Greystone Logistics (ticker: GLGI) has announced its year-end financial results, revealing both challenges and opportunities in the current economic climate. CEO Warren Kruger reported a revenue of $61.78 million with net income of $5.03 million and earnings per share at $0.16.
The company's EBITDA exceeded $13 million, and it has made significant investments to boost its production capacity. Despite a soft manufacturing sector and customer hesitance, particularly from Walmart (NYSE:WMT), the company is optimistic about the demand for plastic pallets and is exploring new opportunities with various clients.
Key Takeaways
- Greystone Logistics reported a year-end revenue of $61.78 million, with earnings per share at $0.16.
- Net income stood at $5.03 million, and EBITDA exceeded $13 million.
- The company is initiating a $1 million stock buyback plan after its upcoming Q filing in mid-October.
- Walmart is projected to contribute about $6 million annually, with new warehouse tools expected to improve product consistency and ergonomics.
- Greystone is expanding its relationship with Walmart and exploring opportunities with clients like Yuengling, Toyota (NYSE:TM), and Kroger (NYSE:KR).
- The Jasper, Indiana facility is set to ramp up production by the end of September.
- Sales volumes remained flat over the past fiscal year, but growth is anticipated through new customer contracts and a dedicated sales team.
Company Outlook
- Greystone Logistics sees growing demand for plastic pallets as companies transition from wood, driven by automation in distribution centers.
- The company is working on sustainability by creating pallets from waste in collaboration with Berry Plastics.
- A dedicated in-house sales team is expected to drive revenue growth in the upcoming year.
Bearish Highlights
- The manufacturing sector has been soft, causing customer hesitance and impacting sales volumes.
- Sales volumes have been flat due to a customer transition that limited revenue growth.
Bullish Highlights
- The company has increased its capacity, which could potentially add $40 million in revenue.
- There is an optimism for increased revenue growth, supported by new products and potential new customer contracts.
Misses
- Despite stable bottom-line performance, the anticipated volume growth has not been achieved.
- The current net operating losses stand at $5.1 million, with $4 million available for the next year.
Q&A highlights
- CEO Warren Kruger acknowledged past communication challenges and emphasized improvements in outreach.
- Kruger invited attendees for direct contact and follow-up questions, indicating openness to investor communication.
Greystone Logistics' year-end financial results reflect a company at a crossroads, facing industry headwinds while positioning itself for future growth. With its strategic investments and focus on expanding its market share, particularly in the burgeoning plastic pallet sector, Greystone Logistics remains committed to navigating the challenges ahead and capitalizing on new opportunities.
InvestingPro Insights
Greystone Logistics (ticker: GLGI) has recently shared its financial outcomes, highlighting a resilient performance in a challenging environment. With a focus on the company's valuation and shareholder value, here are some insights from InvestingPro that could provide additional context to the company's financial health and future prospects.
InvestingPro Data shows that Greystone Logistics has a market capitalization of $43.27 million, underlining its position in the market. The company's Price/Earnings (P/E) ratio stands at 9.75, which adjusts to a slightly lower 9.23 for the last twelve months as of Q4 2024, suggesting a potentially undervalued stock in comparison to its earnings. Moreover, the company's Price to Book (P/B) ratio as of the same period is 1.71, which can be indicative of a reasonable valuation relative to the company's assets.
From the perspective of revenue, Greystone Logistics reported $61.78 million over the last twelve months as of Q4 2024, with a modest growth rate of 1.68%. This growth, although slight, may signal stability in the company's revenue streams amidst the economic headwinds mentioned in the article.
InvestingPro Tips for GLGI highlight that the company has a high shareholder yield and a valuation that implies a strong free cash flow yield. These factors, along with the company's ability to maintain profitability over the last twelve months and a strong return over the last five years, could be attractive to investors seeking companies with solid financial fundamentals. Moreover, it is worth noting that while Greystone Logistics does not pay a dividend, the company's liquid assets exceed its short-term obligations, which enhances its financial flexibility.
For investors looking for comprehensive analysis and additional insights, InvestingPro offers a total of 6 tips for Greystone Logistics, which can be accessed through the dedicated InvestingPro page for GLGI at https://www.investing.com/pro/GLGI. These tips may provide investors with a deeper understanding of the company's financial position and future potential, aiding in informed decision-making.
Full transcript - Greystone Logistics (GLGI) Q4 2024:
Operator: Welcome to the Greystone Logistics Year-End Results Conference Call. At this time, all participants will be in a listen-only mode. Later, we will conduct the question-and-answer session. I would now like to turn it over to our host, Brendan Hopkins. You may begin.
