(DYNAMEX LOGO)
1870 Crown Drive
Dallas, TX 75234
214-561-7500
Fax: (214) 561-7499
For immediate release
For further information contact:
Ray Schmitz
Vice President and Chief Financial Officer
(214) 561-7503
ray.schmitz@dynamex.com
DYNAMEX ANNOUNCES THIRD QUARTER
FISCAL YEAR 2003 RESULTS
THIRD QUARTER HIGHLIGHTS:
o SALES INCREASE 9.0% TO $62 MILLION.
o NET INCOME TOTALS $2.1 MILLION OR $0.18 PER FULLY DILUTED SHARE.
o BANK CREDIT FACILITY EXTENDED THROUGH NOVEMBER 30, 2005.
o MANAGEMENT RAISES OUTLOOK FOR FY 2003 AND AFFIRMS FY 2004.
JUNE 4, 2003 -- DALLAS, TEXAS -- Dynamex Inc. (Amex: DDN), a leading provider of
same-day delivery and logistics services in the United States and Canada, today
announced net income of $2.1 million or $0.18 diluted earnings per common share
for the FY 2003 third quarter versus net income of $1.3 million or $0.12 diluted
earnings per common share for the same period last year. Current year net income
includes income tax benefits of approximately $425,000 ($0.04 per share)
associated with Dynamex Canada Corp.'s payment of a $2.5 million cash dividend
to Dynamex Inc. this quarter. Current year earnings per share also include the
impact of the issuance of 700,000 common shares during the third quarter of FY
2002.
FY 2003 third quarter sales were $62 million, 9.0% higher than the prior year.
Current year sales were positively impacted by the strengthening Canadian
dollar. The favorable change in the exchange rate between the Canadian dollar
and the U.S. dollar in the current year versus the prior year had the effect of
increasing sales $1.4 million in the current year quarter. Excluding the impact
of the exchange rate, sales were 6.5% higher in the current year quarter than
last year, in line with the Company's outlook of 5% to 9% year-over-year growth.
On demand sales, which currently represent approximately 47% of sales, were 6.0%
higher while other services were 11.8% higher.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were
$3.4 million (5.5% of sales) in the FY 2003 third quarter compared to $3.4
million (6.0% of sales) in the prior year. Current year EBITDA was negatively
impacted by the write-off of receivables from Air Canada ($200,000) and costs
related to the start-up of new business ($60,000) as well as the impact of
unusually harsh weather conditions in both the U.S. and Canada.
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DYNAMEX - THIRD QUARTER FISCAL YEAR 2003
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Selling, general and administrative ("SG&A") expenses were $14.4 million in the
current year quarter compared to $13.7 million in last year's quarter. SG&A
expenses were 23.2% of sales in the current year quarter compared to 24.0% in
the same quarter last year. Approximately $0.3 million of the increase results
from the change in the exchange rate between the Canadian dollar and the U.S.
dollar in the current year versus the prior year. Higher wages and benefits, the
result of an increase in sales and operating personnel to support expanding
operations along with the lifting of the salary freeze, higher unemployment
taxes and medical insurance, account for most of the remaining increase.
THIRD QUARTER HIGHLIGHTS
"We delivered improved financial results during the third fiscal quarter despite
the sluggish economic environment and some unusually harsh weather conditions.
We maintained a healthy momentum in sales growth with all three of our revenue
streams increasing during the period and we are particularly pleased with the
execution and results from our national accounts programs. Even though the
period was challenging due to increases in healthcare costs and general
insurance and the Air Canada write-off, we were able to manage our costs
accordingly to offset the financial impact of these issues. We have also
implemented plans to compensate for some of these increases going forward," said
Dynamex Chairman and Chief Executive Officer, Rick McClelland.
"Our unique position in the same-day transportation industry is proving
beneficial to the Company under current economic conditions. While the weak
economy has resulted in lower volumes from some accounts, new business activity
has increased and thus offsets this decline. With the current economic market,
shippers are seeking ways to reduce costs, reduce assets and improve customer
service in all areas of their business related to the final delivery of their
products whether it is on a local, regional or national basis. As a result, our
distribution and outsourcing services are doing especially well. We are
benefiting from solid execution and from the significant investments we have
made in the network of businesses that we acquired and integrated, the
development of our same day service menu, our local, regional and national sales
initiatives, and our industry leading technology," McClelland added.
