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, 2012: Dollar Thrifty Automotive Group Reports Third Quarter Earnings, Updates Guidance
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DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
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(Registrant)
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November 1, 2012
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By:
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/s/ H. CLIFFORD BUSTER III
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H. Clifford Buster III
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Senior Executive Vice President, Chief Financial
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Officer and Principal Financial Officer
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99.1
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News release of Dollar Thrifty Automotive Group, Inc. dated November 1, 2012: Dollar Thrifty Automotive Group Reports Third Quarter Earnings, Updates Guidance
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●
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the impact of our pending acquisition by Hertz Global Holdings, Inc. (“Hertz”) and related developments, including the potential for diversion of management’s attention, loss of key personnel and disruption of our operations, as well as the possibility that regulatory approval and, if required by applicable law, approval by the Company’s stockholders may not be obtained as planned, which could delay or prevent the acquisition;
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●
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the risks to our business and prospects as a stand-alone company, in light of our dependence on future economic growth to achieve revenue growth in key airport and local markets, high barriers to entry in the insurance replacement market, capital and other constraints to expanding company-owned stores internationally, and the challenges we would face in further reducing our expenses;
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●
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the impact of the continuing challenging global economic environment, the ongoing Eurozone sovereign debt issues and governmental actions to address budget deficits through austerity and other measures, which are fueling concerns about global economic prospects and could materially adversely affect unemployment rates and consumer discretionary spending, including for international inbound travel to the United States and for leisure travel more generally, on which we are substantially dependent;
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●
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the continuing significant political unrest and other concerns involving 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 level of risk vehicles (i.e., those vehicles not acquired through a guaranteed residual value program) in our fleet and our exposure to wholesale used vehicle prices;
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●
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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 based on pricing volatility in the used vehicle market;
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our ability to reduce our fleet capacity as and when projected by our plans;
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the continuing strength of the U.S. automotive industry on which we depend for vehicle supply;
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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 and mobile applications increases in the marketing and sale of travel-related services;
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the effectiveness of actions we take to maintain a low cost structure and to manage liquidity;
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the impact of repurchases of our common stock pursuant to our share repurchase program;
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our ability to obtain cost-effective financing as needed without unduly restricting our operational flexibility;
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our ability to comply with financial covenants, and the impact of those covenants on our operating and financial flexibility;
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whether our preliminary expectations about our federal income tax position 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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our ability to continue to defer the reversal of prior period tax deferrals and the availability of accelerated depreciation payments in future periods, the lack of either of which could result in material cash federal income tax payments in future periods;
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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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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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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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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 Statement of Income
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(In thousands, except share and per share data)
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||||||||||||||||
Unaudited
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||||||||||||||||
Three months ended
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As % of
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|||||||||||||||
September 30,
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Total revenues
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||||||||||||||
2012
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2011
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2012
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2011
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|||||||||||||
Revenues:
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||||||||||||||||
Vehicle rentals
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$ | 442,336 | $ | 435,578 | 96.0% | 96.4% | ||||||||||
Other
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18,254 | 16,144 | 4.0% | 3.6% | ||||||||||||
Total revenues
