Greystone Logistics Inc

Good day, everyone, and welcome to today's Greystone Annual Results Conference Call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing star 1 on your phone. Please note this call is being recorded, and I'll be standing by should you need assistance. Now it's my pleasure to turn the conference over to Brendan Hopkins. Please go ahead.

Thank you, Elvis. Thank you everyone for joining us today. We have a brief safe harbor, and then we'll get started. 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.

Thank you, Brendan, very much. I appreciate that. Welcome, everyone, to the call today. I have with me today Marilyn Carter, who is our general manager at the plant. She'll just be here in case there's any operational questions that people have later that I can't specifically address. I want to first start with a big, again, thank you. Thank you very much for being shareholders, or thank you very much for looking at our stock and potentially being a shareholder. Last year, Greystones, I'm very happy with the year. I wish I could say I was clicking my heels happy. I'm very happy because, again, we had a steady-eddy year. We had over $57 million in revenue. We had $0.07 share earnings. Our EBITDA was $10 million, and it was a good year. We paid down. I just am going to review some of the things we talked about in previous quarters. What did you do? What kind of accomplishments did you have? Well, as those who have been shareholders for some time know that we've We are prepared. We spent a lot of money on equipment a few years ago, and so we do have capacity. That's one of the things I'll address here about sales in our pipeline. However, the last year we created a lot of cash. We created $10 million, and I want you to know what we're doing with our money, what we're doing with your money. And we spent, we had a preferred years and years ago, another board member, myself, Bob Rosine, put in $5 million in a preferred just to keep the company afloat. We paid on that preferred for years and years and years, and it paid a hefty dividend. We were paying at the time around 11%, so we were paying $550,000, and We created cash, and we talked about it on a board level, and we said this is the right thing to do is pay that back. And so we bought those preferred shares back from Mr. Rosie and myself, saved the company $550,000 in dividends. We were able to do that because of the good things that the company is doing, and that's creating cash. We also, unfortunately, last year had a fire. Some of you may or may not know about the fire. On our website, if you go under investors, you can scroll down and you can actually see a video that we've done comparing wood fires to plastic fires because there's rarely a plastic fire anywhere in the country. And that's one of the headwinds that we always face because we're fighting the wood pallet industry and they have a very big lobby and they don't want us in the industry. So I encourage you to go and watch that video. It's very informative, actually. So in doing so, we thought, okay, let's plan for our future. A parcel of land close to our three other facilities, because where we had the fire is about 35-minute drive. It's just warehouse. We had pallets in the warehouse. So we bought for $1.8 million in cash, we bought some acreage very close to the facility. We are currently using that as a trailer storage. We're not going to build anything right now, but we're prepared because we are rebuilding the 25,000-square-foot facility. We scraped the land, and we're rebuilding that facility. But we do have within, I would say, a half a mile from our locations, we have a new beautiful, beautiful piece of property that there is a building on the structure. We store just a few small items in the building now, but that building will eventually be razed and we'll have manufacturing space that we can build in the future. We also paid, we bought last year, the board authorized a share buyback, and we bought a million, we didn't get it all accomplished during our corporate year, but I'm happy to say as of right now, we've bought back $1 million and 9,000 shares, lowering our overall share count, and so everybody owns a little bit more now if you're a shareholder. We did that again because we said we've got cash on hand, we like what we're doing here, and we're going to buy our own shares. Additionally, if you look at our debt, we just continue to pound down our debt, and it's a We just were focused on pounding down debt, creating cash, pounding down debt. So that's where we are on the income statement balance sheet. I want to talk about what's important here and what's really important, and I've been laser focused on, is sales. And last year, as we talked about in the past, it seemed sluggish last year before the – It just seemed that there weren't the buyers out there. Right after the election, we kind of had a spurt, and that was good for our fourth quarter. We were really, really busy in our fourth quarter. But, again, now there's a malaise, it seems, and I don't know if it's a tariff malaise, but I talk to others in the manufacturing world, and they're suffering a little bit. It's almost like we're right on the edge of – a big explosion, but it's just people continue to hold back. So that's bothered me a little bit because we have tens of millions, if not hundreds of millions of dollars in our pipeline. So we had some new products last year that took off, a nice 45-inch by 45-inch pallet. It's a beautiful, lightweight product that our customers were asking for. We had a brewery, a significant brewery that I won't mention their name right now because we're working with them and we want to make sure that they have a new keg pallet that we designed for them and we'll be rolling out. And I'll announce that as soon as we have some in the marketplace. And it's a Again, we have great engineering, great design minds that we work with, and so I think it's going to be something we're really going to be excited about. Our