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DAIO. Thanks for your reply, I bought last year when Hweb was talking about it on the savvy board and sold it all around $12 if I remember correctly. It was down big in the last few days so I am continuing to buy as I think this is one to hold for years. If it goes down more after earnings I will keep buying. JMO
Yeah i'm doing what Trader Fan said, I sold 2 million shares at .0009 and now i'm waiting for news and blow out volume to sell the rest.
I bought at .0001 so I can't lose now.
Good luck to you.
DAIO $5.18 anyone else think it's time to buy?
Earnings are at the end of this month. TIA
I think i'll give it a week or two because I have nothing to lose.
Thanks again.
So if you were me you would hold it till .0005 ? How do you know when it's time to sell ? I'm just asking not going to hold you to any answer.
Thanks for your reply.
MLHC Traderfan
I think sometimes you buy the bottom rung stocks. I put a bid in yesterday for 5 million shares at .0001 and it bought right away.
MLHC seems to have a good story, I just wanted your opinion on why the huge volume spike yesterday. Does this mean massive dilution that's what I think but does it matter? I risked $500 so no big deal, just wanted your thoughts if you have time. TIA
Please keep posting, I put a bid in today 5000000 shares at .0001 and it bought right away. Can't hurt to risk $500 in my opinion. TIA
I bought a starter position this week. Just wanted to know your thoughts,
Also Linuspop if he reads this. TIA
LoL ,
I wish he would talk more about new business, When we get new work that can be done on existing equipment the margins are much better.
That's why I was thinking a Nasdaq listing would bring more credibility to Greystone. I'm in for another year, next earnings is mid October.
GREYSTONE LOGISTICS, INC. REPORTS YEAR END RESULTS OF OPERATIONS FOR THE YEAR ENDED MAY 31, 2018 GREYSTONE LOGISTICS, INC. Tulsa, OK—09/10/18—(OTCQB:GLGI). Tulsa-based Greystone Logistics, Inc. reports record sales for fiscal year ended May 31, 2018. Sales for the fiscal year ended May 31, 2018 were $48,609,075 compared to $40,044,110 in the prior year for an increase of $8,564,965, a 21% increase. Sales for the last three months of the corporate year were $16,535,247 with earnings of $.04 per share of common stock versus $14,284,287 with earnings of $.03 per share last year. Greystone’s sales to its major customers in fiscal year 2018 were 76% of sales compared to 71% in the prior year. Greystone’s net income was $1,871,101 in fiscal year 2018 compared to $2,246,908 in fiscal year 2017. Greystone recorded net income available to common stockholders for fiscal year 2018 of $1,239,678, or $.04 per share, compared to $1,660,921, or $0.06 per share, in fiscal year 2017. EBITDA for fiscal year 2018 was $7,565,938 compared to $7,153,461 in 2017. “Management is pleased with our record-breaking sales for our 2018 corporate year ending May 31, 2018 and particularly the results of the 4 th quarter”, stated CEO Warren Kruger. Kruger continued, “The strong finish to our year was anticipated. Margins were compressed for the full year by the front loading of start-up costs for our new production lines. Our sales growth is smoothing the historically cyclical nature of our business and the growing production volume will allow us to spread fixed costs among more units and ultimately bring efficiencies that create increased income levels. We are in the late stages of implementing a plan to further automate processes on our production lines giving additional tools to our employees to enhance their work experience and make us more cost efficient.” “Our growing relationship with the national pallet leasing company puts our product in almost every industry in America thus bringing market credibility and awareness of the robust nature of Greystone’s 100% recycled plastic pallets nationally and worldwide. This exposure is adding customers from referrals within these multiple industries. Greystone mitigates the concentration of business with our national brewing and leasing customers through long runs of product, 24/7/365, to substantiate the overall demand of product for existing and new customers. Maintaining the capital and time commitments for molds, equipment and infrastructure provides optimal growth while creating a barrier to entry from competition. Our customers recognize the numerous long-term benefits of plastic pallets and particularly enjoy being able to get a credit back on broken pallets that we regrind and use again with the knowledge they are helping the environment.” Greystone Logistics is a “Green” manufacturing company that reprocesses recycled plastic and designs, manufactures, sells high quality 100% recycled plastic pallets that provide logistical solutions needed by a wide range of industries such as the food and beverage, automotive, chemical, pharmaceutical and consumer products. The Company’s technology, including that used in its injection molding equipment, proprietary blend of recycled plastic resins and patented pallet designs, allows production of high quality pallets more rapidly and at lower costs than many processes. The recycled plastic for its pallets helps control material costs while reducing environmental waste and provides cost advantages over users of virgin resin. This press release includes certain statements that may be deemed “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including the potential sales of pallets or other possible business developments are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, including the ability of the Company to continue as a going concern. Actual results may vary materially from the forwardlooking statements. For a list of certain material risks relating to the Company and its products, see Greystone Logistics’ Form 10-K for the fiscal year ended May 31, 2018.
SYEV 0.13 bought a starter position today. Seems cheap here , made money three times before on this stock. I'll buy again at .10 or lower. Not sure why this went so low? Time will tell
I think when we get all the new machines up and running
we could get to $80 million in revenue, That's a guess but it should be close. What are your thoughts on a 2 for one reverse split and a move to the Nasdaq Small Cap?. I don't know the difference between the cost of the OTCQB and a Nasdaq listing
Thanks for your response.
I don't like the idea of dilution, not saying your wrong though.
I think if Warren would have come out and said this lease contract is worth x amount and will take x # of years to fill and we have x amount of new business in the pipeline and pump just a bit we may be at $1 then say an offering only to pay down debt. Remember when he did that 15 page work up showing the future growth ( I'm guessing it was for MCC) But something like that now would be a good idea. JMO
Types of Rights Offerings
There are two general types of rights offerings: direct rights offerings and insured/standby rights offerings. In direct rights offerings, there are no standby/backstop purchasers (purchasers willing to purchase unexercised rights) as the issuer only sells the number of exercised shares. If not subscribed properly, the issuer may be undercapitalized. Insured/standby rights offerings, usually the more expensive type, allow third-parties/backstop purchasers (e.g. investment banks) to purchase unexercised rights. The backstop purchasers agree to the purchase prior to the rights offering. This type of agreement ensures the issuing company that their capital requirements will be met.
Rights Offering Advantages
Companies generally offer rights when they need to raise money. Examples include when there is a need to pay off debt, purchase equipment, or acquire another company. In some cases, a company may use a rights offering to raise money when there are no other viable financing alternatives. Other significant benefits of a rights offering are that the issuing company can bypass underwriting fees, there is no shareholder approval needed, and market interest in the issuer's common stock generally peaks. For existing shareholders, rights offerings present the opportunity to purchase additional shares at a discount.
Rights Offering Disadvantages
Sometimes, rights offerings present disadvantages to the issuing company and existing shareholders. Shareholders may disapprove because of their concern with dilution. The offering may result in more concentrated investor positions. The issuing company, in an attempt to raise capital, may find that additional required filings and procedures associated with the rights offering are too costly and time-consuming; the costs of the rights offering may outweigh the benefits (cost-benefit principle).
Read more: Rights Offering (Issue) https://www.investopedia.com/terms/r/rightsoffering.asp#ixzz5OMbeP2g6
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I was thinking that the debt is being paid off with each pallet that is produced for the lease customer, at the end of the lease they own the machine.
"In August, 2016, Greystone entered into a three-year lease agreement with respect to certain production equipment with a total cost of approximately $5.4 million. The lease agreement includes a bargain purchase option to acquire the production equipment at the end of the lease term. The lease is for two Milacron injection molding machines and two pallet molds designed and dedicated to production of 48X40 pallets (the “Pallets”) for a specific customer. Lease payments are payable on a per invoice basis at the rate of $6.25 for each pallet shipped and produced by the leased production equipment. The lease provides for minimum monthly lease rental payment based upon the total Pallets sold in excess of a specified amount not to exceed the monthly productive capacity of the leased machines. "
2019 would be three years, I was thinking $5.4 million of the debt is gone then.
I hope Warren gives us a good R&E PR
GLGI 0.55 Lots of volume, this is going to be a great quarter IMO.
Hopefully Warren gives us some details on new customers and size of lease pallet customer contract, also a good amount of debt drops in 2019 an update on that would be nice., I think we could jump to all time highs on the SP. Remember to hold until the revenues and earnings PR comes out (if your planning on selling a few). Earnings should be out around the 25th.
Back in today at $6.75 will buy down to $5
Insiders have bought over $30 million and still buying.
Also pays a divi . Seems cheap to me but what do I know. Lol
If I didn't have so many shares I'd buy more, The last time I bought was in the low .20's. Call the main office and ask for Bill Rahhal's cell phone # tell them your a shareholder. He almost always answers but if he doesn't then call an hour later or the next day, he is very friendly and answers every question. Be sure to ask where revenue can go after all the new molds are in place. It's just a matter of time in my opinion.
You were right the $6.5 million is expanded from the $4.5 and may expand some more. The thing I think about is if we got to $40 million in revenue with 2 new molds where will we go with another 4-5 new molds? It's worth waiting another year or two. JMO
Just a guess, I'll have to call them to find out. I do think if it's a national new customer that can pay cash for the $4.5 then it seems to me that would be a first order and they would need a lot more pallets.
