Stran & Company, Inc. ("Stran" or the
"Company") (NASDAQ: SWAG) (NASDAQ: SWAGW), 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 year ended December
31, 2022.
Andy Shape, President and CEO of Stran,
commented, “Throughout 2022, we continued to grow and generated
revenue of approximately $59.0 million for the 2022 fiscal year, a
48.5% increase compared to 2021. Importantly, we returned to
profitability for the fourth quarter of 2022, generating
approximately $18.3 million in revenue and $903,000 of net income
compared to $12.6 million in revenue and net loss of $31,000 for
the fourth quarter of 2021. We believe these fourth-quarter 2022
results are primarily a result of the investments we have made into
the business and enhanced sales and marketing initiatives. We
implemented a number of business initiatives during the year with
the objective of enhancing our long-term growth and profitability.
These initiatives included strategic investments, multiple
acquisitions, and implementation of the first phase of NetSuite ERP
for improved operational efficiencies and scalability, while
managing expenses. We expect to continue these and other efforts
toward attaining sustained strong performance. At the same time, we
have maintained a solid balance sheet with a combined $25.0 million
of cash and short-term investments as of December 31, 2022, with no
long-term debt.”
“During 2022, we announced three acquisitions,
all of which we believe will bring Stran unique advantages and
opportunities. To start 2022, we acquired the business and assets
of G.A.P. Promotions, LLC (“G.A.P. Promotions”), which added
customers in new industry verticals, while providing us new revenue
streams that we plan to build upon. Following the G.A.P. Promotions
acquisition, we acquired the business and assets of Trend
Promotional Marketing Corporation (d/b/a Trend Brand Solutions)
(“Trend”), a strategic transaction, as Trend is located in the
Houston, Texas area, which is home to two dozen Fortune 500
companies, and ranks third among metro areas in Fortune 500
headquarters locations. Trend enables us to expand into new and
important geographies. Subsequently, we closed the acquisition of
the business and assets of Premier Business Services (“Premier
NYC”), which brought talent and expertise in the promotional
products industry. Premier NYC also has long-standing customer
relationships that we intend to expand over time. With these
acquisitions, we have significantly expanded our operational
capacity, entered important geographies, and brought on talented
employees.”
“More recently, in January 2023, we also
announced that we had signed a definitive agreement to acquire the
business and assets of T R Miller Co., Inc. (“T R Miller”). T R
Miller generated over $19 million of revenue in its 2022 fiscal
year and has an established state-of-the-art decoration,
fulfillment and distribution center, enabling delivery of quality
products, innovative ideas, reliable services and timely
deliveries. We intend to close this acquisition in the second
quarter of 2023.”
“Beyond executing on our M&A strategy, we
have signed contracts with large national and multi-national
customers. Notably, we signed a multi-year contract with a national
healthcare company to provide incentive products and literature to
consumers, which may allow us to access the healthcare market. We
also signed a contract with a leading North American infrastructure
services company to provide promotional products and services,
which came as a referral from an existing customer. In addition, we
recently announced that we signed a customer contract with a
multinational direct-selling beauty products company to assist them
in growing their North American loyalty program. We have launched
this program and are supporting their more than four million beauty
influencers with a new e-commerce store, which provides an
easy-to-use platform to access incentive merchandise. These
contracts are expected to be not only revenue-generative, but also
provide opportunities for expansion that we intend to pursue.”
“Overall, we believe our growth strategy has
resulted in increased revenue, growth in our customer base, and
geographic expansion, while maintaining a strong balance sheet. To
demonstrate our confidence in the future of Stran, during 2022 we
also announced our stock repurchase program and have repurchased
approximately 1.78 million shares of common stock to date, which we
believe demonstrates our commitment to stockholder value. We
believe that we continue to be a leader within the industry, and
intend to continue to take advantage of the vast opportunities
within the market,” concluded Mr. Shape.
Financial Results
Fourth Quarter 2022 Results
Revenue increased 45.0% to $18.3 million for the
three months ended December 31, 2022, from $12.6 million for the
three months ended December 31, 2021. We recorded the highest
quarterly revenue in our history. As in many previous years, our
net sales and profits were impacted by the holiday selling season.
The increase was primarily due to increased sales and marketing, an
increase in lead generation initiatives as well as the acquisitions
of the G.A.P. Promotions assets in January 2022, the Trend Brand
Solutions assets in August 2022, and the Premier NYC assets in
December 2022.
