GATX Corp. (GMT) filed Quarterly Report for the period ended 2009-09-30.
GATX Corporation is a unique finance and leasing company combining asset knowledge and services structuring expertise creative partnering and risk capital to serve customers and partners worldwide. GATX Corporation provides leasing and financial services responsive to the specialized needs of a range of businesses. GATX Corporation specializes in railcar and locomotive operating leasing aircraft operating leasing information technology leasing and venture finance for customers in diverse industrial sectors worldwide. (Company Press Release) Gatx Corp. has a market cap of $1.29 billion; its shares were traded at around $28.07 with a P/E ratio of 14.2 and P/S ratio of 0.9. The dividend yield of Gatx Corp. stocks is 4%.
Highlight of Business Operations:
Net income was $59.9 million or $1.24 per diluted share for the first nine months of 2009 compared to net income of $165.9 million or $3.31 per diluted share for the first nine months of 2008. The 2009 results include after tax unrealized losses of $18.5 million or $0.38 per diluted share related to certain interest rate swaps at GATX’s AAE Cargo A.G. affiliate (AAE). Results for the first nine months of 2008 include $26.4 million or $0.52 per diluted share in aggregate after tax income from the reversal of an income tax accrual, a gain on the sale of real estate and the reversal of environmental reserves, both in Europe, and net unrealized gains related to AAE interest rate swaps.
Net income was $19.6 million or $0.42 per diluted share for the third quarter of 2009 compared to net income of $73.9 million or $1.46 per diluted share for the third quarter of 2008. Third quarter 2008 results include after tax income of $24.4 million or $0.48 per diluted share in income from a gain on the sale of real estate and the reversal of environmental reserves as well as unrealized gains from AAE interest rate swaps.
During the first nine months of 2009, Rail’s investments, which consisted primarily of new railcars acquired pursuant to existing commitments and portfolio acquisitions, were $277.3 million compared to $266.7 million in 2008. At September 30, 2009, Rail had total assets of $5.2 billion, including $1.0 billion of off balance sheet assets, compared to $5.0 billion, including $1.0 billion of off balance sheet assets, at September 30, 2008.
Rail’s segment profit in 2009 was impacted by $22.0 million of unrealized losses due to changes in the fair value of certain interest rate swaps at AAE. Segment profit in 2008 reflected a $12.0 million gain on the sale of an office building and the reversal of $8.2 million of reserves due to the settlement of an environmental liability, both in Europe, and a $3.7 million unrealized gain on the interest rate swaps at AAE. Excluding these items, Rail’s segment profit decreased $69.3 million, primarily due to lower lease, scrapping and asset remarketing income.
Lease income in North America decreased $6.8 million, primarily due to fewer cars on lease and $5.2 million of reduced rents on restructured leases resulting from customer bankruptcies and non-performing leases. These items were partially offset by higher lease rates on leases renewed in the prior year. On average during the first nine months of 2009, there were approximately 600 fewer railcars on lease as compared to the first nine months of 2008, primarily due to lease-end returns. The current year includes 3,650 active cars that were acquired in December 2008 from Allco Finance Group Limited (“Allco”), largely offsetting the impact of lease-end returns on 2009 lease income. In Europe, a $15.5 million decrease in lease income was driven by the unfavorable foreign exchange effects of a stronger U.S. Dollar and was partially offset by higher lease rates and an average of 95 more cars on lease. Asset remarketing income decreased $10.3 million due to fewer asset sales in the current period. Other income was $39.1 million lower, primarily due to lower scrap income (driven by significantly lower steel prices), a $12.0 million gain on the sale of an office building recorded in 2008 and the receipt in the prior year of a lease termination fee. Affiliates’ earnings were lower due to the $22.0 million unrealized loss at AAE compared to the $3.7 million unrealized gain in 2008. Excluding the unrealized loss and gain, 2009 affiliates’ earnings were lower primarily due to a casualty gain recognized by an affiliate in the prior year and lower operating results at AAE due to fewer cars on lease.
Lease income in North America decreased $5.2 million, primarily due to fewer cars on lease and $2.5 million of reduced rents on restructured leases resulting from customer bankruptcies. On average during the third quarter of 2009, there were approximately 1,400 fewer railcars on lease as compared to the third quarter of 2008, primarily due to lease-end returns. The current year includes 3,650 active cars that were acquired in December 2008 from Allco, largely offsetting the impact of lease-end returns on 2009 lease income. In Europe, a $3.7 million decrease in lease income due to the unfavorable foreign exchange effects of a stronger U.S. Dollar was partially offset by higher renewal rates in 2009. Asset remarketing income decreased $8.3 million due to fewer asset sales in the current period. Other income was $22.3 million lower, primarily due to lower scrap in
GMT is in the portfolios of David Dreman of Dreman Value Management.
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