Greystone Logistics Earnings Call: Shock Loss, Planned Rebuild

Greystone Logistics ((GLGI)) has held its Q2 earnings call. Read on for the main highlights of the call.

Greystone Logistics Faces Sudden Setback but Signals Path to Recovery

The tone of Greystone Logistics’ latest earnings call mixed clear disappointment over a sharp, unexpected revenue shock with cautious confidence about recovery. Management openly acknowledged the material impact from the abrupt loss of a long-standing customer and the resulting layoffs and idle equipment, but also highlighted a series of new contracts, operational strengths, and lender support that they believe can stabilize the business over the next several quarters. The call conveyed near-term pain but an underlying message that the company’s installed capacity and emerging opportunities can ultimately offset the disruption.

A Stopgap Revenue Boost from Resin-Processing Contract

Greystone has moved quickly to partially offset lost business by securing an eight-month contract to grind and granulate roughly 18 million pounds of plastic. Work is set to begin next week and should start contributing revenue immediately thereafter. While not a full replacement for the departed customer, this contract provides a tangible near-term revenue stream and helps utilize some of the company’s existing equipment and workforce. For investors, it represents a bridge opportunity that buys time as longer-term sales channels are rebuilt.

Walmart Progress and High-Tech Tracking Pallet Trials

The relationship with Walmart remains a key strategic anchor. Greystone recently manufactured and delivered a new Walmart-specific pallet design in December, with successful testing at major import facilities in Mira Loma and Chicago. Over the past five to six years, this relationship has generated about $30 million in revenue, underscoring its importance. The company is also piloting cellular track-and-trace technology, featuring an estimated seven-year battery life and the ability to monitor location and temperature. If adopted at scale, this technology could unlock closed-loop logistics and higher-value pallet programs, potentially creating recurring revenue streams beyond traditional pallet sales.

Lender Flexibility Eases Near-Term Cash Flow Pressure

On the financing front, Greystone’s primary lender has agreed to convert payments to interest-only for calendar 2026, a shift from previous principal-plus-interest payments of roughly $250,000 per month. Management also expressed confidence that its revolving credit facility will be renewed. This bank support provides meaningful breathing room for cash flow at a time when revenue is under pressure and much of the company’s capacity is underutilized. The relief should help preserve liquidity while new business ramps and mitigate the risk that debt obligations force more drastic operational cuts.

Substantial Installed Capacity Positions Company for a Rebound

Despite the current slowdown, Greystone emphasized that it is not constrained by production capability. The company has approximately $60 million invested in manufacturing equipment, including about $10 million of recently installed machinery that is largely idle. Management framed this as a key strategic asset: once new and existing customers ramp orders, Greystone should be able to scale quickly without major incremental capital spending. In effect, the company is carrying a surplus of capacity today in anticipation of improved demand in coming quarters.

Growing Sales Pipeline and Product Diversification

To replace lost volume, Greystone is leaning on a developing pipeline that extends beyond its historical customer mix. Management highlighted purchase orders and opportunities with Toyota for extruded pallets, as well as active discussions with Berry Plastics and Southwire. Distributor partners are described as committed to supporting the company’s offerings. In addition, Greystone is broadening its reach into non-pallet plastic products and outsourcing work, aiming to fill excess capacity with new applications. This diversification strategy could reduce reliance on any single large customer and potentially smooth out future revenue volatility.

Management’s Equity Stake and Operational Discipline

Chief Executive Officer Warren Kruger underscored his alignment with shareholders by noting his ownership of 8,884,354 shares in the company. Management described Greystone as a lean organization with experienced operations leaders and strong plant management. Following recent layoffs, the team believes the company is streamlined but still capable of executing its production and sales plans. The leadership reiterated confidence that, with the current structure and cost base, the business can return to a more normal growth trajectory within roughly six months.

