Orchids Paper Products Company's 3Q 2016 net sales of converted product decreased 3% primarily due to increased competitive pressures and continued heavy promotional activity on branded products. Net sales of parent rolls increased from $0.1 million to $1.3 million. Total net sales were $39.6 million in the 3Q 2016, compared to $46.8 million in 3Q 2015, as the company said in the press release received by Lesprom Network.
Gross profit as a percent of net sales decreased 5% and Adjusted EBITDA margin decreased 5%, both primarily due to spreading fixed and semi-variable costs over a decreased sales volume. Overhead costs related to the Barnwell, South Carolina facility start-up increased from virtually nothing to approximately $1.5 million in the 3Q 2016.
In January-September 2016, net sales of converted product increased 2% primarily due to strong 1Q 2016 sales to private label customers and strong sales on the West Coast.
In January-September 2016, gross profits increased by 9% and Adjusted EBITDA increased by 13%.
Jeff Schoen, President and CEO, stated: "Orchids year-to-date 2016 performance has improved significantly as bottom-line metrics such as Gross profits (+9.5%), Net income (+3%), Adjusted EBITDA (+13%), and Operating cash flow less changes in working capital (+51%), have all increased significantly over the same period last year.
“At the same time, competitive pressures continued in 3Q 2016 which negatively impacted sales volume. On a positive note, sales volume picked-up in September, and we expect sales volume to continue to increase into 4Q 2016 due to new distribution and recovery of private label business with existing customers. As we look forward, Orchids has increased its sales force by 40% to promote Orchids' capabilities to gain new customers and gain a broader base of private label and branded products within new distribution channels.”
Orchids Paper Products Company produces a full line of tissue products, including paper towels, bathroom tissue and paper napkins.
