Greystone Logistics Plunges to $1.1M Loss on 20% Sales Drop

TL;DR

**GLGI's Q1 results are a red flag; sales are down, and they're bleeding cash, signaling a tough road ahead.**

AI Summary

GREYSTONE LOGISTICS, INC. (GLGI) reported a significant decline in financial performance for the three months ended August 31, 2025, with sales decreasing by 20.27% to $10,732,573 from $13,460,647 in the prior year. The company swung to a net loss of $1,099,022, a stark contrast to the net income of $335,454 reported for the same period in 2024. This resulted in a basic and diluted loss per share of $0.04, down from a gain of $0.01 per share. Gross profit plummeted by 83.27% to $318,343 from $1,902,894, primarily due to higher cost of sales relative to revenue. Operating income shifted from a gain of $824,524 in 2024 to an operating loss of $1,224,984 in 2025. Cash and cash equivalents increased to $2,339,269 as of August 31, 2025, from $1,545,035 as of May 31, 2025, driven by net cash provided by operating activities of $1,908,265. The company also repurchased $123,147 of common stock during the quarter, increasing treasury stock to 609,000 shares.

Why It Matters

This sharp decline in GLGI's sales and profitability signals significant headwinds for investors, potentially impacting stock valuation and future dividend prospects. The competitive landscape in plastic pallet manufacturing, where GLGI operates, appears to be intensifying, putting pressure on pricing and margins. For employees, a sustained downturn could lead to operational adjustments or workforce reductions. Customers might see changes in product availability or pricing strategies as the company navigates its financial challenges. The broader market may view this as an indicator of softening demand in the logistics and manufacturing sectors, especially for recycled plastic products.

Risk Assessment

Risk Level: high — The company reported a net loss of $1,099,022 for the quarter, a significant reversal from a $335,454 net income in the prior year, indicating deteriorating financial health. Sales decreased by 20.27% from $13,460,647 to $10,732,573, and gross profit fell by 83.27% to $318,343, demonstrating severe pressure on revenue generation and cost control. The shift to an operating loss of $1,224,984 from an operating income of $824,524 further highlights operational inefficiencies.

Analyst Insight

Investors should consider reducing exposure to GLGI given the substantial decline in sales and net income, coupled with a significant drop in gross profit. Monitor future filings closely for any signs of revenue stabilization or margin improvement, but for now, a cautious or bearish stance is warranted.

Financial Highlights

debt To Equity

1.34

revenue

$10,732,573

operating Margin

-11.41%

total Assets

$43,660,900

total Debt

$10,537,807

net Income

$(1,099,022)

eps

$(0.04)

gross Margin

2.96%

cash Position

$2,339,269

revenue Growth

-20.27%

Key Numbers

• $10,732,573 — Sales (Decreased by 20.27% from $13,460,647 in Q1 2024)
• $(1,099,022) — Net Income (Loss) (Shifted from a net income of $335,454 in Q1 2024 to a net loss)
• $(0.04) — Basic and Diluted EPS (Decreased from $0.01 in Q1 2024)
• $318,343 — Gross Profit (Decreased by 83.27% from $1,902,894 in Q1 2024)
• $(1,224,984) — Operating Income (Loss) (Shifted from an operating income of $824,524 in Q1 2024 to an operating loss)
• $2,339,269 — Cash, end of period (Increased from $1,545,035 at May 31, 2025)
• $1,908,265 — Net cash provided by operating activities (Provided cash flow for the three months ended August 31, 2025)
• $123,147 — Repurchase of common stock (Amount spent on share repurchases during the quarter)
• 27,270,271 — Shares outstanding (As of October 15, 2025)
• $9,968,888 — Term loans payable to IBC (Outstanding as of August 31, 2025)

Key Players & Entities

• GREYSTONE LOGISTICS, INC. (company) — registrant
• International Bank of Commerce (company) — lender for term loans and revolving loan
• Warren F. Kruger (person) — Chairman, CEO, and President of Greystone Logistics, Inc. and owner of Yorktown Management & Financial Services, LLC
• Yorktown Management & Financial Services, LLC (company) — entity wholly owned by Warren F. Kruger, renting equipment and office space to Greystone
• Greystone Real Estate, L.L.C. (company) — entity owning manufacturing facilities leased by Greystone
• TriEnda Holdings, L.L.C. (company) — manufacturer of plastic pallets where Warren F. Kruger is non-executive chairman of the board of directors of the majority owner
• Green Plastic Pallets (company) — entity owned by James Kruger, brother to Warren Kruger, purchasing pallets from Greystone
• Robert B. Rosene, Jr. (person) — member of Greystone's Board of Directors and former limited guarantor for IBC loans
• First Interstate Bank (company) — lender for a term loan secured by real estate
• Securities and Exchange Commission (regulator) — filing oversight

