Dollar Thrifty Automotive Group Reports Record Fourth Quarter Profit
Reports 2010 Outlook
TULSA, Okla., Feb. 17 -- Dollar Thrifty Automotive Group, Inc. today reported results for the fourth quarter and year ended December 31, 2009. Net income for the 2009 fourth quarter was $11.5 million, or $0.42 per diluted share, compared to a net loss of $72.2 million, or $3.36 loss per diluted share, in the fourth quarter of 2008. Net income for the fourth quarter of 2009 included a favorable impact on income of $0.14 per diluted share, compared to a loss of $1.54 per diluted share in last year's fourth quarter, both of which relate to changes in fair value of derivatives and impairments of long-lived assets.
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Non-GAAP net income for the 2009 fourth quarter was $7.7 million, or $0.28 per diluted share, compared to a non-GAAP net loss of $39.1 million, or $1.82 loss per diluted share, for the 2008 fourth quarter. Non-GAAP net income (loss) excludes the (increase) decrease in fair value of derivatives and non-cash charges related to the impairments of long-lived assets, net of related tax impact. Corporate Adjusted EBITDA for the fourth quarter of 2009 was $26.2 million, compared to a loss of $43.4 million in the fourth quarter of 2008. Reconciliations of non-GAAP to GAAP results are included in Tables 3 and 4.
"We are all proud of the Company's dramatic financial turnaround that is clearly demonstrated in our operating results for the quarter and full year. The Company realized a $69.6 million year-over-year improvement in Corporate Adjusted EBITDA for the fourth quarter. Additionally, we also are reporting our fourth consecutive quarter of year-over-year improvement in financial performance while operating in the challenging economy of 2009," said Scott L. Thompson, President and Chief Executive Officer.
For the quarter ended December 31, 2009, the Company's total revenue was $345.3 million, as compared to $355.1 million for the comparable 2008 period. The decline in revenue was primarily driven by a 12.2 percent decrease in rental days, partially mitigated by an 11.6 percent improvement in revenue per day. On a same store basis, rental revenues for locations open during both periods were up 1.7 percent compared to the fourth quarter of 2008. The fourth quarter average fleet was down 10.5 percent compared to the fourth quarter of 2008.
"Revenue for the quarter was in line with our expectations and our overall return on asset strategy. We continue to focus on the profitability of rental transactions and overall price discipline in the industry. Consistent with our strategy, at times we will accept lower transaction days and utilization in order to maintain the proper balance between price and volume," said Thompson.
Per vehicle depreciation cost of $274 per month in the fourth quarter of 2009 was approximately 33 percent lower than the comparable quarter of 2008. Numerous factors drove the improvement in depreciation cost per vehicle, including a significant improvement in used vehicle residual values as they recovered from the historical lows experienced in the fourth quarter of 2008, extension of our fleet holding periods, better mix optimization, a move towards a greater proportion of risk vehicles in the fleet and more effective remarketing. Vehicle utilization was 78.8 percent, down 150 basis points from last year's fourth quarter. Utilization was adversely impacted by an increase in the number of vehicles held for remarketing during the period and the Company's focus on price discipline.
Direct vehicle and operating expenses and selling, general and administrative expenses were lower in the fourth quarter of 2009 compared to the same quarter in 2008 primarily as a result of transaction declines, cost reduction efforts and cost efficiency initiatives. As a percentage of revenues, these operating expenses declined 620 basis points to 65.1 percent of revenues, compared to 71.3 percent in the fourth quarter of 2008. Interest expense for the fourth quarter of 2009 declined on a year-over-year basis primarily as a result of a $760 million reduction in debt compared to 2008 levels, partially offset by lower returns on invested cash.
Full Year Results
For the year ended December 31, 2009, net income was $45.0 million, or $1.88 per diluted share. For the year ended December 31, 2008, the net loss was $346.7 million, or $16.22 loss per diluted share. The net loss in 2008 included a $14.31 loss per diluted share related to the impairment of goodwill and long-lived assets and changes in fair value of derivatives, compared to a favorable impact on income of $0.65 per diluted share in 2009. Consistent with our 2009 revenue guidance, total revenue for the year was $1.55 billion, a decrease of 8.9 percent over the comparable period in 2008.
Non-GAAP earnings per diluted share for the year ended December 31, 2009 was $1.24, compared to a non-GAAP loss per diluted share of $1.91 for the same period in 2008. Non-GAAP net income (loss) excludes the (increase) decrease in fair value of derivatives and the non-cash charges related to the impairment of goodwill and long-lived assets, net of related tax impact. Corporate Adjusted EBITDA for the year ended December 31, 2009 was $99.4 million, an increase of $101.7 million from the $2.3 million loss for the year ended December 31, 2008. A reconciliation of non-GAAP to GAAP results is included in Tables 3 and 4.
