DDMX: Plunges to 52-Week Low on Q1 Results and Guidance Cut
Submitted By Knobias ClipReport
DDMX: Plunges to 52-Week Low on Q1 Results and Guidance Cut
By Fain Hughes, fhughes@knobias.com
Shares of Dynamex, Inc. (DDMX) plunged to a 52-week low on Thursday after the Company reported its financial results after the bell on Wednesday for the first quarter ended October 31, 2008.
Sales increased 3.3% to $115 million this quarter compared to the prior year. Net income was $3.0 million, or $0.30 fully diluted net income per share, compared to $4.0 million, or $0.39 per fully diluted share, in the prior year. The gross margin was 26.9% of sales in the current quarter, up from 26.6% in the same quarter last year.
The Company is beginning to see a slowdown in shipment volume from a number of our customers. Additionally, the Company is currently in discussions with its largest customer to rescale its delivery network in response to lower volumes and to reduce costs. As a result, the Company expects sales to this customer to be, at a minimum, approximately 25% lower on an annual basis. The Company now expects FY09 sales to be 8% to 12% below the prior year due to unexpected declines in customer shipments, a substantially lower Canadian dollar and lower fuel surcharges. The Company expects FY09 net income to range between $1.00 and $1.20 per fully diluted share compared to $1.53 per share last year.
Rick McClelland, Chairman of Dynamex, commented in a conference call today, “The economy has continued to weaken, and we have witnessed a significant drop in volume in November. This leaves us with an unclear outlook for the remainder of 2009. While our variable cost structure, technology and North American presence will provide us with a platform to sustain solid levels of profitability during this period of market uncertainty, our business is not entirely immune from the effects of the current environment. Therefore, we have modified our outcome for 2009.”
He continued, “We will not sit back and wait for the economy to turn positive. We have expanded our sales headcount and expect to reach our expansion goals of 25% by the end of Q3. In addition, we have closed two small tuck-in acquisitions. We are also in active discussions with several others that are interested in exiting the business. We are seeing a stronger stream of oppurtunities due to the economy. Our franchise pipeline is also active and we look for that to expand.”
Mr. McClelland concluded, “We are vigorous and well positioned competitor. We have a unique service menu and there is no other competitor that looks like us in the U.S or Canada. The negative economy presents us with opportunities for outsourcing, acquisitions and franchises. We a not an asset-based company with limited capital expenditure requirements. We are debt free and have a debt capacity of $40 million. Compared to many companies, we are well-financed to weather the storm. We will continue to build and aggressively manage costs.”
Stephens downgraded DDMX today to Equal-Weight from Overweight and cut its price target to $15 from $35.