This is what I don't like about Warren, he should be giving every detail about how the business will look in a few years. He seems to care less about the long term shareholders. JMO
The $6.5 million and the $4.5 million orders are from the new new customer is my guess. I will hold my shares for a year or two if needed. At some point in time the share price will have a large run. IMO
GREYSTONE LOGISTICS, INC. REPORTS RESULTS OF OPERATIONS FOR THE PERIODS ENDED FEBRUARY 28, 2018
Mon April 23, 2018 6:00 AM|GlobeNewswire|About: GLGI
Tulsa, OK, April 23, 2018 (GLOBE NEWSWIRE) -- (OTCQB:GLGI). Tulsa-based Greystone Logistics, Inc. (GLGI) reported sales for the three months ended February 28, 2018 totaled $12,064,651 compared to $8,693,851 for the prior period for an increase of $3,370,800, or 39%. Sales for the nine months ended February 28, 2018 were $32,073,828 compared to $25,759,823 for the prior period for an increase of $6,314,005, or 25%. Net income was $5,546 compared to $920,883 for the three months ended February 28, 2018 and 2017, respectively, and $679,899 compared to $1,133,317 for the nine months ended February 28 2018 and 2017, respectively.
Greystone recorded a net loss attributable to common shareholders (after preferred dividends and income attributable to variable interest entities) for the three months ended February 28, 2018 of $(152,554), or $(0.01) per share, compared to net income attributable to common shareholders of $773,667, or $0.03 per share, for the prior period. For the nine months ended February 28, 2018, Greystone recorded net income attributable to common stockholders (after preferred dividends and income attributable to variable interest entities) of $210,817, or $0.01 per share, compared to $697,337, or $0.02 per share in the prior period. EBITDA was $1,912,468 for the quarter ended February 28, 2018 and $5,052,992 for the nine months ended February 28, 2018.
“Greystone has shown substantial sales growth in fiscal year 2018 compared to fiscal year 2017” stated CEO Warren Kruger. Kruger continued, “The top line growth has been phenomenal. However, I am not satisfied with the results of the quarter but do anticipate a strong finish in our 4th quarter. When we first recognized the vision of where the plastic pallet market could grow, our goal has been to take our superior 100% recycled products and push market acceptance. The market has clearly accepted the product as sales are now being pulled versus pushed as demonstrated by a national customer contacting Greystone and placing a $6.5 million pallet order for delivery beginning in the fourth quarter of fiscal year 2018 through fiscal year 2019. This substantial growth in sales can unfortunately affect short-term earnings as operational and implementation costs level out. As we build new 24/7 production teams, costs are front loaded and the cash flow per machine lags until production stability is achieved. Two production machines were added in fiscal year 2018 and three more will be added in fiscal year 2019 to support demand for pallets. We will see better margins through consistent, stabilized production of the new machines while we continue to grow. The additional sales growth in fiscal year 2019 means capital expenditures and substantial expenses including chillers, concrete work, electrical upgrades, recycled plastic processing equipment, and new space for storage, grinding and granulating. These expenditures to accommodate this growth translate into adding and training substantial personnel to operate and maintain the machinery while we simultaneously automate numerous repetitive tasks to gain efficiencies and improve productivity. Long-term steady earnings are paramount for Greystone. Our shareholders want returns that meet or beat expectations and our entire team work diligently to achieve this outcome. We want patient shareholders to be rewarded and our teams work on that every day.”
Greystone Logistics is a “Green” manufacturing and leasing company that reprocesses and sells recycled plastic and designs, manufactures, sells high quality 100% recycled plastic pallets that provide logistical solutions needed by a wide range of industries such as the food and beverage, automotive, chemical, pharmaceutical and consumer products. The Company’s technology, including that used in its injection molding equipment, proprietary blend of recycled plastic resins and patented pallet designs, allows production of high quality pallets quickly and at lower costs than many processes. The recycled plastic for its pallets helps control material costs while reducing environmental waste and provides cost advantages over users of virgin resin.
This press release includes certain statements that may be deemed “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including the potential sales of pallets or other possible business developments are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, including the ability of the Company to continue as a going concern. Actual results may vary materially from the forward-looking statements. For a list of certain material risks relating to the Company and its products, see Greystone Logistics’ Form 10-K for the fiscal year ended May 31, 2017.
Non-GAAP Financial Measure
This press release contains disclosure of EBITDA, which is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. A reconciliation of net income to EBITDA, the most comparable GAAP financial measure, as well as additional information concerning EBITDA, are included at the end of this release.
Greystone Logistics, Inc.
Reconciliation of Consolidated Net Income to EBITDA
For the Three Months and Nine Months Ended February 28, 2018
Three Months Ended
Nine Months Ended
February 28, 2018
February 28, 2018
Net Income
$
5,546
$
679,899
Income Taxes
639,600
899,100
Depreciation and Amortization
928,114
2,476,050
Interest Expense
339,208
997,944
EBITDA (A)
$
1,912,468
$
5,052,993
(A) EBITDA represents income before income taxes plus interest, depreciation and amortization. The EBITDA presented above, while considered the most common definition used by investors and financial analysts, may not be comparable to similarly titled measures reported by other companies. Greystone believes that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to other financial measures determined under GAAP.
Contact:
Warren F. Kruger
President/CEO
Corporate Office
1613 East 15th Street
Tulsa, Oklahoma 74120
(918) 583-7441
(918) 583-7442 (FAX)
I'm happy to see your still in, I agree with what you said.
I'm hoping the rev and earning PR says something about the new new customer turning into a much larger customer.
10-Q
Quarterly Report (10-q)
Date :
04/16/2018 @ 4:16PM
Source :
Edgar (US Regulatory)
Stock :
Greystone Logistics, Inc. (QB) (GLGI)
Quote :
0.415 0.0 (0.00%) @ 4:05PM
Quarterly Report (10-q)
Print
Alert
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED February 28, 2018
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ________
Commission file number 000-26331
GREYSTONE LOGISTICS, INC.
(Exact name of registrant as specified in its charter)
Oklahoma
75-2954680
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
1613 East 15 th Street, Tulsa, Oklahoma
74120
(Address of principal executive offices)
(Zip Code)
(918) 583-7441
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to post and submit such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Smaller reporting company [X]
Indicate by checkmark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: April 10, 2018 - 28,361,201
GREYSTONE LOGISTICS, INC.
FORM 10-Q
For the Period Ended February 28, 2018
Page
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
3
Consolidated Balance Sheets (Unaudited) As of February 28, 2018 and May 31, 2017
3
Consolidated Statements of Operations (Unaudited) For the Nine Months Ended February 28, 2018 and 2017
4
Consolidated Statements of Operations (Unaudited) For the Three Months Ended February 28, 2018 and 2017
5
Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended February 28, 2018 and 2017
6
Notes to Consolidated Financial Statements (Unaudited)
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
21
Item 4.
Controls and Procedures
21
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
21
Item 1A.
Risk Factors
21
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
21
Item 3.
Defaults Upon Senior Securities
21
Item 4.
Mine Safety Disclosures
22
Item 5.
Other Information
2 2
Item 6.
Exhibits
22
SIGNATURES
23
2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Greystone Logistics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
February 28, 2018
May 31, 2017
Assets
Current Assets:
Cash
$
334,036
$
579,021
Accounts receivable -
Trade, net of allowance for doubtful accounts of
$31,660 at February 28, 2018 and May 31, 2017
3,673,965
6,160,145
Related party receivables
55,080
73,578
Inventory
4,088,774
1,587,552
Prepaid expenses
105,925
136,395
Total Current Assets
8,257,780
8,536,691
Property, Plant and Equipment, net
22,884,618
19,706,782
Deferred Tax Asset
-
281,415
Total Assets
$
31,142,398
$
28,524,888
Liabilities and Equity
Current Liabilities:
Current portion of long-term debt
$
8,240,541
$
2,493,236
Current portion of capital leases
2,432,198
2,261,560
Accounts payable and accrued expenses
2,850,482
5,727,903
Deferred revenue
4,595,034
-
Accrued expenses - related parties
26,072
29,076
Preferred dividends payable
-
29,726
Total Current Liabilities
18,144,327
10,541,501
Deferred Tax Liability
600,685
-
Long-Term Debt, net of current portion
9,245,283
15,310,754
Capital Leases, net of current portion
1,797,036
1,532,503
Equity:
Preferred stock, $0.0001 par value, cumulative, 20,750,000 shares authorized, 50,000 shares issued and outstanding, liquidation preference of $5,000,000
5
5
Common stock, $0.0001 par value, 5,000,000,000 shares authorized, 28,361,201 shares issued and outstanding
2,836
2,836
Additional paid-in capital
53,790,764
53,790,764
Accumulated deficit
(53,514,174
)
(53,724,991
)
Total Greystone Stockholders’ Equity
279,431
68,614
Non-controlling interest
1,075,636
1,071,516
Total Equity
1,355,067
1,140,130
Total Liabilities and Equity
$
31,142,398
$
28,524,888
The accompanying notes are an integral part of these consolidated financial statements.