"As we began 2009, we faced a number of significant challenges that necessitated changing the Company rapidly in order to enhance our competitiveness and to properly position the Company for success. I would like to thank the entire Dollar Thrifty team for their openness to change and their significant contributions in a difficult year," said Thompson.
Liquidity and Capital Resources
During the fourth quarter of 2009, the Company further strengthened its liquidity and tangible net worth through a successful $120 million equity offering. As of December 31, 2009, the Company had $500 million in cash and cash equivalents, and an additional $623 million in restricted cash and investments primarily available for the purchase of vehicles and/or repayment of vehicle financing obligations. The Company's tangible net worth at December 31, 2009 was $368 million.
2010 Outlook
The Company expects industry conditions to improve slightly in 2010 as a result of several factors. Continued improvement in the overall economy, combined with ongoing recovery in the credit markets, is expected to result in low single-digit growth in transaction days in 2010. The Company believes that customer demand for its value-oriented leisure brands and continued industry pricing discipline will result in moderate price increases in revenue per day on a year-over-year basis. Finally, the Company believes that recent favorable trends in the used vehicle markets will continue throughout 2010, resulting in solid residual values and improvements in monthly fleet operating costs year-over-year.
Based on the above expectations, the Company is targeting Corporate Adjusted EBITDA for the full year of 2010 to be within a range of $120 million to $140 million. The Company provided the following additional information with respect to its full year guidance:
-- Vehicle rental revenues are projected to be up 2 - 4 percent compared
to 2009, resulting from low single-digit increases in both transaction
days and revenue per day.
-- Vehicle depreciation costs for the full year of 2010 are expected to
be approximately $325 per vehicle per month. The Company noted that
disposition of vehicles is expected to create some volatility in the
level of these costs on a quarter-to-quarter basis.
"In 2009, our primary objectives were the preservation of liquidity and maximization of cash flow. With those objectives achieved, the Company is well positioned to take advantage of a mildly improving economy. We will seek profitable transaction growth in 2010 with the objective of maximizing return on assets for our shareholders," said Thompson.
Web cast and conference call information
The Dollar Thrifty Automotive Group, Inc. fourth quarter and full year 2009 earnings conference call will be held on Wednesday, February 17th, at 8:00 a.m. (CST). Those interested in listening to the conference call live may access the call via Web cast at the corporate Web site, www.dtag.com, or by dialing 888-946-7608 (domestic) or 630-395-0278 (international) using the pass code "Dollar Thrifty." An audio replay of the conference call will be available through March 3, 2010, by calling 866-491-2914 (domestic) or 203-369-1721 (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 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 over 80 countries. Dollar and Thrifty have over 600 corporate and franchised locations in the United States and Canada, operating in virtually all of the top U.S. and Canadian airport markets. The Company's approximately 6,000 employees are located mainly in North America, but global service capabilities exist through an expanding international franchise network. For additional information, visit www.dtag.com or the brand sites at www.dollar.com and www.thrifty.com.
This press release contains "forward-looking statements" about our expectations, plans and performance. These statements use such words as "may," "will," "expect," "believe," "intend," "should," "could," "anticipate," "estimate," "forecast," "project," "plan" and similar expressions. These statements do not guarantee future performance and Dollar Thrifty Automotive Group, Inc. assumes no obligation to update them. Risks and uncertainties that could materially affect future results include:
-- the impact of persistent pricing and demand pressures, particularly in
light of the continuing volatility in the global financial and credit
markets and concerns about global economic prospects and the timing
and strength of a recovery, which have continued to depress consumer
confidence and spending levels;
-- whether ongoing governmental and regulatory initiatives in the United
States and elsewhere to stimulate economic growth will be successful;
-- the effectiveness of actions we take to manage costs and liquidity and
whether further reductions in the scope of our operations will be
necessary in light of the economic environment;
-- our ability to obtain cost-effective financing as needed (including
replacement of asset backed medium term notes and other indebtedness
as it comes due) without unduly restricting operational flexibility,
particularly if global economic conditions and credit markets fail to
improve;
-- our ability to comply with financial covenants or to obtain necessary
amendments or waivers, and the impact of the terms of any required
amendments or waivers, such as potential reductions in lender
commitments;