business with one of our largest customers, IGPS, remains very, very steady. They are a wonderful customer. We love working for them. Last year, we – they – We do quite a bit of business with them, but last year they offered us a significant amount more. They had some sort of machine issue. They have another plant that they own that they produce a few pallets for, but they needed additional product last year, and we were happy to provide that for them. And so our sales were up during 24 with them, and it seems like it would seem on their income statement that it's flattened out, but it's just gone back to kind of a normal However, we've filled that. We had a nice year with Walmart. We had $7 million of revenue with them last year. And I want to talk about that. It leads me to just the pipeline. I first called on Walmart in 2003. And so we didn't get any business with them for probably 15 or 16 years. and I don't know, we've probably done $15 or $20 million of them now. And so my point is it sometimes is a frustratingly long sales cycle, but it is once we get the customer, it's a wonderful thing. Walmart actually helped us design a warehouse pallet that was a little different than what we had been selling them, And it's great. It's a lighter weight. It's got, of course, it's got our standard good coefficient of friction, so there's no slippage. But it also has more ergonomically friendly handholds, and we've changed the bottom up where they were having some damage caused by fork tines. So that product is being produced and is going out. And there's also a big opportunity with – That customer and others, we believe that in certain closed lanes where they may be using a chef now or they may be using whitewood, there's an opportunity for sales to that customer, more sales. And we are, on the technology side, we're using cellular technology. We can use Bluetooth, much like an Apple tag, and that works. But we've been using cellular technology that actually we put the cellular device inside the pallet, and we can track it anywhere in the country. And so the one thing about cellular is that there's only a certain amount of energy. So you have to be very careful with the energy that you consume. And so we only ping it once a day. But with AI, AI is now managing this software properly. where if it doesn't move, then it doesn't get pinged, so it doesn't drain energy. So these batteries can last five, six, seven, eight years. And so we're excited about that because now there's the mysterious disappearance when we go into a situation where we have an opportunity to be in a closed loop. Now that is more secure because these are assets. There's no doubt about it. As a matter of fact, when we sell that asset to our customers, We, when they do a fork tine, does damage it, and that's where most of our damage comes from is fork tines. When that damage does occur, we actually buy it back from our customers. So it's shocking. We probably bought back 500,000 pallets last year, and that's real green. I mean, when you talk about a green business, we're taking plastic out. and we almost use exclusively recycled plastic or mineral products. And then when they're broken, we buy them back, and we push out the fiberglass rods that they have them, which provide bone structure for racking purposes. And we reuse the rods, and we regrind and repelletize and reinject the plastic. So it's an exciting time. We are finally getting some traction. On our extrusion side, which is just extruded lumber, it's hollow extruded lumber, I also encourage you, if you've not seen the film on that, you might go to our website and on that same under investors, you can scroll down and you can see the video of the robot manufacturing the extruded pallet product. It's pretty cool. But Toyota, we're getting good traction there. I've seen a lot of correspondence about Toyota pushing this product down to their vendor level, and we're getting orders. So I'm excited about that. We've had some other opportunities with big, big companies to look at this, and it's been slower, of course. As I mentioned, the sales cycle sometimes can be frustratingly slow. But we've talked to Apple about this. And so we're excited about the extruded product. To our other injection line, we are working on some elephants. And we continue to hunt the smaller opportunities. But we are working on some very, very, very large opportunities And the beautiful thing about us right now is we are positioned very, very well. We don't have a lot of debt, but we have a lot of capacity available. And we are working on that right as we speak. In the past, we used distributors, non-stocking and stocking distributors. And for the last two years, we've had boots on the ground out of our own corporate entity. And they're good boots, too. Ron Skelhaus, who I've worked with for Almost 20 years is out there, and he's worked within the Walmart system. He's worked within the Simplot system, which Simplot is a big potato company, and we make beautiful freezer pallets for them. So we also have a gentleman named Gary Morris who's been working with us. Gary has been around this industry for 20 years. And I will tell you, for me, who I've been around since 2003 as well, it's really a nice feeling when you have people around you that understand the industry, understand how hard the industry is, and understand the huge opportunities within the industry. And I wanted Marilyn in here as well on the operational side. because we work with our employees, and Marilyn's probably been with us 17 or 18 years now, and grew to be our general manager. So it's a wonderful story there. Anyway, that kind of gives you a broad background on the sales, the year end, and where I see us going. But I will say we have to put on sales this year. We just have to because the earnings will drop from the sky if we get our revenue up. And we are out there daily hunting. So at this point, I'll open it up to questions, and hopefully I can answer anything that you guys have to say. to ask.

