Exhibit 99.1
Dynamex — Fourth Quarter Fiscal Year 2006September 20, 2006
Page 1
5429 LBJ Freeway
Suite 1000
Dallas, TX 75240
214-560-9000
Fax: (214) 560-9349
For immediate release
For further information contact:
Ray Schmitz
Vice President and Chief Financial Officer
(214) 560-9308
ray.schmitz@dynamex.com
DYNAMEX ANNOUNCES FOURTH QUARTER
FISCAL YEAR 2006 RESULTS
Fourth Quarter & FY 2006 Highlights:
| • | | 4th Quarter sales increase 12.4% to $95 million |
| |
| • | | 4th Quarter net income per fully diluted share increases 34% to $0.31 per share |
| |
| • | | FY 2006 sales increase 11.6%, net income per fully diluted share increases 16.8% to $1.11 per share |
| |
| • | | FY 2006 share repurchase exceeds 1.2 million shares |
| |
| • | | Company expects FY 2007 diluted earnings per common share to range between $1.25 and $1.35 |
September 20, 2006 — Dallas, Texas— Dynamex Inc. (NASDAQ:DDMX), the leading provider of same-day delivery and logistics services in the United States and Canada, today announced net income of $3.3 million or $0.31 diluted earnings per common share for the FY 2006 fourth quarter compared to $2.7 million or $0.23 diluted earnings per common share in the prior year quarter. For the full fiscal year ended July 31, 2006, the Company reported net income of $12.4 million or $1.11 diluted earnings per common share, compared with net income of $11.2 million or $0.95 diluted earnings per common share in the prior year.
Sales increased 12.4% to $95 million in the FY 2006 fourth quarter compared to the prior year. Excluding the impact of exchange rate fluctuations between the Canadian dollar and the U.S. dollar, sales increased 8.1%. Higher fuel surcharges in the current period accounted for approximately 3% of the increase in sales this quarter compared to the prior year quarter.
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Selling, general and administrative (“SG&A”) expenses increased 14.5% to $20.4 million in the FY 2006 fourth quarter compared to the prior year period. Approximately 25% of the year-over-year dollar increase is attributable to changes in the Canadian/U.S. exchange rate. Excluding the impact of exchange rate changes, SG&A increased 10.9%. As a percentage of sales, SG&A expenses were 21.5% in FY 2006, the same percentage as the prior year. The current quarter includes approximately $500,000 related to new business startups, employee severance costs and relocation of the corporate headquarters. The remaining increase is attributable to the cost of additional personnel required to operate and manage new business along with normal increases in compensation and other expenses.
Operating income was $5.6 million in the current year quarter, an increase of 30% from the prior year quarter. This increase is primarily attributable to increased sales and a higher gross profit percentage.
Income tax expense was $2.3 million which was approximately 41% of income before taxes in the current year quarter compared to $1.6 million, or 38% of income before taxes in the prior year. The current year increase is attributable to the impact of the repatriation of cash from Canada.
Fourth Quarter Highlights
“Our fourth quarter results were solid across the board and we expect the positive trends in our business to continue into fiscal 2007,” said Dynamex Chairman and CEO, Rick McClelland. “As we expected, top line growth accelerated during the quarter as a result of new business awarded in the U.S. and Canada earlier in the year. With sales growth of 12.4% during the quarter, we are very pleased with the current momentum of the business.
“Margin improvement was also solid, with our gross margin increasing to 28.0% from 26.9% and EBITDA margin increasing to 6.5% from 5.8% a year ago,” added McClelland. “With net income increasing 34.0% from a year ago, we were very successful in managing our expenses during the quarter. Our cost of sales as a percentage of sales decreased 110 basis points during the quarter even though sales increased $10.4 million.
“During the quarter, our initiative to license our technology and certain business processes continued to gain momentum,” added McClelland. “We signed four additional franchise agreements in the Canadian market, increasing the total number of agreements in that market to seven. We also began marketing efforts in the U.S. during the quarter with one agreement being signed. We are encouraged with the response to this program and believe the inherent value we are providing to smaller transportation companies is clearly evident due to the response we have received thus far. We expect royalties from the current franchisees to be approximately $400,000 on an annualized basis.
