TULSA, Okla. -

The current used-vehicle landscape helped Dollar Thrifty Automotive Group post record first-quarter profit.

As the company revealed its latest financial performance on Wednesday, DTAG calculated that its first-quarter net income came in at $40.4 million or $1.35 per diluted share. That level is up from the year-ago net income amount of $16.5 million, or 53 cents per diluted share.

Dollar Thrifty also reported corporate adjusted EBITDA for the first quarter of $76.8 million, compared to $36.3 million in the first quarter of last year.

“We are pleased to report another record quarter, and the highest first quarter profit in the company’s history,” said Scott Thompson, DTAG’s chairman, president and chief executive officer.

“A strong used-car market, combined with continued emphasis in the areas of cost control, productivity initiatives, fleet utilization and balance sheet management enabled us to achieve another record quarter, in spite of a competitive rate environment,” Thompson highlighted.

DTAG computed its fleet cost per vehicle dropped to $136 per month during the first quarter, down from $251 per month during the year-ago quarter. The company explained the decrease in fleet cost per vehicle per month resulted primarily from lower overall depreciation rates on its fleet due to the ongoing strength of the used-vehicle market and improved fleet strategies. 

Additionally, Dollar Thrifty noted that vehicle remarketing volumes increased significantly on a year-over-year basis due to a substantial fleet refresh cycle currently underway.

The company sold approximately 14,400 risk vehicles at a total gain of $14.3 million during the first quarter, compared to approximately 6,900 risk vehicles at a total gain of $7.9 million in the first quarter of last year.

The average fleet for the quarter was up 3.6 percent compared to the prior-year period, according to DTAG officials.

Other First-Quarter Financial Measures

For the quarter that ended March 31, DTAG determined its vehicle rental revenue came to $339.1 million, up from $332.3 million for the same period in 2011.

The company said a 6.5-percent increase in rental days helped to drive the increase in vehicle rental revenue for the quarter, which was partially offset by a 4.2-percent decrease in revenue per day. 

Officials noted first-quarter vehicle utilization stood at 81.0 percent, up from 79.7 percent during last year’s first quarter. They computed revenue per unit per month for the first quarter was $1,115, compared to $1,131 per unit per month in the first quarter of last year.

Elsewhere on DTAG’s financial statement, the company indicated direct vehicle and operating expenses and selling, general and administrative expenses (operating expenses) for the first quarter totaled 64.5 percent of revenues, compared to 65.3 percent of revenues in the first quarter of 2011. 

Officials pointed out the decrease was primarily attributable to $3.5 million of merger-related expenses incurred in 2011 that did not recur this year.

DTAG went on to mention net interest expense declined to $17.1 million in the first quarter, down from $21 million a year ago. The company said the decrease in interest expense primarily reflects refinancing of its legacy fleet financing facilities at lower interest rates in the second half of last year.

In assessing other first-quarter figures, Thompson said, “Demand for our value-oriented product offerings is strong, as evidenced by our rental day growth this quarter.

“The recovery in the leisure travel market continues to show steady improvement, and as we head into the peak season we are pleased with the strength of our forward reservation bookings,” he continued.

Liquidity and Capital Resources

As of March 31, the company noted that it had $492 million in cash and cash equivalents, and an additional $214 million in restricted cash and investments primarily available for the purchase of vehicles and/or repayment of vehicle financing obligations. 

Dollar Thrifty also pointed out that it has made seasonal fleet investments of approximately $290 million since Dec. 31, which were funded by a blend of unrestricted cash, restricted cash and vehicle debt. Non-vehicle capital expenditures for the quarter totaled approximately $5 million.

DTAG revealed that subsequent to quarter-end, it reduced its outstanding letters of credit supporting its secured vehicle financing facilities by approximately $145 million, utilizing a portion of its excess cash on hand to meet the collateral enhancement requirements under those facilities. This use of cash is expected to save the company $6 million on an annualized basis by eliminating the interest cost associated with leveraged sources of collateral enhancement. 

“The company retains the flexibility to replace this cash collateral with funds borrowed under its revolving credit facility or the issuance of letters of credit as it deems appropriate,” officials stressed.

With respect to share repurchase activity, DTAG noted that it repurchased 64,200 shares at an average price of $78.19 during the quarter.  These repurchases are in addition to the previously disclosed 1.45 million shares repurchased by the company on Feb. 9 under a forward stock repurchase agreement.

As of March 31, the company had approximately $295 million in share repurchase capacity remaining under its share repurchase program.
Officials tabulated the company’s tangible net worth at $635 million, and DTAG had no corporate debt outstanding.   

2012 Outlook Update

Based on first quarter performance, current overall economic conditions, expectations for continued strength in the domestic used vehicle market and continued improvement in travel volumes, Dollar Thrifty revised its full-year guidance for diluted earnings per share to be within a range of $5.00 to $5.60. 

Additionally, officials said their corporate adjusted EBITDA for the full year is expected to be within a range of $285 million to $310 million.