Friday, April 26, 2013

GATX 1Q results slip; railcar leasing is “strong”

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GATX Corp. Thursday reported first-quarter net income of $27.1 million, or 57 cents per diluted share, down from $30.3 million, or 64 cents per diluted share, in the first quarter of 2012. Results fell short of Wall Street analyst expectations. Revenue of about $272 million was in line with expectations. 

The company's Rail North America segment profit was $50.3 million in the first quarter of 2013, compared with $50.7 million in the first quarter of 2012.

GATX President and CEO Brian A. Kenney said, "The North American railcar leasing market remains strong. Our fleet utilization was 97.8% at March 31, and first quarter renewal success was 80.7%, driven by high demand for tank cars. We continue to capitalize on the current market conditions by increasing lease rates and stretching lease terms. GATX's Lease Price Index ("LPI") was positive 30.8% for the quarter and the average renewal term for cars in the LPI was 65 months. Demand for new tank cars continues at unprecedented levels, and our scheduled deliveries through 2014 have been placed with customers on long-term leases at attractive rates."

Kenney also noted, "In GATX Rail International, our European tank car fleet performed well in a weaker environment and we continue to pursue attractive investment opportunities in the European tank car market."

In a note late Thursday to clients, KeyBanc Capital Markets analysts Steve Barger and Tejas Patel said, "Overall, we believe (GATX) is a high-quality company that is executing well in its businesses, especially in the North American Rail where it is locking in strong lease rates at long terms, giving it excellent revenue and earnings visibility. That said, we maintain our view that (GATX) is fairly valued at these levels. As such, we are maintaining our HOLD rating."