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Executives

H. Buster - Chief Financial Officer, Senior Executive Vice President and Treasurer

Scott Thompson - Chief Executive Officer, President and Director

Vicki Vaniman - Executive Vice President, Secretary and General Counsel

Analysts

Fred Lowrance - Avondale Partners, LLC

Michael Millman - Millman Research Associates

Christopher Agnew - MKM Partners LLC

Sachin Shah - ICAP

John Healy - Northcoast Research

Neil Portus - Goldman Sachs Group Inc.

Stephen O'Hara - Sidoti & Company, LLC

Dollar Thrifty Automotive Group (DTG) Q2 2011 Earnings Call August 8, 2011 10:00 AM ET

Operator

Welcome, and thank you for joining the Dollar Thrifty Automotive Group second quarter financial results. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd like to go ahead and turn the call over to your host for today to Ms. Vicki Vaniman, General Counsel. Ma'am, you may begin.

Vicki Vaniman

Thank you. Good morning, and welcome to the Dollar Thrifty Automotive Group Inc. Second Quarter 2011 Earnings Release Conference Call. Scott Thompson, President and Chief Executive Officer; and Cliff Buster, Chief Financial Officer, will be the hosts for today's call.

Some of the comments contained in this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed in forward-looking statements due to many factors. These factors include, among others, matters that Dollar Thrifty has noted in its latest earnings release and filings with the SEC. Dollar Thrifty undertakes no obligation to update or revise forward-looking statements.

Today, the company will use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers and can be found in today's press release or posted to our company website at dollar -- at dtag.com under the Investor Info tab.

And now I would like to turn the call over to Scott to discuss our second quarter earnings.

Scott Thompson

Thank you, Vicki, and good morning, everyone. I'm pleased to report another record quarter. Our focus on profitable business, combined with our cost controls, allowed us to achieve a corporate adjusted EBITDA margin of 20.5%, in spite of an unfavorable pricing environment and a significant decrease in gains from sale of risk vehicles on a year-over-year basis. Corporate adjusted EBITDA for the second quarter of 2011 totaled $81.2 million compared to $74.3 million in the second quarter of 2010. Our performance this quarter is very consistent with our return-on-asset focus.

During the quarter, we continued to take steps to expand revenue opportunities and strengthen our distribution channel. In April, our brands began booking reservations under our new long-term agreement with Orbitz, providing us with additional online distribution channel that saw immediate and meaningful booking results. Additionally during June, we executed a long-term extension of our agreement with Expedia, allowing us to continue as a preferred brand on the Expedia site. Finally, in the area of franchising, we granted an additional 10 franchises during the quarter. Year-to-date, through June, we've granted a total of 16 franchises in 13 new markets.

Now for a few comments on financial items before Cliff goes through the details. Rental revenue for the second quarter of 2011 were consistent with 2010, as a 3% increase in rental days was offset by a 3.4% decrease in revenue per day. We believe that fleet decisions and the industry following the crisis in Japan impacted fleet levels and pricing in the quarter.

Also, you should note that since we do not have significant contracted business, we tend to be more impacted by short-term swings in rate movements. The rate environment is improving in the third quarter but is still slightly negative to prior year.

Turning to fleet. As a result of the company's fleet refreshing that took place in the second quarter of 2010 and our decision to hold additional vehicles for the spring and summer peak rental period this year, we sold approximately 10,500 fewer vehicles this quarter as compared to the second quarter of 2010. This timing difference in fleet deletions resulted in a $9.7-million reduction in vehicle gains for this quarter as compared to the second quarter of 2010. Gains per unit sold averaged $2,116 per vehicle during the second quarter of 2011 compared to $1,459 in the second quarter of 2010. As we've discussed in the past, running a risk fleet at times will make the operating numbers a bit choppy.

This quarter, the reduction in car sale gains was a headwind. This headwind was offset by lower base depreciation rates on vehicles, as we updated our expectation for used vehicle market for the balance of the year and beyond.

