MicroCapClub Invitational: Greystone Logistics (GLGI)

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    06-May-2015

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A few months ago I wrote an article entitled: 8 Habits Of Highly Effective MicroCap CEOs. Greystone Logistics (GLGI) CEO Warren Kruger is one of the few CEOs Ive met recently that meets all 8 criteria. Warren Kruger owns 30% of the company, takes an average salary, buys stock in the open market every quarter, and has invested over $10 million of his own money to turn the company around. I would also add that there has been little to no share dilution for several years. With the turnaround complete, the stage is set for a growth story to emerge. Greystone Logistics is the only public company focused on manufacturing and leasing plastic pallets, the fastest growing segment of the $9.5 billion pallet industry. The company is currently trading at 4x TTM EPS. This is the first time the company has presented anywhere, so listen to CEO Warren Kruger as he tells the story.

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  • 1.Recycled Plasc Pallets | Plasc Resin Processing | Pallet Lease and Rental Programs www.greystonelogiscs.com

2. Disclosures Disclaimer: This material has been prepared by the company described and is being distributed by the company. The company prepared the facts that underlie this execuve summary and addional informaon is available in publicly led documents. Viewers are encouraged to review informaon presented herein for accuracy or completeness. This summary is not an oer to sell neither securies nor a solicitaon of an oer to by securies. Legal Notes & Disclosures: Greystone Logiscs, Inc. may make certain forward-looking statements that relate to future events or future business and nancial performance. Such statements can be only predicons and the actual events or results may dier from those discussed due to, among other things, those risks described in Greystone Logiscs, Inc. reports or evident on Forms 10-Q and 10-K. Opinions expressed herein are subject to change without noce. This document is published solely for informaon purposes and is not to be construed as an oer to sell or the solicitaon of an oer to buy any security in any state. Past performance does not guarantee future performance. Addional informaon is available upon request. www.greystonelogiscs.com 2 3. Descripon of Business Who We Are: Publicly traded company (OTCBB: GLGI) Producon plant located in Beendorf, IA 24/7 Operaons Experienced management team www.greystonelogiscs.com 1 4. Descripon of Business What We Do: Manufacture plasc pallets made from recycled plasc www.greystonelogiscs.com 2 5. Descripon of Business What We Do: Manufacture plasc pallets made from recycled plasc Sell processed recycled plasc www.greystonelogiscs.com 3 6. Descripon of Business What We Do: Manufacture plasc pallets made from recycled plasc Sell processed recycled plasc Rent and lease plasc pallets www.greystonelogiscs.com 4 7. Our Customers Food and Beverage Industry Pharmaceucal Industry Automove Industry Consumer Product Industry Pallezed Exports Agricultural Industry www.greystonelogiscs.com 5 8. Business Advantages Innovave Technologies Patented injecon molding equipment Proprietary blend of recycled petrochemical resins Patented pallet designs Compeve Advantage Proprietary processed plasc waste resin blend allows for the output of high quality pallets more quickly and less expensively then compeon Greystone is the industry low-cost producer www.greystonelogiscs.com 6 9. Business Advantages Environmental Friendly Reduces environmental waste by repurposing Posive image in an environmentally conscious economy Leading Beer Industry Pallet Manufacturer In over ten years, Greystone has become the leading pallet manufacturer in the beer industry with over 4 million patented recycled plasc pallets delivered to customers including Miller Brewing and Coors Brewing www.greystonelogiscs.com 7 10. Business Highlights Rapid Growth Greystone has grown from Research and Development rm to projected $25 million in revenue (2013) since merging into public shell One of the Largest Post-Industrial Users/Resellers of Plasc Greystone is