), a leader in leasing transportation assets, reported second
quarter 2012 adjusted earnings of 80 cents per share, which breezed
passed the Zacks Consensus Estimate of 61 cents.
Adjusted earnings for the second quarter shot up 86% from 43
cents per share in the year-ago quarter. This increase was
primarily driven by higher lease rates, better asset utilization,
and improvement in lease terms alongside higher demand for
Adjusted earnings in the second quarter exclude the negative
impact of special items related to tax adjustments that amounted to
$15.3 million (or 31 cents per share).
Revenues for the second quarter increased 9% year over year to
$343 million and surpassed the Zacks Consensus Estimate of $338
million, aided by lease rates, North American fleet utilization and
growth in the lease terms.
Adjusted profit from the
segment increased to $65.9 million in the reported quarter from
$49.8 million in the year-ago quarter. Adjusted profit for the
quarter excludes the negative impact of $16.3 million related to
pre-tax expenses. The year-over-year growth was aided by lease
renewal, pricing improvement higher asset remarketing and lowered
GATX's Lease Price Index (LPI) improved substantially to 23.9%
from 4.4% in the year-ago quarter. Further, the term of lease
renewals increased to 59 months from 41 months in the year-ago
As of June 30, 2012, the North American fleet totaled
approximately 109,187 cars compared with 108,764 cars at the end of
second quarter 2011. Fleet utilization remained at 98.3% compared
with 98.2% in the year-ago quarter. The European wholly-owned tank
car fleet increased to approximately 21,209 cars from 20,675 in the
year-ago quarter. Fleet utilization was 96.3% versus 95.7% in the
Profit from the
segment increased to $14.6 million in the reported quarter from
$8.8 million in the year-ago quarter driven by higher asset
remarketing opportunities and strong performances by marine joint
ventures operating in ethylene market. The segment comprises
approximately $804.7 million worth owned assets (including on and
off balance sheet assets) and second-party managed portfolios of
approximately $149.0 million.
Profit from the
American Steamship Company
(ASC) segment reported profit of $14.0 million versus $8.6 million
in the year-ago period. The year-over-year growth was attributable
to increased volumes and pricing.
The company exited second quarter 2012 with cash and cash
equivalents of $227.7 million compared with $248.4 million in
For fiscal 2012, management raised its earnings estimate to the
range of $2.65-$2.75 from previous forecast of $2.40-$2.60 per
We expect GATX Corp. to benefit from higher lease rates and
increased asset utilization and remarketing opportunities. The
company's segments remain poised to deliver strong results given
improvements in underlying market fundamentals.
Further, expansion of the company's asset base to enhance its
long-term performance as well as paying higher returns to
shareholders through dividend payments bode well for increased
market traction. However, regulatory pressures and competitive
threats from carriers like
J.B. Hunt Transport Services
) compel us to remain cautious on the stock.
We currently have a long-term Neutral recommendation on GATX.
However, for the short term (1-3 months), the stock has a Zacks #3
GATX CORP (GMT): Free Stock Analysis Report
HUNT (JB) TRANS (JBHT): Free Stock Analysis
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