), leading railcar leasing company, reported fourth-quarter 2013
adjusted earnings of $1.14 per share, beating the Zacks Consensus
Estimate of 93 cents. The results showed a massive improvement
from adjusted earnings of 56 cents earned a year ago.
Adjusted earnings for the fourth quarter of 2012 excluded the
impact of benefits from tax adjustments and other items of $2.8
million (6 cents per share).
Revenues increased 7.5% year over year to $356.6 million,
above the Zacks Consensus Estimate of $348 million.
For 2013, the company reported adjusted earnings per share of
$3.50, up from $2.81 a year ago. Revenues for the year totaled
$1,321.0 million, higher than $1,243.2 generated in 2012.
Operating expenses increased to $289.2 million from $276.7
million in the year-ago quarter. For the full year, operating
expenses were up 6.8% to $1,072.6 million.
Profit from the
Rail North America
segment increased to $75.2 million in the fourth quarter from
$59.8 million in the year-ago quarter driven by higher lease
rates and asset remarketing activities.
GATX' Lease Price Index (LPI) improved substantially to 37.1%
from 32.3% in the year-ago quarter. Further, the term of lease
renewals was 60 months versus 65 months in the comparable quarter
The North American fleet totaled approximately 109,113 cars
compared with 109,551 cars at the end of fourth-quarter 2012.
Fleet utilization increased to 98.5% from 97.9% in the year-ago
Adjusted profit from the
segment was $19.6 million compared with adjusted (excluding the
negative impacts of $2 million in pre tax and other items) income
of $12.5 million in the year-ago quarter. The European wholly
owned tank car fleet totaled approximately 21,922 compared with
21,840 in the year-ago quarter. Fleet utilization was 96.6%
versus 95.1% in the year-earlier quarter.
was $26.9 million in the fourth quarter against a loss of $1.4
million in the year-ago quarter. The segment currently comprises
approximately $857 million worth of owned assets and third-party
managed portfolios worth approximately $125 million.
Profit from the
American Steamship Company
(ASC) segment was $5.1 million compared with $8.2 million in the
year-ago quarter. Weather hindrances were primarily responsible
for the decline in profits.
The company exited 2013 with cash and cash equivalents of
$379.7 million compared with $234.2 million in 2012.
Dividend & Share Repurchase
GATX increased quarterly dividend payment by 6.5% to 33 cents.
The increased dividend will be paid on Mar 31, 2014 to
shareholders of record as on Feb 28, 2014. The company has also
initiated a new share repurchase program worth $250 million
following expiry of its previous $200 million share buyback
GATX expects its full-year 2014 earnings in the range of
$3.85-$4.05 per share.
The company expects higher profit in its Rail North America
segment driven by lease revenue growth. The company projects
lease rates to be on the higher end for most tank car types. In
addition, it expects demand to continue rise for railcars and
expects to tap this opportunity by winning long-term lease
For the Portfolio Management segment, GATX expects to gain
from its partnership with Rolls-Royce. However, lower remarketing
opportunities in its owned portfolio could trim down profits for
In ASC, the company expects to register improved tonnage due
to recapturing opportunities.
Further, GATX Rail Europe is expected to gain on gradual
improvement in market condition, resulting in higher profits in
2014. The company has accelerated its investment in the past two
years in this business and expects to continue in the current
We expect market fundamentals to continue to improve in 2014
for GATX, 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 tie-up with Rolls Royce is
generating strong results, strengthening GATX' competitive
The company currently has a Zacks #3 (Hold).
Other Stocks to Consider
Other stocks worth considering within the sector include
Trinity Industries Inc.
American Railcar Industries, Inc.
Ryder System, Inc.
). While Trinity Industries sports a Zacks Rank #1 (Strong Buy),
American Railcar and Ryder System have a Zacks Rank #2 (Buy).
AMER RAILCAR (ARII): Free Stock Analysis
GATX CORP (GMT): Free Stock Analysis Report
RYDER SYS (R): Free Stock Analysis Report
TRINITY INDS IN (TRN): Free Stock Analysis
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