<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT FOR THE QUARTER ENDED APRIL 30, 1997
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- ACT OF 1934 FOR THE TRANSACTION PERIOD FROM __________ TO _________.
COMMISSION FILE NUMBER: 000-21057
------------------------
DYNAMEX INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 86-0712225
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2630 SKYMARK AVENUE
SUITE 610
MISSISSAUGA, ONTARIO L4W 5A4
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code:
(905) 238-6414
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
7,337,505 SHARES OF COMMON STOCK, $.01 PAR VALUE,
OUTSTANDING AS OF MAY 27, 1997.
<PAGE> 2
DYNAMEX INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets 2
July 31, 1996 and April 30, 1997 (Unaudited)
Condensed Consolidated Statements of Operations (Unaudited) 3
Three and Nine Months ended April 30, 1996 and 1997
and Pro Forma
Condensed Consolidated Statements of Cash Flows 4
Nine Months ended April 30, 1996 and 1997
and Pro Forma
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 2. Changes in Securities 12
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE> 3
DYNAMEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
July 31, April 30,
1996 1997
--------- ---------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 894 $ 1,192
Accounts receivable - net 11,141 18,405
Prepaid and other current assets 856 2,683
-------- --------
12,891 22,280
PROPERTY AND EQUIPMENT - net 2,047 4,673
INTANGIBLES - net 18,196 39,249
DEFERRED OFFERING EXPENSES 763 --
OTHER ASSETS 1,102 1,806
-------- --------
$ 34,999 $ 68,008
======== ========
LIABILITIES
CURRENT
Accounts payable $ 1,088 $ 938
Accrued liabilities 5,446 9,503
Current portion of long-term debt 2,271 523
-------- --------
8,805 10,964
LONG-TERM DEBT 20,036 20,301
-------- --------
28,841 31,265
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock; 10,000,000 shares authorized;
none outstanding -- --
Common stock 50,000,000 shares authorized;
2,543,460 and 6,987,505 shares outstanding 25 70
Stock warrants 624 --
Additional paid-in capital 8,756 38,169
Accumulated deficit (3,262) (1,151)
Unrealized foreign currency translation adjustment 15 (345)
-------- --------
6,158 36,743
-------- --------
$ 34,999 $ 68,008
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE> 4
DYNAMEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Nine Months Ended
April 30, April 30, April 30,
------------------------------ ------------------- -------------------
1996 1996 1997 1996 1997 1996 1997
-------- -------- -------- -------- -------- -------- --------
Pro forma Pro forma
<S> <C> <C> <C> <C> <C> <C> <C>
SALES $ 21,154 $ 26,414 $ 34,155 $ 50,015 $ 91,001 $ 77,243 $ 91,756
COST OF SALES 14,434 17,797 22,501 35,079 60,600 51,624 61,060
-------- -------- -------- -------- -------- -------- --------
GROSS PROFIT 6,720 8,617 11,654 14,936 30,401 25,619 30,696
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 5,195 6,380 8,365 12,390 22,930 20,519 23,166
DEPRECIATION AND AMORTIZATION 464 537 997 1,066 2,514 1,838 2,531
-------- -------- -------- -------- -------- -------- --------
OPERATING INCOME 1,061 1,700 2,292 1,480 4,957 3,262 4,999
INTEREST EXPENSE 583 607 345 1,079 853 1,673 770
-------- -------- -------- -------- -------- -------- --------
INCOME BEFORE TAXES 478 1,093 1,947 401 4,104 1,589 4,229
INCOME TAXES 3 481 779 11 1,639 699 1,689
-------- -------- -------- -------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM 475 612 1,168 390 2,465 890 2,540
EXTRAORDINARY ITEM - Loss on repayment of
Junior subordinated Debentures (less
applicable income taxes of $223) -- -- -- -- (335) -- --
-------- -------- -------- -------- -------- -------- --------
NET INCOME $ 475 $ 612 $ 1,168 $ 390 $ 2,130 $ 890 $ 2,540
======== ======== ======== ======== ======== ======== ========
NET INCOME PER COMMON SHARE
Income before extraordinary item $ 0.13 $ 0.14 $ 0.17 $ 0.11 $ 0.37 $ 0.20 $ 0.37
Extraordinary item -- -- -- -- (0.05) -- --
-------- -------- -------- -------- -------- -------- --------
Net income per common share $ 0.13 $ 0.14 $ 0.17 $ 0.11 $ 0.32 $ 0.20 $ 0.37
======== ======== ======== ======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 3,732 4,493 7,070 3,732 6,649 4,493 6,860
======== ======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
3
<PAGE> 5
DYNAMEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
