other Comprehensive Loss | 16
| Note 13. Legal Proceedings and Other Contingencies | 16
| Note 14. Financial Data of Business Segments | 16
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| Overview | 22
| Discussion of Operating Results | 22
| Segment Operations | 24
| Cash Flow Discussion | 38
| Liquidity and Capital Resources | 40
| Critical Accounting Policies and Estimates | 42
| Non-GAAP Financial Measures | 43
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 45
Item 4 | Controls and Procedures | 46
Part II - OTHER INFORMATION
Item 1 | Legal Proceedings | 47
Item 1A | Risk Factors | 47
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 47
Item 5 | Other Information | 47
Item 6 | Exhibits | 48
SIGNATURE | 49

FORWARD-LOOKING STATEMENTS
Statements in this report not based on historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those discussed. Forward-looking statements include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance, prospects, or future events. In some cases, forward-looking statements can be identified by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "outlook," "continue," "likely," "will," "would", and similar words and phrases. Forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of the date they are made, and are not guarantees of future performance. We do not undertake any obligation to publicly update or revise these forward-looking statements.
The following factors, in addition to those discussed under "Risk Factors" and elsewhere in our other filings with the U.S. Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2022 and in any subsequent reports on Form 10-Q, could cause actual results to differ materially from our current expectations expressed in forward-looking statements:

•the impact of the ongoing military action between Russia and Ukraine, including sanctions and countermeasures, on domestic and global economic and geopolitical conditions in general, including supply chain challenges and disruptions •the duration and effects of the global COVID-19 pandemic and measures taken in response, including adverse impacts on our operations, commercial activity, supply chain, the demand for our transportation assets, the value of our assets, our liquidity, and macroeconomic conditions •exposure to damages, fines, criminal and civil penalties, and reputational harm arising from a negative outcome in litigation, including claims arising from an accident involving transportation assets •inability to maintain our transportation assets on lease at satisfactory rates due to oversupply of assets in the market or other changes in supply and demand •a significant decline in customer demand for our transportation assets or services, including as a result of: ◦weak macroeconomic conditions or increased interest rates ◦weak market conditions in our customers' businesses ◦adverse changes in the price of, or demand for, commodities ◦changes in railroad operations, efficiency, pricing and service offerings, including those related to "precision scheduled railroading" or labor strikes or shortages ◦changes in, or disruptions to, supply chains ◦availability of pipelines, trucks, and other alternative modes of transportation ◦changes in conditions affecting the aviation industry, including reduced demand for air travel, geographic exposure and customer concentrations ◦other operational or commercial needs or decisions of our customers ◦customers' desire to buy, rather than lease, our transportation assets •higher costs associated with increased assignments of our transportation assets following non-renewal of leases, customer defaults, and compliance maintenance programs or other maintenance initiatives •events having an adverse impact on assets, customers, or regions where we have a concentrated investment exposure •financial and operational risks associated with long-term purchase commitments for transportation assets •reduced opportunities to generate asset remarketing income |  | •inability to successfully consummate and manage ongoing acquisition and divestiture activities •reliance on Rolls-Royce in connection with our aircraft spare engine leasing businesses, and the risks that certain factors that adversely affect Rolls-Royce could have an adverse effect on our businesses •fluctuations in foreign exchange rates •prolonged inflation or deflation •inability to attract, retain, and motivate qualified personnel, including key management personnel •failure to successfully negotiate collective bargaining agreements with the unions representing a substantial portion of our employees •asset impairment charges we may be required to recognize •deterioration of conditions in the capital markets, reductions in our credit ratings, or increases in our financing costs •competitive factors in our primary markets, including competitors with significantly lower costs of capital •risks related to our international operations and expansion into new geographic markets, including laws, regulations, tariffs, taxes, treaties or trade barriers affecting our activities in the countries where we do business •changes in, or failure to comply with, laws, rules, and regulations •U.S. and global political conditions •inability to obtain cost-effective insurance •environmental liabilities and remediation costs •potential obsolescence of our assets •inadequate allowances to cover credit losses in our portfolio •operational, functional and regulatory risks associated with climate change, severe weather events and natural disasters, and other environmental, social and governance matters •inability to maintain and secure our information technology infrastructure from cybersecurity threats and related disruption of our business •changes in assumptions, increases in funding requirements or investment losses in our pension and post-retirement plans •inability to maintain effective internal control over financial reporting and disclosure controls and procedures

1

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GATX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except share data)

| June 30 |  | December 31
| 2023 |  | 2022
Assets |  |  |
Cash and Cash Equivalents | $ | 317.5 |  |  | $ | 303.7 |
Restricted Cash | 0.2 |  |  | 0.3 |
Short-Term Investments | — |  |  | 148.5 |
Receivables |  |  |
Rent and other receivables | 70.0 |  |  | 71.4 |
Finance leases (as lessor) | 127.9 |  |  | 96.5 |
Less: allowance for losses | (5.9) |  |  | (5.9) |
| 192.0 |  |  | 162.0 |
Operating Assets and Facilities | 12,392.5 |  |  | 11,675.0 |
Less: allowance for depreciation | (3,521.8) |  |  | (3,424.7) |
| 8,870.7 |  |  | 8,250.3 |
Lease Assets (as lessee) |  |  |
Right-of-use assets, net of accumulated depreciation | 228.4 |  |  | 243.5 |
| 228.4 |  |  | 243.5 |
Investments in Affiliated Companies | 611.7 |  |  | 575.1 |
Goodwill | 119.0 |  |  | 117.2 |
Other Assets (includes $9.7 and $40.0 related to assets held for sale) | 250.6 |  |  | 271.4 |
Total Assets | $ | 10,590.1 |  |  | $ | 10,072.0 |
Liabilities and Shareholders’ Equity |  |  |
Accounts Payable and Accrued Expenses | $ | 202.8 |  |  | $ | 202.2 |
Debt |  |  |
Commercial paper and borrowings under bank credit facilities | 10.9 |  |  | 17.3 |
Recourse | 6,785.6 |  |  | 6,431.5 |
| 6,796.5 |  |  | 6,448.8 |
Lease Obligations (as lessee) |  |  |
Operating leases | 241.1 |  |  | 257.9 |
| 241.1 |  |  | 257.9 |
Deferred Income Taxes | 1,066.6 |  |  | 1,031.5 |
Other Liabilities | 104.2 |  |  | 102.0 |
Total Liabilities | 8,411.2 |  |  | 8,042.4 |
Shareholders’ Equity |  |  |
Common stock, $0.625 par value: Authorized shares — 120,000,000 Issued shares — 68,756,041 and 68,575,974 Outstanding shares — 35,448,375 and 35,268,308 | 42.5 |  |  | 42.4 |
Additional paid in capital | 807.8 |  |  | 792.2 |
Retained earnings | 2,931.6 |  |  | 2,831.5 |
Accumulated other comprehensive loss | (178.1) |  |  | (211.6) |
Treasury stock at cost (33,307,666 and 33,307,666 shares) | (1,424.9) |  |  | (1,424.9) |
Total Shareholders’ Equity | 2,178.9 |  |  | 2,029.6 |
Total Liabilities and Shareholders’ Equity | $ | 10,590.1 |  |  | $ | 10,072.0 |

See accompanying notes to condensed consolidated financial statements.
2

GATX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(In millions, except per share data)

| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Revenues |  |  |  |  |  |  |
Lease revenue | $ | 308.6 |  |  | $ | 284.9 |  |  | $ | 610.6 |  |  | $ | 568.2 |
Marine operating revenue | 2.0 |  |  | 5.2 |  |  | 5.5 |  |  | 11.4 |
Other revenue | 32.6 |  |  | 22.6 |  |  | 66.0 |  |  | 49.7 |
Total Revenues | 343.2 |  |  | 312.7 |  |  | 682.1 |  |  | 629.3 |
Expenses |  |  |  |  |  |  |
Maintenance expense | 82.3 |  |  | 70.8 |  |  | 166.2 |  |  | 145.4 |
Marine operating expense | 2.4 |  |  | 3.9 |  |  | 4.4 |  |  | 8.1 |
Depreciation expense | 92.1 |  |  | 90.0 |  |  | 181.9 |  |  | 179.5 |
Operating lease expense | 9.0 |  |  | 9.0 |  |  | 18.0 |  |  | 18.1 |
Other operating expense | 11.0 |  |  | 9.3 |  |  | 22.0 |  |  | 20.0 |
Selling, general and administrative expense | 52.0 |  |  | 47.9 |  |  | 102.4 |  |  | 95.1 |
Total Expenses | 248.8 |  |  | 230.9 |  |  | 494.9 |  |  | 466.2 |
Other Income (Expense) |  |  |  |  |  |  |
Net gain (loss) on asset dispositions | 41.1 |  |  | (24.2) |  |  | 88.2 |  |  | 49.5 |
Interest expense, net | (63.7) |  |  | (51.9) |  |  | (122.7) |  |  | (103.1) |
Other expense | (4.9) |  |  | (11.3) |  |  | (8.9) |  |  | (13.3) |
Income (loss) before Income Taxes and Share of Affiliates’ Earnings | 66.9 |  |  | (5.6) |  |  | 143.8 |  |  | 96.2 |
Income taxes | (17.6) |  |  | (2.7) |  |  | (37.8) |  |  | (25.1) |
Share of affiliates' earnings, net of taxes | 14.0 |  |  | 10.9 |  |  | 34.7 |  |  | 7.3 |
Net Income | $ | 63.3 |  |  | $ | 2.6 |  |  | $ | 140.7 |  |  | $ | 78.4 |
Other Comprehensive Income (Loss), Net of Taxes |  |  |  |  |  |  |
Foreign currency translation adjustments | $ | 23.1 |  |  | $ | (34.7) |  |  | $ | 31.9 |  |  | $ | (60.5) |
Unrealized (loss) gain on derivative instruments | (0.2) |  |  | 0.2 |  |  | 0.6 |  |  | 0.6 |
Post-retirement benefit plans | 1.1 |  |  | 1.7 |  |  | 1.0 |  |  | 3.2 |
Other comprehensive income (loss) | 24.0 |  |  | (32.8) |  |  | 33.5 |  |  | (56.7) |
Comprehensive Income (Loss) | $ | 87.3 |  |  | $ | (30.2) |  |  | $ | 174.2 |  |  | $ | 21.7 |
Share Data |  |  |  |  |  |  |
Basic earnings per share | $ | 1.74 |  |  | $ | 0.07 |  |  | $ | 3.88 |  |  | $ | 2.21 |
Average number of common shares | 35.6 |  |  | 35.5 |  |  | 35.6 |  |  | 35.5 |
Diluted earnings per share | $ | 1.74 |  |  | $ | 0.07 |  |  | $ | 3.87 |  |  | $ | 2.18 |
Average number of common shares and common share equivalents | 35.7 |  |  | 36.0 |  |  | 35.7 |  |  | 36.0 |

See accompanying notes to condensed consolidated financial statements.
3

GATX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)

| Six Months Ended June 30
| 2023 |  | 2022
Operating Activities |  |  |
Net income | $ | 140.7 |  |  | $ | 78.4 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization expense | 189.7 |  |  | 186.1 |
Net gains on disposition of owned assets | (89.0) |  |  | (77.3) |
Asset impairments | 1.2 |  |  | 31.5 |
Deferred income taxes | 27.8 |  |  | 15.6 |
Share of affiliates’ earnings, net of dividends | (34.7) |  |  | (7.3) |
Changes in working capital items | 22.7 |  |  | (10.5) |
Net cash provided by operating activities | 258.4 |  |  | 216.5 |
Investing Activities |  |  |
Portfolio investments and capital additions | (873.6) |  |  | (684.5) |
Portfolio proceeds | 166.5 |  |  | 160.8 |
Proceeds from sales of other assets | 10.9 |  |  | 19.4 |
Proceeds from short-term investments | 150.0 |  |  | — |
Other | 1.6 |  |  | 28.2 |
Net cash used in investing activities | (544.6) |  |  | (476.1) |
Financing Activities |  |  |
Net proceeds from issuances of debt (original maturities longer than 90 days) | 585.4 |  |  | 395.1 |
Repayments of debt (original maturities longer than 90 days) | (250.0) |  |  | (250.0) |
Net (decrease) increase in debt with original maturities of 90 days or less | (6.8) |  |  | 3.4 |
Stock repurchases | — |  |  | (39.2) |
Dividends | (40.8) |  |  | (39.2) |
Purchases of assets previously leased | — |  |  | (1.5) |
Other | 11.1 |  |  | 30.4 |
Net cash provided by financing activities | 298.9 |  |  | 99.0 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 1.0 |  |  | (3.4) |
Net increase (decrease) in Cash, Cash Equivalents, and Restricted Cash during the period | 13.7 |  |  | (164.0) |
Cash, Cash Equivalents, and Restricted Cash at beginning of the period | 304.0 |  |  | 344.5 |
Cash, Cash Equivalents, and Restricted Cash at end of the period | $ | 317.7 |  |  | $ | 180.5 |

See accompanying notes to condensed consolidated financial statements.
4

GATX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(In millions, except per share data)

| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
| Shares |  | Dollars |  | Shares |  | Dollars |  | Shares |  | Dollars |  | Shares |  | Dollars
Common Stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of the period | 68.7 |  |  | $ | 42.4 |  |  | 68.5 |  |  | $ | 42.4 |  |  | 68.6 |  |  | $ | 42.4 |  |  | 68.3 |  |  | $ | 42.2 |
Issuance of common stock | 0.1 |  |  | 0.1 |  |  | — |  |  | — |  |  | 0.2 |  |  | 0.1 |  |  | 0.2 |  |  | 0.2 |
Balance at end of the period | 68.8 |  |  | 42.5 |  |  | 68.5 |  |  | 42.4 |  |  | 68.8 |  |  | 42.5 |  |  | 68.5 |  |  | 42.4 |
Treasury Stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of the period | (33.3) |  |  | (1,424.9) |  |  | (32.9) |  |  | (1,386.7) |  |  | (33.3) |  |  | (1,424.9) |  |  | (32.8) |  |  | (1,377.7) |
Stock repurchases | — |  |  | — |  |  | (0.3) |  |  | (33.2) |  |  | — |  |  | — |  |  | (0.4) |  |  | (42.2) |
Balance at end of the period | (33.3) |  |  | (1,424.9) |  |  | (33.2) |  |  | (1,419.9) |  |  | (33.3) |  |  | (1,424.9) |  |  | (33.2) |  |  | (1,419.9) |
Additional Paid In Capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of the period |  |  | 797.5 |  |  |  |  | 781.5 |  |  |  |  | 792.2 |  |  |  |  | 763.8 |
Share-based compensation effects |  |  | 10.3 |  |  |  |  | 3.2 |  |  |  |  | 15.6 |  |  |  |  | 20.9 |
Balance at end of the period |  |  | 807.8 |  |  |  |  | 784.7 |  |  |  |  | 807.8 |  |  |  |  | 784.7 |
Retained Earnings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of the period |  |  | 2,888.6 |  |  |  |  | 2,808.1 |  |  |  |  | 2,831.5 |  |  |  |  | 2,751.5 |
Net income |  |  | 63.3 |  |  |  |  | 2.6 |  |  |  |  | 140.7 |  |  |  |  | 78.4 |
Dividends declared ($0.55 and $0.52 per share QTR and $1.10 and $1.04 YTD) |  |  | (20.3) |  |  |  |  | (19.1) |  |  |  |  | (40.6) |  |  |  |  | (38.3) |
Balance at end of the period |  |  | 2,931.6 |  |  |  |  | 2,791.6 |  |  |  |  | 2,931.6 |  |  |  |  | 2,791.6 |
Accumulated Other Comprehensive Loss |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of the period |  |  | (202.1) |  |  |  |  | (184.5) |  |  |  |  | (211.6) |  |  |  |  | (160.6) |
Other comprehensive income (loss) |  |  | 24.0 |  |  |  |  | (32.8) |  |  |  |  | 33.5 |  |  |  |  | (56.7) |
Balance at end of the period |  |  | (178.1) |  |  |  |  | (217.3) |  |  |  |  | (178.1) |  |  |  |  | (217.3) |
Total Shareholders’ Equity |  |  | $ | 2,178.9 |  |  |  |  | $ | 1,981.5 |  |  |  |  | $ | 2,178.9 |  |  |  |  | $ | 1,981.5 |

See accompanying notes to condensed consolidated financial statements.
5

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. Description of Business
As used herein, "GATX," "we," "us," "our," and similar terms refer to GATX Corporation and its subsidiaries, unless indicated otherwise.
We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results through three primary business segments: Rail North America, Rail International, and Portfolio Management. Financial results for our tank container leasing business ("Trifleet Leasing") are reported in the Other segment.
In the first quarter of 2023, we sold our rail business in Russia ("Rail Russia") within the Rail International segment. The net assets of Rail Russia had been reported as held for sale since the third quarter of 2022. See "Note 6. Asset Impairments and Assets Held for Sale" for further information.
In the second quarter of 2023, we sold one of our liquefied gas-carrying vessels (the "Specialized Gas Vessels") within the Portfolio Management segment. We had previously sold one vessel in the first quarter of 2023 and two vessels in the third quarter of 2022. The one remaining vessel is classified as held for sale as of June 30, 2023.
In the second quarter of 2023, GATX Engine Leasing ("GEL") acquired nine aircraft spare engines for approximately $239 million.
NOTE 2. Basis of Presentation
We prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our unaudited condensed consolidated financial statements do not include all of the information and footnotes required for complete financial statements. We have included all of the normal recurring adjustments that we deemed necessary for a fair presentation.
Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results we may achieve for the entire year ending December 31, 2023. In particular, asset remarketing income does not occur evenly throughout the year. For more information, refer to the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2022.
New Accounting Pronouncements Not Yet Adopted

Standard/Description | Effective Date and Adoption Considerations | Effect on Financial Statements or Other Significant Matters
Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional practical expedients and exceptions in the application of GAAP principles to contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates being discontinued as a result of reference rate reform. | Optional expedients are available for adoption from March 12, 2020 through December 31, 2024. | For any contracts that reference LIBOR, we are currently assessing how this standard may be applied to specific contract modifications through December 31, 2024.

