- GAAP results include non-cash charges of $13.30 per diluted share
related to the impairment of goodwill and other intangible assets and
the change in fair value of derivatives
- Company renews credit facilities to meet peak vehicle financing needs
- Company reaffirms 2008 non-GAAP EPS and Corporate EBITDA guidance
TULSA, Okla., May 12 /PRNewswire-FirstCall/ -- Dollar Thrifty Automotive
Group, Inc. (NYSE: DTG) today reported results for the first quarter ended
March 31, 2008. The net loss for the 2008 first quarter was $297.9 million, or
$14.07 loss per diluted share, compared to net income of $5.2 million, or
$0.21 per diluted share, for the comparable 2007 quarter. The decrease in
first quarter net income year over year included a $12.52 loss per diluted
share related to the impairment of goodwill and other intangible assets and a
$0.78 decrease in fair value of derivatives.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020412/DTGLOGO)
The non-GAAP net loss for the 2008 first quarter was $16.2 million, or
$0.77 loss per diluted share as compared to net income of $9.8 million, or
$0.40 per diluted share for the 2007 first quarter. Non-GAAP net income (loss)
excludes from GAAP net income (loss) the (increase) decrease in fair value of
derivatives and the non-cash charges related to the impairment of goodwill and
other intangible assets, net of related tax impact. A reconciliation of non-
GAAP to GAAP results is included in Table 3.
For the quarter ended March 31, 2008, the Company's total revenue was
$396.5 million, as compared to $398.0 million for the comparable 2007 period.
Vehicle rental revenue in the 2008 first quarter was $378.0 million, a two
percent increase over the 2007 first quarter as a result of an increase of
approximately three percent in rental days and a decrease of one percent in
revenue per day.
"As we had anticipated, weakness in demand and pricing in January, coupled
with an increase in fleet costs, adversely affected our performance in the
quarter," said Gary L. Paxton, President and Chief Executive Officer. "Since
February, key operating trends have improved and are more positive. Looking
back on the last six months, we believe that December and January represented
a trough in terms of both pricing and demand."
"The Company recently completed a round of financing, as we renewed our
conduit facility and commercial paper program and liquidity facility," said
Mr. Paxton. "This financing, coupled with ongoing efforts to better optimize
our fleet levels, utilization and holding periods, provides us with sufficient
capacity to meet our peak vehicle financing needs in 2008, even as the
Company's 2004 Series medium term notes fully amortize by June." Mr. Paxton
noted that the Company has no additional maturities of asset backed medium
term notes until 2010.
Although revenue per day improved through the quarter, it did not improve
enough to overcome a decline in January, ending down approximately one percent
year over year. Vehicle depreciation costs per vehicle increased
approximately 31 percent in the first quarter of 2008 over the first quarter
of 2007, and were above the Company's expectations due primarily to softness
in the used car market. Vehicle utilization for the first quarter was flat
with last year reflecting a weak January 2008. The Company expects that its
new fleet optimization software, together with the anticipated extension of
fleet holding periods, should moderate the increase in vehicle depreciation
costs over the course of the year and should enable the Company to operate a
more efficient fleet program.
The Company was required to record a non-cash impairment charge for
goodwill and other intangible assets in the first quarter of 2008. Under SFAS
No. 142, "Goodwill and Other Intangible Assets", the Company is required on at
least an annual basis to perform an impairment analysis on goodwill and other
intangible assets. This analysis includes, among other things, a
reconciliation of current equity market capitalization to shareholders'
equity. As a result of the decline in the Company's stock price, the
Company's total shareholders' equity at March 31, 2008 exceeded its equity
market capitalization, including the application of a reasonable control
premium, for this same period. The Company is required to place greater
emphasis on the current stock price than on management's long-range forecast
in performing its impairment assessment. The Company performed the required
steps for impairment analysis and concluded that goodwill and other intangible
assets (related to reacquired franchise rights) were impaired. The Company
recorded a $281.2 million non-cash charge (pre-tax) related to the impairment
of the entire goodwill ($223.2 million after-tax) and a $69.0 million non-cash
charge (pre-tax) related to the impairment of the entire reacquired franchise
rights ($42.0 million after-tax) during the first quarter of 2008.
