Anthony Perala

Anthony Perala inquired about the rationale for redeeming the preferred stock with cash instead of conversion, its signal of confidence, and the current macroeconomic environment's impact on customer sentiment and the company's outlook.

Answer

CEO Warren Kruger explained that redeeming the preferred stock was a financially prudent move to eliminate a high 11% interest payment, thereby freeing up $550,000 in annual cash flow. He noted the decision signals confidence and removes a long-standing uncertainty for investors. Regarding the macro outlook, Kruger expressed optimism due to Greystone's primarily domestic business, but acknowledged potential indirect risks if tariffs impact major customers like Walmart.

Anthony Perala of PALcapital sought clarification on several topics, including whether the redesigned Walmart mold shipped during the first quarter, the decision-making structure for pallet adoption across Walmart's distribution centers, the potential revenue opportunity from the new large-format Uline pallet, and the drivers behind the quarter's high capital expenditures.

Answer

CEO Warren Kruger confirmed that shipments to Walmart did occur in Q1 and are now on a steady weekly schedule for one DC. He explained that each of Walmart's 35 DCs has autonomy in purchasing decisions. Regarding the Uline pallet, Kruger stated it's too early to forecast revenue but highlighted the strategic importance of the new extrusion line for custom sizes, with a test product expected within weeks. He attributed the $3.3 million in CapEx to a new chiller, welding equipment for the extrusion line, and a CNC machine, noting that future spending would be closer to maintenance levels.

Asked about the capital expenditure guidance for fiscal 2024 and the company's priorities for allocating free cash flow.

Answer

The company expects lower, maintenance-focused CapEx for the year, as major growth spending is complete. The board is actively considering the best ways to utilize growing cash reserves for shareholder benefit and company growth, with debt paydown being a continued focus, but no specific new initiatives have been announced.