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GATX Corp (GATX) Q2 EarningsTop, Revenues Lag, View Intact

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GATX Corporation (GATX - Free Report) reported better-than-expected earnings per share but lower-than-expected revenues in the second quarter of 2017. The company’s earnings (on an adjusted basis) of $1.32 per share surpassed the Zacks Consensus Estimate of $1.10.

Revenues of $348.8 million fell short of the Zacks Consensus Estimate of $360.7 million. However, both earnings and revenues declined year over year, reflecting challenging market conditions. While the bottom line contracted 11.41%, revenues declined 2.93%.

Segment-Wise Results

Profits at the Rail North America segment were $74.9 million compared with $76.8 million, reported a year ago. This downside was mainly due to lower lease revenues and higher maintenance costs. 

During the reported quarter, GATX Corp.’s Lease Price Index (LPI) plunged 21.4% compared with a reduction of 25.4% in the second quarter of 2016. The metric declined 32.6% in the previous quarter. Furthermore, average lease renewal term for cars included in the LPI was 32 months in the reported quarter compared with 34 months in the year-ago quarter.

Per GATX Corp.’s press release, Rail North America’s wholly owned fleet had approximately 121,000 railcars at the end of the second quarter. Fleet utilization came in at 98.8%, marginally up from the year-ago quarter.

Profits at the Rail International segment rallied 27.7% year over year to $16.6 million. This upside was driven by lower maintenance expenses. Also, GATX Rail Europe’s fleet totaled approximately 23,000 cars at the end of the reported quarter. Fleet utilization was 95.7% compared with 94.8%at the end of the second quarter of 2016.

Profits at the Portfolio Management unit were $19.8 million in the discussed quarter, significantly down from the year-ago figure of $36.5 million. The American Steamship segment’s profit of $6.5 million in the second quarter compared favorably with the year-ago profit of $4.2 million.

GATX Corporation Price, Consensus and EPS Surprise

 

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

Liquidity

GATX Corp. exited the quarter with cash and cash equivalents of $284.3 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.

Outlook for 2017

This Zacks Rank #3 (Hold) company still expects 2017 earnings per share in the band of $4.40–$4.60. In fact, the Zacks Consensus Estimate of $4.58 is within this guided range. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader transportation space are keenly waiting for second-quarter earnings reports from key players like Canadian National Railway Company (CNI - Free Report) , Alaska Air Group (ALK - Free Report) and Norfolk Southern Corporation (NSC - Free Report) . While Canadian National is scheduled to report its second-quarter results on Jul 25, Alaska Air Group and Norfolk Southern will both report on Jul 26.

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