PRYOR, Okla., July 30 /EMWNews/ -- Orchids Paper Products

Company (Amex: TIS) today reported net income for the three months ended

June 30, 2008 of $887,000, or $.14 per diluted share, compared with

$743,000, or $0.12 per diluted share, in the same period in 2007. Net

income was $1,498,000, or $0.23 per diluted share, for the first six months

of 2008, an increase of $886,000 compared to net income of $612,000, or

$.10 per diluted share, reported for the first half of 2007.



    Three-month period ended June 30, 2008



    Net sales for the 2008 quarter were $22.3 million, an increase of 21%

over the $18.5 million reported for the same quarter of 2007. The increase

in net sales was primarily the result of a more than two-fold increase in

parent roll shipments, a 14% increase in the selling price per ton of

converted products, and, to a lesser extent, an increase in the selling

price of parent rolls.



    Earnings before interest, taxes, depreciation and amortization (EBITDA)

increased $69,000 to $2.4 million in the quarter ended June 30, 2008,

compared to $2.3 million in the prior year quarter. As a percent of net

sales, EBITDA was 10.8% in the 2008 quarter compared with 12.6% in the 2007

quarter.



    Gross profit for the second quarter of 2008 was $3.1 million, an

increase of $369,000, or 13%, when compared with a gross profit of $2.8

million in the comparable prior year quarter. Gross profit as a percent of

net sales decreased to 14.0% in the second quarter of 2008 compared to

14.9% for the same period in 2007. As a percent of net sales, gross profit

decreased primarily due to higher paper and converting production costs

and, to a lesser extent, the effect of the lower gross profit margin

percentage realized on parent roll sales as compared to converted product

sales. These factors were partially offset by the increased overall

shipment volumes and higher converted product selling prices.



    Selling, general and administrative expenses in the second quarter of

2008 totaled $1.5 million, an increase of $321,000, or 27%, when compared

with selling, general and administrative expenses of $1.2 million in the

second quarter of 2007. Higher costs associated with additions to the

Company's senior management team and increased legal expenses accounted for

most of the increase. As a percent of net sales, selling, general and

administrative expenses increased to 6.7% for the quarter ended June 30,

2008 compared to 6.3% in the prior year quarter.



    Interest expense for the second quarter of 2008 totaled $320,000

compared to interest expense of $708,000 in the same period in 2007. Lower

LIBOR interest rates and the absence of interest on our 12% subordinated

debentures totaling $2.15 million, which were retired in December, 2007,

accounted for most of the decrease.



    Six-month period ended June 30, 2008



    For the first six months of 2008, the Company reported net sales of

$42.6 million, an increase of 21% compared to $35.2 million reported for

the first six months of 2007. Higher parent roll sales and higher prices

for converted finished products were the main reasons for the increase.



    EBITDA increased $686,000 to $4.5 million in the six months ended June

30, 2008, compared to $3.8 million in the first six months of 2007. As a

percent of net sales, EBITDA was 10.5% in the 2008 year-to-date period

compared with 10.8% in the 2007 period.



    Gross profit for the six months ended June 30, 2008 was $5.8 million,

an increase of $1.3 million, or 30%, when compared with a gross profit of

$4.5 million in the comparable prior year period. Gross profit as a percent

of net sales increased to 13.6% in the 2008 period compared to 12.8% for

the same period in 2007. As a percent of net sales, gross profit increased

primarily due to the higher sales volumes and higher selling prices being

partially offset by higher paper and converting production costs and, to a

lesser extent, the lower gross profit margins realized on the increased

parent roll sales when compared to margins realized on converted product

sales.



    Selling, general and administrative expenses in the six months ended

June 30, 2008 totaled $2.9 million, an increase of $647,000, or 29%, when

compared with selling, general and administrative expenses of $2.2 million

in the same period of 2007. Higher costs associated with additions to the

Company's senior management team, increased accruals under the Company's

incentive bonus plan and increased legal expenses accounted for most of the

increase. As a percent of net sales, selling, general and administrative

expenses increased to 6.8% for the six-month period ended June 30, 2008

compared to 6.3% in the prior year period.



    Interest expense for the six-month period ended June 30, 2008 totaled

$731,000 compared to interest expense of $1.6 million in the same period in

2007. Lower average bank borrowings, lower LIBOR rates and margins over

LIBOR on our new credit facility entered into in April, 2007 and the

absence of interest on our subordinated debentures as discussed above all

contributed to the decrease.



    Commenting on the results, Mr. Robert Snyder, President and Chief

Executive Officer, stated, "During the second quarter, we began a process

of price increases and product content reductions as well as maintaining

our focus on continuous improvement in our converting operation. The

benefits of these, however, were mostly offset by higher costs,

particularly those for waste paper and energy. These efforts will continue

and we expect to obtain additional benefits during the rest of the year."



