(DYNAMEX LETTERHEAD)
FOR IMMEDIATE RELEASE
For further information contact:
Ray Schmitz
Vice President and Chief Financial Officer
(214) 561-7503
ray.schmitz@dynamex.com
DYNAMEX ANNOUNCES FOURTH QUARTER
AND FISCAL YEAR 2003 RESULTS
FOURTH QUARTER HIGHLIGHTS:
o FOURTH QUARTER NET INCOME INCREASES 80% TO $2.2 MILLION OR $0.20 PER SHARE.
o SALES SET QUARTERLY RECORD, INCREASING 12.5% TO $67.6 MILLION.
o MANAGEMENT AFFIRMS OUTLOOK FOR FY 2004.
OCTOBER 1, 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 $2.2 million or $0.20 basic income per share for
the fourth quarter of FY2003 versus net income of $1.2 million or $0.11 basic
income per share for the same period last year. For the year ended July 31,
2003, the Company reported net income of $7.6 million or $0.68 basic income per
share, compared to a net loss of $16.3 million or $1.53 net loss per share for
the prior year.
FY2002 includes a non-cash, after-tax adjustment of $19.3 million to adjust the
carrying value of goodwill to fair value in accordance with FASB Statement No.
142 "Goodwill and Other Intangible Assets". FY2002 also includes one-time
charges totaling $1.2 million associated with reorganizing Canadian operations.
Excluding the goodwill impairment adjustment and one-time charges, FY2002 net
income would have been $4.2 million, or $0.40 basic income per share.
Sales in the FY 2003 fourth quarter increased 12.5% compared to the prior year
to $67.6 million, the highest quarterly sales ever recorded by the Company.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were
$4.0 million compared to $3.4 million in the same quarter last year, an increase
of 17% (see Reconciliation of Non-GAAP Financial Measures on page 7 of this
release). For the year ended July 31, 2003, EBITDA was $14.9 million, a 9%
improvement over adjusted EBITDA for the prior year.
Selling, general and administrative ("SG&A") expenses increased 10% in the FY
2003 fourth quarter compared to the prior year period to $15.6 million.
Approximately one third of the increase is due to the change in the exchange
rate between the Canadian dollar and the U.S. dollar. The remaining increase is
due principally to higher compensation and benefits associated
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DYNAMEX - FOURTH QUARTER FISCAL YEAR 2003
October 1, 2003
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with the lifting of the salary freeze earlier this fiscal year, additional
operating personnel to handle new business startups, higher sales commissions
related to new business, additional sales personnel, costs of implementation and
training for a customer resource management system and higher unemployment taxes
and medical insurance premiums. As a percentage of sales, SG&A expenses were
23.1% in FY2003 compared to 23.5% in the prior year.
Other income for the FY2003 fourth quarter was $247,000 compared to $106,000 in
the prior year period. The increase is primarily attributable to foreign
currency transaction gains realized on the payment of Canadian dollar
denominated inter-company royalties and interest to the U.S. parent in the
current year quarter.
FISCAL YEAR 2003 AND FOURTH QUARTER HIGHLIGHTS
"We are extremely pleased with our fourth quarter and fiscal year 2003 results,"
said Dynamex Chairman and CEO, Rick McClelland. "Our business is geared to
perform well in just about any economic environment because of our variable cost
structure and our full service menu that allows us to scale operations to meet
our customers' requirements. Despite an unstable economy, concerns over
terrorism and the war, significant increases in insurances costs, and inclement
weather, our operating results improved across the board. As a result of our
continuing emphasis on our local and national sales organization and focus on
customer satisfaction, we grew our sales by over 6% this year. More importantly,
we delivered more than a 150% increase in net income and improved shareholder
value.
"Our position in the same-day transportation industry continues to strengthen,"
McClelland added. "Our people, comprehensive service menu, national coverage
throughout the United States and Canada, and extensive customer relationships
differentiate Dynamex from any other provider of same-day transportation
services. We are experiencing strong new business momentum in the marketplace as
evidenced by our recent announcement of new service agreements that will
generate $30 million in sales over the next three years. Our on-demand,
distribution and outsourcing revenue streams are continuing to grow and we
expect continued new business success in fiscal 2004.
"As we move into the 2004 fiscal year, we are excited about our prospects for
continued growth and increased shareholder value," McClelland concluded. "We are
forecasting a 10%-25% increase in fiscal year 2004 net income and our capital
structure will be even more attractive as we plan to reduce long-term debt by
approximately $7.0 million this year. Our employees are doing a tremendous job
of reacting and adapting to the changes that are occurring in the same-day
transportation industry as a result of the economy. Despite these challenges in
fiscal 2003, Dynamex generated strong results. Our focus in fiscal 2004 is to
continue to increase our sales, improve net income and reduce debt and we
believe we are well poised to achieve those goals."
DEBT REDUCTION
The Company reduced long-term debt $5.0 million in the fourth quarter this year,
including the scheduled quarterly term-loan installment of $1.375 million.
Long-term debt has been reduced to slightly less than $20 million at the end of
FY 2003, approximately 37%, or $11.5 million below the prior year.
