Datamark Systems Group Inc.
TSX : DMK

Datamark Systems Group Inc.

May 11, 2006 16:48 ET

Datamark Systems Group Inc. Announces Results for the First Quarter Ended March 31, 2006 and Declares a Special Dividend of $1.00 per Share

MONTREAL, QUEBEC--(CCNMatthews - May 11, 2006) - Datamark Systems Group Inc. (TSX:DMK)

Cash Flow

We continued to generate operating cash flow in a stable business environment during the first quarter of 2006. We used cash to further reduce long-term debt to $2,292,000 from $2,794,000 at the end of 2005 and our capital lease obligation decreased to $979,000 compared to $1,032,000. Cash during the period increased to $4,854,000 compared to $3,385,000 as at December 31, 2005.

Dividend

The Company is pleased to announce that the Board of Directors has declared a dividend in the amount of $1.00 per common share of Datamark Systems Group Inc. issued and outstanding common shares, payable in cash on June 02, 2006 to shareholders of record on May 26, 2006.

Results of Operations

Consolidated sales for the first quarter ended March 31, 2006 were $27,349,000, compared to $28,002,000 for the first quarter of 2005. Sales declined mainly as a result of lower traditional business forms sales compared to the same period of last year.

Cost of sales decreased by 1.8% to $19,354,000 compared to $19,704,000 for the first quarter of last year. As a result of lower sales and competitive pricing, gross margin decreased to $7,995,000 or 29.2% of sales for the first quarter of 2006 compared to $8,298,000 or 29.6% of sales for the same period last year.

Selling and administrative expenses increased to $6,386,000 or 23.4% of sales in the first quarter of 2006 compared to $6,266,000 or 22.4% of sales in the first quarter of 2005. This increase was mainly due to higher shipping and delivery expenses as a result of a change in sales mix.

Interest expense declined to $43,000 compared to $114,000 in the first quarter of 2005 as a result of lower debt following debt repayments during 2005.

Net earnings were $668,000 or $0.05 per share for the first quarter ended March 31, 2006 compared to $834,000 or $0.07 per share for the same period of last year.

Outlook

The market for many of our products and services, particularly our traditional printed products, remains very competitive. In addition technological changes continue to impact the demand for some of the traditional business forms. Notwithstanding these industry challenges, we are continuing to focus on expanding our product and service offerings. In addition we have hired new senior sales and marketing executives who will help us exploit market opportunities as they present themselves.

Corporate Developments

The Audit Committee of the Board of Directors has recommended to the shareholders of the Corporation to vote for the appointment of Raymond Chabot Grant Thornton as the new auditors for the fiscal year ending December 31, 2006. The Corporation's annual meeting of shareholders will be held on June 22, 2006.

The Corporation announces that Mr. Claude Perrotte, Executive Vice-President and Co-Chief Executive Officer will be retiring as at June 30, 2006. We would like to take this opportunity to thank Mr. Perrotte for his loyal service during the last 24 years and wish him well in retirement. Mr. Perrotte will remain as a member of the Board of Directors of the Corporation.

Datamark Systems Group Inc. is dedicated to providing efficient and innovative document management solutions. The Company's operating divisions and subsidiaries, Datamark Systems Inc., Proforms and Les Impressions Intra-Media Inc. provide a full range of products and services including forms, labels, airline products and short and long run commercial printing. Document management services encompass warehousing and distribution as well as customized inventory and cost reporting. Datamark Systems Group Inc.'s plants and distribution centers are in Quebec, Ontario, Manitoba and Alberta. Datamark Systems Group Inc. is listed on the Toronto stock Exchange under the symbol DMK.

Contact Information

  • Datamark Systems Group Inc.
    Jeffrey Zunenshine
    President
    (450) 663-7878, Ext.410