Earnings call transcript: Stran & Co Q4 2024 sees revenue rise, stock soars

Stran & Co Inc (SWAG) reported its financial results for the fourth quarter of 2024, showing an 8.8% increase in annual revenue to $82.7 million. Despite a net loss of $4.1 million, the company’s stock surged by 20.9% in trading, reflecting investor confidence in its strategic initiatives and future growth prospects. The company has set ambitious goals for 2025, including targeting $100 million in annual revenue and resuming a $10 million share repurchase program.

Key Takeaways

• Stran & Co’s annual revenue increased by 8.8% year-over-year.
• The company reported a net loss of $4.1 million, up from a $400,000 loss in 2023.
• Stran & Co’s stock price increased by 20.9% following the earnings call.
• Strategic initiatives include expanding service offerings and targeting high-potential verticals.
• The company aims to achieve $100 million in revenue for 2025.

Company Performance

Stran & Co demonstrated robust revenue growth in 2024, with an 8.8% increase compared to the previous year. This growth was driven by strong performance in its core segments, particularly the Strand Segment, which generated $72.7 million in revenue. Despite a widening net loss, the company maintained a healthy cash position of $18.2 million and reported zero long-term debt, underscoring its financial resilience.

Financial Highlights

• Annual Revenue: $82.7 million (8.8% increase YoY)
• Gross Profit: $25.8 million (31.2% gross margin)
• Net Loss: $4.1 million (compared to $400,000 loss in 2023)
• Cash Position: $18.2 million with zero long-term debt

Outlook & Guidance

Looking ahead, Stran & Co has set a target of reaching $100 million in annual revenue. The company plans to accelerate growth across its segments and broaden its customer base in high-potential verticals such as hospitality, healthcare, infrastructure, and gaming. The resumption of a $10 million share repurchase program is also on the agenda, reflecting management’s confidence in the firm’s future.

Executive Commentary

CEO Andy Shape emphasized the strategic importance of 2025, stating, "We view 2025 as a pivotal year, one in which we will begin to fully realize the strategic investments made over the past eighteen months." He also highlighted the company’s resilience, noting, "Our diversified business, strong balance sheet and scalable infrastructure give us the resilience to thrive even in challenging conditions."

Risks and Challenges

• Inflationary pressures could impact cost structures and margins.
• Global trade disruptions and tariff-related costs pose potential challenges.
• The need to manage operational efficiencies amidst expanding service offerings.
• Competition in targeted high-potential verticals could intensify.
• Dependence on successful implementation of strategic initiatives to drive growth.

Q&A

During the earnings call, Bill Jordan from TSA Investments inquired about the company’s profitability goals. In response, management highlighted efforts to reduce audit-related expenses and focus on operational efficiencies, leveraging the NetSuite ERP implementation to drive automation and cost reduction.

Full transcript - Stran & Co Inc (SWAG) Q4 2024:

Conference Operator: morning, everyone, and welcome to the Stran and Company Fiscal Year twenty twenty four Earnings Conference Call. Listen only mode and the floor will be open for questions following the presentation. Please note this conference is being recorded. I will now turn the conference over to your host Alexandra Shilt. Alexandra, the floor is yours.

Alexandra Shilt, Investor Relations, Stran and Company: Thank you. Good morning and thank you for joining Strahan and Company’s year end twenty twenty four financial results and business update conference call. With us today are Andy Shape, Chief Executive Officer and David Browner, Chief Financial Officer. The company issued a press release yesterday, 04/14/2025, detailing its financial results for the year ended 12/31/2024. The release is also available on its website.

If you have any questions following today’s call or would like additional information, please contact Crescendo Communications at (212) 671-1020. Today’s remarks will include a review of financial and operational performance followed by a Q and A session. Please note that the company may make forward looking statements during the call that involve risks and uncertainties, many of which are outside of its control. We encourage you to review Strahan’s filings with the SEC for a full discussion of these risk factors. With that, I’ll now turn the call over to Andy Shape.

Please go ahead, Andy.