"Our financial outlook remains firm as we go into the fourth quarter of this
fiscal year. We are focused on continued improvement in our overall financial
performance, reducing debt and maintaining a strong balance sheet. We believe
our business is well positioned for continued growth," McClelland concluded.
GROSS PROFIT MARGIN
The gross profit margin for the current year quarter was 28.7% compared to 29.9%
in the prior year. The reduced gross margin percentage is primarily attributable
to the write-off of receivables from Air Canada due to their filing under the
Companies' Creditors Arrangement Act (approximately $200,000), higher insurance
(approximately $310,000), costs related to new business startups (approximately
$60,000) and a change in business mix. On-demand sales were 47.4% of total sales
in the current quarter, compared to 48.7% in the prior year quarter.
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DEPRECIATION AND AMORTIZATION
Depreciation and amortization ("D&A") in the FY 2003 third quarter decreased to
$518,000 from $699,000 in the FY 2002 third quarter. As a percent of sales, D&A
decreased to 0.8% from 1.2% in the prior year. The reduction is primarily
attributable to lower capital expenditures in recent years and a switch to
two-way mobile data communication devices that require no capital expenditure.
INTEREST EXPENSE
Interest expense for the three months ended April 30, 2003 was $571,000, 14.4%
below the prior year period. This decrease is primarily attributable to lower
outstanding debt during the current quarter versus the prior year quarter and a
lower effective interest rate. As of April 30, 2003, long-term debt was $24.9
million, $8.5 million (25%) below the prior year.
BANK CREDIT AGREEMENT
On May 30, 2003, the Company amended and extended its bank credit agreement.
Under the terms of the amended agreement, the Company prepaid $1.2 million of
the amortizing term loan from available cash and the facility was extended
through November 30, 2005. The amended agreement consists of an amortizing term
loan of $13 million and a revolving credit facility of $19.5 million. Required
principal payments, on the amortizing term loan, consist of $1.375 million
quarterly, with a final payment of $625,000 due on November 30, 2005. Interest
on outstanding borrowings is payable monthly at prime, plus a margin ranging
from 0.50% to 0.0%, or LIBOR, plus an applicable margin ranging from 3.5% to
2.0%, based upon the ratio of Total Debt to EBITDA, as defined. A ratio of Total
Debt to EBITDA of less than 1.75 to 1.00 will lower the applicable margin from
0.5% to 0.125% for prime based loans and from 3.5% to 2.5% on LIBOR based loans
and removes certain restrictions. At April 30, 2003, the Total Debt to EBITDA
ratio was 2.04 to 1.00.
OUTLOOK
The following outlook is provided in connection with Regulation FD 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 2003 year-over-year Sales Per Day to increase between
5.5% and 6.5% compared to FY 2002, assuming the Canadian dollar remains at
current levels. The Company expects year-over-year Sales Per Day growth for
fourth quarter of FY 2003 to range between 9% and 11%.
In the FY 2003 4th quarter, Dynamex Canada Corp. is expected to pay Dynamex Inc.
approximately $1.6 million of accrued inter-company interest and royalties, net
of Canadian withholding taxes of $160,000. The Canadian taxes will be offset in
the Company's Statement
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of Operations by the recognition of a foreign tax credit of $160,000. The cash
received by Dynamex Inc. will be used to further reduce outstanding debt.
The Company is raising its expectation for basic net income per share for FY
2003 from between $0.55 and $0.65 to between $0.60 and $0.70, due to the tax
benefit associated with the Canadian dividend and the strengthening Canadian
dollar.
The Company believes that sales will continue to strengthen and as this occurs,
net income should increase at a higher rate than sales due to the leverage from
our relatively fixed cost infrastructure and favorable U.S. income tax position.
The Company believes that an expected 10% increase in sales in FY 2004 should
result in net income per share of $0.75 to $0.85.
