Greystone Logistics Inc

Good day everyone and welcome to today's Greystone Logistics Q2 results conference call. At this time all participants are in a listen-only mode. Later you have an opportunity to ask questions during the Q&A, the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. Please note this call is being recorded and I'll be standing by if you should need assistance. It is now my pleasure to turn the conference over to Brendan Hopkins. Please go ahead sir.

Thank you and thank you all for joining us for our Q2 results. We have a brief safe harbor and then we'll be getting started on the call. 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 Krueger, CEO of Greystone Logistics.

Thank you, Brendan. Hello everyone and welcome to the call. First off, I'd like to start with my friend and investor Joel Marcus, unfortunately, passed away. And he's a great friend of ours and many of you may or may not have known anybody. He's a really good person and very bright guy. And I'm just, I'm sorry that we won't be able to participate with him anymore. So and after that, let me talk about what's going on with Greystone. I've been disappointed in the first six months top line, but we are, as I mentioned last quarter, things are falling into place as I wanted them to. Our extrusion, we've actually sold some of our extrusion line. It's the hollow lumber that we refabricated and made into what looks like a wooden pallet, but it's a hollow plastic extruding pallet. And Toyota has, we are still awaiting a good size order from Toyota. So we're excited about that. I was with Gary Morris, who runs that end of it this week in Indianapolis. And he has, he has a lot of other opportunities that are now working. He's actually at the plant in Jasper today. So he was also in Jasper, Indiana. He also is, we've done some things with Berry Plastics, and he was there yesterday at Berry, and Berry wants to take all their plastic from their operations, the waste plastic, and they want to put it back into plastic pallets. And we've been doing some of that for them, and they're going to, it looks like they're going to increase that with us. So that's fun in that regard. I also mentioned last quarter that we were waiting on some good news from our Walmart, and we've been filling some import facilities. Well, I'm pleased to say that we have another import facility in California that we have been supplying for. We supplied some. We went out there to December 15th and got a purchase order for a relatively less than a half million dollars, but we started there, and I just got an email today that they're going to get on a regular schedule of taking units out there. So we're excited about that. It's a big, big, big import facility, and so we're excited to continue to work with Walmart. They've been a fabulous customer, and I think we're going to continue to do a lot more with them. We have been waiting for a can and bottle pallet that we made of tool that came in, and I've mentioned this previously. The tool was, there were some adjustments that needed to be made, so we had to send it back overseas to make those adjustments. That tool is back in, so we are now, it's a large pallet, so 44 by 56 pallet for aluminum cans and PET bottles, that type of product. And so we have had some people waiting for us to have the tool back, so I think that we'll start getting some orders on that product as well in the second half of the year. We've, our big customer, IGPS, they're a big pallet leasing company, so as you know, if you go into a Costco and you see a plastic pallet, that's a rented pallet, and that's one that we've manufactured for IGPS. They've been a good customer, and they continue to be a good customer. They're a good group. They have a good model, and I've, my only push with them is, I'd like them to take another million dollars a month from us, so I'm working on that as well. Again, I'm sorry about the softness of the first half of the year. There's a lot of movement within the industry. It was really almost, as I've said in the past, it was a weird year, soft year. No one was spending money, and I will tell you that it's been busy. And I had a call from a consultant who took us into Nestle on the December the 18th, so it's weird that I rarely do I go on calls from the December 15th on, and in this call, there were probably, oh gosh, a dozen people associated with it, either online or in the room. So Nestle is looking to do something. Again, they want to get away from wood. I was at a closure company up in Indianapolis yesterday. The closure company, again, they send 300,000 pallets out a year on wood, and again, they're ready for a change. So we were talking about how best to serve them and what type of product they need, and could they do a closed loop? And in this world, I think we'll see a lot more closed loops within organizations where we manage a small pool for them, not like an open pool like IGPS, but a closed pool. But other than that, we feel good about our operations. We've got a beautiful new rating for our safety and efficiency, so we're excited about that. I'll put out a press release on that. And operationally, I'm happy. I mentioned Mexico in my press release, and we have got some orders from Mexico, and we're considering moving a piece of equipment down to Mexico. We've manufactured under contract down there two years ago, and we did okay, but I just wasn't satisfied with the supplier we had. And I've got someone who would operate our own equipment down there if we decide to send some down there, because we have some opportunities with AB and Constellation brands, and those are the type of people you would move equipment for because they need pallets on an ongoing basis. Other than that, I'd love to open it up for questions and be happy to answer anyone's question that may have.