Now Cliff will review the financial details for the quarter. Cliff?

H. Buster

Thank you, Scott. Non-GAAP net income, excluding merger-related expenses, totaled $42.9 million for the second quarter of 2011 compared to $42 million in the second quarter of 2010. Again, excluding the impact of the merger-related expenses, non-GAAP diluted earnings per share for the second quarter of 2011 totaled $1.37 per share compared to $1.39 per share in the second quarter of 2010.

I need to point out that there have been no significant equity grants since 2010, although our diluted share count increased by approximately 1 million shares compared to the prior year periods. This is the result of the application of the treasury stock method for accounting purposes in computing diluted shares. Due to the increase in the company's stock price since 2010, approximately 200,000 fewer shares are soon to be repurchased from the proceeds of option exercises.

Additionally, approximately 800,000 fewer shares are soon to be repurchased, attributable to the inability to benefit from the tax deduction arising from those assumed option exercises under the treasury stock method, as the company does not expect to be a cash taxpayer in 2011. The inability to benefit the deduction is expected to reverse in future periods when the company becomes a cash taxpayer, and our diluted share count would decline accordingly.

Now turning to Table 1 in the press release. Rental revenues for the second quarter of 2011 were $378 million, down slightly from prior year levels. Our fleet utilization during the second quarter of 2011 decreased 340 basis points from the second quarter of 2010, as we held additional fleet during the quarter to protect against potential supply disruptions resulting from the crisis in Japan in March.

Selling, general and administrative expenses in the second quarter of 2011 decreased $6.3 million from prior year levels, primarily attributable to a $5.7 million decrease in merger-related expenses on a year-over-year basis. Direct vehicle and operating expenses in the second quarter of 2011 declined $2.4 million compared to the second quarter of 2010, in spite of a 7.6% increase in our average fleet size. The decline in DV&O during the period was primarily attributable to the favorable experienced in our insurance programs during the quarter, offset by higher gasoline and maintenance expenses. Excluding merger-related expenses incurred during both periods, operating expenses, SG&A and DVO totaled 60.4% of revenues for the second quarter of 2011 compared to 61% of revenues in the second quarter of 2010.

Vehicle depreciation expense for the quarter increased $3.2 million or 5% from $63.3 million in the second quarter of 2010 to $66.5 million in the second quarter of 2011. The increase was the result of a $9.7-million decrease in gains on sales of risk vehicles compared to the prior period due to approximately 10,500 fewer vehicles sold, combined with a 7.8% increase in the average depreciable fleet. As Scott mentioned, these items were offset by a decrease in our base depreciation rate per vehicle, as we continue to refine our residual value estimates to more closely align them with expected market conditions at the anticipated time of disposition.

Interest expense, net of interest income, totaled $18.3 million for the second quarter of 2011, down from $21.6 million for the same period last year. I should note that we are earning approximately 22 basis points on our excess cash, which is currently a drag on our return on assets.

Moving to key balance sheet items on Table 2 of the press release. Cash and cash equivalents totaled $456 million as of June 30, 2011, a decrease of $107 million from December 31, 2010. Restricted cash declined by $151 million to $126 million during the same period. The declines in both unrestricted and restricted cash resulted from seasonal investments in revenue-earning vehicles to meet expected feet -- fleet demand and discretionary investments in our Canadian fleet.

Given the company's significant cash position and the cost differential between the interest rate on the Canadian fleet-financing facility and interest earned on the investment of excess cash, the company fully repaid and terminated its Canadian financing facility during the second quarter. Direct investments in the Canadian fleet funded from unrestricted cash totaled approximately $100 million as of June 30.

As noted in our press release, the company expects to utilize excess cash on hand to repay all of its outstanding corporate debt totaling approximately $143 million prior to year end. This action, combined with the elimination of the Canadian financing facility, will reduce the company's interest expense by approximately $9 million annually.

