GATX Corporation GMT, a leading railcar leasing company, reported higher-than-expected earnings in the first quarter of 2015. The company’s earnings grew 54.4% to $1.39 per share, handily beating the Zacks Consensus Estimate of $1.08 per share.
Revenues of $319.7 million were below the Zacks Consensus Estimate of $323 million. The top line, however, grew 11.5% on a year-over-year basis. Total expenses increased to $239.4 million from $223 million in the first quarter of 2014.
Segment Results
Profits from the Rail North America segment climbed to $105.8 million in the first quarter of 2015 from $75 million in the year-ago quarter, driven by higher lease rates and increased asset remarketing income. Contributions from the recently purchased boxcar fleet also led to the increase.
During the first quarter of 2015, GATX’s Lease Price Index (LPI) increased 43.2% over the weighted-average expiring lease rate. The comparable figure was 33.9% a year ago. Furthermore, the average lease renewal term for cars included in the LPI was 59 months versus 62 months in the comparable quarter last year.
GATX stated in its press release that Rail North America’s wholly owned fleet had approximately 126,000 rail-cars. Fleet utilization increased to 99.3% from 98.5% in the year-ago period.
Profit from the Rail International segment grew only 5.3% year over year to $21.8 million. Higher number of cars on lease at GATX Rail Europe boosted segmental profit.
GATX Rail Europe’s fleet totaled approximately 22,000 cars at the end of the reported quarter. Fleet utilization was 95.9% versus 96% at the end of the comparable quarter of 2014.
Profit from Portfolio Management was $15.9 million in the first quarter, up 33.6%. The improvement in profits was due to the increased asset remarketing income. Furthermore, higher rates for the inland marine and wholly owned ocean-going vessels in the reported quarter also boosted segmental profit.
The American Steamship Company segment incurred a loss of $0.4 million in the first quarter of 2015, as opposed to a loss of $1.2 million a year-ago. Segmental results were hurt by the ice cover on the Great Lakes.
Liquidity
The company exited the first quarter of 2015 with cash and cash equivalents of $351.4 million compared with $209.9 million at the end of 2014.
Guidance
GATX Corp. has retained its guidance for 2015. It still expects earnings per share in the range of $5.15 to $5.35 for the year. The Zacks Consensus Estimate for 2015 currently stands at $5.25 per share.
Zacks Rank
GATX presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the transportation industry are Covenant Transportation Group CVTI, JetBlue Airways Corp. JBLU and Ryder System R. Covenant Transportation Group sports a Zacks Rank #1 (Strong Buy) while JetBlue and Ryder System carry a Zacks Rank #2 (Buy).
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