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So Kruger is buying again. He just filed a form 4 disclosing a small order. Why is he buying now after no activity for two months? I'm just glad there is some news to read. This non-activity is killing me. I can't wait for earnings
I don't know if that's new. Their product page shows way more than 7 pallets so I feel like that is old. They've been talking about leasing for years so that idea is not new. But I don't know for sure. Maybe the AB stuff is a lease deal, that would be great. If have to search around to check out that distributor. I know they've been working with a distributor for a long time but can't remember their name.
I wish it was time for the next 10q. I'd really like to hear some news
woah, that is huge! I wonder who he bought from and if he's going to stop. Every time I see a purchase I wonder if it's him. That's 1.6% of the outstanding shares a price 43% higher than current
He must really think it's undervalued.
Why do you think AB has contacted Greystone? Anyone have thoughts on this?
I have been wondering what AB wants with Greystone. I know that AB has been purchasing plastic pallets from Rehrig Pacific since at least 2003 so what would they want with GLGI? As Phaedrus has said, AB was purchasing $20M annually at least at one point so I imagine that by now AB would have as many plastic beverage pallets as they want. Rehrig has been around for something like a hundred years so I doubt they're going anywhere. Does anyone have a theory? Maybe AB wants a specialty pallet that Rehrig doesn't supply like the keg pallets.
Most of Rehrig's products are other plastic things like bins and trash cans. They have some large contracts for cities to use their garbage pins and things like that.
The only difference I can think of is on the recycled content side of things. Rehrig's website states the pallets are "100% recyclable" and that "our products are designed to contain as much as 100% recycled material, depending on customer requirements." These statements only mean that all their products could be recycled into something and that at least one of their products is made from 100% recycled material. I have read in a comment on a forum that Rehrig offers a pop bottle credit similar to GLGI where they'll buy back a broken pallet for some amount. AB has an environmental initiative that is striving to do things like reduce water usage, greenhouse gases, etc:
http://legacy.ab-inbev.com/go/social_responsibility/Environment/2017_Goals.cfm
So my conspiracy theory is that, as part of their environmental initiative, AB wants recycled pallets and Rehrig doesn't supply those so they are going to have GLGI replace their existing pallets as the Rehrig pallets break. AB will ship the broken Rehrig pallets to Greystone who will grind them up and mix up their special sauce then mold new recycled pallets. AB will slowly transition to using GLGI pallets.
Along with this theory, the Dec 2013 test pallets sent from GLGI to AB were normal GLGI beverage pallets for AB to check the supplier's quality. Then AB sent old rehrig pallets to GLGI who came up with a design and plastic mix that will work for the required load. The new mold is done and the latest test pallets sent to AB are the final design using Rehrig's broken old pallets.
I think if Rehrig's pallets were made of recycled materials then they would state that explicitly instead of saying they are "recyclable." Maybe the only way Rehrig can get the high strength necessary for the beverage pallets is to make them with virgin plastic and then when the pallets break they are recycled into other low strength products like soda trays.
I've emailed AB and Rehrig but that was a dead end. I emailed GLGI to ask if they could recycle another company's pallets and if anyone had ever asked them to do that but they didn't respond. Maybe the no response is because that's exactly what AB and GLGI are doing, or maybe I spend too much time thinking about this stuff...
IBC has granted GLGI the waiver they requested for violating the debt service coverage ratio in the most recent quarter. http://goo.gl/p8YKJZ
Also Kruger is still buying. He filed two more form 4s this week. It's funny to see him buy $525 worth of stock
Really good point. On top of that I expect more buyers will come in as the debt goes down because many people view it as too risky
Thank you
Thanks everyone. Glad you all enjoyed the article
@wolf, that is the first article I've written for Seeking Alpha. Only other thing I've done is another write up of GLGI last summer that I posted on oldschoolvalue.com.
http://www.oldschoolvalue.com/forum/discussion/comment/7560#Comment_7560
@phaedrus, the crowd has definitely moved on from Greystone. That was really the reason I wrote the article. I think it has dropped off everyone's radar and there are some good things happening that no one is noticing. If all the recent insider activity can't send the price up, then I think it's going to take earnings or an AB announcement. If GLGI would/could just issue a press release stating that they have completed a mold for AB and shipped them pallets then...
my article has been released. Enjoy
http://seekingalpha.com/article/2866476-insiders-cant-get-enough-of-greystone-logistics
Why would option exercising point to Kruger buying out the company? Is it because options would be lost due to a change in control?
