Thursday, April 26, 2012

GATX Rail: Car utilization and earnings high

Written by  Luther S. Miller, Senior Consulting Editor

GATX Corp. reported Thursday that its Rail segment earned a profit of $58.6 million in the first quarter of 2012 vs. $51.6 million in the year-ago quarter. GATX said the improvement was driven by "increasing lease rates and lower maintenance expense due to the high renewal success rate in North America."

As of March 31, GATX Rail's wholly-owned North American fleet totaled approximately 109,000 cars, and fleet utilization was 98.5% vs. 98.2% at year's end and 97.8% on March 31, 2011.

Brian A. Kenney, president and CEO of GATX, said, "Demand for most railcar types in our fleet continues to be strong. GATX's North American fleet utilization improved to 98.5% at the end of the first quarter. The commercial team remains focused on improving lease rates while also increasing lease terms on many car types. GATX's Lease Price Index ("LPI") was a positive 19.2% with an average renewal term of 55 months, and the renewal success rate was over 80%.

"We continue to take delivery of new railcars under our five-year supply agreement, and we are placing these cars on long-term leases at very attractive rates. We are also taking delivery of new tank cars in Europe and achieving favorable lease terms," Kenney said.

During this year's the first quarter, the change in the Lease Price Index was a positive 19.2%, compared with a positive 13.2% in the prior quarter and a negative 0.5% in the first quarter 2011, said GATX. The average lease renewal term for cars in the LPI during the first quarter was 55 months compared with 48 months in the 2011 fourth quarter and 41 months in the prior-year period. Rail's investment volume, driven by new railcar purchases in North America and Europe, was $143.7 million.

At the corporate level, GATX reported 2012 first-quarter net income of $30.3 million or 64 cents per diluted share, compared with net income of $19.9 million or 42 cents per diluted share in the first quarter of 2011.