3
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the Nine Months Ended February 28,
2018
2017
Sales
$
32,073,828
$
25,759,823
Cost of Sales
27,325,588
21,103,691
Gross Profit
4,748,240
4,656,132
General, Selling and Administrative Expenses
2,177,164
2,133,228
Operating Income
2,571,076
2,522,904
Other Income (Expense):
Other income
5,867
-
Interest expense
(997,944
)
(832,887
)
Income before Income Taxes
1,578,999
1,690,017
Provision for Income Taxes
899,100
556,700
Net Income
679,899
1,133,317
Income Attributable to Variable Interest Entity
(185,520
)
(180,466
)
Preferred Dividends
(283,562
)
(255,514
)
Net Income Attributable to Common Stockholders
$
210,817
$
697,337
Income Per Share of Common Stock -
Basic and Diluted
$
0.01
$
0.02
Weighted Average Shares of Common Stock Outstanding -
Basic
28,361,201
28,309,003
Diluted
28,992,153
28,888,170
The accompanying notes are an integral part of these consolidated financial statements.
4
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended February 28,
2018
2017
Sales
$
12,064,651
$
8,693,851
Cost of Sales
10,349,347
6,234,807
Gross Profit
1,715,304
2,459,044
General, Selling and Administrative Expenses
724,748
745,924
Operating Income
990,556
1,713,120
Other Income (Expense):
Other expense
(6,202
)
-
Interest expense
(339,208
)
(290,087
)
Income before Income Taxes
645,146
1,423,033
Provision for Income Taxes
639,600
502,150
Net Income
5,546
920,883
Income Attributable to Variable Interest Entity
(62,552
)
(60,914
)
Preferred Dividends
(95,548
)
(86,302
)
Net Income (Loss) Attributable to Common Stockholders
$
(152,554
)
$
773,667
Income (Loss) Per Share of Common Stock -
Basic and Diluted
$
(0.01
)
$
0.03
Weighted Average Shares of Common Stock Outstanding -
Basic
28,361,201
28,361,201
Diluted
28,361,201
28,935,114
The accompanying notes are an integral part of these consolidated financial statements.
5
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended February 28,
2018
2017
Cash Flows from Operating Activities:
Net income
$
679,899
$
1,133,317
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization
2,578,842
1,997,334
Deferred tax expense
882,100
556,700
Loss on sale of equipment
7,932
-
Decrease in trade accounts receivable
2,486,180
3,142,917
Decrease in related party receivables
18,498
28,536
Increase in inventory
(2,501,222
)
(2,246,947
)
Decrease (increase) in prepaid expenses
30,470
(87,243
)
Increase (decrease) in accounts payable and accrued expenses
(2,778,406
)
307,005
Increase in deferred revenue
4,595,034
-
Net cash provided by operating activities
5,999,327
4,831,619
Cash Flows from Investing Activities:
Purchase of property and equipment
(3,768,337
)
(2,242,366
)
Proceeds from sale of equipment
3,000
-
Net cash used in investing activities
(3,765,337
)
(2,242,366
)
Cash Flows from Financing Activities:
Proceeds from long-term debt
2,320,200
-
Payments on long-term debt and capitalized leases
(4,544,487
)
(2,704,325
)
Proceeds from revolving loan
240,000
500,000
Payments on revolving loan
-
(275,000
)
Debt issue costs
-
(130,000
)
Proceeds from exercised stock options
-
57,000
Dividends paid on preferred stock
(313,288
)
(288,669
)
Distributions paid by variable interest entity
(181,400
)
(162,609
)
Net cash used in financing activities
(2,478,975
)
(3,003,603
)
Net Decrease in Cash
(244,985
)
(414,350
)
Cash, beginning of period
579,021
897,377
Cash, end of period
$
334,036
$
483,027
Non-cash Activities:
Acquisition of equipment by capital lease
$
1,998,500
$
5,450,474
Equipment acquired from related party pursuant to long-term debt
$
-
$
1,469,713
Acquisition of building pursuant to long-term debt
$
-
$
318,750
Revolver loan converted to term loan
$
2,500,000
$
-
Conversion of related party accrued interest to long-term debt
$
-
$
2,475,690
Warrants to purchase common stock issued
$
-
$
120,000
Preferred dividend accrual
$
-
$
26,850
Supplemental information:
Interest paid
$
993,394
$
832,887
Income taxes paid
$
10,000
$
-
The accompanying notes are an integral part of these consolidated financial statements.
6
GREYSTONE LOGISTICS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Basis of Financial Statements
In the opinion of Greystone Logistics, Inc. (“Greystone”), 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 February 28, 2018, the results of its operations for the nine-month and three-month periods ended February 28, 2018 and 2017, and its cash flows for the nine-month periods ended February 28, 2018 and 2017. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the fiscal year ended May 31, 2017 and the notes thereto included in Greystone’s Form 10-K for such period. The results of operations for the nine-month and three-month periods ended February 28, 2018 and 2017 are not necessarily indicative of the results to be expected for the full fiscal year.
The consolidated financial statements of Greystone include its wholly-owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”) and Plastic Pallet Production, Inc. (“PPP”), and the variable interest entity, Greystone Real Estate, L.L.C. (“GRE”). GRE owns two buildings located in Bettendorf, Iowa which are leased to GSM.
Note 2. Earnings Per Share
Basic earnings per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income (loss) available to common stockholders by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income (loss) available 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.
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Greystone excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is anti-dilutive, as follows:
2018
2017
Nine-month periods ended February 28:
Preferred stock convertible into common stock
3,333,333
3,333,333
Total
3,333,333
3,333,333
Three-month periods ended February 28:
Options to purchase common stock
200,000
-
Warrants to purchase common stock
500,000
-
Preferred stock convertible into common stock
3,333,333
3,333,333
Total
4,033,333
3,333,333
The following tables set forth the computation of basic and diluted earnings per share for the following periods:
2018
2017
Nine-month periods ended February 28:
Numerator -
Net income attributable to common stockholders
$
210,817
$
697,337
Denominator -
Weighted-average shares outstanding - basic
28,361,201
28,309,003
Incremental shares from assumed conversion of options and warrants
630,952
579,167
Diluted shares
28,992,153
28,888,170
Income per share -
Basic and Diluted
$
0.01
$
0.02
Three-month periods ended February 28:
Numerator -
Net income (loss) attributable to common
stockholders
$
(152,554
)
$
773,667
Denominator -
Weighted-average shares outstanding - basic
28,361,201
28,361,201
Incremental shares from assumed
conversion of options and warrants
-
573,913
Diluted shares
28,361,201
28,935,114
Income (Loss) per share -
Basic and Diluted
$
(0.01
)
$
0.03
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Note 3. Inventory
Inventory consists of the following:
February 28, 2018
May 31, 2017
Raw materials
$
1,243,777
$
669,083
Finished goods
2,844,997
918,469
Total inventory
$
4,088,774
$
1,587,552
Note 4. Property, Plant and Equipment
A summary of property, plant and equipment for Greystone is as follows:
February 28, 2018
May 31, 2017
Production machinery and equipment
$
33,026,562
$
27,493,614
Plant buildings and land
5,306,784
5,296,784
Leasehold improvements
349,246
263,710
Furniture and fixtures
402,870
392,371
39,085,462
33,446,479
Less: Accumulated depreciation and amortization
(16,200,844
)
(13,739,697
)
Net Property, Plant and Equipment
$
22,884,618
$
19,706,782
Production machinery and equipment includes equipment capitalized pursuant to a capital lease in the amount of $7,322,364. The equipment is being amortized using the straight-line method over 12 years.
Production machinery includes deposits on equipment in the amount of $366,503 that had not been placed into service as of February 28, 2018. Two plant buildings and land are owned by GRE, a VIE, having a net book value of $3,041,389 at February 28, 2018.
Depreciation expense, including amortization expense related to assets under capital leases, for the nine months ended February 28, 2018 and 2017 was $2,476,050 and $1,936,512, respectively.
Note 5. Related Party Transactions/Activity
Yorktown Management & Financial Services, LLC
Yorktown Management & Financial Services, LLC (“Yorktown”), an entity wholly-owned by Greystone’s CEO and President, owns and rents to Greystone (1) grinding equipment used to grind raw materials for Greystone’s pallet production and (2) extruders for pelletizing recycled plastic into pellets for resale and for use as raw material in the manufacture of pallets. GSM pays weekly rental fees to Yorktown of $22,500 for use of Yorktown’s grinding equipment and $5,000 for the use of Yorktown’s pelletizing equipment for which GSM paid Yorktown rental fees of $1,072,500 and $1,100,000 for the nine months ended February 28, 2018 and 2017, respectively.
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In addition, Yorktown provides office space for Greystone in Tulsa, Oklahoma at a monthly rental of $4,000.
TriEnda Holdings, L.L.C.
TriEnda Holdings, L.L.C. (“TriEnda”) is a manufacturer of plastic pallets, protective packing and dunnage utilizing thermoform processing for which Warren F. Kruger, Greystone’s President and CEO, serves TriEnda as the non-executive Chairman of the Board and is a partner in a partnership which has a majority ownership interest in TriEnda. Greystone provided tolling services, blending and pelletizing plastic resin, for TriEnda through March 2017. Revenue from TriEnda totaled $-0- and $519,814 for the nine months ended February 28, 2018 and 2017, respectively.
Greystone periodically purchases material and pallets from TriEnda. Purchases for the nine months ended February 28, 2018 and 2017 totaled $123,072 and $24,265, respectively.
