Stran & Company, Inc. ("Stran" or the "Company")
(NASDAQ: STRN) (NASDAQ: STRNW), a leading outsourced
marketing solutions provider that leverages its promotional
products and loyalty incentive expertise, today provided a business
update and reported financial results for the three months ended
March 31, 2022.
Andy Shape, President and CEO of Stran,
commented, “We continue to successfully execute on our business
strategy, as demonstrated by a 62.5% increase in revenue to $12.3
million for the first quarter of 2022, compared to the same period
last year. Furthermore, we completed the highly synergistic and
accretive acquisition of G.A.P. Promotions in January 2022. G.A.P.
expands our reach within the beverage and consumer packaged goods
industries. Even excluding the G.A.P. acquisition, our organic
revenue increased 50.8% over the same period last year. As
confirmation of the traction we’re gaining in the market, we also
secured a multi-year contract with a large, nationally recognized
healthcare company, which reflects our ability to address the
complex marketing needs of our customers. The healthcare industry
represents a significant market opportunity for promotional
products. This contract alone is expected to generate over $6
million in annual recurring revenue for Stran with the ability to
expand our engagement as we continue to perform. To support our
continued growth, we appointed Sheila Johnshoy as Chief Operating
Officer in March 2022. Sheila brings over 20 years of industry
experience with an impressive track record developing and executing
growth strategies, as well as building effective sales and
marketing teams. We are honored to have Sheila join our team during
this exciting time, as we work aggressively to expand our market
share.
“Overall, we believe that we have built a highly
scalable business model, as illustrated by the decrease in
operating expenses as a percentage of revenue, despite acquisition
and integration expenses related to the G.A.P. acquisition,
continued implementation of Oracle’s NetSuite as our new Enterprise
Resource Planning (ERP) system, as well as the addition of public
company costs and other fixed expenses to support our planned
growth. As a result, we expect to continue and improve upon our
track record of profitability in 2022 and beyond. We ended the
quarter with $30 million in cash reserves and no long-term debt.
Moreover, we are well capitalized to internally fund and execute
both our organic growth and acquisition strategies.”
Financial Results
Revenue for the three months ended March 31,
2022 was $12.3 million compared to $7.5 million for the same period
in 2021. The increase was primarily due to higher spending from
existing clients as well as business from new customers.
Additionally, we benefited from the acquisition of the G.A.P.
Promotions assets in January 2022.
Gross profit increased 40.4% to $3.2 million, or
26.3% of sales, for the three months ended March 31, 2022, compared
to $2.3 million, or 30.4% of revenue, for the same period last
year. The increase in gross profit was due to increased sales,
partially offset by an increase in purchasing costs.
Net loss for the three months ended March 31,
2022 was approximately $0.5 million, compared to net loss of
approximately $0.3 million for the same period last year. This
decrease was primarily due to integration expenses related to the
acquisition of the GAP Promo assets, ongoing expenses related to
being a public company, and higher cost of purchases. These factors
were partially offset by the increase in sales from our January
2022 G.A.P. asset purchase and the increase from recurring organic
sales.
Conference Call
Stran will host a conference call today at 10:00
A.M. Eastern Time to discuss the Company’s financial results for
the first quarter ended March 31, 2022, as well as the Company’s
corporate progress and other developments.
The conference call will be available via
telephone by dialing toll free 888-506-0062 for U.S. callers or +1
973-528-0011 for international callers and using entry code:
832782. A webcast of the call may be accessed at
https://www.webcaster4.com/Webcast/Page/2855/45543 or on the
Investors section of the Company’s website at ir.stran.com.
A webcast replay will also be available on the
Company’s Investors section of the website (ir.stran.com) through
May 12, 2023. A telephone replay of the call will be available
approximately one hour following the call, through May 26, 2022,
and can be accessed by dialing 877-481-4010 for U.S. callers or +1
919-882-2331 for international callers and entering conference ID:
45543.
About Stran
Over the past 27 years, Stran has grown to
become a leader in the promotional products industry, specializing
in complex marketing programs to help recognize the value of
promotional products, branded merchandise and loyalty incentive
programs as a tool to drive awareness, build brands and impact
sales. Stran is the chosen partner of many Fortune 500 companies,
across a variety of industries, to execute their promotional
marketing, loyalty and incentive, sponsorship activation,
recruitment, retention, and wellness campaigns. Stran provides
world-class customer service and utilizes cutting-edge technology,
including efficient ordering and logistics technology to provide
order processing, warehousing and fulfillment functions. The
Company’s mission is to develop long-term relationships with its
clients, enabling them to connect with both their customers and
employees in order to build lasting brand loyalty. Additional
information about the Company is available at: www.stran.com.
Forward Looking Statements
This press release contains “forward-looking
statements” that are subject to substantial risks and
uncertainties. All statements, other than statements of historical
fact, contained in this press release are forward-looking
statements. Forward-looking statements contained in this press
release may be identified by the use of words such as “anticipate,”
“believe,” “contemplate,” “could,” “estimate,” “expect,” “intend,”
“seek,” “may,” “might,” “plan,” “potential,” “predict,” “project,”
“target,” “aim,” “should,” "will” “would,” or the negative of these
words or other similar expressions, although not all
forward-looking statements contain these words. Forward-looking
statements are based on the Company’s current expectations and are
subject to inherent uncertainties, risks and assumptions that are
difficult to predict. Further, certain forward-looking statements
are based on assumptions as to future events that may not prove to
be accurate. These and other risks and uncertainties are described
more fully in the section titled “Risk Factors” in the final
prospectus related to the public offering filed with the SEC and
other reports filed with the SEC thereafter. Forward-looking
statements contained in this announcement are made as of this date,
and the Company undertakes no duty to update such information
except as required under applicable law.
