Thursday, July 19, 2012

GATX Corp. 2Q income down; still beats Street

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GATX Corp. reported second-quarter net income of $23.5 million, or 49 cents per share, down 11% from $26.4 million, or 56 cents per share, it notched in the second quarter of 2011. Adjusted earnings results of 80 cents per share, however, still beat Wall Street consensus analyst expectations of 61 cents per share.

The adjustments included factoring interest rate swaps at a European affiliate and other tax adjustments. GATX also raised its full-year earnings outlook. Both factors were credited with triggering an increase in the company's stock price in trading.

Revenue rose 9% to $343 million in the second quarter, attributed largely to strong demand for railcars.

GATX President and CEO Brian A. Kenney asserted, "We are seeing continued strong demand for most railcar types in our fleet. During the second quarter, GATX's Lease Price Index ("LPI") was a positive 23.9% and the average renewal term for cars in the LPI was 59 months. These results were achieved while maintaining over 98% utilization of the North American railcar fleet.

"There is also healthy demand for new railcars delivering under our five-year supply agreement," Kenney said. "Railcars scheduled to deliver through the end of 2013 have already been allocated to customers on long-term leases at very attractive rates."

Mr. Kenney continued, "In Europe, we are placing new tank car deliveries at favorable rates and demand for existing tank cars remains solid. Also, during the quarter we announced our entry into the Indian railcar leasing market with the purchase of railcars that will begin to deliver in August."

Concerning expectations, Kenney said, "Based on year-to-date performance and continued strength in rail, we are increasing our 2012 full-year earnings expectations to a range of $2.65 to $2.75 per diluted share."