Green Plastic Pallets
Greystone sells plastic pallets to Green Plastic Pallets (“Green”), an entity that is owned by James Kruger, brother to Warren Kruger, Greystone’s President and CEO. Greystone had sales to Green of $330,144 and $220,325 for the nine months ended February 28, 2018 and 2017, respectively. The account receivable due from Green at February 28, 2018 was $55,080.
Note 6. Debt
Debt as of February 28, 2018 and May 31, 2017 is as follows:
February 28, 2018
May 31, 2017
Term loan A payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%, maturing January 7, 2019
$
4,116,415
$
4,626,191
Term loan B payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%
-
1,715,132
Term loan C payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%, maturing August 4, 2020
1,667,182
-
Term loan D payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.75%, maturing January 10, 2022
2,452,757
-
Term loan E payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.75%, maturing January 10, 2022
525,200
-
Revolving loan payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.75%, due January 31, 2020
-
2,260,000
Note payable to First Bank, prime rate of interest plus 1.45% but not less than 4.95%, monthly principal and interest payment of $30,628, due August 21, 2021, secured by production equipment
1,176,233
1,396,448
Term loan payable by GRE to International Bank of Commerce, interest rate of 4.5%, monthly principal and interest payment of $26,215, due January 31, 2019
2,700,205
2,841,285
Note payable to Robert Rosene, 7.5% interest, due January 15, 2020
4,469,355
4,469,355
Note payable to Yorktown Management & Financial Services, LLC, 5% interest, due February 28, 2019, monthly principal and interest payments of $20,629
240,970
413,969
Other
263,141
310,036
Total Debt
17,611,458
18,032,416
Debt issue costs, net of amortization
(125,634
)
(228,426
)
Less: Current portion
(8,240,541
)
(2,493,236
)
Long-term debt
$
9,245,283
$
15,310,754
10
The prime rate of interest as of February 28, 2018 was 4.50%. Effective March 22, 2018, the prime rate of interest increased to 4.75%.
Loan Agreement between Greystone and IBC
The Loan Agreement (“IBC Loan Agreement”), dated January 31, 2014, among Greystone and GSM (the “Borrowers”) and International Bank of Commerce (“IBC”), as amended, provides for certain term loans and a revolver loan.
Effective January 10, 2018, the Borrowers and IBC entered into the Fifth Amendment to the IBC Loan Agreement providing (i) a conversion of the existing revolver loan with an outstanding balance of $2,500,000 into Term Loan D with a maturity date of January 10, 2022, (ii) an advancing Term Loan E of $1,000,000 with a maturity date of January 10, 2022 for the procurement of production equipment, and (iii) an amended and modified revolving loan of $3,000,000 with a maturity date of January 31, 2020. The three notes bear interest at the greater of the prime rate of interest plus 0.5%, or 4.75%.
Effective August 4, 2017, the Borrowers and IBC entered into the Fourth Amendment to the IBC Loan Agreement providing for Term Loan C in the amount of $1,795,000 for the purchase of certain production equipment. Term Loan C bears interest at the greater of prime plus 0.5%, or 4.00% and matures August 4, 2020.
The IBC term loans make equal monthly payments of principal and interest in such amounts sufficient to amortize the principal balance of (i) Term Loan A over a seven-year period beginning January 31, 2016 (currently $74,455 per month), (ii) Term Loan C over a seven-year period beginning August 31, 2017 (currently $25,205 per month) and (iii) Term Loan D over a four-year period beginning August 4, 2020 (currently $57,469 per month). Term Loan E requires monthly interest payments until January 10, 2019, after which monthly payments of principal and interest are required in an amount sufficient to amortize the loan over a four-year period. The monthly payments of principal and interest on the IBC term loans may vary as a result of changes in the prime rate of interest.
The IBC Loan Agreement, as amended, provides a revolving loan in an aggregate principal amount of up to $3,000,000 (the “Revolving Loan”). The exact amount which can be borrowed under the Revolving Loan from time to time is dependent upon the amount of the borrowing base, but can in no event exceed $3,000,000.The Revolving Loan bears interest at greater of the prime rate of interest plus 0.5%, or 4.75% and matures January 31, 2020. The Borrowers are required to pay all interest accrued on the outstanding principal balance of the Revolving Loan on a monthly basis. Any principal on the Revolving Loan that is prepaid by the Borrowers does not reduce the original amount available to the Borrowers.
The IBC Loan Agreement includes customary representations and warranties and affirmative and negative covenants which include (i) requiring the Borrowers to maintain a debt service coverage ratio of 1:25 to 1:00 and a funded debt to EBIDA ratio not exceeding 3:00 to 1:00 measured quarterly, (ii) subject to certain exceptions, limiting the Borrowers’ combined capital expenditures on fixed assets to $1,500,000 per year, (iii) prohibiting Greystone, without IBC’s prior written consent, from declaring or paying any dividends, redemptions of stock or membership interests, distributions and withdrawals (as applicable) in respect of its capital stock or any other equity interest, other than additional payments to holders of its preferred stock in an amount not to exceed $500,000 in any fiscal year, (iv) subject to certain exceptions, prohibiting the incurrence of additional indebtedness by the Borrowers, and (v) requiring the Borrowers to prevent (A) any change in capital ownership such that there is a material change in the direct or indirect ownership of (1) Greystone’s outstanding preferred stock, and (2) any equity interest in GSM, or (B) Warren Kruger from ceasing to be actively involved in the management of Greystone as President and/or Chief Executive Officer. The foregoing list of covenants is not exhaustive and there are several other covenants contained in the IBC Loan Agreement.
As of February 28, 2018, management has concluded that Greystone was in compliance with the covenants of the IBC Loan Agreement.
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The IBC Loan Agreement includes customary events of default, including events of default relating to non-payment of principal and other amounts owing under the IBC Loan Agreement from time to time, inaccuracy of representations, violation of covenants, defaults under other agreements, bankruptcy and similar events, the death of a guarantor, certain material adverse changes relating to a Borrower or guarantor, certain judgments or awards against a Borrower, or government action affecting a Borrower’s or guarantor’s ability to perform under the IBC Loan Agreement or the related loan documents. Among other things, a default under the IBC Loan Agreement would permit IBC to cease lending funds under the IBC Loan Agreement, and require immediate repayment of any outstanding notes with interest and any unpaid accrued fees.
The IBC Loan Agreement is secured by a lien on substantially all of the assets of the Borrowers. In addition, the IBC Loan Agreement is secured by a mortgage granted by GRE on the real property owned by GRE in Bettendorf, Iowa (the “Mortgage”). GRE is owned by Warren F. Kruger, Greystone’s President and CEO, and Robert B. Rosene, Jr., a director of Greystone. Messrs. Kruger and Rosene have provided a combined limited guaranty of the Borrowers’ obligations under the IBC Loan Agreement, with such guaranty being limited to a combined amount of $6,500,000 (the “Guaranty”). The Mortgage and the Guaranty also secure or guaranty, as applicable, the obligations of GRE under the Loan Agreement between GRE and IBC dated January 31, 2014 as discussed in the following paragraph.
Loan Agreement between GRE and IBC
On January 31, 2014, GRE and IBC entered into a Loan Agreement which provided for a mortgage note to GRE of $3,412,500. The note provides for a 4.5% interest rate and a maturity of January 31, 2019 and is secured by a mortgage on the two buildings in Bettendorf, Iowa which are leased to Greystone.
Note Payable between Greystone and Robert B. Rosene, Jr.
Effective December 15, 2005, Greystone entered into an agreement with Robert B. Rosene, Jr., a member of Greystone’s board of directors, to convert $2,066,000 of advances into an unsecured note payable at 7.5% interest. Effective June 1, 2016, the note was restated (the “Restated Note”) to combine the outstanding principal, $2,066,000, and accrued interest, $2,475,690, into an unsecured note payable of $4,541,690 with an extended maturity date of January 15, 2020. The Restated Note provides that accrued interest is payable monthly and allows Greystone to use commercially reasonable efforts to pay such amounts as allowed by the IBC Loan Agreement against the interest accrued prior to the restatement.
Note Payable between Greystone and Yorktown Management Financial Services, LLC (“Yorktown”)
On February 29, 2016, Greystone entered into an unsecured note payable to Yorktown in the amount of $688,296 in connection with the acquisition of equipment from Yorktown. The note payable bears interest at the rate of 5% and is payable over three years with monthly principal and interest payments of $20,629.
Maturities
Maturities of Greystone’s long-term debt for the five years subsequent to February 28, 2018 are $8,240,541, $5,910,483, $3,078,725, $381,709 and $-0-.
The current maturities of long-term debt include two notes with IBC with a January 31, 2019 maturity – IBC Term Loan A with a February 28, 2018 balance of $4,116,415 and a term loan payable by GRE to IBC with a February 28, 2018 balance of $2,700,205. Greystone and IBC are currently reviewing these notes for an extension or renewal.
