Savvy Trades and Investments

[Fisher]

GLGI - Yeah I read that. The cost for the new machines should have been capitalized to the balance sheet and not impact COGS so I'm not sure why they mention it there. $1.7m extra showed up in COGS. That's quite a bit of extra production employees & training. The explanation doesn't seem adequate to me. There are certainly some fixed COGS which with the big increase in volume would benefit contribution margin so to me the relative change in COGS is worse than it appears at first.

Lets say each new production employee costs $25/hr burdened. That's an extra $13.5k/qtr. 25 new employees for the full quarter would be about $340k. That leaves an awful lot in the difference.

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.