Stran & Company (asi/337725), a Top 40 promotional products distributorship, increased annual sales in 2021 but net income declined.

On March 28, the Quincy, MA-based firm released its first full-year financial report since listing as a publicly traded company in November 2021.

Andy Shape, Stran & Company

Stran said revenue for 2021 rose 5.2% compared to 2020 to $39.7 million.

“The increase was primarily due to higher spending from existing clients as well as business from new customers,” the company shared. “Additionally, we benefited from the acquisition of (distributorship) Wildman Imprints’ assets in September of 2020.”

Recurring organic sales were up $10.3 million, or 49.5%, to $31.2 million, the firm asserted. Those recurring sales exclude revenue from things like personal protective equipment (bigger in 2020 due to pandemic demand and unsustainable in the long run) and a massive program Stran did for the U.S. Census that ended in 2020.

Stran’s net income tallied $235,240 in 2021, down from about $1 million the year prior. The decrease in PPE business and the nonrecurrence of the Census job factored into the decline, as did increased expenses related to Stran’s initial public offering and higher freight expenses, the company said. The growth in recurring organic sales, along with business that came from the acquisition of Wildman Imprints, helped partially offset the decline in profitability.

Stran noted that gross profit increased 3.1% to $11.8 million, or 29.8% of sales, for the full year 2021, compared to $11.5 million, or 30.4% of revenue, for the same period last year. “The increase in gross profit was due to increased sales and reduced cost of purchases from improvements in sourcing capabilities and buying power, partially offset by an increase in freight costs,” the company shared.

While Stran at the end of the day was profitable, the company posted an operating loss of $438,000 for 2021. “The shift from operating profit in 2020 to operating loss in 2021 was due to an increase in operating expenses, which in turn was due to additional expenses related to the acquisition of the Wildman Imprints assets, the implementation of a new ERP system, the recently completed initial public offering and ongoing public company expenses and organic growth in our business,” Stran noted.

Andy Shape, CEO and president of Stran, said the company expects to achieve double-digit organic revenue growth in 2022. He said the year is already off to a good start.

Top 40 #promoproducts distributor Stran & Co. has completed the acquisition of a distributorship whose clients include beverage industry giants like Diageo, Molson Coors & Rémy Martin https://t.co/H6nUotEzyb@ASI_MBell @stranpromosol @asicentral

— Chris Ruvo (@ChrisR_ASI) February 2, 2022

“In January 2022 we signed a multi-year contract with a large nationally recognized healthcare company to provide incentive products and literature designed to help drive consumer health behaviors, which we expect will drive significant revenue with potential expansion opportunities,” said Shape. “This new customer illustrates our shift from largely transactional sales to program offerings with long-term recurring revenue streams.”

Beyond driving sales through connecting with new clients, Stran is also working to generate more business from existing customers. “We are especially encouraged by the macro trends, as employees return to the workplace and there are more in-person events,” Shape shared.

Stran’s 2021 financial numbers do not include sales from GAP Promotions (asi/199882), a distributorship that Stran acquired in February 2022. More acquisitions could be forthcoming.

“We remain focused on accretive acquisitions that would be highly synergistic with our existing operations,” said Shape. “We believe the (promo) market is ripe for consolidation, and our goal is to position Stran at the forefront of the industry.”

Shape said Stran concluded 2021 with more than $32 million in cash, approximately $40 million in working capital, and no long-term debt. “As a result,” he added, “we believe we are well capitalized to accelerate our growth strategy, including investments in new sales and marketing initiatives, while continuing our track record of profitability.”

Stran ranked 32^nd on Counselor’s most recent list of the 40 largest distributors in promo. The company reported to Counselor full-year revenue of $46.9 million for 2020, a figure that differs from what the company reported in its just-released financial report. Howie Turkenkopf, vice president of marketing, explained the difference: “The 2020 numbers in our public filing only include the fourth-quarter revenue from Wildman Imprints as opposed to what we reported to ASI which was their full-year revenue. In addition, there was other revenue in 2020 that did not come along with Stran as the new public company.”