    As announced, the Company will hold a teleconference to discuss its

second quarter earnings at 10:00 a.m. (CDT) on Thursday, July 31. All

interested parties may participate in the teleconference by calling 888 419

5570 and providing passcode 68349486. A question and answer session will be

part of the teleconference's agenda. Those intending to access the

teleconference should dial-in fifteen minutes prior to the start. The call

may also be accessed live via webcast through the Company's website at

http://www.orchidspaper.com under "Investors." A replay of the

teleconference will be available for 30 days on the Company's website.

    About Orchids Paper Products Company



    Orchids Paper Products Company is an integrated manufacturer of tissue

paper products serving the private label consumer market. The Company

produces a full line of tissue products, including paper towels, bathroom

tissue and paper napkins. From its operations in Pryor, Oklahoma, Orchids

Paper Products Company uses recycled waste paper to produce finished tissue

products that it provides to retail chains throughout the central United

States. For more information on the Company and its products, visit the

Company's website at http://www.orchidspaper.com.



    This release contains forward-looking statements. These statements

relate to future events or future financial performance, and involve known

and unknown risks, uncertainties and other factors that may cause its

actual results, levels of activity, performance or achievements to be

materially different from any future results, levels of activity,

performance or achievements expressed or implied by such forward-looking

statements. In some cases, forward-looking statements can be identified by

terminology such as "may," "should," "could," "expects," "plans,"

"intends," "anticipates," "believes," "estimates," "predicts," "potential"

or "continue" or the negative of such terms or other comparable

terminology. Although the Company believes that the expectations reflected

in the forward-looking statements are reasonable, it cannot guarantee

future results, levels of activity, performance or achievements. These

statements are only predictions.



    Factors that could materially affect the Company's actual results,

levels of activity, performance or achievements include, without

limitation, those detailed under the caption "Risk Factors" in the

Company's Annual Report on Form 10-K for the fiscal year ended December 31,

2007 as filed with the Securities and Exchange Commission on March 18,

2008.



    The Company's actual results may be materially different from what it

expects. The Company does not undertake any duty to update these forward-

looking statements after the date hereof, even though the Company's

situation may change in the future. All of the forward-looking statements

herein are qualified by these cautionary statements.










                        Orchids Paper Products Company

                           Selected Financial Data

  (in thousands, except net selling price per ton, tonnage, cost per ton and

                               per share data)



                                          Three Months Ended  Six Months Ended

                                               June 30,          June 30,

                                             2008     2007     2008     2007

    Net Sales                              $22,315  $18,515  $42,590  $35,152

    Cost of Sales                           19,193   15,762   36,779   30,667

    Gross Profit                             3,122    2,753    5,811    4,485

    Selling, General and

     Administrative Expenses                 1,491    1,170    2,876    2,229

    Operating Income                         1,631    1,583    2,935    2,256

    Interest Expense                           320      708      731    1,581

    Other (Income) Expense, net                 (5)      (7)      (6)     (27)

    Income Before Income Taxes               1,316      882    2,210      702

    Provision for Income Taxes                 429      139      712       90

    Net Income                                $887     $743   $1,498     $612



    Net income per share:

      Basic                                  $0.14    $0.12    $0.24    $0.10

      Diluted                                $0.14    $0.12    $0.23    $0.10



    Other Income Statement Data:

      Depreciation                            $772     $749   $1,526   $1,498

      Commission Expense                      $251     $256     $493     $478

      Earnings Before Interest, Income

        Taxes, Depreciation

        and Amortization (EBITDA)           $2,408   $2,339   $4,467   $3,781



    Operating Data:

      Total Tons Shipped                    14,226   12,816   27,188   23,977

      Net Selling Price per Ton             $1,569   $1,445   $1,566   $1,466

      Total Paper Cost per Ton Consumed       $814     $735     $809     $756

      Total Paper Cost                     $11,580   $9,418  $22,133  $18,115



    Cash Flow Data:

      Cash Flow Provided by (Used in):

      Operating Activities                  $4,021     $979   $3,706   $1,909

      Investing Activities                 $(2,377)  $1,357  $(2,736)  $1,280

      Financing Activities                 $(1,386) $(2,335)   $(712) $(3,188)



    Balance Sheet Data:

                                                            As of

                                                   June 30,       December 31,

                                                     2008              2007

    Working Capital                                 $2,012            $1,714

    Net Property, Plant and Equipment              $58,065           $56,856

    Total Assets                                   $71,473           $68,303

    Long-Term Debt, net of current portion         $22,324           $23,264

    Total Stockholders' Equity                     $29,760           $28,042