PRYOR, Okla., Oct. 28 /PRNewswire-FirstCall/ -- Orchids Paper
Products Company (NYSE Amex: TIS) today reported net income for the
three months ended September 30, 2009 of $3.8 million, or $0.52 per
diluted share, compared with $1.4 million or $0.22 per diluted
share, in the same period in 2008. Net income was $10.4 million, or
$1.49 per diluted share, for the first nine months of 2009, an
increase of $7.5 million compared to net income of $2.9 million, or
$0.45 per diluted share, reported for the first nine months of
2008. Three-month period ended September 30, 2009 Net sales
increased 5% to $24.6 million in the quarter ended September 30,
2009, a Company record, compared to $23.3 million in the same
period of 2008. Net sales of converted product increased in the
quarter ended September 30, 2009 by $2.9 million, or 15%, to $22.2
million compared to $19.3 million in the same period last year. Net
sales of parent rolls decreased $1.6 million, or 40%, to $2.4
million in the quarter ended September 30, 2009 compared to $4.0
million in the same period last year. The increase in net sales of
converted product is primarily the result of a 9% increase in the
net selling price per ton of converted product shipments and a 6%
increase in converted tons sold. Net sales of parent rolls were
negatively affected by a 17% decrease in parent roll tonnage
shipped and a 40% decrease in the net selling price. Earnings
before interest, taxes, depreciation and amortization (EBITDA)
increased $3.7 million to $6.7 million, another Company record, in
the quarter ended September 30, 2009, compared to $3.0 million in
the prior year quarter. Compared to the second quarter of 2009,
EBITDA for the third quarter of 2009 increased $88,000. As a
percent of net sales, EBITDA was 27.1% in the 2009 quarter compared
with 13.0% in the 2008 quarter. Gross profit for the third quarter
of 2009 was $7.4 million, an increase of $3.6 million, or 96%, when
compared with a gross profit of $3.8 million in the comparable
prior year quarter. Gross profit as a percent of net sales
increased to 30.2% in the third quarter of 2009 compared to 16.3%
for the same period in 2008. As a percent of net sales, gross
profit increased primarily due to lower waste paper prices,
increased converted product selling prices, increased shipment
volumes of converted products, lower converting direct labor costs
and reduced packaging costs. The increased converted product
shipment volume contributed to the improved gross profit percentage
by reducing the amount of parent rolls available to sell in the
open market, which generally carry a lower gross profit margin than
those realized on converted products. Compared to the second
quarter of 2009, our cost of waste paper increased in the third
quarter of 2009 by approximately $600,000 or 21%. Prior to the
third quarter, waste paper prices decreased significantly from
December 2008 through the beginning of the second quarter of 2009,
following a rapid increase from late 2007 through the end of the
third quarter of 2008 Selling, general and administrative expenses
in the third quarter of 2009 totaled $1.8 million, an increase of
$221,000, or 14.2%, when compared with selling, general and
administrative expenses of $1.6 million in the third quarter of
2008. Higher costs associated with accruals under the incentive
bonus plan, higher professional fees as well as increased
commissions due to increased sales of converted product were the
primary reasons for the increase. As a percent of net sales,
selling, general and administrative expenses increased to 7.2% for
the quarter ended September 30, 2009, compared to 6.7% in the prior
year quarter. Interest expense for the third quarter of 2009
totaled $174,000 compared to interest expense of $310,000 in the
same period in 2008. This decrease was mainly driven by lower LIBOR
interest rates and lower margins over LIBOR. As of September 30,
2009, the full year effective tax rate is estimated to be 33.2%. As
a result, the effective rate for the third quarter of 2009 was
30.5%. Nine-month period ended September 30, 2009 Net sales
increased 10% to $72.3 million in the nine months ended September
30, 2009, compared to $65.9 million in the same period of 2008. Net
sales of converted product increased for the nine months ended
September 30, 2009, by $12.0 million, or 22%, to $65.8 million
compared to $53.8 million in the same period last year. Net sales
of parent rolls decreased $5.5 million, or 46%, to $6.6 million in
the nine months ended September 30, 2009 compared to $12.1 million
in the same period last year. EBITDA increased $11.2 million to
$18.7 million in the nine months ended September 30, 2009, compared
to $7.5 million in the first nine months of 2008. As a percent of
net sales, EBITDA was 25.8% in the 2009 nine month period compared
with 11.4% in the 2008 period. Gross profit for the nine months
ended September 30, 2009, was $21.7 million, an increase of $12.1
million, or 126%, when compared with a gross profit of $9.6 million
in the comparable prior year period. Gross profit as a percent of
net sales increased to 30.0% in the 2009 period compared to 14.6%
for the same period in 2008. As a percent of net sales, gross
profit increased primarily due to lower waste paper costs, higher
selling prices, higher converted product shipment volumes and lower
converting direct labor costs being partially offset by higher
converting overhead costs. The increased converting shipment volume
contributes to the improved gross profit percentage as discussed
above. Selling, general and administrative expenses in the nine
months ended September 30, 2009, totaled $5.7 million, an increase
of $1.3 million, or 29%, when compared with selling, general and
administrative expenses of $4.4 million in the same period of 2008.