6

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
NOTE 3. Revenue
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We disaggregate revenue into three categories as presented on our statement of comprehensive income (loss):
Lease Revenue
Lease revenue, which includes operating lease revenue and finance lease revenue, is our primary source of revenue.
Operating Lease Revenue
We lease railcars, aircraft spare engines, tank containers, and other operating assets under full-service and net operating leases. We price full-service leases as an integrated service that includes amounts related to maintenance, insurance, and ad valorem taxes. We do not offer stand-alone maintenance service contracts. Operating lease revenue is within the scope of Topic 842, and we have elected not to separate non-lease components from the associated lease component for qualifying leases. Operating lease revenue is recognized on a straight-line basis over the term of the underlying lease. As a result, lease revenue may not be recognized in the same period as maintenance and other costs, which we expense as incurred. Variable rents are recognized when applicable contingencies are resolved. Revenue is not recognized if collectability is not reasonably assured. See "Note 4. Leases".
Finance Lease Revenue
In certain cases, we lease railcars and tank containers that, at lease inception, are classified as finance leases. In accordance with Topic 842, finance lease revenue is recognized using the interest method, which produces a constant yield over the lease term. Initial unearned income is the amount by which the original lease payment receivable and the estimated residual value of the leased asset exceeds the original cost or carrying value of the leased asset. See "Note 4. Leases".
Marine Operating Revenue
We generate marine operating revenue through shipping services completed by our marine vessels. For vessels operating in a pooling arrangement, we recognize pool revenue based on the right to receive our portion of net distributions reported by the pool, with net distributions being the net voyage revenue of the pool after deduction of voyage expenses. For vessels operating out of the pool, we recognize revenue over time as the performance obligation is satisfied, beginning when cargo is loaded through its delivery and discharge.
Other Revenue
Other revenue is composed of customer liability repair revenue, termination fees, revenue from aircraft spare engines utilized in an engine capacity agreement, and other miscellaneous revenues. Select components of other revenue are within the scope of Topic 606. Revenue attributable to terms provided in our lease contracts are variable lease components that are recognized when earned, in accordance with Topic 842.
NOTE 4. Leases
GATX as Lessor
We lease railcars, aircraft spare engines, tank containers, and other operating assets under full-service and net operating leases. We price full-service leases as an integrated service that includes amounts related to maintenance, insurance, and ad valorem taxes. In accordance with applicable guidance, we do not separate lease and non-lease components when reporting revenue for our full-service operating leases. In some cases, we lease railcars and tank containers that, at lease inception, are classified as finance leases. For certain operating leases, revenue is based on equipment usage and is recognized when earned. Typically, our leases do not provide customers with renewal options or options to purchase the asset. Our lease agreements do not generally have residual value guarantees. We collect reimbursements from customers for damage to our railcars, as well as additional rental payments for usage above specified levels, as provided in the lease agreements.
7

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following table shows the components of our lease revenue (in millions):

| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Operating lease revenue: |  |  |  |  |  |  |
Fixed lease revenue | $ | 281.7 |  |  | $ | 260.9 |  |  | $ | 558.5 |  |  | $ | 521.2 |
Variable lease revenue | 23.9 |  |  | 21.7 |  |  | 46.4 |  |  | 42.5 |
Total operating lease revenue | $ | 305.6 |  |  | $ | 282.6 |  |  | $ | 604.9 |  |  | $ | 563.7 |
Finance lease revenue | 3.0 |  |  | 2.3 |  |  | 5.7 |  |  | 4.5 |
Total lease revenue | $ | 308.6 |  |  | $ | 284.9 |  |  | $ | 610.6 |  |  | $ | 568.2 |

In accordance with the terms of our leases with customers, we may earn additional revenue, primarily for customer liability repairs. This additional revenue is reported in other revenue in the statements of comprehensive income (loss) and was $21.8 million and $45.7 million for the three and six months ended June 30, 2023 and $18.3 million and $40.9 million for the three and six months ended June 30, 2022.
NOTE 5. Fair Value
The assets and liabilities that GATX records at fair value on a recurring basis consisted entirely of derivatives at June 30, 2023 and December 31, 2022.
In addition, we review long-lived assets, such as operating assets and facilities, investments in affiliates, and goodwill, for impairment whenever circumstances indicate that the carrying amount of these assets may not be recoverable or when assets may be classified as held for sale. We determine the fair value of the respective assets using Level 3 inputs, including estimates of discounted future cash flows (including net proceeds from sale), independent appraisals, and market comparables, as applicable. See "Note 6. Asset Impairments and Assets Held for Sale" for further information.
Derivative Instruments
Fair Value Hedges
We use interest rate swaps to manage the fixed-to-floating rate mix of our debt obligations by converting a portion of our fixed rate debt to floating rate debt. For fair value hedges, we recognize changes in fair value of both the derivative and the hedged item as interest expense. We had four instruments outstanding with an aggregate notional amount of $200.0 million as of June 30, 2023 with maturities ranging from 2025 to 2027 and four instruments outstanding with an aggregate notional amount of $200.0 million as of December 31, 2022 with maturities ranging from 2025 to 2027.
Cash Flow Hedges
We use Treasury rate locks and swap rate locks to hedge our exposure to interest rate risk on anticipated transactions. We also use currency swaps, forwards, and put/call options to hedge our exposure to fluctuations in the exchange rates of foreign currencies for certain loans and operating expenses denominated in non-functional currencies. We had twelve instruments outstanding with an aggregate notional amount of $172.6 million as of June 30, 2023 that mature in 2023 and one instrument outstanding with an aggregate notional amount of $110.1 million as of December 31, 2022 that matures in 2023. Within the next 12 months, we expect to reclassify $1.6 million ($1.2 million after-tax) of net losses on previously terminated derivatives from accumulated other comprehensive loss to interest expense. We reclassify these amounts when interest and operating lease expense on the related hedged transactions affect earnings.
Non-Designated Derivatives
We do not hold derivative financial instruments for purposes other than hedging, although certain of our derivatives are not designated as accounting hedges. We recognize changes in the fair value of these derivatives in other expense immediately.
Certain of our derivative instruments contain credit risk provisions that could require us to make immediate payment on net liability positions in the event that we default on certain outstanding debt obligations. The aggregate fair value of our derivative instruments
8

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
with credit risk related contingent features that were in a liability position as of June 30, 2023 was $14.9 million. We are not required to post any collateral on our derivative instruments and do not expect the credit risk provisions to be triggered.
In the event that a counterparty fails to meet the terms of an interest rate swap agreement or a foreign exchange contract, our exposure is limited to the fair value of the swap, if in our favor. We manage the credit risk of counterparties by transacting with institutions that we consider financially sound and by avoiding concentrations of risk with a single counterparty. We believe that the risk of non-performance by any of our counterparties is remote.
The following table shows our derivative assets and liabilities that are measured at fair value (in millions):

|  |  | Significant Observable Inputs (Level 2)
| Balance Sheet Location |  | Fair Value June 30, 2023 |  | Fair Value December 31, 2022
Derivative Assets |  |  |  |  |
Foreign exchange contracts (1) | Other assets |  | $ | 0.1 |  |  | $ | — |
Foreign exchange contracts (2) | Other assets |  | — |  |  | 0.7 |
Total derivative assets |  |  | $ | 0.1 |  |  | $ | 0.7 |
Derivative Liabilities |  |  |  |  |
Interest rate contracts (1) | Other liabilities |  | $ | 11.9 |  |  | $ | 11.6 |
Foreign exchange contracts (1) | Other liabilities |  | 3.0 |  |  | 0.5 |
Foreign exchange contracts (2) | Other liabilities |  | 10.4 |  |  | — |
Total derivative liabilities |  |  | $ | 25.3 |  |  | $ | 12.1 |

_________
(1) Designated as hedges.
(2) Not designated as hedges.
We value derivatives using a pricing model with inputs (such as yield curves and foreign currency rates) that are observable in the market or that can be derived principally from observable market data. As of June 30, 2023 and December 31, 2022, all derivatives were classified as Level 2 in the fair value hierarchy. There were no derivatives classified as Level 1 or Level 3.
The following table shows the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges (in millions):

|  | Carrying Amount of the Hedged Assets/(Liabilities) |  | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
Line Item in the Balance Sheet in Which the Hedged Item is Included |  | June 30 2023 |  | December 31 2022 |  | June 30 2023 |  | December 31 2022
Recourse debt |  | $ | (195.2) |  |  | $ | (195.2) |  |  | $ | (11.9) |  |  | $ | (11.6) |

9

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following tables show the impacts of our derivative instruments on our statements of comprehensive income (loss) (in millions):

|  | Amount of Loss (Gain) Recognized in Other Comprehensive Income (Loss) |
|  | Three Months Ended June 30 |  | Six Months Ended June 30 |  |  |
Derivative Designation |  | 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |
Derivatives in cash flow hedging relationships: |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 1.0 |  |  | $ | (4.6) |  |  | $ | 2.5 |  |  | $ | (7.9) |  |  |  |
Total |  | $ | 1.0 |  |  | $ | (4.6) |  |  | $ | 2.5 |  |  | $ | (7.9) |  |  |  |

Location of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss into Earnings |  | Amount of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss into Earnings |
| Three Months Ended June 30 |  | Six Months Ended June 30 |  |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |
Interest expense |  | $ | 0.4 |  |  | $ | 0.4 |  |  | $ | 0.8 |  |  | $ | 0.8 |  |  |  |
Other expense |  | 0.8 |  |  | (5.2) |  |  | 2.4 |  |  | (8.1) |  |  |  |
Total |  | $ | 1.2 |  |  | $ | (4.8) |  |  | $ | 3.2 |  |  | $ | (7.3) |  |  |  |

The following tables show the impact of our fair value and cash flow hedge accounting relationships, as well as the impact of our non-designated derivatives, on the statements of comprehensive income (loss) (in millions):

| Amount of Gain (Loss) Recognized in Interest Expense on Fair Value and Cash Flow Hedging Relationships
| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Total interest expense | $ | (63.7) |  |  | $ | (51.9) |  |  | $ | (122.7) |  |  | $ | (103.1) |
Gain (loss) on fair value hedging relationships |  |  |  |  |  |  |
Interest rate contracts: |  |  |  |  |  |  |
Hedged items | 2.6 |  |  | 1.5 |  |  | 0.3 |  |  | 7.2 |
Derivatives designated as hedging instruments | (2.6) |  |  | (1.5) |  |  | (0.3) |  |  | (7.2) |
Gain (loss) on cash flow hedging relationships |  |  |  |  |  |  |
Interest rate contracts: |  |  |  |  |  |  |
Amount of loss reclassified from accumulated other comprehensive loss into earnings | (0.4) |  |  | (0.4) |  |  | (0.8) |  |  | (0.8) |

10

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

| Amount of Gain (Loss) Recognized in Other Expense on Cash Flow Hedging Relationships and Non-Designated Derivative Contracts
| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Total other expense | $ | (4.9) |  |  | $ | (11.3) |  |  | $ | (8.9) |  |  | $ | (13.3) |
Gain (loss) on cash flow hedging relationships |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |
Amount of (loss) gain reclassified from accumulated other comprehensive loss into earnings (1) | (0.8) |  |  | 5.2 |  |  | (2.4) |  |  | 8.1 |
(Loss) gain on non-designated derivative contracts | (7.5) |  |  | 3.2 |  |  | (11.2) |  |  | 4.7 |

_________
(1) These amounts are substantially offset by foreign currency remeasurement adjustments on related hedged instruments, also recognized in other expense.
Other Financial Instruments
Except for derivatives, as disclosed above, GATX has no other assets and liabilities measured at fair value on a recurring basis. The carrying amounts of cash and cash equivalents, restricted cash, rent and other receivables, accounts payable, and commercial paper and borrowings under bank credit facilities with maturities under one year approximate fair value due to the short maturity of those instruments. There were no short-term investments at June 30, 2023. As of December 31, 2022, short-term investments of $148.5 million consisted of U.S. Treasury securities, which were classified as held-to-maturity and valued at amortized cost.
We estimate the fair values of fixed and floating rate debt using discounted cash flow analyses that are based on interest rates currently offered for loans with similar terms to borrowers of similar credit quality. The inputs we use to estimate each of these values are classified in Level 2 of the fair value hierarchy because they are directly or indirectly observable inputs.
The following table shows the carrying amounts and fair values of our other financial instruments (in millions):

| June 30, 2023 |  | December 31, 2022
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Liabilities |  |  |  |  |  |  |
Recourse fixed rate debt | $ | 6,248.3 |  |  | $ | 5,564.2 |  |  | $ | 6,045.1 |  |  | $ | 5,309.8 |
Recourse floating rate debt | 570.0 |  |  | 567.9 |  |  | 417.8 |  |  | 417.0 |

NOTE 6. Asset Impairments and Assets Held for Sale
In the third quarter of 2022, we made the decision to exit Rail Russia, which is reported within the Rail International segment. The net assets of Rail Russia were then classified as held for sale and adjusted to the lower of their respective carrying amounts or fair value less costs to dispose. As a result, we recorded impairment losses totaling $14.6 million in 2022, which are presented in net asset dispositions in the statements of comprehensive income (loss). The impairment charges included $1.2 million for the anticipated liquidation of the cumulative translation adjustment. In the first quarter of 2023, we completed the sale of Rail Russia and recorded a gain of $0.3 million, which is presented in net gain on asset dispositions in the statements of comprehensive income (loss).
In the second quarter of 2022, we made the decision to sell our five Specialized Gas Vessels within the Portfolio Management segment. The Specialized Gas Vessels were classified as held for sale and adjusted to the lower of their respective carrying amounts or fair value less costs to dispose. As a result, we recorded impairment losses totaling $34.3 million in 2022. The impairments were driven by our decision to sell these vessels and resulted from the associated change in our expected use and holding periods for these assets. We sold two vessels in the third quarter of 2022. In the first quarter of 2023, we sold one vessel, resulting in a loss on disposition of $0.4 million, and recorded an impairment loss of $1.2 million on one of the two remaining vessels. The impairment loss was included in net gain on asset dispositions in the statements of comprehensive income (loss). In the second quarter of 2023, we sold one vessel and recorded a gain of $0.2 million associated with this sale. The one remaining vessel continues to be classified as held for sale and its fair value was $8.9 million as of June 30, 2023. We based the fair value of the asset on our estimate of the expected net sales proceeds.
11

