TULSA, Okla. -

Dollar Thrifty Automotive Group performed better financially in the first quarter than its management initially expected, and although the company certainly took a hit from the winter storms that gripped much of the country in January and February, Dollar Thrifty’s top boss says the industry is poised for a good summer.

Overall, the company posted net income of $16.5 million, down from $27.3 million in the first quarter of 2010. Officials stressed, however, that the company expected this drop-off would happen.

In fact, the decline largely was attributable to the company deliberately cutting back on vehicle dispositions. This, in turn, led to smaller gains from vehicle sales. Revenues, meanwhile, were rather steady from the first quarter of 2010, coming in at $348.3 million.

Likewise, vehicle rental revenues were steady from the prior year, too. Rental days climbed 2.7 percent, but this was offset by revenue per day dropping 2.7 percent.

Average fleet climbed 3.5 percent.

“Our results for the quarter exceeded our previously announced expectations as business strengthened during the latter part of the quarter, with March revenues coming in very strong,” stated Scott Thompson, president and chief executive officer.

“We are particularly pleased with our performance this quarter considering the operating environment caused by the severe winter storms in January and February,” he continued. “The company generated a Corporate Adjusted EBITDA margin of 10.4 percent during a seasonally weak quarter for the industry.”

Thompson added: “As previously disclosed, first quarter rental revenues were adversely impacted by the significant winter storms in January and February, with a loss of rental days and a weakened pricing environment following the storms. We are pleased with the subsequent recovery in revenues, and believe the industry is now well positioned headed into the summer peak season.”

Sharing more specifics about the earnings, DTAG noted that the first-quarter periods for both 2010 and 2011 benefited from changes in fair value of derivatives. The net favorable impact for the most recent period was $0.07 per diluted share and $0.14 per diluted share a year ago.

Meanwhile, Dollar Thrifty posted non-GAAP net income of $14.5 million during the first quarter. This is down from $23 million in the prior-year period.
Merger-related costs pushed down the non-GAAP and GAAP earnings results of both quarters. Specifically, the expense was $3.5 million in the recent period and $1.7 million a year ago.

Dollar Thrifty’s gains on risk-vehicle sales came in at $7.9 million, compared to $25.7 million a year ago. Officials explained that DTAG held vehicles in case of supply disruptions as well as to support rental day demand gains. Dollar Thrifty disposed about 7,600 fewer vehicles during the period.

Corporate adjusted EBITDA reached $36.3 million, down from $49.4 million a year ago.

Pushing downward on the most recent period’s EBITDA was a $1.8 million increase in merger-related costs and the aforementioned $17.8 million cut in gains on risk vehicle sales.

That reduction in gains on risk vehicle sales also impacted the fleet cost per vehicle, which climbed from $206 per month in the first quarter of 2010 to $251 per month in the most recent period.

DTAG’s vehicle utilization came in at 79.7 percent, compared to 80.3 percent a year ago.

Liquidity

Moving along, the company indicated that its cash and cash equivalents at the end of the first quarter totaled $519 million. It also had $160 million in restricted cash and investments, which are to be used primarily for buying vehicles or paying debt.

Tangible net worth for Dollar Thrifty stood at $536 million, with no corporate debt.

Update on FTC

Additionally, DTAG gave an update with regards to the Federal Trade Commission and the merger situation with Avis Budget Group.

Officials noted: "As previously reported, the company submitted its certification of substantial compliance with the Federal Trade Commission’s second request in late February. The company is currently continuing to cooperate with Avis Budget with respect to FTC issues. The company and Avis Budget currently have no agreement, written or verbal, regarding merger terms, including price."

Guidance

Looking forward, DTAG also updated its projections for full-year 2011 corporate adjusted EBITDA and fleet costs.

With the used-vehicle market continuing to strengthen and expected to remain moving upward through the next quarter or longer, DTAG has trimmed its full-year fleet cost range to $230-$240 per vehicle per month.

“In the event current conditions in the used-vehicle market continue beyond the second quarter, fleet costs for the full year of 2011 could decline further,” officials explained. “The company expects to realize significant benefit from sales of risk vehicles during the second quarter, resulting in a fleet cost of approximately $200 to $210 per vehicle per month in the second quarter.”

DTAG is maintaining its previous rental revenue guidance. It is projecting 2- to 4-percent growth, due largely to more transactions.

Meanwhile, Dollar Thrifty now projects its full-year corporate adjusted EBITDA will reach somewhere between $260 million and $285 million, given the company’s strong first quarter, cost-control strategies and the aforementioned fleet-cost reductions.

The projection does not include any impact that merger-related expenses would have.

“Armed with two well-established value brands, a sturdy balance sheet and very competitive operating and financing costs, we are excited about the future for the company,” Thompson noted.

“We expect that revenue growth, combined with cost controls and an excellent used-vehicle market will result in another outstanding year for the company,” he concluded.