Dollar Thrifty Automotive Group (DTG)

Q2 2012 Earnings Call

August 01, 2012 9:00 am ET


Vicki J. Vaniman - Executive Vice President, Secretary and General Counsel

Scott L. Thompson - Chairman, Chief Executive Officer and President

H. Clifford Buster - Chief Financial Officer, Senior Executive Vice President and Treasurer


Adam Jonas - Morgan Stanley, Research Division

Afua Ahwoi - Goldman Sachs Group Inc., Research Division

Michael Millman - Millman Research Associates

John M. Healy - Northcoast Research

Christopher Agnew - MKM Partners LLC, Research Division

Stephen O'Hara - Sidoti & Company, LLC



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Welcome, and thank you for joining the Dollar Thrifty Automotive Group's Second Quarter Financial Results. [Operator Instructions] This conference is being recorded. If anyone has any objections, you may disconnect at this time.

I would now like to introduce Vicki Vaniman, Executive Vice President and General Counsel.

Vicki J. Vaniman

Thank you. Good morning, and welcome to the Dollar Thrifty Automotive Group, Inc. Second Quarter 2012 Earnings Release Conference Call. Scott Thompson, Chairman, 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 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 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 our company website,, under the Investor Info tab.

And now, I would like to turn the call over to Scott to discuss our second quarter earnings.

Scott L. Thompson

Thank you, Vicki, and good morning, everyone. Our results today mark not only another quarter of year-over-year improvement in profitability but also a record quarter for the company. The 24% increase in earnings per share resulted in the company achieving the highest earnings per share for the second quarter of the company's history. Customer-driven growth in rental base, improved vehicle utilization, a strong used vehicle market, continued emphasis on cost controls combined with the benefits of our share repurchase program to drive our quarterly performance.

Now for some details. Net income for the quarter was $49.4 million, or $1.69 per diluted share, compared to net income of $42.5 million, or $1.36 per diluted share, in the second quarter of 2011. Corporate adjusted EBITDA increased to $88.3 million compared to $81.2 million in the second quarter of 2011. Rental revenues for the second quarter of 2012 were consistent with prior-year levels. A 4.2% increase in rental days was effectively offset by a 3.8% decrease in revenue per day.

In light of the relatively flat current economic environment, we are pleased with the continued growth in rental days, although somewhat disappointed by the pricing environment in the industry.

Dollar Thrifty continues to be focused on return on assets and is avoiding booking unprofitable transactions. Revenue per units totaled $1,077 per unit per month for the second quarter of 2012 compared to $1,080 per unit per month for the second quarter of 2011.

An increase in utilization enabled us to offset the year-over-year softening pricing environment without adding incremental fleet.

Fleet cost trends for the quarter continued to be positive with fleet cost per vehicle for the second quarter of 2012 declining to $162 per month compared to $188 per month for the second quarter of 2011.

During the second quarter of 2012, we realized gains on sales of risk vehicles of $22.5 million compared to $17.8 million in the second quarter of 2011.

Now, I'd like to touch on a couple of non-financial highlights for the second quarter. First, I'm proud to announce that in June, our Australian licensee was named 1 of only 2 rental company suppliers to the Australian Federal Government under a 3-year exclusive contract. Beginning in July, Thrifty Rental Car will supply rental cars to 112 departments and agencies of the Australian Federal Government with another 84 agencies eligible to join after the initial rollout. This is an example of our brand's improved competitiveness and recognizes the quality of our products and services. We congratulate our Australian partners on this huge win. DTG will benefit from this via franchising fees.

Turning to our customer-choice program, we continue to expand our choice services that were initially rolled out in 2009. Choice allows the customers a fast rental experience and the ability to choose any car in their reserved car class. It has been very well received by our customers. We recently converted our 31st location to choice. As of quarter end, over 50% of our total rental transactions are serviced through choice locations.

Lastly, I'm proud to announce our continued expansion of our brand representation through to both corporate store openings and new franchise locations. Our goal is to achieve a 2% revenue growth annually through new corporate store openings. Through June 30, we opened 2 new airport locations, JFK in New York and Brownsville in Texas. Also, in July, we opened 1 additional airport and 4 off-airport corporate locations.

On the franchising front, we had 18 new franchise locations opened during the quarter, including 1 in the U.S. and 17 international locations. This brings the total number of franchise openings year-to-date to 42, including 8 locations in the U.S. and 34 international locations.

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