STRN - Earnings call transcript Q1 2022

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. And welcome to the Stran & Company First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. to Investor floor Relations. like host, to now Waldman, David would turn over the the I Please ahead. go

David Waldman

Good morning, call. everyone. & Company's And thank you first financial for quarter results conference XXXX joining Stran

Andy the On with is financial Chris Chief XX, release Officer. the Financial results XXXX company's also press Executive company a Friday, us are which Rollins, issued call The website. today, Officer Shape, today containing and on Chief posted May quarter first

any the The for If about the additional now you like questions XX, or Crescendo information XXX-XXX-XXXX. operational after the company, at call, provide ended March have company's XXXX. contact please results reviewing months financial and the would any three will prepared Communications remarks management

during timing call, statements its number Before future make and These forward-looking financial this and business may and success. we ability involve assumptions on started, everyone statements conference plan, would get we to regarding we of like impact uncertainties based a Stran's to revenues and implement competitive are With turn risks expected that are of to Officer. of respect future of Shape, all involving judgments to decisions, business will I go Stran's future Please which over Andy. and conditions and or beyond control. are accurately to ahead, and market which predict the impossible many Executive call that, now difficult with Andy economic, Chief remind

Andy Shape

the quarter. else today, we as first significant everyone made joining thank for you, you during And Thank David. discuss our progress

important, period an $XX G.A.P. as have for a organic cash and million revenue solid to of XX, that increased balance debt compared highlight same last excluding And first year. XX.X% to we like with our a more maintained March XXXX, revenue long-term XXXX. Promotions $XX.X in reserves I’d achieved increase XXXX. sheet of Even the XX.X% QX, over acquisition, the First, record of quarter of we million when the

is already market. in direct for we organizations, opportunistic, transformative a the marketing This aggressive proving leading is on XXXX we year is while gaining recent example complex result the contract our to as significant Stran, address $X growth with of to to the this million. yet traction revenue acquisition The their One executing execute on over is a value our be multiyear strategies. Our of as ability initial wins with well expected secured national was contract needs. selection as healthcare ability based contract large to be are company.

However, we additional can we believe from well. secure this as business organization

demonstrate look forward capabilities a them also to in study case We to as our healthcare sector. highlighting the

marketing promotional already to power this, increase companies tool drive healthy They now brand are a products as as While, of such behaviors. awareness. products consumer the utilize promotional to realizing

our to is result, similar the in customer a goal months engagements As add ahead.

as for creating as a much warehousing, platform displace, programs point-of-sale, on-demand, processing, projects kitting extension print act assembly distribution We the incentive you loyalty services, order customer and a services, fulfilment more. custom e-commerce capabilities, of these and and customizable an winning providing our by comprehensive compelling customer proposition as result value and truly offering. of products, are We see our branded of sourcing can and merchandizing flexible a services,

these note to seeing are in few meet products numbers revenues quarter, second over secured $XX.X build very of as to are months. strong in these with to Heading reflected to are the million the It -- designed clients. reiterate All the total are needs year-to-date. of over our of we important is delivered accustomed bookings each next unique orders that

year. the for However, this trend of the balance well bodes

track $X now over sales companies, leading we a our companies opportunities and members. is into roaster XXXX. with an within have inception. the of markets. and growth, as record we very that recently, invested beverage these been to our and perfect this top-tier new expands The own its appointed acquisition full-service identifying G.A.P. as to well own acquired our impressive believe industry Promotions, track Most consumer represent reach we generated we goods addition G.A.P. To pursue sales as a acquiring with as goods our have noting G.A.P. attractive operations. In well that organic and record make since clients. relationships proven profitable end-to-end packaged multiples, existing management in combination worth sizable our marketing will of always beverage synergistic in consumer be at support continue packaged It’s also We M&A of that which This integrating adds growth, million and sectors, promotional key XXXX marriage. operations. quickly heavily agency a G.A.P.’s solutions team highly continued

