Dollar Thrifty 4Q profit soars on lower costs

AP News
Posted: Feb 21, 2012 8:32 AM
Dollar Thrifty 4Q profit soars on lower costs

Dollar Thrifty Automotive Group Inc. said Tuesday its fourth-quarter profit nearly tripled, as strong demand for used cars boosted the resale values of its vehicles and lowered the company's costs.

For the quarter ended Dec. 31, the Tulsa, Okla.-based rental car company earned $33.9 million, or $1.08 per share, up from $12.5 million, or 41 cents per share, in the same quarter a year earlier.

Excluding a one-time charge of 1 cent per share, Dollar Thrifty said it posted an adjusted profit of $1.09 per share for the 2011 quarter, easily beating average analysts' estimates of 74 cents per share.

Revenue edged up to $353.7 million from $349.1 million, while analysts polled by FactSet expected a profit of $355.9 million in revenue.

Vehicle rental revenue rose about a percent to $338.3 million, as the number of days vehicles were rented for rose 5.2 percent, but revenue per day fell 4.2 percent. Vehicle utilization rose to 81.1 percent from 79.7 percent, the company said.

Depreciation costs fell 29 percent to $218 per vehicle from $308 per vehicle in the year-earlier quarter, as strong demand for used cars and trucks boosted used vehicle prices. Meanwhile, gains on risk vehicles, which also factor into depreciations, rose to $3.8 million from a loss of $100,000.

For the full-year 2011, Dollar Thrifty earned $159.6 million, or $5.11 per share, up from $131.2 million, or $4.34 per share, in 2010. Revenue rose to $1.55 billion from $1.54 billion.

The company said it expects the U.S. travel market to improve this year and for used vehicle prices to be "solid." It projected an increase in vehicle rental revenue of 3 percent to 5 percent and for vehicle depreciation costs to fall between $220 and $240 per vehicle per month.

Based on those assumptions, the company projected a first-quarter profit of between $1.15 and $1.40 per share and a full-year profit of $4.60 to $5.20 per share.

Analysts polled by FactSet expect first-quarter and full-year profits of 77 cents and $4.71 per share, respectively.

Separately, the company said Thursday that it extended its shareholder rights plan _ a maneuver designed to deter any unsanctioned attempts to take over the company _ by one year until May 30, 2013.

Dollar Thrifty originally adopted the plan, known as a "poison pill," in May 2011 amid attempts by Avis Budget Group Inc. and Hertz Global Holdings Inc. to acquire the company.

In the months since, both companies have dropped their bids for Dollar Thrifty. But Scott Thompson, the company's chairman, president and chief executive, said Tuesday that the plan might still be needed as protection from "parties that may not be acting in the best interests of all of our stockholders."