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MicroCapClub Invitational: Greystone Logistics (GLGI)


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A few months ago I wrote an article entitled: 8 Habits Of Highly Effective MicroCap CEO’s. Greystone Logistics (GLGI) CEO Warren Kruger is one of the few CEO’s I’ve met recently that meets all 8 criteria. Warren Kruger owns 30% of the company, takes an average salary, buys stock in the open market every quarter, and has invested over $10 million of his own money to turn the company around. I would also add that there has been little to no share dilution for several years. With the turnaround complete, the stage is set for a growth story to emerge. Greystone Logistics is the only public company focused on manufacturing and leasing plastic pallets, the fastest growing segment of the $9.5 billion pallet industry. The company is currently trading at 4x TTM EPS. This is the first time the company has presented anywhere, so listen to CEO Warren Kruger as he tells the story.

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MicroCapClub Invitational: Greystone Logistics (GLGI)

  1. 1. Recycled  Plas�c  Pallets  |  Plas�c  Resin  Processing  |  Pallet  Lease  and  Rental  Programs  www.greystonelogis�  
  2. 2. Disclosures   Disclaimer:  This  material  has  been  prepared  by  the  company  described  and  is  being   distributed  by  the  company.  The  company  prepared  the  facts  that  underlie  this   execu�ve  summary  and  addi�onal  informa�on  is  available  in  publicly  filed   documents.  Viewers  are  encouraged  to  review  informa�on  presented  herein  for   accuracy  or  completeness.  This  summary  is  not  an  offer  to  sell  neither  securi�es   nor  a  solicita�on  of  an  offer  to  by  securi�es.     Legal  Notes  &  Disclosures:  Greystone  Logis�cs,  Inc.  may  make  certain  forward-­‐looking   statements  that  relate  to  future  events  or  future  business  and  financial   performance.  Such  statements  can  be  only  predic�ons  and  the  actual  events  or   results  may  differ  from  those  discussed  due  to,  among  other  things,  those  risks   described  in  Greystone  Logis�cs,  Inc.  reports  or  evident  on  Forms  10-­‐Q  and  10-­‐K.   Opinions  expressed  herein  are  subject  to  change  without  no�ce.  This  document  is   published  solely  for  informa�on  purposes  and  is  not  to  be  construed  as  an  offer  to   sell  or  the  solicita�on  of  an  offer  to  buy  any  security  in  any  state.  Past   performance  does  not  guarantee  future  performance.  Addi�onal  informa�on  is   available  upon  request.  www.greystonelogis�   2  
  3. 3. Descrip�on  of  Business   Who  We  Are:     Publicly  traded  company   (OTCBB:  GLGI)     Produc�on  plant  located   in  Be�endorf,  IA   ̶  24/7  Opera�ons     Experienced  management   team    www.greystonelogis�   1  
  4. 4. Descrip�on  of  Business     What  We  Do:     Manufacture  plas�c   pallets  made  from   recycled  plas�c  www.greystonelogis�   2  
  5. 5. Descrip�on  of  Business     What  We  Do:     Manufacture  plas�c   pallets  made  from   recycled  plas�c     Sell  processed   recycled  plas�c  www.greystonelogis�   3  
  6. 6. Descrip�on  of  Business     What  We  Do:     Manufacture  plas�c   pallets  made  from   recycled  plas�c     Sell  processed   recycled  plas�c     Rent  and  lease  plas�c   pallets  www.greystonelogis�   4  
  7. 7. Our  Customers     Food  and  Beverage  Industry     Pharmaceu�cal  Industry     Automo�ve  Industry     Consumer  Product  Industry     Palle�zed  Exports     Agricultural  Industry  www.greystonelogis�   5  