joined organization. with Johnshoy more over the Officer. discussed, not effective we recently executing market previously marketing sales as Sheila with of joining, time She team be track executive our really Operating record, as as our short her made have to aggressively We a impressive experience the team XX has developing as since strategies, an excited Chief share. years In As work and considerable of well part expand could building impact growth as teams. brings to Sheila

planned a the that not we support have G.A.P. costs as other illustrated and members, growth. Also, expenses management industry of percentage to Overall, we Company year built the in the integration to our our operating we a bear products business model. awareness expenses last increase related myself results participating been expenses acquisition scalable the first team as investor best of as is Additionally, and decrease do including to in by had believe public and This and include revenue. actively conferences, our highly quarter accelerated Stran mind well solutions. for fixed in

we only potentials. this revenue growth, maintain we to our profitability, record earning but as not our track of continue company ahead expect Looking tremendous believe has we

maintained the have in no solid $XX ended balance We reserves a and long-term with We cash million quarter sheet. debt.

acquisitions strategies. organic and result, well and growth As we execute are a to fund internally capitalized both

raise share frustration with have We levels. investors our no our numerous that has the we're share alone in say small fact anywhere given impacted trading price with terms, of microcap disproportionately uncertain the capital We're to near me companies. -- impacted the Let current no market at plans which companies we the by this cash. market, sell-off now cap and below not the in anywhere

the for we create and volatile. in our we in for Nonetheless, buyback we are results are for as plan put this However, the additional share themselves shareholders, speak have as a this believe opportunity so long an in game. place we value while markets to see

utilizing blackout giving will we XX-K shares the plan the noting to management the and that and have we of reason buyback sole extended have an But also for opportunistically in back outside can timing It buy the is of will also not consider We the period the started market. the blackout shares. the board been worth XX-Q.

wrap clear market industry is up, leader. promotional market and to yet the an valued highly enormous fragmented billion no So over products $XX is and

over the and broader we of addition, believe within loyalty strong track acquisitions, accretive turn Stran can program, expanding are a our point, Officer packaging within billion Financial this ahead, $XXX Chris. become our to incentive to player tradeshow Rollins on organic and record In printing product we go major growth Chris Based markets. our Chief this financials. over Please the go At I'd to call industry. like

Chris Rollins

to period March months customers. as existing the was XXXX for in Revenue primarily was The due spending from compared well the clients $X.X higher increase million million $XX.X XX, XXXX. to as ended three business Andy. from you, same Thank for new

XX.X% period profit being These not Additionally, increase months XX, purchasing due gross or of partially lack in last fully by Promotions G.A.P. or XXXX. still year. sales an and the for The cost. sales ended of increased offset in reopened increase million, profit the $X.X assets to the in-person was from we same partially benefited a for million, to of events acquisition of increased business were in XX.X% the three $X.X in as XXXX, result Gross the revenue January pandemic. increases of a to COVID-XX XX.X% sales March offset compared by

in client, Additionally, margins contract, the our also lower presence healthcare size the to us expand the our market. of healthcare foothold we an sheer it important but had provides given to slightly new due

to approximately expenses factors increase We ongoing operating the XXXX, comes $XX was million, cash of for margins. three the the expenses to freight loss $XX the March was deposit reserves period and implementation and Promo of On offset the to XX, of revenue expenses was due our increase compared related quarter. But was higher cash same no even It's this $XX as a increase to to quarter asset G.A.P. ERP sales. revenue, and noting Operating XXXX XXXX the was with decrease year, G.A.P. the long-term the in XXXX primarily expenses primarily which by equivalents Net system basis were loss three acquisition also of to in higher the platform to million a and in organic for were we loss year. months over XX.X% customer related and a the points ended from backing reoccurring company integration general Operating period million Promo expenses, worth the and end the business. million the the due and $XXX,XXX sheet. this $XXX,XXX first balance ongoing of new $XXX,XXX for offset the additional period out G.A.P. $XX decrease from of was last of for that company partially our Oracle's which net cash sales percentage an administrative year. growth had $XXX,XXX, an assets, of a of Promo expenses last NetSuite organic to had XX, debt. purchases. January cost the higher our carefully March our the the of due purchase public public had $XX as, These This the from year, a loss lower ended XX, million, at months same in approximately of manage This section of the assets, March liability related last being approximately for to a the XX.X% expenses. of acquisition compared compared of XXX we in continue to same