April 30, April 30,
-------------------- --------------------
1996 1997 1996 1997
-------- -------- -------- --------
Pro forma
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income $ 390 $ 2,130 $ 890 $ 2,540
Adjustment to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,066 2,515 1,838 2,531
Loss on disposition stock warrant -- 558 -- --
Unrealized foreign currency adjustment (6) (360) (6) (360)
Changes in current assets and current liabilities:
Accounts receivable (474) (2,999) (945) (2,999)
Prepaids and other assets (89) (951) 36 (951)
Accounts payable and accrued expenses 951 1,744 14 1,692
-------- -------- -------- --------
Net cash provided by operating activities 1,838 2,637 1,827 2,453
-------- -------- -------- --------
INVESTING ACTIVITIES
Payment for acquisitions (12,267) (16,544) -- (9,695)
Purchase of property and equipment (457) (1,377) (634) (1,305)
-------- -------- -------- --------
Net cash used by financing activities (12,724) (17,921) (634) (11,000)
-------- -------- -------- --------
FINANCING ACTIVITIES
Principal payment on long-term debt (3,414) (5,498) 484 8,900
Net borrowing under line of credit (2,686) 678 63 678
Proceeds from long-term debt 17,876 --
Proceeds from issuance of stock warrants 624 --
Net proceeds from sale of common stock -- 21,148
Other assets, deferred offering expenses and intangibles (1,504) (746) (1,692) (882)
-------- -------- -------- --------
Net cash provided (used) by financing activities 10,896 15,582 (1,145) (8,696)
-------- -------- -------- --------
NET INCREASE IN CASH 10 298 48 149
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 506 894 2,354 1,043
======== ======== ======== ========
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 516 $ 1,192 $ 2,402 $ 1,192
======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE ON NON-CASH
INFORMATION
Cash paid for interest $ 403 $ 898
======== ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Capital lease obligations $ 43 $ 467 $ 43 $ 467
======== ======== ======== ========
In conjunction with the acquisition described, liabilities
were assumed as follows:
Fair value of assets acquired $ 14,325 $ 21,771 $12,569
Cash paid (12,267) (16,544) (9,695)
-------- -------- -------
Liabilities assumed and incurred $ 2,058 $ 5,227 2,874
======== ======== =======
</TABLE>
4
<PAGE> 6
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated interim financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and thus do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
The accompanying Unaudited Pro Forma Condensed Consolidated Statements
of Operations present the comparative results of operations for the nine months
ended April 30, 1997 as if the Company's initial public offering ("IPO") and
five acquisitions closed concurrently with the IPO ("IPO Acquisitions") had
occurred as of the beginning of that period. Consequently, the results of
operations for this period include the issuance of 173,485 shares of common
stock as partial consideration for the IPO Acquisitions and the issuance of
2,990,000 shares of common stock pursuant to the IPO. The accompanying
Unaudited Pro Forma Condensed Statement of Operations presents the comparative
results of operations for the nine and three month periods ended April 30, 1997
as if the acquisition of the on-demand, ground courier operations of Mayne
Nickless and the IPO Acquisitions had occurred as of the beginning of that
period. Consequently, the results of operations for these periods include the
issuance of 173,485 shares of common stock and the issuance of 1,134,000 shares
of common stock pursuant to the IPO, the proceeds from such shares being used
to finance the cash portion of the IPO Acquisitions. In addition, the Pro Forma
results of operations have been adjusted to reflect the effect of changes to
certain components of costs and expenses. These items include adjustments to
compensation to owners and managers of the IPO Acquired Companies to reflect
agreed upon compensation levels subsequent to the acquisition by the Company,
adjustments to rental expense to reflect agreed upon modifications to lease
agreements to be effective subsequent to the acquisition by the Company and
adjustments to certain corporate overhead, other costs and expenses which are
not ongoing costs of the businesses acquired and would not have been incurred
had the acquisitions by the Company occurred at the beginning of the period.
