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GATX's Q2 Earnings Beat, Decline Y/Y Due to Coronavirus Woes

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GATX Corporation’s GATX second-quarter 2020 earnings per share (excluding 6 cents from non-recurring items) came in at $1.05, surpassing the Zacks Consensus Estimate of 91 cents. However, the bottom line declined year over year due to coronavirus-led disruptions on Rail North America and Rail International segments.

Total revenues were $300.5 million in the reported quarter. Total expenses (on a reported basis) inched up 2.3% to $232.2 million.

Segmental Results

Profits in the Rail North America segment decreased to $50 million from the prior-year quarter’s level of $85.8 million. This downside was due to low gains on asset dispositions. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was -28% in the reported quarter, compared with the year-ago quarter’s -2.8%. Additionally, average lease renewal term for cars included in the LPI was 31 months, compared with 40 months in the year-ago quarter.

In fact, Rail North America’s wholly owned fleet had approximately 117,800 rail cars at the end of June 2020. Fleet utilization was 98.7%, compared with 99.5% at the end of second-quarter 2019.

In the Rail International segment, profits fell 6.1% year over year to $20 million. Results were hurt by coronavirus-led shutdowns at railcar manufacturing facilities.

Moreover, GATX Rail Europe’s fleet totaled 25,700 rail cars at the end of the quarter. Fleet utilization was 98.4%, compared with 98.9% at the end of second-quarter 2019.

In the Portfolio Management unit, profits surged 62.2% year over year to $19.3 million, driven by the Rolls-Royce and Partner Finance affiliates’ buoyant performance.

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

 

Liquidity

GATX, carrying a Zacks Rank #5 (Strong Sell), exited the second quarter with cash and cash equivalents of $492.9 million compared with $151 million at the end of 2019.

Sectorial Snapshot

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

Delta, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $4.58 from non-recurring items) of $4.43 per share in the June quarter, wider than the Zacks Consensus Estimate of a loss of $3.97. Total revenues in the quarter came in at $1,468 million, surpassing the Zacks Consensus Estimate of $1,400.8 million.

J.B. Hunt, carrying a Zacks Rank #3 (Hold), reported second-quarter earnings of $1.14 per share, which surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million also beat the Zacks Consensus Estimate of $2,060.9 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kansas City Southern’s second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 (Hold) company’s total revenues of $547.9 million lagged the Zacks Consensus Estimate of $550.2 million.

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