Delaware
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1-13647
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73-1356520
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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99.1
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News release of Dollar Thrifty Automotive Group, Inc. dated November 1, 2011: Dollar Thrifty Automotive Group Reports Record Quarterly Net Income
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DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
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|
(Registrant)
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November 1, 2011
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By:
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/s/ H. CLIFFORD BUSTER III
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H. Clifford Buster III
|
||
Senior Executive Vice President, Chief Financial
|
||
Officer and Principal Financial Officer
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99.1
|
News release of Dollar Thrifty Automotive Group, Inc. dated November 1, 2011: Dollar Thrifty Automotive Group Reports Record Quarterly Net Income
|
·
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the risks to our business and growth prospects as a stand-alone company, in light of our dependence on future growth of the economy as a whole to achieve meaningful revenue growth in the key airport and local markets we serve, high barriers to entry in the insurance replacement market, and capital and other constraints on expanding company-owned stores internationally;
|
·
|
the impact of persistent pricing and demand pressures on our results and our low cost structure, particularly in light of the continuing volatility in the global financial and credit markets, and concerns about global economic prospects and the potential for a return of recessionary conditions that could materially adversely affect consumer discretionary spending, including for leisure travel on which we are substantially dependent;
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·
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the impact of pending and future U.S. governmental action to address budget deficits through reductions in spending and similar austerity measures, which could materially adversely affect unemployment rates and consumer spending levels;
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·
|
the impact of developments outside the United States, such as the sovereign credit issues in certain countries in the European Union, which could affect the relative volatility of global credit markets generally, and the continuing significant political unrest in certain oil-producing countries, which has contributed to price volatility for petroleum products, and in recent periods higher average gasoline prices, which could affect both broader economic conditions and consumer spending levels;
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·
|
the impact of pricing and other actions by competitors;
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·
|
our ability to manage our fleet mix to match demand and meet our target for vehicle depreciation costs, particularly in light of the significant increase in the level of risk vehicles (i.e., those vehicles not acquired through a guaranteed residual value program) in our fleet and our exposure to the used vehicle market;
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·
|
the cost and other terms of acquiring and disposing of automobiles and the impact of conditions in the used vehicle market on our vehicle cost, including the impact on vehicle depreciation costs in 2011 based on recent pricing volatility in the used vehicle market, and our ability to reduce our fleet capacity as and when projected by our plans;
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·
|
the strength of the ongoing recovery in the U.S. automotive industry, particularly in light of our dependence on vehicle supply from U.S. automotive manufacturers, and whether the recovery is sustained;
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·
|
airline travel patterns, including disruptions or reductions in air travel resulting from capacity reductions, pricing actions, severe weather conditions, industry consolidation or other events, particularly given our dependence on leisure travel;
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·
|
access to reservation distribution channels, particularly as the role of the Internet increases in the marketing and sale of travel-related services;
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·
|
the effectiveness of actions we take to manage costs and liquidity;
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·
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the impact of repurchases of our common stock pursuant to our share repurchase program;
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·
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our ability to comply with financial covenants, including the new financial covenants included in our amended senior secured credit facilities, and the impact of those covenants on our operating and financial flexibility;
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·
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our ability to obtain cost-effective financing as needed without unduly restricting our operational flexibility;
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·
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whether our preliminary expectations about our federal income tax position, after giving effect to the impact of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, are affected by changes in our expected fleet size or operations or further legislative initiatives relating to taxes in the United States or elsewhere;
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·
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the cost of regulatory compliance, costs and other effects of potential future initiatives, including those directed at climate change and its effects, and the costs and outcome of pending litigation;
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·
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disruptions in the operation or development of information and communication systems that we rely on, including those relating to methods of payment;
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·
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local market conditions where we and our franchisees do business, including whether franchisees will continue to have access to capital as needed; and
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·
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the impact of other events that can disrupt consumer travel, such as natural and man-made catastrophes, pandemics, social unrest and actual and perceived threats or acts of terrorism.