Revenue-earning vehicles, net of depreciation, totaled $1.8 billion at June 30, 2011, an increase of approximately $460 million from December 31, 2010, levels. The increase in the book value of the fleet resulted from the increase in the average rental fleet, resulting from seasonal fleet increases for the spring and summer peak season, as well as additional fleet held during the quarter to protect against potential supply disruptions. While the average fleet for the quarter was up 7.6% compared to prior year, our ending fleet as of June 30 was only up 3.6% compared to June 2010.

Vehicle debt increased approximately $80 million from December 31 to June 30 with vehicle debt now totaling $1.33 billion. The increase in vehicle debt resulted from borrowings to support seasonal fleet investments, offset by the repayment of our Series 2006 medium-term notes and the Canadian financing facility.

Now turning to liquidity and capital resources. The seasonal fleet investments I previously mentioned totaled approximately $460 million and were funded utilizing a combination of restricted cash, borrowings under our fleet-financing facilities and unrestricted cash. Through June 30, investments in the securitization for collateral enhancement under our fleet-financing facilities totaled approximately $154 million. The majority of these funds should move back to unrestricted cash by year-end in the normal course of fourth quarter de-fleeting. Since December 31, the company has repaid $500 million of asset-backed notes through borrowings under the variable funding note facilities that were put in place in 2010.

As previously announced, during July, the company completed the issuance of $500 million of Series 2011-1 medium-term notes that provide significant additional capacity to meet future debt maturities and fleet-financing needs, while extending the company's debt maturity profile. The new series of notes have an expected bottom maturity date of February 2015 and a weighted average coupon of 2.81%. The cost of funds on these notes is lower than the majority of the company's existing fleet-financing sources and substantially lower than the company's existing medium term notes, which bear a fixed rate of interest of 5.16%. Additionally, the notes have a blended collateral enhancement rate of approximately 45%, which is significantly lower than the company's variable funding notes issued in 2010 and will allow the company to reduce its overall equity investment in the fleet.

We ended the quarter with tangible net worth of $584 million and no net corporate debt. The company's leverage ratio, based on gross corporate debt, totaled only 0.62:1 of trailing 12 months corporate adjusted EBITDA for the period ended June 30.

I'll now turn the call back over to Scott for discussion of possible merger activity and our outlook for 2011.

Scott Thompson

Thank you, Cliff. I would now like to make a few brief remarks about possible merger activity. As I'm sure you will respect, I'll be limited on my comments on this topic during Q&A.

As previously reported, Dollar Thrifty submitted its certification of substantial compliance with the FTC's second request in late February 2011. The company has signed a joint defense agreement with Avis Budget and is continuing to cooperate with Avis Budget to support their work with the FTC, which we perceive as active. Additionally, Hertz made an unsolicited exchange offer for the company in May and has subsequently extended it to September 9, 2011. Dollar Thrifty has signed a joint defense agreement with Hertz in order to support its work with the FTC. We also perceive Hertz's FTC efforts as active.

The Board of Directors of Dollar Thrifty have recommended that the shareholders not tender their shares into the Hertz exchange offer. If Avis or Hertz efforts become inactive, we would expect to terminate their respective joint defense agreements. Dollar Thrifty has no agreement written or verbal, with either Hertz or Avis Budget with respect to merger terms, including price.

We have devoted significant time and financial resources to this frustrating process, and we are very interested in bringing this process to a close. We need clarity on our strategic alternatives for the benefit of our shareholders and employees, as continuing the current state of uncertainty indefinitely is not acceptable. The company is cash rich and underleveraged and needs to move forward in a way that enhances shareholder value. We have been working on unsolicited merger issues since 2008, and they are expensive and distracting.

Turning to 2011 outlook. We're updating our revenue guidance based on the rate environment experienced through the first half of 2011. Although we expect to continue to positively benefit from single-digit revenue growth, we expect volume growth to be offset by competitive price environments, resulting in 2011 rental revenues in line with 2010 revenues.