FAQ

Risk Factors

• Significant Decline in Revenue and Profitability [high — financial]: Sales decreased by 20.27% to $10,732,573 for the three months ended August 31, 2025, compared to $13,460,647 in the prior year. This led to a net loss of $1,099,022, a substantial swing from a net income of $335,454 in the same period last year. Gross profit plummeted by 83.27% to $318,343 from $1,902,894, indicating significant pressure on the cost of sales relative to revenue.
• Deterioration in Operating Performance [high — financial]: The company experienced a shift from an operating income of $824,524 in the prior year to an operating loss of $1,224,984 for the three months ended August 31, 2025. This indicates a severe decline in the core business operations' ability to generate profit.
• Increased Cost of Sales [medium — operational]: The primary driver for the gross profit decline was a higher cost of sales relative to revenue. While sales decreased by 20.27%, the cost of sales only decreased by 10.07% ($10,414,230 in 2025 vs. $11,557,753 in 2024), leading to a significant margin compression.
• Negative Earnings Per Share [high — financial]: The company reported a basic and diluted loss per share of $0.04 for the three months ended August 31, 2025, a sharp decline from a gain of $0.01 per share in the same period of the prior year. This reflects the overall deterioration in profitability.
• Reliance on Debt Financing [medium — financial]: As of August 31, 2025, the company had $9,968,888 in term loans payable to IBC and a total long-term debt (net of current portion) of $8,213,566. The significant operating losses could strain the company's ability to service this debt.

Industry Context

Greystone Logistics operates in the logistics and transportation sector, which is highly competitive and sensitive to economic cycles. The industry is characterized by fluctuating fuel costs, labor availability, and regulatory changes. Recent trends indicate a growing demand for efficient supply chain solutions, but also increasing pressure on margins due to rising operational costs and intense competition.

Regulatory Implications

The company must comply with various transportation regulations, including those related to safety, emissions, and driver hours. Any non-compliance could result in fines, operational disruptions, and reputational damage. Changes in tax laws or accounting standards could also impact financial reporting and profitability.

What Investors Should Do

1. Monitor cost of sales closely: The significant increase in cost of sales relative to revenue is the primary driver of the current losses. Investors should look for management's plan to control these costs.
2. Analyze the sustainability of cash flow: While operating cash flow was positive ($1,908,265), it was generated during a period of significant operating loss. Understanding the drivers of this cash flow and its sustainability is crucial.
3. Evaluate management's strategy for revenue turnaround: The 20.27% decline in sales is a major concern. Investors need to assess management's strategy to reverse this trend and regain market share.
4. Assess debt servicing capacity: With a substantial amount of debt, including $9,968,888 in term loans, investors should evaluate the company's ability to meet its debt obligations given the current negative profitability.

Key Dates

• 2025-08-31: End of the second fiscal quarter — Reporting period for the significant decline in sales and net loss.
• 2025-05-31: End of the first fiscal quarter — Prior period comparison point for cash and cash equivalents, and shares outstanding.

Glossary

Treasury Stock

Shares of a company that it has repurchased or bought back from the open market. These shares are no longer outstanding and do not have voting rights. (The company increased its treasury stock by repurchasing $123,147 of common stock, indicating a potential strategy to manage share count or return capital to shareholders, though current financial performance raises questions about this.)

Accumulated Deficit

The cumulative net losses of a company since its inception, minus any cumulative net income. It represents a deficit in retained earnings. (The accumulated deficit increased to $28,732,081 as of August 31, 2025, from $27,633,059 as of May 31, 2025, reflecting the recent net loss and ongoing historical losses.)

Weighted-average shares outstanding

The average number of a company's shares outstanding over a specific period, used in calculating earnings per share. It accounts for shares issued or repurchased during the period. (The weighted-average shares outstanding decreased from 28,279,701 in 2024 to 27,278,050 in 2025, which would typically mitigate the impact of a net loss on EPS, but the loss was still significant.)

Cost of Sales

The direct costs attributable to the production or purchase of the goods sold by a company during a period. This includes materials and direct labor. (A significant increase in Cost of Sales relative to revenue was the primary driver of the drastic reduction in gross profit.)

Year-Over-Year Comparison

Compared to the prior year's second quarter, Greystone Logistics has experienced a severe downturn. Revenue has fallen by 20.27% to $10,732,573, and the company has swung from a net income of $335,454 to a net loss of $1,099,022. Gross profit has been decimated, dropping 83.27% from $1,902,894 to $318,343, primarily due to a disproportionately higher cost of sales. Consequently, operating income has shifted from a healthy $824,524 to a significant operating loss of $1,224,984, signaling a substantial deterioration in operational efficiency and profitability.

