|New Threads Only:|
|New Threads & Replies:|
Forum List » Business News and Headlines|
SEC Filings, Earing Reports, Press Releases
Dollar Thrifty Automotive Group Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 7, 2009 12:05AM
Dollar Thrifty Automotive Group Inc. (DTG) filed Quarterly Report for the period ended 2009-03-31.
Highlight of Business Operations:
During the first quarter of 2009, the Company’s revenues were negatively impacted by a 12.2% reduction in the number of rental days due to challenging economic conditions, partially offset by a 4.1% increase in average revenue per day. In addition to a decline in rental volume and fleet size, which lowered vehicle depreciation and direct vehicle and operating expenses, during the first quarter of 2009 the Company benefited from cost reduction efforts made in the second half of 2008. The Company had a loss before income taxes of $10.8 million for the first quarter of 2009, compared to a loss before income taxes of $395.6 million in the first quarter of 2008. Additionally, the Company experienced an increase in the fair value of derivatives in the first quarter of 2009 compared to a decrease in the first quarter of 2008. The Company had goodwill and long-lived impairment expense of $350.2 million in the first quarter of 2008, due to non-cash charges relating to goodwill impairment of $281.2 million and reacquired franchise rights impairment of $69.0 million.
Other revenue decreased $1.4 million due to a $2.7 million decrease in leasing revenue, primarily due to elimination of the franchisee leasing program, and a decrease in fees and services revenue from franchisees and a $0.5 million decrease in parking revenue, partially offset by an increase of $1.7 million in the market value of investments in the Company’s deferred compensation and retirement plans. The revenue relating to the deferred compensation and retirement plans is attributable to the mark-to-market valuation of the corresponding investments and is offset in selling, general and administrative expenses and, therefore, has no impact on net income.
Cash generated from investing activities was $262.8 million. The principal source of cash from investing activities during the three months ended March 31, 2009 was proceeds from the sale of used revenue-earning vehicles, which totaled $569.2 million, partially offset by $228.5 million in purchases of revenue-earning vehicles and the separate classification of $100 million of cash and cash equivalents required to be maintained at all times under the Company’s recent amendment of the Senior Secured Credit Facilities separately identified on the face of the balance sheet as cash and cash equivalents – required minimum balance (see Note 3 of Notes to condensed consolidated financial statements). The Company’s need for cash to finance vehicles is seasonal and typically peaks in the second and third quarters of the year when fleet levels build to meet seasonal rental demand. Fleet levels are the lowest in the first and fourth quarters when rental demand is at a seasonal low. In addition, restricted cash at March 31, 2009 decreased $22.3 million from December 31, 2008, including $23.9 million used for vehicle financing, partially offset by interest income earned on restricted cash and investments of $1.6 million. The Company expects to continue to fund its revenue-earning vehicles with cash provided from operations and from disposal of used vehicles. The Company also used cash for non-vehicle capital expenditures of $1.8 million. These expenditures consist primarily of airport facility improvements for the Company’s rental locations and information technology related projects.
Cash used in financing activities was $641.2 million primarily due to the repayment of amounts outstanding under the Liquidity Facility and the Conduit Facility in the amount of $274.9 million and $215.0 million, respectively. Additionally, due to non-renewal of the vehicle manufacturer and bank lines of credit, the Company repaid $114.9 million of financing under these arrangements relating to vehicles that were sold during the first quarter of 2009. The Company also prepaid $20 million of its Term Loan and paid $4.0 million in deferred financing cost associated with the amendments to the Senior Secured Credit Facilities.
At March 31, 2009, the Company’s senior secured credit facilities (the "Senior Secured Credit Facilities”) were comprised of a $231.3 million Revolving Credit Facility and a $158.1 million Term Loan. The Senior Secured Credit Facilities contain certain financial and other covenants, including a covenant, to maintain a minimum adjusted tangible net worth of $150 million and a minimum of $100 million of unrestricted cash and cash equivalents including $60 million held in separate accounts with the Collateral Agent to secure payment of amounts outstanding under the Term Loan and letters of credit issued under the Revolving Credit Facilities, a covenant that sets the maximum amount the Company can spend annually on the acquisition of non-vehicle capital assets and a limitation on cash dividends and share repurchases. Additionally, the Company executed mortgages in favor of Deutsche Bank encumbering eight additional properties not previously encumbered as well as certain vehicles not pledged as collateral under another vehicle financing facility. The Senior Secured Credit Facilities are collateralized by a first priority lien on substantially all material non-vehicle assets and certain vehicle assets not pledged as collateral under a vehicle financing facility. As of March 31, 2009, the Company is in compliance with all covenants.
Based on the Company’s level of floating rate debt (excluding notes with floating interest rates swapped into fixed rates) at March 31, 2009, a 50 basis point fluctuation in interest rates would have an approximate $2 million impact on the Company’s expected pretax income on an annual basis. This impact on pretax income would be modified by earnings from cash and cash equivalents and restricted cash and investments, which are invested on a short-term basis and subject to fluctuations in interest rates. At March 31, 2009, cash and cash equivalents totaled $93.0 million, cash and cash equivalents – required minimum balance totaled $100.0 million and restricted cash and investments totaled $574.3 million.
Stocks Discussed: DTG,