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Dynamex Announces Third Quarter Fiscal Year 2010 Results

Third Quarter Highlights: Sales increase 12.8% to $104 million Net income per fully diluted share increased 59% to $0.27 Operating income increased 53% to $4.1 million

June 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 $2.6 million or $0.27 per fully diluted share for the FY 2010 third quarter. This compares to net income of $1.6 million or $0.17 per fully diluted share in the FY 2009 third quarter.

James L. Welch, president and chief executive officer of Dynamex stated, "During the quarter we saw a noteworthy improvement in sales, which increased 13% year-over-year and a substantial increase in operating income, which grew 53% when compared to last year. Also, for the nine months ended April 30, our operating income increased 7% over the same 2009 period, despite a slight decline in sales. We believe our efforts to optimize our cost structure continue to positively impact our operating results."

Welch added, "While our fiscal third quarter results show an improvement over the same quarter last year, the 2010 quarter proved to be more challenging than we expected. First, excess capacity in the same-day transportation market continues to pressure pricing and margins. Second, severe winter weather interrupted operations in a number of locations for several days in February. Finally, while certain business sectors have shown signs of improvement, our industry has not yet experienced a similar level of recovery."

Sales were $104 million this quarter, representing a 12.8% year-over-year increase due principally to the stronger Canadian dollar, higher fuel surcharges and higher core sales. The stronger Canadian dollar increased sales approximately $7.1 million while fuel surcharges were approximately $2.2 million higher and core sales $2.5 million higher compared to the same quarter last year. Core sales per day (sales excluding changes in fuel surcharge and foreign exchange), increased 1.1% compared to the same quarter last year. Core sales per day increased 1.9% in the U.S. and were flat in Canada.

Salaries and employee benefit costs increased $0.7 million, or 3.3%, compared to the prior year quarter. On a constant dollar basis, (converting Canadian dollars at a fixed exchange rate), salaries and employee benefit costs declined $0.5 million or 2.5%. The bulk of this decline is attributable to company initiatives including the FY 2009 fourth quarter management realignment, the closing of the Canadian administrative office and the reduction in force made in our FY 2009 second quarter. The decline from company initiatives was offset, in part, by higher bonus and severance costs of approximately $0.6 million. Salaries and employee benefit costs represented 19.8% of sales in the current quarter compared to 21.6% in the same quarter last year.

Other expenses were $5.2 million, down $0.3 million, or 5.5% compared to the prior year quarter due principally to lower bad debt and insurance expense. Other expenses represented 4.9% of sales this quarter compared to 6.1% last year.

Operating income was $4.1 million, an increase of 53% compared to the prior year quarter. Purchased transportation costs, the largest component of operating expenses, represented 65.6% of sales in the current year quarter, compared to 63.1% last year. The increase in the percentage this year is attributable to the impact of a more competitive pricing environment.

Other income, net declined from $64,000 in the FY 2009 quarter to $22,000 in the current quarter. This reduction is primarily related to the decline in net realized foreign currency gains last year compared to the current year.

Income tax expense was $1.5 million, or 36.2% of income before taxes compared to $1.1 million, or 39.8% of income before taxes in the prior year quarter. The Company’s current annual effective income tax rates are approximately 42.5% in the U.S. and 32.0% in Canada.

Long-Term Debt
Long-term debt was zero at April 30, 2010. Cash flow generated from operations was more than sufficient to fund operations and capital expenditures.

Welch noted, ―We are confident in our ability to satisfy our capital requirements and maintain a healthy balance sheet despite the economy. Our debt-free balance sheet affords us the ability to focus our capital towards attractive growth opportunities and long-term profitability.

EBITDA Margin
Earnings before interest, taxes, depreciation, amortization ("EBITDA") were $5.2 million, 5.0% of sales, in the current quarter compared to $3.6 million, 3.9% of sales, in the same quarter last year (see Reconciliation of Non-GAAP Financial Measures on page 7 of this release.)

Cash Flow from Operations
Net cash provided by operating activities was $9.8 million for the nine months ended April 30, 2010 compared to cash provided by operating activities of $7.1 million in the prior year period. The increase in net cash provided from operations was principally attributable to lower working capital requirements; $2.6 million in the current year compared to $5.6 million in the prior year due to the timing of payments and cash receipts from customers. The Company had cash and cash equivalents of $18.7 million at April 30, 2010.

Depreciation and Amortization
Depreciation and amortization ("D&A") increased to $1.1 million in the quarter from $0.8 million in the third quarter last year due principally to the purchase of specialized equipment in the FY 2009 third quarter to service a specific customer. As a percent of sales, D&A was 1.0% this year compared to 0.9% last year.

Interest Expense
Interest expense for the three months ended April 30, 2010 was $41,000, $10,000 less than the prior year period.

Outlook

The following outlook for FY 2010 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.

Welch explained, "Based on our results through the fiscal third quarter and the highly competitive pricing environment in this industry, we are adjusting our guidance for the full fiscal year. We expect pricing pressure to continue over the near-term, but are confident in the long-term prospects for our business, given our strong competitive positioning and business model."

Management now expects sales for the full 2010 fiscal year of between $405 million and $410 million and net income of $1.05 to $1.15 per fully diluted share.

Investor Call
The Company will host an investor conference call on Thursday, June 3, 2010 at 9:00 a.m. Central Daylight Time. All interested parties may access the call Toll-Free at 1-877-407-0784. 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 10, 2010 at, Toll-Free, 1-877-660-6853, enter Account Number 3055 and Conference ID Number 350491.

The conference call will also be available on the Internet through Thomson’s website, located at www.earnings.com, and 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.

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, dxNow™, 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.