I have no idea if Kruger will buy out GLGI. They did try to go private in the summer of 2013 but it ended up costing too much for the reverse split so they backed out. He must think it's undervalued since he's buying so maybe he takes it private. But I don't know how to predict that
Kruger did buy Trienda in bankruptsy last year. I think all that greystone has said about that is that the two businesses are not in competition
I will link my article. It has been published on Seeking Alpha but only the Pro members can see it until tonight. It's not really much that hasn't been talked about on here or other articles before. More of just me trying to tell the world that there are some positive signs in GLGI
I've been thinking about the AB point of view as well, and Rehrig. I wonder if I could get in touch with an AB truck driver or someone else who knew about that stuff. I'm really curious on what AB wants from the GLGI relationship. As you said, they already have some plastic pallets from Rehrig so why call GLGI? The original press release said something like AB wanted to supplement their existing plastic pallet pool. Maybe Rehrig can't keep up with the volume? Are GLGI's pallets better? Have Rehrig's pallets been breaking? Maybe GLGI's are cheaper?
Yeah I'm not sure about the whole process with AB. Don't know what's different about the mold that was created.
Even if it's a 'normal' beverage pallet there could be something special about it. For example Kruger has said that the beverage pallet for MC is of a size that no one else in the work makes. Who know why they need it that certain size but for some reason that's what MC uses.
I know the mold created by GLGI for the other major beer distributor is of a GLGI design. That is to say it was not a direct copy of whatever pallets they use right now. That could be good or bad. Could be bad if it's some special pallet that is only needed in small quantities. Could be good if it's a better design that is intended to replace their entire fleet of pallets
He said he cannot comment any further on AB and I am modifying my article to remove mentions of that. He said that after their initial press release mentioning AB, they got a call from AB clarifying how AB feels about being mentioned in public. I imagine this is why GLGI hasn't provided any AB update in the past. So I guess I won't be getting any more AB updates...
I asked about the wine and it is a closed loop system. It's an automated plant like MC but not for distribution (at least yet). I just added this info to my article as well
No I didn't. That's a good question though. I will email him again (hopefully he's not sick of me yet). I think it must have gone well because they moved forward with creating a mold and Kruger has stated in the past that a mold costs $250k
The whole process with a new pallet can take a long time. My mistake when I bought in to GLGI was assuming it'd be quick without checking past experience. It generally takes them a year or two. This may not inspire confidence, but in Jan 2013 Kruger said that MC already had a prototype for the slim keg pallet and here we are two years later and they are now saying it's complete enough to generate revenue. The slim keg pallet may be more of an extreme example though because it was a new concept whereas I think the AB pallet is more of a copy of what AB already has
I never thought about the cash for the options but that is interesting. I was thinking they have to pay taxes on current price minus $0.12 but didn't think about paying the company the $0.12. A total of 650k options were exercised which is only $78k so I doubt the company really had to have that money.
I heard back from the CFO yesterday and submitted an article to seeking alpha today.
Main things from the cfo:
AB has the new pallet from Glgi and is evaluating. MC has the new slim keg pallet and is evaluating. The two pallets referred to in the press release were the slim keg and a nestable. MC places POs on an annual basis as the order for 2015 is "similar" to 2014. About 92% of sales to MC is the beverage pallet so 1/2 barrel is only 8%.
You know, I've been wondering if all this activity is due to a specific event or just the general feeling that the stock is undervalued. My first thought is that the one big event is just my hope and reality is it's just generally undervalued. But I don't know
As far as the options, they all could have exercised at any time since June 2013 but this is the first time the price has been around $0.30 since then. So why did they not exercise all the options until the past few months? The price never dropped as low as it has, but they could have exercised in the $0.40s.
Since all of the options have been exercised by 4 different people, I feel like there must be some specific event that has triggered it. Seems a bit strange that all of them would decide around the same time that the stock is just generally undervalued.
Maybe the $3m wine order was the big news. Maybe the next quarter will be big because of payment timing issues as they alluded to in the press release. Maybe they expect a big order and announcement soon. Maybe I spend too much time thinking about this stuff...
Maybe you are looking at the last 6 months results versus the last 3 months? Resin was up YOY when looking at 6 months but down when looking at 3 months.
Personally, I don't take their resin sales to mean much. It kind of jumps around and they always say they will sell when they get a chance. It comes and goes. I think they have to make some resin for their own manufacturing and then when they can sell some excess they take that opportunity
I emailed them right after they put out the nt-10q. Haven't back yet but I'll post if they do. Maybe ill call if they don't reply
I wonder if the two new molds they mentioned are the AB and the slim keg.
They put that in a strange place. Should've mentioned $3M in the press release but whatever.