Andy Shape, Chief Executive Officer, Stran and Company: Thank you, Allie, and good morning, everyone. I’m extremely pleased to be back with you and resume our quarterly conference calls. I’d like to begin by discussing the critical event that shaped much of our internal focus in 2024, the comprehensive re audit of our historical financials. This process became necessary after the SEC barred our previous audit firm from working with public companies. While this disruption was entirely out of our control, we responded with transparency and urgency.

We partnered with Markham, which is now part of CBIZ, a top tier public accounting firm with deep expertise in public accounting audits. Together, we completed a detailed rigorous re audit process that extended across multiple years of financial statements and and included thorough internal control testing and documented documentation reviews. While the process temporarily diverted resources and paused certain growth initiatives, it ultimately reinforced the strength and reliability of our financial reporting infrastructure. Today, Stroud operates with upgraded compliance protocols, greater internal controls, and a more credible audit partner, enhancements that will serve as foundation for future growth and investor competence. I’ll go through our financial performance and strategic highlights.

Despite these internal demands, 2024 was a year of meaningful progress. We reported revenues of $82,700,000 which is an 8.8% year over year increase and gross profit of $25,800,000 achieving a 31.2% gross margin. These results underscore the strength of our business model and the dedication of our team. A highlight of the year was our acquisition of Gander Group Assets in August 2024. Gander is a highly respected loyalty incentive and merchandise provider in the gaming sector, a vertical we view as a rich with opportunity.

In just a few months post acquisition through the end of twenty twenty four, Gander contributed $9,900,000 in revenue and has become a key pillar of our newly established Stron Loyalty Solutions, also known as SLS segment. With Gander, we’re expecting our addressable market diversifying our customer base and gaining deeper penetration in experience driven industries. We’ve also begun to build cross selling bridges between Gander and legacy Strand accounts, creating synergies we expect to further develop in 2025 and help us drive towards our next milestone of $100,000,000 in annual revenue. From a profitability standpoint, Gander operates at somewhat lower gross margin profile, reflecting a different mix of product categories and pricing dynamics, but enhances our total revenue base and expands our addressable market. Most importantly, it validated our belief that targeted, well integrated acquisitions can accelerate both our top line and strategic momentum without compromising quality or culture.

In 2024, we also secured multiple 6 figure, multiyear contracts across sectors such as residential real estate, diagnostics, public transportation, and premium consumer products. These wins reflect both versatility of our platform and our reputation as a trusted partner, not just a vendor. We grew existing relationships with large enterprise clients across sectors, including automotive, infrastructure and energies. In many cases, our work has evolved beyond branded merchandise into digital store management, loyalty platforms and data driven campaign execution. This evolution speaks to the scalability of our solutions and the long term stickiness of our customer relationships.

One of our new partnerships is with the National Residential Housing Developer, a company that is expanding across multiple US markets and needed a scalable brand and merchandise solution for tenant engagement, internal onboarding, and community programming. We were able to deliver a centralized promotional platform that integrates seamlessly with our operations and align with their brand vision. Another standout win was with a molecular diagnostics company. This client was looking for a creative and compliant way to support patient outreach programs and provide engagement across the country. Through a combination of curated merchandise kits, fulfillment and real time reporting tools, we provided a turnkey solution that addressed both their marketing and regulatory needs.

And in the consumer product space, we began working with a premium recreational watercraft manufacturer that selected Strana’s branded merchandise partner. This client was drawn to our fulfillment capabilities, particularly for high end dealer focused merchandise programs that require customization and precision logistics. In total, these wins will represent millions of dollars of potential recurring revenue diversified across industries and geography. Shifting to technology advancements and operational enhancements, one of our most significant milestones in 2024 was the preparation of our NetSuite ERP, culminating with the successful launch of NetSuite in January 2025. The enterprise wide platform is a tremendous step as we look to replace legacy tools that will automate many processes and centralize our operations.

NetSuite is already delivering greater visibility, more automation, and accuracy across departments. It also has improved our ability to respond quickly to client needs, support higher volumes, and scale efficiently. It will be the cornerstone of our efforts to drive operational excellence in 2025. As we look towards the remainder of 2025, operating efficiency will be a major area of focus. With the Gander acquisition integrated, NetSuite Live, and compliance investments behind us, we’re now turning attention towards expense management, process streamlining, and margin expansion.