From a fleet perspective, we, like all the rental car companies, are continuing to benefit from the strength of the used vehicle market. In our prior guidance, we had not forecasted strength in the used vehicle market to continue beyond the end of the second quarter. Additionally, we had not completed our 2012 fleet purchases. We now expect very favorable used vehicle market to continue through the balance of 2011, subject to the normal seasonality. Additionally, our expectations for 2012 and beyond are that the market will soften slightly. We are using an assumed Manheim Index of 123 for long-term planning and residual value assumptions.

We're also reporting that we've substantially completed our 2012 fleet purchase negotiations, and the economics on those purchase were favorable to our expectations. We expect little change in our average cap cost per vehicle purchased in 2012 versus 2011. This provides us with further confidence in our outlook on future fleet costs. Based on all these factors and others, we are lowering our full year 2011 fleet cost target to a range of $215 to $225 per vehicle per month.

Based on the above and the current operating environment, the company is now targeting, exclusive of any merger-related expenses, corporate adjusted EBITDA of $270 million to $290 million for full year 2011. And since I'm sure somebody will ask about July operations, let me say that revenues were up 2%, and that we recorded our best monthly pretax results in the company's history, exclusive of car gains or with car gains.

We're not yet giving 2012 guidance but I would like to make a couple of points. First, I think you can see from the significant deleveraging and refinancing activities that Cliff discussed, that the 2012 will benefit greatly from interest savings. Second, I think you can see that our fleet cost for 2012 is shaping up nicely. We have taken a reasonable but maybe somewhat conservative approach in our assumptions on future residual values, which could provide additional upside if current market trends continue into 2012. Lastly, rental days should be expected to grow in 2012. It is a little too early to have color on 2012 pricing as we need to determine if this quarter's pricing was all about excess fleet due to potential supply disruptions or other factors.

In conclusion, we continue to benefit from our strong balance sheet, our competitive fleet cost and low operating cost structure, combined with our 2 well-established value brands. We believe these attributes, augmented by a dedicated workforce focused on customer service, will allow us to continue to maximize our return on assets and profitability. We produced record results in 2010 and are optimistic that we are on track to have another outstanding year in 2011.

That concludes our prepared remarks. Operator, would you please open the call for questions?

Question-and-Answer Session

Operator

[Operator Instructions] The first question does come from Chris Agnew with MKM Partners.

Christopher Agnew - MKM Partners LLC

I wondered if I -- just on the fleet cost. But just how do we think about maybe per-unit, per-month vehicle costs versus the Manheim 123 that you talked about in your long-term assumptions?

Scott Thompson

Could you refine your question a little bit, Chris?

Christopher Agnew - MKM Partners LLC

I mean, your -- you said that your long-term assumptions for your fleet costs include use a Manheim value of 123.

Scott Thompson

Correct.

Christopher Agnew - MKM Partners LLC

And I was just wondering, I mean, we think about your fleet costs and you give -- typically give guidance in terms of per-unit, per-month vehicle costs. And I'm just trying to relate the 2, that's all.

Scott Thompson

Okay. Well, I mean, I think the last number I saw for Manheim is running about 126 in July, give or take. I think what we're telling you is that we're using 123 going forward into '12 as that we expect the used car market in 2011 was a little bit overheated from some of the Japanese activity, and then we'd expect it to cool off a little bit in 2012. If for some reason, the used car market doesn't pull back some, then there would be certainly some upside to our fleet costs. We are benefiting this year from some -- from not projecting the used car market being this robust, and there's certainly are some, what I'll call, depreciation gains that are running through the numbers. I think I gave you the per-car gains for second quarter were a record at over 2,000, and certainly some of those would mitigate next year.

Christopher Agnew - MKM Partners LLC

Okay. So I mean, in the first quarter, you -- we basically need to back out the per-unit gains and sort of normalize for that, and then use the current Manheim. Is that the right way to think about it? I mean, I think about the first quarter, you didn't...

Scott Thompson

Are you working on 2012?

