Stran & Company (asi/337725), a Top 40 promotional products distributor, says that it generated its highest-ever quarterly sales in the fourth quarter of 2022 and returned to profitability during the three-month span that concluded Dec. 31.

The publicly traded Quincy, MA-headquartered company also produced a double-digit annual revenue increase for 2022, though for the year the firm experienced a loss of $788,441, or -$0.04 per share, amid a number of factors that offset the strong sales.  

Andy Shape, Stran & Company

On the topline, Stran reported in a public filing that its total revenue for 2022 rose 48.5% year over year to $58.95 million. Speaking to ASI Media, CEO Andy Shape noted that the figure in the public filing includes only the sales of three distributorships that Stran acquired after the acquisitions closed last year. If those companies’ full-year pre-and-post-acquisition sales are factored in, Stran’s sales were $64.25 million in 2022, the company said.

A somewhat similar reporting difference dynamic was in play for 2021, which accounts for the $39.7 million in Stran’s earnings statement for full-year 2021 sales differing from the $47.3 million in full-year 2021 sales it reported for consideration in last year’s Counselor annual Top 40 distributor rankings.

Shape explained to ASI Media: “In 2021, we also had a big portion of our Wildman Imprints acquisition that happened before we closed and went public. We also had a separate operating company under Stran Loyalty Group that was not counted in our filings for most of 2021. Those are all billed under Stran now. But, because of SEC rules, we could not count those in our filings until after we went public and started billing under Stran.”

The $64.25 million tally for 2022 represents a 35% revenue increase compared to the Top 40-reported $47.3 million.

Acquisitions, Higher Sales, New Customers

One driver of growth for Stran in 2022 was acquisitions. The distributorship closed on Premier Business Services in December 2022. It also purchased Gloucester, MA-based GAP Promotions (asi/199882) in the first quarter of 2022 and Houston-area Trend Brand Solutions (asi/346428) in the third quarter.

“With these acquisitions, we have significantly expanded our operational capacity, entered important geographies, and brought on talented employees,” Shape, a member of Counselor’s Power 50 list of the promotional products industry’s most influential people, said in a statement. Stran expects to complete another acquisition –  T.R. Miller Co. Inc. (asi/272250)  – in the second quarter of 2023.

Full-year revenue growth also was a result of higher spending from existing clients as well as business from new customers, Stran reported. Shape pointed to recent wins he believes will help continue to drive sales gains, including contracts with national and multi-national customers. Among those: helping to advance a North American loyalty program for a direct-selling beauty products company.

“We have launched this program and are supporting their more than four million beauty influencers with a new e-commerce store,” Shape said, noting other big contracts center on providing incentive products and literature to a healthcare company’s target consumers, as well as promotional products and services to a leading infrastructure services company.

A Return to Profitability in Q4

Stran became a publicly traded company in late 2021. It posted quarterly losses in the first three quarters of 2022. Ultimately, that led to the net loss on the year.

Stran said the lack of profitability was primarily due to an increase in lead generation initiatives, integration expenses related to acquisitions, the implementation of an internal commercial enterprise resource planning system on NetSuite ERP’s platform, ongoing expenses related to being a public company, and higher cost of purchases.

Still, the profitability picture brightened in the fourth quarter: Stran recorded net income of $903,000, which translated to $0.05 basic earnings per share (EPS) and $0.03 diluted EPS for the three-month period. Higher sales (driven by essentially the same factors that fueled annual growth) and what Stran described as more efficient management of operating expenses helped power the quarterly profitability, the company reported.

Speaking of sales: Topline fourth quarter 2022 revenue increased 45% year over year to $18.3 million – a tally that Stran described as the highest quarterly revenue in the company’s history.

Shape noted that Stran had a combined $25 million in cash and short-term investments as of Dec. 31, 2022, with no long-term debt.

“Overall, we believe our growth strategy has resulted in increased revenue, growth in our customer base, and geographic expansion, while maintaining a strong balance sheet,” Shape said. “We believe that we continue to be a leader within the industry, and intend to continue to take advantage of the vast opportunities within the market.”