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GATX's Q4 Earnings Beat Mark, Surge Y/Y on Higher Revenues

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GATX Corporation’s (GATX - Free Report) fourth-quarter 2021 earnings (excluding 11 cents from non-recurring items) of $1.58 per share surpassed the Zacks Consensus Estimate of $1.07. The bottom line surged more than 200% year over year. Following this strong performance on the bottom-line front, shares of the company gained 6.5% at the close of business on Jan 25.

Total revenues of $321 million increased 5.3% year over year, mainly due to 5.2% rise in lease revenues, which came in at $288.4 million. Lease revenues contributed 89.8% to the top line. Marine operating revenues contributed 1.7% to the top line. The rest came from other sources. Total expenses (on a reported basis) inched up 7.3% to $248.2 million.

Segmental Details

Profits in the Rail North America segment soared 52.7% year over year to $75.6 million. The upside was primarily led by higher gains on asset dispositions. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was -0.7% in the reported quarter compared with the year-ago quarter’s -22.6%. Average lease renewal term for cars included in the LPI was 37 months compared with 34 months in the year-ago quarter.

GATX Corporation Price, Consensus and EPS Surprise

GATX Corporation Price, Consensus and EPS Surprise

GATX Corporation price-consensus-eps-surprise-chart | GATX Corporation Quote


Rail North America’s wholly-owned fleet consisted of approximately 114,500 rail cars at the end of Dec 31, 2021. Fleet utilization was 99.2% compared with 98.1% at the end of fourth-quarter 2020.

In the Rail International segment, profits rose 12.9% year over year to $28.9 million in the fourth quarter. Results were primarily driven by more railcars on lease.

GATX Rail Europe’s fleet totaled around 27,100 rail cars at the end of the quarter. Fleet utilization was 98.7% in the reported quarter compared with 98.1% at the end of the fourth quarter of 2020.

The Portfolio Management unit reported a segmental profit of $36.3 million in the December quarter against a loss of $5.7 million in the year-ago quarter. This improvement can be contributed to strong performance at the Rolls-Royce and Partners Finance affiliates and GATX Engine Leasing earnings.

Liquidity

GATX, carrying a Zacks Rank #2 (Buy), exited the fourth quarter with cash and cash equivalents of $344.3 million compared with $292.2 million at the end of 2020.

2022 Outlook

GATX’s management expects recovery in the North American railcar leasing market to continue in 2022. Based on this recovery and recent investments made across its global businesses, the company expects 2022 earnings per share to be in the range of $5.50-$5.80. The Zacks Consensus Estimate for the same stands at $5.40.

Market lease rates are expected to be higher than average expiring rates for railcars renewing during the year. This, coupled with higher asset disposition gains, is expected to boost profits at the Rail North America segment in 2022. Management also expects the Rail International segment’s profits to increase in 2022 owing to strong demand for new and existing railcars in Europe and India. Within the Portfolio Management segment, the company anticipates a decrease in earnings from Rolls-Royce and Partners Finance affiliates, thanks to significant uncertainty in the global aviation market due to the prevalent pandemic. Owing to strong demand for tank containers, GATX expects higher Trifleet earnings in 2022.

Sectorial Snapshot

Within the broader Transportation sector, J.B. Hunt Transport Services (JBHT - Free Report) , United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) recently reported fourth-quarter 2021 results.

J.B. Hunt Transport Services, carrying a Zacks Rank #1 (Strong Buy), reported fourth-quarter 2021 earnings of $2.28 per share, surpassing the Zacks Consensus Estimate of $1.99. The bottom line surged 58.3% year over year on the back of higher revenues across all segments. You can see the complete list of today’s Zacks #1 Rank stocks here.

J.B. Hunt’s operating revenues of $3,497 million also outperformed the Zacks Consensus Estimate of $3,287.8 million. The top line jumped 27.7% year over year. Total operating revenues, excluding fuel surcharges, rose 21.7% year over year.

United Airlines, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding 39 cents from non-recurring items) of $1.60 per share in the fourth quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $2.23. The amount of loss narrowed by 77.1% year over year.

United Airlines’ operating revenues of $8,192 million also outperformed the Zacks Consensus Estimate of $7,930.9 million. The top line surged more than 100% year over year, with passenger revenues which accounted for 84% of the top line, soaring 185.4% to $6,878 million.

Delta, carrying a Zacks Rank #5 (Strong Sell), reported fourth-quarter 2021 earnings (excluding 86 cents from non-recurring items) of 22 cents per share, outpacing the Zacks Consensus Estimate of 15 cents. Earnings came against the year-ago quarter’s loss of $2.53 per share. Strong holiday travel demand and favorable pricing aided the December quarter’s results.

Delta’s revenues came in at $9,470 million, which not only beat the Zacks Consensus Estimate of $9,232.1 million, but also soared in excess of 100% from the year-ago figure as people resorted to air travel during the holidays.