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GATX Corp (GATX) Q3 Earnings Surpass Estimates, Down Y/Y

Zacks Equity Research
·4-min read

GATX Corporation’s GATX third-quarter 2020 earnings per share (excluding 32 cents from non-recurring items) came in at $1.03, which surpassed the Zacks Consensus Estimate of 86 cents. However, the bottom line declined 17.6% year over year primarily due to lower profitability in the Rail North America segment.

Total revenues were $304.4 million in the reported quarter. Total expenses (on a reported basis) inched up 1.2% to $226.3 million.

Segmental Results

Profits in the Rail North America segment declined to $56.1 million in the third quarter from the prior-year quarter’s level of $60.9 million. The downside was primarily due to lower lease revenues. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was -29.4% in the reported quarter, compared with the year-ago quarter’s -7.7%. Additionally, average lease renewal term for cars included in the LPI was 29 months compared with 40 months in the year-ago quarter.

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In fact, Rail North America’s wholly-owned fleet had approximately 118,100 rail cars at the end of Sep 30, 2020. Fleet utilization was 98.2% compared with 99.2% at the end of third-quarter 2019.

Meanwhile, in the Rail International segment, profits rose to $24 million in the third quarter from the prior-year quarter’s level of $19.9 million. Results were driven by more railcars on lease.

Also, GATX Rail Europe’s fleet totaled 26,000 rail cars at the end of the quarter. Fleet utilization was 98.2% compared with 99.4% at the end of third-quarter 2019.

In the Portfolio Management unit, profits surged more than 100% year over year to $44.3 million, driven by higher remarketing income at the Rolls-Royce and Partners Finance affiliates.

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 #3 (Hold), exited the third quarter with cash and cash equivalents of $459.8 million compared with $151 million at the end of 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sectorial Snapshot

Apart from GATX, let’s take a look into some other Zacks Transportation sector’s third-quarter earnings like Delta Air Lines DAL , J.B. Hunt Transport Services JBHT and  United Airlines Holdings, Inc. UAL.

Delta incurred a loss (excluding $5.17 from non-recurring items) of $3.30 per share in the September quarter, wider than the Zacks Consensus Estimate of a loss of $3.14. Meanwhile, Delta reported earnings of $2.32 per share (on an adjusted basis) in the year-ago quarter, driven by high passenger revenues as air-travel demand was buoyant at that time.

J.B. Hunt reported mixed third-quarter 2020 results, with earnings missing estimates while revenues beating the same. Quarterly earnings of $1.18 per share fell short of the Zacks Consensus Estimate of $1.26. Moreover, the bottom line declined 15.7% year over year due to disappointing performance of its intermodal (JBI) unit. Total operating revenues increased 4.6% to $2,472.5 million. Revenues also beat the consensus mark of $2,345.2 million.

United Airlines incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share, wider than the Zacks Consensus Estimate of a loss of $7.63. Results were hurt by coronavirus-induced weakness in air-travel demand. Moreover, operating revenues of $2,489 million slumped 78.1% year over year and also lagged the Zacks Consensus Estimate of $2,570.1 million. The year-over-year plunge was caused by 84.3% plunge in passenger revenues to $1,649 million.

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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
 
GATX Corporation (GATX) : Free Stock Analysis Report
 
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Zacks Investment Research