Down 54% this year, Orchids Paper Products Company (TIS) has been looking for a way to reverse its fortunes. Last week, the company announced that it has acquired a major new business award from a new customer in a new distribution channel—the company recently completed its ultra premium facility in Barnwell, SC— the company stated that this customer is expected to be a top 5 Orchids' customer with shipments beginning in the fourth quarter 2017. Jeff Schoen, the President & CEO, stated that he believes this customer will boost revenue to $220 to $240 million. 2016 revenue was $165 million.
The company expects lower capital spending going forward at approximately $5 million compared to $80 million spent last year. The company mentioned in its Q2 call that the stock is grossly undervalued but outlined a risk "Given our story is a positive one, we expect to resolve the debt concerns through a refinancing program with our existing banks or with an alternative debt structure in Q3."
A risk is that Orchids is looking for the correct way to refinance the debt and is trying not to do an equity raise. Net sales dropped $10 million for the first 6 months of the year. The company also discussed possible mezzanine financing, which is typically more expensive.