That's great news!
why do you say 3 million dollar? I only see that it's "a significant purchase order"
Conspiracy theory for the weekend:
Something around October happened that the insiders know means good things are coming. As a result, Labarre, Rosene, and Kruger exercised their options in Oct and Nov. Kruger wanted to buy some shares but he was afraid that the price would rise too much after his first purchase that he wouldn't be able to buy all that he wanted. So he came up with a plan on how to buy the maximum amount of shares. He knew they were going to put out a bad quarter so he thought he'd buy some before the quarter then the quarter would knock the price down so he could buy some more.
Double bonus conspiracy theory: The 10Q is going to have some good news inside but they wanted to buy more shares so they first released an NT-10Q containing only negative news. And today Kruger was buying like a mad man.
or the company is just going down the toilet and the insiders are panicking...
Yeah that doesn't make sense. Same goes for the other director option exercising. Maybe there's some other good news to be included in the 10Q
I don't know how they draw that line but I can't imagine he'd be buying if he thought the price were going to drop.
As far as announcing an AB contract, it's public knowledge that they have some sort of relationship with AB. And he is telling the public about every purchase he's making. But I don't know anything about this stuff
oh man! I've been checking filings constantly to see if he was behind any of the bigger buys. He must expect a bright future
There is good and bad for sure.
On the bad side we have the poor operating results from the past quarter. Sales and margin took a dive. The main question to me going forward is why did this happen and will it continue?
On the good side we have the low share price versus management's opinion of what it should be. They must feel as though it's undervalued. Three of them recently exercised their options and Kruger is now buying at $0.27. In May Kruger was buying at $0.47 and last year they tried to take it private at $0.50.
There are also some good possibilities for the next couple of quarters IMO. I know a lot was made of the inventory build up this past year without much coming from it but they are still building up. Total inventory is down in the most recent quarter but raw materials is up to an all time high, 22% higher than the last quarter and 55% YOY. Also by now they have finished the pallet built for AB and the slim keg pallet.
My hope is they have big orders for these two new pallets from MC and AB.
Kruger is buying. He just filed a form 4 that I think says he bought 50k shares. I think there's a typo in the A or D column and it should be two A's. At least according to the number of shares owned it seems like it should be two A's.
Nat, this wouldn't be the first time they've left out the cost of resin sales. They did the same in the 10-Q filed in Jan 2014. I believe that's the only other time though. Don't know why
Interesting. Is OTCQB a big deal or more prestigious? GLGI must be doing it for a reason but what's the reason?
I don't know if they've updated their website but there are some contradictions. On the http://www.greystonelogistics.com/index_company.php page it says this: "Roll out product recently completed product line – The Company currently has seven different pallets..." but then on the product page it shows about 40 pallets
Greystone's new slim barrel keg: I have been wondering what sort of impact it will have. They said the mold will be done in Nov and that their "brewery customers have stated an interest." I emailed GLGI, miller, and coors to ask about their sales mix of slim kegs vs regular kegs vs cans/bottles but none of them gave me anything. Does anyone know any numbers on how many slim kegs MC sells?
The CFO answered some of my questions today.
I had emailed them following earnings. You may or may not already know some of this but here it is. Their responses in Italic
1. Do you have any interest on getting Greystone listed on a major exchange? If so are you taking any steps to get there and do you have a target time frame in mind? There is currently no interest to be listed on a major exchange.
2. Have you thought about doing conference calls to go along with your earnings releases? Not at the current time. Greystone will continue to seek better ways to communicate with shareholders.
3. Do you have any comment on Trienda? With Mr. Kruger's involvement it seems like a merger or partnership of some sort might make sense as I imagine there'd be some synergies. Are you planning anything on this front? No comment except that (1) Warren is not involved in the daily operations of Trienda and (2) there is no consideration for a merger. Any relationships that may develop in the future will be timely reported to the public.
4. Can you give an update on the "1/6 and 1/4 barrel slim keg pallet"? When will that be ready? Do you expect large sales on this pallet for your brewery customers? On this one I believe you have a typo on your website because it says this is an "export/one way". The brewery customers have stated an interest in the slim keg pallet, but there is no commitment at the current time. The mold will be completed about November of this year. Any projection of the impact on the market is speculation at this time.
5. In December 2013 you announced delivery of pallets to Anheuser Busch as part of a test run. And then in your loan documentation in Feb there is a mention of terms specific to Anheuser. Can you give any information on the relationship with Anheuser? Have they ordered more pallets? Are they still in the evaluation phase? Do you have any revenue expectations for their account? Do you have a timeframe when we might know more? Greystone is currently developing a mold to specifically meet Anheuser Busch’s needs. Accordingly, any new orders will be contingent on AB’s evaluation. The AB mold is complete and samples should be shipped to AB in approximately one month. Any timing or sales projection on Greystone’s part would be purely subjective.