Orchids Paper Products Company 3rd Quarter Net Income Rises
Oct. 26, 2011 - Orchids Paper Products Company (NYSE Amex: TIS) today reported third quarter 2011 financial results.
- Net sales in the third quarter of 2011 increased 6% to $26.1 million, a new quarterly record, compared with $24.5 million in the same period in 2010. Year-to-date net sales increased $1.9 million, or 3% to $72.2 million, compared with $70.2 million in the same period of 2010.
- Third quarter 2011 net income was $1.6 million, an increase of $205,000, or 14%, compared with $1.4 million of net income in the same period of 2010. Year-to-date net income for 2011 was $3.5 million, a decrease of $1.5 million, or 30%, compared with $5.0 million of net income in the same period of 2010.
- Diluted net income per share for the third quarter 2011 was $0.21 per diluted share compared with $0.18 per diluted share in the same period in 2010. Year-to-date diluted net income per share for 2011 was $0.45 compared with $0.64 per diluted share for the same period of 2010.
- Compared to the second quarter of 2011, net sales in the current quarter increased $2.7 million, or 12%, net income increased $450,000, or 38%, and diluted net income per share increased $0.05 per diluted share.
Mr. Robert Snyder, President and Chief Executive Officer, stated, "We are pleased that our third quarter performance resulted in earnings that exceeded those of the prior year in spite of the very strong headwinds from increased fiber prices and that we established a new quarterly net sales record. Despite an increase of $1.2 million in quarter over quarter fiber costs, continued improvements in sales and operations combined with cost reduction efforts allowed us to improve our net income and EBITDA in the current year quarter by $205,000 and $102,000, respectively. These efforts also allowed us to record our second consecutive sequential quarterly improvement in both sales and earnings."
Mr. Snyder added, "We realized the previously announced new converted product business during the quarter and continue to be positive about the future converted product business opportunities in the market place."
Three-month period ended September 30, 2011
Net sales in the quarter ended September 30, 2011 were $26.1 million, an increase of $1.6 million, or 6%, compared to $24.5 million in the same period of 2010. Net sales of converted product were $21.4 million in the 2011 quarter, favorable by $1.7 million, or 9%, compared to the $19.7 million of net sales in the same quarter last year. Net sales of parent rolls were $4.7 million in the third quarter of 2011, a decrease of $149,000, or 3%, compared to $4.9 million of parent roll sales in the same quarter last year. The increase in converted product sales resulted from an 8% increase in converted product tonnage shipped and a 1% increase in net selling price per ton. Net sales of parent rolls were positively affected by a 9% increase in net selling prices being partially offset by an 11% decrease in tonnage shipped.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the quarter ended September 30, 2011 was $4.2 million, an increase of $102,000, or 2%, compared to $4.1 million in the same period in the prior year. As a percent of net sales, EBITDA was 16.1% in the 2011 quarter compared with 16.7% in the 2010 quarter.
Gross profit for the third quarter of 2011 was $3.9 million, a decrease of $93,000, or 2%, when compared with a gross profit of $4.0 million in the prior year quarter. Gross profit as a percent of net sales was 15.1% in the third quarter of 2011 compared to 16.4% for the same period in 2010. As a percent of net sales, gross profit decreased primarily due to higher waste paper prices being partially offset by increased levels of converted product shipments and lower converting production costs.
Cost per ton of waste paper in the third quarter of 2011 was 22% higher than the costs incurred in the same quarter of 2010, resulting in increased cost of sales of $1.2 million. Converted product sales increased as a percent of overall sales, which had a positive effect on overall gross profit because converted product sales generally provide a higher gross profit margin than parent roll sales.
Selling, general and administrative expenses in the third quarter of 2011 totaled $1.5 million, a decrease of $141,000, or 9% compared to the $1.6 million incurred in the same quarter of 2010. As a percent of net sales, selling, general and administrative expenses decreased to 5.8% for the quarter ended September 30, 2011, compared to 6.7% in the prior year quarter.
Interest expense for the third quarter of 2011 totaled $103,000 compared to interest expense of $249,000 in the same period in 2010. The lower level of interest expense resulted from the effects of the refinancing of the Company's credit facility on April 25, 2011, which resulted in lower borrowing levels and interest rates.
As of September 30, 2011, the full year effective tax rate is estimated to be 30.0%.
On September 21, 2011, dividends totaling $749,000, or $0.10 per share, were paid to stockholders of record as of September 5, 2011, bringing total dividends paid to stockholders during 2011 to $2.2 million, or $0.30 per share.
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 primarily recycled waste paper to produce finished tissue products that it provides to retail chains throughout the central United States.
SOURCE: Orchids Paper Products Company