  8. 8. Business  Advantages     Innova�ve  Technologies     Patented  injec�on  molding   equipment     Proprietary  blend  of  recycled   petrochemical  resins     Patented  pallet  designs   Compe��ve  Advantage     Proprietary  processed  plas�c  waste   resin  blend  allows  for  the  output  of   high  quality  pallets  more  quickly  and   less  expensively  then  compe��on     Greystone  is  the  industry  low-­‐cost   producer  www.greystonelogis�   6  
  9. 9. Business  Advantages   Environmental  Friendly     Reduces  environmental  waste  by   repurposing     Posi�ve  image  in  an  environmentally   conscious  economy   Leading  Beer  Industry  Pallet   Manufacturer     In  over  ten  years,  Greystone  has   become  the  leading  pallet   manufacturer  in  the  beer  industry   with  over  4  million  patented   recycled  plas�c  pallets  delivered  to   customers  including  Miller  Brewing   and  Coors  Brewing  www.greystonelogis�   7  
  10. 10. Business  Highlights   Rapid  Growth     Greystone  has  grown  from  Research   and  Development  firm  to  projected   $25  million  in  revenue  (2013)  since   merging  into  public  shell   One  of  the  Largest  Post-­‐Industrial   Users/Resellers  of  Plas�c     Greystone  is  one  of  the  country’s   largest  post-­‐industrial  users  and   resellers  of  plas�c  –  over  40  million   pounds  www.greystonelogis�   8  
  11. 11. Business  Highlights   Pallet  Rental  Program     Greystone  is  poised  to  ini�ate   plas�c  pallet  rental  program       U.S.  wood  pallet  leasing   revenue  is  currently  over  $1.5   billion  annually     Only  one  other  plas�c  pallet   rental  provider   Hundreds  of  Customers     Pfizer,  Apotex,  Omaha  Steaks,   Miller  Brewing,  Coors  Brewing    www.greystonelogis�   9  
  12. 12. Market  Opportunity   $9.5  Billion  Pallet  Industry     Pallets  are  used  in  virtually  all  industries  in  which   products  are  broadly  distributed.  The  600  million  to  1   billion  pallets  going  into  the  system  each  year  create   an  es�mated  $9.5  billion  dollar  industry.  While  wood   s�ll  dominates  the  market  today,  plas�c  pallets  are     gaining  in  total  share  of  pallets  in  use.       Greystone  is  the  only  publicly-­‐traded  company   focused  on  the  fast-­‐growing  plas�c  segment  of  the   $9.5  billion  industry.  www.greystonelogis�   10  
  13. 13. Market  Opportunity     $5  Billion  Leasing  Industry     $5  Billion  HDPE  Recycling  Industry    www.greystonelogis�   11  
  14. 14. Market  Opportunity   Shi�  to  Plas�c  from  Wood     Plas�c  more  durable  than  wood  pallets     Plas�c  pallet  sales  growing  at  double-­‐ digit  rates     Disposal  issues  and  fumiga�on  costs   coupled  with  regulatory  mandates  on   pest,  biological,  and  chemical   infesta�on  with  wood  pallets  means   more  emphasis  on  alternate  solu�ons     As  a  result,  industry  is  rapidly   transi�oning  to  plas�c  pallets     The  opportunity  exists  for  hyper-­‐growth   in  leased  plas�c  pallets  and  excess   ground  and  reprocessed  resin  sales  www.greystonelogis�   12  
  15. 15. Market  Opportunity   Shi�  to  Plas�c  from  Wood     A  Freedonia  Industrial  report   es�mated  the  demand  for   wood  pallets  to  exceed  $1   billion  in  2013.  At  the  same   �me,  the  demand  for  plas�c   pallets  was  projected  to   exceed  $100  million.   Freedonia  es�mates  that  the   demand  for  plas�c  pallets   will  con�nue  to  outpace   wood  as  percentage  of  the   market.  www.greystonelogis�   13  
  16. 16. Market  Opportunity   Beverage  Industry  Opportunity     Greystone  is  leveraging  the  company’s  success  in  the   beverage  industry,  which  currently  represents  35%  of  the   plas�c  pallet  market     The  two  largest  U.S.  beer  breweries  total  80%  of  the  U.S.   beer  market  and  circulate  4-­‐6  million  pallets  within  their   distribu�on  system  annually.  Approximately  10-­‐20%  of   these  pallets  are  lost  or  damaged  per  year,  thus  requiring   consistent  replacement  orders     The  beer  industry  represents  just  5%  of  the  total  beverage   industry.  Greystone  is  the  sole  provider  of  recycled  plas�c   pallets  for  Miller  Brewing  and  Coors  Brewing,  and  is   working  to  capture  addi�onal  market  share  in  other  areas   of  the  beverage  sector    www.greystonelogis�   14  
