Dollar Thrifty Automotive CEO Discusses Q3 2010 Results – Earnings Call Transcript
Dollar Thrifty Automotive Group, Inc. (
)
Q3 2010 Earnings Call Transcript
November 2, 2010 9:00 am ET
Executives
Vicki Vaniman – EVP, General Counsel and Secretary
Scott Thompson - President and CEO
Cliff Buster – EVP and CFO
Analysts
Chris Agnew - MKM Partners
John Healy - Northcoast Research
Steve O’Hara - Sidoti Company
Emily Shanks - Barclays Capital
Michael Millman - Millman Research Associates
Neal Portis [ph] - Goldman Sachs
Jordan Hymowitz - Philadelphia Financial
Bill Cavalla [ph] - Oscar Gruss
Sachin Shah - Capstone Global Markets
Presentation
Operator
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Dollar Thrifty Automotive Group, Inc. Q3 2009 Earnings Call Transcript
Welcome and thank you for joining the Dollar Thrifty Automotive Group third quarter financial results conference call. All participants are going to be in a listen-only mode until the question and answer session. As a reminder, this call is being recorded, if you have any objections to the recording, you may disconnect at this time. I would now like to turn the call over to your host Miss Vicki Vaniman, General Counsel. You may begin.
Vicki Vaniman
Thank you. Good morning and welcome to the Dollar Thrifty Automotive Group, Inc. third quarter 2010 earnings release conference call. Scott Thompson, President and Chief Executive Officer, and Cliff Buster, Chief Financial Officer, will be the hosts for today's call. Some of the comments contained in this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed as forward-looking statements due to many factors. These factors include, among others, matters that Dollar Thrifty has noted in its latest earnings release and filings with the SEC. Dollar Thrifty undertakes no obligations to update or revise forward-looking statements.
Today, the company will use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers and can be found in today's press release or posted to the company website at dtag.com, under the Investor Info tag. As you know, our merger agreement with Hertz was terminated subsequent to the failure of the shareholders to approve that as a special meaning of the shareholders on September 30th. On October 5th Avis Budget and Dollar Thrifty announced that the companies would cooperate on efforts to obtain anti-trust clearance for Avis budget to acquire Dollar Thrifty. And that Avis Budget agreed to Dollar Thrifty’s request to defer making its exchange offer while the company’s pursue approval for our proposed acquisition. Dollar Thrifty is not a party to a merger agreement and we will not make further comments on any related matters at the time. Accordingly we will not be commenting on any of the after mentioned topics on this call and ask that you refrain from any related questions during the question and answer session of the call. And now, I would like to turn the call over to Scott to discuss our record third-quarter earnings.
Scott Thompson
Thank you Vicki and good morning everyone. I am extremely pleased to report that the company achieved its seventh consecutive quarter of year-over-year double-digit growth in corporate adjusted EBITDA. In spite of the lingering uncertainties surrounding the US economy, slower than expected growth in the travel demand and the decline in the gains on vehicles sales compared to the third quarter of 2009. I would also note that the third quarter of 2010 marks the best quarterly performance in the company’s 60 year history. Corporate adjusted EBITDA for the third quarter of 2010 totaled $81.8 million. However, the third quarter was adversely impacted by $11.9 million in merger-related expenses. Excluding the merger-related expenses, corporate adjusted EBITDA for the third quarter of 2010 would have been $93.7 million, an increase of 71% compared to the same period in 2009.
Our performance this quarter demonstrates the successful combination of our strategy. The company realized a volume increase while maintaining price discipline. This balanced approach to revenue generation which combined with cost reductions across all areas of the company. I am particularly pleased with our employees execution during this peak summer season. They focused on our customers as evidenced by improvement in all of our critical customer satisfaction scopes. They achieved record profitability and lastly, they avoided being distracted by proposed merger activity.
Now turning to potential highlights for the quarter. Rental revenue for the quarter was up 1.6% compared to the third quarter of 2009 driven primarily by 1.4% increase in transaction days which was in line with our planned fleet levels for the quarter. During the third quarter of 2010, we faced a challenging compare on RPD, as we realized a 12% increase in RPD during the third quarter of 2009. In spite of this difficult comparison, the company managed to achieve a modest improvement in RPD during the quarter by also achieving this volume targets. As a result of our fleet refreshening and diversification programs during the last several quarters, we have decreased the average age in mileage on our risk fleet to an average age of nine months and 20,000 miles, down from 12 months or 28,000 miles from the third-quarter of 2009. We are now trending towards normalized fleet cost level that will be less impacted by gains on sales in the recently completed quarters.
Fleet depreciation per unit for the third-quarter of 2010 totaled $262 per month including gains on sales of approximately $10 million. Gains in the current quarter were $6.8 million lower than the third quarter of 2009 and on sequential basis $17.6 million lower than the second quarter of 2010. I will provide fleet cost updates in the fourth quarter of 2010 later in the call. One of the keys to maximizing return on assets has been our financial focus throughout the organization on cost control and operating efficiencies. During the third quarter, we saw benefits of these efforts across the organization, as we achieved reductions in operating expenses while increasing the company's revenue base.
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