Gross profit increased 45.4% to $5.3 million, or
29.2% of revenue, for the three months ended December 31, 2022,
from $3.7 million, or 29.1% of revenue, for the three months ended
December 31, 2021. The increase in the dollar amount of gross
profit was due to increased sales. The increase in gross profit
margin was the result of improved rebate levels and purchasing from
suppliers.
Net income for the three months ended December
31, 2022 was $903,000 compared to net loss of $31,000 for the three
months ended December 31, 2021. This increase was primarily due to
an increase in lead generation initiatives, higher sales and more
efficient management of operating expenses in the fourth quarter of
2022.
Full Year 2022 Results
Revenue increased 48.5% to $59.0 million
for the year ended December 31, 2022, from $39.7 million for
the year ended December 31, 2021. The increase was primarily
due to higher spending from existing clients as well as business
from new customers. Additionally, revenues increased as a result of
the acquisitions of the G.A.P. Promotions assets in January 2022,
the Trend Brand Solutions assets in August 2022, and the Premier
NYC assets in December 2022.
Gross profit increased 40.0% to $16.6 million,
or 28.1% of revenue, for the year ended December 31, 2022, from
$11.8 million, or 29.8% of revenue, for the year ended December 31,
2021. The increase in the dollar amount of gross profit was due to
increased sales, partially offset by an increase in purchasing
costs.
Net loss for the year ended December 31, 2022
was $0.8 million compared to net earnings of $0.2 million for the
year ended December 31, 2021. This decrease was primarily due to an
increase in lead generation initiatives, integration expenses
related to the acquisition of the G.A.P. Promotions assets, Trend
assets and Premier NYC assets, the implementation of an internal
commercial enterprise resource planning system on NetSuite ERP’s
platform, ongoing expenses related to being a public company, and
higher cost of purchases in 2022.
Conference Call
The Company will host a conference call at 10:00
A.M. Eastern Time today to discuss the Company’s financial results
for the fourth quarter and fiscal year ended December 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:
863795. A webcast of the call may be accessed
at https://www.webcaster4.com/Webcast/Page/2855/47814 or
on the Investor Relations section of the Company’s website
at ir.stran.com.
A webcast replay will be available on the
Investor Relations section of the Company’s website (ir.stran.com)
through March 29, 2024. A telephone replay of the call will be
available approximately one hour following the call, through April
12, 2023, 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: 47814.
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 promotional programs manager 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 Company’s
periodic reports which are filed with the Securities and Exchange
Commission. 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) 671-1021SWAG@crescendo-ir.com
Press Contact:Howie Turkenkopf
press@stran.com
BALANCE SHEETS |
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December
31, |
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December 31, |
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2022 |
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2021 |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
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$ |
15,253,756 |
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$ |
32,226,668 |
|
Short-Term Investments |
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9,779,355 |
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- |
|
Accounts Receivable, Net |
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14,442,626 |
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8,982,768 |
|
Deferred Income Taxes |
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|
841,000 |
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|
113,000 |
|
Inventory |
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|
6,867,564 |
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5,230,792 |
|
Prepaid Corporate Taxes |
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|
87,459 |
|
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|
87,459 |
|
Prepaid Expenses |
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|
386,884 |
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|
623,402 |
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Deposits |
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910,486 |
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|
299,411 |
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48,569,130 |
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47,563,500 |
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PROPERTY AND EQUIPMENT, NET: |
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1,000,090 |
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615,837 |
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OTHER ASSETS: |
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Intangible Assets - Customer Lists, Net |
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6,272,205 |
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1,929,294 |
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Right of Use Asset - Office Leases |
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784,683 |
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1,094,778 |
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7,056,888 |
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3,024,072 |
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$ |
56,626,108 |
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$ |
51,203,409 |
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LIABILITIES AND STOCKHOLDER'S EQUITY |
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CURRENT LIABILITIES: |
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Current Portion of Contingent Earn-Out Liabilities |
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$ |
1,809,874 |
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$ |
665,855 |
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Current Portion of Lease Liability |
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324,594 |
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310,095 |
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Accounts Payable and Accrued Expenses |
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4,051,657 |
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4,983,496 |
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Accrued Payroll and Related |
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608,589 |
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836,915 |
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Unearned Revenue |
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633,148 |
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721,608 |
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Rewards Program Liability |
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6,000,000 |
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43,878 |
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Sales Tax Payable |
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365,303 |
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106,824 |
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Note Payable - Wildman |