  17. 17. Key  Customer  Profiles   MillerCoors  Brewing  (Beer  Industry)     MillerCoors  is  the  second  largest  beer   brewery  in  the  U.S.  Greystone  Logis�cs  is  now   the  exclusive  recycled  plas�c  pallet  supplier   Graphic  Packaging  Interna�onal     Graphic  Packaging  Holding  Company  (NYSE:   GPK),  is  a  leading  provider  of  packaging   solu�ons  to  food,  beverage  and  other   consumer  product  companies   Pfizer,  Inc.     One  of  the  world’s  largest  research-­‐based   pharmaceu�cal  companies   Apotex  Corp  (Pharmaceu�cal  Industry)     Founded  in  1974,  Apotex  Corp.  is  the  largest   Canadian-­‐owned  pharmaceu�cal  company  www.greystonelogis�   15  
  18. 18. Business  Model   Organic  Growth  Within  Rapid-­‐Growing  Pallet   Industry     As  the  materials  handling  industry  con�nues  to  adopt   plas�c  pallets  for  environmental,  export,  safety,  health,   cost  and  efficiency  concerns,  Greystone  will  benefit  from     this  sustainability  trend.    Plas�c  is  becoming  the  shipping   pla�orm  of  choice  for  export  shipments  as  most  countries   require  extremely  stringent  and  expensive  requirements   for  wood  pallets    www.greystonelogis�   16  
  19. 19. Business  Model   Capitalize  on  Resin  Processing  and  Sales    Increased  industrial  use  of  recycled  resin  has  allowed  profitable   sale  of  excess  recycled  resin.  Plas�cs’  recycling  is  an  established   na�onal  industry.  According  to  the  American  Chemistry  Council,   the  number  of  companies  handling  and  reclaiming  post-­‐consumer   plas�cs  (over  1,790)  is  nearly  six  �mes  greater  than  in  the  early   days,  1986  (310).  Over  �me,  the  recycling  of  plas�cs  will  con�nue   to  grow  and  become  a  more  efficient  and  conven�onal  segment  of   the  na�onal  economy.  www.greystonelogis�   17  
  20. 20. Business  Model   Promote  Lease  Pallet  Management  Solu�ons     Lease  pallets  into  a  managed  rental  pool     Na�onal  beverage  and  regional  customers  will  drive   growth  in  this  mul�-­‐billion  dollar  market  dominated  by   wood   Leverage  Miller  Brewing  &  Coors  Brewing  Success     Leverage  current  success  of  being  the  exclusive  supplier  of   100%  recycled  plas�c  pallets  for  MillerCoors  with  other   industry  giants  moving  from  wood  to  plas�c  www.greystonelogis�   18  
  21. 21. Business  Model   Sales  and  Marke�ng  Support   of  Alliance  Partner  SONOCO   Transport  Packaging,  a  $4.5  billion   global  manufacturer  of  industrial  and   consumer  products,  u�lizing  their  reach   and  buying  power  to  grow  sales  while   fully  developing  our  extensive  distributor   network  www.greystonelogis�   19  
  22. 22. Business  Model   Con�nue  to  Expand  Product  Line     Greystone  currently  has  mul�ple   product  lines  with  more  than  twenty   different  pallets  and  configura�ons  of   light,  mid,  and  heavy  duty  pallets   including:     37  x  32   48  x  48     37  x  37   40  x  32   44x56   IBC    Pallet     48  x  40   Export  Nestable     48  x  44   Beer  Keg  Pallets   48  x  45   24x40     Iden�ty  Accre�ve  Targets     Greystone  will  iden�fy  companies  that   would  accre�ve  acquisi�ons  www.greystonelogis�   20  