Increased accruals under the Company's incentive bonus plan,
increased converted product sales commissions, an increase in stock
option expense primarily due to a higher market price of the
Company's stock, and increased professional and legal expenses
accounted for most of the variance. As a percent of net sales,
selling, general and administrative expenses increased to 7.9% for
the nine-month period ended September 30, 2009 compared to 6.7% in
the prior year period. Interest expense for the nine months ended
September 30, 2009, totaled $468,000 compared to interest expense
of $1.0 million in the same period in 2008. Lower LIBOR rates and
lower margins over LIBOR drove the favorable variance. Commenting
on the results, Mr. Robert Snyder, President and Chief Executive
Officer, stated, "I am pleased with the progress of our company
during the quarter, from the strong support our equity offering
received, which has further strengthened our balance sheet, to the
continued strength of our converted product production and
shipments. In addition, we began construction on a new warehouse
facility at the beginning of October in connection with the
start-up of a new converting line expected by the end of the second
quarter of 2010. The new converting line, which has a design
capacity of up to 4 million cases per year, will be a state-of-the
art line, capable of producing both bathroom tissue and towel
products. It will also provide improved product configuration
offerings and enhanced graphics and embossing." Conference
Call/Webcast As announced, the Company will hold a teleconference
to discuss its third quarter earnings at 11:00 a.m. (ET) on
Thursday, October 29, 2009. All interested parties may participate
in the teleconference by calling 800 688 0796 and providing
passcode 97839982. A question and answer session will be part of
the teleconference's agenda. Those intending to access the
teleconference should dial in fifteen minutes prior to the start.
The call may also be accessed live via webcast through the
Company's website at http://www.orchidspaper.com/ under
"Investors." A replay of the teleconference will be available for
30 days on the Company's website. Non-GAAP Financial Measures This
press release contains non-GAAP financial measures. A non-GAAP
financial measure is a numerical measure of a Company's financial
performance that excludes or includes amounts so as to be different
than the most directly comparable measure calculated and presented
in accordance with Generally Accepted Accounting Principles
("GAAP") in the United States in the statement of income, balance
sheet or statement of cash flows of the Company. The two non-GAAP
financial measures used within this press release are 1) EBITDA and
2) Net Debt. EBITDA is not a measurement of financial performance
under GAAP and should not be considered as an alternative to net
income, operating income or any other performance measure derived
in accordance with GAAP, or as an alternative to cash flow from
operating activities or a measure of our liquidity. EBITDA
represents net income before net interest expense, income tax
expense, depreciation and amortization. Management believes EBITDA
facilitates operating performance comparisons from period to period
and company to company by eliminating potential differences caused
by variations in capital structures (affecting relative interest
expense), tax positions (such as the impact on periods or companies
of changes in effective tax rates or net operating losses) and the
age and book depreciation of facilities and equipment (affecting
relative depreciation expense). Net Debt is not a measurement of
financial performance under GAAP and should not be considered as an
alternative to total debt outstanding, total liabilities or any
other performance measure derived in accordance with GAAP. Net Debt
represents total debt outstanding reduced by cash and cash
equivalents on hand. Management believes the presentation of Net
Debt provides the reader with additional information regarding the
Company's liquidity and debt leverage positions. Forward-Looking
Statements This release contains forward-looking statements that
involve certain contingencies and uncertainties. The Company
intends these forward-looking statements to be covered by the safe
harbor provision for forwarding-looking statements contained in the
Private Securities Litigation Reform Act of 1995. These statements
relate to future events or future financial performance, and
involve known and unknown risks, uncertainties and other factors
that may cause its actual results, levels of activity, performance