“As we move into fiscal 2007, we believe Dynamex is well positioned to achieve continued growth and strong financial performance,” concluded McClelland. “We continue to be the leader in our industry. Our new business pipeline remains strong. Our business generates strong cash
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flow which funded over $21 million of Dynamex common stock repurchases during FY 2006 and we had virtually no long-term debt at the end of the year. All of our actions continue to be focused on improving shareholder value.”
Long-Term Debt
Total outstanding bank debt was $900 as of July 31, 2006 compared to zero debt at July 31, 2005. The Company utilized excess cash and temporary borrowings to fund stock repurchases during FY 2006.
Margins
The gross margin was 28.0% of sales in the current year quarter compared to 26.9% in the prior year quarter. Purchased transportation increased slightly to 65.1% of sales this year from 65.0% last year. Other cost of sales declined from $6.8 million last year to $6.5 million this quarter due principally to lower insurance costs. Other cost of sales represented 7.3% of sales this year compared to 8.0% in the prior year.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $6.1 million, a 26% increase from the same quarter last year (see Reconciliation of Non-GAAP Financial Measures on page 7 of this release). EBITDA, as a percentage of sales, was 6.5% this quarter compared to 5.8% for the same quarter last year.
Depreciation and Amortization
Depreciation and amortization (“D&A”) in the fourth quarter 2006 was $467,000 this year compared to $489,000 last year. As a percent of sales, D&A was 0.5% compared to 0.6% in the prior year.
Interest Expense
Interest expense for the three months ended July 31, 2006 was $83,000, $20,000 below the prior year period.
Stock Repurchase Plan
The Board of Directors has authorized a total of $30 million to repurchase the Company’s common stock. As of July 31, 2006, the Company had repurchased slightly over 1.2 million common shares at a total cost of $21.5 million. Management intends to continue to purchase shares from time to time using available cash or temporary borrowings from the bank facility.
Outlook
The following outlook for FY 2007 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 year-over-year sales growth of between 10% and 15% for fiscal year 2007 based on the expectation that the exchange rate between the Canadian dollar and the U.S. dollar will average approximately 0.89 for the full year.
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Management expects the operating margin for FY2007 to be relatively unchanged from the current level.
The effective income tax rate is expected to range between 39.0% and 40.0% of income before income taxes.
The Company expects FY 2007 net income to range between $1.25 and $1.35 per fully diluted share.
Investor Call
The Company will host an investor conference call on Thursday, September 21, 2006 at 10:00 a.m. Central Daylight Time. All interested parties may access the call Toll-Free at 1-877-407-9039. A participant will need the following information to access the conference call:
Company name — “Dynamex”. A telephone replay of the conference call will be available through September 28, 2006 at Toll-Free 1-877-660-6853, enter Account Number 3055 and Conference ID Number 214541.
The conference call will also be available on the Internet through Thomson’s website, located atwww.earnings.com, and the link is also available through the Company’s website atwww.dynamex.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, an Internet replay will be available shortly after the call for 30 days.
* * *
Dynamex is the leading provider of same-day delivery and logistics services in the United States and Canada. Additional press releases and investor relations information as well as the Company’s Internet e-commerce services package, dxNow™, is available atwww.dynamex.com.
This release contains forward-looking statements that involve assumptions regarding Company operations and future prospects. Although the Company believes its expectations are based on reasonable assumptions, such statements are subject to risk and uncertainty, including, among other things, the effect of changing economic conditions, acquisition strategy, competition, foreign exchange, the ability to meet the terms of current borrowing arrangements, and risks associated with the local delivery industry. These and other risks are mentioned from time to time in the Company’s filings with the Securities and Exchange Commission. In light of such risks and uncertainties, the Company’s actual results could differ materially from such forward-looking statements. The Company does not undertake any obligation to publicly release any revision to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Caution should be taken that these factors could cause the actual results to differ from those stated or implied in this and other Company communications.
