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GATX Corp Surpasses Earnings and Revenue Estimates in Q3

GATX CorporationGATX reported better-than-expected earnings per share and revenues in the third quarter of 2017. The company's earnings of $1.25 per share (on an adjusted basis) breezed past the Zacks Consensus Estimate of 99 cents. Revenues of $359.6 million were also above the Zacks Consensus Estimate of $349.6 million.

However, in the reported quarter, both earnings and revenues declined on a year-over-year basis, reflecting challenging market conditions. While the bottom line contracted 44.4%, revenues declined 0.9%.

Segment-Wise Results

Profits at the Rail North America segment declined to $70.2 million from $87.9 million a year ago. The downturn was mainly due to lower revenues and higher maintenance costs. During the reported quarter, the renewal lease rate change of the company's Lease Price Index (LPI) was -27%. Additionally, average lease renewal term for cars included in the LPI was 35 months in the reported quarter compared with 29 months in the year-ago quarter.

Per this transportation company's press release, Rail North America's wholly owned fleet had approximately 120,000 rail cars at the end of the third quarter. Fleet utilization came in at 98.5% compared with 99% in the year-ago quarter.

Profits at the Rail International segment decreased 13.7% year over year to $20.1 million. The decline was owing to lower insurance proceeds. Moreover, GATX Rail Europe's fleet totaled approximately 23,000 rail cars at the end of the reported quarter. Fleet utilization was 95.6% compared with 95% at the end of the third quarter of 2016.

Profits at the Portfolio Management unit were $12.8 million in the quarter, down significantly from the year-ago figure of $64.1 million. The decline was primarily due to a residual sharing fee settlement amounting to $49.1 million that was received last year. However, the American Steamship segment's profit of $12.1 million in the same quarter compared favorably with the year-ago profit of $7.8 million.

Liquidity

GATX exited the third quarter with cash and cash equivalents of $199.2 million compared with $307.5 million at the end of 2016. Restricted cash was $3.7 million compared with $3.6 million at the end of 2016.

GATX Corporation Price, Consensus and EPS Surprise

GATX Corporation Price, Consensus and EPS Surprise | GATX Corporation Quote

Outlook Tweaked

The company expects 2017 earnings per share at the high end or marginally exceed the range of $4.40-$4.60 (earlier guidance had hinted at earnings in the range of $4.40-$4.60). Better-than-expected performances of GATX International and American Steamship units contributed to this Zacks Rank #3 (Hold) company's improved guidance for 2017.

Currently, the Zacks Consensus Estimate for full-year 2017 is pegged at $4.61 per share. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the Zacks Transportation sector also keenly await third-quarter earnings reports from key players like Canadian National Railway Company CNI , Norfolk Southern Corp. NSC and Genesee & Wyoming Inc. GWR in the coming days. While Canadian National and Norfolk Southern are scheduled to report on Oct 24 and Oct 25, respectively, Genesee & Wyoming will report on Oct 31.

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GATX Corporation (GATX): Free Stock Analysis Report

Canadian National Railway Company (CNI): Free Stock Analysis Report

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Genesee & Wyoming, Inc. (GWR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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