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GL

GREYSTONE LOGISTICS, INC. (GLGI)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 FY2024 delivered strong profitability despite lower sales: revenue of $17.414M vs $18.954M YoY, with gross margin up to 23.2% from 13.0% and EPS of $0.06 vs $0.04 YoY .
  • Versus prior quarter (Q4 FY2023), revenue increased to $17.414M from ~$16.0M, with EBITDA of $4.228M essentially in line-to-ahead of the ~$4.0M guided, and margins above the ~20% guidance (actual 23.2%)—a positive surprise .
  • Management attributes margin strength primarily to lower raw material costs and operational progress, supported by capital investments in two large-tonnage injection machines and a robotic extrusion line .
  • Near-term catalysts include continued margin normalization, incremental volumes from key customers (e.g., iGPS) and new product tooling in targeted verticals (grocery, can, nut, cement, tech, beverage) .
  • Wall Street consensus estimates from S&P Global were unavailable; comparisons to external estimates are not provided. If estimates become available, margin outperformance vs management’s own guidance suggests potential positive estimate revisions .

What Went Well and What Went Wrong

What Went Well

  • Significant margin expansion: gross margin rose to 23.2% from 13.0% YoY on lower raw material costs and operational improvements; EBITDA increased to $4.228M from $3.302M YoY .
  • Management confidence and pipeline: “Credit goes to our employees for the robust start… capital investment… were well timed… We remain confident that we will fill our machines with aggressive marketing of our creatively designed products.” — CEO Warren Kruger .
  • Guidance execution: Q1 EBITDA of $4.228M exceeded ~$4.0M management guidance; gross margin of 23.2% topped ~20% guided—showing disciplined cost control and pricing normalization .

What Went Wrong

  • Top-line softness vs prior year: sales declined to $17.414M from $18.954M YoY, reflecting demand variability despite improved margins .
  • Volume timing/vulnerability to customer cadence: prior commentary noted shifting volume and raw material processing constraints (pelletizing line delays), creating timing risk for sequential flows—partially addressed as equipment progress advances .
  • External constraints: regulatory and fire-retardant requirements remain a barrier to broader plastic pallet adoption in certain channels (e.g., Costco), necessitating ongoing R&D and potentially higher product costs .

Financial Results

MetricQ1 2023 (Aug 31, 2022)Q3 2023 (Feb 28, 2023)Q4 2023 (May 31, 2023)Q1 2024 (Aug 31, 2023)
Revenue ($USD Millions)$18.954 —~$16.000 $17.414
Gross Margin (%)13.0% 17.5% 20.0% 23.2%
EBITDA ($USD Millions)$3.302 —$5.1 (≈$4.0 ex-tax credits) $4.228
Net Income ($USD Millions)$1.374 $3.56 —$1.744
Diluted EPS ($USD)$0.04 $0.13 —$0.06

Notes:

  • Q4 FY2023 EBITDA was $5.1M including tax credits; approximately $4.0M excluding those credits .
  • Certain period EPS and revenue figures were not disclosed in the available transcripts/press releases for those specific quarters .

Segment breakdown: The company does not disclose formal segments; revenue is primarily from recycled plastic pallets for diversified end markets (food & beverage, automotive, chemical, pharmaceutical, consumer products) .

KPIs (selected):