At this time, we'll open the question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad, and you will be placed into the queue in the order received. You may remove yourself from the queue at any time by pressing pound and 1. Once again, if you would like to ask a question, please press star and 1 on your telephone keypad now. And our

first question comes from Anthony Paralla. Please go ahead, sir. Hey there, Warren. How's it going today? Good. How are you?

Good, good. Thanks for taking the question here quick. Just two quick ones for me. Could you, in the press release, you mentioned some of the weakness due to a customer with their annual budget in the fourth quarter. Could you speak a little bit more to that and then maybe how you expect business to trend with that customer maybe throughout calendar 2025 and into 2026?

Well, I'm glad you answered a great question. That actually is IGPS. We have a contract with them to provide a certain number of pallets, and that's where I'd like to get another million dollars a month out of them. We are, once we cap out on our PO, they really don't have any more budget money to spend, just like so many people. They're pretty rigid. They don't, just because we can make it, they won't buy it if it's not in the budget. So anyway, that's the one I was mentioning.

Okay, excellent. And then just, could you clarify, it was mentioned in the press release with the new CFO arrangement with Forvis, but could you clarify on the share buyback if you started buying back in December or if it was a 30-day wait period from the day that was mentioned in that press release? I was a little confused.

Another great question. And we have started buying back shares, and we'll report that on a quarterly basis. And then anything, any large blocks that we buy, we'll also put out a press release on any large blocks. But we won't, we won't on, we want the small stuff that we're buying back, the small numbers, we'll put that out on our queue, and we'll put the numbers that we bought back on our next

filing. Okay, excellent. That's it for me. Look forward to talking again soon. Thanks.

Yep,

thank

you.

And our next question comes from Michael. Please go ahead, Michael.

Thank you. Mike, I was looking to take a slightly different approach if I could. I was wondering if I could make a few statements and then ask you to either affirm those or correct them. Okay, great. Thank you. The stated goal of $60 million in sales looks like it might be a little bit tough to reach now after the first six months. But how close, do you think you're going to come pretty close to that number? Maybe not quite reach it, but come fairly close?

Yeah, I do. We have a, one I didn't mention, we have a big customer that's been, that purchased through us over the years, that we have a $5 million PO with them, that that'll, that's, it's new. So that'll come in the last, latter two months of our year. So I think we'll be, I think that that $60 is achievable. So yeah, we're going to work hard to get there. I mean, with this new Walmart order and the other one and some of the things we have in the pipeline, yeah, we may very well hit that. And I have to fill up that's, I really, with this new equipment we've put in over the last couple of years, I've mentioned it before. My, what I'm doing with, and we have boots on the ground now, we are out there and we are actively, in the past we used stocking and non-stocking distributors and we didn't have that much capacity. And now that we've put in, spent the money on the capacity, we are literally out there pounding the pavement and, you know, we are, we are going to fill equipment. That's what we're going to do.

That's awesome. That's awesome. Thank you very much. And the next one and the last one was, can you tell me how much of a, I feel like there's a big push towards plastic with tech companies and the use of automation to move, move pallets. They have to be precise. Can you just kind of elaborate a little bit on what the demand is and what the market is right now going from wood to, wood to plastic?