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460,590 | 451,722 | 100.0% | 100.0% | ||||||||||||
Costs and Expenses:
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||||||||||||||||
Direct vehicle and operating
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215,790 | 214,536 | 46.9% | 47.5% | ||||||||||||
Vehicle depreciation and lease charges, net
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89,131 | 63,299 | 19.4% | 14.0% | ||||||||||||
Selling, general and administrative
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54,454 | 47,851 | 11.8% | 10.6% | ||||||||||||
Interest expense, net
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12,206 | 19,627 | 2.6% | 4.4% | ||||||||||||
Total costs and expenses
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371,581 | 345,313 | 80.7% | 76.5% | ||||||||||||
(Increase) decrease in fair value of derivatives
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40 | 523 | 0.0% | 0.1% | ||||||||||||
Income before income taxes
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88,969 | 105,886 | 19.3% | 23.4% | ||||||||||||
Income tax expense
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33,469 | 39,265 | 7.3% | 8.7% | ||||||||||||
Net income
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$ | 55,500 | $ | 66,621 | 12.0% | 14.7% | ||||||||||
Earnings per share:
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||||||||||||||||
Basic
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$ | 1.99 | $ | 2.30 | ||||||||||||
Diluted
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$ | 1.91 | $ | 2.13 | ||||||||||||
Weighted average number
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||||||||||||||||
of shares outstanding:
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||||||||||||||||
Basic
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27,905,118 | 28,958,718 | ||||||||||||||
Diluted
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29,085,630 | 31,304,829 | ||||||||||||||
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Table 1 (Continued) | ||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
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Consolidated Statement of Income
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(In thousands, except share and per share data)
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||||||||||||||||
Unaudited
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||||||||||||||||
Nine months ended
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As % of
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|||||||||||||||
September 30,
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Total revenues
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||||||||||||||
2012
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2011
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2012
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2011
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Revenues:
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Vehicle rentals
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$ | 1,160,322 | $ | 1,146,041 | 95.7% | 95.9% | ||||||||||
Other
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51,928 | 49,157 | 4.3% | 4.1% | ||||||||||||
Total revenues
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1,212,250 | 1,195,198 | 100.0% | 100.0% | ||||||||||||
Costs and Expenses:
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Direct vehicle and operating
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596,463 | 583,799 | 49.2% | 48.8% | ||||||||||||
Vehicle depreciation and lease charges, net
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188,368 | 203,983 | 15.5% | 17.1% | ||||||||||||
Selling, general and administrative
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147,479 | 145,641 | 12.2% | 12.2% | ||||||||||||
Interest expense, net
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44,601 | 58,899 | 3.7% | 4.9% | ||||||||||||
Total costs and expenses
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976,911 | 992,322 | 80.6% | 83.0% | ||||||||||||
(Increase) decrease in fair value of derivatives
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525 | (3,367 | ) | 0.0% | (0.3% | ) | ||||||||||
Income before income taxes
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234,814 | 206,243 | 19.4% | 17.3% | ||||||||||||
Income tax expense
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89,516 | 80,594 | 7.4% | 6.8% | ||||||||||||
Net income
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$ | 145,298 | $ | 125,649 | 12.0% | 10.5% | ||||||||||
Earnings per share: (a)
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||||||||||||||||
Basic
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$ | 5.15 | $ | 4.35 | ||||||||||||
Diluted
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$ | 4.94 | $ | 4.03 | ||||||||||||
Weighted average number
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||||||||||||||||
of shares outstanding:
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||||||||||||||||
Basic
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28,217,067 | 28,872,747 | ||||||||||||||
Diluted
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29,436,527 | 31,216,741 | ||||||||||||||
(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.
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Selected Operating and Financial Data
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Three months ended
September 30, 2012
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Nine months ended
September 30, 2012
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OPERATING DATA:
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Vehicle Rental Data:
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Average number of vehicles operated
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119,424 | 112,712 | ||||||||||
% change from prior year
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6.0% | 3.2% | ||||||||||
Number of rental days
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9,303,762 | 25,343,896 | ||||||||||
% change from prior year
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7.1% | 5.9% | ||||||||||
Vehicle utilization
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84.7% | 82.1% | ||||||||||
Percentage points change from prior year
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0.8 p.p.
