GATX Corporation (NYSE:GATX) reported 2018 second quarter net income of $38.8 million or $1.01 per diluted share, compared to net income of $53.4 million or $1.35 per diluted share in the second quarter of 2017. Net income for the first six months of 2018 was $115.1 million or $2.99 per diluted share, compared to $110.9 million or $2.79 per diluted share in the prior year period. The 2018 second quarter and year-to-date results include a net negative impact of $5.8 million or $0.15 per diluted share, attributed to costs associated with the closure of a railcar maintenance facility in Germany. The 2017 second quarter and year-to-date results include net gains of approximately $1.1 million or $0.03 per diluted share, associated with the planned exit of the majority of Portfolio Management’s marine investments. Details related to these items are provided in the attached Supplemental Information under Tax Adjustments and Other Items.
Brian A. Kenney, president and chief executive officer of GATX stated, “Rail North America experienced a more favorable industry environment in the second quarter, as railroad car loadings increased and railroad velocity decreased relative to 2017. Although lease revenue remains under pressure due to continued railcar oversupply and a large railcar manufacturing backlog, Rail North America continues to perform extremely well. Fleet utilization was 98.9% at quarter end, the renewal success rate was 78.6% during the quarter, absolute lease rates increased across the fleet and costs remain under control. The renewal lease rate change for GATX’s Lease Price Index was negative 16.1% in the second quarter with an average renewal term of 41 months.
“Rail International is performing very well. In Europe, we are seeing gradual, broad improvement across the chemical, petroleum, and freight markets. As a result, utilization at GATX Rail Europe increased to 97.8% at quarter end. In India, customer demand for new railcar leases is gaining momentum, and total investment volume for 2018 will be strong.
“Rolls-Royce and Partners Finance affiliates’ performance continues to drive solid results within the Portfolio Management segment. American Steamship Company successfully deployed ten vessels into service and is seeing increased demand for its services.
Mr. Kenney concluded, “Given the improving business environment, we now expect our 2018 full-year earnings to be in the range of $4.90 to $5.10 per diluted share. This guidance excludes the impact of the railcar maintenance facility closure in Germany, as noted above.”
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