Greystone Logistics, Inc. (GLGI) Earnings Call Transcript & Summary

Good day, everyone, and welcome to today's Greystone Reports Q1 conference call. [Operator Instructions] Please note, this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Brendan Hopkins. Please go ahead.

Thank you, and thank you all for joining us today. We have a brief safe harbor, and then we'll get started. So 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 Kruger, CEO of Greystone.

Good afternoon, everyone. I'm pleased that you've joined us today, and I wanted to give you an update on where we stood. Last quarter, it was a difficult call for me because it was a -- more trying. And today, I can offer up a better outlook of where Greystone is. We continue to make continual progress on the sales front. You can see about sales, our sales have not picked up dramatically. We've had some good things happen recently. I've signed nondisclosures with 3 international groups to manufacture pallets for them in the United States. That's very positive. And 1 of those 3, we actually -- they purchased some tooling, and we got the tooling in last week from Taiwan where we made the tools. And we have produced sample parts for them, and it's -- they're very, very pleased. So that opportunity is about -- as with all these things in the sales cycle, about 45 days behind, but we're on track there. And again, the other 2 opportunities, we have the packaging show starting -- it starts Sunday in Chicago. It's an annual packaging show. And I'll be there, Monday, Tuesday and Wednesday. And I have meetings with the international -- our new opportunities. So we're looking forward to running some revenue through our machines. There are, of course, risks and uncertainties, but I'm very cautiously optimistic now that we are finally on track to get where we need to be. I've got -- for 2027 calendar year, we have a bunch of the pipeline that we've penciled in. And so last month, we had a nice $500,000 order come through, and -- so we'll be completing that through this month. And that, with our steady businesses, it helps on the cash flow side. I will say cash flow is watching -- we're watching things like a hawk. Of course, we're only spending and making capital expenditures on operating equipment where we need to do the right thing on maintenance and so forth. But we are focusing on sales. I am discussing with others, trying to get a sales group aligned with us. So we're working on that. And I think in the next 90 days, some really, really, really positive things are going to happen for us. So I do want to say that we had a product, and I can -- I think I can mention this name. I don't think we have a nondisclosure. We've been working with [ Quikrete ] for many years, about 6 years. And the gentleman we were working with was working out of San Antonio, one of the facilities there. And we were trying -- we were testing one of our newer products, it's probably the most robust product we have. And we put cellular tracking and technology in there. And the interesting thing with that is it is a lease pool type of program that we're heading towards. And Quikrete has their own pallet pool. So this isn't -- and it's a wooden pallet pool. So this is a very, very, very interesting opportunity for us because of the size and scope of their organization. Of course, with all things, like I said, we are working with the gentleman for 6 years who left. So now we're working with new people to bring that opportunity to fruition. We're also working with a couple of other -- while we had iGPS, the giant leasing company that we've manufactured for, we were prohibited from doing business in the leasing world. So we have some leasing companies that have been working with us. I've got 3 nice, nice opportunities that are with 3 different organizations for a pooling programs. And we're excited about those because those are with tools that we already have. We don't have to create new tools, these are existing tools that we have. And just so everyone understands, in this world, everything is large. The tooling, the tools are 40,000 pounds apiece. The injection machines at 3,300 tons pressure, massive machines that are $2.5 million a pop. And so we have a wonderful asset base. And again, we just need to fill the revenue side. So I'd love it if someone out there in this audience said, "Gosh, I know the Quikrete people." So that would be a wonderful addition. But I'm -- you can see from our filing, our cash flow is tenuous. We have steady customers that have been customers for 20 years that continue to order. So we have a nice base, but the nice base is not enough. And it's on my shoulders to continue to bring in revenue. And so that's what I have been focusing on, and that's what I'm working for our shareholder base to bring on new customers. So that being said, I'd love to take questions from people out there. So if you have any, let me know. If not, I know that we're working very hard for our shareholders.

[Operator Instructions] And our first question will come from Adam Posner.

Warren, thanks for your time as always. It sounds like a lot of exciting things coming down the line and everything here. Just wanted to ask you how sort of morale the team is doing? And I know it's been a tough time. It sounds like we're getting to the other side of it, but how is everybody sort of doing with that?

Adam, that's a really good question because 1 of my -- 1 of the things in my life is I -- I love people, and I love to work with people and some of the people that I've worked with, it's been 25 years. And these are relationships that aren't built overnight. And so they have faith in what we're doing. They have faith in each other. And so that helps. But it's -- I will tell you, it's been very trying. When we -- last December, we laid off hundreds. And we are running a lean machine now, as we should always, but we are running a really lean machine now because we are watching the cash. And so we're also -- my Board has instructed me to continue to look for opportunities out there with partnerships. And so we are working on those types of things. So I really appreciate it. The team is holding up well, but they also have to be reassured. And I've told them this. We've been through a swoon like this before, and this is something we'll come out on the other side. So thank you very much for asking because we have wonderful, wonderful people. And I will tell you, many of them have been there for their entire career. So I care about them, and they care about the company.

[Operator Instructions] And we'll move next to Eric Nickerson. Please go ahead.

Warren, you may be pleased to know that there's at least 1 person out here who reads your filings. And I ask just a few questions to ask that kind of jumped out at me from this 10-Q. I noticed we had $6 million something in sales last quarter and $5 million something in cost of goods sold. So I'm trying to wonder if you're walking $0.75 million gross loss on sales, are there some sales in there that maybe we shouldn't be doing?

No, the depreciation, that -- it skews that. Just -- our depreciation is great. We have over -- I don't have the numbers right in front of me, but you'll notice, it's 400 and -- yes, I do have the numbers in front of me. It's 400 in, let's see, in May. The depreciation is going to run $460,000 a month, and that goes up in cost. They way they book it kind of goes up and cost of goods sold. So it skews.

You run depreciation as part of cost of goods sold then?

That's exactly right. Yes, for the machine cost, yes. Yes.

That's...

So that's a very good catch. I appreciate that you looked at it. Let me mention a couple of other things, Eric, while you're -- since you've asked. I just had a meeting today with our lead bank, and that's IBC. Because I give them a 6-month projection and kind of tell them where they are. And they are -- it's a wonderful institution, and they've been working extremely well with us. And they -- we, of course, were interest only through year-end. The notes -- both those notes, not the working capital line, but both the notes, they are running -- they run probably through, I think, '30, 2030 or something. They are out there quite a bit. But because of our position and the way we -- and our auditors made us put everything current as though everything is due today. And it's really not. So just so that since you're asking questions on the balance sheet, we do have an interest only, and our payments don't renew until after the first of the year.