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DYNAMEX - FOURTH QUARTER FISCAL YEAR 2003
October 1, 2003
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SALES PER DAY
Sales Per Day in the fourth quarter 2003 increased 12.5% to $1.06 million. Sales
were positively impacted by a 12.4% increase in the average exchange rate
between the Canadian dollar and the U.S. dollar compared to the prior year.
Excluding the effect of the exchange rate, Sales Per Day increased 8.1% in the
fourth quarter 2003 compared to the same quarter last year.
MARGINS
The gross margin was 28.7% of sales in the current year quarter, down slightly
compared to 29.0% in the prior year due to the continuing shift in business mix
from on-demand to other services, a result of the sales focus toward regional
and national accounts. EBITDA, as a percentage of sales, was 5.9% compared to
5.7% in the prior year quarter.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization ("D&A') in the fourth quarter 2003 decreased to
$515,000 from $740,000 in the fourth quarter of 2002. As a percent of sales, D&A
was 0.8% compared to 1.2% in the prior year. The reduction in D&A in the current
year is primarily attributable to lower capital expenditures in recent years and
the switch to two-way mobile data communication devices that require no initial
capital expenditure.
INTEREST EXPENSE
Interest expense for the three months ended July 31, 2003 was $407,000, 43%
below the prior year period. This decrease is primarily attributable to lower
outstanding debt and to a lower prime rate during the current quarter versus the
prior year quarter.
OUTLOOK
The following outlook for FY2004 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.
Management remains focused on the long-term growth and profitability of the
Company. The outlook presented herein is for the fiscal year only, and does not
address expected results of operations by quarter.
The outlook for FY2004 assumes an average exchange rate of $0.69 U.S. for each
Canadian dollar.
The Company expects Total Sales Per Day, year-over-year growth in fiscal year
2004 of between 9% and 12%.
Dynamex expects FY2004 gross margins to decline slightly versus the prior year
as the percentage of scheduled and distribution and outsourcing sales increases
compared to on-demand sales. The EBITDA margin is expected to be between 5.75%
and 6.25% of sales. The Company expects SG&A expenses to increase by 5.0% to
7.0% in FY2004 compared to FY2003 but decline as a percentage of sales.
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October 1, 2003
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Depreciation and amortization is not expected to change significantly in FY2004
from current levels. Interest expense is expected to decline in FY2004 due to a
lower level of debt, relatively stable interest rates, lower amortization of
financing costs and a reduction in the margins charged by the bank group.
Capital expenditures are expected to be in the $2.5 million range.
The Company expects the effective income tax rate for FY 2004 to be
approximately 30% as available net operating loss carryforwards will offset
taxable income in the U.S. This outlook does not contemplate recognizing the
benefit of available, but unused U.S. tax benefits.
The Company expects net income for FY2004 to range from $8.5 to $9.5 million,
$0.75 to $0.85 basic earnings per share. Also, the Company expects to reduce
long-term debt by approximately $7.0 million in FY2004.
INVESTOR CALL
The Company will host an investor conference call on Thursday, October 2, 2003
at 10:00 a.m. Central Daylight Time. All interested parties may access the call
Toll-Free at 1-877-692-2592. 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 October 9, 2003 at Toll-Free
1-877-519-4471, Conference Pin #4198823.
The conference call will also be available on the Internet through VCall's
website, located at www.vcall.com, and the link is 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.
* * *
Dynamex is a 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(TM), is available at www.dynamex.com and www.dxnow.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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October 1, 2003
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DYNAMEX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<Table>
<Caption>
JULY 31, JULY 31,
2003 2002
------------ ------------
ASSETS
CURRENT
Cash and cash equivalents $ 4,338 $ 4,489
Accounts receivable (net of allowance for doubtful
accounts of $721 and $562, respectively) 26,109 23,165
Prepaid and other current assets 2,453 3,223
Deferred income tax 1,976 1,657
------------ ------------
Total current assets 34,876 32,534
Property and equipment - net 4,287 4,627
Goodwill 44,743 43,739
Intangibles - net 981 950
Deferred income taxes 10,064 11,407
Other assets 590 613
------------ ------------
Total assets $ 95,541 $ 93,870
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT
Accounts payable trade $ 6,564 $ 3,894
Accrued liabilities 14,805 13,543
Current portion of long-term debt 5,728 5,778
------------ ------------
Total current liabilities 27,097 23,215
Long-term debt 14,116 25,531
------------ ------------
Total liabilities 41,213 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
Accumulated deficit (20,250) (27,828)
Unrealized foreign currency translation adjustment 402 (1,222)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 54,328 45,124
