GATX reported Q4/17 net income of $342.1 million, compared to net income of $30.9 million in Q4/16. The results include impacts from the Tax Cuts and Jobs Act, which allowed GATX to a record a one-time non-cash net tax benefit of $315.9 million.

Net income for the full-year 2017 was $502.0 million, compared to $257.1 million in the prior year.

Brian A. Kenney, president and CEO of GATX, said, “We outperformed our original expectations in 2017. Continued industry-wide railcar overcapacity negatively impacted lease renewal pricing at Rail North America, however outstanding performance by our commercial team enabled us to maintain higher than expected fleet utilization throughout the year.

“We also capitalized on continued strong North American secondary market demand by optimizing the fleet through railcar sales, generating significant remarketing income. Rail International maintained higher average fleet utilization than expected during the year, while American Steamship earned significantly higher segment profit in 2017 by carrying more tonnage and operating their fleet more efficiently. Lastly, within Portfolio Management, our Rolls-Royce Partners Finance affiliates produced another year of higher than expected financial results.”

Rail North America reported segment profit of $61.2 million in Q4/17, compared to $48.5 million in Q4/16. Full-year 2017, Rail North America reported segment profit of $299.3 million, compared to $321.9 million in 2016. The decline in full-year 2017 segment profit was primarily the result of lower revenues. Segment profit in 2016 included an impairment loss of $29.8 million for certain railcars in flammable service.

At December 31, 2017, Rail North America’s wholly owned fleet was approximately 120,000 cars, including more than 16,000 boxcars.

“We anticipate railcar overcapacity to continue in North America in 2018. However, certain industry data points suggest that the railcar leasing market is slowly improving. For example, throughout 2017, railcar loadings generally improved and absolute railcar lease rates increased broadly, albeit off a very low base,” Kenney said. “Despite these positive signs, we expect that absent an unforeseen demand catalyst, Rail North America will earn lower segment profit in 2018, as market lease rates are expected to remain below average expiring rates for railcars renewing during the year.”

Fleet utilization was 98.2% at the end of the fourth quarter, compared to 98.5% at the end of the prior quarter and 98.9% at the end of 2016. During the fourth quarter, the renewal lease rate change of the GATX Lease Price Index (LPI) was minus 32.4%. This compares to minus 27.0% in the prior quarter and minus 36.2% in Q4/16. The average lease renewal term for all cars included in the LPI during the fourth quarter was 36 months, compared to 35 months in the prior quarter and 29 months in Q4/16. The fourth quarter renewal success rate was 74.8%, compared to 74.9% at the end of the prior quarter and 64.7% at the end of 2016.

For full-year 2017, the renewal lease rate change of the LPI was minus 28.2% and the average renewal term was 33 months, compared to minus 20.3% and 32 months in 2016. Renewal success rate for the year was 74.7% compared to 66.7% in 2016. Asset remarketing income for the year was $44.6 million and total investment volume was $460.9 million.

Rail International’s segment profit was $18.7 million in Q4/17, compared to $14.1 million in Q4/16. Rail International reported full-year segment profit of $68.8 million in 2017, compared to $63.0 million in 2016. The fourth quarter and full-year 2017 segment profit increase was primarily driven by more railcars on lease at GATX Rail Europe and lower maintenance costs.

At the end of 2017, GRE’s fleet consisted of approximately 23,000 cars and utilization was 96.8%, compared to 95.6% at the end of the third quarter and at 2016 year end.

“Rail International is expected to show higher profitability in 2018, primarily due to a stronger ruro,” Kenney said.

American Steamship Company reported a segment profit of $6.1 million in Q4/17, compared to a segment loss of $2.8 million in Q4/16. Segment profit for full-year 2017 was $24.5 million, compared to $10.1 million in 2016. The increase in quarterly and full year segment profit is primarily attributable to more tonnage and increased operational efficiency.

Additionally, in Q4/16, ASC reported $5.0 million of expense related to an increased accrual for pending litigation and costs associated with the scheduled return of a leased vessel.

ASC operated 12 vessels during the year and carried approximately 27.8 million net tons of cargo, compared to 11 vessels which carried 25.4 million net tons in 2016.

Portfolio Management reported segment profit of $9.0 million in Q4/17 compared to $17.7 million in Q4/16. The decrease in fourth quarter profit was due to lower contributions from the marine portfolio.

For full-year 2017, Portfolio Management reported segment profit of $56.3 million, compared to $136.9 million in 2016. The 2016 results included $79.2 million related to residual sharing gains and a residual settlement fee.

“ASC is expected to produce higher segment profit in 2018 due to freight rate escalation and further fleet efficiencies,” Kenney said. “We anticipate that Portfolio Management will generate lower residual sharing income in 2018, however, this should be partially offset by another strong year at our Rolls-Royce Partners Finance affiliates.”