Each of the above mentioned acquisitions has been accounted for under the
purchase method of accounting. Accordingly, the total purchase price, including
transaction costs, has been allocated to the assets and liabilities of the
acquired businesses based on their estimated fair value.
The unaudited Pro Forma Condensed Consolidated Statements of Cash
Flows give additional effect to the issuance of the balance of shares of common
stock issued in connection with the IPO, the application of the proceeds
thereof and the mandatory exercise of the bridge warrants simultaneously
therewith.
The pro forma results are not necessarily indicative of actual results
which might have occurred had the operations of the Company and the acquired
businesses been combined at the beginning of the periods presented.
The Condensed Consolidated Balance Sheet at July 31, 1996 has been
derived from the Company's Form 10-K for the year ended July 31, 1996. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
5
<PAGE> 7
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
2. CAPITAL STOCK
In August 1996, the Company completed the IPO. Pursuant to the IPO the
Company issued 2,600,000 shares of its $.01 par value common stock at the
offering price of $8.00 per share, less underwriters' discount and offering
costs. In September 1996, the Underwriters exercised their over-allotment
option pursuant to which the Company issued an additional 390,000 shares of
common stock, also at the offering price of $8.00 per share, less underwriters'
discount.
Concurrently with the closing of the IPO, the Company issued options
to purchase 257,000 shares of common stock pursuant to the 1996 Stock Option
Plan. All of the options are exercisable at $8.00 per share, the initial public
offering price.
3. BUSINESS COMBINATIONS
In October 1996, the Company acquired the same-day delivery business
of Express-It (New York, New York) for 444,250 shares of Common Stock and
acquired substantially all of the assets of Dollar Courier (San Diego,
California) for total consideration of approximately of approximately $330,000,
payable over approximately two years. In December 1996, the Company acquired
Boogey Transportation Ltd. (Saskatoon, Saskatchewan) for approximately $471,000
in cash and 22,920 shares of common stock and certain of the assets of Winged
Foot Couriers, Inc. (New York, New York) for approximately $675,000 in cash. In
January 1997, the Company acquired Max America Holdings, Inc. and the assets of
One Hour Delivery Service, Inc. and Priority Parcel Express, Inc., all of which
operate in Dallas, Texas, for total consideration of approximately $8,700,000,
including 154,990 shares of common stock. In February 1997, the Company
acquired Eagle Couriers, Inc. of Richmond, Virginia for approximately
$1,075,000 in cash and 96,000 shares of common stock. In April 1997, the
Company acquired Regina Mail Marketing, Inc., which operates in Regina
Saskatchewan, for $1,200,000 in cash and 22,400 shares of common stock. In May
1997, the Company acquired Road Runner Transportation Inc., which has
operations in Minneapolis-St. Paul, Denver, Dallas, Austin and San Antonio, for
$11,200,000 in cash and 350,000 shares of common stock.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A. MATERIAL CHANGES IN FINANCIAL CONDITION
For the nine months ended April 30, 1997 the Company's pro forma
earnings before interest, taxes, depreciation and amortization
("EBITDA") amounted to approximately $7.5 million as compared to $5.1
million for the same period one year earlier. This increase reflects
the additional cash flow resulting from the acquisitions made during
the past nine months and the increased sales and improved
profitability from the Company's existing operations.