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Note 7. Capital Leases
Capital leases as of February 28, 2018 and May 31, 2017:
February 28, 2018
May 31, 2017
Non-cancellable capital leases with private company, interest rates of 7.4% and 5.0%, maturing February 24, 2023 and August 7, 2019
$
4,229,234
$
3,794,063
Less: Current portion
(2,432,198
)
(2,261,560
)
Non-cancellable capital leases, net of current portion
$
1,797,036
$
1,532,503
In February, 2018, Greystone entered into a five-year lease agreement, interest rate of 7.4% and maturity date of February 24, 2023, (“Agreement A”) with an unrelated private company to provide for certain production equipment with a cost of approximately $2.0 million. In August, 2016, Greystone entered into a three-year lease agreement, interest rate of 5.0% and maturity date of August 7, 2019, (“Agreement B”) with the same unrelated private company to provide for certain production equipment with a total cost of approximately $5.4 million. The lease agreements include a bargain purchase option to acquire the production equipment at the end of the lease terms. Lease payments are made on a per invoice basis at rates of (i) $3.32 per pallet produced on the leased equipment and sold to the private company, estimated payments of $40,000 per month, for Agreement A and (ii) $6.25 per pallet produced on the equipment and sold to the private company, approximately $200,000 per month, for Amendment B. Both Agreements A & B provide for minimum monthly lease rental payments based upon the total pallets sold in excess of a specified amount not to exceed the monthly productive capacity of the leased machines.
The production equipment under the non-cancelable capital leases has a gross carrying amount of $7,322,364 at February 28, 2018. Amortization of the carrying amount of approximately $402,000 and $246,000 was included in depreciation expense for the nine months ended February 28, 2018 and 2017, respectively.
Future minimum lease payments under non-cancelable capital leases as of February 28, 2018, are approximately:
Twelve months ended February 28, 2019
$
2,844,000
Twelve months ended February 28, 2020
573,700
Twelve months ended February 28, 2021
573,700
Twelve months ended February 28, 2022
573,700
Twelve months ended February 28, 2023
240,500
Total lease payments
4,805,600
Imputed interest
576,366
Present value of minimum lease payments
$
4,229,234
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Note 8. Deferred Revenue
In February, 2018, a new customer entered into a contract with Greystone to purchase plastics pallets with shipments occurring from May, 2018 through about August, 2018. The customer prepaid $4,595,034 to provide funding to Greystone for procuring raw materials to produce the pallets. Revenue will be recognized by Greystone as pallets are shipped to the customer.
Note 9. Fair Value of Financial Instruments
The following methods and assumptions are used in estimating the fair-value disclosures for financial instruments:
Debt: The carrying amount of notes with floating rates of interest approximate fair value. Fixed rate notes are valued based on cash flows using estimated rates of comparable notes. The carrying amounts reported in the balance sheet approximate fair value.
Note 10. Concentrations, Risks and Uncertainties
Greystone derived approximately 76% and 67% of its total sales from two customers in fiscal years 2018 and 2017, respectively. The loss of a material amount of business from one or both of these customers could have a material adverse effect on Greystone.
Greystone purchases damaged pallets from its customers at a price based on the value of the raw material content in the pallet. A majority of these purchases, totaling $1,200,335 and $1,202,381 in fiscal years 2018 and 2017, respectively, is from one of its major customers.
Robert B. Rosene, Jr., a Greystone director, has provided financing and guarantees on Greystone’s bank debt. As of February 28, 2018, Greystone is indebted to Mr. Rosene in the amount of $4,469,355 for a note payable due January 15, 2020. There is no assurance that Mr. Rosene will renew the note as of the maturity date.
Note 11. Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers ” (“ASU 14-09”) which creates a comprehensive set of guidelines for the recognition of revenue under the principle: “Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The requirements of ASU 14-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and will require either retrospective application to each prior period presented or retrospective application with the cumulative effect of initially applying the standard recognized at the date of adoption. Management believes that the impact of this ASU will not have a material effect on our financial position and results of operations.
14
In February 2016, the FASB issued Accounting Standards 2016-02, Leases (Topic 842) , which is intended to improve financial reporting about leasing transactions. The ASU will require organizations (“lessees”) that lease assets with lease terms of more than twelve months to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In addition, the ASU will require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The effective date of this ASU is for fiscal years beginning after December 31, 2018 and interim periods within that year. Greystone is currently reviewing the ASU to assess the potential impact on the consolidated financial statements.
Note 12. Income Taxes
On December 22, 2017, the President signed into legislation The Tax Cuts and Jobs Act (the Act). The Act changes existing U.S. tax law and includes numerous provisions that will affect Greystone’s business, including income tax accounting, disclosure and tax compliance. As a result of the changes in tax rates as provided in the Act and reassessing deferred income taxes using state income tax rates, Greystone revalued all deferred tax assets and liabilities, and as a result, the deferred taxes at February 28, 2018 decreased $474,100 and the provision for income taxes for the three months ended February 28, 2018 increased by a like amount.
Note 13. Commitments
At February 28, 2018, Greystone had commitments totaling $702,508 toward the purchase of production equipment. In March, 2018, Greystone issued a purchase order for certain production equipment at a cost of approximately $2.3 million.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
General to All Periods
The unaudited consolidated statements include Greystone Logistics, Inc., and its two wholly-owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”) and Plastic Pallet Production, Inc. (“PPP”). Greystone also consolidates its variable interest entity, Greystone Real Estate, L.L.C. (“GRE”). All material intercompany accounts and transactions have been eliminated.
References to fiscal year 2018 refer to the nine and three month periods ended February 28, 2018. References to fiscal year 2017 refer to the nine and three month periods ended February 28, 2017.
Sales
Greystone’s primary focus is to provide quality plastic pallets to its existing customers while continuing its marketing efforts to broaden its customer base. Greystone’s existing customers are primarily located in the United States and engaged in the beverage, pharmaceutical and other industries. Greystone has generated, and plans to continue to generate, interest in its pallets by attending trade shows sponsored by industry segments that would benefit from Greystone’s products. Greystone hopes to gain wider product acceptance by marketing the concept that the widespread use of plastic pallets could greatly reduce the destruction of trees on a worldwide basis. Greystone’s marketing is conducted through contract distributors, its President and other employees.
15
Personnel
Greystone had approximately 197 and 158 full-time employees as of February 28, 2018 and 2017, respectively.
Nine-Month Period Ended February 28, 2018 Compared to Nine-Month Period Ended February 28, 2017
Sales
Sales for fiscal year 2018 were $32,073,828 compared to $25,759,823 in fiscal year 2017 for an increase of $6,314,005. The increase in pallet sales in fiscal year 2018 over 2017 was primarily due to sales growth to a pallet leasing company, one of Greystone’s major customers. To meet customer demand, Greystone will install a leased injection mold machine with estimated delivery in May, 2018. In March, 2018, Greystone placed an order to purchase another injection molding machine for estimated delivery in November 2018.
Greystone has two major customers which accounted for approximately 76% and 67% of sales in fiscal years 2018 and 2017, respectively. Pallet sales to Greystone’s major customers are generally based on the customers’ needs which may vary by period. Greystone is not able to predict the future needs of these major customers and will continue its efforts to grow sales through the addition of new customers developed through Greystone’s marketing efforts.
Cost of Sales
Cost of sales in fiscal year 2018 was $27,325,588, or 85% of sales, compared to $21,103,691, or 82% of sales, in fiscal year 2017. Greystone achieved a 25% increase in sales volume from fiscal year 2017 to 2018. The impact of this significant increase in sales volume had a direct effect on production costs resulting in the increase in the ratio of cost of sales to sales from fiscal year 2017 to 2018. Substantial increases in the number of employees, training and operating costs, recycling costs and the addition of five new injection molding machines plus associated supporting equipment have resulted in the increase in the ratio of cost of sales to sales during fiscal year 2018. Greystone continues to monitor pricing, operating procedures and cost of operations toward reducing the production costs of pallets thereby improving gross margins from sales.
General, Selling and Administrative Expenses
General, selling and administrative expenses were $2,177,164 in fiscal year 2018 compared to $2,133,228 in fiscal year 2017 for an increase of $43,936, or approximately 2%. The difference between fiscal year 2018 and fiscal year 2017 is primarily attributable to timing of expenses for the respective periods.
16
Other Income (Expenses)
Other income was $5,867 and $-0- in fiscal years 2018 and 2017, respectively. The source of other income is the sale of scrap material.
Interest expense was $997,944 and $832,887 in fiscal years 2018 and 2017 for an increase of $165,057. The increase in interest expense in fiscal year 2018 over fiscal year 2017 is principally due to an increase in the weighted average of the prime rate of interest (4.31% in fiscal year 2018 compared to 3.57% in fiscal year 2017) and an approximately $50,000 increase in amortization expense associated with debt service costs.
Provision for Income Taxes
The provision for income taxes was $899,100 and $556,700 in fiscal years 2018 and 2017, respectively. The provision for income taxes includes an added adjustment of $474,100 in fiscal year 2018 as discussed in Note 11, Income Taxes, in the notes to the consolidated financial statements. The provision for income taxes does not include the income from the variable interest entity as the entity is not included in the income tax returns of Greystone and the taxable income of the entity is passed-through to the respective owners.
Based upon a review of its income tax filing positions, Greystone believes that its positions would be sustained upon an audit by the Internal Revenue Service and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.
Net Income
Greystone recorded net income of $679,899 in fiscal year 2018 compared to $1,133,317 in fiscal year 2017 primarily for the reasons discussed above.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders for fiscal year 2018 was $210,817, or $0.01 per share, compared to $697,337, or $0.02 per share, in fiscal year 2017 primarily for the reasons discussed above.
17
Three-Month Period Ended February 28, 2018 Compared to Three-Month Period Ended February 28, 2017
Sales
Sales for fiscal year 2018 were $12,064,651 compared to $8,693,851 in fiscal year 2017 for an increase of $3,370,800. The increase in pallet sales in fiscal year 2018 over 2017 was primarily due to sales growth to a pallet leasing company, one of Greystone’s major customers.