Brendan Hopkins: Great. Thank you. And thank you all for joining us today. We have a brief safe harbor and I'll be handing it over to Warren. Except for historical information contained herein, the statements in this conference call are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from forecasted results. With that said, I would like to turn the call over to Warren Kruger, CEO of Greystone.
Warren Kruger: Good morning and thank you very much for listening in on this call this morning. I want to first of all apologize that we were late in our filing. We -- unfortunately life got in the way this year. Our controller, who's been with us for 20-years, he went into the hospital and had to be -- had to have a tube put down his throat and he was out of -- it put us a little wacky. And so Brice had to work diligently to without him to get things accomplished, so I apologize that we were late that's something that we have not - does not occurred in the past and I'm going to take steps to ensure that, that doesn't happen in the future. That being said, I'm very happy to announce that we had a really good year for Greystone. We are -- our revenue was $61,780,715, $0.16 a share earnings. We had EBITDA of over $13 million a share, and our net income was $5,027,491. It was a very good year, yet it wasn't up to what I had projected. I was -- we have spent a lot of money, as you well know, or you may or may not know, we've spent a lot of money on equipment over the last couple of years and on molds, gearing up for additional sales. At one time a couple years ago, we had no capacity whatsoever. We were overwhelmed and it was concerned if something large came along that we wouldn't be able to handle it. In that period of time, since then, we now have the capacity to do another $40 million in revenue with equipment that we have and with our extrusion line that we acquired down in Jasper, Indiana. And so I want to talk about what's happened, I am out there every single week and I will tell you that in the manufacturing sector, it is soft and we -- I have a lot of orders in the pipeline, but people are holding off. And I think that it's just a sign of the economy right now. And I think there's some uncertainty about what's happening this year in the political spectrum. So I'm not going to make this a political call, but I do believe that there's almost a recession-like feeling out there in the marketplace. So we -- I anticipated Walmart we put on with a new tool that we worked in concert with them on, and we've got about a pace of about $6 million a year with them. And I anticipated much more than that with them, but even they are holding off a little bit. And they're doing a lot of automation in all their distribution centers. And so they really, it bodes well for Greystone in the future, because they need consistency and they need exactly what we've designed. So I'm excited about that, but it is -- they're holding back. So I anticipate that we will see more of that. I've actually, I'm so bold that I've ordered another tool that will be in in about five months that emulates exactly what we produce for them and it's a ware -- we call it a warehouse tool, because it's for their warehouses and we did it in concert. We can use it for any customer, but we did it in concert with them. They had suggested some ergonomics that would help their valued associates. And so we helped them with handholds in the correct spots and easy to grip. We dropped some weight out of the product. And where they were having some damage with walkies, they call them walkies, or where they're moving the pallet around, we've eliminated some of the damage points that they had. So I'm very excited about that product. And let me also talk about the -- we've got a 43x43 pallet that's for a Southwest wire, a big opportunity. So we're looking at that. It's ordering that tool. We have another keg pallet for Yuengling. We did a prototype with them, a three-dimensional, we designed it and then made a three-dimensional product for their kegs. And it worked in their system. We ran it through the system, the prototype. And so with that tool is now on order. And then we have a 43x37 that, with some beverage companies, that I'm looking to get a purchase order first before I order up that tool. And if I get a purchase order, that's another product that we'll have online. We've also our extruded lumber product. We now have the tooling back. That's probably six months behind schedule as so many things happen. But I anticipate that by the end of this month, we'll get samples out to customers, including Toyota, who's been waiting patiently to view this for export purposes. So I want to dig a little bit deeper into the numbers, so I'm going to turn it over to Brice that he can kind of review a few things off the income statement balance sheet and then I can answer questions about sales later or operations or Brice and I can handle your financial calls. Brice?