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 95,541 $ 93,870
============ ============
</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PERCENTAGE DATA)
<Table>
<Caption>
THREE MONTHS ENDED YEAR ENDED
JULY 31, JULY 31,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(UNAUDITED)
Sales $ 67,592 $ 60,103 $ 250,801 $ 235,945
Cost of sales 48,224 42,647 177,850 165,919
------------ ------------ ------------ ------------
Gross profit 19,368 17,456 72,951 70,026
Selling, general and administrative
expenses 15,590 14,133 58,417 56,944
Depreciation and amortization 515 740 2,124 2,957
(Gain) loss on disposal of property
and equipment 9 (3) 19 (21)
------------ ------------ ------------ ------------
Operating income 3,254 2,586 12,391 10,146
Interest expense 407 722 2,194 3,065
Other (income) expense (247) (106) (340) 414
------------ ------------ ------------ ------------
Income before taxes 3,094 1,970 10,537 6,667
Income tax expense 889 748 2,959 3,658
------------ ------------ ------------ ------------
Income before cumulative effect of
change in accounting principle 2,205 1,222 7,578 3,009
Cumulative effect of change in
accounting for goodwill -- -- -- (19,261)
------------ ------------ ------------ ------------
Net income (loss) $ 2,205 $ 1,222 $ 7,578 $ (16,252)
============ ============ ============ ============
Basic earnings (loss) per common share:
Before cumulative effect of
accounting change $ 0.20 $ 0.11 $ 0.68 $ 0.28
Accounting change -- -- -- (1.81)
------------ ------------ ------------ ------------
Basic earnings (loss) per
common share $ 0.20 $ 0.11 $ 0.68 $ (1.53)
============ ============ ============ ============
Diluted earnings (loss) per common share:
Before cumulative effect of
accounting change $ 0.19 $ 0.11 $ 0.67 $ 0.28
Accounting change -- -- -- (1.81)
------------ ------------ ------------ ------------
Diluted earnings (loss) per
common share $ 0.19 $ 0.11 $ 0.67 $ (1.53)
============ ============ ============ ============
</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
CONTINUED
<Table>
<Caption>
THREE MONTHS ENDED YEAR ENDED
JULY 31, JULY 31,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(UNAUDITED)
Weighted average shares:
Common shares outstanding 11,208 11,207 11,208 10,614
Adjusted common shares - assuming
exercise of stock options 11,432 11,245 11,364 10,651
Selected items as a percentage of sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 71.3% 71.0% 70.9% 70.3%
------------ ------------ ------------ ------------
Gross profit 28.7% 29.0% 29.1% 29.7%
Selling, general and
administrative expenses 23.1% 23.5% 23.3% 24.1%
Depreciation and amortization 0.8% 1.2% 0.8% 1.3%
(Gain) loss on disposal of property
and equipment 0.0% 0.0% 0.0% 0.0%
------------ ------------ ------------ ------------
Operating income 4.8% 4.3% 5.0% 4.3%
Adjusted EBITDA Margin 5.9% 5.7% 5.9% 5.8%
Adjusted EBITDA $ 4,016 $ 3,432 $ 14,855 $ 13,613
Reconciliation of Non-GAAP Financial Measures:
Net income (loss) $ 2,205 $ 1,222 $ 7,578 $ (16,252)
Adjustments:
Cumulative effect of change in
accounting for goodwill -- -- -- 19,261
Income tax expense 889 748 2,959 3,658
Interest expense 407 722 2,194 3,065
Depreciation and amortization 515 740 2,124 2,957
------------ ------------ ------------ ------------
EBITDA 4,016 3,432 14,855 12,689
Canadian tax reorganization:
Foreign currency transaction loss -- -- -- 714
Legal and professional fees -- -- -- 210
------------ ------------ ------------ ------------
EBITDA adjusted for unusual/non-
recurring charge $ 4,016 $ 3,432 $ 14,855 $ 13,613
============ ============ ============ ============
</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
<Table>
<Caption>
YEAR ENDED
JULY 31,
----------------------------
2003 2002
------------ ------------
OPERATING ACTIVITIES
Net income (loss) $ 7,578 $ (16,252)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 2,091 2,872
Amortization and write down of goodwill and intangible assets 33 30,109
Provision for losses on accounts receivable 896 623
Deferred income taxes 1,024 (8,852)
(Gain) loss on disposal of property and equipment 19 (21)
Changes in current operating assets and liabilities:
Accounts receivable (3,840) 1,177
Prepaids and other assets 770 (61)
Accounts payable and accrued liabilities 3,932 92
------------ ------------
Net cash provided by operating activities 12,503 9,687
------------ ------------
INVESTING ACTIVITIES
Purchase of property and equipment (1,744) (1,362)
Net proceeds from disposal of property and equipment 56 12
------------ ------------
Net cash used in investing activities (1,688) (1,350)
------------ ------------
FINANCING ACTIVITIES
Principal payments on long-term debt (6,691) (11,255)
Net borrowings (payments) under line of credit (4,775) (700)
Net proceeds from sale of common stock 2 --
Other assets and deferred offering costs (169) (332)
------------ ------------
Net cash used in financing activities (11,632) (12,287)
------------ ------------
------------ ------------
EFFECT OF EXCHANGE RATES ON CASH FLOW INFORMATION 667 373
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (151) (3,577)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 4,489 8,066
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 4,338 $ 4,489
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 1,767 $ 2,508
============ ============
Cash paid for taxes $ 1,413 $ 2,067
============ ============
</Table>
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