Investor Optimism Soars On GATX? Shares Up After Favorable Outlook For Aircraft Spare Engine Demand, Q4 Earnings Beat

GATX Corporation GATX reported fourth-quarter revenues of $368.70 million, beating the street view of $365.40 million. 

The company reported adjusted earnings per share of $1.74, beating the analyst consensus of $1.58.

Revenue by segments: Lease (+10.1% Y/Y), Non-dedicated engine revenue (+773.3%), Marine operating (-70.4% Y/Y), and others (+27.3% Y/Y).

Rail North America reported segment profit of $66.7 million in the fourth quarter of 2023, compared to $83.5 million in the fourth quarter of 2022.

As of Dec. 31, 2023, Rail North America’s wholly owned fleet was approximately 110,500 cars, including more than 9,300 boxcars. Fleet utilization was 99.3% at the end of the fourth quarter, compared to 99.3% at the end of the prior quarter and 99.5% at 2022 year end.

“In Portfolio Management, the Rolls-Royce and Partners Finance affiliates outperformed our original expectation due to the strong recovery in global passenger air travel,” said Robert C. Lyons, president and chief executive officer of GATX.

Portfolio Management reported segment profit of $31.3 million in the fourth quarter of 2023 versus $23.1 million a year ago. 

“In Portfolio Management, we anticipate robust demand for aircraft spare engines, which should result in another year of strong earnings from RRPF and our wholly owned engines,” Lyons added.

Outlook: The company initiates 2024 earnings guidance of $7.30–$7.70 per diluted share versus $7.00 street view.

For 2024, the company expects Rail North America’s segment profit to increase, driven by higher lease revenue.

The company said it continues to add new railcars to the fleet and renew expiring leases at higher lease rates across many car types.

Price Action: GATX shares are trading higher by 6.80% to $126.71 on the last check Tuesday.