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following table summarizes the components of asset impairments by segment (in millions):

| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Attributable to Consolidated Assets |  |  |  |  |  |  |
Portfolio Management | $ | — |  |  | $ | 31.5 |  |  | $ | 1.2 |  |  | $ | 31.5 |
Total | $ | — |  |  | $ | 31.5 |  |  | $ | 1.2 |  |  | $ | 31.5 |

The following table summarizes assets held for sale by business segment (in millions):

| June 30 2023 |  | December 31 2022
Rail North America | $ | 0.8 |  |  | $ | 1.2 |
Rail International | — |  |  | 13.7 |
Portfolio Management | 8.9 |  |  | 25.1 |
Total | $ | 9.7 |  |  | $ | 40.0 |

All assets held for sale at June 30, 2023 are expected to be sold within one year and are included in Other Assets on the balance sheet.
12

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
NOTE 7. Pension and Other Post-Retirement Benefits
The following table shows the components of net periodic cost for the three months ended June 30, 2023 and 2022 (in millions):

| 2023 Pension Benefits |  | 2022 Pension Benefits |  | 2023 Retiree Health and Life |  | 2022 Retiree Health and Life
Service cost | $ | 1.4 |  |  | $ | 1.9 |  |  | $ | 0.1 |  |  | $ | 0.1 |
Interest cost | 4.1 |  |  | 2.3 |  |  | 0.2 |  |  | 0.1 |
Expected return on plan assets | (5.3) |  |  | (3.8) |  |  | — |  |  | — |
Settlement accounting adjustment | 1.4 |  |  | 0.9 |  |  | — |  |  | — |
Amortization of (1): |  |  |  |  |  |  |
Unrecognized prior service credit | — |  |  | — |  |  | (0.1) |  |  | (0.1) |
Unrecognized net actuarial loss (gain) | 0.3 |  |  | 2.4 |  |  | (0.2) |  |  | (0.1) |
Net periodic cost | $ | 1.9 |  |  | $ | 3.7 |  |  | $ | — |  |  | $ | — |

The following table shows the components of net periodic cost for the six months ended June 30, 2023 and 2022 (in millions):

| 2023 Pension Benefits |  | 2022 Pension Benefits |  | 2023 Retiree Health and Life |  | 2022 Retiree Health and Life
Service cost | $ | 2.7 |  |  | $ | 3.9 |  |  | $ | 0.1 |  |  | $ | 0.1 |
Interest cost | 8.3 |  |  | 4.9 |  |  | 0.4 |  |  | 0.2 |
Expected return on plan assets | (10.7) |  |  | (7.8) |  |  | — |  |  | — |
Settlement accounting adjustment | 1.4 |  |  | 0.9 |  |  | — |  |  | — |
Amortization of (1): |  |  |  |  |  |  |
Unrecognized prior service credit | — |  |  | — |  |  | (0.2) |  |  | (0.1) |
Unrecognized net actuarial loss (gain) | 0.5 |  |  | 4.6 |  |  | (0.3) |  |  | (0.2) |
Net periodic cost | $ | 2.2 |  |  | $ | 6.5 |  |  | $ | — |  |  | $ | — |

_________
(1) Amounts reclassified from accumulated other comprehensive loss.
The service cost component of net periodic cost is recorded in selling, general and administrative expense and the non-service components are recorded in other expense in the statements of comprehensive income (loss).
Certain lump sum distributions paid to retirees triggered settlement accounting, resulting in the recognition of $1.4 million of expense for the three and six months ended June 30, 2023, and $0.9 million of expense for the three and six months ended June 30, 2022.
13

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
NOTE 8. Share-Based Compensation
During the six months ended June 30, 2023, we granted 189,900 non-qualified employee stock options, 32,970 restricted stock units, 36,860 performance shares, and 11,018 restricted stock units awarded to non-employee directors. For the three and six months ended June 30, 2023, total share-based compensation expense was $5.1 million and $8.6 million and the related tax benefits were $1.3 million and $2.2 million. For the three and six months ended June 30, 2022, total share-based compensation expense was $2.4 million and $7.1 million and the related tax benefits were $0.6 million and $1.8 million.
The estimated fair value of our 2023 non-qualified employee stock option awards and related underlying assumptions are shown in the table below:

| 2023
Weighted-average estimated fair value | $ | 41.06 |
Quarterly dividend rate | $ | 0.55 |
Expected term of stock options, in years | 4.2
Risk-free interest rate | 3.7 | %
Dividend yield | 1.9 | %
Expected stock price volatility | 35.4 | %
Present value of dividends | $ | 8.57 |

NOTE 9. Income Taxes
The following table shows our effective income tax rate for the six months ended June 30:

| 2023 |  | 2022
Effective income tax rate | 26.3 | % |  | 26.1 | %

The small increase in the effective rate for the current year compared to the prior year was primarily due to the mix of pre-tax income among domestic and foreign jurisdictions, which are taxed at different rates.
NOTE 10. Commercial Commitments
We have entered into various commercial commitments, such as guarantees, standby letters of credit, performance bonds, and guarantees related to certain transactions. These commercial commitments require us to fulfill specific obligations in the event of third-party demands. Similar to our balance sheet investments, these commitments expose us to credit, market, and equipment risk. Accordingly, we evaluate these commitments and other contingent obligations using techniques similar to those we use to evaluate funded transactions.
The following table shows our commercial commitments (in millions):

| June 30 2023 |  | December 31 2022
Standby letters of credit and performance bonds | $ | 8.8 |  |  | $ | 9.0 |
Derivative guarantees | 1.6 |  |  | 1.9 |
Total commercial commitments (1) | $ | 10.4 |  |  | $ | 10.9 |

_________
(1) There were no liabilities recorded on the balance sheet for commercial commitments at June 30, 2023 and December 31, 2022. As of June 30, 2023, our outstanding commitments expire in 2023 through 2026. We are not aware of any event that would require us to satisfy any of our commitments.
We are parties to standby letters of credit and performance bonds, which primarily relate to contractual obligations and general liability insurance coverages. No material claims have been made against these obligations, and no material losses are anticipated. We also guarantee payment by an affiliate for final settlement of certain derivatives if they are in a liability position at expiration. The amount of the payment is ultimately determined by the value of the derivative upon final settlement.
14

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
NOTE 11. Earnings per Share
We compute basic and diluted earnings per share using the two-class method, which is an earnings allocation calculation that determines Earnings Per Share ("EPS") for each class of common stock and participating security. Our vested and exercisable stock options contain non-forfeitable rights to dividends or dividend equivalents and are classified as participating securities in the calculation of EPS. Our unvested stock options, restricted stock units, performance shares and non-employee director awards do not contain nonforfeitable rights to dividends or dividend equivalents and are therefore not classified as participating securities.
Under the two-class method, net income is allocated between shares of common stock and participating securities based on their participating rights. Basic EPS is computed by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding. We weight shares issued or reacquired for the portion of the period that they were outstanding. Diluted EPS is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding adjusted for the dilutive effect of unvested stock options, restricted stock units and performance shares. The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock method or the two-class method. Earnings allocable to participating securities include the portion of dividends declared and the portion of undistributed earnings during the period.
The following table shows the computation of our basic and diluted earnings per common share (in millions, except per share amounts):

| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Basic earnings per share: |  |  |  |  |  |  |
Net income | $ | 63.3 |  |  | $ | 2.6 |  |  | $ | 140.7 |  |  | $ | 78.4 |
Less: Net income allocated to participating securities | (1.3) |  |  | — |  |  | (2.8) |  |  | — |
Net income available to common shareholders | $ | 62.0 |  |  | $ | 2.6 |  |  | $ | 137.9 |  |  | $ | 78.4 |
Weighted-average shares outstanding - basic | 35.6 |  |  | 35.5 |  |  | 35.6 |  |  | 35.5 |
Basic earnings per share | $ | 1.74 |  |  | $ | 0.07 |  |  | $ | 3.88 |  |  | $ | 2.21 |
Diluted earnings per share: |  |  |  |  |  |  |
Net income | $ | 63.3 |  |  | $ | 2.6 |  |  | $ | 140.7 |  |  | $ | 78.4 |
Less: Net income allocated to participating securities | (1.3) |  |  | — |  |  | (2.8) |  |  | — |
Net income available to common shareholders | $ | 62.0 |  |  | $ | 2.6 |  |  | $ | 137.9 |  |  | $ | 78.4 |
Weighted-average shares outstanding - basic | 35.6 |  |  | 35.5 |  |  | 35.6 |  |  | 35.5 |
Effect of dilutive securities: |  |  |  |  |  |  |
Equity compensation plans | 0.1 |  |  | 0.5 |  |  | 0.1 |  |  | 0.5 |
Weighted-average shares outstanding - diluted | 35.7 |  |  | 36.0 |  |  | 35.7 |  |  | 36.0 |
Diluted earnings per share | $ | 1.74 |  |  | $ | 0.07 |  |  | $ | 3.87 |  |  | $ | 2.18 |

15

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
NOTE 12. Accumulated Other Comprehensive Loss
The following table shows the change in components for accumulated other comprehensive loss (in millions):

| Foreign Currency Translation Loss |  |  |  | Unrealized Gain (Loss) on Derivative Instruments |  | Post-Retirement Benefit Plans |  | Total
Balance at December 31, 2022 | $ | (152.1) |  |  |  |  | $ | (11.2) |  |  | $ | (48.3) |  |  | $ | (211.6) |
Change in component | 8.8 |  |  |  |  | (1.1) |  |  | (0.1) |  |  | 7.6 |
Reclassification adjustments into earnings (1) | — |  |  |  |  | 2.0 |  |  | — |  |  | 2.0 |
Income tax effect | — |  |  |  |  | (0.1) |  |  | — |  |  | (0.1) |
Balance at March 31, 2023 | $ | (143.3) |  |  |  |  | $ | (10.4) |  |  | $ | (48.4) |  |  | $ | (202.1) |
Change in component | 23.1 |  |  |  |  | (1.3) |  |  | 1.6 |  |  | 23.4 |
Reclassification adjustments into earnings (1) | — |  |  |  |  | 1.2 |  |  | — |  |  | 1.2 |
Income tax effect | — |  |  |  |  | (0.1) |  |  | (0.5) |  |  | (0.6) |
Balance at June 30, 2023 | $ | (120.2) |  |  |  |  | $ | (10.6) |  |  | $ | (47.3) |  |  | $ | (178.1) |

_________
(1) See "Note 5. Fair Value" and "Note 7. Pension and Other Post-Retirement Benefits" for impacts of the reclassification adjustments on the statements of comprehensive income (loss).
NOTE 13. Legal Proceedings and Other Contingencies
Various legal actions, claims, assessments and other contingencies arising in the ordinary course of business are pending against GATX and certain of our subsidiaries. These matters are subject to many uncertainties, and it is possible that some of these matters could ultimately be decided, resolved or settled adversely.
On June 30, 2023 a third-party complaint was filed by Norfolk Southern Railway Company and Norfolk Southern Corporation (collectively, “Norfolk Southern”) against us and several other parties in the Northern District of Ohio (Eastern Division) for contribution and recovery of environmental damages related to the derailment of a Norfolk Southern train in East Palestine, Ohio that included railcars owned by GATX Corporation. The Company intends to vigorously defend this lawsuit. At this time, the Company cannot reasonably estimate the loss or range of loss, if any, that may ultimately be incurred in connection with this lawsuit and therefore has not established any accruals for potential liability related to this incident.
On July 25, 2023 a separate third-party complaint was filed by Norfolk Southern against us and two other defendants in the Northern District of Ohio (Eastern Division) for contribution to personal injury and property damages claims related to the derailment of the Norfolk Southern train in East Palestine, Ohio. As of the time of this Quarterly Report on Form 10-Q, the Company has not yet been served in this action. If served, the Company intends to vigorously defend this lawsuit. At this time, the Company cannot reasonably estimate the loss or range of loss, if any, that may ultimately be incurred in connection with this lawsuit and therefore has not established any accruals for potential liability related to this incident.
For a full discussion of our other pending legal matters, please refer to the notes included with our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.
NOTE 14. Financial Data of Business Segments
The financial data presented below depicts the profitability, financial position, and capital expenditures of each of our business segments.
We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results through three primary business segments: Rail North America, Rail International, and Portfolio Management. Financial results for Trifleet Leasing are reported in the Other segment.
Rail North America is composed of our operations in the United States, Canada, and Mexico. Rail North America primarily provides railcars pursuant to full-service leases under which it maintains the railcars, pays ad valorem taxes and insurance, and provides other ancillary services.
16

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Rail International is composed of our operations in Europe ("GATX Rail Europe" or "GRE"), India ("Rail India"), and until January 31, 2023, Rail Russia. GRE primarily leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the railcars and provides value-added services according to customer requirements. In the first quarter of 2023, we completed the sale of Rail Russia. See "Note 6. Asset Impairments and Assets Held for Sale" for further information.
Portfolio Management is composed primarily of our ownership in the RRPF affiliates, a group of joint ventures with Rolls-Royce plc that lease aircraft spare engines, GEL, our direct ownership of aircraft spare engines that are leased or employed in engine capacity agreements, and the Specialized Gas Vessels. In the second quarter of 2023, GEL acquired nine aircraft spare engines for approximately $239 million, and GATX sold one of the Specialized Gas Vessels. GATX had previously sold one of the Specialized Gas Vessels in the first quarter of 2023 and two Specialized Gas Vessels in the third quarter of 2022. The one remaining vessel continues to be classified as held for sale as of June 30, 2023. See "Note 6. Asset Impairments and Assets Held for Sale" for further information.
Other includes Trifleet Leasing operations, as well as selling, general and administrative expenses, income taxes, and certain other amounts not allocated to the segments.
Segment profit is an internal performance measure used by the Chief Executive Officer to assess the profitability of each segment. Segment profit includes all revenues, expenses, pre-tax earnings from affiliates, and net gains on asset dispositions that are directly attributable to each segment. We allocate interest expense to the segments based on what we believe to be the appropriate risk-adjusted borrowing costs for each segment. Segment profit excludes selling, general and administrative expenses, income taxes, and certain other amounts not allocated to the segments.
17

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following tables show certain segment data for each of our business segments (in millions):

| Rail North America |  | Rail International |  | Portfolio Management |  | Other |  | GATX Consolidated
Three Months Ended June 30, 2023 |  |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |
Lease revenue | $ | 218.9 |  |  | $ | 73.1 |  |  | $ | 8.1 |  |  | $ | 8.5 |  |  | $ | 308.6 |
Marine operating revenue | — |  |  | — |  |  | 2.0 |  |  | — |  |  | 2.0 |
Other revenue | 21.5 |  |  | 3.1 |  |  | 6.4 |  |  | 1.6 |  |  | 32.6 |
Total Revenues | 240.4 |  |  | 76.2 |  |  | 16.5 |  |  | 10.1 |  |  | 343.2 |
Expenses |  |  |  |  |  |  |  |  |
Maintenance expense | 66.8 |  |  | 14.6 |  |  | — |  |  | 0.9 |  |  | 82.3 |
Marine operating expense | — |  |  | — |  |  | 2.4 |  |  | — |  |  | 2.4 |
Depreciation expense | 66.1 |  |  | 16.6 |  |  | 6.1 |  |  | 3.3 |  |  | 92.1 |
Operating lease expense | 9.0 |  |  | — |  |  | — |  |  | — |  |  | 9.0 |
Other operating expense | 6.7 |  |  | 2.3 |  |  | 1.4 |  |  | 0.6 |  |  | 11.0 |
Total Expenses | 148.6 |  |  | 33.5 |  |  | 9.9 |  |  | 4.8 |  |  | 196.8 |
Other Income (Expense) |  |  |  |  |  |  |  |  |
Net gain on asset dispositions | 34.1 |  |  | 0.7 |  |  | 6.0 |  |  | 0.3 |  |  | 41.1 |
Interest expense (income), net | (44.5) |  |  | (13.5) |  |  | (6.5) |  |  | 0.8 |  |  | (63.7) |
Other (expense) income | (2.1) |  |  | (2.6) |  |  | 0.2 |  |  | (0.4) |  |  | (4.9) |
Share of affiliates' pre-tax earnings | — |  |  | — |  |  | 20.3 |  |  | — |  |  | 20.3 |
Segment profit | $ | 79.3 |  |  | $ | 27.3 |  |  | $ | 26.6 |  |  | $ | 6.0 |  |  | $ | 139.2 |
Less: |  |  |  |  |  |  |  |  |
Selling, general and administrative expense | 52.0 |
Income taxes (includes $6.3 related to affiliates' earnings) | 23.9 |
Net income | $ | 63.3 |
Net Gain on Asset Dispositions |  |  |  |  |  |  |  |  |
Asset Remarketing Income: |  |  |  |  |  |  |  |  |
Net gains on disposition of owned assets | $ | 30.7 |  |  | $ | 0.1 |  |  | $ | 5.9 |  |  | $ | 0.2 |  |  | $ | 36.9 |
Residual sharing income | 0.1 |  |  | — |  |  | 0.1 |  |  | — |  |  | 0.2 |
Non-remarketing net gains (1) | 3.3 |  |  | 0.6 |  |  | — |  |  | 0.1 |  |  | 4.0 |
| $ | 34.1 |  |  | $ | 0.7 |  |  | $ | 6.0 |  |  | $ | 0.3 |  |  | $ | 41.1 |
Capital Expenditures |  |  |  |  |  |  |  |  |
Portfolio investments and capital additions | $ | 161.3 |  |  | $ | 77.3 |  |  | $ | 239.0 |  |  | $ | 9.0 |  |  | $ | 486.6 |
Selected Balance Sheet Data at June 30, 2023 |  |  |  |  |  |
Investments in affiliated companies | $ | 0.4 |  |  | $ | — |  |  | $ | 611.3 |  |  | $ | — |  |  | $ | 611.7 |
Identifiable assets | $ | 6,680.2 |  |  | $ | 1,952.3 |  |  | $ | 1,371.6 |  |  | $ | 586.0 |  |  | $ | 10,590.1 |