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DYNAMEX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except per share data)
(Unaudited)
| | | | | | | | | |
| | | July 31, | | | July 31, | |
| | | 2006 | | | 2005 | |
ASSETS | | | | | | | | |
| CURRENT | | | | | | | | |
| Cash and cash equivalents | | $ | 6,058 | | | $ | 11,678 | |
| Accounts receivable (net of allowance for doubtful accounts of $676 and $767, respectively) | | | 36,425 | | | | 31,703 | |
| Income taxes receivable | | | 1,577 | | | | — | |
| Prepaid and other current assets | | | 2,689 | | | | 3,115 | |
| Deferred income tax | | | 2,322 | | | | 1,992 | |
| | | | | | | |
| Total current assets | | | 49,071 | | | | 48,488 | |
| Property and equipment — net | | | 5,967 | | | | 5,597 | |
| Goodwill | | | 46,934 | | | | 46,088 | |
| Intangibles — net | | | 390 | | | | 463 | |
| Deferred income taxes | | | 5,580 | | | | 7,625 | |
| Other assets | | | 2,357 | | | | 1,214 | |
| | | | | | | |
| Total assets | | $ | 110,299 | | | $ | 109,475 | |
| | | | | | | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| CURRENT | | | | | | | | |
| Accounts payable trade | | $ | 11,168 | | | $ | 11,145 | |
| Accrued liabilities | | | 19,014 | | | | 14,426 | |
| Current portion of long-term debt | | | — | | | | — | |
| | | | | | | |
| Total current liabilities | | | 30,182 | | | | 25,571 | |
| | | | | | | | | |
| Long-term debt | | | 905 | | | | 8 | |
| | | | | | | |
| Total liabilities | | | 31,087 | | | | 25,579 | |
| | | | | | | |
| | | | | | | | | |
| COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Preferred stock; $0.01 par value, 10,000 shares authorized; none outstanding | | | — | | | | — | |
| Common stock; $0.01 par value, 50,000 shares authorized; 10,638 and 11,612 outstanding, respectively | | | 106 | | | | 116 | |
| Additional paid-in capital | | | 58,514 | | | | 77,196 | |
| Accumulated earnings | | | 16,160 | | | | 3,768 | |
| Unrealized foreign currency translation adjustment | | | 4,432 | | | | 2,816 | |
| | | | | | | |
| TOTAL STOCKHOLDERS’ EQUITY | | | 79,212 | | | | 83,896 | |
| | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 110,299 | | | $ | 109,475 | |
| | | | | | | |
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(in thousands except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three months ended | | | Year ended | |
| | | July 31, | | | July 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| Sales | | $ | 94,543 | | | $ | 84,122 | | | $ | 358,374 | | | $ | 321,103 | |
| | | | | | | | | | | | | | | | | |
| Cost of sales: | | | | | | | | | | | | | | | | |
| Purchased transportation | | | 61,576 | | | | 54,719 | | | | 233,084 | | | | 206,316 | |
| Other | | | 6,524 | | | | 6,829 | | | | 26,227 | | | | 25,707 | |
| | | | | | | | | | | | | |
| | | | 68,100 | | | | 61,548 | | | | 259,311 | | | | 232,023 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 26,443 | | | | 22,574 | | | | 99,063 | | | | 89,080 | |
| | | | | | | | | | | | | | | | | |
| Selling, general and administrative Expenses: | | | | | | | | | | | | | | | | |
| Salaries, wages & employee benefits | | | 13,979 | | | | 11,938 | | | | 53,707 | | | | 47,606 | |
| Other | | | 6,374 | | | | 5,829 | | | | 23,418 | | | | 21,443 | |
| | | | | | | | | | | | | |
| | | | 20,353 | | | | 17,767 | | | | 77,125 | | | | 69,049 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 467 | | | | 489 | | | | 1,931 | | | | 1,648 | |
| (Gain) loss on disposal of property and equipment | | | — | | | | — | | | | 1 | | | | (21 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 5,623 | | | | 4,318 | | | | 20,006 | | | | 18,404 | |