Greystone has two major customers who accounted for approximately 80% and 67% of sales in fiscal years 2018 and 2017, respectively. Pallet sales to Greystone’s major customers are generally based on the customers’ need which may vary by period. Greystone is not able to predict the future needs of these major customers and will continue its efforts to grow sales through the addition of new customers developed through Greystone’s marketing efforts.
Cost of Sales
Cost of sales in fiscal year 2018 was $10,349,347, or 86% of sales, compared to $6,234,807, or 72% of sales, in fiscal year 2017. Greystone achieved a 39% increase in sales volume from fiscal year 2017 to 2018. The impact of this significant increase in sales volume had a direct effect on production costs resulting in the increase in the ratio of cost of sales to sales from fiscal year 2017 to 2018. Substantial increases in the number of employees, training and operating costs, recycling costs and the addition of five new injection molding machines plus associated supporting equipment have resulted in the increase in the ratio of cost of sales to sales during fiscal year 2018. Greystone continues to monitor pricing, operating procedures and cost of operations toward reducing the production costs of pallets thereby improving gross margins from sales.
General, Selling and Administrative Expenses
General, selling and administrative expenses were $724,748 in fiscal year 2018 compared to $745,924 in fiscal year 2017 for a decrease of $21,176 or 3%. The difference between fiscal year 2018 and fiscal year 2017 is primarily attributable to timing of expenses for the respective periods.
Other Income (Expenses)
Other income (loss) was $(6,202) and $-0- in fiscal years 2018 and 2017, respectively. The loss is attributable to a sale of equipment.
Interest expense was $339,208 in fiscal year 2018 compared to $290,087 in fiscal year 2017 for an increase of $49,121. The increase is principally attributable to increases in the weighted average of the prime rate of interest between fiscal year 2018 and 2017 (4.46% in fiscal year 2018 compared to 3.96% in fiscal year 2017).
18
Provision for Income Taxes
The provision for income taxes was $639,600 and $502,150 in fiscal years 2018 and 2017, respectively. The provision for income taxes includes an added adjustment of $474,100 in fiscal year 2018 as discussed in Note 11, Income Taxes, in the notes to the consolidated financial statements. The provision for income taxes does not include the income from the variable interest entity as the entity is not included in the income tax returns of Greystone and the taxable income from this entity is passed-through to the respective owners.
Based upon a review of its income tax filing positions, Greystone believes that its positions would be sustained upon an audit by the Internal Revenue Service and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.
Net Income
Greystone recorded net income of $5,546 in fiscal year 2018 compared to net income of $920,883 in fiscal year 2017 primarily for the reasons discussed above.
Net Income (Loss) Attributable to Common Stockholders
The net loss attributable to common stockholders for fiscal year 2018 was $(152,554), or $(0.01) per share, compared to net income of $773,667, or $0.03 per share, in fiscal year 2017 primarily for the reasons discussed above.
Liquidity and Capital Resources
A summary of cash flows for the nine-month period ended February 28, 2018 is as follows:
Cash provided by operating activities
$
5,999,327
Cash used in investing activities
$
(3,765,337
)
Cash used in financing activities
$
(2,478,975
)
The contractual obligations of Greystone for long-term debt and capital lease obligations are as follows:
Total
Less than
1 year
1-3 years
4-5 years
More than
5 years
Long-term debt and capital leases
$
21,840,692
$
10,672,739
$
9,979,980
$
1,187,973
$
-0-
19
Greystone had a working capital deficit of $(9,886,547) at February 28, 2018. To provide for the funding to meet Greystone’s operating activities and contractual obligations as of February 28, 2018, Greystone will have to continue to produce positive operating results or explore various options including additional long-term debt and equity financing. However, there is no guarantee that Greystone will continue to create positive operating results or be able to raise sufficient capital to meet these obligations.
The current maturities of long-term debt include two notes with IBC with a January 31, 2019 maturity – IBC Term Loan A with a February 28, 2018 balance of $4,116,415 and a term loan payable by GRE to IBC with a February 28, 2018 balance of $2,700,205. Greystone and IBC are currently reviewing these notes for an extension or renewal. Management believes that Greystone and IBC will enter into an agreement for the extensions or renewals.
Effective January 10, 2018 and as discussed further in Note 12 to the consolidated financial statements, Greystone and IBC entered into the Fifth Amendment to the IBC Loan Agreement dated January 31, 2014 which provided for (1) converting the existing revolving loan with a balance of $2,500,000 at February 28, 2018 into a four-year term loan, (2) new funding in the amount of $1,000,000 for the purchase of production equipment with monthly interest payments only for one year then monthly principal and interest sufficient to amortize the loan over four years and (3) a new revolving loan for $3,000,000 with a maturity date of January 31, 2020. Additionally, during fiscal year 2018, production equipment valued at approximately $2.0 million was acquired through a leasing arrangement.
Substantially all of the financing that Greystone has received through the last few fiscal years resulted from loans provided by certain officers and directors of Greystone and bank notes which are guaranteed by certain officers and directors of Greystone. Greystone continues to be dependent upon its officers and directors to provide and/or secure additional financing and there is no assurance that its officers and directors will continue to do so. As such, there is no assurance that funding will be available for Greystone to continue operations.
Greystone has 50,000 outstanding shares of cumulative 2003 Preferred Stock with a liquidation preference of $5,000,000 and a preferred dividend rate of the prime rate of interest plus 3.25%. Greystone does not anticipate that it will make cash dividend payments to any holders of its common stock unless and until the financial position of Greystone improves through increased revenues, another financing transaction or otherwise. Pursuant to the IBC Loan Agreement, as discussed in Note 6 to the consolidated financial statements, Greystone may pay dividends on its preferred stock in an amount not to exceed $500,000 per year.
Forward Looking Statements and Material Risks
This Quarterly Report on Form 10-Q includes certain statements that may be deemed “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, that address activities, events or developments that Greystone expects, believes or anticipates will or may occur in the future, including decreased costs, securing financing, the profitability of Greystone, potential sales of pallets or other possible business developments, are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties. The forward-looking statements contained in this Quarterly Report on Form 10-Q could be affected by any of the following factors: Greystone’s prospects could be affected by changes in availability of raw materials, competition, rapid technological change and new legislation regarding environmental matters; Greystone may not be able to secure additional financing necessary to sustain and grow its operations; and a material portion of Greystone’s business is and will be dependent upon a few large customers and there is no assurance that Greystone will be able to retain such customers. These risks and other risks that could affect Greystone’s business are more fully described in Greystone’s Form 10-K for the fiscal year ended May 31, 2017, which was filed on August 25, 2017. Actual results may vary materially from the forward-looking statements. Greystone undertakes no duty to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, Greystone carried out an evaluation under the supervision of Greystone’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of Greystone’s disclosure controls and procedures pursuant to the Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based on an evaluation as of May 31, 2017, Warren F. Kruger, Greystone’s Chief Executive Officer, and William W. Rahhal, Greystone’s Chief Financial Officer, identified one material weakness in Greystone’s internal control over financial reporting. As of the end of the period covered by this Quarterly Report on Form 10-Q, such material weaknesses had not been rectified. As a result of the continuation of this material weakness, Greystone’s CEO and Chief Financial Officer concluded that Greystone’s disclosure controls and procedures were not effective at February 28, 2018.
During the nine-month period ended February 28, 2018, there were no changes in Greystone’s internal controls over financial reporting that have materially affected, or that are reasonably likely to materially affect, Greystone’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
21
Item 4. Mine Safety Disclosures .
Not applicable.
Item 5. Other Information .
None.
Item 6. Exhibits.
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
31.1
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
31.2
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
101
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at February 28, 2018 and May 31, 2017, (ii) the Consolidated Statements of Operations for the nine-month and three-month periods ended February 28, 2018 and 2017, (iii) the Consolidated Statements of Cash Flows for the nine-month periods ended February 28, 2018 and 2017, and (iv) the Notes to the Consolidated Financial Statements (submitted herewith).
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
GREYSTONE LOGISTICS, INC.
(Registrant)
Date: April 16, 2018
/s/ Warren F. Kruger
Warren F. Kruger, President and Chief Executive Officer (Principal Executive Officer)
Date: April 16, 2018
/s/ William W. Rahhal
William W. Rahhal, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
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Index to Exhibits
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
31.1
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
31.2
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith).
101
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at February 28, 2018 and May 31, 2017, (ii) the Consolidated Statements of Operations for the nine-month and three-month periods ended February 28, 2018 and 2017, (iii) the Consolidated Statements of Cash Flows for the nine month periods ended February 28, 2018 and 2017, and (iv) the Notes to the Consolidated Financial Statements (submitted herewith).
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Bought again today at 9.35 I think with advertisers leaving face book and the mid term elections in Nov this will do well.
Time will tell.
ETM $10
I agree CBS is out of favor I think ETM is also.
I'm buying more and plan to hold until November, with the mid terms coming up I think ETM will do well. Also ETM has a better divi. Any thoughts? TIA
“In 2017 we made concerted efforts to expand our footprint in the healthcare markets,” said David Houston, Chief Financial Officer of LiveWorld. “We saw our new revenue in healthcare grow by approximately 24% in the year. This growth came from new and existing relationships in pharma, as well as, new client relationships with insurance providers and hospitals.”
