Record results at Dollar Thrifty as market rebounds

3rd Nov 2010
Record results at Dollar Thrifty as market rebounds

Dollar Thrifty has revealed record earnings for the third quarter as the car rental organisation generated more money from vehicle rentals and costs declined.

Earnings for the three months ended September 30th jumped 64 per cent, with net income climbing to $49.2 million, or $1.62 per share.

This is compared to $30.1 million, or $1.29 per share, in the prior-year period.

Excluding charges and other items, adjusted earnings amounted to $1.51 per share.

Revenue edged up one per cent to $443.5 million from $438.9 million as vehicle rental revenue increased.

Analysts surveyed by Thomson Reuters had expected $455.8 million.

“In spite of a slower than expected economic recovery and a reduction in car sale gains compared to the third quarter of 2009, the company delivered its seventh consecutive quarter of year-over-year double-digit growth in Corporate Adjusted EBITDA,” said Dollar Thrifty chief executive Scott Thompson.

“This quarter is also the best quarterly performance in the company’s sixty year history.”


Looking Forward

Dollar Thrifty is presently in talks with Avis Budget Group about a potential buyout, following a recent decision by shareholders to reject a buyout bid from rival Hertz.

Talks are centred on acquiring antitrust clearance for a possible bid from the company.

Dollar Thrifty also forecast revenue growth for its seasonally slow fourth quarter today, joining its rivals in signaling an improvement in car rental demand.

The car rental company now expects fourth-quarter rental revenue to grow by two to four percent, higher than the third-quarter growth of 1.6 per cent.

“We’re cautious but fairly optimistic that the travel market will be coming back - although coming back slowly- but will certainly be positive for the foreseeable future,” a company executive said on a conference call with analysts.

Dollar Thrifty kept its 2010 outlook for adjusted EBITDA, excluding merger costs, at $240-$260 million, after raising it four times this year.

The company was one of the few major car rental companies to post a profit in 2009.

The car rental industry is closely tied to airline traffic and hotel bookings and has been seeing improving fundamentals during the second half of 2010, with demand strengthening due to recovering business and travel trends in the United States.

Profitability has also been helped by a strong used car market and lower fleet costs.


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