SAME DAY TRANSPORTATION & DISTRIBUTION SOLUTIONS DYNAMEX INC. ANNUAL REPORT

Transcription

1 SAME DAY TRANSPORTATION & DISTRIBUTION SOLUTIONS DYNAMEX INC. ANNUAL REPORT 2007

2 FINANCIAL HIGHLIGHTS Fiscal Year Ended July Sales $ 413,774 $ 358,374 $ 321,103 Operating Income $ 21,757 $ 20,006 $ 18,404 Net Income $ 14,962 $ 12,392 $ 11,185 EBITDA $ 26,193 $ 22,212 $ 20,278 In thousands SALES (in millions) OPERATING INCOME (in millions) NET INCOME (in millions) EBITDA (in millions)

3 TO OUR SHAREHOLDERS I am extremely pleased with our performance during fiscal I believe few firms in the same day transportation arena produced stronger top line and bottom line results than we did during the year and my hat is off to the people on our team who made it happen: package-by-package, delivery by delivery, day-by-day, traffic jam by traffic jam. The highlights for the fiscal year include sales growth of 15.5%, an increase in net income per fully diluted share of 25.9% and the repurchase of over 600,000 shares of the Company s common stock. Operating income increased $1.8 million to $21.8 million for the year, in a period of substantial growth and the challenges associated with all the new business startups. For the fiscal year ended July 31, 2007, we reported net income of $15 million or $1.39 diluted earnings per common share, compared with net income of $12.4 million or $1.11 diluted earnings per common share in the prior year. Income before taxes was $23.5 million for the year, an increase of $3.5 million or 17.8% over the prior year. Total outstanding bank debt was zero as of July 31, 2007 compared to $900,000 on July 31, The Company utilized $14.9 million of cash generated from operations and temporary bank borrowings to fund the repurchase of over 600,000 shares of the Company s common stock during fiscal As of July 31, 2007, the Company had repurchased 1.8 million common shares at a total cost of $36.4 million since the repurchase program was initiated in the first quarter of FY Our Board of Directors has authorized a total of $58.0 million to repurchase the Company s common stock and we intend to continue to purchase our common stock from time to time using available cash or temporary borrowings from our bank facility as we believe this is the best use of our excess cash currently. We ended the fiscal year with $8.9 million in cash and equivalents. With a very strong balance sheet, the Company has tremendous strategic flexibility to take advantage of any opportunities to improve our financial performance and strengthen our overall position in the marketplace. An example of such an opportunity occurred during the fourth fiscal quarter as we completed four tuck-in acquisitions, which is consistent with our strategy of opportunistically expanding our business by acquiring smaller operators that we can easily integrate into our operations and that will be immediately accretive. DYNAMEX, INC. ANNUAL REPORT

4 Another exciting example for capitalizing on the large opportunity in the same-day transportation and logistics marketplace is the franchise model licensing initiative we launched during fiscal At the end of fiscal 2007, we had signed agreements with franchisees that cover 35 markets enabling us to strengthen our position in many markets including Florida, California, Michigan, New York State, the central state areas as well as eastern and western Canada. The pieces of the value proposition that seem to be most appealing to prospective franchisees include: Fresh, hosted, industry specific technology. Business processes and guidance related to adding new services that allow owners to take their business to the next level. The sales horsepower associated with being an affiliate of Dynamex. The ability to leverage their client base by selling into the Dynamex network. Access to our national account revenue stream. This program continues to help us add operating capacity, expand our network and generate an associated revenue stream in the form of royalties. The increase in capacity and coverage is taking place without Dynamex taking on the operational distractions and integration risks of a large-scale acquisition plan. And the process does not come with a requirement to commit large amounts of capital. I am very pleased with the momentum of this initiative. In terms of our overall position in the marketplace, I believe it is strong and growing stronger with each day. We continue to see strong interest in our service menu and overall value proposition. We re continuing to target local, regional and national shippers that have same day transportation requirements. Those needs can take the form of a single package that has to be moved between two points in the same city or across the country in a matter of minutes or hours. Frequently, those needs are for local and regional distribution services where we pick-up numerous shipments at one location in the early morning and achieve time specific delivery later the same day within a local or regional area. In many cases we bundle our services in order to create a tailored solution for a shipper. In summary, I am pleased with our fiscal 2007 performance and our market position as we enter fiscal We have a very strong balance sheet. We have a business generating strong top and bottom line growth. We have a unique value proposition and great geographic reach. We believe all of these strengths translate into a 4 DYNAMEX, INC. ANNUAL REPORT 2007