or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or
implied by such forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
"may," "should," "could," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential" or
"continue" or the negative of such terms or other comparable
terminology. Although the Company believes that the expectations
reflected in the forward-looking statements are reasonable, it
cannot guarantee future results, levels of activity, performance or
achievements. These statements are only predictions. Factors that
could materially affect the Company's actual results, levels of
activity, performance or achievements include, without limitation,
those detailed under the caption "Risk Factors" in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
2008 as filed with the Securities and Exchange Commission on March
12, 2009 and the Company's Quarterly Report on the Form 10-Q for
the quarterly period ended June 30, 2009 as filed with the
Securities and Exchange Commission in August 13, 2009. The
Company's actual results may be materially different from what it
expects. The Company does not undertake any duty to update these
forward-looking statements after the date hereof, even though the
Company's situation may change in the future. All of the
forward-looking statements herein are qualified by these cautionary
statements. About Orchids Paper Products Company Orchids Paper
Products Company is an integrated manufacturer of tissue paper
products serving the private label consumer market. The Company
produces a full line of tissue products, including paper towels,
bathroom tissue and paper napkins. From its operations in Pryor,
Oklahoma, Orchids Paper Products Company uses recycled waste paper
to produce finished tissue products that it provides to retail
chains throughout the central United States. For more information
on the Company and its products, visit the Company's website at
http://www.orchidspaper.com/. Orchids Paper Products Company
Selected Financial Data (in thousands, except net selling price per
ton, tonnage, cost per ton and per share data) Three Months Nine
Months Ended September 30, Ended September 30, ----------------
---------------- 2009 2008 2009 2008 ---- ---- ---- ---- Converted
Product Net Sales $22,160 $19,300 $65,750 $53,798 Parent Roll Net
Sales 2,397 4,012 6,578 12,104 ----- ----- ----- ------ Net Sales
$24,557 $23,312 72,328 $65,902 Cost of Sales 17,128 19,518 50,639
56,297 ------ ------ ------ ------ Gross Profit 7,429 3,794 21,689
9,605 Selling, General and Administrative Expenses 1,772 1,551
5,689 4,427 ----- ----- ----- ----- Operating Income 5,657 2,243
16,000 5,178 Interest Expense 174 310 468 1,041 Other Income (5)
(3) (9) (9) -- -- -- -- Income Before Income Taxes 5,488 1,936
15,541 4,146 Provision for Income Taxes 1,673 513 5,154 1,225 -----
--- ----- ----- Net Income $3,815 $1,423 $10,387 $2,921 ======
====== ======= ====== Net income per share: Basic $0.56 $0.22 $1.58
$0.46 Diluted $0.52 $0.22 $1.49 $0.45 EBITDA Reconciliation: Net
Income $3,815 $1,423 $10,387 $2,921 Plus: Interest Expense 174 310
468 1,041 Plus: Income Tax Expense 1,673 513 5,154 1,225 Plus:
Depreciation 1,003 783 2,641 2,310 ----- --- ----- ----- Earnings
Before Interest, Income Tax and Depreciation and Amortization
(EBITDA) $6,665 $3,029 $18,650 $7,497 Operating Data: Total Tons
Shipped 13,755 13,837 38,481 41,025 Net Selling Price per Ton
$1,785 $1,685 $1,880 $1,606 Total Paper Cost per Ton Consumed $678
$799 $669 $810 Total Paper Cost $8,929 $11,056 $26,225 $33,240 Cash
Flow Data: Cash Flow Provided by (Used in): Operating Activities
$4,063 $(5) $14,060 $3,701 Investing Activities $(21,911) $(1,423)
$(29,056) $(4,159) Financing Activities $16,371 $1,179 $15,302 $467
As of ------ September December 30, 31, Balance Sheet Data: 2009
2008 ---- ---- Cash Plus Short Term Investments $22,819 $11 Working
Capital $29,226 $3,453 Net Property, Plant and Equipment $64,573
$60,659 Total Assets $104,783 $74,482 Total Debt $24,050 $24,065
Total Stockholders' Equity $59,826 $33,562 As of ------ September
December 30, 31, Net Debt Reconciliation: 2009 2008 ---- ----
Current Portion Long Term Debt $3,140 $2,998 Long Term Debt 20,910
21,067 ------ ------ Total Debt $24,050 $24,065 Less Cash (317)
(11) Less Short Term Investments (22,502) - ------- --- Net Debt
$1,231 $24,054 ====== ======= DATASOURCE: Orchids Paper Products
Company CONTACT: Keith Schroeder, Chief Financial Officer of
Orchids Paper Products Company, +1-918-824-4605 Web Site:
http://www.orchidspaper.com/
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