GATX Corporation (NYSE: GATX) earnings recovered somewhat in the second quarter of 2019 after taking a nosedive in the first quarter. The railcar leasing company posted diluted earnings per share (EPS) of $1.86, up from $1.01 in the second quarter of 2018, and beat analyst estimates of $1.32.
This quarter’s results are also a substantial improvement over last quarter’s reported EPS of $1.12, down from $1.98 year-over-year. GATX posted a second quarter 2019 net income of $68 million, up from $41.5 million in the first quarter. “Asset dispositions,” or selling off assets, accounted for $32.9 million of the net gain between quarters.
“Conditions in the North American railcar leasing market are consistent with our expectations coming into the year,” GATX CEO Brian Kenney said. “Fleet utilization increased to 99.5 percent at the end of the quarter and our renewal success rate was 85.3 percent. As expected, the renewal lease rate change of GATX’s Lease Price Index was negative 2.8 percent in the quarter, with an average renewal term of 53 months.”
The company’s North American rail segment posted $85.8 million in profit during the second quarter of 2019, up from $64.2 million during the same quarter last year. This segment is where asset dispositions played the largest role.
Year-to-date, the North American segment reported profits of $154.2 million, compared to $173.1 million in the same period of 2018. Company leaders attributed this drop to lower gains on asset dispositions and higher ownership costs.
At the close of the second quarter, the North American segment housed approximately 119,500 railcars, including approximately 16,000 boxcars. Railcare fleet utilization stayed mostly consistent over last quarter, moving from 99.4 percent to 99.5. Utilization during the same quarter last year was 98.9 percent.
Remarketing income for the North American segment was $26.9 million in the second quarter.
The company’s international segment posted a profit of $21.3 million in the second quarter of 2019, up from $12.8 million in the second quarter of 2018. Rail International reported segment profit of $36.1 million year-to-date 2019, compared to $31.8 million for the same period of 2018.
The international segment’s year-to-date profit took a $5.8 million, or $0.15 per diluted share, hit during the second quarter, attributed to costs associated with the closure of a railcar maintenance facility in Germany.
At the end of the second quarter, the international segment had 24,000 railcars and utilization was 98.9 percent, consistent with the first quarter of the year and up from 97.8 percent at the end of the second quarter of 2018.
“Rail International continues to perform well with GATX Rail Europe’s fleet utilization remaining steady at 98.9 percent at quarter end,” Kenney said. “In India, customer demand for new railcar leases continues to gain momentum, and investment volume for 2019 remains robust.”
GATX’s total income for the first six months of 2019 was $109.5 million, or $2.97 per diluted share, compared to $115.1 million, or $2.99 per diluted share, in the prior year period. The company reiterated its full-year 2019 guidance.
“Given the current business environment and our financial performance thus far in 2019, our 2019 full-year earnings estimate is unchanged at $4.85-$5.15 per diluted share,” Kenney said.
GATX stock was trading at $76.53 around 9:45 a.m. Thursday, up about 0.94 percent.