Given future. the point, share a this we our the you previously position program of to in near call repurchase expect strength utilize be turn a as $XX to over we Andy I'll of to Andy. mentioned, the announced sheet, to this At back in balance million. And up

Andy Shape

up, Great, growth sheet all have while strategies organic thank you, To acquisitions. of a synergistic pursue actively to to execute capitalized wrap continually and on balance strong we our Chris. well

open to you extremely We we providing to are At thank are of the all the would forward I'd further to about well unfold. up take advantage like And the joining to for us of this XXXX. look of excited Operator? developments the we updates opportunities call like in point front questions. for call positioned to outlook today. as

Operator

Certainly. question. is The questions. now Instructions] Reilly is for first [Operator with EF Your Hutton. post open floor question Edward from coming your Please

line Your is live.

Edward Reilly

could for to I and to increased taking wondering guys. pass speak was my Thanks Hey, if your costs question. inflationary ability to customers. your you on pressures

Andy Shape

Great Eddie. question. Thanks,

Typically, the is. written the So we contracts we model with that as all them. business is one of products our benefits out of our price are reorder that

And customers, three we based ideal have buy to when turn So year. inventory $X.X times for. situations inventory But we on we that our per sell we price over bought in typically, we that million now. for that the inventory four through inventory right

freight other before costs back we any to it prices we've impacted But So our as through and start increases usually as has increase, seen. inbound prices that increase to typically what reorder, too really go to price customers much. we we we or relative increase costs, or inflation see any sell

as them, need us we to typically are as price cover and of lot protect a increases, to within increases they order only just does typically if XX our inflationary, valid living increase from or we quote transaction our well well for customers, as as XX that regular orders cost So for to as quotes of days, do identifying our we days.

typically and they once we is the place -- purchased usually goods that we fixed. an So, order,

market the not of So, protect where those us prices. long a for have things we does retail from period model it time adjust and can in a

that. flexible very with we're So

Edward Reilly

liability Got it. gained? do revenue, for you can of the a I healthcare was guys just have you kind the this customer more of wondering anything the Is does program unpack me. it deferred that customer with and me to little bit if for deposit

Andy Shape

rewards a program is completely This running we consumers. separate. this send for this use this need and a been those is a customer But we've program that to No, we cards gift that loyalty -- money is fund cards. that to to out

don't $XX and aside year, deposit we're to $XX anywhere that make from is the revenue gift obviously earmark funds. historically but the set cards grow. per We only that that we processing as offset. the continuing funding. revenue, to give count then they of for they million us And transactions So we directly fees that Typically as million that managing for just and is count the that that but service we fund program those

So aside account It's they anywhere directly million cards in us use set a cash gift that we XX from then typically card gift to then those fund we funding. that send $XX funding for those to cards. million

make So shows on -- offsetting note be as to although cash, to we liability it's up that don't sheet rated want ours. it's directly it that misleading it balance since we'd the like it's that

Chris Rollins

and zoom up they out down up the and cash down together -- same. amount, and up go at account the and down liability, They of to at go same

Edward Reilly

makes then ERP expenses, so the are relating a sense. on operating can maybe that have operating it. expenses? you more we the just Yep, and acquisition picture in do to the of got normalized And costs paint to quarter Yep, costs, happen upgrade better

Andy Shape

Well, anything that's between first D&O $XXX,XXX IR, public, we quarter. legal, just compliance, look approximately expenses to the that the at public are being if related insurance, accounting

Some PIPE. of kind was of a of a the the expenses going insurance onetime opposite. as of one that are those that result the But

of the terms -- In

Chris Rollins

add the on for think the I in ERP, The for -- consulting just month $XX,XXX fees of quarter.