Yes, I can. I will say that all this automation, and there's a, there is so much automation going on now. It's, it's amazing. But there's good and bad with automation for us, just so you know. Okay. On the good side, when I get an order, like I did, we did Trincare family estates, which is Sutter home wines. They're the second largest winery in America. We did it about eight years ago. We put 70,000 units in their totally automated facility. No human touches their, their pallets or their product. It's just amazing. And of course they haven't broken one pallet in seven or eight years because it's never, it's the fork truck. It's the human element that damages these things. So it's not in an open loop where it can be pushed off a truck or stabbed with a forked tine or, or stolen. And so those things are good. And so I, we're going to see a lot more of those opportunities as warehouses go to automation and they have to, they can't have wood pieces, wood chips falling down. So that's, that's really what we're seeing with Walmart is Walmart's cleaning their Walmart gets it. I mean, they are a good group and they're, you know, they're, they understand that the consistency and so forth is very, very important and cleanliness. So to answer your question is there is, and I can't give you a number, but I will say, I will tell you that it's, it's millions and millions. The way I look at things, CHEP, who's a rental palette company that rents wooden pallets. CHEP is owned by a Australian firm and they have, they rent and have in their inventory in the United States over a hundred million pallets that they just rent. And they're a blue wooden pallet. You'll see them in the marketplace. Well, where I am in my world is those one day, those hundred million pallets will be plastic pallets and not wooden pallets. And it's just, it's heading that way. And it's, it is a, it's not a sprint, but it's a marathon. And we are positioned very, very well for that marathon. And so, and we want to accommodate people. We, we, I like to have a lot of new products so I can fill up. It's nice to have, if I have 50 molds and every mold gives me a one to five million dollars, I'll be a happy camper. And so to answer your question, it is unfillable at this point. You know, it's really, there's, there's all kinds of room out there. I can't even give you a guesstimate on how many units are out there other than what I just did with the CHEP example.

That's awesome. Thank you very much for your leadership. Very excited to be here.

Appreciate it. Thank you so much for being an investor.

Our next question comes from Robert Littlehale. Please go ahead, Robert.

Hi, Warren. How are you? How

are you?

Good, thank you. Could you just give us a little more color as far as the sales side of the business? I mean, I know you like to sell and you, you've been so successful through the years, but who do you have around you? And just can you kind of talk about how your sales team approaches new opportunities?

Yes, Robert. And you were there in the early days where we didn't have, I mean, we didn't have any excess money. And that's why we originally set up a stocking and non-stocking distributors. Because it was a way for us to, you know, I would go out and work with them and I didn't have to have boots on the ground. And over the years, in the last 22 years, you know, I tried to have salespeople that and I was, I didn't succeed. I had poor success. And what's happened in the last two years has been my plant manager, Rod Scalhase, who's worked with me for 18 years and is a fine human being. He had a hip issue that prevented him from spending a lot of time on floor. So we have a new general manager and he has, Ron has been working with me out in the marketplace. And he's the one who has a, he just is so good with customers. He's so good with Walmart. He's so good with Simplot. He's just really good. So he's really helped me a lot. Then mentioning a gentleman named Gary Morris. Gary has been in this industry for 20 years. He's the one that we bought his equipment that was extrusion equipment he developed. And it is, if you haven't seen it, if you'll go to the website, go to graystonepalettes.com, our website, and go in the media section. And if you'll go, there's a video of about, if you scroll down in the investor section, you'll see our robotic facility in Jasper making those parts. And my point is with Gary, he understands, he understands injection, he understands thermal forming, he understands extrusion. And he also has customer experience and contacts within the industry. So we have, in this world, these are long sales cycles. And he has some things, he has a bottler that he has that I think that we're going to build a new tool for. He has another big company in Atlanta that is, it's really a massive opportunity. And when I say massive, anything at 50,000 plus is good. When you go over 100,000, 200,000, those are really, really good opportunities. Because those can fill a machine for one to two years kind of thing. So Bob, to answer your question, those guys are really helping me out. And it's been, it's really been a reprieve. We're also working, you know, I have an investment in an extrusion company. And that extrusion company is, there's two companies, Tri-End and Penda. And they have, they have a lot of salespeople. They have a lot of boots on the ground. And we've started working more hand in glove with them. It's been separation of church and state between the two of us. But we're starting to use their salespeople. And their salespeople will say, well, oh, it's an example. The customer I was with yesterday, they couldn't use a thermoform pallet because they needed a base of some type. And thermoforms are more two dimensional pallets. They're not three dimensional, so they don't generally have bottoms. And so they said, hey, they turn that over to us. So that's one where they'll win and we'll win, should we be fortunate enough to get the customer. So my sales basis has really, it's growing. And I have another gentleman I was on the phone with today that we're talking about going to work with us also, because he's got tremendous experience in this industry. And it's a hard, it's long sales cycles and it's a hard cycle. But just to answer your question, Bob, those guys are really helping out and we're starting to see the fruits of their labors.