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1.8 p.p. | ||||||||||
Average revenue per day
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$47.54 | $45.78 | ||||||||||
% change from prior year
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(5.1% | ) | (4.4% | ) | ||||||||
Monthly average revenue per vehicle
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$1,235 | $1,144 | ||||||||||
% change from prior year
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(4.2% | ) | (1.9% | ) | ||||||||
Average depreciable fleet
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120,757 | 113,968 | ||||||||||
% change from prior year
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6.2% | 3.5% | ||||||||||
Monthly average depreciation (net) per vehicle
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$246 | $184 | ||||||||||
% change from prior year
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32.3% | (10.7% | ) | |||||||||
FINANCIAL DATA: (in millions) (unaudited)
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Non-vehicle depreciation and amortization
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$ | 7 | $ | 19 | ||||||||
Non-vehicle interest expense
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2 | 6 | ||||||||||
Non-vehicle interest income
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- | (1 | ) | |||||||||
Non-vehicle capital expenditures
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4 | 14 | ||||||||||
Cash paid for income taxes
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12 | 26 | ||||||||||
Table 2 (Continued) | |||||||||||||
Selected Balance Sheet Data
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(In millions)
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September 30,
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December 31,
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||||||||||||
2012 | 2011 | 2011 | |||||||||||
(unaudited)
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Cash and cash equivalents
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$ | 457 | $ | 499 | $ | 509 | |||||||
Restricted cash and investments
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250 | 201 | 353 | ||||||||||
Revenue-earning vehicles, net
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1,876 | 1,605 | 1,468 | ||||||||||
Vehicle debt
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1,481 | 1,315 | 1,400 | ||||||||||
Stockholders' equity
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744 | 669 | 608 | ||||||||||
Tangible Net Worth Calculation
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(In millions)
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September 30,
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December 31,
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||||||||||||
2012 | 2011 | 2011 | |||||||||||
(unaudited)
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Stockholders' equity
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$ | 744 | $ | 669 | $ | 608 | |||||||
Less: Software, net
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(19 | ) | (22 | ) | (22 | ) | |||||||
Tangible net worth
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$ | 725 | $ | 647 | $ | 586 | |||||||
Table 3
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Dollar Thrifty Automotive Group, Inc.
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Non-GAAP Measures
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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 a supplemental measure of the Company's liquidity by adjusting earnings to exclude certain non-cash items, taxes and corporate-level capital structure decisions (i.e. non-vehicle interest), thus, allowing the Company's management, including the chief operating decision maker, as well as investors and analysts, to evaluate the Company's operating cash flows based on the core operations of the Company. Additionally, the Company believes Corporate Adjusted EBITDA is a relevant measure of operating performance in providing a measure of profitability that focuses on the core operations of the Company while excluding certain items that do not directly reflect ongoing operating performance. The Company's management, including the chief operating decision maker, uses Corporate Adjusted EBITDA to evaluate the Company's performance and in preparing monthly operating performance reviews and annual operating budgets. 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 statements of income, and must be considered in performing a comprehensive assessment of overall financial performance. 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 amounts presented may not be comparable to similar measures disclosed by other companies.
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||||||||||||||||
Three months ended
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Nine months ended
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|||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2012
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2011
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2012
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2011
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(in thousands)
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(in thousands)
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Reconciliation of Net Income to
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||||||||||||||||
Corporate Adjusted EBITDA
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Net income - as reported
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$ | 55,500 | $ | 66,621 | $ | 145,298 | $ | 125,649 | ||||||||
(Increase) decrease in fair value of derivatives
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40 | 523 | 525 | (3,367 | ) | |||||||||||
Non-vehicle interest expense
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1,379 | 3,709 | 5,705 | 9,053 | ||||||||||||
Income tax expense
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33,469 | 39,265 | 89,516 | 80,594 | ||||||||||||