Net proceeds of the Company's IPO amounted to approximately $21.4
million. Approximately $8.4 million of this amount was utilized to
complete the acquisitions at the time of the IPO and the balance was
utilized to reduce long-term debt.
Subsequent to the IPO, the Company has completed eleven acquisitions
with total consideration of approximately $33.0 million, consisting of
$23.7 million in cash and $9.3 million in the form of the Company's
common stock (1,090,560 shares). Based on each of these acquired
company's most recent annual (or annualized, in certain instances)
historical operating results, and adjusted for certain pro forma items
such as changes in owners' compensation, these eleven businesses have
combined annual revenues of approximately $48.5 million and EBITDA of
approximately $5.7 million.
The cash portion of the Post-IPO Acquisitions has been funded from
internally generated cash and proceeds from the Company's revolving
credit facility. As of May 27, 1997, amounts outstanding under the
Company's $40 million revolving credit facility are approximately
$32.5 million.
The Company anticipates utilizing its cash flow from operations,
proceeds from its revolving credit facility and the issuance of
additional shares of its common stock to complete additional
acquisitions in the coming months. The aggregate size of the
acquisitions made subsequent to the IPO and the pace of these
acquisitions has been greater than management originally anticipated.
Should future acquisition opportunities be comparable, the Company's
existing credit facility may not be adequate to fund these
acquisitions. Therefore, management expects to expand this facility in
order to provide greater financial resources for use in the Company's
acquisition program. There is no assurance, however, as to the
magnitude of such expansion or that it will be available on terms
acceptable to the Company.
Even with expanded capacity under its revolving credit agreement, the
Company could require additional sources of capital should the rate of
acquisitions and the size of these acquisitions continue consistent
with recent activity. Such sources of additional capital might include
the issuance of debt or equity securities. There is no assurance that
such sources of capital will be available to the Company or that they
will be available on terms acceptable to the Company. Accordingly, the
Company's acquisition and expansion program could be negatively
affected by these factors.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
B. MATERIAL CHANGES IN RESULTS OF OPERATIONS
In December 1995, the Company acquired the ground courier operations
of Mayne Nickless which resulted in the Company gaining operations in
San Diego, Los Angeles, San Francisco, Seattle, Vancouver, Pittsburgh,
Boston, Washington, D.C., and Baltimore. In August 1996, concurrently
with the closing of its IPO, the Company completed five acquisitions
with operations in Winnipeg, Halifax, Chicago, Columbus, Ohio, and New
York. All of these acquisitions have been accounted for using the
purchase method of accounting. Therefore, the results of operations of
the acquired companies are included with those of the Company as of
the date of the acquisition.
The pro forma results of operations present the results of operations
of the Company as if the above acquisitions had occurred as of the
beginning of the period presented and as if the IPO had occurred as of
July 31, 1996.
Subsequent to the IPO and through April 30, 1997, the Company has
completed ten additional acquisitions with operations in New York, San
Diego, Saskatoon, Saskatchewan, Regina, Saskatchewan, Dallas and
Richmond, Virginia (the "Post-IPO Acquisitions"). Each of these
acquisitions has been accounted for using the purchase method of
accounting. Therefore, the results of operations of the businesses are
included with those of the Company from the date of acquisition.
