Car News
Car Reviews
Cars for Sale
Car Discussion

Dollar Thrifty Automotive Group Reports First Quarter 2008 Results

GAAP results include non-cash charges of $13.30 per diluted sharerelated to the impairment of goodwill and other intangible assets and thechange in fair value of derivatives

Company renews credit facilities to meet peak vehicle financingneeds

Company reaffirms 2008 non-GAAP EPS and Corporate EBITDA guidance

TULSA, Okla., May 12 -- Dollar Thrifty Automotive Group, Inc.today reported results for the first quarter ended March 31, 2008. The netloss for the 2008 first quarter was $297.9 million, or $14.07 loss perdiluted share, compared to net income of $5.2 million, or $0.21 per dilutedshare, for the comparable 2007 quarter. The decrease in first quarter netincome year over year included a $12.52 loss per diluted share related tothe impairment of goodwill and other intangible assets and a $0.78 decreasein fair value of derivatives.

The non-GAAP net loss for the 2008 first quarter was $16.2 million, or$0.77 loss per diluted share as compared to net income of $9.8 million, or$0.40 per diluted share for the 2007 first quarter. Non-GAAP net income(loss) excludes from GAAP net income (loss) the (increase) decrease in fairvalue of derivatives and the non-cash charges related to the impairment ofgoodwill and other intangible assets, net of related tax impact. Areconciliation of non- GAAP to GAAP results is included in Table 3.

For the quarter ended March 31, 2008, the Company"s total revenue was$396.5 million, as compared to $398.0 million for the comparable 2007period. Vehicle rental revenue in the 2008 first quarter was $378.0million, a two percent increase over the 2007 first quarter as a result ofan increase of approximately three percent in rental days and a decrease ofone percent in revenue per day.

"As we had anticipated, weakness in demand and pricing in January,coupled with an increase in fleet costs, adversely affected our performancein the quarter," said Gary L. Paxton, President and Chief ExecutiveOfficer. "Since February, key operating trends have improved and are morepositive. Looking back on the last six months, we believe that Decemberand January represented a trough in terms of both pricing and demand."

"The Company recently completed a round of financing, as we renewed ourconduit facility and commercial paper program and liquidity facility," saidMr. Paxton. "This financing, coupled with ongoing efforts to betteroptimize our fleet levels, utilization and holding periods, provides uswith sufficient capacity to meet our peak vehicle financing needs in 2008,even as the Company"s 2004 Series medium term notes fully amortize byJune." Mr. Paxton noted that the Company has no additional maturities ofasset backed medium term notes until 2010.

Although revenue per day improved through the quarter, it did notimprove enough to overcome a decline in January, ending down approximatelyone percent year over year. Vehicle depreciation costs per vehicleincreased approximately 31 percent in the first quarter of 2008 over thefirst quarter of 2007, and were above the Company"s expectations dueprimarily to softness in the used automobile market. Vehicle utilization for thefirst quarter was flat with last year reflecting a weak January 2008. TheCompany expects that its new fleet optimization software, together with theanticipated extension of fleet holding periods, should moderate theincrease in vehicle depreciation costs over the course of the year andshould enable the Company to operate a more efficient fleet program.

The Company was required to record a non-cash impairment charge forgoodwill and other intangible assets in the first quarter of 2008. UnderSFAS No. 142, "Goodwill and Other Intangible Assets", the Company isrequired on at least an annual basis to perform an impairment analysis ongoodwill and other intangible assets. This analysis includes, among otherthings, a reconciliation of current equity market capitalization toshareholders" equity. As a result of the decline in the Company"s stockprice, the Company"s total shareholders" equity at March 31, 2008 exceededits equity market capitalization, including the application of a reasonablecontrol premium, for this same period. The Company is required to placegreater emphasis on the current stock price than on management"s long-rangeforecast in performing its impairment assessment. The Company performed therequired steps for impairment analysis and concluded that goodwill andother intangible assets (related to reacquired franchise rights) wereimpaired. The Company recorded a $281.2 million non-cash charge (pre-tax)related to the impairment of the entire goodwill ($223.2 million after-tax)and a $69.0 million non-cash charge (pre-tax) related to the impairment ofthe entire reacquired franchise rights ($42.0 million after-tax) during thefirst quarter of 2008.

Outlook

"Our first quarter performance and the key business drivers underlyingit were largely in line with what we expected in February when we providedour forecast for 2008," Mr. Paxton said. "As a result, and based on whatwe see now, we are maintaining our full year non-GAAP earnings per shareand Corporate EBITDA guidance."

For 2008, the Company"s earnings per diluted share guidance is a rangeof $1.00 to $1.50 and Corporate EBITDA of $97 million to $115 million. This guidance is based on achieving about a two percent growth in bothrental day volume and revenue per day, along with improved fleetutilization. The Company noted that it now assumes that vehicledepreciation costs on a per vehicle basis will be about 12 to 14 percenthigher for the full year 2008 compared to 2007, based primarily on a softerused automobile market and the related impact the Company is experiencing on somemakes and models in the fleet. The Company anticipates alleviating some ofthe cost increases in vehicle depreciation by increasing the level ofNon-Program Vehicles in its fleet and extending its fleet holdingperiods.

"We expect that our operating environment will remain challengingthrough at least the first half of 2008," said Mr. Paxton. "We remainfocused on executing our strategy to achieve improvements in revenuediversification, fleet utilization, productivity, cost control andprofitability.

Web cast and conference call information

The Dollar Thrifty Automotive Group, Inc. first quarter 2008 earningsconference call will be held on Monday, May 12, 2008, at 10:00 a.m. (CDT).Those interested in listening to the conference call live may access thecall via Web cast at the corporate Web site, http://www.dtag.com/, or bydialing 800-988-9640 (domestic) or 210-234-0007 (international) using thepass code "Dollar Thrifty." An audio replay of the conference call will beavailable through May 26, 2008, by calling 866-499-4547 (domestic) or203-369-1805 (international). The replay will also be available via thecorporate Web site for one year.