Dynamex Posts 3Q Fiscal Year 2009 Results

Jun 08, 2009 (Close-Up Media via COMTEX) -- DDMX | Quote | Chart | News | PowerRating -- Dynamex Inc., a provider of same-day delivery and logistics services in the United States and Canada, announced net income of $1.6 million or $0.17 fully diluted net income per share for the FY 2009 third quarter compared to $3.8 million or $0.37 per fully diluted share in the prior year.

Sales were $92 million this quarter, down 18.4 percent compared to the prior year. The lower U.S./Canadian dollar exchange rate this quarter compared to the prior year quarter, accounts for approximately 6.7 percent while reduced fuel surcharges account for approximately 5.1 percent of the year-over-year sales decline. Our core growth rate, the rate excluding the impact of foreign exchange and fuel surcharges, declined approximately 6.6 percent compared to the prior year quarter. The U.S. core growth rate declined 9.5 percent while the Canadian core growth rate declined 3.1 percent. Approximately half of the decline in U.S. core sales is attributable to a reduction in shipment volumes from our largest U.S. customer.

Selling, general and administrative ("SG&A") expenses were $21.3 million, 6.5 percent below the prior year. Substantially all the dollar decline is attributable to the lower Canadian dollar this year compared to the prior year as the incremental investments we are making in the sales force offset lower bonus accruals and the reductions in force made last quarter. As a percentage of sales, SG&A expenses were 23.1 percent in the current quarter compared to 20.2 percent in the prior year quarter.

Operating income declined 55 percent compared to the prior year quarter as sales declined 18.4 percent. Cost of sales, which generally vary with sales, declined as a percentage of sales from 73.8 percent to 73.1 percent while the relatively fixed SG&A expenses, including the additional investment we are making in the sales organization, increased as a percentage of sales from 20.2 percent to 23.1 percent. Purchased transportation costs, the largest component of cost of sales represented 64.5 percent of sales in the current year quarter, compared to 66.0 percent in the prior year. Other direct costs, that are less variable than purchased transportation, were 8.6 percent of sales compared to 7.8 percent last year.

Income tax expense was $1.1 million, 39.8 percent of income before taxes in the current year quarter compared to $2.3 million, 38.1 percent of income before taxes in the prior year. The higher effective tax rate this year results from the repatriation of approximately $6 million from Canada in the first quarter of FY 2009. We expect the effective tax rate to be in the 40 percent range for the remainder of the 2009 fiscal year.

Third Quarter Highlights

"Our fiscal third quarter results reaffirmed the trends we discussed when we updated our guidance in late April," said James L. Welch, president and chief executive officer of Dynamex. "The economy remains weak and this is resulting in lower shipment volumes for many of our customers. Despite the current conditions, I am pleased with our 26.9 percent gross margin, which was better than the year ago quarter and validates the effectiveness of our variable, direct cost structure. Furthermore, we increased our cash by $5.7 million while funding $3.3 million in capital expenditures. Our business remains profitable, and very importantly, we have zero debt.

"While we continue to believe there will be little improvement in shipment volumes through the balance of our fiscal year ending in July, the investment in our sales force continues to be a priority for our business," added Welch. "This involves the recruitment, training and development of a significantly larger and more highly skilled sales force. While the timing of any improvements in the economy are uncertain at best, we will be well poised to leverage these opportunities as soon as they begin to occur.

"Given the current economic challenges, we are pleased with our third quarter results," concluded Welch. "I am especially proud of our employees' hard work and dedication during current conditions to ensure our business delivers the best possible results for our customers and shareholders. We believe our business is very well positioned both today and for the future when the business environment improves."

Long-Term Debt

Long-term debt was zero at April 30. Cash on hand and cash flow generated from operations was sufficient to fund operations and capital expenditures.

Margins

The gross margin was 26.9 percent of sales in the current quarter, at the upper end of our target range of 26.5 percent to 27.0 percent, and above the same quarter last year. Management expects the gross margin percentage for the remainder of this fiscal year to be in our target range of 26.5 percent to 27.0 percent.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $3.6 million, 3.9 percent of sales in the current quarter compared to $6.9 million or 6.1 percent of sales in the same quarter last year (see Reconciliation of Non-GAAP Financial Measures on page 7 of this release).

Cash Flow from Operations

Net cash provided by operating activities was $7.1 million compared to $6.4 million net cash provided in the prior year. The increase in cash provided by operating activities this year is principally attributable to lower requirements to fund increases in working capital compared to the prior year.

Depreciation and Amortization

Depreciation and amortization ("D&A") was $849,000 in this quarter, up from $747,000 in the third quarter last year due principally to the higher level of capital additions over the last two fiscal years. As a percent of sales, D&A was 0.9 percent, compared to 0.7 percent in the prior year period. In the current quarter, the Company purchased approximately $2.8 million of specialized equipment to service a specific customer under a five-year contract extension that will increase future D&A.

Interest Expense

Interest expense for the three months ended April 30, was $51,000, $3,000 above the prior year period.

Outlook

The following outlook for FY 2009 is provided in connection with Regulation FD and to ensure that all investors continue to have equal access to information. The following outlook contains forward-looking statements that involve assumptions regarding Company operations and future prospects. Caution should be taken that the actual results could differ materially from those stated or implied in this and other Company communications.

The Company expects FY 2009 sales of $390 million to $405 million.

Dynamex is a provider of same-day delivery and logistics services in the United States and Canada.

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