PRYOR, Okla., July 29 /PRNewswire-FirstCall/ -- Orchids Paper
Products Company (NYSE Amex: TIS) today reported net income for the
three months ended June 30, 2009 of $3.8 million, or $0.55 per
diluted share, a fourth consecutive quarterly record, compared with
$887,000, or $0.14 per diluted share, in the same period in 2008.
Net income was $6.6 million, or $0.97 per diluted share, for the
first six months of 2009, an increase of $5.1 million compared to
net income of $1.5 million, or $0.23 per diluted share, reported
for the first half of 2008. Three-month period ended June 30, 2009
Net sales increased 8%, to $24.1 million in the quarter ended June
30, 2009, compared to $22.3 million in the same period of 2008. Net
sales of converted product increased in the quarter ended June 30,
2009 by $5.1 million, or 29% to $22.5 million compared to $17.4
million in the same period last year. Net sales of parent rolls
decreased $3.3 million or 68% to $1.6 million in the quarter ended
June 30, 2009 compared to $4.9 million in the same period last
year. The increase in net sales of converted product is primarily
the result of a 19% increase in the net selling price per ton of
converted product shipments and a 9% increase in converted tons
sold. Net sales of parent rolls were negatively affected by a 58%
decrease in parent roll tonnage shipped and a 22% decrease in the
net selling price. Earnings before interest, taxes, depreciation
and amortization (EBITDA) increased $4.2 million to $6.6 million in
the quarter ended June 30, 2009, a fourth consecutive quarterly
record, compared to $2.4 million in the prior year quarter. As a
percent of net sales, EBITDA was 27.3% in the 2009 quarter compared
with 10.8% in the 2008 quarter. Gross profit for the second quarter
of 2009 was $7.8 million, an increase of $4.7 million or 151% when
compared with a gross profit of $3.1 million in the comparable
prior year quarter. Gross profit as a percent of net sales
increased to 32% in the second quarter of 2009 compared to 14% for
the same period in 2008. As a percent of net sales, gross profit
increased primarily due to lower paper and energy costs, higher
converted product selling prices, increased converted product
shipment volumes and lower converting direct labor costs. These
factors were partially offset by higher converting overhead costs.
The increased converted product shipment volume contribute to the
improved gross profit percentage by reducing the amount parent roll
sales we have available to sell in the open market, which generally
carry a lower gross profit margin than those realized on converted
product sales. Selling, general and administrative expenses in the
second quarter of 2009 totaled $2.1 million, an increase of
$600,000, or 40%, when compared with selling, general and
administrative expenses of $1.5 million in the second quarter of
2008. Higher costs associated with stock option expense primarily
due to a higher market price of the Company's stock, accruals under
the incentive bonus plan, increased commissions on converted
product and costs associated with additions to our senior
management team were the primary reasons for the increase. As a
percent of net sales, selling, general and administrative expenses
increased to 8.6% for the quarter ended June 30, 2009, compared to
6.7% in the prior year quarter. Interest expense for the second
quarter of 2009 totaled $135,000 compared to interest expense of
$320,000 in the same period in 2008. This decrease is mainly driven
by lower LIBOR interest rates and lower margins over LIBOR, and to
a lesser extent a lower average borrowing balance. As of June 30,
2009, the full year effective tax rate is estimated to be 34.6%. As
a result, the effective rate for the second quarter of 2009 was
32.7%. Six-month period ended June 30, 2009 Net sales increased
12%, to $47.8 million in the six months ended June 30, 2009,
compared to $42.6 million in the same period of 2008. Net sales of
converted product increased for the six months ended June 30, 2009,
by $9.1 million, or 26% to $43.6 million compared to $34.5 million
in the same period last year. Net sales of parent rolls decreased
$3.9 million or 48% to $4.2 million in the quarter ended June 30,
2009 compared to $8.1 million in the same period last year. EBITDA
increased $7.5 million to $12.0 million in the six months ended
June 30, 2009, compared to $4.5 million in the first six months of
2008. As a percent of net sales, EBITDA was 25.1% in the 2009
year-to-date period compared with 10.5% in the 2008 period. Gross
profit for the six months ended June 30, 2009 was $14.3 million, an
increase of $8.5 million, or 145%, when compared with a gross
profit of $5.8 million in the comparable prior year period. Gross
profit as a percent of net sales increased to 29.9% in the 2009
period compared to 13.6% for the same period in 2008. As a percent
of net sales, gross profit increased primarily due to the lower
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 six months ended June 30, 2009 totaled $3.9
million, an increase of $1.0 million, or 36%, when compared with
selling, general and administrative expenses of $2.9 million in the
same period of 2008. Increased accruals under the Company's
incentive bonus plan, costs associated with additions to our senior
management team, an increase in stock option expense primarily due
to a higher market price of the Company's stock, and increased
commission expenses related to higher converted product sales
accounted for most of the variance. As a percent of net sales,
selling, general and administrative expenses increased to 8.2% for
the six-month period ended June 30, 2009 compared to 6.8% in the
prior year period. Interest expense for the six-month period ended
June 30, 2009 totaled $294,000 compared to interest expense of
$731,000 in the same period in 2008. Lower LIBOR rates, lower
margins over LIBOR, and to a lesser extent, lower average bank
borrowings drove the decreased expense. Commenting on the results,
Mr. Robert Snyder, President and Chief Executive Officer, stated,
"I am very pleased with the record earnings and sales this quarter.
