Dollar Thrifty Automotive Group’s first-quarter profit more than doubled from a year earlier on a combination of higher rental volume and lower vehicle-depreciation costs.
Net income jumped to $40.4 million from $16.5 million a year earlier largely on lower depreciation costs, which plunged to 12% of total revenue from 21% a year earlier.
The company banked more on the strong used-car market by selling more than twice as many “risk” vehicles back into the market as it did a year earlier. (A “risk” vehicle is when a car-rental company buys a car outright, whereas a “repurchase” vehicle is when a car-rental company reaches an agreement to sell the car back to the automaker at a predetermined price).
Revenue rose 2.3% to $356.3 million, as a 6.5% increase in rental days more than offset a 4.2% decline in revenue per day.
Dollar Thrifty continues to be a buyout target of Hertz Global Holdings. Last week, Hertz CEO Mark Frissora said during the company’s earnings call that it made “substantial progress” towards getting U.S. regulatory approval to acquire Dollar Thrifty because Hertz has plans to sell its Advantage Rent-a-Car brand.
Hertz first made an offer to buy Dollar Thrifty in April 2010 and subsequently engaged in a bidding war with Avis Budget Group before the latter bowed out of the process last October to focus on acquiring Avis Europe.
Later that month, Dollar Thrifty said it would remain a standalone entity, while Hertz officially withdrew its offer, which reached as high as $2.1 billion last May. Hertz has continued to work with the Federal Trade Commission to eliminate antitrust issues.
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