-- whether efforts to revitalize the U.S. automotive industry are
successful, particularly in light of our dependence on vehicle supply
from U.S. automotive manufacturers;
-- the impact of pricing and other actions by competitors;
-- our ability to manage the consequences under our financing agreements
of an event of bankruptcy with respect to any of the monoline insurers
that provide credit support for our asset backed financing structures;
-- the cost and other terms of acquiring and disposing of automobiles and
the impact of conditions in the used car market on our ability to
reduce our fleet capacity as and when projected by our plans;
-- the potential for significant cash tax payments in 2010 as a result of
the reduction in our fleet size and the resulting impact of our
inability to defer gains on the disposition of our vehicles under our
like-kind exchange program;
-- our ability to manage our fleet mix to match demand and reduce vehicle
depreciation costs, particularly in light of the significant increase
in the level of Non-Program Vehicles (i.e., those vehicles not
acquired through a guaranteed residual value program) in our fleet and
our exposure to the used car market;
-- the impact of our strategy to increase holding periods for vehicles in
our fleet, including potential adverse customer perceptions of the
quality of our fleet and increased servicing costs;
-- airline travel patterns, including disruptions or reductions in air
travel resulting from airline bankruptcies, industry consolidation,
capacity reductions and pricing actions;
-- local market conditions where we and our franchisees do business,
including whether franchisees will continue to have access to capital
as needed;
-- volatility in gasoline prices;
-- access to reservation distribution channels;
-- disruptions in the operation or development of information and
communication systems that we rely on, including those relating to
methods of payment;
-- the cost of regulatory compliance, costs and other effects of
potential future initiatives, including those directed at climate
change and its effects, and the costs and outcome of pending
litigation; and
-- the impact of natural catastrophes and terrorism.
Forward-looking statements should be considered in light of information in this press release and other filings we make with the Securities and Exchange Commission.
Table 1
-------
Dollar Thrifty Automotive Group, Inc.
Consolidated Statement of Operations
-------------------------------------
(In thousands, except share and per share data)
Unaudited
Three months ended As % of
December 31, Total revenues
2009 2008 2009 2008
---- ---- ---- ----
Revenues:
Vehicle rentals $329,746 $336,731 95.5% 94.8%
Other 15,576 18,378 4.5% 5.2%
------ ------ --- ---
Total revenues 345,322 355,109 100.0% 100.0%
------- ------- ----- -----
Costs and Expenses:
Direct vehicle and operating 178,354 199,550 51.6% 56.2%
Vehicle depreciation and lease
charges, net 80,886 132,739 23.4% 37.4%
Selling, general and
administrative 46,638 53,453 13.5% 15.1%
Interest expense, net 22,930 27,533 6.6% 7.7%
Goodwill and long-lived asset
impairment 1,948 16,678 0.7% 4.7%
----- ------ --- ---
Total costs and expenses 330,756 429,953 95.8% 121.1%
------- ------- ---- -----
(Increase) decrease in fair
value of derivatives (8,825) 34,071 (2.6%) 9.6%
------ ------ ---- ---
Income (loss) before income taxes 23,391 (108,915) 6.8% (30.7%)
Income tax expense (benefit) 11,927 (36,737) 3.5% (10.4%)
------- -------- --- -----
Net income (loss) $11,464 $(72,178) 3.3% (20.3%)
======= ======== === =====
Earnings (loss) per share: (b)
Basic $0.44 $(3.36)
Diluted $0.42 $(3.36)
Weighted average number
of shares outstanding: (b)
Basic 25,920,013 21,469,360
Diluted 27,490,310 21,469,360
Year ended As % of
December 31, Total revenues
2009 2008 2009 2008
---- ---- ---- ----
Revenues:
Vehicle rentals $1,472,918 $1,616,153 95.3% 95.2%
Other 73,331 81,840 4.7% 4.8%
------ ------ --- ---
Total revenues 1,546,249 1,697,993 100.0% 100.0%
--------- --------- ----- -----
Costs and Expenses:
Direct vehicle and operating 768,456 888,294 49.7% 52.3%
Vehicle depreciation and lease
charges, net 426,092 539,406 27.6% 31.8%
Selling, general and
administrative 200,389 213,734 13.0% 12.6%
Interest expense, net 96,560 110,424 6.2% 6.5%
Goodwill and long-lived asset
impairment 2,592 366,822 0.1% 21.6%
----- ------- --- ----
Total costs and expenses 1,494,089 2,118,680 96.6% 124.8%
--------- --------- ---- -----
(Increase) decrease in fair
value of derivatives (28,848) 36,114 (1.8%) 2.1%
------- ------ ---- ---
Income (loss) before income taxes 81,008 (456,801) 5.2% (26.9%)
Income tax expense (benefit)
(2008 Restated) (a) 35,986 (110,083) 2.3% (6.5%)
------- --------- --- -----
Net income (loss) (2008
Restated) (a) $45,022 $(346,718) 2.9% (20.4%)
======= ========= === =====
Earnings (loss) per share:
(2008 Restated) (a) (b) (c)
Basic $1.98 $(16.22)
Diluted $1.88 $(16.22)
Weighted average number
of shares outstanding: (b)
Basic 22,687,077 21,375,589
Diluted 23,966,538 21,375,589
(a) The amounts for 2008 have been restated to correct an error in the
calculation of the income tax benefit related to the goodwill and
long-lived asset impairments during the first quarter of 2008. This
restatement decreases the income tax benefit, increases the net loss,
increases deferred tax liabilities and decreases retained earnings,
each of which is impacted by $6.3 million.