one of the countrys largest post-industrial users and resellers of plasc over 40 million pounds www.greystonelogiscs.com 8 11. Business Highlights Pallet Rental Program Greystone is poised to iniate plasc pallet rental program U.S. wood pallet leasing revenue is currently over $1.5 billion annually Only one other plasc pallet rental provider Hundreds of Customers Pzer, Apotex, Omaha Steaks, Miller Brewing, Coors Brewing www.greystonelogiscs.com 9 12. Market Opportunity $9.5 Billion Pallet Industry Pallets are used in virtually all industries in which products are broadly distributed. The 600 million to 1 billion pallets going into the system each year create an esmated $9.5 billion dollar industry. While wood sll dominates the market today, plasc pallets are gaining in total share of pallets in use. Greystone is the only publicly-traded company focused on the fast-growing plasc segment of the $9.5 billion industry. www.greystonelogiscs.com 10 13. Market Opportunity $5 Billion Leasing Industry $5 Billion HDPE Recycling Industry www.greystonelogiscs.com 11 14. Market Opportunity Shi to Plasc from Wood Plasc more durable than wood pallets Plasc pallet sales growing at double-digit rates Disposal issues and fumigaon costs coupled with regulatory mandates on pest, biological, and chemical infestaon with wood pallets means more emphasis on alternate soluons As a result, industry is rapidly transioning to plasc pallets The opportunity exists for hyper-growth in leased plasc pallets and excess ground and reprocessed resin sales www.greystonelogiscs.com 12 15. Market Opportunity Shi to Plasc from Wood A Freedonia Industrial report esmated the demand for wood pallets to exceed $1 billion in 2013. At the same me, the demand for plasc pallets was projected to exceed $100 million. Freedonia esmates that the demand for plasc pallets will connue to outpace wood as percentage of the market. www.greystonelogiscs.com 13 16. Market Opportunity Beverage Industry Opportunity Greystone is leveraging the companys success in the beverage industry, which currently represents 35% of the plasc pallet market The two largest U.S. beer breweries total 80% of the U.S. beer market and circulate 4-6 million pallets within their distribuon system annually. Approximately 10-20% of these pallets are lost or damaged per year, thus requiring consistent replacement orders The beer industry represents just 5% of the total beverage industry. Greystone is the sole provider of recycled plasc pallets for Miller Brewing and Coors Brewing, and is working to capture addional market share in other areas of the beverage sector www.greystonelogiscs.com 14 17. Key Customer Proles MillerCoors Brewing (Beer Industry) MillerCoors is the second largest beer brewery in the U.S. Greystone Logiscs is now the exclusive recycled plasc pallet supplier Graphic Packaging Internaonal Graphic Packaging Holding Company (NYSE: GPK), is a leading provider of packaging soluons to food, beverage and other consumer product companies Pzer, Inc. One of the worlds largest research-based pharmaceucal companies Apotex Corp (Pharmaceucal Industry) Founded in 1974, Apotex Corp. is the largest Canadian-owned pharmaceucal company www.greystonelogiscs.com 15 18. Business Model Organic Growth Within Rapid-Growing Pallet Industry As the materials handling industry connues to adopt plasc pallets for environmental, export, safety, health, cost and eciency concerns, Greystone will benet from this sustainability trend. Plasc is becoming the shipping plaorm of choice for export shipments as most countries require extremely stringent and expensive requirements for wood pallets www.greystonelogiscs.com 16 19. Business Model Capitalize on Resin Processing and Sales Increased industrial use of recycled resin has allowed protable sale of excess recycled resin. Plascs recycling is an established naonal industry. According to the American Chemistry Council, the number of companies handling and reclaiming post-consumer plascs (over 1,790) is nearly six mes greater than in the early days, 1986 (310). Over me, the recycling of plascs will connue to grow and become a more ecient and convenonal segment of the naonal economy. www.greystonelogiscs.com 17 20. Business