The Big Turnaround
Tulsa’s Dollar Thrifty Auto Group goes from cautionary tale to Cinderella story.
Dollar Thrifty Auto Group headquarters in Tulsa.
Photo by Heath Sharp
Editors' Note: Dollar Thrifty Auto Group announced its acquisition by Hertz after Oklahoma Magazine's press time.
Four years ago, Dollar Thrifty Auto Group barely had a nickel to its name. A perfect storm of financial disasters – among them a staggering $2.5 billion in debt, plummeting stock, customer service woes, and a $250 million bill to Chrysler that was sitting unpaid – brought the auto group’s global empire to the edge of utter ruin and threatened to deal a major blow to Tulsa’s economy.
“When it rains, it pours,” says Scott Thompson, Dollar Thrifty’s chairman, president and CEO.
So how, in four short years, has Dollar Thrifty gone from nearly being kicked off the New York Stock Exchange to one of the best-performing stocks on the market? Nothing less than sea change, it turns out.
“When a new management team came on board in late 2008 to oversee the turnaround of the company, we based the turnaround’s foundation on respect for diversity of opinion, dedication to change, measured risk taking, and maximum commitment and effort,” Thompson says. “The company diversified its fleet to include a variety of auto manufacturer suppliers, put in place a much leaner corporate structure and tried to be nimbler in decision making.”
According to Thompson, specific initiatives included downsizing and streamlining (and eliminating) top management positions, closing unprofitable locations and improving Dollar Thrifty’s fleet capabilities. And looking at the company’s most recent numbers, it’s clear that the strategy worked a financial miracle.
“In 2011, Dollar Thrifty reported the best year in the company’s history, with $303.2 million in Corporate Adjusted EBITDA, compared to a $2.3 million loss in 2008,” Thompson says. “The DTG stock has gone from below $1 a share in October 2008 to where it is today in the mid-$70s.
“Certain outside factors certainly helped,” Thompson admits. “The residual on used cars improved significantly. Travel volumes stabilized, and pricing in the industry generally improved. We also were lucky that Chrysler was able to fully satisfy its account receivable and become a healthy supplier for Dollar Thrifty. Never underestimate the power of luck.”
And never underestimate the power of employee dedication, too, he says. “Dollar Thrifty’s 5,900 employees have been loyal, hardworking and deserve the lion’s share of the credit for our performance.”
“Everyone was very concerned,” says long-time employee Sandy Martin, Dollar Thrifty’s director of e-marketing and Administration in Global Marketing and e-commerce. “We knew that we were really struggling, and many organizational changes were being made. We had to deal with the emotions of losing good work relationships, the uncertainty of our own futures and taking on new responsibilities, all while attempting to execute the ‘turnaround plan’ being presented to us.
“I was very impressed with how all employees, especially the management team, came together and fought hard,” Martin continues. “We continue to fight that hard every day. I think it really showed what Dollar Thrifty is made of – worldwide, not just here in Tulsa.
“Communication is what helped us get through it all – everyone was open and honest, we worked together and we had the same goal.”
It’s no secret that the Tulsa economy has breathed a sigh of relief since Dollar Thrifty emerged from financial dark ages. Mike Neal, president and CEO of the Tulsa Metro Chamber, says Dollar Thrifty is an integral member of the Tulsa business community.
“Dollar Thrifty is a valued corporate citizen and contributes significantly to the Tulsa region’s economic development success,” he says. “We look forward to continued success from this leading company.” He also notes that Dollar Thrifty is a partner in the Tulsa Metro Chamber-led Tulsa’s Future economic development plan, “which has a goal of boosting high-value, primary jobs and capital investment in northeast Oklahoma.”
Thompson says that Dollar Thrifty also plays an important philanthropic role in the Tulsa community, but that above all, “the most important thing we can and are doing is to run the company in a manner that the community can be proud of and so that our employees can feel comfortable that their jobs will never again be at risk due to a financial crisis.”
With the recent rags-to-riches metamorphosis Dollar Thrifty has undergone, Thompson is exuberant about the group’s future. “We believe Dollar Thrifty is in the best competitive position in its history as a result of the strength of its balance sheet, improvements in technology and a dedicated workforce,” he says. “There are new initiatives every week as we create the company’s future. We think there is more to the story, and we are looking forward to reporting it as it unfolds.”