(b) Because the Company incurred a loss from continuing operations during
the quarter and year ended December 31, 2008, outstanding stock
options, performance awards and employee and director compensation
shares deferred are anti-dilutive. Accordingly, basic and diluted
weighted average shares outstanding are equal for such period.
(c) The underlying diluted per share information is calculated from the
weighted average common and common stock equivalents outstanding
during each quarter, which may fluctuate based on quarterly income
levels and market prices. Therefore, the sum of the quarters' per
share information may not equal the full year amounts.
Table 2
-------
Dollar Thrifty Automotive Group, Inc.
Selected Operating and Financial Data
-------------------------------------
Three months ended Year ended
December 31, 2009 December 31, 2009
----------------- -----------------
OPERATING DATA:
Vehicle Rental Data:
Average number of vehicles
operated 96,306 102,948
% change from prior year (10.5%) (14.4%)
Number of rental days 6,983,015 30,616,395
% change from prior year (12.2%) (17.0%)
Vehicle utilization 78.8% 81.5%
Percentage points change
from prior year (1.5) p.p. (2.3) p.p.
Average revenue per day $47.22 $48.11
% change from prior year 11.6% 9.8%
Monthly average revenue per
vehicle $1,141 $1,192
% change from prior year 9.4% 6.5%
Average depreciable fleet 98,437 105,301
% change from prior year (9.8%) (14.9%)
Monthly average depreciation
(net) per vehicle $274 $337
% change from prior year (32.5%) (7.2%)
FINANCIAL DATA: (in millions)
(unaudited)
Non-vehicle depreciation and
amortization $6 $27
Non-vehicle interest expense 3 13
Non-vehicle interest income - (2)
Non-vehicle capital expenditures 9 16
Cash paid for income taxes 4 22
Selected Balance Sheet Data
---------------------------
(In millions)
December 31,
2009 2008
---- ----
(unaudited)
Cash and cash equivalents (d) $500 $230
Restricted cash and investments 623 597
Revenue-earning vehicles, net 1,229 1,946
Vehicle debt 1,570 2,310
Non-vehicle debt (corporate debt) 158 178
Stockholders' equity (2008 Restated) (a) 394 209
Adjusted Tangible Net Worth Calculation
---------------------------------------
(In millions)
December 31,
2009 2008
---- ----
(unaudited)
Stockholders' equity (2008 Restated) (a) $394 $209
Less: Intangible assets, net (26) (30)
Plus: Accumulated other comprehensive loss 18 29
-- --
Adjusted tangible net worth $386 $208
==== ====
(d) Under the terms of an amendment to the Senior Secured Credit
Facilities, the Company is required to maintain a minimum cash
balance of $100 million at all times, such minimum balance is
included in cash and cash equivalents herein.
Table 3
---------
Dollar Thrifty Automotive Group, Inc.