Our financial performance continues to strengthen our balance
sheet. We are excited about the future here at Orchids as we
continue to grow our business. To that end, we have several
projects underway, including the construction of a new warehousing
complex that will be located adjacent to the converting plant. We
are also evaluating the addition of another converting line."
Conference Call/Webcast As announced, the Company will hold a
teleconference to discuss its second quarter earnings at 11:00 a.m.
(ET) on Thursday, July 30. All interested parties may participate
in the teleconference by calling 888 268 4180 and providing
passcode 10695805. 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. 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. 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 Ended
Six Months Ended June 30, June 30, ------------------
---------------- 2009 2008 2009 2008 ---- ---- ---- ---- Converted
Product Net Sales $22,533 $17,380 $43,591 $34,498 Parent Roll Net
Sales 1,598 4,935 4,180 8,092 ----- ----- ----- ----- Net Sales
$24,131 $22,315 47,771 $42,590 Cost of Sales 16,303 19,193 33,511
36,779 ------ ------ ------ ------ Gross Profit 7,828 3,122 14,260
5,811 Selling, General and Administrative Expenses 2,087 1,491
3,917 2,876 ----- ----- ----- ----- Operating Income 5,741 1,631
10,343 2,935 Interest Expense 135 320 294 731 Other Income (1) (5)
(4) (6) --- --- --- --- Income Before Income Taxes 5,607 1,316
10,053 2,210 Provision for Income Taxes 1,832 429 3,481 712 -----
--- ----- --- Net Income $3,775 $887 $6,572 $1,498 ====== ====
====== ====== Net income per share: Basic $0.58 $0.14 $1.02 $0.24
Diluted $0.55 $0.14 $0.97 $0.23 EBITDA Reconciliation: Net Income
$3,775 $887 $6,572 $1,498 Plus: Interest Expense 135 320 294 731
Plus: Income Tax Expense 1,832 429 3,481 712 Plus: Depreciation 834
772 1,638 1,526 --- --- ----- ----- Earnings Before Interest,
Income Tax and Depreciation and Amortization (EBITDA) $6,576 $2,408
$11,985 $4,467 Operating Data: Total Tons Shipped 12,297 14,226
24,726 27,188 Net Selling Price per Ton $1,962 $1,569 $1,932 $1,566
Total Paper Cost per Ton Consumed $642 $814 $664 $809 Total Paper
Cost $8,189 $11,580 $17,289 $22,133 Cash Flow Data: Cash Flow
Provided by (Used in): Operating Activities $5,278 $4,021 $9,997
$3,706 Investing Activities $(5,856) $(2,377) $(7,145) $(2,736)
Financing Activities $820 $(1,386) $(1,069) $(712) As of ----- June
30, December 31, Balance Sheet Data: 2009 2008 ---- ---- Cash Plus
Short Term Investments $4,294 $11 Working Capital $8,710 $3,453 Net
Property, Plant and Equipment $63,666 $60,659 Total Assets $83,202
$74,482 Total Debt $22,631 $24,065 Total Stockholders' Equity
$40,934 $33,562 As of ----- June 30, December 31, Net Debt
Reconciliation: 2009 2008 ---- ---- Current Portion Long Term Debt
$3,363 $2,998 Long Term Debt 19,268 21,067 ------ ------ Total Debt
$22,631 $24,065 Less Cash (1,794) (11) Less Short Term Investments
(2,500) - ------ --- Net Debt $18,337 $24,054 ======= =======
DATASOURCE: Orchids Paper Products Company CONTACT: Keith
Schroeder, Chief Financial Officer of Orchids Paper Products,
+1-918-824-4605 Web Site: http://www.orchidspaper.com/
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