The following table sets forth certain items from the Company's
consolidated statements of operations expressed as a percentage of
sales:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Nine Months Ended
April 30, April 30, April 30,
------------------------ ----------------- -----------------
1996 1996 1997 1996 1997 1996 1997
------ ------ ------ ------ ------- ------ -------
Pro forma Pro forma
<S> <C> <C> <C> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 68.2 67.4 65.9 70.1 66.6 66.8 66.5
----- ----- ----- ----- ----- ----- -----
Gross profit 31.8 32.6 34.1 29.9 33.4 33.2 33.5
Selling, general and
administrative expenses 24.6 24.2 24.5 24.8 25.2 26.6 25.2
Depreciation and amortization 2.2 2.0 2.9 2.1 2.8 2.4 2.8
----- ----- ----- ----- ----- ----- -----
Operating profit 5.0 6.4 6.7 3.0 5.4 4.2 5.4
Interest expense 2.8 2.3 1.0 2.2 0.9 2.2 0.8
----- ----- ----- ----- ----- ----- -----
Income (loss) before taxes
and extraordinary item 2.3% 4.1% 5.7% 0.8% 4.5% 2.1% 4.6%
===== ===== ===== ===== ===== ===== =====
</TABLE>
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Three months ended April 30, 1996 vs. three months ended April 30, 1997.
Sales increased $13,001,000 (61.5%) due primarily to the acquisition
of the Mayne Nickless operations which occurred in December 1995 and
the IPO Acquisitions. Sales attributable to the Post-IPO Acquisitions
amount to approximately $6,000,000 during the 1997 period.
Cost of sales increased $8,067,000 (55.9%), reflecting the
acquisitions described above. As a percentage of sales, such amounts
decreased from 68.2% to 65.9%. This change reflects the higher gross
profit of the Mayne Nickless, IPO Acquisition, and the Post-IPO
Acquisition companies. The business of those operations consisted
almost entirely of "on-demand" services. These services generally have
a higher gross margin than the "scheduled" or "fleet management"
services which comprised a larger portion of the business mix for the
historical operations of the Company.
Selling, general and administrative expenses increased $3,170,000
(61.0%) due to costs associated with the Mayne Nickless, IPO
Acquisition and Post-IPO Acquisitions. As a percentage of sales, these
expenses decreased slightly from 24.6% to 24.5%. The increase in
absolute amounts reflects the higher administrative costs associated
with "on-demand" services, as well as increased corporate costs
associated with the Company's growth and the increased reporting and
other obligations attendant to the Company's status as a public
corporation. The decrease as a percent of sales reflects spreading
certain fixed costs over a larger revenue base. In addition, other
costs were eliminated through the consolidation of administrative and
support functions in certain branches.
Depreciation and amortization increased both in absolute terms,
$533,000 (114.9%), and as a percentage of sales, 2.2% to 2.9%. These
increases result from depreciation and amortization of assets acquired
with the acquisitions discussed above, including intangible assets
such as goodwill.
Interest expense decreased $238,000 (40.8%) due to the retirement of a
portion of outstanding debt in August 1996 with proceeds of the IPO.
Therefore, as percentage of sales, interest expense decreased from
2.8% to 1.0%. This decrease was offset to some extent by additional
borrowings related to the Post-IPO Acquisitions.
Pro forma three months ended April 30, 1996 to three months ended April 30,
1997.
Sales increased $7,741,000 (29.3%) due primarily to the Post-IPO
Acquisitions and increased sales to regional and national accounts in
Canada.
Cost of sales increased $4,704,000 (26.4%) due primarily to the above
increase in sales. As a percentage of sales, cost of sales decreased
from 67.4% to 65.9%. This decrease results primarily from the effect
of a high proportion of higher gross margin "on-demand" business
during the 1997 period due to the Post-IPO Acquisitions.
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Selling, general and administrative expenses increased $1,985,000
(31.1%), due to costs associated with increased sales, including those
from the Post-IPO Acquisitions, and increased costs in the 1997
quarter related to the Company's public company status. As a
percentage of sales, such costs increased from 24.2% to 24.5%.
Depreciation and amortization increased $460,000 (85.7%) due to the
effect of amortization of costs related to the Post-IPO Acquisitions.
As a percentage of sales, depreciation and amortization increased from
2.0% to 2.9% between the periods.