As on-demand sales decline as a percentage of total sales, and due to the rising
cost of cargo, liability and other insurance, the Company expects cost of sales
to continue to increase as a percentage of sales in FY 2004. SG&A expenses are
expected to increase in absolute dollars but decline as a percentage of sales.
The Company expects interest expense to decline as outstanding debt is repaid
and the applicable margin on the bank credit facility is reduced. The Company
expects to achieve a Total Debt to EBITDA ratio of less than 1.75 to 1.00 by the
end of the FY 2004 first quarter, resulting in a 1% reduction in the interest
rate.
The Company expects to pay only minimal cash income taxes in the U.S. in FY 2003
and FY 2004. For federal income tax purposes, the Company can offset
approximately $5.5 million of taxable income on an annual basis with goodwill
deductions. Purchased goodwill is amortized over 15 years for U.S. federal
income tax purposes. As the Company realizes the benefit of the goodwill
amortization, it records a reduction in deferred tax assets and a charge to
income tax expense using the Company's U.S. effective income tax rate, currently
at approximately 36%. Taxable U.S. income, in excess of the goodwill
amortization deduction, is expected to be offset by net operating loss
carryforwards. The current effective income tax rate for Canadian operations is
approximately 38%.
INVESTOR CALL
The Company will host an investor conference call on Thursday, June 5, 2003 at
10:00 a.m., Central Standard Time, at Toll Free (877) 692-2592. 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
June 12, 2003 at Toll Free (877) 519-4471, Conference Pin # 3947879.
The conference call also will be available on the Internet through VCall's
website, located at www.vcall.com or the link is also available through the
Company's website at www.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.
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Additional press releases and investor relations information as well as the
Company's Internet e-commerce services package, dxNow(TM), is available at
www.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)
<Table>
<Caption>
APRIL 30, JULY 31,
2003 2002
------------ ------------
(UNAUDITED)
ASSETS
CURRENT
Cash and cash equivalents $ 5,358 $ 4,489
Accounts receivable (net of allowance for doubtful
accounts of $721 and $562, respectively) 25,877 23,165
Prepaid and other current assets 1,922 3,223
Deferred income tax 1,916 1,657
------------ ------------
Total current assets 35,073 32,534
Property and equipment - net 4,408 4,627
Goodwill 44,579 43,739
Intangibles - net 829 950
Deferred income taxes 10,360 11,407
Other assets 622 613
------------ ------------
Total assets $ 95,871 $ 93,870
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT
Accounts payable trade $ 5,247 $ 3,894
Accrued liabilities 13,785 13,543
Current portion of long-term debt 5,804 5,778
------------ ------------
Total current liabilities 24,836 23,215
Long-term debt 19,081 25,531
------------ ------------
Total liabilities 43,917 48,746
------------ ------------
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;
11,208 and 11,207 outstanding, respectively 112 112
Additional paid-in capital 74,064 74,062
Retained deficit (22,455) (27,828)
Unrealized foreign currency translation adjustment 233 (1,222)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 51,954 45,124
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 95,871 $ 93,870
============ ============
</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(RESTATED)
Sales $ 62,146 $ 57,030 $ 183,209 $ 175,842
Cost of sales 44,321 39,990 129,626 123,272
------------ ------------ ------------ ------------
Gross profit 17,825 17,040 53,583 52,570
Selling, general and administrative
expenses 14,422 13,676 42,827 42,811
Depreciation and amortization 518 699 1,609 2,217
(Gain) loss on disposal of property
and equipment (3) (5) 10 (18)
------------ ------------ ------------ ------------
Operating income 2,888 2,670 9,137 7,560
Interest expense 571 667 1,787 2,343
Other (income) expense (19) (27) (93) 520
------------ ------------ ------------ ------------
Income before taxes 2,336 2,030 7,443 4,697
Income tax expense 238 700 2,070 2,910
------------ ------------ ------------ ------------
Income before cumulative effect of
change in accounting principle 2,098 1,330 5,373 1,787
