GATX posts Q4, full-year 2016 results
Brian A. Kenney, president and chief executive officer of GATX Corporation, said the company achieved record earnings per share for the full year of 2016.
GATX Corporation had a net income of $30.9 million on revenues of $362.1 million for the fourth quarter of 2016, year-over-year declines of 46.9 percent and 4.4 percent, respectively, according to the company’s most recent financial statements.
For the full year of 2016, the Chicago-based railcar lessor had a net income of $257.1 million, rising 25.2 percent from 2015. GATX had earnings of $6.29 per diluted share for the full year of 2016, compared with $4.69 per diluted share for 2015.
“GATX achieved record earnings per share again in 2016 despite the rail industry experiencing a second year of reduced carloadings and a large oversupply of railcars,” GATX President and CEO Brian A. Kenney said.
However, revenues for the year slipped 2.2 percent from 2015 to $1.42 billion.
“Lease rates experienced significant pressure during the year,” Kenney said. “The fourth quarter renewal lease rate change of GATX’s Lease Price Index decreased by 36.2 percent. In response to the lower lease rate environment, we successfully shortened the term of lease renewals, achieving an average renewal term of 29 months in the fourth quarter of 2016.”
For each segment in 2016, compared to a year prior:
• Rail North America had profits of $321.9 million, down 15.2 percent;
• Rail International had profits of $63.0 million, down 10.1 percent;
• American Steamship Company (ASC) had profits of $10.1 million, down 33.1 percent;
• And Portfolio Management had profits of $136.9 percent, up 174.9 percent.
Rail North America’s profits declined for the full year due to higher operating expenses, higher ownership costs, lower disposition gains on owned assets and a non-cash asset impairment loss of $29.8 million.
In regards to the Rail International segment, GATX said, “While more railcars were on lease at GATX Rail Europe (GRE), higher maintenance, predominantly driven by higher wheelset costs, and lower gains on asset dispositions negatively affected full-year segment profit.”
ASC operated 11 vessels in 2016 and transported about 25.4 million net tons of cargo, down from 13 vessels in 2015 and the transport of 26.5 million net tons of cargo. “The decrease in tonnage and segment profit was driven by reduced coal and limestone demand,” GATX said.
The Portfolio Management segment’s sharp increase in profits for 2016 was predominantly driven by residual sharing fees and a residual sharing settlement fee, GATX said.
“Many of the market challenges we faced in 2016 continue as we move into 2017,” Kenney said. “As a result, we currently expect 2017 earnings to be in the range of $4.40 - $4.60 per diluted share.
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