Greystone Logistics processes about 60 million pounds per year of recovered material into new pallets. | Courtesy of Greystone Logistics
Lower recovered HDPE prices have helped increase the profitability of a recycled plastic pallet manufacturer.
According to a press release, Tulsa, Okla.-based Greystone Logistics tallied $61 million in sales during the fiscal year that ended May 31, 2023. That was down 18% from the prior year.
But the company, which produces plastics pallets made with 100% recycled material, reported its gross profit margin was 15.4% for the most recent year, up from 10.5% during the previous year.
Lower prices for feedstock contributed to better profitability in the most recent year.
“Pricing for our main commodity HDPE forced large price adjustments upward last year causing a slight decrease in demand,” CEO Warren Kruger stated in the release. “Greystone’s sales pipeline and opportunities are compounding due to changes in pricing made possible from reductions in the cost of raw materials.”
The company’s annual report noted that, during the 2022 fiscal year (June 2021 though May 2022), “customers shied away from inflationary pricing,” resulting in a decrease in sales.
In an Aug. 29 conference call with investors, Kruger noted that the prices for PE shot up from about January 2021 through August 2022, forcing Greystone to raise prices “dramatically.” He used the example of a customer faced with a price increase of 30 cents per pound for a 40- or 50-pound pallet, noting that they often delayed orders as a result.
“And then in about August of ‘22, things turned around and it’s been great since then,” Kruger said. “Prices have come down and we’ve actually lowered some of our pricing to get people to order.”
The number of pallets sold during the 2023 fiscal year was still down by about one-quarter, but the profitability increased because plastic got cheaper, the annual report stated.
“As raw material pricing returned to relatively normal historic levels during the second quarter of fiscal year 2023, the Company focused its efforts on rebuilding relations with existing customers as well as seeking new customers,” the report noted.
Greystone, which has manufactured its pallets in Bettendorf, Iowa, opened a new production facility in Jasper, Ind. in April 2023. The plant uses injection molding and robotic materials handling equipment purchased from Paradigm Plastic Pallets.
Greystone recycles about 60 million pounds of recovered HDPE per year, with feedstock consisting of damaged plastic pallets, post-industrial plastic and clean post-consumer flake purchased from other reclaimers.
Pallet customers include Walmart and iGPS, which buys pallets and rents them to other companies, such as Costco, Procter & Gamble and Niagara Bottling.