Greystone Logistics, Inc. (PNK:GLGI) Q3 2024 Earnings Call Transcript

Greystone Logistics, Inc. (PNK:GLGI) Q3 2024 Earnings Call Transcript April 17, 2024

Greystone Logistics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day everyone, and welcome to today’s Greystone Logistics’ Q3 Results. At this time all participants are in a listen-only mode. Later, you will have the opportunity to ask a question during the question-and-answer session. [Operator Instructions] And as a reminder, today’s call is being recorded. [Operator Instructions]. It’s now my pleasure to turn the conference over to Brendan Hopkins. Please go ahead.

Brendan Hopkins : Thank you. And thank you everyone for joining us today. We have a brief Safe Harbor and 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 Safe Harbor provisions the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results and 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 Logistics.

Warren Kruger : Thank you, Brendan. I appreciate everyone being here today at the call. We look forward to taking questions a little later. I just want to talk a little bit about the last three months and the last nine months. The last three months have been a little weaker than what I would have hoped for. We have a very large retailer in America, that we’d had the tool about a month ago, but supply chain timing has not really benefited any of us in the manufacturing sector. It’s taking longer to get tooling, equipment, and so forth. We do have a tool that should be here in the next 30 days, and that tool, I would doubt, will stop running for the foreseeable future. We also have retooled our automobile pallet, and of course, we are now out with Tesla, General Motors, Ford, we’re showing that product.

And I’m very optimistic about that as well. We’re also looking to buy, our Nestable business has been up some, and we’re excited about that. In terms of the last nine months, there’s a little bit of confusion with the retained earnings credit we got from the government that helped not only earnings but retain employees. The credit we got really did help us retain our employees. It was something that benefited all of America, I think, and most certainly affected us. But it skewed our numbers somewhat. Our numbers are good this year. They are a little bit under-projected. I anticipate that we’ll get back on track very soon. So, I look forward to the questions a little later. And right now, I want to turn it over to Brice Dille, who will go over the numbers for us.

Brice Dille: Okay. Quickly, for the nine months, we made $0.09 a share. And as Warren was indicating, the previous nine months, we had a $3.2 million employee retention credit that comes back from the COVID days. That was $3.2 million. So when you look at the earnings per share, the $0.09 compared to the $0.16, if you took out the $3.2 million, the nine months was substantially better than the previous nine months. And if you look at the revenues for those comparable periods, it was $46 million compared to $44 million. And then if you look at the quarter-over-quarter, that employee retention credit was in the third quarter of 2023. So if you look over the quarter-by-quarter results, you have one chance per share compared to the $0.13.

But if you take the effect of the $3.2 million out, and really, the quarter sales was stronger, earnings were about flat. And if you have any follow-up questions about employee retention credits, we can always answer that. But effectively, everybody knows this on the call. If the government gives them money, you retain your employee, and you got an employee retention credit. So when you look at EBITDA for the nine months. 2024, it’s essentially $9.6 million, I call it $10 million.

Warren Kruger : Hey, Brice, let me stop you for a second. Tommy, can you do something in the background for us?

Brendan Hopkins: It’s someone talking in the background on Brice’s line, I think.

Brice Dille: I don’t think it was on my line. Was there a question that somebody was asking?

Warren Kruger : No, it’s just there was some background. Brice, I’m sorry to interrupt you.

Brice Dille: Yeah, I did hear that background noise. Did everybody — was everybody able to catch the earnings per share and the sales and net income figure?

Warren Kruger : I could catch it, so if we need to follow up with questions later, we can do so.

Brice Dille: Okay.

Warren Kruger : I’m going to take it back from Brice at this point. We’re trying to get in rhythm here. Can we open it up to go ahead and ask questions and answers?

Operator: Yes, thank you. [Operator Instructions] And we’ll take our first question from Anthony Perala.

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Q&A Session

Anthony Perala: Hey, Warren. Thanks for taking my questions here. Just if you could give some color, I’m not sure if this is the one you mentioned in the earlier part of your remarks, but a large retailer budget. I know last call you had mentioned some delays on the Walmart shipment, wanting to get some ergonomic handles and some other specifications there. Just if you could give an update on where that’s at and if that was the one you had mentioned in your prepared remarks?