Brice Dille: Okay, thank you, Warren. I'd like to start and Warren hit on a couple of these items. And at the very end, we'll follow-up with questions. You have a specific question about a specific item. Revenues were up approximately $1 million. Our cost of goods sold were down. Our raw material cost went down. This was kind of post-COVID. Things were getting back to normal. I think that's getting more into a flow of things. That revenue stream we're talking about is, Warren, kind of, mentioned our capacity, what we can do. We can obviously hit the $62 million. If you look at our 10-K, this year was really a story about cash. Our cash was up $5.1 million and our debt went down $3.8 million, that's almost a $9 million swing in cash. So our core operations was throwing off cash. There wasn't a lot of moving parts to that cash. That really is just operations throwing cash off. As I mentioned, our revenues were up $1 million, our cost of goods sold were down, our cash was up, our debt was down, our EBITDA was $13 million, which is a reflection. The EBITDA is a reflection of cash. We're able to cover our taxes. We're in a deferred tax situation because they're NOL. Our depreciation is “free cash” but we're replacing equipment. We're able to buy all our equipment and not have to incur additional debt and we pay down our debt for the year. Our long-term debt went down for the year. So really, the story I want to go to, it was call it $62 million in revenues. Income before taxes was $6 million, net income $5 million, earnings per share $16 million, diluted was $0.15 a share, but it's a cash story. This is a cash flow generating organization, and we have very good customers that pay us in a timely manner. It's easy to project out your payables and your receivables, because we don't have receivables over 30 days. We're in a very timely situation. We can really plan cash in, cash out, and plan debt payments down and cash in. So I guess that's the story I want to get to in the numbers. And just looking at the cash flow statement, I just want to say our working capital is now -- it's almost $9 million. I mean our current assets, compared to current liabilities is in the $9 million range. $16 million minus $7 million, $7.1 million, it's $9 million, $400,000 or something. It's a good situation to be in. So from a company standpoint as a CFO, I would like to say it's becoming a very easy company to manage, because of a cash flow situation, the cash in cash out, out the door. Warren mentioned briefly, yes, we did have a delay in the filing. There was some movements we had made prior to the filing to fix the situation. It will not present itself again next year. I'll make that statement right now. We had started to make some movements. They were probably a little bit later. You can't plan on somebody going to ICU for 22-days. That's how long he was in there for. But that will not happen again. So, I'll turn it back over to Warren, if you want to talk about anything and then we can open it up to questions afterwards.
Warren Kruger: No - thanks, Brice. No, I believe it's time. Brendan, why don't we open it up for Q&A?
Brendan Hopkins: Sounds good.
Operator: Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] And our first question will come from Anthony Perala with Punch & Associates.
Anthony Perala: Hey, Warren, thanks for taking the question here. First off, I'd just kind of piggybacking on Brice’s comments on the cash. I'd be curious, it was nice to see the PR on the approved stock buyback plan this summer? Just curious on if you've been active on that plan or when kind of you'll be out of a blackout period and able to start executing on that $1 million share buyback?
Brice Dille: Thank you for the question, Anthony. I wanted, of course, I'm sometimes very impatient, and I wanted to start it quite some time ago, but our legal counsel has suggested that we wait another 30 days after the first -- the Q for the first part of the year. So that's kind of our schedule right now and that's only 30 days away.
Brice Dille: And let me add real quick, because I mean Warren's kind of put me in charge of this, working through our legal counsel, and we want to make sure when we kick this off, it's all above board, legal and everything. The $1 million is approved by the board. We have got the paperwork in place to get everything started. Our legal counsel advised us you have to start it in a blackout period after the next Q is issued and that's when we put the press release out that said it would be middle to -- let me think what month this is, September middle of October. So once we file the 10-Q, we can start the process of buying shares back in the open market.
Anthony Perala: Excellent. Yes, that's coming up here soon. Nice to hear. And then another one, Warren, I'd just be curious, it's nice getting the rundown of sales and the pipeline, exciting things happening here. If you could just expand a little bit more on the Walmart relationship. I think that's the first time I've heard you mention that you anticipate that growing with them. Just kind of how you see that maybe evolving over the next couple of years here as they get a little bit more open to adding to their automated DC network with plastic pallets?
Warren Kruger: Great. I really -- I took another great question. Let me first talk about, I'm going to segue over to Walmart. Let me talk about our relationship with IGPS, which is the largest leasing company - plastic pallet leasing company in America, fine company to do a wonderful job. If the pallet world, some of you are there investors, really know, but some of you that don't, there are the two giant wooden pallet rental pools, CHEP and PECO. And some people call it PECO, I call it PECO. And there are red and blue pallets. So if you go to Costco (NASDAQ:COST) and you see a red pallet or a blue pallet, those are rented pallets. And the same thing holds true for the IGPS. It's a rented pallet. So that opportunity is - it's really prevalent in the palette world and I would anticipate that with Walmart being the largest retailer, they too have their own products that come in. So we have talked with them about having a smaller pool that's their own that could potentially be in their system for their own products that they manufacture. So those are the opportunities we see. But also back to their DCs that I talked about, they're so much more automation out there in this world and everything that goes in now, that these warehouses really are automated, and they have to have consistency. And I will tell you that the same thing I've been saying for 20 years, wood pallets, the nails pop up, the boards pop off, I mean, it just happens. Nothing's going to change over time with that. And so the opportunity for plastic just continues to grow. And so we're going to try to take advantage of that. And we're going to try to make sure that when they go to one of their DCs goes over, we want to be competitive in our pricing with our product, because I believe we have the greatest plastic pallet in the United States of America. And so I believe that we'll continue to have success with their distribution centers as they get away from wood.