Outlook
"Our first quarter performance and the key business drivers underlying it
were largely in line with what we expected in February when we provided our
forecast for 2008," Mr. Paxton said. "As a result, and based on what we see
now, we are maintaining our full year non-GAAP earnings per share and
Corporate EBITDA guidance."
For 2008, the Company's earnings per diluted share guidance is a range of
$1.00 to $1.50 and Corporate EBITDA of $97 million to $115 million. This
guidance is based on achieving about a two percent growth in both rental day
volume and revenue per day, along with improved fleet utilization. The
Company noted that it now assumes that vehicle depreciation costs on a per
vehicle basis will be about 12 to 14 percent higher for the full year 2008
compared to 2007, based primarily on a softer used car market and the related
impact the Company is experiencing on some makes and models in the fleet. The
Company anticipates alleviating some of the cost increases in vehicle
depreciation by increasing the level of Non-Program Vehicles in its fleet and
extending its fleet holding periods.
"We expect that our operating environment will remain challenging through
at least the first half of 2008," said Mr. Paxton. "We remain focused on
executing our strategy to achieve improvements in revenue diversification,
fleet utilization, productivity, cost control and profitability.
Web cast and conference call information
The Dollar Thrifty Automotive Group, Inc. first quarter 2008 earnings
conference call will be held on Monday, May 12, 2008, at 10:00 a.m. (CDT).
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
800-988-9640 (domestic) or 210-234-0007 (international) using the pass code
"Dollar Thrifty." An audio replay of the conference call will be available
through May 26, 2008, by calling 866-499-4547 (domestic) or 203-369-1805
(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. and Canadian airport markets. The
Company's approximately 8,500 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.
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. Management
believes they are based on reasonable assumptions, but they 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 whether recent favorable pricing, demand and
utilization trends will persist during the upcoming peak rental season; the
impact of pricing and other actions by competitors, particularly if demand
softens; airline travel patterns, including disruptions or reductions in air
travel resulting from recent airline bankruptcies and industry consolidation
or other factors such as fuel costs; the cost and other terms of acquiring and
disposing of automobiles; the financial performance and prospects of our
principal vehicle supplier; our ability to manage our fleet mix to match
demand and reduce vehicle depreciation costs, particularly as we increase the
level of Non-Program Vehicles (those without a guaranteed residual value) and
exposure to fluctuations in the used car market; our ability to comply with
financial covenants and to obtain financing as needed without unduly
restricting operational flexibility, particularly given recent events
involving the credit markets and Monolines that provide credit support for our
asset backed financing structures; the effectiveness of other actions we take
to manage costs and liquidity; disruptions in information and communication
systems we rely on; access to reservation distribution channels; the cost of
regulatory compliance and the outcome of pending litigation; local market
conditions where we and our franchisees do business; 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 with the
Securities and Exchange Commission ("SEC").
This release includes certain non-GAAP financial measures as defined under
SEC rules. As required by SEC rules, important information regarding such
measures is contained on Table 3 to this release.
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
March 31, Total revenues
2008 2007 2008 2007
Revenues:
Vehicle rentals $377,971 $370,568 95.3% 93.1%
Other 18,535 27,395 4.7% 6.9%
Total revenues 396,506 397,963 100.0% 100.0%
Costs and Expenses:
Direct vehicle and operating 215,363 201,437 54.3% 50.6%
Vehicle depreciation and lease
charges, net 122,662 93,283 30.9% 23.4%
Selling, general and
administrative 53,672 65,301 13.5% 16.4%
Interest expense, net 22,137 19,070 5.7% 4.8%
Goodwill and other intangible
asset impairment 350,144 - 88.3% -
Total costs and expenses 763,978 379,091 192.7% 95.2%
(Increase) decrease in fair value
of derivatives 28,147 7,793 7.1% 2.0%
Income (loss) before income taxes (395,619) 11,079 (99.8%) 2.8%
Income tax expense (benefit) (97,677) 5,917 (24.7%) 1.5%
Net income (loss) $(297,942) $5,162 (75.1%) 1.3%
Income (loss) per share: (a)
Basic $(14.07) $0.22
Diluted $(14.07) $0.21
Weighted average number
of shares outstanding: (a)
Basic 21,174,980 23,248,966
Diluted 21,174,980 24,304,626
(a) Because the Company incurred a loss from continuing operations in the
first quarter of 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.
