Orchids Paper Products sees a blooming future

BY RICHARD MIZE Published: November 15, 2009
Be
fore that came an investment in case-packing equipment. The new warehouse and converter are necessary for Orchids to continue to grow, Snyder said.

"We’re successful because we have a good management team in place with a very willing workforce that makes a quality product at an affordable price,” he said. "We have made prudent investments for our future, as far as keeping our costs down. We’ve been able to increase our sales of our products on a consistent basis. ... That’s what we’re doing. We’ve been growing and we’re continuing to grow and we’re going to be significantly growing by the middle of next year.”

Not that Orchids’ future is assured. John Nobile, stock analyst for Taglich Brothers Inc., a New York City brokerage that helped launch Orchids’ IPO, said the company faces several challenges.

They include energy costs and aggressive pricing by competitors, which could force Orchids to decrease its prices to compete, Nobile said in a research note.

He also said Orchids’ reliance on just three customers for most of its sales — Dollar General, Family Dollar and Wal-Mart, which accounted for 64 percent of sales in 2008 — is risky, especially since sales are by purchase order and not supply agreements.

"Orchids may not be able to keep its key customers or these customers may cancel purchase orders or reschedule or decrease their level of purchases from the company,” Nobile wrote. "Any substantial decrease or delay in sales to one or more of Orchids’ key customers would harm sales and financial results.”

On the other hand, he told The Oklahoman that Orchids’ outlook was "glowing.”

Schroeder was optimistic and said Orchids, founded in 1998, has not been thrown by the dips in the economy.

"Our product is very recession-resistant. It sells well in both good economies and bad economies,” he said. "We’re also in the private-label sector of the economy, which continues to grow. It actually is outpacing the growth of the overall market. So we’re in a very good spot on the value end of the market and a very good spot in the private-label sector, as well.”


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