Anthony Perala: That's great. Thanks for your time. Look forward to talking to you again soon.
Warren Kruger: Thank you.
Operator: And our next question will come from Robert Littlehale with JPMorgan Chase (NYSE:JPM).
Robert Littlehale: Hi, Warren, how are you?
Warren Kruger: Good, Robert. How are you?
Robert Littlehale: I'm fine, thank you. Couple of questions, the Jasper, Indiana facility, is that -- can you maybe just tell us a little bit about the facility? Is it at full capacity or is some of that capacity that you spoke of in terms of getting to $100 million without any issues, is some of that capacity rest in Jasper?
Warren Kruger: Yes, it does.
Robert Littlehale: You can just sort of give us some perspective.
Warren Kruger: Let me do something for you today, Robert. On our website, I've meant to do this. We have a video of the robotics of the facility and I'm going to put - I'm going to post that video on our website. I'll have our marketing ad people do that and then you'll see it's really quite interesting. But what we've done and I'll forewarn you that the product that they were manufacturing when we bought the equipment, they were not -- they shut things down, because that was right after the COVID and the pandemic and pricing was through the roof. And the group that owned it just decided to liquidate it rather than just keep pouring money into it. So where we are, we've redesigned the product to make it more just like lumber. It will look like a wooden pallet and it's just going to be a plastic pallet. It's got a hollow 2x4s that we'll use and those dies, we had those made in Austria. And that's -- so they're back and we're rolling. I'm excited about that, because we can make a pallet a minute over there. And so we've got a lot of capacity to make product. And so it's at zero right now. And I would hope that by then -- and I hope it's not a good strategy. I am telling you that I am on it to get production out of that facility. And we have already, there are people waiting for samples. So by the end of this month, we will be sending samples out to customers. And the beautiful thing about the equipment there, most of our molds cost $300,000 to $500,000 a piece, so there -- it's not for the faint of heart to just willy nilly go out and buy tooling. But with the facility down there, we can make any product up to 60x60 without new tooling. Because all you do is you just shorten the length of the boards that you're manufacturing and cutting off. So it's really going to be a fun, I think, fun to see where we can go with that equipment. So that is equipment that we have available. We've also put two large tonnage machines in Missouri at someone, who was outsourcing for us previously over the years. And that equipment really has been idle and it's a lot of money tied up in equipment. And we need to get that equipment running, because it will do nothing but great things for our top line and bottom line.
Robert Littlehale: What's your NOL currently?
Warren Kruger: Brice, can you help me with that?
Brice Dille: Yes, it was, let me pull it off the balance sheet. It's $5.1 million, I mean, that's not really book tax, that's just net operating losses. I think, don't quote me, I think $4 million of that will be available for next year and then approximately the remaining $1 million, $1.1 million does not expire.
Robert Littlehale: Final question in terms of when you guys go to trade shows, you know, obviously in this environmentally sensitive world we live in, can you sense that there's more and more of a groundswell in terms of getting away from wooden pallets for obvious reasons, whether they're somewhat unreliable, but they're causing trees to be cut down dramatically. Any signs that obviously the world is thinking differently than perhaps they did a few years ago?