_________
(1) Includes net gains (losses) from scrapping of railcars.
18

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

| Rail North America |  | Rail International |  | Portfolio Management |  | Other |  | GATX Consolidated
Three Months Ended June 30, 2022 |  |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |
Lease revenue | $ | 203.0 |  |  | $ | 66.5 |  |  | $ | 8.2 |  |  | $ | 7.2 |  |  | $ | 284.9 |
Marine operating revenue | — |  |  | — |  |  | 5.2 |  |  | — |  |  | 5.2 |
Other revenue | 18.8 |  |  | 1.9 |  |  | 0.1 |  |  | 1.8 |  |  | 22.6 |
Total Revenues | 221.8 |  |  | 68.4 |  |  | 13.5 |  |  | 9.0 |  |  | 312.7 |
Expenses |  |  |  |  |  |  |  |  |
Maintenance expense | 57.8 |  |  | 12.2 |  |  | — |  |  | 0.8 |  |  | 70.8 |
Marine operating expense | — |  |  | — |  |  | 3.9 |  |  | — |  |  | 3.9 |
Depreciation expense | 64.9 |  |  | 17.2 |  |  | 4.9 |  |  | 3.0 |  |  | 90.0 |
Operating lease expense | 9.0 |  |  | — |  |  | — |  |  | — |  |  | 9.0 |
Other operating expense | 5.9 |  |  | 2.1 |  |  | 0.6 |  |  | 0.7 |  |  | 9.3 |
Total Expenses | 137.6 |  |  | 31.5 |  |  | 9.4 |  |  | 4.5 |  |  | 183.0 |
Other Income (Expense) |  |  |  |  |  |  |  |  |
Net gain (loss) on asset dispositions | 5.1 |  |  | 1.4 |  |  | (30.8) |  |  | 0.1 |  |  | (24.2) |
Interest expense, net | (34.9) |  |  | (11.1) |  |  | (4.6) |  |  | (1.3) |  |  | (51.9) |
Other (expense) income | (1.3) |  |  | 1.1 |  |  | — |  |  | (11.1) |  |  | (11.3) |
Share of affiliates' pre-tax earnings | — |  |  | — |  |  | 15.6 |  |  | — |  |  | 15.6 |
Segment profit (loss) | $ | 53.1 |  |  | $ | 28.3 |  |  | $ | (15.7) |  |  | $ | (7.8) |  |  | $ | 57.9 |
Less: |  |  |  |  |  |  |  |  |
Selling, general and administrative expense | 47.9 |
Income taxes (includes $4.7 related to affiliates' earnings) | 7.4 |
Net income |  | $ | 2.6 |
Net Gain (Loss) on Asset Dispositions |  |  |  |  |  |  |  |  |
Asset Remarketing Income: |  |  |  |  |  |  |  |  |
Net gains on disposition of owned assets | $ | 1.2 |  |  | $ | 0.3 |  |  | $ | — |  |  | $ | 0.1 |  |  | $ | 1.6 |
Residual sharing income | 0.1 |  |  | — |  |  | 0.7 |  |  | — |  |  | 0.8 |
Non-remarketing net gains (1) | 3.8 |  |  | 1.1 |  |  | — |  |  | — |  |  | 4.9 |
Asset impairments | — |  |  | — |  |  | (31.5) |  |  | — |  |  | (31.5) |
| $ | 5.1 |  |  | $ | 1.4 |  |  | $ | (30.8) |  |  | $ | 0.1 |  |  | $ | (24.2) |
Capital Expenditures |  |  |  |  |  |  |  |  |
Portfolio investments and capital additions | $ | 253.7 |  |  | $ | 48.8 |  |  | $ | — |  |  | $ | 11.6 |  |  | $ | 314.1 |
Selected Balance Sheet Data at December 31, 2022 |  |  |  |  |  |
Investments in affiliated companies | $ | 0.8 |  |  | $ | — |  |  | $ | 574.3 |  |  | $ | — |  |  | $ | 575.1 |
Identifiable assets | $ | 6,445.7 |  |  | $ | 1,774.4 |  |  | $ | 1,106.6 |  |  | $ | 745.3 |  |  | $ | 10,072.0 |

_________
(1) Includes net gains (losses) from scrapping of railcars
19

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

| Rail North America |  | Rail International |  | Portfolio Management |  | Other |  | GATX Consolidated
Six Months Ended June 30, 2023 |  |  |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |
Lease revenue | $ | 434.0 |  |  | $ | 143.5 |  |  | $ | 16.4 |  |  | $ | 16.7 |  |  | $ | 610.6 |
Marine operating revenue | — |  |  | — |  |  | 5.5 |  |  | — |  |  | 5.5 |
Other revenue | 45.3 |  |  | 6.0 |  |  | 10.9 |  |  | 3.8 |  |  | 66.0 |
Total Revenues | 479.3 |  |  | 149.5 |  |  | 32.8 |  |  | 20.5 |  |  | 682.1 |
Expenses |  |  |  |  |  |  |  |  |
Maintenance expense | 133.7 |  |  | 30.5 |  |  | — |  |  | 2.0 |  |  | 166.2 |
Marine operating expense | — |  |  | — |  |  | 4.4 |  |  | — |  |  | 4.4 |
Depreciation expense | 131.6 |  |  | 32.3 |  |  | 11.5 |  |  | 6.5 |  |  | 181.9 |
Operating lease expense | 18.0 |  |  | — |  |  | — |  |  | — |  |  | 18.0 |
Other operating expense | 13.7 |  |  | 4.5 |  |  | 2.3 |  |  | 1.5 |  |  | 22.0 |
Total Expenses | 297.0 |  |  | 67.3 |  |  | 18.2 |  |  | 10.0 |  |  | 392.5 |
Other Income (Expense) |  |  |  |  |  |  |  |  |
Net gain on asset dispositions | 81.9 |  |  | 1.5 |  |  | 4.5 |  |  | 0.3 |  |  | 88.2 |
Interest (expense) income, net | (86.8) |  |  | (26.0) |  |  | (12.2) |  |  | 2.3 |  |  | (122.7) |
Other (expense) income | (2.5) |  |  | (6.9) |  |  | (0.3) |  |  | 0.8 |  |  | (8.9) |
Share of affiliates' pre-tax (losses) earnings | (0.4) |  |  | — |  |  | 48.3 |  |  | — |  |  | 47.9 |
Segment profit | $ | 174.5 |  |  | $ | 50.8 |  |  | $ | 54.9 |  |  | $ | 13.9 |  |  | $ | 294.1 |
Less: |  |  |  |  |  |  |  |  |
Selling, general and administrative expense | 102.4 |
Income taxes (includes $13.2 related to affiliates' earnings) | 51.0 |
Net income | $ | 140.7 |
Net Gain on Asset Dispositions |  |  |  |  |  |  |  |  |
Asset Remarketing Income: |  |  |  |  |  |  |  |  |
Net gains on disposition of owned assets | $ | 75.4 |  |  | $ | 0.5 |  |  | $ | 5.5 |  |  | $ | 0.2 |  |  | $ | 81.6 |
Residual sharing income | 0.2 |  |  | — |  |  | 0.2 |  |  | — |  |  | 0.4 |
Non-remarketing net gains (1) | 6.3 |  |  | 1.0 |  |  | — |  |  | 0.1 |  |  | 7.4 |
Asset impairments | — |  |  | — |  |  | (1.2) |  |  | — |  |  | (1.2) |
| $ | 81.9 |  |  | $ | 1.5 |  |  | $ | 4.5 |  |  | $ | 0.3 |  |  | $ | 88.2 |
Capital Expenditures |  |  |  |  |  |  |  |  |
Portfolio investments and capital additions | $ | 457.8 |  |  | $ | 158.4 |  |  | $ | 239.0 |  |  | $ | 18.4 |  |  | $ | 873.6 |

_________
(1) Includes net gains (losses) from scrapping of railcars.
20

GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

| Rail North America |  | Rail International |  | Portfolio Management |  | Other |  | GATX Consolidated
Six Months Ended June 30, 2022 |  |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |
Lease revenue | $ | 403.7 |  |  | $ | 134.1 |  |  | $ | 16.5 |  |  | $ | 13.9 |  |  | $ | 568.2 |
Marine operating revenue | — |  |  | — |  |  | 11.4 |  |  | — |  |  | 11.4 |
Other revenue | 41.8 |  |  | 4.2 |  |  | 0.1 |  |  | 3.6 |  |  | 49.7 |
Total Revenues | 445.5 |  |  | 138.3 |  |  | 28.0 |  |  | 17.5 |  |  | 629.3 |
Expenses |  |  |  |  |  |  |  |  |
Maintenance expense | 117.7 |  |  | 26.2 |  |  | — |  |  | 1.5 |  |  | 145.4 |
Marine operating expense | — |  |  | — |  |  | 8.1 |  |  | — |  |  | 8.1 |
Depreciation expense | 128.4 |  |  | 35.2 |  |  | 9.9 |  |  | 6.0 |  |  | 179.5 |
Operating lease expense | 18.1 |  |  | — |  |  | — |  |  | — |  |  | 18.1 |
Other operating expense | 13.2 |  |  | 4.5 |  |  | 1.1 |  |  | 1.2 |  |  | 20.0 |
Total Expenses | 277.4 |  |  | 65.9 |  |  | 19.1 |  |  | 8.7 |  |  | 371.1 |
Other Income (Expense) |  |  |  |  |  |  |  |  |
Net gain (loss) on asset dispositions | 76.7 |  |  | 2.4 |  |  | (29.9) |  |  | 0.3 |  |  | 49.5 |
Interest expense, net | (69.3) |  |  | (22.3) |  |  | (9.3) |  |  | (2.2) |  |  | (103.1) |
Other (expense) income | (2.0) |  |  | 0.7 |  |  | (0.1) |  |  | (11.9) |  |  | (13.3) |
Share of affiliates' pre-tax earnings | — |  |  | — |  |  | 10.8 |  |  | — |  |  | 10.8 |
Segment profit (loss) | $ | 173.5 |  |  | $ | 53.2 |  |  | $ | (19.6) |  |  | $ | (5.0) |  |  | $ | 202.1 |
Less: |  |  |  |  |  |  |  |  |
Selling, general and administrative expense | 95.1 |
Income taxes (includes $3.5 related to affiliates' earnings) | 28.6 |
Net income |  | $ | 78.4 |
Net Gain (Loss) on Asset Dispositions |  |  |  |  |  |  |  |  |
Asset Remarketing Income: |  |  |  |  |  |  |  |  |
Net gains on disposition of owned assets | $ | 65.6 |  |  | $ | 0.7 |  |  | $ | — |  |  | $ | 0.2 |  |  | $ | 66.5 |
Residual sharing income | 2.1 |  |  | — |  |  | 1.6 |  |  | — |  |  | 3.7 |
Non-remarketing net gains (1) | 9.0 |  |  | 1.7 |  |  | — |  |  | 0.1 |  |  | 10.8 |
Asset impairments | — |  |  | — |  |  | (31.5) |  |  | — |  |  | (31.5) |
| $ | 76.7 |  |  | $ | 2.4 |  |  | $ | (29.9) |  |  | $ | 0.3 |  |  | $ | 49.5 |
Capital Expenditures |  |  |  |  |  |  |  |  |
Portfolio investments and capital additions | $ | 534.1 |  |  | $ | 127.7 |  |  | $ | — |  |  | $ | 22.7 |  |  | $ | 684.5 |

_________
(1) Includes net gains (losses) from scrapping of railcars.
21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results through three primary business segments: Rail North America, Rail International, and Portfolio Management. Financial results for our tank container leasing business ("Trifleet Leasing") are reported in the Other segment.
In the first quarter of 2023, we sold our rail business in Russia ("Rail Russia") within the Rail International segment. The net assets of Rail Russia had been reported as held for sale since the third quarter of 2022.
In 2023, we sold two of our liquefied gas-carrying vessels (the "Specialized Gas Vessels") within the Portfolio Management segment. We had previously sold two vessels in the third quarter of 2022. The one remaining vessel continues to be classified as held for sale as of June 30, 2023.
In the second quarter of 2023, GATX Engine Leasing ("GEL") acquired nine aircraft spare engines for approximately $239 million. Financial results for this business are reported in the Portfolio Management segment.
The following discussion and analysis should be read in conjunction with the Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2022. We based the discussion and analysis that follows on financial data we derived from the financial statements prepared in accordance with U.S. Generally Accepted Accounting Standards ("GAAP") and on certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP components to the most comparable GAAP components, see "Non-GAAP Financial Measures" at the end of this item.
Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results we may achieve for the entire year ending December 31, 2023. In particular, asset remarketing income does not occur evenly throughout the year. For more information, refer to the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2022.
Russia/Ukraine Conflict
On February 24, 2022, Russian military forces launched a military action in Ukraine. In response to this action, the United States and other countries imposed various economic sanctions and measures against Russia, Belarus, certain sections of Ukraine, and related persons and entities. Russia subsequently enacted countermeasures. Additional sanctions and countermeasures have continued to be imposed as the conflict continues. We continue to closely monitor developments and potential impacts from enacted sanctions and countermeasures and will take mitigating actions as appropriate. This conflict and resulting response have impacted the global economy, financial markets, and supply chains and could adversely affect our business, financial condition, and results of operations.
To date, the conflict has not had a material impact on business operations at our global railcar, aircraft spare engine, and tank container leasing businesses outside of Russia. Furthermore, the nature of the impact on financial results varies across our business units, including the Rolls-Royce & Partners Finance joint ventures (collectively the "RRPF affiliates" or "RRPF"). Initially, an increase in steel prices led to higher new asset costs across our rail and tank container leasing businesses, a trend that supports higher lease rates on many existing assets but makes new investments more challenging. The ongoing conflict continues to cause volatility in steel prices. Supply chain disruptions, slower new railcar deliveries, and limited access to key components such as wheelsets have been more impactful in Europe and India. We continue to monitor the nature and magnitude of these impacts across our rail and tank container leasing businesses.
In 2022, after a thorough strategic review, we made the decision to exit Rail Russia. This decision was due to the impacts of the Russia/Ukraine conflict on our business and the business risks associated with the geopolitical environment resulting from that conflict. In the first quarter of 2023, we completed the sale of Rail Russia.
DISCUSSION OF OPERATING RESULTS
Net income for the first six months of 2023 was $140.7 million, or $3.87 per diluted share, compared to $78.4 million, or $2.18 per diluted share, for the same period in 2022. Results for the six months ended June 30, 2023 included a net negative impact of $1.1 million ($0.03 per diluted share) from tax adjustments and other items, compared to a net negative impact of $44.4 million ($1.23 per diluted share) from tax adjustments and other items for the six months ended June 30, 2022. See "Non-GAAP Financial Measures" at the end of this item for further details. Excluding the impact of these items, net income increased $19.0 million compared to the prior year, largely due to higher affiliates' earnings at the RRPF affiliates and the sale of natural gas holdings at Portfolio Management.
22