I agree, i only sold a small amount, this $4.5 million order can turn into a multi-year purchase order we could get to 60 million in revenue. If this new order can use existing equipment/molds it should be very profitable. GLGI looks very cheap here. BTW i bought SYEV about 3 weeks ago at .15, i only wish i would have bought more, Lol
Zach,
You still in or did you sell your shares?
GREYSTONE LOGISTICS, INC. REPORTS RESULTS OF OPERATIONS FOR THE PERIOD ENDED NOVEMBER 30, 2017
Jan 22, 2018
OTC Disclosure & News Service
-
Tulsa, OK, Jan. 22, 2018 (GLOBE NEWSWIRE) -- (OTCQB:GLGI). Tulsa-based Greystone Logistics, Inc. reported sales for the three months ended November 30, 2017 totaled $9,722,102 compared to $9,221,711 for the prior year period for an increase of $511,391, or 6%. Sales for the six months ended November 30, 2017 were $20,009,177 compared to $17,065,972 for the prior period for an increase of $2,943,205, or 17%.
Greystone recorded net income attributable to common shareholders (after preferred dividends and income attributable to variable interest entities) for the six months ended November 30, 2017 of $363,371, or $0.01 per share, compared to a net loss attributable to common shareholders of $(76,330), or $(0.00) per share, for the prior period. For the three months ended November 30, 2017, Greystone recorded net loss attributable to common stockholders (after preferred dividends and income attributable to variable interest entities) of $(11,337), or $0.00 per share, compared to a prior period net income attributable to common stockholders of $41,109, or $0.00 per share. EBITDA was $3,204,732 for the six months ended November 30, 2017 and $1,315,798 for the three months ended November 30, 2017.
“Although we are pleased with the company’s top line growth, our results from operations were effected by extraordinary costs of ramping up production for our new leasing customer and completing installation of the previously reported new 3500 ton injection machine”, stated CEO Warren Kruger. Kruger continued, “Increased margins while growing sales continue to be a major focus for Greystone. On January 17, 2018, we received a purchase order for our 48X40 heavy duty pallet totaling in excess of $4.5 million from a new national customer. We first called on this potential opportunity over 15 years ago. Our persistency paid off. We continue to diversify our customer base and create innovative recycled pallet solutions. The revenue from this new customer will be recognized over several months beginning about March 2018. Our production and operation teams work diligently to maintain a high degree of utilization on equipment. This goal has a positive impact by lowering fixed costs allocation per pallet produced thus driving increased margins on greater sales volume. We look forward to our third and fourth quarters which are historically Greystone’s strongest. Additionally, we are continuing to invest in equipment and facilities to drive growth and shareholder value.”
With oil going up, I wonder if they will get the hydrocarbon contracts again?
SCDA made a good profit, and the contracts went away when oil dropped. Just a thought
Entercom Communications Corp. (ETM) Given $14.00 Consensus Target Price by Analysts
Mae Love
January 17, 2018
Share
The institutional investor held 827,361 shares of the broadcasting company at the end of 2017Q3, valued at $9.47M, up from 160,000 at the end of the previous reported quarter. Noble Financial restated a "buy" rating on shares of Entercom Communications in a report on Monday, November 27th. About 70,987 shares traded. The FCF Growth of Entercom Communications Corp. It has underperformed by 32.35% the S&P500.
Euclidean Technologies Management Llc, which manages about $111.78 million and $104.46 million US Long portfolio, decreased its stake in Teradata Corp Del (NYSE:TDC) by 66,829 shares to 11,500 shares, valued at $389,000 in 2017Q3, according to the filing. The stock exchanged hands with 2,468,629 numbers of shares compared to its average daily volume of 4.55M shares. Tower Research Capital LLC TRC bought a new position in shares of Entercom Communications during the second quarter valued at about $122,000. Costco Wholesale Corp now has $84.24 billion valuation. The stock increased 1.55% or $1.15 during the last trading session, reaching $75.12. About 221,200 shares traded. CAE Inc. (NYSE:CAE) has risen 26.75% since January 15, 2017 and is uptrending. It has outperformed by 43.18% the S&P500. Shares for $937,421 were sold by Murphy James P. Savings Bank Of America De invested in 5,862 shares.
Among 3 analysts covering Canon (NYSE:CAJ), 1 have Buy rating, 1 Sell and 1 Hold. The company was downgraded on Monday, November 28 by BTIG Research. On Wednesday, October 4 the insider ZOOK DENNIS R sold $809,578. Therefore 40% are positive. Portfolio Recovery Associates had 17 analyst reports since October 14, 2015 according to SRatingsIntel. The stock has a consensus rating of "Hold". The company was maintained on Monday, November 27 by Noble Financial. CLSA downgraded the shares of CAJ in report on Friday, July 15 to "Underperform" rating. The rating was maintained by Macquarie Research on Tuesday, September 1 with "Buy". The firm has "Neutral" rating by Buckingham Research given on Friday, June 24. 488,246 were reported by State Street.
Investors sentiment decreased to 0.99 in 2017 Q3. Its up 0.35, from 1.15 in 2017Q2.
The Shareholder Yield is a way that investors can see how much money shareholders are receiving from a company through a combination of dividends, share repurchases and debt reduction. Oregon Pub Employees Retirement Fund reported 24,476 shares stake. Victory Cap Inc owns 3,944 shares. During the same quarter previous year, the business posted $0.27 earnings per share. Keybank Natl Association Oh holds 0% of its portfolio in H&R Block, Inc. Voya Investment Mgmt Ltd Com owns 19,392 shares for 0% of their portfolio. Profitable Developments Inc (PRDL)'s Williams %R presently stands at 0.00. Aperio Gp Ltd Liability reported 0.01% of its portfolio in H&R Block, Inc. (NYSE:T). Barrington Strategic Wealth Mngmt Group Ltd owns 5,657 shares or 0.11% of their U.S. portfolio. (NYSE:T). Bowen Hanes And has invested 0.29% of its portfolio in AT&T Inc. Dekabank Deutsche Girozentrale owns 157,956 shares.
Investors sentiment increased to 1.5 in 2017 Q3. Its up 0.05, from 0.78 in 2017Q2. It improved, as 77 investors sold T shares while 609 reduced holdings. 20 funds opened positions while 52 raised stakes. Metropolitan Life Insur Co invested 0% in Entercom Communications Corp. (NYSE:ETM). Walleye Trading Lc owns 0% invested in Entercom Communications Corp. ETM's latest closing price was 4.14% away from the average price of 200 days while it maintained a distance of 1.24% from the 50 Day Moving Average and 1.93% away compared to its SMA 20. Bridgeway Cap Management has invested 0.04% in Entercom Communications Corp. (NYSE:CAE). Nexus Mngmt accumulated 949,625 shares. Marble Harbor Invest Counsel Ltd Liability Corp has invested 0.63% in AT&T Inc
Entercom Completes Merger with CBS Radio
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Creates a Leading, Integrated Media and Entertainment Company and One of America’s Top Two Radio Broadcasters
Entercom Communications Corp. (“Entercom”) (NYSE: ETM) today announced that it has completed its merger with CBS Radio Inc. (“CBS Radio”), creating a leading American media and entertainment company and one of the top two radio broadcasters in the country. Entercom is now the #1 creator of live, original, local audio content in the United States and the nation’s unrivaled leader in news and sports radio. With a nationwide footprint of 235 stations, Entercom will engage over 100 million people weekly with a premier collection of highly-rated, award-winning radio stations, digital platforms and live events.
“We are thrilled to officially close our transformational merger with CBS Radio and welcome their talented employees and iconic brands to Entercom,” said David Field, Entercom’s President and Chief Executive Officer. “We look forward to capitalizing on our unique positions in sports, news, music, podcasting, live events, digital and more to provide outstanding experiences for our listeners and compelling integrated marketing opportunities for our advertisers. We now have the scale and capabilities to drive meaningful growth and to compete more effectively with other media for a larger share of advertising dollars. We also look forward to helping to elevate the Radio industry, which remains massively undervalued by advertisers despite having emerged as America’s #1 Reach medium, delivering outstanding ROI to customers.”
About Entercom Communications Corp.
Entercom Communications Corp. (NYSE: ETM) is a leading American media and entertainment company reaching and engaging over 100 million people each week through its premier collection of highly rated, award winning radio stations, digital platforms and live events. As one of the country’s two largest radio broadcasters, Entercom offers integrated marketing solutions and delivers the power of local connection on a national scale with coverage of close to 90% of persons 12+ in the top 50 markets. Entercom is the #1 creator of live, original, local audio content and the nation’s unrivaled leader in news and sports radio. Learn more about Philadelphia-based Entercom at www.Entercom.com, Facebook and Twitter (@Entercom).
Forward-Looking Statements
This communication contains “forward-looking statements.” All statements other than statements of historical fact contained in this report are forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements usually relate to future events and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results. Forward-looking statements are often identified by the words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “projects,” “would,” “will,” “could,” “may,” “estimate,” “outlook” and similar expressions, including the negative thereof. The absence of these words, however, does not mean that the statements are not forward-looking. These forward-looking statements are based on our current expectations, beliefs and assumptions concerning future developments and business conditions and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.
