Dynamex - Earning Profits in Local Delivery

I recently posted that Dynamex will be a significant part of Amazon's new effort to offer same day delivery. Dynamex is the largest same-day delivery firm with operations in the United States and Canada. They are also the only one that is publicly traded which provides a window on a segment of the Courier, Express, and Postal Market within which UPS, FedEx and the Postal Service do not compete.

The company just announced its First Quarter Earnings of $0.31, 5 cents better than analyst estimates of $0.26 cents. Dynamex (DDMX) was able to increase its earnings even though revenue was down 13.9% overall and 9.2% excluding changes in fuel surcharges and the value of the Canadian dollar.

How did Dynamex increase its profits in tough times? The company made a strong effort to control sales, general and administrative costs. Compensation and benefit costs declined by 12.9% which included a major effort to streamline overhead through the closing of their Canadian administrative office. Most of all of Dynamex's delivery drivers are contractors and the decline in demand is reflected in a decline in spending for contract transportation.

In its conference call, Dynamex President James Welch stated that they have seen little improvements in economic activity over the past year. He acknowledged that sales activity today is the best it has been in the year he has been at the company. Given that Dynamex has been able to earn strong profits through the recession, it would seem that its prospects going forward could improve if their sales activity becomes actual sales and the economy improves.