Non-GAAP Measures
-----------------
Non-GAAP pretax income (loss), Non-GAAP net income (loss) and Non-GAAP
EPS exclude the impact of the (increase) decrease in fair value of
derivatives and the impact of goodwill and long-lived asset impairments,
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 and the nature of the non-cash impairments, 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 (loss) per
the income statement to non-GAAP pretax income (loss):
Three months ended Year ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
(in thousands) (in thousands)
Income (loss) before income
taxes - as reported $23,391 $(108,915) $81,008 $(456,801)
(Increase) decrease in fair
value of derivatives (8,825) 34,071 (28,848) 36,114
Goodwill and long-lived asset
impairment 1,948 16,678 2,592 366,822
------- -------- ------- --------
Pretax income (loss) - non-GAAP $16,514 $(58,166) $54,752 $(53,865)
======= ======== ======= ========
The following table reconciles reported GAAP net income (loss) per the
income statement to non-GAAP net income (loss):
Three months ended Year ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
(in thousands) (in thousands)
Net income (loss) - as reported
(2008 Restated) (a) $11,464 $(72,178) $45,022 $(346,718)
(Increase) decrease in fair
value of derivatives, net of
tax (e) (4,950) 20,070 (16,917) 21,271
Goodwill and long-lived asset
impairment, net of tax (2008
Restated) (a) (f) 1,209 13,058 1,497 284,537
------ -------- ------- --------
Net income (loss) - non-GAAP $7,723 $(39,050) $29,602 $(40,910)
====== ======== ======= ========
The following table reconciles reported GAAP diluted earnings (loss)
per share ("EPS") to non-GAAP diluted EPS:
Three months ended Year ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
EPS, diluted - as reported
(2008 Restated) (a) $0.42 $(3.36) $1.88 $(16.22)
EPS impact of (increase)
decrease in fair value of
derivatives, net of tax (0.18) 0.93 (0.71) 1.00
EPS impact of goodwill and long-
lived asset impairment, net of
tax (2008 Restated) (a) 0.04 0.61 0.06 13.31
----- ------ ----- ------
EPS, diluted - non-GAAP (g) $0.28 $(1.82) $1.24 $(1.91)
===== ====== ===== ======
(e) The tax effect of the (increase) decrease in fair value of
derivatives is calculated using the entity-specific, U.S. federal
and blended state tax rate applicable to the derivative instruments
which amounts are ($3,875,000) and $14,001,000 for the three months
ended December 31, 2009 and 2008, respectively, and ($11,931,000)
and $14,843,000 for the year ended December 31, 2009 and 2008,
respectively.
(f) The tax effect of the goodwill and long-lived asset impairment is
calculated using the tax-deductible portion of the impairment and
applying the entity-specific, U.S. federal and blended state tax
rate which amounts are $739,000 and $3,620,000 for the three months
ended December 31, 2009 and 2008, respectively, and $1,095,000 and
$82,285,000 for the year ended December 31, 2009 and 2008,
respectively.
(g) Since each category of earnings per share is computed independently
for each period, total per share amounts may not equal the sum of
the respective categories.
Table 4
-------
Dollar Thrifty Automotive Group, Inc.
Non-GAAP Measures
-----------------
Corporate Adjusted 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 as recapped below. The Company believes
Corporate Adjusted EBITDA is important as it provides investors with a
supplemental measure of the Company's liquidity by adjusting earnings
to exclude certain non-cash items. The Company has revised its calculation
of Corporate Adjusted EBITDA for all periods presented to be consistent.
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 Adjusted EBITDA amounts presented may
not be comparable to similar measures disclosed by other companies.
Three months ended Year ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
(in thousands) (in thousands)
Reconciliation of Net Income
(Loss) to Corporate Adjusted
EBITDA
-----------------------------
Net income (loss) - as reported
(2008 Restated) (a) $11,464 $(72,178) $45,022 $(346,718)
(Increase) decrease in fair
value of derivatives (8,825) 34,071 (28,848) 36,114
Non-vehicle interest expense 2,644 5,275 12,797 17,620
Income tax expense (benefit)
(2008 Restated) (a) 11,927 (36,737) 35,986 (110,083)
Non-vehicle depreciation 4,142 6,216 19,200 22,722
Amortization 1,839 2,011 7,994 7,355
Non-cash stock incentives 1,080 1,563 4,698 3,917
Goodwill and long-lived asset
impairment 1,948 16,678 2,592 366,822
Other (1) (280) (6) -
------- -------- ------- -------
Corporate Adjusted EBITDA $26,218 $(43,381) $99,435 $(2,251)
======= ======== ======= =======
Reconciliation of Corporate
Adjusted EBITDA to Cash Flows
From Operating Activities
------------------------------
Corporate Adjusted EBITDA $26,218 $(43,381) $99,435 $(2,251)
Vehicle depreciation, net of
gains/losses from disposal 80,831 132,545 425,574 538,250
Non-vehicle interest expense (2,644) (5,275) (12,797) (17,620)
Change in assets and
liabilities, net of
acquisitions, and other 17,492 (112,380) 148,961 (48,330)
------ -------- ------- -------
Net cash provided by
(used in) operating
activities $121,897 $(28,491) $661,173 $470,049
======== ======== ======== ========
Memo:
Net cash provided by (used in)
investing activities $(15,401) $196,864 $153,706 $(161,260)
Net cash provided by (used in)
financing activities $87,922 $(147,939) $(644,111) $(180,178)
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