Filing Documents

• glgi20250831_10q.htm (10-Q) — 676KB
• ex_865943.htm (EX-31.1) — 13KB
• ex_865945.htm (EX-32.1) — 6KB
• ex_865966.htm (EX-99.1) — 8KB
• 0001437749-25-030982.txt ( ) — 3996KB
• glgi-20250831.xsd (EX-101.SCH) — 41KB
• glgi-20250831_def.xml (EX-101.DEF) — 285KB
• glgi-20250831_lab.xml (EX-101.LAB) — 239KB
• glgi-20250831_pre.xml (EX-101.PRE) — 312KB
• glgi-20250831_cal.xml (EX-101.CAL) — 43KB
• glgi20250831_10q_htm.xml (XML) — 485KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Consolidated Balance Sheets (Unaudited) As of August 31, 2025 and May 31, 2025 1 Consolidated Statements of Operations (Unaudited) For the Three Months Ended August 31, 2025 and 2024 2 Consolidated Statements of Changes in Equity (Unaudited) For the Three Months Ended August 31, 2025 and 2024 3 Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended August 31, 2025 and 2024 4

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 19 Item 4.

Controls and Procedures

Controls and Procedures 19

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 20 Item 1A.

Risk Factors

Risk Factors 20 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20 Item 3. Defaults Upon Senior Securities 20 Item 4. Mine Safety Disclosures 20 Item 5. Other Information 20 Item 6. Exhibits 21

SIGNATURES

SIGNATURES 22 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Greystone Logistics, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) August 31, May 31, 2025 2025 Assets Current Assets: Cash $ 2,339,269 $ 1,545,035 Accounts receivable - Trade 2,561,555 4,359,815 Related parties 794,183 890,883 Inventory 3,475,157 3,484,038 Prepaid expenses 365,928 556,912 Total Current Assets 9,536,092 10,836,683 Property, Plant and Equipment, net 29,114,385 30,044,886 Right-to-use Assets 5,010,423 5,091,348 Total Assets $ 43,660,900 $ 45,972,917 Liabilities and Equity Current Liabilities: Current portion of long-term debt $ 2,324,241 $ 2,249,524 Current portion of financing leases 2,982 4,457 Current portion of operating leases 308,732 303,815 Accounts payable and accrued expenses 3,907,165 4,023,920 Deferred revenue 22,964 22,964 Preferred dividends payable - 1,610 Total Current Liabilities 6,566,084 6,606,290 Long-Term Debt, net of current portion and debt issuance costs 8,213,566 8,833,483 Operating Leases , net of current portion 4,785,433 4,864,486 Deferred Tax Liability 5,441,677 5,792,349 Total Liabilities 25,006,760 26,096,608 Commitments and Contingencies (Note 12) Equity: Preferred stock, $ 0.0001 par value, cumulative, 20,750,000 shares authorized; - 0 - shares issued and outstanding - - Common stock, $ 0.0001 par value, 5,000,000,000 shares authorized; 27,879,701 shares issued; 27,270,701 and 27,360,577 shares outstanding in August 31, 2025 and May 31, 2025, respectively 2,788 2,788 Treasury Stock, at cost, 609,000 and 519,124 shares at August 31, 2025 and May 31, 2025, respectively ( 729,884 ) ( 606,737 ) Additional paid-in capital 48,113,317 48,113,317 Accumulated deficit ( 28,732,081 ) ( 27,633,059 ) Total Equity 18,654,140 19,876,309 Total Liabilities and Equity $ 43,660,900 $ 45,972,917 The accompanying n

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) Note 1. Basis of Financial Statements In the opinion of Greystone Logistics, Inc. ("Greystone" or the "Company"), the accompanying unaudited consolidated financial statements contain all adjustments and reclassifications, which are of a normal recurring nature, necessary to present fairly its financial position as of August 31, 2025, and the results of its operations and cash flows for the three months ended August 31, 2025 and 2024. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the fiscal year ended May 31, 2025, and the notes thereto included in Greystone's Annual Report on Form 10-K for such period, as filed with the Securities and Exchange Commission. The results of operations for the three months ended August 31, 2025 and 2024 are not necessarily indicative of the results to be expected for the full fiscal year. The unaudited consolidated financial statements of Greystone include its wholly owned subsidiaries, Greystone Manufacturing, L.L.C. ("GSM") and Plastic Pallet Production, Inc. ("PPP"). All material intercompany accounts and transactions have been eliminated in the unaudited consolidated financial statements. Note 2. Earnings (Loss) Per Share Basic earnings (loss) per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares used in the basic earnings per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. Greystone's Series 2003 preferred stock, which is conve

View Full Filing

View this 10-Q filing on SEC EDGAR