Contacts:
Investor Relations Contact:
Crescendo Communications, LLCTel: (212)
671-1021STRN@crescendo-ir.com
Press Contact:
Howie Turkenkopf press@stran.com
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
March 31, |
|
December 31, |
|
2022 |
|
2021 |
ASSETS |
CURRENT ASSETS: |
|
|
|
Cash |
$ |
40,004,860 |
|
$ |
32,226,668 |
Accounts Receivable, Net |
|
9,844,720 |
|
|
8,982,768 |
Deferred Income Taxes |
|
287,400 |
|
|
113,000 |
Inventory |
|
6,147,458 |
|
|
5,230,792 |
Prepaid Corporate Taxes |
|
87,459 |
|
|
87,459 |
Prepaid Expenses |
|
497,303 |
|
|
623,402 |
Deposits |
|
837,655 |
|
|
299,411 |
|
|
57,706,855 |
|
|
47,563,500 |
|
|
|
|
PROPERTY AND EQUIPMENT,
NET: |
|
650,185 |
|
|
615,837 |
|
|
|
|
OTHER ASSETS: |
|
|
|
Intangible Assets - Customer Lists, Net |
|
4,113,542 |
|
|
1,929,294 |
Right of Use Asset - Office Leases |
|
1,019,412 |
|
|
1,094,778 |
|
|
5,132,954 |
|
|
3,024,072 |
|
$ |
63,489,994 |
|
$ |
51,203,409 |
|
|
|
|
LIABILITIES AND STOCKHOLDER'S EQUITY |
CURRENT LIABILITIES: |
|
|
|
Current Portion of Contingent Earn-Out Liabilities |
$ |
1,572,970 |
|
$ |
665,855 |
Current Obligation under Right of Use Asset - Office Leases |
|
314,793 |
|
|
310,095 |
Accounts Payable and Accrued Expenses |
|
4,002,765 |
|
|
4,983,496 |
Accrued Payroll and Related |
|
711,020 |
|
|
836,915 |
Unearned Revenue |
|
1,786,381 |
|
|
721,608 |
Rewards Program Liability |
|
10,043,878 |
|
|
43,878 |
Sales Tax Payable |
|
110,748 |
|
|
106,824 |
Note Payable - Wildman |
|
162,358 |
|
|
162,358 |
|
|
18,704,913 |
|
|
7,831,029 |
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
Long-Term Contingent Earn-Out Liability |
|
1,488,603 |
|
|
976,078 |
Long-Term Obligation under Right of Use Asset - Office Leases |
|
704,619 |
|
|
784,683 |
|
|
2,193,222 |
|
|
1,760,761 |
|
|
|
|
STOCKHOLDER'S EQUITY: |
|
|
|
Common Stock, $.0001 Par Value; 300,000,000 Shares Authorized, |
|
|
|
20,127,788 and 19,753,813 Shares Issued and Outstanding |
|
|
|
as of March 31, 2022 and December 31, 2021, respectively |
|
2,014 |
|
|
1,976 |
Additional Paid-In Capital |
|
41,273,665 |
|
|
39,747,649 |
Retained Earnings |
|
1,316,180 |
|
|
1,861,994 |
|
|
42,591,859 |
|
|
41,611,619 |
|
$ |
63,489,994 |
|
$ |
51,203,409 |
STATEMENTS OF
EARNINGSFOR THE THREE MONTHS ENDED MARCH 31, 2022
AND 2021
|
Three Months EndedMarch 31, 2022 |
|
Three Months EndedMarch 31, 2021 |
|
|
|
|
SALES |
$ |
12,259,583 |
|
|
$ |
7,544,191 |
|
|
|
|
|
COST OF SALES: |
|
|
|
Purchases |
|
7,956,616 |
|
|
|
4,535,233 |
|
Freight |
|
1,084,802 |
|
|
|
717,250 |
|
|
|
9,041,418 |
|
|
|
5,252,483 |
|
|
|
|
|
GROSS PROFIT |
|
3,218,165 |
|
|
|
2,291,708 |
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
General and Administrative Expenses |
|
4,024,218 |
|
|
|
2,645,457 |
|
|
|
4,024,218 |
|
|
|
2,645,457 |
|
|
|
|
|
EARNINGS (LOSS) FROM
OPERATIONS |
|
(806,053 |
) |
|
|
(353,749 |
) |
|
|
|
|
OTHER INCOME AND
(EXPENSE): |
|
|
|
Other Expense |
|
(3,680 |
) |
|
|
- |
|
Other Income |
|
90,595 |
|
|
|
- |
|
Interest Expense |
|
(3,731 |
) |
|
|
(12,862 |
) |
|
|
83,184 |
|
|
|
(12,862 |
) |
|
|
|
|
INCOME BEFORE INCOME
TAXES |
|
(722,869 |
) |
|
|
(366,611 |
) |
|
|
|
|
PROVISION FOR INCOME
TAXES: |
|
(177,055 |
) |
|
|
(76,526 |
) |
|
|
|
|
NET EARNINGS |
|
(545,814 |
) |
|
|
(290,085 |
) |
|
|
|
|
NET EARNINGS PER COMMON
SHARE |
|
|
|
Basic |
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
Diluted |
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING |
|
|
|
Basic |
|
20,061,143 |
|
|
|
10,000,000 |
|
Diluted |
|
31,777,338 |
|
|
|
10,000,000 |
|
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