During the corresponding time, Orchids Paper Products Co recorded a revenue increase by 0.78 % year on year, sequentially revenue fell by -10 %. While revenue at the Orchids Paper Products Co's corporate clients
Orchids Paper Products Co's Comment on Sales, Marketing and Customers
We supply both large national customers and regional customers with a focus on
high growth regions of the United States. Our largest customers are Dollar General,
Family Dollar and HEB, which accounted for 61% of our converted product sales
in 2015. Our products are a daily consumable item. Therefore, the order stream
from our customer base is fairly consistent with limited seasonal fluctuations.
Changes in the national economy do not materially affect the market for our products
due to their non-discretionary nature and high degree of household penetration.
Demand for tissue typically grows in line with overall population, and our customers
are typically located in regions of the U.S. where the population is growing faster
than the national average. Additionally, private label consumer products have
continued to gain market share over branded products.
We focus our sales efforts on areas within approximately 500 miles of either our
manufacturing facility in Oklahoma or Fabrica’s manufacturing facility in
Mexicali, Mexico, as we believe this radius maximizes our freight cost advantage.
The freight optimization effect will apply to our South Carolina facility as well.
Because we are one of the few integrated tissue paper manufacturers in the areas
around both our Oklahoma facility and Fabrica’s Mexicali facilities, we
believe we typically have lower freight costs to our customers’ distribution
centers located in our target regions. Our target region around our Oklahoma facility
includes Texas, Oklahoma, Kansas, Missouri and Arkansas. The Fabrica Transaction
has allowed us to more effectively service customers that are located on the West
Coast by directly shipping them products that are produced in Mexico under the
Supply Agreement. As a result, we have expanded our target region to include California,
Nevada, Arizona, New Mexico and Utah. Our planned manufacturing facility in Barnwell,
South Carolina is intended to help us meet the growing demand in the southeastern
region of the United States. Demand for tissue in the “at home” tissue
market has historically been closely correlated to population growth and as such,
performs well in a variety of economic conditions. Our expanded target region
has experienced strong population growth for the past fourteen years relative
to the national average, and these trends are expected to continue.
Our products are sold primarily under our customers’ private labels and,
to a lesser extent, under our brand names such as Colortex®, My Size®,
Velvet®, Big Mopper®, Linen Soft®, Soft & Fluffy®, and Tackle®.
The Fabrica Transaction gave us the exclusive right to sell products under Fabrica’s
brand names in the United States, including under the names Virtue®, Truly
Green®, Golden Gate Paper® and Big Quality®. All of our converted
product net sales are derived through truck load purchase orders from our customers.
Parent roll net sales are derived from purchase orders that generally cover a
one-month time period. We do not have supply contracts with any of our customers,
which is normal practice within our industry.
Sources:
Orchids Paper Products Co’s official press releases and regulatory filings; CSIMarket.com’s market research; and the financial filings and press releases of other companies cited in this report.
Updated on:
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