Non-vehicle depreciation
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4,346 | 4,786 | 13,203 | 14,559 | ||||||||||||
Amortization
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1,919 | 1,896 | 5,520 | 5,703 | ||||||||||||
Non-cash stock incentives
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1,558 | 987 | 4,974 | 3,124 | ||||||||||||
Other
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(5 | ) | (231 | ) | (1,436 | ) | (243 | ) | ||||||||
Corporate Adjusted EBITDA
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$ | 98,206 | $ | 117,556 | $ | 263,305 | $ | 235,072 | ||||||||
Reconciliation of Corporate Adjusted EBITDA
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||||||||||||||||
to Cash Flows From Operating Activities
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||||||||||||||||
Corporate Adjusted EBITDA
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$ | 98,206 | $ | 117,556 | $ | 263,305 | $ | 235,072 | ||||||||
Vehicle depreciation, net of gains/losses from disposal
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89,131 | 63,290 | 188,368 | 203,956 | ||||||||||||
Non-vehicle interest expense
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(1,379 | ) | (3,709 | ) | (5,705 | ) | (9,053 | ) | ||||||||
Change in assets and liabilities and other
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13,769 | (5,962 | ) | (11,198 | ) | 28,635 | ||||||||||
Net cash provided by operating activities (b)
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$ | 199,727 | $ | 171,175 | $ | 434,770 | $ | 458,610 | ||||||||
Memo:
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Net cash provided by / (used in) investing activites
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$ | 53,893 | $ | 41,421 | $ | (530,291 | ) | $ | (326,408 | ) | ||||||
Net cash provided by / (used in) financing activities (b)
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$ | (82,228 | ) | $ | (169,196 | ) | $ | 43,742 | $ | (95,882 | ) | |||||
(b) Certain reclassifications have been made to the 2011 financial information to conform to the classifications used in 2012. |
Table 3 (Continued) | ||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
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Non-GAAP Measures
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Full Year
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2012
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2011
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(in millions)
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||||||||||||||||
Reconciliation of Pretax Income to
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(forecasted) | (actual) | ||||||||||||||
Corporate Adjusted EBITDA
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||||||||||||||||
Pretax income
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$255 - $265 | $ | 261 | |||||||||||||
(Increase) decrease in fair value of derivatives (2012 amount is YTD September 2012)
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1 | (3 | ) | |||||||||||||
Non-vehicle interest expense
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7 | 11 | ||||||||||||||
Non-vehicle depreciation
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18 | 19 | ||||||||||||||
Amortization
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7 | 7 | ||||||||||||||
Non-cash stock incentives
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7 | 3 | ||||||||||||||
Other | (1 | ) | - | |||||||||||||
Merger-related expenses (c) | 6 | 5 | ||||||||||||||
Corporate Adjusted EBITDA, excluding merger-related expenses | $300 - $310 | $ | 303 | |||||||||||||
Full Year
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||||||||||||||||
2012
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2011
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|||||||||||||||
Reconciliation of GAAP diluted earnings per share ("EPS") | ||||||||||||||||
to non-GAAP diluted EPS: | (forecasted) | (actual) | ||||||||||||||
EPS, diluted (d) | $5.39 - $5.61 | $ | $5.11 | |||||||||||||
EPS impact of (increase) decrease in fair value of derivatives, net of tax (e) | 0.01 | (0.06 | ) | |||||||||||||
EPS impact of merger-related expenses, net of tax (f) | 0.11 | 0.09 | ||||||||||||||
Non-GAAP diluted EPS, excluding merger-related expenses (g) | $5.50 - $5.75 | $ | 5.13 | |||||||||||||
(c)
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Merger-related expenses include legal, litigation, advisory and other fees related to a potential merger transaction.
Full year 2012 includes $5.7 million of merger-related expenses through September 30, 2012.
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(d)
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Forecasted EPS for the year ended December 31, 2012 is calculated using pretax income as noted above with an assumed
38% tax rate and approximately 29.3 million diluted shares.
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(e)
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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 is ($1.4) million for the year ended December 31, 2011.
The tax effect of the forecasted (increase) decrease in fair value of derivatives for the year ended December 31, 2012 (which
is based on the year-to-date September 30, 2012 amount) is approximately $0.2 million.
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(f)
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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 $1.9 million for the year ended December 31, 2011. The tax effect
of the forecasted merger-related expenses for the year ended December 31, 2012 (which is based on the year-to-date
September 30, 2012 amount) is approximately $2.4 million.
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(g)
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Since each category of EPS is computed independently for each period, total per share amounts may not equal the sum of the
respective categories.
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