Dollar Thrifty Automotive Group Reports Third Quarter Earnings, Updates Guidance

   Dollar Thrifty Automotive Group Reports Third Quarter Earnings, Updates
                                   Guidance

PR Newswire

TULSA, Okla., Nov. 1, 2012

TULSA, Okla., Nov. 1, 2012 /PRNewswire/ -- Dollar Thrifty Automotive Group,
Inc. (NYSE: DTG) today reported results for the third quarter ended September
30, 2012.  In conjunction with its earnings release, the Company announced
that it would not be holding a conference call to review the results of the
quarter in light of its pending merger with Hertz, and the related FTC
approval efforts that are being directed by Hertz.  Net income for the 2012
third quarter was $55.5 million, or $1.91 per diluted share, compared to net
income of $66.6 million, or $2.13 per diluted share, for the third quarter of
2011.  The Company also reported Corporate Adjusted EBITDA for the third
quarter of 2012 of $98.2 million, compared to $117.6 million in the third
quarter of 2011. 

(Logo: http://photos.prnewswire.com/prnh/20020412/DTGLOGO)

The Company noted that both its GAAP pretax income and Corporate Adjusted
EBITDA for the third quarter of 2012 were negatively impacted by
merger-related expenses of $5.7 million, while no such expenses were incurred
during the third quarter of 2011.  Additionally, the Company noted that gains
on sales of risk vehicles totaled $5.2 million in the third quarter of 2012,
down from $17.4 million in the third quarter of 2011. 

"We are pleased to report another solid quarter that has added to a strong
year-to-date performance.  Excluding merger-related expenses, the Company has
now generated $269 million in Corporate Adjusted EBITDA for the nine months
ended September 30, 2012," said Scott L. Thompson, Chairman, President and
Chief Executive Officer.  "In spite of a lackluster economic environment and
continued softness in pricing in the industry, the combination of increased
rental demand, ongoing focus on operational efficiencies and disciplined fleet
management allowed us to continue to deliver solid results," said Thompson.  

For the quarter ended September 30, 2012, the Company's vehicle rental revenue
was $442.3 million, compared to $435.6 million in the third quarter of 2011. 
Monthly revenue per unit was $1,235 in the third quarter of 2012 compared to
$1,289 for the same period last year.  The Company realized rental day growth
of 7.1 percent, which was partially offset by a 5.1 percent decrease in
revenue per day.  Utilization in the third quarter of 2012 was 84.7 percent,
compared to 83.9 percent in the third quarter of 2011.  The average rental
fleet operated during the quarter increased 6.0 percent compared with the
prior year period.

Fleet cost per vehicle was $246 per month in the third quarter of 2012,
compared to $186 per month in the third quarter of 2011.  The increase in
fleet cost per vehicle was partially attributable to a $12.2 million decrease
in gains on sales of risk vehicles, combined with higher average base
depreciation rates compared to the third quarter of 2011.  The Company noted
that gains on sales of risk vehicles totaled $5.2 million during the third
quarter of 2012 compared to $17.4 million in the third quarter of 2011 on a
comparable number of risk vehicle sales.  The decline in gains on risk vehicle
sales was attributable to a lower average gain per unit sold as a result of
refinements to base depreciation rates to reduce gains and lower volatility in
fleet costs.  The increase in base depreciation rates in the third quarter of
2012 primarily resulted from the significant fleet refresh in the first half
of 2012.  In conjunction with the fleet replacement cycle, a large number of
model year 2010 vehicles that were in the fleet during 2011, and had residual
values in excess of book values, were replaced with newer vehicles.

Direct vehicle and operating expenses and selling, general and administrative
expenses (operating expenses) totaled $270.2 million in the third quarter of
2012 compared to $262.4 million in the third quarter of 2011.  This increase
was primarily due to $5.7 million in merger-related expenses incurred in the
third quarter of 2012, while no such expenses were incurred in the 2011 third
quarter.  Excluding these merger-related expenses, operating expenses totaled
57.4 percent of revenues for the third quarter of 2012, compared to 58.1
percent of revenues in the third quarter of 2011.  Interest expense, net,
declined to $12.2 million in the third quarter of 2012, down from $19.6
million in the third quarter of 2011.  The decrease in interest expense
primarily reflects the Company's refinancing of its legacy fleet financing
facilities at lower interest rates in the second half of 2011. 

