Top 40 distributor Stran & Company (asi/337725) says unaudited financial results show the firm increased sales approximately 17% on an annual basis in the first quarter of 2024.

The preliminary word – a projection – on the publicly traded promotional products distributor’s Q1 performance comes following a financial reporting delay that resulted from the firm’s former auditor running afoul of the Securities and Exchange Commission (SEC).

Andy Shape, Stran & Company

Stran has a new auditor, Marcum LLP, but official audited results aren’t ready yet. The Quincy, MA-based firm said it’s working with Marcum to complete the full-picture financial report, but didn’t give an exact timeframe on when the numbers will be available.

Stran didn’t provide a precise revenue number for Q1 2024 in its preliminary results update. In Q1 2023, Stran generated about $15.8 million in revenue. A 17% increase on that would put this year’s first-quarter topline sales in the range of $18.5 million.

CEO Andy Shape, a member of Counselor’s Power 50 list of promo’s most influential people, said that adding new clients and increasing business with existing customers helped propel the revenue rise.

“We are pleased to report we project strong growth,” said Shape, Counselor’s 2023 Person of the Year. “We expect these results despite a challenging market for our industry, which reflects our strong reputation and increasing market share.” ASI Research shows that, industrywide, distributors’ sales collectively declined nearly 1% year over year in Q1.

An auditor of publicly traded companies ran afoul of the SEC for alleged fraud, and that's causing headaches for the company's unfortunate clients (who did no wrong), including a Top 40 #promoproducts firm. https://t.co/Uemm8Jf2zt

— Chris Ruvo (@ChrisR_ASI) May 15, 2024

Stran said preliminary results indicate that it increased gross margin by 100 basis points. Cash, cash equivalents and investments are expected to have been $20.2 million as of March 31 this year, up from $18.5 million at the end of 2023. Stran did not issue word on per-share earnings/net income.

Stran had been slated to report the fully audited quarterly results on May 15. However, that plan got torpedoed due to an early May-announced $14 million settlement between the SEC and now-defunct accounting firm BF Borgers and its owner – the auditor Stran had been using to review its financials.

The SEC said BF Borgers engaged in “deliberate and systemic failures” to comply with standards of the Public Company Accounting Oversight Board (PCAOB) in audits and reviews incorporated in 1,500 SEC filings between January 2021 and June 2023.

The BF Borgers downfall meant that companies that had relied on the firm for audits needed to have new audits performed. Trump Media and Technology Group, the owner of social networking site Truth Social, was among BF Borgers’ clients. Trump Media, which fired the auditor following the SEC charges, delayed its quarterly filing, too.

Stran and other BF Borgers clients were not accused of wrongdoing.

A quarterly record in sales in Q4 of 2023 helped spur Stran to its best-ever annual sales total last year. Based on reported 2022 North American promotional product revenue of $64.3 million, Stran & Co. ranked 34^th on Counselor’s most recent list of the largest distributors in the industry. The new rankings are due out this summer.