Net income for the second quarter of 2023 was $63.3 million, or $1.74 per diluted share, compared to $2.6 million, or $0.07 per diluted share, for the same period in 2022. Results for the second quarter of 2023 included a net positive impact of $0.2 million ($0.01 per diluted share) from tax adjustments and other items, compared to a net negative impact of $35.9 million ($1.00 per diluted share) from tax adjustments and other items for the three months ended June 30, 2022. See "Non-GAAP Financial Measures" at the end of this item for further details. Excluding the impact of these items, net income increased $24.6 million compared to the prior year, largely due to higher asset disposition gains at Rail North America, higher affiliates' earnings at the RRPF affiliates, and the sale of natural gas holdings at Portfolio Management.
The following table shows a summary of our reporting segments and consolidated financial results (in millions, except per share data):

| Three Months Ended June 30 |  | Six Months Ended June 30 |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Segment Revenues |  |  |  |  |  |  |  |  |
Rail North America | $ | 240.4 |  |  | $ | 221.8 |  |  | $ | 479.3 |  |  | $ | 445.5 |  |  |
Rail International | 76.2 |  |  | 68.4 |  |  | 149.5 |  |  | 138.3 |  |  |
Portfolio Management | 16.5 |  |  | 13.5 |  |  | 32.8 |  |  | 28.0 |  |  |
Other | 10.1 |  |  | 9.0 |  |  | 20.5 |  |  | 17.5 |  |  |
| $ | 343.2 |  |  | $ | 312.7 |  |  | $ | 682.1 |  |  | $ | 629.3 |  |  |
Segment Profit (Loss) |  |  |  |  |  |  |  |  |
Rail North America | $ | 79.3 |  |  | $ | 53.1 |  |  | $ | 174.5 |  |  | $ | 173.5 |  |  |
Rail International | 27.3 |  |  | 28.3 |  |  | 50.8 |  |  | 53.2 |  |  |
Portfolio Management | 26.6 |  |  | (15.7) |  |  | 54.9 |  |  | (19.6) |  |  |
Other | 6.0 |  |  | (7.8) |  |  | 13.9 |  |  | (5.0) |  |  |
| 139.2 |  |  | 57.9 |  |  | 294.1 |  |  | 202.1 |  |  |
Less: |  |  |  |  |  |  |  |  |
Selling, general and administrative expense | 52.0 |  |  | 47.9 |  |  | 102.4 |  |  | 95.1 |  |  |
Income taxes (includes $6.3 and $4.7 QTR and $13.2 and $3.5 YTD related to affiliates' earnings) | 23.9 |  |  | 7.4 |  |  | 51.0 |  |  | 28.6 |  |  |
Net Income (GAAP) | $ | 63.3 |  |  | $ | 2.6 |  |  | $ | 140.7 |  |  | $ | 78.4 |  |  |
Net income, excluding tax adjustments and other items (non-GAAP) (1) | $ | 63.1 |  |  | $ | 38.5 |  |  | $ | 141.8 |  |  | $ | 122.8 |  |  |
Diluted earnings per share (GAAP) | $ | 1.74 |  |  | $ | 0.07 |  |  | $ | 3.87 |  |  | $ | 2.18 |  |  |
Diluted earnings per share, excluding tax adjustments and other items (non-GAAP) (1) | $ | 1.73 |  |  | $ | 1.07 |  |  | $ | 3.90 |  |  | $ | 3.41 |  |  |
Investment Volume | $ | 486.6 |  |  | $ | 314.1 |  |  | $ | 873.6 |  |  | $ | 684.5 |  |  |

The following table shows our return on equity for the trailing 12 months ended June 30:

| 2023 |  | 2022
Return on Equity (GAAP) | 10.5 | % |  | 9.1 | %
Return on Equity, excluding tax adjustments and other items (non-GAAP) (1) | 11.4 | % |  | 11.1 | %

_________
(1) See "Non-GAAP Financial Measures" at the end of this item for further details.
23

Segment Operations
Segment profit is an internal performance measure used by the Chief Executive Officer to assess the profitability of each segment. Segment profit includes all revenues, expenses, pre-tax earnings from affiliates, and net gains on asset dispositions that are directly attributable to each segment. We allocate interest expense to the segments based on what we believe to be the appropriate risk-adjusted borrowing costs for each segment. Segment profit excludes selling, general and administrative expenses, income taxes, and certain other amounts not allocated to the segments.
RAIL NORTH AMERICA
Segment Summary
Demand for existing railcars continued to be robust for most railcar types, and Rail North America continued to capitalize on current market conditions by increasing renewal lease rates and lengthening lease terms. Utilization was 99.3% at the end of the quarter.
The following table shows Rail North America's segment results (in millions):

| Three Months Ended June 30 |  | Six Months Ended June 30 |  |  |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |
Lease revenue | $ | 218.9 |  |  | $ | 203.0 |  |  | $ | 434.0 |  |  | $ | 403.7 |  |  |  |  |  |  |
Other revenue | 21.5 |  |  | 18.8 |  |  | 45.3 |  |  | 41.8 |  |  |  |  |  |  |
Total Revenues | 240.4 |  |  | 221.8 |  |  | 479.3 |  |  | 445.5 |  |  |  |  |  |  |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |
Maintenance expense | 66.8 |  |  | 57.8 |  |  | 133.7 |  |  | 117.7 |  |  |  |  |  |  |
Depreciation expense | 66.1 |  |  | 64.9 |  |  | 131.6 |  |  | 128.4 |  |  |  |  |  |  |
Operating lease expense | 9.0 |  |  | 9.0 |  |  | 18.0 |  |  | 18.1 |  |  |  |  |  |  |
Other operating expense | 6.7 |  |  | 5.9 |  |  | 13.7 |  |  | 13.2 |  |  |  |  |  |  |
Total Expenses | 148.6 |  |  | 137.6 |  |  | 297.0 |  |  | 277.4 |  |  |  |  |  |  |
Other Income (Expense) |  |  |  |  |  |  |  |  |  |  |  |  |
Net gain on asset dispositions | 34.1 |  |  | 5.1 |  |  | 81.9 |  |  | 76.7 |  |  |  |  |  |  |
Interest expense, net | (44.5) |  |  | (34.9) |  |  | (86.8) |  |  | (69.3) |  |  |  |  |  |  |
Other expense | (2.1) |  |  | (1.3) |  |  | (2.5) |  |  | (2.0) |  |  |  |  |  |  |
Share of affiliates' pre-tax losses | — |  |  | — |  |  | (0.4) |  |  | — |  |  |  |  |  |  |
Segment Profit | $ | 79.3 |  |  | $ | 53.1 |  |  | $ | 174.5 |  |  | $ | 173.5 |  |  |  |  |  |  |
Investment Volume | $ | 161.3 |  |  | $ | 253.7 |  |  | $ | 457.8 |  |  | $ | 534.1 |  |  |  |  |  |  |

The following table shows the components of Rail North America's lease revenue (in millions):

| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Railcars | $ | 198.2 |  |  | $ | 180.5 |  |  | $ | 393.0 |  |  | $ | 359.2 |
Boxcars | 14.2 |  |  | 16.1 |  |  | 28.0 |  |  | 31.7 |
Locomotives | 6.5 |  |  | 6.4 |  |  | 13.0 |  |  | 12.8 |
Total | $ | 218.9 |  |  | $ | 203.0 |  |  | $ | 434.0 |  |  | $ | 403.7 |

24

Rail North America Fleet Data
The following table shows fleet activity and statistics for Rail North America railcars, excluding boxcars, for the quarter ended:

| June 30 2022 |  | September 30 2022 |  | December 31 2022 |  | March 31 2023 |  | June 30 2023
Beginning balance | 100,452 |  |  | 101,272 |  |  | 101,289 |  |  | 100,954 |  |  | 101,219 |
Railcars added | 1,414 |  |  | 772 |  |  | 583 |  |  | 1,816 |  |  | 358 |
Railcars scrapped | (594) |  |  | (506) |  |  | (486) |  |  | (324) |  |  | (316) |
Railcars sold | — |  |  | (249) |  |  | (432) |  |  | (1,227) |  |  | (676) |
Ending balance | 101,272 |  |  | 101,289 |  |  | 100,954 |  |  | 101,219 |  |  | 100,585 |
Utilization rate at quarter end (1) | 99.4 | % |  | 99.6 | % |  | 99.5 | % |  | 99.3 | % |  | 99.3 | %
Renewal success rate (2) | 87.7 | % |  | 87.2 | % |  | 85.7 | % |  | 77.9 | % |  | 85.3 | %
Active railcars at quarter end (3) | 100,614 |  |  | 100,834 |  |  | 100,396 |  |  | 100,475 |  |  | 99,871 |
Average active railcars (4) | 100,079 |  |  | 100,783 |  |  | 100,618 |  |  | 100,552 |  |  | 100,230 |

_________
(1) Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.
(2) The renewal success rate represents the percentage of railcars on expiring leases that were renewed with the existing lessee. The renewal success rate is an important metric because railcars returned by our customers may remain idle or incur additional maintenance and freight costs prior to being leased to new customers.
(3) Active railcars refers to the number of railcars on lease to customers. Changes in railcars on lease compared to prior quarters are impacted by the utilization of new railcars purchased from builders or in the secondary market and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.
(4) Average active railcars for the quarter is calculated using the number of active railcars at the end of each month.
As of June 30, 2023, leases for approximately 10,300 tank and freight cars and approximately 1,100 boxcars are scheduled to expire over the remainder of 2023. These amounts exclude railcars on leases expiring in 2023 that have already been renewed or assigned to a new lessee.
In 2022 we entered into a new long-term railcar supply agreement with a subsidiary of Trinity Industries, Inc. ("Trinity") to purchase 15,000 newly built railcars through 2028, with an option to order up to an additional 500 railcars each year from 2023 to 2028. The agreement enables us to order a broad mix of tank and freight cars. Trinity will deliver 6,000 tank cars (1,200 per year) from 2024 through 2028. The remaining 9,000 railcars, which can be a mix of freight and tank cars, will be ordered at a rate of 1,500 railcars per order year from 2023 to 2028 and delivered under a schedule to be determined. At June 30, 2023, 1,859 railcars have been ordered pursuant to the terms of the agreement, none of which have been delivered.
In 2018, we amended a long-term supply agreement with Trinity to extend the term to December 2023, and we agreed to purchase 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through 2023. At June 30, 2023, all 4,800 railcars have been ordered pursuant to the amended terms of the agreement, of which 4,194 railcars have been delivered.
In 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. ("ARI"), pursuant to which we agreed to purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-year period, beginning in April 2019 and ending in December 2023. ARI's railcar manufacturing business was acquired by a subsidiary of The Greenbrier Companies, Inc. on July 26, 2019, and such subsidiary assumed all of ARI's obligations under our long-term supply agreement. As of June 30, 2023, all 7,650 railcars have been ordered, of which 6,672 railcars have been delivered. All railcars covered under this agreement are expected to be delivered by early 2024.
25

Lease Price Index
Our Lease Price Index ("LPI") is an internally-generated business indicator that measures renewal activity for our North American railcar fleet, excluding boxcars. The average renewal lease rate change is reported as the percentage change between the average renewal lease rate and the average expiring lease rate. The average renewal lease term is reported in months and reflects the average renewal lease term in the LPI.
In the second quarter of 2023, we modified the methodology of the LPI calculation to more consistently reflect actual trends in renewal lease rates and renewal lease terms across the North American non-boxcar fleet. Under the modified methodology, the LPI calculation includes all renewal activity based on a 12-month trailing average, and the renewals are weighted by the count of all renewals during the reporting period. We believe this modification will provide investors and other constituents with a more complete representation of lease rate and term performance. The prior period LPI metrics presented below have been updated to reflect the change in calculation.
During the second quarter of 2023, the renewal rate change of the LPI was positive 33.1%, compared to positive 28.3% in the prior quarter, and positive 6.1% in the second quarter of 2022. Lease terms on renewals for cars in the LPI averaged 61 months in the current quarter, compared to 55 months in the prior quarter, and 51 months in the second quarter of 2022.
26

The following table shows fleet activity and statistics for Rail North America boxcars for the quarter ended:

| June 30 2022 |  | September 30 2022 |  | December 31 2022 |  | March 31 2023 |  | June 30 2023
Beginning balance | 10,283 |  |  | 10,315 |  |  | 10,224 |  |  | 8,663 |  |  | 8,789 |
Boxcars added | 85 |  |  | — |  |  | 106 |  |  | 229 |  |  | 279 |
Boxcars scrapped | 64 |  |  | (91) |  |  | (94) |  |  | (103) |  |  | (109) |
Boxcars sold | (117) |  |  | — |  |  | (1,573) |  |  | — |  |  | — |
Ending balance | 10,315 |  |  | 10,224 |  |  | 8,663 |  |  | 8,789 |  |  | 8,959 |
Utilization rate at quarter end (1) | 99.9 | % |  | 100.0 | % |  | 99.9 | % |  | 100.0 | % |  | 99.8 | %
Active boxcars at quarter end (2) | 10,309 |  |  | 10,220 |  |  | 8,657 |  |  | 8,788 |  |  | 8,942 |
Average active railcars (3) | 10,239 |  |  | 10,267 |  |  | 9,032 |  |  | 8,720 |  |  | 8,855 |

_________
(1) Utilization is calculated as the number of boxcars on lease as a percentage of total boxcars in the fleet.
(2) Active boxcars refers to the number boxcars on lease to customers. Changes in boxcars on lease compared to prior quarters are impacted by the utilization of new boxcars purchased from builders or in the secondary market and the disposition of boxcars that were sold or scrapped, as well as the fleet utilization rate.
(3) Average active boxcars is calculated using the number of active boxcars at the end of each month.
Comparison of the First Six Months of 2023 to the First Six Months of 2022
Segment Profit
In the first six months of 2023, segment profit of $174.5 million increased 0.6% compared to $173.5 million for the same period in the prior year. The increase was primarily driven by higher lease revenue and net gains on asset dispositions, partially offset by higher maintenance expense and interest expense. The amount and timing of disposition gains is dependent on a number of factors and may vary materially from year to year.
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Revenues
In the first six months of 2023, lease revenue increased $30.3 million, or 7.5%, driven by higher lease rates. Other revenue increased $3.5 million due to higher repair revenue and higher lease termination fees.
Expenses
In the first six months of 2023, maintenance expense increased $16.0 million, driven by more repair events, general inflationary pressures, and more repairs performed by the railroads. Depreciation expense increased $3.2 million due to the timing of new railcar investments and dispositions. Other operating expense increased $0.5 million due to higher switching and freight costs, partially offset by lower storage costs.
Other Income (Expense)
In the first six months of 2023, net gain on asset dispositions increased $5.2 million due to higher gains per railcar sold in the current year, partially offset by fewer railcars sold and lower net scrapping gains. The amount and timing of disposition gains is dependent on a number of factors and may vary materially from year to year. Interest expense increased $17.5 million, primarily driven by a higher average debt balance and a higher average interest rate.
Investment Volume
During the first six months of 2023, investment volume was $457.8 million compared to $534.1 million in the same period in 2022. We acquired 1,619 newly built railcars and purchased 1,021 railcars in the secondary market in the first six months of 2023, compared to 2,761 newly built railcars and 420 railcars in the secondary market in the same period in 2022.
Our investment volume is predominantly composed of acquired railcars, but also includes certain capitalized repairs and improvements to owned railcars and our maintenance facilities. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of railcars purchased, which may include tank cars and freight cars, as well as newly manufactured railcars or those purchased in the secondary market.
Comparison of the Second Quarter of 2023 to the Second Quarter of 2022
Segment Profit
In the second quarter of 2023, segment profit of $79.3 million increased 49.3% compared to $53.1 million for the same period in the prior year. The increase was primarily driven by higher lease revenue and higher net gains on asset dispositions, partially offset by higher maintenance expense. The amount and timing of disposition gains is dependent on a number of factors and will vary from year to year.
Revenues
In the second quarter of 2023, lease revenue increased $15.9 million, or 7.8%, driven by higher lease rates. Other revenue increased $2.7 million, primarily due to higher repair revenue.
Expenses
In the second quarter of 2023, maintenance expense increased $9.0 million. The increase was largely due to more repair events, higher costs, general inflationary pressures, and more repairs performed by the railroads. Depreciation expense increased $1.2 million due to the timing of new railcar investments and dispositions. Other operating expense increased $0.8 million due to higher switching, freight, and insurance costs.
Other Income (Expense)
In the second quarter of 2023, net gain on asset dispositions increased $29.0 million largely due to more railcars sold, partially offset by lower net scrapping gains and lower residual sharing gains. The amount and timing of disposition gains is dependent on a number of factors and will vary from quarter to quarter. Net interest expense increased $9.6 million, driven by a higher average debt balance and a higher average interest rate.
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RAIL INTERNATIONAL
Segment Summary
Rail International, composed primarily of GATX Rail Europe ("GRE"), produced solid operating results in the first six months of 2023 and continued to grow its fleet. GRE experienced renewal lease rate increases for most railcar types in the period.
Our rail business in India ("Rail India") increased its fleet size in the first six months of 2023 and continued to focus on investment opportunities, diversification of its fleet, and developing relationships with customers, suppliers and the Indian Railways. Demand for railcars in India remained robust, driven by continued growth in the economy and infrastructure development.
In the first quarter of 2023, we sold Rail Russia and recorded a gain of $0.3 million upon completion of the sale. The net assets of Rail Russia had been classified as held for sale, and we recorded impairment losses of $14.6 million in 2022. See "Note 6. Asset Impairments and Assets Held for Sale " in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
The following table shows Rail International's segment results (in millions):

