Shares of GATX CorporationGMT gained 5.71% on Jan 21 to reach $37.94, following higher-than-expected earnings reported by the company for the fourth quarter of 2015. The railcar leasing company's earnings (excluding special items) came in at $1.44 per share, ahead of the Zacks Consensus Estimate by 4 cents and up 10.8% from the fourth quarter of 2014.
The company's top line, hurt by lower marine operating revenues, missed the Zacks Consensus Estimate by over 6% in the final quarter of 2015. Total revenue also declined significantly on a year-over-year basis. Expenses declined 8.7% to $292 million in the fourth quarter.
Segment-wise Results in Q4
Profits from the Rail North America segment improved to $98.8 million from $83.7 million in the fourth quarter of 2014. Segmental profit gained primarily due to higher lease rates and increased boxcar utilization revenue, apart from lower net maintenance expenses.
During the reported quarter, GATX's Lease Price Index (LPI) showed a positive 20.5% renewal rate change. The comparable figure in the third quarter of 2015 was 25.6%. LPI was adversely impacted by the weak coal market. Furthermore, the average lease renewal term for cars included in the LPI was 43 months versus 67 months in the comparable quarter last year.
GATX stated in its press release that Rail North America's wholly owned fleet had approximately 124,500 rail-cars at the end of the fourth quarter of 2015. Fleet utilization came in at 99.1% as opposed to 99.2% in the year-earlier quarter.
Profit from the Rail International segment declined 27.5% year over year to $13.7 million. GATX Rail Europe's fleet totaled approximately 22,900 cars at the end of the reported quarter. Fleet utilization was 95.8% versus 95.9% at the end of the comparable quarter of 2014. Softness in the euro hurt segmental profit.
Profit from the Portfolio Management unit came in at $40.9 million in the final quarter of 2015.
The American Steamship Company segment made a profit of $1.7 million in the fourth quarter, down significantly from the year-ago quarter. Segmental results were hurt by the soft iron ore demand.
GATX exited 2015 with cash and cash equivalents of $202.4 million compared with $209.9 million at the end of 2014. Restricted cash was $17.3 million as opposed to $14.5 million at the end of 2014.
2016 Earnings Guidance
GATX expects full-year 2016 earnings per share in the band of $5.25 to $5.45. The Zacks Consensus Estimate for the year currently stands at $5.40.
GATX currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader transportation space are Alaska Air Group, Inc. ALK , Delta Air Lines, Inc. DAL and Hawaiian Holdings Inc. HA , all of which sport a Zacks Rank #1 (Strong Buy).