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GATX posts sluggish Q3 results amid challenging railcar leasing market

Earnings per share at GATX for the quarter surpassed analyst expectations despite declining from last year, as challenging conditions persist in the North American railcar leasing market.

   Chicago-based global railcar lessor GATX Corp. reported a net income of $49 million for the third quarter of 2017, falling from $95.7 million for the third quarter of last year.
   Earnings per share (EPS) of $1.25, which fell from $2.36 per share for last year’s third quarter, still surpassed analyst expectations, beating the Zacks estimate of $0.99 per share.
   GATX noted that last year’s third quarter results included net after-tax gains of $34.6 million related to the exit of marine investments and other items.
   Meanwhile, revenues for the third quarter of 2017 totaled $359.6 million, slipping 1 percent year-over-year.
   The Rail North America segment recorded a profit of $70.2 million for the quarter, down 20.1 percent year-over-year due to a 3.2 percent year-over-year drop in revenues to $242.4 million and higher maintenance expenses. “Challenging conditions continue in the North American railcar leasing market due to the oversupply of existing railcars and a large manufacturing backlog,” GATX President and CEO Brian Kenney said.
   As of Sept. 30, Rail North America’s wholly-owned fleet consisted of approximately 120,000 railcars, including about 16,600 boxcars.
   Meanwhile, the Rail International segment had a $20.1 million profit for the quarter, slipping 13.7 percent year-over-year, as higher revenues were more than offset by lower insurance proceeds. The segment’s revenues rose 8.5 percent from last year’s third quarter to $52.3 million.
   As of Sept. 30, GATX Rail Europe’s fleet consisted of approximately 23,000 railcars.
   American Steamship Company, which operates a fleet of U.S.-flag vessels on the Great Lakes, recorded a segment profit of $12.1 million for the quarter, up 55.1 percent year-over-year thanks to cargo tonnage transport rising 12.6 percent year-over-year to 9.8 million net tons. However, this was partially offset by higher operating costs due to more vessels in operation. Revenues at American Steamship Company totaled $60.2 million for the quarter, up 14 percent year-over-year.
   The Portfolio Management segment’s profit totaled $12.8 million for the quarter, down from $64.1 million for the third quarter of last year, primarily due to a residual sharing fee settlement of $49.1 million received in 2016. Meanwhile, the segment’s revenues totaled $4.7 million for the quarter, down from $11.6 million a year prior.