| Three Months Ended June 30 |  | Six Months Ended June 30 |  |  |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |
Lease revenue | $ | 73.1 |  |  | $ | 66.5 |  |  | $ | 143.5 |  |  | $ | 134.1 |  |  |  |  |  |  |
Other revenue | 3.1 |  |  | 1.9 |  |  | 6.0 |  |  | 4.2 |  |  |  |  |  |  |
Total Revenues | 76.2 |  |  | 68.4 |  |  | 149.5 |  |  | 138.3 |  |  |  |  |  |  |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |
Maintenance expense | 14.6 |  |  | 12.2 |  |  | 30.5 |  |  | 26.2 |  |  |  |  |  |  |
Depreciation expense | 16.6 |  |  | 17.2 |  |  | 32.3 |  |  | 35.2 |  |  |  |  |  |  |
Other operating expense | 2.3 |  |  | 2.1 |  |  | 4.5 |  |  | 4.5 |  |  |  |  |  |  |
Total Expenses | 33.5 |  |  | 31.5 |  |  | 67.3 |  |  | 65.9 |  |  |  |  |  |  |
Other Income (Expense) |  |  |  |  |  |  |  |  |  |  |  |  |
Net gain on asset dispositions | 0.7 |  |  | 1.4 |  |  | 1.5 |  |  | 2.4 |  |  |  |  |  |  |
Interest expense, net | (13.5) |  |  | (11.1) |  |  | (26.0) |  |  | (22.3) |  |  |  |  |  |  |
Other (expense) income | (2.6) |  |  | 1.1 |  |  | (6.9) |  |  | 0.7 |  |  |  |  |  |  |
Segment Profit | $ | 27.3 |  |  | $ | 28.3 |  |  | $ | 50.8 |  |  | $ | 53.2 |  |  |  |  |  |  |
Investment Volume | $ | 77.3 |  |  | $ | 48.8 |  |  | $ | 158.4 |  |  | $ | 127.7 |  |  |  |  |  |  |

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GRE Fleet Data
The following table shows fleet activity and statistics for GRE railcars for the quarter ended:

| June 30 2022 |  | September 30 2022 |  | December 31 2022 |  | March 31 2023 |  | June 30 2023
Beginning balance | 27,192 |  |  | 27,470 |  |  | 27,701 |  |  | 28,005 |  |  | 28,461 |
Railcars added | 347 |  |  | 277 |  |  | 362 |  |  | 502 |  |  | 376 |
Railcars scrapped or sold | (69) |  |  | (46) |  |  | (58) |  |  | (46) |  |  | (78) |
Ending balance | 27,470 |  |  | 27,701 |  |  | 28,005 |  |  | 28,461 |  |  | 28,759 |
Utilization rate at quarter end (1) | 99.9 | % |  | 99.4 | % |  | 99.3 | % |  | 98.5 | % |  | 96.9 | %
Active railcars at quarter end (2) | 27,434 |  |  | 27,534 |  |  | 27,801 |  |  | 28,031 |  |  | 27,875 |
Average active railcars (3) | 27,158 |  |  | 27,489 |  |  | 27,658 |  |  | 27,931 |  |  | 27,973 |

_________
(1) Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.
(2) Active railcars refers to the number of railcars on lease to customers. Changes in railcars on lease compared to prior quarters are impacted by the utilization of newly built railcars and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.
(3) Average active railcars for the quarter is calculated using the number of active railcars at the end of each month.
As of June 30, 2023, leases for approximately 2,178 railcars are scheduled to expire over the remainder of 2023. These amounts exclude railcars on leases expiring in 2023 that have already been renewed or assigned to a new lessee.
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Rail India Fleet Data
The following table shows fleet activity and statistics for Rail India railcars for the quarter ended:

| June 30 2022 |  | September 30 2022 |  | December 31 2022 |  | March 31 2023 |  | June 30 2023
Beginning balance | 5,198 |  |  | 5,503 |  |  | 5,564 |  |  | 5,872 |  |  | 6,351 |
Railcars added | 305 |  |  | 61 |  |  | 308 |  |  | 479 |  |  | 576 |
Ending balance | 5,503 |  |  | 5,564 |  |  | 5,872 |  |  | 6,351 |  |  | 6,927 |
Utilization rate at quarter end (1) | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
Active railcars at quarter end (2) | 5,503 |  |  | 5,564 |  |  | 5,872 |  |  | 6,351 |  |  | 6,927 |
Average active railcars (3) | 5,366 |  |  | 5,518 |  |  | 5,703 |  |  | 6,038 |  |  | 6,584 |

_________
(1) Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.
(2) Active railcars refers to the number of railcars on lease to customers. Changes in railcars on lease compared to prior quarters are impacted by the utilization of newly built railcars and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.
(3) Average active railcars for the quarter is calculated using the number of active railcars at the end of each month.
Comparison of the First Six Months of 2023 to the First Six Months of 2022
Foreign Currency
Rail International's reported results of operations are impacted by fluctuations in the exchange rates of the U.S. dollar versus foreign currencies in which it conducts business, primarily the euro. In the first six months of 2023, fluctuations in the value of the euro, relative to the U.S. dollar, negatively impacted lease revenue by approximately $1.4 million and segment profit, excluding other income (expense), by approximately $0.8 million compared to the same period in 2022.
Segment Profit
In the first six months of 2023, segment profit of $50.8 million decreased 4.5% compared to $53.2 million for the same period in the prior year. Segment profit in 2023 included a $0.3 million disposition gain recorded as a result of the decision to exit the Rail Russia business. Excluding this disposition gain, results for Rail International were $2.7 million lower than 2022. The decrease was primarily due to changes in foreign exchange rates, including the impact of euro-zloty fluctuations, partially offset by more railcars on lease and higher lease rates.
Revenues
In the first six months of 2023, lease revenue increased $9.4 million, or 7.0%, due to more railcars on lease and higher lease rates at GRE and Rail India, partially offset by the impact of foreign exchange rates. Other revenue increased $1.8 million, driven by higher repair revenue.
Expenses
In the first six months of 2023, maintenance expense increased $4.3 million, primarily due to more repairs performed and higher costs for repairs, partially offset by the impact of foreign exchange rates. Depreciation expense decreased $2.9 million, due to certain operating assets at GRE becoming fully depreciated in the prior year and the impact of foreign exchange rates, partially offset by the impact of new railcars added to the fleet.
Other Income (Expense)
In the first six months of 2023, net gain on asset dispositions decreased $0.9 million, driven by fewer railcars sold and lower net scrapping gains, partially offset by the gain recorded on the sale of Rail Russia. Net interest expense increased $3.7 million, due to a higher average interest rate and a higher average debt balance. Other (expense) income was unfavorable by $7.6 million, driven by the negative impact of changes in foreign exchange rates, primarily euro-zloty fluctuations.
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Investment Volume
During the first six months of 2023, investment volume was $158.4 million compared to $127.7 million in the same period in 2022. In the first six months ended June 30, 2023, GRE acquired 878 newly built railcars compared to 572 newly built railcars for the same period in 2022, and Rail India acquired 1,055 newly built railcars in the current year compared to 673 newly built railcars for the same period in 2022.
Our investment volume is predominantly composed of acquired railcars, but also includes certain capitalized repairs and improvements to owned railcars. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of the various car types acquired, as well as fluctuations in the exchange rates of the foreign currencies in which Rail International conducts business.
Comparison of the Second Quarter of 2023 to the Second Quarter of 2022
Foreign Currency
Rail International's reported results of operations are impacted by fluctuations in the exchange rates of the U.S. dollar versus foreign currencies in which it conducts business, primarily the euro. In the second quarter of 2023, fluctuations in the value of the euro, relative to the U.S. dollar, positively impacted lease revenue by approximately $1.5 million and segment profit, excluding other income (expense), by approximately $0.7 million compared to the same period in 2022.
Segment Profit
In the second quarter of 2023, segment profit of $27.3 million decreased 3.5% compared to $28.3 million for the same period in the prior year. The decrease was primarily due to changes in foreign exchanges rates, including the impact of euro-zloty fluctuations, partially offset by more railcars on lease and higher lease rates.
Revenues
In the second quarter of 2023, lease revenue increased $6.6 million, or 9.9%, due to more railcars on lease and higher lease rates at GRE and Rail India, as well as the impact of foreign exchange rates. Other revenue increased $1.2 million, driven by higher repair revenue.
Expenses
In the second quarter of 2023, maintenance expense increased $2.4 million, due to more repairs performed, higher costs for repairs, and the impact of foreign exchange rates. Depreciation expense decreased $0.6 million, due to certain operating assets at GRE becoming fully depreciated in the prior year, partially offset by the impact of new railcars added to the fleet and the impact of foreign exchange rates.
Other Income (Expense)
In the second quarter of 2023, net gain on asset dispositions decreased $0.7 million, driven by fewer railcars sold and lower net scrapping gains. Net interest expense increased $2.4 million due to a higher average interest rate and a higher average debt balance. Other (expense) income was unfavorable by $3.7 million, driven by the negative impact of changes in foreign exchange rates, primarily euro-zloty fluctuations.
PORTFOLIO MANAGEMENT
Segment Summary
Portfolio Management's segment profit is attributable primarily to income from the RRPF affiliates, a group of 50% owned domestic and foreign joint ventures with Rolls-Royce plc (or affiliates thereof, collectively "Rolls-Royce"), a leading manufacturer of commercial aircraft jet engines. Segment profit included earnings from the RRPF affiliates of $48.3 million and $20.3 million for the six months and three months ended June 30, 2023, compared to $10.8 million and $15.6 million for the same periods in 2022. In the first quarter of 2022, RRPF recorded an impairment charge associated with aircraft spare engines in Russia that RRPF does not expect to recover. GATX's 50% share of that net impairment was $15.3 million ($11.5 million after tax).
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The operating environment for the RRPF affiliates continued to improve as international air passenger demand continues to recover.
Portfolio Management also includes GEL, our wholly owned entity that invests directly in aircraft spare engines. In the second quarter of 2023, GEL acquired nine aircraft spare engines for approximately $239 million. As of June 30, 2023, GEL owned 28 aircraft spare engines, with 14 on long-term leases with airline customers and 14 that are employed in an engine capacity agreement with Rolls-Royce for use in its engine maintenance programs. All engines at GEL are managed by the RRPF affiliates.
Portfolio Management also owns the Specialized Gas Vessels. In 2022, we made the decision to sell the Specialized Gas Vessels and recorded impairment losses totaling $34.3 million. We sold two Specialized Gas Vessels in the third quarter of 2022. In the first quarter of 2023, we sold one vessel and recorded losses of $1.6 million associated with the sale of the vessel and impairment of one of the two remaining vessels. In the second quarter of 2023, we sold one vessel and recorded a gain of $0.2 million associated with this sale. The one remaining vessel continues to be classified as held for sale as of June 30, 2023.
During the second quarter of 2023, Portfolio Management sold its natural gas holdings and recorded a gain of $5.7 million.
Portfolio Management's total asset base was $1,371.6 million at June 30, 2023, compared to $1,123.8 million at March 31, 2023, and $1,023.7 million at June 30, 2022.
The following table shows Portfolio Management’s segment results (in millions):

| Three Months Ended June 30 |  | Six Months Ended June 30 |  |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |
Lease revenue | $ | 8.1 |  |  | $ | 8.2 |  |  | $ | 16.4 |  |  | $ | 16.5 |  |  |  |  |
Marine operating revenue | 2.0 |  |  | 5.2 |  |  | 5.5 |  |  | 11.4 |  |  |  |  |
Other revenue | 6.4 |  |  | 0.1 |  |  | 10.9 |  |  | 0.1 |  |  |  |  |
Total Revenues | 16.5 |  |  | 13.5 |  |  | 32.8 |  |  | 28.0 |  |  |  |  |
Expenses |  |  |  |  |  |  |  |  |  |  |
Marine operating expense | 2.4 |  |  | 3.9 |  |  | 4.4 |  |  | 8.1 |  |  |  |  |
Depreciation expense | 6.1 |  |  | 4.9 |  |  | 11.5 |  |  | 9.9 |  |  |  |  |
Other operating expense | 1.4 |  |  | 0.6 |  |  | 2.3 |  |  | 1.1 |  |  |  |  |
Total Expenses | 9.9 |  |  | 9.4 |  |  | 18.2 |  |  | 19.1 |  |  |  |  |
Other Income (Expense) |  |  |  |  |  |  |  |  |  |  |
Net gain (loss) on asset dispositions | 6.0 |  |  | (30.8) |  |  | 4.5 |  |  | (29.9) |  |  |  |  |
Interest expense, net | (6.5) |  |  | (4.6) |  |  | (12.2) |  |  | (9.3) |  |  |  |  |
Other income (expense) | 0.2 |  |  | — |  |  | (0.3) |  |  | (0.1) |  |  |  |  |
Share of affiliates' pre-tax earnings | 20.3 |  |  | 15.6 |  |  | 48.3 |  |  | 10.8 |  |  |  |  |
Segment Profit (Loss) | $ | 26.6 |  |  | $ | (15.7) |  |  | $ | 54.9 |  |  | $ | (19.6) |  |  |  |  |
Investment Volume | $ | 239.0 |  |  | $ | — |  |  | $ | 239.0 |  |  | $ | — |  |  |  |  |

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The following table shows the net book values of Portfolio Management's assets (in millions):

| June 30 2022 |  | September 30 2022 |  | December 31 2022 |  | March 31 2023 |  | June 30 2023
Investment in RRPF Affiliates | $ | 596.2 |  |  | $ | 603.7 |  |  | $ | 574.3 |  |  | $ | 597.2 |  |  | $ | 611.3 |
GEL owned aircraft spare engines | 333.2 |  |  | 329.5 |  |  | 475.0 |  |  | 469.6 |  |  | 702.5 |
Specialized Gas Vessels | 70.3 |  |  | 28.4 |  |  | 25.1 |  |  | 15.2 |  |  | 8.9 |
Other owned assets | 24.0 |  |  | 29.5 |  |  | 32.2 |  |  | 41.8 |  |  | 48.9 |
Managed assets (1) | 6.0 |  |  | 4.1 |  |  | 2.3 |  |  | 1.4 |  |  | 1.0 |