Nine-Month Results

For the nine months ended September 30, 2012, net income was $145.3 million,
or $4.94 per diluted share, compared to net income of $125.6 million, or $4.03
per diluted share, for the comparable period in 2011.  The Company reported
Corporate Adjusted EBITDA for the nine months ended September 30, 2012 of
$263.3 million, compared to $235.1 million for the nine months ended September
30, 2011.  The Company noted it incurred merger-related expenses of $5.7
million and $4.6 million for the nine months ended September 30, 2012 and
2011, respectively. 

Additionally, the Company noted that gains on risk vehicle sales totaled $42.0
million for the nine months ended September 30, 2012, compared to $43.1
million for the nine months ended September 30, 2011.   

Liquidity and Capital Resources 

As of September 30, 2012, the Company had $457 million in cash and cash
equivalents, and an additional $250 million in restricted cash and investments
primarily available for the purchase of vehicles and/or repayment of vehicle
financing obligations.  The Company noted that as a result of its fleet
refresh cycle and seasonal fleet investments, its investment in the fleet has
increased approximately $410 million since December 31, 2011.  Those
investments were funded by a blend of unrestricted cash, restricted cash and
vehicle debt. Non-vehicle capital expenditures for the nine months ended
September 30, 2012 totaled approximately $14 million. Investments in fleet
will decline significantly during the balance of the year which will result in
an increase in cash and cash equivalents by year-end.

As of September 30, 2012, the Company had approximately $41 million of letters
of credit outstanding and available capacity of approximately $409 million
under its $450 million Revolving Credit Facility.

The Company's tangible net worth was $725 million as of September 30, 2012,
and the Company had no corporate debt outstanding.

2012 Outlook Update 

The Company noted that based on its year-to-date performance through September
30, 2012 and its outlook for the fourth quarter, it is revising guidance for
the full year of 2012 for Corporate Adjusted EBITDA and earnings per share,
both excluding merger-related expenses.  The Company further noted that its
previously announced guidance for rental revenue and fleet cost expectations
for the full year of 2012 remain unchanged.   

The Company revised its guidance for Corporate Adjusted EBITDA, excluding
merger-related expenses, for the full year of 2012 to a range of $300 million
to $310 million, up from its prior guidance of $285 million to $310 million. 
Additionally, the Company revised its estimate for diluted earnings per share,
excluding merger-related expenses, to a range of $5.50 to $5.75 per share for
2012, up from its previously announced range of $5.25 to $5.70 per share.

About Dollar Thrifty Automotive Group, Inc.

Through its Dollar Rent A Car and Thrifty Car Rental brands, the Company has
been serving value-conscious leisure and business travelers since 1950.  The
Company maintains a strong presence in domestic leisure travel in virtually
all of the top U.S. and Canadian airport markets, and also derives a
significant portion of its revenue from international travelers to the U.S.
under contracts with various international tour operators.  Dollar and Thrifty
have approximately 280 corporate locations in the United States and Canada,
with approximately 5,900 employees located mainly in North America.  In
addition to its corporate operations, the Company maintains global service
capabilities through an expansive franchise network of approximately 1,300
franchise locations in 82 countries.  For additional information, visit
www.dtag.com or the brand sites at www.dollar.com and www.thrifty.com.

Cautionary Statement Regarding Forward-Looking Statements

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
relating to our business that could materially affect our future results
include:

  o the impact of our pending acquisition by Hertz Global Holdings, Inc.
    ("Hertz") and related developments, including the potential for diversion
    of management's attention, loss of key personnel and disruption of our
    operations, as well as the possibility that regulatory approval and, if
    required by applicable law, approval by the Company's stockholders may not
    be obtained as planned, which could delay or prevent the acquisition;
  o the risks to our business and prospects as a stand-alone company, in light
    of our dependence on future economic growth to achieve revenue growth in
    key airport and local markets, high barriers to entry in the insurance
    replacement market, capital and other constraints to expanding
    company-owned stores internationally, and the challenges we would face in
    further reducing our expenses;
  o the impact of the continuing challenging global economic environment, the
    ongoing Eurozone sovereign debt issues and governmental actions to address
    budget deficits through austerity and other measures, which are fueling
    concerns about global economic prospects and could materially adversely
    affect unemployment rates and consumer discretionary spending, including
    for international inbound travel to the United States and for leisure
    travel more generally, on which we are substantially dependent;
  o the continuing significant political unrest and other concerns involving
    certain oil-producing countries, which has contributed to price volatility
    for petroleum products, and in recent periods higher average gasoline
    prices, which could affect both broader economic conditions and consumer
    spending levels;
  o the impact of pricing and other actions by competitors;
  o our ability to manage our fleet mix to match demand and meet our target
    for vehicle depreciation costs, particularly in light of the significant
    level of risk vehicles (i.e., those vehicles not acquired through a
    guaranteed residual value program) in our fleet and our exposure to
    wholesale used vehicle prices;
  o the cost and other terms of acquiring and disposing of automobiles and the
    impact of conditions in the used vehicle market on our vehicle cost,
    including the impact on vehicle depreciation costs based on pricing
    volatility in the used vehicle market;
  o our ability to reduce our fleet capacity as and when projected by our
    plans;
  o the continuing strength of the U.S. automotive industry on which we depend
    for vehicle supply;
  o airline travel patterns, including disruptions or reductions in air travel
    resulting from capacity reductions, pricing actions, severe weather
    conditions, industry consolidation or other events, particularly given our
    dependence on leisure travel;
  o access to reservation distribution channels, particularly as the role of
    the Internet and mobile applications increases in the marketing and sale
    of travel-related services;
  o the effectiveness of actions we take to maintain a low cost structure and
    to manage liquidity;
  o the impact of repurchases of our common stock pursuant to our share
    repurchase program;
  o our ability to obtain cost-effective financing as needed without unduly
    restricting our operational flexibility;
  o our ability to comply with financial covenants, and the impact of those
    covenants on our operating and financial flexibility;
  o whether our preliminary expectations about our federal income tax position
    are affected by changes in our expected fleet size or operations or
    further legislative initiatives relating to taxes in the United States or
    elsewhere;
  o our ability to continue to defer the reversal of prior period tax
    deferrals and the availability of accelerated depreciation payments in
    future periods, the lack of either of which could result in material cash
    federal income tax payments in future periods;
  o 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;
  o disruptions in the operation or development of information and
    communication systems that we rely on, including those relating to methods
    of payment;
  o local market conditions where we and our franchisees do business,
    including whether franchisees will continue to have access to capital as
    needed; and
  o the impact of other events that can disrupt consumer travel, such as
    natural and man-made catastrophes, pandemics, social unrest and actual and
    perceived threats or acts of terrorism.

Additional Information

On September 10, 2012, Hertz filed with the United States Securities and
Exchange Commission (the "SEC") a tender offer statement on Schedule TO and
Dollar Thrifty filed with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 ("Schedule 14D-9") regarding the tender offer described
herein.  Investors and security holders of Dollar Thrifty are strongly advised
to read the tender offer statement (as updated and amended) filed by Hertz and
the Schedule 14D-9 (as updated and amended) filed by Dollar Thrifty with the
SEC, because each contains important information that Dollar Thrifty's
stockholders should consider before tendering their shares.  The tender offer
statement and other documents filed by Hertz with the SEC are available for
free at the SEC's web site (http://www.sec.gov).  Copies of Hertz's filings
with the SEC may be obtained at the SEC's web site (http://www.sec.gov) or by
directing a request to Hertz at (201) 307-2100. Copies of Dollar Thrifty's
filings with the SEC are available free of charge on Dollar Thrifty's website
at www.dtag.com or by contacting Dollar Thrifty's Investor Relations
Department at 918-669-2236.

Forward-looking statements should be considered in light of information in
this press release and other filings we make with the SEC. 

                                                   

                                                                       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
                             2012             2011             2012    2011
Revenues:
  Vehicle rentals            $    442,336     $    435,578     96.0%   96.4%
  Other                      18,254           16,144           4.0%    3.6%
       Total revenues        460,590          451,722          100.0%  100.0%
Costs and Expenses:
  Direct vehicle and         215,790          214,536          46.9%   47.5%
  operating
  Vehicle depreciation and   89,131           63,299           19.4%   14.0%
  lease charges, net
  Selling, general and       54,454           47,851           11.8%   10.6%
  administrative
  Interest expense, net      12,206           19,627           2.6%    4.4%
       Total costs and       371,581          345,313          80.7%   76.5%
  expenses
(Increase) decrease in fair  40               523              0.0%    0.1%
value of derivatives
Income before income taxes   88,969           105,886          19.3%   23.4%
Income tax expense           33,469           39,265           7.3%    8.7%
Net income                   $      55,500    $      66,621    12.0%   14.7%
Earnings per share: 
  Basic                      $          1.99  $          2.30
  Diluted                    $          1.91  $          2.13
Weighted average number
 of shares outstanding:
  Basic                      27,905,118       28,958,718
  Diluted                    29,085,630       31,304,829
                             Nine months ended                 As % of 
                             September 30,                     Total revenues
                             2012             2011             2012    2011
Revenues:
  Vehicle rentals            $ 1,160,322      $ 1,146,041      95.7%   95.9%
  Other                      51,928           49,157           4.3%    4.1%
       Total revenues        1,212,250        1,195,198        100.0%  100.0%
Costs and Expenses:
  Direct vehicle and         596,463          583,799          49.2%   48.8%
  operating
  Vehicle depreciation and   188,368          203,983          15.5%   17.1%
  lease charges, net
  Selling, general and       147,479          145,641          12.2%   12.2%
  administrative
  Interest expense, net      44,601           58,899           3.7%    4.9%
       Total costs and       976,911          992,322          80.6%   83.0%
  expenses
(Increase) decrease in fair  525              (3,367)          0.0%    (0.3%)
value of derivatives
Income before income taxes   234,814          206,243          19.4%   17.3%
Income tax expense           89,516           80,594           7.4%    6.8%
Net income                   $    145,298     $    125,649     12.0%   10.5%
Earnings per share: (a)
  Basic                      $          5.15  $          4.35
  Diluted                    $          4.94  $          4.03
Weighted average number
 of shares outstanding:
  Basic                      28,217,067       28,872,747
  Diluted                    29,436,527       31,216,741

