Dollar Thrifty Automotive Group Inc. today reported results for the second quarter ended June 30, 2012. Net income for the 2012 second quarter was $49.4 million, compared to net income of $42.5 million for the second quarter of 2011. The company also reported Corporate Adjusted EBITDA for the second quarter of 2012 of $88.3 million, up from $81.2 million in the second quarter of 2011.
"We are pleased to report record second quarter results, particularly in light of the disappointing current economic environment. Rental day growth, improved vehicle utilization, a strong used vehicle market and continued focus on cost control all contributed to the year-over-year improvement and mitigated the softness in pricing," said Scott L. Thompson, chairman, president and CEO.
For the quarter, the company's vehicle rental revenue was $378.9 million, compared to $378.2 million in the second quarter of 2011. Revenue per unit was $1,077 in the second quarter of 2012 compared to $1,080 for the same period last year.
The company realized rental day growth of 4.2%, which was mostly offset by a 3.8% decrease in revenue per day. Utilization in the second quarter of 2012 was 80.3%, compared to 77.4% in the second quarter of 2011, with the average fleet size consistent year over year.
Fleet cost per vehicle was $162 per month in this quarter compared to $188 per month in the second quarter of 2011. The decrease in fleet cost per vehicle was attributable to lower base depreciation rates due to the ongoing strength of the used vehicle market and the resulting favorable impact on vehicle residual values, combined with a year-over-year increase in gains on sales of risk vehicles.
The company sold approximately 18,700 risk vehicles at a total gain of $22.5 million during the second quarter of 2012 compared to approximately 8,400 risk vehicles at a total gain of $17.8 million in the second quarter of 2011. The increase in the number of risk vehicles sold is attributable to a substantial fleet refresh cycle underway in 2012.
As of June 30, 2012, the company's tangible net worth was $663 million, and the company had no corporate debt outstanding.
Merger Activity and FTC Update
The company noted that neither Hertz nor any other company has put forward an offer during 2012 to purchase the company, despite persistent press reports about commitments Hertz has made to the Federal Trade Commission (FTC) to divest of certain Dollar Thrifty assets in the context of a hypothetical transaction.
The company noted that those reports have created uncertainty for its employees and business partners, and the company has communicated its concerns regarding these reported divestiture commitments to senior officials at the FTC.
The company noted that after three years of merger-related activity and speculation, it believes it is time for a compelling offer to be made or for this process to come to a close so that the company can move forward under its standalone plan without the constant distraction of merger speculation.
2012 Outlook Update
The company expects that continued rental day growth, offset by compression in revenue per day, will result in full year 2012 rental revenues increasing modestly compared to 2011.
The company noted that the used vehicle market has been strong throughout the first half of 2012, and the company has sold approximately 33,100 vehicles at a realized gain of $36.8 million during the six months ended June 30, 2012.
The company noted that it expects the used vehicle market to remain strong through at least the back half of the year, subject to normal seasonality. The company also noted that gains on sales of risk vehicles will decline significantly in the back half of the year as its fleet refresh cycle winds down. The company is improving its fleet cost outlook for the full year of 2012, which it now expects to range from $200 - $210 per vehicle per month.
The company said that the expected improvement in fleet costs will be mostly offset by the change in revenue mix between volume and price. Accordingly, the company is reaffirming its prior guidance for Corporate Adjusted EBITDA for the full year of 2012 of $285 million to $310 million.
Finally, the company noted that it is revising its earnings per share guidance based on share repurchase activity that has been completed through June 30, 2012. The company is now targeting diluted earnings per share to range from $5.25 to $5.70 per share for 2012, up from its previously announced range of $5.00 to $5.60 per share.