Greystone Logistics: Big Upside, Even if This Pallet Maker Just Rehits its High-Water Mark

Preferred stock redemption and other factors point to higher prices ahead for GLGI stock

Greystone Logistics, Inc. (GLGI)

Greystone Logistics (OTCMKTS:GLGI) is yet another established, profitable, OTC-listed company likely well-known among the nanocap/microcap investing community, but still a bona fide “under the radar” name among most market participants. Admittedly, it makes sense that the market still hasn’t fully discovered GLGI stock.

Shares in this manufacturer of plastic pallets have experienced a wave or two of strong performance over the past five years, the performance of GLGI over a more recent time frame has been far less stellar, with choppy earnings leading to choppy price performance.

That said, with the stock trending higher so far this year, another breakout may be on the horizon. The reasons for this are manyfold, related primarily to the operating performance of this company, as well as due to an important change in Greystone’s capital structure.

Add in the fact that shares sport a fairly low valuation, and could benefit from catalysts beyond just improvements in operating performance, and there’s much to suggest merit in buying into GLGI at current prices.

Greystone Logistics: Background

Under numerous names, Tulsa, Oklahoma-based Greystone Logistics as a business entity has been around for over 50 years. However, over the last 20 of these years, Greystone’s focus has been on building a better pallet.

Seeking to capitalize on both the global push to “go green,” as well as on the desire of end-users to avail themselves of the common pain points with wooden pallets (infestation, wood chips on the warehouse floor) as warehousing becomes more and more automated, Greystone has been on the forefront of the pivot from wooden to durable plastic pallets.

Over the past decade, Greystone’s business has taken off in a big way, but take a look at GLGI’s financials during this time frame, and you may grow concerned that the company may just well have peaked several years ago. That is, while sales over the trailing twelve month period are up by over 145% compared to ten years ago, revenue and earnings have been choppy since the Covid era.

Temporary factors like supply shocks, and more long-lasting headwinds like economic uncertainty, has resulted in years where Greystone generates EBITDA of around $12 million, operating income in the $5 million-$6 million range, and net income in the $4 million-$6 million range, and years where the figures fall moderately below these levels.

However, while the trailing twelve month period may represent one of the low points, with TTM revenue of $54.7 million, EBITDA of $8.7 million, operating income of $2.8 million, and net earnings of $2.6 million, more recent results suggest better times ahead for the current fiscal year, which ends in May 2026.

Recent Results, Developments, and Management Commentary

Greystone’s most recent fiscal results are for the quarter ending February 28, 2025, the company’s fiscal third quarter. Based on the recent earnings release history, Q4 FY25 results will likely arrive sometime in late August or early September.

During Q3 FY25, Greystone reported a modest increase in sales ($14.3 million vs. $14 million in Q3 FY24), but a big jump in operating income and net earnings compared to the prior year’s quarter. EBITDA came in at $3 million, up by nearly 43% compared to Q3 FY24.

Operating income came in at $1.36 million, versus around $600,000 during Q3 FY24. Net income of around $850,000 (3 cents per share) represented a more-than threefold YoY increase. More importantly, Greystone CEO Warren Kruger discussed on the post-earnings conference call, business has picked up since the election, with Kruger noting that results during Q4 FY2025 will likely be similar to that of results during Q3.

On the conference call, Kruger also noted some other promising developments with Greystone, including the company’s efforts to introduce trackable plastic pallets, which would be used to help Greystone develop a “pallet as a service” type of revenue model. The GLGI CEO also noted how the company was on the verge of removing another longstanding overhang for GLGI stock: $5 million in outstanding preferred stock.

As announced in a subsequent press release on April 23, 2025, this preferred stock, held primarily by insiders like Kruger, has been redeemed and retired. As these preferred shares carried a fairly high yield (around 11%), this suggests a moderate boost for GLGI’s net earnings moving forward.

Since the April earnings call, Greystone has made another announcement that will likely bode well for GLGI shareholders going forward as well. GLGI has completed the repurchase of 1 million shares. The company first announced its 1 million share buyback plan back in June 2024. GLGI had around 27.7 million shares outstanding as of the Q3 2025 earnings release, but with the common share count at around 28.3 million at the time of the initial buyback announcement, this suggests that the outstanding share count now stands at around 27.3 million.

GLGI Stock Valuation

Based on the implied share count, at current prices, $1.27 per share, GLGI has a market cap of around $34.6 million. As of Feb. 28, Greystone had $3.8 million in cash, $11.65 million in short and long-term outstanding debt, $5.24 million in short and long-term operating lease liabilities, and around $2.8 million in preferred stock still outstanding.

However, with the preferred stock now fully-redeemed, and the company buying another ~$500k or so during March and April to complete its 1 million share buyback, it may be fair to say that GLGI has utilized some of its aforementioned cash position, although much of this may have been replenished by operating cash flow.

To be conservative, though, we will deduct the preferred and common share repurchase amounts from the Feb. 28, 2025 cash position, when assessing GLGI’s valuation on an EV/EBITDA basis. Hence, adding GLGI’s $16.9 million in debt and lease liabilities to the market cap, and backing out just $500,000 in cash, we get an enterprise value of around $51 million.