Interest expense decreased in real terms by $262,000 (43.2%) and as a
percentage of sales, 2.3% to 1.0%. This decrease results from the
reduction of outstanding debt with a portion of the proceeds of the
IPO and from lower interest rates associated with the Company's
amended bank credit facility. The decrease was offset by some extent
by the effect of increased borrowings related to the Post-IPO
Acquisitions.
Nine months ended April 30, 1996 vs. nine months ended April 30, 1997.
Sales increased $40,986,000 (81.9%) due primarily to the acquisition
of the Mayne Nickless operations which occurred in December 1995, the
IPO Acquisitions in August 1996, and the Post-IPO Acquisitions. Sales
from the Post-IPO Acquisitions amount to approximately $8,780,000
during the 1997 period.
Cost of sales increased $25,521,000 (72.8%), reflecting the
acquisitions described above. As a percentage of sales, such amounts
decreased from 70.1% to 66.6%. This change reflects the higher gross
profit of the Mayne Nickless, the IPO Acquisition, and Post-IPO
Acquisition companies. The business of those operations consisted
mostly of "on-demand" services. These services generally have a higher
gross margin than the "scheduled" or "fleet management" services which
comprised a larger portion of the business mix for the historical
operations of the Company.
Selling, general and administrative expenses increased $10,540,000
(85.1%) due to costs associated with the Mayne Nickless, IPO and
Post-IPO Acquisitions. As a percentage of sales, these expenses
increased from 24.8% to 25.2%. This reflects the higher administrative
costs associated with "on-demand" services, as well as increased
corporate costs associated with the Company's growth and status as a
public Corporation. This increase was offset by the elimination of
certain administrative costs associated with revenue in Western Canada
and Arizona which was discontinued. In addition, other costs were
eliminated through the consolidation of administrative and support
functions in certain branches.
Depreciation and amortization increased both in absolute terms,
$1,448,000 (135.8%), and as a percentage of sales, 2.1% to 2.8%. These
increases result from depreciation of assets acquired with the
acquisitions discussed above, including intangible assets such as
goodwill.
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Interest expense decreased $226,000 (20.9%) due to the retirement of a
portion of outstanding debt in August 1996 with proceeds of the IPO.
Therefore, as percentage of sales, interest expense decreased from
2.2% to 0.9%. This decrease was offset to some extent by additional
borrowings related to the Post-IPO Acquisitions.
Results of operations for the three months ended January 31, 1997
include an extraordinary charge of $335,000, net of income taxes,
resulting from the early retirement of the Company's Junior
Subordinated Debentures concurrently with the IPO.
Pro forma nine months ended April 30, 1996 vs. pro forma nine months ended
April 30, 1997.
Sales increased $14,513,000 (18.8%) due primarily to the Post-IPO
Acquisitions and increased sales to regional and national accounts in
Canada. The increase from these additional sales was affected by a
decline in revenues of approximately $1,600,000 in Western Canada and
Arizona due to the discontinuation of certain unprofitable business in
these areas. The increase in sales in the 1997 period was in spite of
generally lower levels of business activity in late December and early
January due to the Christmas and New Year's holidays falling in the
middle of a week.
Cost of sales increased $9,436,000 (18.3%) due primarily to the above
increase in sales. As a percentage of sales, cost of sales decreased
slightly from 66.8% to 66.5%. This minor change results from the
change in product mix between relative high gross margin "on-demand"
services and the relative lower gross margin "scheduled" and "fleet
management" services.
Selling, general and administrative expenses increased $2,647,000
(12.9%), due to costs associated with increased sales, including that
from the Post-IPO Acquisitions, and increased costs in the 1997 period
related to the Company's public company status. The increase was
offset by the elimination of certain administrative costs associated
with revenue in Western Canada and Arizona which was discontinued as
well as the elimination of other costs through the consolidation of
administrative and support services in certain branches. As a
percentage of sales, however, such costs decreased from 26.6% to
25.2%. The decrease as a percent of sales reflects spreading certain
fixed costs over a larger revenue base.
