CIT Group (CIT) tanked 7% Tuesday after posting dismal quarterly earnings and a steep currency bill tied to the sale of some of its Brazilian operations.
Earnings per share of $0.75 missed Wall Street's expectations by 10% and sales of $805 million fell 2% short, based on Bloomberg consensus data. Meanwhile, net income of $144 million dropped 43% year over year.
The New York-based commercial lender's decline was caused by an unexpected hike in acquisition and restructuring costs, including a $58 million after-tax charge related to the sale of some non-strategic Brazilian businesses, largely driven by currency headwinds.
"Excluding restructuring costs and the amortization of intangibles, operating expenses were quite a bit below the normal run rate due to lower employee costs and adjustments related to FDIC insurance premiums," CFO Carol Hayles said on the earnings call.
Had it not been for such charges, CIT Group would have been comparably thrifty on the quarter, especially after scaling back employee costs, including bonuses, by about $20 million, Hayles said.
CIT also saw some of its leasing revenue dry up when some of its commercial planes needed to come off the market for repairs.
"We had a couple of planes that came off lease that needed to be kind of refurbished ... and caused elevated costs in the quarter," Hayles said. "That's the item that I said ... we wouldn't expect to recur at that level."
CEO John Thain, who's expected to retire this quarter, said CIT is focused on establishing itself as a purer commercial bank, which was reinforced with last year's acquisition of OneWest Bank and the sale of some of its Brazilian and Mexican operations.
CIT Group certainly does need to see a turnaround, as shares have fallen 38% over the last 12 months. And Wall Street appears confident the company can pull it off, as 62% of its listed analysts maintain Buy ratings and a price target of roughly $50, or 81% above Tuesday trading levels, according to Bloomberg consensus data.