If you'd like to ask a question, please press star 1 on your phone now, and you'll be placed into the queue in the order received. Again, everyone, star 1 for a question. And we have no questions at this time. Brendan, I'll turn the program back over to you for any additional or closing comments. Brendan?

Let me finish up then. Let me finish up, if I may, if Brendan is on mute. I just want to, again, I want to thank our shareholders and know that the team here we talked about this morning, you know, we went as a team, and it's fun out there, and it's fun building something. We just need to get out there and sell now. That's it. We've got a wonderful operation. It runs very, very well. Great people. Many of our employees have been with us years and years and years. We have beautiful facilities. And, of course, I have an open invitation for any of our shareholders at any time to come to Bentendorf, Iowa, see our recycling center, see our two manufacturing, our two 60,000-square-foot facilities, manufacturing centers. It's a pleasure and an honor to be CEO of this company.

And Brendan and Warren, we do have two questions queued up. Would we like to take those at this time? Yes. Yes. All right. Our first question is from Robert Littlehale.

Hi, Warren. Can you hear me okay? Hi, Robert. Yes, sir. Could you just give us a sense of what your incremental capacity is currently?

I could probably put an additional $40 million in revenue on just on our injection machines, and that's probably light, but I'm trying to be conservative. I could add $40 million, and that's, you know, that's – over time we probably spent 68 million dollars on equipment over the last 23 years so we are prepared and we only have now our debt is as you can see when you see the balance sheets it's really for a company the size is just a minimus and uh we also on the extrusion exclusion line, we probably can put $5 to $10 million there. So overall, it's a big number. It's $45 to $50 million that we could add without adding another one, without adding another general manager. So you can see why our focus is so much now on not building but now going out and filling machines.

Was there insurance? That backstopped you on the fire?

Yes, sir. Yes, sir. We did the numbers. What was it? Do you have any idea? I can't remember. Yes, we had full coverage. The facility that burned, it's out in the country. There's two 25,000-square-foot facilities across the street from one another. And it's really their older facility. warehouse type of facilities, and we had some sort of animal. They assumed it was some sort of animal that chewed on the lines and caught the building on fire. So that was – because it was – at night, there's no one around, and it started at night, and it went on for quite a while, and it's a testament to what – like we talk about Plastic Palace all the time – It's not like some giant inferno and the lava is flowing down the mountain. It's not. They burn and they smolder. And, unfortunately, we had enough damage and we had to raise the building. But it was structurally, the building was still there. And we, I think we purchased those buildings for less than $200,000, two and a quarter or something like that. and we put good money into them, but we had sufficient coverage that our new building will not, we will not have really theoretically come out of pocket because the insurance will take care of the construction of the whole facility.

What's your current headcount?

175 full-time employees, and then we've got 30 uh which we would call leased employees so we've probably got about 215 people are they hard to find no sir uh it's actually we we leased some when it was a little tougher after covid we leased probably 75 at one time uh and that was uh that worked for us very very well But now that things have kind of calmed down, we do have job applicants that come through our facility. But it's funny because we, a lot of our staff, it's a funny blue-collar company because we have great staff, and so many of them have been here for years and years and years and years. And they have a 401K, and they make good money, and they're, you know, They're good workers. So we are very fortunate in that regard. And I'll take my hat off to the people I work with. We make it a nice environment. We have Christmas parties. We have Thanksgiving parties. We do things to try to bring our people together. So to answer your question, it's been much, much, much, much improved and easier. And right now we haven't gone through another growth spurt. If we go through a growth spurt and we're filling equipment and we need volume, we will have trained people, trained operators. That will be great. What we'll need are line staff to work the pulling the pallets and putting the pallets together. And we can, I'm very, very confident we can fill that capacity in a relatively easy fashion now.