Factors that could cause actual results to differ materially from those in the forward-looking statements include, among others, risks associated with tax liabilities, or changes in U.S. federal tax laws or interpretations to which they are subject; risks that the new businesses will not be integrated successfully or that the combined companies will not realize estimated cost savings, value of certain tax assets, synergies and growth or that such benefits may take longer to realize than expected; failure to realize anticipated benefits of the combined operations; risks relating to unanticipated costs of integration; the impact of consummation of the transaction on relationships with third parties, including advertiser clients, employees and competitors; a decline in advertising revenue and the seasonality of advertising revenue; intense competition in the broadcast radio and media distribution industries; impact on advertising rates and revenues due to technological changes and failure to timely or appropriately respond to such changes; ability to attract new and retain existing advertiser clients in the manner anticipated; increases in or new royalties; high fixed costs; ability to hire and retain key personnel; failure to protect our intellectual property; availability of sources of funding on favorable terms or at all; changes in legislation or governmental regulations affecting the companies; economic, social or political conditions that could adversely affect the companies or their advertiser clients; conditions in the credit markets; and risks associated with assumptions the parties make in connection with the parties’ critical accounting estimates and legal proceedings.
ETM $10.30 I'm buying again.
Hope i'm right Lol
Moody's assigns a Ba3 rating to CBS Radio's new revolver; term loan B-1 rating unchanged following upsize
Global Credit Research - 06 Nov 2017
New York, November 06, 2017 -- Moody's Investors Service (Moody's) assigned CBS Radio Inc.'s (CBS Radio) proposed $250 million revolving credit facility a Ba3 rating. The Ba3 rating of the upsized term loan B-1 and B1 Corporate Family Rating (CFR) are unchanged. The outlook remains stable.
The term loan B-1 due 2024 is expected to be upsized by $830 million to $1,330 million from $500 million. The proceeds of the upsized term loan B-1 and a draw of $100 million from the new revolver are expected to fund the repayment of the existing term loan B due 2023 and repay the outstanding balance on the prior revolving credit facility. The transaction extends the maturity date of the credit facility and leads to additional interest expense savings.
The transaction is expected to close following the merger between CBS Radio and Entercom Communications Corp. that was announced on February 2, 2017 with Entercom being the surviving entity. CBS shareholders are expected to own 72% of the combined entity with Entercom shareholders owning a 28% position. The debt issued at CBS Radio, including the new revolver, term loan B-1 and $400 million of senior notes will remain outstanding as the change of control provision will not be triggered by the transaction. The debt will be issued by CBS Radio and be secured by the assets of both companies. Shortly after the closing of the transaction, we will withdraw all the ratings at CBS Radio and assign the debt ratings under the surviving entity, Entercom (B1 CFR; stable).
The merger will create a substantially larger company with pro-forma LTM revenue of $1.6 billion as of Q3 2017 with 235 stations. The greater scale of the combined company is expected to increase its competitive position and heighten demand from local and national advertisers. While Entercom's management team has a good track record of performance and integrating acquisitions, the merger with a much larger company elevates integration risk which may delay the cost and revenue benefits of the transaction.
A summary of Moody's actions are as follows:
..CBS Radio Inc.
New $250 million revolving credit facility due 2022, assigned Ba3 (LGD3)
Corporate Family Rating unchanged at B1
Upsized term loan B-1 due 2024 unchanged at Ba3 (LGD3)
The assigned ratings are subject to review of final documentation and no material change in the terms and conditions of the transaction as provided to Moody's.
RATINGS RATIONALE
CBS Radio's B1 CFR reflects the company's position as the second largest radio broadcaster in the US and its announced acquisition with Entercom. The combined company will have leading market positions in 22 of the top 25 markets. The company benefits from a geographically diversified footprint with strong market clusters in most of the areas it operates which enhances its competitive position. A diversified format offering of music, news, and sports are also positives to the rating. Leverage pro-forma for the transaction is approximately 4.5x as of Q3 2017 (including Moody's standard lease adjustments) and is expected to decline to 4.4x pro-forma for announced asset sales and approximately $100 million of projected debt repayment in the near term. Modest amounts of capital expenditures are expected to lead to good free cash flow that will be used for dividends, stock buybacks, additional acquisitions or debt repayment. The rating also reflects the secular pressure in the radio industry with an increasing number of digital music offerings and advertising alternatives as well as the cyclicality of the industry. Revenue and EBITDA performance at CBS Radio have been weak YTD in 2017, although a part of the increase in expenses is due to its prior plan to operate on a standalone basis which will not be recurring post the closing of the merger. CBS Radio's performance was also impacted by the uncertainty during the time between when the acquisition was announced and the expected closing in November in our opinion.
Liquidity is expected to be good as reflected in our speculative grade liquidity rating of SGL-2. The company will benefit from a $250 million revolver due in 2022 that is expected to have $100 million drawn at closing of the merger. The revolver is subject to a net secured leverage ratio of 4x (up to 4.5x one year after permitted acquisitions) as calculated by the credit agreement. The term loan is covenant lite. The cash balance at closing is expected to be approximately $10 million and we project the cash balance to increase as announced asset sales are completed.
The outlook is stable and reflects our expectation for modestly negative pro-forma revenue growth through 2018 due to secular challenges in the radio industry, the need to integrate assets following the merger and turn around performance at underperforming stations. However, debt repayment or cash funded acquisitions are expected to be a source of deleveraging over the next year and we project leverage levels will be relatively unchanged during the time period.
The rating could be upgraded if leverage declined below 3.75x (including Moody's standard adjustments) following a successful integration with a good liquidity profile and a high single digit percentage of free cash flow to debt ratio. Positive organic revenue growth and stable EBITDA margins would also be required in addition to confidence that management would maintain financial policies (including dividends, share repurchases, and acquisitions) that were consistent with a higher rating level.
The rating could be downgraded if leverage increased above 5.25x due to underperformance, audience and advertising revenue migration to competing media platforms, or other leveraging events. A reduction in free cash flow to debt ratio (after dividends) well below 5% or a weakened liquidity profile could also lead to negative rating pressure.
CBS Radio Inc. is currently an operating subsidiary of CBS Corporation. In February, 2017 CBS Radio entered into a merger agreement with Entercom Communications Corp. The company is the second largest radio operator in the US based on revenue. Standalone LTM revenue as of Q3 2017 is approximately $1.2 billion.
The principal methodology used in this rating was Media Industry published in June 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology
ETM $10.55
Merger with CBS radio. I bought last week under $10.50
But i think it's a buy under $11.
From the CC .... We have previously indicated that the merger would generate $25 million in net cost synergies. We are now revising that figure to $100 million in net cost synergies. And again, these are net cost synergies. It will still allow for significant expansion in investment and various key growth drivers in the organization as we work to accelerate our revenue growth.Also from the CC............In addition the Board has authorized a $100 million stock repurchase program authorization under which we expect to repurchase roughly $30 million in stock in 2018, subject to market conditions. As this merger has always been principally about our conviction that the combined entity would have the scale, brands, the people and the capabilities to drive meaningful revenue acceleration and value creation going forward. We've been hard at work developing our extensive plans to drive growth of the business through a series of changes, enhancements and investments across the organization. In the days, weeks and months ahead, we will be rolling out our plans, aggressively capitalize on our significant opportunities across essentially 8 separate (inaudible). Number 1, scale-driven national revenue opportunities. As a result of this transformational merger, Entercom will emerge as one of the industry's 2 largest players with the scale to compete effectively with other media for a larger share of ad dollars. We'll be building out robust national business development capabilities. Number 2, CBS Radio turnaround.
Also Cramer did a piece on it and it's still on yahoo.
Thoughts anyone? TIA
Entercom Communications Corporation (ETM) Board Declares Share Repurchase Plan
Posted by Anthony Sawyer on Nov 2nd, 2017 // No Comments
inShare
Entercom Communications Corporation logoEntercom Communications Corporation (NYSE:ETM) declared that its Board of Directors has authorized a stock repurchase plan, which authorizes the company to repurchase $100.00 million in outstanding shares on Thursday, November 2nd, EventVestor reports. This repurchase authorization authorizes the company to purchase up to 22.2% of its stock through open market purchases. Stock repurchase plans are often a sign that the company’s management believes its stock is undervalued.
Several brokerages have weighed in on ETM. BidaskClub upgraded Entercom Communications Corporation from a “sell” rating to a “hold” rating in a research note on Friday, August 11th. Noble Financial reiterated a “buy” rating on shares of Entercom Communications Corporation in a research note on Monday, July 31st.
Entercom Communications Corporation (NYSE:ETM) last posted its earnings results on Thursday, November 2nd. The company reported $0.09 EPS for the quarter, missing the consensus estimate of $0.22 by ($0.13). Entercom Communications Corporation had a net margin of 4.27% and a return on equity of 8.50%. The business had revenue of $122.30 million during the quarter, compared to analyst estimates of $120.76 million. During the same quarter in the prior year, the business earned $0.27 earnings per share. The firm’s revenue was up .6% compared to the same quarter last year.
ETM $10.40 I'm buying here and i will buy down to $9 should it go that low. Increase in divi, share buy back, it pays you while you wait. JMO
PERI $1.04 anyone buying? anyone holding into earnings ?
Any thoughts? TIA
GLGI... the 2nd largest customer Miller Coors bought a lot more pallets this quarter.
CCNI Good quarter IMO , I bought some about a week ago.
Your thoughts? TIA