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Table 1
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||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
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||||||||||||||||
Consolidated Statements of Income
|
||||||||||||||||
(In thousands, except share and per share data)
|
||||||||||||||||
Unaudited
|
||||||||||||||||
Three months ended
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As % of
|
|||||||||||||||
September 30,
|
|
Total revenues
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues:
|
||||||||||||||||
Vehicle rentals
|
$ | 435,578 | $ | 425,467 | 96.4% | 95.9% | ||||||||||
Other
|
16,144 | 18,077 | 3.6% | 4.1% | ||||||||||||
Total revenues
|
451,722 | 443,544 | 100.0% | 100.0% | ||||||||||||
Costs and Expenses:
|
||||||||||||||||
Direct vehicle and operating
|
214,536 | 204,207 | 47.5% | 46.0% | ||||||||||||
Vehicle depreciation and lease charges, net
|
63,299 | 85,732 | 14.0% | 19.3% | ||||||||||||
Selling, general and administrative
|
47,851 | 59,359 | 10.6% | 13.4% | ||||||||||||
Interest expense, net
|
19,627 | 22,335 | 4.4% | 5.0% | ||||||||||||
Long-lived asset impairment
|
- | 703 | 0.0% | 0.2% | ||||||||||||
Total costs and expenses
|
345,313 | 372,336 | 76.5% | 83.9% | ||||||||||||
(Increase) decrease in fair value of derivatives
|
523 | (6,464 | ) | 0.1% | (1.4% | ) | ||||||||||
Income before income taxes
|
105,886 | 77,672 | 23.4% | 17.5% | ||||||||||||
Income tax expense
|
39,265 | 28,507 | 8.7% | 6.4% | ||||||||||||
Net income
|
$ | 66,621 | $ | 49,165 | 14.7% | 11.1% | ||||||||||
Earnings per share:
|
||||||||||||||||
Basic
|
$ | 2.30 | $ | 1.72 | ||||||||||||
Diluted
|
$ | 2.13 | $ | 1.62 | ||||||||||||
Weighted average number
|
||||||||||||||||
of shares outstanding:
|
||||||||||||||||
Basic
|
28,958,718 | 28,644,859 | ||||||||||||||
Diluted
|
31,304,829 | 30,319,476 | ||||||||||||||
|
Table 1 (Continued) | ||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
|
||||||||||||||||
Consolidated Statements of Income
|
||||||||||||||||
(In thousands, except share and per share data)
|
||||||||||||||||
Unaudited
|
||||||||||||||||
Nine months ended
|
As % of
|
|||||||||||||||
September 30,
|
|
Total revenues
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues:
|
||||||||||||||||
Vehicle rentals
|
$ | 1,146,041 | $ | 1,138,029 | 95.9% | 95.8% | ||||||||||
Other
|
49,157 | 50,072 | 4.1% | 4.2% | ||||||||||||
Total revenues
|
1,195,198 | 1,188,101 | 100.0% | 100.0% | ||||||||||||
Costs and Expenses:
|
||||||||||||||||
Direct vehicle and operating
|
583,799 | 577,430 | 48.8% | 48.6% | ||||||||||||
Vehicle depreciation and lease charges, net
|
203,983 | 208,060 | 17.1% | 17.5% | ||||||||||||
Selling, general and administrative
|
145,641 | 162,841 | 12.2% | 13.7% | ||||||||||||
Interest expense, net
|
58,899 | 65,392 | 4.9% | 5.5% | ||||||||||||
Long-lived asset impairment
|
- | 942 | 0.0% | 0.1% | ||||||||||||
Total costs and expenses
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992,322 | 1,014,665 | 83.0% | 85.4% | ||||||||||||
(Increase) decrease in fair value of derivatives
|
(3,367 | ) | (21,338 | ) | (0.3% | ) | (1.8% | ) | ||||||||
Income before income taxes
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206,243 | 194,774 | 17.3% | 16.4% | ||||||||||||
Income tax expense
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80,594 | 76,054 | 6.8% | 6.4% | ||||||||||||
Net income
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$ | 125,649 | $ | 118,720 | 10.5% | 10.0% | ||||||||||
Earnings per share: (a)
|
||||||||||||||||
Basic
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$ | 4.35 | $ | 4.15 | ||||||||||||
Diluted
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$ | 4.03 | $ | 3.93 | ||||||||||||
Weighted average number
|
||||||||||||||||
of shares outstanding:
|
||||||||||||||||
Basic
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28,872,747 | 28,592,794 | ||||||||||||||
Diluted
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31,216,741 | 30,209,462 | ||||||||||||||
(a) The underlying diluted per share information is calculated from the weighted average common and common stock equivalents outstanding during each quarter, which may fluctuate based on quarterly income levels and market prices. Therefore, the sum of the quarters’ per share information may not equal the total year amounts.
