GATX Q1 Earnings Surpass Estimates, Revenues Disappoint

GATX Corporation (NYSE:GATX) posted mixed results in first-quarter 2018, wherein earnings per share outpaced the Zacks Consensus Estimate but revenues lagged the same.

The transportation company’s earnings per share of $1.98 surpassed the Zacks Consensus Estimate of $1.17. The bottom line also improved 37.5% on a year-over-year basis. On the flip side, revenues of $305.3 million fell short of the Zacks Consensus Estimate of $306.3 million. The metric also contracted 3.4% year over year. The downside can be attributable to declines in marine operating revenues as well as revenues from other sources.

For 2018, this Zacks Rank #3 (Hold) company continues to expect earnings per share in the range of $4.55-$4.75. The Zacks Consensus Estimate for 2018 earnings per share is pegged at $4.57 per share, toward the lower end of the guided range. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Segment-Wise Results/ Segmental Performance in Details

Profits at the Rail North America segment improved to $108.9 million from $93 million a year ago. The uptick was mainly owing to higher gains on asset disposition in the quarter under review. The renewal lease rate change of the company’s Lease Price Index (LPI) was -11.6% in the reported quarter. Additionally, average lease renewal term for cars included in the LPI was 34 months compared with 29 months in the year-ago quarter.

In fact, Rail North America’s wholly owned fleet had approximately 119,000 rail cars at the end of the reported quarter. Fleet utilization came in at 98.2% compared with 99.1% at the end of the year-ago quarter.

Profits at the Rail International segment increased 41.8% year over year to $19 million. The uptick was owing to a rise in railcars on lease at GATX Rail Europe, apart from the favorable movements related to foreign exchange.

Moreover, GATX Rail Europe’s fleet totaled approximately 23,000 rail cars at the end of the first quarter. Fleet utilization was 96.7% compared with 95% at the end of the year-ago quarter.

Profits at the Portfolio Management unit decreased 5.4% to $13.9 million. Moreover, the American Steamship segment's profit was $0.8 million in the reported quarter against the year-ago loss of $0.2 million. Segmental operations were hampered as vessels were in winter lay-up for most of the first quarter.

Liquidity

GATX exited the quarter with cash and cash equivalents of $233.1 million compared with $296.5 million at the end of 2017. Restricted cash was $4.3 million compared with $3.2 million at the end of the previous year.

Upcoming Releases

Investors interested in the broader Zacks Transportation sector are keenly awaiting first-quarter earnings reports from key players like JetBlue Airways Corporation (NASDAQ:JBLU) , Norfolk Southern Corporation (NYSE:NSC) and Union Pacific Corporation (NYSE:UNP) . While JetBlue will report on Apr 24, Norfolk Southern and Union Pacific will announce the same on Apr 25 and Apr 26, respectively.

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