Table 2
Dollar Thrifty Automotive Group, Inc.
Selected Operating and Financial Data
Three months ended
March 31, 2008
OPERATING DATA:
Vehicle Rental Data: (includes franchise acquisitions)
Average number of vehicles operated 111,168
% change from prior year 1.9%
Number of rental days 8,407,876
% change from prior year 2.9%
Vehicle utilization 83.1%
Percentage points change from prior year (0.1)p.p.
Average revenue per day $44.95
% change from prior year (0.9%)
Monthly average revenue per vehicle $1,133
% change from prior year 0.1%
Average depreciable fleet 111,781
% change from prior year 0.2%
FINANCIAL DATA: (in millions) (unaudited)
Non-vehicle depreciation and amortization $7
Non-vehicle interest expense 5
Non-vehicle interest income (1)
Non-vehicle capital expenditures (excludes acquisitions) 9
Franchise acquisitions -
Cash paid (refunded) for income taxes -
Selected Balance Sheet Data
(In millions)
March 31, December 31,
2008 2007 2007
(unaudited)
Cash and cash equivalents $136 $185 $101
Restricted cash and investments 267 110 133
Revenue-earning vehicles, net 2,598 2,852 2,808
Vehicle debt 2,342 2,679 2,408
Non-vehicle debt (corporate debt) 248 - 249
Stockholders' equity 269 652 579
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 other intangible 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
March 31,
2008 2007
(in thousands)
Income (loss) before income taxes -
as reported $(395,619) $11,079
(Increase) decrease in fair value of
derivatives 28,147 7,793
Goodwill and other intangible asset
impairment 350,144 -
Pretax income (loss) - non-GAAP $(17,328) $18,872
The following table reconciles reported GAAP net income (loss) per the
income statement to non-GAAP net income (loss):
Three months ended
March 31,
2008 2007
(in thousands)
Net income (loss) - as reported $(297,942) $5,162
(Increase) decrease in fair value of
derivatives, net of tax 16,542 4,601
Goodwill and other intangible asset
impairment, net of tax 265,183 -
Net income (loss) - non-GAAP $(16,217) $9,763
The following table reconciles reported GAAP diluted earnings (loss) per
share ("EPS") to non-GAAP diluted earnings (loss) per share ("EPS"):
Three months ended
March 31,
2008 2007
EPS, diluted - as reported $(14.07) $0.21
EPS impact of (increase) decrease in
fair value of derivatives, net of tax 0.78 0.19
EPS impact of goodwill and other
intangible asset impairment, net of tax 12.52 -
EPS, diluted - non-GAAP $(0.77) $0.40
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
March 31,
2008 2007
(in thousands)
Net income (loss) - as reported $(297,942) $5,162
(Increase) decrease in fair value of
derivatives 28,147 7,793
Non-vehicle interest expense 4,590 1,242
Income tax expense (benefit) (97,677) 5,917
Non-vehicle depreciation 5,242 5,314
Amortization 1,642 1,638
Non-cash stock incentives 868 817
Goodwill and other intangible asset
impairment 350,144 -
Other 45 (209)
Corporate EBITDA $(4,941) $27,674
SOURCE: Dollar Thrifty Automotive Group, Inc.
CONTACT: Financial, Richard Neu, Interim Chief Financial Officer,
+1-918-669-2288, Media, Fred Fleischner, Executive Director, Corporate
Communications, +1-918-669-3086, fred.fleischner@dtag.com, or Investors, Todd
D. Dallenbach, Executive Director, Investor Relations, +1-918-669-2414,
todd.dallenbach@dtag.com, all of Dollar Thrifty Automotive Group, Inc.
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020412/DTGLOGO
Web site: http://www.dtag.com
