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Dynamex Announces First Quarter Fiscal Year 2011 Results

First Quarter Highlights:

First quarter net sales increased 11.2% to $111 million Net income per fully diluted share declined from $0.31 last year to $0.14 this quarter due principally to merger related costs

December 2, 2010 — 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 $1.4 million, or $0.14 fully diluted net income per share, for the FY 2011 first quarter compared to $3.0 million, or $0.31 fully diluted net income per share, in the prior year quarter. The current quarter includes an $1.8 million pre-tax, $1.7 million after tax ($0.17 per fully diluted share), charge for merger related costs.

James L. Welch, President and Chief Executive Officer of Dynamex stated, "Following a successful fiscal 2010, the Company continued to build momentum during our fiscal first quarter producing better than expected sales. Core sales per day increased for the fifth consecutive quarter, which is directly correlated to our continued focus on our long-term strategic initiatives."

Welch added, "Pricing remains highly competitive, and as a result, purchased transportation expenses were higher, as a percentage of sales, than the previous year. However, we believe the Company is showing significant improvement in its operations and is well positioned for continued expansion as the broader economy continues to slowly improve."

Sales were $111 million in the current quarter, which represented an 11.2% year-over-year increase due to higher core sales and fuel surcharges and a stronger Canadian dollar. The increase in core sales (sales excluding changes in fuel surcharge and foreign exchange), accounts for 8.2% of the increase. Core sales increased approximately 9.1% in Canada and 8.3% in the U.S. Higher fuel surcharges and the stronger Canadian dollar account for approximately 1.3%, and 1.7% respectively, of the increase in sales this quarter.

Salaries and employee benefit costs increased $0.6 million in the current quarter, or 3.0% compared to the same quarter last year. The increase is principally attributable to higher medical and dental costs, higher severance, and the impact of the stronger Canadian dollar. Salaries and employee benefit costs represented 18.5% of sales in the current quarter compared to 20.0% in the same quarter last year.

Other expenses were $6.6 million, an increase of $0.9 million, or 15.7% compared to the prior year quarter. In the current year, other expenses include approximately $0.5 million for higher claims and legal settlements, and $0.5 million for contract labor directly related to the increase in sales. Other expenses represented 6.0% of sales this quarter compared to 5.7% last year.

Operating income was $3.0 million, a decline of 36% compared to the prior year quarter. Excluding merger related costs, operating income would have been approximately 3.3% higher this year than last year. Purchased transportation costs, the largest component of operating expenses, represented 65.7% of sales in the current year quarter, compared to 63.8% of sales in the prior year quarter. The increase in the percentage this year is primarily attributable to the impact of a more competitive pricing environment.

Income tax expense was $1.6 million, or 53.0% of income before taxes, in the current quarter compared to $1.6 million, or 34.3% of income before taxes, in the prior year quarter. The effective tax rate in the current year was impacted by merger related costs that are expensed for financial accounting purposes but not currently deductible for federal income tax purposes as these costs are required to be added to the tax basis of the Company. The prior year benefited from a reduction in the Canadian federal income tax rate and a $0.1 million reduction in deferred tax liabilities associated with the reduced tax rate. Excluding merger related costs, the Company’s current annual effective income tax rate in the U.S. is approximately 41.5% and 29.0% in Canada.

Bank Credit Facility
Amounts outstanding under the bank credit facility totaled $0.5 million at October 31, 2010. Acquisition and merger related costs, primarily in the U.S., were the primary drivers of borrowings this quarter.

EBITDA Margin
Earnings before interest, taxes, depreciation, and amortization ("EBITDA") were $4.1 million, 3.7% of sales in the current quarter compared to $5.7 million, or 5.7% of sales in the same quarter last year (see Reconciliation of Non-GAAP Financial Measures on page 7 of this release). Excluding merger related costs of $1.8 million, the current year would have been $5.9 million, or 5.3% of sales.

Cash Flow
Net cash provided by operating activities was $1.2 million this year compared to $1.1 million in the prior year. The increase in net cash provided from operations was principally attributable to the lower working capital requirements offset by lower net income in the current quarter compared to the prior year quarter. The Company had cash and cash equivalents of $24.3 million at October 31, 2010, compared to $11.0 at October 31, 2009.

Net cash used in investing activities was $4.1 million compared to $0.6 last year. The increase was due to higher property and equipment additions and acquisitions this quarter compared to last year’s quarter. The company continues to expect capital expenditures to range between $2.0 million and $3.0 million for FY 2011.

Depreciation and Amortization
Depreciation and amortization ("D&A") was $1.1 million in the quarter, the same as the prior year quarter. As a percent of sales, D&A was 1.0% this year compared to 1.1% last year.

Interest Expense
Interest expense for the three months ended October 31, 2010 was $43,000, $5,000 below the prior year period.

For further information contact:
Ray Schmitz (214) 560-9308
[email protected]

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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, dxNowTM, 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.

www.Dynamex.com