5 significant opportunity for continued growth as the same-day delivery and logistics industry in the United States and Canada is a multibillion market that is extremely fragmented. As we move forward, our revenue engines will continue to include: organic growth with local, regional and national shippers; our franchising program; tuck-in acquisitions; and partnering or alliance relationships such as our relationships with certain global express carriers and third party logistics firms. In addition to growth, you can also expect to see a continued focus on improvements to our cost structure with a strong emphasis on local and regional execution. Marketing a national service is a big mistake if you can t make it happen where the rubber meets the road every day at the local business center; which means managing capacity and service quality every day. In that regard, we are blessed with people throughout the Company who understand those imperatives. They exhibit high levels of competence, work ethic and dedication every day along with a sense of emergency. Those attributes are the key success factors in our business. It is the people on our team that have propelled Dynamex toward the $500 million dollar threshold and who will now turn their attention, skills and efforts to the $1 billion milestone. These are exciting times for everyone on our team. With all of that in mind, we brought Maurice Levy on board in July as Chief Operating Officer to assist us at the executive level. Maurice possesses strong sales, marketing and general management expertise and has a solid record of achievement in our industry. Increasing our market share along with our top and bottom line is extremely important and we believe that expanding our management team with an executive of Maurice s caliber is the right move at the right time. This move brings additional and fresh perspective to bear on our opportunities and will allow me to devote more time to long term strategy and planning activities including management development, alliances, strategic account development and our franchising initiative. I want to thank everyone on our team for their continued dedication during fiscal Everyone on our entire team is focused on excellence at all levels and generating continued returns for our shareholders during fiscal 2008 and beyond. Respectfully, Rick McClelland President, Chief Executive Officer Chairman of the Board DYNAMEX, INC. ANNUAL REPORT

6 DYNAMEX INFORMATION TECHNOLOGY UPDATE OCTOBER, 2007 Dynamex continues to maintain its leadership position in the same-day transportation and logistics industry by continually upgrading and enhancing the Company s Information Technology (IT) systems. Our development and implementation continues on the Dynamex Enterprise Computing System (DECS), which is the state-ofthe-art operational platform for Dynamex and its franchise partners. With completion of the core application, including full integration to the Dynamex Oracle ERP system and Siebel CRM application, our focus is now on enhancing the operational components of the platform. This includes driver vehicle location (GPS technology), full chain of custody tracking with enhanced scanning technology, signature image capture and presentation for improved proof-of-delivery capabilities, and integration with the industry-leading intelligent dispatch engine for automated driver assignments for our on-demand business. We expect all of these features will be fully implemented in calendar year Our focus also continues on enhancing our technology infrastructure to support the rollout of our companywide voice-over-ip communications system. This will include 7-digit extension dialing company wide, integrated voice mail and , and internally hosted conference calls and web presentations. We expect to recognize communications cost savings as the rollout continues throughout Our sales team is fully supported with sophisticated routing technology from IIT to support the bid and proposal process, and recent implementation of Siebel 8.0 to enhance the customer and prospect relationship management process. Our accounting team is being supported with the recent implementation of the Laserfiche document management system for streamlining the A/P approval process, and future implementations of other accounting paper workflow processes. The current rollout of the Sterling Commerce GIS platform will support both operations and accounting with enhanced EDI capabilities for over 50 customers that currently integrate with Dynamex electronically. We are very excited about these enhancements to our IT systems as we expect not only to provide better service to our customers, but also provide the Company with significant cost advantages over time. These state-of-the-art IT systems and enhancements also continue to further distance Dynamex from its competitors. 6 DYNAMEX, INC. ANNUAL REPORT 2007