Abrupt Loss of iGPS Disrupts an 11-Year Revenue Stream

The central negative event driving the current turbulence is the sudden termination of an 11-year relationship with major customer iGPS. The decision led to an immediate halt in related revenue and was described by management as a significant, exogenous shock. Greystone had built meaningful volume around this customer over more than a decade, making the abrupt nature of the loss particularly damaging. The company now faces the task of replacing a mature, recurring revenue stream with new accounts and programs at a time when macro and industry conditions are already challenging.

Large Workforce Reduction and Operational Reset

The fallout from losing iGPS has been most visible in the workforce. Toward the end of November, Greystone laid off approximately 140 employees, cutting headcount to the 80s from prior levels as high as about 250. Management indicated that the associated severance and restructuring costs will be recorded in the first half of the corporate year. While painful, these actions are intended to align the cost structure with lower current volumes and preserve the company’s financial position. The smaller workforce also reflects the reality of underutilized equipment while the sales team works to build replacement business.

Near-Term Revenue Uncertainty as Volume Rebuilds

Greystone acknowledged that revenue growth will be constrained in the near term. Historically, the company recycled roughly 300,000 to 400,000 pallets per year for iGPS and referred to up to 800,000 pallets being removed from the system annually. With that volume now gone, management expects it will take at least a couple of quarters to add meaningful new revenue. They characterized the next few months as a period of transition during which existing contracts, new customers, and diversified products will be ramped. The goal is to have the company “back on track” in about six months, but management was clear that the path there will involve short-term softness in top-line performance.

Idle Equipment, Debt Load and Short-Term Financial Strain

A key challenge is that much of Greystone’s debt is tied to equipment that is not currently being fully utilized, especially the roughly $10 million in newly installed machinery. With fewer orders flowing through the plants, depreciation and financing costs weigh more heavily on the income statement. This mismatch between capacity and demand is a major driver of current cash pressure and limits near-term financial flexibility. The banking concessions help alleviate some of this strain, but until volumes recover and the equipment base is more fully leveraged, investors should expect tighter margins and sensitivity to any incremental demand shocks.

Market Sell-Off Highlights Investor Concerns

The stock market has reacted negatively to these developments. Management noted a significant wave of selling after the iGPS announcement, including one day cited with approximately 335,000 shares changing hands and a sharp decline in share price. This reaction reflects investor worries about revenue visibility, balance sheet leverage, and the time required to rebuild lost business. The sell-off underscores the heightened risk perception around Greystone in the short term, but also potentially sets up a scenario where execution on new contracts and pipeline opportunities could drive outsized share-price recovery if management delivers.

Forward-Looking Outlook: Rebuilding Over the Next Six Months

Looking ahead, Greystone provided a relatively clear, if cautious, roadmap for the next few quarters. The eight-month, 18-million-pound resin-processing contract is expected to generate revenue starting almost immediately. Headcount reductions—from nearly 250 employees to the 80s—are intended to right-size costs while the company works to ramp new business. Management aims to leverage about $10 million in brand-new equipment as well as roughly $60 million of total installed equipment investment as demand returns. With bank loan payments reset to interest-only in 2026 and the revolver extension anticipated, liquidity should be sufficient to navigate the transition. Over the next couple of quarters, the company plans to replace volume historically tied to recycling 300,000 to 400,000 pallets per year for iGPS by expanding closed-loop leasing and recycling programs, particularly around Walmart’s large distribution footprint and the ongoing trials of cellular track-and-trace pallets. Management believes these initiatives can drive meaningful revenue additions and put the business “back on track” within about six months.

In sum, Greystone Logistics’ earnings call painted a picture of a company dealing with a sharp, event-driven setback but not a structural breakdown. The sudden loss of a major customer, associated layoffs, and near-term financial strain are significant challenges, and investors have reacted accordingly. Yet management’s sizable equity stake, supportive lender, large installed capacity, and expanding pipeline with blue-chip names like Walmart and Toyota offer a plausible path to recovery. For investors willing to tolerate near-term volatility, the story now hinges on whether Greystone can convert its operational assets and new opportunities into sustained, replacement revenue over the next several quarters.