 

(a)  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 total year amounts.

 

                                                                     Table 2 
Dollar Thrifty Automotive Group, Inc.
Selected Operating and Financial Data
                           Three months           Nine months ended
                           ended
                           September 30,          September 30,
                           2012                   2012
OPERATING DATA:
Vehicle Rental Data: 
 Average number of          119,424                112,712
 vehicles operated
    % change from prior     6.0%                   3.2%
 year
 Number of rental days      9,303,762              25,343,896
    % change from prior     7.1%                   5.9%
 year
 Vehicle utilization        84.7%                  82.1%
    Percentage points       0.8 p.p.               1.8 p.p.
 change from prior year
 Average revenue per day    $47.54                 $45.78
    % change from prior     (5.1%)                 (4.4%)
 year
 Monthly average revenue    $1,235                 $1,144
 per vehicle
    % change from prior     (4.2%)                 (1.9%)
 year
 Average depreciable        120,757                113,968
 fleet 
    % change from prior     6.2%                   3.5%
 year
 Monthly average
 depreciation (net) per     $246                   $184
 vehicle
    % change from prior     32.3%                  (10.7%)
 year
FINANCIAL DATA: (in
millions)  (unaudited)
 Non-vehicle depreciation   $                      $              
 and amortization           7                        19
 Non-vehicle interest       2                      6
 expense
 Non-vehicle interest       -                      (1)
 income
 Non-vehicle capital        4                      14
 expenditures 
 Cash paid for income       12                     26
 taxes
Selected Balance Sheet Data
(In millions)
                            September 30,          December 31,
                            2012           2011    2011
                            (unaudited)
 Cash and cash equivalents  $         457  $  499  $              
                                                   509
 Restricted cash and        250            201     353
 investments
 Revenue-earning vehicles,  1,876          1,605   1,468
 net
 Vehicle debt               1,481          1,315   1,400
 Stockholders' equity       744            669     608
 Tangible Net Worth Calculation
 (In millions)
                            September 30,          December 31,
                            2012           2011    2011
                            (unaudited)
 Stockholders' equity       $         744  $  669  $              
                                                   608
 Less:  Software, net       (19)           (22)    (22)
 Tangible net worth         $         725  $  647  $              
                                                   586

 

