PRYOR, Okla., April 29 /PRNewswire-FirstCall/ -- Orchids Paper
Products Company (NYSE Amex: TIS) today reported net income for the
three months ended March 31, 2009 of $2.8 million, or $0.42 per
diluted share, the third consecutive quarterly record, compared
with $611,000, or $0.09 per diluted share, in the same period in
2008. Net sales for the first quarter of 2009 were $23.6 million,
an increase of 17% over the $20.3 million reported for the same
quarter of 2008. Net sales of converted product in the first
quarter of 2009 were $21.0 million, an increase of 23% compared to
the $17.1 million of net sales in the same period in 2008, while
net sales of parent rolls decreased $600,000, or 18% to $2.6
million compared to $3.2 million in the same quarter of 2008. The
increase in converted product net sales was primarily the result of
a 23% increase in the net selling price per ton which was slightly
offset by a 1% decrease in tonnage shipped. Product content changes
completed during 2008 were the primary reason for the lower tonnage
shipped. Parent roll revenues decreased primarily due to a 14%
decrease in tonnage shipped and a 4% decrease in the selling price
per ton. The decrease in parent roll sales is primarily due to a
softened parent roll market. Earnings before interest, taxes,
depreciation and amortization (EBITDA) was $5.4 million for the
quarter ended March 31, 2009, the third consecutive quarterly
record, and represented an increase of $3.3 million, or 163%,
compared to the $2.1 million of EBITDA in the quarter ended March
31, 2008. As a percentage of net sales, EBITDA was 22.9% in the
2009 quarter compared with 10.2% in the 2008 quarter. Gross profit
in the quarter ended March 31, 2009, increased $3.7 million, or
139%, to $6.4 million compared to $2.7 million in the same quarter
last year. Gross profit as a percentage of net sales in the 2009
quarter was 27.2% compared to 13.2% in the 2008 quarter. The
primary reasons for the increase in gross profit as a percentage of
net sales are the higher selling prices for converted products and
the lower cost of wastepaper. In addition, improved productivity in
the converting operation resulted in a 16% increase in cases
shipped in the 2009 period compared to the same period in 2008,
which basically offset the effects of product content changes on
the amount of tonnage shipped. Paper production costs decreased
approximately 16% in the three months ended March 31, 2009,
compared to the same period in 2008, primarily due to a 30%
decrease in the cost of wastepaper, resulting in an approximately
$1.4 million increase in gross profit. Lower natural gas prices and
lower direct labor charges in converting were largely offset by
higher converting overhead costs. Converting overhead costs
increased in the 2009 quarter over the 2008 quarter primarily due
to increased maintenance and repair costs and the cost of outside
warehousing. Selling, general and administrative expenses in the
three months ended March 31, 2009, increased $400,000, or 32%, to
$1.8 million compared to $1.4 million in the prior year quarter.
Higher accruals under the Company's incentive bonus program, higher
sales commission expense due to increased sales levels, increased
packaging-related selling costs, higher legal and professional fees
and costs associated with additions to the senior management team
were the major reasons for the increase. As a percentage of net
sales, selling, general and administrative expenses increased to
7.7% in the first quarter of 2009 compared to 6.8% in the same
quarter of 2008. Interest expense decreased $252,000 to $159,000 in
the quarter ended March 31, 2009, compared to $411,000 in the
quarter ended March 31, 2008. Lower LIBOR interest rates and lower
margins over LIBOR, reflecting improved financial performance, were
the primary reasons for the decrease in interest expense. Mr.
Robert Snyder, President and Chief Executive Officer, stated, "We
are pleased with our results for the first quarter of 2009, as we
achieved a third consecutive record net earnings and EBITDA levels
in a quarter which is typically softer than the rest of the year.
In addition to our converting operation producing a record number
of cases this quarter, production and shipments of converted
product increased approximately 15% and 16%, respectively, over the
first quarter of 2008. As you can see by our record shipments, the
at-home tissue market for our customers remains strong." Mr. Snyder
continued, "We are pleased with the continued strengthening of our
balance sheet and cash flow from operations. During the quarter, we
reduced our net debt (funded debt less cash) by $3.7 million, from
$24.0 million at December 31, 2008 to $20.3 million at March 31,
2009. In addition, we have reduced our funded debt-to-EBITDA ratio
as defined in our credit agreements, from 1.85:1 as of the end of
2008 to 1.41:1 at the end of the first quarter of 2009. This
improvement in our financial condition may be especially important
if we determine the need to expand our current warehouse which
would require funding." Forward-Looking Statements This release
contains forward-looking statements. 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. 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. Conference Call/Webcast Orchids Paper Products Company
will conduct its first quarter financial results conference call
beginning at 11:00 a.m. (ET) on Thursday, April 30th. All
interested parties may participate in the teleconference by calling
(888) 419 5570 and providing passcode 517 902 12. A question and
answer session will be part of the teleconference's agenda. Those
intending to access the teleconference should dial in 15 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 and 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. 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 wastepaper 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 tonnage, price and
cost per ton and per share data) Three Months Ended March 31, 2009
2008 Converted Product Net Sales $21,057 $17,117 Parent Roll Net
Sales 2,583 3,158 Net Sales 23,640 20,275 Cost of Sales 17,208
17,586 Gross Profit 6,432 2,689 Selling, General and Administrative
Expenses 1,830 1,385 Operating Income 4,602 1,304 Interest Expense
159 411 Other Income, net (3) (1) Income Before Income Taxes 4,446
894 Provision for Income Taxes 1,649 283 Net Income $2,797 $611 Net
income per share: Basic $0.44 $0.10 Diluted $0.42 $0.09 EBITDA
Reconciliation: Net Income $2,797 $611 Plus: Interest Expense 159
411 Plus: Income Tax Expense 1,649 283 Plus: Depreciation 804 754
Earnings Before Interest, Income Tax and Depreciation and
Amortization (EBITDA) $5,409 $2,059 Operating Data: Total Tons
Shipped 12,429 12,962 Net Selling Price per Ton $1,902 $1,564 Total
Paper Cost per Ton Consumed $687 $818 Total Paper Cost $8,539
$10,604 Cash Flow Data: Cash Flow Provided by (Used in): Operating
Activities $4,721 $(315) Investing Activities $(1,290) $(359)
Financing Activities $(1,890) $674 As of March 31, December 31,
Balance Sheet Data: 2009 2008 Cash $1,552 $11 Working Capital
$4,717 $3,453 Net Property, Plant and Equipment $61,144 $60,659
Total Assets $76,778 $74,482 Total Debt $21,889 $24,065 Total
Stockholders' Equity $36,726 $33,562 As of March 31, December 31,
Net Debt Reconciliation: 2009 2008 Current Portion Long Term Debt
$3,138 $2,998 Long Term Debt 18,751 21,067 Total Debt $21,889
$24,065 Less Cash (1,552) (11) Net Debt $20,337 $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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