The other question I had, you mentioned Nestle and they finally said, you know, we have to get away from wood. And in sort of delineating the reasons why they want to get away from wood, what did they tell you? What did they say? What was the motivating factor in their minds?

One thing about wood, the problems associated with it don't go away. So when you read on our website, we put bullet points for why plastic pallets are better. It really is true that when you hit a, if you go into a Costco or a Sam's and you see wood on the floor, you see those pallets and you'll see the broken lead edges. And I will tell you, when you go to these distribution centers and they're using these automated guided vehicles and they hit

wood

that's broken off, it stops the vehicle, it stops the process. It really becomes a pain. And then the nails, really nails kind of inch out and then they'll cut the bottom of box and goods will go on the floor. It's just, it's amazing. It really happens and it's not like it doesn't happen. And then there you also have the, with wood, wood can be contaminated. Yesterday I talked to a gentleman and he said, you know, we had these wooden pallets in the 250,000 square foot facility and they got moldy. He said we had to disinfect, we had to take all those out of there and disinfect the entire facility. So these are real things that happen in real life. And eventually people get tired of doing it the same way they've always done it. And so that's why we're seeing the shift, continue to see the shift from wood to plastic.

Thank you. Appreciate it.

Yes, sir. Hope you're well, Bob. As a reminder, if you would like to ask a question, please press star and one on your telephone keypad now. And at this time there appears to be no further questions. I'll turn the call back over to our presenters

for closing remarks.

Well, I just want to thank everybody for being on the call. And I'm excited about the next two quarters and about the calendar year 2025. There are a lot of, there's just a lot of things going on in our industry. And it just takes that one little push to get another $12 million a year or $24 million a year and $36 million a year. And I'd most certainly, I mean, I just we need to head towards that $100 million revenue marks. And that's where we want to go. We want to get there. We want to continue with our momentum. We may we're going to continue to look at sales opportunities. And if there's growth in acquisitions, we'll look at small acquisitions as well. We'll look at partnering up with people to move our product. And hopefully, ideally, we'd like to continue to look at our listing and what we need to do to potentially uplift. So I appreciate everybody being there. Brendan, do you want to close with a few comments?

No, I think we covered everything. I mean, I would say there would be one question that wasn't asked that I'll probably get, which you might as well answer now. I know we've been engaged in looking for a new CFO. Just wondering if there's any updates as to how that process is coming along, if there's any candidates in the pipeline, that type of thing.

Well, I'm glad you mentioned that. I will say that this I the we went through two. We had a long time wonderful, good friend. Bill Rahal was my friend for a quarter century. And and he finally said at 83 years old, he said, well, my wife just said more. And he was such a wonderful CFO and such a good friend. And then we stumbled a couple of times trying to replace him. And that's four of us. What we did with four of us is we need to make sure our filings are done promptly and correctly. And that they're a big firm, a big firm across America. And I feel very comfortable with them and getting our our cues and our cave file on the financial side. And we are our we continue to generate good numbers internally. We have we have good security and we when monitoring of what we're doing on the accounting front. And right now we're going to use four of us as a CFO overview. They're going to see if questions they review our financials, they look at them, they make suggestions. And and I like the arrangement. I do believe that we will find the right person, but I am not going to rush into it. Greystone is a it's it is not we don't make a thousand parts. We have twenty five to thirty different SKUs. And it's a we have a good system in place, as I mentioned, and we have good oversight. And so I'm I'm comfortable right now staying where we are with four of us. And then when the right candidate arises and they will, we will we will bring

them on board. OK. That's it. I guess I keep up the

good work and I'm looking forward to the second half of this year, showing the promise that it seems to be. Great. Great. Thanks, everyone, so much.

This does conclude today's Greystone Logistics Q2 Results Conference call. Thank you for your participation. You may now disconnect and have a great day.