Christopher Agnew - MKM Partners LLC

2012, yes.

Christopher Agnew - MKM Partners LLC

Yes. I think here's the way I think to think about 2012 -- and of course, you violated your more than one question on a call rule. But I think...

Christopher Agnew - MKM Partners LLC

That was the follow up.

Scott Thompson

Yes. I would think -- the way I would think about 2012 is with the used car market, if your assumption is used car market is going to cool off and be more like a 123 Manheim that -- for 2012, that would be about a $40 million headwind to 2012 in the fleet costs, in any kind of projection 2012. That headwind on fleet costs would be offset or mitigated somewhat by significant reductions in interest expense, which Cliff was talking about in his prepared remarks, and probably around half of that headwind would be offset by reduced interest expense, due to deleveraging and favorable interest rate environment. And then from that, you have to make some volume and revenue assumptions for '12 that would also probably mitigate some of that headwind from a fleet cost standpoint. Now the headwind number I gave you on the fleet costs for 2012 was $40 million. If you believe that we've been conservative on our used car assumptions, the 123 is not the right number, then you would need to adjust that headwind. That's about as far as I can go on 2012, otherwise I'm not going to walk myself into guidance, and we really would rather wait and do that at the end of the third quarter.

Operator

[Operator Instructions] The next question does come from John Healy with Northcoast Research.

John Healy - Northcoast Research

Cliff and Scott, I was hoping you could give a little bit more color regarding your decision to make some changes with the balance sheet. I was hoping you could lend a little color to what specifically with the Canadian's facility that you saw that you wanted to kind of pay that down. And the balance sheet continues to remain underlevered, and we're just wondering the decision why to pay that instrument off. And then maybe how you're thinking about things down the road, if you guys do like to stay independent in terms of allocating capital?

H. Buster

Sure, John. With respect to the Canadian financing facility, that was one of our more expensive pieces of debt that we had. And we took a look at Canada and decided that with the amount of excess cash we're sitting on, it didn't make sense to continue to have that big of a negative arbitrage, and so we went ahead and made those investments directly in Canada. There's a secondary benefit to that, that by doing that, that will move Canada to be able to use some of its previously unutilized NOLs to offset taxes in future periods. So that was a little bit of a strategic decision on that front. And then with respect to longer-term that you discussed, I'll defer that to Scott.

Scott Thompson

Thank you, Cliff. I think, clearly, we've got excess cash, and I think, as you can see, Cliff has been using some of it to deleverage the balance sheet where it made sense in Canada primarily. Then I think we've also said that we'd take out our corporate debt. That corporate debt would need to be taken out. Quite frankly, if anyone were to buy us, they would need to take that debt out. That debt would also have to be taken out if we were going to do any kind of leveraged recap. And so it seems that unless we needed the money in the next year or 2, which we don't, that we should go ahead and take that out because we would end up having to take that out no matter what our future direction is. As far as what is the proper long-term capital structure, I think we've been very clear that, currently, we're not running the ideal long-term capital structure, but that we're currently being patient to fully explore our strategic options before we do anything with the capital structure. I think from our prepared remarks you should also take that we don't think that we're going to continue to explore the strategic alternatives forever. That at some point in time, we need to move on and look forward, optimize our capital structure and run our business.

Operator

The next question comes from Michael Millman with Millman Research and Associates.

Michael Millman - Millman Research Associates

I guess -- giving the last question the cost of -- the follow -- to follow, which is how much leverage are you willing to take? And my question is, where's the industry fleet levels currently?