_________
(1) Amounts shown represent the estimated net book value of assets managed for third parties and are not included in our consolidated balance sheets.
RRPF Affiliates Engine Portfolio Data
As of June 30, 2023, the RRPF affiliates' portfolio consisted of 392 aircraft spare engines with a net book value of $4,106.6 million, compared to 395 aircraft spare engines with a net book value of $4,088.2 million at the end of the prior quarter and 396 aircraft spare engines with a net book value of $4,218.9 million at June 30, 2022.
The following table shows portfolio activity and statistics for the RRPF affiliates' aircraft spare engines for the quarter ended:

| June 30 2022 |  | September 30 2022 |  | December 31 2022 |  | March 31 2023 |  | June 30 2023
Beginning balance | 398 |  |  | 396 |  |  | 394 |  |  | 398 |  |  | 395 |
Engine acquisitions | 1 |  |  | 3 |  |  | 5 |  |  | 1 |  |  | 3 |
Engine dispositions | (3) |  |  | (5) |  |  | (1) |  |  | (4) |  |  | (6) |
Ending balance | 396 |  |  | 394 |  |  | 398 |  |  | 395 |  |  | 392 |
Utilization rate at quarter end (1) | 91.9 | % |  | 93.7 | % |  | 94.2 | % |  | 94.4 | % |  | 95.9 | %
Average leased engines (2) | 367 |  |  | 365 |  |  | 373 |  |  | 374 |  |  | 375 |

_________
(1) Utilization is calculated as the number of engines on lease as a percentage of total engines in the fleet.
(2) Average leased engines is calculated using the number of leased engines at the end of each month.
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Comparison of the First Six Months of 2023 to the First Six Months of 2022
Segment Profit
In the first six months of 2023, segment profit was $54.9 million, compared to segment loss of $19.6 million for the same period in the prior year. Segment profit in 2023 included $1.4 million of losses associated with the Specialized Gas Vessels. Segment loss in 2022 included a $31.5 million impairment charge recorded as a result of the decision to sell the Specialized Gas Vessels and a $15.3 million net impairment charge (GATX's 50% share) for aircraft spare engines in Russia that RRPF does not expect to recover. Excluding these losses, results for Portfolio Management were $29.1 million higher than 2022, driven by higher earnings at the RRPF affiliates, the sale of natural gas holdings, and higher results from GEL operations.
Revenues
In the first six months of 2023, lease revenue was comparable to the same period in the prior year. Marine operating revenue decreased $5.9 million, driven by the absence of revenue from the Specialized Gas Vessels sold in 2022 and 2023. Other revenue increased $10.8 million as a result of revenue from engines acquired in 2022 and 2023 and utilized in the engine capacity agreement with Rolls-Royce.
Expenses
In the first six months of 2023, marine operating expense decreased $3.7 million, due to the absence of expense from the Specialized Gas Vessels sold in 2022 and 2023. Depreciation expense increased $1.6 million, due to new aircraft spare engines acquired in 2022 and 2023, offset by the absence of depreciation expense on the Specialized Gas Vessels due to the classification of the vessels as held for sale in 2022.
Other Income (Expense)
In the first six months of 2023, net gain (loss) on asset dispositions was favorable by $34.4 million, driven by impairment losses recorded in the prior year due to the decision to sell the Specialized Gas Vessels and the sale of the natural gas holdings in the current year.
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In the first six months of 2023, income from our share of affiliates' earnings increased $37.5 million, driven by the absence of the $15.3 million net impairment charge recorded in the prior year for aircraft spare engines in Russia that RRPF does not expect to recover, higher income from operations, and higher remarketing income.
Investment Volume
In the first six months of 2023, investment volume was $239.0 million, compared to zero in the same period in 2022. During 2023, GEL acquired nine aircraft spare engines.
Comparison of the Second Quarter of 2023 to the Second Quarter of 2022
Segment Profit
In the second quarter of 2023, segment profit was $26.6 million, compared to segment loss of $15.7 million for the same period in the prior year. Segment profit in 2023 included $0.2 million of gains associated with the Specialized Gas Vessels. Segment loss in 2022 included a $31.5 million impairment charge recorded as a result of the decision to sell the Specialized Gas Vessels. Excluding these items, results for Portfolio Management were $10.6 million higher than 2022, driven by higher earnings at the RRPF affiliates, the sale of natural gas holdings, and higher results from GEL operations.
Revenues
In the second quarter of 2023, lease revenue was comparable to the same period in the prior year. Marine operating revenue decreased $3.2 million, driven by the absence of revenue from the Specialized Gas Vessels sold in 2022 and 2023. Other revenue increased $6.3 million as a result of revenue from engines purchased in 2022 and 2023 and utilized in the engine capacity agreement with Rolls-Royce.
Expenses
In the second quarter of 2023, marine operating expense decreased $1.5 million, due to the absence of expense from the Specialized Gas Vessels sold in 2022 and 2023. Depreciation expense increased $1.2 million, due to new aircraft spare engines acquired in 2022 and 2023, offset by the absence of depreciation expense on the Specialized Gas Vessels due to the classification of the vessels as held for sale in 2022.
Other Income (Expense)
In the second quarter of 2023, net gain (loss) on asset dispositions was favorable by $36.8 million, driven by impairment losses recorded in the prior year as a result of the decision to sell the Specialized Gas Vessels and the sale of the natural gas holdings in the current year.
In the second quarter of 2023, income from our share of affiliates' earnings increased $4.7 million, driven by higher income from operations and higher remarketing income.
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OTHER
Other comprises our Trifleet Leasing business, as well as selling, general and administrative expenses ("SG&A"), unallocated interest expense, and miscellaneous income and expense not directly associated with the reporting segments and certain eliminations.
In the second quarter of 2022, GATX executed a multi-party amended and restated settlement agreement related to its share of estimated environmental remediation costs to be incurred at a previously owned facility that was sold in 1974. As a result, GATX recorded $5.9 million of expense to establish a reserve for its share of the remaining anticipated remediation and related costs.
The following table shows components of Other (in millions):

| Three Months Ended June 30 |  | Six Months Ended June 30 |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Trifleet Leasing revenue | $ | 10.1 |  |  | $ | 9.0 |  |  | $ | 20.5 |  |  | $ | 17.5 |  |  |
Trifleet Leasing segment profit | $ | 3.5 |  |  | $ | 3.4 |  |  | $ | 7.2 |  |  | $ | 6.4 |  |  |
Unallocated interest income | 2.7 |  |  | 0.1 |  |  | 5.7 |  |  | 0.6 |  |  |
Other (expense) income, including eliminations | (0.2) |  |  | (11.3) |  |  | 1.0 |  |  | (12.0) |  |  |
Segment Profit (Loss) | $ | 6.0 |  |  | $ | (7.8) |  |  | $ | 13.9 |  |  | $ | (5.0) |  |  |
Selling, general and administrative expense | $ | 52.0 |  |  | $ | 47.9 |  |  | $ | 102.4 |  |  | $ | 95.1 |  |  |

Trifleet Leasing Summary
The tank container leasing market experienced softer demand across certain regions, with some companies postponing investment decisions. Utilization was 91.5% at the end of the quarter.
Trifleet Leasing Tank Container Data
The following table shows fleet statistics for Trifleet Leasing's tank containers for the quarter ended:

| June 30 2022 |  | September 30 2022 |  | December 31 2022 |  | March 31 2023 |  | June 30 2023
Ending balance - owned and managed | 20,576 |  |  | 21,187 |  |  | 21,999 |  |  | 22,528 |  |  | 22,870 |
Utilization rate at quarter-end - owned and managed (1) | 92.4 | % |  | 93.1 | % |  | 93.1 | % |  | 93.1 | % |  | 91.5 | %

_________
(1) Utilization is calculated as the number of tank containers on lease as a percentage of total tank containers in the fleet.
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SG&A, Unallocated Interest and Other
SG&A increased $7.3 million for first six months of 2023 compared to the same period in the prior year. SG&A increased $4.1 million for the second quarter of 2023 compared to the same period in the prior year. Both variances were driven by higher employee-related expenses, including higher share-based compensation expenses, and higher legal costs.
Unallocated interest income (the difference between external interest expense and interest expense allocated to the reporting segments) in any year is affected by our consolidated leverage position, the timing of debt issuances and investing activities, and intercompany allocations.
Other (expense) income, including eliminations was favorable by $13.0 million for first six months of 2023 compared to the same period in the prior year. Other (expense) income, including eliminations was favorable by $11.1 million in the second quarter of 2023 compared to the same period in the prior year. Both variances were driven by the absence of environmental remediation costs recorded in the prior year, lower pension-related expenses, the absence of make whole payments associated with the early repayment of debt in the prior year, and the impact of foreign exchange rates on a foreign pension plan.
Consolidated Income Taxes
See "Note 9. Income Taxes" in Part I, Item 1 of this Quarterly Report on Form 10-Q.
CASH FLOW DISCUSSION
We generate a significant amount of cash from operating activities and investment portfolio proceeds. We also access domestic and international capital markets by issuing unsecured or secured debt and commercial paper. We use these resources, along with available cash balances, to fulfill our debt, lease, and dividend obligations, to support our share repurchase programs, and to fund portfolio investments and capital additions. We primarily use cash from operations to fund daily operations. The timing of asset dispositions and changes in working capital impact cash flows from portfolio proceeds and operations. As a result, these cash flow components may vary materially from quarter to quarter and year to year.
As of June 30, 2023, we had an unrestricted cash balance of $317.5 million. We also have a $250 million 3-year unsecured revolving credit facility in the United States that matures in 2026 and a $600 million, 5-year unsecured revolving credit facility in the United States that matures in 2028, both of which are fully available as of June 30, 2023.
The following table shows our cash flows from operating, investing and financing activities for the six months ended June 30 (in millions):

| 2023 |  | 2022 |  |
Net Cash Provided by Operating Activities | $ | 258.4 |  |  | $ | 216.5 |  |  |
Net Cash Used in Investing Activities | (544.6) |  |  | (476.1) |  |  |
Net Cash Provided by Financing Activities | 298.9 |  |  | 99.0 |  |  |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 1.0 |  |  | (3.4) |  |  |
Net increase (decrease) in Cash, Cash Equivalents, and Restricted Cash during the period | $ | 13.7 |  |  | $ | (164.0) |  |  |

Net Cash Provided by Operating Activities
Net cash provided by operating activities for the first six months of 2023 of $258.4 million increased $41.9 million compared to the same period in 2022. Comparability among reporting periods is impacted by the timing of changes in working capital items. Specifically, higher cash receipts from revenue and lower cash payments for operating expenses were partially offset by higher payments for interest and operating leases.
38

Net Cash Used in Investing Activities
The following table shows our principal sources and uses of cash flows from investing activities for the six months ended June 30 (in millions):

| 2023 |  | 2022 |  |
Portfolio Investments and Capital Additions (1) | $ | (873.6) |  |  | $ | (684.5) |  |  |
Portfolio Proceeds (2) | 166.5 |  |  | 160.8 |  |  |
Proceeds From Short-Term Investments (3) | 150.0 |  |  | — |  |  |
Other Investing Activity | 12.5 |  |  | 47.6 |  |  |
Net Cash Used in Investing Activities | $ | (544.6) |  |  | $ | (476.1) |  |  |

_________
(1) Portfolio investments and capital additions primarily consist of purchases of operating assets and capitalized asset improvements.
(2) Portfolio proceeds primarily consist of proceeds from sales of operating assets.
(3) Proceeds from short-term U.S. Treasury Obligations with an original maturity date of over 90 days.
The increase in portfolio investments and capital additions of $189.1 million for the first six months of 2023 was primarily due to more aircraft spare engines acquired at GEL and more railcars acquired at Rail International, partially offset by fewer railcars acquired at Rail North America and fewer tank containers acquired at Trifleet Leasing. The timing of investments depends on purchase commitments, transaction opportunities, and market conditions.
Portfolio proceeds increased by $5.7 million for the first six months of 2023, resulting from proceeds from the sale of Rail Russia and two of the Specialized Gas Vessels at Portfolio Management, partially offset by fewer railcars sold at Rail North America.
Net Cash Provided by Financing Activities
The following table shows our principal sources and uses of cash flows from financing activities for the six months ended June 30 (in millions):

| 2023 |  | 2022 |  |
Net proceeds from issuance of debt (original maturities longer than 90 days (1) | $ | 585.4 |  |  | $ | 395.1 |  |  |
Repayments of debt (original maturities longer than 90 days) (1) | (250.0) |  |  | (250.0) |  |  |
Net (decrease) increase in debt with original maturities of 90 days or less | (6.8) |  |  | 3.4 |  |  |
Dividends | (40.8) |  |  | (39.2) |  |  |
Purchases of assets previously leased (2) | — |  |  | (1.5) |  |  |
Stock repurchases (3) | — |  |  | (39.2) |  |  |
Other | 11.1 |  |  | 30.4 |  |  |
Net cash provided by financing activities | $ | 298.9 |  |  | $ | 99.0 |  |  |

_________
(1) In the first six months of 2023, proceeds from the issuance of debt were $585.4 million (net of debt issuance costs). We issued $400 million of 10-year unsecured debt at a 5.474% yield and drew $190.2 million from the four delayed draw bank term loans noted in the Delayed Draw Terms Loan section of "Liquidity and Capital Resources" below.
(2) We did not purchase any railcars that were previously leased in the first six months 2023, compared to 21 railcars in the first six months of 2022.
(3) We did not repurchase any shares of common stock in the first six months of 2023, compared to 418,757 shares of common stock repurchased for $42.2 million during the same period in 2022, of which $39.2 million settled in the period.
39

LIQUIDITY AND CAPITAL RESOURCES
General
We fund our investments and meet our debt, lease, and dividend obligations using our available cash balances, as well as cash generated from operating activities, sales of assets, commercial paper issuances, committed revolving credit facilities, distributions from affiliates, and issuances of secured and unsecured debt. We primarily use cash from operations to fund daily operations. We use both domestic and international capital markets and banks to meet our debt financing needs.
Material Cash Obligations
The following table shows our material cash obligations, including debt principal and related interest payments, lease payments, and purchase commitments at June 30, 2023 (in millions):

| Material Cash Obligations by Period
| Total |  | 2023 (1) |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | Thereafter
Recourse debt | $ | 6,847.5 |  |  | $ | 250.0 |  |  | $ | 523.6 |  |  | $ | 518.2 |  |  | $ | 560.0 |  |  | $ | 429.1 |  |  | $ | 4,566.6 |
Interest on recourse debt (2) | 2,096.4 |  |  | 124.7 |  |  | 222.4 |  |  | 208.1 |  |  | 195.6 |  |  | 176.4 |  |  | 1,169.2 |
Commercial paper and credit facilities | 10.9 |  |  | 10.9 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Operating lease obligations | 276.6 |  |  | 18.5 |  |  | 39.2 |  |  | 36.5 |  |  | 45.0 |  |  | 38.8 |  |  | 98.6 |
Purchase commitments (3) | 2,656.6 |  |  | 599.8 |  |  | 583.4 |  |  | 352.3 |  |  | 334.4 |  |  | 337.9 |  |  | 448.8 |
Total | $ | 11,888.0 |  |  | $ | 1,003.9 |  |  | $ | 1,368.6 |  |  | $ | 1,115.1 |  |  | $ | 1,135.0 |  |  | $ | 982.2 |  |  | $ | 6,283.2 |

_________
(1) For the remainder of the year.
(2) For floating rate debt, future interest payments are based on the applicable interest rate as of June 30, 2023.
(3) Primarily railcar purchase commitments. The amounts shown for all years are based on management's estimates of the timing, anticipated railcar types, and related costs of railcars to be purchased under its agreements. For additional details on our purchase agreements, refer to the discussion of Rail North America operating results within this item.
Short-Term Borrowings
We primarily use short-term borrowings as a source of working capital and to temporarily fund differences between our operating cash flows and portfolio proceeds, and our capital investments and debt maturities. We do not maintain or target any particular level of short-term borrowings on a permanent basis. Rather, we will temporarily utilize short-term borrowings at levels we deem appropriate until we decide to pay down these balances.
The following table shows additional information regarding our short-term borrowings for the six months ended June 30, 2023:

| Europe (1)
Balance as of June 30 (in millions) | $ | 10.9 |
Weighted-average interest rate | 4.0 | %
Euro/dollar exchange rate | 1.09 |
Average daily amount outstanding year to date (in millions) | $ | 17.9 |
Weighted-average interest rate | 3.3 | %
Average Euro/dollar exchange rate | 1.08 |
Average daily amount outstanding during the second quarter (in millions) | $ | 18.3 |
Weighted-average interest rate | 3.4 | %
Average Euro/dollar exchange rate | 1.09 |

