Vehicle rental industry to remain very competitive in 2006: Dollar Thrifty

Dollar Thrifty Automotive Group, Inc. has disclosed that its total revenue for the fourth quarter was a record $355.2 million, up 1.7 percent from the comparable 2004 quarter.

Net income for the 2005 fourth quarter was $5.6 million compared to net income of $1.4 million, or $.05 per diluted share in the 2004 fourth quarter.

For the year ended December 31, 2005, the company's revenue was a record $1.5 billion, a 6.9 percent increase over the prior year. Net income was $58.4 million. 
The fourth quarter revenue includes a 3.7 percent increase in vehicle rental revenue resulting from a 3.0 percent increase in rental days combined with a 0.7 percent increase in revenue per day.

Gary Paxton, president and chief executive officer, said that the company demonstrated its ability to manage through an environment of competitive industry pricing, disruptions from hurricanes and the changing landscape of the Internet reservation channels and still grow revenues, net income and profit margins.

“We again demonstrated our expertise in efficiently managing our fleet resulting in strong vehicle utilization. In addition, we were able to capture used car market opportunities to lower vehicle costs. Our costs also improved as a result of a change in the vicarious liability laws which will benefit our industry going forward,” said Paxton.

On 2006, Paxton said, “Rising vehicle depreciation and associated interest costs in excess of general inflation will place added pressure on our industry to raise prices this year. We are planning for a 3 to 4 percent increase in revenue per day and a 5 to 6 percent increase in rental days in 2006 which combined would offset the expected increase in vehicle depreciation costs. Early 2006 pricing trends are positive and we are optimistic that we can achieve increases in revenue per day.”

The company also identified and implemented numerous cost saving initiatives which, along with lower costs resulting from changes in vicarious liability insurance laws, are expected to offset increased spending for information technology and marketing, higher vehicle interest expense and other inflationary cost increases.

“We will continue to pursue additional cost saving opportunities this year. Based on these factors, the company estimates 2006 earnings per share in the range of $2.05 to $2.35,” said Paxton.

The company recently shared that its board has approved a $300 million share repurchase programme. The rental car company said in a news release the program replaces an existing $100 million buyback plan under which it had used $44.7 million to buy about 1.6 million shares.