A single transaction reshaped GATX in the first half of two thousand twenty-six, and the second quarter is the first clean look at how the combined fleet performs. On New Year's Day the company closed a roughly $4.2 billion deal to acquire approximately 101,000 railcars from Wells Fargo. The deal was financed through the GABX joint venture with Brookfield and consolidated on GATX's balance sheet. The fleet instantly nearly doubled in size. The core operational questions for an owner of railcars are not just about how many cars the company owns but about how full those cars stay leased, how much rent they pull in, and how much the financing costs of the deal erode the return. Strong renewal economics are the spine of the bull case, while sustained leverage discipline is the spine of the bear case. The combination of those two ingredients, rather than either alone, is what has to hold together over the next several quarters for the thesis to keep working. None of the operating metrics in the second quarter by itself is a tell: utilization is healthy, lease rate gains are slowing, and the financing cost has stepped up. The aggregate effect is what matters, and the aggregate effect is currently favorable but tighter than it was a year ago.
The second-quarter operating numbers read as healthy. Railcar fleet utilization in North America was 98.0%, modestly below 99.2% a year ago. Diluted earnings per share of $2.84 beat the prior-year reading of $2.06. The Lease Price Index renewal rate change of 16.8% stayed well above mid-cycle, even with the slower pace from a year ago. The shares closed near $173.62 at the time of this update. Net income attributable to GATX moved sharply higher. The trailing and forward P/E reflect modest expected earnings growth into twenty twenty-seven.
The counterargument is real and lives in the leverage line. Recourse debt and lease obligations net of cash climbed from $8.26 billion a year ago to $11.73 billion at quarter end. Recourse leverage moved from 3.1 to 3.3 times. Interest expense in the Rail North America segment alone rose to $103.7 million from $64.4 million. The question for the next several quarters is not whether GATX can lease the new cars; the question is whether the renewal economics and the steady gains on asset sales stay wide enough to absorb the higher financing cost while the company gradually buys out Brookfield.