Dollar Thrifty Third Quarter Income Down Over 2011
Rising fleet costs, soft pricing and merger-related expenses impacted profits in the quarter.
Dollar Thrifty Automotive Group Inc. reported Nov. 1 results for the third quarter that ended Sept. 30, 2012. Dollar Thrifty said it would not hold a conference call to review the results in light of its pending merger with Hertz and the related FTC approval efforts.
Net income for the 2012 third quarter was $55.5 million, compared to net income of $66.6 million for the third quarter of 2011.
Dollar Thrifty noted that income for the quarter was negatively impacted by merger-related expenses of $5.7 million, while no such expenses were incurred during the third quarter of 2011.
"Excluding merger-related expenses, the company has now generated $269 million in corporate adjusted EBITDA for the nine months ended Sept. 30, 2012," said Scott L. Thompson, chairman, president and CEO of Dollar Thrifty. "In spite of a lackluster economic environment and continued softness in pricing in the industry, the combination of increased rental demand, ongoing focus on operational efficiencies and disciplined fleet management allowed us to continue to deliver solid results.”
Car Rental Revenue
For the third quarter, Dollar Thrifty’s vehicle rental revenue was $442.3 million, compared to $435.6 million in the third quarter of 2011.
Monthly revenue per unit was $1,235 in the third quarter of 2012 compared to $1,289 for the same period last year. The company realized rental day growth of 7.1%, which was partially offset by a 5.1% decrease in revenue per day.
Utilization in the third quarter of 2012 was 84.7%, compared to 83.9% in the third quarter of 2011, while the average rental fleet operated during the quarter increased 6% compared with the prior-year period.
Fleet cost per vehicle was $246 per month in the third quarter of 2012, compared to $186 per month in the third quarter of 2011. The increase in fleet cost per vehicle was partially attributable to a $12.2 million decrease in gains on sales of risk vehicles, combined with higher average base depreciation rates compared to the third quarter of 2011, Dollar Thrifty reported.
The company also noted that gains on sales of risk vehicles totaled $5.2 million during the third quarter of 2012 compared to $17.4 million in the third quarter of 2011 on a comparable number of risk vehicle sales. The decline in gains on risk vehicle sales was attributable to a lower average gain per unit sold as a result of refinements to base depreciation rates to reduce gains and lower volatility in fleet costs.
The increase in base depreciation rates in the third quarter of 2012 primarily resulted from the significant fleet refresh in the first half of 2012, the company reported. In conjunction with the fleet replacement cycle, a large number of model-year 2010 vehicles that were in the fleet during 2011, and had residual values in excess of book values, were replaced with newer vehicles.
In the nine-month period, the company’s tangible net worth was $725 million and the company had no corporate debt outstanding.
Outlook
The company noted that based on its year-to-date performance through Sept. 30, 2012 and its outlook for the fourth quarter, previously announced guidance for rental revenue and fleet cost expectations for the full year of 2012 remain unchanged.
Dollar Thrifty did revise its guidance for corporate adjusted EBITDA, excluding merger-related expenses, for the full year of 2012 to a range of $300 million to $310 million, up from its prior guidance of $285 million to $310 million.
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