Consumables

Orchids Paper Products Company Reports Record Net Sales And 2013 First Quarter Results

Friday 26. April 2013 - Orchids Paper Products Company (NYSE MKT: TIS) today reported first quarter 2013 financial results.

Summary:
— Established a new quarterly record for both total net sales and
converted product net sales of $26.6 million and $24.6 million,
respectively.
— Converted product shipments were 1,864,000 cases, equaling the record
shipment level achieved in the first quarter of 2012.
— EBITDA in the first quarter of 2012 was $6.2 million, an increase of
$484,000, or 9%, over the prior year quarter.
— First quarter 2013 net income was $3.1 million, an increase of $571,000,
or 23%, compared with $2.5 million of net income in the same period of
2012.
— Diluted net income per share for the first quarter 2013 was $0.39 per
diluted share compared with $0.32 per diluted share in the same period
in 2012.
Mr. Robert Snyder, President and Chief Executive Officer, stated, “We are pleased to announce the achievement of record sales levels for total sales and converted product sales at $26.6 million and $24.6 million, respectively. Achievement of these records in the first quarter, which is normally a soft quarter, allows us to get off to a very solid start for the 2013 year. Case shipments of converted product, while a bit under our expectations, essentially equaled our previous shipment record of 1,864,000 cases. Our earnings in the first quarter were solid, with diluted earnings per share of $0.39 per share and EBITDA of $6.2 million, both a significant improvement over the prior year quarter’s results and the last three sequential quarters.”
Mr. Snyder added, “We have refined our shipment expectations for 2013 after analysis of the net effects of changes in our customer base volumes and additional business wins. While we now believe that the first half of 2013 will be under our original estimates due to a recalibration of anticipated shipment volumes on some of the previously announced new business, we anticipate a strong second half run rate of 8.9 million to 9.3 million cases. The new business environment is still positive and we are aggressively pursuing all pertinent opportunities. Our new product development efforts have resulted in a product offering line-up for the mid and premium tier markets that is resonating well with the market. As a result, we continue to be positive on the long-term outlook for the company.”
Three-month period ended March 31, 2013
Net sales in the quarter ended March 31, 2013 were $26.6 million, an increase of $882,000 million, or 3%, compared to $25.7 million in the same period of 2012. Net sales of converted product were $24.6 million in the 2013 quarter, favorable by $1.0 million, or 4%, compared to the $23.6 million of net sales in the same quarter last year. Net sales of parent rolls were $2.0 million in the first quarter of 2013, essentially flat with the $2.1 million of parent roll sales in the same quarter last year. The increase in converted product sales resulted from a 6% increase in converted product tonnage shipped partially offset by a 1% decrease in net selling price per ton. The increase in shipments was due to a combination of new product sales which were primarily in the mid-tier market.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the quarter ended March 31, 2013 was $6.2 million, an increase of $484,000, or 9%, compared to $5.7 million in the same period in the prior year. As a percent of net sales, EBITDA was 23.1% in the 2013 quarter compared with 22.0% in the 2012 quarter.
Gross profit for the first quarter of 2013 was $6.5 million, an increase of $394,000, or 6%, when compared with a gross profit of $6.1 million in the prior year quarter. Gross profit as a percent of net sales was 24.5% in the first quarter of 2013 compared to 23.8% for the same period in 2012. As a percent of net sales, gross profit increased primarily due to lower recycled fiber prices and lower paper manufacturing costs being partially offset by higher converting production costs.
Cost per ton of recycled fiber in the first quarter of 2013 was 13% lower than the costs incurred in the same quarter of 2012, resulting in a reduction in cost of sales of approximately $376,000. Overhead costs in the paper manufacturing area in the first quarter of 2013 were approximately $480,000 lower than the prior year costs primarily due to lower natural gas costs, lower maintenance and repair costs and lower labor costs. Converting costs were higher in the first quarter of 2013 primarily due to outside warehousing expense and labor costs. Outside warehouse costs for finished products were incurred and are expected to be incurred in the future because the amount of storage space required to appropriately service anticipated future shipment levels exceeds our internal warehouse capacity.
Selling, general and administrative expenses in the first quarter of 2013 totaled $2.3 million, flat with the prior year quarter. Due to the increased sales levels in the 2013 quarter, selling, general and administrative expenses as a percent of net sales decreased to 8.5% compared to 8.9% for the prior year quarter.
Interest expense for the first quarter of 2013 totaled $93,000 compared to interest expense of $107,000 in the same period in 2012. The lower level of interest expense resulted from lower amounts outstanding under the Company’s credit facility.
As of March 31, 2013, the effective tax rate for the full year is estimated to be 31.1%. In the first quarter of 2013, an Indian lands tax credit relating to calendar year 2012 that expired as of December 31, 2011 and was subsequently signed into law in January of 2013 was recognized that reduced the reported income tax rate by 5.3% to 25.8%.
Total debt outstanding as of March 31, 2013 was $15.9 million and the total of cash and short-term investments stood at $10.6 million. As a result, net debt outstanding as of March 31, 2013 was $5.4 million.
On March 28, 2013, the Company paid dividends totaling $2.3 million, or $0.30 per share, to stockholders of record as of March 19, 2013.