  23. 23. Key  Financials   Condensed  Income  Statements  (000)    FY  May   Revs   EBITDA   Net  Inc.   EPS   FY07  A   $12,454   -­‐$471   -­‐$2,600   -­‐$0.13   FY08  A   $21,081   $2,836   $928   $0.02   FY09  A   $16,691   $2,807   $842   $0.02   FY10  A   $16,231   $2,349   $503   $0.0   FY11  A   $20,502   $1,752   $13   $-­‐0.03   FY12  A   $24,158   $3,890   $2,103   $0.07   FY13  E   $25,000   $4,470   $2,250   $0.09   FY14  E   $31,548   $5,647   $3,790   $0.14   FY15E   $38,239   $7,647   $4,780   $0.18  www.greystonelogis�   21  
  24. 24. Total  Sales:  $24,186,000   Miller  Brewing  Co.   29.6%   Graphic  Packaging  Intl   16.8%   Coors  Brewing   9.4%   Apotex   7.1%   Decade  Products   4.9%   Sonoco   3.8%   Fabricas  Monterrey  SA   2.9%   Norleans  Technologies,  Inc.   2.9%   Plas�c  Pallet  &  Container   2.0%   Trademark  Plas�cs   1.9%  www.greystonelogis�   22  
  25. 25. Financial  Performance   Net  Income    $40,000      $38,239     EBITDA    $35,000     Revenues    $31,548      $30,000      $24,186      $25,000      $20,502      $25,000      $16,691      $16,231      $20,000      $15,000      $10,000      $2,807      $2,349      $3,890      $7,647      $4,470      $5,647      $5,000      $732      $1,254      $422      $1,934      $-­‐      $2,250      $3,790      $4,780      $(5,000)   2009   2010    $(770)   2011   2012   2013   2014   2015  www.greystonelogis�   23  
  26. 26. Total  Projected  Revenue  and  Income   Year  End  May  31  ($000s)   2009   2010   2011   2012   2013   2014   2015   Pallet  Revenue   $16,691     $16,230     $15,218     $20,371     $21,500     $24,234     $27,019    Cost  of  Goods  Sold   $13,385     $13,273     $12,968     $14,722     $16,573     $18,691   $20,256  Gross  Margin   $3,306     $2,957     $2,040     $5,649     $4,927     $5,543   $6,763   Recycled  Plas�c  Revenue   $5,284     $3,786     $3,500     $7,350   $11,220  Cost  of  Goods  Sold   $5,389     $4,505     $3,325   $6,885   $9,537  Gross  Margin   $(105)     ($719)   $175   $465   $1,683  Recycled  Resin  SGA  (Included  in  Plant  SGA)   Leasing  Revenue  Cost  of  Goods  Sold  Gross  Margin  Leasing  SGA  Opera�ng  Profit   NET  SALES   $16,691     $16,230     $20,502     $24,158     $25,000   $31,584   $38,239  Cost  of  Goods  Sold   $13,385     $13,273     $18,357     $19,228     $19,898   $25,576   $29,793  Opera�ng  Profit   $2,503     $2,002     $2,145     $4,930     $5,102   $6,008   $8,446  Corporate  SGA   ($1,078)   ($1,135)   ($1,921)   ($1,993)   ($2,200)   ($2,300)   ($2,400)  Interest   ($908)   ($750)   ($1,086)   ($897)   ($870)   ($696)   ($522)  EBITDA   $2,566     $2,139     $626     $3,890     $4,470     $5,647   $7,647  Income  Taxes  (Tax  Loss  Carry  Forward  Used)  Net  Income   $732     $422     $(770)   $1,934     $2,250   $3,790   $4,780   NET  SALES  GROWTH   -­‐3%   29%   30%   3%   21%   17%  Gross  Opera�ng  Profit   15.00%   12.34%   10.46%   20.40%   20.40%   19.02%   22.08%  Net  Income  to  Sales   4.39%   2.60%   0.00%   8.00%   9.00%   12.00%   12.50%  EBITDA  to  Sales   15.37%   13.18%   3.01%   16.10%   17.90%   17.90%   20.00%  G&A  to  Sales   6.46%   6.99%   9.37%   8.25%   8.80%   7.28%   6.28%  www.greystonelogis�   24  
  27. 27. Management   Warren  F.  Kruger,  CEO     Over  35  years  experience  in  financial  services  and  manufacturing  industries     Co-­‐founded  MCM  Group,  Ltd.  In  1990  and  sold  to  Cendant  Corp.  in  1996  (NYSE:  CD)     Owned  and  operated  three  ice  factories  and  sold  to  Packaged  Ice,  Inc.  in  an  industry   rollup     SONOCO  PRODUCTS,  Sales  Alliance  Partner   Ron  Schelhaas,  Plant  Manager   Bill  Rahhal,  CFO   William  Pritchard,  General  Counsel     Greystone  Logis�cs  Online:  www.greystonelogis�     Mailing  Address:      Plant  Loca�on:   1613  East  15th  Street      2601  Shoreline  Drive   Tulsa,  Oklahoma  74114    Be�endorf,  Iowa  52722   Office:  918.583.7411      Plant:  563.332.0052   Fax:  918.583.7442      www.greystonelogis�   25