Scott Thompson

Okay. The amount of leverage that would be proper on this -- on the Dollar Thrifty entity would depend on what kind of debt you're talking about, whether it's 2-year, 5-year, 10-year, probably also depends on the rate. Now what I said historically is that because our footprint is smaller than our competitors, that probably we should be less leveraged than our competitors. But other than that, we haven't firmed up an exact number. As far as where the fleets are, I think in Cliff's prepared remarks, he told you that we ran heavy during the second quarter to protect ourselves from fleet disruptions. It ultimately did not come to fruition. It would appear, from what I heard on the other earnings conference calls, that my friends in the industry did exactly the same thing is that everybody loaded up on fleet to make sure that they didn't run out, and then quite frankly, everybody got their delivery. So the industry, as a whole, in the second quarter was very overfleeted. And in fact, when I to looked at how overfleeted the industry was in the second quarter, I'm actually very surprised that pricing wasn't even lower than it actually was. And I think, in total, the industry actually showed quite a bit of price discipline in the second quarter, considering how large the fleets were. We were up on average as -- I think we were up a little over 7%, and then we ended the fleet -- ended the quarter, up about 3.6%. I don't know exactly what the deplanements [ph] are, but say it's 2%, so I would say that we're pretty much in line with deplanements. I don't know exactly where everyone else is, but as I mentioned in my prepared remarks, the third quarter pricing has increased. Although it continues to be negative to last year, but it's certainly firmer than it was in the second quarter.

Michael Millman - Millman Research Associates

So your assumption is that the industry has come down more in line with volume as you have?

Scott Thompson

I think the industry has done some of that, especially when you see the car gains that have been reported, plus certainly volumes has been strong in the third quarter. But I think we'll have to wait and see, see how everybody really fleets for the fourth quarter is probably the more important data point rather than where the fleets are, like right now, today.

Operator

The next question comes from Fred Lowrance with Avondale Partners.

Fred Lowrance - Avondale Partners, LLC

Just a couple of quick housekeeping questions. Just as I look at the decline in interest expense during the quarter, obviously, there was a decrease in the amount of fleet debt that you had. I'm just wondering what -- I guess maybe when that Canadian debt was retired, and sort of what that contributed to the quarter. And then a follow-up. If you're paying down your corporate debt by the end of the year, yet you're still guiding for an $11-million non-vehicle interest expense number, I guess I'm kind of wondering is that you're just kind of assuming you pay it down on the last day of the year or just trying to get some color around that.

H. Buster

With respect to the Canadian facility, it was paid off in April of this year. I don't know the exact number in terms of the savings for the quarter but it was probably in the neighborhood of about $1 million. The other significant year-over-year difference is the fact that last year we had the Series 2006 medium-term notes outstanding, which had a fixed rate of interest north of 5%. Those notes were retired this year, and so you had lower cost of debt through our conduit facilities replacing those medium-term notes for a portion of the quarter.

Fred Lowrance - Avondale Partners, LLC

And then just on the full year guidance on non-vehicle interest expense. I guess you're paying down your existing corporate debt. Wondering where that number go -- why are we still at '11? What's your assumptions there are?

Scott Thompson

Well, I don't think we've given detailed guidance on what corporate interest would be, I think all we've given is guidance for EBITDA for 2011. That make sense?

Fred Lowrance - Avondale Partners, LLC

Yes, that's fine.

Operator

The next question comes from Neil Portus with Goldman Sachs.

Neil Portus - Goldman Sachs Group Inc.

Based on your comments, I think you reaffirmed your outlook for low single-digit volume growth this year. So I just wanted to get a little more color on what the underpinnings for your continued confidence there are. What volume trends did you see in 2Q, and what are you seeing in your booking window so far?

Scott Thompson

You're right. We expect volume increases in days for the balance of the year. I think, as you know, we had a 3%-ish volume increase in the second quarter. We're continuing to see really, quite frankly, good volume into the third quarter, and there appear to be plenty of days out there that pricing is just not exactly where we would want it. But volume feels, quite frankly, relatively good.

Neil Portus - Goldman Sachs Group Inc.

Any call-offs between the different -- your different business segments?

Scott Thompson

I would tell you the tour business has been strong, and it's grown probably slightly faster than the other segments of the business. I think the -- we -- although we don't do much, the small business area has grown close to double digits, and that's certainly been a bright spot. But that gives you a little bit of color for it.