  • YoY indicators: Gross margin +1,020 bps to 23.2%; EPS +$0.02 to $0.06; EBITDA +$0.926M to $4.228M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent (Q1 2024)Change
RevenueQ1 2024“Up 10% over Q4 2023” ($17.6M implied from ~$16.0M base) $17.414M Maintained / slightly below implied
Gross Margin (%)Q1 2024~20% 23.2% Raised/Beat
EBITDA ($USD)Q1 2024~$4.0M $4.228M Beat
CapexFY 2024Maintenance capex and molds; no major expansion No explicit Q1 update provided Maintained (no change indicated)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 FY2023)Current Period (Q1 FY2024)Trend
Resin/raw material costsMaterial pricing normalized vs pandemic; gross margin rising to 17.5% in Q3 and ~20% in Q4 Margin strength driven by lower raw material costs to 23.2% Improving
Capacity & equipmentAdded two 3,300-ton machines; extrusion line acquisition in Indiana; Missouri outsourcing; ramp expected over next quarters Capital investment in two large-tonnage injection machines and robotic extrusion line; tooling expansion underway Executing
Customer pipeline (iGPS, Walmart, beverage)iGPS additional production and recycling flows; Walmart opportunities; non-alcoholic beverage prospects Sales team filling pipeline with existing/new customers; targeted verticals (grocery, can, nut, cement, tech, beverage) Broadening
Fire-retardant/regulatoryOngoing FR solution development; constraints in channels like Costco; cost considerations Not specifically updated in Q1 PR Ongoing R&D
Capital allocation/uplistingCash generation, potential deleveraging and alternatives; Board/CFO changes; uplisting considerations No explicit capital allocation update in Q1 PR Evaluating
Workforce dynamicsEmployee leasing to meet throughput; headcount down slightly YoY; overtime-friendly workforce Not discussed in Q1 PR Stable operations
Technology/track & traceIncreased use of tracking sensors on pallets for logistics/temperature monitoring Not discussed in Q1 PR Emerging capability

Management Commentary

  • “Credit goes to our employees for the robust start… capital investment in two new large tonnage injection molding machines and a robotic extrusion line… preparing Greystone for our next growth cycle… We remain confident that we will fill our machines with aggressive marketing of our creatively designed products.” — Warren Kruger, CEO .
  • CFO framed Q1 expectations on the Q4 call: “sales… up about 10% over the fourth quarter… gross margins… ~20%… EBITDA… about $4 million,” which Q1 actuals met/beat on margins and EBITDA .
  • Strategic positioning: ongoing tooling for expansion into grocery, can, nut, cement, tech, beverage industries; robotic extrusion line enables flexible sizes without heavy mold costs .

Q&A Highlights

  • Capex trajectory: Shift to maintenance capex and molds in FY2024 after >$7M growth capex last year; ample capacity to target >$100M revenue with equipment on hand .
  • Cash use and capital allocation: Generating cash; Board evaluating best uses (deleveraging, opportunities), with cautious stance on macro/employee availability .
  • Volume timing and customers: Additional iGPS production expected to benefit near-term volumes; some Walmart volumes delayed and anticipated to pick up later .
  • Governance/leadership: Added independent Board member and CFO transition underway (Curtis Crosier), supporting potential uplisting readiness .

Estimates Context

  • Wall Street consensus estimates from S&P Global for Q1 FY2024 were unavailable at time of analysis; therefore, no formal “vs consensus” comparison is included. If consensus becomes available, the margin and EBITDA beats vs management guidance could imply upward estimate revisions .

Key Takeaways for Investors

  • Margin normalization is the core driver: Q1 gross margin of 23.2% vs 13.0% YoY and ahead of ~20% internal guidance; EBITDA of $4.228M beat guidance—this margin trajectory is the key stock narrative near term .
  • Revenue stability with pipeline upside: Q1 sales of $17.414M were in line with guided trajectory (~10% QoQ over ~$16.0M in Q4), with potential incremental volumes from iGPS, Walmart, and newer beverage prospects .
  • Capacity in place to scale: Two large injection machines and robotic extrusion line plus Missouri/outsourced capacity position GLGI to absorb demand without heavy near-term growth capex .
  • Watch regulatory/R&D milestones: Fire-retardant solutions remain a gating factor for certain customers (e.g., Costco); commercialization progress could unlock additional channels .
  • Capital allocation optionality: Cash generation enables deleveraging and potential shareholder-friendly actions; leadership changes and uplisting considerations could broaden investor access .
  • Trading lens: Near-term positive skew from margin beats and operational execution; monitor sequential volumes from key accounts and any update on estimates/uplisting to gauge incremental catalysts .

Appendix: Primary Sources Read

  • Q1 FY2024 8-K 2.02 press release (three months ended August 31, 2023) with EBITDA reconciliation .
  • Earnings call transcripts providing prior quarter context: Q4 FY2023 (Aug 29, 2023) and Q3 FY2023 (Apr 17, 2023) .

Note: A dedicated Q1 FY2024 earnings call transcript was not available in the document catalog; we used the Q1 FY2024 press release and adjacent-quarter calls for full context .