Over the trailing twelve month period, Greystone has reported EBITDA of around $8.7 million. Against this relatively-weak year alone, GLGI stock appears to be undervalued, with a TTM EV/EBITDA ratio of around 6x. Even if valued as a commodity chemicals business, rather than as, say, a packaging stock (which mostly trade at higher EBITDA multiples), GLGI appears cheap, with many of these names trading at EV/EBTIDA ratios in the 6x-8x range.

Given the growing likelihood that the coming quarters will be similarly strong for GLGI, shares stand to benefit from another re-rating, on multiple expansion and on earnings growth. If Greystone can sustain strong results in the coming quarters, hitting the upper range of historical annual EBITDA, $12 million, is well within reach.

At a 6x multiple, this would give GLGI an enterprise value of around $72 million. Subtract debt and lease liabilities, and add back cash, and we get a market cap of around $55.6 million, or over $2 per share, a more than 60% premium compared to current prices. Yes, I may be leaning too much on EBITDA, and as I’ve said before I should take Munger’s musings on EBITDA more to heart.

Still, given the moderate impact the redemption of preferred stock will have on earnings going forward, not to mention the impact of the share purchases on EPS, a big jump in net earnings would likely drive a similarly-strong move to the upside. Backing out depreciation, we get around $1.4 million in quarterly operating earnings for Greystone, or around $5.6 million annualized.

Subtract interest expense totaling around $1.1 million annually, Greystone could report pre-tax earnings of around $4.5 million over the next twelve months. GLGI’s effective tax rate has varied over the year, due in some part to net loss carryforwards that have since expired. For simplicity’s sake, we’ll estimate a 25% effective tax rate, to account for federal and state-level income taxes.

This points to net earnings of around $3.375 million, or around 12 cents per share, with zero adjustment for preferred stock dividends. Multiply that by GLGI’s current TTM P/E ratio of 16x, and we get a valuation of around $1.92 per share, over 50% above present price levels.

Others Potential Catalysts to Consider

Greystone may appear well-positioned to re-hit its high-water mark in terms of earnings, but don’t ignore the potential for Greystone to ultimately benefit from increased market share. The company has spent years building out its manufacturing capacity. Kruger noted on the earnings call that GLGI could easily add an additional $40 million worth of additional annual business with little required additional capital expenditures.

In other words, assuming similar margins, that would mean an incremental $4 million in annual operating income. Given how much of Greystone’s current operating income is eaten up by debt servicing, an additional $4 million would have a tremendous impact on the bottom line. Quite possibly, it could lead to a doubling of net earnings compared to present levels.

That said, I wouldn’t buy GLGI on this potential catalyst. There’s been talk of Greystone scaling up around for years, and it has yet to truly take shape, although the above-mentioned “pallets as a service” approach could be the ticket to such a level of increased sales/profitability.

Given the aggressive common and preferred share repurchasing over the past year, GLGI may just well continue to utilize return-of-capital measures like buybacks to increase the underlying value of shares. If coupled with further earnings growth, this could result in another strong wave of outsized price appreciation for GLGI stock.

Risks/Concerns to Keep in Mind

While Kruger seemed confident that strong business would persist, his remarks regarding the impact of tariffs on demand do suggest being prepared for the situation here to not play out as rosily as expected. Noting how Greystone’s business is concentrated in the U.S., Kruger downplayed how much the Trump tariffs could affect sales moving forward, but did note that on the next conference call, he would provide commentary on how this factor is affecting pallet demand from major retailer customers like Walmart.

Greystone has historically had a large amount of related party transactions, going beyond just the now-redeemed preferred stock held by insiders. As noted in the latest 10-Q, Greystone rents manufacturing facilities from a member of GLGI’s board.

Yorktown Management, an entity fully-owned by Warren Kruger, not only leases GLGI its office space, but also some of its grinding equipment as well.

To top it all off, Greystone buys and sells pallets from another pallet company (TriEnda Holdings) that Kruger is a major shareholder in, as well as does business with another pallet company owned by Warren Kruger’s brother.

All of these related-party transactions add up to an annual volume in the low seven-figures. On the latest conference call, Warren Kruger was defensive when asked about the other related party transactions by an analyst, but provided little in the way of information about whether Greystone will eventually reduce these related-party transactions, such as through the purchase of its leased real estate/equipment from these insiders.

While to some extent a red flag, given how Kruger and the other insiders were willing to sell back their preferred shares, giving up on a juicy 11% yield, maybe that event marks the start of a winding down of these other related-party transactions. In turn, perhaps paving the way for GLGI to move out of the OTC shadows, and to a major market listing.

Bottom Line on GLGI Stock

Greystone shares have been covered by many microcap commentators in the past, with said commentators crafting bull cases that have failed to fully play out. However, in light of the preferred stock redemption, as well as possible normalization of results in the quarters ahead, after a moderate rally earlier this year (from around $1 to around $1.30 per share), GLGI may have room to make another breakout move.

On a longer time frame, if a further scaling-up of Greystone finally arrives, and is coupled with another factor like a market uplisting for shares, the impact on the price of GLGI stock could be tremendous.

GLGI is not very liquid. It may best to slowly ease into a position. Nevertheless, given these strengths, small investors seeking big opportunities in little-explored areas of the market may want to take a look at Greystone Logistics stock at current prices.

DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in GLGI.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from GLGI or any other entity for writing this article. I have no business relationship with GLGI, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading GLGI stock. Do your own due diligence, and caveat emptor.