Dollar Thrifty Automotive Group Reports Third Quarter 2007 Results
TULSA, Okla., Nov. 7, 2007 -- Dollar Thrifty Automotive Group, Inc. today reported net income for the third quarter ended September 30, 2007 of $11.3 million, or $0.48 per diluted share, compared to $5.9 million, or $0.24 per diluted share, for the comparable 2006 quarter.
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Non-GAAP earnings per diluted share were $1.01 for the 2007 third quarter as compared to $0.83 for the 2006 third quarter. Non-GAAP net income excludes from GAAP net income the (increase) decrease in fair value of derivatives, net of related tax impact. A reconciliation of non-GAAP to GAAP net income is included in Table 3.
Third quarter 2007 GAAP and non-GAAP net income included a non-cash charge of $0.08 per diluted share to write off computer software made obsolete by the Company's new fleet optimization software and severance costs of $0.07 per diluted share for previously announced organizational changes. The third quarter 2006 GAAP and non-GAAP net income included $0.07 per diluted share of outsourcing transition costs and $0.03 per diluted share of severance costs.
For the quarter ended September 30, 2007, the Company's total revenue was a record $522.0 million, an increase of 7.7 percent over the comparable 2006 period. Vehicle rental revenue in the 2007 third quarter was $501.4 million, an 11.1 percent increase over the 2006 third quarter as a result of an 11.0 percent increase in revenue per day.
"We were pleased with our business and financial performance during the quarter, as we generated solid growth in revenues and earnings," said Gary L. Paxton, President and Chief Executive Officer. "We achieved this increase in profitability despite the headwinds of a 20 percent increase in vehicle depreciation costs. We continued to trade-off strong revenue per day increases for lower rental day volume growth. We also continued to manage down costs resulting in both direct operating expenses and selling, general, and administrative expenses decreasing significantly as a percentage of revenue compared to a year earlier."
Continuing the commitment to building shareholder value, during the third quarter, the Company restarted its share repurchase program purchasing 1,976,106 shares at a cost of $60.1 million, equaling approximately 8 percent of the Company's total outstanding shares. There is $128.6 million of remaining authorization to be completed by December 31, 2008.
Outlook
The Company expects revenue to continue to grow in the fourth quarter over the prior year with a modest increase in rental days and higher revenue per day, although at levels lower than previously forecasted. On a year-over-year basis, revenue per day growth will moderate due to a difficult comparison to the fourth quarter of 2006 when significant price increases began.
On the expense side, the Company expects to realize cost savings from previously announced initiatives. Vehicle depreciation cost increases will further moderate compared to earlier quarters as the Company begins to purchase 2008 model vehicles. The Company does, however, expect that a temporary delay in vehicle shipments from its primary vehicle supplier will adversely impact fourth quarter vehicle depreciation expense.
Based on the foregoing, the Company is lowering and narrowing its earnings guidance range to $1.75 to $1.85 per share from the previous guidance of $2.00 to $2.40 per share. This reduction includes slower revenue growth than previously forecasted, a $0.15 per share impact from the delay in vehicle shipments, and the $0.08 per share write-down of obsolete software taken in the third quarter. Full year 2007 guidance includes a total of $0.32 per share for severance costs, outsourcing transition costs, and asset write-downs, and excludes any impact of an increase or decrease in the fair value of derivatives.
"As we look into 2008, we are optimistic that we will continue to grow revenue, control costs and improve our bottom line performance," Paxton said. "We have raised our pricing significantly over the past two years to partially offset 25 percent increases in vehicle costs in both 2006 and 2007. We expect vehicle cost increases to moderate significantly in 2008. The combined effects of our revenue growth initiatives, along with the benefit we will see in 2008 of significant cost actions already taken, and the opportunity to further reduce costs with our new fleet optimization software, fuel our optimism for the upcoming year."
Nine Month Results
For the nine months ended September 30, 2007, net income was $31.8 million, or $1.32 per diluted share. For the nine months ended September 30, 2006, net income was $54.3 million or $2.12 per diluted share. Total revenue for the period was $1.4 billion, an increase of 8.2 percent over the comparable nine months of 2006.
Non-GAAP earnings per diluted share for the nine months ended September 30, 2007, were $1.76 as compared to $2.29 of non-GAAP earnings per diluted share for same time period in 2006. GAAP and non-GAAP net income for the nine months ended September 30, 2007 include $0.10 per diluted share of outsourcing transition costs, $0.08 per diluted share to write off obsolete computer software, $0.07 per diluted share of severance costs, and $0.03 per share to write off deferred financing fees for the Company's former revolving credit facility which was retired in June. For the comparable 2006 period, GAAP and non-GAAP net income included $0.07 of outsourcing transition costs and $0.03 of severance costs.
