Dollar Thrifty Automotive Group, Inc. Q1 2010 Earnings Call Transcript

Dollar Thrifty Automotive Group, Inc. Q1 2010 Earnings Call Transcript
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Dollar Thrifty Automotive Group Inc. (DTG)

Q1 2010 Earnings Call

April 28, 2010 9:00 am ET

Executives

Vicki Vaniman – Executive Vice President, General Counsel

Scott Thompson – President and Chief Executive Officer

Clifford Buster – Chief Financial Officer

Presentation

Operator

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Welcome to the Dollar Thrifty Automotive Group first quarter financial results conference call. All participants will be able to listen only for the duration of the conference. As a reminder, this call is being recorded. If you have any objections, you may disconnect. I would now like to turn the call over to Miss

Vicki Vaniman, Executive Vice President, and General Counsel. You may begin.

Vicki Vaniman

Thank you. Good morning and welcome to the Dollar Thrifty Automotive Group, Inc. first quarter 2010 earnings release conference call. Scott Thompson, President and Chief Executive Officer, and Cliff Buster, Chief Financial Officer, will be 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 in 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 Automotive Group, Inc., undertakes no obligation 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, dtag.com, under the investor info tab.

As you know, our company announced that it entered into a merger agreement with Hertz on Sunday. Given that the transaction must go through the normal regulatory and shareholder approval process, we are unable to comment on the transaction and will not be conducting a

question-and-answer session at the end of this call.

Today's call does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Hertz will file with the SEC a registration statement on Form S-4 that will include a proxy statement of Dollar Thrifty that also constitutes a prospectus of Hertz as well as other documents about the proposed transaction. A definitive proxy statement and prospectus will be mailed to stockholders of Dollar Thrifty.

Investors and stockholders of Dollar Thrifty are urged to read all of these documents carefully and in their entirety when they become available because they will contain important information about the proposed transaction. Investors and stockholders will be able to obtain free copies of the proxy statement prospectus and related documents once they are filed with the SEC through the SEC's website at sec.gov.

Documents filed by Hertz will be available free of charge on Hertz's website at hertz.com or by contacting Hertz's investor relations department at area code (201) 307-2100. Documents filed by Dollar Thrifty will be available free of charge on our website or by contacting Dollar Thrifty's investor relations department at area code (918) 669-2119.

Hertz, Dollar Thrifty, their directors and executive officers may be deemed to be participants in the solicitation of proxies from Dollar Thrifty's stockholders in connection with the proposed transaction. Information about the directors and executive officers of Hertz is set forth in its 2010 annual proxy statement on file with the SEC. Information about Dollar Thrifty's directors and executive officers is included in our 2010 annual proxy statement, which is also on file with the SEC.

Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interest by security holdings or otherwise will be contained in the proxy statement and prospectus and other materials to be filed with the SEC. Now I would to turn the call over to Scott.

Scott Thompson

Thank you, Vicki, and good morning everyone. We are very pleased to report that our performance in the first quarter of 2010 represents the most profitable first quarter in the company's history. The company generated corporate adjusted EBITDA of $49.4 million, a $51.8 million improvement from the $2.4 million loss recorded in the first quarter of 2009.

Additional highlights for the quarter include the company's fifth consecutive quarter of year-over-year improvement in corporate adjusted EBITDA, the fifth consecutive quarter of year-over-year improvement in RPD, and further de-leveraging of the balance sheet of the company.

Now turning to details of the first quarter, on a same store basis rental revenues were consistent with the first quarter of 2009 as increases in revenue per day offset a decline in same store transactions. Rental revenues for the quarter declined 3.7%, primarily driven by a 7.4% decrease in rental days, of which 4% was attributable to locations closed, closures completed in 2009. This decline was partially offset by a 3.9% increase in revenue per day.

We continue to focus on profitability of rental transactions; and consistent with this strategy, we will at times accept lower transaction days and utilization in order to maintain a proper balance between price and volume. This is consistent with our return on asset focus.

During the quarter, we realized very favorable fleet costs of $207 per unit per month, driven by both a continued strength in the used vehicle market as well as extensive changes made in the remarketing and planning of fleet during 2009. These changes were designed to lower our fleet costs and mitigate enterprise risk.

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