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Table 2
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||||||||||||
Dollar Thrifty Automotive Group, Inc.
|
||||||||||||
Selected Operating and Financial Data
|
||||||||||||
Three months ended
September 30, 2011
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|
Nine months ended
September 30, 2011
|
||||||||||
OPERATING DATA:
|
||||||||||||
Vehicle Rental Data:
|
||||||||||||
Average number of vehicles operated
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112,665 | 109,168 | ||||||||||
% change from prior year
|
4.3% | 5.2% | ||||||||||
Number of rental days
|
8,690,838 | 23,930,099 | ||||||||||
% change from prior year
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4.1% | 3.3% | ||||||||||
Vehicle utilization
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83.9% | 80.3% | ||||||||||
Percentage points change from prior year
|
(0.1) p.p.
|
(1.4) p.p. | ||||||||||
Average revenue per day
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$50.12 | $47.89 | ||||||||||
% change from prior year
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(1.7% | ) | (2.5% | ) | ||||||||
Monthly average revenue per vehicle
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$1,289 | $1,166 | ||||||||||
% change from prior year
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(1.8% | ) | (4.3% | ) | ||||||||
Average depreciable fleet
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113,719 | 110,125 | ||||||||||
% change from prior year
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4.2% | 5.1% | ||||||||||
Monthly average depreciation (net) per vehicle
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$186 | $206 | ||||||||||
% change from prior year
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(29.0% | ) | (6.8% | ) | ||||||||
FINANCIAL DATA: (in millions) (unaudited)
|
||||||||||||
Non-vehicle depreciation and amortization
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$ | 6 | $ | 20 | ||||||||
Non-vehicle interest expense
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4 | 9 | ||||||||||
Non-vehicle interest income
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- | (1 | ) | |||||||||
Non-vehicle capital expenditures
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3 | 11 | ||||||||||
Cash paid for/(refund of) income taxes
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12 | (33 | ) | |||||||||
Table 2 (Continued) | |||||||||||||
Selected Balance Sheet Data
|
|||||||||||||
(In millions)
|
|||||||||||||
September 30,
|
December 31,
|
||||||||||||
2011 | 2010 | 2010 | |||||||||||
(unaudited)
|
|||||||||||||
Cash and cash equivalents (b)
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$ | 499 | $ | 519 | $ | 563 | |||||||
Restricted cash and investments
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201 | 290 | 277 | ||||||||||
Revenue-earning vehicles, net
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1,605 | 1,468 | 1,342 | ||||||||||
Vehicle debt
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1,315 | 1,380 | 1,249 | ||||||||||
Non-vehicle debt (corporate debt)
|
- | 151 | 148 | ||||||||||
Stockholders' equity
|
669 | 521 | 539 | ||||||||||
Tangible Net Worth Calculation
|
|||||||||||||
(In millions)
|
|||||||||||||
September 30,
|
December 31,
|
||||||||||||
2011 | 2010 | 2010 | |||||||||||
(unaudited)
|
|||||||||||||
Stockholders' equity
|
$ | 669 | $ | 521 | $ | 539 | |||||||
Less: Software, net
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(22 | ) | (24 | ) | (24 | ) | |||||||
Tangible net worth
|
$ | 647 | $ | 497 | $ | 515 | |||||||
(b) Under the terms of certain of its financing arrangements, the Company was required to maintain a minimum cash balance of $100 million at all times. For the 2010 reporting periods, such minimum balance is included in cash and cash equivalents herein. In February 2011, the requirement to maintain such minimum cash balance was eliminated.
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|||||||||||||
Table 3 | ||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
|
||||||||||||||||
Non-GAAP Measures
|
||||||||||||||||
Non-GAAP pretax income, Non-GAAP net income and Non-GAAP EPS exclude the impact of the (increase) decrease in fair value of derivatives and the impact of long-lived asset impairments, net of related tax impact (as applicable), from the reported GAAP measures and are further adjusted to exclude merger-related expenses. Due to volatility resulting from the mark-to-market treatment of the derivatives and the nature of the non-cash impairments and merger-related expenses, the Company believes non-GAAP measures provide an important assessment of year-over-year operating results. See tables below for a reconciliation of non-GAAP to GAAP results.