Depreciation and amortization increased $693,000 (37.7%) due to the
effect of amortization of costs related to the Post-IPO Acquisitions.
As a percentage of sales, depreciation and amortization increased from
2.4% to 2.8% between the periods.
Interest expense decreased in real terms by $903,000 (54.0%) and as a
percentage of sales, 2.2% to 0.8%. This decrease results from the
reduction of outstanding debt with a portion of the proceeds of the
IPO and from lower interest rates associated with the Company's
amended bank credit facility. The decrease was offset by some extent
by the effect of increased borrowings related to the Post-IPO
Acquisitions.
11
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(c) During the third quarter ended April 30, 1997, the
Company has sold or issued the following unregistered
securities:
(1) In February 1997, the Company issued 96,000 shares of
Common Stock to the shareholders of Eagle Couriers, Inc.
as partial consideration for the acquisition of such
transportation company.
(2) In April 1997, the Company issued 22,400 shares of Common
Stock to the shareholders of Regina Mail Marketing, Inc.
as partial consideration for the acquisition of such
transportation company.
In issuing such securities, the Company relied on the exemption from
the registration and prospectus delivery requirements of the Securities Act
provided by Section 4(2) of the Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
11.1 Calculation of Net Income Per Common Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
Report dated May 16, 1997 concerning the acquisition of
Road Runner Transportation, Inc.
12
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DYNAMEX INC.
Dated: June 9, 1997 by /s/RICHARD K. MCCLELLAND
---------------------------------------
Richard K. McClelland
President, Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
Dated: June 9, 1997 by /s/ROBERT P. CAPPS
---------------------------------------
Robert P. Capps
Vice President-Chief Financial Officer
(Principal Financial Officer)
13
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
11.1 Calculation of Net Income Per Common Share
27.1 Financial Data
</TABLE>
<PAGE> 1
DYNAMEX INC. AND SUBSIDIARIES
CALCULATION OF NET INCOME PER COMMON SHARE
(In Thousands except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Nine Months Ended
April 30, April 30, April 30,
------------------------- ----------------- -----------------
1996 1996 1997 1996 1997 1996 1997
------- ------ ------- ------ -------- ------- --------
Pro forma Pro forma
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income $ 475 $ 612 $1,168 $ 390 $2,130 $ 890 $2,540
====== ====== ====== ====== ====== ====== ======
Weighted Average Common shares
Outstanding 2,543 3,845 6,961 2,543 6,462 3,845 6,701
Common Share Equivalents Related to
Options and Warrants 1,189 648 109 1,189 187 648 159
------ ------ ------ ------ ------ ------ ------
Common Shares and Common Share
Equivalents 3,732 4,493 7,070 3,732 6,649 4,493 6,860
====== ====== ====== ====== ====== ====== ======
Common Stock Price used under Treasury
Stock Method $ 8.00 $ 8.00 $ 7.94 $ 8.00 $ 9.22 $ 8.00 $ 9.22
Net Income per Common Share $ 0.13 0.14 0.17 $ 0.10 0.32 $ 0.20 0.37
====== ====== ====== ====== ====== ====== ======
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<CASH> 1,192
<SECURITIES> 0
<RECEIVABLES> 18,700
<ALLOWANCES> 295
<INVENTORY> 0
<CURRENT-ASSETS> 22,280
<PP&E> 10,210
<DEPRECIATION> 5,537
<TOTAL-ASSETS> 68,008
<CURRENT-LIABILITIES> 10,964
<BONDS> 20,301
0
0
<COMMON> 70
<OTHER-SE> 36,673
<TOTAL-LIABILITY-AND-EQUITY> 68,008
<SALES> 34,155
<TOTAL-REVENUES> 34,155
<CGS> 0
<TOTAL-COSTS> 22,501
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 345
<INCOME-PRETAX> 1,947
<INCOME-TAX> 779
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,168
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