Operator

The next question comes from Steve O'Hara with Sidoti.

Stephen O'Hara - Sidoti & Company, LLC

Just kind of curious about the credit situation right now. I mean, I know you guys are underlevered, and it doesn't appear you have any real need for any credit, additional credit right now. I was wondering if there's been any change in tone from any of the lenders recently.

Scott Thompson

What -- I think they've been very happy, but, Cliff, you've been dealing with them more than I have.

H. Buster

Yes. We haven't had any negative change in tone, Stephen. I would say it's been positive.

Scott Thompson

Yes, very, very -- I mean, your last deal came in with enhancements down, rates very favorable, strong demand, and so now -- I think from the financial standpoint, it's felt pretty good. But of course, our credit profile had certainly improved over the last few years.

Operator

[Operator Instructions] The next question does come from Sachin Shah with Tullett Prebon [ph].

Sachin Shah - ICAP

I just had a couple of questions. The first part is, it seems like you guys are drawing a line in the sand as far as the negotiation, the dialogue that you may be having with Hertz and Avis Budget. How much has this distracted your results thus far, and what impact had it had on your guidance? That's the first part. The second part is you mentioned that this is becoming very frustrated. You said that several times in various ways. Is there a timeline where enough is enough that you kind of giving these guys to come back and just get this thing sorted out on any trust perspective and/or negotiating a price that's beneficial to all shareholders?

Scott Thompson

I'll take that. First of all, we compliment you on asking 5 questions in 1, and I'll try to be the best answer to at least 4.5 of them. First of all, I would disagree with your characterization that we've drawn a line in the sand. We certainly have not drawn a line in the sand. We continue to work with Hertz and Avis in a complex situation, and so there certainly is no line in the sand. And we continue to be open to alternatives. Your reading of the level of frustration is absolutely on point. We are very frustrated, and I'm sure the investors are somewhat frustrated. But I think the main frustrations that we feel is you have to remember, we have 6,000 employees. That is 6,000 families, and look, 6,000 families need to know what their future looks like. And being in play for a couple of years is certainly wearing on our employees day to day, and that's really where the frustration level that I feel day to day. Is there an absolute drop-dead date? No, there is no absolute drop-dead date. The Board continues to work on its fiduciary duty to make sure we explore all of our alternatives in a prudent way. Now certainly there's an October 1 date that is significant to this situation, where all obligations to Hertz drop off on October 1, and we're certainly watching that date as probably others are. But there certainly is not a drop-dead date. But my point being is we cannot stay in this period of play forever. To date, it has not been a huge distraction other than it has kept us probably from moving forward on the growth initiatives. And we're going to give it some more time, but this can't go on forever. And quite frankly, I appreciate your question.

Operator

And the final question does come from Chris Agnew with MKM Partners.

Christopher Agnew - MKM Partners LLC

Scott, I just wondering if you could comment on the trend you're seeing geographically, the second quarter and then currently, maybe particularly Florida.

Scott Thompson

Yes. First of all, as I said in my prepared remarks, revenues in July were up 2%, and we recorded our best month in the company's history, with or without car gains. So I guess the first message is the overall trend looks pretty good. As far as particularly areas, Florida, the volume has been good. The pricing's been a little bit softer. Towards the Midwest, the Dallas, Houston, middle of the country, pricing has been firmer. West coast has been what I call in the middle. East coast, the northeast has been relatively firm, if that helps you very much. But I think the key point that I wanted to make was, look, the third quarter looks okay from what we're seeing right now.

Operator

There are no other questions at this time.

Scott Thompson

Thank you, operator. Certainly, we appreciate your time and interest today. I want to recognize and thank the Dollar Thrifty employees for their efforts everyday in helping the company achieve its goals. Lastly, I would like to thank our suppliers, lenders and shareholders for their ongoing support.

Operator, that concludes our call today.

Operator

Thank you for your participation in today's conference call. The call has concluded. You may go ahead and disconnect at this time.

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