Web cast and conference call information
The Dollar Thrifty Automotive Group, Inc. third quarter 2007 earnings conference call will be held on Wednesday, November 7, 2007, at 10:00 a.m. (CST). Those interested in listening to the conference call live may access the call via Web cast at the corporate Web site, http://www.dtag.com/, or by dialing 888-425-9158 (domestic) or 210-839-8553 (international) using the pass code "Dollar Thrifty." An audio replay of the conference call will be available through November 21, 2007, by calling 800-945-7761 (domestic) or 203-369-3954 (international). The replay will also be available via the corporate Web site for one year.
About Dollar Thrifty Automotive Group, Inc.
Dollar Thrifty Automotive Group, Inc. is a Fortune 1000 Company headquartered in Tulsa, Oklahoma. Driven by the mission "Value Every Time," the Company's brands, Dollar Rent A Car and Thrifty Car Rental, serve value-conscious travelers in approximately 70 countries. Dollar and Thrifty have over 800 corporate and franchised locations in the United States and Canada, operating in virtually all of the top U.S. airport markets and in all of the top Canadian airport markets. The Company's more than 8,400 employees are located mainly in North America, but global service capabilities exist through an expanding international franchise network. For additional information, visit http://www.dtag.com/.
Some of the statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Dollar Thrifty Automotive Group, Inc. believes such forward-looking statements are based upon reasonable assumptions, such statements are not guarantees of future performance and certain factors could cause results to differ materially from current expectations. These factors include: price and product competition; access to reservation distribution channels; economic and competitive conditions in markets and countries where the companies' customers reside and where the companies and their franchisees operate; natural hazards or catastrophes; incidents of terrorism; airline travel patterns; changes in capital availability or cost; costs and other terms related to the acquisition and disposition of automobiles; systems or communications failures; costs of conducting business and changes in structure or operations; and certain regulatory and environmental matters and litigation risks. Should one or more of these risks or uncertainties, among others, materialize, actual results could vary from those estimated, anticipated or projected. Dollar Thrifty Automotive Group, Inc. undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
Table 1
Dollar Thrifty Automotive Group, Inc.
Consolidated Statement of Income
(In thousands, except share and per share data)
Unaudited
Three months ended As % of
September 30, Total revenues
2007 2006 2007 2006
Revenues:
Vehicle rentals $501,381 $451,435 96.0% 93.1%
Other 20,639 33,272 4.0% 6.9%
Total revenues 522,020 484,707 100.0% 100.0%
Costs and Expenses:
Direct vehicle and operating 245,824 233,113 47.1% 48.1%
Vehicle depreciation and lease
charges, net 143,053 122,503 27.4% 25.3%
Selling, general and
administrative 59,427 66,396 11.4% 13.7%
Interest expense, net 35,808 33,005 6.8% 6.8%
Total costs and expenses 484,112 455,017 92.7% 93.9%
(Increase) decrease in fair value
of derivatives 21,660 25,391 4.2% 5.2%
Income before income taxes 16,248 4,299 3.1% 0.9%
Income tax expense (benefit) 4,935 (1,585) 0.9% (0.3%)
Net income $11,313 $5,884 2.2% 1.2%
Earnings per share:
Basic $ 0.50 $ 0.25
Diluted $ 0.48 $ 0.24
Weighted average number
of shares outstanding:
Basic 22,695,359 23,884,407
Diluted 23,707,551 25,036,891
Nine months ended As % of
September 30, Total revenues
2007 2006 2007 2006
Revenues:
Vehicle rentals $1,303,043 $1,172,614 95.0% 92.5%
Other 68,544 95,229 5.0% 7.5%
Total revenues 1,371,587 1,267,843 100.0% 100.0%
Costs and Expenses:
Direct vehicle and operating 672,812 628,393 49.1% 49.6%
Vehicle depreciation and lease
charges, net 357,677 275,716 26.1% 21.7%
Selling, general and
administrative 184,728 195,313 13.5% 15.4%
Interest expense, net 83,919 72,882 6.0% 5.8%
Total costs and expenses 1,299,136 1,172,304 94.7% 92.5%
(Increase) decrease in fair value
of derivatives 18,202 7,135 1.3% 0.5%
Income before income taxes 54,249 88,404 4.0% 7.0%
Income tax expense 22,453 34,059 1.7% 2.7%
Net income $31,796 $54,345 2.3% 4.3%
Earnings per share:
Basic $ 1.38 $ 2.22
Diluted $ 1.32 $ 2.12
Weighted average number
of shares outstanding:
Basic 23,075,896 24,456,656
Diluted 24,127,756 25,586,734
Table 2
Dollar Thrifty Automotive Group, Inc.