_________
(1)Short-term borrowings in Europe are composed of borrowings under bank credit facilities.
40

Credit Lines and Facilities
We have a $600 million, 5-year unsecured revolving credit facility in the United States. In the second quarter of 2023, we entered into an amendment to this facility to extend the maturity by one year from May 2027 to May 2028. As of June 30, 2023, the full $600 million was available under this facility. Additionally, we have a $250 million 3-year unsecured revolving credit facility in the United States. In the second quarter of 2023, we also entered into an amendment to this facility, which extended the maturity by one year from May 2025 to May 2026. As of June 30, 2023, the full $250 million was available under this facility.
Our European subsidiaries have unsecured credit facilities with an aggregate limit of €35.0 million. As of June 30, 2023, €25.0 million was available under these credit facilities.
Delayed Draw Term Loans
The following table shows our delayed draw term loan agreements ("DDTL") as of June 30, 2023 (in millions):

| DDTL Date |  | Maturity Date |  | Facility Amount |  | Total Amount Drawn(1) |  | Amount Drawn in 2023 |  | Total Amount Outstanding
U.S.(2) | 12/14/2020 |  | 12/14/2023 |  | $ | 500.0 |  |  | $ | 384.0 |  |  | $ | — |  |  | $ | 250.0 |
U.S. | 1/12/2023 |  | 1/12/2026(3) |  | 100.0 |  |  | 100.0 |  |  | 100.0 |  |  | 100.0 |
India(4)(5) | 6/16/2023 |  | 6/20/2027 |  | 50.0 |  |  | 12.2 |  |  | 12.2 |  |  | 12.2 |
U.S. | 1/31/2023 |  | 1/31/2028 |  | 50.0 |  |  | 50.0 |  |  | 50.0 |  |  | 50.0 |
India(4) | 9/12/2022 |  | 2/28/2028 |  | 28.0 |  |  | 28.0 |  |  | 28.0 |  |  | 28.0 |

_________
(1) Amounts borrowed and repaid are not allowed to be re-borrowed.
(2) In 2021, we terminated the remaining unused commitment of $116 million.
(3) Contains two one-year extension options.
(4) Denominated in Indian rupees, but presented in U.S. dollars in this table.
(5) Advances on this facility can be drawn through December 31, 2023. One quarter of the outstanding balance is due on June 20, 2026 with the remaining balance due on June 20, 2027.
Restrictive Covenants
Our $250 million and $600 million revolving credit facilities contain various restrictive covenants, including requirements to maintain a fixed charge coverage ratio and an asset coverage test. Some of our bank term loans have the same financial covenants as these facilities.
The indentures for our public debt also contain various restrictive covenants, including limitations on liens provisions that restrict the amount of additional secured indebtedness that we may incur. Additionally, certain exceptions to the covenants permit us to incur an unlimited amount of purchase money and nonrecourse indebtedness.
At June 30, 2023, our European rail subsidiaries ("GATX Rail Europe" or "GRE") had outstanding term loans, public debt, and private placement debt balances totaling €740.0 million. The loans are guaranteed by GATX Corporation and are subject to similar restrictive covenants as the revolving credit facility noted above.
At June 30, 2023, we were in compliance with all covenants and conditions of all of our credit agreements. We do not anticipate any covenant violations nor do we expect that any of these covenants will restrict our operations or our ability to obtain additional financing.
Credit Ratings
The global capital market environment and outlook may affect our funding options and our financial performance. Our access to capital markets at competitive rates depends on our credit rating and rating outlook, as determined by rating agencies. As of June 30, 2023, our long-term unsecured debt was rated BBB by Standard & Poor's, Baa2 by Moody’s Investor Service and BBB+ by Fitch Ratings, Inc., and our short-term unsecured debt was rated A-2 by Standard & Poor's, P-2 by Moody’s Investor Service and F2 by Fitch Ratings, Inc.. Our rating outlook from all agencies was stable.
41

Leverage
Leverage is expressed as a ratio of debt (including debt and lease obligations, net of unrestricted cash and short-term investments) to equity. The following table shows the components of recourse leverage (in millions, except recourse leverage ratio):

| June 30 2023 |  | March 31 2023 |  | December 31 2022 |  | September 30 2022 |  | June 30 2022
Debt and lease obligations, net of unrestricted cash and short-term investments: |  |  |  |  |  |  |  |  |
Unrestricted cash and short-term investments | $ | (317.5) |  |  | $ | (177.4) |  |  | $ | (452.2) |  |  | $ | (596.3) |  |  | $ | (180.3) |
Commercial paper and bank credit facilities | 10.9 |  |  | 20.3 |  |  | 17.3 |  |  | 16.3 |  |  | 20.0 |
Recourse debt | 6,785.6 |  |  | 6,360.9 |  |  | 6,431.5 |  |  | 6,353.1 |  |  | 5,964.4 |
Operating lease obligations | 241.1 |  |  | 246.2 |  |  | 257.9 |  |  | 259.0 |  |  | 266.7 |
Total debt and lease obligations, net of unrestricted cash and short-term investments | $ | 6,720.1 |  |  | $ | 6,450.0 |  |  | $ | 6,254.5 |  |  | $ | 6,032.1 |  |  | $ | 6,070.8 |
Total recourse debt (1) | $ | 6,720.1 |  |  | $ | 6,450.0 |  |  | $ | 6,254.5 |  |  | $ | 6,032.1 |  |  | $ | 6,070.8 |
Shareholders' Equity | $ | 2,178.9 |  |  | $ | 2,101.5 |  |  | $ | 2,029.6 |  |  | $ | 1,940.5 |  |  | $ | 1,981.5 |
Recourse Leverage (2) | 3.1 |  |  | 3.1 |  |  | 3.1 |  |  | 3.1 |  |  | 3.1 |

_________
(1) Includes recourse debt, commercial paper and bank credit facilities, and operating and finance lease obligations, net of unrestricted cash and short-term investments.
(2) Calculated as total recourse debt / shareholder's equity.
GATX Common Stock Repurchases
On January 25, 2019, our board of directors approved a $300.0 million share repurchase program, pursuant to which we are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to Rule 10b5-1 plans. The share repurchase authorization does not have an expiration date, does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time. The timing of repurchases will be dependent on market conditions and other factors. No share repurchases were completed during the six months ended June 30, 2023, compared to 418,757 shares of common stock purchased for $42.2 million, excluding commissions, of which $39.2 million settled in the period during the first six months in 2022. As of June 30, 2023, $89.6 million remained available under the repurchase authorization.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no changes to our critical accounting policies during the six months ended June 30, 2023. Refer to our Annual Report on Form 10-K for the year ended December 31, 2022, for a summary of our policies.
42

NON-GAAP FINANCIAL MEASURES
In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP components, as defined by the Securities and Exchange Commission ("SEC"). These measures are not in accordance with, or a substitute for, GAAP, and our financial measures may be different from non-GAAP financial measures used by other companies. We have provided a reconciliation of our non-GAAP components to the most directly comparable GAAP components.
Reconciliation of Non-GAAP Components Used in the Computation of Certain Financial Measures
Net Income Measures
We exclude the effects of certain tax adjustments and other items for purposes of presenting net income, diluted earnings per share, and return on equity because we believe these items are not attributable to our business operations. Management utilizes net income, excluding tax adjustments and other items, when analyzing financial performance because such amounts reflect the underlying operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides investors and other users of our financial statements with meaningful supplemental information for purposes of analyzing year-to-year financial performance on a comparable basis and assessing trends.
The following tables show our net income and diluted earnings per share, excluding tax adjustments and other items (in millions, except per share data):

Impact of Tax Adjustments and Other Items on Net Income: |  |  |  |  |  |  |
| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Net income (GAAP) | $ | 63.3 |  |  | $ | 2.6 |  |  | $ | 140.7 |  |  | $ | 78.4 |
Adjustments attributable to consolidated pre-tax income: |  |  |  |  |  |  |
(Gain) Loss on Specialized Gas Vessels at Portfolio Management (1) | $ | (0.2) |  |  | $ | 31.5 |  |  | $ | 1.4 |  |  | $ | 31.5 |
Gain on sale of Rail Russia at Rail International (2) | — |  |  | — |  |  | (0.3) |  |  | — |
Environmental remediation costs (3) | — |  |  | 5.9 |  |  | — |  |  | 5.9 |
Total adjustments attributable to consolidated pre-tax income | $ | (0.2) |  |  | $ | 37.4 |  |  | $ | 1.1 |  |  | $ | 37.4 |
Income taxes thereon, based on applicable effective tax rate | $ | — |  |  | $ | (1.5) |  |  | $ | — |  |  | $ | (1.5) |
Other income tax adjustments attributable to consolidated income: |  |  |  |  |  |  |
Income tax rate change (4) | — |  |  | — |  |  | — |  |  | (3.0) |
Total other income tax adjustments attributable to consolidated income | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (3.0) |
Adjustments attributable to affiliates' earnings, net of taxes: |  |  |  |  |  |  |
Aircraft spare engine impairment at RRPF (5) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 11.5 |
Total adjustments attributable to affiliates' earnings, net of taxes | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 11.5 |
Net income, excluding tax adjustments and other items (non-GAAP) | $ | 63.1 |  |  | $ | 38.5 |  |  | $ | 141.8 |  |  | $ | 122.8 |

43

Impact of Tax Adjustments and Other Items on Diluted Earnings per Share: |  |  |  |
| Three Months Ended June 30 |  | Six Months Ended June 30
| 2023 |  | 2022 |  | 2023 |  | 2022
Diluted earnings per share (GAAP) | $ | 1.74 |  |  | $ | 0.07 |  |  | $ | 3.87 |  |  | $ | 2.18 |
Adjustments attributable to consolidated income, net of taxes: |  |  |  |  |  |  |
(Gain) Loss on Specialized Gas Vessels at Portfolio Management (1) | (0.01) |  |  | 0.87 |  |  | 0.04 |  |  | 0.87 |
Gain on sale of Rail Russia at Rail International (2) | — |  |  | — |  |  | (0.01) |  |  | — |
Environmental remediation costs (3) | — |  |  | 0.12 |  |  | — |  |  | 0.12 |
Other income tax adjustments attributable to consolidated income: |  |  |  |  |  |  |
Income tax rate change (4) | — |  |  | — |  |  | — |  |  | (0.08) |
Adjustments attributable to affiliates' earnings, net of taxes: |  |  |  |  |  |  |
Aircraft spare engine impairment at RRPF (5) | — |  |  | — |  |  | — |  |  | 0.32 |
Diluted earnings per share, excluding tax adjustments and other items (non-GAAP)* | $ | 1.73 |  |  | $ | 1.07 |  |  | $ | 3.90 |  |  | $ | 3.41 |

_________
* Sum of individual components may not be additive due to rounding.
44

The following tables show our net income and return on equity, excluding tax adjustments and other items, for the trailing 12 months ended June 30 (in millions):

| 2023 |  | 2022
Net income (GAAP) | $ | 218.2 |  |  | $ | 179.5 |
Adjustments attributable to consolidated pre-tax income: |  |  |
Loss on Specialized Gas Vessels at Portfolio Management (1) | $ | 4.2 |  |  | $ | 31.5 |
Net loss on Rail Russia at Rail International (2) | 14.3 |  |  | — |
Environmental remediation costs (3) | — |  |  | 5.9 |
Net insurance proceeds (6) | — |  |  | (5.3) |
Total adjustments attributable to pre-tax income | $ | 18.5 |  |  | $ | 32.1 |
Income taxes thereon, based on applicable effective tax rate | $ | — |  |  | $ | (0.2) |
Other income tax adjustments attributable to income: |  |  |
Income tax rate change (4) | — |  |  | (3.0) |
Total other income tax adjustments attributable to consolidated income | $ | — |  |  | $ | (3.0) |
Adjustments attributable to affiliates' earnings, net of taxes: |  |  |
Aircraft spare engine impairment at RRPF (5) | $ | — |  |  | $ | 11.5 |
Total adjustments attributable to affiliates' earnings, net of taxes | $ | — |  |  | $ | 11.5 |
Net income, excluding tax adjustments and other items (non-GAAP) | $ | 236.7 |  |  | $ | 219.9 |

_________
(1) In the second quarter of 2022, we made the decision to sell the Specialized Gas Vessels. As a result, we recorded $31.5 million of losses in the second quarter of 2022 associated with the impairments of these assets. In the fourth quarter of 2022, we recorded $2.8 million of losses associated with the impairments of these assets. In the first quarter of 2023, we recorded $1.6 million of losses associated with the impairments and subsequent sales of these assets. In the second quarter of 2023, we recorded a gain of $0.2 million associated with the subsequent sales of these assets.
(2) In the third quarter of 2022, we made the decision to exit Rail Russia and recorded losses in 2022 associated with the impairment of the net assets. In the first quarter of 2023, we sold Rail Russia and recorded a gain on the final sale of this business.
(3) Reserve recorded as part of an executed agreement for anticipated remediation costs at a previously owned property, sold in 1974.
(4) Deferred income tax adjustment due to an enacted corporate income tax rate reduction in Austria in 2022.
(5) Impairment losses related to aircraft spare engines in Russia that RRPF does not expect to recover.
(6) Net gain from insurance recoveries for storm damage to a maintenance facility at Rail North America.

| 2023 |  | 2022
Return on Equity (GAAP) | 10.5 | % |  | 9.1 | %
Return on Equity, excluding tax adjustments and other items (non-GAAP) | 11.4 | % |  | 11.1 | %

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Since December 31, 2022, there have been no material changes in our interest rate and foreign currency exposures or types of derivative instruments used to hedge these exposures. For a discussion of our exposure to market risk, refer to "Item 7A. Quantitative and Qualitative Disclosure about Market Risk" of our Annual Report on Form 10-K for the year ended December 31, 2022.
45

Item 4. Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective.
No changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended June 30, 2023, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
46

PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Information concerning litigation and other contingencies is described in "Note 13. Legal Proceedings and Other Contingencies" in Part I, Item 1 of this Quarterly Report on Form 10-Q and is incorporated herein by reference.
Item 1A. Risk Factors
There have been no material changes in our risk factors since December 31, 2022. For a discussion of our risk factors, refer to "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On January 25, 2019, our board of directors approved a $300.0 million share repurchase program, pursuant to which we are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to Rule 10b5-1 plans. The share repurchase authorization does not have an expiration date, does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time. The timing of share repurchases will be dependent on market conditions and other factors.
No share repurchases were completed during the second quarter of 2023. As of June 30, 2023, $89.6 million remained available under the repurchase authorization.
Item 5. Other Information
Insider Trading Plans
None of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the Company's quarter ended June 30, 2023.
47

Item 6. Exhibits

Exhibit Number | Exhibit Description
Filed with this Report:
31A | Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CEO Certification).
31B | Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CFO Certification).
32 | Certification Pursuant to 18 U.S.C. Section 1350 (CEO and CFO Certification).
101 | The following materials from GATX Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, are formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months and six months ended June 30, 2023 and 2022, (iii) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022, (iv) Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months and six months ended June 30, 2023 and 2022, and (v) Notes to Condensed Consolidated Financial Statements.
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document).
Incorporated by Reference:
3.1 | Restated Certificate of Incorporation of GATX Corporation is incorporated herein by reference to Exhibit 3.2 to GATX’s Form 8-K dated October 31, 2013, file number 1-2328.
3.2 | Amended and Restated By-Laws of GATX Corporation, as amended and restated on October 28, 2022, are incorporated herein by reference to Exhibit 3.1 of GATX’s Form 8-K dated November 1, 2022, file number 1-2328.
10.1 | Extension Notice dated May 3, 2023, to Citibank N.A. as administrative agent of the Company’s Five Year Revolving Credit Agreement, dated May 21, 2021, as amended is incorporated by reference to Exhibit 10.1 to GATX’s Form 8-K dated May 19, 2023, file number 1-2328.

Certain instruments evidencing long-term indebtedness of GATX Corporation are not being filed as exhibits to this Report because the total amount of securities authorized under any such instrument does not exceed 10% of GATX Corporation's total assets. GATX Corporation will furnish copies of any such instruments upon request of the Securities and Exchange Commission.
48

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GATX CORPORATION (Registrant)
/s/ Thomas A. Ellman
Thomas A. Ellman
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer)

Date: July 27, 2023
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