Andy Shape

Yes.

Chris Rollins

ERP. the For

Andy Shape

think, the stock-based, out acquisition was $XX,XXX then was compensation for there and I in some to Yeah, then in stock-based that, option, -- then the also, And there and of stock $XX,XXX related of some compensation. ERP.

Chris Rollins

That's right.

Edward Reilly

And could you looks then that got on you. on Got comment just acquisition Okay, you. the pipeline, how currently?

Andy Shape

Sure.

all actively So we're pursuing sorts of of, targets. acquisition

we to things don't One impatient. want the be of

we're who of we being to so And do with. really want deal selective a

we've someone out there's good where want capitalized don't very So a their and buy customers they that want And of opportunities because their And revenue, want had that chance to a the out already meet synergistic have their and overpay. want make with G.A.P. not also properties. was to to we buy that great opportunity, was really expand go and We sure example customers. we go on don't to revenue. with relationship. we to just large proper

to Is anything of that's being So And rush don't are we're dot to sure just that or competitors. we looking we're selective. of actively to more competitors cross Like when that don't doing We we're into We're our who comes things the dozens knowledge, to though, partners. more say said, in public talking want them. our to it. make for and are dozens right it we space. Ts have I We customer actively we obviously, want but talking to

Edward Reilly

to are blackout then repurchase that that last them repurchase period regard share me, utilize the Speakers]. over Cool. one And the in for for to [Multiple program. the just Is today, able effectively to you

Andy Shape

not that. is. But sure relying few counsel our I I'm for days. on think think people what think exactly we're week, I I a next it's -- it

I we our that. to But earliest plan market think the execute that. have for is that maybe till Tuesday another is I we is in go think could the

Edward Reilly

Thanks, All And guys. right, congrats. excellent.

Andy Shape

Thank you. Eddie. Thanks,

Operator

Your next from Please question. question [ph]. Marquese is pose Anthony coming your

Your live. line is

Unidentified Analyst

feel first comfortable comfortable Hi, else? I even I feel giving point question. At had That's late, on what listened you to will At yearly will I apologize. questions? point what guidance? two come you everything giving to but guidance, my Q&A

Chris Rollins

For forecasted revenue.

Unidentified Analyst

We be Yeah. careful were We to new we just careful, being want forward-looking about statements. to fairly since want be listed.

year's getting million, we under $X -- we acquired million we some of then and we announced we if day-by-day. announced of we're $XX announcements So then at taking that made looking look the we're G.A.P. we last and But, just add revenue that at

making three to together, If prove of you that'll rather pretty doing. proving we're rather and than a those us combine idea the it. give on forward-looking to want But we're going them really saying what we're rely it statements you good our than of going

want little of just we also underneath very before. So right also serious we're -- bit growth remember, in we're in mode And get us now. to a

at aggressively So very staff. at really we're we're quickly adding can looking looking change aggressively acquisitions, because, things new

statements things in change far make And very So those want we don't too advance. could quickly. to

Unidentified Analyst

far you’re I I you others? trading in I sector, you. think as value, relative company as there least growing at of? coverage, only can in where comps Right. any can that think the covers company research Are very public can given public least see, think at that lack of company this comps any one or of rapidly, you Are to there versus terms point you're

Andy Shape

few would I different a there's public comps. Yeah. say

London sure for a they’re not it's competitor, it's. the exchange. I similar but Imprints, they're not think ticker, direct And one, first on The I'm the very

Unidentified Analyst

Right.

Andy Shape

They They historically, company, one, comp, London really we us. that's a then do revenue Superior in do. have Imprints. Group. only they million There's one it's have revenue, choose. I another around BAMKO, we in about there's with or what Pebble think And they million the For it's competes -- XX% $XXX Group also division a directly they're And closest about of did called on one but of the that is for $XXX called accounts the Companies, that's their but uniform revenue.

