GATX Corp. (GATX) Tops Q3 EPS by 18c

October 20, 2016 8:34 AM EDT
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GATX Corp. (NYSE: GATX) reported Q3 EPS of $1.50, ex-items, $0.18 better than the analyst estimate of $1.32. Revenue for the quarter came in at $362.9 million versus the consensus estimate of $369.38 million.

Brian A. Kenney, president and chief executive officer at GATX stated, “Market dynamics in the North American rail industry are similar to recent quarters. A growing oversupply of railcars, fewer railcar loadings, and improved railroad velocity continue to present significant challenges. Railcar lessors are aggressively attempting to place new deliveries and their existing idle railcars, resulting in declining lease rates. In the third quarter, the renewal lease rate change of GATX’s Lease Price Index decreased by 21.4%, the average renewal term was 29 months, and our renewal success rate was 74.1%.

“Despite the difficult market conditions, Rail North America is performing well. Our fleet utilization increased to 99.0% in the quarter; we further optimized our fleet by selling railcars in the secondary market at attractive prices, and we are successfully placing future years’ railcar deliveries from our committed purchase agreement. This continued success is a direct result of GATX’s well-diversified fleet, high-quality customer base, and outstanding service.

“Utilization at GATX Rail Europe remains healthy at 95.0%, despite weakness in the petroleum market. American Steamship Company’s financial performance is stable, as we are operating fewer vessels in 2016 due to soft demand for iron ore on the Great Lakes. In the Portfolio Management segment, remarketing income during the quarter was $49.1 million higher than originally anticipated. This was driven by a large residual sharing fee settlement in the managed portfolio that was received in the quarter.”

Mr. Kenney concluded, “Our strategy in this market is to aggressively protect fleet utilization, reduce the length of lease term as rates decline, continue to improve efficiency within our maintenance network, tightly control SG&A, and capitalize on attractive growth opportunities as asset prices fall. Based on year-to-date performance, we are maintaining our 2016 full-year earnings guidance of $5.55-$5.75 per diluted share. This guidance excludes the $0.74 per share contribution from the Portfolio Management fee noted above.”

For earnings history and earnings-related data on GATX Corp. (GATX) click here.

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