|
||||||||||||||||
The following table reconciles reported GAAP pretax income per the income statement to non-GAAP pretax income:
|
||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||
Income before income taxes - as reported
|
$ | 105,886 | $ | 77,672 | $ | 206,243 | $ | 194,774 | ||||||||
(Increase) decrease in fair value of derivatives
|
523 | (6,464 | ) | (3,367 | ) | (21,338 | ) | |||||||||
Long-lived asset impairment | - | 703 | - | 942 | ||||||||||||
Pretax income - non-GAAP
|
$ | 106,409 | $ | 71,911 | $ | 202,876 | $ | 174,378 | ||||||||
Merger-related expenses | - | 11,937 | 4,600 | 20,459 | ||||||||||||
Non-GAAP pretax income, excluding merger-related expenses | $ | 106,409 | $ | 83,848 | $ | 207,476 | $ | 194,837 | ||||||||
The following table reconciles reported GAAP net income per the income statement to non-GAAP net income:
|
||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||
Net income - as reported
|
$ | 66,621 | $ | 49,165 | $ | 125,649 | $ | 118,720 | ||||||||
(Increase) decrease in fair value of derivatives, net of tax (c)
|
307 | (3,791 | ) | (1,974 | ) | (12,513 | ) | |||||||||
Long-lived asset impairment, net of tax (d) | - | 429 | - | 575 | ||||||||||||
Net income - non-GAAP
|
$ | 66,928 | $ | 45,803 | $ | 123,675 | $ | 106,782 | ||||||||
Merger-related expenses, net of tax (e) | - | 6,956 | 2,679 | 11,921 | ||||||||||||
Non-GAAP net income, excluding merger-related expenses | $ | 66,928 | $ | 52,759 | $ | 126,354 | $ | 118,703 |
Table 3 (Continued)
|
||||||||||||||||
The following table reconciles reported GAAP diluted earnings per share ("EPS") to non-GAAP diluted EPS:
|
||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
EPS, diluted - as reported
|
$ | 2.13 | $ | 1.62 | $ | 4.03 | $ | 3.93 | ||||||||
EPS impact of (increase) decrease in fair value of derivatives, net of tax
|
0.01 | (0.13 | ) | (0.06 | ) | (0.41 | ) | |||||||||
EPS impact of long-lived asset impairment, net of tax | - | 0.01 | - | 0.02 | ||||||||||||
EPS, diluted - non-GAAP (f)
|
$ | 2.14 | $ | 1.51 | $ | 3.96 | $ | 3.53 | ||||||||
EPS impact of merger-related expenses, net of tax | - | 0.23 | 0.09 | 0.39 | ||||||||||||
Non-GAAP diluted EPS, excluding merger-related expenses (f) | $ | 2.14 | $ | 1.74 | $ | 4.05 | $ | 3.93 | ||||||||
(c) The tax effect of the (increase) decrease in fair value of derivatives is calculated using the entity-specific, U.S. federal and blended state tax rate applicable to the derivative instruments which amounts are $216,000 and ($2,673,000) for the three months ended September 30, 2011 and 2010, respectively, and ($1,393,000) and ($8,825,000) for the nine months ended September 30, 2011 and 2010, respectively.
|
||||||||||||||||
(d) The tax effect of the long-lived asset impairment is calculated using the tax-deductible portion of the impairment and applying the entity-specific, U.S. federal and blended state tax rate which amounts are $274,000 and $367,000 for the three months and nine months ended September 30, 2010, respectively. | ||||||||||||||||
(e) Merger-related expenses include legal, litigation, advisory and other fees related to a potential merger transaction. The tax effect of the merger-related expenses is calculated using the entity-specific, U.S. federal and blended state tax rate applicable to the merger-related expenses which amount is $4,981,000 for the three months ended September 30, 2010, and $1,921,000 and $8,538,000 for the nine months ended September 30, 2011 and 2010, respectively. | ||||||||||||||||
(f) Since each category of EPS is computed independently for each period, total per share amounts may not equal the sum of the respective categories. |
Table 4
|
||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
|
||||||||||||||||
Non-GAAP Measures
|
||||||||||||||||
Corporate Adjusted EBITDA means earnings, excluding the impact of the (increase) decrease in fair value of derivatives, before non-vehicle interest expense, income taxes, non-vehicle depreciation, amortization, and certain other items as shown below. The Company believes Corporate Adjusted EBITDA is important as it provides investors with a supplemental measure of the Company's liquidity by adjusting earnings to exclude certain non-cash items, in addition to its relevance as a measure of operating performance. The items excluded from Corporate Adjusted EBITDA but included in the calculation of the Company's reported net income are significant components of its consolidated statement of income, and must be considered in performing a comprehensive assessment of overall financial performance. Corporate Adjusted EBITDA Margin provides a measure of the Company's operating profitability. Corporate Adjusted EBITDA is not defined under GAAP and should not be considered as an alternative measure of the Company's net income, cash flow or liquidity. Corporate Adjusted EBITDA and Corporate Adjusted EBITDA Margin amounts presented may not be comparable to similar measures disclosed by other companies.