Warren Kruger : Yes, that’s correct. It was Walmart as our customer, and we anticipated we would have that mold sometime in February or early March. And here we are in April, and we still haven’t received it. We make our tooling overseas, and it’s generally over the last 20 years, it’s been always six months faster than making it in the United States. And it’s relatively more reasonable as well. And so it’s just that they’ve had their own set of issues over there. And I think it all kind of comes back from the — it started with 2020, and then it just rolled forward, and then we had the — supply chain was just upside down. Our price went up on our — and it sounds like excuse after excuse, but it’s the reality of it. And we look forward to getting that tool in because it’s a wonderful new product.

And like I said, once that tool goes in, it should be going right on the clock for the foreseeable future. We also — there’s some other things. The 44×56 beverage pallet we had, it’s a pan, it’s for TT bottles [ph] and cans. That’s best product is now in the marketplace, and we’re getting good interest there, as well as I mentioned the automobile pallet. And our standard business, our 48×40 business is strong, continues to be strong. Our Nestable business continues to be strong. We’re getting lots of requests for proposals now. And it’s been kind of a funny feeling, the election, we’ve had people saying, yes, we’re going to order, we’re going to order, we’re going to order, and then they’re off-ordering. So we’re a little bit confounded by that, but anyway, I hope that helps with your question, Anthony.

Anthony Perala: Yeah, it does. That’s helpful, and you had said just that you expect the tool kind of in the next 30 days here and be able to get that line running?

Warren Kruger : Yes, absolutely.

Anthony Perala: Okay. And then just one more here and jump back in the queue, but any update on the share buyback? It was mentioned last quarter. I’m just curious on what kind of point in the process we are on that authorization and maybe implementing it sometime this year?

Warren Kruger : Yeah, I believe, I anticipate that we’ll start that year-end. And so our year-end, of course, is May 31. And I still anticipate that we’ll be doing that. And we can look forward to, I think, we’ve authorized a million dollars worth of stock buyback. And so as we see opportunity, we will buy that stock.

Anthony Perala: Okay, excellent. I’ll jump back in the queue. Thanks.

Operator: And we’ll take our next question from Eric Nickerson [ph].

Unidentified Analyst: Yeah, just curious about the government credit one more time that you got last year. Was that from forgiveness of a Paycheck Protection Program loan, or was it something else?

Warren Kruger : Employee Retention Credit.

Unidentified Analyst: Say that again, please.

Warren Kruger : Employee Retention Credit, ERC.

Unidentified Analyst: Employee Retention Credit.

Warren Kruger : Yeah. So they did have a program for PPP money, but after the fact, if you retained employees during the COVID period, you were able to get a credit back from the government. And that payment was made in the third quarter of last year, and it was approximately $3.2 million.

Unidentified Analyst: Was that a direct payment, or was it a reduction of taxes owed, or what form did it come in?

Warren Kruger : It was a direct payment.

Unidentified Analyst: Okay, yeah, that’s all I needed. Thanks. Thanks very much.

Warren Kruger : Thank you, Eric.

Operator: And we’ll take our next question from Robert Littlehill.

Robert Littlehill: Hey, Warren.

Warren Kruger : Hello, Robert.

Robert Littlehill: Yes, sir. How are you doing? Well, a couple of quick questions. The tool that you hope to have delivered in 30 days, is that an expensive piece of equipment?

Warren Kruger : It’s $300,000.

Robert Littlehill: $300,000, okay, but obviously strategically important. And then the other question is, in the last quarterly call, you talked about beefing up your outreach, your new business efforts. Could you touch on that in terms of bringing us up to date on how that’s going?

Warren Kruger : I’m so glad you mentioned that, because that was something I wanted to focus on, Robert. We actually, in the past, we’ve used, Greystone started kind of bootstrap a long time ago. And we used to use just stocking distributors and non-stocking distributors. So I’d be out there selling, but we really didn’t have sales people to speak of that were on our payroll. In the last year, we’ve changed that up dramatically. We’ve taken someone who I’ve worked with for 18 years, Ron Schelhaas, who was our Plant Manager. He went through a series of issues and got a new hip finally. And he is the one who leads the charge with Walmart and some of our other retailers. So he’s out there full-time on the payroll. He has an assistant that helps him as well.