GATX 2019 Net Income Holds Steady Despite Railcar Oversupply

GATX reported 2019 Q4/19 net income of $56.6 million compared to net income of $49.2 million in Q4/18. Net income for the full-year 2019 was $211.2 million compared to $211.3 million in the prior year.

The Q4/19 results include a net casualty gain of approximately $8.1 million attributed to an insurance recovery for a damaged vessel at American Steamship Company.

Rail North America reported segment profit of $61.1 million in Q4/19, compared to $66.6 million in Q4/18. Segment profit was impacted by lower lease revenue in the quarter. Full-year 2019 Rail North America reported segment profit of $276.2 million, compared to $307.9 million in 2018. Higher revenues in 2019 were more than offset by lower gains on asset dispositions and higher ownership costs in 2019, resulting in lower segment profit.

At Dec. 31, 2019, Rail North America’s wholly owned fleet was approximately 118,000 cars, including more than 15,000 boxcars. The following fleet statistics exclude the boxcar fleet.

Fleet utilization was 99.3% at the end of Q4/19, compared to 99.2% at the end of the prior quarter and 99.4% at 2018 year end.

“Despite the uncertain global economy, we exceeded our original expectations and produced excellent financial results in 2019,” said Brian A. Kenney, president and chief executive officer of GATX. “In Rail North America, a continuing market oversupply of railcars, coupled with reduced carload volume and increased railroad velocity, put pressure on lease rates throughout the year. However, our commercial team’s outstanding performance in maintaining 99% fleet utilization combined with further efficiency improvements in our maintenance network resulted in Rail North America exceeding its segment profit expectations.

Kenney added, “For 2020, we anticipate declining performance at Rail North America to be offset by increasingly strong performance in Rail International and Portfolio Management. Specifically, we expect the aforementioned market challenges in the North American rail industry to persist in 2020. Revenue pressure on the existing fleet should continue as the average lease rate on lease renewals should be lower than the average expiring lease rate. This will be the main driver behind lower segment profit in Rail North America in 2020.

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