GATX Corp. (GATX) Tops Q4 EPS by 11c; Guides In-Line

GATX Corp. (NYSE: GATX) reported Q4 EPS of $1.14, $0.11 better than the analyst estimate of $1.03. Revenue for the quarter came in at $362.1 million versus the consensus estimate of $357.27 million.

GUIDANCE:

GATX Corp. sees FY2017 EPS of $4.40-$4.60, versus the consensus of $4.48.

Brian A. Kenney, president and chief executive officer of GATX stated, “GATX achieved record earnings per share again in 2016 despite the rail industry experiencing a second year of reduced carloadings and a large oversupply of railcars. Our well-diversified fleet, quality customer base, and outstanding service helped Rail North America maintain high utilization of 98.9% at year end. We continued to optimize our fleet by selling railcars into a robust secondary market, with Rail North America remarketing income eclipsing $46 million in 2016. We also continued to improve the efficiency of our maintenance network, in part by successfully executing our strategy of servicing more of our railcars within our owned network.

“Lease rates experienced significant pressure during the year. The fourth quarter renewal lease rate change of GATX’s Lease Price Index decreased by 36.2%. In response to the lower lease rate environment, we successfully shortened the term of lease renewals, achieving an average renewal term of 29 months in the fourth quarter of 2016.

“Within Rail International, GATX Rail Europe continued to produce solid operating results and stable utilization of 95.6% at year end. In 2016, American Steamship Company transported less tonnage than in 2015, as difficult conditions for our Great Lakes’ customers continued. In Portfolio Management, the Rolls-Royce Partners Finance affiliates produced another year of outstanding financial results."

Mr. Kenney added, “Many of the market challenges we faced in 2016 continue as we move into 2017. As a result, we currently expect 2017 earnings to be in the range of $4.40 - $4.60 per diluted share. Our guidance represents a level of performance that is considerably higher than in prior downturns. This illustrates our success over the last several years of stretching lease terms to lock in attractive lease rates; optimizing the fleet through secondary market acquisitions and divestitures; improving the efficiency of our maintenance network; and, ultimately, focusing our business on our core strengths.

“In the fourth quarter of 2016, there were some improved metrics in the North American rail industry as well as some new pockets of opportunity with certain customers. Absent these positive signs becoming a trend, the downturn in the North American rail industry may be more prolonged than in prior cycles. However, regardless of economic and industry fundamentals, we believe that GATX is well positioned to outperform our competitors, pursue growth opportunities, and provide excellent service to our customers across the globe.”

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

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