| | | | | | | | | | | | | | | | | |
| Interest expense | | | 83 | | | | 103 | | | | 295 | | | | 466 | |
| Other (income) expense | | | (56 | ) | | | (76 | ) | | | (275 | ) | | | (226 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Income before taxes | | | 5,596 | | | | 4,291 | | | | 19,986 | | | | 18,164 | |
| | | | | | | | | | | | | | | | | |
| Income tax expense | | | 2,284 | | | | 1,570 | | | | 7,594 | | | | 6,979 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,312 | | | $ | 2,721 | | | $ | 12,392 | | | $ | 11,185 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per common share: | | $ | 0.31 | | | $ | 0.23 | | | $ | 1.12 | | | $ | 0.97 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per common share: | | $ | 0.31 | | | $ | 0.23 | | | $ | 1.11 | | | $ | 0.95 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares: | | | | | | | | | | | | | | | | |
| Common shares outstanding | | | 10,657 | | | | 11,599 | | | | 11,057 | | | | 11,544 | |
| Adjusted common shares — assuming exercise of stock options | | | 10,811 | | | | 11,855 | | | | 11,197 | | | | 11,804 | |
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(in thousands except percentage data)
(Unaudited)
Continued
| | | | | | | | | | | | | | | | | |
| | | Three months ended | | | Year ended | |
| | | July 31, | | | July 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| Selected items as a percentage of sales: | | | | | | | | | | | | | | | | |
| Sales | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| Cost of sales: | | | | | | | | | | | | | | | | |
| Purchased transportation | | | 65.1 | % | | | 65.0 | % | | | 65.0 | % | | | 64.3 | % |
| Other | | | 6.9 | % | | | 8.1 | % | | | 7.3 | % | | | 8.0 | % |
| | | | | | | | | | | | | |
| | | | 72.0 | % | | | 73.1 | % | | | 72.3 | % | | | 72.3 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 28.0 | % | | | 26.9 | % | | | 27.7 | % | | | 27.7 | % |
| | | | | | | | | | | | | | | | | |
| Selling, general and administrative expenses: | | | | | | | | | | | | | | | | |
| Salaries, wages & employee benefits | | | 14.8 | % | | | 14.2 | % | | | 15.0 | % | | | 14.8 | % |
| Other | | | 6.7 | % | | | 6.9 | % | | | 6.5 | % | | | 6.7 | % |
| | | | | | | | | | | | | |
| | | | 21.5 | % | | | 21.1 | % | | | 21.5 | % | | | 21.5 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 0.5 | % | | | 0.6 | % | | | 0.5 | % | | | 0.5 | % |
| (Gain) loss on disposal of property and equipment | | | 0.0 | % | | | 0.0 | % | | | 0.0 | % | | | 0.0 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 6.0 | % | | | 5.2 | % | | | 5.7 | % | | | 5.7 | % |
| | | | | | | | | | | | | | | | | |
| EBITDA Margin | | | 6.5 | % | | | 5.8 | % | | | 6.2 | % | | | 6.3 | % |
| EBITDA | | $ | 6,146 | | | $ | 4,883 | | | $ | 22,212 | | | $ | 20,278 | |
| | | | | | | | | | | | | | | | | |
| Reconciliation of Non-GAAP Financial Measures: | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,312 | | | $ | 2,721 | | | $ | 12,392 | | | $ | 11,185 | |
| Income tax expense | | | 2,284 | | | | 1,570 | | | | 7,594 | | | | 6,979 | |
| Interest expense | | | 83 | | | | 103 | | | | 295 | | | | 466 | |
| Depreciation and amortization | | | 467 | | | | 489 | | | | 1,931 | | | | 1,648 | |
| | | | | | | | | | | | | |
| EBITDA | | $ | 6,146 | | | $ | 4,883 | | | $ | 22,212 | | | $ | 20,278 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales by Service Type | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| On Demand | | $ | 35,702 | | | | 37.7 | % | | $ | 31,693 | | | | 37.7 | % | | $ | 134,179 | | | | 37.5 | % | | $ | 124,206 | | | | 38.6 | % |
