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» GATX's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» GATX Corp. CEO Discusses Q3 2010 Results - Earnings Call Transcript
» GATX Corp. Q2 2010 Earnings Call Transcript
Today, we reported 2011 third quarter net income of $32.9 million or $0.70 per diluted share. This includes a net benefit of $1.3 million or $0.03 per diluted share related to a tax benefit from the reduction of statutory tax rates in the United Kingdom of $4.1 million or $0.09 per diluted share partially offset by negative after-tax fair value adjustments, certain interest rate swaps at our European rail affiliate, AAE Cargo of $2.8 million or $0.06 per diluted share. This compares to 2010 third quarter net income of $21.1 million or $0.45 per diluted share, which includes a net negative impact of $0.8 million or $0.02 per diluted share related to the negative after-tax value adjustments of interest rate swaps at AAE of $2.7 million or $0.06 per diluted share partially offset by a tax benefit of $1.9 million or $0.04 per diluted share also from the reduction of statutory tax rates in the United Kingdom.Year-to-date 2011, we reported net income of $79.2 million or $1.68 per diluted share. The year-to-date results include a net benefit of $13.9 million or $0.30 per diluted share related to the aforementioned tax benefit due to the change in tax rate and positive after-tax fair value adjustments of the interest rate swaps at AAE of $9.8 million or $0.21 per diluted share. Year-to-date 2010, we reported net income of $61.3 million or $1.31 per diluted share. The year-to-date results include a net benefit of $1.7 million or $0.04 per diluted share related to the previously discussed tax benefit due to the change in tax rate. The favorable resolution of litigation matter and tax accrual reversal that occurred in the second quarter of 2010 and negative after-tax fair value adjustments of the AAE interest rate swaps of $8 million or $0.17 per diluted share.
Rail’s results are reflective of the favorable operating environment. GATX’s North American fleet utilization was 98.2% at the end of the third quarter consistent with the end of the second quarter. The renewal rates in the lease price index were 9.6% above expiring rate and the average renewal terms of cars in the LPI increased to 49 months.As noted during our second quarter call, we do not anticipate a strong result in the LPI in the fourth quarter due to a limited number of renewals that are coming us very high rate. That said we are pleased with the rate environment at present. The success rate on renewals during the quarter was about 75%. In Europe, GATX’s wholly-owned tank car fleet utilization improved to 96% and we continue to achieve lease rate increases. In specialty, the spare aircraft engine leasing joint venture with Rolls-Royce continues to perform extremely well, while the ocean-going marine joint ventures had mixed results. Rates have improved in the gar carrier market due to demand for ethylene in China. However, the bulker and chemical tanker markets continued to be weak. As noted in the press release, we dissolved the Clipper Fourth joint venture, in which GATX held a 45% interest. As a result of the dissolution, GATX incurred an impairment loss of $5.2 million, which is reflected in share of affiliates earnings and retain six of the 14 handy-size chemical parcel tankers. American Steamship Company’s operations were interrupted during the quarter due to a brief strike by the American Maritime Officers union, which represents the licensed crew members aboard ASC’s vessels. We expect customer demand to remain stable through the end of the year and ASC is working to makeup for the volumes lost during the work stoppage. During the third quarter, asset remarketing activity strengthened as anticipated. Also we invested approximately $200 million primarily in rail assets in North America and Europe. As we look toward the end of the year, we continue to expect 2011 full year earnings in the range of $1.85 to $1.95 per diluted share. This excludes the impact of the AAE interest rate swaps, tax benefit, and strike effects at ASC. Read the rest of this transcript for free on seekingalpha.com