Selected Operating and Financial Data
Three months ended Nine months ended
September 30, 2007 September 30, 2007
OPERATING DATA:
Vehicle Rental Data: (includes
franchise acquisitions)
Average number of vehicles operated 138,524 127,654
% change from prior year 0.8% 3.4%
Number of rental days 10,749,841 29,010,948
% change from prior year 0.0% 1.8%
Vehicle utilization 84.4% 83.2%
Percentage points change from
prior year (0.6) p.p. (1.4) p.p.
Average revenue per day $46.64 $44.92
% change from prior year 11.0% 9.2%
Monthly average revenue per
vehicle $1,206 $1,134
% change from prior year 10.1% 7.5%
Same Store Vehicle Rental Data:
(excludes franchise acquisitions)
Average number of vehicles
operated 131,506 120,091
% change from prior year (4.3%) (2.7%)
Number of rental days 10,206,816 27,332,412
% change from prior year (5.0%) (4.1%)
Vehicle Leasing Data:
Average number of vehicles leased 6,116 5,841
% change from prior year (48.5%) (45.5%)
Monthly average revenue per
vehicle $582 $543
% change from prior year 17.1% 14.6%
FINANCIAL DATA: (in millions) (unaudited)
Non-vehicle depreciation and
amortization $7 $21
Non-vehicle interest expense 6 10
Non-vehicle interest income (3) (8)
Non-vehicle capital expenditures
(excludes acquisitions) 14 34
Franchise acquisitions 1 24
Cash paid for income taxes 3 13
Selected Balance Sheet Data
(In millions)
September 30, December 31,
2007 2006 2006
(Unaudited)
Cash and cash equivalents $ 190 $242 $192
Restricted cash and investments 416 260 390
Revenue-earning vehicles, net 2,726 2,993 2,624
Vehicle debt 2,606 2,984 2,744
Non-vehicle debt (corporate debt) 249 - -
Stockholders' equity 628 670 648
Table 3
Dollar Thrifty Automotive Group, Inc.
Non-GAAP Measures
Non-GAAP pretax income, Non-GAAP net income and Non-GAAP EPS exclude the
impact of the (increase) decrease in fair value of derivatives, net of
related tax impact (as applicable), from the reported GAAP measure. Due
to volatility resulting from the mark-to-market treatment of the
derivatives, the Company believes non-GAAP measures provide an important
assessment of year over year operating results. See table below for a
reconciliation of non-GAAP to GAAP results.
The following table reconciles reported GAAP pretax income per the income
statement to non-GAAP pretax income:
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
(in thousands) (in thousands)
Income before income taxes - as
reported $16,248 $4,299 $54,249 $88,404
(Increase) decrease in fair
value of derivatives 21,660 25,391 18,202 7,135
Pretax income - non-GAAP $37,908 $29,690 $72,451 $95,539
The following table reconciles reported GAAP net income per the income
statement to non-GAAP net income:
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
(in thousands) (in thousands)
Net income - as reported $11,313 $5,884 $31,796 $54,345
(Increase) decrease in fair value
of derivatives, net of tax 12,749 14,936 10,707 4,197
Net income - non-GAAP $24,062 $20,820 $42,503 $58,542
The following table reconciles reported GAAP diluted earnings per share
("EPS") to non-GAAP diluted earnings per share ("EPS"):
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
EPS, diluted - as reported $0.48 $0.24 $1.32 $2.12
EPS impact of (increase) decrease
in fair value of derivatives, net
of tax 0.54 0.60 0.44 0.16
EPS, diluted - non-GAAP $1.01 $0.83 $1.76 $2.29
Corporate EBITDA means earnings, excluding the impact of the (increase)
decrease in fair value of derivatives, before non-vehicle interest
expense, income taxes, non-vehicle depreciation, amortization, and certain
other items specified in the Company's $600 million credit agreement. The
Company believes Corporate EBITDA is important as it is utilized in the
calculation of financial covenants in the Company's credit agreement and
provides investors with a supplemental measure of the Company's liquidity.
The Company has revised its calculation of Corporate EBITDA for all
periods presented to be consistent with the Company's credit agreement.
EBITDA is not defined under GAAP and should not be considered as an
alternative measure of the Company's net income, operating performance,
cash flow or liquidity. Corporate EBITDA amounts presented may not be
comparable to similar measures disclosed by other companies.
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
(in thousands) (in thousands)
Net income - as reported $11,313 $5,884 $31,796 $54,345
(Increase) decrease in fair value
of derivatives 21,660 25,391 18,202 7,135
Non-vehicle interest expense 6,053 1,226 10,398 2,917
Income tax expense (benefit) 4,935 (1,585) 22,453 34,059
Non-vehicle depreciation 5,552 5,054 16,098 15,207
Amortization 1,566 1,618 4,675 4,801
Non-cash stock incentives 4,454 3,464 6,794 10,862
Other 3,222 32 3,234 72
Corporate EBITDA $58,755 $41,084 $113,650 $129,398
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