There was some talk about uplisting. Is that sort of on the shelf at the moment?

No, it's something we're actually working with a few groups to make that a reality. So we think that we, on the OTC level, I've gone to a couple of these small conferences, OTC-type companies. I show up, and I think it's going to be all OTC companies, and it's kind of a meet-and-greet, investors and so forth, and frankly, there's a lot of NASDAQ players there, and I'll talk to these NASDAQ companies about their valuation, and it's shocking to me how different it is on the NASDAQ versus the OTC, and that just goes to the, there's so many people who can't buy our stock or prohibited from buying our stock because we're on the OTC. So it's something that we have discussed over the years, but the focus, there's a focus on it now.

Thank you, Warren. That's all for me.

Robert, great to hear from you.

Next we have Joe Russo. Hey, Warren, how are you? I'm well, Joe. How are you?

Great.

Thank you.

So I just want to ask around capital allocation. You completed the buyback in the last year. I'm curious if you're thinking about re-upping that and then just along the same lines, just the outlook for CapEx this year.

We are not going to spend a lot of money. It will be maintenance capex this year, just really maintenance capex. Any capital expenditures will be for tools, new tools for a specific customer. We're not even going to do any, you know, we've done some. We still have a pallet last year. We think it's one of our better pallets. It's a mirror pallet that we really designed so that Quikrete, the concrete company, they have a real tough time in that industry because it's brutal. And we designed a product for that, and we just haven't gotten in front of the right people with that product. And now that we can put cellular technology in it, that might very well be what pushes that product over the edge. But we're not going to spend any money on CapEx unless it's maintenance CapEx. unless it's something like adding a tool. If we kick off a program with someone and we have one or two tools, we may need a backup tool just in case something happens. That's where we'd spend our money. We are going to continue to pay down debt, and we're going to continue to be prudent with our money. We have discussed buying back more shares, frankly, and We'll manage our cash well on that, though, and be careful. One thing we are spending some money on, and I'm glad that we've continued this discussion, because I have purchased cellular tracking technology, some cellular devices, and they're not inexpensive. So there will be some money spent there. But those will be recovered, that money will be recovered, because it's really almost a cost of materials. And so we will be recovering that as those products go out the door.

Got it. That's great. I guess just a quick one. It sounds like, you know, for the year, there's some puts and takes on revenues. Obviously, we hope we get some new orders, new customers. But, you know, it sounds like, you know, IGPS might be a bit lower this year. Maybe like Walmart's potentially a bit higher this year. Just curious, like, you know, how you think, like, the baseline is for, you know, this year versus last, if you were to kind of put the pieces together. I know it's hard to say.

For me, it's disappointing because I have a sales – I can put on a sales hat, and I've done so, and I've been a part of a lot of the sales over the years. And so I love that role. I love that role. And I'm really, I'm frankly a little disappointed that I haven't, we really haven't drug in another, like I said, a big elephant. And we're working on that. One of the things is still, and you're going to hear this for 23 years you've heard this, there are still people who just will say, well, we need to have a fire retardant, an FM approved fire retardant pallet. And you go from using recycled material, now they want to know where your material came from and the lineage of the material, and then you're adding chemicals into the material. And instead of having something that's $55, now you're at $90. And then, of course, then the sales go away because no one wants to spend the money. So it's... And it's a misnomer, again. And, again, I go back to the film we did, and it's on our website. It's something that FM and UL make a lot of money doing the testing, but it's something that is really, if we could push that question out of the way, that would be a godsend.

Okay. Thank you so much.

Yes, sir. Thank you, Joe. Gentlemen, we have no further questions at this time. Brendan, I'll turn it back over to you for any closing comments.

All right. Great. Thank you, Elvis. Everyone, I appreciate you all joining us today. I would say that we have paid some lip service to the NASDAQ up list over these past few quarters, and I can assure you that we are indeed working with some groups do facilitate that happening sooner rather than later.

Thanks, everyone, so very much, and we'll talk to you soon.

That concludes our meeting today. You may now disconnect.