7 SERVICE OFFERINGS ON-DEMAND DELIVERY CRITICAL SHIPMENTS NEEDING DELIVERY IN THE SAME DAY Ground Delivery in 1 to 6 Hours In-City & City-to-City (up to 400+ miles) Same-Day Air Delivery Professional, Uniformed & Bonded Independent Contract Drivers Order & Track Online FAA Compliant SCHEDULED DELIVERY SCHEDULED VEHICLES FOR RECURRING SAME- DAY DISTRIBUTION Static or Variable Route Services Single Package to Multiple Pallet Deliveries; Hundreds or Thousands of Shipments Per Day Dedicated Driver for the Route Minimized Handling Consistent, Scheduled Stops Local, Regional & Transborder Flexible & Adjustable as Your Business Changes Optimization Modeling and Routing Program Available DEDICATED FLEET SERVICES ONE OR MULTIPLE VEHICLES DEDICATED TO A BUSINESS Full- or Half-Day Basis Your Facility or Ours Same Vehicle Eliminates Sorting Branding Program Available Optimized Routing Programs Variable Cost Structures Reduced Administrative Burden Eliminates Assets & Liabilities Local, Regional & National Scalable Experienced Operations Management Customized Reporting EXPEDITE SERVICES GROUND OR AIR SOLUTIONS FOR URGENT, TIME-SENSITIVE SHIPMENTS Direct Drive In-City & City-to-City (up to 400+ miles) FAA Compliant Transborder Specialists Local, Regional, National & International ISO:9001 Certified BIOTRANSPORT SERVICES SPECIALLY CERTIFIED DRIVERS TO HANDLE BIOMEDICAL MATERIAL OSHA Compliant JCAHO Compliant HAZMAT Certified Chain of Custody Records VALUE ADDED SERVICES WE MANAGE A DEDICATED TEAM TO WORK FOR A BUSINESS STRATEGIC STOCKING FACILITIES MANAGEMENT CALL CENTERS SEMI-TECHNICAL FIELD SERVICES Single-Source Solution Improved Efficiencies Dedicated Teams Reduced Administrative Costs dynamex.com dxnow FOR ORDERS 24-HOURS A DAY 7 DAYS A WEEK Secure Online Ordering Real-Time Online Tracking Online Reports to Quickly Manage & Analyze Shipping Costs Instant Proof-of-Delivery Print Waybills & Shipping Labels Multiuser Accounts Address Storage Smart Code Reference Billing Credit Card Payments Bilingual Secure 24-Hour Access 24-Hour Help Desk FRANCHISING LICENSING OUR SUCCESS SO OTHERS CAN GROW THEIR BUSINESS Fresh, hosted, industry specific technology. Business processes and guidance related to adding new services that allow owners to take their business to the next level. The sales horsepower associated with being an affiliate of Dynamex. The ability to leverage their client base by selling into the Dynamex network. Access to our national account revenue stream.

8 SENIOR MANAGEMENT Richard K. McClelland President, Chief Executive Officer James R. Aitken President, Dynamex Canada Samuel T. Hicks Controller Maurice Levy Vice President, Chief Operating Officer Andrew Pardue Vice President, Information Services Martin A. Piccolo Vice President, Administration, Canada Ray E. Schmitz Vice President, Chief Financial Officer Catherine J. Taylor President, Dynamex USA BOARD OF DIRECTORS Richard K. McClelland, Chairman Brian J. Hughes Wayne L. Kern Bruce E. Ranck Stephen P. Smiley CORPORATE HEADQUARTERS 5429 LBJ Freeway, Suite 1000 Dallas, Texas Phone: Fax: CANADA ADMINISTRATION 2630 Skymark Avenue Suite 610 Mississauga, ON L4W 5A4 Phone: Fax: AUDITORS BDO Seidman, LLP 700 North Pearl, Suite 2000 Dallas, TX Phone: Fax: TRANSFER AGENT Computershare Investor Services, L.L.C. 350 Indiana Street, Suite 800 Golden, CO Investor Inquiries: Dynamex Inc.