Revenue during the quarter dropped 25.95 percent to $35.35 million from $47.74 million in the previous year period. Gross margin for the quarter contracted 1827 basis points over the previous year period to 5.57 percent. Operating margin for the quarter stood at negative 2.50 percent as compared to a positive 17.35 percent for the previous year period.

Operating loss for the quarter was $0.88 million, compared with an operating income of $8.28 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $2.81 million compared with $11.71 million in the prior year period. At the same time, adjusted EBITDA margin contracted 1657 basis points in the quarter to 7.95 percent from 24.52 percent in the last year period.

Jeff Schoen, president and chief executive officer, stated, "As we expected, the first half of 2017 was going to be a challenging period until the new business awarded started to be produced and shipped. Sales were negatively impacted in January and February by one-time inventory reductions in preparation for a restage of private label programs that started to ship in March. Costs were negatively impacted by the continued effect of start-up costs for our Barnwell, South Carolina plant. Looking to the second quarter, production of the new volume that we announced in January, representing 3.0MM cases or more of new business, has begun, which we expect to be fully implemented by the beginning of third quarter. As previously stated, we expect the new volume to generate in the area of $15 million to $20 million of EBITDA and to attain a run rate of $50 million to $60 million of EBITDA when our new capacity is sold out.

The company has spent $18.05 million cash to meet investing activities during the quarter as against cash outgo of $20.78 million in the last year period.

Cash flow from financing activities was $11.46 million for the quarter, down 26.51 percent or $4.14 million, when compared with the last year period.

Cash and cash equivalents stood at $5.78 million as on Mar. 31, 2017, down 28.14 percent or $2.26 million from $8.04 million on Mar. 31, 2016.

Working capital drops significantly
Orchids Paper Products Company has witnessed a decline in the working capital over the last year. It stood at $9.31 million as at Mar. 31, 2017, down 58.73 percent or $13.24 million from $22.55 million on Mar. 31, 2016. Current ratio was at 1.23 as on Mar. 31, 2017, down from 2.01 on Mar. 31, 2016.

Cash conversion cycle (CCC) has decreased to 16 days for the quarter from 51 days for the last year period. Days sales outstanding were almost stable at 36 days for the quarter, when compared with the last year period.

Days inventory outstanding has decreased to 25 days for the quarter compared with 34 days for the previous year period. At the same time, days payable outstanding went up to 44 days for the quarter from 18 for the same period last year.