), a leader in leasing transportation assets, reported third
quarter 2012 adjusted earnings of 75 cents per share, which
surpassed the Zacks Consensus Estimate of 66 cents and also
improved from the year-ago adjusted earnings of 67 cents. The
year-over-year growth was aided by higher lease rates, fleet
utilization and rising demand for tank cars.
Adjusted earnings for the quarter excluded the impacts of tax
adjustments and Other Items related gains of $18.2 million (or 38
cents per diluted share)
Revenues for the third quarter were $343.4 million, below the
Zacks Consensus Estimate of $363 million, but slightly up from
$337.9 million in the year-ago quarter.
Adjusted profit from the
segment decreased to $65.6 million in the reported quarter from
$66.1 million in the year-ago quarter. The segment's adjusted
profit was mainly impacted by lower remarketing activities and
scrap rate along with increased other expenses.
Adjusted profits for the reported quarter excluded the
negative impacts of $2.1 million related to pre-tax expense and
GATX' Lease Price Index (LPI) improved substantially to 26.4%
from negative 9.6% in the year-ago quarter on fewer idle
railcars. Further, the term of lease renewals increased to 59
months from 49 months in the year-ago quarter.
The North American fleet totaled approximately 109,162 cars in
the third quarter compared to 109,091 cars at the end of third
quarter 2012. Fleet utilization remained flat year over year at
98.2%. The European wholly owned tank car fleet totaled
approximately 21,314 cars against 20,828 in the third quarter of
2011. Fleet utilization was 96.6% versus 96.0% in the
Profit from the
segment increased to $15.0 million in the reported quarter from
$11.5 million in the year-ago quarter driven by higher asset
remarketing activities. In the reported quarter the segment
comprised approximately $815.1 million of owned assets (including
on and off balance sheet assets) and third-party managed
portfolios of around $147.5 million.
Profit from the
American Steamship Company
(ASC) segment was $13.2 million in the third quarter compared to
$8.5 million in the year-ago period. The year-over-year growth
was primarily attributable to higher volumes and rate
The company exited third quarter 2012 with cash and cash
equivalents of $430.6 million compared with $248.4 million in
For fiscal 2012, management expects adjusted earnings in the
range of $2.65 - $2.75 per diluted share.
We believe GATX will remain focused on improving lease
pricing, asset utilization and asset remarketing opportunities.
Further, enhancing infrastructure through investing in railcar
also bodes well given the current momentum in rail intermodal
services. The company's expansion of asset base to enhance its
long-term performance would remain accretive to increase market
However, we remain on the sidelines due to economic
volatilities and difficult market conditions surrounding its
businesses. Additionally, regulatory pressures and competitive
threats from carriers like
American Railcar Industries, Inc.
) compel us to remain cautious on the stock.
We are currently maintaining our long-term Neutral
recommendation on GATX. For the short-term (1-3 months), the
company has a Zacks #3 (Hold) Rank.
AMER RAILCAR (ARII): Free Stock Analysis
GATX CORP (GMT): Free Stock Analysis Report
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