|
||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||
Reconciliation of Net Income to
|
||||||||||||||||
Corporate Adjusted EBITDA
|
||||||||||||||||
Net income - as reported
|
$ | 66,621 | $ | 49,165 | $ | 125,649 | $ | 118,720 | ||||||||
(Increase) decrease in fair value of derivatives
|
523 | (6,464 | ) | (3,367 | ) | (21,338 | ) | |||||||||
Non-vehicle interest expense
|
3,709 | 2,464 | 9,053 | 7,301 | ||||||||||||
Income tax expense
|
39,265 | 28,507 | 80,594 | 76,054 | ||||||||||||
Non-vehicle depreciation
|
4,786 | 4,782 | 14,559 | 15,108 | ||||||||||||
Amortization
|
1,896 | 1,771 | 5,703 | 5,472 | ||||||||||||
Non-cash stock incentives
|
987 | 842 | 3,124 | 3,254 | ||||||||||||
Long-lived asset impairment | - | 703 | - | 942 | ||||||||||||
Other
|
(231 | ) | - | (243 | ) | (22 | ) | |||||||||
Corporate Adjusted EBITDA
|
$ | 117,556 | $ | 81,770 | $ | 235,072 | $ | 205,491 | ||||||||
Reconciliation of Corporate Adjusted EBITDA
|
||||||||||||||||
to Cash Flows From Operating Activities
|
||||||||||||||||
Corporate Adjusted EBITDA
|
$ | 117,556 | $ | 81,770 | $ | 235,072 | $ | 205,491 | ||||||||
Vehicle depreciation, net of gains/losses from disposal
|
63,290 | 85,723 | 203,956 | 208,018 | ||||||||||||
Non-vehicle interest expense
|
(3,709 | ) | (2,464 | ) | (9,053 | ) | (7,301 | ) | ||||||||
Change in assets and liabilities and other
|
(5,800 | ) | 13,765 | 28,509 | (40,315 | ) | ||||||||||
Net cash provided by operating activities (h)
|
$ | 171,337 | $ | 178,794 | $ | 458,484 | $ | 365,893 | ||||||||
Memo:
|
||||||||||||||||
Net cash provided by / (used in) investing activites
|
$ | 41,421 | $ | (15,373 | ) | $ | (326,408 | ) | $ | (147,535 | ) | |||||
Net cash used in financing activities (h)
|
$ | (169,358 | ) | $ | (14,290 | ) | $ | (95,756 | ) | $ | (199,755 | ) |
Table 4 (Continued) | ||||||||||||||||
Full Year
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
(in millions)
|
||||||||||||||||
Reconciliation of Pretax Income to
|
(forecasted) | (actual) | ||||||||||||||
Corporate Adjusted EBITDA
|
||||||||||||||||
Pretax income
|
$226 - $246 | $221 | ||||||||||||||
(Increase) decrease in fair value of derivatives (2011 amount is YTD September 2011)
|
(3 | ) | (29 | ) | ||||||||||||
Non-vehicle interest expense
|
11 | 10 | ||||||||||||||
Non-vehicle depreciation
|
19 | 20 | ||||||||||||||
Amortization
|
8 | 7 | ||||||||||||||
Non-cash stock incentives
|
4 | 5 | ||||||||||||||
Long-lived asset impairment
|
- | 1 | ||||||||||||||
Merger-related expenses (g) | 5 | 23 | ||||||||||||||
Corporate Adjusted EBITDA, excluding merger-related expenses | $270 - $290 | $258 | ||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Corporate Adjusted EBITDA | $ | 117,556 | $ | 81,770 | $ | 235,072 | $ | 205,491 | ||||||||
Total Revenues | 451,722 | 443,544 | 1,195,198 | 1,188,101 | ||||||||||||
Corporate Adjusted EBITDA Margin | 26.0% | 18.4% | 19.7% | 17.3% | ||||||||||||
(g) Merger-related expenses include legal, litigation, advisory and other fees related to a potential merger transaction. | ||||||||||||||||
Full year 2011 includes $4.6 million of merger-related expenses through September 30, 2011. | ||||||||||||||||
(h) Certain reclassifications have been made to the 2010 financial information to conform to the classifications used in 2011. | ||||||||||||||||