Warren Kruger: Yes, and there's a couple of things there: one, I'm going to talk about a call I was on with Constellation Brands (NYSE:STZ), and they had a bunch of different competitors on, and they were exploring the opportunity of using plastic. The crazy thing is, the guy that was leading the call, he says, we cut down a forest every day to send our beer to America. And I mean, it was an astounding statement, because it's just wrong. I mean, it's just wrong. And so they still have not converted over. So the Constellation, which is Corona and all their other brands, number, I think they're the number one, well, they are, I don't think they're the number one import brand in America. And they still send everything in on a wooden pallet that's a one-way pallet that goes to landfill. That's again, that's just wrong. That's the kind of thing from the top I don't understand when everyone talks about recycling in green, it starts at the top and that has to be from someone on top saying, hey, listen, let's explore what we need to do to get rid of this wood now. And you can't just keep meeting about it. The other thing that I'll mention, Robert, is that there has been in the last five years this bio plastic. A lot of people saying, oh, we should have something that disintegrates in the ground, or at least part of our recycling should be with bio. And I can't tell you how many people have tried to sell me bio plastic. Well, that's great, except none of my customers have said, hey, change from 100% recycled plastic to partially recycled plastic and then partially bio plastic. But the conversations, that my point there is, the conversations are occurring, but I think that where we are, we don't need to be everything to everyone. We need to be -- we are really good at processing polyethylene and polypropylene. We're really good at it. We have grinding capacity, we have beading capacity. So what we need is to continue to have people out there in positions of authority, who can make the decision to say, hey, listen, we are going to use recycled plastic pallets in our system. I'll tell you one, this last year, something I haven't mentioned is a new customer has been Berry Plastics and Berry is a very large manufacturer of bottles and they have a lot of things that they do for the market. They're taking their plastic waste and sending it to us and we are in turn creating their pallets for them for their system. So they're actually someone who has said, let's make this happen. And they are taking, they want a zero waste of their own plastic. They don't want to put it in landfill and they don't want to sell it to someone. They've been trying to use it internally and we're helping them create that opportunity.
Robert Littlehale: Great. That's all from me. Thank you. Thank you both.
Warren Kruger: Thank you, Robert.
Brice Dille: Okay. Thank you.
Operator: [Operator Instructions] And it appears there are no further questions at this time. I'll turn the conference back to Mr. Kruger for any additional or closing remarks.
Warren Kruger: Thank you. I just want to thank everyone very, very much for getting on these calls with us. I have been chastised over the years a few times about not communicating as well as I should, and I'll take ownership of that. So we've been trying to do a better job of doing that. Brendan Hopkins has helped us, our IR team, and that's really helped to allow us to communicate directly. My phone line is always available though, so if anyone has a question or a comment and they want to reach out to me, please do so, because I will be timely getting back with you. So if there's nothing else from any other questions, Brendan, you want to close it down?
Brendan Hopkins: Yes, sure.
Operator: Pardon me [Multiple Speakers] this is the operator. We do have an additional question. Would you like to go ahead and take that?
Warren Kruger: Absolutely.
Operator: Okay, great. Thank you. That will come from Tim Chattered with [Morose Investment Management] (ph).
Unidentified Analyst: Hey, sorry for getting in here at the end, but I'm just curious if you -- what's your volumes were for the fiscal year? Were they up or down?
Brice Dille: Our sales volumes? I'm sorry.
Unidentified Analyst: Volume of products, so revenues is, price times volume, I'm just curious if your volumes were higher for the fiscal year to send it?
Warren Kruger: Well, I will say they were about flat. What happened previously, we popped up in the $70 million some odd range a few years ago and we had a customer that we were buying resin for and of course we were buying resin and putting it in the pricing and it was substantial amount of plastic that we were purchasing. They rolled off of that and started sending in their own product, which affected our top line somewhat, but really didn't affect our bottom line. So our revenue this last year, our volume was about flat. And that's, I have been, I even told my board, I've told my board now that for about six months, because we've been working hard, I've said, you know, my -- what I've tax tasked with is filling our capacity, we have some, we have some fabulous products. And we need to fill our capacity. So we've got things like Kroger. It's a huge, huge, huge opportunity. And they too want to go over to plastic pallets. But it's just getting those customers to push it over the edge. And that's kind of where I am. That's what's been a little frustrating for me is that I -- we have the products, we have the equipment, and we were anticipating much more volume this year than we've got. So I've got with me now, I've got a full-time sales team that work for us, not just using -- not just outsourcing it to distributors, stocking and non-stocking distributors. We actually have boots on the ground, and these are people that I trust and I've worked with for a long time. One of the gentlemen we picked up when we bought the extrusion equipment has been in this industry 20-years. He really knows products out there. He knows what customers want. And he's a closer. So we do have some boots on the ground now. And so I do anticipate this year is going to be a good year for new customer revenue growth.
Unidentified Analyst: Got it. Thanks.
Brice Dille: You bet.
Unidentified Analyst: If there's nothing else. Go ahead, I’m sorry.
Operator: No further questions at this time.
Warren Kruger: Okay. Thank you all very, very much. And reach out to me or Brice if you need anything else. Thanks so much.
Brice Dille: Thank you very much.
Operator: This concludes today's conference call. Thank you for attending.
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