Market Overview

GATX Corporation Reports 2019 First-Quarter Results

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  • Net income for the first quarter 2019 was $41.5 million or $1.12 per diluted share
  • Company reiterates 2019 full-year earnings guidance
  • Rail North America fleet utilization remains at 99.4%

CHICAGO, April 24, 2019 (GLOBE NEWSWIRE) -- GATX Corporation (NYSE:GATX) today reported 2019 first quarter net income of $41.5 million or $1.12 per diluted share, compared to net income of $76.3 million or $1.98 per diluted share in the first quarter of 2018.

Brian A. Kenney, president and chief executive officer of GATX, stated, "Conditions in the North American railcar leasing market are consistent with our expectations coming into the year.  GATX's fleet utilization remains extremely high at 99.4% and our renewal success rate in the quarter was 83.6%.  The renewal lease rate change of GATX's Lease Price Index ("LPI") was positive 5.2%, with an average renewal term of 39 months.

"Rail International produced strong operating results, with GATX Rail Europe's fleet utilization increasing to 98.9% at the end of the quarter.  The lease rate environment in Europe is improving and demand for new cars is steady.  The Rolls-Royce and Partners Finance affiliates continue to perform well due to robust demand for aircraft spare engines.  American Steamship Company's sailing season began at the end of March, and eleven vessels are currently scheduled to operate in 2019."

Mr. Kenney concluded, "The current business environment and our financial performance thus far in 2019 is consistent with our original expectations.  Therefore, our 2019 full-year earnings estimate is unchanged at $4.85 - $5.15 per diluted share, excluding the impact of Tax Benefits and Other Items."

RAIL NORTH AMERICA
Rail North America reported segment profit of $68.4 million in the first quarter of 2019, compared to $108.9 million in the first quarter of 2018. The decline in segment profit is mainly attributable to lower remarketing income recognized in the current quarter.  Remarketing income was $9.8 million in the first quarter of 2019 compared to $50.0 million in the first quarter of 2018.  The 2019 full year remarketing expectations remain unchanged from prior guidance.

At March 31, 2019, Rail North America's wholly owned fleet was comprised of approximately 121,000 railcars, including approximately 16,000 boxcars.  The following fleet statistics and performance discussion exclude the boxcar fleet.

Fleet utilization was 99.4% at the end of the first quarter, compared to 99.4% at the end of the prior quarter and 98.2% at the end of the first quarter of 2018.  During the first quarter of 2019, the renewal lease rate change of the GATX Lease Price Index ("LPI") was positive 5.2%.  This compares to negative 0.9% in the prior quarter and negative 11.6% in the first quarter of 2018.  The average lease renewal term for cars included in the LPI during the first quarter was 39 months, compared to 43 months in the prior quarter and 34 months in the first quarter of 2018.  The first quarter renewal success rate was 83.6%.  Rail North America's investment volume during the first quarter was $99.0 million.

Additional fleet statistics, including information about the boxcar fleet, and macroeconomic data related to Rail North America's business are provided on the last page of this press release.

RAIL INTERNATIONAL
Rail International's segment profit was $14.8 million in the first quarter of 2019, compared to $19.0 million in the first quarter of 2018.  The decline in segment profit was primarily driven by foreign exchange variance.

At March 31, 2019, GATX Rail Europe's (GRE) fleet consisted of approximately 23,500 cars and utilization was 98.9%, compared to 98.8% at the end of the prior quarter and 96.7% at the end of the first quarter of 2018.  Additional fleet statistics for GRE are provided on the last page of this press release.

PORTFOLIO MANAGEMENT
Portfolio Management reported segment profit of $12.3 million in the first quarter of 2019, compared to $13.9 million in the first quarter of 2018.  The decline in segment profit is primarily driven by lower marine operating results partially offset by higher affiliate income at the Rolls-Royce and Partners Finance affiliates (RRPF).

AMERICAN STEAMSHIP COMPANY
American Steamship Company (ASC) reported a segment profit of $2.5 million in the first quarter of 2019, compared to $0.8 million in the first quarter of 2018.  ASC's operations are limited during the first quarter as the vessels are in winter lay-up from mid-January through late-March.

COMPANY DESCRIPTION
GATX Corporation (NYSE:GATX) strives to be recognized as the finest railcar leasing company in the world by our customers, our shareholders, our employees and the communities where we operate. As the leading global railcar lessor, GATX has been providing quality railcars and services to its customers for more than 120 years. GATX has been headquartered in Chicago, Illinois, since its founding in 1898. For more information, please visit the Company's website at www.gatx.com.

TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss 2019 first-quarter results. Call details are as follows:

Wednesday, April 24th
11:00 A.M. Eastern Time
Domestic Dial-In:  1-800-667-5617
International Dial-In:  1-334-323-0509
Replay: 1-888-203-1112 or 1-719-457-0820 /Access Code: 3700627

Call-in details, a copy of this press release and real-time audio access are available at www.gatx.com. Please access the call 15 minutes prior to the start time. Following the call, a replay will be available on the same site.

FORWARD-LOOKING STATEMENTS
Statements in this Earnings Release not based on historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those discussed.  These include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance, prospects, or future events.  In some cases, forward-looking statements can be identified by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "outlook," "continue," "likely," "will," "would", and similar words and phrases.  Forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain.  Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of the date they are made, and are not guarantees of future performance. We do not undertake any obligation to publicly update or revise these forward-looking statements.

The following factors, in addition to those discussed in our other filings with the SEC, including our Form 10-K for the year ended December 31, 2018 and subsequent reports on Form 10-Q, could cause actual results to differ materially from our current expectations expressed in forward-looking statements:

  • exposure to damages, fines, criminal and civil penalties, and reputational harm arising from a negative outcome in litigation, including claims arising from an accident involving our railcars
  • inability to maintain our assets on lease at satisfactory rates due to oversupply of railcars in the market or other changes in supply and demand
  • a significant decline in customer demand for our railcars or other assets or services, including as a result of:

    • weak macroeconomic conditions

    • weak market conditions in our customers' businesses

    • declines in harvest or production volumes

    • adverse changes in the price of, or demand for, commodities

    • changes in railroad operations or efficiency

    • changes in supply chains

    • availability of pipelines, trucks, and other alternative modes of transportation

    • other operational or commercial needs or decisions of our customers
  • higher costs associated with increased railcar assignments following non-renewal of leases, customer defaults, and compliance maintenance programs or other maintenance initiatives
  • events having an adverse impact on assets, customers, or regions where we have a concentrated investment exposure
  • financial and operational risks associated with long-term railcar purchase commitments, including increased costs due to tariffs or trade disputes
  • reduced opportunities to generate asset remarketing income
  • operational and financial risks related to our affiliate investments, including the Rolls-Royce & Partners Finance joint ventures
  • fluctuations in foreign exchange rates
  • failure to successfully negotiate collective bargaining agreements with the unions representing a substantial portion of our employees
  • asset impairment charges we may be required to recognize
  • deterioration of conditions in the capital markets, reductions in our credit ratings, or increases in our financing costs
  • uncertainty relating to the LIBOR calculation process and potential phasing out of LIBOR after 2021
  • competitive factors in our primary markets, including competitors with a significantly lower cost of capital than GATX
  • risks related to our international operations and expansion into new geographic markets, including the imposition of new or additional tariffs, quotas, or trade barriers
  • changes in, or failure to comply with, laws, rules, and regulations
  • inability to obtain cost-effective insurance
  • environmental remediation costs
  • inadequate allowances to cover credit losses in our portfolio
  • inability to maintain and secure our information technology infrastructure from cybersecurity threats and related disruption of our business

FOR FURTHER INFORMATION CONTACT:
GATX Corporation
Jennifer McManus
Senior Director, Investor Relations
GATX Corporation
312-621-6409
jennifer.mcmanus@gatx.com

Investor, corporate, financial, historical financial, and news release information may be found at www.gatx.com.

(4/24/2019)


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share data)

  Three Months Ended
March 31
  2019   2018
Revenues      
Lease revenue $ 274.4     $ 273.2  
Marine operating revenue 13.1     14.2  
Other revenue 29.5     17.9  
Total Revenues 317.0     305.3  
Expenses      
Maintenance expense 81.2     81.2  
Marine operating expense 12.1     12.5  
Depreciation expense 79.9     77.4  
Operating lease expense 13.7     13.0  
Other operating expense 8.0     8.6  
Selling, general and administrative expense 46.1     44.9  
Total Expenses 241.0     237.6  
Other Income (Expense)      
Net gain on asset dispositions 8.9     56.1  
Interest expense, net (46.5 )   (39.9 )
Other expense (3.2 )   (1.3 )
Income before Income Taxes and Share of Affiliates' Earnings 35.2     82.6  
Income taxes (8.4 )   (20.6 )
Share of affiliates' earnings, net of taxes 14.7     14.3  
Net Income $ 41.5     $ 76.3  
       
Share Data      
Basic earnings per share $ 1.14     $ 2.02  
Average number of common shares 36.5     37.9  
Diluted earnings per share $ 1.12     $ 1.98  
Average number of common shares and common share equivalents 37.1     38.5  
Dividends declared per common share $ 0.46     $ 0.44  
               


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)

  March 31   December 31
 
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