The it's could like more is comp other Cintas well. uniform, But uniform-driven. actually be considered a Cintas. a as rest a

Superior really are, Group three we ones are Pebble, for main that look Companies. the of those Imprints So at and

Unidentified Analyst

for opportunity whether your get deals, sense the months just valuations by Okay. in And interest the economic Are better seeing acquisition? to this, has several last for on of volatility, potential affected your created question recent in the the in you markets, given I I'm going seeing in you a terms front? have rates and volatility are acquisitions deals? is final what's more, mind trying see this you more

Andy Shape

it honesty. patient I being people not because quite, have don't it Not especially who why yet. may little think a to has about That's we're people struggling, be yet bit is, feel started quite

to raising we run working to start based find on just business start to we rates capital, harder finding their up, as or see interest do find to are much As we people as capital. to struggling go execute,

more I for us. run. isn't for open the think harder it's things opportunistic them to because up that'll Not because just company strong,

growing, enough companies are waiting recognized find when and that a looking we But to hard want or like a But that So having that just or some bottom for we up, our we're us, time to so growing patiently happen. we Not needs, had keeping to that we to when people up growing think want time we but And, I those be at, to we risk. work are capital similar strong we're yet. take don't grew opportunistic do being even feeders, faster. fast that don't were really we with it made working people were hard was keeping difficult. it and hard like have

look So right in feel we some months, people we up next But it will really are now. to few starting finding open that are further. the even

Unidentified Analyst

you thank very much. Okay,

Andy Shape

Because this more. really -- additional year of yeah, up started, people beginning spending was thing the opening one is

everyone big a So seen increase, a see everyone pickup. industry to started I right think the is now

So economy I damper a think everyone then, everything maybe was the very optimistic. that. putting and events started world And and on

those up think, So opportunities we will even more. see I that open

Unidentified Analyst

Got it.

very you Okay. much. Thank Great quarter.

Andy Shape

Thank you.

Chris Rollins

Thanks.

Operator

from follow-up a e pose have Hutton, at Please EF coming Ed question. question your Reilly We

is line Your live.

Edward Reilly

sorry. guys, Hey,

Just for one me. more

making the of that You positions hiring. majority kind what you're are mentioned I adding wondering of of up staff. types was that aggressively new

Andy Shape

the six few Chief hired a We past there's CTO, Chief a So We've different months. Chief Operating were a of Officer, new hired. a We hired hired in Staff. new Officer. things Technology that

a in SEO, provider, grow marketing, Specialist, cover of on them. President up Vice takes and our that new media new and charge as of a We accounts as service also in client some executing that's and sales to head of Services hired content sales Marketing Sales people digital additional well Client social people help

to So, that significant handle looking growth. infrastructure we're is there's One at. out twofold building our our

in is what going to times $XX to continue we to us that. get As XX us grow, say million got

So we recognize that.

additional So handle we our that customers and it on. build can so need bring to we infrastructure sales additional

development and business that, In help sales, can pay put addition resources those. that and those hiring new for to work marketing folks to we're

two at them doing one looking really that them one doing not we're So them simultaneously. simultaneous not or in of after but sections, doing

and generate to us So new we're adding on that on business backend. more can execute business people more that the people help

are within technology well as our people those examples, team. hired we've some So as some few people that a additional

Edward Reilly

Right. you. Thank

Operator

coming with Forge [Operator Helen Instructions] question. next Please Capital your from pose question Your is [ph]. Litzak

Your is line live.

Unidentified Analyst

are space? on you Congratulations the market? in beverage to since within ask this you customers seeing get the wanted completion quarter. traction additional how I Promo, strong will And of the additional G.A.P.

Andy Shape

massive is the you. a Yeah, opportunity. Thank space beverage

the you about you restaurant, where you a think can all into buy anywhere If you bar store a a merchandise over see if package go or alcohol, or place.