| Scheduled/Distribution | | | 28,050 | | | | 29.7 | % | | | 26,512 | | | | 31.5 | % | | | 109,037 | | | | 30.4 | % | | | 97,464 | | | | 30.4 | % |
| Outsourcing | | | 30,791 | | | | 32.6 | % | | | 25,917 | | | | 30.8 | % | | | 115,158 | | | | 32.1 | % | | | 99,433 | | | | 31.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Sales | | $ | 94,543 | | | | 100.0 | % | | $ | 84,122 | | | | 100.0 | % | | $ | 358,374 | | | | 100.0 | % | | $ | 321,103 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales by Country | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| United States | | $ | 59,953 | | | | 63.4 | % | | $ | 56,049 | | | | 66.6 | % | | $ | 230,768 | | | | 64.4 | % | | $ | 213,718 | | | | 66.6 | % |
| Canada | | | 34,590 | | | | 36.6 | % | | | 28,073 | | | | 33.4 | % | | | 127,606 | | | | 35.6 | % | | | 107,385 | | | | 33.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Sales | | $ | 94,543 | | | | 100.0 | % | | $ | 84,122 | | | | 100.0 | % | | $ | 358,374 | | | | 100.0 | % | | $ | 321,103 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(in thousands)
| | | | | | | | | |
| | | Year ended | |
| | | July 31, | |
| | | 2006 | | | 2005 | |
| OPERATING ACTIVITIES | | | | | | | | |
| Net income | | $ | 12,392 | | | $ | 11,185 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 1,931 | | | | 1,648 | |
| Amortization of deferred bank financing fees | | | 24 | | | | 59 | |
| Provision for losses on accounts receivable | | | 695 | | | | 531 | |
| Deferred income taxes | | | 1,716 | | | | 3,652 | |
| Stock option compensation | | | 717 | | | | 459 | |
| (Gain) loss on disposal of property and equipment | | | 1 | | | | (21 | ) |
| Changes in current operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (5,417 | ) | | | (4,879 | ) |
| Prepaids and other assets | | | (1,151 | ) | | | (929 | ) |
| Accounts payable and accrued liabilities | | | 4,611 | | | | 2,812 | |
| | | | | | | |
| Net cash provided by operating activities | | | 15,519 | | | | 14,517 | |
| | | | | | | |
| | | | | | | | | |
| INVESTING ACTIVITIES | | | | | | | | |
| Purchase of property and equipment | | | (2,193 | ) | | | (2,423 | ) |
| Cash payment for acquisition | | | — | | | | (100 | ) |
| Proceeds from sale of property and equipment | | | — | | | | 28 | |
| Purchase of investments | | | (160 | ) | | | (358 | ) |
| | | | | | | |
| Net cash used in investing activities | | | (2,353 | ) | | | (2,853 | ) |
| | | | | | | |
| | | | | | | | | |
| FINANCING ACTIVITIES | | | | | | | | |
| Principal payments on long-term debt | | | (3 | ) | | | (2 | ) |
| Net borrowings under line of credit | | | 900 | | | | (10,000 | ) |
| Net proceeds from exercise of stock options | | | 1,084 | | | | 1,113 | |
| Tax benefit realized from exercise of stock options | | | 1,044 | | | | 317 | |
| Purchase of treasury stock | | | (21,538 | ) | | | — | |
| Other assets | | | (964 | ) | | | (2 | ) |
| | | | | | | |
| Net cash used in financing activities | | | (19,477 | ) | | | (8,574 | ) |
| | | | | | | |
| | | | | | | | | |
| EFFECT OF EXCHANGE RATES ON CASH FLOW INFORMATION | | | 691 | | | | 661 | |
| | | | | | | |
| | | | | | | | | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | (5,620 | ) | | | 3,751 | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | | | 11,678 | | | | 7,927 | |
| | | | | | | |
| CASH AND CASH EQUIVALENTS, END OF YEAR | | $ | 6,058 | | | $ | 11,678 | |
| | | | | | | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | | | | | |
| Cash paid for interest | | $ | 304 | | | $ | 506 | |
| | | | | | | |
| Cash paid for taxes | | $ | 6,910 | | | $ | 2,872 | |
| | | | | | | |
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