Dollar Thrifty Automotive Group (DTG)

Q4 2010 Earnings Call

February 24, 2011 9:00 am ET


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

Scott Thompson - Chief Executive Officer, President and Director


Fred Lowrance - Avondale Partners, LLC

Michael Millman - Millman Research Associates

Christopher Agnew - MKM Partners LLC

Sachin Shah - ICAP

Michael Friedman - Noble Financial Group

Judy Delgado

John Healy - Northcoast Research

Neil Portus - Goldman Sachs Group Inc.

Jordan Hymowitz - Philadelphia Financial

Stephen O'Hara - Sidoti & Company, LLC



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Welcome, and thank you for joining the Dollar Thrifty Automotive Group Fourth Quarter and Full Year 2010 Financial Results Conference Call. [Operator Instructions] Now, I will turn the call over to Mr. Cliff Buster, Chief Financial Officer. You may begin, sir.

H. Buster

Thank you. Good morning, and welcome to the Dollar Thrifty Automotive Group Fourth Quarter and Full Year 2010 Earnings Release Conference Call. Scott Thompson, President and Chief Executive Officer, and I 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 the company website under the Investor Information tab.

Now I would like to turn the call over to Scott to discuss our fourth quarter and full year earnings.

Scott Thompson

Thank you, Cliff, and good morning, everyone. I'm proud to report that the company achieved its eighth consecutive quarter of year-over-year double-digit growth in corporate adjusted EBITDA.

Now for the highlights. For the full year 2010, we reported $258.3 million in corporate adjusted EBITDA excluding merger-related expenses. This represents an increase of 160% over our 2009 performance and $100 million better than the best year in the company's 61-year history. This during the year when the economy was less than robust. We reported corporate adjusted EBITDA for the fourth quarter of 2010 of $30.2 million, and excluding car gains in 2009 and merger costs in the current year, the fourth quarter is up dramatically from the same period last year.

We reported tangible net worth of $515 million and unrestricted cash of $563 million; again, record numbers for the company. Lastly, but maybe most importantly, we achieved record customer service scores, demonstrating our focus is not just on short-term profitability, but that we're also making investments in our future through training and technology. As an example, we rolled out our choice product offering in 22 locations throughout 2010 and plan to open 11 additional locations in 2011. Customer feedback on this program has been exceptional, as it reduces rental transaction time and provides customers with flexibility to choose the vehicle of their preference from a group of available vehicles. Overall, it was truly an outstanding year for Dollar Thrifty.

Now turning to the financial details of the fourth quarter. Rental revenue for the quarter was up 1.6% compared to the fourth quarter 2009, driven primarily by 2.8% increase in transaction days, partially offset by 1.2% decrease in revenue per day. This quarter we had a challenging comparison on RPD as we realized a 12% increase in RPD during the fourth quarter of 2009. Additionally, this year's winter storm in late December mitigated pricing opportunities in a critical Christmas holiday period.

Consistent with the third quarter of 2010, we are now realizing fleet cost levels that will be less impacted by gains on sales on earlier quarters in 2010. Fleet depreciation per unit in the fourth quarter 2010 totaled $308 per month, which reflects effectively breakeven results on disposition of vehicles. During the fourth quarter of 2010, we continue to reap the benefits of productivity and cost reduction initiatives, and for the second consecutive quarter, we realized reductions in operating expense dollars while increasing the company's revenue base.

Corporate adjusted EBITDA for the fourth quarter of 2010 totaled $30.2 million. Excluding merger-related expenses, corporate adjusted EBITDA totaled $32.3 million, an increase of 23% compared to the same period in 2009. I'd also point out that this increase was achieved in spite of a $16.3 million decline in the gain on sale of risk vehicles in the fourth quarter 2010 as compared to the fourth quarter 2009.

Our performance during the seasonally challenging quarter highlighted the fundamental changes we have made in our business model, as the company is reporting the highest fourth quarter corporate adjusted EBITDA in the last five years. We continue to maintain a sharp focus in revenue management, employee productivity and expense control while simultaneously keeping continued improvement in customer satisfaction scores a top objective.

Now Cliff will take a deeper dive into the financial details of the quarter.

H. Buster

Thanks, Scott. Non-GAAP net income excluding merger-related expenses totaled $9.5 million for the fourth quarter of 2010, a 23% increase from the fourth quarter of 2009. Again, excluding the impact of merger-related expenses, non-GAAP diluted earnings per share for the fourth quarter of 2010 totaled $0.31 per share compared to $0.28 per share in the fourth quarter of 2009. I would point out that our share count increased approximately 10% from the fourth quarter of 2009 as a result of our common stock offering in last year's fourth quarter.

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