So buy always bulletproof even alcohol people and the tough. economy the it's to when to to is fairly economy, seem continue

So that's opportunity. a tremendous

that are only brands, is only experience they also it us resources and base, really space and applying some fantastic us as together. has and customers not also buying attracting to new as So that but helped G.A.P. within G.A.P. not restaurants’ not well -- fantastic as customer base, have some G.A.P.’s we for that their some expanding introduced use clients of to only some customer

beverage and more some have started with of trying organizations. gone from those we've out combined, visited and sales already G.A.P.’s more as and those So -- opportunities I new are may customers them to mentioned, really great. we've already opportunities And get finding

that's huge So opportunity. a

expanding We current and tools have through marketing space business, direct to in a since current the expand on beverage with as looking space. beverage we concentrates G.A.P.’s as within well as expanding build division clients extensive well. whole sales, customers acquiring that of our We're list have that an that continue new them to and that

us just is G.A.P. even really that great further. help So it's a expand market and

Unidentified Analyst

them That's they great. their look of displays, some saw I really great. really, -- Yeah,

So thank you for that.

Andy Shape

you. Thank

Operator

Please your from is coming question. question [Indiscernible]. next pose Your Maya

Your live. line is

Unidentified Analyst

my taking question. for you Thank

of you follow buy aim wondering I aim are you disconnect how how can one you the Eagle But the daily enlighten us the was XX% buyback? how price. you Andy, with with -- [ph]. you the on there's reiterate aggressive to Given One how know aggressive if share to intending guys I have volume. be being you regulations, to Thanks.

Andy Shape

Sure.

So XXb-XX know to of mentioned, I what exactly think is be there us to only do within some restricts like share But today. market. you count restrictions -- the restricted so is we can do. we as I able to -- don't much the what the are the And

So based board I conditions. in go did $XX Directors probably capital our of on to authorized aggressive -- to go think shares. authorize market up a to repurchase little do million that's

opens everything included are shortly. be We very and at and we'll that to we so all looking what that. looking we will and up just So soon to to purchase go as share that's million But put future that $XX coming that we We're -- can be do start near shares insider be based the some do window also fairly executing go we price been aggressive the use ready up to compliance in myself but get think not flexible buys, -- lined as on will the offer authorized. did on I does.

blackout But, the we XX that. So is and to go an between we as the are have we open to do period well. when now closed period window mid-June looking is into say blackout then and have quarter-end, days do before

want why accelerate to this public we the did growth that, we and of capital, we the recognizing money the reason did are why also why raise went we reason and do the We the business. reason pipe was we because raise

to and our it's a buy to limit aware using want stock, we do true we capital capital our leader do because also a this, we be our price us. become if don't want limit good a buyback the a of all to by use of leader. that to we ourselves just shares, we to So reasons why that, within do all player to this to didn't may And back that industry, want

conscious to balance. want that that nice find we're of So and

Unidentified Analyst

us guys' guys Do it? like Or you of be plan expect can buying to period action your Absolutely. starts to blackout until enlighten I And how a appreciate that. occurrence with daily you -- again?

Andy Shape

that We're not -- executed see too we have We want yet. it sure to not how yet.

see to then almost or So depending how on a making of we execute are week those we want we're basis. how the on daily And by play yeah, on that day-by-day decisions week to we'll But it planning volume. goes. going on it

Unidentified Analyst

Thank you. great Congrats on a quarter.

Andy Shape

Thanks Maya.

Operator

to There over this to questions any queue now closing management remarks. to further be the would in no like appear for floor back turn I at time.

Andy Shape

everybody, for you, joining. Thank

are everyone us us providing the ourselves. support. to and future. in proud with industry. promotional Stran, recognizes that And about XXXX to quarter have our hope thank into you over about in really to working us. first the everyone a listening in more We revenue look Thank for create more value. this industry. something and growth. looking story I the past everyone believe months. met behind Learning to with believing you forward forward and We're company few and future really We're We you our such within special making shareholder our grow push company, to to insight the of products hard we're Thank for who's this

So thank you your for time today.

Operator

conference and This ladies gentlemen. today's does you, conclude Thank call.

time. have a And Thank your day. this at for you your participation. phone may You lines wonderful disconnect

Stran & Company (SWAG) 18 May 222022 Q1 Earnings call transcript