Dollar Thrifty Automotive Group Inc. today provided an update on preliminary estimates for second quarter results and its outlook for the full year of 2010. The car rental company announced that it expects second quarter corporate adjusted EBITDA to be within a range of $70 million to $75 million, up significantly from $20.9 million in the year-ago period.
The company also noted that it recorded approximately $5 million of expenses related to the proposed Hertz transaction during the quarter. Excluding these transaction costs, corporate adjusted EBITDA for the second quarter is projected to be within a range of $75 million to $80 million.
Dollar Thrifty noted that it is lowering its guidance for vehicle rental revenue for the full year of 2010 to an increase of 1 to 2 percent compared to 2009, down from its prior guidance of 2 to 4 percent. In addition, the company lowered its expected fleet cost target from $275 per unit per month to a range of $245 to $255 per month.
Based on the Dollar Thrifty's estimated results through the second quarter and its outlook for revenue and fleet costs for the remainder of 2010, it expects corporate adjusted EBITDA, excluding expenses related to the Hertz transaction, to be within a range of $200 million to $220 million for the full year of 2010. The company's previous guidance range for 2010 was $170 - $190 million, and the company's 2009 corporate adjusted EBITDA was $99.4 million.
Dollar Thrifty also provided an updated outlook for fleet cost per unit per month for 2011, lowering its outlook for fleet cost to a range of $300 to $310 per month, compared to its previous guidance of $325 per month. The car rental company noted that the ongoing positive effects of changes made in its operations and fleet management, combined with solid macroeconomic factors in the used car market, are expected to impact fleet costs in 2011 and beyond.
Wall Street View
With this new guidance, research analysis firm Avondale Partners LLC is raising its 2Q'10 and FY'10 EPS estimates for Dollar Thrifty and repeats its Market Outperform rating and $60 price target on DTG.
"Earnings improvement is being driven by continued strong used vehicle residual values - a trend benefitting the entire rental car industry," the firm wrote in a statement.
Avondale also noted that DTG announced August 18th as the date for its special meeting of stockholders to vote on the proposed Hertz (HTZ) merger offer. "We expect a competitive offer from Avis Budget Group (CAR) prior to that date," the firm wrote.
"Any CAR offer should be above the current HTZ offer, boosting DTG shares and likely forcing HTZ to raise its current offer," according to the research note.