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GATX Corp (GATX) Beats Q1 Earnings Estimates, Down 22.1% Y/Y

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GATX Corporation’s GATX first-quarter 2021 earnings of $1.02 per share surpassed the Zacks Consensus Estimate of 86 cents. However, the bottom line declined 22.1 year over year primarily due to lower profitability in the Rail North America segment and disappointing performance in the Portfolio Management unit. The lacklustre bottom-line performance disappointed investors. Consequently, the stock lost 3.6% of its value on Apr 20.

Total revenues were $305.8 million in the reported quarter. Bulk of the top line (91.8%) came from lease revenues. Marine operating revenues contributed 1.2% to the top line. The balance came from other sources. Meanwhile, total expenses (on a reported basis) inched up 1.4% to $235.7 million.

Other Details

Profits in the Rail North America segment declined to $65.7 million in the first quarter from the prior-year quarter’s level of $72 million. The downside was primarily caused by lower gains on asset dispositions and lower lease revenue in the quarter. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was -18.1% in the reported quarter compared with the year-ago quarter’s 11.6%. Additionally, average lease renewal term for cars included in the LPI was 30 months compared with 31 months in the year-ago quarter.

In fact, Rail North America’s wholly-owned fleet had approximately 116,800 rail cars at the end of Mar 31, 2021. Fleet utilization was 97.8% compared with 99% at the end of first-quarter 2020.

GATX Corporation Price, Consensus and EPS Surprise

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

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

In the Rail International segment, profits rose to $21.8 million in the first quarter from the prior-year quarter’s level of $13.9 million. Results were driven by more railcars on lease as well as impacts from foreign currency exchange rates.

Also, GATX Rail Europe’s fleet totaled 26,500 rail cars at the end of the quarter. Fleet utilization was 98.2% compared with 98.5% at the end of first-quarter 2020.

The Portfolio Management unit reported segmental profit of $6.1 million in the March-end quarter compared with the segmental profit of $19.5 million in first-quarter 2020. The deterioration was primarily due to lower lease revenue and lower remarketing income at the Rolls-Royce and Partners Finance affiliates.

EPS Guidance 2021

The company reiterated its 2021 full-year guidance. Full-year earnings estimate is kept unchanged at $4.00 to $4.30 per share. The midpoint of the guidance is in line with the Zacks Consensus Estimate, pegged at $4.15.

Liquidity

GATX, carrying a Zacks Rank #3 (Hold), exited the first quarter with cash and cash equivalents of $958.9 million compared with $292.2 million at the end of 2020. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines DAL, J.B. Hunt Transport Services JBHT and Kansas City Southern KSU recently reported first-quarter 2021 results.

Delta, carrying a Zacks Rank #3, incurred a loss (excluding $1.70 from non-recurring items) of $3.55 per share. The figure was wider than the Zacks Consensus Estimate of a loss of $3.08. Meanwhile, total revenues of $4,150 million topped the Zacks Consensus Estimate of $3,821.3 million.

J.B. Hunt, a Zacks #3 ranked player, reported earnings of $1.37 per share. The figure beat the Zacks Consensus Estimate of $1.18. Total operating revenues of $2,618.1 million also surpassed the Zacks Consensus Estimate of $2,486.9 million.

Kansas City Southern, carrying a Zacks Rank of 3, reported earnings (excluding 23 cents from non-recurring items) of $1.91 per share. The figure missed the Zacks Consensus Estimate of $2. Moreover, quarterly revenues of $706 million lagged the Zacks Consensus Estimate of $714.3 million.

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