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162,358 |
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162,358 |
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13,955,523 |
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7,831,029 |
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LONG-TERM LIABILITIES: |
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Long-Term Contingent Earn-Out Liabilities |
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2,845,944 |
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976,078 |
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Long-Term Lease Liability |
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460,089 |
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784,683 |
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3,306,033 |
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1,760,761 |
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STOCKHOLDER'S EQUITY: |
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Common Stock, $.0001 Par Value; 300,000,000 Shares Authorized,
18,475,521 and 19,753,852 Shares Issued and Outstanding as of
December 31, 2022 and December 31, 2021, respectively |
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1,848 |
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1,976 |
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Additional Paid-In Capital |
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38,279,151 |
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39,747,649 |
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Retained Earnings |
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1,083,553 |
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1,861,994 |
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39,364,552 |
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41,611,619 |
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$ |
56,626,108 |
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$ |
51,203,409 |
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STATEMENTS OF EARNINGS (LOSS) AND RETAINED
EARNINGS |
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2022 AND
2021 |
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Three Months
EndedDecember 31,
2022 |
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Three Months EndedDecember
31, 2021 |
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Twelve Months EndedDecember 31,
2022 |
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Twelve Months EndedDecember 31,
2021 |
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(Unaudited) |
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(Unaudited) |
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SALES |
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$ |
18,310,908 |
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$ |
12,627,598 |
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$ |
58,953,467 |
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$ |
39,702,714 |
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COST OF SALES: |
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Purchases |
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11,548,916 |
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7,537,247 |
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37,391,939 |
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23,972,797 |
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Freight |
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1,418,024 |
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1,415,390 |
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4,991,854 |
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3,893,847 |
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12,966,940 |
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8,952,637 |
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42,383,793 |
|
|
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27,866,644 |
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GROSS PROFIT |
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5,343,968 |
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3,674,961 |
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16,569,674 |
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11,836,070 |
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OPERATING EXPENSES: |
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General and Administrative Expenses |
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4,922,595 |
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3,941,718 |
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18,075,369 |
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12,273,949 |
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|
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4,922,595 |
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3,941,718 |
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18,075,369 |
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12,273,949 |
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EARNINGS (LOSS) FROM OPERATIONS |
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421,373 |
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(266,757 |
) |
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(1,505,695 |
) |
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(437,879 |
) |
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OTHER INCOME AND (EXPENSE): |
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Other Income (Expense) |
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20,383 |
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(74,160 |
) |
|
|
112,507 |
|
|
|
702,280 |
|
Interest Income (Expense) |
|
|
103,803 |
|
|
|
(70,595 |
) |
|
|
94,680 |
|
|
|
(136,661 |
) |
Unrealized Gain (Loss) on Short-Term Investments |
|
|
51,994 |
|
|
|
- |
|
|
|
(179,120 |
) |
|
|
- |
|
|
|
|
176,180 |
|
|
|
(144,755 |
) |
|
|
28,067 |
|
|
|
565,619 |
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|
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EARNINGS (LOSS) BEFORE INCOME TAXES |
|
|
597,553 |
|
|
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(411,512 |
) |
|
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(1,477,628 |
) |
|
|
127,740 |
|
|
|
|
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|
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PROVISION FOR INCOME TAXES |
|
|
(305,415 |
) |
|
|
(380,957 |
) |
|
|
(699,187 |
) |
|
|
(107,500 |
) |
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NET EARNINGS (LOSS) |
|
|
902,968 |
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(30,555 |
) |
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|
(778,441 |
) |
|
|
235,240 |
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NET EARNINGS PER COMMON SHARE |
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Basic |
|
$ |
0.05 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.04 |
) |
|
$ |
0.02 |
|
Diluted |
|
$ |
0.03 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.04 |
) |
|
$ |
0.01 |
|
|
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WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING |
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|
|
|
|
|
|
Basic |
|
|
19,202,619 |
|
|
|
10,928,043 |
|
|
|
19,202,619 |
|
|
|
10,928,043 |
|
Diluted |
|
|
29,668,865 |
|
|
|
10,928,043 |
|
|
|
19,202,619 |
|
|
|
21,023,688 |
|
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