Cumulative effect of change in
accounting for goodwill -- -- -- (19,261)
------------ ------------ ------------ ------------
Net income (loss) $ 2,098 $ 1,330 $ 5,373 $ (17,474)
============ ============ ============ ============
Basic earnings (loss) per common share:
Before cumulative effect of
accounting change $ 0.19 $ 0.12 $ 0.48 $ 0.17
Accounting change -- -- -- (1.85)
------------ ------------ ------------ ------------
Basic earnings (loss) per
common share $ 0.19 $ 0.12 $ 0.48 $ (1.68)
============ ============ ============ ============
Diluted earnings (loss) per common share:
Before cumulative effect of
accounting change $ 0.18 $ 0.12 $ 0.47 $ 0.17
Accounting change -- -- -- (1.84)
------------ ------------ ------------ ------------
Diluted earnings (loss) per
common share $ 0.18 $ 0.12 $ 0.47 $ (1.67)
============ ============ ============ ============
</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED) - CONTINUED
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(RESTATED)
Weighted average shares:
Common shares outstanding 11,208 10,680 11,207 10,414
Adjusted common shares - assuming
exercise of stock options 11,379 10,722 11,332 10,450
Selected items as a percentage of sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 71.3% 70.1% 70.8% 70.1%
------------ ------------ ------------ ------------
Gross profit 28.7% 29.9% 29.2% 29.9%
Selling, general and
administrative expenses 23.2% 24.0% 23.4% 24.3%
Depreciation and amortization 0.8% 1.2% 0.9% 1.3%
(Gain) loss on disposal of property
and equipment 0.0% 0.0% 0.0% 0.0%
------------ ------------ ------------ ------------
Operating income 4.7% 4.7% 4.9% 4.3%
EBITDA Margin 5.5% 6.0% 5.9% 5.8%
Adjusted EBITDA 3,425 3,396 10,839 10,181
Reconciliation of Non-GAAP Financial Measures:
Net income (loss) $ 2,098 $ 1,330 $ 5,373 $ (17,474)
Adjustments:
Cumulative effect of change in
accounting for goodwill -- -- -- 19,261
Income tax expense 238 700 2,070 2,910
Interest expense 571 667 1,787 2,343
Depreciation and amortization 518 699 1,609 2,217
------------ ------------ ------------ ------------
EBITDA 3,425 3,396 10,839 9,257
Canadian tax reorganization:
Foreign currency transaction loss -- -- -- 714
Legal and professional fees -- -- -- 210
------------ ------------ ------------ ------------
EBITDA adjusted for unusual/non-
recurring charge $ 3,425 $ 3,396 $ 10,839 $ 10,181
============ ============ ============ ============
</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
NINE MONTHS ENDED
APRIL 30,
------------------------------
2003 2002
------------ ------------
(RESTATED)
OPERATING ACTIVITIES
Net income (loss) $ 5,373 $ (17,474)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 1,582 2,146
Amortization and write down of goodwill and intangible assets 27 30,095
Provision for losses on accounts receivable 677 498
Deferred income taxes 788 (9,356)
Gain on disposal of property and equipment 10 (18)
Changes in current operating assets and liabilities:
Accounts receivable (3,388) (480)
Prepaids and other assets 1,302 525
Accounts payable and accrued liabilities 1,594 122
------------ ------------
Net cash provided by operating activities 7,965 6,058
------------ ------------
INVESTING ACTIVITIES
Purchase of property and equipment (1,366) (1,250)
Net proceeds from disposal of property and equipment 62 12
------------ ------------
Net cash used in investing activities (1,304) (1,238)
------------ ------------
FINANCING ACTIVITIES
Principal payments on long-term debt (4,346) (9,675)
Net borrowings (payments) under line of credit (2,075) (200)
Net proceeds from sale of common stock 3 --
Other assets and deferred offering costs (83) (235)
------------ ------------
Net cash used in financing activities (6,501) (10,110)
------------ ------------
EFFECT OF EXCHANGE RATES ON CASH
FLOW INFORMATION 709 422
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 869 (4,868)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,489 8,066
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 5,358 $ 3,198
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 1,369 $ 1,918
============ ============
Cash paid for taxes $ 938 $ 1,785
============ ============
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of 1,000 shares in shareholder class
action lawsuit settlement $ -- $ 1,313
Issuance of note receivable to finance customer trade receivable -- 166
</Table>
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