GATX Third-Quarter Profit Falls On Lower US Rail Volumes

Declining U.S. rail volumes contributed to GATX's GATX third-quarter net profits falling 4% to $45.1 million, or $1.25/diluted share, from $47 million, or $1.22/diluted share, in the third quarter of 2018.

GATX is a major railcar lessor and manufacturer, with operations in North America, Europe and India.

"For the third consecutive quarter, North American railroad car loadings decreased and railroad velocity increased relative to 2018. Despite these negative indicators for the railcar leasing market, GATX's fleet is generally performing as we expected coming into 2019," said Brian A. Kenney, president and chief executive officer of GATX.

Profit for GATX's North American segment also slipped in the third quarter, falling 10.7% to $60.9 million. 

GATX's fleet utilization in the third quarter in North America was 99.2%, which the company said was "very high" and the result of its diversified fleet. That utilization rate is flat with the third quarter of 2018 and down slightly from 99.5% in the second quarter of 2019.

The company's Lease Price Index (LPI) was down by -7.7% in the third quarter, and the average renewal term was 40 months. GATX defines its Lease Price Index as "an internally generated business indicator that measures lease rate pricing on renewals" for its North American railcar fleet, excluding boxcars. It's a weighted-average lease renewal rate for a group of railcars representative of GATX's rail fleet for North America.

In comparison, the LPI for the second quarter was -2.8%, while the LPI for the third quarter of 2018 was -11.5%.

As of the end of the third quarter, GATX's North American rail fleet consisted of approximately 119,000 railcars, including approximately 16,000 boxcars.

Overall company revenue in the third quarter was $360.7 million, up 3.1% from the same period in 2018. But overall expenses rose about 3.1% over the same period to $273.5 million.

Source: GATX

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