), a leader in leasing transportation assets, reported adjusted
fourth quarter 2012 earnings of 56 cents per share, beating the
Zacks Consensus Estimate of 54 cents. However, earnings for the
quarter fell 9.7% from the year-ago adjusted earnings of 62
Adjusted earnings for the fourth quarter excluded the
favorable impacts of the benefits from tax adjustments and other
items amounting to $2.8 million (6 cents per share).
For fiscal 2012, adjusted earnings per share were $2.81, up
39.8% year over year from $2.01. Adjusted earnings for 2012
excluded the favorable impacts of benefits from tax adjustments
and other items amounting to $3.5 million (7 cents per
Revenues for the quarter increased 0.5% year over year $331.7
million, but missed the Zacks Consensus Estimate of $346 million.
For the full year, revenues increased 4.3% year over year to
For the fourth quarter, operating profits decreased 11.5% year
over year to $76.1 million. For fiscal 2012, profits increased to
$ 325.6 million from $303.5 million.
Total operating expenses (including ownership cost, and other
costs and expenses) increased 3.2% year over year to $276.7
million in the reported quarter. For the full year, operating
expenses increased 2% year over year to $1,004.1 million.
Profits from the
segment increased 19.8% year over year to $59.8 million in the
reported quarter from the adjusted profit of $49.9 million in the
GATX' Lease Price Index (LPI) improved substantially to 32.3%
from 13.2% in the year-ago quarter. Further, the term of lease
renewals increased to 65 months from 48 months in the year-ago
The North American fleet totaled approximately 109,551 cars
compared with 109,070 cars at the end of fourth quarter 2011.
Fleet utilization decreased to 97.9% from 98.2% in the year-ago
quarter. The European wholly owned tank car fleet totaled
approximately 21,840 compared to 20,927 in the year-ago period.
Fleet utilization was 95.1% versus 97.1% in the year-earlier
reported loss of $1.4 million in the fourth quarter compared to a
profit of $16.6 million in the year-ago period. The decline was
due to a $14.8 million loss recognized in the reported quarter
from GATX' interest disposition in a joint venture. The segment
currently comprises approximately $797.4 million of owned assets
(including on and off balance sheet assets) and third-party
managed portfolios of approximately $143.2 million.
Profits from the
American Steamship Company
(ASC) segment dipped 12.8% year over year to $8.2 million in the
fourth quarter. The decline was due to lower shipments owing to
disruption in operations given low water levels on the Great
The company exited fiscal 2012, with cash and cash equivalents
of $234.2 million compared with $248.4 million in 2011.
GATX expects full-year 2013 earnings in the range of $3.10 to
$3.20 per share.
GATX expects the North American chemical and petroleum markets
to provide a favorable operating environment for tank car leasing
despite demand weakness across certain freight car types. The
company expects cars scheduled for maintenance, in particular,
tank car will increase in 2013, consequently increasing
maintenance costs over 2012 levels.
GATX expects Portfolio Management segment
continue benefit f
Rolls-Royce and Partners Finance affiliates. It expects ASC
segment's volume to remain subdued from the year-ago level.
Moreover, low water levels on the Great Lakes will disrupt the
operating environment. Further, marine investments are also
expected to yield low volumes.
Other stocks worth considering within the sector are
), which has a Zacks Rank 1 (Strong Buy),
American Railcar Industries, Inc.
Ryder System, Inc.
), both having a Zacks Rank #2 (Buy) rating.
Despite the surrounding weakness in the European freight car
market, GATX mainly benefited from higher lease rates and strong
utilization of European tank in 2012. The company benefited from
the significant investment opportunities that prevailed in the
European market. In 2012, the company also stepped into emerging
markets like India with the purchase of railcars.
We expect market fundamentals to continue to improve in 2013,
supporting higher lease rates, carloads, increased asset
utilization and remarketing opportunities. The company remains
focused on expanding its asset base to enhance its long-term
performance. Further, the joint venture with Rolls Royce is
also producing strong results for the company, uplifting its
The company currently retains a Zacks #4 (Sell).
AMER RAILCAR (ARII): Free Stock Analysis
AIRCASTLE LTD (AYR): Free Stock Analysis
GATX CORP (GMT): Free Stock Analysis Report
RYDER SYS (R): Free Stock Analysis Report
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