“Consistent with our initial outlook, conditions remain robust across our global markets,” GATX Corporation President and CEO Robert C. Lyons said during a second-quarter 2024 financial report. He pointed out that at Rail North America, fleet utilization “remained high” at 99.3% at quarter’s end; Rail International produced “solid operating results”; and the Chicago-based railcar lessor’s 2024 full-year earnings estimate “remains unchanged.”
For GATX, net income for the three-months ended June 30, 2024, came in at $44.4 million, or $1.21 per diluted share, compared with net income of $63.3 million, or $1.74 per diluted share, in the prior-year period. The second-quarter 2024 results included a net negative impact of $8.0 million, or $0.22 per diluted share, from Tax Adjustments and Other Items, according to the lessor, which also noted that second-quarter 2023 results included a net positive impact of $0.2 million, or $0.01 per diluted share, from Tax Adjustments and Other Items.
RAIL NORTH AMERICA
Profit at GATX’s Rail North America segment was $78.8 million in second-quarter 2024, vs. $79.3 million in the prior-year period. Year to date 2024, the lessor said that the segment had a profit of $169.1 million, compared with $174.5 million for the same period in 2023. “Lower 2024 second-quarter and year-to-date results were due to lower gains on asset dispositions and higher interest expense, largely offset by higher revenue driven by higher lease rates,” GATX reported. “Demand for railcars being sold in the secondary market remains strong, and full-year remarketing income is expected to be in line with original expectations.”
As of June 30, Rail North America’s wholly owned fleet comprised approximately 111,100 cars, including about 9,000 boxcars. The following fleet statistics and performance discussion exclude the boxcar fleet. Fleet utilization came in at 99.3% at the end of second-quarter 2024, compared with 99.4% at the end of the prior quarter and 99.3% at the end of second-quarter 2023. During second-quarter 2024, the renewal lease rate change of the Lease Price Index (LPI) was positive 29.4%. This compares with an LPI of positive 33.0% in the prior quarter and positive 33.1% in second-quarter 2023. The average lease renewal term for all cars included in the LPI during second-quarter 2024 was 61 months, vs. 64 months in the prior quarter and 61 months in second-quarter 2023. The second-quarter 2024 renewal success rate was 84.1%, compared with 83.4% in the prior quarter and 85.3% in second-quarter 2023. Rail North America’s investment volume during second-quarter 2024 was $308.1 million, according to GATX.
“At Rail North America, fleet utilization remained high at 99.3% at the end of the quarter and the renewal success rate was strong at 84.1%,” Robert Lyons said. “The renewal lease rate change of GATX’s LPI was positive 29.4% with an average renewal term of 61 months. We continue to successfully place deliveries of new railcars under our existing supply agreement. In addition, we acquired over 600 railcars in the secondary and spot markets during the quarter.”
RAIL INTERNATIONAL
Profit at GATX’s Rail International segment was $26.5 million in second-quarter 2024, compared with $27.3 million in the prior-year period. Year to date 2024, this segment’s profit came in at $55.3 million vs. $50.8 million for the same point in 2023, according to the lessor, which noted that year-to-date 2023 results included a net positive impact of $0.3 million from Tax Adjustments and Other Items. “Excluding the impact of these items, 2024 second-quarter and year-to-date results were favorably impacted by more railcars on lease and higher lease rates and negatively impacted by higher interest and maintenance expenses,” GATX said.
As of June 30, GATX Rail Europe’s (GRE) fleet consisted of more than 29,600 cars. Fleet utilization was 95.8%, vs. 95.3% at the end of the prior quarter and 96.9% at the end of second-quarter 2023.
As of June 30, Rail India’s fleet comprised more than 9,900 railcars. Fleet utilization was 100%—the same as the end of the prior quarter and the end of second-quarter 2023.
“Rail International produced solid operating results,” Robert Lyons said. “Demand for most railcar types remains stable and GATX Rail Europe’s fleet utilization was 95.8% at quarter end. We continue to take delivery of new railcars in Europe and India, and in July, Rail India celebrated the delivery of its 10,000th railcar. This milestone is reflective of our ongoing commitment to India and the impressive growth outlook for its freight rail market.”
ENGINE LEASING
GATX reported that its Engine Leasing segment profit came in at $18.4 million for second-quarter 2024, compared with $26.6 million in the prior-year period. Year to date 2024, segment profit was $44.1 million vs. $54.9 million at the same point last year. According to GATX, second-quarter 2023 results included a net positive impact of $0.2 million from Tax Adjustments and Other Items; 2024 and 2023 year-to-date results include a net positive impact of $0.6 million and a net negative impact of $1.4 million, respectively, from Tax Adjustments and Other Items. “Excluding the impact of these items, lower 2024 second-quarter and year-to-date results were driven by lower earnings from the Rolls-Royce and Partners Finance (RRPF) affiliates, partly offset by increased earnings from GATX Engine Leasing, the company’s wholly owned engine portfolio,” GATX said. “During the comparative periods, lower RRPF earnings was driven by the timing of remarketing events and resulting lower remarketing income.”
“Engine Leasing performed well as demand for aircraft spare engines remains very strong,” Robert Lyons said. “We anticipate favorable operating conditions for Engine Leasing for the balance of the year. Further, capitalizing on attractive opportunities to increase our direct investment in aircraft spare engines, we acquired three engines for $71.3 million during the quarter, and we foresee an active investment calendar during the second half of this year.”
2024 OUTLOOK
“We came into the year with positive expectations, and market conditions and trends have been as anticipated,” Robert Lyons concluded. “Therefore, our 2024 full-year earnings estimate remains unchanged at $7.30–$7.70 per diluted share, excluding the impact of Tax Adjustments and Other Items.”
More financial report details can be found on GATX’s Investor Relations website.
