Orchids Paper Products Company (NYSEAMERICAN: TIS) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company announced an amendment to a credit agreement as well as a new customer win. Of course, the news excited investors who are pushing the stock on a run for the top. Today, we’ll talk about the amended agreement, what we’re seeing from TIS as a result, and what we’ll be watching for with regard to the stock ahead.
TIS Is Flying On An Amended Agreement
As mentioned above, Orchids Paper Products is having a great start to the trading session this morning after announcing an amended credit agreement and a new customer. In a press release issued early this morning, the company said that it has increased the amount available under a revolving credit line by $5.9 million. Of course, this funding will help the company to facilitate growth.
Another big part of the announcmeent was that the company won a new customer. The new customer is a national supercenter retailer. In the release, TIS said that the win means that it will be the supplier of 100% of the retailer’s recycled ultra-premium kitchen towel and bath tissue. It is expected that shipments under this agreement will begin in March of next year. The company is expecting that this new customer will make a significant contribution to its profitability.
In a statement, Jeff Schoen, President and CEO at TIS, had the following to offer:
Our lenders continue to support and maintain access to the liquidity needed to operate our business. On November 20, we executed modifications to our credit facilities to increase the amount available under our revolving line of credit by $5.9 million and to defer future principal and interest payments to December 31, 2018. In addition, the amended agreement extends the milestone dates to execute a transaction to December 31, 2018. At the end of the third quarter, the Company had $5.1 million of cash on hand.
Additionally, we recently won a significant bid from a national supercenter retailer as the sole supplier of 100% recycled ultra-premium kitchen towel and bath tissue supporting the sustainable product channel, which will be serviced out of our Barnwell facility using QRT paper. We expect this business to begin shipping in March 2019 and to make a significant contribution to the overall profitability of the Company.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Orchids Paper Products, the news proved to be overwhelmingly positive. First and foremost, the additional $5.9 million made available through its revolving credit facility will assist the company with regard to expansion of its products to meet the demands of the new customer. Moreover, the new customer announcement means that the company is likely to see a strong increase in revenue and potential profitability. So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:41), TIS is trading at $1.98 per share after a gain of $1.30 per share or 191.18% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on TIS. In particular, we’re interested in following the story surrounding the company’s new customer and the growth in revenue that the new customer generates. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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