We believe this discipline will position Strong to convert more top line revenue into bottom line performance, improving profitability while maintaining a strong customer experience. For our strategic priorities for 2025, moving forward, our strategic roadmap is clear and actionable, built around multiple core principles. First, we want to accelerate growth across both Stron and SLS by executing on a robust enterprise sales pipeline. Second, we look to broaden our customer base at high potential verticals like hospitality, healthcare, infrastructure, and gaming. Third, we look to deepen existing client relationships by expanding our service portfolio to areas like loyalty programs, analytics, and branded customer experiences.

Fourth, leverage our technology stack, particularly NetSuite, to enhance operational efficiency and improve fulfillment performance. And fifth, operate optimize operating expenses across both segments while with a focus on sustainable margin accretive growth. Collectively, these priorities position us to execute with more precision, scalability, and client impact than ever. In terms of macroeconomic and forward outlooks, we recognize the broader macroeconomic environment remains complex. Ongoing inflationary pressures, global trade disruptions, and tariff related costs continue to create uncertainty across all industries.

However, we believe Stron is very well positioned to navigate these challenges. Our diversified client base, strong cash position, zero long term debt and scalable operating model provide us with flexibility and resilience. Most importantly, we remain committed to delivering value to our customers and long term returns to our shareholders. Regarding tariffs, the recent tariffs, Strana’s consistently demonstrated the agility, creativity and operational discipline needed to navigate an evolving global trade environment. We’ve been proactively preparing for potential tariff increases and supply chain disruption, and we’ve already done executing on those contingency plans.

These efforts have included expanding our domestic sourcing, diversifying manufacturing partners, tightening cost controls, and maintaining clear transparent communication with our customers. Our prior years did ensure continuity, value, and quality for our customers without compromising our profitability. Ultimately, our guiding principle remains the same, deliver high impact, high quality branded solutions in the most efficient and resilient way possible. I’d also like to briefly address the share of our the status of our share repurchase program. Due to trading restrictions related to the re audit of our historical financials, we were unable to execute any share repurchases during 2024.

That said, Strahan’s Board previously authorized a $10,000,000 share repurchase program and as of year end 2024, approximately $6,600,000 of that authorization remains available. With 2024 audit process now behind us and a more stable operating environment ahead, we intend to resume our buyback efforts in 2025. We view this as an important lever to enhance shareholder value and reflect our confidence in the company’s long term prospects. We view 2025 as a pivotal year, one in which we will begin to fully realize the strategic investments made over the past eighteen months. I’m confident that we’re turning the corner towards more efficient, scalable and profitable phase of growth.

With that, I’ll now turn the call over to our CFO, David Browner, walk through the financial results in more detail. David, please go ahead.

David Browner, Chief Financial Officer, Stran and Company: Thank you, Andy. Sales increased 8.8% to approximately $82,700,000 for the year ended 12/31/2024 from approximately $76,000,000 for the year ended 12/31/2023. Sales from the Strand segment decreased to approximately $72,700,000 for the year ended 12/31/2024 from approximately $76,000,000 for year ended 12/31/2023. Sales from the Strand Loyalty Solutions segment increased to approximately $9,900,000 from year ended 12/31/2024 from zero in the year ended 12/31/2023. The increase in the total sales was primarily due to the acquisition of the Gander Group assets in August of twenty twenty four.

For the Strand segment, the decrease in sales was primarily due to lower spending from new and existing clients. For the SLS segment, the increase in sales was due to the acquisition of the Gander Group assets in August of twenty twenty four. Gross profit increased 3.9% to approximately $25,800,000 or 31.2% of sales for the year ended 12/31/2024, from approximately $24,900,000 or 32.7% of sales for the year ended 12/31/2023. Gross profit of the Strand segment decreased to approximately $23,700,000 for the year ended 12/31/2024 from approximately $24,900,000 for the year ended 12/31/2023. The gross profit of the SLS segment increased to approximately 2,100,000 for the year ended 12/31/2024, from zero in the year ended 12/31/2023.

