November 14, 2022
Stran’s Sales Up 50% in 2022, But Firm Experienced Net Loss
The publicly traded Top 40 distributor recorded sales of more than $40 million through the first nine months of the year.
Stran & Company’s (asi/337725) sales are soaring, but profitability continues to elude the publicly traded Top 40 promotional products distributor.
The Boston-area firm announced Nov. 14 that its total sales for the first nine months of 2022 were up 50% year over year to $40.64 million. Third-quarter performance, also just revealed, helped power that gain, with quarterly revenue rising 24% compared to the prior year’s Q3 for a tally of nearly $13.6 million.
Andy Shape, Stran & Company
Still, Stran recorded a loss in the third quarter of 2022 and over the course of the year’s initial nine months. For the quarter, loss was just over $688,000, or -$0.03 per basic share. For the year through September, Stran’s loss was nearly $1.7 million, or -$0.09 per basic share.
Stran explained that the after-tax losses are primarily a result of lead-generation initiatives; integration expenses related to the acquisitions of distributors GAP Promotions (asi/199882) and Trend Brand Solutions (asi/346428); ongoing expenses related to becoming a public company (which happened in November 2021); and higher cost of purchases. Stran also reported sales gains but losses after interest, taxes, depreciation and amortization in the first and second quarters of 2022.
On the bright side, Stran has posted positive gross profit gains. Gross profit for the third quarter rose 14% year over year to about $4.2 million. For the nine-month period, it increased 37% to $11.2 million.
CEO Andy Shape, who made his debut on Counselor’s Power 50 list of the industry’s most influential people in 2022, is confident that the firm’s sales acceleration will continue and that net profitability will soon follow.
“We have effectively implemented a growth strategy that we believe is allowing us to reach new records, operationally, financially and geographically,” Shape said.
He’s particularly excited about growth prospects presented by the acquisition of Trend Brand Solutions, as well as other potential future acquisitions.
“Trend brings an established footprint in Houston, TX, which is home to two dozen Fortune 500 companies, and we believe provides opportunities to further penetrate the southern U.S. market,” Shape said. “In addition to our continued organic growth, M&A continues to be a fundamental pillar of our strategy to accelerate growth, further establish our leadership position within this highly fragmented industry, and benefit from economies of scale.”
Based on reported 2021 North American promo product revenue of $47.3 million, Stran & Company ranked 34th on Counselor’s most recent list of the largest distributors in the industry.