Model Promote Lease Pallet Management Soluons Lease pallets into a managed rental pool Naonal beverage and regional customers will drive growth in this mul-billion dollar market dominated by wood Leverage Miller Brewing & Coors Brewing Success Leverage current success of being the exclusive supplier of 100% recycled plasc pallets for MillerCoors with other industry giants moving from wood to plasc www.greystonelogiscs.com 18 21. Business Model Sales and Markeng Support of Alliance Partner SONOCO Transport Packaging, a $4.5 billion global manufacturer of industrial and consumer products, ulizing their reach and buying power to grow sales while fully developing our extensive distributor network www.greystonelogiscs.com 19 22. Business Model Connue to Expand Product Line Greystone currently has mulple product lines with more than twenty dierent pallets and conguraons of light, mid, and heavy duty pallets including: 37 x 32 48 x 48 37 x 37 40 x 32 44x56 IBC Pallet 48 x 40 Export Nestable 48 x 44 Beer Keg Pallets 48 x 45 24x40 Identy Accreve Targets Greystone will idenfy companies that would accreve acquisions www.greystonelogiscs.com 20 23. Key Financials Condensed Income Statements (000) FY May Revs EBITDA Net Inc. EPS FY07 A $12,454 -$471 -$2,600 -$0.13 FY08 A $21,081 $2,836 $928 $0.02 FY09 A $16,691 $2,807 $842 $0.02 FY10 A $16,231 $2,349 $503 $0.0 FY11 A $20,502 $1,752 $13 $-0.03 FY12 A $24,158 $3,890 $2,103 $0.07 FY13 E $25,000 $4,470 $2,250 $0.09 FY14 E $31,548 $5,647 $3,790 $0.14 FY15E $38,239 $7,647 $4,780 $0.18 www.greystonelogiscs.com 21 24. Total Sales: $24,186,000 Miller Brewing Co. 29.6% Graphic Packaging Intl 16.8% Coors Brewing 9.4% Apotex 7.1% Decade Products 4.9% Sonoco 3.8% Fabricas Monterrey SA 2.9% Norleans Technologies, Inc. 2.9% Plasc Pallet & Container 2.0% Trademark Plascs 1.9% www.greystonelogiscs.com 22 25. Financial Performance Net Income $40,000 $38,239 EBITDA $35,000 Revenues $31,548 $30,000 $24,186 $25,000 $20,502 $25,000 $16,691 $16,231 $20,000 $15,000 $10,000 $2,807 $2,349 $3,890 $7,647 $4,470 $5,647 $5,000 $732 $1,254 $422 $1,934 $- $2,250 $3,790 $4,780 $(5,000) 2009 2010 $(770) 2011 2012 2013 2014 2015 www.greystonelogiscs.com 23 26. Total Projected Revenue and Income Year End May 31 ($000s) 2009 2010 2011 2012 2013 2014 2015 Pallet Revenue $16,691 $16,230 $15,218 $20,371 $21,500 $24,234 $27,019 Cost of Goods Sold $13,385 $13,273 $12,968 $14,722 $16,573 $18,691 $20,256 Gross Margin $3,306 $2,957 $2,040 $5,649 $4,927 $5,543 $6,763 Recycled Plasc Revenue $5,284 $3,786 $3,500 $7,350 $11,220 Cost of Goods Sold $5,389 $4,505 $3,325 $6,885 $9,537 Gross Margin $(105) ($719) $175 $465 $1,683 Recycled Resin SGA (Included in Plant SGA) Leasing Revenue Cost of Goods Sold Gross Margin Leasing SGA Operang Prot NET SALES $16,691 $16,230 $20,502 $24,158 $25,000 $31,584 $38,239 Cost of Goods Sold $13,385 $13,273 $18,357 $19,228 $19,898 $25,576 $29,793 Operang Prot $2,503 $2,002 $2,145 $4,930 $5,102 $6,008 $8,446 Corporate SGA ($1,078) ($1,135) ($1,921) ($1,993) ($2,200) ($2,300) ($2,400) Interest ($908) ($750) ($1,086) ($897) ($870) ($696) ($522) EBITDA $2,566 $2,139 $626 $3,890 $4,470 $5,647 $7,647 Income Taxes (Tax Loss Carry Forward Used) Net Income $732 $422 $(770) $1,934 $2,250 $3,790 $4,780 NET SALES GROWTH -3% 29% 30% 3% 21% 17% Gross Operang Prot 15.00% 12.34% 10.46% 20.40% 20.40% 19.02% 22.08% Net Income to Sales 4.39% 2.60% 0.00% 8.00% 9.00% 12.00% 12.50% EBITDA to Sales 15.37% 13.18% 3.01% 16.10% 17.90% 17.90% 20.00% G&A to Sales 6.46% 6.99% 9.37% 8.25% 8.80% 7.28% 6.28% www.greystonelogiscs.com 24 27. Management Warren F. Kruger, CEO Over 35 years experience in nancial services and manufacturing industries Co-founded MCM Group, Ltd. In 1990 and sold to Cendant Corp. in 1996 (NYSE: CD) Owned and operated three ice factories and sold to Packaged Ice, Inc. in an industry rollup SONOCO PRODUCTS, Sales Alliance Partner Ron Schelhaas, Plant Manager Bill Rahhal, CFO William Pritchard, General Counsel Greystone Logiscs Online: www.greystonelogiscs.com Mailing Address: Plant Locaon: 1613 East 15th Street 2601 Shoreline Drive Tulsa, Oklahoma 74114 Beendorf, Iowa 52722 Oce: 918.583.7411 Plant: 563.332.0052 Fax: 918.583.7442 www.greystonelogiscs.com 25