The increase in the dollar amount for the total gross profit was primarily due to the acquisition of the Gander Group assets in August 2024. For the Strand segment, the decrease in the dollar amount of the gross profit was due to the decrease in sales of approximately $3,300,000 which was primarily offset by a decrease in cost of sales of approximately 2,200,000.0 For the SLS segment, the increase in the dollar amount of gross profit was due to the acquisition of the Gander Group assets in August of twenty twenty four. The decrease in the total gross profit margin to 31.2% for the year ended 12/31/2024, compared to 32.7% for the year ended 12/31/2023, was primarily due to the acquisition of the Gander Group assets in August of twenty twenty four, which operates at a lower gross profit margin than the Strand segment. The gross profit margin for the Strand segment remains unchanged at 32.9% for the year ended December 2023. The gross profit margin for the SLS segment was 20.8% at year end 12/31/2024.

Operating expenses increased 17.6% to approximately $30,700,000 for the year ended 12/31/2024, from approximately $26,100,000 for the year ended 12/31/2023. Operating expenses for the Strand segment increased to approximately 27,600,000 for the year ended 12/31/2024, from approximately $26,100,000 for the year ended 12/31/2023. Operating expenses of the SLS segment increased to approximately $3,100,000 for year ended 12/31/2024, from zero for the year ended 12/31/2023. As a percentage of sales, operating expenses increased to 37.2% for the year ended 12/31/2024, from 34.4% for the year ended 12/31/2023. As a percentage of sales, operating expenses for the Strand segment increased to 37.9% for the year ended 12/31/2024 from 34.4% for the year ended 12/31/2023.

As a percentage of sales, operating expenses for the SLS segment were 31.4% for the year ended 12/31/2024. For the Strand segment, the increase in the dollar amount of operating expenses was primarily due to expenses related to Strand’s NetSuite enterprise resource planning system implementation, acquisition and integration of the Gander Group assets and legal and accounting expenses related to the re audit of historical financial statements. For the SLS segment, the increase in dollar amount of the operating expenses was due to the acquisition of the Gander Group assets in August of twenty twenty four. Net loss for the year ended 12/31/2024, was approximately $4,100,000 compared to approximately $400,000 for the year ended 12/31/2023. This change was primarily due to the increase in operating expenses, including extraordinary professional fees related to the re audit and successful completion of the acquisition of the Gander Group.

At 12/31/2024, the company had approximately $18,200,000 of cash, cash equivalents and investments and no long term debt. At this point, I’ll turn the call back over to Andy.

Andy Shape, Chief Executive Officer, Stran and Company: Thank you, David. Before we open up the call to questions, I want to take a moment to recap what we’ve covered today. We made significant strides over the past year, successfully completing a complex but essential re audit process that has strengthened our financial foundation and internal controls. We delivered solid full year results, including $82,700,000 in revenue and completed the strategic acquisition of Gander Group, which has already begun to contribute meaningfully to our growth. We also secured new long term client partnerships across diverse and high potential industries.

Importantly, we achieved this growth while maintaining a strong balance sheet, a healthy cash position, no long term debt, and a scalable operating model that positions us well for the future. As we look ahead, we’re focused on execution, growing our core business, scaling our new SLS segment, expanding into new markets and driving operating efficiencies. We believe 2025 will be a transformational year for Strong, a true inflection point as we shift from a period of foundational investment to one of strategic acceleration. Our team is energized, our platform is stronger than ever, and we are well positioned to lead in an evolving marketplace. While the broader macroeconomic environment remains uncertain with inflation, tariffs, global supply chain dynamics continue to present headwinds, we remain confident in our ability to adapt, deliver and grow.

Our diversified business, strong balance sheet and scalable infrastructure give us the resilience to thrive even in challenging conditions. You again for joining us today and for your continued interest in STRAN. With that, we’ll now open it up to up the call to questions. Operator?

Conference Operator: Thank you very much. We are now opening the floor for questions.

