Greystone Logistics, Inc. (PNK:GLGI) Q1 2024 Earnings Call Transcript

Bill Rahhal: Well, for 23%, we — that’s really, we are very happy about that. And in terms of controlling our pricing, we can a little bit on the raw material side. And what I mean by that is, we weighed — part of our capital expenditure last year was on a new B-B line, because if you have to buy B-Bs in the marketplace, as I said, you can pay up to $0.20 a pound extra for a pound of plastic, and we did not have enough B-B capacity. So to help control those costs, we’ve added a — I don’t even know, but we added another line that can probably put out 5,000 pounds an hour. And it has helped us and we’ll — that will continue to help us keep our pricing low and keep our pricing competitive. And so we can control our raw materials a little bit. And so we’ve continued to do that. Our goal — and that — it was always been the 20% margin range. That’s kind of where we wanted to be. So if we can exceed that then it’s good for all of us.

Unidentified Analyst : Okay. I guess what I’m really asking is you’ve made the investments in the new machines anticipating growth, which is great. I’m sure growth will come. When it does, do you anticipate margins increasing at all because you’ve got your fixed costs, which aren’t going to change, and in theory you’ll be puffing out more product. You’d see margins going up from that at all?

Warren Kruger: Yes, I see your point. I’m sorry I missed that earlier and absolutely, I love volume. Volume solves a lot of issues and volume makes you look a lot — you’re a more shiny penny. So yes, because our fixed costs, I don’t anticipate them going up substantially. And once you cover those fixed costs, you can really expand your margin. So I would think that we will have some margin expansion in just — if we get the volume that I anticipate.

Operator: We’ll take our next question from Anthony Perala.

Anthony Perala: I guess just, you had alluded to the trajectory of sales for the year a couple of questions ago, but just we’re halfway through fiscal Q2 here. Any high level color on how it’s shaping up, kind of trajectory versus fiscal Q1?

Warren Kruger: Yes. Again, I — earlier I alluded to this. You want those customers to use what you already have, but in the big opportunities, such is not always the case. And so I think some of the volume and the opportunities we have, I see those happening towards the end of the year where I see — in the next six months, what I see happening is, I believe that some of our existing customers will reorder and help us continue to fill machinery. And I believe that some of the new tooling we have. I failed to mention one tool that I was excited about years ago, and it had a very slow start and that’s a 48×45 automobile pallet. It has the ability to put seat belts on there, so you can strap down goods in the auto industry. And we built our tool.

We were very excited about it. But again, these tools are $250,000, $350,000. And if you make a little bit of an error, it can cost you time and money. And our pallet did not nest, not nest, but when they were stacking other competitors’ pallets with ours, they weren’t stacking well. And so our connections in the General Motors and the Ford world suggested that we redo the bottom to nest in those, and that’s what we have done. So that product is coming back to us and we will do a big push in the auto sector for that, at Tesla, General Motors, Ford and Toyota. So we will do that. Matter of fact, I am headed down to a Toyota call this week. And then I anticipate that, that 44×56, we had decent orders on our old 44×56, and it really wasn’t that good at tool.