Dynamex reports lower 2Q net income, higher sales

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Dynamex Inc., a provider of same-day delivery and logistics services in the United States and Canada, on Thursday, March 6, announced net income of $3.4 million for the fiscal year 2008 second quarter compared to $3.7 million in the prior year. The prior-year quarter includes a one-time after-tax benefit of $1.0 million from interest and foreign exchange gains from the resolution of prior-year cross-border transfer pricing issues between Canada and the United States; excluding this one-time benefit, last year’s net income would have been $2.8 million.

Sales increased 10.9 percent to $112 million this quarter compared to the prior year. The exchange rate between the Canadian dollar and the U.S. dollar was about 16 percent higher this quarter than the same quarter last year. The company estimates that higher fuel surcharges account for about 2.7 percent of the increase in sales. The core growth rate, the rate excluding the impact of the stronger Canadian dollar and higher fuel surcharges, was about 2.2 percent.

“The second quarter was another positive period for our business,” said Rick McClelland, chairman and chief executive officer of Dallas-based Dynamex. “We expect year-over-year sales growth for the remainder of the 2008 fiscal year to be in the 10 percent to 12 percent range.” McClelland said the higher costs associated with the unprecedented new business activity and delivery model changes experienced by Dynamex in fiscal 2007 also have normalized and are now providing the expected bottom-line benefits.

“During the quarter, we continued to expand our franchise program, adding five quality locations in the United States,” McClelland said. “New business activity remains strong, and we continue to focus on expanding relationships with our existing customer base. The financial benefits of our outsourced distribution model versus running an in-house distribution fleet becomes more compelling to potential customers given the current economic conditions. And as the economy has softened, we have also seen an increase in the number of opportunities to acquire customer lists.”

McClelland said Dynamex’s outlook remains positive for the remainder of the year. “Our balance sheet is extremely strong with zero long-term debt,” he said. “Margins remain within our targeted range, and both our top and bottom lines continue to grow. We continue to believe we have a significant opportunity for continued growth and profitability that will result in solid returns for our shareholders.”