Bill Jordan, Analyst, TSA Investments: Questions.

Conference Operator: Thank you. Our first question is coming from Bill Jordan of TSA Investments. Bill, your line is live.

Bill Jordan, Analyst, TSA Investments: Thank you. Congratulations on getting through that re audit. I’m sure it was a major distraction for the company. Obviously, there are a lot of onetime expenses during the year. As you look ahead, can you just provide some light on, your goals for profitability this year coming forward?

Andy Shape, Chief Executive Officer, Stran and Company: Sure. Yes. So thank you. Yes. That was a heavy lift on our end, and I’m really proud of our team for, the resiliency that we put towards getting that re audit done.

It took a lot of focus, energy, time and resources to put towards that. But it was a necessary step to maintaining and preserving shareholder value in the public company that we have and the long term success. We did put a lot of energy on that. So in terms of our profitability efforts this year, first and foremost, fees associated with the audit itself will inherently go down because we don’t have to do a re audit of nearly three years. Instead, we’re in a cadence now.

Our new audit firm knows more about our business. We have outside consultants that understand our business and really have better process controls in place. So first and foremost, those fees will drop significantly both from a hard dollar and then from a soft dollar perspective. It will allow myself as CEO, David as the CFO and our other executives to concentrate more on the operating business than on the reaudit. So, that allows us to go manage, our our OpEx, make adjustments where necessary, as well as concentrate more on our revenue growth and profitability growth by driving margins, you know, targeting additional customers and really looking towards growing the business.

So, you know, those are those are some of the things that we’re able to do for profitability. And when we look at our goals this year, our goals are to continue to have revenue growth while driving revenue and creating operational efficiencies. And the final aspect is the final implementation of NetSuite. So it’s taken us years to implement NetSuite because we have combined over hundreds of years of with all the acquisitions together of business working separately. Now that we have NetSuite as our central hub for all that data to go into, it allows us to create efficiencies, create automation, and really reduce some of the manual work that goes into some of the legacy business that we have that now we’re able to automate and really, create more efficiencies driven that.

So that’s the first step was having NetSuite as our core base system to build off of, and we’re really excited about the the the progress that we’ve made and the potential future, efficiencies that we can gain for that. So hopefully, that answers your question about, you know, how we’re going to really concentrate on reducing OpEx while continuing to maintain growth. And that’s the combination that we’re looking for is we continue to grow the company, increase our margin our our gross margin, and increase our net margin by reducing operational expenses.

Bill Jordan, Analyst, TSA Investments: Thank you very much. That was that was great. That cleared it up for me. Thank you. Yep.

Conference Operator: Thank you very much. Not seeing anyone else come into queue just at the moment. I can hand back over to the management team for any further comments.

Andy Shape, Chief Executive Officer, Stran and Company: Great. Well, thank you everybody for joining us. I’m glad to be back. It’s been, over a year since we’ve had a a earnings call. It’s exciting to be back, explaining what what Strand is doing and and and giving everyone visibility what we’re doing.

Thank you for your support of Stron. We’re very excited about the rest of 2025, being able to get back to concentrating on our business, concentrating on growth, concentrating on reducing our operational expenses and gain operational efficiencies, to really create long term shareholder value. This is a business that’s been in business for thirty years. If we look at the macroeconomic trends that are happening right now, there’s some uncertainty, but that’s where we thrive. We have thrived in the past and we’re looking and we’re planning on doing that moving forward where we’re well positioned with a strong team, a leadership team and a management team that knows how to, really continue to grow business and capture market share, when things may be uncertain, because we’re not uncertain about the future of STRAN.

There may be some, you know, very short term uncertainty about the macroeconomic trends, but that doesn’t deter us from the long term value that we know Stron has and we’re confident. So we’re very excited about 2025, being able to get back to work, on what we do best. And, thank you for everyone supporting us and, look forward to giving more reports in the future. Thank you for your time, and and talk to you soon.

Conference Operator: Thank you very much. This does conclude today’s conference. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

Andy Shape, Chief Executive Officer, Stran and Company: Thank you.

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