                                                                Table 3 
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 shown below.  The Company believes Corporate Adjusted EBITDA is
important as it provides a supplemental measure of the Company's liquidity by
adjusting earnings to exclude certain non-cash items, taxes and
corporate-level capital structure decisions (i.e. non-vehicle interest), thus,
allowing the Company's management, including the chief operating decision
maker, as well as investors and analysts, to evaluate the Company's operating
cash flows based on the core operations of the Company. Additionally, the
Company believes Corporate Adjusted EBITDA is a relevant measure of operating
performance in providing a measure of profitability that focuses on the core
operations of the Company while excluding certain items that do not directly
reflect ongoing operating performance.  The Company's management, including
the chief operating decision maker, uses Corporate Adjusted EBITDA to evaluate
the Company's performance and in preparing monthly operating performance
reviews and annual operating budgets.  The items excluded from Corporate
Adjusted EBITDA, but included in the calculation of the Company's reported net
income, are significant components of its consolidated statements of income,
and must be considered in performing a comprehensive assessment of overall
financial performance.  Corporate Adjusted EBITDA is not defined under GAAP
and should not be considered as an alternative measure of the Company's net
income, cash flow or liquidity.  Corporate Adjusted EBITDA amounts presented
may not be comparable to similar measures disclosed by other companies.
                   Three months ended           Nine months ended
                   September 30,                September 30, 
                   2012          2011           2012           2011
                   (in thousands)               (in thousands)
Reconciliation of
Net Income to 
Corporate Adjusted
EBITDA
Net income  - as   $   55,500    $    66,621    $  145,298     $   125,649
reported
(Increase)
decrease in fair   40            523            525            (3,367)
value of
derivatives
Non-vehicle        1,379         3,709          5,705          9,053
interest expense
Income tax expense 33,469        39,265         89,516         80,594
Non-vehicle        4,346         4,786          13,203         14,559
depreciation
Amortization       1,919         1,896          5,520          5,703
Non-cash stock     1,558         987            4,974          3,124
incentives
Other              (5)           (231)          (1,436)        (243)
Corporate Adjusted $   98,206    $  117,556     $  263,305     $   235,072
EBITDA
Reconciliation of
Corporate Adjusted
EBITDA
to Cash Flows From
Operating
Activities
Corporate Adjusted $   98,206    $  117,556     $  263,305     $   235,072
EBITDA 
Vehicle
depreciation, net  89,131        63,290         188,368        203,956
of gains/losses
from disposal
Non-vehicle        (1,379)       (3,709)        (5,705)        (9,053)
interest expense
Change in assets
and liabilities    13,769        (5,962)        (11,198)       28,635
and other
     Net cash
provided by        $ 199,727     $  171,175     $  434,770     $   458,610
operating
activities (b)
Memo:
Net cash provided
by / (used in)     $   53,893    $    41,421    $ (530,291)    $  (326,408)
investing
activities
Net cash provided
by / (used in)     $ (82,228)    $ (169,196)    $    43,742    $  
financing                                                       (95,882)
activities (b)

 

(b)   Certain reclassifications have been made to the 2011 financial
information to conform to the classifications used in 2012.

 

                                                                Table 3
                                                               (Continued) 
Dollar Thrifty Automotive Group, Inc.
Non-GAAP Measures
                                     Full Year 
                                     2012             2011
                                     (in millions)
Reconciliation of Pretax Income to   (forecasted)     (actual)
Corporate Adjusted EBITDA
Pretax income                         $255 - $265     $    261
(Increase) decrease in fair value of
derivatives (2012 amount is YTD      1                (3)
September 2012)
Non-vehicle interest expense         7                11
Non-vehicle depreciation             18               19
Amortization                         7                7
Non-cash stock incentives            7                3
Other                                (1)              -
Merger-related expenses (c )         6                5
Corporate Adjusted EBITDA, excluding  $300 - $310     $    303
merger-related expenses
                                     Full Year 
                                     2012             2011
Reconciliation of GAAP diluted
earnings per share ("EPS")           (forecasted)     (actual)

to non-GAAP diluted EPS:
EPS, diluted (d)                      $5.39 - $5.61   $   5.11
EPS impact of (increase) decrease in
fair value of derivatives, net of    0.01             (0.06)
tax (e)
EPS impact of merger-related         0.11             0.09
expenses, net of tax (f)
Non-GAAP diluted EPS, excluding       $5.50 - $5.75   $   5.13
merger-related expenses (g)

 

      Merger-related expenses include legal, litigation, advisory and other
(c )  fees related to a potential merger transaction. Full year 2012 includes
      $5.7 million of merger-related expenses through September 30, 2012.
      Forecasted EPS for the year ended December 31, 2012 is calculated using
(d)   pretax income as noted above with an assumed 38% tax rate and
      approximately 29.3 million diluted shares.
      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 is ($1.4)
(e)   million for the year ended December 31, 2011. The tax effect of the
      forecasted (increase) decrease in fair value of derivatives for the year
      ended December 31, 2012 (which is based on the year-to-date September
      30, 2012 amount) is approximately $0.2 million.
      The tax effect of the merger-related expenses is calculated using the
      entity-specific, U.S. federal and blended state tax rate applicable to
(f)   the merger-related expenses which amount is $1.9 million for the year
      ended December 31, 2011. The tax effect of the forecasted merger-related
      expenses for the year ended December 31, 2012 (which is based on the
      year-to-date September 30, 2012 amount) is approximately $2.4 million.
      Since each category of EPS is computed independently for each period,
(g)   total per share amounts may not equal the sum of the respective
      categories.

 

SOURCE Dollar Thrifty Automotive Group, Inc.

Website: http://www.dtag.com
Contact: Financial: H. Clifford Buster III, Chief Financial Officer,
+1-918-669-3277; or Investor Relations and Corporate Communications: Anna
Bootenhoff, +1-918-669-2236, Anna.Bootenhoff@dtag.com